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                                                                    EXHIBIT 10.7

                          FORM OF EMPLOYMENT AGREEMENT

     This EMPLOYMENT AGREEMENT ("Agreement") is made this      day of March,
2000, by and between Imperial Parking Corporation, a Delaware corporation with
its principal place of business at 601 West Cordova Street, Vancouver, British
Columbia V6B1G1 (the "Company") and Bryan Wallner, an individual residing at
5683 Westport Road, West Vancouver, British Columbia, V7V1M3 ("Executive").

     WHEREAS, the Company desires to retain the services of Executive as Senior
Vice President--Operations and Executive desires to serve in that capacity.

     NOW THEREFORE, in consideration of the premises and of the mutual covenants
and undertakings stated herein, Executive and the Company hereby agree as
follows.

     1. PERIOD OF EMPLOYMENT. Subject to all of the terms and conditions hereof
including without limitation, the termination provisions of this Agreement, the
term of this Agreement shall commence on the date on which is consummated the
distribution (the "Distribution") by First Union Real Estate Equity and Mortgage
Investments ("First Union") of substantially all of the Company's common stock,
par value $.01 per share, to the beneficiaries of First Union (the "Commencement
Date") and end on the fifth anniversary thereof (sometimes referred to as the
"Term" or the "Employment Period"). By executing this Agreement, the Company and
Executive represent that neither (i) the negotiation or execution of this
Agreement nor (ii) the performance of their respective duties and obligations
hereunder, shall violate any other agreement or law to which such parties are
bound or subject.

     2. DUTIES AND POWERS OF EXECUTIVE. Subject to all of the terms and
conditions hereof, the Company shall employ Executive as Senior Vice
President--Operations of the Company. During the Employment Period, Executive
shall have these powers and duties normally associated with the position of
Senior Vice President--Operations and such other powers and duties as may be
prescribed by the Company; provided, that, such powers and duties are consistent
with Executive's position. During the Employment Period, Executive shall
exclusively devote his professional and business time (other than absences due
to illness or vacation) to Executive's duties hereunder, except that Executive
may serve on boards of directors or advisory boards of charitable organizations
for reasonable amounts of time and make reasonable personal investments;
provided, that, such activities do not interfere with his services to the
Company.

     3. COMPENSATION.

          (a) During the Employment Period, the Company shall pay Executive an
     annual base compensation of $237,000 (U.S.) in approximately equal
     installments in accordance with the Company's customary payroll practices
     ("Base Salary"). During the Employment Period, Executive's Base Salary
     shall not be reduced.

          (b) For every fiscal year during the Employment Period, Executive
     shall be paid an annual bonus no later than sixty (60) days following the
     close of the Company's fiscal year equal to 1.75% of the increase in the
     Company's EBITDA over the Company's
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     EBITDA for 1998 ("1998 EBITDA"), calculated in accordance with generally
     accepted accounting principles (the "Bonus"). For purposes of calculating
     EBITDA, all nonrecurring extraordinary expenses and any impact on EBITDA of
     any acquisitions or dispositions shall be excluded. In addition, EBITDA
     shall be adjusted to reflect the amount of Company capital (including an
     interest charge on such capital at a rate of not more than 10% per annum)
     utilized in connection with acquiring, leasing and development of new
     Company operated parking facilities.

          (c) Stock Options.

             (i) Thirty (30) trading days following the Commencement Date, the
        Board or the compensation committee of the Board shall cause the Company
        to grant Executive a stock option to acquire 21,250 shares of the
        Company's common stock which is intended to represent 1.0% of the issued
        and outstanding shares of the Company's common stock on a fully diluted
        basis (calculated without giving effect to the grant contemplated
        hereunder) as of the date of grant (the "Option"). To the extent
        necessary to carry out the intended terms of this paragraph (c)(i), the
        Option shall be adjusted as is necessary to take into account any change
        in the common stock of the Company in a manner consistent with
        adjustments made to other option holders and/or shareholders of the
        Company generally. In addition, in the event that a rights offering of
        the Company's common stock is made by the Company to its shareholders,
        Executive shall be entitled to an additional option grant to acquire
        1.0% of the shares of common stock issued pursuant to such offering on
        the first $30,000,000 raised (the "Additional Option"). The Additional
        Option shall be granted under substantial similar terms as those set
        forth herein and with an exercise price per share equal to the fair
        market value per share of the common stock upon the date of grant. The
        Additional Option shall vest (or be vested) at the same time (and in the
        same proportion) as the Option (if partially unvested) or shall be fully
        vested if the Option is fully vested.

             (ii) The Option described in paragraph (i) above shall be granted
        subject to the following terms and conditions: (A) except as provided
        below, the Option shall be granted under and subject to the Company's
        stock option plan; (B) the exercise price per share of each Option shall
        be equal to the greater of the (1) the last reported sales price of a
        share of the common stock on the day which is the thirtieth (30th)
        trading date following the Commencement Date or (2) the average closing
        price of a share of common stock for the ten (10) day trading period
        ending on the date which is the thirtieth (30th) trading date following
        the Commencement Date, in either case, as reported on such principal
        trading market for the Company's common stock where quotes are readily
        available; provided, that, the exercise price of the Option shall be
        adjusted at least monthly, but not below zero, by an increase of 0.8333%
        per month (less all dividends and distributions (including non-cash
        distributions) made to common shareholders on a per share basis) (C) the
        Option shall vest and be exercisable as to 2.0833% of the shares subject
        thereto on each of the forty-eight (48) monthly anniversaries of the
        grant date; (D) unless earlier terminated or forfeited, the Option shall
        be exercisable for the ten (10) year period following the date of grant;
        (E) the Option shall become immediately vested and exercisable in full
        upon a Change in Control (as defined below) or upon Executive's
        termination of employment by the Company without Cause (as defined
        below) or due to his death or Disability (as defined below) or upon
        Executive's termination of employment by him for Good Reason (as defined
        below); (F) the Option shall provide that upon Executive's termination
        of

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        employment due to his death, Disability, by the Company without Cause or
        by Executive for Good Reason, such Option will remain exercisable by
        Executive (or his beneficiaries or estate in the event of his death) for
        six (6) months following his termination of employment and in the event
        Executive's employment is terminated for any other reason, ninety (90)
        days following such termination of employment, but, in either case, in
        no event beyond the ten (10) year term and (G) the Option shall be
        evidenced by, and subject to, a stock option agreement whose terms and
        conditions are consistent with the terms hereof. In addition, the
        Company shall take all action necessary such that the shares of common
        stock issuable upon exercise of the Option are registered on Form S-4 or
        Form S-8 (or any successor or other appropriate forms) to the extent
        such shares are eligible for registration thereon.

     4. BENEFITS.

          (a) During the Employment Period, the Company shall provide to
     Executive all such health insurance, dental insurance, life insurance,
     disability insurance, retirement savings, pension, and other fringe
     benefits as are provided from time to time by the Company to its senior
     executives generally, in accordance with the Company's general benefits
     practices then in effect, in addition to any fringe benefits provided for
     expressly in this Agreement without regard to eligibility restrictions
     contained therein.

          (b) During the Employment Period and upon appropriate documentation,
     the Company shall reimburse Executive for all reasonable business and
     travel expenses incurred by Executive in performing his duties hereunder in
     accordance with the Company's reimbursement policy for senior executive
     officers.

          (c) During the Employment Period, Executive shall be entitled to a
     minimum of three (3) weeks paid vacation per year and such other paid
     absences whether for holidays, sick days, personal time or any similar
     purposes in accordance with the plans, policies and practices of the
     Company in effect from time to time for senior executive officers
     generally; provided, however, if less than three (3) weeks vacation is
     taken by Executive in any year, the balance of vacation time may be taken
     in whole or in part in any later year or years in addition to that year's
     vacation time.

          (d) During the Employment Period, the Company shall provide Executive,
     at the Company's sole cost and expense, a new midsize automobile to be
     selected by Executive which shall be replaced by the Company at the end of
     its lease term which shall not exceed three (3) years. In addition to the
     aggregate leasing or purchase costs, the Company shall bear all expenses
     relating to the automobile, including, but not limited to insurance, fuel,
     garaging and maintenance for such vehicle; provided, that, such amounts
     will not exceed $10,000 (U.S.) annually. Upon termination of Executive's
     employment for any reason, Executive may purchase from the Company or its
     agent, at its depreciated value, the automobile or assume any lease
     obligations with respect thereto.

          (e) By March 31 of each year during the Employment Period, the Company
     shall pay to Executive an additional cash payment to make Executive whole
     for any additional taxes owed by Executive on all cash and non-cash
     benefits provided under this Agreement (including this clause (e)) due to
     residing in Vancouver, British Columbia and being

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     subject to Canadian national and local taxes at any time during such year
     over such obligations if Executive had resided solely in Cincinnati, Ohio
     during such year.

          (f) If the Company requires that Executive relocate and Executive
     agrees to such relocation, prior to the date Executive relocates his family
     to such region or area so requested by the Company (the "Metro Area"), the
     Company shall reimburse Executive, on an after tax basis, (i) the cost of
     temporary housing for a period of up to one year for a furnished
     one-bedroom apartment in a first class rental building located within the
     Metro Area and (ii) for a period of one year, the cost of reasonable travel
     expenses for Executive and his family to visit the Metro Area once.

          (g) If Executive relocates his family to the Metro Area as provided in
     clause (g) above, the Company shall reimburse Executive, on an after tax
     basis, for all relocation expenses incurred in connection with Executive's
     move, including without limitation, reasonable costs for Executive and his
     family to visit the Metro Area once in order to procure a residence
     (including, related travel expenses), reasonable transportation costs for
     Executive and his family to move to the Metro Area, all real estate
     brokerage and related fees, closing costs, and legal expenses incurred in
     connection with the purchase or leasing of a new home and sale of
     Executive's current residence, the actual cost of moving Executive's and
     his family's household goods and personal effects. In addition, the Company
     shall reimburse Executive, on an after tax basis, for any equity losses
     Executive incurred on the sale of his current residence. In addition,
     Company shall reimburse Executive, on an after tax basis, the cost of
     temporary housing (not to exceed three (3) months) suitable for Executive
     and his family during the period from his family's relocation to the Metro
     Area until the closing date on the purchase or lease of the family's
     permanent residence.

          (i) As soon as administratively feasible following the execution of
     this Agreement, the Company shall pay directly to Executive's legal
     counsel(s) the reasonable attorneys' fees and costs that Executive incurred
     in connection with the negotiation and preparation of this Agreement,
     provided that such legal fees do not exceed $5,000 (U.S.), such cap to be
     exclusive of any costs (including cost associated with Canadian counsel
     retained by Executive's U.S. counsel).

     5. TERMINATION. Executive's employment by the Company hereunder shall end
immediately upon:

          (a) Receipt by the Company of Executive's resignation from the Company
     on no less than forty-five (45) days prior written notice;

          (b) Executive's receipt of written notice from the Company of
     termination of Executive's employment on no less than forty-five (45) days
     prior written notice;

          (c) Executive's death or Disability; or

          (d) Expiration of the Employment Period, and the date on which any of
     the foregoing terminations shall occur shall be the "Termination Date"
     hereunder.

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     6. PAYMENTS UPON TERMINATION.

          (a) If Executive's employment hereunder ends by reason of:

             (i) Resignation by Executive without Good Reason;

             (ii) The termination by the Company for Cause; or

             (iii) Death;

then the Company shall pay Executive's Base Salary through the Termination Date,
accrued, but unpaid Bonus for completed performance periods, and any other
payments or benefits due to Executive under any plan or policy of the Company or
as otherwise set forth in this Agreement. In addition, if Executive's employment
is terminated due to his death, then the Company shall pay to his beneficiaries
or estate, as the case may be, a pro-rated Bonus for the year of termination.

          (b) If Executive's employment hereunder ends by reason of Disability,
     then the Company shall continue to pay Executive's Base Salary and
     pro-rated Bonus for six (6) months offset by any payments Executive should
     receive under a long-term disability plan maintained by the Company or its
     affiliates. In addition, Executive shall be paid any accrued, but unpaid
     Bonus for completed performance periods and any other payments or benefits
     due to Executive under any plan or policy of the Company or as otherwise
     set forth in this Agreement including any benefits that Executive may be
     entitled to under any disability insurance maintained for the benefit of
     Executive during the term of his employment.

          (c) If Executive's employment hereunder ends by reason of:

             (i) Termination by the Company without Cause, or

             (ii) Resignation by Executive for Good Reason

then the Company shall, within 15 days after the Termination Date, pay Executive
a lump sum payment in cash equal to two times the sum of (i) his then annual
Base Salary and (ii) his annual Bonus paid for the year prior to the year his
termination, but in no event shall the sum of Base Salary and annual Bonus be
less than $237,000 (U.S.) for this purpose ("Severance"), together with any
other amounts that he is owed under any incentive plans or other benefit plans
(including, without limitation, severance or bonus plans) in which he is then
participating and any amounts that may become due under Section 4(e) for the
year of termination, taken into account the Severance. In addition, the Company
shall continue to provide Executive and his family with fully paid health and
dental insurance coverage for a period of two years following such termination.

          (d) Termination by the Company for Cause shall mean termination for:

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             (i) An act or acts of dishonesty or fraud, knowingly and
        intentionally undertaken by Executive, and intended to result in
        enrichment of Executive at the expense of the Company;

             (ii) Failure to perform the duties and obligations of Executive's
        employment which are willful and deliberate on Executive's part and
        which are not remedied in a reasonable period of time after receipt of
        written notice from the Company;

             (iii) The final conviction of Executive of, or plea by Executive of
        guilty or nolo contendere to, a felony involving moral turpitude; or

             (iv) A breach of any material provision of this Agreement which
        Executive has failed to cure within thirty (30) days of written notice
        thereof by the Company.

For purposes of this paragraph, no act by Executive shall be considered
"willful" or "intentional" unless committed in bad faith or without a reasonable
belief that the act or omission was in the best interests of the Company. Cause
shall not exist under this paragraph unless and until the Company has delivered
to Executive a copy of a resolution duly adopted by a majority of the Board
(excluding Executive for purposes of determining such majority) at a meeting of
the Board called and held for such purpose (after reasonable (but in no event
less than twenty (20) days) notice to Executive and an opportunity for
Executive, together with the counsel, to be heard before the Board), finding
that in the good faith opinion of the Board, Executive was guilty of the conduct
set forth in this paragraph and specifying the particulars thereof in detail.
This shall not prevent Executive from challenging in any court of competent
jurisdiction the Board's determination that Cause exists.

          (e) Good Reason for resignation by Executive shall mean resignation
     because of:

             (i) a voluntary termination of employment by Executive that occurs
        within twelve (12) months following the first anniversary of a Change in
        Control (as defined below);

             (ii) without the express written consent of Executive, the
        assignment to Executive of duties materially adverse and inconsistent in
        any substantial respect with Executive's position, authority and
        responsibilities at the Company or any other material change in
        authority;

             (iii) any material failure by the Company to comply with the
        provisions of this Agreement other than any failure remedied by the
        Company, within thirty (30) days following receipt of notice thereof
        given by Executive; or

             (iv) any failure of the Company to pay Executive his Base Salary
        when otherwise due or any action taken by the Company or the Company to
        reduce such

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        Base Salary, other than an inadvertent failure which is immediately
        remedied by the Company after notice thereof given by Executive.

          (f) Change of Control shall mean the occurrence of one or more of the
     following:

             (i) An acquisition (other than directly from the Company) of any
        voting securities of the Company (the "Voting Securities") by any
        "Person" (as the term person is used for purposes of Section 13(d) or
        14(d) of the Securities Exchange Act of 1934, as amended (the " 1934
        Act")) immediately after which such Person has "Beneficial Ownership"
        (within the meaning of Rule 13d-3 promulgated under the 1934 Act) of
        thirty-five percent (35%) or more of the combined voting power of the
        Company's then outstanding Voting Securities; provided, however, that in
        determining whether a Change in Control has occurred, Voting Securities
        which are acquired in a "Non-Control Acquisition" (as hereinafter
        defined) shall not constitute an acquisition which would cause a Change
        in Control. A "Non-Control Acquisition" shall mean an acquisition by (1)
        an employee benefit plan (or a trust forming a part thereof) maintained
        by (x) the Company or any of its affiliates or (y) any corporation or
        other Person of which a majority of its voting power or its equity
        securities or equity interest is owned directly or indirectly by the
        Company (a "Subsidiary"), (2) the Company or any of its affiliates or
        (3) any Person in connection with a "Non-Control Transaction" (as
        defined below).

             (ii) The individuals who are members of the Board on the
        Commencement Date (the then "Incumbent Board"), cease for any reason to
        constitute at least majority of the Board; provided, however, that if
        the election, or nomination for election by the Company's stockholders,
        of any new director was approved by a vote of at least two-thirds of the
        then Incumbent Board, such new director shall, for purposes of this
        Agreement, be considered as a member of the Incumbent Board; provided,
        further, however, that no individual shall be considered a member of the
        Incumbent Board if such individual initially assumed office as a result
        of either an actual or threatened "Election Contest" (as described in
        Rule 14a-II promulgated under the 1934 Act) or other actual or
        threatened solicitation of proxies or consents by or on behalf of a
        Person other than the Board (a "Proxy Contest") including by reason of
        any agreement intended to avoid or settle any Election Contest or Proxy
        Contest; or

             (iii) The consummation of-

                (a) A merger, consolidation or reorganization involving the
           Company, unless

                1. the stockholders of the Company, immediately before such
           merger, consolidation or reorganization, own, directly or indirectly,
           immediately following such merger, consolidation or reorganization,
           at least sixty percent of the combined voting power of the
           outstanding Voting Securities of the corporation resulting from such
           merger or consolidation or reorganization (the "Surviving
           Corporation") in substantially the same proportion as their ownership
           of the Voting Securities immediately before such merger,
           consolidation or reorganization, and

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                2. the individuals who were members of the Incumbent Board
           immediately prior to the execution of the agreement providing for
           such merger, consolidation or reorganization constitute at least a
           majority of the members of the board of directors of the Surviving
           Corporation or a corporation beneficially owning, directly or
           indirectly, a majority of the Voting Securities of the Surviving
           Corporation, and

                3. no Person (other than the Company, any Subsidiary, any
           employee benefit plan (or any trust forming a part thereof)
           maintained by the Company, the Surviving Corporation or any
           Subsidiary, or any Person who, immediately prior to such merger,
           consolidation or reorganization had Beneficial Ownership of
           thirty-five percent (35%) or more of the then outstanding Voting
           Securities) owns, directly or indirectly, thirty percent or more of
           the combined voting power of the Surviving Corporation's then
           outstanding voting securities (a transaction described in clauses 1.
           through 3. shall herein be referred to as a "Non-Control
           Transaction"); or

          (b) A complete liquidation or dissolution of the Company; or

          (c) The sale or other disposition of all or substantially all of the
     assets of the Company to any Person.

A Change in Control shall not be deemed to occur solely because any Person (the
"Subject Person") acquired Beneficial Ownership of more than the permitted
amount of the outstanding Voting Securities as a result of the acquisition of
Voting Securities by the Company which, by reducing the number of Voting
Securities outstanding, increases the proportional number of shares Beneficially
Owned by the Subject Person, provided that if a Change in Control would occur
(but for the operation of this sentence) as a result of the acquisition of
Voting Securities by the Company, and after such share acquisition by the
Company, the Subject Person becomes the Beneficial Owner of any additional
Voting Securities which increases the percentage of the then outstanding Voting
Securities Beneficially Owned by the Subject Person, then a Change in Control
shall occur. In addition, notwithstanding anything contained in this Agreement
to the contrary, if Executive's employment is terminated prior to a Change in
Control and Executive reasonably demonstrates that such termination (i) was at
the request of a third party who has indicated an intention or taken steps
reasonably calculated to effect a Change in Control and who effectuates a Change
in Control (a "Third Party") or (ii) otherwise occurred in connection with, or
in anticipation of, a Change in Control which actually occurs, then for all
purposes of this Agreement, the date of a Change in Control with respect to
Executive shall mean the date immediately prior to the date of such termination
of the Executive's employment.

Notwithstanding the foregoing, the consummation of the Distribution shall not be
a Change in Control for purposes of this Agreement.

          (g) Disability means the determination by a physician mutually
     agreeable to the Company and Executive that Executive is unable to perform
     Executive's duties hereunder by reason of illness or other physical or
     mental impairment or condition for 182 days in any 365 day period.

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          (h) In the event that any payment or benefit made to Executive
     pursuant to this Agreement or otherwise (the "Payments") becomes subject to
     an excise taxes ("Excise Tax") under Section 4999 of the Internal Revenue
     Code of 1986, as amended (the "Code"), then the amounts payable to
     Executive under this Agreement shall be the greater of (A) the Payments, if
     the result of subtracting the Excise Tax from the Payments is more than the
     Safe Harbor Cap and (B) the Payments, reduced to the maximum amount as will
     result in no portion of the Payments being subject to the Excise Tax (the
     "Safe Harbor Cap"). For purposes of reducing the Payments to the Safe
     Harbor Cap, only amounts payable to Executive under this Agreement (and no
     other Payments) shall be reduced, unless consented to by Executive. The
     determination of amounts required to be paid under this Section 6(h) shall
     be made by an independent auditor selected and paid by the Company. Such
     independent auditor shall be a nationally recognized accounting firm used
     by the Company to audit its financial statements.

     7. CONFIDENTIALITY; NON-COMPETITION; AND NON-SOLICITATION.

          (a) Executive shall hold in a fiduciary capacity for the benefit of
     the Company all secret or confidential information, knowledge or data
     relating to the Company or its affiliates ("Confidential Information"),
     which shall have been obtained by Executive during Executive's employment
     by the Company and which shall not be or become public knowledge (other
     than by acts by Executive or representatives of Executive in violation of
     this Agreement). After termination of Executive's employment with the
     Company, Executive shall not, without the prior written consent of the
     Company or as may otherwise be required by law or legal process,
     communicate or divulge any such information, knowledge or data to anyone
     other than the Company and those designated by it.

          (b) In consideration of the benefits to be provided to Executive
     hereunder, Executive covenants that he will not, without the prior written
     consent of the Company, during the Employment Period and the twelve (12)
     month period following his termination of employment for any reason (the
     "Restriction Period") engage in any way, directly or indirectly, in the
     Business (as defined below) of the Company anywhere within Canada OR
     LOCATIONS IN THE U.S. IN WHICH THE COMPANY IS CONDUCTING BUSINESS AS OF THE
     EXECUTIVE'S DATE OF TERMINATION,other than as an employee of the Company.
     For purposes of this Section 7, Business means all activities of the
     Company relating to (i) acquiring, owning, leasing, managing or operating
     parking facilities; (ii) providing consulting services in connection with
     the development and operation of parking facilities; (iii) manufacturing,
     assembling, selling and distributing parking meters and parking facility
     operation and control equipment; and (iv) printing and selling parking
     tickets. Notwithstanding any other provision contained herein, Executive
     shall not be deemed to have breached this covenant if he engages in the
     Business with any Canadian entity outside of Canada.

          (c) Executive hereby covenants and agrees that, at all times during
     the Restriction Period, Executive shall not employ or seek to employ any
     person employed during such period by the Company, or otherwise encourage
     or entice such person or entity to leave such employment.

     8. NO SET-OFF. The Company's obligations to make the payments provided for
in this Agreement and otherwise to perform its obligations hereunder shall not
be affected by

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any circumstances, including, without limitation, any set-off, counterclaim,
recoupment, or other right which the Company or the Company may have against
Executive or others. In no event, shall Executive be obligated to seek other
employment by way of mitigation of the amounts payable to Executive under any of
the provisions of this Agreement.

     9. SUCCESSORS AND ASSIGNS. This Agreement is binding on Executive and the
Company and its successors and assigns; provided, however, that the rights and
obligations of the Company under this Agreement may not be assigned to a
successor without the prior written consent of Executive which consent shall not
be unreasonably withheld. No rights or obligations of Executive hereunder may be
assigned by Executive to any other person or entity.

     10. GOVERNING LAW. This Agreement shall be construed under and governed by
the laws of the State of New York without regard to the conflicts or choice of
law provisions thereof.

     11. SEVERABILITY. Each section and provision of this Agreement shall be
considered severable and any invalidity of any provision shall not render
invalid or impair to any extent any other section or provision hereof, all of
which shall be interpreted to carry out the intent of the parties to the fullest
extent permissible under the law.

     12. ARBITRATION. If any dispute arises between the parties with respect to
the application, interpretation, or termination of this Agreement, then such
dispute shall be submitted to arbitration for resolution in New York City. The
arbitrator shall be selected and the arbitration shall be conducted pursuant to
the Employment Dispute Resolution Rules of the American Arbitration Association
("AAA"). Any request for arbitration must be made in writing by the party
seeking arbitration and must be delivered by hand or sent by registered or
certified mail, return receipt requested, postage prepaid, to both the other
party and the AAA within 90 days after the date on which the dispute between the
parties first arose. The decision of the arbitrator regarding any such dispute
shall be final and binding on both parties, and any court of competent
jurisdiction may enter judgment upon the award. The Company shall reimburse
Executive for all reasonable legal fees and out-of-pocket expenses attributable
to the dispute, unless the position taken by the Company is found to be correct
in all material respects.

     13. NOTICES. All notices hereunder shall be in writing and shall be deemed
to have been duly given if delivered by hand or sent by registered or certified
mail, return receipt requested, postage prepaid, to the party to receive the
same at the address set forth on the first page of this Agreement or at such
other address as may have been furnished to the sender by notice hereunder. All
notices shall be deemed given on the date on which delivered or, if mailed, 2
days after the date postmarked.

     14. SURVIVAL OF RIGHTS AND OBLIGATIONS. All rights and obligations of
Executive and the Company arising during the term of this Agreement shall
continue to have full force and effect after the termination of the Agreement
unless otherwise provided herein.

     15. MISCELLANEOUS. This Agreement shall be effective upon consummation of
the Distribution. If the Distribution does not occur, this Agreement shall be
null and void and Executive's Prior Agreement (as defined below) shall remain in
full force and effect without

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regard to this Section 15. Upon its effectiveness, this Agreement shall contain
the entire understandings of the parties hereto with respect to the employment
of Executive by the Company, and supersede all prior agreements, promises,
covenants, arrangements, communications, representations or warranties, whether
oral or written, by any officer, employee or representative of any party hereto
in respect of such subject matter, including, without limitation, as of the
Commencement Date, the Employment Agreement, by and between, First Union
Management Inc., Imperial Parking Limited and Executive, dated January 15, 1999
(the "Prior Agreement"). No provision thereof may be altered, amended, modified,
waived, or discharged in any way whatsoever except by written agreement executed
by the parties. No delay or failure of either party to insist, in any one or
more instances, upon performance of any of the terms and conditions of this
Agreement or to exercise any rights or remedies thereunder shall constitute a
waiver or a relinquishment of such rights or remedies or any other rights or
remedies hereunder.

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

<TABLE>
<S>                                            <C>
Bryan Wallner                                  IMPERIAL PARKING CORPORATION

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

                                               By:

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

     Only with respect to the termination of the Prior Agreement as provided in
Section 15 of the Agreement.

FIRST UNION MANAGEMENT, INC.

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

IMPERIAL PARKING LIMITED

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

                                       11<PAGE>   1
                                                                   Exhibit 10.22

                    CONFIDENTIAL MATERIALS OMITTED AND FILED
                   SEPARATELY WITH THE SECURITIES AND EXCHANGE
                     COMMISSION. ASTERISKS DENOTE OMISSIONS.

                         CUSTOM MANUFACTURING AGREEMENT

This Agreement is entered into as of this 27th day of September, 1999 (the
"Effective Date"), by and between Draxis Pharma, Inc., 16751 Route
Transcanadienne, Kirkland, Quebec H9H 4J4 (hereinafter referred to as "Draxis")
and Penwest Pharmaceuticals Co., 2981 Route 22, Patterson, New York 12563, a
Washington corporation (hereinafter referred to as "Penwest").

         WHEREAS, Penwest is a producer and marketer of controlled release
systems for use in the manufacture of pharmaceutical preparations; and

         WHEREAS, Penwest desires to have Draxis provide manufacturing and
laboratory services, specifically custom granulation, by granulating different
raw materials provided by Penwest, to prepare different formulations of
Penwest's line of controlled release systems which are marketed under the
tradename TIMERx(R) ("TIMERx"); and

         WHEREAS, Draxis possesses valuable facilities and know-how and employs
personnel having skills relative to the manufacture of pharmaceutical compounds
and excipients and is willing to provide granulating services to Penwest.

         NOW THEREFORE, in consideration of the premises and the undertakings of
the parties hereinafter set forth, the parties agree as follows:

                                 1. DEFINITIONS

1.1 "FDA" shall mean the U.S. Food and Drug Administration.

1.2 "Materials" shall mean (a) Raw Materials and (b) any specialized packaging
and/or shipping containers and/or labeling components that are used by Draxis
solely in its performance under this Agreement.
<PAGE>   2
1.3 "Packaging Specifications" shall mean any and all specifications for Product
packaging that accompany a given order for Product(s), as required under Section
5.2.

1.4 "Product(s)" as used herein shall mean the granulated forms of those
different formulations of Penwest's line of controlled release systems sold
under the tradename TIMERx and listed in Exhibit A attached hereto. Exhibit A
may be revised from time to time during the Term as may be mutually agreed by
the parties in writing.

1.5 "Product Specifications" shall mean any and all specifications for the
Product(s) that accompany a given order for Product(s), as required under
Section 5.2.

1.6 "Raw Materials Specifications" shall mean any and all specifications for the
Raw Materials (as defined below) that accompany a given order for Product(s), as
required under Section 5.2.

1.7 "Specifications" shall mean the Packaging Specifications, the Product
Specifications and the Raw Materials Specifications.

1.8 "Term" shall mean the Initial Term and any Renewal Term(s) as hereinafter
defined.

1.9 "TIMERx Technology" shall mean all know-how, trade secrets, and related
information and techniques communicated by Penwest to Draxis in connection with
the granulation of TIMERx pursuant to this Agreement, whether patentable or not.

                    2. SUPPLY AGREEMENT; DRAXIS IMPROVEMENTS

2.1 During the Term, Draxis shall granulate and sell to Penwest and Penwest
shall purchase from Draxis, subject to the terms and conditions hereinafter set
forth from Draxis, the Product(s) in quantities as ordered hereunder.

2.2 Draxis acknowledges and agrees that intellectual property rights in any
discoveries or inventions relating to and/or improvements, modifications,
alterations or enhancements to any of Penwest's TIMERx Technology made in the
course of Draxis's activities under this Agreement ("Inventions") shall be the
exclusive property of Penwest. Draxis shall cooperate with Penwest in Penwest's
patent filings or other

                                       2
<PAGE>   3
activities with respect to such intellectual property. Draxis shall, throughout
the term, (a) promptly notify Penwest of any and all Inventions, and (b) execute
any and all documents reasonably required by Penwest in support of such patent
filings or other activities.

                      3. TERM AND TERMINATION OF AGREEMENT

3.1 The term of this Agreement shall extend from the Effective Date and shall
continue through the Initial Term, which is defined as the five (5) year period
following the Effective Date (the "Initial Term"). Except as provided below, the
Agreement shall be automatically renewed for successive periods of one (1) year
each, (the "Renewal Term(s)"). At any time following the five-year anniversary
of the Effective Date, either party may terminate this Agreement upon at least
six (6) months prior written notice to the other party.

3.2 This Agreement may be terminated by written notice by the non-breaching
party in the event that the other has breached this Agreement in any material
manner and shall have failed to remedy such breach within forty-five (45) days
after written notice thereof from the non-breaching party.

3.3 If either party shall commence as debtor any proceedings under any
bankruptcy, insolvency, reorganization, readjustment of debt, dissolution or
liquidation law or statue of the Federal Government or any state or provincial
government or any subdivision of either now or hereafter in effect; or if any
such proceedings shall be commenced against such party, or any trustee or
receiver in respect of either party shall be appointed in any such proceedings,
and any such party shall be appointed in any such proceedings, and any such
party shall by any act or failure to act indicate approval of, or consent to or
acquiescence in such proceedings or in the appointment of any such trustee or
receiver; or if any such proceedings brought against such party shall be
approved by any court or shall remain undismissed for sixty (60) days; or if any
warrant of attachment shall be issued against all the assets of such party and
shall not be released within sixty (60) days after its levy, then, in any such
case, the party not involved in such proceedings, other than as a creditor,
shall have the option to terminate this Agreement by written notice and upon the
giving of such notice this Agreement shall immediately terminate.

                                       3
<PAGE>   4
3.4 Within ninety (90) days of the effective date of any termination of this
Agreement, Penwest shall purchase from Draxis, at Draxis's cost, if any, all
remaining Materials; provided, however, that Penwest shall not be so obligated
(a) in the event that (i) Draxis terminates this Agreement other than for cause
or (ii) Penwest terminates this Agreement for cause, or (b) in the case of
Materials that Penwest reasonably considers to be unusable. The foregoing shall
be delivered at the expense of the party that is responsible for the termination
of the Agreement, in accordance with applicable laws and regulations, to Penwest
F.O.B. Draxis's warehouse in Kirkland Quebec. Penwest shall be responsible for
reimbursing Draxis for any costs incurred by Draxis in connection with the
cancellation of any Firm Order, as defined in Exhibit D, unless such
cancellation occurs in connection with Penwest's termination of this Agreement
for cause pursuant to Section 3.2.

3.5 Termination of this Agreement shall not relieve either party from any
liabilities or obligations which may be accrued prior to the date of such
termination, including but not limited to Penwest's obligation to pay for
Product(s) delivered to Penwest by Draxis. Notwithstanding anything else in this
Agreement to the contrary, the parties agree that Sections 2.2, 3, 8, 9, 10 and
12 shall survive the termination of this Agreement.

3.6 Upon the termination of this Agreement, Draxis shall provide to Penwest the
originals all Specifications; provided, however, that a copy of such document
may be retained by Draxis for archival purposes, as a means of determining any
continuing obligation or confidentiality, but for no other purpose.

                                 4. PERFORMANCE

4.1 During the Term and subject to the terms and conditions hereof, Draxis shall
(a) granulate all Product(s), in accordance with the Product Specifications, (b)
use no Raw Materials that fail to meet the Raw Materials Specifications, and (c)
package all Product(s) in accordance with the Packaging Specifications. Penwest
shall supply Draxis with the Material Safety Data Sheets (MSDS) for all
materials to be supplied by Penwest to Draxis. If the Specifications are
changed, Penwest shall also provide reasonable technical assistance and
associated services to enable Draxis to custom manufacture and package the
Product(s) in conformity with the new specifications.

                                       4
<PAGE>   5
4.2 Draxis shall obtain each of the raw materials listed in Exhibit C ("Raw
Materials") from Penwest's approved supplier for each such Raw Material in
quantities sufficient to permit Draxis to fill all of Penwest's orders in
accordance with the provisions of Section 5; provided, however that, with
respect to any of the Raw Materials held by Penwest as of the Effective Date,
Draxis shall first obtain such Raw Material(s) from Penwest until it has
exhausted all supplies of such Raw Materials held by Penwest. Draxis shall
arrange for the delivery of all Raw Materials to Draxis's facility. Penwest
shall reimburse Draxis for any and all expenses associated with obtaining and
delivering Raw Materials, except that Draxis shall bear such expenses with
respect to any of the same that constitute replacements of Raw Materials
destroyed or rendered useless due to the negligent failure of Draxis. Risk of
loss of all Raw Materials delivered to Draxis hereunder shall remain with
Penwest until delivered to Draxis' loading dock. Any and all Raw Materials so
supplied shall at all times be and remain the property of Penwest until such Raw
Materials are used by Draxis in the manufacture of Product(s). Any other
materials to be used by Draxis in the performance of its obligations hereunder
(including without limitation water, equipment, and plant supplied) shall be
supplied by Draxis, at its expense, in quantities sufficient to permit Draxis to
fill Penwest's orders in accordance with the provisions of Section 5.

4.3 Draxis shall perform all of its obligations hereunder in accordance with
U.S. current Good Manufacturing Practices ("cGMP"). Without limiting the
foregoing, Draxis shall at all times store and preserve all Materials to be used
by Draxis in the performance of its obligations hereunder and shall segregate
the same from any other property or materials as may be required under cGMP
regulations.

4.4 Draxis shall perform, or have performed, those quality control tests set
forth in Exhibit B-1, with respect to all Raw Materials. Draxis understands that
Penwest is relying on Draxis to perform or have performed such tests and that
Penwest and its suppliers will not have conducted any such testing.

4.5 Draxis shall perform those quality control tests set forth in Exhibit B-2,
with respect to each batch of each Product. In the event Penwest requests that
any additional tests be performed, Draxis shall, if Draxis has the capacity to
perform such tests and Draxis can perform such additional testing in a timely
manner, perform such test as requested by Penwest. Penwest shall reimburse
Draxis for all costs of performing such additional testing.

                                       5
<PAGE>   6
4.6 Draxis shall perform those inspections, measurements and tests that are set
forth in Exhibit B-3.

4.7 Draxis shall provide to Penwest a copy of the results of all quality control
tests performed by or on behalf of Draxis promptly upon completion of all such
testing. Draxis shall not ship any batch of a Product (a) that fails to meet the
Product Specifications, (b) containing any Raw Materials that failed to meet the
Raw Materials Specifications, or (c) the packaging for which failed to meet the
Packaging Specifications, unless directed to so ship by Penwest in writing.
Without limiting the foregoing, Draxis shall be responsible for (a) batch
manufacturing record review and final Product release, (b) preparing and
maintaining reserve/retain samples for Materials, Raw Materials and completed
Product lots, and (c) phase-time testing of Materials and Raw Materials.

4.8 If Penwest determines that a Product batch does not conform with the
Specifications, Penwest shall so notify Draxis within thirty (30) days following
the date of delivery of such Product batch to Penwest under Section 5.4. Penwest
shall be deemed to have accepted any Product batch with respect to which it
fails to so notify Draxis. If Draxis and Penwest do not agree on whether a
Product batch conforms with the Product Specifications, the matter shall be
submitted for testing to an independent testing laboratory acceptable to both
parties. The determination of such independent laboratory shall be binding on
both parties. If Draxis or the independent testing laboratory agrees with
Penwest, Draxis shall (a) at its own expense accept return of any shipment not
accepted or reimburse Penwest for the cost of disposal or destruction, at
Draxis' option, and (b) replace the non-conforming Product batch with a
conforming Product batch. Until a dispute is resolved, Penwest shall not dispose
of such batch without the prior written authorization of Draxis. The cost of the
independent testing laboratory shall be borne by the party whose testing results
were in error.

4.9 Without limiting the foregoing, Draxis shall make no final disposition of
any Materials, Raw Materials or Products without prior consultation with, and
the prior written approval of, Penwest.

4.10 Either of the parties shall have the right to request changes to any of the
Specifications. Recommendations to change any of the Specifications shall be in

                                       6
<PAGE>   7
writing. Draxis shall implement no change in the manufacturing process for the
Product(s), including but not limited to any change in major manufacturing
equipment, control parameters, in-process specifications, or working formulae,
or any of the Specifications, whether requested by either of the parties or
requested or required by any Governmental or regulatory authority ("Governmental
Authority"), unless the parties have agreed in writing to such change. Any costs
incurred due to any such change shall be paid by Draxis, except for costs that
would not have been incurred but for a change or changes in the (a)
Specifications or (b) cGMP (but only to the extent such change or changes in
cGMP are relevant only to Draxis' manufacture of the Products), which shall be
paid by Penwest.

4.11 Draxis shall promptly notify Penwest of any problems or unusual production
situations which have the potential to have a material adverse effect on Draxis'
performance hereunder. Together with any such notice, Draxis also shall provide
to Penwest a written summary of the plan of action by which Draxis intends to
correct such problems or unusual production situations. Draxis further agrees to
(a) meet with representatives of Penwest to discuss any such problems or unusual
production situations, (b) implement any and all reasonable suggestions offered
by Penwest for correcting such problems or unusual production situations, and
(c) keep Penwest fully informed of Draxis's progress toward correcting such
problems or unusual production situations until they are resolved.

4.12 Draxis shall promptly notify Penwest of any and all contact it has with the
FDA or any Governmental Authority relating to the Product(s) that might
adversely affect Draxis' ability to perform its obligations under this Agreement
or result in an inspection of the facilities at which Draxis granulates and
packages the Products.

4.13 Throughout the term of this Agreement, Draxis shall promptly provide to
Penwest copies of any production documents prepared or maintained by Draxis with
respect to Draxis' obligations under the Agreement, as well as samples of the
Product(s) or the Raw Materials, unless otherwise prohibited by FDA regulations,
including cGMP. Any and all such samples shall be shipped to Penwest at
Penwest's expense in accordance with Section 5.4 or as otherwise instructed by
Penwest.

4.14 Draxis shall maintain accurate inventory records of Raw Materials and shall
provide to Penwest, on a monthly basis, a running balance thereof.

                                       7
<PAGE>   8
4.15 Penwest shall provide to Draxis all information reasonably necessary for
Draxis to manufacture the Products in accordance with the Specifications and the
requirements of cGMP, and shall make its employees reasonably available to
respond to questions concerning such information.

4.16 Penwest shall be responsible for tracking, investigating and responding to
third party customer complaints. Draxis shall (a) promptly communicate to
Penwest any and all such complaints that are received by Draxis, and (b) provide
to Penwest all reasonable assistance, including without limitation any
laboratory testing of Product. Draxis' reasonable document and laboratory
testing costs associated with providing such assistance shall be reimbursed by
Penwest, unless the cause of the relevant third party customer's complaint is
subsequently determined to have been related to any failure of Draxis to perform
its obligations hereunder.

4.17 The parties agree to hold operations planning meetings not less than once
in each calendar quarter during the Term. Each such meeting shall be held at a
mutually agreeable location, and each party shall bear its own expenses in
connection with participating in each such meeting. The purpose of such meetings
shall be to discuss and attempt to settle any financial planning issues,
production schedule changes, new product inclusions, line extensions and such
other topics as either party may raise or as may be of material interest to
either party in connection with this Agreement and their respective rights and
obligations hereunder.

                               5. ORDER PROCEDURE

5.1 Penwest agrees to purchase the Product(s) in a production batch or a
multiple thereof. (The production batch size of each Product is set forth in
Exhibit A).

5.2 Product(s) shall be ordered on Penwest's standard purchase order forms.
Together with each order for Product(s), Penwest shall provide to Draxis , as
applicable to such order, the required specifications corresponding the test
parameters set forth in Exhibits B-1, B-2 and B-3 for the Raw Materials,
Product(s) and Packaging, respectively. The terms and conditions contained
therein, to the extent they are inconsistent or in conflict with the provisions
of this Agreement or impose additional obligations on

                                       8
<PAGE>   9
Draxis, are superseded by the provisions of this Agreement. Subject to Section
1(c) of Exhibit D, Draxis shall promptly confirm receipt of Penwest's purchase
orders.

5.3 Penwest shall submit to Draxis Product order forecasts in accordance with
the provisions set forth in Exhibit D.

5.4 Draxis shall ship Products ordered by Penwest pursuant to this Section 5 in
accordance with Penwest's instructions. Draxis shall arrange for the shipment of
the Products, F.O.B. Draxis' loading dock. Penwest shall provide a listing of
carriers and shall pay outbound freight delivery costs. Draxis shall schedule
freight pick-up, load the carrier's trailer and complete the documentation.
Title to, and risk of loss of, all Products shipped hereunder shall remain with
Draxis until delivered to Penwest's carrier at Draxis' loading dock, at which
time such title and risk shall pass to Penwest. Draxis shall not be liable to
Penwest for loss of any kind arising out of or in relation to damage to
Products, however caused, which occurs after title to and risk for the Product
passes to Penwest, nor shall any liability of Penwest to Draxis under this
Agreement be diminished or extinguished by reason of such loss. For greater
certainty, Penwest shall be liable for all risk of loss while Products are in
transit, and Penwest is responsible for ensuring that adequate insurance
coverage is obtained and maintained for the Products from the time title passes
to Penwest.

                                   6. PAYMENTS

6.1 Draxis agrees to sell and Penwest agrees to purchase, subject to the other
terms and conditions of this Agreement, the custom granulated Product(s) at the
prices set forth in Exhibit A, a copy of which is attached hereto and made a
part hereof. All payments to Draxis shall be due within forty-five (45) days
after receipt by Penwest of the corresponding Product and release documents, and
shall be payable in Canadian dollars in Kirkland, Quebec by check or wire
transfer, at Penwest's option.

6.2 The purchase prices set forth in Exhibit A shall remain in effect through
the date shown. Thereafter, the prices shall be increased or decreased to
reflect any documented increase or decrease in costs incurred by Draxis in
purchasing the Materials and/or as the result of changes to any of the
Specifications; provided, however, that such prices shall not be increased
unless (a) any such increase in costs is beyond the reasonable control of
Draxis, and (b) Draxis has afforded representatives of Penwest a reasonable

                                       9
<PAGE>   10
opportunity to review Draxis' documentation of such increase or decrease in
costs. Draxis shall be permitted to pass along such increased costs to Penwest
on all subsequent orders received from Penwest with delivery dates after such
price increase becomes effective. In addition, any increase or decrease in cost
due to an increase or decrease in labor and/or overhead, shall be identified for
Penwest no later than December 15th of each year and subsequently passed on to
Penwest beginning on January 1 of the following year. In no event, however,
shall the price of any Product increase (a) during the first year of the term of
this Agreement or (b) during any subsequent year by more than the lesser of (i)
any increase in the Chemicals Producers Price Index (as published by the U.S.
Bureau of Labor Statistics) or (ii) five percent (5%) per year.

6.3 The prices paid for Products pursuant to this Section 6 do not include use,
consumption, sales or excise taxes of any taxing authority. The amount of such
taxes, if any, shall be added to the price of the Products in effect at the time
of shipment thereof and shall be reflected in the invoices submitted to Penwest
by Draxis. Penwest shall pay the amount of such taxes to Draxis in accordance
with the payment provisions relating to shipments of Products set forth in
Section 6.1 hereof. Draxis hereby agrees to indemnify Penwest against, and shall
reimburse Penwest for, any expenditures Penwest may be required to make on
account of Draxis' failure to pay such taxes or other related governmental
charges to the relevant taxing authorities.

                               7. LABELS, LABELING

7.1 Penwest shall provide Product-specific labels for the Product(s).

7.2 Draxis shall have responsibility for ordering and purchasing all packaging
components other than labels.

                               8. CONFIDENTIALITY

         Each party agrees to the confidentiality provisions set forth in
Exhibit E hereto.

                                       10
<PAGE>   11
                                  9. WARRANTIES

9.1 Draxis represents and warrants that (a) its performance hereunder shall be
in accordance with cGMP's and that the Product(s) shall (i) conform to the
Product Specifications, (ii) contain no Raw Materials that fail to meet the Raw
Materials Specifications, and (iii) be packaged only in accordance with the
Packaging Specifications, (b) in performing its services hereunder, Draxis shall
comply with all provincial, state, local, and federal laws and regulations
applicable to such services and shall obtain and maintain all necessary
registrations and permits applicable to such services, and (c) no Product shall
be (i) adulterated or misbranded within the meaning of Sections 404 or 505 of
the Federal Food, Drug and Cosmetic Act ("the Act"), as amended, or the
regulations issued thereunder or within the meaning of any provincial, state or
local law the adulteration and misbranding provisions of which are similar to
the Act or (ii) a product which may not, under the provisions of any law or
regulations, be introduced into interstate commerce. Excluded from the above
representations and warranties are any failures of the Product(s) due to defects
in the Product Specifications or as the result of problems with the (a) Raw
Materials which could not be detected by the quality control tests specified in
Exhibit B-2 or (b) Product(s) which could not be detected by the quality control
tests specified in Exhibit B-1.

9.2 Draxis further represents and warrants that (a) it will comply with all
provincial and federal laws and regulations regarding the handling, storage,
transportation, generation and disposal of waste and regulated substances
created during its performance under this Agreement to the extent such laws and
regulations are applicable to such performance, and (b) it has no knowledge of
any third party patent rights or other intellectual property rights that would
be infringed by Draxis' activities under this Agreement or would allow
misappropriation of trade secrets.

9.3 Draxis agrees to indemnify, hold harmless and defend Penwest from and
against all laborers', materialmen's and/or mechanics' liens arising from the
performance of Draxis's obligations under this Agreement and shall keep the
property of Penwest free from all such claims, liens, and encumbrances while
such property is on Draxis's premises.

9.4 Draxis further represents and warrants that it, and any third parties upon
which it relies for the timely performance by Draxis of its obligations
hereunder, will maintain

                                       11
<PAGE>   12
Year 2000 Compliance throughout the term of this Agreement. Regardless of the
accuracy of the representation set forth in this Section 9.4, Draxis further
represents and warrants that there shall be no materially adverse effect upon
the timely performance by Draxis of its obligations hereunder that is
attributable to its failure, or the failure of any such third party, to maintain
Year 2000 Compliance. For purposes of this Section 9.4, "Year 2000 Compliance"
refers to the capacity of the software and hardware Draxis uses in the
performance of its obligations hereunder, and/or that of any third parties upon
which Draxis relies for the timely performance of such obligations, (a) to
recognize and process all date fields, and perform all date-dependent
calculations and operations (including sorting, comparing and reporting)
correctly, and (b) not to experience software ending and/or invalid and/or
incorrect results as a result of the change of century or the occurrence of any
particular date (all without human intervention, other than original data entry
of valid dates)

9.5 EXCEPT AS SET FORTH IN THIS ARTICLE 9, DRAXIS MAKES NO REPRESENTATION OR
WARRANTY, EXPRESS OR IMPLIED, WITH RESPECT TO THE PRODUCTS, WHETHER AS TO
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR OTHERWISE. NOTWITHSTANDING
ANY PROVISIONS OF THIS AGREEMENT, NEITHER DRAXIS NOR PENWEST NOR ANY OF EITHER
PARTY'S EMPLOYEES, DIRECTORS, OFFICERS, AGENTS, REPRESENTATIVES, ASSIGNS OR
SUBCONTRACTORS SHALL HAVE ANY LIABILITY FOR SPECIAL, INCIDENTAL, CONSEQUENTIAL,
PUNITIVE OR EXEMPLARY DAMAGES, LOST PROFITS OR ECONOMIC LOSSES OTHER THAN DIRECT
DAMAGES RESULTING FROM THE BREACH BY EITHER PARTY OF ITS OBLIGATIONS HEREUNDER.

9.6 Penwest represents and warrants that it has no knowledge of any third party
patent rights or other intellectual property rights that would be infringed by
Draxis's activities under this Agreement or would allow misappropriation of
trade secrets.

9.7 Penwest warrants that any labels and all information supplied to Draxis
shall not be false or misleading in any particular and shall be in compliance
with applicable FDA regulations.

                                       12
<PAGE>   13
9.8 Penwest represents and warrants that, to the extent that it provides any
Materials with respect to any of the Products, such Materials shall comply with
the relevant Specifications and cGMP.

9.9 Each party represents and warrants to the other that neither it nor any of
its officers, directors, or employees performing services under this Agreement
has been debarred, or convicted of a crime which could lead to debarment, under
the Generic Drug Enforcement Act of 1992, 21 United States Code ss306(a) and
(b). Each party shall notify the other party immediately in the event that such
party, or any of its officers, directors, or employees performing services under
this Agreement, (a) becomes debarred or receives notice of action or threat of
action with respect to its debarment or (b) becomes the object of any
investigation or subject of any report regarding such party, or any of its
officers, directors, or employees performing services under this Agreement, in
connection with any activity that could result in debarment or suspension or
refusal of approval, including without limitation any inspection report, warning
letter, notice of opportunity for hearing in a case of debarment, or any other
Justice Department, FDA or other federal or state government inquiry or action
bearing on potentially illegal activities.

                                  10. INDEMNITY

10.1 Penwest shall defend, indemnify, protect, and hold Draxis, its directors,
officers, employees, agents and representatives (the "Draxis Indemnitees")
harmless from all claims, demands, suits, proceedings for damages, costs
(including reasonable attorney's fees), expenses and losses which arise (a) from
any claim or charge by a third party for patent infringement, (b) as the result
of any breach of this Agreement by Penwest, or (c) from the use, manufacture,
marketing, sale and/or distribution of any or all of the Products; provided,
however, that Draxis shall not be indemnified for any claims, demands, suits,
proceedings for damages, costs, expenses or losses which arise from (i) any
breach of this Agreement by Draxis, (ii) the violation of Draxis's warranties
set forth in Article 9, or (iii) the negligence or willful misconduct of any
Draxis Indemnitee in connection with the performance of Draxis' obligations
hereunder.

10.2 Draxis shall defend, indemnify, protect, and save Penwest, its directors,
officers, employees, agents and representatives harmless from all claims,
demands, suits or proceedings for damages and costs (including reasonable
attorney's fees) expenses and

                                       13
<PAGE>   14
losses which arise from (a) any breach of this Agreement by Draxis, (b) the
violation of Draxis's warranties set forth in Article 9, or (c) the negligence
or willful misconduct of any Draxis Indemnitee in connection with the
performance of Draxis' obligations hereunder.

10.3     (a) Any indemnitee seeking indemnification under this Agreement (the
         "Indemnitee") shall forthwith notify the other party (the "Indemnitor")
         of such matter in writing. If any claim of any nature whatsoever (a
         "Claim") is made against an Indemnitee, and if the Indemnitee intends
         to seek indemnity with respect thereto under this Agreement, the
         Indemnity shall promptly (and in any case within thirty (30) days of
         such Claim being made) notify the Indemnitor of such Claim with
         reasonable particulars. The Indemnitor shall have thirty (30) days
         after receipt of such notice to undertake, conduct and control, through
         counsel of their own choosing (reasonably acceptable to Indemnitee) and
         at the Indemnitor's own expense, the settlement or defense thereof, and
         the Indemnitee shall cooperate with the Indemnitor in connection
         therewith, except that with respect to settlements entered into by the
         Indemnitor (i) the consent of the Indemnitee shall be required if the
         settlement provides for equitable relief or monetary damages against
         the Indemnitee, which consent shall not be unreasonably withheld or
         delayed, and (ii) the Indemnitor shall obtain the release of the
         Indemnitee by the claimant. If the Indemnitor undertakes, conducts and
         controls the settlement or defense of such Claim, the Indemnitor shall
         (i) permit the Indemnitee to participate in such settlement or defense
         through counsel chosen by the Indemnitee, provided that the fees and
         expenses of such counsel shall be borne by the Indemnitee, and (ii)
         promptly reimburse the Indemnitee for the full amount of any loss
         resulting from any Claim and all related expenses (other than the fees
         and expenses of counsel as aforesaid) incurred by the Indemnitee. The
         Indemnitee shall not pay or settle any Claim so long as the Indemnitor
         is reasonably contesting any such Claim in good faith on a timely
         basis. Notwithstanding the two immediately preceding sentences, the
         Indemnitee shall have the right to pay or settle any such Claim,
         provided that in such event it shall waive any right to indemnity
         therefor by the Indemnitor.

         (b) With respect to third party Claims, if the Indemnitor does not
         notify the Indemnitee within thirty (30) days after the receipt of the
         Indemnitee's notice of a claim of indemnity hereunder that it elects to
         undertake the defense thereof, the

                                       14
<PAGE>   15
         Indemnitee shall have the right, but not the obligation, to contest,
         settle or compromise the Claim in the exercise of its reasonable
         judgment using counsel of its choice at the expense of the Indemnitor.

         (c) In the event of any Claim by a third party against an Indemnitee,
         the defense of which is being undertaken and controlled by the
         Indemnitor, the Indemnitee shall use all reasonable efforts to make
         available to the Indemnitor those employees whose assistance, testimony
         or presence is necessary to assist the Indemnitor in evaluating and in
         defending any such Claim; provided that the Indemnitor shall be
         responsible for reasonable expenses associated with any employees made
         available by the Indemnitee to the Indemnitor hereunder, which expense
         (i) shall be equal to an amount to be mutually agreed upon per person
         per hour or per day or each day or portion thereof that such employees
         are assisting, and (ii) shall not exceed the actual cost to the
         Indemnitee associated with such employees.

10.4 Effective throughout the Term of this Agreement and thereafter, for a
period of not less than four (4) years, the parties shall each carry and
maintain in full force and effect, Commercial General Liability insurance
written on the standard approval Policy Form, including Products Liability and
Blanket Contractual Liability with limits of liability of not less than
$5,000,000 Combined Single Limit, Bodily Injury and Property Damages. Said
insurance policies shall be obtained from an insurance company having a Best's
rating of A-, Class VIII or higher. Each party shall furnish the other with
certificates of said commercial general liability and Product liability
insurance. The indemnification obligations herein shall apply on a first dollar
basis without limitation or reduction due to any deductible or selfinsured
retention which either party may have under their respective insurance
coverages.

10.5 Penwest shall be responsible for all recalls of any Product. Any expense
incurred by Draxis from an injunction, recall, or stop sale or from a
governmental action or directive of similar nature, resulting from the
undertaking of the parties hereunder shall be the responsibility of Penwest,
provided such governmental actions, injunctions, recall and/or stop sale do not
arise from a breach of the Agreement by Draxis.

                                       15
<PAGE>   16
                       11. PRODUCTION FACILITY INSPECTION

11.1 Penwest shall have the right, but not the obligation, at reasonable
intervals and on ten (10) days, other than a Saturday, Sunday or statutory
holiday in the Province of Quebec, ("Business Days") prior written notice during
normal business to inspect (a) those sections of Draxis's manufacturing,
laboratory, and warehousing facilities used in the manufacture, storage,
testing, shipping or receiving of the Product(s) or the components thereof (the
"Facilities"), and (b) documentation demonstrating Draxis' satisfactory
performance of its obligations under Section 4.3. Penwest shall have the further
right to review, from time to time as it reasonably requests, on ten (10)
Business Days prior written notice and during Draxis' normal business hours,
each permit and license of Draxis which is related to this Agreement. Draxis
shall cooperate with Penwest to facilitate a pre-production inspection of the
Facilities.

11.2 Penwest shall, in addition, have the right, but not the obligation, at
reasonable intervals and at a mutually agreeable time no later than twenty (20)
days after the date on which Draxis receives written notice from Penwest (but
not more than twelve (12) times during each year of the Agreement in the
aggregate for all Penwest customers), to provide to its customer(s) access
during normal business hours to the Facilities and to knowledgeable Draxis
personnel as is reasonably required to demonstrate and explain to such
customer(s) the nature, capacity, and general procedures of the work to be
performed by Draxis for Penwest hereunder; provided, however, that (a) no such
customer shall have the right to conduct a full inspection of the sort and scale
permitted to Penwest under section 11.1 and (b) each such customer shall have
signed a confidentiality agreement containing substantially those provisions set
forth in Exhibit E hereto, if so requested by Draxis, as a condition to such
access.

11.3 In the event that Draxis's facilities are the subject of an inspection by
any duly authorized agency of the federal, state, local or any foreign
government and the inspection involves the Facilities or the Product(s), Draxis
shall notify Penwest of such inspection and provide to Penwest a summary of
findings that directly relate to the manufacture, storage, testing, shipping or
receiving of the Product(s) or components hereof.

11.4 Draxis shall notify Penwest of all waste haulers used, and the location of
all disposal sites used, in connection with this Agreement. In addition, Draxis
shall take all

                                       16
<PAGE>   17
reasonable steps necessary to permit Penwest and/or its customers to visit such
disposal sites.

                                12. General Terms

12.1 This Agreement shall be governed and construed in accordance with the laws
of the State of New York, excluding its conflicts of law principles and
excluding the United Nations Convention on Contracts for the International Sale
of Goods.

12.2 Any notice, required or permitted to be given under this Agreement, shall
be deemed sufficient if (a) sent prepaid through a nationally recognized
overnight courier service such as Federal Express, to the other party to the
address shown below or to such other address as either party may be from time to
time designate pursuant to these provisions, or (b) sent via telefax to telefax
equipment designated by the party to whom such notice is directed pursuant to
this paragraph; and in either case, shall be deemed received one (1) business
day after it is sent.
If to Draxis:

Dwight Gorham
President
Draxis Pharma Inc.
16751 Route Transcanadienne
Kirkland, Quebec H9H 4J4
Fax No.: (514) 694-3841

Copy to corporate counsel:

Draxis Health Inc.
6870 Goreway Drive
Mississauga, Ontario  L4V 1P1
Attention:  Director, Legal Affairs and General Counsel
Fax No.: (416) 544-5494

If to Penwest:

Paul K. Wotton
Penwest Pharmaceuticals Company
2981 Route 22
Patterson, New York 12563
Fax No.:  (914) 878-3420

                                       17
<PAGE>   18
Copy to corporate counsel:

Hale and Dorr LLP
60 State Street
Boston, Massachusetts
Attention:  Steven D. Singer, Esq.

12.3 No liability shall result for either party from delay in performance of
this Agreement in whole or in part if performance as agreed has been made
impracticable by compliance in good faith with any applicable foreign or
domestic governmental regulations or order whether or not such order later
proves to be invalid, or by the occurrence of a contingency the nonoccurrence of
which was a basic assumption on which this Agreement was made, including, but
not limited to, acts of God, fire, flood, accident, riot, war, sabotage, strike,
labor trouble or shortage, or embargo. If any such circumstances affect only a
part of Draxis's capacity to perform, Draxis shall have the right to allocate
production and deliveries among all of its customers and its own requirements
ratably, based on purchases over the previous twelve (12) months. Quantities of
Product(s) affected by this paragraph may, at the option of either party, be
eliminated from the Agreement without liability, but the Agreement shall remain
otherwise unaffected.

12.4 The failure of either party to insist on strict performance of any
provision of this Agreement or to take advantage of any right hereunder shall
not be construed as a waiver of any subsequent performance of such provision or
right.

12.5 The headings and captions contained herein are for reference only and shall
not constitute a substantive part of this Agreement.

12.6 The parties are and will remain at all times independent contractors, and
no agency or employment relationship exists between them.

12.7 This Agreement may not be assigned by either party without the written
consent of the other (which consent shall not be unreasonably withheld) except
to a subsidiary or affiliate or in the case of a sale or transfer of all or
substantially all of its business related to the Product(s) by way of
acquisition, consolidated or merger. Notwithstanding the foregoing, this
Agreement shall be binding upon the respective successors and assigns of either
party hereto.

                                       18
<PAGE>   19
12.8 If any provisions of this Agreement are held invalid or unenforceable, such
invalidity and unenforceability shall not affect the validity or enforceability
of any other provisions of the Agreement, except those where the invalidated or
unenforceable provisions comprise an integral part or, or any otherwise clearly
inseparable from, the intent and sense of the Agreement. In the event any
provision is held invalid or unenforceable, the parties will attempt to agree
upon a valid and enforceable provision which shall be a reasonable substitute
for such invalid or unenforceable provision in light of the intent of this
Agreement and upon so agreeing, shall incorporate such substitute provision of
this Agreement.

12.9 This document, including its exhibits, contains the entire Agreement
between the parties pertaining to its subject matter and shall not be altered or
modified, except in a writing signed by both parties.

12.10 Except as otherwise expressly stated, all dollar amounts referred to in
this Agreement are in Canadian dollars.

12.11 Any dispute, controversy, or claim arising out of or relating to this
Agreement or to a breach thereof, including its interpretation, performance, or
termination, other than any dispute, controversy or claim concerning patent
infringement, validity or enforceability, shall be finally resolved by
arbitration. The arbitration shall be conducted by three (3) arbitrators, one to
be appointed by the party initiating the proceeding within ten (10) days of
filing its claim, one to be appointed within thirty (30) days thereafter by the
other party, and the third being nominated by the two arbitrators so selected
within thirty days thereafter or, if they cannot agree on a third arbitrator, by
the President of the American Arbitration Association. The arbitration shall be
conducted in accordance with the Commercial Arbitration Rules of the American
Arbitration Association, which shall administer the arbitration, and the laws of
the State of New York. The arbitration, including the rendering of the award,
shall take place in New York, New York. The decision of the arbitrators shall be
binding upon the parties to this Agreement, and the expense of the arbitration
(including without limitation the award of the attorneys' fees to the prevailing
party) shall be paid as the arbitrators determine. The decision of the
arbitrators shall be final, and judgement thereon may be entered by any court of
competent jurisdiction. Notwithstanding this, application may be made to any
court for a judicial acceptance of the award or order of enforcement. In

                                       19
<PAGE>   20
the event of any dispute relating to patent infringement, validity or
enforceability, the parties agree to waive their respective rights to a jury
trial.

                                       20
<PAGE>   21
                  IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their duly authorized representatives as of the date
and year first written above.

DRAXIS PHARMA INC.                              PENWEST PHARMACEUTICALS CO.

BY: /s/ Dwight Gorham                           BY: /s/ Paul Wotton
    -----------------                              ----------------------
TITLE:  President                               TITLE:  VP Business Development
       ----------                                      ------------------------
DATE:  September 29, 1999                       DATE:  September 27, 1999
       ------------------                              ---------------------

                                       21
<PAGE>   22
                    CONFIDENTIAL MATERIALS OMITTED AND FILED
             SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
                          ASTERISKS DENOTE OMISSIONS.

                                    EXHIBIT A

                                    PRODUCTS

<TABLE>
<CAPTION>
                                                                                 1999 Price Through 12/31/99
          Product Name                          Batch Size                           (Canadian dollars)
----------------------------------        ------------------------        ------------------------------------------
<S>                                       <C>                             <C>
            TIMERx-A                              720 kg                                      *
            TIMERx-N                              720 kg                                      *
            TIMERx-O                              500 kg                                      *
</TABLE>

                                       22
<PAGE>   23
                    CONFIDENTIAL MATERIALS OMITTED AND FILED
             SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
                          ASTERISKS DENOTE OMISSIONS.

                                   EXHIBIT B-1

                                      * * *

                                       23
<PAGE>   24
                    CONFIDENTIAL MATERIALS OMITTED AND FILED
             SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
                          ASTERISKS DENOTE OMISSIONS.

                                      * * *

                                       24
<PAGE>   25
                    CONFIDENTIAL MATERIALS OMITTED AND FILED
             SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
                          ASTERISKS DENOTE OMISSIONS.

                                      * * *

                                       25
<PAGE>   26
                    CONFIDENTIAL MATERIALS OMITTED AND FILED
             SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
                          ASTERISKS DENOTE OMISSIONS.

                                      * * *

                                       26
<PAGE>   27
                    CONFIDENTIAL MATERIALS OMITTED AND FILED
             SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
                          ASTERISKS DENOTE OMISSIONS.

                                   EXHIBIT B-2

                                      * * *

                                       27
<PAGE>   28
                    CONFIDENTIAL MATERIALS OMITTED AND FILED
             SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
                          ASTERISKS DENOTE OMISSIONS.

                                      * * *

                                       28
<PAGE>   29
                                   EXHIBIT B-3

                               DRUM TIMERx 45 GAL

-------------------------------------------------------------------------------
                                      TEST
-------------------------------------------------------------------------------
Appearance
-------------------------------------------------------------------------------
Correctness of text
-------------------------------------------------------------------------------
Dimensions
-------------------------------------------------------------------------------
Diameter
-------------------------------------------------------------------------------
Height
-------------------------------------------------------------------------------

                                  POLYBAG # 21

-------------------------------------------------------------------------------
                                      TEST
-------------------------------------------------------------------------------
Appearance
-------------------------------------------------------------------------------
Dimensions
-------------------------------------------------------------------------------
Height
-------------------------------------------------------------------------------
Length
-------------------------------------------------------------------------------
Width
-------------------------------------------------------------------------------
Material thickness
-------------------------------------------------------------------------------
Seam integrity
-------------------------------------------------------------------------------
Thermal analysis
-------------------------------------------------------------------------------

                                       29
<PAGE>   30
                                    EXHIBIT C

                                  RAW MATERIALS

                                      * * *

                                      * * *

                                      * * *

                                      * * *

                                      * * *

                                      * * *

                                      * * *

                                       30
<PAGE>   31
                                    EXHIBIT D

                              OPERATING PROVISIONS

1.       Forecasts

         On the Effective Date and on or before the fifteenth (15th) calendar
         day of each month thereafter, Penwest shall provide to Draxis a copy of
         its forecast of its requirements of Products for the twelve (12) month
         period beginning the subsequent calendar month, each such forecast to
         include projected Product orders for each calendar month of such twelve
         (12) month period ("Monthly Projections"). In the event that a forecast
         is not delivered by such date, the prior month's forecast shall remain
         in effect.

2.       Annual Limit

         Draxis agrees to produce up to one hundred (100) metric tons of
         Product(s) during each twelve (12) month period of this Agreement.
         Quantities greater than this amount shall require review and approval
         by Draxis.

3.       Firm Orders and Quantity Commitments

         Monthly Projections for the first two (2) months of the twelve (12)
         month period covered by the most recent forecast delivered pursuant to
         Section 1 of this Exhibit D are deemed to be firm, and as such Penwest
         and Draxis, subject to Section 2 of this Exhibit D, are committed to
         same (a "Firm Order"). Penwest shall issue purchase orders to Draxis in
         accordance with such Firm Orders. The parties shall use reasonable best
         efforts to negotiate any change in the delivery date of any such Firm
         Order. Monthly Projections for the following three (3) months of such
         twelve (12) month period are deemed to be firm, subject to changes by
         Penwest, at Penwest's discretion, in the timing of delivery of Product
         orders forming part of such Monthly Projections (a "Quantity
         Commitment"). If any Product order forming part of a Firm Order or
         Quantity Commitment is cancelled, other than due to termination of the
         Agreement, the costs of Materials for such order then held by Draxis
         shall be for the account of Penwest. Any inventory of Materials or
         Products held by Draxis beyond (a) requirements necessary for delivery
         of the Products required under prevailing Firm Orders or Quantity
         Commitments or (b) any safety stock approved by Penwest pursuant to
         Section 4 of this Exhibit D, is the responsibility of Draxis, unless
         such inventory is approved in writing by Penwest. Draxis shall use its
         best efforts, but shall not be obligated, to fill any Penwest purchase
         order that, if filled, would cause Penwest to exceed the relevant Firm
         Order amount.

                                       31
<PAGE>   32
4.       Safety Stock

         Draxis shall carry the necessary safety stock of Materials to ensure
         timely delivery of Product orders corresponding to Firm Orders and
         Quantity Commitments. Draxis shall, in a timely fashion, inform Penwest
         in writing of its reasonable requirements for any Materials having
         unusually long re-order lead times, and Penwest shall promptly provide
         to Draxis written approval of Draxis's purchase of such Materials.

5.       Delivery Performance

         Draxis shall deliver (a) ninety-eight percent (98%) of all Product
         orders that form part of any Firm Order on, or within three (3)
         business days of, the delivery dates specified in purchase orders
         corresponding to such orders, and (b) ninety-five percent (95%) of the
         quantity of Product order by Penwest pursuant to such purchase orders,
         provided that Penwest's payment obligations pursuant to Section 6 shall
         apply only to those quantities of Product actually delivered to
         Penwest. For purposes of this Section 5 of this Exhibit D, subject to
         Section 4.8, Draxis shall be deemed to have delivered Product to
         Penwest when such Product has been accepted by Penwest's carrier in
         accordance with Section 3.

6.       Changes to Operating Provisions

         Upon at least sixty (60) days prior written notice, either party may
         terminate the operating provisions set forth in this Exhibit D;
         provided, however, that no such termination shall take effect until the
         parties have reached agreement on new operating provisions to take
         effect on the effective date of such termination.

                                       32
<PAGE>   33
                                    EXHIBIT E

                         CONFIDENTIALITY OF INFORMATION

         1. Draxis possesses certain information concerning its business and
other confidential information (hereinafter collectively referred to as the
"Draxis Information") which it wishes to disclose to Penwest for purposes of
carrying out this Agreement (the "Purpose"). Penwest possesses certain
information concerning its business and other confidential information
(hereinafter collectively referred to as the "Penwest Information") which it
wishes to disclose to Draxis for the Purpose. In addition to the terms defined
above, unless something in the context or subject matter is inconsistent
therewith:

         (a)      "Discloser" means Draxis with respect to the disclosure of the
                  Draxis Information and means Penwest with respect to the
                  disclosure of the Penwest Information;

         (b)      "Information" means Draxis Information with respect to the
                  disclosure or receipt of Draxis Information and means Penwest
                  Information with respect to the disclosure or receipt of
                  Penwest Information; and

         (c)      "Recipient" means Draxis with respect to the receipt of
                  Penwest Information and means Penwest with respect to the
                  receipt of Draxis Information.

         2. Discloser shall at its discretion provide such of the Information to
Recipient as is required for the Purpose. Nothing in this Agreement obligates
Discloser to make any particular disclosure of Information.

         3. All right, title and interest in and to the Information shall remain
the exclusive property of Discloser and the Information shall be held in trust
and confidence by Recipient for Discloser. No interest, license or any right
respecting the Information, other than as expressly set out herein, is granted
to Recipient under this Agreement by implication or otherwise.

         4. Recipient shall not use the Information in any manner except as
reasonably required for the Purpose.

         5. Recipient shall use all reasonable efforts to protect Discloser's
interest in the Information and keep it confidential, using a standard of care
no less than the degree of care that Recipient would be reasonable expected to
employ for its own similar confidential information. In particular, Recipient
shall not, directly or indirectly, disclose, allow access to, transmit or
transfer the Information to a third party without

                                       33
<PAGE>   34
the Discloser's prior written consent. Recipient shall disclose the Information
only to those of its employees, or to those employees of any consultant of the
Recipient, who have a need to know the Information for the Purpose. Recipient
shall, prior to disclosing the Information to such employees and consultants,
issue appropriate instructions to them to satisfy its obligations herein and
obtain their written agreement to receive and use the Information on a
confidential basis on the same conditions as contained in this Agreement.

         6.  The Information shall not be copied, reproduced in any form or
stored in a retrieval system or database by Recipient without the prior written
consent of Discloser, except for such copies and storage as may reasonably be
required internally by Recipient for the Purpose.

         7.  The obligations of the Recipient under Sections 4, 5 and 6 shall
not apply to Information:

         (a) which at the time of disclosure is readily available to the trade
             or the public;

         (b) which after disclosure becomes readily available to the trade or
             the public, other than through a breach of this Agreement;

         (c) which is subsequently lawfully and in good faith obtained by
             Recipient from an independent third party without breach of this
             Agreement, as shown by documentation sufficient to establish the
             third party as a source of the Information, and not obtained by
             the third party from Discloser;

         (d) which Recipient can establish, by documented and competent
             evidence, was in its possession prior to the date of disclosure of
             such Information by Discloser, or

         (e) any Information which the Recipient is by law required to disclose.

         8. Recipient shall, upon request of Discloser, immediately return the
Information and all copies thereof in any form whatsoever under the power or
control of Recipient to Discloser, and delete the Information from all retrieval
systems and databases.

         9. Due to the valuable and proprietary nature of the Information to
Discloser, the obligations assumed by Recipient under this Exhibit E shall
continue for ten (10) years after disclosure of such Information.

         10. Each party acknowledges that any breach of this agreement may cause
irreparable harm to the other party, and agrees that the remedies for breach may
include, in addition to

                                       34
<PAGE>   35
damages and other available remedies, injunctive relief against such breach. The
prevailing party shall be entitled to the award of its reasonable attorneys'
fees in any action to enforce this agreement.

                                       35

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