EXHIBIT 10.34 LICENCE & DEVELOPMENT AGREEMENT ------------------------------- AGREEMENT, effective as of this 30th November 1993 (hereinafter referred to as the "EFFECTIVE DATE"), by and between SCHEIN PHARMACEUTICAL, INC, 100 Campus Drive, Florham...

 
                                                                   EXHIBIT 10.34

                        LICENCE & DEVELOPMENT AGREEMENT
                        -------------------------------


AGREEMENT, effective as of this 30th November 1993 (hereinafter referred to as
the "EFFECTIVE DATE"), by and between SCHEIN PHARMACEUTICAL, INC, 000 Xxxxxx
Xxxxx, Xxxxxxx Xxxx, XX 00000 XXX, (hereinafter referred to as "LICENSEE") and
ETHICAL HOLDINGS PLC, a company registered in the United Kingdom and having its
principal place of business at Corpus Christi House, 0 Xxxx Xxxxxx,
Xxxxxxxxxxxxx, Xxxxxxxxxxxxxx, XX00 0XX, Xxxxxxx (hereinafter referred to as
"ETHICAL").

    
                               WITNESSETH THAT:
                               ----------------

WHEREAS, ETHICAL has acquired improved formulations of ********* for once daily
administration in man (hereinafter defined as the "PRODUCT"), combining active
drug agents in a patented pharmaceutical formulation capable of delivering the
drug agents in a controlled release manner after oral administration to man; and

WHEREAS, ETHICAL and LICENSEE have signed a Letter of Intent dated 30 August
1993 and LICENSEE desires to manufacture and/or have manufactured by ETHICAL and
sell the PRODUCT (hereinafter defined) in the TERRITORY; and
    
WHEREAS, ETHICAL owns valuable ETHICAL KNOW-HOW (hereinafter defined) and has
sought PATENT RIGHTS (hereinafter defined) relating to pharmaceutical
formulations designed to provide controlled release of active constituents from
solid dosage forms; and
    
WHEREAS, LICENSEE desires to aid the final product development and registration
with the U.S. FDA and LICENSEE will make the regulatory filing and the ANDA will
be held in the LICENSEE's name;


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                                    Page 1                           November 93

 
NOW THEREFORE, in consideration of the foregoing and the mutual covenants and
conditions set forth herein, the parties hereto mutually agree as follows:
    

ARTICLE I.  DEFINITIONS
-----------------------

The following terms shall have the meanings set forth in this Article I:
    
A.   "ETHICAL" means ETHICAL HOLDINGS PLC, Corpus Christi House, 0 Xxxx Xxxxxx,
     Xxxxxxxxxxxxx, Xxxxx, XX00 0XX.
    
B.   "LICENSEE" means SCHEIN PHARMACEUTICAL, INC, 000 Xxxxxx Xxxxx, Xxxxxxx
     Xxxx, XX 00000, XXX.
    
C.   "EFFECTIVE DATE" means 30th November 1993.
    
D.   "ETHICAL KNOW-HOW" means all confidential scientific and medical
     information, technical data and marketing studies in ETHICAL'S possession
     or from time to time invented or developed or acquired by or on behalf of
     ETHICAL or under the control of ETHICAL (other than LICENSEE KNOW-HOW)
     relating specifically to the registration, marketing, manufacture, use or
     sale of PRODUCT including, but not limited to, toxicological,
     pharmacological, analytical and clinical data, bioavailability studies,
     product forms and formulations, control assays and specifications, methods
     of preparation and stability data and specifically including all
     information contained in all health registration dossiers to be filed in
     various countries of the European Community (EC) and shall further include
     all Third Party data which ETHICAL has access to and is free to disclose
     without restriction or compensation to such Third Party. Not withstanding
     the foregoing, the term 'ETHICAL KNOW-HOW' shall not be deemed to refer to
     information and data of the type which would not be required to be
     maintained as confidential by either party pursuant to the provision of
     Subsections B1 or 2 of Article XI.

                                    Page 2                          November 93

 
E.   "LICENSEE KNOW-HOW" means all confidential scientific and medical
     information and technical data from time to time, developed or acquired by
     or on behalf of LICENSEE (other than ETHICAL KNOW HOW) relating
     specifically to the manufacture or use of the PRODUCT, including, but not
     limited to, toxicological, pharmacological, analytical and clinical data,
     bioavailability studies, product forms and formulations, control assays and
     specifications, methods of preparation and stability data, and specifically
     including all information contained in all health registration dossiers
     filed in the TERRITORY by the LICENSEE. Not withstanding the foregoing, the
     term `LICENSEE KNOW-HOW' shall not be deemed to refer to information and
     data of the type which would not be required to be maintained as
     confidential by either party pursuant to the provision of Subsections B1 or
     2 of Article XI.
    
F.   "PATENT RIGHTS" means the ** patent numbers ********** **********
     ********** ********** ******** and any and all ****** ****** *** **********
     ****** patents and patent applications filed by or issued to ETHICAL and
     licensed or assigned to ETHICAL relating to controlled release formulations
     for oral administration in man, or the manufacture or use of them, together
     with any and all patents that may issue or may have issued therefrom,
     including any and all divisions, continuations, continuations-in-part,
     extensions, additions or reissues of or to any of the aforesaid patent
     applications.
    
G.   "PRODUCT" means controlled release ******* ** ******** based on the PATENT
     RIGHTS and ETHICAL KNOW-HOW, containing ********* manufactured according
     to the technology protected in the PATENT RIGHTS defined above to be used
     for human therapy and exhibiting a similar pharmacokinetic profile to

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     ********** ******* ********* ******* sold in the TERRITORY at the EFFECTIVE
     DATE under the trade name ******** *** and as further defined in Appendix 
     1.
    
H.   "FINISHED PRODUCT" means PRODUCT in final consumer package.
    
I.   "TERRITORY" means the ******* ***** ** ******** ********* *** ***********
     *** ***********.

J.   "NET SALES" of the PRODUCT means the gross sales of FINISHED PRODUCT
     actually invoiced by the LICENSEE or LICENSEE's sublicensee hereunder to
     INDEPENDENT THIRD PARTY, less chargebacks and rebates specifically related
     to volume sales of the PRODUCT (up to a maximum of *** of gross sales), the
     total ordinary and customary trade discounts (but not including cash
     discounts for prompt payment), rebate for inventory price protection
     covering the last 30 (thirty) days' sales by customers claiming such
     rebates to counter competitive pressures, excise taxes, other consumption
     taxes, customs duty, credits or allowances actually granted on account of
     rejection or return of FINISHED PRODUCT.
    
K.   "INDEPENDENT THIRD PARTY" means any party other than ETHICAL and LICENSEE
     and their subsidiaries or affiliates.

L.   "AGREEMENT" means this agreement duly signed by the Parties.
    
M.   "DEVELOPMENT PROGRAMME" means the detailed schedule as set forth as
     Appendix 2 hereto which describes the planned development activities,
     project deliverables and timetable presently believed to be required to
     obtain regulatory approval to market, promote and distribute the PRODUCT in
     the TERRITORY. Without limiting the generality of the foregoing, the
     DEVELOPMENT PROGRAMME outlines the obligations of ETHICAL with respect to
     pre-clinical
     
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                                    Page 4                          November 93

 
     studies and the obligations of LICENSEE with respect to manufacturing
     development, including compliance with "Good Manufacturing Practice"
     requirements applicable in the TERRITORY. The DEVELOPMENT PROGRAMME may be
     amended from time to time by the mutual consent of the parties in light of
     periodic progress reviews and regulatory requirements. Neither party shall
     be required to perform development work with respect to the PRODUCT except
     as set forth in the DEVELOPMENT PROGRAMME as from time to time is in
     effect.

N.   ***** ***** *** ****** ****** **** *** **** **************.
    
0.   "MARKETING AUTHORISATIONS" means the consent or approval of the *** and any
     applicable comparable state agencies required to market or distribute the
     FINISHED PRODUCT in the TERRITORY.
    
ARTICLE II.  WARRANTY
---------------------

ETHICAL warrants that it is exclusive owner of all rights, title and interest in
and to the PATENT RIGHTS and ETHICAL KNOW-HOW and that it is free to enter into
this AGREEMENT and to carry out all of the provisions hereof including its
agreement to grant to LICENSEE an exclusive licence with the right to grant
certain sub-licences with respect to the PRODUCT in the TERRITORY without any
consents from any third parties.
    
ARTICLE III.  LICENCE GRANT
---------------------------
    
A.   Subject to C below ETHICAL hereby grants to LICENSEE the exclusive right
     under the PATENT RIGHTS and ETHICAL KNOW-HOW with the right to grant sub-
     licenses, to make and/or manufacture, use, promote and sell the PRODUCT and
     FINISHED PRODUCT in the TERRITORY.

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B.   Subject to C below, ETHICAL hereby grants to LICENSEE the exclusive right
     to use ETHICAL's KNOW-HOW for marketing and selling the PRODUCT in the
     TERRITORY.

C.   For the avoidance of doubt, and in addition to Article XI hereof, ETHICAL
     shall have a continuing right to make, have made and use for its own
     investigational and developmental purposes (but not sell, directly or
     indirectly in, or to the TERRITORY) the PRODUCT in the TERRITORY. If
     ETHICAL acquires or develops rights to additional claims or indications for
     the PRODUCT, it shall make these available to LICENSEE as part of the
     licence granted hereunder, without additional compensation to ETHICAL
     provided that any additional development costs for such claims or
     indications are mutually agreed.

D.   All proprietary rights and rights of ownership with respect to the PATENT
     RIGHTS, and ETHICAL KNOW-HOW shall at all times remain solely with ETHICAL
     and LICENSEE shall have no proprietary rights in or to the PATENT RIGHTS,
     and ETHICAL KNOW-HOW other than those specifically granted herein. All
     proprietary rights to LICENSEE KNOW-HOW belong to and shall at all times
     remain solely with LICENSEE, other than as specifically provided herein.
     
E.   LICENSEE shall exert its best efforts to commercialise and to create a
     demand for the PRODUCT and FINISHED PRODUCT in the TERRITORY under its own
     trademark and other private labels, consistent with the market potential
     for the PRODUCT in the TERRITORY determined by LICENSEE in a commercially
     reasonable manner. LICENSEE shall own and retain all right, title, and
     interest in and to any trademark or trademarks used by it in the TERRITORY
     in connection with the PRODUCT.

                                    Page 6                          November 93

 
F.   LICENSEE will be responsible for ensuring that the sale and supply by
     LICENSEE of the PRODUCT and FINISHED PRODUCT within the TERRITORY is in
     accordance with the legal and regulatory requirements of the TERRITORY,
     subject to the compliance by ETHICAL with its representations and
     obligations under this AGREEMENT.

G.   For the term of this AGREEMENT, ETHICAL agrees that it will not, directly
     or indirectly, market, sell, or distribute in the TERRITORY or develop or
     assist in the development for use, marketing, sale or distribution in the
     TERRITORY any PRODUCT or FINISHED PRODUCT except as provided in this
     AGREEMENT.

ARTICLE IV.  PAYMENT PRIOR TO COMMERCIALISATION
-----------------------------------------------

    
A.   In consideration of the development and technical support to the LICENSEE
     in the TERRITORY for the PRODUCT, the LICENSEE agrees to pay ETHICAL *
     ***** ** *** ********** **** ******** **** ******* ******** ** ********,
     ("LICENSEE payments"), of which ETHICAL has already received from
     LICENSEE the *** ** *** ****** ***** ******* *** *********** ******** **
     ********. The remainder will be paid in instalments as follows:

     a)   ********* *********** ******** ** ******** upon signing of this 
          AGREEMENT.

     b)   ********** **** ******* * ****** ******** ** ******** upon LICENSEE's
          completion of a pilot bioavailability study in no less than 12
          (twelve) subjects demonstrating concentration time profile for the
          ***** strength PRODUCT satisfactory to progress the project on to ANDA
          programme.


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                                    Page 7                          November 93

 
     c)   ********** **** ******* * ****** ******** ** ******** upon LICENSEE's
          completion of a pilot bioavailability study in no less than 12
          (twelve) subjects demonstrating concentration time profile for the
          ***** strength PRODUCT satisfactory to progress the project on to ANDA
          programme.
          
     d)   ********* **** ******* * *********** ******** ** ******* upon
          satisfactory manufacturing technology transferred to LICENSEE or a
          LICENSEE affiliate, or, upon mutual agreement, at ETHICAL's nominated
          manufacturer as witnessed by the production of necessary bio-batches
          according to the PRODUCT specification agreed to in writing by
          LICENSEE and ETHICAL following successful completion of the pilot
          bioavailability study referred to in subsection (b) or (c) above and,
          in the case of ETHICAL's manufacture of the PRODUCT or ETHICAL's
          nominated manufacturer, the execution of a Supply Agreement between
          ETHICAL and LICENSEE

     e)   ********** ***** ******* * ********** ******** ** ******* upon
          LICENSEE's filing to the FDA of an application for approval of a *****
          strength PRODUCT.
          
     f)   ********** ****** ******* * *********** ******** ** ******** upon
          LICENSEE's filing to the FDA of an application for approval of a *****
          strength PRODUCT.
    
     g)   ********** ***** ******* * *********** ******** ** ******** upon FDA 
          approval of either or both strengths.
    
B.   In the event that scientific results do not indicate that the Product
     objectives can be obtained, LICENSEE may nominate an alternative project
     (including the development programme relating to ********* *** **** ***
     ***** ***** ************** as contemplated by the Licence & Development
     Agreement dated
     
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                                    Page 8                          November 93

 
     15th January, 1993 between LICENSEE and ETHICAL (the ***********
     Agreement") and apply the payments made under this Article IV A (a) and the
     ********** ***** ******* * ****** **** ******** ** ******** payment
     described in Article IV A to such project, less ETHICAL's documented 
     out-of-pocket expenses for Product development for the period starting 1st
     December, 1993 through completion of the pilot biostudies described below
     (the "Development Period"). This right so to nominate expires at the due
     date of the payment required under Article IV A(b).

C.   These payments are not to be regarded as a pre-payment against royalty as
     described under Article V. It is further understood that LICENSEE shall not
     be liable to make any payment provided above in Subsection A except upon
     the occurrence of the milestone therein specified for such payment. 

ARTICLE V. RUNNING ROYALTIES
----------------------------
    
LICENSEE shall pay to ETHICAL running royalties as follows:
    
A.   ******* ** * ********** ** ****** ******** ** *** *** *****.
    
B.   ** *** ***** **** ******* ** **** ****** ********* * ***** *****
     ************ ** ** ****** *** ******* ** *** ********* *** ****** *****
     **** ** ***** ******** ************* ***** **** *** ******** ********* ****
     ***** ** ** ******* *** *** *** ** * ******** ****** ********* ** **
     ******** ****** **** ** ********** **** ******* ** *******

C.   LICENSEE shall promptly give notice to ETHICAL of the date of first
     commercial sale of the PRODUCT in the TERRITORY.
     

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D.   In the event the royalty rates set forth immediately above exceed those
     allowable by applicable law or governmental rule or regulation, they shall
     be so modified as to conform to the maximum royalty rate(s) allowable.
    
E.   The obligation to pay running royalties hereunder shall terminate with
     respect to sales of the PRODUCT which follow the termination of this
     AGREEMENT (except for those royalties contemplated by Article IX hereof).
    
F.   Royalty term may be subject to review and renegotiation in the event of
     intensive competitive pressures, and the parties undertake to conduct such
     review and renegotiation in good faith.
    
ARTICLE VI.  PAYMENT OF RUNNING ROYALTIES
-----------------------------------------
    
A.   Running royalties due to ETHICAL under Article V of this AGREEMENT shall
     accrue when the FINISHED PRODUCT is invoiced by the LICENSEE in accordance
     with the provisions below:

B.   Running royalties accruing hereunder shall be due and payable on the 45th
     (forty-fifth) day following the close of each fiscal quarterly period of
     LICENSEE.

C.   Running royalties accruing hereunder shall be paid in U.S. dollars to
     ETHICAL or ETHICAL's designee, acceptable to ******** in its reasonable
     business judgment, duly named by ETHICAL in written notice to LICENSEE.

D.   Running royalties accruing hereunder shall be paid in United States
     Dollars.
    
E.   If, at any time, legal restrictions in the TERRITORY prevent the prompt
     payment of running royalties or any portion thereof accruing hereunder, the
     parties shall meet to discuss suitable and reasonable alternative methods
     of reimbursing ETHICAL the amount of such running royalties.

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ARTICLE VII. ROYALTY REPORTS
----------------------------
    
A.   Each payment of running royalties made to ETHICAL hereunder shall be
     accompanied by a written report, prepared and signed by a financial officer
     of LICENSEE, showing the NET SALES for the months of the quarterly period
     for which payment is being made. In the event that no running royalty is
     due to ETHICAL hereunder for any such quarterly period, LICENSEE shall so
     report.
    
B.   LICENSEE gun maintain and keep for a period of at least 3 (three) years or,
     if shorter, for such period as required by applicable **** ******* ** *****
     **** complete and accurate records in sufficient detail to enable any
     running royalties which shall have accrued hereunder to be determined.
    
C.   Upon the request of ETHICAL, but not exceeding once in any one yearly
     period, LICENSEE shall permit an independent public accountant selected by
     ETHICAL and acceptable to LICENSEE, which acceptance shall not be
     unreasonably withheld, to have access to such of the records of LICENSEE as
     may be necessary to verify the accuracy of the royalty reports and payments
     submitted to ETHICAL hereunder. Any such inspection of LICENSEE's records
     shall be at ETHICAL's expense, except that if any such inspection reveals a
     deficiency in an amount of running royalty actually paid to ETHICAL
     hereunder in any quarterly period of ** ***** ******** or more of the
     amount of such running royalty actually due to ETHICAL hereunder, then the
     expense of such inspection shall be borne by LICENSEE instead of by ETHICAL
     Any amount of deficiency shall be paid promptly to ETHICAL.
    
ARTICLE VIII. REGISTRATION OF THE LICENSED PRODUCT
--------------------------------------------------
    
A.   ETHICAL and LICENSEE have agreed that PRODUCT development should progress
     as specified in Appendices 1 and 2.

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B.   LICENSEE shall bear the cost of all application fees to government
     authorities for MARKETING AUTHORISATIONS including, without limitation,
     *********** *** **** ************ ******** ***** **** *** or any other fees
     concerning approvals from government authorities necessary to commercialise
     the PRODUCT in the TERRITORY. The Marketing Authorisations and all ******
     in the TERRITORY shall be the sole and exclusive property of LICENSEE.
    
C.   During the course of this AGREEMENT, LICENSEE may wish ETHICAL to develop
     additional strengths of the product which ETHICAL will undertake on terms
     and conditions mutually acceptable to both parties according to the
     principles of this AGREEMENT.
    
ARTICLE IX. DURATION. TERMINATION
---------------------------------
    
A.   DURATION
     --------
    
     This AGREEMENT shall come into force as of the EFFECTIVE DATE and remain in
     force for the term of any patents issued in the TERRITORY relating to the
     PRODUCT and included in the PATENT RIGHTS or for ** ********* ***** from
     first commercial sale, whichever is the longer.

     This AGREEMENT shall automatically be extended thereafter for successive 2
     (two) year terms unless either party notifies the other of its decision not
     to renew this AGREEMENT at least 12 (twelve) months prior to the
     commencement of any such renewal term. Following any such termination
     LICENSEE shall have the right to manufacture and distribute the PRODUCT in
     the TERRITORY on a non-exclusive basis for which LICENSEE would pay to
     ETHICAL * ******** ****** ***** ** ** ***** ******** of NET SALES of the
     PRODUCT in the TERRITORY.

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B.   TERMINATION FOR CAUSE
     ---------------------

     Either party hereto may terminate this AGREEMENT upon 90 (ninety) days
     written notice calculated from the date of receipt of such notice to the
     other party of its intention to do so in the event of violation or breach
     of any of the material provisions of this AGREEMENT. Should, however, the
     other party remedy the default upon which said notice is based within the
     said 90 (ninety) day period, the notice shall be without effect and this
     AGREEMENT shall continue in full force and effect.

C.   (1)  In the event this AGREEMENT is terminated prior to the date of its
          expiration in the TERRITORY due to fault of LICENSEE, LICENSEE shall
          promptly make an accounting to ETHICAL of the inventory of all
          PRODUCT which it has on hand in the TERRITORY, if any, as of the date
          of such termination and said parties shall thereafter have the right
          for a period of 6 (six) months after said termination to sell such
          inventory of PRODUCT provided that the NET SALES thereof shall be
          subject to the royalty provisions of Article V and so payable to
          ETHICAL. Thereafter, any remaining inventory of PRODUCT shall be
          disposed of by mutual agreement in accordance with regulatory
          requirements.

     (2)  In the event this AGREEMENT is terminated prior to the date of its
          expiration due to fault of ETHICAL, LICENSEE shall have the
          unrestricted right to continue to use and sublicense the PATENT RIGHTS
          and ETHICAL KNOW-HOW RIGHTS, and to make, manufacture, use, promote
          and sell the PRODUCT and FINISHED PRODUCT in the TERRITORY for the
          duration as defined in Article IX A above, in which case Article V, A
          shall read ** ** ** ********* *** ****** ** **** **** ***** ****
          *******.


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D.   (1)  If, within 6 (six) months after receipt of MARKETING AUTHORISATIONS
          for the PRODUCT in the TERRITORY, LICENSEE has not commenced
          commercial sales of the PRODUCT, then ETHICAL may terminate the
          AGREEMENT effective immediately upon giving notice to LICENSEE.

     (2)  Should LICENSEE proceed to commercialise the PRODUCT in the
          TERRITORY and then choose to abandon commercialisation of the PRODUCT
          in the TERRITORY for any reasons, then LICENSEE shall promptly notify
          ETHICAL of such abandonment of commercialisation, and ETHICAL may
          terminate this AGREEMENT, effective immediately upon giving notice to
          LICENSEE.

     (3)  Should LICENSEE make the determination, for any reason, that it does
          not intend to commercialise the PRODUCT in the TERRITORY, then
          LICENSEE shall promptly notify ETHICAL of the same and ETHICAL may
          terminate this AGREEMENT immediately upon giving notice to LICENSEE.

E.   Upon any early termination of this AGREEMENT in full due to the fault of
     LICENSEE, ETHICAL shall have the right to use, including license to any
     Third Party(ies), any LICENSEE KNOW-HOW and any other information and data
     developed by or for LICENSEE with respect to the PRODUCT subject to
     compensation arrangements to LICENSEE mutually acceptable to LICENSEE and
     ETHICAL (including without limitation royalty payments in respect of such
     LICENSEE KNOW-HOW).

F.   In the event any of the patents included in the PATENT RIGHTS is found by a
     court of applicable jurisdiction to be invalid or unenforceable in the
     TERRITORY and as a result thereof an INDEPENDENT THIRD PARTY would be
     entitled to manufacture or distribute and thereafter commercialises the
     PRODUCT in the

                                    Page 14                          November 93

 
     TERRITORY utilising any technology covered by the PATENT RIGHTS, then
     LICENSEE in its discretion may terminate this AGREEMENT or, at LICENSEE's
     election, continue this AGREEMENT in full force and effect **** * *********
     ** ******* ********* ** *** *** ******** *******. Such termination would
     not be subject to Article IX C (2) of this AGREEMENT.
    
G.   Termination of this AGREEMENT, due to the fault of either party, shall be
     without prejudice to any other rights or remedies then or thereafter
     available to either party under this AGREEMENT or otherwise.

H.   The rights granted either party to terminate this Agreement prior to the
     expiration of its term shall not be affected in any way by that party's
     waiver of or failure to take action with respect to any previous default
     hereunder.

ARTICLE X. PRODUCT MANUFACTURE BY LICENSEE
------------------------------------------

If LICENSEE undertakes to manufacture PRODUCT and FINISHED PRODUCT in the
TERRITORY such manufacturing shall be in accordance with prevailing "Good
Manufacturing Practice" in the TERRITORY.
    
ARTICLE X1. PRODUCT MANUFACTURE AND SUPPLY BY ETHICAL
-----------------------------------------------------
    
At the request of LICENSEE, ETHICAL shall use its best efforts to manufacture or
have manufactured and provide to LICENSEE such supply of PRODUCT as is
requested by LICENSEE. ETHICAL shall ensure that it or any nominated
manufacturer or manufacturers comply with the appropriate standards required to
meet US Good Manufacturing Practice, for sale of the PRODUCT in the TERRITORY.
Any such manufacture and supply of PRODUCT will be in accordance with the terms
and conditions of the separate Supply Agreement to be negotiated and agreed upon
in good faith between the parties

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ARTICLE XII. INFORMATION TRANSFER: CONFIDENTIALITY AND COOPERATION
------------------------------------------------------------------
    
A.   Within 30 (thirty) days following the signing of this AGREEMENT, ETHICAL
     shall provide to LICENSEE copies of relevant ETHICAL KNOW-HOW.
    
B.   Each party shall hold in strict confidence any tangible information
     relating to the PRODUCT marked confidential received from the other party
     (or oral information which is reduced to tangible form within 30 (thirty)
     days of disclosure and noted to be confidential), unless such information:
    
    1.  Is already in its possession.
    
    2.  Is already in the public domain or knowledge at the time of disclosure
        or later comes into the public domain or knowledge without fault on the
        part of the recipient.
    
    3.  Is subsequently disclosed to the recipient by a third party who did not
        acquire it in confidence from the other party.
    
    4.  Is required to be disclosed in connection with any legal proceedings or
        in order to obtain permission to manufacture or market the PRODUCT in
        the TERRITORY.
    
     This provision shall remain valid for a period of ***** ***** after
     termination of this AGREEMENT.
    
C.   For the period starting with the EFFECTIVE DATE and ending with the first
     commercial sale of the PRODUCT in the TERRITORY, ETHICAL shall report to
     LICENSEE on a monthly basis the progress of the DEVELOPMENT PROGRAMME, as
     defined in Appendix 2, of the PRODUCT. LICENSEE will provide a project
     update to ETHICAL on a quarterly basis. ETHICAL will use its

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                                    Page 16                         November 93

 
     best efforts to carry out the DEVELOPMENT PROGRAMME in accordance with the
     timetable setforth in Appendix 2. ETHICAL will carry out the DEVELOPMENT
     PROGRAMME in accordance with applicable laws and regulations of the
     TERRITORY, including, without limitation, *** ***********. All costings
     included in the DEVELOPMENT PROGRAMME shall be jointly reviewed every *
     ***** ****** by ETHICAL and LICENSEE.
    
D.   ETHICAL will on a continuous basis provide to LICENSEE any ETHICAL KNOW-HOW
     developed, information acquired or development planned in relation to the
     PRODUCT and all improvements and modifications of the PRODUCT from time to
     time invented, developed or acquired by or on behalf of ETHICAL. Prior to
     the date of first commercial sale of the PRODUCT in the TERRITORY, LICENSEE
     shall provide to ETHICAL a summary of its marketing plans for the PRODUCT.
    
E.   ETHICAL shall make available to LICENSEE, on a reasonable consultation
     basis without charge to LICENSEE, such advice of its technical personnel as
     may reasonably be requested by LICENSEE in connection with the PRODUCT, it
     being understood that LICENSEE will reimburse all reasonable out-of-pocket
     expenses incurred by ETHICAL attending meetings requested by LICENSEE.
    
F.   LICENSEE shall disclose to ETHICAL and ETHICAL shall disclose to LICENSEE
     all reports or other knowledge they my possess with respect to "adverse
     drug experiences" *** ******* ** *********** *********** ** *** ****, mis-
     labelling, stability failures or microbiological contamination with respect
     to the PRODUCT (whether occurring within or outside of the TERRITORY)
     within 10 (ten) days of becoming aware of same. With respect to "serious
     adverse drug experiences" *** ******* ** ** *** ******* *** *******
     *********** ** *** ****, LICENSEE shall disclose to ETHICAL and ETHICAL
     shall disclose to LICENSEE all reports and

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                                    Page 17                          November 93

 
     other knowledge they may possess as soon as possible and in no event later
     than 2 (two) business days of the receipt of such report or notification of
     the serious adverse drug experience. The content of such disclosure shall
     comply with *** *** *********** ********** ** ************ ** *** *** with
     respect to such matters. Each party shall promptly deliver to the other,
     copies of all correspondence which such party may send to, or receive from,
     *** *** with respect to the PRODUCT.
    
G.   During the term of this AGREEMENT, at least semi-annually, ETHICAL shall
     furnish to LICENSEE any ETHICAL KNOW-HOW and any other information and data
     developed or acquired by or under the control of ETHICAL with respect to
     the PRODUCT. ETHICAL hereby acknowledges and agrees that LICENSEE may use,
     within the TERRITORY, all such ETHICAL KNOW-HOW and information and data
     without restriction and without additional compensation to ETHICAL, other
     than as provided in this AGREEMENT, to make, have made, use and sell the
     PRODUCT in the TERRITORY.
    
H.   During the term of this AGREEMENT, at least semi-annually, LICENSEE shall
     furnish to ETHICAL any LICENSEE KNOW-HOW and any other information and data
     developed or acquired by or under the control of LICENSEE with respect to
     the PRODUCT, subject to the following sentence. LICENSEE shall be under no
     obligation to provide any LICENSEE KNOW-HOW, information or data to ETHICAL
     hereunder (i) if the disclosure of such would be in violation of any
     obligation LICENSEE owes to any THIRD PARTY, or (ii) until and unless
     LICENSEE and ETHICAL have entered into a mutually acceptable arrangement
     providing compensation to LICENSEE for ETHICAL's use of any such LICENSEE
     KNOW-HOW, information or data. Notwithstanding the foregoing, LICENSEE
     agrees to provide to ETHICAL, at no charge to ETHICAL, a summary (without
     data) of the results of the bioavailability studies referred to in Article
     IV hereof.

* redacted pursuant to confidential treatment request
    
                                    Page 18                          November 93

 
ARTICLE XIII. INFRINGEMENT
--------------------------    

A. (1)  ETHICAL and LICENSEE each agree to notify the other in writing of any
        alleged infringement or potential infringement of any PATENT RIGHTS or
        any information or allegations impacting on the validity of any such
        PATENT Rights, in the TERRITORY promptly after becoming aware of the
        same.

   (2)  Should ETHICAL elect to take action in its own name against an alleged
        infringer, then all recoveries from such action shall inure to the
        benefit of the parties in accordance with their mutual agreement taking
        into consideration the profits lost by ETHICAL and LICENSEE in respect
        of the sales accounted for by the infringer and ETHICAL shall bear the
        cost and expense of any such action.

   (3)  If, within 30 (thirty) days after receipt by ETHICAL of notification of
        alleged infringement, ETHICAL does not take action against an alleged
        infringer or potential infringer and has failed to notify LICENSEE in
        writing of its intent promptly to commence an action to terminate the
        alleged infringement or potential infringement, then LICENSEE shall have
        the right to commence such action on its own behalf at its own cost and
        expense and to use ETHICAL's name in connection therewith, in which case
        any recoveries shall inure to the benefit of LICENSEE

   (4)  ETHICAL AND LICENSEE, each at the request of the other, shall assist
        each other and cooperate in any action taken, other than direct
        financial assistance, against an alleged infringer or potential
        infringer.

B. (1)  ETHICAL hereby represents that, to the best of its knowledge, none of
        the PATENT RIGHTS or ETHICAL KNOW-HOW infringe on the patent or other
        legally protected proprietary rights of any Third Party, and it has not
        received
    
                                    Page 19                          November 93

 
        any notice or claim of any such infringement worldwide. ETHICAL agrees
        to hold LICENSEE harmless from any judgements, losses or costs
        (including reasonable attorneys' fees) incurred in the event a claim or
        legal action is asserted against LICENSEE to the effect that the
        manufacture, use or sale of the PRODUCT infringes the PATENT RIGHTS or
        other legally protected proprietary rights of THIRD PARTIES.

   (2)  ETHICAL mid LICENSEE shall each give to the other prompt written notice
        of any claim or action made against either of them alleging that any of
        the PATENT RIGHTS infringe the rights of an INDEPENDENT THIRD PARTY and
        arising from the manufacture, use or sale of the PRODUCT in the
        TERRITORY. ETHICAL and LICENSEE agree to cooperate and collaborate with
        each other in undertaking a full investigation of the situation and in
        taking such action as they shall agree is appropriate in the
        circumstances.
    
C. ETHICAL shall be solely responsible for and bear the cost of the prosecution
   and maintenance of the PATENT RIGHTS.
    
D. The provisions of this Article XIII shall survive termination of this
   AGREEMENT.
    
ARTICLE XIV. TRANSFER OF RIGHTS AND OBLIGATIONS
-----------------------------------------------
    
This AGREEMENT, in whole or in part, shall not be assignable by either party
hereto to any INDEPENDENT THIRD PARTY without the prior written consent of the
other party hereto except that either party may assign this AGREEMENT to an
affiliated company or the successor or assignee of substantially all of its
business. It is expressly understood and agreed by the parties hereto that the
assignor of any rights hereunder shall remain bound by its duties and
obligations hereunder.
    
                                    Page 20                          November 93

 
ARTICLE XV. DISCLOSURE
----------------------    
    
ETHICAL and LICENSEE shall have the right, subject to the written approval of
the other, to disclose to any Third Party(ies) in connection with any
announcement, news release, or for any other reason the existence of this
AGREEMENT entered into with the LICENSEE, but not the terms hereof.
Notwithstanding the foregoing, each party shall have the right to make such
disclosures relating to this AGREEMENT as may be required by applicable laws
and regulations.
    
ARTICLE XVI. FORCE MAJEURE  
--------------------------      

ETHICAL and LICENSEE shall not be liable for delays if such delays are due to
force majeure case, such as strikes, disputes with workmen, failure of supplies
from ordinary sources, fire, floods earthquakes, governmental regulation against
the aims of this AGREEMENT, war, legislation or any other cause, either similar
or dissimilar to the foregoing, beyond the reasonable control of the parties
winch cannot be overcome by due diligence.
    
ARTICLE XVII. NOTICE  
--------------------      

Any notice or report required or permitted to be given or made under this
AGREEMENT by either party to the other shall be in writing, sent by hand or by
registered or express mail or courier, postage prepaid, telex or telefax,
addressed to such other party at its address indicated at the beginning of this
AGREEMENT or to such other address as the addressee shall have last furnished in
writing to the addressor, and shall be effective upon receipt by the addressee.

                             Page 21                                 November 93

 
ARTICLE XVIII. FURTHER ASSURANCES
---------------------------------    

From and after the date hereof, without further consideration, ETHICAL and
LICENSEE shall, from time to time during the term of this AGREEMENT, upon
request by the other, perform all actions and execute, acknowledge and deliver
all such further documents or instruments as may be required to give effect to
the purpose and intent of this AGREEMENT Without limiting the generality of the
foregoing, the obligations of ETHICAL and LICENSEE are undertaken with a
principle objective of complying with all pertinent provisions of applicable
law, orders and regulations relating to the manufacture, use or sale in the
TERRITORY of pharmaceutical products; the obligation of ETHICAL shall include
the attendance by representatives of ETHICAL, upon reasonable advance request by
LICENSEE, at meetings with *** *** with respect to *** **** *** *******
*************** ** *** ******** ** *** ******* ** ********* ****** ****
********* All out-of-pocket expenses incurred in attending such meetings will
be paid by LICENSEE.
    
ARTICLE XIX. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS
-------------------------------------------------------------------    

Except as otherwise specifically provided in this AGREEMENT, all
representations, warranties and agreements contained in this AGREEMENT shall
survive the execution and delivery of this AGREEMENT and remain in full force
and effect regardless of any investigation made by or on behalf of either
ETHICAL or LICENSEE.
    
ARTICLE XX. ARBITRATION
-----------------------    

All disputes arising in connection with the AGREEMENT shall be settled under the
Rules of Conciliation and Arbitration of the International Chamber of Commerce
by one or more arbitrator in accordance with the said RULES, as follows:

* redacted pursuant to confidential treatment request
    
                            Page 22                                  November 93

 
Each of the parties shall designate its arbitrator within 15 (fifteen) days from
notification by registered letter. The two arbitrators thus designated shall
designate a third arbitrator within 30 days from designation of the second
arbitrator, the said third arbitrator shall preside over the arbitration court.
Arbitration should be held in London if ETHICAL initiates the request and if
LICENSEE initiates the request arbitration should be held in *** *****
    
ARTICLE XXI. DISCLAIMER OF AGENCY
---------------------------------    

The parties acknowledge that each of LICENSEE and ETHICAL are independent
contractors and nothing herein contained shall be deemed to create any
relationship in the nature of agency, joint venture, partnership or similar
relations between LICENSEE and ETHICAL.
    
ARTICLE XXII. SEVERABILITY
--------------------------

Whenever possible, each provision of this AGREEMENT shall be interpreted in such
manner as to be effective and valid under applicable law, but if any provision
of this AGREEMENT should be prohibited or invalid under applicable law, such
provision shall be ineffective to the extent of such invalidity without
invalidating the remainder of such provision or the remaining provisions of this
AGREEMENT to the extent such modification does not impair or change the intent
of the parties hereto.
    
ARTICLE XXIII. PARAGRAPH HEADINGS
---------------------------------

The subject headings of the Articles of this AGREEMENT are included for the
purposes of convenience only, and shall not affect the construction or
interpretation of any of its provisions.

* redacted pursuant to confidential treatment request
    
                                    Page 23                          November 93

 
ARTICLE XXIV. ENTIRE AGREEMENT: AMENDMENT
-----------------------------------------    

This AGREEMENT contains the entire understanding of the parties with respect to
the matters contained herein and supersedes any previous agreements and may be
altered or amended only by a written instrument duly executed by both parties
hereto.
    
IN WITNESS WHEREOF, the parties hereto have executed this AGREEMENT in
duplicate originals.
    
ETHICAL HOLDINGS LTD               SCHEIN PHARMACEUTICAL. INC
--------------------               --------------------------   


BY: /s/ X. X. Xxx                  BY: /s/ Xxxxxx Xxxxxxx 
   ------------------                  ------------------ 


PRINT: XX. X. X. Xxx               PRINT: Xxxxxx Xxxxxxx 
       --------------                     ---------------  

    
DATE: 11/th/ Jan 1994              DATE: 15 Jan 94      
      ---------------                    ----------------

                                    Page 24                          November 93

 
                        APPENDIX 1 - PRODUCT DEFINITION
                        -------------------------------
    
     **   ** ***** ******* ** *** * *** ** ********* ** ** ********** ** ***
          **** ******** ******** ********* ***


* redacted pursuant to confidential treatment request


                                   Page 25                           November 93

 
                                  [    *    ]


*    Entire page redacted pursuant to confidential treatment request.