Document:

ASSET PURCHASE AGREEMENT

      This ASSET PURCHASE AGREEMENT (the "Agreement") is made and entered into
this 1st day of March, 2004, by and among Able Propane Co., LLC, a New Jersey
limited liability company, ("Seller"), Able Energy, Inc., a New Jersey
corporation, Christopher Westad (the "Owners"), and Timothy Harrington (Manager)
and Liberty Propane, L.P., a Delaware limited partnership ("Parent"), and Action
Gas Propane Operations, LLC, a Delaware limited liability company, and its
successors and assigns ("Buyer").

                                    RECITALS:

      A. Seller is engaged in, among other things, the sale of liquid-propane
gas as well as the installation, repair and maintenance of related equipment in
the State of New Jersey (the "Propane Business").

      B. The Owners own all of the issued and outstanding equity interest of
Seller.

      C. Seller agrees to sell and Buyer agrees to purchase certain assets
operated by, used in or resulting from the Propane Business and to enter into
various ancillary agreements to accomplish the transactions set forth herein.

      D. Seller and each of the Owners and Manager agree to enter into a
Noncompetition Agreement with Buyer.

                                   AGREEMENT:

      In consideration of the mutual agreements, covenants and premises set
forth herein, the parties agree as follows:

                                  SECTION ONE

                           PURCHASE AND SALE OF ASSETS

1.1   Agreement to Sell and Purchase.

      Seller (and the Owners, to the extent owning any Purchased Assets (defined
below) used in the Propane Business) agrees to sell, grant, convey, transfer,
assign and deliver to Buyer, and Buyer agrees to purchase and accept from Seller
and the Owners, on the Closing Date (as defined in Section 3.1), all of Seller's
and the Owners' right, title, and interest in, to and under the assets and
properties (free and clear of all liens and encumbrances) of every kind, nature
and description (wherever located), operated by, used in, resulting from or made
part of the Propane Business as the same shall exist on the Closing Date (the
"Purchased Assets"), except those assets and properties specifically excluded
pursuant to Section 1.2. The Purchased Assets shall include but not be limited
to:

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      (a)   The propane gas related tangible and intangible property including
            but not limited to customer storage tanks and cylinders (whether
            installed or uninstalled); tank and cylinder and tank related parts,
            pieces, fittings and equipment; 2 30,000 gallon bulk storage tanks;
            trucks, trailers, cars, vehicles; appliance inventory; office
            furniture and equipment; parts held for resale; fixtures; shop and
            other equipment; computer system (including both software and
            hardware); regulators, compressors, pumps, pigtails, meters, hoods,
            stands, bases, tools, vaporizers, dispensing units; inventory not
            otherwise listed; improvements on leased real property; trade
            accounts receivable (subject to Section 2.2); Pre-receipted
            Accounts, Pre-paid Accounts; and Customer Deposits (each as defined
            in and subject to Section 2.3); all propane gas inventory; supplies;
            customer information and lists, names or trade names including the
            name "Able Propane" (subject to Sections 5.1 and 5.2), copyrights,
            patents, licenses, permits and tanks in place of either Seller or
            the Owners that are operated by, used in, resulting from or made
            part of the Propane Business.

      (b)   To the extent not conveyed in Section 1.1(a), all assets listed on
            Exhibit 1.1(b);

      (c)   All books and records and all files, documents, papers, agreements,
            books of account and other records pertaining to the Purchased
            Assets which are located at the offices of Seller or otherwise used
            in connection with the Propane Business;

      (d)   All rights of Seller under all contracts, agreements, covenants,
            leases (building, land, vehicles, loading facilities, storage tank
            or otherwise) except the rights of Seller under those contracts
            listed on Exhibit 4.1(f) for which the obligations of Seller were
            not specifically assumed by Buyer on Exhibit 1.3.

1.2   Excluded Assets.

      The Purchased Assets to be sold and purchased under Section 1.1 shall not
include the following (the "Excluded Assets"):

      (a)   The minute books and ownership records of Seller;

      (b)   Seller's investment securities, cash and cash equivalents (such as
            demand deposit or money market accounts);

      (c)   Claims for refund of taxes and other governmental charges of
            whatever nature for all periods prior to the Closing Date, state
            sales tax deposits, prepaid expenses, non-trade receivables and
            storage gas deposits;

      (d)   Rights which accrue or will accrue to Seller and the Owners under
            this Agreement; and

      (e)   Claims or rights against third parties relating to liabilities or
            obligations which are not specifically assumed by Buyer hereunder.

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1.3   Seller's Liabilities.

      All of Seller's liabilities, debts and obligations of every character or
description, known or unknown, including accrued vacation pay and benefits
(defined as an employee's earned but unused vacation time or benefits but which
amount Seller shall pay through the Closing Date to all employees employed at
that time), accruing or arising from transactions or occurrences prior to the
Closing Date shall be Seller's sole obligation and responsibility except as
specifically set forth as follows regarding the proration of certain taxes
and/or except for the liabilities and contractual arrangements as specifically
assumed by Buyer under this Agreement and set forth in Exhibit 1.3 hereto. With
respect to the Purchased Assets, all personal property taxes, inventory taxes or
assessments of like kind, for the year of Closing (as defined in Section 3.1)
shall (i) be prorated based on the number of days owned by each party in the
calendar year and (ii) thereafter be paid by the parties in accordance with such
proration. Buyer shall not assume or be liable for any contract, liability or
obligation of, or claim against Seller or any Owner except to the extent
specifically assumed as set forth on Exhibit 1.3. Buyer shall not assume or be
liable for any sales or transfer taxes arising out of the transfer or sale of
the Purchased Assets.

                                  SECTION TWO

            PAYMENT OF PURCHASE PRICE/TERMS AND COLLATERAL AGREEMENTS

2.1   Asset Purchase Price; Noncompete Payment; Allocation.

      (a)   The aggregate base purchase price for the Purchased Assets (the
            "Purchase Price") shall be Four Million Four Hundred Thousand
            Dollars ($4,400,000) (consisting of (1) Three Million Dollars
            ($3,000,000) in cash (the "Closing Payment"), and (2) Five Hundred
            Thousand Dollars ($500,000) in a Subordinated Promissory Note (the
            "Subordinated Promissory Note") substantially in the form attached
            hereto as Exhibit 2.1(a),

            (i)   plus the Accounts Receivable Payment (as defined and
                  calculated in accordance with Section 2.2);

            (ii)  plus or minus the Pre-receipted Accounts, Pre-paid Accounts,
                  Accruals and Customer Deposits (each as defined and calculated
                  in accordance with Section 2.3).

      (b)   In addition, as consideration for the agreements of Seller and each
            of the Owners contained in their Noncompetition, Nonsolicitation and
            Nondisclosure Agreements (the "Noncompetition Agreements"), Buyer
            shall pay the aggregate sum of Nine hundred Thousand Dollars
            ($900,000) (the "Noncompete Payment") payable in accordance with
            Section 2.4(iii);

      (c)   The Purchase Price shall be allocated among the Purchased Assets as
            set forth in Exhibit 2.1(c).

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2.2   Determination of Accounts Receivable Payment.

      Buyer will purchase the accounts receivable resulting from Seller's sales
of liquid propane gas owed to Seller at the close of business on the day
immediately prior to the Closing Date (the "Accounts Receivable") and will pay
(within thirty (30) days following the Closing Date) Seller for said accounts
receivable (the "Accounts Receivable Payment") according and pursuant to the
following recitation and assumptions:

      (a)   Accounts aged 0 - 30 days old:      100% of face value

      (b)   Accounts aged 31 - 60 days old:     95% of face value

      (c)   Accounts aged 61 - 90 days old:     85% of face value

      (d)   Accounts aged over 91 days old      0% of face value

For a period of 120 days, Buyer will collect and remit monthly to Seller, all
collections on accounts aged over 90 days as of the closing date. After 120
days, the remaining balance on all such accounts will revert to the Buyer.

2.3   Pre-receipted Accounts, Pre-paid Accounts, Accruals and Deposits.

      Buyer and Seller shall determine what, if any, of Seller's accounts are to
be classified as "Pre-receipted Accounts" and/or "Pre-paid accounts" and/or
"Accruals" as of the close of business on the day immediately prior to the
Closing Date. It is agreed that the cash portion of the Purchase Price shall be
increased or reduced within thirty (30) days following the Closing Date by the
net amount and/or value of the Pre-receipted Accounts and/or Pre-paid Accounts
and/or Accrual as said amount and/or value, unused vacation pay, tax prorations,
unearned tank rent, asset discrepancies or liabilities assumed by Buyer, all as
determined as of the close of business on the day immediately prior to the
Closing Date.

      Buyer and Seller shall further determine Seller's "Customer Deposits" held
as of the close of business on the day immediately prior to the Closing Date. It
is agreed that the cash portion of the Purchase Price shall be reduced at
Closing by the net amount and/or value of the Customer Deposits as said amount
and/or value is determined as of the close of business on the day immediately
prior to the Closing Date.

2.4   Payment of Asset Purchase Price.

      (a)   Buyer shall pay the Purchase Price and the Noncompete Payment to
            Seller and the Owners as follows:

            (i)   Three Million Dollars ($3,000,000) (the "Closing Payment")
                  shall be paid by Buyer by a wire transfer at the time of
                  Closing.

            (ii)  The Accounts Receivable Payment net of the Section 2.3
                  adjustments shall be paid by Buyer by wire transfer within
                  thirty (30) days following the Closing Date.

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            (iii) The Noncompete Payment shall be paid in installments in
                  accordance with Exhibit 2.4(iii) hereof.

            (iv)  Buyer shall deliver the Subordinated Promissory Note to
                  Seller.

2.5   Storage of Tanks

                  Buyer shall have the right to store the 2 30,000 gallon tanks
and other new, unused, uninstalled customer storage tanks at the Able Energy,
Inc bulk plant located at 344 Route 46, Rockaway, NJ, 07866, at no charge, until
such time as Buyer has established its own bulk storage facility.

                                 SECTION THREE

                                     CLOSING

3.1   Closing Date.

      The closing of the transactions contemplated by this Agreement shall be
held at the office of Sichenzia Ross Friedman Ference LLP, 1065 Avenue of the
Americas, New York, NY, 10018 at 9:00 A.M on March 1, 2004.. The closing shall
be deemed effective as of the close of business on February 29, 2004, with the
actual closing to take place on March 1, 2004. The date and event of such sale
and purchase are, respectively, hereinafter referred to as the "Closing Date"
and the "Closing."

3.2   Seller's Duties at Closing.

      (a)   At the Closing, Seller shall deliver or cause to be delivered to
            Buyer:

            (i)   The duly executed General Bill of Sale substantially in the
                  form attached hereto as Exhibit 3.2(a)(i) and such other bills
                  of sale, endorsements, checks, assignments, certificates of
                  title and other instruments of transfer and conveyance as
                  shall be effective to vest title to each of the Purchased
                  Assets in Buyer.

            (ii)  Documents evidencing that Seller has taken all requisite
                  corporate action to change its name to "_______________,"
                  effective immediately following the Closing Date, and is
                  prepared to file an amendment to Seller's
                  ____________________reflecting such name change immediately
                  following the Closing Date.

            (iii) Copies of the resolutions of the Board of Directors of Seller
                  adopting and approving this Agreement and authorizing the
                  transactions contemplated hereby.

            (iv)  The duly executed Noncompetition Agreements of Seller and each
                  of the Owners substantially in the form attached hereto as
                  Exhibit 3.2(a)(iv).

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            (v)   A good standing certificate for Seller from New Jersey dated
                  no more than ten (10) days prior to the Closing Date attached
                  hereto as Exhibit 3.2(a)(v).

            (vi)  The duly executed Landlord Agreements substantially in the
                  form attached as Exhibit 3.2(a)(vi).

            (vii) The duly executed SubLease Agreements substantially in the
                  form attached hereto as Exhibit 3.2(a)(vii) (the "SubLease
                  Agreements");

           (viii) A list of Seller's trade creditors attached as Exhibit
                  3.2(a)(viii).

            (ix)  An acknowledgment to the assignment of this Agreement to
                  Buyer's and Parent's lender in the form attached hereto as
                  Exhibit 3.2(a)(ix).

            (x)   With respect to Seller's indebtedness for borrowed money in
                  existence immediately prior to the Closing, a payoff letter
                  executed by the creditors with respect thereto in the form
                  attached as Exhibit 3.2(x).

            (xi)  A duly executed license from the state of New Jersey granting
                  the Buyer the authority to operate a propane company in the
                  state of New Jersey.

            (xii) An assignment of the through put agreement between Seller and
                  Alcoa/Howmet.

      (b) At the Closing, Buyer shall deliver or cause to be delivered to
Seller:

      (i)   The Closing Payment to be transferred by wire to Seller's and the
            Owners' accounts in accordance with Exhibit 3.2(b)(i).

      (ii)  The duly executed Noncompetition Agreements of Seller and each of
            the Owners.

      (iii) The duly executed Lease Agreements.

      (iv)  The duly executed Assumption Agreement substantially in the form
            attached hereto as Exhibit 3.2(b)(v).

                                  SECTION FOUR

                         REPRESENTATIONS AND WARRANTIES

4.1   Representations and Warranties of Seller and the Owners.

      Seller and the Owners, jointly and severally, represent and warrant to
Buyer, now and as of the closing, as follows:

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      (a)   Status and Authorization. Seller operates as a limited liability
            company known as Able Propane Co., LLC, was formed under the laws of
            the State of New Jersey and is wholly owned by the Owners. Except as
            disclosed in Exhibit 4.1(a), Seller is in good standing under the
            laws of the State of New Jersey and has the power to own its
            property and to carry on its business as now being conducted. Seller
            is duly qualified to do business and is in good standing in each
            jurisdiction set forth in Exhibit 4.1(a) in which such qualification
            is necessary. Seller and the Owners have full power, authority and
            legal capacity to execute and deliver this Agreement and to perform
            the obligations of Seller and the Owners under the terms hereof. The
            execution and delivery of this Agreement and the performance of all
            the obligations of Seller under the terms hereof have been duly
            authorized by all actions necessary to authorize execution, delivery
            and performance of this Agreement and the transactions contemplated
            hereby. Seller has no subsidiaries, affiliates or investments in any
            other entity or business operation, and Seller has no subsidiary or
            affiliate whose liabilities or obligations will be assumed by Buyer.

      (b)   Restrictions. Neither Seller nor any Owner is subject to any
            restriction under any law or contained in any organizational
            document, bylaw, mortgage, lien, lease, agreement, instrument,
            order, judgment or decree, which would prevent the consummation of
            the transactions contemplated by this Agreement or which would be
            violated by such consummation.

      (c)   Financial Statements.

            (i)   Seller has delivered to Buyer: (i) balance sheets of Seller as
                  at June 30, for each of the three preceding fiscal years and
                  the related statements of income for each of the fiscal years
                  then ended, and (ii) a balance sheet of Seller (the "Interim
                  Balance Sheet") as at September 30, 2003 (the "Financial
                  Statement Date"), and the related unaudited statement of
                  income for the three months then ended (together, the
                  "Financial Statements"). Copies of the Financial Statements
                  are set forth on Exhibit 4.1(c). The Financial Statements and
                  the notes thereto are true, correct, accurate and complete and
                  fairly present the financial condition and the results of
                  operation of Seller as at the respective dates of and for the
                  periods referred to in the Financial Statements, all in
                  accordance with GAAP, subject, in the case of interim
                  Financial Statements, to normal recurring year-end adjustments
                  (the effect of which will not, individually or in the
                  aggregate, be adverse) and the absence of notes (that, if
                  presented, would not differ from those included in the Interim
                  Balance Sheet). The Financial Statements referred to in this
                  section reflect the consistent application of such accounting
                  principles throughout the periods involved.

            (ii)  Except for (a) liabilities fully reflected or reserved against
                  in the Interim Balance Sheet; and (b) regular and usual
                  liabilities and obligations incurred in the ordinary course of
                  business consistent with past practices after the Financial
                  Statement Date, Seller has no liabilities, obligations or
                  claims (absolute, accrued, fixed or contingent, matured or
                  unmatured, or otherwise), including liabilities, obligations
                  or claims which may become known or which arise only after the
                  Closing Date and which result from actions, omissions or
                  occurrences of Seller prior to the Closing Date.

                                      -7-
<PAGE>

            (iii) Since the date of the Interim Balance Sheet, there has not
                  been any adverse change in the business, operation,
                  properties, prospects, assets, or condition of Seller, and no
                  event has occurred and no circumstance exists that may result
                  in such an adverse change.

      (d)   Purchased Assets. Seller and/or the Owners have good title to the
            personal (tangible and intangible) property to be sold hereunder. As
            of the Closing Date, none of the Purchased Assets to be transferred
            to Buyer pursuant to this Agreement will be subject to any contract
            of sale, or to encumbrances, claims, security agreements, liens or
            charges of any kind or character (other than those encumbrances
            described on Exhibit 4.1(d)). No person, corporation or firm has any
            ownership interest or claim in the Purchased Assets being
            transferred pursuant to this Agreement other than Seller and the
            Owners.

      (e)   Condition and Sufficiency of the Purchased Assets. The Purchased
            Assets are structurally sound, are in good operating condition and
            repair, and are adequate for the uses to which they are being put,
            and none of such Purchased Assets are in need of maintenance or
            repairs except for ordinary, routine maintenance and repairs. The
            Purchased Assets are sufficient for the continued conduct of the
            Propane Business after the Closing Date in substantially the same
            manner as conducted prior to the Closing Date.

      (f)   Contracts. Except as set forth in Exhibit 4.1(f), Seller is not,
            with respect to or affecting the Purchased Assets, a party to a
            contract of any nature or any of the following contracts, whether
            the same be written or oral:

            (i)   Contracts not made in the ordinary course of business;

            (ii)  Employment contracts, executive employment agreements,
                  executive compensation agreements, employee pension or
                  retirement plans or similar arrangements or agreements;

            (iii) Contracts with any labor union or similar arrangements or
                  agreements;

            (iv)  Bonus, insurance or similar plans providing employee benefits
                  or similar arrangements or agreements;

            (v)   Leases with respect to any property, whether as lessor or
                  lessee, or license agreements;

            (vi)  Continuing contracts for the future purchase of materials,
                  supplies or equipment outside the ordinary course of business;

                                      -8-
<PAGE>

            (vii) Chattel, mortgages, equipment leases, security agreements or
                  conditional sales agreements; or

           (viii) Partnership, joint venture or other business enterprise
                  agreements and franchise agreements.

            Seller has performed all obligations presently required to be
            performed by it and is not in default under any contract to which it
            is a party. Seller has the ability and authority to transfer, assign
            or convey to Buyer all of the contracts and leases used in the
            Propane Business which Buyer needs to continue the business as
            contemplated under this Agreement and to which Buyer has agreed to
            assume pursuant to the specific terms set forth herein.

      (g)   Accounts Receivable. All accounts receivable of Seller that are
            reflected on the Interim Balance Sheet or on the accounting records
            of Seller as of the Closing Date represent valid obligations arising
            from sales actually made or services actually performed in the
            ordinary course of business. There is no contest, claim, or right of
            set-off, other than returns in the ordinary course of business,
            under any contract with any obligor of an account receivable
            relating to the amount or validity of such account receivable.

      (h)   Taxes. The term "Taxes" means all net income, capital gains, gross
            income, gross receipts, sales, use, transfer, ad valorem, franchise,
            profits, license, capital, withholding, payroll, employment, excise,
            goods and services, severance, stamp, occupation, premium, property,
            assessments, or other governmental charges of any kind whatsoever,
            together with any interest, fines and any penalties.

            (i)   Seller has duly and timely filed (and prior to the Closing
                  Date will duly and timely file) true, correct and complete tax
                  returns, reports or estimates, all prepared in accordance with
                  applicable laws, for all years and periods (and portions
                  thereof) and for all jurisdictions (whether federal, state,
                  local or foreign) in which any such returns, reports or
                  estimates were due. All Taxes shown as due and payable on such
                  returns, reports and estimates have been paid, and there is no
                  current liability for any Taxes due and payable in connection
                  with any such returns. There are no existing liens for Taxes
                  upon any of the Purchased Assets.

            (ii)  Seller has (i) withheld all required amounts from its
                  employees, agents, contractors and nonresidents and remitted
                  such amounts to the proper agencies; (ii) paid all employer
                  contributions and premiums and (iii) filed all federal, state,
                  local and foreign returns and reports with respect to employee
                  income tax withholding, and social security and unemployment
                  taxes and premiums, all in compliance with the withholding tax
                  provisions of the Internal Revenue Code of 1986, as amended
                  (the "Code"), or any prior provision of the Code and other
                  applicable laws.

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      (i)   Litigation and Laws. Except as disclosed in Exhibit 4.1(i), neither
            Seller nor the Owners are now involved in any litigation or dispute
            affecting the Purchased Assets nor are either Seller or the Owners
            aware of any pending litigation or dispute which may arise and
            Seller is not engaged in nor to the knowledge of Seller or any of
            the Owners, threatened with any legal action or other proceeding
            before any court or administrative agency, and has not been charged
            with, and is not, to the knowledge of Seller or any of the Owners,
            under investigation with respect to any charge concerning any
            violation of any provision of federal, state or local law or
            administrative regulation, including but not limited to, any matter
            before the Environmental Protection Agency or any like governmental
            agency whether at the federal, state, county or local level with
            respect to its business. Further, Seller has previously complied and
            is in compliance with all federal, state, county and local laws and
            administrative regulations with respect to its Propane Business.

      (j)   Environmental Matters. Except as set forth in Exhibit 4.1(j):

            (i)   Seller is, and at all times has been, in compliance with, and
                  has not been and is not in violation of or liable under, any
                  environmental health or safety law. Neither Seller nor the
                  Owners has any basis to expect, nor has any of them received,
                  any actual or threatened order, notice, or other communication
                  from any governmental body or private citizen acting in the
                  public interest of any actual or potential violation or
                  failure to comply with any environmental health or safety law,
                  or of any actual or threatened obligation to undertake or bear
                  the cost of any environmental, health and safety liabilities
                  with respect to any of its facilities or any other properties
                  or assets (whether real, personal, or mixed) in which Seller
                  held an interest, or with respect to any property or facility
                  at or to which hazardous materials were generated,
                  manufactured, refined, transferred, imported, used, or
                  processed by Seller or from which hazardous materials have
                  been transported, treated, stored, handled, transferred,
                  disposed, recycled, or received by Seller.

            (ii)  Neither Seller nor any Owner has any environmental, health,
                  and safety liabilities with respect to the facilities or with
                  respect to any other properties and assets (whether real,
                  personal, or mixed) in which Seller or any of the Owners has
                  or had an interest.

            (iii) Except for propane gas, there are no hazardous materials
                  present on or in the environment at the facilities used by
                  Seller in connection with the Propane Business, including any
                  hazardous materials contained in barrels, above or underground
                  storage tanks, landfills, land deposits, dumps, equipment
                  (whether moveable or fixed) or other containers, either
                  temporary or permanent, and deposited or located in land,
                  water, dumps, or any other part of the facilities or
                  incorporated into any structure therein or thereon. Neither
                  Seller nor any Owner has permitted or conducted, or is aware
                  of, any hazardous activity conducted with respect to the
                  facilities or any other properties or assets (whether real,
                  personal, or mixed) in which Seller has or had an interest
                  except in compliance with all applicable environmental laws.

                                      -10-
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            (iv)  There has been no release or threat of release, of any
                  hazardous materials at or from the facilities or at any other
                  locations where any hazardous materials were generated,
                  manufactured, refined, transferred, produced, imported, used,
                  or processed from or by the facilities, or from or by any
                  other properties and assets (whether real, personal, or mixed)
                  in which Seller has or had an interest, whether by Seller or
                  any Owner.

      (k)   Labor Relations.

            (i)   Seller has made no representations to its employees with
                  respect to any undertaking or commitment by Buyer to employ
                  such employees. Seller has no liability under the National
                  Labor Relations Act, the Fair Labor Standards Act, the Civil
                  Rights Act, the Equal Employment Opportunity Act or any other
                  social, employment or labor law affecting Seller which would
                  adversely affect the Propane Business. No employee, officer,
                  or director of Seller is a party to, or is otherwise bound by,
                  any agreement or arrangement, including any confidentiality,
                  noncompetition, or proprietary rights agreement, between such
                  employee or director and any other person that in any way
                  adversely affects or will affect the operation of the Propane
                  Business after the Closing Date.

            (ii)  In the three (3) year period immediately preceding the Closing
                  Date, Seller has not been or is not a party to any collective
                  bargaining or other labor contract. In the same three year
                  period there has not been, there is not presently pending or
                  existing, and there is not threatened, (i) any strike,
                  slowdown, picketing, work stoppage, or employee grievance
                  process, (ii) any proceeding against or affecting Seller
                  relating to the alleged violation of any legal requirement
                  pertaining to labor relations or employment matters, including
                  any charge or complaint filed by an employee or union with the
                  National Labor Relations Board, the Equal Employment
                  Opportunity Commission, or any comparable governmental body,
                  organizational activity or other labor or employment dispute
                  against or affecting Seller or its premises, or (iii) any
                  application for certification of a collective bargaining
                  agent. No event has occurred or circumstance exists that could
                  provide the basis for any work stoppage or other labor
                  dispute. There is no lockout of any employees by Seller, and
                  no such action is contemplated by Seller. Seller is not liable
                  for the payment of any compensation, damages, taxes, fines,
                  penalties, or other amounts, however designated, for failure
                  to comply with any of the foregoing legal requirements.

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      (l)   No Omissions or Misrepresentations. No representation, warranty or
            statement of either Seller or any Owner contained in this Agreement
            or in the Exhibits attached hereto is false, or in light of the
            circumstances in which it was made, misleading in any respect and
            there has been no omission or failure to disclose facts known by any
            Owner, or any officer or director of Seller which would adversely
            affect the transactions set forth in this Agreement.

4.2   Representations and Warranties of Buyer.

      Buyer represents and warrants to Seller as follows:

      (a)   Status and Authorization. Buyer is a limited liability company duly
            organized, validly existing and in good standing under the laws of
            the State of Delaware and has the power to own its property and to
            carry on its business as it is now being conducted by Seller. Buyer
            has full power, authority and legal capacity to execute and deliver
            this Agreement and to perform Buyer's obligations under the terms
            hereof. The execution and delivery of this Agreement and the
            performance of all the obligations of Buyer under the terms hereof
            have been duly authorized by all actions necessary to authorize
            execution, delivery and performance of this Agreement and the
            transactions contemplated hereby.

      (b)   Restrictions. Buyer is not subject to any restriction contained in
            any organizational document, bylaw, mortgage, lien, lease,
            agreement, instrument, order, judgment or decree which would prevent
            the consummation of the transactions contemplated by this Agreement.

                                  SECTION FIVE

                             POST-CLOSING COVENANTS

      5.1   Use of Seller's Name.

      Immediately after the Closing Date, Seller and the Owners will take all
necessary actions to enable Buyer to use "Able Propane," including, but not
limited to, a formal name change of Seller under applicable state law(s) and a
transfer of all registered and trade names to Buyer.

      5.2   Further Assurances.

      The parties agree, without further consideration, to execute and deliver
such further instruments of transfer or assignment or other documents and to
take such other action as the other parties reasonably may request for the
purpose of carrying out the terms of this Agreement and the other documents
referred to herein.

                                      -12-
<PAGE>

                                  SECTION SIX

                               GENERAL PROVISIONS

6.1   Survival of Representations and Warranties; Indemnity Agreement.

      (a)   The representations, warranties, covenants and agreements given by
            Seller, the Owners and Buyer which are contained in this Agreement
            shall survive the Closing Date for a period of three (3) years from
            the Closing Date except for Seller's representation regarding (1)
            Taxes which shall expire and terminate upon the expiration of the
            applicable statute of limitations specified in the Code or in the
            laws of any state or other taxing authority as such statute of
            limitations period may be validly extended pursuant to applicable
            tax laws and (2) Seller's and the Owners' representations regarding
            environmental matters under Section 4.1(j) which shall expire upon
            the expiration of the applicable statutes of limitations as
            specified in the applicable laws. Seller and the Owners will
            indemnify Buyer, and Buyer will indemnify Seller and the Owners
            against any loss, cost, liability or expense (including, without
            limitation, costs and expenses of litigation and reasonable
            attorneys' fees) incurred or suffered by either party as a result of
            the inaccuracy, misrepresentation or breach of any of the
            representations, warranties, covenants and agreements of Seller, the
            Owners or Buyer, as the case may be, contained in this Agreement.
            Seller and the Owners will further indemnify Buyer for the assertion
            against Buyer of any liability of Seller which is not expressly
            assumed by Buyer pursuant to this Agreement, including but not
            limited to that lawsuit filed 4/15/03, Reference: B10289423, Suit:
            SL-00001042-2003, Case: L 001042 03, in Superior Court Law Div. Of
            New Jersey by Fremont Indemnity Co. against Able Propane Co., Able
            Oil Melbourne, Inc, Able Oil Company Inc D/B/A Northwest Petroleum
            198 Green Pond Road, Rockaway, NJ, 07866. Buyer will further
            indemnify Seller for the assertion against Seller of any liability
            expressly assumed by Buyer pursuant to this Agreement as well as for
            any loss suffered by Seller or the Owners as a result of Buyer's use
            of the Purchased Assets or operation of the Propane Business
            following the Closing Date.

      (b)   The obligations and liabilities of any party to indemnify any other
            party under this Section 6.1 hereof with respect to claims relating
            to third parties ("Claims") shall be subject to the following terms
            and conditions:

            (i)   The party to be indemnified (the "Indemnified Party") will
                  give the other party (the "Indemnifying Party") prompt notice
                  of any such Claim, and the Indemnifying Party will undertake
                  the defense, compromise or settlement thereof by
                  representatives chosen by it. The failure to promptly notify
                  the Indemnifying Party shall not relieve such party of its
                  obligations hereunder provided that the failure so to notify
                  does not adversely prejudice the Indemnifying Party's ability
                  to defend such Claim.

            (ii)  If the Indemnifying Party, within a reasonable time after
                  notice of any such Claim, fails to defend a Claim, the
                  Indemnified Party will (upon further notice to the
                  Indemnifying Party) have the right to undertake the defense,
                  compromise or settlement of such Claim on behalf of, and for
                  the account and risk of the Indemnifying Party, subject to the
                  right of the Indemnifying Party to assume the defense of such
                  Claim at any time prior to settlement, compromise or final
                  determination thereof.

                                      -13-
<PAGE>

            (iii) Anything in this Section 6.1(b) to the contrary
                  notwithstanding (a) if there is a reasonable probability that
                  a Claim may adversely affect the Indemnified Party other than
                  as a result of money damages or other money payments, the
                  Indemnified Party shall have the right, as its own cost and
                  expense, to defend, compromise or settle such Claim, and (b)
                  the Indemnifying Party shall not, without the written consent
                  of the Indemnified Party, settle or compromise any Claim or
                  consent to the entry of any judgment which does not include as
                  an unconditional term thereof the giving by the claimant or
                  the plaintiff to the Indemnified Party a release from all
                  liability in respect of such Claim.

6.2   Notices.

      Any notice, request, instrument or other document to be given hereunder
shall be effective only if it is in writing and (i) personally delivered, (ii)
sent by certified or registered mail, return receipt requested, postage prepaid
or (iii) sent by a nationally recognized overnight delivery service, with
delivery confirmed to:

      (a)   Buyer:

                  Kent A. Misemer
                  Liberty Propane L.P.
                  10740 Nall Avenue, Suite 201
                  Overland Park, Kansas 66211
                  Phone:  913.648.1588
                  Fax:  913.648.5108

         With a copy to:

                  Mitchell E. Albert
                  Sonnenschein Nath & Rosenthal LLP
                  4520 Main Street, Suite 1100
                  Kansas City, Missouri 64111
                  Phone:  816.460.2400
                  Fax:  816.460.2416

      (b)   Seller:

                  Timothy Harrington
                  Able Energy
                  198 Green Pond Road
                  Rockaway, New Jersey, 077866
                  Phone:  973.625.1012
                  Fax:  973.586.9866

                                      -14-
<PAGE>

         With a copy to:

                  Darrin Ocasio
                  Sichenzia Ross Friedman Ference
                  1065 Avenue of the Americas
                  New, York, New York, 10018
                  Phone: 212-930-9700
                  Fax: 212-930-9725

or to such other address as the parties hereto may designate by notice given as
above provided. A notice shall be deemed to have been given as of the date when
(i) personally delivered, (ii) five (5) days after the date when deposited with
the United States mail properly addressed or (iii) when receipt of a Notice sent
by an overnight delivery service is confirmed by such overnight delivery
service, as the case may be, unless the sending party has actual knowledge that
a notice was not received by the intended recipient.

6.3   Confidentiality.

      All of the parties to this Agreement shall maintain the confidentiality of
all information received pursuant to this Agreement, which is not otherwise
publicly available. Such information shall be held in confidence and shall not,
at any time, be used for any purpose by the party receiving such information,
unless such information becomes publicly available through a source other than
the parties hereto to whom such information was disclosed.

6.4   Amendment.

      This Agreement may be amended only by a written instrument signed by each
of the parties hereto.

6.5   Waiver.

      Any waiver shall be valid if set forth in writing signed by the waiving
party or by one authorized on behalf of such party. Waiver of any provision of
this Agreement or of any breach hereof shall be a waiver of only said specific
provision or breach and shall not be deemed a waiver of any other provision or
any further breach hereof.

6.6   Governing Law.

      This Agreement shall be governed by, and construed and enforced in
accordance with, the laws of the State of New Jersey.

                                      -15-
<PAGE>

6.7   Entire Agreement.

      This Agreement and all agreements specifically referred to herein
constitute the entire agreement and understanding of the parties with respect to
the transactions contemplated hereby and supersede any and all prior agreements
and understandings relating to the subject matter hereof.

6.8   Headings.

      The section and article headings contained in this Agreement are inserted
for convenience of reference only and shall not affect the meaning or
interpretation of this Agreement.

6.9   Binding Effect.

      This Agreement shall be binding upon and inure to the benefit of the
parties, their successors and assigns.

6.10  Assignment.

      Buyer has the right to assign its rights under this Agreement to its
parent or an entity formed by Buyer to carry on the Propane Business. Buyer and
its assigns have the further right to assign their rights under this Agreement
to any entity acquiring the stock, assets or operations of Buyer or taking any
interest therein as collateral security. Each of Buyer, Parent and their
respective permitted assigns shall have the right, without the prior consent of
Seller, at any time, in its sole discretion, to assign, in whole or in part, its
rights under this Agreement and all other documents, instruments and agreements
executed in connection with this Agreement for collateral security purposes to
any lender providing financing to Buyer, Parent and/or such permitted assigns.

6.11  Counterparts.

      This Agreement may be executed in any number of separate counterparts,
each of which shall be deemed to be an original, but which together shall
constitute one and the same instrument.

6.12  Construction.

      This Agreement shall not be construed against any party for having drafted
it or for having the Agreement drafted by such party's counsel.

6.13  Fees and Expenses.

      Each party hereto shall be responsible for its own costs, fees and
expenses including any brokerage/finder's fees incurred through the Closing
Date.

                                      -16-
<PAGE>

6.14  Arbitration.

      In the event of any dispute, interpretation, conflict or claim, in tort,
contract or otherwise, based upon or related to this Agreement, the parties
hereby irrevocably agree that such dispute, interpretation, conflict or claim
shall be resolved by binding arbitration under the rules for Commercial
Transactions before the American Arbitration Association in Rockaway, New
Jersey. Any party bringing suit or action, other than through binding
arbitration, shall hereby have such suit or claim immediately dismissed with
prejudice by the court having jurisdiction thereon.

                     [SIGNATURES ARE ON THE FOLLOWING PAGE]

                                      -17-
<PAGE>

      IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on the day and year first above written.

SELLER:                                 ABLE PROPANE CO., LLC
                                        a New Jersey Limited Liability Company

                                        By:
                                           Name: _______________________________
                                           Title:  _____________________________

OWNERS:

                                        By:
                                           Name: Able Energy, Inc_______________

                                        By: ____________________________________
                                            Name: Christopher Westad

MANAGER:                                By:  ___________________________________
                                            Name:  Timothy Harrington

BUYER:

                                            ACTION GAS PROPANE OPERATIONS, LLC

                                            By:  Liberty Propane, L.P.,
                                                   its sole member
                                            By:  Liberty Propane GP, LLC,
                                                   General Partner of
                                                     Liberty Propane, L.P.

                                            By:  _______________________________
                                            Name:  _____________________________
                                            Title:  ____________________________

                                      -18-
<PAGE>

                                            PARENT:

                                            LIBERTY PROPANE L.P.,
                                            a Delaware Limited Partnership
                                            By Liberty Propane GP, LLC, its
                                                   General Partner

                                            By:
                                            Name: ______________________________
                                            Title:  ____________________________

                                      -19-Note:  Certain  portions of this document have been marked  "[C.I.]" to indicate
that   confidential   treatment  has  been   requested  for  this   confidential
information.  The  confidential  portions have been omitted and filed separately
with the Sec1urities and Exchange Commission.

                                                                 EXHIBIT 10(b.2)

                       TERMINATION AND TRANSFER AGREEMENT

      THIS TERMINATION AND TRANSFER AGREEMENT dated as of February 24, 2004 (the
"Effective  Date"),  is  made  by and  between  DUSA  PHARMACEUTICALS,  INC.,  a
corporation  organized  and existing  under the laws of the State of New Jersey,
having  offices  at 25  Upton  Drive,  Wilmington,  Massachusetts  01887  U.S.A.
("DUSA") and DRAXIS HEALTH INC., a corporation  organized and existing under the
laws of Canada,  having offices at 6870 Goreway Drive,  Suite 200,  Mississauga,
Ontario L4V 1P1 Canada ("Draxis").

                             PRELIMINARY STATEMENTS

      WHEREAS, DUSA, Draxis, and PARTEQ RESEARCH AND DEVELOPMENT INNOVATIONS,  a
non-profit  corporation  without share capital  organized and existing under the
laws of the  Province  of  Ontario,  having  offices  at  Queens  University  at
Kingston,  Kingston,  Ontario  Canada  KL7 3N6  ("PARTEQ")  are  parties to that
certain  Amended and  Restated  Assignment  Agreement  dated April 16, 1999 (the
"Assignment") pursuant to which DUSA assigned to Draxis all of DUSA's rights and
obligations  under that  certain  the  Amended and  Restated  License  Agreement
between DUSA and PARTEQ effective as of March 11, 1998 (the "License"),  insofar
as such rights and obligations relate to the Territory (defined below); and

      WHEREAS,  in  connection  with the execution of the  Assignment,  DUSA and
Draxis also entered into that certain  Confidential  Disclosure  Agreement dated
April 16, 1999 (the "CDA"); and

      WHEREAS, in May 2001, Draxis obtained  Registration (defined below) of the
DUSA Product (defined below) in the Territory; and

      WHEREAS,  each of the Parties  (defined  below)  believe that it is in its
best  interest  for Draxis  to: (a) return to DUSA all rights  granted to Draxis
under the Assignment and terminate the Assignment;  and (b) transfer to DUSA all
right, title and interest in and to the Registration  together with all relevant
know-how,  pre-clinical and clinical study data and results,  reports,  records,
market  research  and  materials  including,   without  limitation,   any  CTAs,
Registration  Applications  (as each is  defined  below)  and  other  regulatory
filings in Draxis' name relating to the DUSA  Product,  all subject to the terms
and conditions set forth herein.

      NOW THEREFORE,  in consideration of the foregoing  preliminary  statements
and the mutual  agreements  and covenants set forth herein,  the Parties  hereby
agree as follows:

1.    DEFINITIONS.

      As used in this Agreement, the following terms shall have the meanings set
forth in this  Section  1 unless  context  clearly  and  unambiguously  dictates
otherwise.  References  to the singular  include the plural and vice versa,  and
references to Sections,  Exhibits and Schedules are  references to the sections,
exhibits and schedules of this Agreement.

      1.1  "Affiliate"   shall  mean,  with  respect  to  a  Party,  any  entity
controlling,  controlled by, or under common control with, such Party,  for only
so long as such control exists.  For these  purposes,  "control" shall refer to:
(i)  the  possession,  directly  or  indirectly,  of the  power  to  direct  the
management  or policies of an entity,  whether  through the  ownership of voting
securities,  by  contract  or  otherwise;  or (ii) the  ownership,  directly  or
indirectly,  of more than fifty percent (50%) of the voting  securities or other
ownership interest of an entity.

<PAGE>

Note:  Certain  portions of this document have been marked  "[C.I.]" to indicate
that   confidential   treatment  has  been   requested  for  this   confidential
information.  The  confidential  portions have been omitted and filed separately
with the Sec1urities and Exchange Commission.

      1.2  "Agreement"  shall  mean  this  termination  and  transfer  agreement
together  with  the  preliminary  statements  and all  exhibits,  schedules  and
attachments hereto and thereto.

      1.3  "Assignment"  shall  have the  meaning  assigned  to such term in the
preliminary statements of this Agreement.

      1.4 "CDA" shall have the meaning  assigned to such term in the preliminary
statements of this Agreement.

      1.5 "CTA" shall mean a clinical  trial  application  filed with the TPD as
required prior to the commencement of any clinical trial of Products, the Method
or the DUSA Product in humans in the Territory.

      1.6  "Confidential  Information"  shall have the meaning  assigned to such
term in the CDA.

      1.7 "Draxis  Know-How" shall mean any and all  improvements,  discoveries,
claims, formulae, processes, trade secrets, technologies and know-how (including
confidential  data  and  information),   whether   patentable  or  unpatentable,
generated,  owned or controlled by Draxis or its  Affiliates  during the term of
the Assignment: (i) useful or necessary for the development, use or sale of: (1)
Products  and/or the  Method in the  Territory;  or (2) the DUSA  Product in the
Territory;  or (ii) relating to the Invention;  including,  without  limitation,
synthesis,  preparation,  recovery and  purification  processes and  techniques,
control methods and assays,  chemical data,  toxicological  and  pharmacological
data and  techniques,  clinical  data,  medical uses,  product forms and product
formulations and specifications.

      1.8 "Draxis  Patent  Rights"  shall mean all patents  (including,  without
limitation,   all   reissues,   extensions,   substitutions,   re-registrations,
re-examinations,   re-validations,  supplementary  protection  certificates  and
patents of addition) and patent applications (including, without limitation, all
provisional  applications,  continuations,  continuations-in-part and divisions)
which:  (i) are useful or  necessary  for the  development,  use or sale of: (1)
Products  and/or the  Method in the  Territory;  or (2) the DUSA  Product in the
Territory;  or (ii)  relate to the  Invention;  and in each case are owned by or
licensed to Draxis or its  Affiliates as of the  Effective  Date as set forth on
Schedule 1.8.

      1.9 "Draxis Intellectual  Property" shall mean,  collectively,  the Draxis
Know-How and Draxis Patent Rights.

      1.10 "DUSA  Product" shall mean  collectively:  (i) Levulan(R) 20% topical
solution;   and   (ii)   DUSA's   proprietary,   disposable   applicator   being
commercialized  under  the  trademark  Kerastick(R),   for  the  application  of
Levulan(R) 20% topical solution.

      1.11 "Effective  Date" shall have the meaning assigned to such term in the
introductory paragraph of this Agreement.

      1.12  "First  Commercial  Sale"  shall  mean  the  first  sale  for use or
consumption of the DUSA Product in the Territory.

                                      -2-
<PAGE>

Note:  Certain  portions of this document have been marked  "[C.I.]" to indicate
that   confidential   treatment  has  been   requested  for  this   confidential
information.  The  confidential  portions have been omitted and filed separately
with the Sec1urities and Exchange Commission.

      1.13 "GAAP" shall mean  generally  accepted  accounting  principles in the
United States, consistently applied by the party at issue.

      1.14 "Gross Sales" shall mean the gross  invoiced  sales price received by
DUSA or its Affiliates and sublicensees, if any, with respect to the sale of the
DUSA  Product for the  Territory,  it being  agreed by the  Parties  that only a
customary  number of samples of the DUSA Product shall be provided to the market
for  promotional  purposes,  as  determined  by  DUSA  in  its  reasonable  sole
discretion.

      1.15  "Improvements"  shall have the meaning  assigned to such term in the
License and incorporated by reference in to the Assignment.

      1.16 "Indemnitee"  shall have the meaning assigned to such term in Section
8.3.

      1.17  "Invention"  shall  have the  meaning  assigned  to such term in the
License and incorporated by reference in to the Assignment.

      1.18  "Levulan(R)"  shall mean DUSA's brand of the  chemical  compound 5 -
aminolevulinic acid HCl.

      1.19  "License"  shall  have  the  meaning  assigned  to such  term in the
preliminary statements of this Agreement.

      1.20  "Materials"  shall have the meaning assigned to such term in Section
3.2.1.

      1.21 "Method" shall have the meaning  assigned to such term in the License
and incorporated by reference in to the Assignment.

      1.22 "Party" shall mean DUSA or Draxis and, when used in the plural, shall
mean DUSA and Draxis.

      1.23  "Products"  shall  have the  meaning  assigned  to such  term in the
License and incorporated by reference in to the Assignment.

      1.24  "Proprietary  Information"  shall have the meaning  assigned to such
term in Section 7.2.

      1.25 "Registration"  shall mean approval by the Regulatory  Authorities in
the Territory of any  Registration  Application  including,  but not limited to,
pricing  and  reimbursement  approvals,  for  Products,  the  Method or the DUSA
Product.

      1.26  "Registration  Application"  shall mean any filing(s)  made with the
Regulatory  Authorities  including,  without  limitation,  a new drug submission
filed with the TPD, for regulatory  approval of the marketing,  manufacture  and
sale (and  pricing,  as  applicable)  of the  Products,  the  Method or the DUSA
Product in the Territory.

      1.27  "Regulatory  Authority"  shall mean the TPD together with the Health
Products and Food Branch of Health Canada, or any successors thereto, as well as
any state or local health regulatory  authorities  having  jurisdiction over any
activities  contemplated  by the  Parties  including,  without  limitation,  the
marketing,  manufacture, and sale of Products, the Method or the DUSA Product in
the Territory.

                                      -3-
<PAGE>

Note:  Certain  portions of this document have been marked  "[C.I.]" to indicate
that   confidential   treatment  has  been   requested  for  this   confidential
information.  The  confidential  portions have been omitted and filed separately
with the Sec1urities and Exchange Commission.

      1.28 "Royalty  Payment Period" shall mean the period  commencing as of the
First Commercial Sale and terminating upon the expiration of five (5) years. For
these purposes,  a "year" shall refer a calendar year beginning on the Effective
Date and ending of 365 days (or 366 days in a leap year) thereafter.

      1.29 "Territory" shall mean Canada.

      1.30  "TPD"  shall mean the  Therapeutic  Products  Directorate  of Health
Canada, or any successor thereto.

      1.31  "Transfer  Fees"  shall have the  meaning  assigned  to such term in
Section 3.3

      1.32 "United  States,"  "U.S." or "U.S.A." shall mean The United States of
America.

2.    REPRESENTATIONS AND WARRANTIES.

      2.1 Representations and Warranties of Both Parties.  Each Party represents
and warrants to the other Party, as of the Effective Date, that:

            2.1.1 such  Party:  (1) is a  corporation  duly  organized,  validly
existing and in good standing under the laws of the  jurisdiction in which it is
incorporated;  (2) has the corporate  power and authority and the legal right to
own and operate its  property  and assets,  to lease the  property and assets it
operates under lease, and to carry on its business as it is now being conducted;
and (3) is in compliance with all  requirements of applicable law, except to the
extent that any  noncompliance  would not have a material  adverse effect on the
properties,  business,  financial or other condition of such Party and would not
materially  adversely  affect such  Party's  ability to perform its  obligations
under this Agreement;

                                      -4-
<PAGE>

Note:  Certain  portions of this document have been marked  "[C.I.]" to indicate
that   confidential   treatment  has  been   requested  for  this   confidential
information.  The  confidential  portions have been omitted and filed separately
with the Sec1urities and Exchange Commission.

            2.1.2 such Party:  (1) has the corporate power and authority and the
legal  right to  enter  into  this  Agreement  and to  perform  its  obligations
hereunder;  and (2) has  taken  all  necessary  corporate  action on its part to
authorize the execution and delivery of this  Agreement and the  performance  of
its obligations hereunder. The Agreement has been duly executed and delivered on
behalf of such  Party,  and  constitutes  a legal,  valid,  binding  obligation,
enforceable against such Party in accordance with its terms;

            2.1.3 such Party has obtained all necessary consents,  approvals and
authorizations of all governmental  authorities and third parties required to be
obtained by such Party in connection with this Agreement; and

            2.1.4  the  execution  and  delivery  of  this   Agreement  and  the
performance of such Party's  obligations  hereunder:  (1) do not, to the best of
such Party's  knowledge,  conflict with or violate any requirement of applicable
laws or  regulations;  and (2) do not  conflict  with,  or  constitute a default
under, any contractual obligation of such Party.

      2.2 Representations and Warranties of Draxis. Draxis hereby represents and
warrants to DUSA, as of the Effective Date, that:

            2.2.1 Draxis is the owner of a Registration for the DUSA Product and
such Registration is in full force and effect and has been maintained to date;

            2.2.2 to the best of Draxis' knowledge:  (1) Draxis has disclosed to
DUSA all Draxis Know-How in its or its Affiliates possession; and (2) Draxis and
its Affiliates have exclusive  rights to all of the Draxis Know-How in existence
on the  Effective  Date and the exclusive  right to grant  licenses with respect
thereto;

            2.2.3 Draxis is the owner of, or has exclusive rights to, all of the
Draxis Patent  Rights set forth on Schedule 1.8, and has the exclusive  right to
grant to DUSA the rights granted under this Agreement. Schedule 1.8 sets forth a
complete and accurate list of all Draxis Patent Rights;

            2.2.4 Draxis has not entered into any agreement with any third party
that  is in  conflict  with  the  return  of  rights  to DUSA  pursuant  to this
Agreement; and

            2.2.5 Draxis is in full  compliance with the terms and conditions of
the  Assignment  and no payments  or other  financial  obligations  are due from
Draxis to any third party (including, without limitation, PARTEQ) thereunder.

      2.3  Representations  and Warranties of DUSA.  DUSA hereby  represents and
warrants to Draxis,  as of the Effective  Date,  that DUSA is in full compliance
with the terms and conditions of the Assignment.

3.    TERMINATION; TECHNOLOGY TRANSFER.

      3.1  Termination  of Assignment.  Effective as of the Effective  Date, the
Parties agree to terminate the Assignment  and all  obligations of each Party to
the other under the Assignment, except for those set forth in Sections 6.1, 6.2,
and 14.1 (solely with respect to claims arising prior to the Effective  Date) of
the License which are incorporated by reference into the Assignment, which shall
survive  such  termination.  Thereafter,  DUSA  shall  be  free to  develop  and
commercialize  Products and the Method in the Territory without  compensation or
other  obligation to Draxis,  subject to payment of the termination  payment set
forth in Section 4.1.

                                      -5-
<PAGE>

Note:  Certain  portions of this document have been marked  "[C.I.]" to indicate
that   confidential   treatment  has  been   requested  for  this   confidential
information.  The  confidential  portions have been omitted and filed separately
with the Sec1urities and Exchange Commission.

      3.2 Technology Transfer; Grant of Rights.

            3.2.1 Within  thirty (30) days of the  Effective  Date,  Draxis will
return  or  transfer  to DUSA all data,  information  and  materials  including,
without  limitation,  all  pre-clinical  and  clinical  study data and  results,
reports,  records, market research,  Confidential Information and all regulatory
filings  (e.g.,  all  CTAs,   Registration   Applications   and   Registrations)
(collectively,  the "Materials"),  together with all know-how,  including Draxis
Know-How,  pertaining to the development and  commercialization  of Products and
the Method as well as the DUSA  Product,  received  by Draxis or its  Affiliates
from DUSA or  developed  by Draxis,  its  Affiliates  and/or  their  third party
contractors  or  collaboration  partners  during  the  term  of the  Assignment.
Schedule  3.2.1  sets  forth an  initial  list of  Materials  for  transfer.  In
addition,  the Parties shall work together to identify any additional  Materials
and know-how,  including  Draxis  Know-How,  that should be transferred.  In the
event  that,  after  the  Effective  Date,  Draxis or DUSA  identifies  any such
Materials  or know-how,  including  Draxis  Know-How,  received by Draxis or its
Affiliates  from DUSA or developed by Draxis,  its  Affiliates  and/or its third
party  contractors or collaboration  partners during the term of the Assignment,
the  identifying  Party shall promptly notify the other and the Parties agree to
promptly make  arrangements for the return or transfer to DUSA of such Materials
or know-how,  including  Draxis  Know-How,  as applicable.  Notwithstanding  the
foregoing,  Draxis shall be entitled to retain  archival copies of all Materials
and  know-how,  including  Draxis  Know-How,  in electronic or hardcopy form for
purposes of its ongoing confidentiality obligations pursuant to Section 7.

            3.2.2 To the extent  required  for DUSA to access  Materials  in the
possession of third party  contractors  and  collaboration  partners  engaged by
Draxis or its Affiliates to perform  services on its or their behalf  including,
without limitation,  to conduct: (1) preclinical or clinical studies on Products
and the Method as well as the DUSA Product;  or (2) market  research on the DUSA
Product,  Draxis agrees to grant permission  under any applicable  agreement for
such third parties to give access to DUSA such  Materials and any other data and
documentation  relating  to  Products,  the Method or the DUSA  Product in their
possession.  In addition, Draxis shall assign, or have its Affiliate assign, its
rights to DUSA as needed under  applicable  agreements  to permit such access by
DUSA and,  subject to the prior written  approval of DUSA,  Draxis may assign to
DUSA obligations of  confidentiality,  if any, that are required for purposes of
such access.  As of the Effective  Date,  Draxis has  identified the third party
contractors and collaboration partners set forth on Schedule 3.2.2.

            3.2.3 To enable DUSA to fully  exploit its rights under the License,
Draxis and its Affiliates hereby grant to DUSA an exclusive,  irrevocable, fully
paid-up, royalty-free,  right and license under the Draxis Intellectual Property
to develop,  make,  have made,  use, offer to sell, sell and have sold Products,
the Method and the DUSA Product for all  indications  worldwide.  The  foregoing
license shall include the right to grant sublicenses.

      3.3 Fees and  Expenses.  Each party  shall bear its own fees and  expenses
incurred in connection  with the  transactions  contemplated  by this Agreement;
provided,  that, the Parties agree that any fees, charges,  transfer taxes, bulk
sales  taxes or other  payments  ("Transfer  Fees")  required  to be made to any
governmental  entity in connection with the transfer of Materials shall be borne
by DUSA. Draxis and DUSA shall cooperate in timely making and filing all filings
including, but not limited to, tax returns, reports and forms as may be required
with respect to any Transfer  Fees payable in connection  with the  transactions
contemplated by this Agreement.

4.    CONSIDERATION.

      4.1  Termination  Payment to Draxis.  As  consideration  to Draxis for the
return to DUSA of the  licenses  and other  rights  granted to Draxis  under the
Assignment,   DUSA  shall  pay  to  Draxis  a   non-refundable,   non-creditable
termination  payment of [c.i.]  within two (2) business days of the execution of
this Agreement by both Parties.

      4.2 Royalties.  In recognition of the  value-added  contributions  made by
Draxis  in  obtaining  Registration  of  the  DUSA  Product  in  the  Territory,
including,  without  limitation,  the data,  information,  Materials  and Draxis
Intellectual  Property developed by Draxis during the term of the Assignment all
of which are being transferred or licensed to DUSA pursuant to Section 3.2, DUSA
shall pay to Draxis during the Royalty  Payment Period a royalty [c.i.] of Gross
Sales by DUSA and its Affiliates and sublicensees, if any, in the Territory.

5.    PAYMENTS AND REPORTS.

      5.1 Payments.

            5.1.1  Beginning  with  the  Calendar  Quarter  in which  the  First
Commercial  Sale  of a DUSA  Product  is made  in the  Territory  by DUSA or its
designee,  and for each  Calendar  Quarter  during the  Royalty  Payment  Period
thereafter,  royalty  payments  pursuant  to Section 4.2 shall be made to Draxis
within  forty-five  (45) days  following the end of each such Calendar  Quarter.
Each royalty  payment shall be  accompanied by a report,  summarizing  the total
Gross  Sales  during  the  relevant  Calendar  Quarter  and the  calculation  of
royalties,  if any, due thereon.  In the event that no royalties  are payable in
respect  of a given  Calendar  Quarter,  DUSA shall  submit a royalty  report so
indicating.

                                      -6-
<PAGE>

Note:  Certain  portions of this document have been marked  "[C.I.]" to indicate
that   confidential   treatment  has  been   requested  for  this   confidential
information.  The  confidential  portions have been omitted and filed separately
with the Sec1urities and Exchange Commission.

            5.1.2 All other  payments to be made under this  Agreement  shall be
made in  accordance  with  the  terms  set  forth in the  applicable  Section(s)
regarding such payments

      5.2 Mode of Payment.  All payments under this  Agreement  shall be made in
Canadian Dollars,  via wire transfer of immediately  available funds as directed
by Draxis from time to time.  For sales of DUSA Product in the Territory made in
a currency other than Canadian Dollars,  royalties hereunder shall be calculated
in the currency of such sale or payment and converted  into Canadian  Dollars at
the  rate  published  by the Bank of  Canada  on the  last  business  day of the
Calendar Quarter in which such sale is made.

      5.3 Late  Charges.  Amounts  not paid when due as set forth in Section 5.1
shall be subject to a late charge at a rate of interest  equal to the prime rate
plus three  percent (3%) as reported on the date such payment is due by the East
Coast Edition of The Wall Street  Journal,  with daily  compounding of interest.
Payment by DUSA of such late charges shall be Draxis' sole and exclusive  remedy
for any failure of DUSA to pay any amounts under this Agreement when due.

      5.4 Records  Retention.  DUSA and its  Affiliates  shall keep complete and
accurate  records  pertaining  to the sale of the DUSA Product in the  Territory
during the Royalty  Payment  Period,  for a period of three (3)  calendar  years
after the year in which such sales occurred,  and in sufficient detail to permit
Draxis  to  confirm  the  accuracy  of the  aggregate  royalties  paid  by  DUSA
hereunder.

      5.5 Audits.  During the Royalty  Payment  Period and for a period of three
(3) years  thereafter,  at the  request  and  expense  of  Draxis,  DUSA and its
Affiliates,  if any, shall permit an independent,  certified  public  accountant
appointed by Draxis and reasonably  acceptable to DUSA, at reasonable  times and
upon reasonable  notice (but in no case no more than once per calendar year), to
examine such records as may be necessary  for the sole purpose of verifying  the
calculation and reporting of Gross Sales in the Territory and the correctness of
any royalty payment made under this Agreement. The independent, certified public
accountant  shall  disclose  to  Draxis  only  the  royalty  amounts  which  the
independent auditor believes to be due and payable hereunder to Draxis and shall
disclose  no other  information  revealed  in such  audit.  Any and all  records
examined by such  independent  accountant  shall be deemed  DUSA's  Confidential
Information  which may not be disclosed by said  independent,  certified  public
accountant  to any third party.  If, as a result of any  inspection of the books
and records of DUSA, it is shown that any royalty  payments under this Agreement
were less than the amount which should have been paid,  then DUSA shall make all
payments  required  to be made to  eliminate  any  discrepancy  revealed by said
inspection within forty-five (45) days of Draxis' demand therefor.  Draxis shall
pay for such audits,  except that in the event that the royalty payments made by
DUSA were less than ninety percent (90%) of the  undisputed  amounts that should
have been paid  during the  period in  question,  DUSA shall pay the  reasonable
costs of the audit.

                                      -7-
<PAGE>

Note:  Certain  portions of this document have been marked  "[C.I.]" to indicate
that   confidential   treatment  has  been   requested  for  this   confidential
information.  The  confidential  portions have been omitted and filed separately
with the Sec1urities and Exchange Commission.

      5.6 Taxes.  The Parties  understand  that,  under applicable law as of the
Effective Date, there are no withholding requirements for the payments set forth
in this Agreement. In the event that DUSA is required to withhold any tax to the
tax or revenue  authorities in the Territory regarding any payment to Draxis due
to the laws of the Territory,  such amount shall be deducted from the payment to
be made by DUSA, and DUSA shall promptly notify Draxis of such  withholding and,
within a reasonable  amount of time after making such deduction,  furnish Draxis
with  copies  of any tax  certificate  or other  documentation  evidencing  such
withholding.  Each Party  agrees to  cooperate  with the other Party in claiming
exemptions from such  deductions or  withholdings  under any agreement or treaty
from time to time in effect.

6.    COVENANTS.

      6.1 Joint  Covenants.  Promptly  after the Effective  Date, and in no case
more than sixty (60) days thereafter, the Parties shall file with any applicable
Regulatory  Authorities  any and all  information  required  by such  Regulatory
Authorities to transfer all regulatory  filings  (e.g.,  all CTAs,  Registration
Applications and Registrations) filed with such Regulatory Authority from Draxis
or any  Affiliate,  to  DUSA.  The  Parties  also  agree  to use all  reasonable
commercial  efforts to take any and all other actions required by any Regulatory
Authority,  or other governmental entity in the Territory, if any, to effect the
transfer  of all such  regulatory  filings,  along with the drug  identification
number(s)  assigned  to the DUSA  Product in the  Territory  from  Draxis or any
Affiliate, as applicable, to DUSA.

      6.2 Covenants of Draxis. Draxis covenants with DUSA as follows:

            6.2.1 Draxis has returned or transferred, or will return or transfer
as  required  pursuant  to Section  3.2,  to DUSA all  Materials  and  know-how,
including Draxis Know-How,  pertaining to the development and  commercialization
of Products  and the Method as well as the DUSA  Product,  received by Draxis or
its  Affiliates  from DUSA, or developed by Draxis,  its  Affiliates  and/or its
third  party  contractors  or  collaboration  partners,  during  the term of the
Assignment  (subject to Draxis' right to retain an archival copy as set forth in
Section 3.2.1);

            6.2.2  Draxis shall comply with all  applicable  state,  provincial,
federal  and  international  laws,  rules and  regulations  (including,  without
limitation,  those applicable to the transfer of regulatory  records and filings
relating to Products,  the Method and the DUSA Product) in  connection  with the
performance of its obligations under this Agreement;

            6.2.3  Draxis and its  Affiliates  shall  report to DUSA any product
complaints and/or safety information (e.g., adverse drug experiences)  regarding
the DUSA Product in the  Territory  promptly  after being made aware of same, in
order to permit DUSA to make timely reports to the Regulatory Authorities as may
be required; and

            6.2.4 Draxis and its Affiliates  agree,  on their own behalf and for
the benefit of DUSA, that, during the Royalty Payment Period, neither Draxis nor
any of its Affiliates  shall develop,  manufacture for itself or its Affiliates,
market,   distribute   or  sell  a   product,   either   for   prescription   or
over-the-counter  sale, which competes with the Invention and all  Improvements,
if any, in the Territory.

7.    CONFIDENTIALITY.

      7.1  DUSA's  Confidential   Information.   Draxis  acknowledges  that  the
Materials and know-how received by Draxis or its Affiliates from DUSA during the
term of the Assignment are Confidential  Information and subject to terms of the
CDA, which are incorporated in this Agreement by reference.

                                      -8-
<PAGE>

Note:  Certain  portions of this document have been marked  "[C.I.]" to indicate
that   confidential   treatment  has  been   requested  for  this   confidential
information.  The  confidential  portions have been omitted and filed separately
with the Sec1urities and Exchange Commission.

      7.2 Protection of Proprietary  Information.  In addition to the foregoing,
any  Materials  and  know-how,  including  Draxis  Know-How,  pertaining  to the
development  and  commercialization  of Products,  the Method and DUSA  Product,
developed by Draxis,  its  Affiliates  and/or their third party  contractors  or
collaboration  partners  during  the  term  of  the  Assignment   (collectively,
"Proprietary   Information")   shall  be  deemed  to  be  the  confidential  and
proprietary  information  of DUSA as the  disclosing  party.  Draxis  shall keep
confidential and shall not publish or otherwise  disclose or use for any purpose
other than as provided for in this Agreement any such  Proprietary  Information;
except to the extent that it can be established by Draxis that such  Proprietary
Information:

            7.2.1  becomes  published  or  otherwise  part of the public  domain
through no fault or omission on the part of Draxis or its Affiliates;

            7.2.2  is   received   by   Draxis,   without   restriction   as  to
confidentiality  or use,  from a third party  legally  entitled to possession of
such Proprietary Information and having a right of further disclosure; or

            7.2.3  is  required  to  be  disclosed  under   applicable  laws  or
regulations  or an order by a court or other  regulatory  body having  competent
jurisdiction;  PROVIDED, HOWEVER, that except where impracticable,  Draxis shall
give DUSA reasonable advance notice of such disclosure  requirement (which shall
include a copy of any  applicable  subpoena or order) and shall  cooperate  with
DUSA to  oppose,  limit or  secure  confidential  treatment  for  such  required
disclosure. In the event of any such required disclosure,  Draxis shall disclose
only that portion of the Proprietary Information that Draxis is legally required
to disclose.

      7.3 Term of  Obligation.  The  obligations  Draxis under Section 7.2 shall
continue for a period of ten (10) years from the Effective Date.

      7.4  Remedies.  DUSA shall be entitled,  in addition to any other right or
remedy it may have, at law or in equity,  to an injunction,  without the posting
of any  bond or  other  security,  enjoining  or  restraining  Draxis  from  any
violation or threatened violation of this Section 7.

8.    INDEMNIFICATION.

      8.1 By Draxis. Draxis shall indemnify,  defend and hold harmless DUSA, its
Affiliates, and their respective directors, officers, employees and agents, from
and  against  any and all  liabilities,  damages,  losses,  costs  and  expenses
(including the reasonable fees of attorneys and other  professionals) for claims
of any Third Party to the extent arising from or in connection with or otherwise
with respect to:

            8.1.1 a breach of any representation, warranty or covenant of Draxis
contained in this Agreement; or

            8.1.2 a breach of any representation, warranty or covenant of Draxis
contained in the Assignment; or

            8.1.3 any negligence,  recklessness or wrongful  intentional acts or
omissions  of  Draxis,  or  its  Affiliates,  and  their  respective  directors,
officers,  employees and agents,  in connection with Draxis'  performance of its
obligations under this Agreement; or

                                      -9-
<PAGE>

Note:  Certain  portions of this document have been marked  "[C.I.]" to indicate
that   confidential   treatment  has  been   requested  for  this   confidential
information.  The  confidential  portions have been omitted and filed separately
with the Sec1urities and Exchange Commission.

            8.1.4 any  liabilities,  obligations or commitments of whatever kind
and nature,  primary or secondary,  direct or indirect,  absolute or contingent,
known or  unknown,  whether  or not  accrued,  arising  out of or  relating  to,
directly or indirectly, to the development or commercialization of Products, the
Method or DUSA  Product  to the  extent  related  to any period on or before the
Effective Date.

      8.2 By DUSA. DUSA shall indemnify,  defend and hold harmless  Draxis,  its
Affiliates, and their respective directors, officers, employees and agents, from
and  against  any and all  liabilities,  damages,  losses,  costs  and  expenses
(including the reasonable fees of attorneys and other  professionals) for claims
of any Third Party to the extent arising from or in connection with or otherwise
with respect to:

            8.2.1 a breach of any  representation,  warranty or covenant of DUSA
contained in this Agreement;

            8.2.2 DUSA's failure to pay to PARTEQ royalties on sales of the DUSA
Product in the Territory pursuant to the License; or

            8.2.3 any  liabilities,  obligations or commitments of whatever kind
and nature,  primary or secondary,  direct or indirect,  absolute or contingent,
known or  unknown,  whether  or not  accrued,  arising  out of or  relating  to,
directly or indirectly, to the development or commercialization of Products, the
Method or DUSA Product to the extent  related to any period after the  Effective
Date.

      8.3  Notice.  In the event that any person (an  "Indemnitee")  entitled to
indemnification under Section 8.1 or 8.2 is seeking such  indemnification,  such
Indemnitee shall: (i) inform, in writing, the indemnifying Party of the claim as
soon as reasonably  practicable  after such  Indemnitee  receives notice of such
claim; (ii) permit the indemnifying Party to assume direction and control of the
defense  of the  claim  (including  the  sole  right  to  settle  it at the sole
discretion of the indemnifying  Party;  provided,  that such settlement does not
impose any obligation on, or otherwise  adversely affect,  the Indemnitee or the
other Party);  (iii) cooperate as requested (at the expense of the  indemnifying
Party) in the defense of the claim;  and (iv) undertake all reasonable  steps to
mitigate any loss, damage or expense with respect to the claim(s).

      8.4   Complete   Indemnification.   As   the   Parties   intend   complete
indemnification,  all costs and expenses,  including without  limitation,  legal
fees and  expenses,  actually  incurred  by an  Indemnitee  in  connection  with
enforcement of Sections 8.1 or 8.2 shall also be reimbursed by the  indemnifying
Party.

9.    SURVIVAL OF REPRESENTATIONS.

      The  representations  and  warranties  contained in this  Agreement  shall
survive  the  Effective  Date and  remain  in full  force and  effect  until the
expiration of the Royalty Payment Period;  provided,  however, that if notice of
any claim for indemnification  pursuant to Section 8.1 or Section 8.2 shall have
been given prior to the expiration of the Royalty Payment  Period,  the relevant
representations  and  warranties  shall survive for purposes of such claim until
such time as such claim is finally resolved.

                                      -10-
<PAGE>

Note:  Certain  portions of this document have been marked  "[C.I.]" to indicate
that   confidential   treatment  has  been   requested  for  this   confidential
information.  The  confidential  portions have been omitted and filed separately
with the Sec1urities and Exchange Commission.

10.   MISCELLANEOUS.

      10.1 Governing Law. This Agreement shall be governed by, and construed and
interpreted in accordance with, the laws of the Province of Ontario and the laws
of Canada applicable therein.

      10.2  Assignment.  Neither Party shall be entitled to assign its rights or
delegate its  obligations  hereunder  without the express written consent of the
other Party  hereto,  except  that:  (i) either  Party may assign its rights and
transfer  its duties  hereunder  to an  Affiliate  or to any  assignee of all or
substantially  all of its  business  (or that  portion  thereof  to  which  this
Agreement  relates) or in the event of such  Party's  merger,  consolidation  or
involvement in a similar transaction.  No assignment and transfer shall be valid
or  effective  unless done in  accordance  with this Section 10.2 and unless and
until  the  assignee/transferee  shall  agree  in  writing  to be  bound  by the
provisions of this Agreement.

      10.3 Dispute Resolution. Prior to the commencement of any litigation under
this Agreement, a senior executive of the Party considering commencement of such
litigation  shall to  notify a senior  executive  of the other  Party  that such
litigation  is  being  contemplated.  For at least  twenty  (20)  business  days
following  the  other  Party's  receipt  of such  notice,  the  Parties'  senior
executives shall use good faith efforts to make themselves  available to discuss
the dispute and  attempt to resolve the matter.  If the dispute is not  resolved
within  such twenty  (20)  business  days,  the Party  providing  the notice may
commence  litigation  with respect to the subject matter of the dispute and with
respect to any other  claims it may have and  thereafter  neither  Party  hereto
shall have any further obligation under this Section 10.3.

      10.4  Notices.  Any notice or request  required or  permitted  to be given
under or in  connection  with  this  Agreement  shall  be  deemed  to have  been
sufficiently  given if in writing and personally  delivered or sent by certified
mail (return receipt requested),  facsimile transmission (receipt verified),  or
overnight express courier service (signature  required),  prepaid,  to the Party
for which  such  notice is  intended,  at the  address  set forth for such Party
below:

               In the case of DUSA, to:

                                              DUSA Pharmaceuticals, Inc.
                                              25 Upton Drive
                                              Wilmington, Massachusetts 01887
                                              U.S.A.
                                              Attention: President and CEO
                                              Facsimile No.: (978) 657-9193
                                              Telephone No.: (978) 657-7500

               In the case of Draxis, to:

                                              Draxis Health, Inc.
                                              6870 Goreway Drive, Suite 200
                                              Mississauga, Ontario L4V 1P1
                                              Canada
                                              Attention: President
                                              Facsimile No.: (905) 677-5494
                                              Telephone No.: (905) 677-5500

                                      -11-
<PAGE>

Note:  Certain  portions of this document have been marked  "[C.I.]" to indicate
that   confidential   treatment  has  been   requested  for  this   confidential
information.  The  confidential  portions have been omitted and filed separately
with the Sec1urities and Exchange Commission.

                            With a copy to:

                                              Draxis Health Inc.
                                              16751 Trans-Canada Highway
                                              Kirkland, Quebec H9H 4J4
                                              Attention:  General Counsel
                                              Facsimile No.: (514) 630-7201
                                              Telephone No.: (514) 630-7060

or to such  other  address  for such Party as it shall  have  specified  by like
notice to the other Party, provided that notices of a change of address shall be
effective  only upon receipt  thereof.  If delivered  personally or by facsimile
transmission,  the date of delivery shall be deemed to be the date on which such
notice or request was given. If sent by overnight  express courier service,  the
date of delivery  shall be deemed to be the next  business day after such notice
or request was deposited with such service.  If sent by certified mail, the date
of delivery shall be deemed to be the fifth (5th) business day after such notice
or request was deposited with the U.S. or Canadian Postal Service.

      10.5 Books and Records.  Any books and records to be maintained under this
Agreement by a Party shall be maintained in accordance with GAAP.

      10.6 Further  Actions.  Each Party shall execute,  acknowledge and deliver
such  further  instruments,  and do all such other acts,  as may be necessary or
appropriate in order to carry out the purposes and intent of this Agreement.

      10.7 Use of Name;  Publicity.  Except as otherwise  provided  herein:  (i)
neither Party shall have any right, express or implied, to use in any manner the
name or other designation of the other Party, or any other trade name, trademark
or logo of the other Party for any purpose in connection with the performance of
this  Agreement;  and (ii)  neither  Party  shall make any  public  announcement
concerning this Agreement or the subject matter hereof without the prior written
consent of the other Party,  which consent shall not be  unreasonably  withheld;
provided  that  nothing in this  Section  10.7 shall  prevent  either Party from
issuing  statements  that such Party  determines  to be necessary to comply with
applicable law (including the disclosure requirements of the U.S. Securities and
Exchange  Commission,  NASDAQ or any other stock  exchange  on which  securities
issued  by  such  Party  are  traded).   In  the  event  of  a  required  public
announcement,  to the  extent  practicable  under the  circumstances,  the Party
making  such  announcement  shall  provide  the other  Party  with a copy of the
proposed text prior to such  announcement and with financial terms  sufficiently
in advance of the scheduled  release of such  announcement  to afford such other
Party a reasonable opportunity to review and comment upon the proposed text.

      10.8 Waiver.  A waiver by either Party of any of the terms and  conditions
of this  Agreement  in any  instance  shall not be deemed or  construed  to be a
waiver of such term or condition  for the future,  or of any  subsequent  breach
hereof. All rights, remedies, undertakings, obligations and agreements contained
in this Agreement shall be cumulative and none of them shall be in limitation of
any other remedy, right, undertaking, obligation or agreement of either Party.

      10.9 Amendment. No amendment, modification or supplement of any provisions
of this Agreement shall be valid or effective  unless made in writing and signed
by a duly authorized officer of each Party.

                                      -12-
<PAGE>

Note:  Certain  portions of this document have been marked  "[C.I.]" to indicate
that   confidential   treatment  has  been   requested  for  this   confidential
information.  The  confidential  portions have been omitted and filed separately
with the Sec1urities and Exchange Commission.

      10.10 Entire  Agreement.  This Agreement  including the Schedules  hereto,
together  with  the  surviving  sections  of  the  Assignment,   the  referenced
definitions  of the  License  and the CDA,  set forth the entire  agreement  and
understanding between the Parties as to the subject matter hereof and merges all
prior  discussions  and  negotiations  between them,  and neither of the Parties
shall be bound by any conditions,  definitions,  warranties,  understandings  or
representations  with  respect to such  subject  matter  other than as expressly
provided  herein or as duly set  forth on or  subsequent  to the date  hereof in
writing and signed by a proper and duly authorized  officer or representative of
the Party to be bound thereby.

      10.11  Parties  in  Interest.  All of the  terms  and  provisions  of this
Agreement  shall be binding upon,  inure to the benefit of and be enforceable by
the Parties hereto and their respective permitted successors and assigns.

      10.12  Construction  of  Agreement.  The  terms  and  provisions  of  this
Agreement  represent the results of  negotiations  between the Parties and their
representatives,  each of  which  has been  represented  by  counsel  of its own
choosing,  and neither of which has acted under  duress or  compulsion,  whether
legal,  economic or  otherwise.  Accordingly,  the terms and  provisions of this
Agreement  shall be interpreted and construed in accordance with their usual and
customary meanings, and each of the Parties hereto hereby waives the application
in connection with the  interpretation and construction of this Agreement of any
rule of law to the effect that  ambiguous  or  conflicting  terms or  provisions
contained in this Agreement shall be interpreted or construed  against the Party
whose  attorney  prepared  the  executed  draft  or any  earlier  draft  of this
Agreement.

      10.13  Waiver of Jury  Trial.  EACH PARTY  HERETO  HEREBY  WAIVES,  TO THE
FULLEST EXTENT  PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT TO ANY LITIGATION  DIRECTLY OR INDIRECTLY  ARISING OUT OF, UNDER
OR IN CONNECTION  WITH THIS  AGREEMENT.  EACH PARTY HERETO (i) CERTIFIES THAT NO
REPRESENTATIVE,  AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION,  SEEK
TO ENFORCE THAT FOREGOING WAIVER AND (ii)  ACKNOWLEDGES THAT IT HAS BEEN INDUCED
TO ENTER INTO THIS AGREEMENT AND THE RELATED  INSTRUMENTS,  AS  APPLICABLE,  BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 10.13.

      10.14 Descriptive Headings. The descriptive headings of this Agreement are
for  convenience  only,  and  shall be of no force or effect  in  construing  or
interpreting any of the provisions of this Agreement.

      10.15 Counterparts. This Agreement may be signed in counterparts, each and
every one of which shall be deemed an original,  notwithstanding  variations  in
format or file  designation  which may result from the electronic  transmission,
storage and  printing of copies of this  Agreement  from  separate  computers or
printers. Facsimile signatures shall be treated as original signatures.

                                      -13-
<PAGE>

Note:  Certain  portions of this document have been marked  "[C.I.]" to indicate
that   confidential   treatment  has  been   requested  for  this   confidential
information.  The  confidential  portions have been omitted and filed separately
with the Sec1urities and Exchange Commission.

      IN WITNESS  WHEREOF,  the parties hereto have caused their duly authorized
representatives to execute this Agreement.

DRAXIS HEALTH INC.                            DUSA PHARMACEUTICALS, INC.

By: /s/ Alicia Gualtieri                      By:  /s/ D. Geoffrey Shulman
    ------------------------------               -------------------------------
Name: Alicia Gualtieri                        D. GEOFFREY SHULMAN,
Title:  General Counsel and Secretary         President and CEO

PARTEQ  hereby  consents  and agrees to the  termination  of the  Assignment  in
accordance with the terms and conditions of this Agreement.

PARTEQ RESEARCH AND DEVELOPMENT INNOVATIONS

By: /s/ John P. Malloy
    ---------------------------

Name: John P. Malloy    Title:  President & CEO
      --------------            ---------------

                                      -14-
<PAGE>

Note:  Certain  portions of this document have been marked  "[C.I.]" to indicate
that   confidential   treatment  has  been   requested  for  this   confidential
information.  The  confidential  portions have been omitted and filed separately
with the Sec1urities and Exchange Commission.

                                                                 Exhibit 10(b.2)

                                  SCHEDULE 1.8

                              DRAXIS PATENT RIGHTS

NONE

<PAGE>

Note:  Certain  portions of this document have been marked  "[C.I.]" to indicate
that   confidential   treatment  has  been   requested  for  this   confidential
information.  The  confidential  portions have been omitted and filed separately
with the Sec1urities and Exchange Commission.

                                                                 Exhibit 10(b.2)

                                 SCHEDULE 3.2.1

                                    MATERIALS

1. Complete copy of the new drug submission original application.

2.  Copy  of  all  correspondence  to  and  from  Regulatory   Authorities  post
application submission.

3. Copy of notice of compliance letter.

4. Copy of all correspondence to and from Regulatory Authorities post receipt of
the notice of compliance letter.

5. Final agreed upon labeling for Kerastick(R) (if different from application).

<PAGE>

Note:  Certain  portions of this document have been marked  "[C.I.]" to indicate
that   confidential   treatment  has  been   requested  for  this   confidential
information.  The  confidential  portions have been omitted and filed separately
with the Sec1urities and Exchange Commission.

                                                                 Exhibit 10(b.2)

                                 SCHEDULE 3.2.2

                            CONTRACTORS AND PARTNERS

NONE

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