Document:

<PAGE>   1
*** Certain information (indicated by an asterisk) has been omitted from this
document pursuant to a request for confidential treatment. The omitted material
has been filed separately with the Securities and Exchange Commission.

                                                                   EXHIBIT 10.20

                          FOR PURCHASES OF DIRECT-ORDERED & DISTRIBUTED PRODUCTS
                                          NOT SUBJECT TO COMPETITIVE BID PROCESS

                           PHARMACY SUPPLIER AGREEMENT

                                     BETWEEN

                                  NOVATION, LLC

                                       AND

                             WOMEN FIRST HEALTHCARE
                                  ("SUPPLIER")

<PAGE>   2

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                 PAGE
                                                                                 ----
<S>                                                                             <C>
1.     INTRODUCTION ..........................................................     1
       a.        Purchasing Opportunities for Members ........................     1
       b.        Authorized Distributors .....................................     1
       c.        Supplier ....................................................     1
       d.        Contract Prices; Non-Price Specifications; Committed Programs     1

2.     BASIC TERMS ...........................................................     2
       a.        Purchase of Products ........................................     2
       b.        Qualification Requirements ..................................     2
       c.        Optional Purchasing Arrangement .............................     2
       d.        Market Competitive Terms ....................................     3
       e.        Changes in Contract Prices ..................................     3
       f.        Notification of Changes in Pricing Terms ....................     3
       g.        Underutilized Businesses ....................................     3

3.     TERM AND TERMINATION ..................................................     3
       a.        Term ........................................................     3
       b.        Termination by Novation .....................................     4
       c.        Termination by Supplier .....................................     4
4.     PRODUCT SUPPLY ........................................................     4
       a.        Delivery and Invoicing ......................................     4
       b.        Product Fill Rates; Confirmation and Delivery Times .........     5
       c.        Bundled Terms ...............................................     5
       d.        Discontinuation of Products; Changes in Packaging ...........     5
       e.        Replacement or New Products .................................     5
       f.        Member Services .............................................     6
       g.        Product Deletion ............................................     6
       h.        Return of Products ..........................................     6
       i.        Failure to Supply ...........................................     6

5.     PRODUCT QUALITY .......................................................     6
       a.        Free From Defects ...........................................     6
       b.        Product Compliance ..........................................     7
       c.        Patent Infringement .........................................     7
       d.        Product Condition ...........................................     7
       e.        Recall of Products ..........................................     7
       f.        Shelf Life ..................................................     8

6.     CENTURY COMPLIANCE ....................................................     8

       a.        Definitions .................................................     8
       b.        Representations .............................................     8
       c.        Remedies ....................................................     9
       d.        Noncompliance Notice ........................................     9
       e.        Survival ....................................................     9
</TABLE>

                                      -i-
<PAGE>   3

<TABLE>
<S>                                                                             <C>
7.     REPORTS AND OTHER INFORMATION REQUIREMENTS ...........................      9
       a.        Report Content .............................................      9
       b.        Rebates and Incentives Report ..............................     10
       c.        Report Format and Delivery .................................     10
       d.        Requested Product Information ..............................     10
       d.        Other Information Requirements .............................     11

8.     OBLIGATIONS OF NOVATION ..............................................     11
       a.        Information to Members and Authorized Distributors .........     11
       b.        Marketing Services .........................................     11
9.     MARKETING FEES .......................................................     11
       a.         Calculation ...............................................     11
       b.         Payment ...................................................     12
10.    ADMINISTRATIVE DAMAGES ...............................................     13
11.    NONPAYMENT OR INSOLVENCY OF AN AUTHORIZED DISTRIBUTOR ................     13
12.    INSURANCE ............................................................     13
       a.        Policy Requirements ........................................     13
       b.        Self-Insurance .............................................     14
       c.        Amendments, Notices and Endorsements .......................     14
13.    COMPLIANCE WITH LAW AND GOVERNMENT PROGRAM PARTICIPATION .............     14
       a.         Compliance With Law .......................................     14
       b.         Government Program Participation ..........................     14
14.    RELEASE AND INDEMNITY ................................................     15
15.    BOOKS AND RECORDS; FACILITIES INSPECTIONS ............................     15
16.    USE OF NAMES, ETC. ...................................................     15
17.    CONFIDENTIAL INFORMATION .............................................     16
       a.         Nondisclosure .............................................     16
       b.         Definition ................................................     16
18.    MISCELLANEOUS ........................................................     16
       a.        Choice of Law ..............................................     16
       b.        Not Responsible ............................................     17
       c.        Third Party Beneficiaries ..................................     17
       d.        Notices ....................................................     17
       e.        No Assignment ..............................................     17
       f.        Severability ...............................................     17
       g.        Entire Agreement ...........................................     18
</TABLE>

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<PAGE>   4

                             INDEX OF DEFINED TERMS

<TABLE>
<CAPTION>
                                                                            PAGE
                                                                            ----
<S>                                                                         <C>
Agreed Percentage .......................................................     10
Approved ................................................................      2
Authorized Distributors .................................................      1
Calendar-Related ........................................................      7
Century Noncompliance ...................................................      7
Clients .................................................................      1
Committee ...............................................................      2
Conditionally Approved ..................................................      2
Confidential Information ................................................     14
Contract Prices .........................................................      1
Diskette One ............................................................      9
Diskette Two ............................................................      9
Effective Date ..........................................................      3
FDA .....................................................................     12
Federal health care program .............................................     12
Gregorian calendar ......................................................      7
Guidebook ...............................................................      9
Indemnitees .............................................................     13
Legal Requirements ......................................................     12
Marketing Fees ..........................................................     10
Members .................................................................      1
Net Sales Report ........................................................      9
Non-Price Specifications ................................................      1
Novation ................................................................      1
Novation Database .......................................................      1
Products ................................................................      1
Rebates and Incentives Report ...........................................     10
Reporting Month .........................................................      8
Special Conditions ......................................................      1
Secondary Suppliers .....................................................      2
Supplier ................................................................     title page
Systems .................................................................      7
Term ....................................................................      3
Timely ..................................................................      8
</TABLE>

                                     -iii-
<PAGE>   5

                                  NOVATION, LLC

                           PHARMACY SUPPLIER AGREEMENT

1. INTRODUCTION.

        a. PURCHASING OPPORTUNITIES FOR MEMBERS. Novation, LLC ("Novation") is
engaged in providing purchasing opportunities with respect to high quality
products and services to participating health care providers ("Members").
Members are entitled to participate in Novation's programs through their
membership or other participatory status in any of the following client
organizations: VHA Inc., University HealthSystem Consortium, and HealthCare
Purchasing Partners International, LLC (collectively, "Clients"). Novation is
acting as the exclusive agent for each of the Clients and certain of each
Client's subsidiaries and affiliates, respectively (and not collectively), with
respect to this Agreement. A current listing of Members is maintained by
Novation in the electronic database described in the Guidebook referred to in
Subsection 7.c below ("Novation Database"). A provider will become a "Member"
for purposes of this Agreement at the time Novation adds the provider to the
Novation Database and will cease to be a "Member" for such purposes at the time
Novation deletes the provider from the Novation Database.

        b. AUTHORIZED DISTRIBUTORS. Novation and/or the Clients have entered
into arrangements with certain distributors ("Authorized Distributors") that
have agreed to distribute the Products to Members. A current listing of
Authorized Distributors is maintained by Novation in the Novation Database. A
distributor will become an "Authorized Distributor" for purposes of this
Agreement at the time Novation adds the distributor to the Novation Database and
will cease to be an "Authorized Distributor" for such purposes at the time
Novation deletes the distributor from the Novation Database. Any limitations on
the scope of an Authorized Distributor's authority will also be set forth in the
Novation Database. By reason of requirements of law, regulation or internal
policy of certain Members, from time to time Novation may identify underutilized
businesses as Authorized Distributors.

        c. SUPPLIER. Supplier is the manufacturer of products listed on Exhibit
A, the provider of installation, training and maintenance services for such
products, and the provider of any other services listed on Exhibit A (such
products and/or services are collectively referred to herein as "Products").

        d. CONTRACT PRICES; NON-PRICE SPECIFICATIONS; COMMITTED PROGRAMS. A
description of the Products and pricing therefor ("Contract Prices") is attached
hereto as Exhibit A, the other specifications are attached hereto as Exhibit B
("Non-Price Specifications"), and the Special Conditions are attached hereto as
Exhibit C ("Special Conditions").

<PAGE>   6

2. BASIC TERMS.

        a. PURCHASE OF PRODUCTS. Novation and Supplier hereby agree that
Supplier will make the Products available for purchase by the Authorized
Distributors at the Contract Prices for resale to the Members in accordance with
the terms of this Agreement; provided, however. that this Agreement will not
constitute a commitment by any person to purchase any of the Products.

        b. QUALIFICATION REQUIREMENTS. Supplier must complete and submit the
Novation QA/RA questionnaire for evaluation by Novation's Supplier Certification
Committee (the "Committee"). The completed questionnaire addresses the
Supplier's quality standards, procedures, personnel, regulatory history, FDA
inspections and responses, back order history, frequency of product recalls, as
well as contract manufacturers, sub-contractors or re-packagers (if any) as
submitted on the QA/RA questionnaire, unless prior written consent is obtained
from Novation. Failure to use the contract manufacturers, sub-contractors or
re-packagers (if any) listed on the QA/RA questionnaire, shall constitute a
breach of this Agreement, giving Novation a right to terminate this Agreement
and subjecting Supplier to potential liability to Novation, the Clients, the
Members, and the Authorized Distributors, including without limitation,
liability for costs of replacement products and loss of Marketing Fees from such
breach.

Within one hundred eighty (180) days of the Effective Date, Supplier must be
certified as "Approved" or "Conditionally Approved" by the Committee. In certain
instances where the Supplier does not receive the approval of the Committee, the
Committee may wish to monitor the Supplier's quality performance and may
classify the Supplier as "Conditionally Approved." During the "Conditionally
Approved" time period, the Supplier must provide quarterly reports listing any
FDA inspections received during the quarter, FD-483 observations and warning
letters issued, as well as all responses thereto. If no FDA inspections occur,
or inspections occur in which there are no observations or warning letters, the
"Conditionally Approved" Supplier must so indicate in the quarterly reports.
After the 180 day grace period, failure by the Supplier to be deemed "Approved"
or "Conditionally Approved" by the Committee shall constitute a breach of this
Agreement, giving Novation the right to terminate this Agreement and subjecting
Supplier to potential liability to Novation, the Clients, the Members, and the
Authorized Distributors, including without limitation, liability for costs of
replacement products and loss of Marketing Fees resulting from such breach.

        c. OPTIONAL PURCHASING ARRANGEMENT. Novation and Supplier agree that
each Member will have the option of purchasing the Products under the terms of
this Agreement or under the terms of any other purchasing or pricing arrangement
that may exist between such Member and Supplier at any time during the Term;
provided, however, that, regardless of the arrangement, Supplier will comply
with Sections 7 and 9 below. If any Member uses any other purchasing or pricing
arrangement with Supplier when ordering products covered by any contract between
Supplier and Novation, Supplier will notify such Member of the pricing and other
significant terms of the applicable Novation contract.

                                      -2-
<PAGE>   7

        d. MARKET COMPETITIVE TERMS. Supplier agrees that the prices, quality,
value and technology of all Products purchased under this Agreement will remain
market competitive at all times during the Term. Supplier agrees to provide
prompt written notice to Novation of all offers for the sale of the Products
made by Supplier during the Term on terms that are more favorable to the offeree
than the terms of this Agreement. Supplier will lower the Contract Prices or
increase any discount applicable to the purchase of the Products as necessary to
assure market competitiveness. If at any time during the Term Novation receives
information from any source suggesting that Supplier's prices, quality, value or
technology are not market competitive, Novation may provide written notice of
such information to Supplier, and Supplier will, within five (5) business days
for Novation's private label Products and within ten (10) business days for all
other Products, advise Novation in writing of and fully implement all
adjustments necessary to assure market competitiveness.

        e. CHANGES IN CONTRACT PRICES. Unless otherwise expressly agreed in any
exhibit to this Agreement, the Contract Prices will not be increased and any
discount will not be eliminated or reduced during the Term. In addition to any
changes made to assure market competitiveness, Supplier may lower the Contract
Prices or increase any discount applicable to the purchase of the Products at
any time.

        f. NOTIFICATION OF CHANGES IN PRICING TERMS. Supplier will provide not
less than sixty (60) days' prior written notice to Novation and not less than
forty-five (45) days' prior written notice to all Authorized Distributors of any
change in pricing terms permitted or required by this Agreement. For purposes of
the foregoing notification requirements, a change in pricing terms will mean any
change that affects the delivered price to the Member, including, without
limitation, changes in list prices, discounts or pricing tiers or schedules.
Such prior written notice will be provided in such format and in such detail as
may be required by Novation from time to time, and will include, at a minimum,
sufficient information to determine line item pricing of the Products for all
affected Members.

        g. UNDERUTILIZED BUSINESSES. Certain Members may be required by law,
regulation and/or internal policy to do business with underutilized businesses
such as Minority Business Enterprises (MBE), Disadvantaged Business Enterprises
(DBE), Small Business Enterprises (SBE), Historically Underutilized Businesses
(HUB) and/or Women-owned Business Enterprises (WBE). To assist Novation in
helping Members meet these requirements, Supplier will comply with all Novation
policies and programs with respect to such businesses and will provide, on
request, Novation or any Member with statistical or other information with
respect to Supplier's utilization of such businesses as a vendor, distributor,
contractor or subcontractor.

3. TERM AND TERMINATION.

        a. TERM. This Agreement will be effective as of the effective date set
forth in Exhibit D attached hereto ("Effective Date"), and, unless sooner
terminated, will continue in full force and effect for the initial term set
forth in the Non-Price Specifications and for any renewal terms set forth in the
Non-Price Specifications by Novation's delivery of written notice of renewal to
Supplier not less than ten (10) days prior to the end of the initial term or any
renewal

                                      -3-
<PAGE>   8

term, as applicable. The initial term, together with the renewal terms, if any,
are collectively referred to herein as the "Term."

        b. TERMINATION BY NOVATION. Novation may terminate this Agreement at any
time for any reason whatsoever by delivering not less than sixty (60) days'
prior written notice thereof to Supplier. In addition, Novation may terminate
this Agreement immediately by delivering written notice thereof to Supplier upon
the occurrence of either of the following events:

                (1) Supplier breaches this Agreement; or

                (2) Supplier becomes bankrupt or insolvent or makes an
        unauthorized assignment or goes into liquidation or proceedings are
        initiated for the purpose of having a receiving order or winding up
        order made against Supplier, or Supplier applies to the courts for
        protection from its creditors.

Novation's right to terminate this Agreement due to Supplier's breach in
accordance with this Subsection is in addition to any other rights and remedies
Novation, the Clients, the Members or the Authorized Distributors may have
resulting from such breach, including, but not limited to, Novation's and the
Clients' right to recover all loss of Marketing Fees resulting from such breach
through the date of termination and for sixty (60) days thereafter.

        c. TERMINATION BY SUPPLIER. Supplier may terminate this Agreement at any
time for any reason whatsoever by delivering not less than sixty (60) days'
prior written notice thereof to Novation.

4. PRODUCT SUPPLY.

        a. DELIVERY AND INVOICING. On and after the Effective Date, Supplier
agrees to deliver Products ordered directly by the Members to the Members and
Products ordered by the Authorized Distributors on behalf of Members to the
Authorized Distributors, FOB destination, and will direct its invoices to the
ordering organization in accordance with this Agreement. Supplier agrees to
prepay and absorb charges, if any, for transporting Products directly to the
Members or to the Authorized Distributors. Payment terms through Authorized
Distributors are 2%-30, Net 31 days. Supplier will make whatever arrangements
are reasonably necessary with the Members ordering directly and with the
Authorized Distributors to implement the terms of this Agreement; provided,
however, Supplier will not impose any purchasing commitment on any Member or
Authorized Distributor as a condition to the Member's or Authorized
Distributor's purchase of any Products pursuant to this Agreement.

                                      -4-
<PAGE>   9

        b. PRODUCT FILL RATES; CONFIRMATION AND DELIVERY TIMES. Supplier agrees
to provide product fill rates to the Members and Authorized Distributors of
greater than ninety-five percent (95%), calculated as line item orders. Supplier
will provide confirmation of orders from the Members or Authorized Distributors
via the electronic data interchange described in the Guidebook referred to in
Subsection 7.e below within two (2) business days after placement of the order
and will deliver the Products to the Members ordering directly within five (5)
business days and to Authorized Distributors within ten (10) business days after
placement of the order.

        c. BUNDLED TERMS. Supplier agrees to give Novation prior written notice
of any offer Supplier makes to any Member or Authorized Distributor to sell
products that are not covered by this Agreement in conjunction with Products
covered by this Agreement under circumstances where the Member or Authorized
Distributor has no real economic choice other than to accept such bundled terms.

        d. DISCONTINUATION OF PRODUCTS; CHANGES IN PACKAGING. Supplier will have
no unilateral right to discontinue any of the Products or to make any changes in
packaging which render any of the Products substantially different in use,
function or distribution. Supplier may request Novation in writing to agree to a
proposed discontinuation of any Products or a proposed change in packaging for
any Products at least ninety (90) days prior to the proposed implementation of
the discontinuation or change. Under no circumstances will any Product
discontinuation or packaging changes be permitted under this Agreement without
Novation's agreement to the discontinuation or change. In the event Supplier
implements such proposed discontinuation or change without Novation's agreement
thereto in writing, in addition to any other rights and remedies Novation or the
Members may have by reason of such discontinuation or change, (i) Novation will
have the right to terminate any or all of the Product(s) subject to such
discontinuation or change or to terminate this Agreement in its entirety
immediately upon becoming aware of the discontinuation or change or any time
thereafter by delivering written notice thereof to Supplier; (ii) the Members
may purchase products equivalent to the discontinued or changed Products from
other sources and Supplier will be liable to the Members for all reasonable
costs in excess of the Contract Prices plus any other damages which they may
incur; and (iii) Supplier will be liable to Novation and the Clients for any
loss of Marketing Fees resulting from such unacceptable discontinuation or
change plus any other damages which they may incur.

        e. REPLACEMENT OR NEW PRODUCTS. Supplier will have no unilateral right
to replace any of the Products listed in Exhibit A with other products or to add
new products to this Agreement. Supplier may request Novation in writing to
agree to a replacement of any of the Products or the addition of a new product
that is closely related by function or use to an existing Product at least sixty
(60) days prior to the proposed implementation of the replacement or to the new
product introduction. Under no circumstances will any Product replacement or new
product addition to this Agreement be permitted without Novation's agreement to
the replacement or new product.

                                      -5-
<PAGE>   10

        f. MEMBER SERVICES. Supplier will consult with each Member to identify
the Member's policies relating to access to facilities and personnel. Supplier
will comply with such policies and will establish a specific timetable for sales
calls by sales representatives to satisfy the needs of the Member. Supplier will
promptly respond to Members' reasonable requests for verification of purchase
history. If requested by Novation or any Members, Supplier will provide, at
Supplier's cost, on-site inservice training to Members' personnel for pertinent
Products. Supplier will not make inappropriate use of product usage information
relating to any Members that is purchased from third party sources. Supplier
will not send unsolicited product samples to any Member unless the Member has
given Supplier its express written consent to receiving unsolicited product
samples from Supplier.

        g. PRODUCT DELETION. Notwithstanding anything to the contrary contained
in this Agreement, Novation may delete any one or more of the Products from this
Agreement at any time, at will and without cause, upon not less than sixty (60)
days' prior written notice to Supplier.

        h. RETURN OF PRODUCTS. Any Member or Authorized Distributor, in addition
to and not in limitation of any other rights and remedies, will have the right
to return Products to Supplier in accordance with the policies and requirements
attached hereto as Exhibit F.

        i. FAILURE TO SUPPLY. In the event of Supplier's failure to perform its
supply obligations in accordance with the terms of this Section 4, the Member or
the Authorized Distributor may purchase products equivalent to the Products from
other sources and Supplier will be liable to the Member or the Authorized
Distributor for all reasonable costs in excess of the Contract Prices plus any
other damages which they may incur. In such event, Supplier will also be liable
to Novation and the Clients for any loss of Marketing Fees resulting from such
failure plus any other damages which they may incur. The remedies set forth in
this Subsection are in addition to any other rights and remedies Novation, the
Clients, the Members or the Authorized Distributors may have resulting from such
failure.

5. PRODUCT QUALITY.

        a. Free From Defects. Supplier warrants the Products against defects in
material, workmanship, design and manufacturing. Supplier will make all
necessary arrangements to assign such warranty to the Members. Supplier further
represents and warrants that the Products will conform to the specifications,
drawings, and samples furnished by Supplier or contained in the Non-Price
Specifications and will be safe for their intended use. If any Products are
defective and a claim is made by a Member or an Authorized Distributor on
account of such defect, Supplier will, at the option of the Member or the
Authorized Distributor, either replace the defective Products or credit the
Member or the Authorized Distributor. Supplier will bear all costs of returning
and replacing the defective Products, as well as all risk of loss or damage to
the defective Products from and after the time they leave the physical
possession of the Member or the Authorized Distributor. The warranties contained
in this Subsection will survive any inspection, delivery, acceptance or payment
by a Member or an Authorized Distributor. In

                                      -6-
<PAGE>   11

addition, if there is at any time wide-spread failure of the Products, the
Member or the Authorized Distributor may return all said Products for credit or
replacement, at its option. This Subsection and the obligations contained herein
will survive the expiration or earlier termination of this Agreement. The
remedies set forth in this Subsection are in addition to and not a limitation on
any other rights or remedies that may be available against Supplier.

        b. PRODUCT COMPLIANCE. Supplier represents and warrants to Novation, the
Clients, the Authorized Distributors and the Members that the Products are, if
required, registered, and will not be distributed, sold or priced by Supplier in
violation of any federal, state or local law. Supplier represents and warrants
that as of the date of delivery to the Members ordering directly or to the
Authorized Distributors all Products will not be adulterated or misbranded
within the meaning of the Federal Food, Drug and Cosmetic Act and will not
violate or cause a violation of any applicable law, ordinance, rule, regulation
or order. Supplier agrees it will comply with all applicable Good Manufacturing
Practices and Standards contained in 21 C.F.R. Parts 210, 211, 225, 226, 600,
606, 610, 640, 660, 680 and 820 and with the standards of the U.S. Pharmacopoeia
and National Formulary. Single and unit dose packaging will conform to the
Guidelines for Single Use Packaging of Drugs issued by the American society of
HealthSystem Pharmacists. Supplier represents and warrants that it will provide
adequate warnings and instructions to inform users of the Products of the risks,
if any, associated with the use of the Products. Supplier's representations,
warranties and agreements in this Subsection will survive the expiration or
earlier termination of this Agreement.

        c. PATENT INFRINGEMENT. Supplier represents and warrants that sale or
use of the Products will not infringe any United States patent. Supplier will,
at its own expense, defend every suit which will be brought against Novation, a
Member or an Authorized Distributor for any alleged infringement of any patent
by reason of the sale or use of the Products and will pay all costs, damages and
profits recoverable in any such suit. This Subsection and the obligations
contained herein will survive the expiration or earlier termination of this
Agreement. The remedies set forth in this Subsection are in addition to and not
a limitation on any other rights or remedies that may be available against
Supplier.

        d. PRODUCT CONDITION. Unless otherwise stated in the Non-Price
Specifications or unless agreed upon by a Member in connection with Products it
may order, all Products will be new. Products which are demonstrators, used,
obsolete, seconds, or which have been discontinued are unacceptable unless
otherwise specified in the Non-Price Specifications or the Member accepts
delivery after receiving notice of the condition of the Products.

        e. RECALL OF PRODUCTS. Supplier will reimburse Authorized Distributors
and Members for any cost associated with any Product corrective action,
withdrawal or recall requested by Supplier or required by any governmental
entity. In the event a product recall or a court action impacting supply occurs,
Supplier will notify Novation in writing within twenty-four (24) hours of any
such recall or action. Supplier's obligations in this Subsection will survive
the expiration or earlier termination of this Agreement.

                                      -7-
<PAGE>   12

        f. SHELF LIFE. Sterile Products and other Products with a limited shelf
life sold under this Agreement will have the longest possible shelf life and the
latest possible expiration dates. Unless required by stability considerations,
there will not be less than an eighteen (18) month interval between a Product's
date of delivery by Supplier to the Authorized Distributor and its expiration
date. Products will bear the lot number and expiration date on the shelf
package. If a code for the lot number or expiration date is used, a key to the
code will be furnished to each Member.

6. CENTURY COMPLIANCE.

        a. DEFINITIONS. For purposes of this Section, the following terms have
the respective meanings given below:

                (1) "Systems" means any of the Products, systems of distribution
        for Products and Product manufacturing systems that consist of or
        include any computer software, computer firmware, computer hardware
        (whether general or special purpose), documentation, data, and other
        similar or related items of the automated, computerized, and/or software
        systems that are provided by or through Supplier or utilized to
        manufacture or distribute the Products provided by or through Supplier
        pursuant to this Agreement, or any component part thereof, and any
        services provided by or through Supplier in connection therewith.

                (2) "Calendar-Related" refers to date values based on the
        "Gregorian calendar" (as defined in the Encyclopedia Britannica, 15th
        edition, 1982, page 602) and to all uses in any manner of those date
        values, including without limitation manipulations, calculations,
        conversions, comparisons, and presentations.

                (3) "Century Noncompliance" means any aspects of the Systems
        that fail to satisfy the requirements set forth in Subsection 6.b below.

        b. REPRESENTATIONS. Supplier warrants, represents and agrees that the
Systems satisfy the following requirements:

                (1) In connection with the use and processing of
        Calendar-Related data, the Systems will not malfunction, will not cease
        to function, will not generate incorrect data, and will not produce
        incorrect results.

                (2) In connection with providing Calendar-Related data to and
        accepting Calendar-Related data from other automated, computerized,
        and/or software systems and users via user interfaces, electronic
        interfaces, and data storage, the Systems represent dates without
        ambiguity as to century.

                (3) The year component of Calendar-Related data that is provided
        by the Systems to or that is accepted by the Systems from other
        automated, computerized, and/or software systems and user interfaces,
        electronic interfaces, and data storage is represented

                                      -8-
<PAGE>   13

        in a four-digit CCYY format, where CC represents the two digits
        expressing the century and YY represents the two digits expressing the
        year within that century (e.g., 1996 or 2003).

                (4) Supplier has verified through testing that the Systems
        satisfy the requirements of this Subsection including, without
        limitation, testing of each of the following specific dates and the
        transition to and from each such date: September 9, 1999; September 10,
        1999; December 31, 1999; January 1, 2000; February 28, 2000; February
        29, 2000; March 1, 2000; December 31, 2000; January 1, 2001; December
        31, 2004; and January 1, 2005.

        c. REMEDIES. In the event of any Century Noncompliance in the Systems in
any respect, in addition to any other remedies that may be available to Novation
or the Members, Supplier will, at no cost to the Members, promptly under the
circumstances (but, in all cases, within thirty (30) days after receipt of a
written request from any Member, unless otherwise agreed by the Member in
writing) eliminate the Century Noncompliance from the Systems.

        d. NONCOMPLIANCE NOTICE. In the event Supplier becomes aware of (i) any
possible or actual Century Noncompliance in the Systems or (ii) any
international, governmental, industrial, or other standard (proposed or adopted)
regarding Calendar-Related data and/or processing, or Supplier begins any
significant effort to conform the Systems to any such standard, Supplier will
promptly provide the Members with all relevant information in writing and will
timely provide the Members with updates to such information. Supplier will
respond promptly and fully to inquiries by the Members, and timely provide
updates to any responses provided to the Members, with respect to (i) any
possible or actual Century Noncompliance in the Systems or (ii) any
international, governmental, industrial, or other standards. In the foregoing,
the use of "timely" means promptly after the relevant information becomes known
to or is developed by or for Supplier.

        e. SURVIVAL. Supplier's representations, warranties and agreements in
this Section will continue in effect throughout the Term and will survive the
expiration or earlier termination of this Agreement.

7. REPORTS AND OTHER INFORMATION REQUIREMENTS.

        a. REPORT CONTENT. Within twenty (20) days after the end of each full
and partial month during the Term ("Reporting Month"), Supplier will submit to
Novation a report in the form of two (2) diskettes ("Diskette One" and "Diskette
Two") containing the following information in form and content reasonably
satisfactory to Novation ("Net Sales Report"):

                (1) the name of Supplier, the Reporting Month and year and the
        Agreement number (as provided to Supplier by Novation);

                (2) with respect to each Member (described by LIC number (as
        provided to Supplier by Novation), health industry number (if
        applicable), DEA number, full name,

                                      -9-
<PAGE>   14

street address, city, state, zip code and, if applicable, tier and committed
status), the number of units sold, the amount of net sales, whether the sales
were direct or through distribution, and the name of the Authorized Distributor,
if applicable, for each Product on a line item basis, and the sum of net sales
and the associated Marketing Fees for all Products purchased by such Member
directly or indirectly from Supplier during the Reporting Month, whether under
the pricing and other terms of this Agreement or under the terms of any other
purchasing or pricing arrangements that may exist between the Member and
Supplier;

                (3) the sum of the net sales and the associated Marketing Fees
        for all Products sold to all Members during the Reporting Month; and

                (4) such additional information as Novation may reasonably
        request from time to time.

Diskette One will contain the foregoing information for all Product sales made
to Members through Authorized Distributors. Diskette Two will contain the
foregoing information for all Product sales made directly to Members.

        b. REBATES AND INCENTIVES REPORT. At least thirty (30) days prior to the
distribution of any rebate or incentive checks to Members, Supplier will provide
Novation with a rebates and incentives report in the form of a diskette
containing the following information in form and content reasonably satisfactory
to Novation ("Rebates and Incentives Report"):

                (1) the name of Supplier and the Agreement number (as provided
        to Supplier by Novation);

                (2) with respect to each Member earning rebates or incentives
        (described by health industry number (if applicable), DEA number, full
        name, city, state, zip code and, if applicable, tier and committed
        status), the net sales amount used to calculate the rebates or
        incentives and the amount of rebates or incentives earned by such
        Member.

        c. REPORT FORMAT AND DELIVERY. The reports required by this Section will
be submitted electronically in Excel Version 7 or Access Version 7 and in
accordance with other specifications established by Novation from time to time
and will be delivered to:

For the Net Sales Report:

        Novation
        Attn: SRIS Operations
        125 East John Carpenter Freeway, Suite 1500
        Irving, TX 75062

For the Rebates and Incentives Report:

                                      -10-
<PAGE>   15

        Novation
        Attn: Pharmacy Product Manager
        125 East John Carpenter Freeway, Suite 1500
        Irving, TX 75062

        d. REQUESTED PRODUCT INFORMATION. Upon the request of Novation or any
Member at any time during the Term, Supplier will promptly provide or update all
information relevant to the supply and quality of the Products, including
without limitation (i) identification of manufacturers of ingredients and other
Product components; (ii) formulations, ingredient lists and lot assays; (iii)
FDA application, approval and inspection information; (iv) recall information;
(v) analytical control data; (vi) sterility testing data; (vii) bioavailability
data when available; and (viii) descriptions of testing procedures for raw
materials and finished products.

        e. OTHER INFORMATION REQUIREMENTS. In addition to the reporting and
Product information requirements set forth in Subsections 7.a, 7.b, 7.c and 7.d
above, the parties agree to facilitate the administration of this Agreement by
transmitting and receiving information electronically and by complying with the
information requirements set forth in Exhibit F attached hereto. Supplier
further agrees that, except to the extent of any inconsistency with the
provisions of this Agreement, it will comply with all information requirements
set forth in the Novation Information Requirements Guidebook ("Guidebook"). On
or about the Effective Date, Novation will provide Supplier with a current copy
of the Guidebook and will thereafter provide Supplier with updates and/or
revisions to the Guidebook from time to time.

8. OBLIGATIONS OF NOVATION.

        a. INFORMATION TO MEMBERS AND AUTHORIZED DISTRIBUTORS. After the
execution of this Agreement, Novation, in conjunction with the Clients, will
deliver a summary of the purchasing arrangements covered by this Agreement to
each Member and each Authorized Distributor and will, from time to time, at the
request of Supplier, deliver to each Member and each Authorized Distributor
reasonable and appropriate amounts and types of materials supplied by Supplier
to Novation which relate to the purchase of the Products.

        b. MARKETING SERVICES. Novation, in conjunction with the Clients, will
market the purchasing arrangements covered by this Agreement to the Members.
Such promotional services may include, as appropriate, the use of direct mail,
contact by Novation's field service delivery team, member support services, and
regional and national meetings and conferences. As appropriate, Novation, in
conjunction with the Clients, will involve Supplier in these promotional
activities by inviting Supplier to participate in meetings and other reasonable
networking activities with Members.

9. MARKETING FEES.

        a. CALCULATION. Supplier will pay to Novation, as the authorized
collection agent for each of the Clients and certain of each Client's
subsidiaries and affiliates, respectively (and not

                                      -11-
<PAGE>   16

collectively), marketing fees ("Marketing Fees") belonging to any of the Clients
or certain of their subsidiaries or affiliates equal to the Agreed Percentage of
the aggregate gross charges of all net sales of the Products to the Members
directly or indirectly from Supplier, whether under the pricing and other terms
of this Agreement or under the terms of any other purchasing or pricing
arrangements that may exist between the Members and Supplier. Such gross charges
will be determined without any deduction for uncollected accounts or for costs
incurred in the manufacture, provision, sale or distribution of the Products,
and will include, but not be limited to, charges for the sale of products, the
provision of installation, training and maintenance services, and the provision
of any other services listed on Exhibit A. The "Agreed Percentage" will be
defined in the Non-Price Specifications.

        b. PAYMENT. On or about the Effective Date, Novation will advise
Supplier in writing of the amount determined by Novation to be Supplier's
monthly estimated Marketing Fees. Thereafter, Supplier's monthly estimated
Marketing Fees may be adjusted from time to time upon written notice from
Novation based on actual purchase data. No later than the tenth (10th) day of
each month, Supplier will remit the monthly estimated Marketing Fees for such
month to Novation. Such payment will be adjusted to reflect the reconciliation
between the actual Marketing Fees payable for the second month prior to such
month with the estimated Marketing Fees actually paid during such prior month.
Supplier will pay all estimated and adjusted Marketing Fees by check made
payable to "Novation, LLC." All checks should reference the Agreement number.
Supplier will include with its check the reconciliation calculation used by
Supplier to determine the payment adjustment, with separate amounts shown for
each Client's component thereof. Checks sent by first class mail will be mailed
to the following address:

        Novation
        75 Remittance Dr., Suite 1420
        Chicago, IL 60675-1420

Checks sent by courier (Federal Express, United Parcel Service or messenger)
will be addressed as follows:

        The Northern Trust Company
        801 S. Canal St.
        4th Floor Receipt & Dispatch
        Chicago, IL 60607
        Attn: Novation, Suite 1420
        Telephone: (312) 630-8100, #9

                                      -12-
<PAGE>   17

10. ADMINISTRATIVE DAMAGES. Novation and Supplier agree that Novation would
incur additional administrative costs if Supplier fails to provide notice of
change in pricing terms as required in Subsection 2.f above, fails to provide
reports as required in Section 7 above, or fails to pay Marketing Fees as
required in Section 9 above, in each case within the time and manner required by
this Agreement. Novation and Supplier further agree that the additional
administrative costs incurred by Novation by reason of any such failure to
Supplier is uncertain, and they therefore agree that the following schedule of
administrative damages constitutes a reasonable estimation of such costs and
were determined according to the principles of just compensation:

<TABLE>
<S>                                                     <C>
1st failure                                             written warning
2nd failure:                                                 $   500.00
3rd failure:                                                 $ 1,000.00
4th failure:                                                 $ 2,500.00
5th failure:                                                 $ 5,000.00
6th & each subsequent failure:                               $10,000.00
</TABLE>

Novation's right to recover administrative damages in accordance with this
Section is in addition to any other rights and remedies Novation or the Clients
may have by reason of Supplier's failure to pay the Marketing Fees or provide
the reports or notices within the time and manner required by this Agreement.

11. NONPAYMENT OR INSOLVENCY OF A MEMBER OR AN AUTHORIZED DISTRIBUTOR. If a
Member or an Authorized Distributor fails to pay Supplier for Products ordered
by such Member or Authorized Distributor, or if a Member or Authorized
Distributor becomes bankrupt or insolvent or makes an assignment for the benefit
of creditors or goes into liquidation, or if proceedings are initiated for the
purpose of having a receiving order or winding up order made against a Member or
Authorized Distributor, or if a Member or Authorized Distributor applies to the
court for protection from its creditors, then, in any such case, this Agreement
will not terminate, but, in the case of an Authorized Distributor, Supplier will
have the right, upon prior written notice to Novation and the Members, to
discontinue providing Products through that Authorized Distributor, and Supplier
will thereafter provide Products to the Members directly or through another
Authorized Distributor, as directed by Novation, and in the case of a Member,
Supplier will have the right, upon prior written notice to Novation and the
Member, to discontinue selling Products to that Member.

12. INSURANCE.

        a. POLICY REQUIREMENTS. Supplier will maintain and keep in force during
the Term product liability, general public liability and property damage
insurance against any insurable claim or claims which might or could arise
regarding Products purchased from Supplier. Such insurance will contain a
minimum combined single limit of liability for bodily injury and property damage
in the amounts of not less than $2,000,000 per occurrence and $10,000,000 in the
aggregate; will name Novation, the Clients, the Members and the Authorized
Distributors, as their interests may appear, as additional insureds, and will
contain an endorsement providing that

                                      -13-
<PAGE>   18

the carrier will provide directly to all named insured copies of all notices and
endorsements. Supplier will provide to Novation, within fifteen (15) days after
Novation's request, an insurance certificate indicating the foregoing coverage,
issued by an insurance company licensed to do business in the relevant states
and signed by an authorized agent.

        b. SELF-INSURANCE. Notwithstanding anything to the contrary in
Subsection 12.a above, Supplier may maintain a self-insurance program for all or
any part of the foregoing liability risks, provided such self-insurance policy
in all material respects complies with the requirements applicable to the
product liability, general public liability and property damage insurance set
forth in Subsection 12.a. Supplier will provide Novation, within fifteen (15)
days after Novation's request: (1) the self-insurance policy; (2) the name of
the company managing the self-insurance program and providing reinsurance, if
any; (3) the most recent annual reports on claims and reserves for the program;
and (4) the most recent annual actuarial report on such program.

        c. AMENDMENTS, NOTICES AND ENDORSEMENTS. Supplier will not amend, in any
material respect that affects the interests of Novation, the Clients, the
Members or the Authorized Distributors, or terminate said liability insurance or
self-insurance program except after thirty (30) days' prior written notice to
Novation and will provide to Novation copies of all notices and endorsements as
soon as practicable after it receives or gives them.

13. COMPLIANCE WITH LAW AND GOVERNMENT PROGRAM PARTICIPATION.

        a. COMPLIANCE WITH LAW. Supplier represents and warrants that to the
best of its knowledge, after due inquiry, it is in compliance with all federal,
state and local statutes, laws, ordinances and regulations applicable to it
("Legal Requirements") which are material to the operation of its business and
the conduct of its affairs, including Legal Requirements pertaining to the
safety of the Products, occupational health and safety, environmental
protection, nondiscrimination, antitrust, and equal employment opportunity.
During the Term, Supplier will: (1) promptly notify Novation of any lawsuits,
claims, administrative actions or other proceedings asserted or commenced
against it which assert in whole or in part that Supplier is in noncompliance
with any Legal Requirement which is material to the operation of its business
and the conduct of its affairs and (2) promptly provide Novation with true and
correct copies of all written notices of adverse findings from the U.S. Food and
Drug Administration ("FDA") and all written results of FDA inspections which
pertain to the Products.

        b. GOVERNMENT PROGRAM PARTICIPATION. Supplier represents and warrants
that it is not excluded from participation, and is not otherwise ineligible to
participate, in a "Federal health care program" as defined in 42 U.S.C. Section
1320a-7b(f) or in any other government payment program. In the event Supplier is
excluded from participation, or becomes otherwise ineligible to participate in
any such program during the Term, Supplier will notify Novation in writing
within three (3) days after such event, and upon the occurrence of such event,
whether or not such notice is given to Novation, Novation may immediately
terminate this Agreement upon written notice to Supplier.

                                      -14-
<PAGE>   19

14. RELEASE AND INDEMNITY. SUPPLIER WILL RELEASE, INDEMNIFY, HOLD HARMLESS, AND,
IF REQUESTED, DEFEND NOVATION, THE CLIENTS, THE MEMBERS AND THE AUTHORIZED
DISTRIBUTORS, AND THEIR RESPECTIVE OFFICERS, DIRECTORS, REGENTS, AGENTS,
SUBSIDIARIES, AFFILIATES AND EMPLOYEES (COLLECTIVELY, THE "INDEMNITEES"), FROM
AND AGAINST ANY CLAIMS, LIABILITIES, DAMAGES, ACTIONS, COSTS AND EXPENSES
(INCLUDING, WITHOUT LIMITATION, REASONABLE ATTORNEYS' FEES, EXPERT FEES AND
COURT COSTS) OF ANY KIND OR NATURE, WHETHER AT LAW OR IN EQUITY, INCLUDING
CLAIMS ASSERTING STRICT LIABILITY, ARISING FROM OR CAUSED IN ANY PART BY (1) THE
BREACH OF ANY REPRESENTATION, WARRANTY, COVENANT OR AGREEMENT OF SUPPLIER
CONTAINED IN THIS AGREEMENT; (2) THE CONDITION OF ANY PRODUCT, INCLUDING A
DEFECT IN MATERIAL, WORKMANSHIP, DESIGN OR MANUFACTURING; OR (3) THE WARNINGS
AND INSTRUCTIONS ASSOCIATED WITH ANY PRODUCT. SUCH OBLIGATION TO RELEASE,
INDEMNIFY, HOLD HARMLESS AND DEFEND WILL APPLY EVEN IF THE CLAIMS, LIABILITIES,
DAMAGES, ACTIONS, COSTS AND EXPENSES ARE CAUSED BY THE NEGLIGENCE, GROSS
NEGLIGENCE OR OTHER CULPABLE CONDUCT OF INDEMNITEES; PROVIDED, HOWEVER, THAT
SUCH INDEMNIFICATION, HOLD HARMLESS AND RIGHT TO DEFENSE WILL NOT BE APPLICABLE
WHERE THE CLAIM, LIABILITY, DAMAGE, ACTION, COST OR EXPENSE ARISES SOLELY AS A
RESULT OF AN ACT OR FAILURE TO ACT OF INDEMNITEES. THIS SECTION AND THE
OBLIGATIONS CONTAINED HEREIN WILL SURVIVE THE EXPIRATION OR EARLIER TERMINATION
OF THIS AGREEMENT. THE REMEDIES SET FORTH IN THIS SECTION ARE IN ADDITION TO AND
NOT A LIMITATION ON ANY OTHER RIGHTS OR REMEDIES THAT MAY BE AVAILABLE AGAINST
SUPPLIER.

15. BOOKS AND RECORDS; FACILITIES INSPECTIONS. Supplier agrees to keep,
maintain and preserve complete, current and accurate books, records and accounts
of the transactions contemplated by this Agreement and such additional books,
records and accounts as are necessary to establish and verify Supplier's
compliance with this Agreement. All such books, records and accounts will be
available for inspection and audit by Novation representatives at any time
during the Term and for two (2) years thereafter, but only during reasonable
business hours and upon reasonable notice. Novation agrees that its routine
audits will not be conducted more frequently than twice in any consecutive
twelve (12) month period, subject to Novation's right to conduct special audits
whenever it deems it to be necessary. In addition, Supplier will make its
manufacturing and packaging facilities available for inspection from time to
time during the Term by Novation representatives, but only during reasonable
business hours and upon reasonable notice. The exercise by Novation of the right
to inspect and audit is without prejudice to any other or additional rights or
remedies of either party.

16. USE OF NAMES, ETC. Supplier agrees that it will not use in any way in its
promotional, informational or marketing activities or materials (i) the names,
trademarks, logos, symbols or a description of the business or activities of
Novation or any Client, Authorized Distributor or Member without in each
instance obtaining the prior written consent of the person owning the rights
thereto; or (ii) the existence or content of this Agreement without in each
instance obtaining the prior written consent of Novation.

                                      -15-
<PAGE>   20

17. CONFIDENTIAL INFORMATION.

        a. NONDISCLOSURE. Supplier agrees that it will;

                (1) keep strictly confidential and hold in trust all
        Confidential Information, as defined in Subsection 17.b below, of
        Novation, the Clients, the Authorized Distributors and the Members;

                (2) not use the Confidential Information for any purpose other
        than the performance of its obligations under this Agreement, without
        the prior written consent of Novation;

                (3) not disclose the Confidential Information to any third party
        (unless required by law) without the prior written consent of Novation;
        and

                (4) not later than thirty (30) days after the expiration or
        earlier termination of this Agreement, return to Novation, the Client,
        the Authorized Distributor or the Member, as the case may be, the
        Confidential Information.

        b. DEFINITION. "Confidential Information," as used in Subsection 17.a
above, will consist of all information relating to the prices and usage of the
Products (including all information contained in the reports produced by
Supplier pursuant to Section 7 above) and all documents and other materials of
Novation, the Clients, the Authorized Distributors and the Members containing
information relating to the programs of Novation, the Clients, the Authorized
Distributors or the Members of a proprietary or sensitive nature not readily
available through sources in the public domain. In no event will Supplier
provide to any person any information relating to the prices it charges the
Authorized Distributors for Products ordered pursuant to this Agreement without
the prior written consent of Novation.

18. MISCELLANEOUS.

        a. CHOICE OF LAW. This Agreement will be governed by and construed in
accordance with the internal substantive laws of the State of Texas and the
Texas courts will have jurisdiction over all matters relating to this Agreement;
provided, however, the terms of any agreement between Supplier and an Authorized
Distributor or between Supplier and a Member will be governed by and construed
in accordance with the choice of law and venue provisions set forth in such
agreement.

                                      -16-
<PAGE>   21

        b. NOT RESPONSIBLE. Novation and the Clients and their subsidiaries and
affiliates will not be responsible or liable for any Authorized Distributor's
breach of any purchasing commitment or for any other actions of any Authorized
Distributor or Member. In addition, none of the Clients will be responsible or
liable for the obligations of another Client or its subsidiaries or affiliates
or the obligations of Novation or Supplier under this Agreement.

        c. THIRD PARTY BENEFICIARIES. All Clients, Authorized Distributors and
Members are intended third party beneficiaries of this Agreement. All terms and
conditions of this Agreement which are applicable to the Clients will inure to
the benefit of and be enforceable by the Clients and their respective successors
and assigns. All terms and conditions of this Agreement which are applicable to
the Authorized Distributors will inure to the benefit of and be enforceable by
the Authorized Distributors and their respective successors and assigns. All
terms and conditions of this Agreement which are applicable to the Members will
inure to the benefit of and be enforceable by the Members and their respective
successors and assigns.

        d. NOTICES. Except as otherwise expressly provided herein, all notices
or other communications required or permitted under this Agreement will be in
writing and will be deemed sufficient when mailed by United States mail, or
delivered in person to the party to which it is to be given, at the address of
such party set forth below:

If to Supplier:

        To the address set forth by Supplier on the signature page of this
Agreement

If to Novation:

        Novation, LLC
        Attn: General Counsel
        125 East John Carpenter Freeway, Suite 1500
        Irving, TX 75062

or such other address as the party will have furnished in writing in accordance
with the provisions of this Subsection.

        e. NO ASSIGNMENT. No assignment of all or any part of this Agreement may
be made without the prior written consent of the other party; except that
Novation may assign its rights and obligations to any affiliate of Novation. Any
assignment of all or any part of this Agreement by either party will not relieve
that party of the responsibility of performing its obligations hereunder to the
extent that such obligations are not satisfied in full by the assignee. This
Agreement will be binding upon and inure to the benefit of the parties'
respective successors and assigns.

        f. SEVERABILITY. Whenever possible, each provision of this Agreement
will be interpreted in such a manner as to be effective and valid under
applicable law, but if any provision of this Agreement will be prohibited by or
invalid under applicable law, such provision

                                      -17-
<PAGE>   22

will be ineffective to the extent of such prohibition or invalidity without
invalidating the remainder of such provision or the remaining provisions of this
Agreement. Each party will, at its own expense, take such action as is
reasonably necessary to defend the validity and enforceability of this Agreement
and will cooperate with the other party as is reasonably necessary in such
defense.

        g. ENTIRE AGREEMENT. This Agreement, together with the exhibits listed
below, will constitute the entire agreement between Novation and Supplier. This
Agreement, together with the exhibits listed below and each Authorized
Distributor's purchase order will constitute the entire agreement between each
Authorized Distributor and Supplier. In the event of any inconsistency between
this Agreement and an Authorized Distributor's purchase order, the terms of this
Agreement will control, except that the Authorized Distributor's purchase order
will supersede Sections 4 and 5 of this Agreement in the event of any
inconsistency with such Sections. No other terms and conditions in any document,
acceptance, or acknowledgment will be effective or binding unless expressly
agreed to in writing. The following exhibits are incorporated by reference in
this Agreement:

Exhibit A    Product and Service Description and Pricing

Exhibit B    Non-Price Specifications

Exhibit C    Special Conditions

Exhibit D    Effective Date

Exhibit E    Return of Products

Exhibit F    Other Information Requirements

Exhibit G    Pharmacy Supplier Agreement - Proposed Exception Form

                                      -18-
<PAGE>   23

SUPPLIER: WOMEN FIRST HEALTHCARE, INC.
          ---------------------------------------

ADDRESS:  12220 EL CAMINO REAL
          ---------------------------------------
          SUITE 400
          ---------------------------------------
          SAN DIEGO, CA 92130
          ---------------------------------------

SIGNATURE: /s/ [SIGNATURE ILLEGIBLE]
          ---------------------------------------

TITLE:    SENIOR VICE PRESIDENT                        DATE:  11/30/00
          ---------------------------------------             ----------

NOVATION, LLC

SIGNATURE: /s/ [SIGNATURE ILLEGIBLE]
          ---------------------------------------

TITLE:    GROUP SR V.P.                                DATE:  12/20/2000
          ---------------------------------------             ----------

                                      -19-
<PAGE>   24

                                    EXHIBIT A

                   PRODUCT AND SERVICE DESCRIPTION AND PRICING

 [Final listing of products and/or services and prices covered by the Agreement]

ESCLIM - estradiol transdermal system
<TABLE>
<S>                <C>                                     <C>       <C>       <C>
Esclim             64248-0310-01 0.025mg/day               Patch     SEA       ***
Esclim             64248-0320-01 0.0375mg/day              Patch     SEA       ***
Esclim             64248-0330-01 0.05mg/day                Patch     SEA       ***
Esclim             64248-0340-01 0.075mg/day               Patch     SEA       ***
Esclim             64248-0350-01 0.1mg/day                 Patch     SEA       ***
</TABLE>

*** Certain information (indicated by an asterisk) has been omitted from this
document pursuant to a request for confidential treatment. The omitted material
has been filed separately with the Securities and Exchange Commission.
<PAGE>   25

                                    EXHIBIT B

                            NON-PRICE SPECIFICATIONS

                         [Final contract specifications]

Term of Agreement:    December 21, 2000 through September 30, 2001

Contract #:           RX00380 - This contract number is to be used when
                      submitting all sales reports, marketing fee payments, and
                      correspondence.

Pricing:              Nominal

Marketing Fee:        ***

Tiered Pricing:       None

Member Rebates:       None

Incentive Programs:   None

*** Certain information (indicated by an asterisk) has been omitted from this
document pursuant to a request for confidential treatment. The omitted material
has been filed separately with the Securities and Exchange Commission.
<PAGE>   26

                                    EXHIBIT C

                               SPECIAL CONDITIONS
                           [Final Special Conditions]

                                      None.

<PAGE>   27

                                    EXHIBIT D

                                 EFFECTIVE DATE

This Agreement will be effective on December 21, 2000.

<PAGE>   28

                                    EXHIBIT E

                               RETURN OF PRODUCTS

1.      SUPPLIER'S POLICY. Supplier represents that the return goods policy
        attached as Schedule 1 to this Exhibit ("Suppliers Policy") is and will
        continue to be consistent with prevailing practices in the pharmacy
        industry. In reliance on such representation, and subject to the terms
        of this Exhibit, Supplier's Policy is accepted by Novation and Supplier
        agrees to strictly comply with the terms of Supplier's Policy for the
        benefit of the Members and Authorized Distributors with respect to
        Products purchased under this Agreement.

2.      CHANGES TO SUPPLIER'S POLICY. Supplier will have no unilateral right to
        change Supplier's Policy from that set forth in Schedule I hereto during
        the Term. Supplier may request Novation in writing to agree to proposed
        changes to Supplier's Policy, provided that Novation must be given a
        reasonable opportunity (at least sixty (60) days) to review such
        proposed changes prior to any proposed implementation date. Under no
        circumstances will any changes to Supplier's Policy be applicable to
        Products purchased under this Agreement without Novation's agreement to
        the change.

3.      OVERRIDING RETURN RIGHTS. Notwithstanding the terms of Supplier's Policy
        or any contrary provisions elsewhere in this Exhibit, Supplier agrees
        that any Member or Authorized Distributor, in addition to and not in
        limitation of any other rights and remedies, will have the right to
        return any of the Products under the following circumstances without
        charge and for full credit (based on purchase price):

        a.      Return of any dated Product within twelve (12) months after its
                expiration date.

        b.      Return of any Product that is ordered or shipped in error.

        c.      Return of any defective Product.

        d.      Return of any Product that is received in a damaged,
                nonconforming or otherwise unusable condition.

        e.      Return of any recalled Product (see also Section 5.e of the
                Agreement).

4.      DEA FORMS. If requested by the Member or Authorized Distributor,
        Supplier agrees to promptly initiate any DEA forms required for the
        return of Schedule II controlled substances.

5.      WAIVER OF RETURN RIGHTS. Supplier agrees that any Member will have the
        option, to be exercised by written notice to Supplier at any time during
        the Term for purchases after the notice date, of waiving all rights to
        return Products for any reason (except recall) under Supplier's Policy
        or under the terms of this Exhibit in exchange for a right to purchase
        the

<PAGE>   29

Products at an additional discount of _______________ percent (__%) off
Supplier's published list prices.

                                      -2-
<PAGE>   30

                             SCHEDULE 1 TO EXHIBIT E

[WOMEN FIRST LOGO]        WOMEN FIRST HEALTHCARE, LNC.
                          STANDARD OPERATING PROCEDURE

--------------------------------------------------------------------------------
                                                              DOC. NO: 02.006.00
TITLE: RETURNED GOODS AUTHORIZATION                             AUTHOR: J VAUGHN
        AND PROCESSING                                               PAGE 1 OF 5
--------------------------------------------------------------------------------

REVISIONS
REV. DESCRIPTION                                                  EFFECTIVE DATE
Orig. New Procedure                                                April 26,1999

                          WOMEN FIRST HEALTHCARE, LNC.
                         12220 EL CAMINO REAL, SUITE 400
                               SAN DIEGO, CA 92130

APPROVALS:

Jeff Raser                                                        April 15, 1999
----------------------------------------------------              --------------
Vice President, Sales                                                  Date

Patti Consilvio                                                   April l6, 1999
----------------------------------------------------              --------------
Manager, Customer Service                                              Date

Yvette Liebesman                                                  April 16, 1999
----------------------------------------------------              --------------
Manager, Quality Systems                                               Date

Jeanne-Marie Varga                                                April 26, 1999
----------------------------------------------------              --------------
Vice President, Regulatory Affairs & Quality Systems                   Date

Received:

Yvette Liebesman                                                  April 26, 1999
----------------------------------------------------              --------------
Document Center                                                        Date

                                  CONFIDENTIAL

This document is proprietary to Women First HealthCare, Inc. and is intended
soley for internal use. This document and its contents shall not be used or
distributed for any purpose, nor otherwise communicated, disclosed or reproduced
in any way whatsoever without the prior written consent of Women First
HealthCare.

<PAGE>   31

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                     TITLE: RETURNED GOODS AUTHORIZATION AND  DOC. NO: 02.006.00
[WOMEN FIRST LOGO]                PROCESSING                         PAGE 2 OF 5

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1.      OBJECTIVE

        To authorize and process the return of any WFHC-commercialized products
        distributed directly by WFHC.

2.      SCOPE

        This procedure applies to any products returned to WFHC, which are
        distributed by WFHC. For products distributed by Livingston Health
        Services, Inc., LHSI Procedure No. WFH 06-98, "Client Services
        Department Work Instructions, Women First HealthCare" is followed by
        LHSI personnel.

3.      RESPONSIBILITY

        3.1     It is the responsibility of the assigned Customer Service
                Department personnel to authorize all returned goods and the
                Distributor to process according to approved procedures.

        3.2     It is the responsibility of the Regulatory Affairs and Quality
                Systems Department to ensure that this procedure is performed
                and documented correctly.

4.      REFERENCES

        Livingston Healthcare Services, Client Services Department Work
        Instructions, Procedure Number WFH 06-98

5.      POLICY

        5.1     For products distributed by LHSI:

                5.1.1   The return of products distributed to wholesalers from
                        Livingston Health Services, Inc (LHSI) comply with the
                        Returned Goods policy and procedure outlined in LHSI
                        Procedure No. WFH 06-98, "Client Services Department
                        Work Instructions, Women First HealthCare."

                5.1.2   No return will be accepted unless accompanied by a
                        Return Goods Authorization Form, including authorization
                        by the WFHC Manager, Customer Service, or the WFHC
                        Manager, Quality Systems.

        5.2     For products distributed by WFHC Customer Service:

                5.2.1   Products returned within thirty days will receive a
                        credit, refund or replacement.

                5.2.2   Customers will be refunded only the product price, not
                        the freight cost.

                5.2.3   No return will be processed unless accompanied by a
                        Return Goods Authorization (RGA) Form or the RGA number
                        referenced on the return-shipping package.

                                  CONFIDENTIAL

This document is proprietary to Women First HealthCare, Inc. and is intended
solely for internal use. This document and its contents shall not be used or
distributed for any purpose, nor otherwise communicated, disclosed or reproduced
in any way whatsoever without the prior written consent of Women First
HealthCare.

<PAGE>   32

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                     TITLE: RETURNED GOODS AUTHORIZATION AND  DOC. NO: 02.006.00
[WOMEN FIRST LOGO]                PROCESSING                         PAGE 3 of 5

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                        5.2.3.1 For returned goods valued at less than $100, the
                                Customer Service Representative may authorize
                                the return.

                        5.2.3.2 For returned goods valued at greater that $100,
                                the Manager, Customer Service, or the Manager,
                                Quality Systems, must authorize the return.

                5.2.4   Returns will only be accepted from the original
                        purchaser of the product. The authorized Customer
                        Service personnel will provide the customer with the RGA
                        number, along with instructions to ship the product back
                        to WFHC. Credit will only be issued to the original
                        purchaser of the product, upon receipt of the returned
                        product.

6.      PROCEDURE

        6.1     The Return Goods Authorization Log

                6.1.1   All return goods authorizations are logged into the RGA
                        log, an Excel spreadsheet, located in the WFHC directory
                        of y:\\ntserver\users\Customer Service\Returned Goods
                        Authorization\RGA.xls.

                6.1.2   The RGA log contains columns for the following
                        information to be recorded for each RGA:

                        6.1.2.1 Date

                        6.1.2.2 RGA number (assigned as described in section
                        6.2)

                        6.1.2.3 Name of Customer

                        6.1.2.4 Product to be returned

                        6.1.2.5 Distribution Source (LHSI or WFHC)

                        6.1.2.6 Quantity to be returned

        6.2     Assigning RGA numbers

                RGA numbers are 6-digit alpha-numeric codes used to identify
                returned goods, in the format RGAxx-yyy, where:

                6.2.1   "RGA" are the letters "RGA", indicating that this is a
                        returned product.

                6.2.2   "xx" is the last two digits for the year in which the
                        return was requested

                6.2.3   "yyy" is the sequentially assigned number, for the yyyth
                        return authorization issued for that year.

                6.2.4   For example, the fifth return authorized in 1999 would
                        have an "RGA" number of RGA99-005.

        6.3     For products to be returned to LHSI:

                6.3.1   Upon receipt of the RGA form from LHSI, the Manager,
                        Customer Service or the Manager, Quality Systems will
                        determine whether or not to approve the return request.

                6.3.2   If the return request is approved, the Manager, Customer
                        Service or the Manager, Quality Systems:

                                  CONFIDENTIAL

This document is proprietary to Women First HealthCare, Inc. and is intended
solely for internal use. This document and its contents shall not be used or
distributed for any purpose, nor otherwise communicated, disclosed or reproduced
in any way whatsoever without the prior written consent of Women First
HealthCare.

<PAGE>   33

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                     TITLE: RETURNED GOODS AUTHORIZATION AND  DOC. NO: 02.006.00
[WOMEN FIRST LOGO]                PROCESSING                         PAGE 4 OF 5

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                        6.3.2.1 Assigns an RGA number as described in section
                                6.2 and records the RGA number in the RGA log;

                        6.3.2.2 Records the information in the RGA log as
                                described in section 6.1 (the Distribution
                                Source is "LHSI")

                        6.3.2.3 Records the RGA number on the RGA form and faxes
                                it back to the appropriate individual at LHSI.

                6.3.3   If the Manager Customer Service, or the Manager, Quality
                        Systems, has doubts as to whether or not to approve the
                        return, he/she is to discuss the issue with the Vice
                        President, Regulatory Affairs and Quality Systems, and
                        the appropriate LHSI personnel prior to issuing an RGA
                        number and approving the return.

                6.3.4   Upon issuing the RGA authorization and number, and
                        recording the necessary information in the RGA log, the
                        RGA form is forwarded to Quality Systems for archival in
                        the Document Center.

                6.3.5   Upon receipt of the product at the Distributor's
                        warehouse, the Distributor will follow their internal
                        SOPs, in which the product will be verified with the
                        carriers delivery slip and authorized personnel will
                        sign for the return.

        6.4     For products to be returned to WFHC:

                6.4.1   Upon receiving a request to return a product, the
                        Customer Service representative completes a Returned
                        Goods Authorization Form (Exhibit 1), documenting the
                        following information:

                        6.4.1.1 Date of customer contact

                        6.4.1.2 Customer Name

                        6.4.1.3 Company Name (if applicable)

                        6.4.1.4 Customer Address (street address, city, state,
                                zip code)

                        6.4.1.5 Customer telephone number

                        6.4.1.6 Customer fax number (if available)

                6.4.2   For each type of product being returned, complete the
                        following information on the RGA form:

                        6.4.2.1 WFHC Invoice number (if available)

                        6.4.2.2 Product part number or UPC bar code number

                        6.4.2.3 Product name

                        6.4.2.4 Lot number (if applicable)

                        6.4.2.5 Expiration date (if applicable)

                        6.4.2.6 Quantity of product to be returned

                        6.4.2.7 Unit price

                        6.4.2.8 Total price

                6.4.3   Under special circumstances the shipping charge may also
                        be refunded. This is determined at the discretion of the
                        Manager, Customer Service based on WFHC customer
                        satisfaction policies. Unless otherwise instructed,
                        check the "No" box for "Return Freight Authorization".

                                  CONFIDENTIAL

This document is proprietary to Women First HealthCare Inc. and is intended
soley for internal use. This document and its contents shall not be used or
distributed for any purpose, nor otherwise communicated, disclosed or reproduced
in any way whatsoever without the prior written consent of Women First
HealthCare.

<PAGE>   34

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                     TITLE: RETURNED GOODS AUTHORIZATION AND  DOC. NO: 02.006.00
[WOMEN FIRST LOGO]                PROCESSING                         PAGE 5 OF 5

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                6.4.4   Record the reason for the return in the appropriate
                        space on the RGA form.

                6.4.5   Determine the resolution and check the appropriate
                        box(es). If credit will be issued to a credit card,
                        record the type of credit card, the credit card number,
                        and the expiration date. THE CREDIT ISSUED MUST BE IN
                        THE SAME FORM AS THE ORIGINAL PAYMENT BY THE CUSTOMER.

                6.4.6   Record the required information in the RGA log (as
                        indicated in section 6.1) and assign the return an RGA
                        number (as described in section 6.2)

                6.4.7   Inform the customer of the RGA number to reference on
                        the return-shipping package of the product(s). IT IS
                        IMPORTANT THAT THE CUSTOMER REFERENCES THIS RGA NUMBER
                        ON THE RETURN-SHIPPING PACKAGE.

                6.4.8   If the return is related to a customer complaint, WFHC
                        Document Number 02.016, "Customer Complaint Handling",
                        must also be followed, and the RGA number referenced in
                        the description section of the complaint form.

                6.4.9   Upon receipt of the returned product, the authorized
                        Customer Service personnel will:

                        6.4.9.1 Record the date that the return was received on
                                the RGA form and in the appropriate column of
                                the RGA log.

                        6.4.9.2 Product will be inspected to verify that lot or
                                batch number, expiration, item number, quantity,
                                reason for return and other information provided
                                on the RGA are consistent. Any differences must
                                be referred to the Manager, Customer Service for
                                approval. if information matches, the returned
                                goods will be received into the system for
                                credit processing.

                        6.4.9.3 Segregate the product based on reason for return
                                and condition of returned product as follows:

<TABLE>
<CAPTION>
RETURN TO INVENTORY                QUARANTINE
-------------------                ----------
<S>                                <C>
Misshipped product                 Partial or opened product
Misordered product                 Discontinued product
Overstocked product                Damaged product
                                   Product complaints which require an investigation
                                   Recalled product
</TABLE>

                        6.4.9.4 Record the disposition on the RGA form.

                        6.4.9.5 Give a copy of the RGA Form to Finance for
                                credit processing and forward the original to
                                Quality Systems for archival in the Document
                                Center.

7.      EXHIBITS

        Exhibit 1. Return Goods Authorization (RGA) Form

                                  CONFIDENTIAL

This document is proprietary to Women First HealthCare Inc. and is intended
soley for internal use. This document and its contents shall not be used or
distributed for any purpose, nor otherwise communicated, disclosed or reproduced
in any way whatsoever without the prior written consent of Women First
HealthCare.

<PAGE>   35

                                    EXHIBIT F

                         OTHER INFORMATION REQUIREMENTS

        Novation and Supplier desire to facilitate contract administration
transactions ("Transactions") by electronically transmitting and receiving data
in agreed formats in substitution for conventional paper-based documents and to
assure that such Transactions are not legally invalid or unenforceable as a
result of the use of available electronic technologies for the mutual benefit of
the parties.

        The parties agree as follows:

1.      PREREQUISITES.

        a. DOCUMENTS; STANDARDS. Each party will electronically communicate to
or receive from the other party all of the required documents listed in the
Novation Electronic Communication Requirements Schedule attached hereto
(collectively "Documents"). All Documents will be communicated in accordance
with the standards set forth in the applicable sections of the Novation
Information Requirements Guidebook ("Guidebook"). Supplier agrees that the
Guidebook is the Confidential Information of Novation and will not disclose
information contained therein to any other party.

        b. THIRD PARTY SERVICE PROVIDERS. Documents will be communicated
electronically to each party, as specified in the Guidebook, through any third
party service provider ("Provider") with which either party may contract or
VHAseCure.net(TM). Either party may modify its election to use, not use or
change a Provider upon thirty (30) days' prior written notice. Each party will
be responsible for the costs of any Provider with which it contracts, unless the
parties otherwise mutually agree in writing.

        c. SIGNATURES. Each party will adopt as its signature an electronic
identification consisting of symbol(s) or code(s) which are to be affixed to or
contained in each Document transmitted by such party ("Signatures"). Each party
agrees that any Signature of such party affixed to or contained in any
transmitted Document will be sufficient to verify such party originated and
intends to be bound by such Document. Neither party will disclose to any
unauthorized person the Signatures of the other party.

2.      TRANSMISSIONS.

        a. VERIFICATION. Upon proper receipt of any Document, the receiving
party will promptly and properly transmit a functional acknowledgment in return,
unless otherwise specified in the Guidebook.

<PAGE>   36

NOVATION PHARMACY PROGRAM

                                    EXHIBIT G
             PHARMACY SUPPLIER AGREEMENT -- PROPOSED EXCEPTION FORM

SUPPLIER NAME Women First HealthCare

Printed Name Susan E. Dube

Authorized
Signature /s/ SUSAN E. DUBE

Title SENIOR VICE PRESIDENT                               Date November 30, 2000

PAGE #        PARA #                             Define Exception Being Taken

2              2a       Novation and Supplier hereby agree that Supplier will
                        make the Products available for purchase by the
                        Authorized Distributors at the Contract Prices for
                        resale to the Members in accordance with the terms of
                        this Agreement; provided, however, that this Agreement
                        will not constitute a commitment by any person to
                        purchase any of the Products. Supplier may, in its sole
                        discretion and without regard to requests by any other
                        party to this Agreement, make the Products available for
                        purchase directly by Members in limited circumstances,
                        and therefore, any references herein to the Supplier
                        providing the Product directly to Members shall be read
                        in conjunction with this Section 2a.

2              2b       Second paragraph - Within one hundred eighty (180) days
                        of the Effective Date, Supplier must be certified as
                        "Approved" or "Conditionally Approved" by the Committee.
                        In certain instances where the Supplier does not receive
                        the approval of the Committee, the Committee may wish to
                        monitor the Supplier's quality performance and may
                        classify the Supplier as "Conditionally Approved."
                        During the "Conditionally Approved" time period, the
                        Supplier must provide quarterly reports listing any FDA
                        inspections received during the quarter, FD-483
                        observations and warning letters issued, as well as all
                        responses thereto. If no FDA inspections occur, or
                        inspections occur in which there are no observations or
                        warning letters, the "Conditionally Approved" Supplier
                        must so indicate in the quarterly reports. After the 180
                        day grace period, failure by the Supplier to be deemed
                        "Approved" or "Conditionally Approved" by the
                        Committee, in good faith, shall constitute a breach of
                        this Agreement, giving Novation the right to terminate
                        this Agreement.

2              2c       Novation and Supplier agree that each Member will have
                        the option of purchasing the Products under the terms of
                        this Agreement or under the terms of any other
                        purchasing or pricing arrangement that may exist between
                        such Member and Supplier at any time during the Term. If
                        any Member uses an other purchasing or pricing
                        arrangement with Supplier

<PAGE>   37

                        when ordering products covered by any contract between
                        Supplier and Novation, Supplier will notify such Member
                        of the pricing and other significant terms of the
                        applicable Novation contract.

3              2d       Supplier agrees that the prices, quality, value and
                        technology of all Products purchased under this
                        Agreement will remain market competitive at all times
                        during the Term. Supplier agrees to provide prompt
                        written notice to Novation of all offers for the sale of
                        the Products made by Supplier during the Term on terms
                        that are more favorable to the offeree than the terms of
                        this Agreement. Supplier will lower the Contract Prices
                        or increase any discount applicable to the purchase of
                        the Products as necessary to assure market
                        competitiveness. If at any time during the Term,
                        Novation receives information from any source suggesting
                        that Suppliers prices, quality, value or technology are
                        not market competitive, Novation may provide written
                        notice of such information to Supplier, and Supplier
                        will, within five (5) business days for Novation's
                        private label Products and within ten (10) business days
                        for all other Products, advise Novation in writing of
                        and fully implement all adjustments necessary to assure
                        market competitiveness. The terms of this Section 2(d)
                        are limited to comparisons of prices for the Products on
                        other Supplier agreements having like terms and
                        conditions to this Agreement.

3              2e       Unless otherwise expressly agreed in any exhibit to this
                        Agreement, the Contract Prices will not be increased and
                        any discount will not be eliminated or reduced during
                        the Initial Term. In addition to any changes made to
                        assure market competitiveness, Supplier may lower the
                        Contract Prices or increase any discount applicable to
                        the purchase of the Products at an time.

3              3a       This Agreement will be effective as of the effective
                        date set forth in Exhibit D attached hereto (Effective
                        Date"), and, unless sooner terminated, will continue in
                        full force and effect for the initial term set forth in
                        the Non-Price Specifications (the "Initial Term") and
                        for any renewal terms set forth in the Non-Price
                        Specifications by Novation's delivery of written notice
                        of renewal to Supplier not less than ten (10) days prior
                        to the end of the Initial Term or any renewal term, as
                        applicable. The Initial Term, together with the renewal
                        terms if any, are collectively referred herein as the
                        "Term."

4           3b, the     Novation's right to terminate this Agreement due to
              last      Supplier's breach in accordance with this Subsection is
            sentence    in addition to any other rights and remedies Novation,
                        the Clients, the Members or the Authorized Distributors
                        may have resulting from such breach, including, but not
                        limited to, Novation's and the Clients' right to recover
                        all loss of Marketing Fees resulting from such breach
                        earned through the date of termination.

4              4a       On and after the Effective Date, Supplier agrees to
                        deliver Products ordered directly by the Members to the
                        Members and Products ordered by the Authorize
                        Distributors on behalf of Members to the Authorized
                        Distributors, FOB destination, and will direct its
                        invoices to the ordering organization in accordance with
                        this Agreement Supplier agrees to prepay and absorb
                        charges, if any, for transporting Products directly to
                        the Members or to the Authorized Distributors provided
                        that the order is shipped UPS Ground. Payment terms
                        through Authorized Distributors are 2%-30, Net 31 days.
                        Supplier will make whatever arrangements are reasonably
                        necessary with the Members ordering directly and with
                        the Authorized Distributors to implement the terms of
                        this Agreement; provided, however, Supplier will not
                        impose any purchasing commitment on an Member or
                        Authorized Distributor as a condition to the Members or

<PAGE>   38

                        Authorized Distributor's purchase of any Products
                        pursuant to this Agreement. No payment discount may
                        betaken unless payment has been received by Supplier by
                        the due date.

5              4b       Supplier agrees to provide product fill rates to the
                        Members and Authorized Distributors of greater than
                        ninety-five percent (95%), calculated as line item
                        orders. Supplier will provide confirmation orders from
                        the Authorized Distributors via the electronic data
                        interchange ("EDI") when Supplier becomes fully capable
                        of performing EDI for Authorized Distributors within two
                        (2) business days after placement of the order to
                        Authorized Distributors and Supplier will deliver within
                        ten (10) business days after placement of the order.

5              4d       Supplier will notify Novation in writing at least 90
                        days prior to any changes in packaging which render any
                        of the Products substantially different in use,
                        function or distribution.

                        In the event Supplier implements such proposed
                        discontinuation or change without notifying Novation at
                        least 90 days prior in writing, (i) Novation will have
                        the right to terminate any or all of the Product(s)
                        subject to such discontinuation or change or to
                        terminate this Agreement in its entirety immediately
                        upon becoming aware of the discontinuation or change at
                        any time thereafter by delivering written sixty (60)
                        days notice thereof to Supplier; and (ii) Supplier will
                        be liable to Novation and the Clients for any loss of
                        Marketing Fees resulting from less than 90 days
                        notification or any discontinuation or change that is
                        not applied to all similarly situated customers plus any
                        other damages, which a court of competent jurisdiction
                        determines, are caused by Supplier against Novation or a
                        Client respecting Supplier's failure to comply with the
                        notification requirements or any discontinuance or
                        change that is not applied to all similarly situated
                        customers pursuant to this Section 4(d).

6              4(i)     Delete paragraph entitled "Failure to Supply" and
                        replace with: "Novation, the Clients, and the Members
                        reserve all legal rights and remedies for Supplier's
                        failure to perform its supply obligations in accordance
                        with the terms of this Section (Section 4).
                        "Notwithstanding the foregoing, the terms of this
                        Section 4(i) shall not apply to Supplier's inability to
                        supply Product in accordance with the terms of this
                        Agreement due to Force Majeure (as defined herein).
                        Either of the parties shall be excused from the
                        performance of any obligation under this Agreement if
                        and for so long and only to the extent that the
                        nonperformance of such obligation occurs by reason of
                        any act of God, including but not limited to fire,
                        flood, storm, earthquake, epidemic, war, national
                        emergency, labor interruption, or natural disaster
                        ("Force Majeure"), provided that the party claiming such
                        excuse from performance shall have used its best efforts
                        to minimize the effects of the Force Majeure and resume
                        performance. If such event occurs unabated for a period
                        of forty-five (45) days or longer, the party not
                        claiming the excuse may terminate this Agreement upon
                        five (5) days written notice to the other party.

7              5b       Supplier represents and warrants to Novation, the
                        Clients, the Authorized Distributors and the Members
                        that the Products are, if required, registered, and will
                        not be distributed, sold or priced by Supplier in
                        violation of any

<PAGE>   39

                        federal or local law. Supplier represents and warrants
                        that as of the date of delivery to the Members ordering
                        directly or to the Authorized Distributors all products
                        will not be adulterated or misbranded within the meaning
                        of the Federal Food, Drug and Cosmetic Act and will not
                        violate or will cause a violation of any applicable law,
                        ordinance, rule, regulation or order. Supplier agrees it
                        will comply with all applicable Good Manufacturing
                        Practices and Standards contained in 21 C.F.R. Parts
                        210, 211 and with the standards of the US Pharmacopoeia
                        and National Formulary. Supplier represents and warrants
                        that it will provide adequate warnings and instructions
                        to inform users of the Product, of the risks, if any,
                        associated with the use of the Products. Suppliers
                        representations, warranties and agreements in this
                        Subsection will survive the expiration or earlier
                        termination of this Agreement.

Page #       Para #                    Define Exception Being Taken

8              5f       Unless required by stability considerations, there will
                        not be less than a twelve (12) month interval between a
                        Product's date of delivery by Supplier to the Authorized
                        Distributor or directly to the Member and its expiration
                        date. Products will bear the lot number and expiration
                        date on the shelf package. If a code for the lot number
                        or expiration date is used, a key to the code will be
                        furnished to each Member.

8-9         6b,(4)      Supplier has verified through testing that the Systems
                        satisfy the requirements of this Subsection including,
                        testing of each of the following specific dates and the
                        transition to and from each such data: December 31,1998;
                        January 1, 1999; September 9, 1999; September 10, 1999;
                        December 31, 1999; January 1, 2000; February 28, 2000;
                        February 29, 2000; and March 1, 2000.

10             7b       Delete entire paragraph. It does not apply.

11             7d       "Upon the request of Novation at any time during the
                        Term, Supplier will promptly provide or update all
                        information relevant to the supply and quality of the
                        Products, including without limitation (i)
                        identification of manufacturers of ingredients and other
                        Product components; (ii) FDA application, approval
                        letter and post-approval inspection information; (iii)
                        recall information; (iv) analytical control data; and
                        (v) bioavailability data when available.

12             9b       No later than the twentieth (20th) day of the month,
                        Supplier will remit the monthly actual Marketing Fees
                        for the previous month to Novation. Supplier will pay
                        actual Marketing Fees by check made payable to
                        "Novation, LLC." All checks should reference the
                        Agreement number. Checks sent by first class mail will
                        be mailed to the following address:

                        Novation
                        75 Remittance Dr. Suite 1420
                        Chicago, IL 60675-1420

                        Checks sent by courier (Federal Express, United Parcel
                        Service or messenger) will be addressed as follows:

                        The Northern Trust Company
                        801 S. Canal Street
                        4th Floor Receipt and Dispatch

<PAGE>   40

                        Chicago, IL 60607
                        Attn: Novation, Suite 1420
                        Telephone: 312-630-8100,#9

13-14          12a      Supplier will maintain and keep enforced during the Term
                        product liability, general public liability and property
                        damage insurance against any insurable claim or claims
                        which might or could arise regarding Products purchased
                        from Supplier. Such insurance will contain a minimum
                        combined single limit of liability for bodily injury and
                        property damage in the amounts of not less than
                        $2,000,000 per occurrence and $10,000,000 in the
                        aggregate and will name Novation as an additional
                        insured. Supplier will provide Novation, within fifteen
                        (15) days after Novation's request, an insurance
                        certificate indicating the foregoing coverage, issued by
                        an insurance company provided licensed to do business in
                        the relevant states and signed by an authorized agent.

14             13a      Supplier represents and warrants that to the best of its
                        knowledge, after due inquiry, it is in compliance with
                        all federal, state and local statutes, laws, ordinances
                        and regulations applicable to it ("Legal Requirements")
                        which are material to the operation of its business and
                        the conduct of its affairs, including Legal Requirements
                        pertaining to the safety of the Products, occupational
                        health and safety, environmental protection,
                        nondiscrimination, anti-trust and equal employment
                        opportunity. During the term, Supplier will: (i)
                        promptly notify Novation of any lawsuits, claims,
                        administrative actions or other proceedings asserted or
                        commenced against it which assert in whole or in part
                        that Supplier is in noncompliance with any legal
                        requirement which is material to its ability to comply
                        with its obligations under this Agreement, and (ii)
                        promptly provide Novation with true and correct copies
                        of all written notices and adverse findings from the US
                        Food and Drug Administration ("FDA") and all written
                        result of FDA inspections which pertain to the Products.

15             16       Add second paragraph: Novation, or any Client, agrees
                        that they will not use in any way in its promotional,
                        informational or marketing activities or materials (i)
                        the names, trademarks, logos, symbols or a description
                        of the business or activities of Supplier without in
                        each instance first obtaining the prior written consent
                        of the person owning the rights thereto; or (ii) the
                        award or the content of this Agreement without in each
                        instance first obtaining the prior written consent of
                        Supplier.

17             18e      No assignment of all or any part of this Agreement may
                        be made without the prior written consent of the other
                        party, which shall not be unreasonably withheld or
                        delayed; provided, however, that a party may assign its
                        rights and/or delegate its duties under this Agreement
                        without such consent to a third party that currently
                        controls, is controlled by, or is under common control
                        with, the assigning party, upon prior written notice to
                        the non-assigning party. In the event of a permitted
                        assignment hereunder, the assigning party shall remain
                        responsible for the performance of the applicable terms
                        of this Agreement by its assignee, unless otherwise
                        agreed at the time of such assignment.

          Exhibit E     Deleted
          Section
              3a

          Exhibit E     Deleted
          Section 5

<PAGE>   41

25       Exhibit F      Novation and Supplier desire to facilitate contract
           Intro        administration transactions ("Transactions") by
                        electronically transmitting and receiving data in agreed
                        formats in substitution for conventional paper-based
                        documents and to assure that such Transactions are not
                        legally invalid or unenforceable as a result of the use
                        of available electronic technologies for the mutual
                        benefit of the parties. At the time of executing this
                        Agreement, Supplier acknowledges that it is not fully
                        capable of complying with the requirements set forth in
                        this Exhibit F; however, Supplier agrees to work with
                        Novation to comply with the EDI requirements outlined in
                        Section 4(b) and 7 of the Agreement and this Exhibit F.THIS INDENTURE OF LEASE AGREEMENT made this 20th day of October a.d. 2000.

IN PURSUANCE OF THE LAND TRANSFER FORM ACT, PART 2

BETWEEN:

          EBCON  PROPERTIES  LTD., a British  Columbia company having a place of
          -----------------------
          business at 207 - 45485 Knight Road, Chilliwack, British Columbia, V2R
          3G3

                  ( hereinafter called "the lessor" )

                                                               OF THE FIRST PART

AND:

          MERILUS Technologies Inc. 300 - 46165 Yale Rd, Chilliwack, BC V2P 2P2
          -------------------------

                  ( hereinafter called "the Lessee")

                                                             OF THE SECOND PART.

In  consideration  of the  covenants,  agreements  and  conditions  herein , the
parties agree as follows:

PREMISES/ PROPORTIONATE SHARE
-----------------------------

The Lessor demises and leases to the Lessee the premises  (herinafter called the
"Demised Premises"), as more particularly described and outlined in Schedule "A"
attached hereto, comprising an area deemed to be 8075 square feet, more or less,
located  on the  THIRD  floor of that  Building  situated  at 46165  Yale  Road,
Chilliwack, BC, (hereinafter called the "Building")

                            (Municipal/civic address)

For the purposes  within this agreement the  Proportionate  Share of the Demised
Premises  described above shall be determined  based on the ratio of the area of
the Demised  Premises to the total  rentable  area of the  Building of which the
Demised Premises form a part,  specifically Twenty Four And Three One Hundredths
percent (24.03%).

<PAGE>
                                        2

TERM
----

To have and to hold the Premises for and during the term of Three  (3)years from
the Commencement Date.

COMMENCEMENT DATE
-----------------

1st day of December, 2000

TENANT IMPROVEMENTS
-------------------

Tenant space to be improved at the  Lessor's  expense as per the layout shown on
Schedule "A" attached.  Such improvements to include:  o Painted drywall walls -
Schedule "A" o New Carpeting o T- Bar Ceilings o Lighting and  electrical as per
tenants plan - Schedule "B" o 2 Showers / change rooms

RENT
----

The  Lessee  shall pay to the  Lessor,  Rent over the whole of the Term,  of Two
Hundred and Seventy  Three  Thousand  Five Hundred and Forty Six 24/100  dollars
($273,546.24)  payable in advance without  deduction in monthly  installments at
the  first  of each  and  every  month  during  the  Term  commencing  with  the
Commencement  Date and  continuing  thereafter  each and  every  month up to and
including the 1st day of November,  2003; and payable the following manner, that
is to say:

             The  sum  of  Seven   Thousand  and  Thirty  Seven  34/100  dollars
             ($7,037.34)  commencing  on the  1st  day  of  December,  2000  and
             continuing  thereafter on the 1st day of each and every month up to
             and including the 1st day of February, 2001.

             The sum of Seven  Thousand  Three  Hundred and Fifty  Eight  01/100
             dollars  ($7,358.01)  commencing on the 1st day of March,  2001 and
             continuing  thereafter on the 1st day of each and every month up to
             and including the 1st day of May, 2001.

             The sum of Seven  Thousand  Six Hundred and  Seventy  Eight  67/100
             dollars  ($7,678.67)  commencing  on the 1st day of June,  2001 and
             continuing  thereafter on the 1st day of each and every month up to
             and including the 1st day of November, 2003.

<PAGE>
                                       3

In addition to the rent as described  herein the Lessee shall be  responsible to
pay all and any taxes or other charges  levied  against such rent by any and all
government agencies.

TAXES
-----

The Lessee  shall pay its  Proportionate  Share of all  Municipal  or other real
property taxes and rates, including school rates and local improvements assessed
against the said Building of which the Demised Premises form a part.  Payment of
such taxes  shall be made by the Lessee to the Lessor and shall be  included  in
the monthly triple net installment.

OPERATING COSTS
---------------

The  Lessee  shall pay to the Lessor its  Proportionate  Share of the  operating
costs including general upkeep and maintenance reasonably incurred by the Lessor
and also including any license,  taxes, rates or assessments which may be levied
by the  appropriate  governmental  authority in relation to the Building and its
improvements  of which the Demised  Premises  form a part.  These costs shall be
defined to include the following:

a)   insurance as required to adequately protect the Building;

b)   preventative  servicing and minor repairs of the heating,  ventilating  and
     air-conditioning (HVAC) system;

c)   water and sewer rates;

d)   electric power;

e)   gas heating;

f)   snow and garbage removal;

g)   landscaping and common area maintenance;

h)   cleaning and maintenance of the interior of the Building;

i)   exterior window cleaning

j)   preventative servicing and minor repair of elevator;

Payment  of such  costs  shall be made by the  Lessee to the Lessor and shall be
included in the monthly triplenet installment.

Actual  operating costs shall be compiled and summarized  within sixty (60) days
of the end of the calendar  year and provided to the Lessee.  The Lessee will be
responsible to pay its  Proportionate  Share of any amount that may be in excess
of the amount collected by way of the monthly triplenet installment.  The Lessor
shall  refund or credit the Lessee's  Proportionate  Share in the event that the
Lessee has over contributed by way of the monthly triplenet installment.

<PAGE>
                                       4

THE LESSEE COVENANTS WITH THE LESSOR
------------------------------------

1. To repair and to keep the Demised  Premises in as good condition as they were
as of the actual date of  possession  of the Demised  Premises,  subject only to
reasonable wear and tear or damage by fire and lightning, tempest and earthquake
or any other act of God or as a result of war, riot, sabotage or explosion,  and
save as  hereinbefore  reserved and stipulated to be the  responsibility  of the
Lessor.

2. To give the  Lessor  or his  agent  immediate  notice  of any  defect  in the
Building  structure,  windows and glass,  mechanical,  electrical,  plumbing and
heating systems related to the Demised Premises of which the Lessee is aware of.

3. To allow the Lessor to enter and view the Demised  Premises  and the state of
repair,  and to repair according to notice within THIRTY (30) days thereof,  and
in the event of the Lessee  refusing  or  neglecting  to repair,  the Lessor may
enter upon the said  Demised  Premises and make such repairs and may recover the
cost thereof as rent from the Lessee.

4. To keep the Demised Premises in a clean and healthy condition.

5. To  leave  the  Demised  Premises  in a clean  and  tidy  condition  upon the
termination of the term herein,  and to surrender the same to the Lessor in like
condition.

6. To use the  Demised  Premises  for office  purposes,  and not to carry on any
other  business in the  Demised  Premises,  nor to carry on any  business on the
Demised Premises which shall be deemed to be a nuisance,  increase the hazard of
fire,  or create any other  peril,  or be likely to cause damage or liability of
any kind on or in  respect  of the  Demised  Premises  or  adjacent  properties,
without the consent of the Lessor first had and obtained.

7. Not to do or permit to be done on the Demised  Premises  anything whereby the
Insurance on the Demised  Premises or the said  Building may be rendered void or
voidable or the premiums increased.

8. To make no alterations  in the  structure,  plan or partitions of the Demised
Premises nor install any plumbing,  piping,  wiring or heating apparatus without
the written permission of the Lessor first had and obtained but in any event all
repairs, alterations and installations made by the Lessee to or upon the Demised
Premises  shall be the  property  of the Lessor and shall be  considered  in all
respects as part of the Demised Premises.

9. To indemnify  and save harmless the Lessor from and against all or any manner
of claims for liens,  wages or  materials  or for damages to persons or property
caused  during the making of or in  connection  with any  repairs,  alterations,
installations  and additions  which the Lessee shall make or cause to be made on
or to the Demised Premises.

<PAGE>
                                       5

10.  To  maintain  and keep in force at its own  expense  comprehensive  general
liability  insurance with a company approved by the Lessor,  in an amount of ONE
MILLION ( $1,000,000.00 ) DOLLARS or as may from time to time be required by the
Lessor and tenants fire insurance equal to the Demised Premises or of the entire
Building of which the Demised Premises form a part,  insuring the Lessee and the
Lessor against any liability  that may occur against them or any  occurrences in
or about the Demised  Premises during the term or in consequence of the Lessee's
occupancy of the Demised  Premises and resulting in personal  injury or death to
any one or more persons or resulting in damage to any real or personal  property
and to provide a copy of the liability policy to the Lessor.

11. To provide  adequate  insurance  coverage  on the  windows  and glass in the
Demised Premises in respect of breakage or other.

12. Subject to the above,  not to assign or sub-let without leave of the Lessor,
nor to sub-let on terms other than as contained in this Lease, such leave not to
be unreasonably withheld.

13.  To be  responsible  for  and to  pay  any  Social  Services  Tax,  Workers'
Compensation  Board levies and all wages to employees payable in relation to the
operation of the said business being conducted on the Demised  Premises,  and to
save the Lessor harmless therefrom.

14.  Except in the event of  negligence  of the  Lessor,  the Lessee does hereby
release,  remise and forever  discharge the Lessor from all liability or loss or
damage of any kind or nature including loss or damage to the Lessee's  business,
fixtures and chattels caused directly or indirectly by or as a result of fire.

15.  The  Lessor  shall  not be  responsible  for any  defect  in or  change  of
conditions  affecting  the  Demised  Premises  nor for any damage to the Demised
Premises or to any person or the  merchandise,  goods,  chattels,  machinery  or
equipment of the Lessee contained therein.

16. Except in the event of the negligence of the Lessor, the Lessor shall not be
responsible for any loss, damage or expense caused by any overflow or leakage of
water from any part of the Demised Premises or any part of the said Building, or
any other type of damage,  direct or indirect,  occasioned by the use, misuse or
abuse of water or the breaking or bursting of any pipes or plumbing  fixtures or
any other  manner or by the seepage from  adjoining  lands or premises or by any
accident  or  misadventure  to or  arising  from  the  use or  operation  of the
machinery, heating apparatus,  electrical wiring, appliances, gas or other pipes
and appliances or any other fixtures or by structural  defect in the Building or
the Demised Premises.

17. To  indemnify  and save  harmless  the Lessor from and against all manner of
claims, actions,  demands or liabilities,  costs, damages or expenses whatsoever
resulting  from or incidental to the Lessee's use or arising out of the Lessee's
occupation  of the  Demised  Premises  or from any act or omission to act on the
part of the Lessee, its contractors or subcontractors,  or any servant, agent or
employee of them during the Lessee's  occupation  of the Demised  Premises,  and
which may arise by reason of a default  by the Lessee of the  observance  of the
terms and conditions as herein provided.

<PAGE>
                                       6
THE LESSOR COVENANTS WITH THE LESSEE
------------------------------------

18. For quiet enjoyment.

19. To provide to and in the  Demised  Premises a source of light , gas,  power,
hydro, water and sewer services.

20.  Save as  hereinbefore  provided,  to pay all taxes,  rates and  assessments
charged or rated  against  the lands and  Buildings  on or in which the  Demised
Premises are situate during the term granted herein.

21. To ensure  water  tightness  of the roof,  and to repair  and  maintain  the
Building  structure,  roof,  and  exterior  of  the  entire  Building,  and  the
mechanical , electrical,  plumbing and heating  systems  thereof in a reasonable
state of repair,  or to replace any of such systems,  when reasonably  required,
and such costs of a capital nature shall be paid by the Lessor excepting damages
or repairs  attributable to the Lessee which shall then be paid by the Lessee on
demand.

22. To maintain adequate  insurance  coverage on the Demised Premises in respect
of loss by fire.

GENERAL COVENANTS
-----------------

23. The Lessee may at its option register this Lease and shall pay for all costs
related  thereto  including  the  costs  of  obtaining  any  reference  plans if
required.

24.  PROVISO for  re-entry by the said Lessor on  non-payment  of rent  (whether
lawfully  demanded or not) or non- performance or non-observance of covenants or
conditions  herein contained or on the seizure or forfeiture of the term for any
of the causes  herein  mentioned  and this proviso shall extend and apply to all
covenants herein, whether positive or negative.

25.  Provided  that no waiver of, nor  neglect to enforce  the right of re-entry
upon breach of any covenant,  condition or agreement herein contained,  shall be
deemed a waiver of such rights upon any  subsequent  breach of the same,  or any
other covenant, condition or agreement herein contained.

26.  Also in case the Lessee  shall  become  insolvent  or  bankrupt or make any
assignment  for the benefit of creditors or in case of the  non-payment of rent,
at the times herein  provided or if the Lessee shall fail to observe and perform
any of the  covenants and  conditions  herein  contained,  and so its part to be
observed and performed, the Lease shall at the option of the Lessor cease and be
void  and  the  term  hereby  created,  expire  and  be  at an  end,  everything
hereinbefore to the contrary not withstanding, and the then current month's rent
and three (3) months' additional rent shall thereupon immediately become due and
payable and the Lessor may without notice or any form or legal process  re-enter
and take possession of the Demised Premises as though the Lessee or its servants
or other  occupants  of the said  Demised  Premises  were holding over after the
expiration of the term and the term shall be forfeited and void.

<PAGE>
                                       7

27. And it is hereby agreed and declared that in the event the Demised  Premises
shall at any time  during the term  hereby  granted be burned down or damaged by
fire so as to render the same unfit for the purpose of the  Lessee,  then and so
often as the same shall happen the rent hereby reserved, or a proportionate part
thereof  according  to the nature and  extent of the  damage  sustained  and all
remedies for  recovering  the same shall be suspended  and abated until the said
Demised  Premises  shall have been  rebuilt  or made fit for the  purpose of the
Lessee and the Lessee  shall  cease to be held  liable for payment of such rent,
except in respect of such rent as shall  already  have accrued due, and shall be
entitled  to be repaid  any rent paid in  advance  for the period for which rent
shall be suspended as aforesaid.

28.  PROVIDED  that  notwithstanding  anything in this  paragraph  contained the
parties  mutually  agree that in the event the Demised  Premises  are damaged by
fire and the amount of such damage is more than  seventy-five  (75%) percent and
such damage  renders the Demised  Premises  unfit for the purpose of the Lessee,
then either  party  herein  shall be entitled to cancel this Lease and as of the
date of such  cancellation by the other party, all future  obligations which one
party has to the other arising out of this Lease shall forthwith cease.

29. AND it is further  declared  and agreed that if the Lessor  shall  suffer or
incur any  damage,  loss or expense or be obliged to make any  payment for which
the Lessee is liable  hereinunder  by reason of failure of the Lessee to observe
and comply with any of the  covenants of the Lessee herein  contained,  then the
Lessor shall have the right to add the cost or the amount of such damages, loss,
expense  or  payment  to the rent  hereby  reserved  and any such  amount  shall
thereupon  immediately be due and payable as additional  rent and recoverable in
the manner provided by Law for the recovery of rent in arrears.

30. AND that the Lessee shall abide by and comply with all lawful by-laws, rules
and  regulations  of every  Municipal  or other  authority  which in any  manner
relates to or effects  the  business  carried on and  conducted  on the  Demised
Premises  and shall  indemnify  and save  harmless  the  Lessor  from all costs,
charges or damages to which the Lessor may be put or  suffered  by reason of the
breach of the Lessee of any such by-law, rule or regulation.

31.  AND  that  any  notice  to  be  served  hereunder  shall  be  deemed  to be
sufficiently  served on the parties hereto within THREE (3) days of posting,  if
addressed to such party and mailed by pre-paid registered post to the address of
such party as hereinbefore set out.

WHEREVER the singular or masculine are used in this  Indenture the same shall be
deemed to include the plural or feminine or the body politic or corporate,  also
the heirs, executors,  administrators,  successors and assigns of the respective
parties hereto and each of them, where the context or the parties so require.

OPTION TO RENEW
---------------

32.  PROVIDED  that if the  Lessee  duly and  regularly  pays the said  rent and
performs all and every other covenant, proviso and agreement herein contained on
the  part of the  Lessee  to be  paid  and  performed,  the  Lessor  will at the

<PAGE>
                                       8

expiration of the said term on written request by the Lessee, mail by registered
post to or deliver to the Lessor  not later  than  ninety  (90) days  before the
expiration of the said term grant to the Lessee One (1)  renewal(s) of the Lease
of the said Demised  Premises for a further term of Thirty Six (36) months each,
and such new lease shall contain all the  covenants,  provisos,  and  agreements
contained in the present  lease  including  the covenant for renewal as required
pursuant hereto,  except for the covenant  relating to the amount of the rental.
The rental for the  renewal  terms shall be the amount  agreed upon  between the
parties or failing  agreement,  the amount shall be  determined  by  arbitration
under the provisions of the Commercial Arbitration Act of British Columbia.

33.  PROVIDED  the Lessee is not in  default of any of the terms and  conditions
herein  contained,  the parties agree that upon the expiration or termination of
the lease the Lessee or the  Lessor on its  behalf  may  remove  any  equipment,
fittings,  fixtures, furniture and furnishings which are owned by the Lessee and
in the nature of tenants fixtures, provided that the Lessee shall be responsible
for any damage occasioned by the renewal of the aforesaid  equipment,  fittings,
fixtures,  furniture  and  furnishings.  The Lessee  shall  effect such  removal
immediately and in such equipment,  fittings fixtures, furniture and furnishings
not so removed by the time period  allowed shall then become the property of the
Lessor absolutely.

34.  PROVIDED  always and it is hereby agreed that if the said Lessee shall hold
over after the expiration of the term hereby granted and the Lessor shall accept
rent, the new tenancy thereby created shall be a tenancy from month to month and
not a tenancy  from  year to year and  shall be  subject  to the  covenants  and
conditions  herein  contained  and the same are  applicable  to the tenancy from
month to month.

                           END OF TERMS AND CONDITIONS

<PAGE>
                                       9

         DATED  at the  District  of  Chilliwack,  in the  Province  of  British
Columbia, on the day and year written below.

EXECUTION(S) :

                             Execution Date
    Witness Signature(s)     ( Y/ M / D )      Party(ies)   Signatures

------------------------        /    /
                                               Ebcon Properties Ltd.by
                                               its  authorized  signatories.

                                               ---------------------------------

                                               ---------------------------------

------------------------        /    /         Merilus Networking Solutions Inc.
                                               by its authorized signatories.

                                               ---------------------------------

                                               ---------------------------------

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