Document:

<PAGE>   1

                      FIRST AMENDMENT OF RIGHTS AGREEMENT

        THIS AMENDMENT (the "Amendment") dated November 21, 2000, to the Rights
Agreement (the "Rights Agreement") dated as of July 24, 1998 by and between
Computer Network Technology Corporation, a Minnesota corporation (the
"Company"), and ChaseMellon Shareholder Services, L.L.C., a New Jersey limited
liability company (the "Rights Agent").

                                  WITNESSETH:

        WHEREAS, the Company and the Rights Agent entered into the Rights
Agreement; and

        WHEREAS, on November 20, 2000, the Board of Directors of the Company, in
accordance with sections 27 and 28 of the Rights Agreement, determined it
desirable and in the best interests of the Company and its shareholders to amend
certain provisions of the Rights Agreement.

        NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:

        1.     AMENDMENT TO PARAGRAPH 7(B). Paragraph 7(b) of the Rights
Agreement is hereby amended and restated as follows:

        "The Purchase Price for each one-one-thousandth of a Preferred Share
        purchasable pursuant to the exercise of a Right shall be $100, and shall
        be subject to adjustment from time to time as provided in section 11 or
        13 hereof, and shall be payable in lawful money of the United States of
        America in accordance with paragraph (c) below."

        2.     AMENDMENT TO SECTION 7. Section 7 of the  Rights  Agreement is
amended by adding the following new paragraph (g) to the end of such section:

                      "(g) The Company shall use its best efforts to (i) file,
        as soon as practicable following the earliest date after a Person
        becomes an Acquiring Person and after the consideration to be delivered
        by the Company upon exercise of the Rights has been determined in
        accordance with Section 11(a)(iii) hereof, a registration statement
        under the Act (as defined in subparagraph 13(c)(i)), with respect to the
        securities purchasable upon exercise of the Rights on an appropriate
        form, (ii) cause such registration statement to become effective as soon
        as practicable after such filing, and (iii) cause such registration
        statement to remain effective (with a prospectus at all times meeting
        the requirements of the Act) until the earlier of (A) the date as of
        which the Rights are no longer exercisable for such securities, and (B)
        the date of the expiration of the Rights. The Company will also take
        such action as may be appropriate under, or to ensure compliance with,
        the securities or "blue sky" laws of the various states in connection
        with the exercisability of the Rights. The Company may temporarily
        suspend, for a period
<PAGE>   2

        of time not to exceed ninety (90) days after the date set forth in
        clause (i) of the first sentence of this section 7(g), the
        exercisability of the Rights in order to prepare and file such
        registration statement and permit it to become effective. Upon any such
        suspension, the Company shall issue a public announcement stating that
        the exercisability of the Rights has been temporarily suspended, as well
        as a public announcement at such time as the suspension has been
        rescinded (with prompt written notice of each such announcement to be
        given to the Rights Agent). In addition, if the Company shall determine
        that a registration statement is required following the Distribution
        Date, the Company may temporarily suspend (with prompt written notice
        thereof to the Rights Agent) the exercisability of the Rights until such
        time as a registration statement has been declared effective.
        Notwithstanding any provision of this Agreement to the contrary, the
        Rights shall not be exercisable in any jurisdiction if the requisite
        qualification in such jurisdiction shall not have been obtained, the
        exercise thereof shall not be permitted under applicable law, or a
        registration statement shall not have been declared effective."

        3.     AMENDMENT TO SECTION 26. The address for the Company stated in
section 26 of the Rights Agreement is hereby amended and restated to read as
follows:

                    "Computer Network Technology Corporation
                      6000 Nathan Lane North
                      Plymouth, Minnesota 55442
                      Attention:  President"

        4.     AMENDMENT TO EXHIBIT B. The first paragraph of Exhibit B of the
Rights Agreement is hereby amended to replace the use of the purchase price of
"$50" with "$100."

        5.     AMENDMENT TO EXHIBIT C. The first paragraph of Exhibit C of the
Rights Agreement is hereby amended to replace the use of the purchase price of
"$50" with "$100."

        6.     CONTINUING EFFECT. The Rights Agreement, except as amended
hereby, shall be and remain in full force and effect.

        7.     COUNTERPARTS. This Amendment may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed an
original, and all such counterparts shall together constitute but one and the
same instrument. Signature pages delivered by facsimile shall be binding to the
same extent as an original.

                           [Signatures On Next Page.]

                                    2
<PAGE>   3

        IN WITNESS WHEREOF, the parties have caused this Amendment to be
executed as of the day and year first above written.

                                        COMPUTER NETWORK TECHNOLOGY
                                        CORPORATION

                                        By /s/ Gregory T. Barnum
                                           ----------------------------------
                                           Name:Gregory T. Barnum
                                           Title: Chief Financial Officer and
                                           Secretary

                                        CHASEMELLON SHAREHOLDER
                                        SERVICES, L.L.C.

                                        By /s/ Georg Drake
                                           ----------------------------------
                                           Name:Georg Drake
                                           Title: Assistant Vice President

                                       3<PAGE>

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

                           Dated 2/nd/ February, 2000

                              ENDOREX NEWCO, LTD.

                                      AND

                     SCHEIN PHARMACEUTICAL (BERMUDA), LTD.

                   DEVELOPMENT, LICENCE AND SUPPLY AGREEMENT

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                                 Page 1 of 56
<PAGE>

                                   CONTENTS

CLAUSE 1    PRELIMINARY

CLAUSE 2    THE LICENCE

CLAUSE 3    INTELLECTUAL PROPERTY

CLAUSE 4    COMPETING PRODUCTS

CLAUSE 6    PROJECT TEAM AND MANAGEMENT COMMITTEE

CLAUSE 5    DEVELOPMENT OF THE SYSTEM, COMPOUND AND PRODUCT

CLAUSE 7    REGISTRATION OF THE PRODUCT

CLAUSE 8    MARKETING AND PROMOTION OF THE PRODUCT

CLAUSE 9    SUPPLY OF THE PRODUCT

CLAUSE 10   SUPPLY OF THE COMPOUND

CLAUSE 11   FINANCIAL PROVISIONS

CLAUSE 12   PAYMENTS, REPORTS AND AUDITS

CLAUSE 13   DURATION AND TERMINATION

CLAUSE 14   CONSEQUENCES OF TERMINATION

CLAUSE 15   WARRANTY AND INDEMNITY

CLAUSE 16   CUSTOMER COMPLAINTS AND PRODUCT RECALL

CLAUSE 17   MISCELLANEOUS PROVISIONS

SCHEDULE 1  ENDOREX JV PATENTS

SCHEDULE 2  SCHEIN COMPOUND PATENTS

SCHEDULE 3  THE PROJECT

SCHEDULE 4  PROJECT SYSTEM SPECIFICATIONS

SCHEDULE 5  PRODUCT SPECIFICATIONS

------------------------------------------------------------------------------
                                 Page 2 of 56
<PAGE>

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

BETWEEN:
-------

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

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

RECITALS:
--------

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

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

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

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

NOW IT IS HEREBY AGREED AS FOLLOWS:

                            CLAUSE 1 - PRELIMINARY

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

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

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

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

------------------------------------------------------------------------------
                                 Page 3 of 56
<PAGE>

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

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

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

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

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

     DEVELOPMENT COST shall mean the fully allocated cost, which is the sum
     total of all development and other related costs for the SYSTEM incurred
     after the EFFECTIVE DATE, including direct labour, direct materials and
     supplies, variable labour, overhead and attributable administration,
     quality control, quality assurance and other costs, whether incurred by
     ENDOREX JV, its agents or any sub-contractor of ENDOREX JV; such costs to
     be calculated in accordance with generally accepted accounting principles.
     In the case of development services which are provided by a third party,
     the DEVELOPMENT COST of such services shall comprise the amount actually
     paid, as well as any other directly attributable costs incurred by the
     Party.

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

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

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

     EFFECTIVE DATE shall mean 2/nd/ February, 2000.

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

____________________________

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

--------------------------------------------------------------------------------
                                 Page 4 of 56
<PAGE>

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

     ENDOREX JV shall mean Endorex Newco, Ltd.

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

     ENDOREX JV IMPROVEMENTS shall mean any and all improvements or
     enhancements, patentable or otherwise, that have been conceived, created or
     developed during the TERM which can be usefully applied to the SYSTEM
     and/or the PRODUCT, including the manufacture thereof, except for (i)
     improvements relating exclusively to the COMPOUND, or (ii) any improvements
     that are subject to contractual obligations of ENDOREX JV to third parties.
     If the inclusion of an ENDOREX JV IMPROVEMENT is restricted or limited by a
     third party agreement, ENDOREX JV shall use reasonable commercial efforts
     to exclude or where applicable minimise any such restriction or limitation.

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

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

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

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

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

     FCA shall have the meaning as such term is defined in the ICC Incoterms,
     1990,

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                                 Page 5 of 56
<PAGE>

     International Rules for the Interpretation of Trade Terms, ICC Publication
     No. 460.

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

     FIELD shall mean the treatment of any iron overloading disorder by
     subcutaneously delivering the COMPOUND using the SYSTEM.

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

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

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

     LICENCE FEES shall mean any monetary amounts or non cash consideration,
     other than NSP or ROYALTY, received by SCHEIN or its AFFILIATES from a
     third party in relation to the development and commercialisation of the
     PRODUCT outside of the USA, including but not limited to license fees,
     development fees or any other one-off or ongoing fees.

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

     MANUFACTURING COST shall mean the fully allocated cost which is the sum
     total of all production related costs for the COMPOUND (subject to Clause
     10.15), the SYSTEM and PRODUCT, as applicable, (direct labour, direct
     materials, facility overhead and expenses which can be allocated, QA/QC and
     analytical charges, packaging costs for the COMPOUND and/or the SYSTEM
     including, but not limited to, stability and RHA fees) accounted for in
     accordance with United States Generally Accepted Accounting Principles
     applied on a consistent basis.  In the case of COMPOUND, SYSTEM or
     materials which are purchased from a third party, the MANUFACTURING COST of
     such COMPOUND or SYSTEM shall comprise the amount actually paid, including
     import duties, transport and handling costs and other directly attributable
     costs.

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

     NSP shall, subject to the provisions of Clauses 11.4.5, mean in the case of
     PRODUCT sold by SCHEIN or an AFFILIATE or a SUBLICENSEE, that sum
     determined by deducting from the aggregate gross IN MARKET sales proceeds
     billed for the

--------------------------------------------------------------------------------
                                 Page 6 of 56
<PAGE>

     PRODUCT by SCHEIN or, its AFFILIATE or a SUBLICENSEE, as the case may be,
     in accordance with generally accepted accounting principles:-

     (a)   customs duties or other taxes (excluding income or corporation tax),
           directly related to the sale of the PRODUCT which are paid by SCHEIN
           or its AFFILIATE or SUBLICENSEES as the case may be;

     (b)   a discount from the gross sales proceeds to cover such normal costs
           as are incurred by SCHEIN or its AFFILIATES or SUBLICENSEES, as the
           case may be, in respect of transport, shipping insurance, returns and
           discounts related to the sale of the PRODUCT, subject to a cap of 5%
           of the sum of the aggregate gross IN MARKET sales proceeds less the
           deductible items at (a) above.

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

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

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

     PROFIT shall mean NSP less (i) MANUFACTURING COST of the PRODUCT, (ii)
     MANUFACTURING COST of the COMPOUND, and (iii) MARKETING AND SELLING
     EXPENSES; and plus, where applicable, any ROYALTY.

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

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

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

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

     ROYALTY shall mean any amount received by SCHEIN, its AFFILIATES or
     SUBLICENSEES as a royalty on sales of the PRODUCT in the TERRITORY.

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                                 Page 7 of 56
<PAGE>

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

     SCHEIN COMPOUND IMPROVEMENTS shall mean any and all improvements or
     enhancements, patentable or otherwise, relating exclusively to the COMPOUND
     which are owned or licensed by SCHEIN and which can be usefully applied to
     the PRODUCT including the manufacture or use thereof which were first
     conceived, developed, invented or reduced to practice by SCHEIN or ENDOREX
     JV during the TERM except for any improvements that are subject to
     contractual obligations of SCHEIN or ENDOREX JV to third parties.  If the
     inclusion of a SCHEIN COMPOUND IMPROVEMENT is restricted or limited by a
     third party agreement, SCHEIN or ENDOREX JV as the case may be shall use
     reasonable commercial efforts to exclude or where applicable minimise any
     such restriction or limitation.

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

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

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

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

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

     TECHNOLOGICAL COMPETITOR shall mean a company or corporation having a
     substantial part of its business in the transdermal or device drug
     delivery, research, development and manufacturing areas of the
     pharmaceutical industry, with a market capitalization of at least $100
     million, in the case of a publicly-held company, or at least $75 million of
     annual revenues, in the case of a privately-held company.  For the

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                                 Page 8 of 56
<PAGE>

     avoidance of doubt, Bayer AG shall not be deemed a TECHNOLOGICAL COMPETITOR
     of ENDOREX JV.

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

     TERRITORY shall mean all of the countries of the world.

     $ shall mean United States Dollars.

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

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

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

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

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

                            CLAUSE 2 - THE LICENCE

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

     2.1.1  Subject to the terms of this Agreement, ENDOREX JV hereby grants to
            SCHEIN, and SCHEIN hereby accepts for the TERM, an exclusive licence
            to the ENDOREX JV BACKGROUND TECHNOLOGY and ENDOREX JV IMPROVEMENTS
            to package, import, use, offer for sale and sell and otherwise
            distribute the PRODUCT for the FIELD in the TERRITORY.

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

     2.2.1  Any appointment of a SUBLICENSEE for the PRODUCT in any country of
            the TERRITORY outside of [********] shall be determined by the
            MANAGEMENT COMMITTEE and shall require the prior unanimous consent
            of the MANAGEMENT COMMITTEE. In the event that such unanimous
            decision is made by the MANAGEMENT COMMITTEE, SCHEIN shall grant
            such SUBLICENSEE a sub-license to package, import, use, offer for
            sale and sell the PRODUCT for the FIELD in such country of the

________________________________

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

--------------------------------------------------------------------------------
                                 Page 9 of 56
<PAGE>

            TERRITORY. [********]only shall be appointed per country and no sub-
            licence shall be granted to a TECHNOLOGICAL COMPETITOR of ENDOREX
            JV.

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

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

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

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

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

     2.2.7  For the avoidance of doubt:-

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

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

                        CLAUSE 3 - INTELLECTUAL PROPERTY

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

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

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

--------------------------------------------------------------------------------
                                 Page 10 of 56
<PAGE>

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

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

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

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

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

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

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

            (2)  SCHEIN shall promptly notify ENDOREX JV in writing of any
                 patent applications filed by SCHEIN under this Clause 3.3.2 and
                 upon request
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                                 Page 11 of 56
<PAGE>

                 by ENDOREX JV shall provide copies to ENDOREX JV to such patent
                 applications and any patents issuing thereon, to the extent
                 reasonably required in order for ENDOREX JV to fulfil its
                 obligations under this Agreement.

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

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

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

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

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

     3.4.1  SCHEIN and ENDOREX JV shall promptly inform the other in writing of
            any alleged infringement of which it shall become aware by a third
            party of any patents within the SCHEIN COMPOUND PATENTS, SCHEIN
            COMPOUND IMPROVEMENTS, ENDOREX JV PATENTS or ENDOREX JV IMPROVEMENTS
            and provide such other with any available evidence of infringement.

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

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

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                                 Page 12 of 56
<PAGE>

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

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

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

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                                 Page 13 of 56
<PAGE>

3.5  Defence:
     -------

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

     3.5.2  Solely to the extent set out in Clause 3.5.4, ENDOREX JV shall
            indemnify SCHEIN against a claim referred to in Clause 3.5.1,
            provided that ENDOREX JV should have reasonably been aware of such
            third party patent rights as a result of ENDOREX JV's efforts in the
            preparation and prosecution of ENDOREX JV PATENTS as of the
            EFFECTIVE DATE. SCHEIN shall not acknowledge to the third party or
            to any other person the validity of any claims of such a third
            party, and shall not compromise or settle any claim or proceedings
            relating thereto without the prior written consent of ENDOREX JV,
            not to be unreasonably withheld or delayed. At its option, ENDOREX
            JV may elect to take over the conduct of such proceedings from
            SCHEIN with counsel of ENDOREX JV's choice. In such event ENDOREX JV
            shall keep SCHEIN advised of all material developments in the said
            proceedings and shall not settle or compromise such proceedings
            without the prior written consent of SCHEIN which shall not be
            unreasonably withheld or delayed. Should ENDOREX JV not reasonably
            have had knowledge of such third party patent rights as a result of
            ENDOREX JV's efforts in the preparation and prosecution of ENDOREX
            JV PATENTS as of the EFFECTIVE DATE, ENDOREX JV shall not indemnify
            SCHEIN against any such claim.

     3.5.3  In the event that a claim or proceeding is brought against SCHEIN by
            a third party alleging that the manufacture, sale, offer for sale or
            use of the SYSTEM and/or the PRODUCT as claimed exclusively in the
            ENDOREX JV PATENTS or in a patented ENDOREX JV IMPROVEMENT infringes
            the patent rights of such a third party and such claim falls outside
            of the scope of the indemnity granted by ENDOREX JV to SCHEIN
            pursuant to Clause 3.5.2, SCHEIN and ENDOREX JV shall meet to
            discuss in what manner the said proceedings should be defended. In
            accordance with their obligations pursuant to Clause 15.9.5, the
            Parties shall take such action as is reasonable, such as to cease
            selling the PRODUCT, or to re-engineer or modify the PRODUCT so as
            to avoid infringing the patent rights of a third party, or entering
            into a license agreement with such third party after due
            consideration of each of the party's interest in the matter.

     3.5.4  ENDOREX JV's maximum liability pursuant to Clause 3.5.2 for damages
            and costs in relation to all third party claims shall be a reduction
            in full of the royalty payable by SCHEIN to ENDOREX JV pursuant to
            Clause 11.4 for such period until such reduction in royalty amounts
            to $5 million (five million United States Dollars) plus interest
            accruing at 8% per annum; provided however in the event that such
            royalty on the PRODUCT is not available or sufficient to pay such
            obligations, ENDOREX JV shall, at its sole discretion,

--------------------------------------------------------------------------------
                                 Page 14 of 56
<PAGE>

            have the option, to either (i) pay such obligations over such 5 year
            period in equal quarterly installments of principal and interest, or
            (ii) pay the sum of $5 million (five million United States Dollars)
            in one installment. ENDOREX JV shall be entitled to apply the
            reasonable costs and expenses incurred by it in defending such
            claims against the said sum of US$5 million (five million United
            States Dollars. Any reduction in royalty shall apply for so long as
            is necessary to discharge ENDOREX JV's patent liability of $5
            million (five million United States Dollars) pursuant to this Clause
            3.5. ENDOREX JV shall be entitled to apply the reasonable costs and
            expenses incurred by it in defending such claims against the said
            reduction in royalty. In accordance with its obligations pursuant to
            Clause 15.9.5, SCHEIN shall favourably consider taking such action
            as is reasonable, such as to cease selling the PRODUCT so as to
            avoid infringing the patent rights of a third party, or entering
            into a license agreement with such third party after due
            consultation with ENDOREX JV.

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

     3.5.6  In the event that a claim or proceeding is brought against ENDOREX
            JV by a third party alleging that the manufacture, offer for sale,
            sale, distribution or use of the COMPOUND, including but not limited
            to the delivery of such COMPOUND through continuous subcutaneous
            administration, regardless of the device in which it is being
            subcutaneously administered, infringes any adversely held patent or
            involves the unauthorised use of any other intellectual property in
            the TERRITORY, ENDOREX JV shall promptly advise SCHEIN of such
            threat or suit. Subject to ENDOREX JV's obligations pursuant to the
            provisions of Clause 3.5.2, Clause 3.5.3, and Clause 3.5.4., SCHEIN
            shall indemnify ENDOREX JV against such a claim; provided that
            ENDOREX JV shall not acknowledge to the third party or to any other
            person the validity of the claims of such a third party and shall
            not compromise or settle any claim or proceedings relating thereto
            without the written consent of SCHEIN, which shall not be
            unreasonably withheld or delayed. At its option, SCHEIN may elect to
            take over the conduct of such proceedings from ENDOREX JV with
            counsel of SCHEIN's choice. In such event SCHEIN shall keep ENDOREX
            JV advised of all material developments in the said proceedings and
            shall not settle or compromise such proceedings without the consent
            of ENDOREX JV which shall not be unreasonably withheld or delayed.

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

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

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                                 Page 15 of 56
<PAGE>

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

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

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

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

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

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

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

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

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

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                                 Page 16 of 56
<PAGE>

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

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

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

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

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

                         CLAUSE 4 - COMPETING PRODUCTS

4.1  Subject to the provisions of Clause 4.2, ENDOREX JV and SCHEIN shall not
     promote, license, manufacture, market, or sell any external subcutaneous
     infusion device for the continuous delivery of the COMPOUND other than the
     PRODUCT ("COMPETING PRODUCT") in the TERRITORY during the INITIAL PERIOD.

4.2  Notwithstanding the provisions of Clause 4.1, SCHEIN will be permitted to
     market and sell the COMPOUND in any country in the TERRITORY up until
     receipt of the DEVICE REGULATORY APPROVAL for the SYSTEM in such country
     and for a period of six months after such approval, subject to any
     governmental obligation to continue to make available the COMPOUND.  During
     the six months after receipt of the DEVICE REGULATORY APPROVAL in each
     country of the TERRITORY, SCHEIN shall take reasonable steps to reduce and
     eventually phase out its marketing and sale of the COMPOUND in such
     country.  After the expiration of the six month

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                                 Page 17 of 56
<PAGE>

      period, subject only to any governmental obligation to continue to make
      available the COMPOUND, SCHEIN shall no longer market or sell the
      COMPOUND, other than the PRODUCT or as otherwise permitted pursuant to
      this Agreement, for the remaining term of this Agreement.

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

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

4.5.  In the event that the Alternative Compound will be administered by a route
      other than subcutaneous delivery, or the SYSTEM is not a suitable,
      competitive delivery system for such Alternative Compound, then in
      consideration of the expenditure incurred by ENDOREX JV in developing the
      SYSTEM for the COMPOUND, SCHEIN will compensate ENDOREX JV for any lost
      PROFIT sustained in any country in the TERRITORY during the six (6) year
      period commencing upon the execution of this AGREEMENT as follows:

          SCHEIN will pay to ENDOREX JV a quarterly payment equal to (i) the
          [********] during the two calendar quarters immediately preceding the
          calendar quarter in which SCHEIN launches the product containing the
          Alternative Compound less (ii) [********] for each such calendar
          quarter;

      provided, however, that in the event during such period a third party
      launches a product which is competitive with the PRODUCT and [********],
      the Parties shall negotiate in good faith a revised compensation formula
      to take into account the effect of such third party's product on the sales
      of the PRODUCT.

               CLAUSE 5 - PROJECT TEAM AND MANAGEMENT COMMITTEE

5.1   It is recognised by the parties that a significant resource shall be
      required from each party to accomplish successful DEVICE REGULATORY
      APPROVAL in the TERRITORY and launch of the PRODUCT, particularly in the
      co-ordination of logistics, finalisation of various specifications,
      preparation and agreement of clinical

_______________________________

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

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                                 Page 18 of 56
<PAGE>

     study designs and protocols, methodologies transfer, supply and packaging
     configurations, shipping and handling procedures and for this purpose, the
     parties will establish a PROJECT TEAM.

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

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

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

          (i)     supervising the PROJECT TEAM,

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

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

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

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

5.6  In the event of a dispute between the project managers of each Party on the
     PROJECT TEAM, the project managers shall refer the dispute to the
     MANAGEMENT COMMITTEE, who shall discuss the matter and attempt to reach an
     amicable solution.  In the event that the MANAGEMENT COMMITTEE cannot
     resolve the

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                                 Page 19 of 56
<PAGE>

     dispute amicably, the said officers shall refer the dispute to the Chairman
     of ENDOREX JV and the Chief Executive Officer of SCHEIN who shall discuss
     the matter and attempt to reach an amicable solution. The provisions of
     this Clause 5.6 shall be without prejudice to the Parties' other rights and
     remedies.

5.7  The Chairman of ENDOREX JV and the Chief Executive Officer of SCHEIN shall,
     if they are unable to resolve a dispute or difference when it is referred
     to them under Clause 5.6, refer the matter to an independent expert who is
     knowledgeable of the medical device/drug delivery industry (the "Expert").
     The selection of the Expert shall be mutually agreed upon by the Chairman
     of ENDOREX JV and the Chief Executive Officer of SCHEIN.  The Expert shall
     be selected having regard to his suitability to determine the particular
     dispute or difference on which he is being requested to determine.  Unless
     otherwise agreed between the Chief Executive Officers, the following rules
     shall apply to the appointment of the Expert.  The fees of the Expert shall
     be shared equally between the Parties in dispute.  The Expert shall be
     entitled to inspect and examine all documentation and any other material
     which he may consider to be relevant to the dispute.  He shall afford each
     Party a reasonable opportunity (in writing or orally) of stating reasons in
     support of such contentions as each Party may wish to make relative to the
     matters under consideration.  The Expert shall give notice in writing of
     his determination to the Parties within such time as may be stipulated in
     his terms of appointment or in the absence of such stipulation as soon as
     practicable.  The Parties shall request that the Expert in any event
     complete and deliver his findings within four (4) weeks from the reference
     of the dispute or difference to him.  Any determination by the Expert of a
     dispute or difference shall not be final and binding on the Parties.

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

          CLAUSE 6 - DEVELOPMENT OF THE SYSTEM, COMPOUND AND PRODUCT

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

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

___________________________

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

--------------------------------------------------------------------------------
                                 Page 20 of 56
<PAGE>

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

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

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

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

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

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

     The Parties agree that the cost of any such additional development work
     shall [********].  In the event that additional expenditure in excess of
     the [********] required in the aggregate to develop the SYSTEM and to meet
     the PRODUCT SPECIFICATIONS by Clause 6.4 above (i.e., [********] for SYSTEM
     Development) and this Clause 6.5 (i.e., additional development work of up,
     [********] to meet the PRODUCT SPECIFICATIONS), the Parties shall meet to
     discuss the matter in good faith.

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

__________________________

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

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     necessary, formulating, all COMPOUND for delivery with the SYSTEM.

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

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

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

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

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

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

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6.9   The PROJECT TEAM shall be responsible for identifying any additional
      development work outside of the PROJECT which may be required to
      commercialise the PRODUCT in any country of the TERRITORY outside of
      [********] ("[********] Development Work").  The Parties agree that
      [********] shall not be performed until a commercial agreement has been
      concluded [********] of the TERRITORY unless otherwise agreed upon by the
      Parties.  It is the Parties intention that [********] of the TERRITORY.
      The Parties agree that ENDOREX JV's charges to SCHEIN for any such work
      shall be as set out in Clause 11.2 of the Agreement.

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

6.11  SCHEIN shall supply to ENDOREX JV such quantities of COMPOUND [********]as
      ENDOREX JV reasonably requires for the development of the SYSTEM in
      accordance with the PROJECT.  The quantity and delivery dates of such
      quantities of COMPOUND shall be agreed upon by the Parties during the
      PROJECT.

                     CLAUSE 7 - REGISTRATION OF THE PRODUCT

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

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

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

7.4   SCHEIN shall notify ENDOREX JV of the date of submission of any ANDA or
      DEVICE REGULATORY APPLICATION in any country of the TERRITORY and shall
      also notify ENDOREX JV of any ANDA APPROVAL or DEVICE

___________________________

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

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      REGULATORY APPROVAL as soon as is reasonably possible following said
      approval.

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

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

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

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

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

7.10  SCHEIN shall indemnify and hold harmless ENDOREX JV from and against all
      claims, damages, losses, liabilities and expenses to which ENDOREX JV may
      become liable relating to or arising out of SCHEIN's bad faith, negligence
      or intentional misconduct in connection with the filing or maintenance of
      the DEVICE REGULATORY APPLICATIONS and DEVICE REGULATORY APPROVALS in the
      TERRITORY. ENDOREX JV shall indemnify and hold harmless SCHEIN from and
      against all claims, damages, losses, liabilities and expenses to which
      SCHEIN may become liable relating to or arising out of ENDOREX JV's bad
      faith, negligence or intentional misconduct in connection with the filing
      or maintenance of the MAF.

____________________________

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

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

               CLAUSE 8 - MARKETING AND PROMOTION OF THE PRODUCT

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

8.2   In general and consistently with the overall goals of optimizing PRODUCT
      sales, profits and return on investments, SCHEIN shall employ all
      commercially reasonable efforts to develop and maintain sales of the
      PRODUCT in the TERRITORY and for a period of [********] years from
      approval of the PRODUCT shall employ a level of advertising, sales,
      marketing, and promotion efforts in the TERRITORY which is: (1)
      commensurate with that put forth by other pharmaceutical companies of
      similar size to SCHEIN for prescription products of similar market
      potential for similar audience size/type in the TERRITORY, and (2)
      sufficient with respect to the potential for the TERRITORY to fully
      exploit the market potential for the PRODUCT with the understanding that
      advertising, sales, marketing and promotional expenses in the
      [********]after launch shall not, without the MANAGEMENT COMMITTEE's
      consent, exceed [********]of the forecasted NSP, as determined by the
      MANAGEMENT COMMITTEE. After the initial [********] year period all
      dedicated direct marketing and selling expenses for the PRODUCT shall be
      decided upon by the MANAGEMENT COMMITTEE at least 6 months in advance. At
      least 3 months prior to the planned launch of the PRODUCT in the USA,
      SCHEIN will outline to the MANAGEMENT COMMITTEE the structure of the
      promotional activities to be carried out by SCHEIN for the period up to
      the first commercial sale of the PRODUCT and for a period of [********]
      thereafter. SCHEIN shall both prior to and subsequent to the
      launch of a PRODUCT communicate with the MANAGEMENT COMMITTEE regarding
      its objectives for and performance of such PRODUCT in the USA and in all
      of the other countries of the TERRITORY. At

___________________

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

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     meetings of the MANAGEMENT COMMITTEE, SCHEIN shall report on the ongoing
     sales performance of the PRODUCT in the TERRITORY, including marketing
     approaches, educational campaigns, promotional and advertising materials
     and campaigns, sales plans, pricing and results, performance against
     competitors, its objectives for the PRODUCT and its plans for the next year
     of the Agreement. In addition the MANAGEMENT COMMITTEE shall review the
     quarterly PROFIT statements and in particular the calculation of PROFIT,
     NSP and the deductible items listed in the definition of NSP.

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

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

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

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

___________________

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

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     materials within 14 days of receipt for information purposes, SCHEIN shall
     be entitled to proceed to use such trade packaging, cartons and labels and
     other printed materials in connection with the sale of the PRODUCT provided
     however, that in no event shall such materials contain any statement which
     may have a damaging or harmful effect on the commercialisation of the
     PRODUCT and/or the goodwill of ENDOREX JV in the TERRITORY.

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

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

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

                        CLAUSE 9 - SUPPLY OF THE PRODUCT

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

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

_____________________

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

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

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

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

     Subject to the agreement of the PROJECT TEAM, the calendar quarterly
     forecasts (other than for LAUNCH STOCKS) shall not increase or decrease
     from one quarter to the next by more than [********] in terms of volume of
     the PRODUCT ordered. Notwithstanding the foregoing, ENDOREX JV will use its
     reasonable efforts to fulfil SCHEIN's requirements in excess of forecasted
     amounts, but shall not be obliged to meet such requirements if it is not
     reasonably practicable to do so provided that ENDOREX JV shall supply the
     units of PRODUCT so ordered but not immediately available as soon
     thereafter as reasonably practicable.

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

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

_____________________

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

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

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

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

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

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

______________________

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

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

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

9.14  Subject to Clause 17.5 hereof, in the event that (i) ENDOREX JV fails to
      supply a shipment of the PRODUCT which has been ordered by SCHEIN for a
      period [********] from the receipt of a firm purchase order or (ii) there
      are delays in filling [********] which delays [********] when each delay
      is measured beginning on the [********] of the corresponding firm purchase
      order or (iii) there is a shortfall [********] delivered by ENDOREX JV
      which on [********]of the total amount of [********], then ENDOREX JV
      shall promptly notify SCHEIN in writing of the cause of the failure, delay
      or shortfall in supply of the PRODUCT. Unless such failure, delay or
      shortfall is caused by SCHEIN or any other supplier of the COMPOUND or
      other raw materials, if ENDOREX JV has not remedied the failure, delay or
      shortfall within a [********]of such notice, ENDOREX JV and SCHEIN shall
      discuss appropriate remedies which may include, subject to preexisting
      licensing agreements by and between ENDOREX JV and any third party,
      granting SCHEIN a licence to manufacture the PRODUCT itself or appoint an
      alternative manufacturer of the PRODUCT. In the event that SCHEIN is
      granted such a production licence, ENDOREX JV shall without charge:

      9.14.1  provide SCHEIN (or SCHEIN's designee) with any technical data
              necessary for the carrying of this into effect, which information
              or data shall be deemed to be confidential information hereunder.
              To this end, ENDOREX JV shall impart to SCHEIN the documentation
              constituting the required material support, more particularly
              practical performance advice, shop practice, specifications as to
              materials to be used and control methods. For the avoidance of
              doubt, the Parties confirm that ENDOREX JV shall receive the
              royalty set out in Clause 11.3 from the PROFIT on sales of all
              PRODUCT manufactured by SCHEIN or any alternative manufacturer
              appointed by SCHEIN in accordance with this Clause 9.14 in
              consideration of the licence of the ENDOREX JV PATENTS; and

      9.14.2  assist SCHEIN for the working up and use of the ENDOREX JV
              BACKGROUND TECHNOLOGY and ENDOREX JV IMPROVEMENTS, the machinery
              tools and equipment necessary to manufacture the PRODUCT as well
              as for the training of SCHEIN's personnel. For this purpose,

______________________

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

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                                 Page 30 of 56
<PAGE>

              ENDOREX JV shall receive SCHEIN's scientific staff in its premises
              for periods the term of which shall be decided by common consent.

       When ENDOREX JV has remedied the situation that prevented ENDOREX JV from
       satisfying SCHEIN's requirements and is once again able to fulfil its
       obligations to supply the SYSTEM as provided for in this Agreement,
       SCHEIN shall cease manufacturing the PRODUCT or purchasing the PRODUCT
       from an alternative manufacturer [********] and shall resume purchasing
       the PRODUCT from ENDOREX JV pursuant to the terms of this Agreement.

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

                      CLAUSE 10 - SUPPLY OF THE COMPOUND

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

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

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

10.4.  SCHEIN shall supply to ENDOREX JV such quantities of COMPOUND [********]
       as ENDOREX JV requires for the manufacture and supply of PRODUCT to
       SCHEIN and any SUBLICENSEES for commercial sale or promotional samples in
       all of the countries of the TERRITORY. COMPOUND shall be supplied by
       SCHEIN in accordance with orders placed by ENDOREX JV. At the placement
       of such orders, ENDOREX JV shall notify SCHEIN of then remaining amount
       of stocks of COMPOUND held by ENDOREX JV. SCHEIN shall be responsible for
       ensuring that ENDOREX JV receives delivery of COMPOUND in such quantities
       and at such times so as to ensure that ENDOREX JV has sufficient stocks
       of the COMPOUND to meet SCHEIN's firm purchase orders and supply the
       PRODUCT to SCHEIN. SCHEIN

______________________

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

--------------------------------------------------------------------------------
                                 Page 31 of 56
<PAGE>

       shall furnish the appropriate certificate of analysis with each delivery
       of COMPOUND. ENDOREX JV shall be entitled to rely upon such certificates
       of analysis without the necessity of additional testing. As of the date
       of this Agreement, the Parties agree that adequate quantities of COMPOUND
       shall be delivered by SCHEIN to ENDOREX JV at least [********] in advance
       of the date on which the delivery of PRODUCT is scheduled to be made to
       SCHEIN or such longer period as may be agreed by the PROJECT TEAM. During
       the period in which ENDOREX JV is manufacturing LAUNCH STOCKS, the
       foregoing period of [********] shall be increased to [********].

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

10.6.  All quantities of the COMPOUND delivered by SCHEIN hereunder shall
       conform to the COMPOUND SPECIFICATIONS and all prevailing laws and
       regulatory requirements of the country where the COMPOUND is manufactured
       and intended to be sold.

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

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

10.9.  All claims for failure of any shipment of the COMPOUND to conform to the
       COMPOUND SPECIFICATIONS must be made by ENDOREX JV to SCHEIN in writing
       within 30 days following delivery except in the case of latent defects.
       Claims for latent defects shall be made by ENDOREX JV to SCHEIN in
       writing as soon as possible but in any event within 30 days of discovery.
       Failure to make timely claims in

______________________

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

--------------------------------------------------------------------------------
                                 Page 32 of 56
<PAGE>

        the manner prescribed shall constitute acceptance of the shipment.
        COMPOUND which has been delivered and which has been shown within the
        designated period not to conform to COMPOUND SPECIFICATIONS shall be
        replaced at SCHEIN's cost within 90 days of the receipt by SCHEIN of the
        failed COMPOUND.

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

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

10.12   SCHEIN shall indemnify ENDOREX JV against any claims, actions or losses
        arising from any failure, inability or delay in supplying the PRODUCT to
        customers arising out of any failure inability or delay by SCHEIN in
        supplying the COMPOUND to ENDOREX JV or ENDOREX JV's designee in
        accordance with the provisions of this Clause 10.

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

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

10.15   In the event that any royalty, licence fees or other compensation
        obligations related to the COMPOUND and/or the bulk substance which is
        used to formulate the COMPOUND ("Bulk Substance") are payable to any
        third parties as a result of the use of the COMPOUND in the PRODUCT,
        SCHEIN shall be solely responsible for the payment of any such royalty,
        licence fee or other compensation obligations. For the

--------------------------------------------------------------------------------
                                 Page 33 of 56
<PAGE>

        avoidance of doubt, any such royalty, licence fee or other compensation
        obligations relating to the COMPOUND and/or the Bulk Substance shall not
        be included in the calculation of the MANUFACTURING COST of the COMPOUND
        and shall not be deducted from the PROFIT.

10.16.  SCHEIN entered into a supply agreement with Pharmacia & Upjohn Company
        ("PNU") on 1st July 1991 pursuant to which SCHEIN was appointed the
        exclusive worldwide purchaser of the Bulk Substance from PNU. This
        Agreement was terminated by PNU by letter dated 30th July 1999. SCHEIN
        and PNU are presently engaged in discussions regarding future supply of
        such Bulk Substance to SCHEIN. The Parties acknowledge that it is
        critical for the success of the PRODUCT that SCHEIN (i) secure a
        continuous supply of the Bulk Substance, and (ii) obtain supply rights
        to the Bulk Substance. SCHEIN shall use its best commercial efforts to
        ensure a continuous and uninterrupted supply of the Bulk Substance for
        the COMPOUND throughout the TERM of this Agreement. ENDOREX JV shall be
        entitled, at its sole discretion, to forthwith terminate this Agreement,
        in the event that SCHEIN:

        10.16.1  at any time during the TERM of this Agreement, (i) fails to
                 supply a shipment of the COMPOUND which has been ordered by
                 ENDOREX JV for a period exceeding [********] from the receipt
                 of an order from ENDOREX JV or (ii) there are delays in filling
                 each of the [********] successive orders which delays
                 cumulatively exceed [********] when each delay is measured
                 beginning on the 91st day from receipt of the corresponding
                 orders or (iii) there is a shortfall in [********] successive
                 shipments delivered by SCHEIN which on a cumulative basis
                 exceeds [********] of the total amount of said [********]
                 orders; or

        10.16.2  fails to, within [********] from the EFFECTIVE DATE, enter into
                 a supply arrangement with [********], or enter into any other
                 arrangement which secures SCHEIN e supply rights to the Bulk
                 Substance for the TERM of this Agreement.

                       CLAUSE 11 - FINANCIAL PROVISIONS

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

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

_____________________

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

--------------------------------------------------------------------------------
                                 Page 34 of 56
<PAGE>

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

      11.2.1  All work that ENDOREX JV shall perform pursuant to the PROJECT in
              order to meet the PROJECT SYSTEM SPECIFICATIONS in accordance with
              Clause 6.4 hereof, shall be charged [********].

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

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

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

              (i)  SCHEIN shall have no entitlement to any profit which may be
                   made by ENDOREX JV from any such development work performed
                   by ENDOREX JV on the SYSTEM for any such SUBLICENSEE; and

              (ii) ENDOREX JV shall have no entitlement to any profit which may
                   be made by SCHEIN from any such development, trial,
                   regulatory applications or other work performed by SCHEIN on
                   the COMPOUND for any such SUBLICENSEE.

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

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

     11.3.2   At the end of each quarter, ENDOREX JV shall retrospectively
              determine the exact amount of [********] for the preceding
              calendar quarter period and provide [********] to SCHEIN and if
              necessary, there shall be a payment

_____________________

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

--------------------------------------------------------------------------------
                                 Page 35 of 56
<PAGE>

              either by ENDOREX JV to SCHEIN or by SCHEIN to ENDOREX JV to
              adjust [********]

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

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

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

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

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

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

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

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

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

                   CLAUSE 12 - PAYMENTS, REPORTS AND AUDITS

12.1  SCHEIN shall keep true and accurate records of gross sales of the PRODUCT,
      the number of units of PRODUCT sold, the items deducted from the gross
      amount

_____________________

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

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                                 Page 36 of 56
<PAGE>

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

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

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

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

12.5  SCHEIN shall pay interest to ENDOREX JV at the Prime Rate publicly
      announced by Morgan Guaranty Trust Company of New York at its principal
      office on the date (or next to occur business day, if such date is not a
      business day) on which payment should have been made pursuant to the
      applicable provisions of this Agreement plus [********] REPRESENTS
      MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST FOR CONFIDENTIAL
      TREATMENT PURSUANT TO RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF
      1934, AS AMENDED.on all late payments under this Agreement applicable from
      the date on which payment should have been made pursuant to the applicable
      provisions of this Agreement until the date of payment.

12.6  For the 180 day period following the close of each calendar year of the
      Agreement, ENDOREX JV and SCHEIN will, in the event that the other party
      reasonably requests

_________________

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                                 Page 37 of 56
<PAGE>

      such access, provide each other's independent certified accountants
      (reasonably acceptable to the other party) with access, during regular
      business hours and subject to the confidentiality provisions as contained
      in this Agreement, to such party's books and records relating to the
      PRODUCT, solely for the purpose of verifying the accuracy and reasonable
      composition of the calculations hereunder for the calendar year then
      ended.

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

                     CLAUSE 13 - DURATION AND TERMINATION

13.1  This Agreement shall be deemed to have come into force on the EFFECTIVE
      DATE and, subject to the rights of termination outlined in this Clause 13
      will expire on a country by country basis on the 10th anniversary of the
      date of the launch of the PRODUCT in the country concerned ("the INITIAL
      PERIOD").

13.2  At the end of the INITIAL PERIOD, the Agreement shall continue
      automatically for rolling 2 year periods thereafter, unless the Agreement
      has been terminated by either of the parties by serving 2 years' written
      notice on the other immediately prior to the end of the INITIAL PERIOD or
      any additional 2 year period provided for herein.

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

      13.3.1  that other party commits any breach of any of the provisions of
              this Agreement, and in the case of a breach capable of remedy,
              fails to remedy the same within 90 days after receipt of a written
              notice giving full particulars of the breach and requiring it to
              be remedied;

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

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

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

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

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                                 Page 38 of 56
<PAGE>

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

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

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

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

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

      13.5.4  a TECHNOLOGICAL COMPETITOR of ENDOREX JV, or a company with a
              directly competing product (other than Bayer AG), acquires 25% or
              more of the SCHEIN's voting stock or where 25% or more of the
              voting stock of a TECHNOLOGICAL COMPETITOR of ENDOREX JV hereto is
              acquired by SCHEIN.

                    CLAUSE 14 - CONSEQUENCES OF TERMINATION

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

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

      14.2.1  any sums that were due from SCHEIN to ENDOREX JV under the
              provisions of Clause 11 or otherwise howsoever prior to the
              exercise of the right to terminate this Agreement as set forth
              herein shall be paid in full within 30 days of termination of this
              Agreement and receipt of the invoice in respect thereto, and
              ENDOREX JV shall not be liable to repay to SCHEIN any amount of
              money paid or payable by SCHEIN to ENDOREX JV up to the date of
              the termination of this Agreement;

      14.2.2  all confidentiality provisions set out herein shall remain in full
              force and effect for a period of 7 years from the date of
              termination of this Agreement;

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                                 Page 39 of 56
<PAGE>

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

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

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

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

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

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

                      CLAUSE 15 - WARRANTY AND INDEMNITY

15.1  ENDOREX JV represents and warrants that

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

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

_______________________________________________________________________________
                                 Page 40 of 56
<PAGE>

                challenges to ENDOREX JV's right to grant the rights and
                licences herein granted to SCHEIN,

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

15.2    SCHEIN represents and warrants that

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

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

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

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

        15.5.1(a)  the COMPOUND SPECIFICATIONS; and

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

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

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

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

--------------------------------------------------------------------------------
                                 Page 41 of 56
<PAGE>

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

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

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

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

15.7.1  ENDOREX JV shall indemnify, defend and hold SCHEIN harmless from all
        actions, losses, claims, demands, damages, costs and liabilities
        (including reasonable attorneys' fees) to which SCHEIN is or may become
        liable insofar as they arise out of (i) any breach by ENDOREX JV of any
        of its obligations, representations or warranties under this Agreement,
        (ii) a third party claim that the manufacture, sale, use or offer for
        sale of the SYSTEM as included in the PRODUCT, infringes the patent
        rights of such a third party, but only to the extent and subject to the
        limitations set forth in Clauses 3.5. hereof, (iii) ENDOREX JV's bad
        faith, negligence or intentional misconduct in connection with the
        filing or maintenance of the MAF, subject to the provisions of Clause
        7.10, hereof..

15.7.2  SCHEIN shall indemnify, defend and hold harmless ENDOREX JV from all
        actions, losses, claims, demands, damages, costs and liabilities
        (including reasonable attorneys' fees) to which ENDOREX JV is or may
        become liable insofar as they arise out of (i) any breach by SCHEIN of
        any of its obligations, representations or warranties under this
        Agreement, (ii) a third party alleging that the manufacture, offer for
        sale, sale, distribution or use of the PRODUCT with respect to the
        COMPOUND in the TERRITORY infringes any adversely held patent or
        involves the unauthorised use of any other intellectual property, but
        only to the extent and subject to the limitations set forth in Clauses
        3.5.,.(iii) SCHEIN's bad faith, negligence or intentional misconduct in
        connection with the filing or maintenance of the DEVICE REGULATORY
        APPLICATIONS and DEVICE REGULATORY APPROVALS in the TERRITORY, subject
        to the provisions of Clause 7.10, hereof, (iv) labeling and other
        printed material supplied by SCHEIN, except to the extent that such
        claims, damages, losses, liabilities and expenses arise from information
        provided to SCHEIN by ENDOREX JV, subject to the provisions and
        limitations set forth in Clauses 8.6 hereof, and (v) any defective
        materials in the Compound or defect in the COMPOUND which may be
        included in the PRODUCT, as provided in Clause 10.12 herein.

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

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

--------------------------------------------------------------------------------
                                 Page 42 of 56
<PAGE>

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

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

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

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

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

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

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

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

              CLAUSE 16 - CUSTOMER COMPLAINTS AND PRODUCT RECALL

16.1    SCHEIN shall notify ENDOREX JV promptly:-

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

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

16.2    ENDOREX JV shall notify SCHEIN promptly:-.

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

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

--------------------------------------------------------------------------------
                                 Page 43 of 56
<PAGE>

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

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

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

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

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

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

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

                     CLAUSE 17 - MISCELLANEOUS PROVISIONS

17.1    Secrecy:
        -------

        17.1.1  Any information, whether written or oral (oral information shall
                be reduced to writing within one month by the party giving the
                oral information and the written form shall be furnished to the
                other party) pertaining to the PRODUCT that has been or will be
                communicated or delivered by ENDOREX JV to SCHEIN, or by SCHEIN
                to ENDOREX JV, including, without limitation, trade secrets,
                business methods, and cost, supplier, manufacturing and customer
                information, shall be treated by SCHEIN and ENDOREX JV,

--------------------------------------------------------------------------------
                                 Page 44 of 56
<PAGE>

                respectively, as confidential information, and shall not be
                disclosed or revealed to any third party whatsoever or used in
                any manner except as expressly provided for herein; provided,
                however, that such confidential information shall not be subject
                to the restrictions and prohibitions set forth herein to the
                extent that such confidential information:-

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

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

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

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

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

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

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

--------------------------------------------------------------------------------
                                 Page 46 of 56
<PAGE>

                filings with the United States Securities and Exchange
                Commission which may be necessary following execution of this
                Agreement.

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

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

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

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

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

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

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

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

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

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

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

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

--------------------------------------------------------------------------------
                                Page 46 of 56
<PAGE>

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

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

17.8   Waiver:
       ------

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

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

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

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

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

17.11  Notice:
       ------

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

                ENDOREX JV at:

                Clarendon House
                2 Church Street
                Hamilton, Bermuda

                Attention:  Chairman
                Telefax   1 441 292 4720

                With a copy to:

                Elan Corporation, plc
                Lincoln House
                Lincoln Place
                Dublin 2
                Ireland

--------------------------------------------------------------------------------
                                 Page 47 of 56
<PAGE>

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

                SCHEIN at:

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

                Attention:   Chairman
                Telefax:     1 441 292 5152
                With a copy to:

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

                Attention:   General Counsel
                Telefax:     973 593 5152

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

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

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

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

17.12.1  During the period commencing on the date hereof and ending on June 30,
         2000 (the "REVIEW PERIOD"), SCHEIN will promptly conduct or have
         conducted a due diligence review of (1) coverage of the ENDOREX JV
         PATENTS over the SYSTEM and the PRODUCT, (2) freedom from infringement
         liability under third party patents (and potential liability under
         third party patent applications) for the SYSTEM and the PRODUCT as it
         is intended to be produced and sold hereunder, and (3) freedom from

--------------------------------------------------------------------------------
                                 Page 48 of 56
<PAGE>

         infringement liability under third party patents (and potential
         liability under third party patent applications) for the COMPOUND
         including delivery of the COMPOUND through continuous subcutaneous
         administration (the "PATENT DUE DILIGENCE REVIEW"). The freedom from
         infringement review may or may not include features of the PRODUCT and
         the SYSTEM which are beyond the scope of the ENDOREX JV PATENTS, at
         SCHEIN's discretion. The PATENT DUE DILIGENCE REVIEW shall be for the
         entire TERRITORY or any portion thereof that SCHEIN, in its sole
         discretion, determines is necessary. Each Party shall provide
         reasonable cooperation to the other Party during the PATENT DUE
         DILIGENCE REVIEW.

17.12.2  Upon expiration of the REVIEW PERIOD, SCHEIN shall confirm its
         acceptance of this AGREEMENT, in which event the conditions contained
         in this Clause 17.12 shall be deemed fulfilled and the AGREEMENT and
         its provisions shall remain in full force and effect unless SCHEIN
         determines in good faith that (a) the SYSTEM infringes, or is
         reasonably likely to infringe, any third party patent in the TERRITORY,
         (b) the ELAN PATENTS do not cover the SYSTEM, (c) the ELAN PATENTS
         covering the SYSTEM are not valid, or are reasonably likely to be found
         invalid, in which event, SCHEIN shall be entitled to terminate this
         AGREEMENT, or (d) the delivery of the COMPOUND through continuous
         subcutaneous administration infringes or is likely to infringe any
         third party patent in the TERRITORY, in which event this AGREEMENT
         (except for the provisions of Clause 17.1 hereof which shall survive),
         shall be deemed terminated, null and void and of no force or effect
         with no further obligation on either party hereto.

IN WITNESS of which the parties have executed this Agreement.

--------------------------------------------------------------------------------
                                 Page 49 of 56
<PAGE>

                                  SCHEDULE 1

                              ENDOREX JV PATENTS

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

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

--------------------------------------------------------------------------------
                                 Page 50 of 56
<PAGE>

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

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

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

--------------------------------------------------------------------------------
                                 Page 51 of 56
<PAGE>

                                  SCHEDULE 2

                               COMPOUND PATENTS

NONE.

--------------------------------------------------------------------------------
                                 Page 52 of 56
<PAGE>

                                  SCHEDULE 3

                                    PROJECT

                       To be agreed upon by the Parties.

--------------------------------------------------------------------------------
                                 Page 52 of 56
<PAGE>

                                  SCHEDULE 4

                         PROJECT SYSTEM SPECIFICATIONS

                       To be agreed upon by the Parties

--------------------------------------------------------------------------------
                                 Page 54 of 56
<PAGE>

                                  SCHEDULE 5

                            PRODUCT SPECIFICATIONS

                       To be agreed upon by the Parties.

--------------------------------------------------------------------------------
                                 Page 55 of 56
<PAGE>

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

By:    ________________________________

Name:  ________________________________

Title: ________________________________

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

By:    ________________________________

Name:  ________________________________

Title: ________________________________

--------------------------------------------------------------------------------
                                 Page 56 of 56

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