CHIRON CORP, 10-Q, 1995-05-16

CHIRON CORP
10-Q, 1995-05-16
IN VITRO & IN VIVO DIAGNOSTIC SUBSTANCES

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Check One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For Quarterly Period Ended April 2, 1995 Commission File Number: 0-12798

CHIRON CORPORATION
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)

Delaware 94-2754624
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(state or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

4560 Horton Street, Emeryville, California 94608
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(Address of principal executive offices) (Zip code)

(510) 655-8730
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(Registrant's telephone number, including area code)

Not Applicable
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(Former name, former address and former
fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by section 13 or 15(d) of the Security Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days.
Yes X No
----- -----

Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.

Class Outstanding at April 2, 1995
----- ----------------------------

Common Stock, $.01 par value 40,045,138

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CHIRON CORPORATION
TABLE OF CONTENTS
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PAGE NO.

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

Consolidated Balance Sheet as of
March 31, 1995 and December 31, 1994.................................3

Consolidated Statement of Operations for the
three months ended March 31, 1995 and 1994...........................4

Consolidated Statement of Cash Flows for the
three months ended March 31, 1995 and 1994...........................5

Notes to Consolidated Financial Statements...........................6

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS....................13

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS...............................................24

ITEM 2. CHANGES IN SECURITIES...........................................25

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.................................25

ITEM 4. SUBMISSION OF MATTER TO A VOTE OF SECURITY HOLDERS..............25

ITEM 5. OTHER INFORMATION...............................................25

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K................................25

SIGNATURES....................................................................37

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CHIRON CORPORATION
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS)
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March 31, December 31,
1995 1994
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(Unaudited)
ASSETS

<S> <C> <C>
Current assets:
Cash and cash equivalents $ 91,122 $ 84,876
Short-term investments in marketable debt securities 109,807 137,619
------------- -------------
Total cash and short-term investments 200,929 222,495
Accounts receivable 221,189 140,476
Inventories 159,229 47,592
Other current assets 39,472 23,252
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Total current assets 620,819 433,815
Noncurrent investments in marketable debt securities 135,783 171,328
Property, equipment and leasehold improvements, at cost:
Land and buildings 168,000 60,930
Laboratory, production and office equipment 230,094 140,438
Leasehold improvements 86,536 82,145
Construction in progress 76,662 78,998
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561,292 362,511
Less: accumulated depreciation and amortization 90,297 76,337
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Net property, equipment and leasehold improvements 470,995 286,174
Intangible assets, net 164,132 85,803
Investments in equity securities and affiliated companies 31,165 51,425
Other assets 61,049 21,197
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$ 1,483,943 $ 1,049,742
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------------- -------------

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Accounts payable $ 74,349 $ 27,778
Accrued compensation and related expenses 54,484 24,010
Short-term borrowings 84,786 --
Current portion of long-term debt 3,478 3,461
Taxes payable 25,610 10,060
Other current liabilities 150,644 54,332
------------- -------------
Total current liabilities 393,351 119,641
Long-term debt 405,994 338,061
Other noncurrent liabilities 51,999 19,409
Commitments and contingencies
Stockholders' equity:
Common stock 400 334
Additional paid-in capital 1,597,457 1,161,942
Accumulated deficit (961,014) (575,236)
Cumulative foreign currency translation adjustment 439 (1,719)
Unrealized loss from investments (4,683) (12,690)
------------- -------------
Total stockholders' equity 632,599 572,631
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$ 1,483,943 $ 1,049,742
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------------- -------------

</TABLE>

SEE ACCOMPANYING NOTES.

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CHIRON CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
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Three Months Ended
-----------------------------
March 31, March 31,
1995 1994
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<S> <C> <C>
Revenues:
Product sales, net $ 183,909 $ 45,484
Equity in earnings of unconsolidated joint businesses 18,178 15,487
Collaborative agreement revenues 5,567 22,462
Other revenues 10,592 7,948
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Total revenues 218,246 91,381

Expenses:
Research and development 99,055 38,409
Cost of sales 90,282 21,724
Selling, general and administrative 84,894 23,518
Write-off of purchased in-process technologies 230,657 --
Costs related to Ciba transaction 49,520 --
Restructuring and reorganization costs 37,641 --
Other operating expenses 2,280 906
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Total expenses 594,329 84,557
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Income (loss) from operations (376,083) 6,824

Other income (expense), net (1,389) 282
----------- -----------

Income (loss) before income taxes (377,472) 7,106

Provision for income taxes 8,306 2,289
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Net income (loss) $ (385,778) $ 4,817
----------- -----------
----------- -----------

Net income (loss) per share $ (9.64) $ 0.14
----------- -----------
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Weighted average number of shares
used in computing per share amounts 40,013 34,606
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----------- -----------

</TABLE>

SEE ACCOMPANYING NOTES.

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CHIRON CORPORATION
STATEMENT OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
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Three Months Ended
------------------------------
March 31, March 31,
1995 1994
----------- -----------

<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (385,778) $ 4,817
Adjustments to reconcile net income (loss)
to net cash used in operating activities:
Write-off of purchased in-process technologies 230,657 --
Reserves and write-offs 28,370 1,944
Depreciation and amortization 22,666 10,031
Deferred income taxes (557) --
Undistributed earnings of affiliates (189) (247)
Changes, excluding the effect of acquisitions, to:
Accounts receivable 63,604 (15,263)
Inventories (26,749) (3,295)
Other current assets 2,771 (2,182)
Accounts payable 3,035 (7,187)
Current portion of unearned revenue 1,955 (3,347)
Accrued compensation and related expenses 4,670 (5,998)
Taxes payable 7,906 1,906
Other current liabilities 45,369 (2,201)
Other noncurrent liabilities (2,053) (201)
------------ ------------
Net cash used in operating activities (4,323) (21,223)
Cash flows from investing activities:
Purchase of investments in marketable debt securities (19,877) (96,635)
Sale and maturities of investments in marketable debt securities 86,880 51,486
Capital expenditures (28,586) (24,813)
Purchase of IOLAB (96,013) --
Cash acquired from the Acquisitions, net of cash paid 14,225 --
Investments in equity securities and affiliates (2,650) (18,500)
Distributions from affiliates -- 518
Increase in other assets (12,204) (5,939)
------------ ------------
Net cash used in investing activities (58,225) (93,883)
Cash flows from financing activities:
Borrowings under line of credit arrangements 42,971 --
Repayment of notes payable and capital leases (2,450) (77)
Proceeds from capital contribution from Ciba 24,845 --
Proceeds from issuance of common stock 3,060 7,326
----------- -----------
Net cash provided by financing activities 68,426 7,249
----------- -----------
Effect of exchange rate changes on cash and cash equivalents 368 --
----------- -----------
Net increase (decrease) in cash and cash equivalents 6,246 (107,857)
Cash and cash equivalents at beginning of the period 84,876 156,516
----------- -----------
Cash and cash equivalents at end of period $ 91,122 $ 48,659
----------- -----------
----------- -----------

</TABLE>

SEE ACCOMPANYING NOTES.

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CHIRON CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 1995
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1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

The information at March 31, 1995, and for the periods ended March 31, 1995
and 1994, is unaudited, but includes all adjustments which Chiron's
management believes to be necessary for fair presentation of the periods
presented. The consolidated balance sheet amounts at December 31, 1994,
have been derived from audited financial statements. Certain 1994 balances
have been reclassified to conform to the 1995 presentation. Interim
results are not necessarily indicative of results for a full year. The
consolidated financial statements should be read in conjunction with
Chiron's audited consolidated financial statements for the year ended
December 31, 1994, and with Amendment No. 1 to the Company's filing on Form
8-K dated January 4, 1995.

The consolidated financial statements include the accounts of the Company
and its subsidiaries. Investments in joint ventures, partnerships and
interests in other companies in which Chiron has an equity interest of 50
percent or less are accounted for by the equity method, cost method or in
accordance with Statement of Financial Accounting Standards No. 115, as
appropriate. All significant intercompany transactions and balances have
been eliminated.

FISCAL YEAR

Effective for fiscal year 1995, the Company adjusted its fiscal year end
from December 31 to the 52 or 53-week period that ends on the Sunday
nearest December 31. As a result, the first quarter of 1995 represents
the thirteen-week period ended April 2, 1995. For presentation purposes,
dates used in the consolidated financial statements and notes refer to the
calendar month end.

INVENTORIES

Pharmaceutical inventories are stated at the lower of cost or market using
the average cost method or, in the case of vaccine products, using the
last-in, first-out ("LIFO") method. Diagnostic and ophthalmic products are
valued at cost using the first-in, first-out ("FIFO") method which is less
than fair value. Inventories consist of the following:

MARCH 31, DECEMBER 31,
1995 1994
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(IN MILLIONS)
Finished goods $ 98 $ 24
Work in process 23 9
Raw materials 38 15
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$ 159 $ 48
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INCOME TAXES

Income tax expense for the quarters ended March 31, 1995 and 1994, includes
a provision for federal, state and foreign taxes based on the annual
estimated effective rates applicable to certain of the Company's
subsidiaries.

PER SHARE DATA

Per share information is based on the weighted average number of common
shares and dilutive common share equivalents outstanding. Shares issuable
upon the exercise of stock options and certain warrants are included in the
calculations, utilizing the treasury stock method, to the extent they are
dilutive. Shares assumed to be issued upon conversion of the Company's
convertible debentures and certain warrants are not included since their
inclusion would be antidilutive. Fully diluted per share data has not been
presented as the amount would not differ materially from primary per share
data.

REVENUE RECOGNITION

Revenue from product sales consists of shipments of ophthalmic products,
therapeutics, diagnostic materials and instruments and other biologicals
and is generally recognized upon shipment. Revenue from service contracts
is recognized ratably over the life of the contract. Revenue from the sale
of equipment under sales-type leases is recognized at the inception of the
lease. All of the above revenues are included in "Product sales, net" in
the Consolidated Statement of Operations.

2. BUSINESS COMBINATIONS

TRANSACTION WITH CIBA-GEIGY LTD. AND AFFILIATES ("CIBA")

Effective January 1, 1995, Chiron entered into a series of agreements with
Ciba, including an investment agreement, a cooperation and collaboration
agreement and a governance agreement (collectively "agreements"). Ciba now
holds approximately a 49.5 percent ownership interest in Chiron common
stock, partially through a tender offer for approximately 38 percent of
Chiron's outstanding common stock for $117 per share. At the same time,
Chiron acquired all of the outstanding common stock of Ciba Corning
Diagnostics Corp. ("CCD") and Ciba's interests in The Biocine Company and
JV Vax B.V. (a Netherlands company which owns Biocine SpA) in exchange for
6.6 million newly-issued Chiron common shares and a cash payment of $24
million. These two acquisitions of Chiron common stock by Ciba, together
with Ciba's prior holdings of approximately 1.4 million shares, result in
the aforementioned 49.5 percent ownership of the Company's common stock.

Under the terms of the agreements, Ciba is entitled to name three new
members to Chiron's Board of Directors and has limited rights to review and
approve certain Chiron transactions. In connection with these agreements,
Ciba has agreed to guarantee $425 million of new debt for Chiron and has
agreed to provide $250 million (and up to $300 million subject to certain
reductions in the debt guarantee) over five years in support of research at
Chiron, and Chiron has the option of issuing up to $500 million of new
equity to Ciba. In the event Chiron utilizes this research funding, Chiron
will be obligated to offer to Ciba the opportunity to share in the market
opportunities of any resulting

<PAGE>

products. Alternatively, Chiron is entitled to reacquire all rights to
any resulting products by repaying to Ciba, in cash or common stock, an
amount equal to the funding plus an agreed upon return.

The acquisitions of CCD and Ciba's interests' in The Biocine Company and JV
Vax B.V. (the "Acquisitions") were accounted for by the purchase method.
The purchase price of approximately $433 million was allocated to the
acquired assets and assumed liabilities based upon their estimated fair
value on the acquisition date. The fair value of the net assets acquired in
the Acquisitions, including in-process technology, was estimated based on
an independent valuation of the acquired net assets. The aggregate
purchase price of approximately $433 million was less than the fair value
of the net assets acquired by approximately $62 million. This amount was
ratably allocated as a reduction of the noncurrent assets of the acquired
companies.

The Acquisitions include the following components:

(IN MILLIONS)
Fair value of assets acquired $ 692
Common stock issued (408)
Cash paid (24)
Acquisition costs (1)
------
Liabilities assumed $ 259
------
------

As required under generally accepted accounting principles, Chiron
recognized as an expense the amount allocated to in-process technology in
the first quarter of 1995. This resulted in a noncash charge against
earnings of $220 million. Other transaction-related charges totaling $50
million related to employee payments and the related taxes, and legal and
investment advisor fees were also recognized as expenses in the first
quarter of 1995. Ciba has agreed to reimburse the Company $25 million for
a portion of the employee payments and such reimbursement has been
recorded as a capital contribution. Other purchased intangible assets of
approximately $33 million consisting of a customer list and base
technology will be amortized over their estimated useful lives of 10 to 15
years, using the straight-line method.

The results of operations of CCD, JV Vax B.V. and The Biocine Company are
included in Chiron's consolidated operating results from January 1, 1995,
forward. Chiron's interest in the operating results of JV Vax B.V. and The
Biocine Company were included in the Company's 1994 operating results under
the equity method of accounting. The following unaudited proforma
consolidated financial information for the three months ended March 31,
1994, gives effect to the terms of the agreements as if such transactions
had been consummated on January 1, 1994.

THREE MONTHS ENDED MARCH 31, 1994
---------------------------------
(IN MILLIONS, EXCEPT PER SHARE DATA)

Total revenues $ 203
Net income 3
Net income per share 0.07

The above proforma financial information does not purport to be indicative
of actual financial results which would have been obtained had the
acquisitions occurred on January 1, 1994, and should not be construed as
representative of future results of operations. Also, the proforma
financial information does not include the write-off of purchased in-
process technology of $220 million or other

<PAGE>

transaction-related costs totaling $50 million (related to employee
payments and the related taxes, and investment advisor and legal fees)
which were recognized as expense in the first quarter of 1995.

ACQUISITION OF IOLAB

Effective March 31, 1995, Chiron Vision acquired the surgical division of
IOLAB from Johnson & Johnson. The purchase price of approximately $96
million was allocated to the acquired assets and assumed liabilities based
upon their estimated fair value on the acquisition date. The fair value of
the net assets acquired, including in-process technology, was estimated
based on independent valuations of the acquired net assets.

The acquisition includes the following components:

(IN MILLIONS)
Fair value of assets acquired $ 109
Cash paid (95)
Acquisition costs (1)
-------
Liabilities assumed $ 13
------
------

The acquisition was accounted for by the purchase method, and the amount
allocated to in-process technology of $10 million was charged against
earnings in the first quarter of 1995. Other purchased intangible assets
of approximately $46 million consisting of base technology, goodwill, trade
name and a customer list will be amortized over their estimated useful
lives of 10 to 15 years using the straight-line method. IOLAB's results of
operations are included in Chiron's results of operations from March 31,
1995, forward.

Also, the Company recorded additional charges for restructuring and
integration-related expenses totaling $17 million in the first quarter of
1995. Of this amount, approximately $8 million was related to write-downs
of assets. The remaining $9 million consists primarily of $6 million in
employee costs and $3 million for the cost of lease terminations. The
majority of the accrued costs are expected to be paid over the next two
years.

3. RESTRUCTURING AND REORGANIZATION COSTS

Costs totaling $38 million related to restructuring and reorganization
plans, including $17 million arising from the acquisition and integration
of IOLAB (Note 2), represent the expected costs of integrating the acquired
businesses (Note 2) with Chiron's existing businesses, as well as costs
related to the idling of the Company's Puerto Rico manufacturing facility
and the scale-back of manufacturing operations at the Company's Amsterdam
facility, the write-down of duplicate facilities and the postponement of
plans to expand the Company's research and administrative facilities.

Of the approximately $21 million in charges for actions other than the
integration of IOLAB, approximately $15 million related to write-downs of
assets. The remaining costs of approximately $6 million consist primarily
of employee costs of $1 million and $5 million related to additional tax
obligations and lease termination costs. The majority of the accrued costs
are expected to be paid over the next two years.

<PAGE>

4. COLLABORATIONS AND JOINT BUSINESS ARRANGEMENTS

GENERAL

The Company has entered into a number of collaborative arrangements with
other pharmaceutical and biotechnology companies for the development and
marketing of certain technologies and products. The majority of these
collaborations are in the development or clinical trial phase. Chiron and
its collaborative partners generally contribute certain technologies and
research efforts to the collaboration. In addition, Chiron and its
collaborative partners commit, subject to certain limitations and
cancellation clauses, to share in the funding of the collaboration's
ongoing research and clinical trial costs. Chiron, under certain of the
arrangements, has purchased equity securities, including common and
preferred stock and warrants to purchase common and preferred stock, of the
collaborative partner. During the first quarter of 1995 the Company
entered into the following new collaborations:

PROGENITOR, INC.

In March 1995, the Company reached an agreement with Progenitor, Inc.
("Progenitor"), a subsidiary of Interneuron Pharmaceuticals, Inc., to
collaborate in the development and commercialization of therapeutic and
vaccine products incorporating Progenitor's proprietary gene therapy
technology. Under the agreement, Chiron received a license to Progenitor's
nonviral gene expression system for use in the development of products for
the treatment of certain cancers and cardiovascular disorders, development
of infectious disease vaccines and for development of certain other gene
therapy products. Chiron will have the right to manufacture and market any
resulting products of the collaboration. In return for the license and
other rights, Chiron made an initial license payment of $2.5 million to
Progenitor, which was expensed in the first quarter of 1995, and agreed to
make an additional funding payment of $0.5 million and make additional
license payments totaling $1.0 million to retain certain rights to
development of infectious disease vaccines. Also, Chiron has agreed to pay
to Progenitor various product development milestone payments which could
total approximately $3 million per product plus certain other milestone
payments which would be treated as prepaid royalties. In addition,
Progenitor will receive a royalty from any commercial sales of products
resulting from the collaboration.

GENELABS TECHNOLOGIES, INC.,

In March 1995, the Company reached an agreement with Genelabs Technologies,
Inc. ("Genelabs"), whereby Chiron and Genelabs cross-licensed certain
rights to hepatitis C virus ("HCV"), hepatitis G virus ("HGV"), a novel
hepatitis virus discovered by Genelabs, human T-cell leukemia virus-I
("HTLV-I") and human T-cell leukemia virus-II ("HTLV-II") diagnostic
tests. Under the agreement, Chiron acquired certain rights to develop and
market diagnostic products for the detection of HGV, HTLV-I and HTLV-II.
In return, Genelabs acquired development and marketing rights in Asia,
except Japan, for certain products incorporating Chiron's HCV technology.
Chiron has agreed to pay $5.0 million in up front license fees and up to
$9.0 million in HGV development milestones. Chiron also agreed to invest
a total of $10 million in equity securities of Genelabs at the closing.
Of an initial payment of $5.0 million, approximately $4.2 million was
expensed in the first quarter of 1995, while the remainder was recorded
as an investment in securities of Genelabs. Also, under the terms of
the agreement, Chiron has the option to acquire substantially all of the
diagnostics business of Genelabs in the year 2000 at the then fair market
value through the conversion of the $10 million equity investment for
approximately one-half of the business and an additional payment in an
amount to be

<PAGE>

determined for the remaining half. Chiron's agreement to provide the HCV
license is subject to the approval of Ortho, Chiron's joint diagnostic
business partner. Chiron intends to offer Ortho participation in the
collaboration with Genelabs as an equal partner, whereby Ortho would share
equally in all payments under the agreement.

NEW YORK UNIVERSITY

In March 1995, the Company reached an agreement with New York University
("NYU"), for the license of optical mapping technology for use by Chiron
and its sublicensee, Ciba, in development of diagnostics, therapeutics and
vaccines, and Chiron also acquired the right to commercialize a potential
optical mapping instrument. Under the terms of the agreement, Chiron made
a $5.0 million initial payment to NYU, which was expensed in the first
quarter of 1995, for the license and for funding certain research
facilities at NYU. If Chiron decides to continue development of the
instrument, Chiron will be obligated to make a $4.0 million milestone
payment to NYU and will make royalty payments to NYU based upon any future
product sales of the instrument, subject to certain minimum royalties. In
addition, Ciba has agreed to make certain further research payments to NYU
in connection with development of the instrument in exchange for the
sublicense and in exchange for royalty payments by Chiron to Ciba based
upon sales of the instrument.

5. DEBT OBLIGATIONS

ACQUIRED DEBT OF CCD

As part of the Acquisitions, the Company assumed approximately $96 million
in debt of CCD. This debt consists primarily of short-term borrowings
under revolving foreign line of credit arrangements totaling $41 million at
March 31, 1995, and a note payable to Ciba in the amount of $56 million
which is due in the year 2000. The foreign line of credit arrangements
bear interest at local interest rates ranging from 3 percent to 17 percent.
The note payable to Ciba bears interest at a variable rate (6.45 percent
at March 31, 1995).

LINE OF CREDIT ARRANGEMENT

On March 24, 1995, the Company entered into a revolving, unsecured line of
credit arrangement with an international bank under which the Company may
borrow up to $50 million. This credit facility is guaranteed by Ciba and
bears interest at a rate based on LIBOR (6.33 percent on the $40 million
outstanding at March 31, 1995).

6. CONTINGENCIES

See Item 1, Legal Proceedings, on page 24 of this Form 10-Q for a
discussion of certain lawsuits filed against the Company.

7. SUBSEQUENT EVENT - PROPOSED ACQUISITION OF VIAGENE, INC.

On April 23, 1995, the Company entered into an agreement to acquire by
merger Viagene, Inc. ("Viagene") by making a payment of 0.155 share of
Chiron Common Stock or a cash payment of $9 for each Viagene common share
equivalent for a total consideration of approximately $95 million (based
on the closing price of Chiron Common Stock on April 23, 1995 and the
assumption that all Viagene options and warrants not held by Chiron are
exercised prior to the transaction). The agreement stipulates that 40
percent of the aggregate consideration will be in cash and the

<PAGE>

remaining 60 percent will be in Chiron Common Stock. The Company
anticipates that the aggregate consideration will not exceed approximately
$38 million in cash and will result in the issuance of approximately 1
million shares of Chiron Common Stock. The Company has an ongoing
collaboration with Viagene in the area of gene therapy and, due to an
earlier investment as part of the collaboration arrangement, currently
holds approximately 17 percent of the outstanding voting stock of Viagene
(which had a carrying value of approximately $14 million on Chiron's books
at March 31, 1995). The proposed merger is subject to regulatory approval
and approval by Viagene stockholders and is expected to close in the third
quarter of 1995. If the proposed merger is completed, the Company will
account for the merger using the purchase method, and accordingly will
record an expense for the amount of the purchase price allocated to in-
process technology.

<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
- --------------------------------------------------------------------------------

GENERAL

Chiron Corporation (the "Company" or "Chiron"), a human healthcare company,
applies biotechnology and other techniques of modern biology and chemistry to
develop, produce and sell products intended to improve the quality of life by
diagnosing, preventing and treating human disease. Chiron participates in the
global healthcare industry in four markets: diagnostics, including
immunodiagnostics, critical care diagnostics and quantitative probe diagnostics;
therapeutics, including Betaseron-Registered Trademark- (interferon beta 1-b)
for multiple sclerosis and Proleukin-Registered Trademark- (Aldesleukin) for
metastatic kidney cancer; vaccines, including a recombinant acellular pertussis
vaccine and other pediatric vaccines, and vaccines under development for genital
herpes, cytomegalovirus ("CMV"), human immunodeficiency virus ("HIV"), and
hepatitis C virus ("HCV"); and ophthalmic surgical products.

Effective January 1, 1995, Chiron entered into a series of agreements with Ciba-
Geigy Limited of Basel, Switzerland ("Ciba"), including an investment agreement,
a cooperation and collaboration agreement and a governance agreement
(collectively the "agreements"). Ciba now holds approximately a 49.5 percent
ownership interest in Chiron common stock, partially through a tender offer for
approximately 38 percent of Chiron's outstanding common stock for $117 per
share. At the same time, Chiron acquired all of the outstanding common stock of
Ciba Corning Diagnostics Corp. ("CCD") and Ciba's interests in The Biocine
Company and JV Vax B.V. (a Netherlands company which owns Biocine SpA) in
exchange for 6.6 million newly-issued Chiron common shares and a cash payment of
$24 million. These two acquisitions of Chiron common stock by Ciba, together
with Ciba's prior holdings of approximately 1.4 million shares, result in the
aforementioned 49.5 percent ownership of the Company's common stock.

Under the terms of the agreements, Ciba is entitled to name three new members to
Chiron's Board of Directors and has limited rights to review and approve certain
Chiron transactions. In connection with these agreements, Ciba has agreed to
guarantee $425 million of new debt for Chiron and has agreed to provide at least
$250 million (and up to $300 million subject to certain reductions in the debt
guarantee) over five years in support of research at Chiron, and Chiron has the
option of issuing up to $500 million of new equity to Ciba. In the event Chiron
utilizes Ciba's research funding, Chiron will be obligated to offer to Ciba the
opportunity to share in the market opportunities of any resulting products.
Alternatively, Chiron is entitled to reacquire all rights to any resulting
products by repaying to Ciba, in cash or common stock, an amount equal to the
funding plus an agreed upon return.

The acquisitions of CCD and Ciba's interests' in The Biocine Company and JV Vax
B.V. ("the Acquisitions") were accounted for by the purchase method in the first
quarter of 1995. The purchase price of approximately $433 million was allocated
to the acquired assets and assumed liabilities based upon their estimated fair
value on the acquisition date. As required under generally accepted accounting
principles, Chiron recognized as an expense the amount allocated to in-process
technology in the first quarter of 1995. This resulted in a noncash charge
against earnings of $220 million. Other transaction-related charges totaling
$50 million (related to legal and investment advisor fees, as well as employee
payments and related tax liabilities) were also recognized as expenses in the
first quarter of 1995. The results of operations of CCD, Biocine SpA and The
Biocine Company are included in Chiron's consolidated operating results from

<PAGE>

January 1, 1995, forward. Chiron's share of the operating results of Biocine
SpA and The Biocine Company were included in the Company's 1994 operating
results under the equity method of accounting.

Effective March 31, 1995, Chiron Vision acquired the surgical division of IOLAB
from Johnson & Johnson for approximately $96 million. The acquisition was
accounted for by the purchase method, and resulted in a $10 million charge to
earnings in the first quarter of 1995 to expense purchased in-process
technology. Chiron Vision plans to consolidate its intraocular lens
manufacturing in Lyon, France and at IOLAB's plant in Claremont, California.
The Company recorded additional charges for restructuring and integration-
related expenses totaling $17 million. IOLAB's results of operations are
included in Chiron's consolidated operating results from March 31, 1995,
forward.

On April 23, 1995, the Company entered into an agreement to acquire by merger
Viagene, Inc. ("Viagene") by making a payment of 0.155 share of Chiron common
stock or a cash payment of $9 for each Viagene common share equivalent for a
total consideration of approximately $95 million. The agreement stipulates
that 40 percent of the aggregate consideration will be in cash and the remaining
60 percent will be in Chiron common stock. The Company anticipates that the
aggregate consideration will not exceed approximately $38 million in cash and
will result in the issuance of approximately 1 million shares of Chiron Common
Stock. The Company has an ongoing collaboration with Viagene in the area of
gene therapy and, due to an earlier investment as part of the collaboration
arrangement, currently holds approximately 17 percent of the outstanding voting
stock of Viagene (which had a carrying value of approximately $14 million on
Chiron's books at March 31, 1995). The proposed merger is subject to regulatory
approval and approval by Viagene stockholders and is expected to close in the
third quarter of 1995. If the proposed merger is completed, the Company will
account for the merger using the purchase method, and accordingly will record an
expense for the amount of the purchase price allocated to in-process technology.

RESULTS OF OPERATIONS

REVENUES

PRODUCT SALES

The Company's revenues are derived from a variety of sources, including product
sales, collaborative agreements, product royalty agreements and joint business
arrangements. Product sales, Chiron's largest revenue category, consists of the
following product lines in the human healthcare industry for each of the three-
month periods ended March 31:

1995 1994
------- ------
(IN MILLIONS)
Diagnostic products $ 127 $ 4
Ophthalmic products 24 22
Betaseron-Registered Trademark- sales 2 11
Oncology products 13 8
Vaccine products 16 --
Other products 2 --
------ -----
$ 184 $ 45
------ -----
------ -----

<PAGE>

As a result of the January 1995 acquisition of CCD, diagnostic product sales now
represent the largest component of product sales. CCD had sales of $120 million
for the three months ended March 31, 1995. CCD's product sales for the first
quarter of 1994, which are not included in Chiron's 1994 results, were
approximately $101 million. CCD product sales include direct sales and sales-
type leases of CCD's fully-automated random-access immunodiagnostic testing
systems and reagents for these systems, as well as sales of critical blood
analyte systems, clinical chemistry products and manual immunodiagnostic
systems. CCD's sales increased from the prior year primarily due to increased
sales of the immunodiagnostic and critical blood analyte product lines and due
to favorable foreign currency exchange rates. Sales of diagnostic systems
often include the sale of service and maintenance contracts. Revenue from
these service contracts is included in product sales revenue and is recognized
ratably over the life of the contracts.

Diagnostic product sales also include sales of nucleic acid probe products and
instrumentation and sales of antigens and RIBA-Registered Trademark- HCV tests.
Nucleic acid probe products are sold at cost to Daiichi Pure Chemical Co., Ltd.
("Daiichi"), which markets the product in Japan and pays Chiron a royalty based
upon its sales of the product. Nucleic acid probe products are also sold by
Chiron on a research-use only basis in the United States and Europe. Antigens
and RIBA-Registered Trademark- HCV test kits are sold at cost to Ortho
Diagnostic Systems, Inc. ("Ortho"), Chiron's partner in a joint diagnostic
business.

Sales of ophthalmic surgical products increased between years largely due to the
impact of the May 1994 acquisition of Laboratoires Domilens S.A. ("Domilens")
and due to favorable foreign currency rate fluctuations. For the quarter ended
March 31, 1995, sales of intraocular lenses by Domilens contributed $6 million
in incremental revenues. Offsetting these increases were lower sales of
refractive surgery products, particularly of ophthalmic surgical knives used in
radialkeratotomy procedures. Sales of surgical knives have decreased as
refractive surgery procedures are increasingly shifting towards newer
technologies, including the use of corneal shapers and excimer lasers in place
of surgical knives.

During 1994, Chiron operated under an amended Betaseron-Registered Trademark-
supply agreement whereby Chiron recognized substantially all of its Betaseron
- -Registered Trademark- revenue at the time of shipment to its marketing partner,
Berlex Laboratories, Inc. ("Berlex"). Chiron was required to revert to the
terms of the original Betaseron-Registered Trademark- supply agreement by
sometime in 1995 or no later than June of 1996. Chiron exercised its option to
revert to the terms of the original Betaseron-Registered Trademark- supply
agreement effective January 1, 1995. Under those original terms, Chiron will
earn a partial payment for Betaseron-Registered Trademark- upon shipment to
Berlex and a subsequent final payment based upon Berlex's net sales of the
product. Further, because adequate inventory levels had been built by Berlex,
Chiron's Betaseron-Registered Trademark- revenue dropped between years as no
commercial-use vials were shipped during the first quarter of 1995. Total 1995
shipments of Betaseron-Registered Trademark- to Berlex are expected to be
roughly comparable to, or slightly above or below 1994 levels. Assuming
comparable 1994 and 1995 annual vial shipments to Berlex, total 1995 revenues
from Betaseron-Registered Trademark- shipments will be lower than 1994 revenues
by approximately $25 million to $30 million as a result of the reversion to the
original supply agreement.

Sales of oncology products, principally Proleukin-Registered Trademark-,
increased by approximately $5 million between 1994 and 1995 as the number of
vials sold increased in both the European and domestic markets. Average selling
prices were comparable between periods.

Vaccine product sales totaling approximately $16 million consist of sales of
pediatric and adult vaccines primarily in Italy and to public health
organizations by the Company's Biocine SpA subsidiary. Biocine

<PAGE>

SpA's product sales for the first quarter of 1994, which are not included in
Chiron's 1994 results, were approximately $11 million. Biocine SpA's vaccine
products include Acelluvax-Registered Trademark-, a recombinant acellular
pertussis vaccine, Agrippal-Registered Trademark-, a flu vaccine, and
Polioral-Registered Trademark-, an oral polio vaccine. Sales of certain of
Biocine SpA's vaccines are seasonal, particularly the flu vaccine, with strong
sales generally occurring during the pre-flu season in the fourth quarter of
the year.

The Company markets many of its commercial products internationally. As a
result, product revenues are affected by fluctuating foreign currency exchange
rates. Foreign product sales were approximately $118 million and $12 million
for the three months ended March 31, 1995 and 1994, respectively, with
international sales of diagnostic products by CCD and vaccine sales by Biocine
SpA accounting for substantially all of the increase in foreign product sales.
Product sales would have been approximately 4 percent lower in 1995 if currency
exchange rates had remained the same as in 1994. The Company's other revenues,
discussed below, are largely denominated in U.S. dollars.

EQUITY IN EARNINGS OF JOINT BUSINESSES

As of March 31, 1995, Chiron had a 50 percent equity interest in three joint
businesses: a joint diagnostic business with Ortho, a generic cancer
chemotherapeutics business with Ben Venue Laboratories, Inc., and a German
ophthalmic excimer laser business. Chiron's one-half interest in the pretax
operating earnings of its joint diagnostic business with Ortho represents the
largest component of joint business revenues. Approximately 80 percent of the
sales of the Chiron-Ortho joint business arise from sales of HCV blood screening
tests. The joint business also receives a royalty from Abbott Laboratories
("Abbott") for Abbott's sales of HCV tests which use the Chiron technology and
which compete directly with tests marketed by Ortho. Chiron's share of the
profits of the joint business increased by approximately $3 million from the
prior year as lower margins on domestic sales of diagnostic kits by the joint
business were more than offset by increased profits from sales by Ortho's
foreign affiliates and lower research and development spending by the joint
business.

COLLABORATIVE AGREEMENT REVENUES

Collaborative agreement revenues consist of fees received for research services
as they are performed, fees received for completed research or technology, fees
received upon attainment of benchmarks specified in the related research
agreements, and proceeds of sales of biological materials to research partners
for clinical and preclinical testing. Collaborative agreement revenues
decreased from the prior year period due to the January 1995 acquisition of
Ciba's interest in The Biocine Company, Chiron's joint vaccine venture with
Ciba. Prior to the acquisition, Chiron received reimbursement for its vaccine
research expenses from The Biocine Company and recorded such reimbursement as
collaborative agreement revenue. After the acquisition, The Biocine Company
became a wholly owned subsidiary of Chiron and thus no longer provides research
revenues to Chiron. In the first quarter of 1994, Chiron recognized revenues of
$11 million from The Biocine Company. Further contributing to the decrease in
collaborative agreement revenues was the completion of a nucleic acid probe
development program with Daiichi, which had provided first quarter 1994 revenues
of $3 million.

As part of the agreements with Ciba, Ciba has agreed to provide research funding
to Chiron of $250 million over the next five years. Annual funding amounts are
subject to certain limitations and the specific programs to be funded are
subject to Ciba's approval. In the event Chiron utilizes this research funding
arrangement, Chiron will be obligated to offer to Ciba the opportunity to share
in the market opportunities of any resulting products.

<PAGE>

In addition, Chiron is entitled to re-acquire all rights to any resulting
products by repaying to Ciba, in cash or common stock, an amount equal to Ciba's
funding plus interest. During the first quarter of 1995, no research funding
was earned from Ciba under this arrangement.

OTHER REVENUES

Other revenues consist principally of product royalties, government grants and
sales fees earned by the Company for sales and marketing services rendered on
behalf of its generic chemotherapeutics joint venture and on behalf of Ciba.
Sales fees received from Ciba for sales of Aredia-Registered Trademark-, for
which Chiron began earning sales fee revenue in late 1994, accounted for the
increase in other revenues for the first quarter of 1995 as compared with the
first quarter of 1994. Royalty revenue, the largest component of other
revenues, was comparable between periods.

COST AND EXPENSES

RESEARCH AND DEVELOPMENT EXPENSES

Research and development expenses increased significantly between 1994 and 1995
due to the acquisitions of CCD and Biocine SpA, which on a combined basis added
$21 million in incremental research and development expenses. In addition, the
Company entered into new collaboration agreements and funded development
expenses in a number of its existing collaborative arrangements with other
pharmaceutical and biotechnology companies for the research, development and
marketing of certain technologies and products. As part of these collaborative
arrangements, Chiron has made various investments in the equity securities of
the collaborative partners and, in some cases, agreed to provide specified
levels of funding to the collaboration. During the first quarter of 1995, new
collaborative arrangements include the following:

- - In March 1995, the Company reached an agreement with Genelabs Technologies,
Inc. ("Genelabs"), whereby Chiron and Genelabs cross-licensed certain
rights to hepatitis C virus ("HCV"), hepatitis G virus ("HGV"), a novel
hepatitis virus discovered by Genelabs, human T-cell leukemia virus-I
("HTLV-I") and human T-cell leukemia virus-II ("HTLV-II") diagnostic
tests. Under the agreement, Chiron acquired certain rights to develop
and market diagnostic products for the detection of HGV, HTLV-I and
HTLV-II. In return, Genelabs acquired development and marketing
rights in Asia, except Japan, for certain products incorporating Chiron's
HCV technology. Chiron has agreed to pay $5 million in up front license
fees and up to $9 million in HGV development milestones. Chiron also
agreed to invest a total of $10 million in equity securities of Genelabs at
the closing. Of an initial payment of $5 million, approximately $4 million
was expensed in the first quarter of 1995, while the remainder was
recorded as an investment in securities of Genelabs. Also, under the
terms of the agreement, Chiron has the option to acquire substantially all
of the diagnostics business of Genelabs in the year 2000 at the then fair
market value through the conversion of the $10 million equity investment
for approximately one-half of the business and an additional payment in an
amount to be determined for the remaining half. Chiron's agreement to
provide the HCV license is subject to the approval of Ortho, Chiron's joint
diagnostic business partner. Chiron intends to offer Ortho participation
in the collaboration with Genelabs as an equal partner, whereby Ortho would
share equally in all payments under the agreement.

- - An agreement with Progenitor, Inc. ("Progenitor"), a subsidiary of
Interneuron Pharmaceuticals, Inc., to collaborate in the development and
commercialization of therapeutic and vaccine products incorporating
Progenitor's proprietary gene therapy technology. Under the agreement,
Chiron received a license to Progenitor's nonviral gene expression system
for use in the development of products for the

<PAGE>

treatment of certain cancers, cardiovascular disorders, development of
infectious disease vaccines and for development of certain other gene
therapy products. Chiron will have the right to manufacture and market any
resulting products of the collaboration. In return for the license and
other rights, Chiron made an initial payment of $2.5 million to Progenitor,
agreed to make an additional funding payment of $0.5 million, agreed to
make additional license payments totaling $1 million to retain certain
rights to development of infectious disease vaccines and agreed to
make additional product development milestone payments which could total
approximately $3 million for each of the resulting products plus certain
other milestone payments which are treated as prepaid royalties. In
addition, Progenitor will receive a royalty from any commercial sales of
products resulting from the collaboration.

- - An agreement with New York University ("NYU") under which Chiron acquired
rights to optical mapping technology for use by Chiron and its sublicensee,
Ciba, in development of diagnostics, therapeutics and vaccines, and Chiron
also acquired the right to commercialize a potential optical mapping
instrument. Chiron made a $5 million payment to NYU for the license and
for funding of certain research facilities at NYU. If Chiron decides to
continue development of the instrument, Chiron will be obligated to make a
$4 million milestone payment to NYU and will make royalty payments based on
a percentage of sales of the instrument, subject to certain minimum
amounts. In addition, Ciba has agreed to make certain further research
payments to NYU in connection with development of the instrument in
exchange for the sublicense and in exchange for royalty payments by Chiron
to Ciba based upon sales of the instrument.

Incremental research and development expense recognized as a result of the
Company's funding of its collaborations, including the new agreements with
Genelabs, Progenitor and NYU, during the first quarter of 1995 totaled $31
million. In addition to these new agreements, the Company exercised an option
to fulfill its funding requirement through 1996 in a collaboration with G.D.
Searle & Co. ("Searle") by making a $9 million payment to Searle in return for
a lower overall funding amount and the exclusive option to negotiate for the
manufacturing rights to certain of Searle's products. Chiron also made a $4
million payment to DepoTech, Inc. ("DepoTech") related to the attainment of a
development milestone in a therapeutic collaboration and made a $1.5 million
payment to CytoMed, Inc. ("CytoMed") for funding of a collaboration utilizing
complement inhibitors for use in therapeutic and diagnostic applications and
for the purchase of additional equity securities of CytoMed. In addition,
beginning in the first quarter of 1995, the Company began funding 100 percent
of the expenses of its neurological disease collaboration with Cephalon, Inc.
("Cephalon"), resulting in a $6 million expense for the first quarter
collaborative expenses.

With respect to Chiron's in-house research and development programs, Chiron
continued to devote substantial resources to its vaccine programs, growth factor
and nucleic acid therapeutics programs and internal biological therapeutics
programs. In particular, spending in the vaccines program increased by
approximately $4 million (excluding the impact of the acquisition of Biocine
SpA) over the prior year due to clinical trial and manufacturing expenses for
herpes simplex type 2 vaccines and other vaccines currently in development. The
Company also recognized $1.5 million in expense during the first quarter from
the purchase of an option from Johnson & Johnson to participate in a home-access
HIV testing business. During the remainder of 1995, the Company expects that
research and development expense will remain significantly higher than prior
years due to the impact of the acquisitions and to continued expenses in all of
its collaborations. Product development, manufacturing start-up, and regulatory
expenses may also increase in future periods as Chiron's products in development
advance towards commercialization.

<PAGE>

COST OF SALES

Cost of sales increased consistent with the increase in product sales between
years. Gross profit margins decreased slightly from the prior year to 51
percent from 52 percent. Margins on existing product sales decreased from the
prior year due to increased obsolescence reserves on ophthalmic products and
operating expenses associated with the idled Puerto Rico facility. Partially
offsetting these decreases in gross profit margins was the addition of CCD's and
Biocine SpA's product sales which have higher margins than those of the
Company's existing products. Gross profit margins will be adversely impacted
during the remainder of 1995 due to the impact of the reversion to the original
terms of the Betaseron-Registered Trademark- supply agreement which will result
in lower revenues over the next two to three quarters. Further, gross profit
margin percentages may fluctuate significantly in future periods as the
Company's product mix continues to evolve, as the increased costs of new
manufacturing facilities are included in cost of goods sold and as the
restructurings of the Company's ophthalmic, diagnostics, and vaccine businesses
are completed.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Selling, general and administrative expenses ("SG&A expenses") increased between
1994 and 1995, largely due to the impact of the acquisitions of CCD and Biocine
SpA, which together added $46 million in SG&A expenses. SG&A expenses were
higher in the ophthalmic business due to the acquisition of Domilens and
increased costs related to the ophthalmic sales force arising from the
anticipated integration of Chiron Vision's operations with IOLAB. SG&A expenses
also increased due to increased selling costs for the Company's therapeutic
product lines and due to increased professional fees arising from ongoing patent
litigation.

OTHER EXPENSES

The write-off of purchased in-process technology includes $220 million for the
acquisitions of CCD, Biocine SpA and The Biocine Company and $10 million for the
acquisition of IOLAB. The fair value of the net assets acquired in these
acquisitions, including in-process technology, was estimated based on valuations
of the acquired net assets.

Other costs related to the Ciba transaction consist primarily of employee
payments and related tax liabilities and legal and investment advisor fees.
Under the agreements reached with Ciba, Ciba has agreed to reimburse the Company
$25 million for a portion of the employee payments and such reimbursement has
been recorded as a capital contribution.

Restructuring and reorganization costs represent certain accrued costs of
integrating the acquired businesses with Chiron's existing businesses, costs
related to the idling of the company's Puerto Rico manufacturing facility and
the scaling-back of manufacturing operations at the Company's Amsterdam
facility, and costs related to the write-down of duplicate facilities at the
Company's Emeryville, California headquarters. Also included is a charge
related to the postponement of plans to expand the Company's Emeryville research
and administrative facilities. Of the $38 million in total charges,
approximately $23 million related to write-downs of assets. The remaining
charges of $15 million consist of employee costs of $7 million and other accrued
costs of $8 million primarily for lease termination costs and additional tax
obligations. The majority of the accrued costs are expected to be paid over the
next two years.

Other income (expense) consists primarily of investment income on the Company's
cash and investment balances and interest expense accrued on debt and capital
leases. Other income (expense) decreased

<PAGE>

between 1994 and 1995, due to increased interest expense resulting from the
acquired debt of CCD and Biocine SpA and due to lower yields on the Company's
investment portfolio.

The provision for income taxes in 1995 consists primarily of foreign taxes on
certain foreign operations of the Company. Substantially all of the write-off
of purchased in-process technologies is not deductible for income tax purposes
and thus does not create a tax benefit in 1995. The provision for income taxes
in 1994 was based on the estimated annual effective income tax rate. The income
tax provision increased between periods primarily due to the acquisition of
foreign operations which were not included in 1994 results.

OUTLOOK

Chiron may incur a loss in the second quarter of 1995 and expects to incur a
loss in the third quarter of 1995 due to the continuing impact of integrating
CCD, Biocine SpA, The Biocine Company and IOLAB, as well as significant charges
associated with the planned acquisition of Viagene. Profitability of the
Company beyond the third quarter of 1995 depends upon a number of factors.
These factors include: successful integration of the newly acquired businesses
with Chiron; substantial profit contribution from CCD and the newly integrated
ophthalmic business; continuation of substantial profit contribution from the
Chiron-Ortho joint business; continued product sales of Betaseron-Registered
Trademark- in the United States and Proleukin-Registered Trademark- worldwide;
the successful completion of clinical trials and subsequent FDA approval for
commercialization of additional vaccines, diagnostics and pharmaceuticals under
development; and expense reduction in several of the Company's businesses.
There can be no assurance whether any combination of these factors can be
achieved, or that any such combination will result in profitability of the
Company. The integration of CCD, The Biocine Company, Biocine SpA and IOLAB
will have a material impact on the results of operations of the Company going
forward. Although the Company has recorded the majority of the expected cost of
these integrations in the first quarter of 1995, the Company expects to incur
additional charges in subsequent quarters as these integrations are completed.
Profitability of the Company is also dependent on utilization of research
funding available from Ciba. As part of the agreements with Ciba, Ciba agreed
to provide the Company with funding totaling $250 million over the next five
years in support of the Company's research programs.

Achievement and maintenance of profitability are substantially dependent upon
the success of Chiron's collaborations with others. Under the joint business
agreement with Ortho, Chiron and Ortho together determine strategy and budgets
for their joint diagnostics business, but Ortho conducts all commercial
activities, except research and antigen manufacturing, and exercises broad
control over the conduct of day-to-day operations. The Company is also
dependent upon Schering AG, Germany, and its U.S. affiliate, Berlex, for
development, marketing and distribution of Betaseron-Registered Trademark-.
There can be no assurance that the corporate interests of Berlex and Ortho, or
any other corporate partners, are or will remain consistent with those of Chiron
or that any collaborator will succeed in developing new markets or retaining and
expanding the markets served by the commercial collaborations.

In addition, Chiron's 50 percent share of the operating earnings of the
Chiron-Ortho joint business has been a significant source of Chiron's revenues.
The market for immunodiagnostic viral screening tests has evolved rapidly since
the introduction of HCV tests by the Chiron-Ortho joint business and by Abbott.
The joint business may be adversely affected in future periods by increasing
margin pressures, the overall demand for current tests and new diagnostic
products, and by the introduction of competing tests by unlicensed third
parties.

<PAGE>

Furthermore, other Chiron programs will require substantial additional
investment including the cost of funding collaborative research arrangements
with third parties, the cost of clinical trials, the completion of commercial
scale manufacturing facilities, and marketing and sales expenses associated with
product introductions. Also, the planned merger with Viagene will result in a
charge for the expensing of purchased in-process technology and will also result
in increased research and development expenses in future periods. Chiron has
significantly expanded its manufacturing capability to support both approved
products and products in development which has resulted in higher levels of
operating expenses and depreciation, and may result in even higher levels of
operating expenses in future periods. The research, development and market
introduction of new products will require the application of considerable
technical and financial resources by Chiron, while revenues generated from such
products, assuming they are successfully developed, may not be realized for
several years. Other material and unpredictable factors which could affect
operating results include the uncertainty, timing and costs associated with
product approvals and commercialization; the issuance and use of patents and
proprietary technology by Chiron or its competitors; the effect of technology
and other business acquisitions or transactions; the increasing emphasis on
controlling healthcare costs and potential legislation or regulation of
healthcare pricing; and actions by collaborators, customers and competitors.

Chiron exercised its option to revert to the terms of the original Betaseron
- -Registered Trademark- supply agreement effective January 1, 1995. Under those
original terms, Chiron will earn a partial payment for Betaseron -Registered
Trademark- upon shipment to Berlex and a subsequent final payment based upon
Berlex's net sales of the product. Total 1995 shipments of Betaseron
- -Registered Trademark- are expected to be roughly comparable to, or slightly
above or below 1994 levels. Assuming comparable 1994 and 1995 annual vial
shipments to Berlex, total 1995 revenues from Betaseron-Registered Trademark-
shipments will be lower than 1994 revenues by approximately $25 million to $30
million as a result of the reversion to the original supply agreement.

In March 1995, the Company decided to idle its Puerto Rico facility and scale-
back the manufacturing operations at the Company's Amsterdam facility. This
decision was based on the belief that current demand for Betaseron -Registered
Trademark- can be adequately supplied with the expanded manufacturing capacity
at the Company's Emeryville, California facility. Utilization of this idled
manufacturing capacity will require a significant increase in Betaseron
- -Registered Trademark- demand and/or the introduction of new products which
would require significant manufacturing capacity.

The market price of the Company's common stock is subject to significant
volatility, particularly on a quarterly basis. Any shortfall in revenue or
earnings from levels expected by securities analysts could have an immediate and
significant adverse effect on the trading price of the Company's stock in any
given period. Additionally, announcements of technological innovations by the
Company or its competitors, developments concerning proprietary rights, public
concern as to the safety of biotechnology and economic or other external factors
may have a significant impact on the market price of the Company's common stock.
The Company does not currently believe that inflation has a significant impact
upon its business.

LIQUIDITY AND CAPITAL RESOURCES

Chiron has financed product development, operations and capital expenditures
primarily from public and private sales of equity and convertible debt, product
sales, collaborative research revenues and from the earnings of the Chiron-Ortho
joint business. In addition to these sources of capital, future cash
requirements, including possible operating deficits, will be financed through a
combination of debt, mortgage, leases, possible off-balance-sheet financing
(such as R&D limited partnerships), and the use of existing cash and investment
balances. In addition, Ciba has agreed to guarantee $425 million of new debt

<PAGE>

for Chiron, and has agreed to provide $250 million (and up to $300 million
subject to certain reductions in the debt guarantee) over five years in support
of research programs at Chiron. Chiron also has the option of issuing up to
$500 million of new equity to Ciba. Until required for operations, Chiron's
policy is to keep its cash and investments in a diversified portfolio of
investment grade financial instruments, including money market instruments,
corporate notes and bonds, government or government agency securities, or other
debt securities. By policy, the amount of credit exposure to any one
institution is limited. These investments are generally not collateralized and
primarily mature within three years. Investments with original maturities in
excess of one year are presented on the balance sheet as noncurrent investments.

Chiron's liquidity may be impacted in future periods by its decision to fund its
share of expenses in certain of its joint ventures and collaboration
arrangements. Over the next several years, Chiron anticipates funding
collaborations with a number of its research partners, and may make additional
equity investments in collaborative partners. During the first quarter of 1995
the Company funded $34 million under third party collaborations for both
additional equity investments and development expenses. Also, Chiron has agreed
to provide one of its collaborative partners, Cephalon Inc., with an $18 million
credit facility through 1999 and has made advances to Cephalon Inc. totaling $14
million through March 31, 1995.

During the quarter ended March 31, 1995, cash and cash equivalents increased by
approximately $6 million. Of this amount, approximately $4 million was used in
the Company's operating activities, compared to $21 million used in operating
activities in the first quarter of 1994.

Investing activities consumed cash of $58 million in 1995, versus $94 million in
1994. The first quarter of 1995 included the acquisition of IOLAB for $96
million in cash. The first quarter of 1994 included net purchases of marketable
debt securities of $45 million, compared to net sales of marketable debt
securities of $67 million in the first quarter of 1995. Capital expenditures
on plant and equipment were $29 million during 1995 versus $25 million in 1994.
The Company also made investments in the equity securities of collaborative
partners totaling $3 million in the first quarter of 1995 and $19 million in the
first quarter of 1994.

Cash provided by financing activities in the first three months of 1995 of $68
million includes a $25 million capital contribution by Ciba to fund certain
payments to employees which resulted from the agreements with Ciba and $3
million from the issuance of common stock under the Company's employee benefit
plans. Also, in March 1995, the Company borrowed $40 million under a line of
credit arrangement, representing the first utilization of the debt guarantee
provided by Ciba. In addition, as part of the acquisitions, Chiron assumed
approximately $96 million in debt of CCD. This debt consists primarily of
short-term borrowings under foreign line of credit arrangements and a long-term
loan with Ciba.

The proposed acquisition of Viagene will require approximately $38 million in
cash and result in the issuance of approximately 1 million new shares of Chiron
common stock.

More than 60 percent of the Company's product sales in the first quarter of 1995
were made in foreign countries primarily Western European countries and Japan.
Foreign product sales are typically denominated in the currency of the country
in which the sale occurs. To the extent that foreign activities give rise to
receivable and payable balances that are denominated in foreign currencies, the
Company's policy is to mitigate its exposure to fluctuating foreign currency
exchange rates by hedging this exposure by entering into forward foreign
currency contracts which are settled quarterly. The gains and losses on these
hedging contracts are recorded in "Other income (expense)" in the consolidated
statement of operations

<PAGE>

and serve to offset the loss and gain on the underlying exposures. At March 31,
1995, the Company had outstanding forward foreign currency contracts totaling
approximately $37 million.

<PAGE>

ITEM 1. LEGAL PROCEEDINGS

MUREX DIAGNOSTICS, LTD. In a series of actions, the first of which was
brought on March 2, 1992, Chiron together with Ortho Diagnostic Systems, Inc.
("Ortho") and Ortho Diagnostic Systems, Ltd., filed suit in the High Court for
England and Wales against Murex Diagnostics, Ltd. ("Murex"), alleging
infringement of Chiron's U.K. Patent No. 2,212,511 ("the '511 patent") as a
result of Murex's manufacture and sale of HCV immunoassay kits in the U.K.
Murex is a subsidiary of International Murex Technologies Corp., a Canadian
company. Chiron and Ortho sought injunctive relief and unspecified damages. On
May 27, 1994, the court granted judgment for Chiron and Ortho, holding the '511
patent valid and infringed, and ordered Murex to pay damages in an amount to be
determined. Chiron's and Ortho's request for an injunction was granted on
November 30, 1994. Murex has appealed. Chiron is informed that officials
within the British Ministry of Health have in the past raised the possibility of
authorizing Murex's infringement of the `511 patent under the "Crown use"
provisions of British law, with respect to the sale of HCV immunoassay kits to
the British National Health Service. Further, Murex has stated that it will
apply for a compulsory license under the '511 patent. Infringement proceedings
against Murex on German and European patents corresponding to the '511 patent
have also been filed by Chiron and Ortho in Germany, Italy, The Netherlands and
Belgium. On January 23, 1995, Chiron and Ortho were granted an injunction in
Germany. On May 8, 1995, Chiron was granted a cross-border preliminary
injunction by the Dutch court preventing infringement by Murex and certain of
its affiliates covering The Netherlands, Belgium, France, Spain and Luxembourg.
Murex has brought an action in Australia seeking the revocation of the
Australian counterpart of the '511 patent. Chiron has counterclaimed for
infringement.

DANIEL W. BRADLEY. On December 20, 1994, Dr. Daniel W. Bradley, a former
scientist at the U.S. Centers for Disease Control (the "CDC") brought suit in
the United States District Court for the Northern District of California against
Chiron, Ortho, certain employees of Chiron, and the United States government.
Bradley, who collaborated with Chiron scientists on the research that led to the
discovery of HCV, alleges he has been wrongly excluded as an inventor of HCV.
He requests various forms of relief, including declarations that he is an
inventor of Chiron's patents related to HCV and that these patents are
unenforceable. Bradley further seeks monetary damages and a constructive trust
on all past and future profits derived from Chiron's HCV invention, which are
estimated by Bradley to be in excess of $1 billion, as well as penalties under
federal and state Racketeering and Corrupt Organization (RICO) statutes. Chiron
believes that this suit is without merit and that substantial defenses exist.
In 1990, Bradley and the CDC entered into a settlement agreement regarding his
claims of inventorship in which any rights either might have were assigned to
Chiron. Chiron believes that the settlement agreement is valid and bars nearly
all of the claims in the subject litigation. Chiron and the other defendants
have filed a motion to dismiss.

SICOR. In April 1991, Alco Chemicals, Ltd. ("Alco") and Sicor, SpA
("Sicor"), Cetus Ben Venue Therapeutics' ("CBVT") former suppliers of bulk
doxorubicin, filed suit in the United States District Court for the Northern
District of California against Cetus Corporation ("Cetus"), Ben Venue
Laboratories, Inc. ("Ben Venue"), CBVT and Erbamont, Inc. ("Erbamont") and its
affiliates. Sicor had been prevented from manufacturing product for CBVT since
September 1990, when Sicor's facilities in Italy were ordered closed by the
government in connection with trade secret litigation in Italy. In March 1991,
CBVT entered into an agreement with Erbamont which provided for, among other
things, the settlement of several legal proceedings then pending relating to
Erbamont's alleged doxorubicin proprietary rights, and the exclusive supply of
doxorubicin to CBVT by Erbamont. The Sicor complaint alleges breach of the CBVT
contract to purchase bulk doxorubicin from Sicor, as well as antitrust
violations and interference with contract and prospective advantage and seeks
unspecified damages. Cetus has denied any entitlement to recovery in this
lawsuit and has filed a counterclaim against the plaintiffs for fraud and breach
of contract based on Sicor's

<PAGE>

failure to deliver the bulk product. In an order filed on January 11, 1993, the
judge granted summary judgment motions in favor of the Cetus parties and
Erbamont with respect to the Sicor and Alco claims. Sicor appealed the summary
judgment and, in August 1993, dismissed its claims against Erbamont. In an
opinion issued April 3, 1995, the Ninth Circuit Court of Appeals affirmed the
summary judgment on the antitrust claims, but reversed and remanded to the
District Court for further proceedings the claims of breach of contract and
interference with prospective advantage. The Cetus parties filed a motion for
rehearing by the Ninth Circuit Court of Appeals, and, on May 3, 1995, the Court
directed the Sicor parties to file a response to such motion. In the event that
the Ninth Circuit Court of Appeals decision is not changed on rehearing, the
Company believes it has substantial defenses to the remanded claims. A
related arbitration before the International Chamber of Commerce in Paris
brought by Sicor against Chiron, Cetus and Ben Venue has been stayed pending
the resolution of the Cetus parties counterclaims in the above described
litigation.

In February 1995, Sicor and Alco filed a further action in the United
States District Court for the Northern District of California against CBVT for
amounts allegedly owed by CBVT to Sicor and Alco for the supply of doxorubicin,
plus interest and attorneys' fees. This case has been assigned to the same
judge as the above referenced District Court case. Internal investigation of
the claim is under way, and there has been no further action in this suit.

AMERICAN HOME PRODUCTS. On April 27, 1995, American Home Products
Corporation ("AHP") filed suit against Chiron in the Superior Court in New
Castle County, Delaware, claiming compensatory, consequential and punitive
damages based on an alleged breach and repudiation by Chiron of a contract
pursuant to which Chiron had agreed to purchase certain assets from AHP for a
purchase price of $9.75 million. Chiron has not yet answered the complaint.
However, a preliminary review of the facts of the case indicates that Chiron has
significant defenses.

BRILLIANT TRADING CO., WOLFSON. Following the announcement by Chiron of
the signing of a definitive agreement to acquire Viagene, two lawsuits
purporting to be class actions were filed on April 24 and May 1, 1995,
respectively, in the Court of Chancery of the State of Delaware against named
directors and officers of Viagene and against Viagene and Chiron. In one case,
Chiron is sued on a theory that it aided and abetted alleged breaches of
fiduciary duty by Viagene's directors and officers in approving the proposed
acquisition by Chiron; in the other case, Chiron is sued for alleged breaches of
fiduciary duty as a controlling stockholder of Viagene. The defendants seek
declaratory and injunctive relief, an accounting and costs and disbursements.
Chiron believes these suits are without merit.

The Company is party to certain other lawsuits, each of which is described in
Item 3, Legal Proceedings on page 9 of the Company's report on Form 10-K for the
period ended December 31, 1994, and as to which lawsuits there have been no
material developments since such Form 10-K was filed.

ITEM 2. CHANGES IN SECURITIES. None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES. None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. None.

ITEM 5. OTHER INFORMATION. None.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.

<PAGE>

(a) EXHIBITS.

2.01 Agreement and Plan of Merger, made as of February 6,
1987, incorporated by reference to Exhibit 2.01 of the
Registrant's Form 10-Q report for the period ended
September 30, 1994.

4.01 Indenture, dated as of May 21, 1987, between Cetus
Corporation and Bankers Trust Company, Trustee,
incorporated by reference to Exhibit 4.01 of the
Registrant's Form 10-Q report for the period ended
September 30, 1994.

4.02 First Supplemental Indenture, dated as of December 12,
1991, by and among Registrant, Cetus Corporation, and
Bankers Trust Company, incorporated by reference to
Exhibit 4.02 of the Registrant's Form 10-K report for
fiscal year 1992.

4.03 Indenture, dated as of November 15, 1993, between
Registrant and The First National Bank of Boston, as
Trustee, incorporated by reference to Exhibit 4.03 of
the Registrant's Form 10-K report for fiscal year 1993.

4.04 Rights Agreement, dated as of August 25, 1994, between
the Company and Continental Stock Transfer & Trust
Company, which includes the Certificate of Designations
for the Series A Junior Participating Preferred Stock
as Exhibit A, the form of Right Certificate as
Exhibit B and the Summary of Rights to Purchase
Preferred Shares as Exhibit C, incorporated by
reference to Exhibit 4.04 of the Registrant's current
report on Form 8-K dated August 25, 1994.

4.05 Amendment No. 1 to Rights Agreement dated as of
November 20, 1994, between Chiron Corporation and
Continental Stock Transfer & Trust Company,
incorporated by reference to Exhibit 4.05 of the
Registrant's current report on Form 8-K, dated
November 20, 1994.

4.06 $1,000,000 County of Lorain, Ohio Variable Rate
Industrial Revenue Bonds dated as of July 1, 1984, due
July 1, 2014. The Registrant agrees to furnish to the
Commission upon request a copy of such agreement which
it has elected not to file under the provisions of
Regulation 601(b)(4)(iii).

4.07 $1,000,000 Walpole Industrial Development Authority
6.75% Industrial Revenue Bonds dated as of July 1,
1979, due July 1, 2004. The Registrant agrees to
furnish to the Commission upon request a copy of such
agreement which it has elected not to file under the
provisions of Regulation 601(b)(4)(iii).

<PAGE>

10.01 Lease between Registrant and BGR Associates, a
California limited partnership, dated May 26, 1989,
incorporated by reference to Exhibit 10.01 of the
Registrant's Form 10-Q report for the period ended
September 30, 1994.

10.02 Lease between Registrant and BGR Associates II, a
California limited partnership, dated May 26, 1989,
incorporated by reference to Exhibit 10.02 of the
Registrant's Form 10-Q report for the period ended
September 30, 1994.

10.03 Agreement and Plan of Merger dated as of April 23, 1995
between Viagene, Inc., a Delaware corporation, and
Chiron Corporation, incorporated by reference to
Exhibit 10.67 of the Registrant's current report on
Form 8-K dated April 24, 1995.

10.04 Stockholders' Agreement dated as of April 23, 1995
among certain stockholders of Viagene, Inc., a Delaware
corporation, and Chiron Corporation, incorporated by
reference to Exhibit 10.68 of the Registrant's current
report on Form 8-K dated April 24, 1995.

10.05 Stock and Asset Purchase Agreement dated as of March 6,
1995, by and among Johnson & Johnson, a New Jersey
corporation, Site Microsurgical Systems, Inc., a
Pennsylvania corporation, and Chiron Corporation and
Amendment No. 1 to Stock and Asset Purchase Agreement,
entered into March 31, 1995 by and among Johnson &
Johnson, Site Microsurgical Systems, Inc. and Chiron
Corporation.

10.06 Revolving Credit Facility dated as of March 24, 1995,
between Chiron Corporation and Swiss Bank Corporation,
San Francisco Branch.

10.07 Lease between Acorn Development, Inc., a West Virginia
corporation, and IntraOptics, Inc., a Delaware
corporation, dated September 12, 1991, incorporated by
reference to Exhibit 10.06 of the Registrant's Form 10-
K report for fiscal year 1992.

10.08 Joint Venture Agreement by and between Chiron Biocine
Corporation, a California corporation, and CIBA-GEIGY
Biocine Corporation, a Delaware corporation, dated
April 15, 1987 (with certain confidential information
deleted), incorporated by reference to Exhibit 10.23 of
the Registrant's Form 8 filed with the Commission on
February 14, 1992.

<PAGE>

10.09 Amendment to Biocine Joint Venture Agreement by and
between Chiron Biocine Corporation, a California
corporation, and CIBA-GEIGY Biocine Corporation, a
Delaware corporation, effective as of January 1, 1992,
incorporated by reference to Exhibit 10.63 to
Registrant's Form 10-Q report for the period ended
June 30, 1992.

10.10 Research and License Agreement by and between
Registrant and The Biocine Company, a Delaware
partnership, dated April 15, 1987 (with certain
confidential information deleted), incorporated by
reference to Exhibit 10.24 of the Registrant's Form 8
filed with the Commission on February 14, 1992.

10.11 License Agreement by and between CIBA-GEIGY Biocine
Corporation, a Delaware corporation, and The Biocine
Company, a Delaware partnership, dated April 15, 1987
(with certain confidential information deleted),
incorporated by reference to Exhibit 10.25 of the
Registrant's Form 8 filed with the Commission on
February 14, 1992.

10.12 License Agreement by and between Chiron Biocine
Corporation, a California corporation, and The Biocine
Company, a Delaware partnership, dated April 15, 1987
(with certain confidential information deleted),
incorporated by reference to Exhibit 10.26 of the
Registrant's Form 8 filed with the Commission on
February 14, 1992.

10.13 Letter Agreement signed by CIBA-GEIGY Corporation,
dated April 15, 1987, incorporated by reference to
Exhibit 10.13 of the Registrant's Form 10-Q report for
the period ended September 30, 1994.

10.14 Agreement between the Registrant and Ortho Diagnostic
Systems, Inc., a New Jersey corporation, dated
August 17, 1989, and Amendment to Collaboration
Agreement between Ortho Diagnostic Systems, Inc. and
Registrant, dated December 22, 1989 (with certain
confidential information deleted), incorporated by
reference to Exhibit 10.14 of the Registrant's
Form 10-Q report for the period ended September 30,
1994.

10.15 License and Supply Agreement between Ortho Diagnostic
Systems, Inc., a New Jersey corporation, the Registrant
and Abbott Laboratories, an Illinois corporation, dated
August 17, 1989 (with certain confidential information
deleted), incorporated by reference to Exhibit 10.15 of
the Registrant's Form 10-Q report for the quarter ended
June 30, 1994.

<PAGE>

10.16 Chiron 1991 Stock Option Plan, as amended, incorporated
by reference to Annex 1 of the Registrant's Proxy
Statement dated April 18, 1995.*

10.17 Forms of Option Agreements, Chiron 1991 Stock Option
Plan, as amended, incorporated by reference to
Exhibit 10.17 of the Registrant's Form 10-K report for
fiscal year 1993.*

10.18 Forms of Option Agreements, Cetus Corporation Amended
and Restated Common Stock Option Plan, incorporated by
reference to Exhibit 10.33 of Registrant's Form 10-K
report for fiscal year 1991.*

10.19 Forms of Supplemental Letter concerning the assumption
of Cetus Corporation options by Chiron, incorporated by
reference to Exhibit 10.34 of Registrant's Form 10-K
report for fiscal year 1991.*

10.20 Agreement and Plan of Reorganization dated as of
October 11, 1991 by and among the Registrant, Chiron
Ophthalmics, Inc., COI Acquisition Corp., IntraOptics,
Inc. and James R. Cook, M.D., incorporated by reference
to Exhibit 28.2 of Registrant's current report on Form
8-K dated October 14, 1991.

10.21 Indemnification Agreement between the Registrant and
Dr. William J. Rutter, dated as of February 12, 1987
(which form of agreement is used for each member of
Registrant's Board of Directors), incorporated by
reference to Exhibit 10.21 of the Registrant's Form 10-
Q report for the period ended September 30, 1994.

10.22 Stock Purchase Agreement by and between the Registrant
and Johnson & Johnson Development Corporation, a
corporation organized and existing under the laws of
the State of New Jersey, dated as of October 3, 1986,
incorporated by reference to Exhibit 10.22 of the
Registrant's Form 10-Q report for the period ended
September 30, 1994.

10.23 Stock Purchase Agreement between the Registrant and
CIBA-GEIGY, Limited, a corporation organized and
existing under the laws of Switzerland, dated November
14, 1988, incorporated by reference to Exhibit 10.23 of
the Registrant's Form 10-Q report for the period ended
September 30, 1994.

10.24 Form of Debenture Purchase Agreement between the
Registrant and CIBA-GEIGY, Limited, a corporation
organized and existing under the laws of Switzerland,
dated June 22, 1990,

<PAGE>

incorporated by reference to Exhibit 10.25 of the
Registrant's Form 10-K report for fiscal year 1994.

10.25 Chiron Corporation 1.90% Convertible Subordinated Note
due 2000, Series B, incorporated by reference to
Exhibit 10.25 of the Registrant's Form 10-K report for
fiscal year 1993.

10.26 Investment Agreement dated as of November 20, 1994
among Ciba-Geigy Limited, Ciba-Geigy Corporation, Ciba
Biotech Partnership, Inc. and Chiron Corporation,
incorporated by reference to Exhibit 10.54 of the
Registrant's current report on Form 8-K dated
November 20, 1994.

10.27 Governance Agreement dated as of November 20, 1994
among Ciba-Geigy Limited, Ciba-Geigy Corporation and
Chiron Corporation, incorporated by reference to
Exhibit 10.55 of the Registrant's current report on
Form 8-K dated November 20, 1994.

10.28 Subscription Agreement dated as of November 20, 1994
among Ciba-Geigy Limited, Ciba-Geigy Corporation, Ciba
Biotech Partnership, Inc. and Chiron Corporation,
incorporated by reference to Exhibit 10.56 of the
Registrant's current report on Form 8-K dated
November 20, 1994.

10.29 Cooperation and Collaboration Agreement dated as of
November 20, 1994, between Ciba-Geigy Limited and
Chiron Corporation, incorporated by reference to
Exhibit 10.57 of the Registrant's current report on
Form 8-K dated November 20, 1994.

10.30 Registration Rights Agreement dated as of November 20,
1994 between Ciba Biotech Partnership, Inc. and Chiron
Corporation, incorporated by reference to Exhibit 10.58
of the Registrant's current report on Form 8-K dated
November 20, 1994.

10.31 Market Price Option Agreement dated as of November 20,
1994 among Ciba-Geigy Limited, Ciba-Geigy Corporation,
Ciba Biotech Partnership, Inc. and Chiron Corporation,
incorporated by reference to Exhibit 10.59 of the
Registrant's current report on Form 8-K dated
November 20, 1994.

10.32 Amendment dated as of January 3, 1995 among Ciba-Geigy
Limited, Ciba-Geigy Corporation, Ciba Biotech
Partnership, Inc. and Chiron Corporation, incorporated
by reference to Exhibit 10.60 of the Registrant's
current report on Form 8-K dated January 4, 1995.

<PAGE>

10.33 Supplemental Agreement dated as of January 3, 1995
among Ciba-Geigy Limited, Ciba-Geigy Corporation, Ciba
Biotech Partnership, Inc. and Chiron Corporation,
incorporated by reference to Exhibit 10.61 of the
Registrant's current report on Form 8-K dated
January 4, 1995.

10.34 Amendment with Respect to Employee Stock Option
Arrangements dated as of January 3, 1995 among Ciba-
Geigy Limited, Ciba-Geigy Corporation, Ciba Biotech
Partnership, Inc. and Chiron Corporation, incorporated
by reference to Exhibit 10.62 of the Registrant's
current report on Form 8-K dated January 4, 1995.*

10.35 Supplemental Benefits Agreement, dated July 21, 1989,
between the Registrant and Dr. William J. Rutter,
incorporated by reference to Exhibit 10.27 of the
Registrant's Form 10-Q report for the period ended
September 30, 1994.*

10.36 Lease dated as of July 1, 1983 between Cetus
Corporation and H.B. Chapman, Jr., incorporated by
reference to Exhibit 10.28 of the Registrant's Form
10-Q report for the period ended September 30, 1994.

10.37 Amendment to Lease, made as of March 20, 1990, amending
Lease dated July 1, 1983, between Harold B. Chapman,
Jr. and Cetus Corporation.

10.38 Lease commencing March 1, 1987, between EuroCetus B.V.
and the Municipal Land Company of the City of Amsterdam
(Translation), incorporated by reference to Exhibit
10(k) of Cetus Corporation's Form 10-K report for its
fiscal year 1987 (Commission File No. 0-10003).

10.39 Form of Option Agreement (with Purchase Agreements
attached thereto) between Cetus Corporation and each
former limited partner of Cetus Healthcare Limited
Partnership, a California limited partnership,
incorporated by reference to Exhibit 10.31 of the
Registrant's Form 10-Q report for the period ended
September 30, 1994.

10.40 Form of Option Agreement (with forms of Purchase
Agreements attached thereto), dated December 30, 1986,
between Cetus Corporation and each former limited
partner of Cetus Healthcare Limited Partnership II, a
California limited partnership, incorporated by
reference to Exhibit 10.32 of the Registrant's Form 10-
Q report for the period ended September 30, 1994.

<PAGE>

10.41 Big-O Property Purchase and Leaseback Agreement, dated
as of October 31, 1988, between Cetus Corporation and
Richard K. Robbins, incorporated by reference to
Exhibit 10.33 of the Registrant's Form 10-Q report for
the period ended September 30, 1994.

10.42 Triple Net Lease dated as of January 20, 1989, between
Cetus Corporation and BGR Associates III, a California
limited partnership, and Marin County Exchange
Corporation, incorporated by reference to Exhibit 10.34
of the Registrant's Form 10-Q report for the period
ended September 30, 1994.

10.43 License Agreement between the Registrant and the Board
of Trustees of the Leland Stanford Junior University,
dated December 15, 1981, incorporated by reference to
Exhibit 10.07 of the Registrant's Form 10-Q report for
the period ended September 30, 1994.

10.44 Stock Purchase and Warrant Agreement dated May 9, 1989,
between Cetus Corporation and Hoffmann-La Roche Inc.,
incorporated by reference to Exhibit 10.36 of the
Registrant's Form 10-Q report for the period ended
September 30, 1994.

10.45 Letter Agreement, dated as of December 12, 1991,
relating to Stock Purchase and Warrant Agreement
between Registrant and Hoffmann-La Roche Inc.,
incorporated by reference to Exhibit 10.59 of
Registrant's Form 10-K report for fiscal year 1991.

10.46 Agreement and Plan of Merger dated as of July 21, 1991,
by and among Registrant, Chiron Acquisition Subsidiary,
Inc. and Cetus Corporation, incorporated by reference
to Exhibit 28.2 of Registrant's Form 8-K report dated
July 22, 1991.

10.47 Letter Agreement dated September 26, 1990 between the
Registrant and William G. Green, incorporated by
reference to Exhibit 10.41 of the Registrant's Form 10-
K report for fiscal year 1992.*

10.48 Letter Agreement dated December 18, 1991 between
Registrant and Jack Schuler, incorporated by reference
to Exhibit 10.42 of the Registrant's Form 10-K report
for fiscal year 1992.*

10.49 Lease between Sclavo S.p.A. and Biocine Sclavo S.p.A.,
dated January 7, 1992.

<PAGE>

10.50 Agreement made as of November 11, 1993 by and between
Kodak Clinical Diagnostics Limited, a company
registered in England, and Ciba Corning Diagnostics
Corp., a Delaware corporation, and Letter dated
October 7, 1994 from Kodak Clinical Diagnostics
Limited to Ciba Corning Diagnostics Corp. [Certain
information has been omitted from the Agreement
pursuant to a request by Registrant for confidential
treatment pursuant to Rule 24b-2.]

10.51 Letter Agreement dated September 9, 1991 between the
Registrant and Walter Moos, incorporated by reference
to Exhibit 10.47 of the Registrant's Form 10-K report
for fiscal year 1992.*

10.52 Letter Agreement between the Registrant and Walter
Moos, dated February 1, 1993, incorporated by reference
to Exhibit 10.48 of the Registrant's Form 10-K report
for fiscal year 1992.*

10.53 Letter Agreement between Registrant and Renato Fuchs,
dated May 13, 1993, incorporated by reference to
Exhibit 10.47 of the Registrant's Form 10-K report for
fiscal year 1993.*

10.54 Agreement made as of December 6, 1984, by and between
Corning Glass Works, a New York corporation, and
Bioanalysis Limited, a company incorporated in England
and Wales, and Letter dated July 26, 1985 from
Bioanalysis Limited to Corning Glass Works. [Certain
information has been omitted from the Agreement
pursuant to a request by Registrant for confidential
treatment pursuant to Rule 24b-2.]

10.55 Description of Executive Variable Compensation
Program., incorporated by reference to Exhibit 10.58 of
the Registrant's Form 10-K report for fiscal year
1994.*

10.56 Chiron Corporation 1995 Executive Officer Variable Cash
Compensation Plan, incorporated by reference to Annex 2
of the Registrant's Proxy Statement dated April 18,
1995.*

10.57 Regulatory Filing, Development and Supply Agreement
between the Registrant, Cetus Oncology Corporation, a
wholly owned subsidiary of the Registrant, and Schering
AG, a German company, dated as of May 10, 1993 (with
certain confidential information deleted), incorporated
by reference to Exhibit 10.50 of the Registrant's
current report on Form 8-K dated February 9, 1994.

<PAGE>

10.58 Letter Agreement dated December 30, 1993 by and between
Registrant and Schering AG, a German company (with
certain confidential information deleted), incorporated
by reference to Exhibit 10.51 of the Registrant's
Form 10-K report for fiscal year 1993.

10.59 Guaranty, dated as of September 29, 1994, made by
Registrant, in favor of Bankers Trust Company, as
trustee, incorporated by reference to Exhibit 10.52 of
the Registrant's Form 10-Q report for the period ended
September 30, 1994.

10.60 Guaranty, dated as of September 29, 1994, made by Cetus
Corporation, in favor of The First National Bank of
Boston, as trustee, incorporated by reference to
Exhibit 10.53 of the Registrant's Form 10-Q report for
the period ended September 30, 1994.

10.61 Letter Agreements dated September 11, 1992, July 15,
1994 and September 14, 1994 between the Registrant and
Lewis T. Williams, incorporated by reference to
Exhibit 10.54 of the Registrant's Form 10-Q report for
the period ended September 30, 1994.*

10.62 Letter dated January 4, 1995 to C. William Zadel.,
incorporated by reference to Exhibit 10.65 of the
Registrant's Form 10-K report for fiscal year 1994.*

10.63 Letter to Dino Dina dated April 24, 1984, incorporated
by reference to Exhibit 10.66 of the Registrant's
Form 10-K report for fiscal year 1994.*

10.64 Research Agreement, dated as of July 15, 1985, between
Ciba-Geigy Limited, a Swiss corporation, and Ciba
Corning Diagnostics Corp., a Delaware corporation.

10.65 Licensing Agreement, effective December 18, 1986, by
and between Miles Laboratories, Inc., a Delaware
corporation, and Ciba Corning Diagnostics Corp., a
Delaware corporation, and Letter dated December 18,
1992 from Ciba Corning Diagnostics Corp. to Miles
Laboratories, Inc. [Certain information has been
omitted from the Agreement pursuant to a request by
Registrant for confidential treatment pursuant to
Rule 24b-2].

10.66 Magnetocluster Binding Assay Technology Agreement,
dated as of January 21, 1983, by and between
Bioclinical Group, Inc., a Delaware corporation, and
Corning Glass Works, a New York corporation. [Certain
information has been omitted from

<PAGE>

the Agreement pursuant to a request by Registrant for
confidential treatment pursuant to Rule 24b-2].

10.67 Turn-back License Agreement, dated as of May 30, 1986,
by and between Ciba Corning Diagnostics Corp., a
Delaware corporation, and Advanced Magnetics, Inc., a
Delaware corporation. [Certain information has been
omitted from the Agreement pursuant to a request by
Registrant for confidential treatment pursuant to
Rule 24b-2].

10.68 Settlement Agreement, dated August 30, 1989, between
Ciba Corning Diagnostics Corp. and Advanced Magnetics,
Inc. [Certain information has been omitted from the
Agreement pursuant to a request by Registrant for
confidential treatment pursuant to Rule 24b-2].

10.69 Lease made and entered into December 17, 1984 between
BGR Associates, a California limited partnership, and
Cetus Corporation and Amendment to Lease dated
December 17, 1984 entered into effective February 1,
1986.

10.70 Agreement, effective as of December 21, 1988, by and
between Hoffmann-La Roche Inc., a New Jersey
corporation, and Cetus Corporation. [Certain
information has been omitted from the Agreement
pursuant to a request by Registrant for confidential
treatment pursuant to Rule 24b-2].

10.71 Agreement, effective as of December 21, 1988, by and
among F. Hoffmann-La Roche Ltd., a Swiss corporation,
Cetus Corporation, and EuroCetus International, B.V., a
Netherlands Antilles corporation. [Certain information
has been omitted from the Agreement pursuant to a
request by Registrant for confidential treatment
pursuant to Rule 24b-2].

10.72 Agreement, by and between Cetus Oncology Corporation,
EuroCetus International, N.V., and F. Hoffmann-La Roche
Ltd.. [Certain information has been omitted from the
Agreement pursuant to a request by Registrant for
confidential treatment pursuant to Rule 24b-2].

10.73 Agreement commencing January 1, 1991, between EuroCetus
B.V. and the Municipal Development Corporation
(Translation), incorporated by reference to
Exhibit 10.41 of the Registrant's Form 10-K report
for fiscal year 1994.

11 Statement of Computation of Earnings per Share.

27 Financial Data Schedule.

<PAGE>

---------------------------------
*Management contract, compensatory plan or arrangement.

(b) REPORTS ON FORM 8-K.

Chiron filed a current report on Form 8-K, dated January 4, 1995,
reporting under Item 2 the completion of a transaction with Ciba-
Geigy Limited ("Ciba") whereby Ciba acquired through a partial
tender offer an approximate 49.5 percent interest in the Company
and Chiron acquired all of the outstanding common stock of Ciba
Corning Diagnostics Corp. and Ciba's interests in The Biocine
Company and JV Vax B.V. in exchange for 6.6 million new shares of
Chiron common stock and a cash payment of $24 million. On
March 17, 1995, Chiron filed Amendment No. 1 to its current
report on Form 8-K, dated January 4, 1995, to include under
Item 7 the audited financial statements of Ciba Corning
Diagnostics Corp., The Biocine Company and JV Vax B.V. and
pro forma combined condensed financial information.

Chiron filed a current report on Form 8-K, dated March 6, 1995,
reporting under Item 5 the issuance of a press release announcing
the reaching of an agreement to acquire the ophthalmic surgical
division of IOLAB, a Johnson & Johnson company.

Chiron filed a current report on Form 8-K, dated March 10, 1995,
reporting under Item 5 the issuance of a press release by Chiron
and Genelabs Technologies, Inc. announcing they have signed a
heads of agreement to form a worldwide diagnostic alliance.

<PAGE>
CHIRON CORPORATION

March 31, 1995

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed in its behalf by the
undersigned thereunto duly authorized.

CHIRON CORPORATION

DATE: May 15, 1995 BY: /s/Edward E. Penhoet
----------------------- ----------------------------------
Edward E. Penhoet
President and Chief
Executive Officer

DATE: May 15, 1995 BY: /s/Dennis L. Winger
----------------------- ----------------------------------
Dennis L. Winger
Senior Vice President, Finance
and Administration

<PAGE>

STOCK AND ASSET PURCHASE AGREEMENT

BY AND AMONG

JOHNSON & JOHNSON,

SITE MICROSURGICAL SYSTEMS, INC.

AND

CHIRON CORPORATION

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

Dated as of March 6, 1995

<PAGE>

TABLE OF CONTENTS

PAGE

ARTICLE I - DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 2

ARTICLE II - CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.01 Time and Place of Closing . . . . . . . . . . . . . . . . . . . . 14
2.02 Conveyance . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.03 Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.04 Assumption of Liabilities . . . . . . . . . . . . . . . . . . . . 19
2.05 Instruments of Transfer and Assumption . . . . . . . . . . . . . 19
2.06 Nonassignability of Assets . . . . . . . . . . . . . . . . . . . 20
2.07 Apportionments . . . . . . . . . . . . . . . . . . . . . . . . . 22
2.08 Trademarks and Patents . . . . . . . . . . . . . . . . . . . . . 23
2.09 Sales and Transfer Taxes; Fees . . . . . . . . . . . . . . . . . 23
2.10 Relocation of Assets . . . . . . . . . . . . . . . . . . . . . . 24
2.11 Ancillary Documents . . . . . . . . . . . . . . . . . . . . . . . 24
2.12 Transferring the Foreign Business . . . . . . . . . . . . . . . . 26

ARTICLE III - REPRESENTATIONS AND WARRANTIES OF SELLERS . . . . . . . . . . 32
3.01 Organization; Powers; Execution . . . . . . . . . . . . . . . . . 33
3.02 IOLAB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
3.03 Capitalization of IOLAB . . . . . . . . . . . . . . . . . . . . . 34
3.04 Title to Assets . . . . . . . . . . . . . . . . . . . . . . . . . 34
3.05 Title to IOLAB Shares . . . . . . . . . . . . . . . . . . . . . . 34
3.06 Condition of Assets . . . . . . . . . . . . . . . . . . . . . . . 35
3.07 Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . 35
3.08 No Brokers or Finders . . . . . . . . . . . . . . . . . . . . . . 37
3.09 No Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . 37
3.10 Conflicts; Governmental Consents and Approvals; No Violation or
Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
3.11 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . 38
3.12 Contracts and Commitments . . . . . . . . . . . . . . . . . . . . 39
3.13 Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
3.14 Trademarks . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
3.15 Patents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
3.16 Intellectual Property Rights . . . . . . . . . . . . . . . . . . 41
3.17 Legal Proceedings, etc. . . . . . . . . . . . . . . . . . . . . . 42
3.18 Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . . . 42
3.19 Environmental Conditions . . . . . . . . . . . . . . . . . . . . 43
3.20 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
3.21 Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
3.22 Product Registrations . . . . . . . . . . . . . . . . . . . . . . 45

<PAGE>

3.23 Financial Reports . . . . . . . . . . . . . . . . . . . . . . . . 46
3.24 Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
3.25 Product Returns . . . . . . . . . . . . . . . . . . . . . . . . . 47
3.26 No Termination of Business Relationship . . . . . . . . . . . . . 48
3.27 Products Liability . . . . . . . . . . . . . . . . . . . . . . . 48
3.28 FDA and Related Matters . . . . . . . . . . . . . . . . . . . . . 49
3.29 Representations Complete . . . . . . . . . . . . . . . . . . . . 51

ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF BUYER . . . . . . . . . . . 52
4.01 Buyer's Organization; Power; Execution . . . . . . . . . . . . . 52
4.02 Conflicts; Governmental Consents and Approvals; No Violation or
Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
4.03 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
4.04 Investment . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
4.05 No Brokers or Finders . . . . . . . . . . . . . . . . . . . . . . 54

ARTICLE V - CONDITIONS TO CLOSING . . . . . . . . . . . . . . . . . . . . . 54
5.01 Buyer's Conditions . . . . . . . . . . . . . . . . . . . . . . . 54
5.02 Sellers' Conditions . . . . . . . . . . . . . . . . . . . . . . . 56

ARTICLE VI - PRE-CLOSING COVENANTS . . . . . . . . . . . . . . . . . . . . 57
6.01 Conduct of Business . . . . . . . . . . . . . . . . . . . . . . . 57
6.02 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
6.03 No Shopping . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
6.04 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
6.05 Permits and Licenses . . . . . . . . . . . . . . . . . . . . . . 60
6.06 Real Estate Investigations . . . . . . . . . . . . . . . . . . . 60
6.07 Transition Matters . . . . . . . . . . . . . . . . . . . . . . . 61
6.08 Supplements to Disclosure Schedules . . . . . . . . . . . . . . . 61
6.09 Cooperation and Action . . . . . . . . . . . . . . . . . . . . . 62
6.10 Maintenance of Business . . . . . . . . . . . . . . . . . . . . . 62
6.11 Access to Information . . . . . . . . . . . . . . . . . . . . . . 62
6.12 Disposal of Hazardous Substances; Testing and Repair . . . . . . 63
6.13 Audit of the Business . . . . . . . . . . . . . . . . . . . . . . 64

ARTICLE VII - POST-CLOSING COVENANTS . . . . . . . . . . . . . . . . . . . 65
7.01 Use of Seller's Name and Trademarks . . . . . . . . . . . . . . . 65
7.02 Books and Records; Availability of Personnel . . . . . . . . . . 66
7.03 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
7.04 Payments from Third Parties . . . . . . . . . . . . . . . . . . . 68
7.05 Municipal Improvements to the Real Property . . . . . . . . . . . 68
7.06 Pre-Closing Receivables; Returns . . . . . . . . . . . . . . . . 69
7.07 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . 70
7.08 Non-Competition Covenant of Sellers . . . . . . . . . . . . . . . 71

<PAGE>

7.09 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
7.10 Certain Rights Under the CIBA Agreement . . . . . . . . . . . . . 75
7.11 Livingston Facility . . . . . . . . . . . . . . . . . . . . . . . 75
7.12 Sellers' Designated Employee . . . . . . . . . . . . . . . . . . 76
7.13 Product Interruptions . . . . . . . . . . . . . . . . . . . . . . 76
7.14 Nonconforming Inventory . . . . . . . . . . . . . . . . . . . . . 79
7.15 Metal Handpiece Return . . . . . . . . . . . . . . . . . . . . . 80

ARTICLE VIII - EMPLOYEES . . . . . . . . . . . . . . . . . . . . . . . . . 80
8.01 Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
8.02 Employment Terms . . . . . . . . . . . . . . . . . . . . . . . . 81
8.03 Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
8.04 Benefits Requirements . . . . . . . . . . . . . . . . . . . . . . 83
8.05 Sellers' Obligations . . . . . . . . . . . . . . . . . . . . . . 84
8.06 Disabled Employees and Dependents . . . . . . . . . . . . . . . . 85
8.07 Post-Employment Medical Benefits . . . . . . . . . . . . . . . . 85
8.08 No Solicitation of Certain Employees . . . . . . . . . . . . . . 86
8.09 Compliance with WARN . . . . . . . . . . . . . . . . . . . . . . 86
8.10 Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . 87

ARTICLE IX - TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . 87
9.01 Both Parties . . . . . . . . . . . . . . . . . . . . . . . . . . 87
9.02 Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
9.03 Sellers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88

ARTICLE X - INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . 89
10.01 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . 89
10.02 Indemnification by Sellers . . . . . . . . . . . . . . . . . 89
10.03 Indemnification by Buyer . . . . . . . . . . . . . . . . . . 91
10.04 Scope of Sellers' Liability . . . . . . . . . . . . . . . . 92
10.05 Claims; Payments . . . . . . . . . . . . . . . . . . . . . . 93
10.06 Defense of Actions . . . . . . . . . . . . . . . . . . . . . 93
10.07 Limitation: Exclusivity . . . . . . . . . . . . . . . . . . 94

ARTICLE XI - GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . 95
11.01 Payment of Expenses . . . . . . . . . . . . . . . . . . . . 95
11.02 Modifications and Amendments . . . . . . . . . . . . . . . . 96
11.03 Assignability . . . . . . . . . . . . . . . . . . . . . . . 96
11.04 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 96
11.05 Arbitration . . . . . . . . . . . . . . . . . . . . . . . . 98
11.06 Governing Law . . . . . . . . . . . . . . . . . . . . . . . 98
11.07 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
11.08 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . 99
11.09 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . 99

iii

<PAGE>

11.10 Severability . . . . . . . . . . . . . . . . . . . . . . . . 99
11.11 "To the Knowledge." . . . . . . . . . . . . . . . . . . . . 99
11.12 Bulk Sales Laws . . . . . . . . . . . . . . . . . . . . . . 100
11.13 Entire Understanding of the Parties; Amendment . . . . . . . 100
11.14 Survival of Certain Provisions . . . . . . . . . . . . . . . 101
11.15 Schedules . . . . . . . . . . . . . . . . . . . . . . . . . 101
11.16 No Third Party Beneficiaries . . . . . . . . . . . . . . . . 101
11.17 Joint and Several Obligations . . . . . . . . . . . . . . . 102
11.18 Change of Name of Site . . . . . . . . . . . . . . . . . . . 102
11.19 Confidentiality . . . . . . . . . . . . . . . . . . . . . . 102

EXHIBITS

A Schedule of Assets
B Schedule of Assumed Liabilities
C Schedule of Excluded Assets
D Schedule of Excluded Liabilities
E Excluded Employees
F Permitted Encumbrances Schedule
G Site Price List
H Closing Inventory Valuation Worksheet
I Terms Sheet for Cassette Supply Agreement
J Terms Sheet for Suture Supply Agreement
K Terms Sheet for Post-Closing Support Services Agreement
L Terms Sheet for Chlorine Dioxide Sterilization License and Services
Agreement
M Patents Subject to License Agreement
N Terms Sheet for Livingston Production Services Agreement
O Terms Sheet for Customer Loan Servicing
P Foreign Inventory Valuation Worksheet
Q Foreign Inventory Subsequent Adjustment Worksheet
R Description of Real Property

<PAGE>

STOCK AND ASSET PURCHASE AGREEMENT

STOCK AND ASSET PURCHASE AGREEMENT, dated as of March 6, 1995, by and among
JOHNSON & JOHNSON, a New Jersey corporation ("Seller"), SITE MICROSURGICAL
SYSTEMS, INC., a Pennsylvania corporation ("Site"), and CHIRON CORPORATION, a
Delaware corporation ("Buyer"). (Seller and Site are referred to herein
sometimes collectively as the "Sellers".)
WITNESSETH:
WHEREAS, Seller, through certain of its wholly-owned subsidiaries, owns an
ophthalmic surgical device, equipment and associated disposables business, which
conducts business under the "IOLAB" and "Site" names; and
WHEREAS, the IOLAB business is operated, and the assets related to such
business are owned, by IOLAB Corporation, a California corporation ("IOLAB"),
and various of Seller's Affiliates (as defined herein); and
WHEREAS, Seller owns and desires to sell to Buyer or an Affiliate thereof,
and Buyer desires to purchase or cause an Affiliate of Buyer to purchase from
Seller, all of the issued and outstanding capital stock of IOLAB, upon the terms
and conditions hereinafter set forth; and
WHEREAS, Site desires to sell to Buyer or an Affiliate of Buyer, and Buyer
or an Affiliate of Buyer desires to purchase from Site and its Affiliates
substantially all of the assets owned by Site or used primarily in the Site
Business (as defined herein) upon the terms and conditions hereinafter set
forth; and

<PAGE>

WHEREAS, Seller desires to sell to Buyer or an Affiliate of Buyer, and
Buyer or an Affiliate of Buyer desires to purchase from Seller or Affiliates of
Seller other assets that are exclusively related to the Business (as defined
herein) that may be held by Seller or certain of Seller's Affiliates, upon the
terms and conditions hereinafter set forth;
NOW, THEREFORE, in view of the foregoing premises, which are hereby
incorporated as part of this Agreement, and in consideration of the mutual
covenants, representations and warranties herein contained, the parties hereto
agree as follows:

ARTICLE I
DEFINITIONS

The following terms shall have the respective meanings assigned to them
below:
"Affiliate" of a specified person shall mean a person that directly or
indirectly controls or is controlled by, or is under common control with, the
person specified. For the purposes of this definition, "control" (including,
with correlative meaning, the terms "controlled by" and "under common control
with"), as used with respect to any Person, shall mean the ownership of more
than 50% of the voting securities by or of such Person; provided that with
respect to Buyer, a Person may be deemed not to "control" another Person even if
the above standard is met, if Buyer demonstrates that such Person does not
exercise, in fact, the ability to direct the management of Buyer. For purposes
of this definition, IOLAB shall be deemed to be an Affiliate of Seller with
respect to any matter occurring on or prior to the Closing and shall be

<PAGE>

deemed to be an Affiliate of Buyer with respect to any matter occurring
subsequent to the Closing for so long as Buyer has the ability to direct the
management of IOLAB.
"Agreement" shall mean this Stock and Asset Purchase Agreement, including
all Exhibits and Schedules.
"AMVISC Royalty" shall mean royalty payment obligations of IOLAB pursuant
to the Settlement Agreement.
"Ancillary Agreements" shall mean, collectively, the Cassette Supply
Agreement, the Suture Supply Agreement, the License Agreement, the Chlorine
Dioxide Sterilization License and Services Agreement, the Livingston Production
Services Agreement, the Post-Closing Support Services Agreement, Trademark
License Agreement and Customer Loan Servicing Agreement.
"Assets" shall mean the property described on the Schedule of Assets
attached hereto as Exhibit A, with only such changes therein between the date
hereof and the Closing Date (or with respect to a Foreign Jurisdiction, the
Subsequent Transfer Date) as shall have occurred in the ordinary course of
business in transactions not inconsistent with any of Sellers' representations,
warranties, covenants and agreements set forth herein. The Assets shall be
comprised of the Foreign Assets and the Domestic Assets. "Foreign Assets" shall
mean that portion of the Assets that are located outside the United States.
"Domestic Assets" shall mean that portion of the Assets located in the United
States.
"Assumed Agreements" shall mean the Non-Site Equipment Distribution
Agreement and the Contracts to which Seller, Site or any of their respective
Affiliates (other than IOLAB) is a party as of the Closing Date (or with respect
to a Foreign Jurisdiction, the applicable

<PAGE>

Subsequent Transfer Date), and that relate exclusively to the Foreign Business
or the Domestic Site Business, and:
(i) (A) relate to the purchase of materials, products or services, are
sales agent or distribution Contracts or are Contracts that concern the
license, assignment or transfer of Intellectual Property (as defined
herein); or

(B) are not described in clause (A) above, are assignable and
Buyer has advised Seller in writing of its intention to assume such
Contracts upon the later of (1) at least five Business Days prior to the
Closing Date or (2) as soon as reasonably practicable after Buyer shall
have been given a true and complete copy of such Contract;

(ii) are such Contracts described in clause (i)(A) above that are
entered into in the ordinary course of business from the date hereof
through the Closing Date (or with respect to any Foreign Jurisdiction, the
applicable Subsequent Transfer Date); and

(iii) are Contracts described in clause (i)(B) above that are entered
into in the ordinary course of business from the date hereof through the
Closing Date (or with respect to any Foreign Jurisdiction, the applicable
Subsequent Transfer Date) that are assignable and that Buyer has advised
Seller in writing of its intention to assume such Contracts at least five
Business Days prior to the Closing Date (or with respect to any Foreign
Jurisdiction, the applicable Subsequent Transfer Date), unless such
Contract shall have been entered into on or after the seventh Business Day
prior to the Closing Date (or with respect to any Foreign Jurisdiction, the
applicable Subsequent Transfer Date) in which case Buyer may provide such
notice to Seller as soon as reasonably practicable after Buyer shall have
been given a true and complete copy of such Contract.

"Assumed Liabilities" shall mean the obligations and liabilities described
on the Schedule of Assumed Liabilities attached hereto as Exhibit B.
"Business" shall mean the IOLAB Business and the Site Business. Business
shall be comprised of the Domestic Business and the Foreign Business. "Domestic
Business" shall mean that portion of the Business engaged in by IOLAB and Site
and their respective Affiliates in the United States. "Foreign Business" shall
mean that portion of the Business engaged in by IOLAB and Site and their
respective Affiliates outside the United States.

<PAGE>

"Business Day" shall mean any day that is not a Saturday or Sunday or a day
on which banks located in the City of New York are authorized or required to be
closed.
"Buyer" -- see preamble of this Agreement.
"Cassette Supply Agreement" -- see Section 2.11(a).
"Chlorine Dioxide Sterilization License and Services Agreement" -- see
Section 2.11(d).
"CIBA Agreement" shall mean the Asset Purchase Agreement dated as of August
8, 1994, as amended September 1, 1994, among Seller, IOLAB and CIBA Vision
Corporation pursuant to which CIBA Vision Corporation acquired the ophthalmic
pharmaceutical business of IOLAB and its Affiliates.
"Claim" -- see Section 10.05.
"Closing" shall mean the closing of the transactions contemplated under
this Agreement, as described in Article II, other than the closing of the
transactions with respect to a Foreign Jurisdiction occurring on the applicable
Subsequent Transfer Date.
"Closing Date" shall mean the date on which the Closing takes place.
"Continuing Employee" shall mean (i) each IOLAB Employee and (ii) any
Foreign Employee that accepts employment with Buyer as of or following the
Closing Date.
"Contracts" shall mean all contracts, contract rights, leases, licenses,
purchase orders, commitments and other agreements, whether written or oral.
"Customer Loan Servicing Agreement -- see Section 2.11(h).
"Damages" shall mean losses, liabilities, damages, deficiencies, penalties,
costs and expenses (including, without limitation, reasonable costs of
investigation and defense, reasonable attorneys' fees and expenses and court
costs, where applicable). With respect to Damages

<PAGE>

incurred by any officer, director, or employee of the Parties or of their
respective Affiliates, Damages shall expressly not include personal investment
losses incurred by any such individual.
"Disabled Employee" -- see Section 8.06.
"Disclosure Schedules" -- see preamble to Article III.
"Domestic Site Assets" shall mean that portion of the Domestic Assets that
are owned by Site.
"Domestic Site Business" shall mean that portion of the Site Business that
is engaged in by Site and its Affiliates in the United States.
"Employees" shall mean all employees of Seller, Site, IOLAB and their
Affiliates including but not limited to the IOLAB Employees and the Foreign
Employees.
"Environmental Audit" shall mean the Environmental Audit dated February 16,
1995 and the Phase I Environmental Assessment dated March 1995, pertaining to
the IOLAB facility located in Claremont, California, prepared by ERM-West, Inc.
"Environmental Law" shall mean any applicable federal, state, local or
foreign law, statute, ordinance, rule, regulation, code, order, judgment, decree
or injunction relating to (i) the protection of the environment, (including,
without limitation, air, water vapor, surface water, groundwater, drinking water
supply and surface or subsurface land), or (ii) the exposure to, or the use,
storage, recycling, treatment, generation, transportation, processing, handling,
labeling, production, release or disposal of, Hazardous Substances.
"Excluded Assets" shall mean the property, tangible and intangible,
described on the Schedule of Excluded Assets attached hereto as Exhibit C.
"Excluded Employee Liabilities" -- see Section 8.05(b).

<PAGE>

"Excluded Liabilities" shall mean the obligations and liabilities described
on the Schedule of Excluded Liabilities attached hereto as Exhibit D.
"Excluded Livingston Liabilities" -- see Schedule of Excluded Liabilities
attached hereto as Exhibit D.
"Financial Reports" -- see Section 3.23.
"Foreign Employees" shall mean the employees of Seller and its Affiliates
that immediately prior to the Closing dedicated substantially all of their
working time to the Foreign Business.
"Foreign Jurisdictions" -- see Section 2.12.
"Foreign Landed Cost" shall mean the cost of the Foreign Inventory in 1995
local standards, calculated on a country by country basis consistent with GAAP
and the normal accounting practices of the applicable Affiliate of Seller. For
purposes hereof, "1995 local standards" shall include applicable intercompany
mark-up charges and shall not be adjusted for manufacturing variances.
"GAAP" shall mean generally accepted accounting principles at the time in
effect, consistently applied, in the United States or in the applicable Foreign
Jurisdiction.
"Hazardous Substance" means any substance or material listed, defined,
designated or otherwise classified as a pollutant, a contaminant, or hazardous
or toxic under any Environmental Law.
"Horsham Facility" means Site's former facility in Horsham, Pennsylvania.
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.

<PAGE>

"Indemnified Party" and "Indemnifying Party" -- see Section 10.05.
"Intellectual Property" shall mean all of the Patents, Trademarks and
Technology.
"Inventory" shall mean the inventory of raw materials, work-in-process and
finished products (including applicable excess and obsolete inventory of any
such items), wherever located, of Seller and its Affiliates that are used in the
Business. For purposes of this Agreement, Ethicon sutures not used in the IOLAB
Value Added Purchase Plan ("VAPP") shall be excluded from the definition of
"Inventory. See Exhibit H and Exhibit P for methods of determining what
constitutes excess Inventory.
"IOLAB" -- see recitals of this Agreement.
"IOLAB Agreements" shall mean the Contracts to which IOLAB is a party as of
the Closing Date except to the extent that such Contracts are Excluded Assets or
Excluded Liabilities.
"IOLAB Assets" shall mean all of the assets, tangible or intangible,
wherever located, of IOLAB (other than the Excluded Assets).
"IOLAB Business" shall mean the worldwide ophthalmic surgical device
business of IOLAB which consists of researching, developing, manufacturing,
marketing, distributing and selling ophthalmic surgical devices as engaged in by
IOLAB and its Affiliates.
"IOLAB Employees" shall mean the employees of IOLAB immediately after the
Closing Date except for such persons listed on Exhibit E attached hereto and
except for any Disabled Employees at such time such person shall become a
Disabled Employee.
"IOLAB Shares" shall mean all of the issued and outstanding shares of
common stock, par value $1.00 per share, of IOLAB.

<PAGE>

"License Agreement" -- see Section 2.11(e).
"Lien" shall mean any mortgage, trust deed, pledge, security interest,
encumbrance, lien, claim or charge of any kind.
"Livingston Facility" shall mean the manufacturing facility situated in
Livingston, Scotland that is the subject of the Livingston Lease.
"Livingston Lease" shall mean the Lease Agreement, date of entry August 28,
1986, between Johnson & Johnson Medical Ltd. (as successor to Codman Limited)
and Livingston Development Corporation relating to the Livingston Facility.
"Livingston Production Services Agreement" -- see Section 2.11(f).
"Major Foreign Markets" shall mean, collectively, the United Kingdom,
France, Germany, Spain, Italy, Canada, Australia, Taiwan and Thailand.
"Management Committee" of (i) Seller shall mean the management committee of
IOLAB that is comprised of R.J. Darretta, M. McGranaghan, G. Tutwiler,
K. Berlin, C. Felberg, T. Frinzi and D. Bailey; and (ii) Buyer shall mean the
management committee of Chiron Vision Corporation, a wholly-owned subsidiary of
Buyer, that is comprised of W. Link, E. Culver, R. Damron, J. Gordon, L. King,
R. Funsten, A. Corley, T. Wardrup, C. Reich, and D. Morrison.
"Material Contracts" shall mean the Contracts set forth on Schedule 3.12.
"Non-Site Equipment Distribution Agreement" shall mean the Distribution
Agreement dated August 15, 1994 between Orbtek, Inc. and Johnson & Johnson
Professional Products Ltd.
"ordinary course of business" shall mean the conduct of business consistent
in all material respects with past custom and practice.

<PAGE>

"Party" or "Parties" shall mean the parties to this Agreement, that is
Sellers, on the one hand, and Buyer, on the other hand, and their respective
Affiliates, representatives, successors and assigns to the extent permitted.
"Patents" shall mean, collectively, the patents and patent applications
wherever filed (including all divisionals, reissues, reexaminations,
continuations and continuations-in-part and extensions thereof, and any foreign
filings corresponding thereto) listed on Schedule 3.15, subject to (i) any
deletions therefrom as a result of the expiration (through no fault of Sellers
or their Affiliates) of any of the foregoing or the failure to receive any
patent after reasonably diligent prosecution through the final proceeding in any
relevant foreign or domestic patent office and (ii) any additions thereto, in
each case as shall have occurred in the ordinary course of business since the
date of such list or the printouts attached thereto.
"Permits" shall mean each permit, license, franchise and each other
certificate or authorization that is necessary for the conduct of the Domestic
Business issued by any governmental authority or agency having jurisdiction in
the United States.
"Permitted Encumbrances" means (i) Liens securing any Taxes or special
assessments that are either not yet due or are being contested in good faith by
appropriate proceedings (such contested Taxes or special assessments being
described on the Permitted Encumbrances Schedule attached hereto as Exhibit F);
(ii) claims or demands of materialmen, mechanics, carriers, warehousemen,
landlords, and other like Persons, either not overdue or which are being
contested in good faith by appropriate proceedings; (iii) Liens incurred or
deposits made in the ordinary course of business in connection with worker's
compensation, unemployment insurance, social security, and other like laws to
which the underlying obligations are not yet delinquent;

<PAGE>

(iv) exceptions to or defects in title, whether or not of record, including
without limitation, easements, rights-of-way, restrictions and other similar
encumbrances that do not detract materially from the value of the property
subject thereto or materially interfere with the conduct of business at such
property substantially as the same is currently being conducted; (v) Liens
attributable to acts of Buyer that arise from Contracts of Buyer or any of its
Affiliates; (vi) with respect to the Livingston Facility, matters affecting the
landlord's interest therein so long as the Livingston Lease contains a non-
disturbance clause; (vii) any purchase money security interest arising after the
date hereof that individually secures less than $25,000 in indebtedness and
that, in the aggregate with all other purchase money security interests arising
after the date hereof, secures less than $100,000 in indebtedness; (viii)
building and zoning ordinances and regulations, provided that Sellers, IOLAB and
the Real Property are in material compliance therewith; (ix) Liens expressly
disclosed in the footnotes to the Financial Reports for the date as of and the
period ending January 1, 1995; (x) Liens reflected on the Permitted Encumbrances
Schedule attached hereto as Exhibit F; and (xi) Liens that constitute valid
leases or subleases to third parties that are IOLAB Agreements or Assumed
Agreements.
"Person" shall mean and include an individual, a partnership, a joint
venture, a corporation, a trust, any organization (whether incorporated or not)
and a government or any department or agency thereof.
"Post-Closing Support Services Agreement" -- see Section 2.11(c).
"Purchase Price" shall mean U.S. $95,000,000, as adjusted on or after the
Closing Date pursuant to this Agreement.

<PAGE>

"Returns" means all returns, declarations, reports, statements and other
documents required to be filed in respect of Taxes.
"Seller" -- see preamble of this Agreement.
"Sellers" -- see preamble of this Agreement.
"Settlement Agreement" shall mean the Settlement Agreement dated January
11, 1993, as amended by the Agreement dated as of April 1, 1994, among Kabi
Pharmacia AB, Pharmacia Inc., Dr. Endre A. Balazs, Medchem Products, Inc. and
IOLAB (in its own right and as a successor in interest to certain assets and
liabilities of Frigitronics, Inc. and as successor by merger to Precision-Cosmet
Co., Inc.).
"Site" -- see preamble of this Agreement.
"Site Business" shall mean the worldwide ophthalmic surgical equipment and
related disposables business of Site which consists of researching, developing,
manufacturing, marketing, distributing and selling ophthalmic surgical equipment
and related disposables, including, without limitation, the Site Product Line,
as engaged in by Site and its Affiliates.
"Site Product Line" shall mean all products of the Site Business currently
available for sale as referred to in the Site price list attached hereto as
Exhibit G.
"Standard Cost" shall mean the cost of the Inventory in 1994 local
standards, calculated consistent with GAAP and the normal accounting practices
of Seller, IOLAB, Site, or their Affiliates, as the case may be. For purposes
hereof, "1994 local standards" shall exclude applicable intercompany mark-up
charges and shall not be adjusted for manufacturing variances.
"Subsequent Transfer Date" shall mean, with respect to any country in which
the Foreign Business is engaged in as of the Closing Date by Sellers or their
Affiliates, the date that Buyer

<PAGE>

or any Affiliate thereof shall commence sales and distribution of products of
the Business in such country (E.G., through the assumption or receipt of all
relevant product registrations and regulatory approvals).
"Suture Supply Agreement" -- see Section 2.11(b).
"Taxes" means all United States federal, state, local, foreign and other
net income, gross income, gross receipts, sales, use, ad valorem, value added,
intangible, unitary, capital gain, franchise, profits, license, lease, service,
service use, withholding, backup withholding, payroll, employment, estimated,
excise, severance, stamp, occupation, premium, property, real property,
prohibited transactions (as defined under the Employees Retirement Income
Security Act of 1974, as amended), windfall or excess profits, customs, duties
or other taxes, fees, assessments or charges of any kind whatsoever, together
with any interest and any penalties, additions to tax or additional amounts with
respect thereto; provided, however, that such term shall not include transfer
taxes for which Buyer is responsible under Section 2.09 of this Agreement.
"Technology" shall mean designs, inventions, discoveries, ideas, concepts,
formulae, product specifications, data, processes, trade secrets, know-how and
all technology and improvements related thereto, and all proprietary rights
arising therefrom (including, without limitation, copyrights, patent rights and
rights arising under any invention assignments or third party licenses), and all
records and information, registrations and applications therefor that (i) are
used primarily in the Business (other than any of the foregoing that are
included in chlorine dioxide sterilization technology as described in the
Chlorine Dioxide Sterilization License and Services Agreement), (ii) relate
exclusively to the operations of the Business at the

<PAGE>

Livingston Facility and are used in or useful to the Business or (iii) are
owned, leased or licensed by IOLAB or Site.
"Trademarks" shall mean the trademarks (including trademarks for products
of the Business for which Sellers and their Affiliates have not yet established
rights through actual use in connection with products of the Business as
reflected in pending applications or issued registrations), applications for
registration, registrations, renewals and divisional applications listed on
Schedule 3.14 hereto, with such additions thereto as shall have occurred in the
ordinary course of business since the date of such list or the printouts
attached thereto.
"Trademarked Items" -- see Section 7.01.
"Trademark License Agreement" -- see Section 2.11(g).
"United States" shall mean the United States of America, together with its
possessions and territories, including the Commonwealth of Puerto Rico.

ARTICLE II
CLOSING

2.01 TIME AND PLACE OF CLOSING. The Closing shall take place at the
offices of Brobeck, Phleger & Harrison, 4675 MacArthur Court, Suite 1000,
Newport Beach, California, on March 31, 1995, or at such other place or at such
other time as Sellers and Buyer may mutually agree in writing. Time is of the
essence because Sellers' intention to exit the Business is or will become known
to its employees, customers, suppliers and others having dealings with Sellers.

<PAGE>

2.02 CONVEYANCE. On the Closing Date, subject to the terms and conditions
set forth in this Agreement, Sellers (and their Affiliates) shall sell, assign,
transfer and deliver the Assets and the IOLAB Shares, in each case free and
clear of all Liens other than Permitted Encumbrances, and assign and transfer
the Assumed Liabilities to Buyer and Buyer shall purchase and acquire the Assets
and the IOLAB Shares and assume the Assumed Liabilities from Sellers (and their
Affiliates). Buyer may designate one or more of its Affiliates to purchase
the IOLAB Shares and the Assets, to assume the Assumed Liabilities and to
otherwise perform any of Buyer's obligations and to exercise any of Buyer's
rights under this Agreement and any Ancillary Agreement, provided that Buyer and
each such Affiliate shall be jointly and severally liable (i) to Sellers and
Sellers' Affiliates for all obligations and liabilities of Buyer set forth
herein and (ii) for all Assumed Liabilities.
2.03 PURCHASE PRICE.
(a) In consideration of the sale, assignment, license, transfer and
delivery of the Assets and the IOLAB Shares to be sold, assigned, transferred
and delivered pursuant to this Agreement, Buyer shall pay to Sellers an amount
equal to the Purchase Price. Buyer shall pay to Seller the Purchase Price at
the Closing in accordance with Section 2.03(b) hereof.
(b) On the Closing Date, payment of $95,000,000, as adjusted pursuant
to Section 2.07 hereof, shall be made by Buyer in U.S. Dollars by bank wire
transfer in immediately available funds to the account of Johnson & Johnson
(Account No. 910-4001640 at The Chase Manhattan Bank, N.A., New York, New York).
(c) The Purchase Price assumes a valuation (at Standard Cost) of
Inventory as of the Closing Date of $15,000,000. To the extent that the
valuation at Standard Cost of the

<PAGE>

(1) Inventory located in the United States (excluding the cassette Inventory
owned by OMJ Pharmaceuticals, Inc. ("OMJ")) and (2) the Inventory located at the
Livingston Facility (collectively, the "Closing Inventory"), determined as
herein provided, exceeds or is less than $15,000,000, the Purchase Price shall
be adjusted as follows:
(i) Within thirty (30) days following the Closing Date, Buyer
shall deliver to Seller an initial statement (the "Initial Statement")
containing a valuation at Standard Cost of the Closing Inventory (the
"Initial Closing Inventory Valuation"). The Initial Closing Inventory
Valuation shall be based on physical inventories (net of excess and
obsolete) conducted in the United States and at the Livingston Facility by
Seller or Seller's former employees and observed by Buyer and KPMG Peat
Marwick, Buyer's independent public accountant ("KPMG"), as of 11:59 P.M.
(local time) on the Closing Date, for the Closing Inventory other than for
such Closing Inventory that is on consignment to customers of the Business
in the United States (the "Closing Consignment Inventories") and shall be
determined in accordance with Exhibit H hereto. The amount of Closing
Consignment Inventory (in gross units) on the Closing Date shall be
determined in accordance with the perpetual books and records of IOLAB
relating to such Closing Consignment Inventories, and shall be subject to
verification by Buyer of the accuracy of such books and records prior to
Buyer's delivery of the Initial Statement. Simultaneously with the
delivery of the Initial Statement to Seller, Buyer shall deliver or cause
to be delivered all accompanying workpapers relative to the Initial
Statement which workpapers shall include the information specified in
Exhibit H attached hereto.

<PAGE>

(ii) The Initial Closing Inventory Valuation shall be binding
on Seller unless, within twenty (20) days after Seller's receipt of the
Initial Statement, Seller shall have notified Buyer in writing (such
notification, "Seller's Notification") of its disagreement with any of the
values assigned in the Initial Statement. Seller's Notification shall
specify the objections to the values, the reasons therefor and the proposed
valuation of each disputed item. The value of any item on the Initial
Statement not so objected to in Seller's Notification shall thereafter be
binding on Buyer and Seller. Representatives of Seller and Buyer shall
attempt in good faith to resolve any disagreements noted in Seller's
Notification within ten (10) days after Buyer's receipt of Seller's
Notification.
(iii) Disputes between Buyer and Seller relating to the Initial
Statement that cannot be resolved by them within such 10-day period (the
"Disputed Items") shall be referred at the insistence of either party for
binding resolution to either (A) an independent accounting firm selected
within five (5) days thereafter by agreement of Seller and Buyer or (B) a
"Big Six" accounting firm selected by lot, after eliminating Coopers &
Lybrand and KPMG in the event that Seller and Buyer have been unable to
select a firm by agreement within the prescribed period. The determination
of any accounting firm so selected (the "Auditor") with respect to the
value of the Closing Inventory shall be conclusive and binding on the
parties. The fee of the Auditor shall be borne by Seller and Buyer,
equally; provided that, if the Auditor's determination of the dollar value
of the Disputed Items causes the valuation at Standard Cost of the Closing
Inventory to increase by more than two percent (2%) over the Initial
Closing

<PAGE>

Inventory Valuation contained on the Initial Statement then the fee of the
Auditor shall be borne by Buyer.
(iv) The Initial Statement shall become final and binding upon
the Parties upon the earlier of (A) the failure by Seller to object thereto
within the period permitted under Section 2.03(c)(ii), (B) the agreement
between Buyer and Seller with respect thereto and (C) the decision by the
Auditor with respect to any disputes under this Section 2.03(c). The
Initial Statement, as adjusted pursuant to the agreement of the parties or
decision of the Auditor, when final and binding is referred to herein as
the "Final Statement" and the valuation of the Closing Inventory indicated
therein is referred to herein as the "Final Closing Inventory Valuation".
(v) The Purchase Price shall be either (A) adjusted downward
to the extent that $15,000,000 exceeds the Final Closing Inventory
Valuation, dollar for dollar, or (B) adjusted upward to the extent that the
Final Closing Inventory Valuation exceeds $15,000,000, dollar for dollar.
Any payments to be made after the Closing Date pursuant to this Section
2.03(c), either by Seller (if and to the extent that $15,000,000 exceeds
the Final Closing Inventory Valuation) or Buyer (if and to the extent that
the Final Closing Inventory Valuation exceeds $15,000,000) shall be paid
within five Business Days after the Initial Statement shall have become
final and binding pursuant to Section 2.03(c)(iv) (i.e., when it has been
deemed the Final Statement), plus interest on such amount at the rate of
two percent (2%) plus the prime rate offered by Bank of America (or, if
less, the maximum rate permitted by applicable law) calculated from the
Closing Date to the date of payment hereunder.

<PAGE>

(vi) Notwithstanding the foregoing, Buyer and Sellers agree
that the valuation at Standard Cost of the Closing Inventory as determined
above shall not necessarily be determinative of the allocation of the
Purchase Price to such Inventory pursuant to Section 7.09(c)(ii) hereof.
2.04 ASSUMPTION OF LIABILITIES. Buyer hereby agrees to assume the Assumed
Liabilities as of the Closing Date or, with respect to any Assumed Liabilities
relating to a Foreign Jurisdiction, the applicable Subsequent Transfer Date.
Buyer shall perform and discharge all obligations under the Assumed Liabilities
(including, without limitation, all Assumed Agreements); provided that if and
when Buyer is notified that the performance by Buyer of any such obligation is
not or will not be accepted by the obligee in the exercise of such obligee's
lawful rights, Buyer shall promptly notify Seller in writing of such occurrence
and consent in writing to Seller's performance thereof (provided that Buyer may
reasonably withhold such consent, which if withheld shall be deemed reasonable
if Buyer notifies Seller that a bona fide dispute exists between the Buyer and
the obligee with respect to such obligee's refusal to accept Buyer's
performance); Sellers or their Affiliates shall then perform such obligation and
Buyer shall promptly reimburse Sellers for the reasonable costs and expenses
incurred in the performance by Sellers or their Affiliates of such obligation in
compliance with the terms of the applicable Assumed Agreement.
2.05 INSTRUMENTS OF TRANSFER AND ASSUMPTION.
(a) Sellers (on their own behalf and on behalf of any of their
Affiliates) shall deliver to Buyer at the Closing:

<PAGE>

(i) such bills of sale and assignments, and other good and
sufficient instruments of assignment and transfer, in form reasonably
satisfactory to Buyer, as shall be effective to convey and transfer to
Buyer (or its designee), such right, title and interest to the Assets
(other than the Foreign Inventory) as is contemplated hereby; and
(ii) the stock certificates representing the IOLAB Shares, duly
executed in blank or accompanied by duly executed instruments of transfer.
(b) Buyer shall deliver to Sellers at the Closing such instruments of
assumption, in form reasonably satisfactory to Sellers, as shall be effective to
assure Sellers that Buyer will perform and discharge or, pursuant to Section
2.04 hereof, reimburse Sellers for the performance of all obligations related to
the Assumed Liabilities.
(c) Sellers (on their own behalf and on behalf of any of their
Affiliates) shall deliver to Buyer at each Subsequent Transfer Date with respect
to the applicable Foreign Jurisdiction such bills of sale and assignments, and
other good and sufficient instruments of assignment and transfer, in form
reasonably satisfactory to and prepared by Buyer at Buyer's expense, as shall be
reasonably required to convey and transfer to Buyer (or its designee), such
right, title and interest to the Foreign Inventory as is contemplated hereby.
2.06 NONASSIGNABILITY OF ASSETS. Notwithstanding anything to the contrary
contained in this Agreement, to the extent that the sale, assignment, transfer,
conveyance or delivery or attempted sale, assignment, transfer, conveyance or
delivery to Buyer of any Asset (including, without limitation, any agreement
designated as an Assumed Agreement) is prohibited by any applicable law or would
require any governmental or third party authorizations, approvals, consents or
waivers and such authorizations, approvals, consents or waivers shall not have
been

<PAGE>

obtained prior to the Closing, this Agreement shall not constitute a sale,
assignment, transfer, conveyance or delivery, or any attempted sale, assignment,
transfer, conveyance or delivery, thereof. Following the Closing, the Parties
shall use reasonable efforts, and cooperate with each other, to obtain promptly
such authorizations, approvals, consents or waivers; PROVIDED, HOWEVER, that
neither Sellers nor Buyer shall be required to pay any consideration therefor
nor shall the Purchase Price be reduced on account of the failure to obtain any
such authorization, approval, consent or waiver. Pending such authorization,
approval, consent or waiver, the Parties shall cooperate with each other in any
reasonable and lawful arrangements designed to provide to Buyer the benefits of
use of any such Asset, including, enforcing for the benefit of Buyer any or all
rights of Sellers or their Affiliates against any third party arising out of the
breach or cancellation thereof by any such third party or otherwise. Once
authorization, approval, consent or waiver for the sale, assignment, transfer,
conveyance or delivery of any such Asset not sold, assigned, transferred,
conveyed or delivered at the Closing is obtained, Sellers shall, or shall cause
an Affiliate to, assign, transfer, convey and deliver any such Asset to Buyer at
no additional cost. To the extent that any such Asset cannot be transferred or
the full benefits of use of any such Asset cannot be provided to Buyer following
the Closing pursuant to this Section 2.06, then Buyer and Sellers shall enter
into such arrangements (including subleasing or subcontracting if permitted) to
provide to the Parties the economic (taking into account tax costs and benefits)
and operational equivalent of obtaining such authorization, approval, consent or
waiver and the performance by Buyer of the obligations thereunder.

<PAGE>

2.07 APPORTIONMENTS. (a) Subject in all respects to Section 2.09 hereof,
the following items shall be apportioned pro rata between Seller and Buyer, on a
per diem basis, as of the Closing Date: (i) the AMVISC Royalty prepayments made
by IOLAB or any Affiliate thereof pursuant to the Settlement Agreement prior to
Closing which shall be payable in accordance with Section 2.07(b) hereof;
(ii) any prepayments made under any of the Assumed Agreements (i.e., payments
made under any of the Assumed Agreements that are attributable to post-Closing
periods) or in connection with any of the Assets; and (iii) Taxes (including,
without limitation, real property Taxes (on the basis of the actual fiscal years
for which such Taxes are assessed), but excluding income Taxes) imposed on and
paid by Sellers with respect to any of the Assets or in connection with the
operation of the Business but excluding any prepayment of Taxes on behalf of
IOLAB for a taxable period ending on or prior to the Closing Date. At the
Closing, Seller or Buyer, as the case may be, shall pay to the other in
immediately available funds such net amount. If any item cannot be apportioned
accurately at the Closing or if it is apportioned incorrectly at the Closing,
such item shall be apportioned or reapportioned, as the case may be, as soon as
practicable after the Closing Date or the date on which the apportionment error
is discovered, as applicable.
(b) Pursuant to the Settlement Agreement, IOLAB is required to make an
AMVISC Royalty prepayment in an amount equal to $1,400,000 on or prior to March
31, 1995 in respect of the period from April 1, 1995 to and including June 30,
1995 (the "Calendar Quarter") which Seller shall pay on a timely basis on or
prior to the Closing Date. In respect of such payment, Buyer shall pay to
Seller at Closing an amount equal to $15,385 (i.e., $1,400,000 divided by 91,
the number of days comprising the Calendar Quarter), multiplied by

<PAGE>

the difference between 91 and the number of days of the Calendar Quarter that
shall have elapsed prior to and including the Closing Date. Each Party shall
treat any payments made by the Parties pursuant to this Section 2.07 as an
adjustment to the Purchase Price.
2.08 TRADEMARKS AND PATENTS. All Intellectual Property (to the extent that
any of such Intellectual Property is not owned by IOLAB) will be transferred to
Buyer (or an Affiliate thereof) at the Closing, subject to the terms of the
License Agreement and the Trademark License Agreement. In the case of the
Trademarks, such transfer shall be pursuant to a general assignment prepared by
Seller and in a form reasonably satisfactory to Buyer. It is understood and
agreed that all other documentation necessary to effect and perfect the transfer
of the registrations of the Intellectual Property, including the transfer of the
Patents from Sellers (and their Affiliates) to Buyer shall be prepared by Buyer
at Buyer's expense, including, without limitation, all other assignments and
powers of attorney.
2.09 SALES AND TRANSFER TAXES; FEES. All applicable sales, value added,
transfer, documentary, use, filing and other similar taxes and fees (other than
income Taxes of Seller, Site, IOLAB and their Affiliates and Taxes levied on the
intercorporate transfers referred to in Section 6.01 and Schedule 6.01, each of
which shall be borne by Seller) that may be levied on the sale, assignment,
transfer or delivery of the Assets, IOLAB Assets or the IOLAB Shares to Buyer or
its Affiliates as contemplated hereunder, whether levied on Sellers or Buyer,
shall be borne by Buyer. Buyer shall, at its own expense, file all necessary
Returns and other documentation with respect to all such sales or transfer taxes
and, if required by applicable law, Sellers shall join in the execution of any
such Returns or other documentation. In any case where either Seller or Site
shall have been required by law to file the Return (other than income

<PAGE>

Tax Returns) with respect to the sale or transfer of the Assets, in the event of
an audit of such Returns by any taxing authority Seller agrees to make available
to Buyer upon Buyer's reasonable request all such books and records of Sellers
that relate to such Returns and that are necessary in connection with such
audit. At Buyer's expense, Buyer shall have the right to control such audit and
to select counsel or other outside advisors to represent Buyer in such audit
process.
2.10 RELOCATION OF ASSETS. The cost of relocating any of the Assets from
the premises of Seller and its Affiliates to Buyer's premises, to the extent
applicable, shall be borne by Buyer. Seller and its Affiliates shall cooperate
with all reasonable requests of Buyer in relocating the Assets to Buyer's
premises.
2.11 ANCILLARY DOCUMENTS. Buyer, on the one hand, and Seller, Site or an
Affiliate of Seller, on the other hand, will enter into the following agreements
at the Closing to govern certain relationships between them after the Closing:
(a) a supply agreement (the "Cassette Supply Agreement"), in
accordance with the terms sheet therefor annexed hereto as Exhibit I, pursuant
to which Seller's Affiliate in San German, Puerto Rico (the "Puerto Rico
Company") will supply Buyer and its Affiliates with (i) their requirements for
cassettes used in the Business and Buyer and its Affiliates will purchase such
cassettes from the Puerto Rico Company for a period of time after the Closing
and (ii) certain services in connection with post-operative kits.
(b) a supply agreement (the "Suture Supply Agreement"), in accordance
with the terms sheet therefor annexed hereto as Exhibit J, pursuant to which
Seller's Affiliate, Ethicon, Inc. ("Ethicon"), will supply Buyer and its
Affiliates with their requirements for sutures

<PAGE>

of the Business and Buyer and its Affiliates will purchase such sutures from
Ethicon, Inc. for the three (3)-year period after the Closing;
(c) a services agreement (the "Post-Closing Support Services
Agreement"), in accordance with the terms sheet therefor annexed hereto as
Exhibit K, pursuant to which Sellers shall provide certain support services to
Buyer after the Closing;
(d) a license and services agreement (the "Chlorine Dioxide
Sterilization License and Services Agreement"), in accordance with the terms
sheet therefor annexed hereto as Exhibit L, pursuant to which an Affiliate of
Seller will grant certain rights to Buyer necessary for Buyer's and its
Affiliates operation of the chlorine dioxide sterilization machine within the
ophthalmic surgical field and provide certain services to Buyer in connection
therewith;
(e) a license agreement (the "License Agreement"), in a form
acceptable to Buyer and Seller, pursuant to which Buyer shall license to Sellers
and their Affiliates the Patents set forth on Exhibit M hereto on a worldwide
royalty-free exclusive basis for applications and uses relative to contact lens,
and on a worldwide royalty-free non-exclusive basis for applications and use in
fields of interest outside of ophthalmic surgery provided that such license will
contain no rights to sublicense other than manufacturing rights for products
sold by Seller and its Affiliates;
(f) a production services agreement (the "Livingston Production
Services Agreement"), in accordance with the terms sheet therefor annexed hereto
as Exhibit N, pursuant to which an Affiliate of Sellers shall provide certain
production services to Buyer's Affiliate related to the Livingston Facility;

<PAGE>

(g) a trademark license agreement (the "Trademark License Agreement")
in a form acceptable to Buyer and Seller, pursuant to which Buyer shall license
to Sellers and their Affiliates the EZVUE trademark on a worldwide royalty-free
exclusive basis for uses relative to contact lenses; provided, however, that the
Trademark License Agreement will contain no rights to sublicense; and

(h) a customer loan servicing agreement (the "Customer Loan Servicing
Agreement"), in accordance with the terms sheet therefor annexed hereto as
Exhibit O, pursuant to which Buyer shall provide to Seller's Affiliate, Johnson
& Johnson Finance Corporation, invoicing and collection services with respect to
those customer loans set forth on Annex I to Exhibit O.

After the date hereof and prior to the Closing Date, Sellers and Buyer
shall, and shall cause each of their Affiliates to, negotiate in good faith each
of the Ancillary Agreements based on the terms sheets attached hereto and agree
upon the forms of such Ancillary Agreements.

2.12 TRANSFERRING THE FOREIGN BUSINESS.

(a) TRANSFERS AT CLOSING; TRANSFERS POST-CLOSING: The Parties
acknowledge that, with respect to each jurisdiction outside of the United States
in which the Foreign Business is conducted at Closing (each, a "Foreign
Jurisdiction"), notwithstanding that title to the Foreign Assets (other than
Foreign Inventory) with respect to each such Foreign Jurisdiction will be
transferred and conveyed to Buyer (and/or its designated Affiliates) effective
as of the Closing Date, it will not be practicable for the operations in each
such Foreign Jurisdiction to be transferred on the Closing Date. Accordingly,
the Parties agree to use all reasonable efforts to

<PAGE>

transfer the operations in each of the Foreign Jurisdictions on or prior to the
sixtieth (60th) day after the Closing Date, unless, despite the reasonable
efforts of the Parties, Buyer determines that for any reason it is not
practicable for Buyer or its Affiliates to operate the Business in such Foreign
Jurisdiction in which case such operations will be transferred to Buyer as soon
as practicable after such sixtieth (60th) day but in any event on or prior to
the 180th day after the Closing Date. Buyer shall give Seller written notice of
its intention to assume the operation of the Foreign Business in any Foreign
Jurisdiction at least thirty (30) days (or such fewer days as Buyer and Seller
shall agree to) prior to the date that it or its Affiliate intends to assume
such activity. In addition, in order to facilitate the operation by Sellers of
the Foreign Business in each Foreign Jurisdiction during the period between the
Closing Date and each applicable Subsequent Transfer Date (with respect to each
Foreign Jurisdiction, the "Interim Period"), the Parties hereby agree to the
following:

(b) LICENSE TO OPERATE POST-CLOSING: Buyer hereby grants a royalty-
free license to Seller and any Affiliate thereof which shall empower Seller and
such Affiliate to utilize such of the Foreign Assets as are necessary for
Sellers to operate the Foreign Business in each such Foreign Jurisdiction during
the Interim Period. During the Interim Period with respect to each such Foreign
Jurisdiction, Seller or any Affiliate thereof shall operate the Business in such
Foreign Jurisdiction for Seller's or such Affiliate's benefit and account and in
the manner herein provided.

(c) SELLERS' OBLIGATIONS DURING INTERIM PERIOD: Subject to the
provisions of Section 6.01 hereof and the following clause (d), Seller and its
Affiliates shall (i) use their reasonable efforts to (A) operate the Business in
each Foreign Jurisdiction during the Interim

<PAGE>

Period in order to maintain the effectiveness of all product registrations and
governmental permits that are necessary for the operation of the Business in
such Foreign Jurisdiction and (B) preserve in all material respects the present
business relationships and goodwill with respect to the Business in such Foreign
Jurisdictions, and (ii) maintain reasonable levels of Inventory and, if
necessary, to purchase additional Inventory from Buyer at the transfer prices
that were in effect for the Business in January, 1995. Notwithstanding the
above, Buyer hereby acknowledges that neither Seller nor any of its Affiliates
have provided to Buyer or any of its Affiliates any assurances or guarantees
with respect to the sales levels or profits or the preservation of the business
relationships or goodwill in any Foreign Jurisdiction during the Interim Period
or after the Subsequent Transfer Date with respect to such Foreign Jurisdiction.

(d) BUYER'S OBLIGATION DURING INTERIM PERIOD: Buyer will use its
reasonable efforts to cooperate with Seller in connection with the operation of
the Business in such Foreign Jurisdictions by Affiliates of Seller, and to
consult with Seller and such Affiliates with respect to such operations. Buyer
acknowledges that Sellers shall not be liable to Buyer pursuant to Section 6.01
hereof or otherwise for taking any of the actions set forth in Section 6.01 with
the prior consent of Buyer in the manner set forth in Section 6.01.

(e) INVENTORY TRANSFERS ON SUBSEQUENT TRANSFER DATES:

(i) On each Subsequent Transfer Date with respect to a Foreign
Jurisdiction, Affiliates of Seller shall transfer and convey to Buyer all
Inventory with respect to such Foreign Jurisdiction (other than Inventory
located at the Livingston Facility which shall be transferred to Buyer at
the Closing Date) (individually, the "Foreign Inventory"; collectively, the
"Total Foreign Inventory"), which shall be

<PAGE>

purchased by Buyer at the Foreign Landed Cost of such Foreign Inventory in
the local currency of such Foreign Jurisdiction within thirty (30) days
after the invoice date therefor, in accordance with the procedures set
forth herein. The valuation at Foreign Landed Cost of such Foreign
Inventory shall be based on a physical inventory (net of excess and
obsolete) conducted in such Foreign Jurisdiction by or on behalf of Seller
and observed by Buyer and KPMG, as of 11:59 P.M. (local time) on the
Subsequent Transfer Date with respect to such Foreign Jurisdiction, for the
Foreign Inventory other than the Foreign Inventory that is on consignment
to customers of the Business in such Foreign Jurisdiction (the "Foreign
Consignment Inventory") and shall be determined in accordance with
Exhibit P. The amount of Foreign Consignment Inventory (in gross units)
existing on each Subsequent Transfer Date shall be determined in accordance
with the perpetual books and records of the applicable Affiliate of Seller
relating to such Foreign Consignment Inventories and shall be subject to
verification by Buyer of the accuracy of such books and records prior to
Buyer's acceptance of the amount stated on the applicable invoice. Such
invoice shall be delivered by Sellers or their Affiliates to Buyer no more
than 45 days following the Subsequent Transfer Date and shall be
accompanied by a Foreign Inventory Valuation worksheet prepared by or for
Seller or Seller's Affiliate in accordance with Exhibit P. Buyer shall,
within ten (10) days following receipt of such invoice and valuation
worksheet, object to valuation of the Foreign Inventory if Buyer disagrees
with such valuation. Buyer and Sellers shall then have ten (10) days to
resolve any disagreement; otherwise, each such disagreement will be
resolved in accordance with the procedures set forth in subsection (iv)
below.

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(ii) Within sixty (60) days following the Subsequent Transfer
Date with respect to the last Foreign Jurisdiction to be transferred to
Buyer, Seller shall deliver to Buyer an initial statement (the "Initial
Foreign Statement") containing an initial determination of the amount
payable pursuant to clause (vi) of this Section 2.12(e) specifying which
Party is entitled to such payment (such payment, the "Subsequent Adjustment
Payment") and which Party is required to make the Subsequent Adjustment
Payment (the "Initial Foreign Inventory Subsequent Adjustment"). The
Initial Foreign Inventory Subsequent Adjustment shall be based on the
physical inventories conducted in each Foreign Jurisdiction and, with
respect to the Foreign Consignment Inventory (in gross units), the
perpetual books and records of the applicable Affiliate of Seller, each as
set forth in Section 2.12(e)(i) and shall be determined in accordance with
Exhibit Q. Simultaneously with the delivery of the Initial Foreign
Statement to Buyer, Seller shall deliver or cause to be delivered all
accompanying workpapers relative to the Initial Foreign Statement which
workpapers shall include the information specified in Exhibit Q attached
hereto.

(iii) The Initial Foreign Inventory Subsequent Adjustment shall
be binding on Buyer unless, within twenty (20) days after Buyer's receipt
of the Initial Foreign Statement, Buyer shall have notified Seller in
writing (such notification, "Buyer's Foreign Notification") of its
disagreement with any of the values assigned in the Initial Foreign
Statement. Buyer's Foreign Notification shall specify the objections to
the values, the reasons therefor and the proposed valuation of each
disputed item. The value of any item on the Initial Foreign Statement not
so objected to in Buyer's Foreign Notification

<PAGE>

shall thereafter be binding on Buyer and Seller. Representatives of Seller
and Buyer shall attempt in good faith to resolve any disagreements noted
in Buyer's Foreign Notification within ten (10) days after Seller's receipt
of Buyer's Foreign Notification.

(iv) Disputes between Buyer and Seller relating to the Initial
Foreign Statement that cannot be resolved by them within such 10-day period
(the "Disputed Foreign Items") shall be referred at the insistence of
either party for binding resolution to (A) the Auditor, if any, (B) an
independent accounting firm selected within five days thereafter by
agreement of Seller and Buyer or (C) a "Big Six" accounting firm selected
by lot, after eliminating Coopers & Lybrand and KPMG in the event that
Seller and Buyer have been unable to select a firm by agreement within the
prescribed period. The determination of any accounting firm so selected
(the "Foreign Auditor") with respect to the (i) amount of the Subsequent
Adjustment Payment and (ii) the Party required to make the Subsequent
Adjustment Payment shall be conclusive and binding on the Parties. The fee
of the Foreign Auditor shall be borne by Seller and Buyer, equally;
provided that, if the Foreign Auditor's determination of the dollar value
of the Disputed Foreign Items causes a net change in the Subsequent
Adjustment Payment in favor of Buyer by more than $200,000, then the fee of
the Foreign Auditor shall be borne by Seller.

(v) The Initial Foreign Statement shall become final and
binding upon the parties upon the earlier of (A) the failure by Buyer to
object thereto within the period permitted under Section 2.12(e)(iii), (B)
the agreement between Buyer and Seller with respect thereto and (C) the
decision by the Foreign Auditor with respect to any disputes under this
Section 2.12(e). The Initial Foreign Statement, as adjusted pursuant to
the

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agreement of the Parties or decision of the Foreign Auditor, when final and
binding is referred to herein as the "Final Foreign Statement" and the
final determination of the adjustments to the Initial Foreign Inventory
Subsequent Adjustment indicated therein is referred to herein as the "Final
Foreign Inventory Subsequent Adjustment".

(vi) The Subsequent Adjustment Payment shall be made by the
Party, and in the amount, each as set forth in the Final Foreign Statement,
in U.S. Dollars. Any payment to be made (whether by Seller or by Buyer)
pursuant to this Section 2.12(e)(vi) shall be paid within five (5) Business
Days after the Initial Foreign Statement shall have become final and
binding pursuant to Section 2.12(e)(v) (i.e., when it has been deemed the
Final Foreign Statement), and shall include interest on such amount at the
rate of two percent (2%) plus the prime rate offered by Bank of America
(or, if less, the maximum rate permitted by applicable law) calculated from
the Subsequent Transfer Date with respect to the last Foreign Jurisdiction
to be transferred to Buyer to the date of payment of amounts due under this
Section 2.12(e)(vi).

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF SELLERS

Except as set forth (i) on any Schedule to be delivered to Buyer in
connection herewith (collectively the "Disclosure Schedules" or the "Schedules",
individually, a "Disclosure Schedule or a "Schedule") or (ii) expressly in the
notes to the Financial Reports, Sellers hereby represent and warrant to Buyer as
of the date hereof and as of the Closing Date as follows:

<PAGE>

3.01 ORGANIZATION; POWERS; EXECUTION. (a) Each of Seller, Site and their
Affiliates that are parties to the Ancillary Agreements is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, and has all requisite corporate power and
authority to consummate the transactions contemplated by this Agreement and the
Ancillary Agreement to which each is a party.

(b) The execution and delivery of this Agreement and each of the
Ancillary Agreements and the consummation of the transactions contemplated
hereby and thereby by each of Seller, Site and their Affiliates that are parties
thereto have been duly authorized by all necessary corporate action on the part
of each of Seller, Site and such Affiliates, and this Agreement has been, and
each of the Ancillary Agreements shall be as of the Closing Date, duly executed
and delivered by a duly authorized officer of each of Seller, Site and such
Affiliates (as the case may be) and constitutes with respect to the Agreement,
and shall constitute as of the Closing Date with respect to the Ancillary
Agreements, a valid and legally binding obligation of each of Seller, Site and
such Affiliates (as the case may be) in accordance with its respective terms,
subject to the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or other similar laws relating to or affecting
creditor's rights generally and general equitable principles (whether considered
in a proceeding in equity or at law).

3.02 IOLAB. IOLAB is a corporation duly organized, validly existing and
in good standing under the laws of the State of California, and has all
requisite corporate power and authority to own, lease and operate its properties
and to carry on its business as it is now being conducted. IOLAB is duly
qualified to do business and is in good standing as a foreign corporation in
each jurisdiction of the United States except where the failure to obtain or

<PAGE>

maintain such qualification, or good standing would not, individually or in the
aggregate, reasonably be expected to have a material adverse effect on IOLAB or
the Business. IOLAB has no subsidiaries other than Site and does not have any
equity interest, direct or indirect, in any Person other than Site. Other than
the Affiliates, Site and IOLAB, there is no entity owned by Seller that sells,
markets, distributes or manufactures (other than Lifecore Biomedical, Inc.) the
products of the Business.

3.03 CAPITALIZATION OF IOLAB. The authorized capital stock of IOLAB
consists of 1,000,000 shares of common stock of par value $1.00 per share, of
which 1,650 shares are issued and outstanding. The IOLAB Shares have been
validly issued by IOLAB and are fully paid and nonassessable. There are no
outstanding options, warrants or other rights to subscribe for, purchase or
acquire, or any plans, contracts or commitments providing for the issuance of,
any capital stock of IOLAB or any securities convertible into or exchangeable
for any capital stock of IOLAB.

3.04 TITLE TO ASSETS. Except as set forth on Schedule 3.04, Sellers and
their Affiliates have good and marketable (subject, in the case of any Assumed
Agreements, to any required consents to assignment) title to all of the
properties and assets that are material to the Business free and clear of all
Liens except for the Permitted Encumbrances.

3.05 TITLE TO IOLAB SHARES. Seller holds of record and owns beneficially
all of the outstanding shares of IOLAB, free and clear of any restrictions on
transfer, taxes, security interests, options, warrants, purchase rights,
contracts, commitments or Liens except for the Permitted Encumbrances identified
in Schedule 3.05 and except as set forth in IOLAB's Articles of Incorporation.

<PAGE>

3.06 CONDITION OF ASSETS. Each piece of equipment and machinery included
in the Assets and the fixed IOLAB Assets that has an acquisition cost of
$100,000 or more, whether real or personal, owned or leased, is set forth on
Schedule 3.06(a), and except as set forth on Schedule 3.06(b), has been
maintained in the ordinary course of business and is in normal operating
condition (with the exception of normal wear and tear) sufficient in all
material respects for the operation of the Business in accordance with past
practices. Except for equipment and machinery located at the facilities of
Anika Research, Inc. and except as set forth on Schedule 3.06(c), all of the
equipment and machinery included in the Assets and the IOLAB Assets having an
acquisition cost of $100,000 or more, are located at facilities owned or
operated by Seller, Site, IOLAB and their Affiliates.

3.07 REAL PROPERTY. (a) IOLAB has good and marketable title to the real
property described on Exhibit R (the "Real Property"), which is the only
interest in real property owned or held by IOLAB and such Real Property is free
and clear of any Lien, except for the Permitted Encumbrances.

(b) Except as set forth on Schedule 3.07 or as would not have a
material adverse effect on the Business operations as presently conducted on the
Real Property, (i) all improvements located on the Real Property have received
all Permits required in connection with the use thereof currently being made by
IOLAB; (ii) the Real Property and the improvements thereon, comply with all
laws, rules and regulations; (iii) there are no judicial or administrative
actions or proceedings pending or, to the knowledge of Sellers, threatened under
any condemnation, environmental, zoning, land-use or other law, rule or
regulation applicable to the Real Property; (iv) there are no outstanding unpaid
assessment notices against any of the Real

<PAGE>

Property and the cost of all municipal improvements for which any of the Real
Property can be assessed (which improvements have been completed) have been paid
in full; (v) to the knowledge of Sellers, there are no pending or threatened
assessments against any of the Real Property; (vi) neither Seller nor Site is a
"foreign person" within the meaning of the Foreign Investment in Real Property
Tax Act, Section 1445 of the Internal Revenue Code of 1986, as amended, and the
Income Tax Regulations thereunder; and (vii) except as disclosed in materials
described in Schedule 3.07 and furnished to Buyer or Buyer's environmental
consultants and except as disclosed in the Environmental Audit, to the knowledge
of Sellers, no asbestos, asbestos-containing materials, PCB compounds or other
Hazardous Substances have been used by or for Sellers or their Affiliates in the
construction or repair of, or alteration or addition to, any Real Property.

(c) The Livingston Lease is a valid, binding and enforceable agreement
of Seller's Affiliate, Johnson & Johnson Medical Ltd., and, to Sellers'
knowledge, of the other party thereto, subject to the effects of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium, or similar laws
relating to or affecting creditor's rights generally and general equitable
principles (whether considered in a proceeding in equity or at law). There has
not occurred any material default (or any event which upon the provision of
notice or lapse of time or both would become such a material default) under the
Livingston Lease on the part of Seller's Affiliate or, to Sellers' knowledge,
the other party thereto. Seller's Affiliate has the right to quiet enjoyment of
the Livingston Facility for at least the twelve (12)-month period following the
Closing Date. The improvements of the Livingston Facility constructed by or on

<PAGE>

behalf of Seller or its Affiliates, and the operations of Seller and its
Affiliates at the Livingston Facility, comply in all material respects with all
applicable laws, rules and regulations.

3.08 NO BROKERS OR FINDERS. Neither Seller nor any of its Affiliates has
employed any broker, finder, agent or similar intermediary, or incurred any
liability for any brokerage or finder's fees or commissions or similar payments,
in connection with this Agreement or any of the transactions contemplated
hereby.

3.09 NO UNDISCLOSED LIABILITIES. There are no liabilities relating to the
Business that have not been disclosed to Buyer except for such liabilities that
(i) would not have a material adverse effect on the Business, (ii) were set
forth or included on the Financial Reports or (iii) are or have been incurred in
the ordinary course of business.

3.10 CONFLICTS; GOVERNMENTAL CONSENTS AND APPROVALS; NO VIOLATION OR
DEFAULT. Except as set forth on Schedule 3.10, neither the execution and
delivery of this Agreement or the Ancillary Agreements by Sellers or their
Affiliates that are parties thereto nor the consummation by Sellers or such
Affiliates of the transactions contemplated hereby or thereby nor compliance by
Sellers or such Affiliates with any of the provisions hereof shall: (a) conflict
with or result in any breach of any provisions of the Certificate of
Incorporation or Articles of Incorporation or By-laws or other charter documents
of Sellers, IOLAB or such Affiliates; (b) require any consent, approval,
authorization or permit of, or filing with or notification to, any governmental
or regulatory authority, except (i) in connection with any applicable E.E.A.
member state's antitrust approvals, (ii) any such consent, approval,
authorization or permit required to be obtained by Buyer or such filing or
notification required to be made by Buyer in order to take title to the Assets
or the IOLAB Shares or otherwise operate the Business, or

<PAGE>

(iii) where the failure to obtain any such consent, approval, authorization or
permit, or to make such filing or notification, would not have a material
adverse effect on the Business taken as a whole; (c) to Sellers' knowledge,
violate any order, writ, injunction, decree, statute, rule or regulation
applicable to Seller, Site, IOLAB or such Affiliates, or the Assets, which
violation would have a material adverse effect on the Assets or Business taken
as a whole; or (d) result in a default (or any event which, with the giving of
notice or the passage of time, or both would constitute a default) under any of
the terms, conditions or provisions of any Permit or any Material Contract. No
representation or warranty is made pursuant to this Section 3.10(d) with respect
to the Settlement Agreement.

3.11 COMPLIANCE WITH LAWS. Except as set forth on Schedule 3.11 hereto:
(a) Seller's, IOLAB's and their Affiliates' conduct of the Domestic Business,
use of the Domestic Assets and the IOLAB Assets and ownership of the Real
Property are in material compliance with, and are not in violation, in any
material respect, of any applicable laws, rules, regulations or ordinances of
the United States or any state or subdivision thereof (except for matters that
are otherwise specifically addressed in subsection (b) below as to which no
representation or warranty is made in this subsection (a)); (b) all finished
goods purchased from third party manufacturers that are included in the
Inventory meet the specifications therefor and, to Seller's knowledge, (i) FDA
inspections (if any) of the facilities of such third party manufacturers have
not resulted in any observations noted on Form 483, warning letters or similar
actions that currently have a material adverse effect on any product of the
Business, (ii) such third party manufacturers have no material unfulfilled
outstanding agreements with or commitments to the FDA of any kind or character
with respect to the products supplied by such third party manufacturers to the
Business;

<PAGE>

(iii) there is no material adverse regulatory action by the FDA or other
governmental agency pending or threatened against such third party
manufacturers; and (iv) there is no material violation of any applicable law by
any third party manufacturer that would have a material adverse effect on the
Business; and (c) to Sellers' knowledge, Sellers', IOLAB's and their Affiliates'
conduct of the Foreign Business and use of the Foreign Assets are in material
compliance with, and are not in violation, in any material respect, of any
applicable laws, rules, regulations or ordinances of any government or political
subdivision.

3.12 CONTRACTS AND COMMITMENTS. Schedule 3.12 hereto identifies each
Contract of Sellers, IOLAB or their Affiliates currently in effect that is (a)
material to the operation of the Domestic Business or (b) material to the
operation of the Foreign Business, except for sales agent or distribution
Contracts or (c) to Sellers' knowledge, a sales agent or distribution Contract
relating to the Foreign Business (collectively the "Material Contracts"). True,
correct and complete copies, in all material respects, of each written Material
Contract and true and complete written summaries, in all material respects, of
each oral Material Contract have been delivered to Buyer. Except as set forth
in Schedule 3.12, each of the Material Contracts is a valid, binding and
enforceable agreement of Seller, Site, IOLAB or their respective Affiliates and,
to the knowledge of Sellers, of the other parties thereto, subject in each case
to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or other similar laws relating to or affecting creditor's rights
generally and general equitable principles (whether considered in a proceeding
in equity or at law). Except as set forth in Schedule 3.12, there has not
occurred any material default (or events which upon the provision of notice or
lapse of time or both would become such a material default) under any of the
Material Contracts on the part

<PAGE>

of Seller, Site, IOLAB or their respective Affiliates or, to Seller's knowledge,
the other parties thereto.

3.13 CHANGES. Except as set forth on Schedule 3.13, since January 1, 1995
there has been no material adverse change in the financial condition or results
of operations of the Business or the Assets, taken as a whole.

3.14 TRADEMARKS. Except as set forth on Schedule 3.14, the Trademarks are
all of the trademarks of Sellers, Site, IOLAB or their Affiliates that are
necessary for the Business as currently conducted, except for references on
packaging and promotional material to such Affiliates' corporate name or any
derivation thereof. Seller, Site, IOLAB or another Affiliate thereof is the
owner of all right, title and interest in and to the Trademarks and all
registrations of the Trademarks, and the Trademarks, to Sellers' knowledge, are
valid and enforceable against third parties. Except as set forth on Schedule
3.17, there are no third party actions or claims pending against Seller, Site,
IOLAB or any Affiliate thereof in any court or by or before any governmental
body or agency or arbitrator or, to Sellers' knowledge, threatened, that
involves any claim of trademark infringement or the like.

3.15 PATENTS. Seller, Site, IOLAB or another Affiliate thereof is the
owner of all right, title and interest in and to the Patents and the Patents, to
Sellers' knowledge, are valid and enforceable against third parties. Schedule
3.15 includes all of patents and patent applications of Seller, Site, IOLAB and
their Affiliates that are necessary for the Business as currently conducted
except for any patents and patent applications relating to chlorine dioxide
sterilization technology. Except as set forth on Schedule 3.17, there are no
third party actions or claims pending against Seller, Site, IOLAB or any
Affiliate thereof in any court or by or before any

<PAGE>

governmental body or agency or arbitrator or, to Sellers' knowledge, threatened,
that involves any claim of patent infringement or the like.

3.16 INTELLECTUAL PROPERTY RIGHTS. The Technology constitutes all of the
material intellectual property rights (other than the Patents or the Trademarks)
held by Seller, Site, IOLAB, or their Affiliates that are (i) used primarily in
the Business as presently conducted, or (ii) necessary for IOLAB's or Site's
manufacture, production or development of products as presently conducted,
except in either case for the intellectual property rights relating to chlorine
dioxide sterilization technology. Except as set forth in Schedule 3.17, neither
Seller, Site, IOLAB nor their Affiliates have received any communications nor
are they aware that they have violated or, by conducting the Business as
presently conducted, would violate any intellectual property rights of any other
Person. It is IOLAB's and Site's normal policy to cause employees of the
Business to execute confidentiality agreements that typically include invention
assignment provisions and there is no action pending or to Sellers' knowledge,
threatened, by any current or former employee of the Business against Seller,
Site, IOLAB or their Affiliates pursuant to which such current or former
employee is claiming a proprietary interest in any of the Intellectual
Property. All of the Intellectual Property is vested in (or, if applicable,
leased or licensed by) Seller, Site, IOLAB or their Affiliates free and clear of
any Liens except for Permitted Encumbrances. Except as set forth in any
Material Contract, Sellers, IOLAB and their Affiliates pay no royalty or license
fee to any Persons under any of the Intellectual Property and have not licensed
any third party to use on an exclusive basis any of such Intellectual Property
in the ophthalmic surgical field.

<PAGE>

3.17 LEGAL PROCEEDINGS, ETC. Except as set forth on Schedule 3.17 and
except for matters involving only monetary recovery in which the damages sought
to be imposed do not exceed (a) $50,000 individually or (b) $100,000 in the
aggregate with respect to proceedings or investigations which are similar in
nature or arise out of the same set of facts or relate to the same product,
there are no legal, administrative, arbitration or other proceedings or
governmental investigations pending or, to Sellers' knowledge, threatened
against the Business. Schedule 3.17 contains a complete and accurate list and
description of, and IOLAB is not in default with respect to, any material
judgment, order, writ, injunction, decree or award of any court, arbitration or
governmental agency or instrumentality, pertaining to or affecting the
Business. Schedule 3.17 contains a complete and accurate list and description
of, and none of the Sellers or their Affiliates (other than IOLAB) is in default
with respect to, any judgment, order, writ, injunction, decree or award of any
court, arbitration or governmental agency or instrumentality, pertaining to or
affecting the Business, in any material respect. There are no legal,
administrative, arbitration or other investigations or proceedings concerning
Seller, Site or IOLAB or their Affiliates with respect to the transactions
contemplated hereby, other than proceedings related to any applicable E.E.A.
member state's antitrust approvals or similar reviews.

3.18 LABOR MATTERS. None of Seller, Site or IOLAB is a party to or bound
by any collective bargaining agreement, nor are there any labor strikes,
grievances, claims of unfair labor practices or similar material disputes
pending or, to Sellers' knowledge, threatened by any of the employees of the
Domestic Business. To the knowledge of Sellers, there is no organizational
effort presently being made or threatened by or on behalf of any labor union
with

<PAGE>

respect to the employees of the Domestic Business. Prior to the Closing Seller
will provide Buyer with a list of all IOLAB Employees together with compensation
records required to facilitate Buyer's payroll planning and performance of its
obligations hereunder. Except as indicated on Schedule 3.18, none of the IOLAB
Employees has a written contract of employment. None of the IOLAB Employees, to
Sellers' knowledge, has an oral agreement with IOLAB or Seller inconsistent with
an at-will arrangement.

3.19 ENVIRONMENTAL CONDITIONS. Except as set forth on Schedule 3.19 and
except as disclosed in materials described in Schedule 3.07 and furnished to
Buyer or Buyer's environmental consultants and except as disclosed in the
Environmental Audit, (i) no material spills, releases, discharges or disposals
of Hazardous Substances have occurred on or under the Real Property since the
date Seller became the owner (through its ownership of IOLAB) of the Real
Property or are presently occurring on or under the Real Property; (ii) the Real
Property does not contain, nor, since the date that Seller became the owner
(through its ownership of IOLAB) of the Real Property, has the Real Property
contained, any underground storage tanks for any Hazardous Substances; (iii) the
Real Property is in compliance in all material respects with all Environmental
Laws; (iv) Site, IOLAB and their Affiliates have obtained all environmental
permits, licenses and other governmental authorizations necessary for the
conduct of the Business as presently conducted on the Real Property and all such
permits, licenses and governmental authorizations are in good standing; (v)
Site, IOLAB and their Affiliates are in material compliance with all terms and
conditions of such environmental permits, licenses and other governmental
authorizations; and (vi) neither the Business nor any portion of the Real
Property is subject to any outstanding order, decree, enforcement action or
judgment from any

<PAGE>

governmental authority with respect to the generation, treatment, storage,
presence, disposal or release of any Hazardous Substance in, on or under any of
the Real Property. To Sellers' knowledge, Buyer has been provided with true,
complete and accurate copies, in all material respects, of all material reports,
memoranda, audits, studies and related materials whether prepared by Sellers,
IOLAB or their Affiliates or consultants or third parties, regarding the
discharge or disposal of Hazardous Substances or the compliance of the Domestic
Business with Environmental Laws in the possession or control of Sellers.

3.20 TAXES. All Taxes attributable to the Assets or the Business prior to
the Closing Date have been, or will be, timely paid by Sellers or IOLAB and
their Affiliates, except such Taxes, if any, as are being contested in good
faith and disclosed on Schedule 3.20. IOLAB has filed or caused to be filed on
a timely basis, or will file or cause to be filed on a timely basis, all Returns
which it is required to file for periods that include the Closing Date, except
where the failure of which would not reasonably be expected to have a material
adverse effect on the Business, taken as a whole. All such Returns are true and
accurate in all material respects and all Taxes shown to be due on such Returns
have been or will be timely paid. All Taxes of IOLAB for any taxable period
ending on or before the Closing Date (and in portions of periods beginning
before and ending after the Closing Date) have been paid or have been accrued on
the Financial Reports, except where the failure of which would not reasonably be
expected to have a material adverse effect on the Business, taken as a whole.
Except as set forth on Schedule 3.20, no tax liabilities, disallowances or
assessments relating to the Business have been assessed or proposed and to
Seller's knowledge, there is no basis for any such liabilities disallowance or
assessment. Except as set forth on Schedule 3.20, none of IOLAB, Site or

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Seller is being audited by any United States, foreign, state or local government
agency for the non-payment or potential non-payment of any Taxes with respect to
the Business. Sellers have properly accrued, charged or established adequate
reserves in the Financial Reports for all Taxes attributable to the periods set
forth therein, except where the failure of which would not reasonably be
expected to have a material adverse effect on the Business, taken as a whole.

3.21 PERMITS. Except as set forth on Schedule 3.21, and except as would
not have a material adverse effect on the Domestic Business, (i) the Permits
held by Seller, IOLAB, Site and OMJ are all of the Permits necessary for the
operation of the Business as presently conducted; and are, and as of the Closing
will be, in full force and effect; (ii) each of Seller, Site and IOLAB is and
has been in compliance with all conditions or requirements of the Permits; and
(iii) none of them has been notified by any governmental or licensing authority
that such parties intend to cancel, terminate or modify any of such Permits, and
to Seller's knowledge, there is no reasonable basis (other than, to the extent
applicable, the consummation of the transactions contemplated hereby or pursuant
to the Ancillary Agreements) for any (A) cancellation or termination of such
Permits or (B) modification of such Permits that would have a material adverse
effect on the ability of the Business to market any current product of the
Business.

3.22 PRODUCT REGISTRATIONS. (a) Sellers, IOLAB or their Affiliates are
authorized to sell the products of the Business in each of the Major Foreign
Markets in which such products are currently being sold. Except as set forth on
Schedule 3.22(a) and except as would not have material adverse effect on a Major
Foreign Market, neither Seller, IOLAB or the Affiliates have been notified by
any governmental or licensing authority that such parties intend to cancel,

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terminate or modify any of such product registrations and to Sellers' knowledge,
there is no valid basis (other than, to the extent applicable, the consummation
of the transactions contemplated hereby or pursuant to the Ancillary Agreements)
for any such cancellation, termination or modifications. With respect to any
Product currently sold in any country outside of the United States and the Major
Foreign Markets, to Sellers' knowledge, Sellers have obtained all material
governmental permits required by governmental bodies in such countries to sell
and distribute such products.

(b) Except as set forth on Schedule 3.22(b), no Person other than
Seller, Site, IOLAB or their Affiliates has any rights in or to product
registrations relating to the Business' products for sales of such products in
any Major Foreign Market or, to Sellers' knowledge, in any country outside of
the United States and the Major Foreign Markets.

3.23 FINANCIAL REPORTS. Attached hereto as Schedule 3.23 are unaudited
statements of income, including and subject to the notes thereto, relating to
the Domestic Business and the Foreign Business for each of the fiscal years
ended January 2, 1994 and January 1, 1995 (collectively, the "Income
Statements"). It is understood that the statements of income include
allocations of general overhead expenses in accordance with Sellers' and IOLAB's
principles for making such allocations. Also attached as Schedule 3.23 are (i)
the unaudited balance sheet of the Assets and Assumed Liabilities of the
Domestic Site Business dated as of January 2, 1994 and January 1, 1995, (ii) the
unaudited balance sheet of IOLAB dated as of January 2, 1994 and January 1, 1995
(including and subject to the notes thereto) and (iii) the unaudited balance
sheet of IOLAB pro forma (the "Pro Forma Balance Sheet") for the transactions
contemplated hereby dated as of January 1, 1995 (including and subject to the
notes thereto) in a format agreed to by

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the Parties (collectively the "Balance Sheets"; and, together with the Income
Statements, the "Financial Reports"). The Financial Reports were prepared in
accordance with the books of accounts and records of Sellers, IOLAB and their
Affiliates (as the case may be) and fairly present, in all material respects,
the financial condition and results of operations, as of and for the periods
referred to, of the Business or portion thereof as indicated therein, all in
accordance with GAAP, except as set forth in Schedule 3.23.

3.24 INVENTORIES. Subject to any reserve therefor included in the Pro
Forma Balance Sheet and except as set forth in the Schedules hereto, all
Inventories of Sellers and their Affiliates consist of items of a quality usable
or saleable in the normal course of the Business consistent with past practices
and are in quantities sufficient for the normal operation of the Business in
accordance with past practices. Sellers have presented to Buyer Sellers' bases
for Inventory valuation methodology; such bases were fairly and accurately
presented by Sellers to Buyer. Notwithstanding the foregoing, the term
"consistent with past practice" shall not apply to Inventories of new products
of the Business that the Business has marketed for less than six (6) months.

3.25 PRODUCT RETURNS. Except as disclosed in the Business' product return
records or as set forth in Schedule 3.25, since March 31, 1994 Seller, Site,
IOLAB and their Affiliates have not had any of the Business' products returned
by a purchaser or user thereof, other than for minor, nonrecurring warranty
problems or in the ordinary course of business. The Business' product return
records were made available to Buyer prior to the date hereof and to Sellers'
knowledge are true, accurate and complete in all material respects. None of
Seller, Site, IOLAB or their Affiliates is a party to, or otherwise bound by,
with respect to the Business, any

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Contract requiring any of Seller, IOLAB, Site or any of their respective
Affiliates to repurchase inventory or merchandise in the possession of
wholesalers, distributors, retailers or other customers, other than in the
ordinary course of business and consistent with the Business' product return
policies as previously disclosed to Buyer.

3.26 NO TERMINATION OF BUSINESS RELATIONSHIP. Except as set forth on
Schedule 3.26 and except as Seller notifies Buyer in writing after the date
hereof, since January 1, 1995, no Person with which Seller, Site, IOLAB or their
Affiliates has a business relationship relative to the Business that is material
to the Business, taken as a whole (other than customers of the Business), or
with respect to any of the top ten (10) customers of the Business based on 1994
sales, no such customer has given notice of any intention to cancel or otherwise
terminate such business relationship with Seller, Site, IOLAB or their
Affiliates.

3.27 PRODUCTS LIABILITY. Except as set forth on Schedule 3.27 or included
in the Business' product complaint files and medical device reports previously
made available to Buyer (which files Sellers represent are complete in all
material respects), there is no material action, suit, claim, inquiry,
proceeding or investigation by or before any court, governmental agency or
arbitrator pending or, to the knowledge of Sellers, threatened against or
involving any of Seller, Site or IOLAB or to Sellers' knowledge, any of their
Affiliates relating to any product alleged to have been manufactured by or for
or sold by Seller, IOLAB, Site or to Sellers' knowledge, any of their Affiliates
as part of the Business and alleged to have been defective or improperly
designed or manufactured, nor, to the knowledge of Sellers, is there any valid
basis for any such action, suit, claim, inquiry, proceeding or investigation.

<PAGE>

3.28 FDA AND RELATED MATTERS. (a) Except as set forth on
Schedule 3.28(a), Seller, IOLAB, Site or OMJ has filed with the United States
Food and Drug Administration (the "FDA") all Investigational Device Exemptions
for products of the Business currently under study ("IDEs"), Premarket Approval
Applications ("PMAs") and Premarket Notifications - 510(k) ("510(k)s"), and have
obtained such approvals, exceptions and other similar Permits, required in
connection with the operation of the Domestic Business as currently conducted
(including, without limitation, Permits regulating the safety, effectiveness,
sale, distribution or marketing of each of the products of the Domestic Business
currently being sold by Sellers and IOLAB). Sellers have made such approvals,
exceptions and other similar Permits available to Buyer and have also made
available to Buyer for its inspection the following: (i) documentation
concerning product recalls or withdrawals pertaining to the Business since
January 1, 1994 (including those which may be pending or, to Sellers' knowledge,
threatened), whether or not required by the FDA; (ii) documentation concerning
facilities inspections of the facilities located on the Real Property or OMJ's
facilities located in Puerto Rico conducted by the FDA since January 1, 1993
that resulted in observations noted on Form 483 (to the extent such observations
pertaining to OMJ's facilities relate to, or have a material adverse effect on,
the Business); and (iii) other official and formal filings with the FDA, whether
pending or approved, with respect to the Business' products currently marketed
and/or the Business' products currently in development. All such information
provided to Buyer is, to Sellers' knowledge, true, complete and correct in all
material respects. Except as set forth on Schedule 3.28(a), Sellers, IOLAB and
OMJ (to the extent related to the Domestic Business) are in compliance in all
material respects with all requirements of the Federal Food Drug and Cosmetic
Act, as amended ("FDC Act"), and all

<PAGE>

applicable regulations promulgated thereunder with respect to Seller's, Site's
IOLAB's or OMJ's filing and obtaining of approval or effectiveness of IDEs,
PMAs and 510(k)s relating to products currently marketed by the Business.
Except as set forth in Schedule 3.28(a), all postapproval undertakings,
agreements or commitments made by Sellers and IOLAB and OMJ (to the extent
related to the Domestic Business) with respect to all applicable Permits have
been performed in a timely manner and, as required, discharged in all material
respects in accordance with their respective terms. In the United States, all
products of the Business not covered by IDEs, PMAs or 510(k)s are being lawfully
investigated or marketed pursuant to an exemption from the requirements of the
FDC Act and conform in all material respects to the conditions of such
exemptions. Except as disclosed in writing by Sellers to Buyer or set forth in
Schedule 3.28(a), there are no material unfulfilled outstanding agreements with
or commitments to the FDA of any kind or character with respect to any product
of the Business; there are no material adverse regulatory actions by the FDA or
other governmental agencies pending or, to Sellers' knowledge, threatened with
respect to any product of the Business; and Sellers do not have any knowledge or
information with respect to the initiation, pendency or threat by the FDA or
other governmental agencies of any material adverse regulatory action affecting
any of the products of the Business or the operations currently conducted at the
Real Property or at OMJ's facility (which relate to the Business) located in
Puerto Rico. Except as disclosed in writing by Sellers to Buyer or as set forth
in Schedule 3.28(a), neither Seller, Site IOLAB, or OMJ has, since January 1,
1993, received notice from any governmental agency of any action, suit,
investigation, or proceeding alleging, or a court order determining, that the
Business or any of Seller, Site or IOLAB is in violation of the FDC Act or has
illegally or improperly distributed

<PAGE>

or sold products, or otherwise restricting distribution or sale of products of
the Business by Sellers or IOLAB. Except as set forth in Schedule 3.28(a),
neither Sellers, IOLAB or OMJ have received notice, formal or informal, to the
effect that the FDA or other governmental agency, is contemplating the
withdrawal, suspension or cancellation of any approval, or the requiring of
substantial changes to labeling, for any product of the Business. The Real
Property and OMJ's facilities (which relate to the Business) located in Puerto
Rico have been operated and the products of the Business that have been produced
at the Real Property or at OMJ's facilities, have been produced, in all material
respects, in accordance with Good Manufacturing Practices ("GMPs") within the
meaning of applicable FDA, state and local regulations.

(b) Except as set forth in Schedule 3.28(b), no person other than
Sellers, IOLAB or OMJ have any rights in or to the IDEs, PMAs or 510(k)s which
relate to the Business. To the extent that any Person does hold such rights,
Sellers agree to reasonably assist Buyer in identifying such Persons and in
securing such rights for Buyer.

(c) Except as set forth in Schedule 3.28(c), the marketing and
promotional activities conducted by Sellers, IOLAB and their Affiliates in
connection with the Business have been conducted in compliance with the Anti-
Kickback Statute (Social Security Act Section 1129B codified at 42 U.S.C.
Sections 1320(a)-7b).

(d) Except as set forth in Schedule 3.28(d), all of the labels used in
the Business are in compliance in all material respects with all applicable
requirements of the FDC Act as well as all similar applicable requirements of
any government agency.

3.29 REPRESENTATIONS COMPLETE. None of the representations and warranties
made by Sellers herein, nor any statement made in any Exhibit, Schedule or
certificate furnished pursuant

<PAGE>

to this Agreement, contains or will contain any untrue statement of a material
fact, or omit to state any material fact required to be stated therein, or
necessary in order to make the statements made, in light of the circumstances
under which they were made, not misleading. Documents required to be delivered
to Buyer pursuant to this Agreement are, in all material respects, true and
complete copies of what they purport to be.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF BUYER

Buyer hereby represents and warrants to Sellers as of the date hereof and
as of the Closing Date as follows:

4.01 BUYER'S ORGANIZATION; POWER; EXECUTION. (a) Each of Buyer and its
Affiliates which is a party to any Ancillary Agreement is a corporation duly
organized, validly existing and in good standing under the laws of its
respective jurisdiction of incorporation, and has all requisite corporate power
and authority to consummate the transactions contemplated by this Agreement and
the Ancillary Agreements to which each is a party.

(b) The execution and delivery of this Agreement and each Ancillary
Agreement and the consummation of the transactions contemplated hereby and
thereby by Buyer and its Affiliates that are parties thereto have been duly
authorized by all necessary corporate action on the part of the Buyer and such
Affiliate, and this Agreement has been, and each Ancillary Agreement shall be as
of the Closing Date, duly executed and delivered by a duly authorized officer of
Buyer and such Affiliates and constitutes with respect to the Agreement, and
shall

<PAGE>

constitute as of the Closing Date with respect to each Ancillary Agreement, a
valid and legally binding obligation of Buyer and such Affiliates in accordance
with its terms, subject to the effects of bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or other similar laws relating to or
affecting creditor's rights generally and general equitable principles (whether
considered in a proceeding in equity or at law).

4.02 CONFLICTS; GOVERNMENTAL CONSENTS AND APPROVALS; NO VIOLATION OR
DEFAULT. Neither the execution and delivery of this Agreement or the Ancillary
Agreements by Buyer or its Affiliates that are parties thereto nor the
consummation by Buyer or such Affiliates of the transactions contemplated hereby
or thereby nor compliance by Buyer with any of the provisions hereof shall: (a)
conflict with or result in any breach of any provisions of the Certificate of
Incorporation or By-laws or other charter documents of Buyer or such Affiliates;
(b) require any consent, approval, authorization or permit of, or filing with or
notification to, any governmental or regulatory authority, except (i) any
applicable E.E.A. member states' antitrust approvals, (ii) filings in connection
with applicable securities laws, or (iii) any such consent, approval,
authorization or permit required to be obtained by Sellers or filing or
notification required to be made by Sellers in order to transfer title to the
Assets, the IOLAB Assets or the IOLAB Shares; or (c) to the Buyer's knowledge,
violate any order, writ, injunction, decree, statute, rule or regulation
applicable to Buyer or such Affiliates.

4.03 LITIGATION. Except for the matters referenced in clause (b)(i) of
Section 4.02 above, there are no actions, suits, proceedings, claims or
investigations pending or, to Buyer's knowledge, threatened concerning Buyer or
any of its Affiliates with respect to the transactions contemplated hereby.

<PAGE>

4.04 INVESTMENT. Buyer is acquiring the IOLAB Shares for its own account
for investment and not with a view to, or in connection with, a distribution
thereof. Buyer acknowledges that the IOLAB Shares are not registered under the
Securities Act of 1933, as amended, or under any state securities laws and that
the IOLAB Shares may not be transferred or sold except pursuant to the
registration provisions of such Act or any other applicable securities laws or
pursuant to an applicable exemption therefrom.

4.05 NO BROKERS OR FINDERS. Buyer has not employed any broker, finder,
agent or similar intermediary, or incurred any liability for any brokerage or
finder's fees or commissions or similar payments, in connection with this
Agreement or any of the transactions contemplated hereby.

ARTICLE V

CONDITIONS TO CLOSING

5.01 BUYER'S CONDITIONS. All of the obligations of Buyer hereunder are
subject to fulfillment, prior to or at the Closing, of the following conditions:

(a) PERFORMANCE; CERTIFICATE. All representations and warranties made
by Seller and Site in this Agreement shall be true in all material respects at
and as of the time of the Closing as though such representations and warranties
were made at and as of said time (except to the extent, if any, Buyer shall have
waived the same in writing); Seller and Site shall have performed and complied
in all material respects with all the terms, provisions and conditions of this
Agreement to be complied with and performed by Seller and Site at or before the
Closing;

<PAGE>

and Buyer shall have received a certificate of an officer of each of Seller and
Site dated the Closing Date, certifying to such effect.

(b) OTHER DOCUMENTS. Sellers shall have delivered to Buyer duly
executed copies of each of the Ancillary Agreements and a bill of sale for all
of the personal property included in the Assets. Sellers shall have also
delivered all other documents reasonably necessary in order to complete any and
all transfers and assignments provided for in this Agreement and to convey to
Buyer such title to the Assets and the IOLAB Shares as Sellers are required
hereunder to convey. Such documents shall include, in a form reasonably
acceptable to Buyer, the resignations of each member of the Board of Directors
of IOLAB and of those officers of IOLAB as are requested by Buyer prior to the
Closing.

(c) TITLE INSURANCE. Buyer shall have received from a title company
acceptable to Buyer (the "Title Insurance Company") standard ALTA Form B owner's
title insurance policies or date-down endorsements to title insurance policies
with respect to the Real Property. Each such policy or date-down endorsement
shall be accompanied by copies of all documents referenced as exceptions to
title and shall insure title to the Real Property subject only to Permitted
Encumbrances. Seller agrees to cause IOLAB to execute such reasonable
affidavits and other documents, consistent with local practice, as are necessary
to induce the Title Insurance Company to issue the policies and endorsements in
the manner set forth above. All costs in connection with the issuance of such
policies, including without limitation premiums, title search charges, surveys
and out-of-pocket expenses shall be borne fully by Buyer. Buyer will take
reasonable steps to obtain the title policies and Seller will cause IOLAB to
reasonably cooperate with Buyer in obtaining the title policies.

<PAGE>

(d) NO INJUNCTIONS; NO ACTIONS. (i) There shall not be in effect any
order, decree or judgment of any court or governmental body having competent
jurisdiction that prohibits or delays consummation of the transactions
contemplated by this Agreement; and (ii) no action or proceeding shall have been
instituted or threatened by any Person, and at what would otherwise have been
the Closing Date, remains pending or threatened, that has a reasonable
probability of resulting in (A) the obtaining of material damages from Buyer or
its Affiliates for which Buyer or its Affiliates are not indemnified by Sellers
pursuant to Article X hereof; or (B) an order, judgment or decree prohibiting,
delaying or rendering unlawful the consummation of the transactions contemplated
by this Agreement.

(e) NO MATERIAL ADVERSE EFFECT. During the period from the date
hereof to the Closing, there shall not have been any event which had or would
reasonably be expected to have a material adverse effect on the Business, taken
as a whole.

5.02 SELLERS' CONDITIONS. All of the obligations of Sellers hereunder are
subject to fulfillment, prior to or at the Closing, of the following conditions:

(a) PERFORMANCE; CERTIFICATE. All representations and warranties
made by Buyer in this Agreement shall be true in all material respects at and as
of the time of the Closing as though such representations and warranties were
made at and as of said time (except to the extent, if any, Sellers shall have
waived the same in writing); Buyer shall have performed and complied in all
material respects with all the terms, provisions and conditions of this
Agreement to be complied with and performed by Buyer at or before the Closing;
and Sellers shall have received a certificate of an officer of Buyer dated the
Closing Date, certifying to such effect.

(b) PURCHASE PRICE. Seller shall have received the Purchase Price.

<PAGE>

(c) OTHER DOCUMENTS. Buyer shall have duly executed and delivered to
Sellers each of the Ancillary Agreements and an assumption of liabilities with
respect to the Assumed Liabilities.

(d) NO INJUNCTIONS; NO ACTIONS. (i) There shall not be in effect any
order, decree or judgment of any court or governmental body having competent
jurisdiction that prohibits or delays consummation of the transactions
contemplated by this Agreement; and (ii) no action or proceeding shall have been
instituted or threatened by any Person, and at what would otherwise have been
the Closing Date, remains pending or threatened, that has a reasonable
probability of resulting in (A) the obtaining of material damages from Sellers
or its Affiliates for which Seller or its Affiliates are not indemnified by
Buyer pursuant to Article X hereof; or (B) an order, judgment or decree
prohibiting, delaying or rendering unlawful the consummation of the transactions
contemplated by this Agreement.

ARTICLE VI

PRE-CLOSING COVENANTS

Sellers covenant and agree with Buyer and Buyer covenants and agrees with
Sellers that during the period from the date hereof to the Closing Date (or,
with respect to a Foreign Jurisdiction, from the date hereof to the applicable
Subsequent Transfer Date):

6.01 CONDUCT OF BUSINESS. Except as otherwise contemplated by Schedule
6.01 or permitted by this Agreement or consented to by Buyer in writing, Sellers
and their Affiliates shall: (a) carry on the Business in the usual, regular and
ordinary course in substantially the

<PAGE>

same manner as heretofore conducted (other than after the Closing Date the
Foreign Business in any Foreign Jurisdiction for which Sellers' and their
Affiliates' obligations are set forth in Section 2.12(c) hereof); (b) not sell,
assign, transfer, abandon or otherwise dispose of any portion of the IOLAB
Shares or the Real Property or any material portion of the Assets or the IOLAB
Assets, except for (i) Inventory (other than excess Inventory) in the ordinary
course of business and (ii) that portion of the Excluded Assets and the Excluded
Liabilities that Seller shall cause to be transferred from IOLAB to an Affiliate
of Seller on the Closing Date but immediately prior to the transfer of the IOLAB
Shares to Buyer as provided in Schedule 6.01 attached hereto; (c) perform all of
their obligations (which they do not have reason to contest in good faith) under
agreements affecting the Assets or the Business; (d) not mortgage, pledge or
subject to any Lien other than Permitted Encumbrances any of the Assets, the
IOLAB Assets or the IOLAB Shares; (e) not enter into any Material Contract with
respect to the Business or amend or terminate any Material Contract or Permit
without the written consent of an officer of Chiron Vision Corporation holding
the position of Vice President or higher or (notwithstanding the foregoing) the
oral consent of W. Link; and (f) maintain the books of account and records
concerning the Business in the usual, regular and ordinary manner. Buyer hereby
agrees not to hold Sellers or their Affiliates responsible for the results of
any activities carried out or refrained from in accordance with any specific
written instruction of an officer of Chiron Vision Corporation holding the
position of Vice President or higher (or, with respect to Material Contracts,
the oral consent of W. Link) during the period from the date hereof to the
Closing Date (or with respect to any Foreign Jurisdictions, the applicable
Subsequent Transfer Date).

<PAGE>

6.02 NOTICES. Sellers shall promptly notify Buyer of (a) any material
adverse change in the Business taken as a whole or any matter which would render
materially incorrect any representation made in Article III hereof; (b) any
material governmental complaints, investigations or hearings as to the Business
of which Sellers or IOLAB have been advised, or the institution of any material
litigation, involving the Business; (c) any notice or other communication
received by Sellers or IOLAB alleging the existence of any default or event
which with notice or lapse of time or both would become a default under any
Material Contract; or (d) any proposed Contract relative to the Business that is
under consideration which, if entered into prior to the date hereof, would have
been required to be set forth on Schedule 3.12. Buyer shall promptly notify
Sellers of any material adverse change in the Business taken as a whole that it
shall have become aware of any event which would reasonably be expected to have
a material adverse effect on the Business, taken as a whole.

6.03 NO SHOPPING. Seller will not and will not permit any of its
Affiliates to accept, solicit or encourage (including by way of furnishing
information concerning the Business, IOLAB Shares, IOLAB Assets or Assets or
engaging in any discussions relative thereto) any acquisition by any Person
other than Buyer of any of the Business, IOLAB Shares, IOLAB Assets, Assets,
other assets, product lines, product names, intellectual property or know-how
that are the subject of the transactions contemplated hereby, except as any of
the foregoing activities relate to sales of products or other assets of the
Business in the ordinary course of business.

6.04 PUBLICITY. Neither Sellers nor Buyer will release, generate or
permit any press release, public statement or other publicity concerning this
Agreement or the transactions

<PAGE>

contemplated hereunder nor submit this Agreement or any document relating
thereto to any governmental office or agency, without first consulting with and
obtaining the written consent of the other party hereto, except as required by
law or legal authorities.

6.05 PERMITS AND LICENSES. Buyer shall use reasonable efforts (with the
full cooperation of Seller) to contact appropriate governmental authorities and
agencies and take all other steps reasonably necessary to (i) apply, prior to
the Closing, for the issuance of new Permits containing substantially the same
terms and conditions as the applicable Permit held by Seller, Site or IOLAB,
with respect to any Permits that are not transferable with the Business to Buyer
(either due to the cancellation of such Permits upon transfer of the IOLAB
Shares to Buyer or such Permits' non-assignability to Buyer), and (ii) apply for
the assignment to Buyer of any existing Permits of Seller or Site with respect
to any Permits that are assignable.

6.06 REAL ESTATE INVESTIGATIONS. Sellers have afforded and shall afford
to Buyer and its agents, employees, contractors and other representatives
reasonable access to the Real Property, upon reasonable notice, for the purposes
of making boundary line and topographical surveys, conducting a Phase I
environmental assessment and compliance audit and, in general, making tests,
analyses and investigations of the Real Property and the improvements thereon;
provided that such activities do not result in permanent damage and are
conducted so as to minimize any inconvenience or disruption to the Business and
other activities conducted on the Real Property or such improvements. Buyer
shall promptly pay for and be solely responsible for all costs and expenses
associated with such activities. Buyer shall indemnify Sellers and hold Sellers
harmless (i) from any and all claims, demands and liabilities for the costs and
expenses associated with such activities and (ii) against any and all liability
arising from or relating to

<PAGE>

damage or injury to persons or property, real or personal, caused by such
activities of Buyer and its agents, employees, contractors and other
representatives. Copies of the Environmental Audit and surveys, audits,
surveyor's drawings and soil test results which Buyer may obtain by virtue of
this authorization shall be delivered to Seller at no cost to Seller promptly
after Buyer receives such items. Until the Closing, if any, any information
gathered by or for Buyer in connection with the Real Property shall be subject
to the confidentiality provisions set forth in Section 11.19.

6.07 TRANSITION MATTERS. Except as otherwise provided in the Post-Closing
Support Services Agreement, during the period from the date hereof to Closing,
Buyer shall diligently arrange for third parties to provide or shall develop the
capacity on its own to provide support services and functions for the Business
and the Continuing Employees as of the Closing Date, including, without
limitation, compensation and benefits administration and services.

6.08 SUPPLEMENTS TO DISCLOSURE SCHEDULES. Sellers shall supplement or
amend the Disclosure Schedules referred to in this Agreement, in a timely
manner, with respect to any matter arising prior to the Closing and after the
date hereof which, if existing or occurring at or prior to the date of this
Agreement, would have been required to be set forth or described in a Disclosure
Schedule or which is necessary to correct any material information in a
Disclosure Schedule or any representation and warranty of Sellers which has been
rendered materially inaccurate thereby. No later than three (3) Business Days
before the Closing Date, Sellers will provide to Buyer with any new, updated or
supplemental Disclosure Schedules, as required. Notwithstanding any amendment
to the Disclosure Schedules pursuant to this Section, Buyer expressly retains
the right to terminate this Agreement in accordance with Section 9.02 hereof.

<PAGE>

6.09 COOPERATION AND ACTION. Subject to the terms and conditions of this
Agreement, the Parties shall take, or cause to be taken, all action, and to do,
or cause to be done, all things necessary, proper or advisable under applicable
laws and regulations and shall cooperate as reason and commercial prudence
dictate in order to consummate and make effective the transactions contemplated
by this Agreement, including, without limitation, obtaining all material
consents necessary for the transactions contemplated by this Agreement.

6.10 MAINTENANCE OF BUSINESS. From the date hereof until the Closing, and
subject to Section 6.01 of this Agreement, Sellers shall use reasonable efforts
to carry on and preserve the business of the Business, the goodwill of the
Business and the relationships of customers, suppliers, Employees and agents
with the Business in substantially the same manner as have been carried on or
preserved immediately prior to the date hereof; PROVIDED, HOWEVER, that Sellers
shall have no obligation to take any remedial or other action in connection with
any damage to the Business, the goodwill of the Business or such relationships
that may arise from the public or other announcements of the existence of this
Agreement or the consummation of the transactions that are contemplated
hereunder or under the Ancillary Agreements.

6.11 ACCESS TO INFORMATION. Sellers shall give Buyer and its accountants,
legal counsel and other representatives reasonable access for the sole purpose
of allowing Buyer to successfully transition the Business, during normal
business hours and without undue interruption of the Business throughout the
period prior to the Closing, to all of the properties, books, and records and
Contracts relating to the Business, and will furnish Buyer, its accountants,
legal counsel and other representatives during such period all such information
concerning the affairs of the Business as Buyer may reasonably request. In this
regard and during this period Buyer

<PAGE>

shall be given access to the 91Z Documents and all books and records relating to
the Domestic Business and Foreign Business as to which Buyer is not acquiring
title hereunder (such books and records, the "Excluded Records"). If Buyer
reasonably determines that (i) Buyer is legally required to retain any of the
Excluded Records (or copies thereof) or (ii) that the Excluded Records are
integral to Buyer's operation of the Domestic Business after the Closing, then
Buyer and Sellers will work out mutually agreeable procedures with respect to
such Excluded Records. Pending the Closing, Buyer will hold in confidence and
use all information so obtained in accordance with the terms set forth in
Section 11.19.

6.12 DISPOSAL OF HAZARDOUS SUBSTANCES; TESTING AND REPAIR. Prior to the
Closing Date, Seller, at its expense, shall lawfully dispose of all radioactive
materials and radioactive wastes stored on the Real Property and shall use its
reasonable efforts to lawfully dispose of all chemical materials and chemical
waste unrelated to the Business. In the event all chemical materials and
chemical waste stored on the Real Property unrelated to the Business are not
lawfully disposed of prior to the Closing Date, Sellers shall reimburse Buyer
for all reasonable out-of-pocket costs and expenses incurred by Buyer or its
Affiliates during the six (6) month period following the Closing Date related to
the storage, handling, and disposal of such materials and waste. Prior to the
Closing Date, Seller shall also complete the sewer pipe testing and soil
sampling on and under the Real Property in accordance with the recommendations
set forth in IOLAB's internal audit documentation and to Buyer's reasonable
satisfaction. Upon completion of such testing and sampling, Sellers shall
provide to Buyer, promptly upon Seller's receipt thereof, copies of any written
reports or other documentation received by Sellers in connection therewith. If
such testing and sampling reasonably indicates the need for resultant repair or

<PAGE>

replacement of the sewer system or any remediation resulting from leaks or
seepage from the sewer pipe, Seller shall complete the same to Buyer's
reasonable satisfaction.

6.13 AUDIT OF THE BUSINESS. (a) Buyer desires that an audit (the "Audit")
of the books and records and financial statements of the Business be performed,
and acknowledges that such Audit may be necessary in order to enable Buyer to
comply with federal securities laws and regulations. Buyer shall have sole
responsibility for all Audit costs and expenses of Coopers & Lybrand, the
independent accountants that which have been retained by Seller to perform such
Audit.

(b) From and after the date hereof (and after the Closing Date, if
required with respect to the Audit), Sellers shall, and shall cause their
Affiliates to, cooperate with all reasonable requests of Coopers & Lybrand in
connection with the Audit. In connection therewith, Sellers and their
Affiliates shall make available to Coopers & Lybrand all of the books and
records of Sellers and their Affiliates as may be needed in connection with the
Audit and shall provide sufficient internal personnel and resources to support
Coopers & Lybrand's efforts to complete the Audit prior to the Closing Date.

(c) In addition, the Parties hereby acknowledge and agree that (i)
there shall be no adjustment to the Purchase Price and (ii) the Parties'
obligation to close this transaction shall not be affected as a result of any
facts or circumstances of which Buyer would otherwise have no knowledge that
were uncovered by the Audit. Notwithstanding this Section 6.13(c), the
foregoing shall not affect any right of Buyer to indemnification with respect to
any breach of any representation or warranty of Sellers made herein, or any
matter for which Sellers have agreed

<PAGE>

to indemnify Buyer, or any matter for which Sellers have agreed to assume
responsibility as set forth herein.

ARTICLE VII

POST-CLOSING COVENANTS

Sellers covenant and agree with Buyer and Buyer covenants and agrees with
Sellers that on and after the Closing Date:

7.01 USE OF SELLER'S NAME AND TRADEMARKS.

(a) Buyer covenants that nothing in this Agreement or the Ancillary
Agreements, except as hereinafter set forth in paragraph (b) below, shall grant
Buyer or any of its Affiliates the right to use in any manner any trademark,
service mark or trade name (collectively, the "Excluded Trademarks") of Seller
or any of its Affiliates (other than the Trademarks transferred to Buyer
pursuant to this Agreement), including, without limitation, the name "Johnson &
Johnson" or "J&J" or any derivative or similar name.

(b) Seller hereby grants to Buyer permission (i) to use the Excluded
Trademarks on promotional materials in existence on the Closing Date that
display the Excluded Trademarks; and (ii) after the Closing Date, Buyer shall be
permitted to market, sell and distribute all products of the Business displaying
the Excluded Trademarks, and may use all labels, containers, and other printed
material or matter bearing the Excluded Trademarks that are either owned by
IOLAB or included in the Assets and used by Buyer in connection with the
Business. Buyer shall not reprint or make anew any promotional materials
displaying the Excluded Trademarks.

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Sellers and Buyer acknowledge that after expiration of the 6-month period
following the Closing, products of the Business displaying or utilizing such
Excluded Trademarks may continue to be sold in commerce, but Buyer shall not be
permitted to produce additional products of the Business displaying or utilizing
such Excluded Trademarks. Buyer and its Affiliates hereby agree to indemnify
Seller and its Affiliates from and against any and all Damages incurred in
connection with, or deficiencies resulting from, such permitted use by Buyer or
its Affiliates of the Excluded Trademarks to the extent (x) such use was
inconsistent with the practices of the Business conducted on or prior to the
Closing Date or (y) such use by Buyer is unlawful as a result of a change of law
after the Closing Date or the change in ownership of IOLAB contemplated by the
transaction hereby.

(c) Sellers shall provide to Buyer the necessary information and
original registration certificates and for a period of up to three (3) years
following the Closing Date shall execute the necessary documents provided by
Buyer to effect and perfect the transfer of the registrations of the Trademarks.
After such three (3)-year period, Sellers shall have no further obligation
hereunder.

7.02 BOOKS AND RECORDS; AVAILABILITY OF PERSONNEL. (a) Notwithstanding
any provision in this Agreement to the contrary, as of the Closing (i) Buyer
shall assume possession of all books and records of IOLAB (other than the 91Z
Documents) and all other books and records related to the Domestic Business that
are not owned by IOLAB to the extent included as an Asset in Exhibit A hereto
and (ii) Seller's Affiliates shall retain possession of all books and records
related to the Foreign Business; provided that Buyer shall be entitled to
possession (upon reasonable advance written notice to Seller of its intention to
assume possession thereof) to all

<PAGE>

books and records relating exclusively to the Foreign Business to the extent
included as an Asset in Exhibit A hereto. Each Party shall, on the request of
the other Party, make available to such other Party from time to time on a
reasonable basis records and other documents relating to the Business and to
periods prior to the Closing Date, subject to the document retention policies of
such Party. Such records and other documents shall be held by the party in
possession of such documents as required by applicable law and copies shall be
delivered to the other Party upon such other Party's reasonable request at any
time and at such other Party's out-of-pocket expense. Buyer shall cause IOLAB
to comply in all respects with its obligations under Section 2.4 (Documentary
Assets) of the CIBA Agreement (a copy of which has been provided to Buyer prior
to the date hereof) with respect to "Shared Documents" and "Retained Records"
(each as defined therein) to the extent the Shared Documents and Retained
Records are delivered to Buyer on or before the Closing Date.

(b) From and after the Closing Date, at either Party's reasonable
request, the other Party shall make, in the case of Buyer any of the Continuing
Employees then employed by Buyer or its Affiliates and, in the case of Sellers,
any of their then current employees who at one time dedicated substantially all
of their working time to the Business, available to the requesting Party during
normal business hours in such a manner that does not unreasonably interfere with
the normal duties and responsibilities of such employees, in connection with any
matter for which a Party is seeking indemnification under this Agreement and/or
any litigation, governmental investigation and like matter related to the
Business; provided, however, that the requesting Party shall reimburse the
responding Party for the reasonable out-of-pocket costs thereof.

<PAGE>

7.03 INSURANCE. As of the Closing Date the coverage under all insurance
policies of Sellers and their Affiliates related to the Business shall continue
in force only for the benefit of Seller and its Affiliates, and not for the
benefit of Buyer or the Business, except to the extent that such policies cover
losses or claims for which Seller does not fully indemnify Buyer hereunder.
Buyer or its Affiliates shall have the right to make claims or otherwise pursue
the rights of IOLAB under any insurance policies issued by Unaffiliated
Insurance Carriers (as defined below) relating to the Business on or before the
Closing Date (collectively, the "Pre-Closing Insurance Policies") for losses or
claims for which Buyer and its Affiliates are not fully indemnified by Sellers
hereunder. For purposes of this Agreement, "Unaffiliated Insurance Carriers"
shall mean any insurance carrier of which Seller owns thirty-five percent (35%)
or less of the equity as of the Closing Date. As of the Closing Date Buyer
agrees to arrange for its own insurance policies with respect to the Business
covering all periods subsequent to the Closing Date and, except as provided
above, agrees not to seek, through any means, to benefit from any of Sellers or
its Affiliates' insurance policies which may provide coverage for claims
relating in any way to the Business on or prior to the Closing Date.

7.04 PAYMENTS FROM THIRD PARTIES. In the event that, on or after the
Closing Date, either Party shall receive any payments or other funds due to the
other pursuant to the terms hereof or otherwise, then the Party receiving such
funds shall promptly forward such funds to the proper Party.

7.05 MUNICIPAL IMPROVEMENTS TO THE REAL PROPERTY. Buyer shall pay all
assessments against any of the Real Property or any part thereof arising after
the Closing Date for municipal improvements or other work, construction of which
shall be commenced or completed after the

<PAGE>

Closing Date (including any fines, interest or penalties thereon due to the
non-payment thereof), and shall indemnify Sellers and hold Sellers harmless from
any Damages arising therefrom in accordance with Article X hereof.

7.06 PRE-CLOSING RECEIVABLES; RETURNS. (a) As set forth in Exhibit C
hereto, the Pre-Closing Receivables are Excluded Assets, and shall remain the
property of Sellers. Buyer shall use reasonable efforts to pay over to Sellers,
on a monthly basis, all payments received by Buyer in connection with Pre-
Closing Receivables, accompanied by an accounting therefor. Seller shall be
permitted to audit Buyer's books, at Sellers' expense and not more than once per
calendar quarter, in order to confirm the accuracy of the amounts paid over by
Buyer to Seller in accordance with this clause (a). Buyer shall have no
obligation to assist in the collection of Pre-Closing Receivables.

(b) As of the Closing Date, Seller shall pay to Buyer $750,000 (which
amount reflects both Parties' estimate of product returns after the Closing Date
for sales of products of the Business made on or prior to the Closing Date).
Sellers will be responsible for processing and paying all claims for product
returns physically received by Sellers on or before the Closing Date (or with
respect to a Foreign Jurisdiction, the applicable Subsequent Transfer Date).
Buyer will be responsible for processing and paying all claims for product
returns received after the Closing Date (or with respect to a Foreign
Jurisdiction, the applicable Subsequent Transfer Date). In the event Buyer
grants a customer of the Business a credit for a product return received after
the Closing Date (or with respect to a Foreign Jurisdiction, the applicable
Subsequent Transfer Date) and Buyer notifies Seller or Seller otherwise becomes
aware that such customer desires to apply such credit against such customer's
obligations under a Pre-Closing

<PAGE>

Receivable, Seller shall immediately reduce such customer's obligations under
such Pre-Closing Receivable and notify such customer (with a copy to Buyer) of
such reduction and Buyer shall pay to Seller an amount equal to such reduction
within 30 days of receipt of such notice. This Section 7.06(b) represents the
Parties' full settlement of each Party's obligations with respect to product
warranties and returns related to the Business. The obligations of Sellers with
respect to the matters set forth in this Section 7.06(b) shall be deemed to be
fully satisfied, and no indemnification pursuant to Article X hereof or
otherwise shall be due from Sellers or available to Buyer with respect to
product warranties and returns. Notwithstanding the foregoing, this Section
7.06(b) shall not be construed to reduce any indemnification obligation of
Sellers for product liability claims or other matters (other than claims under
product warranties or for product returns) under Article X or any of Sellers'
obligations under Sections 7.13 and 7.14.

7.07 FURTHER ASSURANCES. Buyer and Sellers shall each, from time to time
after the Closing, at the request of the other and without further
consideration, execute and deliver such further documents and instruments of
assignment, transfer, license or assumption and take such further action as the
other may reasonably request in order more effectively to transfer, reduce to
possession and record title to any of the Assets, the IOLAB Assets or the IOLAB
Shares to permit Buyer to operate the Business or to implement the assumption of
the Assumed Liabilities, including, without limitation, with respect to any
opinions of counsel opining as to the validity of the Intellectual Property or
as to the assertion of any third party's intellectual property rights against
the Business, to assist Buyer to have such opinions issued to Buyer if Buyer so
elects. All out-of-pocket expenses involved in compliance with this Section
shall be promptly reimbursed by the requesting Party to the other Party.

<PAGE>

7.08 NON-COMPETITION COVENANT OF SELLERS. Sellers agree that they shall
not, and shall cause their Affiliates not to, for a period of three (3) years
from and after the Closing Date (the "Restricted Period") compete in any market
with Buyer or its Affiliates in the business of manufacturing, distributing, or
selling (a) intraocular lenses, (b) hyaluronic acid viscoelastics for use in
ophthalmic surgery and (c) ophthalmic surgical equipment that competes with the
Site Product Line (collectively, the "Restricted Business"); PROVIDED, HOWEVER,
that the foregoing shall not be deemed to prohibit Sellers or any Affiliate
thereof from (i) owning or acquiring the securities or assets of any Person
where the business or activity of such Person in the Restricted Business does
not exceed twenty percent (20%) of the business of such Person (based on
revenues during the twelve-month period preceding such acquisition or during any
consecutive twelve (12)-month period after such acquisition that is within the
Restricted Period), it being understood that if Sellers or such Affiliate should
own or acquire a Person where the business or activity of such Person exceed
such limits, as of or subsequent to such acquisition during the Restricted
Period, Sellers or such Affiliate shall have the obligation to initiate action
within three (3) months after its acquisition or date of non-compliance
subsequent to its acquisition, as the case may be, to dispose of, or otherwise
relinquish control of, such competing business and to dispose of such business
within twelve (12) months after such acquisition or date of noncompliance, or
(ii) owning or acquiring up to fifteen percent (15%) of the outstanding voting
securities or other equity interests of any Person that has revenues in the
Restricted Business that exceed the limits set forth in clause (i) above.

<PAGE>

7.09 TAX MATTERS.

(a) TAX RETURNS: Seller shall file or cause to be filed when due all
Returns with respect to IOLAB for taxable periods ending on or prior to the
Closing Date. Buyer shall file or cause to be filed when due all other Returns
with respect to IOLAB after the Closing Date.

(b) TAXES: Seller will pay or cause to be paid and shall indemnify
and hold Buyer harmless from and against any and all Taxes with respect to IOLAB
arising or attributable to any taxable period (or that portion of any taxable
period) occurring on or prior to the Closing Date. Buyer will pay or cause to
be paid and shall indemnify and hold Sellers harmless from and against any and
all Taxes with respect to IOLAB arising or attributable to any taxable period
(or that portion of any taxable period) occurring after the Closing. Seller
shall indemnify and hold Buyer harmless from any liability resulting solely from
any Affiliate of IOLAB having been a member of a combined, consolidated or
unitary group on or prior to the Closing Date, including tax liabilities arising
from deferred intercompany transactions, if any.

(i) If, after the Closing, Buyer or its Affiliates (A) receive
any refund, or (B) utilize the benefit of any over-payment of Taxes that
were paid by IOLAB or any Affiliate (as determined at the time such Taxes
were paid), for a taxable period ending on or prior to the Closing Date and
that is an Excluded Asset and/or not reflected on the Pro Forma Balance
Sheet (not including as a result of any carryback items for post-Closing
Date periods) Buyer shall promptly transfer, or cause to be transferred, to
Seller the entire amount of the refund or overpayment (including interest)
received or utilized by Buyer or its Affiliates. Buyer agrees to notify
Seller promptly of both the discovery

<PAGE>

of a right to claim any such refund or overpayment and the receipt of any
such refund or utilization of any such overpayment. Buyer agrees to claim
any such refund or to utilize any such overpayment and to furnish to Seller
all information, records and assistance necessary to verify the amount of
the refund or overpayment. Seller shall reimburse Buyer for its reasonable
out-of-pocket costs incurred in seeking such refund. At Buyer's option, or
when required by applicable law or regulation, Seller shall be responsible
for collecting such refund, with Buyer cooperating to the extent necessary
for Seller to collect such refund.

(ii) Buyer and Seller agree to determine the amount of and
allocate the total consideration transferred by Buyer to Sellers pursuant
to this Agreement in accordance with the fair market value of the IOLAB
Shares, the Assets and the Assumed Liabilities transferred. Sellers and
Buyer agree to prepare and file an IRS Form 8594 in a timely fashion in
accordance with the rules under Section 1060 of the Internal Revenue Code.

(iii) If Seller may be liable for any portion of the Tax payable
in connection with any Return of IOLAB to be filed by Buyer, Buyer shall
cause such Return to be prepared (A) by the same party or parties who
customarily have prepared the Returns filed in prior taxable periods,
provided that Buyer shall have the option at its own expense to engage
another party to prepare returns customarily prepared by an employee or
consultant of the Seller, and (B) on a basis which is consistent with such
previously filed Returns and in accordance with past practice.

<PAGE>

(d) COOPERATION: After the Closing Date, Buyer and IOLAB, on the one
hand, and Seller, on the other hand, will make available to the other, as
reasonably requested, all information, records or documents relating to the
liability for Taxes of the Foreign Business for all periods prior to or
including the Closing Date or the Subsequent Transfer Date, as applicable, and
will preserve such information, records or documents until the expiration of any
applicable statute of limitations or extensions thereof. In furtherance of the
foregoing, Buyer shall provide to Seller (i) copies of Tax receipts for Taxes
paid for IOLAB's taxable year which includes the Closing Date, (ii) information
on IOLAB's pre-Closing taxable income for filing Returns in 1995 and (iii)
notice of post-Closing adjustments to (A) foreign Taxes for income of any period
prior to Closing and (B) year of sale earnings and profits. Buyer shall also
agree to allow IOLAB to join in signing any appropriate elections in the 1995
Returns for Seller, as long as such actions would not be adverse to the
interests of Buyer, and Seller agrees to indemnify Buyer for any liability
arising therefrom. Buyer also agrees that it shall not make any election that
would reasonably be expected to be adverse to Sellers or their Affiliates
without the prior written consent of Seller. However, nothing in the foregoing
sentence shall prevent Buyer from complying with any tax law with which it
reasonably believes it is obligated to comply as a result of the conduct of the
Business activities after the Closing Date.

(e) TAX AUDIT: Seller shall have the right, at its own expense, to
control any audit or examination by any taxing authority, initiate any claim for
refund, contest, resolve and defend against any assessment, notice of
deficiency, or other adjustment or proposed adjustment relating to any and all
Taxes with respect to IOLAB for any taxable period ending on or before the
Closing Date. Buyer shall have the right, at its own expense, to control any
other Tax audit,

<PAGE>

initiate any other claim for refund, contest, resolve and defend against any
other assessment, notice of deficiency, or other adjustment or proposed
adjustment relating to any other Taxes with respect to IOLAB.

(f) SECTION 338 ELECTION: Seller agrees, at Buyer's request, to join
in the making of an election pursuant to Section 338(h)(10) of the Internal
Revenue Code of 1986, as amended, and any corresponding elections under state
laws.

7.10 CERTAIN RIGHTS UNDER THE CIBA AGREEMENT.

(a) The CIBA Agreement provides that a condition to Buyer assuming
IOLAB's rights under Section 9.3 of the CIBA Agreement (a copy of which Section
is attached as Schedule 7.10) shall be Buyer assuming IOLAB's obligation under
such Section. Effective upon Closing, Buyer hereby assumes IOLAB's obligation
under Section 9.3 of the CIBA Agreement.

(b) Notwithstanding Section 17.1 of the CIBA Agreement, Buyer shall
have the right to negotiate and agree with CIBA Vision Corporation as to any
amendment, waiver or other action exclusively relating to IOLAB's rights and
obligations under Sections 2.4, 9.3 and 10.4 of the CIBA Agreement without
notice or consent of Seller and Seller shall have no right without Buyer's prior
written consent to act as IOLAB's representative or agent with respect to such
matters. Seller agrees to cooperate with Buyer in obtaining the agreement of
CIBA Vision Corporation to release IOLAB from its obligations under the CIBA
Agreement other than Sections 2.4, 9.3 and 10.4 to the extent such obligations
would pertain to IOLAB.

7.11 LIVINGSTON FACILITY. If Buyer terminates the Livingston Production
Services Agreement within one (1) year after the Closing Date, Buyer shall not
be responsible for the Excluded Livingston Liabilities and such liabilities
shall be assumed by Seller as of the Closing

<PAGE>

Date; provided that if Buyer does not terminate the Livingston Production
Services Agreement on or before the first anniversary of the Closing Date, the
Excluded Livingston Liabilities shall be deemed an Assumed Liability.

7.12 SELLERS' DESIGNATED EMPLOYEE. In order to facilitate the transition
of the Business to Buyer, Buyer shall provide to Sellers' designated employee at
no expense to Seller or Sellers' designated employee for a period of up to four
months after the Closing Date adequate office space, office furniture and
fixtures, a personal computer and printer as well as office supplies.

7.13 PRODUCT INTERRUPTIONS. (a) Sellers shall pay to Buyer the
Interruption Damages (as defined below), upon written notification by Buyer of
any Product Interruption (as defined below).

(b) For purposes of this Section 7.13:

(1) "Covered Products" shall mean any or all of the following
items, or any portion or component thereof, which are associated with the
PHACO emulsification product line marketed and sold (or held for sale) by
the Business: (i) diaphragmatic cassette; (ii) peristaltic system; and
(iii) CD module. Any product that would otherwise be treated as a Covered
Product shall not be included in the foregoing if (x) the 510(k) submitted
to the FDA and pending approval as of the date hereof with respect to such
product is approved by the FDA, or (y) such product is materially modified
by Buyer, either by design or by manufacture, from the specifications
therefor as reflected in any 510(k) or similar regulatory filing submitted
on or prior to the Closing Date to the FDA or any applicable agency, which
pertains to such product. For purposes of the foregoing,

<PAGE>

a modification of a product shall be deemed "material" if that modification
was the principal cause of the Product Interruption.

(2) "Interruption Damages" shall mean (i) all "out-of-pocket"
costs and expenses of administering the withdrawal, removal or recall
incurred by Buyer or its Affiliates with respect to each Product
Interruption; (ii) all expenses associated with product replacements or
customer credits; and (iii) an amount equal to fifty percent (50%) of the
1994 worldwide revenues (or, if the Product Interruption occurs only in one
or more Foreign Jurisdictions and not in the United States, then the
product revenues attributable to such Foreign Jurisdictions) received by
Sellers, Site, IOLAB and their Affiliates with respect to any Covered
Product that is or becomes the subject of a Product Interruption, which
amounts shall be multiplied by a fraction, the numerator of which is the
number of days that the Product Interruption continues (but in no event
greater than 365 days) and the denominator of which is 365 days. A Product
Interruption shall be deemed to continue with respect to a Covered Product
until a date that is thirty (30) days following the date of receipt of FDA
or applicable agency approval such that the Covered Product, or Buyer's
substitute product therefor, may be lawfully introduced or reintroduced
into the market in each jurisdiction in which a Product Interruption has
occurred. Notwithstanding the foregoing, the Interruption Damages with
respect to the CD Module shall be calculated as set forth above, except
that the amount under subsection (ii) will not be 50% of 1994 revenues but
will, instead, be fifty percent (50%) of $500,000 per year, pro rated for
the appropriate number of days as set forth above.

<PAGE>

(3) "Product Interruption" shall mean any withdrawal, removal or
recall of any Covered Product from the marketplace due principally to a
lack of adequate regulatory approvals for such Covered Product (e.g. 510(k)
or similar regulatory filing) as required within twelve (12) months
following the Closing Date by (i) the FDA, (ii) by similar agencies, as
applicable, in each Foreign Jurisdiction, or (iii) Buyer in its reasonable
anticipation of a requirement by the FDA or the applicable agency in a
Foreign Jurisdiction to withdraw, remove or recall one or more of the
Covered Products from the market in the United States or any Foreign
Jurisdiction. Buyer shall reasonably consult with Seller prior to
determining the appropriate response to any action pending or threatened by
the FDA or the applicable agency and, if reasonably appropriate, shall
permit Seller to participate in any conferences or discussions with the FDA
or the applicable agency regarding the pending or threatened action. Prior
to any withdrawal of a Covered Product that would constitute a Product
Interruption, Buyer shall notify Seller in writing of its intention to
withdraw such Covered Product.

(c) The liability of Sellers hereunder shall arise only with respect
to claims for which Buyer has delivered written notification on or before a date
no more than thirty (30) days following the first anniversary of the Closing
Date. The receipt of Interruption Damages under this Section 7.13 shall be the
exclusive means by which Buyer may recover Damages against Sellers or their
Affiliates for Product Interruptions with respect to the Covered Products.
Buyer should not be entitled to indemnification under Article X for amounts
reimbursed under this Section 7.13.

<PAGE>

7.14 NONCONFORMING INVENTORY. For the purposes of this Agreement, the
term "Nonconforming Inventory" shall mean any product that was manufactured or
produced by or on behalf of Sellers, Site, IOLAB or any of their Affiliates
(other than products that were manufactured or produced after the Closing Date
by Buyer or its Affiliates) in a manner that did not conform, in design,
manufacture, or labeling to the specifications of such product, or applicable
law, in effect at the Closing Date. To the extent that Nonconforming Inventory
is sold by, or included in the inventory of, the Business after the Closing Date
in the United States, or after the applicable Subsequent Transfer Date in any
Foreign Jurisdiction, Sellers shall pay to Buyer, upon written notification by
Buyer, (i) all "out-of-pocket" costs and other expenses incurred by the Buyer
and its Affiliates in administering a withdrawal, removal or recall from the
market of any such Nonconforming Inventory, and (ii) all expenses associated
with product replacements or customer credits for such Nonconforming Inventory.
The liability of Sellers for Nonconforming Inventory hereunder shall arise only
with respect to claims for which Buyer has delivered written notification on or
before a date no more than thirty (30) days following the first anniversary of
the Closing Date or the Subsequent Transfer Date (as the case may be). With
respect to Nonconforming Inventory that is included in Buyer's inventory at the
time a claim is made hereunder, Buyer will permit Seller to repair such
Nonconforming Inventory if, in Buyer's reasonable judgment, repair instead of
replacement will not cause additional risk to Buyer upon subsequent sale.
Sellers shall indemnify Buyer for all Damages resulting from repairs performed
by Seller or its agents (other than Buyer or its Affiliates). The receipt of
payments under this Section 7.14 shall be the exclusive means by which Buyer may
recover Damages against Sellers or their Affiliates for the withdrawal, removal
or recall of

<PAGE>

Nonconforming Inventory from the market. Buyer shall not be entitled to
indemnification under Article X for amounts reimbursed under this Section 7.14.
Notwithstanding the foregoing, this Section 7.14 shall not apply to products
manufactured after the Closing Date pursuant to the Livingston Production
Services Agreement.

7.15 METAL HANDPIECE RETURN. Sellers shall reimburse Buyer for reasonable
out-of-pocket costs and expenses related to the return of the metal CD Phaco
handpiece to those customers which were the subject of the recall of such
devices to the extent Sellers have not completed such returns by the Closing
Date.

ARTICLE VIII

EMPLOYEES

8.01 EMPLOYEES. Buyer intends to maintain after the Closing IOLAB's
Claremont, California campus as a key business center for its ophthalmic
surgical operations. After the Closing, Buyer shall provide the IOLAB Employees
with comparable employment (as defined herein) or the severance benefits set
forth in Sections 8.02(b) and 8.02(c). In addition, prior to the Closing, Buyer
may offer, contingent upon the Closing, comparable employment to all Foreign
Employees and Sellers shall make available and cause their Affiliates to make
available to Buyer such Foreign Employees in connection with Buyer's efforts to
hire such Foreign Employees. Buyer acknowledges that Sellers have not provided
to Buyer any assurances that any Foreign Employee will accept Buyer's offer of
employment. For the purposes of this Article, "comparable employment" for each
Continuing Employee shall mean employment which

<PAGE>

has generally comparable duties and responsibilities (but not necessarily the
same title or position) and the same or greater salary or wage as the employment
which such Continuing Employee had immediately prior to the Closing. Prior to
and after the Closing Date, Sellers and their Affiliates shall cooperate with
Buyer by furnishing to Buyer information that is required with respect to
Continuing Employees in connection with Buyer's organizational planning and will
communicate Buyer's organizational plans to the Continuing Employees. In
addition, Sellers shall allow Buyer reasonable access to all IOLAB Employees and
Foreign Employees prior to the Closing.

8.02 EMPLOYMENT TERMS. (a) Buyer expects to retain approximately seventy
percent (70%) of the Continuing Employees for not less than an additional twelve
(12) months after the expiration of the first six-month period following the
Closing Date. Other than the severance obligations set forth in Sections
8.02(b) and 8.02(c), Buyer shall not have any liability to Seller or any third
party if it retains less than 70% of the Continuing Employees during such twelve
(12)-month period.

(b) If, any Continuing Employee is terminated by Buyer during the
twelve-month period following the Closing Buyer shall (i) furnish sixty (60)
days' advance notice prior to such termination and (ii) provide separation pay
to such Continuing Employee in an amount equal to at least three (3) weeks of
base pay per year of such Continuing Employee's service, including service prior
to the Closing to Seller or any current or former Affiliate thereof; PROVIDED,
HOWEVER, that if Buyer is required by law in any Foreign Jurisdiction to provide
more advance notice or separation pay than is required under clause (i) or (ii)
above, Buyer shall comply with such law and PROVIDED FURTHER, that if Buyer
fails to furnish such Continuing

<PAGE>

Employee at least sixty (60) days' advance notice prior to such termination such
Continuing Employee's separation pay will be increased by one day for each day
such notice fell short of such sixty (60)-day requirement.

(c) For purposes of Section 8.02(b) hereof, any IOLAB Employee that
voluntarily terminates employment with Buyer (i) within twelve (12) months after
the Closing Date due to the fact that the responsibilities of such employee's
position would have required or in fact required such employee to work on other
than an incidental basis at a site outside of Claremont, California, or (ii)
within ninety (90) days after the Closing Date due to the fact that such
employee's position was not "comparable employment" as defined in Section 8.01
above, shall be deemed to have been "terminated by Buyer" and shall be entitled
to the notification and separation payments set forth in Section 8.02(b) hereof.

(d) Notwithstanding the terms of this Section 8.02, Buyer shall not be
obligated to maintain the organizational structure of the Business as in effect
prior to the Closing Date.

8.03 BENEFITS. Unless otherwise specified in this Article VIII, each
Continuing Employee will be entitled to benefits under any employee benefit
plans of Buyer generally made available to other employees of Buyer who are
employed in similar categories of employment subject to Section 8.04. Buyer
shall offer each such Continuing Employee the opportunity, immediately after the
Closing Date, to participate in all such Buyer's employee benefit plans for
which each such Continuing Employee would be eligible under the guidelines for
such plans. For vesting and eligibility purposes under all of Buyer's employee
benefit plans, all such Continuing Employees shall be given full credit for all
service with Seller, Seller's Affiliates or Seller's former Affiliates on and
prior to the Closing Date to the extent such service is

<PAGE>

recognized under Sellers' analogous employee benefit plans, provided that Buyer
shall not be obligated to recognize such service for pension benefit accrual
purposes. In addition to such recognition of all such prior service for purposes
of vesting and eligibility, all such Continuing Employees shall be given credit
for such prior service for purposes of (i) accrual of severance benefits and
(ii) accrual of vacation benefits. In addition to any vacation benefits
provided by Buyer to the Continuing Employees pursuant to Buyer's own plans,
Buyer shall grant each Continuing Employee a number of vacation days without pay
equal to the number of vacation days that such Continuing Employee had accrued
but unused as of the Closing Date and within ten Business Days after the Closing
Date Sellers shall pay the Continuing Employees for such accrued but unused
vacation days. Seller shall provide to Buyer prior to the Closing a list of the
applicable starting service dates for each IOLAB Employee and all periods of
service with Seller, Seller's Affiliates or Seller's former Affiliates, and
Buyer shall be entitled to rely on such list for the purposes of determining
periods of prior service under this Section 8.03.

8.04 BENEFITS REQUIREMENTS. Buyer agrees that in complying with the
benefit requirements set forth in this Article VIII (a) no pre-existing medical
condition of any Continuing Employee or his or her eligible dependents shall
cause Buyer to deny, delay or otherwise alter coverage under Buyer's benefit
plans to any such person; unless such person was not covered under an analogous
plan of Sellers on the Closing Date and would not qualify for coverage under
Buyer's analogous plan; and (b) all expenses incurred by Continuing Employees in
1995 prior to the Closing Date for deductible amounts or maximum out-of-pocket
amounts for 1995 under IOLAB's or Site's comprehensive medical/dental benefit
plan will be applied

<PAGE>

towards and reduce, on a dollar-for-dollar basis, any such amounts under Buyer's
analogous plan(s).

8.05 SELLERS' OBLIGATIONS. (a) All Employees, including Continuing
Employees who as of the Closing Date have vested rights or entitlement to
benefits under any of the benefit plans of Sellers or their current or former
Affiliates shall remain entitled to receive such benefits in accordance with the
terms of such plans. Sellers and their current or former Affiliates remain
responsible for death claims based on death occurring on or before the Closing
Date and for medical and dental claims for services rendered to covered
Employees and their eligible dependents on or before the Closing Date as well as
any benefits available to and elected by Employees or their dependents under the
extension of benefits provisions of Sellers' (and to the extent applicable,
their current or former Affiliates') benefit plans.

(b) It is understood and agreed that neither Buyer nor its Affiliates
shall assume (i) any liability for pension plan benefits or under any employee
benefit plan sponsored by Sellers (or any of their current or former Affiliates)
which may be owing to any Employee as a result of his or her employment with
Sellers (or any of their current or former Affiliates); (ii) any other
obligation or liability of Sellers (or any of their current or former
Affiliates) (A) to any present or former Employee of Sellers (or any of their
current or former Affiliates) arising as a result of his employment with Sellers
(or any of their current or former Affiliates), including, without limitation,
compensation, vacation, severance or termination pay or (B) otherwise arising
from Sellers' or their current or former Affiliates' employer-employee
relationship with the Employees (including without limitation any liabilities or
obligations related to any collective bargaining agreements, statutory
indemnification provisions arising in a Foreign

<PAGE>

Jurisdiction or similar arrangements); (iii) any employee benefit-related
liability that may be owed by Sellers or any current or former Affiliate of
Sellers; or (iv) any liability or obligation to any Employee (other than a
Continuing Employee) arising by operation of law as a result of the transactions
contemplated hereby (collectively, the "Excluded Employee Liabilities"). It is
understood and agreed that the Excluded Employee Liabilities are expressly
assumed and retained by Sellers and their Affiliates. Notwithstanding the
foregoing, Buyer acknowledges its obligations with respect to severance and
vacation benefits to Continuing Employees expressly set forth in Sections
8.02(b), 8.02(c) and 8.03.

8.06 DISABLED EMPLOYEES AND DEPENDENTS. Employees receiving (i) long-term
disability benefits on the Closing Date or (ii) who are on short-term disability
on the Closing Date and convert directly to long-term disability benefits
(collectively, "Disabled Employees") shall not be the responsibility of Buyer
after they become Disabled Employees but shall be the responsibility of Seller
and shall, to the extent provided under the benefit plans of Sellers (and to the
extent applicable, their Affiliates), remain the responsibility of Sellers until
the end of their disability period. Eligible dependents of Employees who are
entitled to receive such benefits shall remain the responsibility of Sellers.
IOLAB Employees who are on short-term disability at the Closing Date and who do
not convert directly to long-term disability but return to active employment
shall be considered "Continuing Employees."

8.07 POST-EMPLOYMENT MEDICAL BENEFITS. Upon termination of their
employment with IOLAB (if such termination occurs during the twelve (12)-month
period after the Closing Date), all Continuing Employees shall be entitled to
any post-employment medical and dental coverage (in addition to that required
under the Consolidated Omnibus Budget Reconciliation Act of 1985)

<PAGE>

generally made available to employees of Buyer under any of Buyer's U.S.
employee benefit plans. If no such plan is made generally available to Buyer's
U.S. employees, then Buyer shall offer all such Continuing Employees, upon
termination of their employment with IOLAB (if such termination occurs during
the twelve (12)-month period after the Closing Date), continuation coverage as
specified under the Consolidated Omnibus Budget Reconciliation Act of 1985 at no
cost to such Continuing Employees; provided that Seller reimburses Buyer for all
costs of providing such coverage promptly upon Buyer's demand.

8.08 NO SOLICITATION OF CERTAIN EMPLOYEES. During the twenty-four (24)-
month period following the Closing Date, Buyer shall not, without the prior
written consent of Seller, directly or indirectly solicit for employment or hire
any international support personnel of Seller or any Affiliate thereof other
than the Employees.

8.09 COMPLIANCE WITH WARN. Buyer shall not, at any time prior to sixty
(60) days after the Closing Date, effectuate a "plant closing" or "mass layoff"
as those terms are defined in the Worker Adjustment Retraining and Notification
Act ("WARN") affecting in whole or in part any facility, site of employment,
operating unit or employee of IOLAB or the Business without complying fully with
the requirements of WARN. In addition, Buyer hereby agrees to indemnify Sellers
and to defend and hold Sellers and their Affiliates harmless from and against
any and all Damages which Sellers or any Affiliate of Sellers may incur in
connection with, any suit or claim of violation brought against Sellers or any
Affiliate of Sellers under WARN for any actions taken by Buyer with regard to
any facility, site of employment, operating unit or employee of IOLAB or the
Business in accordance with Article X hereof.

<PAGE>

8.10 LIMITATIONS. Notwithstanding anything herein to the contrary, the
term "generally made available", or words of similar import as used in this
Article VIII with respect to the employee benefit plans of Buyer shall mean the
employee benefit plans of Buyer (as the same may be amended from time to time)
that are generally made available to the employees of Buyer's ophthalmic
business currently operated by Chiron Vision Corporation and shall not include
any benefit plans that are made available to employees of other Affiliates of
Buyer (including without limitation CIBA Corning Diagnostics).

ARTICLE IX

TERMINATION

9.01 BOTH PARTIES. This Agreement may be terminated at any time prior to
the Closing by the mutual written consent of Sellers and Buyer. In the event of
termination of this Agreement pursuant to this Section 9.01, neither Party shall
have any liability in respect of this Agreement or such termination, except to
the extent a Party has willfully breached this Agreement.

9.02 BUYER. This Agreement may be terminated by Buyer by written notice:
(a) at any time prior to the Closing, if Sellers shall have failed to comply in
any material respect with any of their covenants or agreements contained in this
Agreement and such failure shall be continuing, or if any one or more of the
representations or warranties of Sellers contained in this Agreement shall prove
to have been inaccurate in any material respect when made; provided, however,
that Buyer shall give Sellers a reasonable opportunity to cure any such failure
to so

<PAGE>

comply under this Agreement, by the payment of compensation (if the matter is
reasonably capable of rectification by that means) or by any other rectification
of the matter reasonably acceptable to Buyer before the Closing; (b) at the
Closing, if any of the conditions precedent to the performance of its
obligations at the Closing under Section 5.01 shall not have been fulfilled; or
(c) if the Closing shall not have occurred by March 31, 1995; provided that
neither Buyer nor any of its Affiliates shall be in willful breach of a material
term of this Agreement.

9.03 SELLERS. This Agreement may be terminated by Sellers by written
notice: (a) at any time prior to the Closing, if Buyer shall have failed to
comply in any material respect with any of its covenants or agreements contained
in this Agreement and such failure shall be continuing, or if any one or more of
the representations or warranties of Buyer contained in this Agreement shall
prove to have been inaccurate in any material respect when made; provided,
however, that Sellers shall give Buyer a reasonable opportunity to cure any such
failure to so comply under this Agreement, by the payment of compensation (if
the matter is reasonably capable of rectification by that means) or by any other
rectification of the matter reasonably acceptable to Seller before the Closing;
(b) at the Closing, if any of the conditions precedent to the performance of its
obligations at the Closing under Section 5.02 shall not have been fulfilled; or
(c) if the Closing shall not have occurred by March 31, 1995; provided that
neither Seller, Site nor their Affiliates shall be in willful breach of a
material term of this Agreement.

<PAGE>

ARTICLE X

INDEMNIFICATION
10.01 SURVIVAL.

(a) Except as set forth in Section 10.01(b), all representations and
warranties herein shall survive for a period of one year from and after the
Closing Date and shall then expire and be of no force or effect.

(b) Sellers' representations and warranties set forth in Section 3.20
shall survive until the expiration of all applicable statutes of limitations
relating to Taxes. Sellers' representations and warranties set forth in
Sections 3.01(b), 3.04, 3.05 and 3.07(a) (collectively, the "Ownership
Warranties") shall survive for a period of three years from the Closing Date and
shall then be of no force or effect.

10.02 INDEMNIFICATION BY SELLERS. Sellers shall indemnify and hold
harmless Buyer, Buyer's Affiliates and their respective officers, directors and
employees against and from any and all Damages which Buyer, Buyer's Affiliates
and their respective officers, directors and employees may incur or suffer which
arise out of or result from (i) the misrepresentation of any representation or
the breach of any warranty made by Sellers in this Agreement; (ii) the breach of
any covenant or agreement made by Sellers or their Affiliates in this Agreement
or any Ancillary Agreement other than the Suture Supply Agreement and the
Cassette Supply Agreement (any breach of which shall be governed by such
agreements); (iii) except to the extent that any such claim is based on any of
the Assumed Liabilities, any and all claims by third parties arising out of
Seller's, IOLAB's and its Affiliates' conduct of the Business or use or
ownership of any of the Assets on or prior to the Closing Date (or, with respect
to a Foreign

<PAGE>

Jurisdiction, on or prior to the applicable Subsequent Transfer Date) including,
without limitation, any patent infringement or product liability claims
concerning products relating to the Business that are sold on or prior to the
Closing Date (or, with respect to a Foreign Jurisdiction, on or prior to the
Subsequent Transfer Date); (iv) the Excluded Liabilities; (v) any sales agent or
distribution Contract that (a) is an Assumed Agreement, (b) has an unexpired
term of greater than twelve (12) months from the applicable Subsequent Transfer
Date and may not be cancelled upon ninety (90) or fewer days' notice without any
liability, penalty or premium to Buyer and (c) is not listed on Schedule 3.12
(provided that Sellers' liability under this clause (v) shall not exceed one-
half of the reasonable sums paid by Buyer to the sales agent or distributor to
terminate such Contract; (vi) the environmental condition of the Real Property
or release, presence or disposal of Hazardous Substances on, under or from the
Real Property arising from Sellers' or their Affiliates' conduct of the Business
or use of the Real Property on or before the Closing Date; (vii) any and all
claims of third parties arising from any contamination originating from the
former Garner Glass facility; (viii) Purchase Order No. 91297 dated December 5,
1994, to Sterile Design from IOLAB to the extent such Purchase Order may not be
cancelled by IOLAB upon no more than twelve (12) months notice, in accordance
with its terms, without penalty, premium or liability to Buyer (provided that
such Purchase Order is not amended or modified without Sellers' consent (which
shall not be unreasonably withheld) if such amendment or modification would
increase Sellers' obligations hereunder); or (ix) any and all actions, suits,
proceedings, demands, assessments, judgments, reasonable costs and expenses
incident to any of the foregoing. Notwithstanding the above, Buyer shall have
no right to indemnification under Section 10.02(iii) or 10.02(iv) for
consequential damages resulting from any injunction that

<PAGE>

issues against Buyer or its Affiliates after the Closing Date with respect to
infringement of the intellectual property rights of any Person (other than
Sellers or their Affiliates) arising from the sale of any product by Buyer, its
Affiliates or other Persons acting on behalf of Buyer, so long as, to Sellers'
knowledge, on or before the Closing Date the Business or any of Sellers or their
Affiliates was not infringing such intellectual property rights except as
disclosed in Schedule 3.17.

10.03 INDEMNIFICATION BY BUYER. Buyer shall indemnify and hold harmless
Sellers, Seller's Affiliates and their respective officers, directors and
employees against and from any and all Damages which Sellers, Seller's
Affiliates and their respective officers, directors and employees may incur or
suffer which arise out of or result from (i) the misrepresentation of any
representation or the breach of any warranty made by Buyer in this Agreement;
(ii) the breach of any covenant or agreement made by Buyer or its Affiliates in
this Agreement or any Ancillary Agreement other than the Suture Supply Agreement
and the Cassette Supply Agreement (any breach of which shall be governed by such
documents); (iii) except to the extent that any such claim is based on any of
the Excluded Liabilities, any and all claims by third parties arising out of the
Buyer's and its Affiliates' conduct of the Business or use or ownership of any
of the Assets after the Closing Date (or, with respect to any Foreign
Jurisdiction, after the applicable Subsequent Transfer Date) including, without
limitation, any patent infringement or product liability claims concerning
products relating to the Business that are manufactured or sold after the
Closing Date (or with respect to any Foreign Jurisdiction, after the applicable
Subsequent Transfer Date) whether manufactured by or for Seller or Buyer, or any
Affiliate of either Seller or Buyer, or otherwise, except for products
manufactured by Seller or any Affiliate thereof

<PAGE>

under the Cassette Supply Agreement or the Suture Supply Agreement, under which
product liability shall be governed by the terms of such agreements; (iv) the
Assumed Liabilities; (v) the environmental conditions of the Real Property or
release, presence or disposal of Hazardous Substances (except as otherwise
provided in Section 6.12) on, under or from the Real Property arising from
Buyer's or its Affiliates' conduct of the Business or use of the Real Property
after the Closing Date, excluding any matter for which Sellers have agreed to
indemnify Buyer (including without limitation the matters described in Section
10.02(vi) or (vii)); or (vi) any and all actions, suits, proceedings, demands,
assessments, judgments, reasonable costs and expenses incident to any of the
foregoing.

10.04 SCOPE OF SELLERS' LIABILITY. Indemnification shall be available to
Buyer under Section 10.02(i) for the Sellers' misrepresentation of
representations or breach of warranties only to the extent the aggregate amount
of Damages otherwise due to Buyer for all claims for such indemnification
exceeds $1,500,000 and then indemnification shall be available to Buyer for the
full amount of all payments due Buyer in excess of $1,500,000. Buyer's or its
Affiliates' receipt of payments or proceeds under any Pre-Closing Insurance
Policies with respect to claims for Damages shall preclude Buyer from crediting
such claims toward the $1,500,000. With respect to any Claim for the
misrepresentation of any representation or the breach of any warranty, Sellers
shall have no obligation under Section 10.02(i) to indemnify or hold harmless
Buyer, Buyer's Affiliates, their officers, directors or employees against a
misrepresentation or a breach thereof to the extent that Seller can demonstrate
that Buyer on the date hereof had knowledge of information which would cause a
reasonable person to conclude, in light of the circumstances in which such
information was disclosed to Buyer, that Sellers were, on such date,

<PAGE>

misrepresenting such representation or in breach of such warranty upon which
such Claim is based. The indemnity rights under clauses (ii) through (ix) of
Section 10.02 shall not in any way be limited or impaired by the disclosure of
any information by Sellers or their Affiliates to Buyer or its Affiliates or any
knowledge of Buyer or its Affiliates about the Business or the Assets.

10.05 CLAIMS; PAYMENTS. Any Party claiming it may be entitled to
indemnification under this Article X (the "Indemnified Party") shall give
written notice to the other Party (the "Indemnifying Party") of each matter,
action, cause of action, claim, demand, fact or other circumstances upon which a
claim for indemnification (a "Claim") under this Article X may be based. Such
notice shall contain, with respect to each Claim, such facts and information as
are then reasonably available, and the specific basis for indemnification
hereunder. The failure to so notify the Indemnifying Party shall not relieve it
of any liability that it may have to the Indemnified Party except to the extent
that the Indemnifying Party demonstrates that it or its defense of such a Claim
is prejudiced thereby. All indemnification payments due hereunder shall be paid
promptly in cash. The Parties hereby agree to treat indemnification payments
hereunder as an adjustment to the Purchase Price for Tax purposes.

10.06 DEFENSE OF ACTIONS. The Indemnified Party shall permit the
Indemnifying Party, at the Indemnifying Party's option and expense, to assume
the complete defense of any Claim based on any action, suit, proceeding, claim,
demand or assessment by any third party with full authority to conduct such
defense and to settle or otherwise dispose of the same and the Indemnified Party
will fully cooperate with all reasonable requests in such defense; provided the
Indemnifying Party will not, in defense of any such action, suit, proceeding,
claim, demand or

<PAGE>

assessment, except with the written consent of the Indemnified Party (which
consent will not be unreasonably withheld), consent to the entry of any judgment
or enter into any settlement which (i) provides for any relief other than the
payment of monetary damages that are paid in full by the Indemnifying Party;
(ii) includes any finding or admission of any liability or violation of law or
violation of the rights of any Person; (iii) adversely affects any other claims
that may be made by the Indemnified Party or the Indemnified Party's ability to
defend claims brought against the Indemnified Party; or (iv) fails to include,
as an unconditional term thereof, the giving by the claimant or plaintiff to the
Indemnified Party of a release from all liability in respect thereof. After
notice to the Indemnified Party of the Indemnifying Party's election to assume
the defense of such action, suit, proceeding, claim, demand or assessment, the
Indemnifying Party shall only be liable to the Indemnified Party for such legal
or other expenses subsequently incurred by the Indemnified Party in connection
with the defense thereof that are requested in writing by the Indemnifying
Party. As to those actions, suits, proceedings, claims, demands or assessments
with respect to which the Indemnifying Party does not elect to assume control of
the defense, the Indemnified Party will afford the Indemnifying Party an
opportunity to participate in such defense, at its cost and expense, and will
consult with the Indemnifying Party prior to settling or otherwise disposing of
any of the same and will settle or otherwise dispose of any of the same in a
reasonable manner. Both the Indemnified Party and the Indemnifying Party shall
cooperate with one another in good faith in connection with the defense,
compromise or settlement of any Claim or action.

10.07 LIMITATION: EXCLUSIVITY. (a) Except as set forth in this Section
10.07, no Claim under Section 10.02(i) or 10.03(i) based upon the
misrepresentation of any representation or

<PAGE>

breach of any warranty made in this Agreement shall be made or have any validity
unless the Indemnified Party shall have given notice of such Claim in accordance
herewith to the Indemnifying Party prior to the first anniversary of the Closing
Date.

(b) No Claim based upon the misrepresentation of any representation or
breach of any warranty set forth in the Tax Warranty or the Ownership Warranties
shall be made or have any validity unless the Indemnified Party shall have given
notice of such Claim in accordance herewith to the Indemnifying Party (i) in the
case of the Tax Warranty, prior to the expiration of all applicable statutes of
limitations relating to Taxes or (ii) in the case of the Ownership Warranties,
prior to the third anniversary of the Closing Date.

(c) If full recovery under any such Claim is not had within three
months of such written notice, the Party making such Claim shall use reasonable
efforts to commence arbitration proceedings within ninety (90) days following
the end of such three month period, or such Claim shall be invalidated.

(d) This Article X provides the exclusive means by which a Party may
assert Claims or bring actions against the other Party with respect to
misrepresentations of representations or breaches of warranties in Articles III
and IV hereof.

ARTICLE XI

GENERAL PROVISIONS

11.01 PAYMENT OF EXPENSES. Except as expressly set forth herein, all
costs and expenses related to this Agreement and the related transactions,
including the fees and expenses of legal

<PAGE>

counsel, accountants, brokers and other representatives and consultants, shall
be borne by the Party incurring such costs and expenses, whether or not such
transactions are consummated. Buyer shall pay the costs of all title searches,
title insurance and surveys.

11.02 MODIFICATIONS AND AMENDMENTS. This Agreement shall not be modified
or otherwise amended except pursuant to an instrument in writing executed and
delivered by each of the Parties hereto.

11.03 ASSIGNABILITY. This Agreement and the rights and obligations
hereunder shall extend to, be binding upon and inure to the benefit of the
Parties hereto, their respective successors and permitted assigns, but this
Agreement shall not be assigned or transferred, in whole or in part, by either
Party without the prior written consent of the other Party; provided, however,
that either Party may assign this Agreement to any of its Affiliates or may
designate any Affiliate as a party to any Ancillary Agreement or delegate an
obligation hereunder or thereunder without the prior written consent of the
other Party, so long as Buyer, in the case of the assignment, designation or
delegation of this Agreement by Buyer, or so long as Seller, in the case of the
assignment, designation or delegation of this Agreement by Seller or Site,
remains liable for the obligations assumed by such Affiliate hereunder.

11.04 NOTICES. Any notice to be given hereunder by either Party to the
other Party shall be in writing and delivered (a) personally, or sent by
national overnight delivery service or postage pre-paid registered or certified
U.S. mail or (b) sent by telecopier (with receipt confirmed), provided that a
copy is mailed as provided in clause (a) above, and such notice shall be deemed
given: when delivered, if by personal delivery or overnight delivery service;
or if

<PAGE>

so sent by U.S. mail, three Business Days after deposit in the mail; or if sent
by telecopier, when receipt is confirmed; and shall be addressed:

If to Sellers:

Johnson & Johnson
One Johnson & Johnson Plaza
New Brunswick, NJ 08933
Attention: Ronald G. Gelbman
Telecopier No.: (908) 524-2788

With a copy to:

Office of General Counsel
Johnson & Johnson
One Johnson & Johnson Plaza
New Brunswick, New Jersey 08933
Telecopier No.: (908) 524-2788

If to Buyer:

Chiron Corporation
2650 Horton Street
Emeryville, California 94608
Attention: Officer of the General Counsel
Telecopier No.: (510) 654-5360

With a copy to:

Chiron Vision Corporation
9342 Jeronimo Road
Irvine, CA 92718-1903
Attention: General Counsel
Telecopier No.: (714) 457-0276

or to such other address or telecopier number as either Party shall hereafter
designate by notice given in accordance with this Section.

<PAGE>

11.05 ARBITRATION. The Parties agree, with respect to any disputes
between them, to work diligently and to negotiate in good faith prior to
commencing an arbitration proceeding. Any dispute between the Parties arising
directly or indirectly from this Agreement, the Ancillary Agreements or any
transaction contemplated hereby or thereby or in connection herewith or
therewith shall be resolved by arbitration in Denver, Colorado pursuant to the
Commercial Arbitration Rules then obtaining of the American Arbitration
Association. Neither Party shall commence any action against the other to
resolve any such dispute in any court except to confirm such an arbitrator's
award. Judgment upon any such award rendered may be entered by any court having
jurisdiction thereof. The arbitrator (i) shall not have any power or authority
to add to, alter, amend or modify the terms of this Agreement; (ii) shall
interpret and construe this Agreement in accordance with, and shall be bound by,
the laws of the State of California, except that this Section 11.05 shall be
governed by the Federal Arbitration Act; (iii) shall have no power or authority
to grant or award punitive damages (provided, however, that this shall not apply
to claims of fraud); and (iv) shall establish and enforce appropriate rules to
ensure that the proceeding, including the decision, be kept confidential and
that all confidential information of the Parties be kept confidential and be
used for no purpose other than the arbitration. Except as to matters arising
from claims of fraud, the Parties shall be deemed to have waived any rights to
punitive damages.

11.06 GOVERNING LAW. This Agreement shall be governed by and shall be
construed in accordance with the laws of the State of California.

11.07 WAIVER. The failure of either Party to require the performance of
any term of this Agreement, or the waiver of either Party of any breach of this
Agreement, shall not prevent a

<PAGE>

subsequent exercise or enforcement of such terms or be deemed a waiver of any
subsequent breach of the same or any other term of this Agreement.

11.08 HEADINGS. The Article and Section headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning and interpretation of this Agreement.

11.09 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original and all of which
shall be deemed to constitute the same Agreement.

11.10 SEVERABILITY. If and to the extent that any provision (or any part
thereof) of this Agreement is held to be invalid, illegal or unenforceable, such
holding shall in no way affect the validity, legality or enforceability of the
remainder of this Agreement.

11.11 "TO THE KNOWLEDGE." Notwithstanding any other term or provision of
this Agreement, whenever any representation or warranty is made by one of the
Parties hereto "to the knowledge" (or is similarly qualified) of such Party,
such Party shall not be required to have conducted any specific investigation
with respect to the matter to which the representation or warranty relates
except as otherwise provided in this Section 11.11. The phrases "to the
knowledge of Sellers" or "to Sellers' knowledge," or "to the knowledge of
Buyers" or "to Buyer's knowledge" or "Buyer had knowledge" as used herein shall
mean the actual knowledge of any member of the Management Committee of Sellers
or of Buyer, as the case may be, as shall have been obtained by such member
through the Management Committee's conduct of its normal business activities and
its due diligence investigation in connection with the transactions contemplated
by this Agreement. If pursuant to such activities and investigation of either

<PAGE>

Management Committee any member thereof shall have become aware of any fact or
circumstance relative to any representation or warranty made in Article III that
is qualified by the phrase "to the knowledge of Sellers" or "to Sellers'
knowledge" or made in Article IV that is qualified by the phrase "to the
knowledge of Buyer" or "to Buyers knowledge" or "Buyer had knowledge" such
phrases shall mean the actual knowledge of their respective Management
Committees after reasonable investigation by such member. Notwithstanding
anything herein to the contrary, each Party hereby reserves its respective
rights (and neither Party shall be deemed to have waived such rights) under the
attorney-client privilege or attorney work product doctrine in connection with
any dispute arising hereunder.

11.12 BULK SALES LAWS. Buyer hereby waives compliance by Sellers with the
terms and conditions of any applicable bulk sales law or any other law which
might on failure of compliance therewith impose on a purchaser any liability for
debts or obligations of Sellers; provided, however, that Sellers shall indemnify
Buyer and hold Buyer and its Affiliates harmless from and against any and all
Damages which they may incur in connection with any failure to comply with the
bulk sales laws of any jurisdiction in connection with transactions contemplated
hereby.

11.13 ENTIRE UNDERSTANDING OF THE PARTIES; AMENDMENT. This Agreement
(including the Exhibits and Disclosure Schedules hereto and the Ancillary
Agreements) supersedes all prior agreements among the Parties with respect to
its subject matter (including, but not limited to, the letter of intent between
the Buyer and Seller dated January 5, 1995 and the letter agreement between
Buyer and Seller dated April 27, 1994). This Agreement is intended (together
with the documents referred to herein) as a complete and exclusive statement of
the terms of the

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<PAGE>

agreement among the Parties with respect thereto and cannot be changed or
terminated except by a written instrument executed by Sellers and Buyer. There
have been no representations or statements, oral or written, that have been
relied on by any of the Parties hereto, except those expressly set forth in this
Agreement and the Ancillary Agreements.

11.14 SURVIVAL OF CERTAIN PROVISIONS. The provisions of this Agreement
set forth in Sections 6.04, 6.06, 6.11, 6.13(a), 9.01, 11.01, 11.05, 11.06,
11.14, 11.16 and 11.19 to the extent applicable, and any remedies for the breach
thereof, shall survive the termination of this Agreement.

11.15 SCHEDULES. Disclosure of any fact or item in any Disclosure
Schedule hereto referenced by a particular paragraph or section in this
Agreement shall, should the existence of the fact or item or its contents be
relevant to any other paragraph or section, be deemed to be disclosed with
respect to that other paragraph or section whether or not a specific cross
reference appears; provided that the relevance of such fact or item shall be
reasonably evident from such disclosure. Disclosure of any fact or item in any
Disclosure Schedule hereto shall not necessarily mean that such item or fact is
material to the business, operations or assets of IOLAB, the Business or the
Assets.

11.16 NO THIRD PARTY BENEFICIARIES. This Agreement is solely for the
benefit of the Parties hereto and their respective Affiliates and no provision
of this Agreement (including, without limitation, the provisions of Article
VIII) shall be deemed to confer upon third parties any remedy, claim, liability,
reimbursement, claim of action or other right in excess of those existing
without reference to this Agreement.

101

<PAGE>

11.17 JOINT AND SEVERAL OBLIGATIONS. The obligations of each of the
Sellers hereunder shall be joint and several and the Parties shall be jointly
and severally liable for the obligations of their respective Affiliates. All
payments to and performances rendered by Buyer to any of the Sellers shall be
deemed to be reduced to all of the Sellers. Buyer may rely upon the consent of
Seller for all purposes as though it was the consent of Site.

11.18 CHANGE OF NAME OF SITE. As soon as reasonably practicable after the
Closing Date, Seller shall cause Site to change its corporate name and to
conduct its business under a name which does not materially resemble its name as
of the date hereof.

11.19 CONFIDENTIALITY. Prior to and following the Closing Date, the
Parties shall (and shall cause their respective Affiliates to keep confidential
and not disclose to any Person (other than their respective attorneys,
accountants and advisors) or use (except, in the case of Sellers and their
Affiliates, as permitted herein in connection with preparing Tax Returns,
conducting proceedings relating to Taxes and, prior to the Closing Date, as
required in the conduct of the Business in the ordinary course and consistent
with past practice) any confidential and proprietary information, in the case of
Sellers and their Affiliates relating exclusively to the Business, in the case
of Buyer and its Affiliates, relating exclusively to the Excluded Assets (and,
if the Closing does not occur any such information relating to the Business);
provided, however, that the Parties' obligations under this Section 11.19 (i)
shall not apply to any information which becomes available to the public other
than as a result of disclosure by such Party or its Affiliates; and (ii) shall
not be violated by disclosure pursuant to court order or as otherwise required
by law, on condition that notice of the requirement for such disclosure is given
to the other Party prior to making any disclosure and the first Party cooperates
as the

102

<PAGE>

second Party may reasonably request in resisting it. The Parties shall use
reasonable efforts to cause their respective representatives, employees,
attorneys, accountants and advisors to whom information is disclosed pursuant to
this Section 11.19 to comply with the provisions of this Section 11.19.

103

<PAGE>

IN WITNESS WHEREOF, the Parties hereto intending legally to be bound
hereby, have each caused this Agreement to be duly executed as of the date first
above written.

JOHNSON & JOHNSON

By: Ronald G. Gelbman
-----------------------------------------
Name: Ronald G. Gelbman
---------------------------------------
Title: Member, Executive Committee
--------------------------------------

SITE MICROSURGICAL SYSTEMS, INC.

By: Ronald G. Gelbman
-----------------------------------------
Name: Ronald G. Gelbman
---------------------------------------
Title: Chairman
--------------------------------------

CHIRON CORPORATION

By: William J. Link
-----------------------------------------
Name: William J. Link
---------------------------------------
Title: Vice President
--------------------------------------

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<PAGE>

AMENDMENT NO. 1
TO
STOCK AND ASSET PURCHASE AGREEMENT

THIS AMENDMENT NO. 1 TO STOCK AND ASSET PURCHASE AGREEMENT (the
"Amendment"), entered into this 31st day of March, 1995, is entered into by and
among JOHNSON & JOHNSON, a New Jersey corporation ("Seller"), SITE MICROSURGICAL
SYSTEMS, INC., a Pennsylvania corporation ("Site"), and CHIRON CORPORATION, a
Delaware corporation ("Buyer"), and amends that certain Stock and Asset Purchase
Agreement dated as of March 6, 1995, by and among Seller, Site and Buyer (the
"Agreement") as to the matters set forth hereinbelow. Capitalized terms used
herein and not otherwise defined herein shall have the respective meanings
specified in the Agreement.

WHEREAS, the Parties desire to amend the Agreement as to the specified
matters set forth herein; and

WHEREAS, the Agreement may be amended by the Parties in accordance
with Section 11.13 thereof.

NOW, THEREFORE, in consideration of the premises and promises set
forth in this Amendment.

1. AMENDMENT. The Parties do hereby amend the Agreement as follows:

1.1 CLOSING INVENTORY DEFINITION. Section 2.03 of the Agreement
shall be amended and restated as to the second sentence of subsection (c)
thereof preceding subsection (c)(i) as follows:

"To the extent that the valuation at Standard Cost of (1) the
Inventory located in the United States (excluding the cassette Inventory owned
by OMJ Pharmaceuticals, Inc. ("OMJ")) and (2) the Inventory located at the
Livingston Facility (excluding the finished goods Inventory held as of the
Closing Date for sale in the United Kingdom) (collectively, the "Closing
Inventory"), determined as herein provided, exceeds or is less than $15,000,000,
the Purchase Price shall be adjusted as follows:"

1.2 LICENSE IN FOREIGN JURISDICTIONS. Section 2.12 of the
Agreement shall be amended and restated as to the first sentence of
subsection (b) thereof as follows:

"(b) LICENSE TO OPERATE POST-CLOSING: Buyer hereby grants a
royalty-free license to Seller and any Affiliate thereof which shall empower
Seller and such Affiliate to utilize such of the Foreign Assets as are necessary
for Sellers to operate the Foreign Business in each such Foreign Jurisdiction
during the Interim Period; provided, however, that Seller shall reimburse Buyer
for any royalties and other fees that are due and payable to third parties as a
result of Sellers' and their Affiliates' utilization of such Foreign

<PAGE>

Assets (including, without limitation, royalties or other fees accruing
upon the sales of products of the Business by Seller or its Affiliates) and are
actually paid by Buyer or its Affiliates."

1.3 FDA AND RELATED MATTERS. Section 3.28 of the Agreement
shall be amended and restated as to the final sentence of subsection (a) thereof
as follows:

"Except as set forth in Schedule 3.28(a), the Real Property and
OMJ's facilities (which relate to the Business) located in Puerto Rico have been
operated and the products of the Business that have been produced at the Real
Property or OMJ's facilities, have been produced, in all material respects, in
accordance with Good Manufacturing Practices ("GMPs") within the meaning of
applicable FDA, state and local regulations."

1.4 INSURANCE. Section 7.03 of the Agreement shall be amended
and restated as to the second and third sentences thereof as follows:

"Buyer or its Affiliates shall have the right to make claims or
otherwise pursue the rights of IOLAB under any insurance policies issued by
Unaffiliated Insurance Carriers (as defined below) relating to the Business on
or before the Closing Date (collectively, the "Pre-Closing Insurance Policies")
for losses or claims for which Buyer and its Affiliates are not fully
indemnified by Sellers hereunder, except to the extent that the recovery sought
under such policies is reinsured by Seller or its Affiliates. For purposes of
this Agreement, "Unaffiliated Insurance Carriers" shall mean any insurance
carrier other than Seller or any of its Affiliates."

1.5 SURVIVAL. Section 10.01 of the Agreement shall be amended
and restated as to the second sentence thereof as follows:

"Sellers' representations and warranties set forth in
Sections 3.01(b), 3.04, 3.05 and 3.07(a), and Buyer's representations and
warranties set forth in Section 4.01(b) (collectively, the "Ownership
Warranties") shall survive for a period of three years from the Closing Date and
shall then be of no force and effect."

1.6 INDEMNIFICATION BY SELLERS AS TO ANCILLARY AGREEMENTS.
Section 10.02 of the Agreement shall be amended and restated as to subsection
(ii) thereof (thereby removing references therein to all Ancillary Agreements)
as follows:

"(ii) the breach of any covenant or agreement made by Sellers
or its Affiliates in this Agreement;"

1.7 INDEMNIFICATION BY BUYER AS TO ANCILLARY AGREEMENTS.
Section 10.03 of the Agreement shall be amended and restated as to subsection
(ii) thereof (thereby removing references therein to all Ancillary Agreements)
as follows:

<PAGE>

"(ii) the breach of any covenant or agreement made by Buyer
or their Affiliates in this Agreement;"

1.8 LIVINGSTON FACILITY ASSETS. Section (b) of Exhibit A to the
Agreement shall be amended and restated as follows:

"(b) All contents of the Livingston Facility (with the exception
of all leasehold improvements) to the extent owned by Seller of its Affiliates
other than finished goods Inventory held as of the Closing Date for sale in the
United Kingdom;"

1.9 BOOKS AND RECORDS.

(a) Section (d) of Exhibit A to the Agreement shall be amended
and restated as to subsection (i) thereof as follows:

"(i) the books, records, technical manuals, and other documents
relating to sales, marketing, production, regulatory, financial, research,
development, employee and other matters (including, without limitation, customer
and supplier lists, mailing lists and promotional materials) that relate to the
conduct of the Domestic Site Business or that exclusively relate to the conduct
of the Foreign Business to the extent that such books, records, technical
manuals, and other documents are dated or were prepared on or after January 1,
1993 (collectively, the "Current Books and Records")."

(b) Section 7.02 of the Agreement shall be amended in subsection
(a) thereof by amending and restating the second sentence thereof as follows:

"Each Party shall, on the request of the other Party, make
available to such other Party from time to time on a reasonable basis records
and other documents relating to the Business and to periods prior to the Closing
Date, subject to the document retention policies of such Party, and, provided
that only as to documents relating to regulatory matters, the other Party shall
demonstrate a legitimate business need for access to such regulatory documents."

(c) Section 7.02 of the Agreement shall be further amended in
subsection (a) thereof to add, following the second sentence thereof (as such
sentence is amended in clause 1.9(b) of this Amendment) the following sentence:

"Prior to the destruction or disposal of documents otherwise
subject to this subsection (a), each Party shall notify the other Party of the
identity of such documents to be disposed of or destroyed and shall permit such
other Party a reasonable opportunity at such other Party's expense to review
such documents and, if such other Party so desires, the first Party shall
transfer title and possession of such documents to such other Party, provided
that only as to documents relating to regulatory matters the other Party shall
demonstrate a legitimate business need for title and possession of such
regulatory documents. The Party receiving title and possession of such
documents pursuant to the preceding sentence shall use

<PAGE>

such documents at its own risk and the other Party shall make no representations
or warranties with respect thereto."

1.10 SCHEDULES; DISCLOSURE SCHEDULES. Section 11.15 of the
Agreement shall be amended by adding the following as the third and final
sentence thereof:

"Any reference to the Schedules or the Disclosure Schedules referenced
in this Agreement, the Schedules, the Ancillary Agreements or any
other agreement delivered pursuant to this Agreement shall mean the
Schedules or the Disclosure Schedules as amended, supplemented or
otherwise modified by the Supplemental Disclosure Schedule delivered
by the Sellers as of March 31, 1995."

2. REFERENCES TO THE AGREEMENT. All references to the Agreement
herein and in any Ancillary Agreement, Exhibit or Schedule shall mean the
Agreement as amended by this Amendment.

3. TRANSFER OF OPERATIONS IN CANADA. The Subsequent Transfer Date
with respect to the transfer of the operations of the Business in Canada
(including the Inventory located in Canada) to be transferred to Buyer in
accordance with Section 2.12 of the Agreement shall be March 31, 1995. All
notice requirements under the Agreement necessary to effectuate such transfer on
March 31, 1995 shall be deemed waived by the Parties.

4. NO FURTHER AMENDMENT. Except for those Sections, subsections,
specific portions of subsections specifically amended as set forth hereinabove,
which shall be deemed to amend, modify or, if applicable, restate such specific
matters in the Agreement or Exhibit A thereto, the Agreement and the Exhibits
thereto shall otherwise remain in full force and effect as to all matters
described therein and shall not be deemed to be amended, modified or superseded
by this Amendment.

5. MISCELLANEOUS. The headings contained in this Amendment are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Amendment or the Agreement. This Amendment may be
executed in one or more counterparts, each of which shall be deemed an original,
and all of which together shall constitute one in the same instrument. This
Amendment shall be governed in all respects, including validity, interpretation
and effect, by the laws of the State of California.

<PAGE>

IN WITNESS WHEREOF, the Parties hereto, intending legally to be bound
hereby, have each caused this Amendment to be duly executed as of the date first
above written.

JOHNSON & JOHNSON

By:___________________________

Name:_________________________

Title:________________________

SITE MICROSURGICAL SYSTEMS, INC.

By:___________________________

Name:_________________________

Title:________________________

CHIRON CORPORATION

By:___________________________

Name:_________________________

Title:________________________

<PAGE>

REVOLVING CREDIT AGREEMENT

REVOLVING CREDIT AGREEMENT (this "AGREEMENT") dated as of March 24, 1995
between CHIRON CORPORATION, a Delaware corporation (the "BORROWER"), and SWISS
BANK CORPORATION, SAN FRANCISCO BRANCH (the "BANK").

NOW, THEREFORE, IT IS AGREED:

1. THE ADVANCES. Subject to and upon the terms and conditions set forth
herein, the Bank agrees to make advances (the "ADVANCES") to the Borrower at any
time and from time to time prior to March 22, 1996 (the "EXPIRY DATE");
provided, however, that the aggregate principal amount of Advances outstanding
shall at no time exceed U.S. $50,000,000 (Fifty Million U.S. Dollars) (the
"COMMITMENT").

2. PURPOSE. The Borrower shall use the proceeds of the Advances for
general corporate purposes, including acquisition financing. The Borrower
agrees to indemnify the Bank and hold the Bank harmless from and against any and
all liabilities, losses, damages, costs and expenses of any kind which may be
incurred by the Bank relating to or arising out of any actual or proposed use of
proceeds of Advances hereunder.

3. AVAILABILITY. The following Advances shall be available to the
Borrower hereunder: (a) Prime Rate Advances and Money Market Rate Advances of
up to 270 days; or (b) Eurodollar Rate Advances of one, two, three, six or nine
months. For the purposes of this Agreement, it is understood that (i) the
duration of each Advance shall be referred to as an "INTEREST PERIOD"; (ii) the
Borrower is required to repay each Advance on the last day of the Interest
Period for such Advance; and (iii) no Advance shall have an Interest Period
which extends beyond the Expiry Date.

4. INTEREST. Interest shall be payable in respect of the outstanding
principal amount of each Advance at the maturity thereof. Advances shall bear
interest at the following rates per annum: (a) if a Prime Rate Advance, at the
Bank's floating Prime Rate; (b) if a Money Market Rate Advance, at the quoted
Money Market Rate; or (c) if a Eurodollar Rate Advance, 0.08 of 1% in excess of
the Bank's Eurodollar Rate.

Overdue principal and, to the extent permitted by law, overdue
interest in respect of each Advance and any other overdue amount payable by the
Borrower hereunder shall bear interest, payable on demand, at a rate per annum
equal to 2-1/2% per annum in excess of the Bank's Prime Rate in effect from time
to time.

For the purposes of this Agreement, "PRIME RATE" and "MONEY MARKET
RATE" shall mean those rates so designated by the Bank or determined in
accordance with the practice of the Bank from time to time, it being understood
that the Prime Rate shall in no event be less than 1/2 of 1% in excess of the
rate payable by the Bank from time to time for overnight Federal funds. The
Bank shall determine the "EURODOLLAR RATE" by taking the rate for a loan of a
comparable amount and duration as the proposed Advance from page 3750 of the
"Telerate Screen".

5. INCREASED COSTS. If at any time the Bank shall have determined (which
determination shall, absent manifest error, be final, conclusive and binding on
all parties hereto) that as a result of any change in any applicable law or
governmental rule, regulation or

<PAGE>

order (including any applicable law or governmental rule, regulation or order
respecting capital adequacy), or any interpretation thereof, including the
enactment of any law or governmental rule, regulation or order (whether or not
having the force of law), the cost to the Bank of maintaining its Commitment
hereunder or making, funding or maintaining any Advance shall be increased or
the yield to the Bank on such Advance shall be diminished, then the Bank shall
promptly notify the Borrower thereof, showing in reasonable detail the basis for
the calculation of such increased costs or diminished yield, and the Borrower
shall pay to the Bank an amount sufficient to indemnify the Bank thereagainst.

6. COMMITMENT FEE. The Borrower shall pay the Bank a fee ("COMMITMENT
FEE") computed at a rate per annum of 0.05 of 1% on the average daily unused
portion of the Commitment. Accrued Commitment Fee shall be payable quarterly on
the last business day of each calendar quarter and on the Expiry Date or earlier
termination of the Commitment.

7. NOTICE OF INTENTION TO BORROW. The Borrower shall give the Bank prior
notice at its address on the signature page hereof (a "NOTICE OF BORROWING") by
telephone or facsimile (to be subsequently confirmed in writing) or in writing
(effective upon receipt) of its intention to borrow, specifying the date,
amount, type and tenor of the proposed Advance. The Borrower shall give such
Notice of Borrowing at least two business days prior to any proposed
Eurodollar Rate Advance and by 10:00 a.m Pacific Time on the date of any
proposed Prime Rate Advance.

8. MONEY MARKET RATE ADVANCES. The Borrower may request a Money Market
Rate quote by telephone on any business day. If the Borrower accepts such Money
Market Rate, it must confirm such acceptance in writing.

9. PAYMENTS. All payments made hereunder or under the Note (as
hereinafter defined) shall be made to the Bank without deductions for any
present or future taxes, withholdings, deductions or any other charges (the
"TAXES") imposed or required by any political or taxing authority, it being
understood that the net amount received by the Bank after payment of the Taxes
by the Borrower shall not be less than the payment provided for hereunder. All
payments shall be made to the office of Swiss Bank Corporation in New York, ABA
# 02600799-3, for the account of Swiss Bank Corporation, San Francisco.
Commitment Fee and interest payments (except with respect to Prime Rate
Advances) shall be calculated for the actual number of days elapsed on the basis
of a 360-day year. Interest payments with respect to Prime Rate Advances shall
also be calculated for the actual number of days elapsed but on the basis of a
365- or 366-day year, as the case may be.

10. PREPAYMENT, FUNDING COSTS. Any Prime Rate Advance may be prepaid
without premium or penalty upon two business days' prior notice to the Bank. If
for any reason Eurodollar Rate or Money Market Rate Advances are prepaid, as a
result of acceleration or otherwise, or if the Borrower fails for any reason to
borrow in accordance with a Notice of Borrowing, the Borrower shall pay to the
Bank, on demand, an additional amount as shall be required to compensate the
Bank for any loss connected with its reemployment of the amount so prepaid or of
those funds acquired by the Bank to fund the Advance proposed in such Notice of
Borrowing, as the case may be.

-2-

<PAGE>

11. CONDITIONS PRECEDENT. The obligation of the Bank to make Advances to
the Borrower hereunder is subject to the satisfaction of the following
conditions at the time of the making of the first Advance (except as hereinafter
indicated):

(a) The Bank shall have received a duly executed note (the "NOTE") in
the form of EXHIBIT A hereto.

(b) There shall have been delivered to the Bank (i) certified copies
of (x) the Borrower's charter and by-laws and (y) resolutions of the
Borrower's board of directors or equivalent body authorizing the
transaction evidenced hereby, and (ii) evidence satisfactory to the Bank
of the authority of the Borrower's signatory(ies) hereto and to the Note.

(c) At the time of the making of each Advance, and after giving
effect thereto, there shall exist no Event of Default (as hereinafter
defined) and no condition, event or act which, with the giving of notice or
lapse of time or both, would constitute an Event of Default, and all
representations and warranties made by the Borrower herein shall be true
and correct with the same effect as if those representations and warranties
had been made on and as of such date.

(d) The Bank shall have received from Ciba-Geigy Ltd. (the
"Guarantor") an unconditional guaranty of all of the Borrower's
obligations hereunder and under the Note (the "Guaranty").

12. REPRESENTATIONS AND WARRANTIES. The Borrower makes the following
representations and warranties, all of which shall survive the execution and
delivery of this Agreement:

(a) The Borrower is duly organized and validly existing in good
standing in the jurisdiction of its incorporation.

(b) This Agreement and the Note are duly and properly authorized and
executed by the Borrower and will constitute its legal, valid and binding
obligations enforceable in accordance with their respective terms.

13. COVENANTS. The Borrower covenants and agrees that, until all
obligations incurred by the Borrower under this Agreement are paid in full and
so long as the Commitment is in effect, the Borrower will:

(a) Provide to the Bank (i) as soon as they are available, copies of
all financial statements of the Borrower required to be filed with the
Securities and Exchange Commission; and (ii) with reasonable promptness,
any other information as the Bank may from time to time reasonably request.

(b) Promptly give written notice to the Bank of any condition, event
or act which, with or without the giving of notice or the lapse of time, or
both, would constitute an Event of Default (as hereinafter defined).

-3-

<PAGE>

(c) Not wind up, liquidate or dissolve its affairs or merge or
consolidate into any entity, or convey, sell, lease or otherwise dispose of
(or agree to do any of the foregoing at any future time) all or
substantially all or a substantial part of its property or assets, except
that (i) any corporation may merge or liquidate into the Borrower provided
that either (x) the Borrower shall be the surviving corporation, or (y) if
the Borrower is not the surviving corporation, the Guaranty shall remain
in full force and effect on behalf of the surviving corporation, and (ii)
the Borrower may merge into the Guarantor.

14. EVENTS OF DEFAULT. If any of the following events ("EVENTS OF
DEFAULT") shall occur and be continuing:

(a) The Borrower shall default in the payment of any principal amount
due hereunder or under the Note or shall default in the payment of any
interest amount due hereunder or under the Note and such default shall not
be cured within five (5) days;

(b) The Borrower shall fail to perform or observe any material term
or covenant contained in this Agreement and such failure shall not be
remedied within 30 days, or any representation or warranty made by the
Borrower in this Agreement or in any certificate or other document or
statement furnished at any time hereunder or in connection herewith shall
prove to have been incorrect or untrue in any material respect on the date
as of which made;

(c) A default or event of default with respect to payment shall occur
in respect of bonds, notes, other loans or similar evidences of
indebtedness of the Borrower or any subsidiary in a principal amount of at
least U.S.$ 5,000,000.00, the effect of which is to cause, or to permit the
holder of such indebtedness to cause, such indebtedness to become due prior
to its stated maturity, or any such indebtedness shall not be paid within
any applicable grace period after the due date thereof;

(d) The Guaranty shall cease to be in full force and effect for any
reason whatsoever; or

(e) The Borrower or the Guarantor shall make an assignment for the
benefit of creditors, shall generally fail to pay its debts as they become
due, shall file a petition commencing a voluntary case under any
reorganization or bankruptcy laws, or an involuntary case under such laws
shall be commenced against the Borrower or the Guarantor and such
proceeding shall remain undismissed or unstayed for a period of 30 days;

then, and in any such event, the Bank may by notice to the Borrower take either
or both of the following actions: (i) terminate the Commitment, whereupon the
same shall terminate forthwith, and/or (ii) declare the Advances and all
interest accrued and unpaid thereon, any accrued Commitment Fee, and all other
sums due hereunder, to be immediately due and payable without presentment,
demand, protest or further notice of any kind, all of which are hereby expressly
waived by the Borrower.

15. GOVERNING LAW AND JURISDICTION; WAIVER OF JURY TRIAL. THIS AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF

-4-

<PAGE>

THE STATE OF CALIFORNIA. THE PARTIES HERETO HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVE TRIAL BY JURY.

IN WITNESS WHEREOF, the Borrower and the Bank have caused their duly
authorized officers to execute and deliver this Agreement as of the date first
above written.

CHIRON CORPORATION

By /s/ J.E. Kent
---------------------------------
Title: Treasurer

ADDRESS FOR NOTICES
4560 Horton Street
Emeryville, CA 94608-2916
Attention: Treasurer
Phone: (510) 655-8730
Fax: (510) 601-3343

SWISS BANK CORPORATION,
SAN FRANCISCO BRANCH

By /s/ Jamie Dillon
---------------------------------
Title: Jamie Dillon
Director
Merchant Banking

By /s/ Hans-Ueli Surber
---------------------------------
Title: Hans-Ueli Surber
Executive Director
Merchant Banking

ADDRESS FOR NOTICES
101 California Street
San Francisco, CA 94111-5884
Attention: Jamie Dillon
Phone: (415) 774-3340
Fax: (415) 956-3882

-5-

<PAGE>

PROMISSORY NOTE

U.S. $50,000,000 March 24, 1995

FOR VALUE RECEIVED, the undersigned, CHIRON CORPORATION, a Delaware
corporation the "BORROWER"), hereby promises to pay to the order of SWISS BANK
CORPORATION, SAN FRANCISCO BRANCH (the "BANK"), in lawful money of the United
States of America, in immediately available funds, at the principal office of
Swiss Bank Corporation in New York, the principal amount of each advance (an
"ADVANCE") endorsed on the schedule attached hereto (the "SCHEDULE") on the
maturity date thereof.

The Borrower promises also to pay interest on the unpaid principal amount
of each Advance in like money from and including the date of each Advance until
paid in full at the rate specified in the Schedule, such interest to be paid on
the last day of the Interest Period for such Advance. Interest shall be
calculated for the actual number of days elapsed (i) on the basis of a 365- or
366-day year, as the case may be, in the case of any Advance bearing interest at
a rate based on the Bank's Prime Rate, or (ii) on the basis of a 360-day year,
for all other Advances.

The Borrower hereby authorizes the Bank to endorse on the Schedule the
date, amount and maturity date of, and interest rate with respect to, each
Advance evidenced thereby and all payments of principal thereof, provided that
the failure to make or any error in making such endorsement shall not affect the
obligations of the Borrower to the Bank.

This note is the Note referred to in the Revolving Credit Agreement dated
as of March 24, 1995 between the Borrower and the Bank (as from time to time in
effect, the "AGREEMENT") and is entitled to the benefits thereof.

If an Event of Default (as defined in the Agreement) shall occur and be
continuing, the principal of and accrued interest on this note may be declared
to be due and payable in the manner and with the effect provided in the
Agreement.

The Borrower hereby waives presentment, demand, protest or notice of any
kind in connection with this note.

THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF CALIFORNIA.

CHIRON CORPORATION

By /s/ J.E. Kent
---------------------------------
Title: Treasurer

<PAGE>

AMENDMENT TO LEASE
------------------

This AMENDMENT TO LEASE (the "Amendment") is made as of this 20th day of
March 1990, between Harold B. Chapman, Jr., an unmarried man ("Chapman"), and
Cetus Corporation, a Delaware corporation ("Cetus") (collectively the
"parties").

RECITALS
--------

A. Chapman is the lessor and Cetus is the lessee under that certain
Lease, dated July 1, 1983 (the "Lease"), between Cetus and Chapman concerning
the premises commonly known as M&G Buildings, located at 1400 and 1450 53rd
Street, Emeryville, California. Terms defined in the Lease shall have the same
meaning when used in this Amendment.

B. Pursuant to that certain Settlement Agreement and Release, of even
date herewith, the parties agree to amend the Lease as provided herein.

AGREEMENT
---------

NOW, THEREFORE, in consideration of the premises and other valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties hereby agree as follows:

1. Paragraph 2.1 of the Lease entitled "TERM AND OPTIONS TO RENEW" is
amended in its entirety to read as follows:

2.1 TERM AND OPTIONS TO RENEW. The term of this lease
shall be 7 years from July 1, 1983 (the "Commencement
Date"). Cetus shall, however, have the option to extend
this lease and all of its other provisions for nine

<PAGE>

additional 2-year terms. The exercise of each of these
2-year options shall be automatic unless Cetus gives at
least 60 days notice of its intent not to exercise each such
option. However, if not more than 70 days prior to the
expiration of the then current term Chapman delivers to
Cetus written notice that Chapman seeks notification as to
whether Cetus is exercising its option to extend, then Cetus
must deliver to Chapman within 10 days after Cetus receives
such notice from Chapman, Cetus' written notification as to
whether Cetus is exercising its option to extend. If Cetus
does not deliver the notices required of it pursuant to the
preceding sentence, then Chapman shall be under no
obligation to further extend the lease.

2. Paragraph 3.1 of the Lease entitled "RENT" is amended in its entirety
to read as follows:

3.1 RENT. Rent for the premises shall be $57,362.50 per
month. Effective July 1, 1990, and each July 1st thereafter
during the term of the Lease, up to and including July 2003,
the monthly rent for that July and the succeeding 11 months
for the premises as set forth in the first sentence of this
paragraph shall be two

-2-

<PAGE>

and one-half percent (2-1/2%) greater than the monthly rent
payable for the preceding 12 months. Effective July 1 of
each lease year beginning July 1, 2004 and each July 1st
thereafter, the monthly rent for that July and the
succeeding 11 months shall increase from the rent payable
for the preceding 12 months by a percentage equal to the net
percentage of any increase by which the Consumer Price Index
For All Urban Consumers (1982-84 = 100) of the San
Francisco-Oakland Metropolitan Area, All Items, published by
the Bureau of Labor Statistics of the United States
Department of Labor (the "Index"), as of September of the
prior year, has increased over the Index for the September
of the second prior year. If the Index is not published at
any time pertinent to this provision, the index used shall
be based upon the most closely comparable statistics on the
purchasing power of the consumer dollar as published by a
governmental department or agency.

-3-

<PAGE>

3. This Amendment is binding upon and shall inure to the benefit of the
parties hereto and their respective heirs, executors, administrators, successors
in interest, and assigns. Except as expressly amended hereby, the Lease shall
remain unmodified and in full force and effect.

-4-

<PAGE>

In witness whereof, the parties hereto have executed this
Amendment as of the date first above written.

HAROLD B. CHAPMAN JR

/s/ Harold B. Chapman Jr
---------------------------------

CETUS CORPORATION

By: /s/
------------------------------

Its: Sr. VP
-----------------------------

-5-

<PAGE>

LEASE

Between Sclavo S.p.A., with headquarters in Siena - Via Fiorentina 1, in the
person of Pier Liugi Biagioni (accountant), corporate attorney, provided with
appropriate powers, hereinafter referred to as "lessor"
and Biocine Sclavo S.p.A., with headquarters in Siena - Via Fiorentina 1, in
the person of its sole director, Enzo Mentasti, hereinafter referred to as
"lessee," whereas - Biocine Sclavo S.p.A., with a document dated
October 17, 1991, and ratified the following December 10, 1991, bought a
branch of the vaccine company formerly owned by Sclavo S.p.A.;

- - In order to immediately begin the activities conferred upon it, Biocine
Sclavo S.p.A., needs to utilize property owned by Sclavo within the latter's
facilities in Siena - via Fiorentina 1, as indicated in the aforementioned
divestiture agreements, and in the divestiture agreement related to the company
"Research" branch, dated October 17, 1991 and ratified November 29, 1991.

- - this use is granted by Sclavo S.p.A. for the exclusive purpose of
permitting Biocine Sclavo S.p.A. to begin its activities, and strictly for the
time period required so that Biocine Sclavo may locate other suitable sites at
its own facilities in Bellaria di Rosia - Municipality of Sovicille and/or
elsewhere;

- - in any case, this period may not for any reason exceed 12 years, in
consideration of the lessor's need to make use of the premises it has leased,
since they are an integral part of the Siena facility;

- - Biocine Sclavo S.p.A. agrees to use the premises that are the subject of
this document only provisionally until it is able to find other facilities, and
for this reason certifies that from now on the maximum period of 12 years will
be reduced for those sites that can be progressively freed up by individuals and
property, and at the same time that other suitable sites are located;

having set forth all the above, which is considered an integral part of this
document,

IT IS STIPULATED AND AGREED AS FOLLOWS:
1. Sclavo leases to Biocine Sclavo S.p.A., which accepts the building units
located in Siena - Via Fiorentina 1, within the Sclavo S.p.A. facility, set
aside or entrepreneurial activity in the field of vaccines and similar fields
and the research indicated in the aforementioned divestiture agreements for the
maximum period of 12 years.

<PAGE>

2. The lease is understood as stipulated with regard to every individual
building unit indicated. For this reason the lessee, in fulfillment of the
restitution plan refereed to in Art. 8 below, shall withdraw from the contract
with regard to every individual building unit.
The preparation and notification of the aforementioned restitution plan shall
constitute notice of withdrawal related to the individual property on the part
of the lessee, except in cases when the latter, out of necessity, must
substitute the individual property indicated with another of equivalent cubic
volume. This substitution must be advised to the Lessor with 6 months' notice
with respect to the anticipated withdrawal.

3. The premises shall be leased for the use to which they are currently
intended, and in any case for the performance of activities that do not involve
direct contact with the public.
The Lessee's violation of the change of use covenant will result in IPSO JURE
termination of the contract.

4. The Lessee recognizes that the buildings and premises that are the subject
of this contract are in good condition and are suitable for the agreed use.
Lessee therefore agrees to return them, at the end of the relationship, in the
same condition in which he has found them, except for normal wear and tear due
to use. Given the essentially provisional nature of this contract and the
temporary occupation of premises for the reasons stated in the introduction, the
lessee is prohibited from making any additions that cannot be removed at any
moment without damaging the premises, or any other change without prior written
consent of the owner.

5. Minor maintenance repairs shall remain the responsibility of the Lessee,
particularly those, again of a minor maintenance nature, that pertain to water,
light, and sanitary fittings, to locks and keys, hinges, window and door frames,
and to the wall and window and door frame surfaces.
Shared porter and custodial services shall remain the responsibility of the
Lessor.

<PAGE>

6. Lessee is granted the authority to sublease, even partially, the premises
to the Societa Ricerche Immunobiologiche Srl - Siena - on the condition that the
latter expressly agrees to the conditions of this document, with specific
reference to the temporary nature of same and to the commitment to progressively
return the premises to the Lessor.

7. The annual lease payment is fixed at 1,000,000 (one million) lire, in
addition to VAT to be credited to bank account n. 2423.1 registered to the
Lessor, at Monte dei Paschi di Siena, Siena branch, in a single annual
installment, due on December 30th of each year.
Lessor shall issue standard invoices for the payment of this rent.

8. In keeping with the spirit of this contract, Lessee, on his own behalf and
on behalf of any sub-lessee, shall present, as soon as possible, the restitution
plan for the leased premises. At the latest, restitution will begin starting
the fifth year of the agreed lease period, and restitution shall take place
progressively in such a way that at the end of the twelfth year, according to
the schedule provided in the restitution plan, premises with an overall cubic
volume of no more than 65% of the total leased premises shall have already been
re consigned.

9. The parties formally acknowledge that the agreement related to the
preparation and execution of the restitution plan, as well the duration of the
lease, which may in no case exceed twelve years, is fundamental to the purpose
of this contract, in that they are instrumental to the goal of meeting the
Lessee's temporary need, in expectation of the transfer of Lessee's activities.
For this reason the parties agree that failure to prepare the restitution plan,
as will as failure to implement this plan, shall be cause to terminate the
contract, pursuant to Art. 1456 of the Civil Code.

10. Notwithstanding the above, and despite the fact that the assets that are
the subject of the lease are physically part of the Lessor's premises, Lessee
shall be considered custodian of property leased and expressly shall hold Lessor
harmless for direct or indirect damage that might result to Lessee through
negligent or malicious activities by third parties.

<PAGE>

11. Lessee must observe and have his employees and employees of any sub-lessee,
as well as their respective visitors and workers, observe regulations issued by
the Lessor for the supervision and security of the assets and individuals within
the perimeter of the premises within which the leased premises are located,
which regulations Lessee certifies he is familiar with and accepts.

12. Lessor shall be held harmless in cases of interruption of services for
reasons beyond his control.

13. At any time, Lessor will be able to inspect, or have inspected, the
premises that are the subject of this document.

14. Lessee is responsible for the stamp tax for the contract and receipts.
Registration tax is the equal responsibility of Lessee and Lessor.

Compensation for the services covered by this contract are subject to VAT.

LESSOR LESSEE
SCLAVO S.p.A. BIOCINE SCLAVO S.p.A.
[signature] [signature]

Siena, January 7, 1992 Siena, January 7, 1992

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

FILED IN SIENA, MARCH 17, 1993, N. 1062
VOL. PPP, FORM 3
ONE HUNDRED THOUSAND (100,000) LIRE

[signatures and seal]

<PAGE>

EXHIBIT 10.50

[CONFIDENTIAL TREATMENT REQUESTED]

[Certain information has been omitted herein pursuant to a request for
confidential treatment pursuant to Rule 24b-2.]

AGREEMENT

This Agreement made as of the 11th day of November, 1993, by and
between:

KODAK CLINICAL DIAGNOSTICS LIMITED, a company registered in
England, having its principal office at Mandeville House, 62 The
Broadway, Amersham, Buckinghamshire, HP7 0HJ, England, (hereinafter
KCDL); and

CIBA CORNING DIAGNOSTICS CORP., a Delaware corporation, having its
principal office at 63 North Street, Medfield, Massachusetts 02052,
U.S.A. (hereinafter CCD).

WHEREAS, KCDL has acquired the full power, right, and authority to
grant nonexclusive license under U.S. Patent 4,745,077 issued May 17, 1988, as
well as corresponding patents and patent applications applied for in the
European Patent Office and in the United Kingdom, France, Germany, and Japan
relating to a method useful, in part, for the conduct of human, in vitro
diagnostic immunoassays and genetic probe assays for detection of an analyte in
a human sample contained in a liquid medium characterized by the use of a
labelled reagent which forms a chemiluminescent label system and another reagent
bound to magnetically attractable particles.

WHEREAS, CCD has requested a nonexclusive license under the above-
referenced patents and patent applications for use in certain human, in vitro
diagnostic immunoassay and genetic probe assay systems developed by CCD for the
detection of analytes in human samples contained in a liquid medium, which are
characterized by the use of a labelled reagent to form a chemiluminescent label
system and another reagent bound to magnetically attractable particles.

<PAGE>

-2-

WHEREAS, KCDL and CCD acknowledge and agree that technology
developments related to new and improved human, in vitro diagnostic assay
systems have recently been and are expected to continue to be numerous and
rapid; and that new human, in vitro diagnostic immunoassay products and genetic
probe products are complex systems involving many different technologies,
including but not limited to biotechnology, chemistry, optics, electronics,
fluid management, reagent handling, reaction detection, and equipment design;
and that new human, in vitro diagnostic immunoassay and genetic probe assay
systems must offer a sufficient number of different assays to be attractive to
the marketplace and to be manufacturable on a cost-effective basis;
[CONFIDENTIAL TREATMENT REQUESTED]

NOW, THEREFORE, the parties hereto agree as follows:

ARTICLE 1 -- DEFINITIONS

A. "Licensed Patents" shall mean U.S. Patent 4,745,077 issued May
17, 1988, and any corresponding patents or patent applications applied for in
the European Patent Office or in the United Kingdom, France, Germany, or Japan
as listed in Schedule 1 hereto, and any continuation, continuation-in-part,
reissue, re-examination, extension, substitution, or division of such patents
and applications.

B. "Class A Licensed Products" shall mean any human, in vitro
diagnostic immunoassay products, including but not limited to instruments,
instrument kits, systems, assays or chemical products (but excluding assay
products using genetic probe reagents or a combination of immunoassay reagents
and genetic probe reagents), employing a labelled reagent to form a
chemiluminescent label and another reagent which is bound to magnetically
attractable particles, the manufacture, use or sale of which would, but for the
license granted in Article II hereof, infringe one or more of the License
Patents.

<PAGE>

-3-

C. "Class B Licensed Products" shall mean any human, in vitro
diagnostic genetic probe products, including but not limited to instruments,
instrument kits, systems, assays, or chemical products (including assay products
using a combination of genetic probe reagents and immunoassay reagents),
employing a labelled reagent to form a chemiluminescent label and another
reagents which is bound to magnetically attractable particles, the manufacture,
use or sale of which would, but for the license granted in Article II hereof,
infringe one or more of the Licensed Patents.

D. "Licensed Products" shall mean Class A Licensed Products and
Class B Licensed Products.

E. "Improvement Patent" shall mean any patent or patent
application which (a) CCD or any of its Subsidiaries other than Biotrack,
Inc. owns or has the right to license as of the effective date of this
Agreement, (b) relates to test elements, devices, or methods for the conduct
of human, invitro diagnostic assays and (c) claims a filing priority date on
or before the effective date of this Agreement; and all patents and
patent applications in the U.S. or in any foreign country corresponding
thereto, including any patent granted on any continuation, continuation-in-part,
reissue, re-examination, extension, substitution, or division of such patents
or applications. The term "Improvement Patent" does not include any patent or
patent application or any claim of any patent or patent application relating to
the chemical structure of a chemiluminescent label, any patent or patent
application, or any claim of any patent or patent application relating to
magnetic particle technology, any patent or patent application or any claim of
any patent or patent application relating to the following genetic probe
amplification methods: amplification of midivariant DNA templates, amplification
of midivariant RNA templates, and nucleic acid amplification with DNA-dependent
RNA polymerase activity of RNA replicases (but not excluding any patent
application or any claim of any patent or any patent application to the extent
that they may be applicable to other methods of genetic probe amplification),
or any patent or patent application or any claim of any patent or patent
application that is part of the patent estate acquired by CCD from Triton
Diagnostics, Inc. and relating to cancer diagnostics, or that relates to any
specific markers for measurement of cancer antigens. CCD hereby represents
that, as of the date of this Agreement, no license under patent rights of any
Affiliate of CCD that is not a

<PAGE>

-4-

Subsidiary of CCD is held by CCD or needed for the conduct of CCD's in vito
diagnostics business.

F. "Net Sales" shall mean the actual total revenue received
resulting from the transfer of licensed products, whether through sale,
lease, or other commercial transaction, to a third party, less the following
deductions: (i) actual cash discounts and/or quantity discounts allowed; (ii)
actual credits for customers' returns and allowances; (iii) the value of the
service components of an operating or capital lease which includes a transfer
of licensed products; provided that the deduction for such service components
shall not exceed the actual value (determined by a reasonable accounting
method) or [Confidential Treatment Requested] (iv) actual, separately stated
and billed charges for freight handling and transportation paid by CCD or its
Affiliates; (v) actual, separately stated and billed charges for insurance
charges; and (vi) actual, separately stated and billed sales and use taxes
and other similar taxes incurred; provided, however, that (a) the value of
such Net Sales received from a Royalty-Bearing Distributor which is used
solely for the purpose of calculating ongoing royalty under this Agreement
shall not be less than [Confidential Treatment Requested] of the actual total
revenue received resulting from the transfer of the same quantity of the same
licensed products to End-Users made by CCD and its Affiliates in the United
States during the same royalty reporting period less the appropriate
deductions for items (i) through (vi) above, and (b) the foregoing
information relating to the actual total revenue received from the transfer
of licensed products to End-Users in the United States which is used solely
for royalty calculation purposes hereunder shall be made available only to
auditors of KCDL pursuant to Article V-E of this Agreement.

G. "Affiliate(s)" shall mean any company, partnership, joint
venture, or other entity which directly or indirectly controls, is controlled by
or is under common control with a party. Control shall mean the possession of
[Confidential Treatment Requested] or more of the voting share capital or the
power to direct or cause the direction of the management and policies of the
controlled entity, whether through the ownership of shares, by contract or
otherwise. In the case of CCD, the term "Affiliate" 1) shall also include
Ciba Corning Diagnostics de Mexico, S.A. de C.V., a corporation of Mexico,
having its principal office at Vito Allessio Robles #68 Primer Piso, Cal.,
Florida, CP01030, Mexico DF, Mexico, but only for so long as at least forty-nine
percent (49%) of such company is

<PAGE>

-5-

controlled by CCD, and 2) shall exclude, Biotrack, Inc., a California
corporation with a principal address at 1058 Huff Avenue, Mountain View,
California 94043.

H. "Authorized distributor(s)" shall mean any company,
partnership, joint venture or other entity (other than an End-User) which is
identified in subparagraph (1) below or meets the conditions of subparagraph (2)
below:

(1) The entity is CCD, an Affiliate of CCD, or a
distributor of CCD diagnostics products as of the effective date hereof to be
identified on Schedule 2 to be prepared by CCD and furnished to KCDL within
three (3) months of the effective date of this Agreement; or

(2) The entity meets each of conditions (a) through (c)
below:

(a) the entity is not, and no greater than
[Confidential Treatment Requested] of the voting share capital of the entity is
owned or controlled by, and no power to direct or cause the direction of the
management policies of the entity is under the control of, a manufacturer of
human in vitro diagnostic products with annual net sales revenue of human in
vitro diagnostic products, during the fiscal year immediately prior to the
fiscal year in which such entity is granted the right to sell Licensed Products,
of greater than [Confidential Treatment Requested] as set forth in information
reported by the Venture Planning Group,

(b) in the fiscal year immediately prior to the fiscal
year in which such entity is granted the right to sell Licensed Products, the
entity has annual net sales revenue of human in vitro diagnostic products no
greater than [Confidential Treatment Requested] as set forth in information
reported by the Venture Planning Group, and

The foregoing annual net sales revenue values of
[Confidential Treatment Requested] as set forth in (a) and (b) above shall be
adjusted annually

<PAGE>

-6-

in accordance with the change in the size of the worldwide in vitro diagnostic
market from the effective date of this Agreement to January 1 of the year in
question, as reported by Boston Biomedical Consultants.

I. "Royalty-Bearing Distributor(s)" shall mean any company,
partnership, venture or other entity which meets the conditions of both
subparagraphs (1) and (2) below:

(1) is not an End Use or an Authorized Distributor; and

(2) is not, and no greater than [Confidential Treatment Requested]
of the voting share capital is owned or controlled by, and no power to direct
or cause the direction of the management policies of the entity is under the
control of, a manufacturer of human, in vitro diagnostic products with annual
net sales revenue of human, in vitro diagnostic products, during the fiscal
year immediately prior to the fiscal year in which such entity is granted the
right to sell licensed products, of greater than [Confidential Treatment
Requested] as set forth in information published annually by the Venture
Planning Group; provided, however, that CCD may designate not more than two
entities (in each case together with all affiliates of such entity) as
Royalty-Bearing distributors, without regard to the condition set forth in this
subparagraph (2), subject to the conditions that:

(a) neither such entity nor any of its Affiliates has
manufactured products which infringed the Licensed Patents; and

(b) neither CCD nor any Affiliate of CCD obtains in
connection with the designation of such an entity as a distributor of Licensed
Products any right to use patented technology of such entity or any of its
Affiliates in the manufacture of Licensed Products by or for CCDs, unless such
license is extended to KCDL and its Affiliates at the same royalty rate and on
the same terms and conditions.

Any Royalty-Bearing Distributor designated by CCD pursuant to the foregoing
proviso to subparagraph (2) is hereinafter in this paragraph referred to as a
"Special Royalty-Bearing Distributor" and also shall be considered included in
all references in this Agreement to Royalty-Bearing Distributors. Satisfaction
of the specified conditions

<PAGE>

-7-

(a) and (b) of the proviso to the foregoing subparagraph (2) shall be confirmed
by a certificate signed by an officer of CCD and a certificate signed by an
officer of the Special Royalty-Bearing Distributor, which certificate shall be
given to the best of the knowledge of such officer in the case of CCD's
certificate regarding satisfaction of said condition (a). It shall be presumed,
subject to rebuttal by a preponderance of the evidence, that any license
agreement entered into by CCD with a Special Royalty-Bearing Distributor after
the date of this Agreement and within three years before or five years after the
date that such Special Royalty-Bearing Distributor is authorized by CCD to sell
Licensed Products, and before termination by CCD of such authorization to sell
Licensed Products, is entered into in connection with such distribution
arrangement, and CCD shall provide to KCDL upon request at any time during such
period and at the end of such period a certificate of continued compliance with
the specified condition (b) of the proviso to the foregoing subparagraph (2).

The foregoing annual net sales revenue value of [Confidential Treatment
Requested] in subparagraph (2) above shall be adjusted annually in
accordance with the change in the size of the worldwide in vitro diagnostic
market from the effective date of this Agreement to January 1 of the year in
question, as reported by Boston Biomedical Consultants.

J. "Special Authorized Distributor" shall mean an Authorized
Distributor qualified as such pursuant to subparagraph (1) of Article I-H
which is, or greater than [Confidential Treatment Requested] of the voting
share capital is owned or controlled by, or the power to direct or cause the
direction of the management policies of the entity is under the control of, a
manufacturer of human in vitro diagnostic products with annual net sales
revenue of human, in vitro diagnostic products, during the fiscal year
immediately prior to the fiscal year in which this Agreement is executed, of
greater than [Confidential Treatment Requested] as set forth in information
reported by the Venture Planning Group. To the extent that Net Sales of
Licensed Products by CCD and its Affiliates to Special Authorized
Distributors in any calendar quarter exceed [Confidential Treatment Requested]
of total Net Sales of Licensed Products by CCD and it Affiliates during such
calendar quarter, such excess shall be treated as Net Sales to Royalty
Bearing Distributors for purposes of Article V and Article III-H.

<PAGE>

-8-

K. "End-User(s)" shall mean the customers, such as hospitals,
clinical laboratories, and doctors, who purchase Licensed Products for the
conduct of diagnostic assays. End-Users shall exclude resellers, such as
dealers, distributors, and other manufacturers of diagnostic products, who
purchase diagnostic products for the purpose of reselling them to others.

L. "Subsidiary" shall mean, with respect to CCD, any company in
which more than [Confidential Treatment Requested] of the voting share capital
is owned by CCD as of the date of this Agreement.

ARTICLE II -- LICENSE GRANT

A. KCDL grants to CCD and its Affiliates a non-exclusive license
(without sublicensing rights) under Licensed Patents to make, have made, use,
and sell or otherwise dispose of Licensed Products bearing the name and
trademark of CCD or an Affiliate of CCD prominently displayed thereon to
End-Users, Authorized Distributors and Royalty-Bearing Distributors.

(1) The aforesaid nonexclusive license to have made
Licensed Products includes the right for CCD and/or its Affiliates to work with
third parties who either develop or manufacture, in whole or in part, Licensed
Products, which are supplied for use, resale, or other commercial purposes
solely to CCD and/or its Affiliates.

(2) Under the aforesaid nonexclusive license, CCD and/or
its Affiliates may include on the Licensed Products the name and trademark
of an Authorized Distributor, together with the name and trademark of CCD or an
Affliate of CCD, provided that the name and trademark of CCD or an Affliate of
CCD is displayed on the Licensed Products at least as prominently as the name
and the trademark of the Authorized Distributor.

B. The license granted hereunder shall be subject to and is
conditioned on KCDL's timely receipt of the applicable license payments as
provided under Article III of this Agreement.

<PAGE>

-9-

C. Upon written request by CCD on or before December 31, 1996,
KCDL is willing to [Confidential Treatment Requested] Licensed Products
bearing prominently displayed thereon the name and trademark of CCD, an
Affiliate of CCD, [Confidential Treatment Requested] or a combination of CCD
(or an Affiliate of CCD) and [Confidential Treatment Requested] to End-Users
and to distributors corresponding to those designated as Authorized
Distributors, Royalty-Bearing Distributors, or Special Authorized
Distributors (but who are defined in terms of [Confidential Treatment Requested]
rather than CCD). KCDL will [Confidential Treatment Requested] on reasonable
terms and conditions, including:.

(1) an ongoing royalty based on a percentage of the net selling price
of Licensed Products not to exceed the rates specified in attached Schedule 3;

(2) a nonexclusive license grant to KCDL and its affiliates on
reasonable terms and conditions under selected patents or patent applications
[Confidential Treatment Requested] owns or has the right to license relating to
human, in vitro diagnostic products; and/or

(3) a combination of items (1) and (2) above, with or without any other
license fees and payments.

In the event subparagraph (2) above does not apply, either because
[Confidential Treatment Requested] does not own or have the right to license any
such patents or patent applications or because KCDL and its Affiliates do not
desire to be licensed under any such patents or patent applications, the KCDL
will [Confidential Treatment Requested] on reasonable terms and conditions based
on an ongoing royalty equal to a percentage of the net selling price of
Licensed Products as specified in attached Schedule 3, an initial license
payment not to exceed [Confidential Treatment Requested] and an annual minimum
royalty payment not to exceed [Confidential Treatment Requested]

D. KCDL agrees to use reasonable efforts to conclude negotiation
of license agreements pursuant to Article II-C within a period of time that is
reasonably

<PAGE>

-10-

practical based on the circumstances. Following receipt of CCD's written
request [Confidential Treatment Requested] KCDL shall have a period of four
(4) months from receipt of a full written disclosure of all patents and
patent applications [Confidential Treatment Requested] to December 31, 1996
or the then current date, whichever is earlier, relating to human, in vitro
diagnostics to specify the patents or patent applications [Confidential
Treatment Requested] with respect to which KCDL and/or its Affiliates wish
to obtain a license. In the even the KCDL and/or its Affiliates do not wish
to obtain a license under any selected patents or patent applications
[Confidential Treatment Requested] KCDL shall use diligent efforts to conclude
within an additional four (4) week period (following the end of the
aforementioned 4 month period) a license agreement [Confidential Treatment
Requested] based on the financial terms set forth in Article II-C. In the case
of a license agreement [Confidential Treatment Requested] pursuant to Article
II-C that involves a cross license, KCDL shall be under no obligation whatsoever
to conclude such license agreement if [Confidential Treatment Requested] is
unwilling to grant KCDL and/or its Affiliates a license under those patents or
patent applications which it owns or has the right to license and which KCDL has
selected for inclusion in such cross license.

E. KCDL hereby agrees that upon written request KCDL is willing
to grant [Confidential Treatment Requested] on reasonable terms and conditions
to be negotiated. KCDL agrees to use reasonable efforts to conclude negotiation
of such licenses within a reasonable period of time.

ARTICLE III - LICENSE PAYMENTS AND ROYALTIES

A. CCD shall pay to KCDL an Initial License Payment of
[Confidential Treatment Requested] which shall be payable no later than
December 15, 1993, by electronic wire transfer to an account designated in
writing by KCDL.

B. In addition to the Initial License Payment under Article III-
A, beginning on or before August 31, 1994, and continuing on or before August 31
each year thereafter through and including 2005, CCD shall pay to KCDL, in lieu
of ongoing royalties on sales of Class A Licensed Products by CCD or its
Affiliates to Authorized Distributors or End-Users, an annual, lump-sum license
payment in an amount as shown in Table 1 below.

<PAGE>

-11-

Table 1 - Annual, Lump-Sum License Payments
-------------------------------------------

Calendar Year Lump-Sum License Payment
------------- ------------------------
[Confidential Treatment Requested]
<S> <C>
[Confidential [Confidential Treatment Requested]
Treatment [Confidential Treatment Requested]
Requested] [Confidential Treatment Requested]
[Confidential Treatment Requested]
[Confidential Treatment Requested]
[Confidential Treatment Requested]
[Confidential Treatment Requested]
[Confidential Treatment Requested]
[Confidential Treatment Requested]
[Confidential Treatment Requested]
[Confidential Treatment Requested]
[Confidential Treatment Requested]
</TABLE>

C. Of the total of the annual, lump-sum license payments
specified in Table 1 above, [Confidential Treatment Requested] of
the payments specified in Table 1 represents the total of the annual, lump-sum
license payments to be paid by CCD to KCDL as set forth in Article III-B of this
Agreement under the United States patent of the Licensed Patents. The remainder
of the Payments specified in Table 1 represent the total of the annual, lump-sum
license payments to be paid by CCD to KCDL as set forth in Article III-B of this
Agreement under the non-Untied States patents and patent applications of the
Licensed Patents.

D. In the event that European patent 149565 B1 of Licensed
Patents is revoked by the European Patent Office; KCDL shall promptly
[Confidential Treatment Requested].

E. In the event of a final decision of the Japanese Patent
Office, including any appeal to the Japanese courts, as a result of which the
Japanese Patent Office (1) does not lay open for opposition the Japanese patent
application of Licensed

<PAGE>

-12-

Patents by December 31, 2000, or (2) does not grant a patent on the Japanese
patent application (Kokoku) of the Licensed Patents following the opposition of
such application (Kokoku) by December 31, 2000, CCD shall not be required to
make any of the annual, lump-sum license payments specified in Table 1 after the
year 2000; provided, however, that if a Japanese patent is granted on such
Japanese patent application (Kokoku) after December 31, 2000, CCD shall make any
payments which are specified in Table 1 for the year in which such Japanese
patent is granted through the year 2005 (but excluding any payments specified in
Table 1 for the year(s) after 2000 through the year immediately preceding the
grant of such Japanese patent).

F. In addition to the license payments specified in Article III-A
through Article III-E above, with respect to any sales or other transfer of
Class A Licensed Products and/or Class B Licensed Products on or after the
effective date of this Agreement by CCD or its Affiliates to any Royalty-Bearing
Distributors, CCD shall pay to KCDL an ongoing royalty of [Confidential
Treatment Requested] of Net Sales of such Licensed Products.

G. In addition to the license payments specified in Article
III-A through III-E above, with respect to any sales or other transfer of
Class B Licensed Products, on or after the effective date of this Agreement
by CCD or its Affiliates to any End-Users or Authorized Distributors, CCD
shall pay to KCDL an on going royalty of [Confidential Treatment Requested]
of Net Sales of Class B Licensed Products.

ARTICLE IV -- OPTION FOR LICENSE UNDER CCD PATENTS

A. In partial consideration of the license granted to CCD under
this Agreement, CCD grants to KCDL an irrevocable option to obtain a non-
exclusive, royalty-bearing license (without sublicensing rights) to KCDL and its
Affiliates to make, have made, use and sell or otherwise dispose of products
under any [Confidential Treatment Requested] Improvement Patent including all
patents in any other country corresponding to such Improvement Patent, subject
to KCDL's payment to CCD of total cumulative payments for such license such
that:

(1) In the case of an Improvement Patent whose claims have
applicability to diagnostic assays in general, the present value of such total
cumulative

<PAGE>

-13-

payments, calculated from the date of signing such license, does not exceed
[Confidential Treatment Requested]

(2) In the case of an Improvement Patent whose claims have
applicability only to one or several specific diagnostic assays,
[Confidential Treatment Requested]

B. In both subparagraphs (1) and (2) of paragraph IV-A above,

1. The present values of both streams of payments shall be
calculated:

a. using a discount rate of 10%,

b. on a monthly basis from the date of signing each such
license, and

2. KCDL shall also pay an initial license payment of
[Confidential Treatment Requested], due within thirty (30) days of KCDL
exercising the option. The amount in the case of both clauses (1) and (2) of
paragraph IV-A above shall be reduced if, with respect to the particular
Improvement Patent for which KCDL exercises such option, CCD does not have
corresponding patents in each of the United States, Europe, and Japan. The
amount of such reductions shall be as follows: [Confidential Treatment
Requested] if CCD does not have a corresponding patent in the United States,
[Confidential Treatment Requested] if CCD does not have a corresponding European
patent, and [Confidential Treatment Requested] if CCD does not have a
corresponding Japanese patent.

C. KCDL shall have the right to exercise the aforesaid option
upon written notice to CCD of the Improvement Patent which KCDL wishes to
license. The option granted under this Article IV-A shall become exercisable
by KCDL upon signing this Agreement, and shall remain exercisable until the
earlier of [Confidential Treatment Requested] or the termination of this
Agreement (unless such termination is due to the material breach

<PAGE>

-14-

of CCD in which case such option shall remain exercisable by KCDL until
[Confidential Treatment Requested]. Upon KCDL's exercise of its option
hereunder, the parties shall use diligent efforts to complete within three
months negotiation of a license agreement containing the terms set forth in
this Article, and any such additional terms not inconsistent therewith as are
customary in similar agreements, provided that such additional terms shall be
consistent with the corresponding provisions of this Agreement applicable to
the license granted to CCD hereunder.

ARTICLE V - STATEMENTS, RECORDS AND
ACCOUNTS

A. CCD shall furnish to KCDL two (2) times per year on or before
February 28 and August 31 during the years in which license payments are made
hereunder a written statement that CCD has continued to sell Class A Licensed
Products to Authorized Distributors and End-Users during the preceding six (6)
month periods ending, respectively, on December 31 and June 30.

B. During February, May, August, and November, following each
calendar quarter year, or portion thereof, in which this Agreement is in effect,
CCD shall, with respect to Class A Licensed Products and/or Class B Licensed
Products sold or otherwise transferred by CCD or its Affiliates to Royalty-
Bearing Distributors and/or Class B Licensed Products sold or otherwise
transferred by CCD or its Affiliates to End-Users and Authorized Distributors
during the preceding quarter calendar year, furnish to KCDL.

(1) a written royalty statement separately setting forth:

(a) in each geographic region (i.e., the Americas; Europe,
Middle East, and Africa; and Asia/Pacific), the total Net Sales of all such
Class A Licensed Products and Class B Licensed Products made by CCD and its
Affiliates during the preceding calendar quarter-year, itemized by instrument
model in the case of instruments, and by disease-specific or organ-specific
assay group in the case of assays, the applicable class of Licensed Products to
which it belongs, and the applicable ongoing royalty rate;

<PAGE>

-15-

(b) the total royalty accruing on Net Sales of all such
Class A and Class B Licensed Products; and

(2) payment of any royalty owed for said Net Sales during the
preceding calendar quarter-year.

C. If no Net Sales of Class A Licensed Products or Class B
Licensed Products to Royalty-Bearing Distributors and Class B Licensed Products
to End-Users or Authorized Distributors shall have been made during any calendar
quarter year, or portion thereof, this Agreement is in effect, CCD's royalty
statement shall so report. The first such royalty statement submitted under
this Agreement by CCD shall be due in May, 1994, and shall be applicable to all
such Net Sales of Licensed Products made on or after the effective date of this
Agreement.

D. Within ninety (90) days after termination of this Agreement or
any license under Article II, CCD shall furnish to KCDL a similar royalty
statement covering all Net Sales of Class A Licensed Products to Royalty-Bearing
Distributors and all Class B Licensed Products and Class B Licensed Products to
End-Users and Authorized Distributors made prior to the termination date.

E. CCD shall maintain complete and accurate records of Net Sales
of Licensed Products made by CCD and its Affiliates under this Agreement, and
shall retain such records for a period of three (3) years after submitting the
royalty statement to which they pertain. Such records may, upon thirty (30)
days prior written request by KCDL and at its expense, be audited once per
calendar year during CCD's normal business hours by a public accounting firm
selected by KCDL for the purpose of verifying CCD's compliance with this
Agreement. The accounting firm shall execute a confidentiality agreement with
CCD and shall report to KCDL only whether there is a royalty underpayment and,
if so, the amount thereof. In the event of any underpayment, CCD shall promptly
remit to KCDL all amounts due. If any such inspection discloses an aggregate
underpayment of more than [Confidential Treatment Requested] during any calendar
year, CCD shall reimburse KCDL for the cost of the audit and shall pay interest
to KCDL on the back royalty due KCDL at an annual interest rate equal to
[Confidential Treatment Requested].

<PAGE>

-16-

F. CCD may withhold from its license and royalty payments to KCDL
any income taxes required to be withheld by CCD under the laws of foreign
countries where Licensed Products are sold. Such amount shall be paid to the
appropriate taxing authorities and CCD shall provide KCDL with official receipts
issued by said taxing authority or such other evidence as is reasonabley
available to establish that such taxes have been paid and are available for
credit by KCDL for English income tax purposes. CCD shall cooperate with KCDL
and take all actions reasonably necessary in order to secure a reduction or
elimination of withholding taxes pursuant to applicable income tax treaties
between England and such foreign countries.

ARTICLE VI -- RELEASE OF LIABILITY

KCDL on its own behalf and on behalf of its Affiliates hereby
fully, finally and forever releases CCD and its Affiliates from any and all
claims of liability for any infringement or alleged infringement of Licensed
Patents resulting from the manufacture, use, or sale of Licensed Products prior
to the effective date of this Agreement.

ARTICLE VII -- ENFORCEMENT OF LICENSED PATENTS

A. During the pendency of any opposition proceeding with respect
to the European patent of the Licensed Patents, KCDL will use reasonable efforts
to enforce the United States patent of Licensed Patents upon receipt of credible
evidence which constitutes a reasonable showing that a third party having annual
worldwide net sales revenue of human in vitro diagnostic products in excess of
[Confidential Treatment Requested] as set forth in information published
annually by the Venture Planning Group is engaging in the conduct of activity
which constitutes an infringement of such United States patent.

B. Following the final decision of any opposition proceeding with
respect to the European patent of the Licensed Patents which sustains the grant
of a patent on such European patent, KCDL will use reasonable efforts to enforce
the United Kingdom patent, the French patent, and the German patent of Licensed
Patents upon receipt of credible evidence which constitutes a reasonable showing
that a third party

<PAGE>

-17-

having annual worldwide net sales revenue of human in vitro diagnostic products
in excess of [Confidential Treatment Requested] as set forth in information
published annually by the Venture Planning Group is engaging in the conduct of
activity which constitutes an infringement of any one of the foregoing United
Kingdom, French, or German patents of the Licensed Patents.

In the event that within twelve (12) months following KCDL's
receipt of such evidence, KCDL has not:

(1) entered into a royalty-bearing license under Licensed
Patents with such third party in regard to such infringing activity; or

(2) filed and maintained a claim of patent infringement
against such third party or company in a tribunal of competent jurisdiction in
at least one of the foregoing countries in which such third party is continuing
to engage in such infringing activity; or

(3) taken other action such that the infringing activity of
such third party constitutes a level of annual net sales revenue of less than
[Confidential Treatment Requested];

then any subsequent license payments due KCDL by CCD as specified in Article
III-B and Article III-D of this Agreement shall be reduced by [Confidential
Treatment Requested] until such time as KCDL has taken the action specified in
at least one of clauses (1) through (3) of this paragraph. Thereafter, such
license payments shall be paid in full to KCDL by CCD without any reduction.

C. Following the final decision of any opposition proceeding with
respect to the Japanese patent application (Kokoku) of the Licensed Patents
which results in the grant of a patent on such Japanese patent application
(Kokoku), KCDL will use reasonable efforts to enforce the Japanese patent of
Licensed Patents upon receipt of credible evidence which constitutes a
reasonable showing that a third party having annual net sales revenue of human
in vitro diagnostic products in Japan in excess of [Confidential Treatment
Requested] as set forth in information published annually by the
Venture Planning Group (or other similar source which is acceptable to

<PAGE>

-18-

both parties) is engaging in the conduct of activity which constitutes an
infringement of such Japanese patent.

In the event that within twelve (12) months following KCDL's
receipt of such evidence, KCDL has not:

(1) entered into a royalty-bearing license under Licensed
Patents with such third party in regard to such infringing activity; or

(2) filed and maintained a claim of patent infringement
against such third party in a tribunal of competent jurisdiction; or

(3) taken other action such that the infringing activity
of such third party constitutes a level of annual net sales revenue of less than
[Confidential Treatment Requested];

then any subsequent license payments due KCDL by CCD as specified in Article
III-B of this Agreement shall be reduced by [Confidential Treatment Requested]
until such time as KCDL has taken the action specified in at least one of
clauses (1) through (3) of this paragraph. Thereafter, such license payments
shall be paid in full to KCDL by CCD without any reduction.

D. Any decision to file a claim of patent infringement against a
third party under Licensed Patents shall be a matter within the sole discretion
of KCDL. Upon request and at the expense of KCDL, CCD shall cooperate with KCDL
in regard to prosecuting legal actions relating to such claims of patent
infringement, including but not limited to the furnishing of information and
witnesses and providing reasonable assistance in securing evidence in support of
such actions.

ARTICLE VIII -- TERMINATION

A. Either party shall have the right to terminate this Agreement
following any material breach or default in performance under this Agreement by
the other party upon [Confidential Treatment Requested] prior written notice to
the breaching party specifying the nature of the breach or default. Unless the
breaching party has cured the breach or

<PAGE>

-19-

default prior to the expiration of such [Confidential Treatment Requested]
period, the non-breaching party, at its sole option, may terminate this
Agreement upon written notice to the breaching party. Termination of this
Agreement shall become effective upon receipt of such notice by the breaching
party.

B. During the term of this Agreement, in the event that CCD and
its Affiliates shall cease the manufacture, use, and sale of all Licensed
Products for a continuous period of [Confidential Treatment Requested] or more,
CCD shall have the right to terminate this Agreement.

C. Upon termination of this Agreement for any reason, the license
granted hereunder by KCDL shall terminate and CCD's obligations under this
Agreement to pay any further license payments and ongoing royalties shall cease.

D. Unless sooner terminated under the provisions of this Article
VIII, all licenses granted hereunder shall continue in force for the full term
of all patents licensed hereunder and this Agreement shall terminate on the
expiration of the last such patent to expire. However, in the event that after
[Confidential Treatment Requested], a Licensed Patent has been held permanently
revoked, unenforceable or invalid in any country by a final decision of a court
or other governmental agency of competent jurisdiction, unappealable or
unappealed within the time allowed for appeal, which is rendered in a proceeding
other than the European and Japanese examination or opposition proceedings
referenced in Article III of this Agreement, each of the license payments due as
specified in Table 1 after such final decision shall be reduced by [Confidential
Treatment Requested] for each such country in which such a final decision is
made, except for the United Kingdom in which case such reduction shall be
[Confidential Treatment Requested]. In the event that after August 31, 1996,
such final decisions are effective as to all Licensed Patents, no further
license payments in any amount shall be due as specified in Table 1 after the
date the last such final decision becomes effective. In the event that at any
time a Licensed Patent has been held permanently revoked, unenforceable or
invalid in any country by a final decision of a court or other governmental
agency of competent jurisdiction, unappealable or unappealed within the time
allowed for appeal, no further royalty payments shall be due as specified in
Article III-F or Article III-G under such Licensed Patent in such country.

<PAGE>

-20-

E. Termination of this Agreement shall not relieve the parties of
any obligation accruing prior to the effective date of such termination.

ARTICLE IX -- WARRANTIES AND REPRESENTATIONS

A. KCDL represents and warrants that:

(a) it is a corporation duly organized, validly existing,
and in good standing under the laws of the jurisdiction in which it was
incorporated;

(b) it has the full right, power and authority to enter
into this Agreement and to convey the non-exclusive license granted under this
Agreement;

(c) it has not previously granted, and will not grant to
any third party during the term of this Agreement, any rights that are in
conflict with the license granted to CCD herein; and

(d) there are no patents corresponding to the Licensed
Patents in any countries other than the United States, United Kingdom, France,
Germany and Japan.

B. CCD represents and warrants that:

(a) it is a corporation duly organized, validly existing,
and in good standing under the laws of the jurisdiction in which it was
incorporated;

(b) it has the full right, power and authority to enter
into this Agreement and to convey the option for a non-exclusive license granted
to KCDL under this Agreement; subject to the approval or ratification of CCD's
Board of Directors, as set forth in Section XI below; and

(c) it has not previously granted, and will not grant to
any third party during the term of this Agreement, any rights that are in
conflict with the option granted to KCDL herein; and

<PAGE>

-21-

(d) so far as its representatives negotiating this
Agreement are aware, neither it nor any of its Affiliates have as of the
effective date of this Agreement any existing distributor which constitutes a
company, partnership, joint venture or other entity who is, or greater than
[Confidential Treatment Requested] of the voting share capital is owned or
controlled by, or the power to direct or cause the direction of the management
policies of the entity is under the common control of, a manufacturer of human,
in vitro diagnostic products with annual net sales revenue of human, in vitro
diagnostic products of greater than [Confidential Treatment Requested], except
for [Confidential Treatment Requested] and [Confidential Treatment Requested].

ARTICLE X -- ASSIGNMENT

This Agreement and the license, option and other rights and
obligations hereunder may not be assigned or otherwise transferred, by either
party without the written consent of the other party, which consent shall not be
withheld unreasonably. Notwithstanding the foregoing, either party may assign
this Agreement and the license, and other rights and obligations hereunder, in
connection with the transfer or sale of all or substantially all of that portion
of its business or assets relating to performance of its obligations hereunder,
or in the event of its merger or consolidation with another company at any time
during the term of this Agreement. Any purported assignment in violation of the
preceding two sentences shall be void. Any permitted assignee shall assume all
obligations of its assignor under this Agreement. No assignment shall relieve
either party of responsibility for the performance of any accrued obligation
which such party then has hereunder.

ARTICLE XI -- MISCELLANEOUS

A. No reference to this license and no trademark, trade name or
trade dress or copyrighted work of either party or its Affiliates shall appear
on product that is made, sold or used under this Agreement by the other party,
or on its packaging or in advertising or promotional materials for such product.

B. The specific terms and conditions of this Agreement shall be
treated as confidential information by the parties hereto and shall not be
disclosed to third parties during the term of this Agreement. Notwithstanding
the foregoing, 1) neither

<PAGE>

-22-

party shall be required to maintain the fact or the extent of the license
granted hereunder to CCD and its Affiliates in confidence, 2) KCDL may issue a
press release, in form and content mutually agreeable to KCDL and CCD,
disclosing the license grant hereunder, 3) CCD shall be permitted to disclose
the terms and conditions of this Agreement on a confidential basis to Amersham
International plc of England, and 4) either party hereto may be permitted to
make disclosures relating to the terms and conditions of this Agreement on a
confidential basis in contemplation of a permitted assignment of this Agreement
pursuant to Article X hereof. Furthermore, the content of Schedule 2 to this
Agreement and of the royalty statements delivered pursuant to Article V shall be
treated as confidential information by KCDL and its Affiliates and shall not be
disclosed by KCDL or its Affiliates to third parties during the term of, or at
any time following the termination of, this Agreement, unless required by
operation of applicable law or regulatory requirements.

C. Except as otherwise expressly provided herein, nothing
contained in this Agreement shall:

(1) Grant any license or sublicensing right or confer any
right, by implication, estoppel or otherwise;

(2) Impose any obligation or confer any right to enforce
any patent; or

(3) Constitute any representation, warranty, assurance,
guarantee or inducement whatsoever by either party or any affiliate thereof.

D. KCDL and CCD agree they are independent contractors and that
the relationship between the parties shall not constitute a partnership, joint
venture or agency. Neither party shall have the authority to make any
statements, representations or commitments of any kind, or to take any action,
which shall be binding on the other, without the prior written authorization of
the other party to do so.

E. Failure at any time to require strict performance of any of
the provisions herein shall not waive or diminish a party's right thereafter to
demand strict compliance therewith or with any other provision. Waiver of any
default shall not waive

<PAGE>

-23-

any other default. A party shall not be deemed to have waived any rights
hereunder unless such waiver is in writing and signed by a duly authorized
officer of the party making such waiver.

F. All notices and other communications required or permitted
under the Agreement must be in writing. They may be delivered personally or
sent by telex, commercial courier, postage prepaid mail or facsimile, at the
option of the sending party, except that CCD's Initial License Payment under
Article III-A hereof shall be made by electronic wire transfer to an account
designated in writing by KCDL. All communications and payments, other than the
aforementioned CCD electronic wire transfer payment, must be sent to, and shall
be effective on the date of delivery at, the receiving party's Address for
Notice or Address for Statements and Payments. The initial Address for Notice
and Address for Statements and Payments set forth below and any subsequent
Address for Notice or Address for Statements and Payments may be changed by a
communication as provided herein.

KCDL Address for Notices, Statement and Payments:

The Company Secretary
KODAK CLINICAL DIAGNOSTICS LIMITED
Mandeville House
62 The Broadway
Amersham
Buckinghamshire
HP7 0HJ, England
Facsimile No: 494-431-165

CCD Address for Notices and Payments:

Ciba Corning Diagnostics Corp.
63 North Street
Medfield, MA 02052
U.S.A.
Attn.: President
Facsimile No. 508-359-3879

<PAGE>

-24-

with a copy to:

Ciba Corning Diagnostics Corp.
63 North Street
Medfield, MA 02052
U.S.A.
Attn.: General Counsel
Facsimile No. 508-359-3885

G. This Agreement, which shall be governed by the substantive
laws of the State of New York, U.S.A. (without regard to its conflicts of law
provisions), constitutes the entire Agreement between the parties with respect
to the subject matter hereof. Any modification of this Agreement shall be set
forth in writing and duly executed by both parties.

H. The headings of the several articles of this Agreement are
intended for convenience of reference only and are not intended to be part of or
to affect the meaning of interpretation of this Agreement.

I. If any provision of this Agreement is held invalid, illegal,
or in any other way becomes void or unenforceable, this Agreement and the
remaining provisions thereof shall not in any way be affected or be impaired and
shall continue in full force and effect. In such event, however, at any time
any provision of this Agreement violates or conflicts with, or otherwise does
not satisfy, any provision of applicable law or regulation in any country or
jurisdiction, including the competition laws of the European Communities, then
the parties shall negotiate in good faith such changes or amendments to such
provision as are necessary to eliminate such violation or conflict, or satisfy
such law or regulation, and in so doing, shall attempt to preserve as much as
practicable the economic and other benefits to each party as set forth in such
provision.

J. KCDL shall make those filings in the Commission of the
European Community which are required in order to obtain approval of this
Agreement by the Commission of the European Community. In addition, KCDL shall
prepare responses within a reasonable period of time in writing to any
communications from the Commission of the European Community regarding such
filings. CCD shall reasonably cooperate with KCDL in the preparation of any
such filings and responses.

<PAGE>

-25-

IN WITNESS WHEREOF, the parties have caused their respective
corporate names to be affixed hereto and this instrument to be signed by their
duly authorized officers, all as of the day and year first above written.

KODAK CLINICAL DIAGNOSTICS LIMITED

By /s/ Jose J. Coronas
-------------------------------------
Jose J. Coronas
Title Director
-------------------------------------

CIBA CORNING DIAGNOSTICS CORP.

By /s/ Michael D. Webb
-------------------------------------
Michael D. Webb
Title
-------------------------------------
Vice President

<PAGE>

SCHEDULE 1

LICENSED PATENTS

Country Number Issue Date or Filing Date
------- ------ -------------------------

United States P-4,745,077 5/17/88

European P-149565 B1 12/23/92

German P-3586909 2/4/93

France P-149565 12/23/92

Japan Appln. PA-85/7298 Filed 1/17/85

United Kingdom P-149565 12/23/92

- --------

P = Patent

PA = Patent Application

<PAGE>

SCHEDULE 2

(to be submitted by CCD)

<PAGE>

SCHEDULE 3

1. The ongoing royalty for Class A Licensed Products is equal to the ongoing
royalty percentage as specified in Table 1 or Most Favorable Terms granted to
another licensee (other than CCD) as hereinafter defined in this Schedule.

2. The ongoing royalty for Class B Licensed Products shall be equal to
[Confidential Treatment Requested] of the annual net sales of Class B Licensed
Products or the Most Favorable Terms1 granted to another licensee (other than
CCD) as hereinafter defined in this Schedule.

Table 1
-------

Annual net sales of Class A Licensed Products Ongoing Royalty Percentage 1
- -------------------------------------------------------------------------

On the first [Confidential Treatment Requested] of annual net
sales [Confidential

On the second [Confidential Treatment Requested] of annual net
sales Treatment

On the third [Confidential Treatment Requested] of annual net
sales Requested]

On the fourth [Confidential Treatment Requested] of annual net
sales

On any annual net sales in excess of [Confidential Treatment
Requested]

- -------------
1 Most Favorable Terms:

A. If KCDL grants a license to another licensee (other than CCD) based on
ongoing royalty percentages more favorable than those specified above in this
Schedule 3, KCDL shall immediately reduce the above-noted ongoing royalty
percentages to those granted to such other licensee.

B. The provisions of Section A above shall not apply:

(a) Where the consideration payable by such other licensee includes
substantial rights or immunities in, to or under patent rights held by such
licensee, including rights with respect to patent applications or other
proprietary rights;
(b) Where the more favorable royalty terms for license rights cover only
past infringement or are the result of the settlement or compromise of a claim
of past infringement;
(c) To any license which may be granted to any government;
(d) To any license which may be granted by KCDL to any Affiliate or to an
Affiliate of such Affiliate; or
(e) To any license granted by order of any court or any government agency.

<PAGE>

[KODAK LETTERHEAD]

7 October 1994

General Counsel
Ciba Corning Diagnostics Corp
63 North Street
Medfield
Massachusetts 02052
USA

Dear Sir or Madam

As you may be aware, Eastman Kodak Company ("Kodak") has agreed to sell the
business and assets of its Clinical Diagnostics Division, which includes the
directly wholly owned subsidiary of Kodak Clinical Diagnostics Limited ("KCDL"),
to Johnson & Johnson ("J&J").

In connections with the sale of the business, Kodak desires to assign to J&J, or
to a subsidiary of J&J, all of KCDL's right, title and interest under the
License Agreement, dated 11 November 1993, between you and KCDL, and J&J desires
to assume and discharge or perform when due, or to cause a subsidiary of J&J to
assume and discharge or perform when due, all liabilities or obligations of KCDL
arising out of or relating thereto.

Please indicate your consent to the assignment described above by returning a
signed copy of this letter to the undersigned at:

Legal Department, Kodak Limited, PO Box 66, Kodak House, Station Road, Hemel
Hempstead, Herts HP1 1JU, England

no later than 24 October 1994. If you have any questions, please do not
hesitate to telephone me.

Thank you for your co-operation.
CONSENTED TO:
Yours faithfully CIBA CORNING DIAGNOSTICS CORP

By: /s/
/s/ Terence J. Charlton --------------------
Title: SVP WW Marketing
--------------------
Date: 11/8/94
Terence J Charlton --------------------
Legal Adviser
Kodak Clinical Diagnostics Limited

<PAGE>

EXHIBIT 10.54

[CONFIDENTIAL TREATMENT REQUESTED]

[Certain information has been omitted herein pursunat to a request for
confidential treatment pursuant to Rule 24b-2.]

Dated 6 December 1984

CORNING GLASS WORKS

and

BIOANALYSIS LIMITED

AGREEMENT

Morgan Bruce & Nicholas

CARDIFF

MJP/WW/D2/MISC/X/012A

<PAGE>
THIS IS AN AGREEMENT made as of this 6th day of December One thousand nine
hundred and eighty four by and between Corning Glass Works a New York business
corporation having its principal office at Houghton Park in the City of Corning
New York 14831 (hereinafter "Corning") and Bioanalysis Limited a company
incorporated in England and Wales whose registered office is at College
Buildings University Place Cardiff (hereinafter "Bioanalysis")

WITNESSETH:

WHEREAS, The University of Wales College of Medicine (formerly called the Welsh
National School of Medicine) (hereinafter "WNSM") has developed a proprietary
technique for measurements based upon the phenomenon of chemiluminescence which
Bioanalysis and Corning believe may be applicable to immunoassay and binding
protein assay systems with respect to which technique Bioanalysis asserts that
WNSM owns trade secrets and inventions certain of which have been granted patent
protection and for certain of which WNSM has applied for patent protection ; and

WHEREAS, Bioanalysis has entered into an Agreement with WNSM dated the Twelfth
day of July One thousand nine hundred and eighty four whereby WNSM granted
certain rights to Bioanalysis to market and develop and to sublicense for such
purposes the techniques for the measurement of the presence of antibodies,
binding proteins and other analytes based upon the phenomenon of
chemiluminescence (hereinafter the "WNSM Agreement") a copy of which is attached
hereto and marked Exhibit I ; and

WHEREAS, Corning has developed and markets worldwide a number of clinical
diagnostic products which Corning believes could benefit from the application of
WNSM's chemiluminescence measurement technique ; and

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<PAGE>
WHEREAS, Corning wishes to acquire through Bioanalysis the right and license to
apply WNSM's chemiluminescence measurement technology to clinical diagnostic
immunoassay and binding protein assay systems developed or to be developed by
Corning and Bioanalysis is willing to grant to Corning such rights and licenses
under certain terms and conditions

NOW THEREFORE in consideration of the foregoing premises and of the covenants
terms and conditions set forth hereinbelow the sufficiency of which as
consideration is acknowledged by each of the parties Corning and Bioanalysis
agree as follows :-

ARTICLE I DEFINITIONS:

The following terms when used in this Agreement with initial capitals shall have
the following respective meanings :

1.1 AFFILIATE

Any entity in which a party owns or controls Fifty per cent or more of the
voting securities equity participation or beneficial interest

1.2 WNSM'S PATENT RIGHTS

The patents listed in the Schedule to the WNSM Agreement and all foreign
counterpart filings thereto and all divisions continuations reissues and re-
examinations thereof and all patentable inventions specifically pertaining to
Chemiluminescence Technology which are subject to protection under the
provisions of the United States Patent Act (35 USC) or any foreign patent laws
which are in existence on the date hereof or which may be made at any time
during the Term hereof and which are legally or beneficially owned or controlled
by WNSM or Bioanalysis

1.3 CHEMILUMINESCENCE TECHNOLOGY

The body of knowledge inclusive of WNSM's Patent Rights and

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<PAGE>
Proprietary Information relating to the quantification of substances utilizing
light energy emissions resulting from reactions involving such substances that
is useful in immunoassay and binding protein assay systems

1.4 CORNING QUARTER

The time encompassed by Periods 1-3 4-6 7-10 and 11-13 of a Corning fiscal year
which approximates the calendar year

1.5 NET SALES REVENUES

The aggregate invoice price paid to Corning or an Affiliate of Corning by a
third party customer or by an Affiliate of Corning on account of sales of
Products or performance of assays using Products less all usual allowances
discounts freight insurance sales and use taxes duties and returns and
allowances for defective Products and less any royalties paid to third parties
(Product sales transactions between Corning and Affiliates of Corning consuming
such Products shall be based upon arms' length market pricing for Products)

1.6 PERIOD

A Corning standard four week accounting period

1.7 PRODUCTS

Clinical diagnostic kits and components of diagnostic kits (i) the manufacture
sale or use of which would constitute an infringement of WNSM's Patent rights
but for the licenses granted hereby or (ii) which incorporate to a substantial
degree technical Proprietary Information disclosed to Corning by Bioanalysis and
licensed to Corning hereunder

1.8 PROPRIETARY INFORMATION

Information of any kind owned or controlled by a party hereto which such party
regards as valuable and holds confidentially other than

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<PAGE>
such information which (i) is already known to the receiving party when received
from the other party (ii) is wholly developed by the receiving party outside of
or apart from any Product development work hereunder and without resort to the
information of the other party (iii) is rightfully received by the receiving
party from a third party legally in possession of such information without
confidential restriction in favour of the disclosing party or (iv) is or becomes
public knowledge during the Term of confidential retention without the fault of
the receiving party

1.9 TERM ; TERM OF THIS AGREEMENT

The period beginning with the date hereof and extending through the date of
expiration of the last to expire of any Patent included among WNSM's Patent
Rights subject to the terms of Article IX

ARTICLE II PRODUCT DEVELOPMENT PROGRAM

2.1 Promptly after the date hereof Bioanalysis shall expend its best efforts to
develop and demonstrate diagnostic products using Chemiluminescence Technology
for six analytes to be designated by Corning which shall meet specifications
therefor provided by Corning and agreed by Bioanalysis which agreement shall not
be unreasonably withheld

2.2 Prior to the end of June One thousand nine hundred and eighty five
Bioanalysis shall expend its best efforts to demonstrate (by delivery of
physical prototype assay systems and certified documentation of test results) to
Corning pursuant to a test and demonstration protocol to be provided to
Bioanalysis by Corning within Ninety days after the date hereof

2.2.1 Promptly after review of the documentation from Bioanalysis as
provided in paragraph 2.2 which Corning shall undertake

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<PAGE>
upon receipt of such documentation Corning shall notify Bioanalysis in
writing of its acceptance or its rejection of such results and the
reason(s) therefor Bioanalysis shall have Thirty days from the date
of such notice of rejection to submit a plan to correct the diagnostic
tests for which data were rejected and to re-submit information to
Corning's reasonable satisfaction which resubmission shall be made
within Ninety days after delivery of such plan by Bioanalysis

2.2.2 If Corning does not accept such resubmission within Ninety days after
its delivery to Corning which acceptance shall not be unreasonably
withheld this Agreement may be terminated upon written notice by
Corning to Bioanalysis and the parties shall thereafter have no
obligation to each other except the obligations set forth in paragraph
2.4 and in Article V with respect to Proprietary Information already
disclosed

2.3 If Corning accepts Bioanalysis' demonstration as provided in paragraph 2.2
Bioanalysis and Corning shall agree to a further group of not less than six
diagnostic assays for development using Chemiluminescence Technology pursuant to
a development program similar to that provided in Paragraph 2.2 and Bioanalysis
shall apply the payments received from Corning under paragraph 2.4 to such
continued Product development program

2.3.1 Corning shall provide to Bioanalysis reasonable quantities of
antibodies and materials for the conduct of such development which
Bioanalysis shall use in producing such prototype assays in such
development program provided that

-5-
<PAGE>
nothing in this Agreement shall prevent Bioanalysis from obtaining further
quantities of such materials for its own purposes from any other party on
such terms as may be agreed with that party

2.4 Corning shall pay to Bioanalysis [Confidential Treatment Requested] per
Corning Quarter for Twelve consecutive Quarters commencing with the first full
Quarter after the date hereof (payment being made on the first day of each such
Quarter by direct transfer to the account of Bioanalysis with William's and
Glyn's Bank PLC 6 Albany Road Roath Cardiff (Account No. 11175677)) for
application by Bioanalysis to the development program provided in paragraphs 2.2
and 2.3

2.4.1 Corning's obligation to pay such amounts as provided in paragraph 2.4
shall survive Corning's termination of this Agreement on account of
Bioanalysis' failure to make satisfactory demonstrations as provided
in paragraph 2.2 provided that Bioanalysis will carry out further
research pursuant to a mutually agreeable program for the remainder of
the period over which such payments are made

2.4.2 Corning may but shall not be obligated to extend the period of such
payments for up to Twelve additional Quarters at [Confidential
Treatment Required] per Corning Quarter for further development of
Products by Bioanalysis and Bioanalysis shall perform such work
pursuant to a mutually agreeable development program

2.5 For the period any of the development programs described in this Article II
are in effect Bioanalysis shall submit to Corning quarterly written reports of
progress in such programs within

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<PAGE>
Thirty days after the close of each calendar quarter included in such period

ARTICLE III LICENSES AND IMPROVEMENTS

3.1 Bioanalysis hereby grants to Corning and its Affiliates by virtue of the
WNSM Agreement the exclusive right and license under WNSM's Patent Rights but
without the right to sublicense to make have made use and sell Products and to
practice the methods described in the said Patent Rights to conduct clinical
assays

3.2 Bioanalysis shall promptly after the date hereof disclose to Corning all
Proprietary Information owned or controlled by Bioanalysis which is reasonably
necessary to enable Corning to make have made use and sell Products and to apply
Chemiluminescence Technology to clinical diagnostic assay products and
procedures and Bioanalysis hereby grants to Corning and its Affiliates by virtue
of the WNSM Agreement the right and license to use such Proprietary Information
to make or have made Products in the Countries identified on Exhibit III and to
use and sell Products and to perform clinical assays throughout the world

3.3 In consideration of the royalties payable under Article IV below
Bioanalysis hereby agrees to grant to Corning and its Affiliates by virtue of
the WNSM Agreement an exclusive license under all patent rights inventions
know-how and proprietary information that it may hereafter come to own or
control or shall have the right to sublicense during the Term of this Agreement
and which cover or relate to improvements to WNSM's Patent Rights Products or to
the assays agreed by Bioanalysis and Corning under paragraph 2.1 or which may be
added to by paragraph 2.3 to enable Corning and its Affiliates to use such
Patent rights inventions know-how and Proprietary

-7-
<PAGE>
Information to improve such Products and assays

3.4 If Bioanalysis develops new diagnostic immunoassay and binding protein
tests based upon the Chemiluminescence Technology during the Term other than the
assays identified in Exhibit II and which are not improvements to such assays
Bioanalysis shall promptly and exclusively advise Corning in writing of the
availability of such assays and shall make available to Corning all information
(subject to the terms of Article V) in the possession of Bioanalysis regarding
such assays and shall give Corning One hundred and twenty days to make a
proposal to Bioanalysis whereby Corning shall obtain licenses to make have made
use and sell such assays Bioanalysis shall accept or reject Corning's proposal
within Sixty days after receipt If Bioanalysis does not accept the Corning
proposal then it shall not license any other party on terms which when taken as
a whole are no more favourable to Bioanalysis than those offered by Corning for
a period of two years after Corning makes it proposal without first disclosing
in writing the terms of such other party's proposals and giving Corning the
right to meet such more favourable proposal by giving Bioanalysis written notice
of such election Sixty days after receipt of Corning of Bioanalysis' disclosures

ARTICLE IV ROYALTIES

4.1 Corning shall use its best endeavours to maximise sales of Products and
shall pay to Bioanalysis royalties on Net Sales Revenues as follows:

4.1.1 [Confidential Treatment Requested] per cent of the first
[Confidential Treatment Requested] of net Sales Revenues;

4.1.2 [Confidential Treatment Requested] per cent of the next
[Confidential Treatment Requested] of net Sales Revenues; and

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<PAGE>
4.1.3 [Confidential Treatment Requested] per cent upon Net Sales Revenues
thereafter through expiration of the Term

4.2 If the royalties paid by Corning to Bioanalysis under paragraph 4.1 do not
equal or exceed [Confidential Treatment Requested] in each Twelve consecutive
month period of the Term commencing with the first month after the month during
which occurs the first commercial sale of a Product then upon Ninety days'
written notice Bioanalysis may license third parties under its Chemiluminescence
Technology unless within such Ninety day period Corning pays to Bioanalysis the
difference between actual royalties paid in such last expired Twelve month
period and [Confidential Treatment Requested]

4.2.1 The "first commercial sale" of a Product shall be that transaction
after all approvals of the requisite governmental authorities in the
Country in which such sale occurs have been given for such transaction
pursuant to which Corning sells a Product to or performs an assay
using a Product for a third party or an Affiliate of Corning for a
consideration

4.3 Corning's royalty payments hereunder shall be due and payable within Sixty
days following the close of each Corning Quarter during which sales generating
Net Sales Revenues upon which a royalty is due are invoiced by Corning or its
Affiliates

4.4 With each royalty payment beginning with the first royalty payment due
Corning shall deliver to Bioanalysis a written report stating the number of
Products sold or used in performing assays by Corning and its Affiliates during
the Corning Quarter covered by the report and the royalties due thereon Corning
shall keep records showing the sales of Products in sufficient detail to enable
royalties payable hereunder to be determined and shall permit the
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<PAGE>
records to be examined periodically but not more than once during any Six month
period for the sole purpose of verifying such report. The examination is to be
made at the expense of Bioanalysis by an auditor who is not an employee of
Bioanalysis and who is reasonably acceptable to Corning

4.5 Net Sales Revenues invoiced upon sales and currencies other than United
States Dollars shall be determined by multiplying the unit sales represented in
such transactions times the average unit Net Sales Revenues upon dollar-
denominated sales during the same time period

4.6 A single royalty as computed in paragraph 4.1 shall be payable by Corning
on each Product or assay performed using a Product covered by the licenses
granted under Paragraphs 3.1 through 3.3

4.7 If Corning determines to not proceed with or abandons development of any
assay test Products or to discontinue marketing any Products after their
commercial introduction then it shall promptly notify Bioanalysis in writing of
such determination and Bioanalysis may proceed to develop produce and market
such Products in such manner as it sees fit and Corning's licenses under Article
III above with respect to such Products shall terminate upon Bioanalysis'
commercial introduction of such Products

ARTICLE V CONFIDENTIALITY

5.1 Corning and Bioanalysis may consult with each other during the Term on a
confidential basis to further develop or improve Products pursuant to the terms
hereof. During the course of such consultations each party may disclose or make
available to the other party Proprietary Information

5.2 Corning and Bioanalysis each agree to hold in confidence all

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<PAGE>
information which is subject to disclosure under Paragraphs 2.2, 2.3, 2.4, 2.5,
3.2, 3.3 or 3.4 which is disclosed in writing or if disclosed orally is reduced
to writing or identified in writing within Thirty days after such oral
disclosure which information is identified in any such writings as being
Proprietary Information for a period ending with the later of the expiration of
the Term of this Agreement and five years from the date of disclosure of such
information in that each party shall accord such Proprietary Information the
same degree of security that it holds its own most confidential information of
a similar character and (i) neither party shall disseminate such information to
any third parties except those employees agents and consultants who have a
reasonable need to know such information in connection with the performance of
this Agreement and who are bound to their employer or principal to hold such
information in confidence to the same degree provided herein and (ii) Corning
shall otherwise disseminate such information only to Corning Affiliates who are
bound to Corning to hold such information in confidence to the same degree
provided herein. Neither Corning nor Bioanalysis shall hire any consultant or
third party in connection with the performance of this Agreement or in any
capacity which might result in the disclosure of such Proprietary Information
without first obtaining the other party's prior written approval which approval
shall not be unreasonably withheld.

5.3 Neither Corning nor Bioanalysis shall use the Proprietary Information
except in furtherance of this Agreement and pursuant to the licenses granted
under Article III hereof unless otherwise expressly authorised to do so in
writing by the disclosing party. The Proprietary Information disclosed hereunder
may be incorporated

-11-
<PAGE>
by Corning in patent and regulatory applications filed by Corning only with the
written approval of Bioanalysis which approval shall not be unreasonably
withheld but not otherwise howsoever. Nothing herein shall prevent WNSM or
Bioanalysis from filing patent applications in respect of the Chemiluminescence
Technology

5.4 At the termination or expiration of this Agreement both Corning and
Bioanalysis will return to the other any originals and all copies of any
documents which were transmitted by one to the other which constitute or
otherwise contain Proprietary Information to the other party

ARTICLE VI PATENTS COVENANTS REPRESENTATIONS WARRANTIES

AND INDEMNIFICATION

6.1 Bioanalysis shall at its own expense diligently prosecute counterparts to
the patents listed in the Schedule to the WNSM Agreement in the Countries listed
in Exhibit III and shall maintain the existence of all patents which shall issue
in such Countries for the Term of this Agreement unless otherwise agreed by the
parties
6.2 Bioanalysis represents to Corning that (i) WNSM is the owner of WNSM's
Patent Rights existing as of the date hereof and together with WNSM it is owner
of all Proprietary Information to be disclosed to Corning hereunder (ii) neither
WNSM nor Bioanalysis has previously granted any rights or licenses under WNSM's
Patent Rights or Proprietary Information relating to Chemiluminescence
Technology nor has disclosed such Proprietary Information to any third parties
and (iii) it has the power to grant the licenses and to carry out the covenants
of this Agreement without any prior or conflicting obligations whatsoever
6.3 Bioanalysis shall exercise its best endeavours to maintain the

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<PAGE>
WNSM Agreement in full force and effect during the Term of this Agreement and
shall promptly advise Corning in writing of any circumstance that might give
rise to any right of WNSM to terminate the WNSM Agreement. Bioanalysis shall
indemnify Corning against any loss suffered by Corning should Bioanalysis as a
result of its own default cause the WNSM Agreement to terminate or expire during
the Term of hereof such that Corning's rights and licenses hereunder are
impaired
6.4 Upon written notice of claim by Corning to Bioanalysis and subject to the
provisions of this Paragraph Bioanalysis shall defend indemnify and hold Corning
and its customers harmless from all claims made against Corning or any customer
of Corning based upon an allegation that Products sold by Corning when used in
their intended manner constitute an infringement of any patent rights of any
third party or constitute a misuse or misappropriation of Proprietary
Information of any third party solely by reason of such Products incorporating
the teachings of the Patents Rights or Proprietary Information licensed to
Corning provided also that Corning shall promptly disclose to Bioanalysis such
facts regarding such claim as come to its attention and shall subsequently
cooperate with Bioanalysis and provide all such assistance as it may reasonably
require in the disposition of such claim. Corning may cease making payments to
Bioanalysis under Paragraph 4.1 and may retain in escrow such amounts in the
event that Bioanalysis fails within Thirty days after notice to so agree to
defend and indemnify Corning and Corning shall apply such amounts to the amount
of any damages or settlements Corning pays to such third party and to Corning's
out-of-pocket costs in connection with such claims paying any excess after final

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<PAGE>
determination of such amounts and costs to Bioanalysis and such retention shall
be Corning's exclusive remedy in the event of Bioanalysis' failure to so defend
and indemnify. Corning shall use its best endeavours to resolve any claims of
the kind referred to above as expeditiously as practicable in the circumstances
6.5 If prior to Bioanalysis' obtaining the right hereunder to grant further
licenses in respect of Chemiluminescence Technology as provided in Paragraph 4.2
Corning believes that third parties are infringing patent rights by selling
products or performing services that compete with Products sold by Corning or
its Affiliates and the sale use or performance of which Corning believes
constitute an infringement of WNSM's Patent Rights on a commercial scale that is
estimated revenues from such sales to the asserted infringer of more than
[Confidential Treatment Requested] a year then Corning may bring action against
such alleged infringers at its own cost and expense and Bioanalysis shall
cooperate with Corning and provide all necessary authorities and powers of
attorney to enable Corning to proceed with such suit in its own name. Corning
may retain all damages recovered and amounts received in settlement of such
action from such third parties Corning shall promptly advise Bioanalysis in
writing if it determines not to take action against such alleged infringers or
if the infringement is not one which is on a commercial scale (as defined above)
and Bioanalysis may then take such action with respect to such infringements as
it may determine

ARTICLE VII EXCUSED DELAY

7.1 The timely performance of any obligation arising hereunder by either party
will be excused and such delay of performance shall not constitute breach or
grounds for termination or prejudice of any

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<PAGE>
rights hereunder if the delay of performance is a result of circumstances or
occurrences beyond the reasonable control of the party whose performance is
excused hereunder provided that such party (i) shall immediately resume
performance after the cause of delay is removed and (ii) shall during such delay
be reasonably diligent in avoiding further delay. Without limiting the
generality of circumstances or occurrences beyond the reasonable control of a
party examples of such circumstances or occurrences are strikes shortages of
power materials or transportation acts of government or of God sabotage or
insurrection

7.1.1 A party whose performance may be affected by such an occurrence or
circumstances of force majeure shall promptly give notice to the other
party of the occurrence or circumstance upon which it intends to rely
to excuse its performance

7.1.2 If the circumstances of force majeure affecting either party's
performance hereunder shall delay such party's performance for more
than Six consecutive months the other party may terminate this
Agreement upon Thirty days written notice and all obligations of both
parties which did not arise prior to the effectiveness of such
termination shall end upon such termination

ARTICLE VIII ARBITRATION

All disputes arising in connection with this Agreement shall be finally settled
by arbitration. The arbitration shall be held in New York New York and shall be
conducted in accordance with the rules of arbitration of the American
Arbitration Association by two arbitrators appointed one by each party to this
Agreement. If the

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<PAGE>
arbitrators appointed cannot agree they shall thereupon appoint an umpire or
upon their failure to agree upon an umpire said umpire will be appointed by the
American Arbitration Association. Any decision by the umpire and any one of the
arbitrators shall be binding upon the parties and may be entered as a final
judgment in any court state or federal having jurisdiction. The cost of any
arbitration proceedings shall be borne by the parties as the arbitrators shall
determine or as the parties may otherwise agree

ARTICLE IX DEFAULT AND TERMINATION

This Agreement and all rights granted hereunder may be terminated by either
party (a) in the event of a material default by the other party of any
obligation hereunder to which such party was entitled upon written notice to the
defaulting party which termination shall be effective Thirty days after such
notice of default is given unless the default shall be substantially cured by
the defaulting party prior to the date termination becomes effective or (b)
immediately upon written notice in the event of the bankruptcy or insolvency of
the other party unless the trustee in bankruptcy or receiver of such other party
shall within a reasonable time assume this Agreement or otherwise give
reasonable assurances of the performance of all covenants terms and conditions
of this Agreement

ARTICLE X BINDING EFFECT AND ASSIGNMENT

10.1 This Agreement shall inure to the benefit of and shall be binding upon each
of the parties hereto and their respective successors and assigns

10.2 Neither this Agreement nor any right or obligation arising from this
Agreement shall be assigned or shall be assignable by either party hereto
without the prior express written consent of the other

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<PAGE>
party except that Corning may without the prior consent of Bioanalysis assign
this Agreement and every right and obligation arising from this Agreement to a
wholly-owned subsidiary corporation of Corning subject to Bioanalysis' receiving
such guarantees as it may reasonably require from Corning

ARTICLE XI BREACH BY AFFILIATES

Any act which if it were an act of Corning would be a breach of this Agreement
on its part shall be deemed to be an act for which Corning is responsible if
done by any Affiliate of Corning

ARTICLE XII SEVERABILITY

Any provision of this Agreement which in any way contravenes the law of any
territory in which this Agreement takes effect shall in such territory and to
the extent of such contravention be deemed severable and of no effect but the
other provisions of this Agreement shall continue in full force and effect

ARTICLE XIII NOTICES

All notices reports requests or demands to be given by either party to the other
under the provisions of this Agreement shall be forwarded charges prepaid by
cablegram or by registered or certified air-mail properly addressed to the
respective parties as follows:

If to Corning Corning Medical
Medfield Industrial Park
Medfield
Massachusetts 02052

Attention : The President

copy to : Corning Glass Works
Corning
New York 14831

Attention : Secretary

If to Bioanalysis : Bioanalysis Limited
P.O. Box 88
College Buildings
University Place
Cardiff CF1 1SA
Wales
United Kingdom

Attention : Managing Director

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<PAGE>
or at such other addresses either party may from time to time by written notice
designate as its address for the purposes hereof and shall be deemed to have
been received on the day following the dispatch of any such cablegram and the
eighth day following posting of any such letter

ARTICLE XIV CHOICE OF LAW

This Agreement shall be construed and enforced in accordance with the laws of
the State of New York of the United States of America

ARTICLE XV INDEPENDENT CONTRACTORS

No agency partnership or joint venture is hereby established. Neither
Bioanalysis nor Corning shall enter into or incur or hold itself out to third
parties as having authority to enter into or incur on behalf of the other party
any contractual obligations expenses or liabilities whatsoever

ARTICLE XVI NO WAIVER

No waiver of any breach of the Agreement or any obligation arising under this
Agreement by either party shall constitute a waiver of any subsequent breach or
breaches whether such breaches be of a similar or dissimilar nature

ARTICLE XVII ENTIRE AGREEMENT ; MODIFICATION

This instrument sets forth the entire Agreement between the parties hereto with
respects the license of Bioanalysis' Chemiluminescence Technology to Corning and
as such supersedes all prior and contemporaneous negotiations agreements
representations understandings and commitments with respect thereto. This
Agreement or any obligation of this Agreement shall not be waived released
discharged changed or modified in any manner except by an instrument signed by
the duly authorised officers of each of the parties hereto

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<PAGE>
which instrument shall make specific reference to this Agreement and shall
express the plan or intention to modify same

IN WITNESS whereof Corning and Bioanalysis have executed this Agreement by
their respective duly authorised officers or representatives as of the day first
above written

CORNING GLASS WORKS

by /s/ William G. Toomey
-------------------------------------
William G. Toomey
President - Corning Medical

BIOANALYSIS LIMITED

by /s/ J F Burke
-------------------------------------
J.F. Burke
Managing Director

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<PAGE>
[BIOANALYSIS LIMITED LETTERHEAD]

Our Ref:-JFB/AMR 26th July, 1985.

B.D.Voyce Esq.,
Corning Glass Works,
Corning,
New York 14831.
U.S.A.

Dear Mr. Voyce,

CORNING GLASS WORKS AND BIOANALYSIS LIMITED.

I refer to your letter of 3rd July in connection with the formation of the joint
venture, to be known as Ciba Corning Diagnostics Corporation, by Corning Glass
Works and Ciba Geigy Corporation.

I would confirm that an Agreement was entered into by Corning Glass Works and
Bioanalysis Limited on 6th December,1984 for the licence of chemiluminescence
measurement technology.

I hereby confirm the approval of Bioanalysis Limited to the assignment by
Corning Glass Works to Ciba Corning Diagnostics Corporation of all the
obligations terms and conditions to be performed or carried out by Corning Glass
Works pursuant to the Agreement referred to above.

The address of the new Corporation has been noted on our records for the
purposes of the Licence Agreement.

Yours sincerely,

/s/ J.F.BURKE

J.F.Burke.
For and on behalf of
BIOANALYSIS LIMITED.

<PAGE>
RESEARCH AGREEMENT

RESEARCH AGREEMENT dated as of July 15, 1985 between CIBA-GEIGY
Limited, a corporation of Switzerland, ("CIBA-GEIGY") and Ciba Corning
Diagnostics Corp., a Delaware corporation ("CCD").

WHEREAS, CCD desires to obtain knowledge and research results in the
field of pharmaceuticals, including in particular in the fields of immunology
and biotechnology, for use in the field of diagnostic products;

WHEREAS, in connection therewith CIBA-GEIGY and CCD intend that CIBA-
GEIGY shall give CCD access to CIBA-GEIGY's present Knowledge and Expertise (as
hereinafter defined), existing on the date hereof and as developed by CIBA-GEIGY
hereafter during the term hereof, for use by CCD in the field of diagnostic
products, upon the conditions and in consideration of the payments set forth
below;

WHEREAS, CIBA-GEIGY and CCD intend also that CCD shall give CIBA-GEIGY
access to CCD's present Knowledge and Expertise, existing on the date hereof and
as developed by CCD hereafter during the term hereof, upon the conditions and in
consideration of the payments set forth below;

WHEREAS, the parties intend to effect the exchange of Knowledge and
Expertise and to coordinate research and development activities in the fields of
human pharmaceutical and diagnostic products and after giving priority to their
primary areas of activity to perform such limited additional research for each
other as may be requested by one or the other from time to time for use in their
respective fields, all upon and subject to the terms and conditions hereof.

NOW, THEREFORE, in consideration of the mutual covenants and
agreements of the parties hereinafter set forth, CIBA-GEIGY and CCD do hereby
covenant and agree as follows:

1. DEFINITIONS

The terms defined in this Section 1 shall, for all purposes of this
Agreement, have the meanings in this Section 1 specified.

"Affiliate" of a party shall mean a corporation or any other business
entity, in whatever country organized,
<PAGE>
which controls, is controlled by or is under common control with such party,
whether such control is exercised through majority ownership of outstanding
stock, by agreement or otherwise, it being understood that CCD shall not be
deemed to be an Affiliate of, or to have as an Affiliate, CIBA-GEIGY or Corning
Glass Works, a New York corporation ("Corning"), or any of their respective
Affiliates.

"Agreement Research Cost" of a party shall mean the research costs of
such party, as determined in accordance with the definitions set forth in
Appendix A.

"Effective Date" shall mean the date upon which this Agreement becomes
effective, as determined pursuant to Section 10 below.

"Exclusive Rights" shall have the meaning set forth in Section 6.3.

"Field of Activity" shall mean the Field of CCD Activity or the Field
of CIBA-GEIGY Activity.

"Field of CCD Activity" shall mean the development, manufacture, use
and sale of processes, materials, supplies and equipment for use in the
diagnosis of human and veterinary illnesses and disease conditions.

"Field of CIBA-GEIGY Activity" shall mean:

(i) all human pharmaceuticals and devices, including all processes,
materials, supplies and equipment, used for the treatment, mitigation,
investigation or understanding of diseases or other health problems in
human beings;

(ii) without limiting the foregoing, all products and drug delivery
systems for the controlled administration of pharmaceuticals to human
beings; and

(iii) all materials, applications, and techniques for use in the
discovery, screening or testing of pharmaceutical active products or
materials for human use;
PROVIDED that the "Field of CIBA-GEIGY Activity" shall not include the
manufacture for commercial sale, or the commercial sale, of diagnostic
products except any diagnostic product which is commercialized in combina-
tion with a related therapeutic product.
<PAGE>
"First Commercial Sale" in any country or group of countries shall
mean the first date on which a product is offered for sale on a commercial basis
in such country or group of countries.

"Joint Project Steering Committee" shall mean the committee, including
representatives of CIBA-GEIGY and CCD, as established pursuant to Section 2.1
below.

"Knowledge and Expertise" shall mean all of the knowledge, information
and expertise relating to a party's Field of Activity possessed by such party
and which such party is free to disclose in the areas of science, medicine,
product design or formulation, engineering, manufacturing, product or quality
testing or regulatory compliance or testing. Without limiting the foregoing,
Knowledge and Expertise shall include all the information relating to a party's
Field of Activity which is known or available to the employees of such party or
which is reflected in the writings, laboratory notebooks and results,
publications, drawings, laboratory samples, cell strains or cultures,
computerized information and other records of either party.

"Licensed Product" shall mean any product the Net Sales of which give
rise to a royalty obligation pursuant to Section 7 hereof.

"Licensee" shall mean the party hereto, either CIBA-GEIGY or CCD,
which is licensed by the other party to sell a Licensed Product.

"Licensor" shall mean the party hereto, either CIBA-GEIGY or CCD,
which grants a license to the other party covering a Licensed Product.

"Net Sales" by any party shall mean the amount billed or invoiced on
sales of a Licensed Product by such party, its Affiliates and sublicensees, to
persons or entities other than Affiliates of such party, in bona fide arms'
length transactions, less the following deductions: (i) trade and/or quantity
discounts actually allowed, taken in such amounts as are customary in the trade;
(ii) taxes on the sale to the extent included in the amount billed; and (iii)
amounts repaid or credited by reason of rejections or returns or because of
retroactive price reductions.

"Patent Rights" shall mean all of the right, title and interest in and
to any letters patent (or utility models or applications for either) of either
party and its
<PAGE>
Affiliates in any country of the world, including all the letters patent now
issued or to be issued and any re-issues or extensions thereof or any letters
patent which may issue in the future based upon any applications for letters
patent now pending, or which may be pending any time in the future prior to the
Termination Date.

"Special Research Project" shall mean any specific research project
which one party agrees to perform at the request of the other party pursuant to
Section 3.

"Termination Date" shall mean the date upon which this Agreement
terminates, as determined pursuant to Section 11 below, subject to the terms and
conditions applicable to such termination as specified in such Section 11.

2. RESEARCH AND DEVELOPMENT ACTIVITIES
AND DISCLOSURE OF KNOWLEDGE AND EXPERTISE

2.1 Each of CCD and CIBA-GEIGY shall promptly designate their
respective representatives (who shall be in equal numbers) to the Joint Project
Steering Committee, which shall coordinate the joint research efforts and dis-
closure and transfer of Knowledge and Expertise, as contemplated by this
Agreement. In the event any determination to be made by the Joint Project
Steering Committee shall not be concurred in by all of the then members thereof,
the matter shall be referred for consultation and resolution between CIBA-GEIGY
and CCD. Any member of the Joint Project Steering Committee may be replaced
from time to time by notice to the other party from the party originally
designating such member.

2.2 Subject to the parties' compliance with Section 4 hereof, either
party (the "Disclosing Party") shall make available to the other party (the
"Recipient Party") all of the Disclosing Party's Knowledge and Expertise in its
Field of Activity to the extent needed by the Recipient Party in the pursuit of
its research and product development activities in its Field of Activity.
Disclosure of information by the Disclosing Party shall generally be
accomplished by periodic meetings and the transfer of the Disclosing Party's
written research results but may include the transfer of samples, genetic or
biological materials, drawings, demonstration models or other information.
During the term of this Agreement, the Disclosing Party shall keep the Recipient
Party generally apprised of such of its research activities as it believes will
be of interest to the Recipient Party in its Field of
<PAGE>
Activity. In addition, the Disclosing Party shall without charge at such times
and places as the Recipient Party shall reasonably request:

(i) make available its scientific and technical personnel to assist
the Recipient Party in identifying Knowledge and Expertise possessed by the
Disclosing Party which could be useful in the Field of the Recipient
Party's Activity;

(ii) provide scientific or technical personnel to explain or
demonstrate the Knowledge and Expertise to be transferred; and

(iii) upon the request of the Recipient Party for specific
information or expertise which may be relevant to the Field of the
Recipient Party's Activity, use its best efforts to identify all such
information and expertise within the Disclosing Party's possession and to
transfer such Knowledge and Expertise to the Recipient Party.

2.3 The Joint Project Steering Committee shall coordinate all
transfers of Knowledge and Expertise between CIBA-GEIGY and CCD hereunder and
shall make arrangements for the collaboration of the scientists and technical
experts of the parties, as the Committee deems appropriate. CCD shall keep the
Joint Project Steering Committee advised of CCD's progress on all pending
research and development projects on a quarterly basis.

3. SPECIAL RESEARCH PROJECTS

3.1 If either party (the "Requesting Party") shall determine that a
specific research or development project is needed in support of its business or
research plans and such project falls within the Field of Activity of the other
party (the "Research Party") and is based upon the Research Party's Knowledge
and Expertise, then upon the Requesting Party's written request (but subject to
approval by the Research Party under Section 3.2), such project shall be deemed
to be a Special Research Project and the Research Party shall undertake and
perform such Project for the Requesting Party upon, and subject to, the
following conditions:

(a) Each proposal for a Special Research Project shall be described
in a Project Memorandum (a "Project
<PAGE>
Memorandum"), setting forth in detail the purpose of the project, the activities
to be undertaken and the manner in which results are to be reported. A Project
Memorandum relating to a project expected to involve total Agreement Research
Cost in excess of $250,000 or not expected to be completed within 6 months after
it is commenced shall also specify project milestones and specific activities to
be undertaken or discontinued based upon results obtained at such milestones.

(b) Each Project Memorandum shall be signed by designated representatives
of the Research Party and the Requesting Party and shall include an undertaking
by the Requesting Party to reimburse the Research Party the Agreement Research
Cost of the research so undertaken and to pay any royalties which may be due
pursuant to Section 7.2, 7.3 or 7.4 hereof in respect of products resulting from
such Special Research Project.

(c) Any Knowledge and Expertise or Patent Rights developed during or
arising out of any Special Research Project shall be the property of the
Research Party, but shall be licensed and fully available to the Requesting
Party for use upon, and subject to, the terms of this Agreement.

(d) Each Project Memorandum shall set forth an estimate of the total
Agreement Research Cost which the Research Party reasonably expects to be
incurred by the time each project milestone is reached, and although the
Research Party shall not be bound by such estimate it shall promptly inform the
Requesting Party if the total Agreement Research Cost assigned in such estimate
to any milestone is exceeded or reasonably expected to be exceeded by more than
20% before such milestone is reached. Within 15 days after the end of each
quarter, the Research Party will report to, and bill the Requesting Party for
the Agreement Research Cost actually incurred during such quarter, and the
Requesting Party shall pay all such billings not later than 30 days after the
end of such quarter.

(e) The Requesting Party may cancel or reduce the scope of any Special
Research Project at any time by giving written notice to the Research Party.
Upon receipt of such notice, the Research Party shall immediately adjust its
activities relating to such Project accordingly, in the case of cancellation
taking only such steps as may be necessary to preserve the

<PAGE>
results of such Project already obtained. Notwithstanding such
cancellation or reduction in scope, the Requesting Party shall pay, in
accordance with the procedures set forth above, the full costs of such
Project, as incurred up to the receipt by the Research Party of such notice
and, in the case of any cancelled Project, any activities reasonably
undertaken to complete the termination of such Project, including full
reimbursement of any long-term expenditures or special commitments incurred
for purposes of such, Project to the extent such long-term expenditures or
special commitments are specified in a Project Memorandum. In the case of
any Project the scope of which has been reduced, thereafter the Requesting
Party shall reimburse the Research Party, in accordance with the procedures
set forth above, for the Agreement Research Cost incurred in connection
with the reduced research activities involved (which activities shall be
described in an amendment to the Project Memorandum which the Requesting
Party and the Research Party shall use their best efforts to enter into
promptly after the giving of the foregoing notice by the Requesting Party);
PROVIDED that such reimbursement shall include full reimbursement for any
long-term expenditures or special commitments specified in the original
Project Memorandum.

Furthermore, a Requesting Party which has requested that a Special
Project be performed hereunder shall, upon cancellation or reduction in
scope of such Project, reimburse the Research Party for the amount by which
the amount actually reimbursed on all the remaining Special Research
Projects of the Requesting Party during the twelve months following the
date of any such cancellation or reduction in scope is less than 80% of the
amounts previously budgeted to be reimbursed upon all Special Research
Projects of the Requesting Party, including any Special Research Projects
undertaken subsequent to the date of any such cancellation or reduction in
scope, within such twelve-month period. It is understood that both parties
will cooperate to minimize any losses or disruptions arising from any
cancellations or reductions in scope hereunder. The Research Party shall
continue to perform any pending Special Research Projects diligently and in
good faith as contemplated by the various Project Memoranda, and the
Requesting Party shall be allowed to have new Special Research Projects
performed to the extent
<PAGE>
feasible but subject in all instances to the terms of this Agreement.

(f) If the Requesting Party has any objection to the amount of such
billing, it shall nevertheless pay such billing in full, but may thereafter
cause the Research Party's records with respect thereto to be audited in
accordance with Section 13 hereof and thereafter will be entitled to a
refund of any amounts paid in excess of the amounts required hereunder.
Following such audit, the parties shall endeavor in good faith to resolve
any disagreement with respect to charges hereunder, but any disagreement
which cannot be so resolved shall be submitted to binding arbitration in
accordance with Section 14.

3.2 Each of the parties intends to commit limited additional research
resources as necessary for the conduct of Special Research Projects requested by
the other party subject to reimbursement of its Agreement Research Cost as
provided in this Section 3 and Appendix A. Notwithstanding the foregoing,
neither party shall have any obligation to undertake a Special Research Project
if such project would prejudice its ability to undertake research and
development projects within its own Field of Activity as determined by it in its
sole discretion.

4. CONFIDENTIALITY

4.1 Each party shall maintain as strictly confidential, and shall not
disclose to any third party other than its Affiliates or use for any purpose not
permitted by this Agreement, any Knowledge and Expertise received by such party
pursuant to this Agreement, except for information which is at the time when
disclosed hereunder or thereafter becomes generally known to the public, is
obtained by the party making such disclosure from a third party who has not
breached any obligation of confidence with respect to the subject matter of such
disclosure or was known to the party receiving such disclosure prior to the
time of receipt of such disclosure.

4.2 Each party shall ensure that its standard procedures for the
protection of its confidential Knowledge and Expertise shall operate to
protect against unauthorized disclosure by its (or its Affiliates') employees,
officers, agents and consultants of any confidential Knowledge and Expertise
such party may obtain from the other party pursuant to this Agreement. In
addition, if requested by the
<PAGE>
party making Knowledge and Expertise available, prior to disclosing any
Knowledge and Expertise to any of its (or its Affiliates') employees, agents,
officers or consultants, the party receiving such Knowledge and Expertise shall
require each such person who would receive, or be given access to, any such
Knowledge and Expertise to enter into an agreement, accepting and agreeing to be
bound by the terms of this Section 4. Thereafter, such party, upon the request
of the other party hereto, will take all such actions as may be necessary to
enforce the confidentiality obligations undertaken by such employees,
consultants, officers or agents pursuant to its standard confidentiality
procedures or this Section 4.

5. OWNERSHIP OF RESEARCH RESULTS

All Knowledge and Expertise developed or obtained after the Effective
Date and any Patent Rights resulting therefrom shall be owned by the party
making or developing such Knowledge and Expertise. Where representatives or
employees of both parties are jointly responsible for the development of any
Knowledge and Expertise hereunder, each party shall be deemed to be a co-owner
of such Knowledge and Expertise. In that event, each party shall retain the
exclusive royalty-free right to use such Knowledge and Expertise in such party's
Field of Activity, and both parties shall have the royalty-free nonexclusive
right to use and to license such Knowledge and Expertise outside of both of
their Fields of Activity, but any royalties or other income obtained from
licensing or otherwise making such Knowledge and Expertise available for
commercial use by third parties shall be shared equally by the parties.

6. LICENSES

6.1 Subject to the terms and conditions of this Agreement and to
licenses granted prior to the date hereof, CIBA-GEIGY hereby grants and agrees
to grant to CCD and its Affiliates a license under all of the Patent Rights and
Knowledge and Expertise of CIBA-GEIGY within CIBA-GEIGY's Field of Activity now
or at any time hereafter owned by CIBA-GEIGY, or in respect of which CIBA-GEIGY
has or hereafter shall acquire licensing rights and to the extent thereof, in
all countries of the world, to make, have made, use and sell products and to
practice processes covered thereby to the extent, but only to the extent, that
such Patent Rights and Knowledge and Expertise are used within the Field of CCD
Activity. Except as provided in
<PAGE>
Section 6.3, such license shall be on a nonexclusive basis without sublicensing
rights.

6.2 Subject to the terms and conditions of this Agreement and to
licenses granted prior to the date hereof, CCD hereby grants and agrees to grant
to CIBA-GEIGY and its Affiliates a license under all of the Patent Rights and
Knowledge and Expertise now or at anytime hereafter owned by CCD, or in respect
of which CCD has or hereafter shall acquire licensing rights and to the extent
thereof, in all countries of the world, to make, have made, use and sell
products and to practice processes covered thereby to the extent, but only to
the extent, that such Patent Rights and Knowledge and Expertise cover or relate
to the Field of CIBA-GEIGY Activity or the field of animal health. Except as
provided in Section 6.3, such license shall be on a nonexclusive basis without
the right to grant sublicenses.

6.3 The party granting a license pursuant to Section 6.1 or 6.2 (the
"Licensor") shall extend to the party so licensed (the "Licensee") exclusive
rights to the extent, but only to the extent set forth below as follows:

(a) To the extent permitted by applicable law, any license granted
pursuant to this Section 6 shall be exclusive with respect to any particular
disclosure (a "Disclosure") of Knowledge and Expertise (together with any Patent
Rights covering such Disclosure) (the "Exclusive Rights") for a period
commencing on the date when such Disclosure is made and ending on the earlier of
(i) five years from the date of such Disclosure, (ii) three years from the date
of the First Commercial Sale of such product in any country and (iii) the
Termination Date. Thereafter such license will revert permanently to being
nonexclusive.

(b) If the Licensor desires to utilize any of the Patent Rights or
Knowledge and Expertise as to which the Licensee has, or may have, Exclusive
Rights, the Licensor may give written notice to the Licensee requesting the
Licensee to state whether the Licensee intends to practice such Exclusive Rights
(i) for a product or process described in such notice or (ii) within a country
or group of countries specified in such notice. If the Licensee within 3 months
after receipt of such notice shall state by written notice delivered to the
Licensor that the Licensee intends to commercialize the product or process
described in such notice or within a country or group of countries specified in
such notice, then the Licensee's rights with respect thereto shall remain
exclusive for the period set forth in
<PAGE>
subsection (a); PROVIDED, HOWEVER, that if the Licensee shall fail to begin to
commercialize the Exclusive Rights with respect to such products or processes or
within such country or group of countries within 6 months from the delivery of
the Licensee's notice of its intent to so commercialize, then such Exclusive
Rights shall immediately cease so as to permit the Licensor to undertake, or to
license a third party to undertake, the activities specified in the Licensor's
notice. Furthermore, if the Licensee fails to continue diligently and in good
faith to commercialize a product or process or within a country or group of
countries as specified in the notice given by the Licensee, then the Licensee's
rights shall thereupon become nonexclusive and the Licensor shall thereupon be
entitled to practice, or to license a third party to practice, such rights as
and to the extent set forth in the preceding sentence.

(c) Notwithstanding any Exclusive Rights granted hereunder, CIBA-
GEIGY shall be free at all times to make, have made, use or sell any diagnostic
product which is commercialized in combination with a related therapeutic
product.

(d) Notwithstanding any other provision of this Section 6, to the
extent permitted by applicable law, the licenses granted in Sections 6.1 and 6.2
shall be on an exclusive basis (with sublicensing rights) within the Licensee's
Field of Activity for the life of the rights covered by such license with
respect to any products or processes which are developed or discovered in the
course of any Special Research Project undertaken for the Licensee by the
Licensor.

6.4 The owner of any Patent Rights and Knowledge and Expertise shall
have the unrestricted right to practice and to license to third parties under
such Patent Rights and Knowledge and Expertise as such party sees fit for all
possible uses and activities except to the extent an exclusive license within a
Field of Activity has been granted to the other party. In such event, such
exclusive Licensee shall have the unrestricted right to practice and to license
third parties under such Patent Rights and Knowledge and Expertise within such
party's Field of Activity. If the rights of such Licensee shall thereafter
become nonexclusive, then such Licensee's right to grant sublicenses shall
thereupon cease (such sublicensing rights then reverting to the Licensor), but
any sublicenses granted by the Licensee while its rights were exclusive shall
remain in full force
<PAGE>
and effect for the life of the Patent Rights and the Knowledge and Expertise
covered by such sublicense.

6.5 Any Licensee licensed on a nonexclusive basis (without the right
to grant sublicenses) hereunder shall nonetheless have the right to extend to
its customers the right to use Licensed Products within such Licensee's Field of
Activity.

6.6 The licenses granted and to be granted under this Agreement shall
at the request of either party be confirmed from time to time by individual
license agreements reflecting the provisions of this Agreement.

7. KNOW-HOW FEE; ROYALTIES

7.1 In consideration of the access granted to CIBA-GEIGY's Knowledge
and Expertise, CCD shall pay to CIBA-GEIGY an access fee in the amount of one
percent of the aggregate Net Sales of CCD anywhere in the world for a period of
six years from the Effective Date whether or not the products sold utilize to
any extent such Knowledge and Expertise.

7.2 In addition to the access fee referred to in Section 7.1, CCD
shall pay to CIBA-GEIGY a royalty at the rate of three percent of Net Sales of
all products:

(a) the manufacture, use or sale of which is covered by any Patent
Rights of CIBA-GEIGY; or

(b) which utilize unique biological materials (including cellular
material) or possess unique biological properties first developed or
identified by CIBA-GEIGY or are derived from such biological materials;
provided that if CCD can demonstrate that substantially similar biological
materials were available to be so utilized for the payment of royalties at
a lower rate (or without payment of any royalty) at the time of the First
Commercial Sale of such product in any country, then CCD shall pay
royalties at such lower rate. Products which represent only refinements or
minor improvements to such biological materials previously known to CCD
shall not give rise to a royalty obligation hereunder.
<PAGE>
7.3 CIBA-GEIGY shall pay to CCD a royalty at the rate of three
percent of Net Sales of all of CIBA-GEIGY's sales of products:

(a) the manufacture, use or sale of which is covered by any Patent
Rights of CCD; or

(b) which constitute novel systems or technology for the delivery of
drugs or for the diagnosis of human disease conditions first developed or
identified by CCD; provided that if CIBA-GEIGY can demonstrate that
substantially similar systems or technology were available to be so
utilized for the payment of Royalties at a lower rate (or without payment
of any royalty) at the time of the First Commercial Sale of such product in
any country, then CIBA-GEIGY shall pay royalties at such lower rate.
Products which represent only refinements or minor improvements to such
systems or technology previously known to CIBA-GEIGY shall not give rise to
a royalty obligation hereunder.

7.4 Notwithstanding the provisions of Section 7.2 and 7.3,

(a) the royalty rate applicable to Net Sales of any party with
respect to any product referred to in Section 7.2 or 7.3, as the case may
be, shall not exceed the lowest royalty rate payable to the Licensor in
respect of any license (other than a royalty-free cross license) granted by
the Licensor to any third party anywhere in the world to make, have made,
use or sell a comparable product incorporating the same Patent Rights or
Knowledge and Expertise; and

(b) at the request of either party, the royalty rate provided for in
Section 7.2 or 7.3, as the case may be, or, if appropriate, the Net Sales
base upon which royalties are calculated shall be adjusted to reflect
appropriately (i) the market value of the Patent Rights or other licensed
rights upon which such royalty is based and (ii) the utility of product
components, such as instruments, apart from the incorporation therein of
such Patent Rights or other licensed rights.

7.5 Royalties shall be payable pursuant to Sections 7.2, 7.3 and 7.4
regardless of whether the Patent Rights, Knowledge and Expertise or any products
or processes resulting therefrom giving rise to such royalty obligations
<PAGE>
include, in whole or in part, the results of any Special Research Projects. The
aggregate royalties payable pursuant to Section 7.2, 7.3 or 7.4, as the case may
be, shall not exceed the percentage of Net Sales provided for in such Section,
notwithstanding that any products giving rise to such royalty obligations may
utilize or be based on Patent Rights to more than one patent, more than one item
of Knowledge and Expertise or a combination of Patent Rights and Knowledge and
Expertise. Neither party shall incur any royalty obligation in respect of the
manufacture and use of any products for its own or its Affiliates' research and
development activities.

7.6 The obligations to make royalty payments pursuant to Sections
7.2, 7.3 and 7.4 shall relate to Net Sales during time periods to be determined
as provided below on a country-by-country basis. The time period in each
country shall not be shorter than the term in such country of any Patent Rights
covering the manufacture, use or sale of the product giving rise to the royalty
obligation. If such manufacture, use and sale are not covered by any Patent
Rights, the time period in each country shall expire on the date which is the
earlier of (i) ten years from the First Commercial Sale in such country and (ii)
fifteen years from the First Commercial Sale in any of the United States, the
United Kingdom, West Germany, France and Japan. Where the obligation to pay
royalties arises from both Patent Rights and nonpatented materials, royalties
shall be payable for the longer of the two time periods determined pursuant to
the two preceding sentences.

7.7 In the event that either party shall grant a sublicense to any
third party under any of the Patent Rights or Knowledge and Expertise
exclusively licensed to it hereunder, it shall pay to the other party to this
Agreement a royalty on the Net Sales of its sublicensee (during the term of such
sublicense) equal to the greater of (i) the royalty applicable to such Net
Sales, as determined pursuant to Sections 7.2, 7.3 and 7.4 hereof, or (ii) fifty
percent of any royalty received from such sublicensee. The party granting such
sublicenses shall be responsible to make royalty payments directly to the other
party on account of the sales of its sublicensees and shall insure that the
books and records of such sublicensees are available for examination and
verification by such other party in accordance with the procedures set forth
herein.

7.8 Within 30 days after the end of each of its accounting quarters,
each party having a royalty obligation
<PAGE>
hereunder shall (i) deliver to the other party a written statement showing in
reasonable detail its best estimate of its Net Sales of Licensed Products and
the Net Sales of Licensed Products of its sublicensees during such quarter and
accounting for royalties payable hereunder or showing that no royalty shall be
payable for such period and (ii) make payment of such royalties based on such
estimate, subject to correction based on such party's written statement of its
actual Net Sales for such quarter at the time the next statement is delivered
pursuant to clause (i) above. Royalties shall be payable tn United States
dollars. In the event that royalty payments are to be made by CIBA-GEIGY to CCD
in respect of any quarter, all applicable Net Sales for such quarter denominated
in currencies other than Swiss Francs or United States dollars shall be
translated into Swiss Francs in accordance with CIBA-GEIGY's standard accounting
practices. Thereafter, all applicable Net Sales for such quarter originally
denominated in, or so translated into, Swiss Francs shall be translated into
United States dollars at the spot exchange rate quoted in THE WALL STREET
JOURNAL (EASTERN EDITION) for the last business day of such quarter. In the
event that royalty payments are to be made by CCD to CIBA-GEIGY in respect of
any quarter, all applicable Net Sales for such quarter denominated in currencies
other than United States dollars shall be translated into United States dollars
at such spot exchange rate.

7.9 If governmental regulations prevent remittance from a foreign
country with respect to sales made in that country, the obligation under this
Agreement to pay royalties in respect of sales in that country shall be
suspended (but royalties shall continue to accrue) until such remittances are
possible, and the party entitled to such payments shall have the right, upon
giving written notice to the other party, to receive payment in that country in
the local currency.

8. INFRINGEMENT OF RIGHTS OF THIRD PARTIES

8.1 Neither party makes any representation or warranty that the
practice or use of any of the Patent Rights or Knowledge and Expertise licensed
or disclosed by such party do not or will not infringe or otherwise abridge or
interfere with the rights of any third party.

8.2 In the event any third party shall assert against the Licensee
that the practice of any of the Patent Rights or Knowledge and Expertise
infringes any rights of such third party, the Licensee shall have the exclusive
<PAGE>
right to defend or otherwise dispose of such claim as such Licensee deems
appropriate; provided, however, within 60 days after the assertion of any claim
by such third party, the Licensee shall inform the Licensor of the nature and
basis of such claim and shall transmit with such notice copies of any demand
letters or legal pleadings. If the Licensor shall elect by written notice
delivered to the Licensee within 60 days after receipt of Licensee's notice to
undertake the defense of such claim, then the Licensor shall thereupon assume
the defense of such claim and shall then have full authority to defend and
dispose of such claim as it deems appropriate, and the Licensor shall pay all
defense costs.

8.3 Unless the Licensor elects to assume the defense of any claim
hereunder, the Licensee shall be entitled to offset fifty percent of all defense
costs and all amounts paid in settlement of such claim against any royalties
which may be due the Licensor hereunder and the Licensor shall refund to the
Licensee any royalties paid by Licensee after the date any such claim was
asserted to the extent such fifty percent has not been recovered through such
right of offset.

9. INFRINGEMENT BY THIRD PARTIES

9.1 In the event either party becomes aware that a third party is
infringing any Patent Rights licensed hereunder, CCD and CIBA-GEIGY shall confer
among themselves as to the manner in which they will proceed with respect to
such infringement. The Licensor shall have the exclusive right to commence and
prosecute an action for patent infringement against such infringing party. If
the Licensor undertakes such action, any damages recovered in such action first
shall be applied to reimburse the Licensor for all such expenses not otherwise
reimbursed and next shall be paid to the Licensor and the Licensee in proportion
to their actual damages upon which such recovery was based. If the Licensor
fails to commence an action to prevent such infringement within 60 days after
learning of the facts constituting such infringement, or if the Licensor agrees
to settle any such action on a basis which would allow such infringement or
alleged infringement of an exclusive license to continue, then the Licensee
shall cease to be obligated to pay royalties in respect of Net Sales of any
applicable Licensed Product until such infringement shall have ceased.

9.2 If any of the Patent Rights shall be finally adjudicated to be
invalid or if the manufacture, use or sale
<PAGE>
of a product which gives rise to a royalty hereunder shall be determined not to
constitute an infringement of a given patent, then royalty payments with respect
to the activity covered by such adjudication, to the extent such royalty
payments are based solely on such Patent Rights, shall forthwith cease.

10. EFFECTIVE DATE

This Agreement shall become effective on and as of the Closing Date
under the Asset Transfer Agreement dated as of July 15, 1985 among Gilford
Instrument Laboratories, Inc. ("Gilford"), Corning and CCD.

11. TERMINATION

11.1 This Agreement shall continue in effect until terminated by
either of the parties on one of the grounds set forth below. Termination of
this Agreement shall be effective immediately or on the date specified in any
required notice (the "Termination Date") upon the occurrence of any of the
following conditions:

(i) Upon six months' prior written notice if either Corning or CIBA-
GEIGY (together in each case with its Affiliates) shall cease to own forty
percent of the voting stock of CCD;

(ii) Upon six months' prior written notice if either party concludes
that the business conditions giving rise to the participation of CIBA-GEIGY
in CCD and in the activities contemplated under this Research Agreement
have so changed as to render this Agreement no longer a realistic vehicle
for collaboration in the area of pharmaceuticals and diagnostic products;
PROVIDED that any such notice may not be given prior to seven and one-half
years from the date hereof;

(iii) Upon six months' prior written notice upon the termination
of the Shareholders' Agreement dated as of July 15, 1985, among CIBA-GEIGY,
CIBA-GEIGY Corporation, Corning and Gilford;

(iv) Immediately upon the giving of written notice if either party
shall continue in material breach of its obligations hereunder more than 90
days after notice of such breach is given by the other party hereto; or
<PAGE>
(v) Immediately without notice if either party hereto shall file any
petition seeking relief from its creditors, through an assignment for the
benefit of creditors, the filing of a petition in bankruptcy or otherwise,
or upon the giving of written notice if lenders holding more than
$5,000,000 of debt of such party shall declare it to be in default under
the terms of such loan arrangements.

11.2 In the event of such termination, all licenses granted hereunder
with respect to Patent Rights and Knowledge and Expertise and all royalty
obligations with respect thereto shall continue upon and subject to the terms of
this Agreement, provided, however, neither party shall obtain any rights to
Patent Rights arising after the date any notice of termination is given (or the
Termination Date if notice is not required) or to any Knowledge and Expertise
which has not been disclosed as of such date. For a period of 18 months
following the giving of any notice of termination pursuant to paragraph (i),
(ii) or (iii) of Section 11.1, either party, as Research Party, shall continue
to undertake Special Research Projects for the other party, as Requesting Party,
upon and subject to the conditions set forth in Section 3, and the Research
Party shall continue all pending Special Research Projects or Special Research
Projects undertaken within such 18-month period for a period not to exceed 24
months following the giving of such notice of termination. The parties shall
use their best efforts to complete Special Research Projects to the extent
feasible (and subject to the conditions of Section 3) within such 24-month
period and failing such completion to provide for the orderly transfer of such
Special Research Projects and the results thereof to the Requesting Party (or
its designee). Notwithstanding any termination of the other provisions of this
Agreement, the parties shall continue to observe the provisions of Sections
3.1(c), 4, 5, 6, 7, 8, 9, 12, 13 and 14 hereof with respect to all rights
granted to Patent Rights or disclosures made of Knowledge and Expertise as of
the Termination Date.

12. LIMITATION OF ASSIGNMENT

This Agreement is personal in nature and neither of the parties hereto
shall, without the consent of the other, assign or transfer its rights or
obligations hereunder to another company or person, except as herein expressly
provided or permitted or except to a successor to substantially the whole of its
business and then only subject to the terms and provisions hereof, except that
<PAGE>
CIBA-GEIGY may assign or transfer all or any portion of its rights hereunder
(including its rights under licenses contemplated by Section 7) to any of its
Affiliates which shall agree to be bound by the provisions hereof relating to
the assigned rights with the same effect as if it were named as "CIBA-GEIGY"
therein but CIBA-GEIGY shall continue to be responsible for performance by such
Affiliate of its obligations hereunder. Subject to the foregoing provisions of
this Section 12, this Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and assigns.

13. MAINTENANCE OF BOOKS AND RECORDS; AUDITS

Each party shall maintain true and complete books of account
containing an accurate record of all data necessary for the proper computation
of any payments due from such party under the terms of this Agreement. Each
party shall have the right, by the independent certified public accountant
employed by the other party to conduct such other party's regular annual audit
or by a firm of independent public accountants selected by mutual agreement of
the parties hereto, or if the parties cannot agree, by the American Arbitration
Association (subject to any applicable laws), to examine such books at all
reasonable times (but not more than once in each calendar year) within one year
after the end of the fiscal year to which they relate for the purpose of
verifying such payments. Such examination shall be made during normal business
hours at the place of business of the party being audited. If the verification
hereunder is performed at substantially the same time as and by the independent
certified public accountants employed by the party being audited to conduct its
regular annual audit, the fees and expenses of the accountants performing said
verification shall be borne by such party. In any other event, the fees and
expenses of the accountants performing such verification shall be borne by the
party requesting such audit.

14. ARBITRATION

Any controversy or claim arising out of this Agreement with respect to
the payment of royalties pursuant to Section 7, the payment of Agreement
Research Cost pursuant to Section 3 or apportionment of damages collected from
infringers pursuant to Section 9 shall be settled by arbitration in accordance
with the rules of the American Arbitration Association, and judgment upon the
award rendered by the Arbitrator(s) may be entered in any court
<PAGE>
having jurisdiction thereof. Any arbitration conducted hereunder shall take
place in New York, N.Y. Except as specifically provided in this Section 14, no
other controversy or claim hereunder shall be submitted to arbitration unless
both parties agree to such arbitration in a separate document to such effect.

15. NOTICES

Any notices required or permitted to be given to, or served upon,
either party hereto pursuant to this Agreement shall be sufficiently given or
served if sent to such party by registered air mail and (if urgent) by telex,
addressed to it at its address and telex call number, as set forth below, or to
such other address or call number as it shall designate by written notice given
to the other party:

All notices to CCD shall be addressed as follows:

Ciba Corning Diagnostics Corp.
Medfield Industrial Park
Medfield, Massachusetts 02052
Attention: Vice President, Finance
Telex No.: 192809011 (Quik-Comm System)
Acknowledgment: MEDFIELD CTR
Rapifax: 617-359-2879

All notices to CIBA-GEIGY shall be addressed as follows:

CIBA-GEIGY Limited
CH-4002 Basel
Switzerland
Attention: Legal Department
Telex No.: 62991
Answerback: CIGY CH

With a copy in each case to Corning and CIBA-GEIGY Corporation, addressed
as follows:

Corning Glass Works
Houghton Park
Corning, New York 14831
Attention: Secretary
Telex No.: 932499
Answerback: CORGLAS A
<PAGE>

CIBA-GEIGY Corporation
556 Morris Avenue
Summit, New Jersey 07901
Attention: President
Pharmaceuticals Division
Telex: 138696
Answerback: Through Ardsley computer
CIBA GEIGY YKS

16. AMENDMENTS

No modification or amendment of this Agreement shall be valid or
binding upon the parties hereto unless made in writing and signed on behalf of
each of the parties hereto by their respective duly authorized officers.

17. GOVERNING LAW

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

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

Ciba Corning Diagnostics Corp.

By: /s/ Robert L. Sullivan
-------------------------------------

CIBA-GEIGY Limited

/s/
----------------------------------------
<PAGE>
APPENDIX A

AGREEMENT RESEARCH COSTS

The Agreement Research Costs of a party shall be deemed to be:

(a) all amounts paid or accrued by such party and its Affiliates
during said period in respect of compensation to research personnel directly
engaged substantially full time in work on Special Research Projects or, in the
case of personnel so engaged only part time, a portion of their time devoted to
Special Research Projects, plus

(b) an amount equal to 100% of such compensation so paid or accrued
during said period, such amount being in lieu of any charge or other amount in
respect of materials, supplies, tools, equipment, utilities, rent, depreciation,
overhead or other like items of expense paid or incurred by such party.

The term "compensation", as used herein, includes, without limitation, salaries,
bonuses and commissions; the cost of or amounts charged in the accounts of a
party as provisions for, pension or retirement plans, profit-sharing plans,
medical benefits, group or other insurance, social security, old age and
unemployment taxes, and other employees benefits or taxes.

<PAGE>

EXHIBIT 10.65

[CONFIDENTIAL TREATMENT REQUESTED]

[Certain information has been omitted herein pursuant to a request for
confidential treatment pursuant to Rule 24b-2.]

LICENSING AGREEMENT

THIS AGREEMENT shall be effective on the last date of execution hereof by
and between MILES LABORATORIES, INC. (MILES), a corporation of the State of
Delaware and having its principal place of business at 1127 Myrtle Street,
Elkhart, Indiana 46515 and CIBA CORNING DIAGNOSTICS CORP. (CIBA CORNING), a
corporation of the State of Delaware and having its principal place of
business at 63 North Street, Medfield, Massachusetts 02052.

WHEREAS, MILES owns all rights to United States Patent No. 4,380,580 and
its corresponding foreign-filed counterparts covering certain
chemiluminescent specific binding assay methods and reagent systems;

WHEREAS, CIBA CORNING owns or controls patent rights and confidential
know-how relating to certain chemiluminescent specific binding assay methods
and reagent systems;

WHEREAS, MILES intends to research and develop reagent systems for
performing chemiluminescent specific binding assays which incorporate the
above CIBA CORNING patent rights and/or confidential know-how;

<PAGE>

WHEREAS, CIBA CORNING intends to develop and market instruments and
reagent systems for performing chemiluminescent immunoassays and desires to
receive a nonexclusive license under the above MILES patent rights;

WHEREAS, MILES is willing to grant such a license under the terms hereof
which provide in part that MILES receive certain access and license rights to
patent rights, know-how, and other proprietary rights owned or licensed to
CIBA CORNING concerning its chemiluminescent immunoassay instrument and
reagent systems; and

WHEREAS, CIBA CORNING is willing to grant MILES such access and licensing
rights under the terms hereof.

NOW THEREFORE, in consideration of the mutual promises herein, the parties
agree as follows:

ARTICLE 1

DEFINITIONS

1.1 "CLAIM" shall mean a patent claim which defines an invention which the
patentee has been granted the right to exclude others from making, using, or
selling throughout the granting country. The term does NOT include any claim
which has

<PAGE>

been disclaimed, cancelled, or held to be invalid by a court of competent
jurisdiction in a final decision from which no appeal has or can be taken.

1.2 "LICENSED PATENTS" and "LICENSED PATENT APPLICATIONS" shall mean the
patents and patent applications, including U.S. Patent No. 4,380,580 and its
foreign filed counterparts, listed in Exhibit A attached hereto.

1.3 "LIQUID-PHASE" as applied to any assay shall mean an assay in which
the assay reaction and/or the measurement of generated signal takes place in
the presence of a bulk solution or liquid, and specifically shall NOT include
a solid-phase assay in which an assay reaction and/or the measurement of
generated signal takes place in or on a solid, porous or nonporous, carrier
such as, without limitation, a reagent strip, which solid carrier is not in
contact with a bulk solution or liquid during such reaction or measurement.

1.4 "CHEMILUMINESCENT IMMUNOASSAY" shall mean a LIQUID-PHASE heterogeneous
chemiluminescent assay employing a chemiluminescent reactant as label and
wherein the substance or condition to be determined, i.e., analyte of
interest, is determined by binding thereto of an antibody or other specific
binding protein.

3
<PAGE>

1.5 "CHEMILUMINESCENT BINDING ASSAY" shall mean a LIQUID-PHASE
chemiluminescent assay employing a chemiluminescent reactant as label and
wherein the analyte of interest is determined by binding of any kind of
specific binding substance such as an antibody or other binding protein,
nucleic acid, or the like. A CHEMILUMINESCENT IMMUNOASSAY is one type of
CHEMILUMINESCENT BINDING ASSAY.

1.6 "LICENSED PRODUCT" shall mean a product for performing a
CHEMILUMINESCENT IMMUNOASSAY only, and no other product, which when made,
used, or sold would infringe a CLAIM of a LICENSED PATENT.

1.7 "INSTRUMENT SYSTEM" shall mean the hardware and software components
of an instrument capable of running CHEMILUMINESCENT BINDING ASSAYS.

1.8 "MILES" and "CIBA CORNING" shall include, unless expressly provided
otherwise herein, all of their respective Affiliates, and shall in the case
of MILES specifically include Bayer AG, Germany, and its Affiliates.
Affiliates shall mean any corporation or other business entity controlled by,
controlling, or under common control with the affected party, wherein control
means direct or indirect beneficial ownership of at least fifty

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<PAGE>

percent (50%) of the voting stock or the maximum amount allowed under local
law, or at least fifty percent (50%) interest in the income, of such
corporation or other business entity.

1.9 "NET SALES" shall mean invoiced price for sales less actual credited
allowances to customers for spoiled, damaged, outdated, or returned LICENSED
PRODUCT.

1.10 "CONFIDENTIAL MATTER" shall mean information or material, whether of
a technical, business, or other nature, which constitutes a trade secret,
know-how or other confidential asset not within the public domain.

1.11 "PROPRIETARY TECHNOLOGY" shall mean patent rights and CONFIDENTIAL
MATTER.

ARTICLE 2

LICENSE TO CIBA CORNING

2.1 MILES grants to CIBA CORNING a worldwide, nonexclusive,
nontransferable right and license, with no right to grant any sublicenses, to
make, have made, use, and sell LICENSED PRODUCTS. Accordingly, the license to
CIBA CORNING includes the right of CIBA CORNING and purchasers of its
LICENSED PRODUCTS to practice

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<PAGE>

methods covered by the LICENSED PATENTS and LICENSED PATENT APPLICATIONS only
by using such LICENSED PRODUCTS.

ARTICLE 3

ROYALTY TO MILES

3.1 In consideration for the above license, CIBA CORNING shall pay MILES
a royalty of [Confidential Treatment Requested] of NET SALES of LICENSED
PRODUCTS by CIBA CORNING. LICENSED PRODUCT shall be considered as sold when
invoiced to the customer. Royalty shall be due for sales to an Affiliate only
if LICENSED PRODUCT is consumed by such Affiliate, in which case, royalty shall
be calculated from the invoiced price to such Affiliate or a reasonable
arms-length invoice price if such Affiliate is treated on a more favorable
basis than the general trade. Otherwise, royalty shall be due when sold by
such Affiliate to a third party and NET SALES calculated based on the
invoiced price to such party.

3.2 No royalty shall be due for sales of a LICENSED PRODUCT covered by a
LICENSED PATENT APPLICATION but not by a LICENSED PATENT.

3.3 If during the term of the license granted to CIBA CORNING hereunder
MILES grants a license to a third party other than an Affiliate to make, have
made, use, or sell LICENSED

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<PAGE>

PRODUCT at a royalty rate that is less than [Confidential Treatment Requested],
MILES shall so notify CIBA CORNING in writing and the royalty rate set forth in
Paragraph 3.1 above shall thereupon become the same as the royalty rate for such
third party.

ARTICLE 4

PAYMENTS AND RECORDS

4.1 CIBA CORNING shall keep complete and accurate records containing all
information required for the computation and verification of the royalties to
be paid hereunder.

4.2 CIBA CORNING shall, upon request of MILES, permit an independent
public accountant selected by MILES to have access during ordinary business
hours to such records as may be necessary to determine either the accuracy of
any report or the sufficiency of any payment made under this Agreement within
two (2) years prior to such request. Such accountant shall disclose to MILES
only information necessary to inform MILES of:

a) the accuracy of the reports of CIBA CORNING and payments to MILES; and

b) the extent of any inaccuracy or noncompliance.

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<PAGE>

The accountant shall be paid by MILES unless a deficiency of greater than ten
percent (10%) is reported, whereupon CIBA CORNING shall pay all such
accountant costs and fees.

4.3 On or before thirty (30) days after March 31, June 30, September 30,
and December 31 of each year throughout the term of this Agreement, CIBA
CORNING shall deliver to MILES a quarterly written statement of account of
NET SALES of LICENSED PRODUCT. The first written statement delivered to MILES
shall include an accounting of all NET SALES of LICENSED PRODUCT which
occurred prior to the effective date hereof.

4.4 Payment of royalties shall accompany each statement submitted in
accordance with Paragraph 4.3 above.

4.5 If the manufacture, use or sale of a LICENSED PRODUCT in a particular
country infringes a dominant patent of a third party, CIBA CORNING shall,
upon written notice to MILES, have the right to deduct from royalty due MILES
on account of sales of such LICENSED PRODUCT in such country any royalty
required to be paid to such third party to continue the manufacture, use and
sale thereof, provided, however, that any such deduction shall not exceed
fifty-percent (50%) of such royalty due MILES. For the purposes of this
Paragraph, a dominant patent shall mean a patent having a claim that is of
such breadth that there is no

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<PAGE>

subject matter of any claim in the LICENSED PATENTS in such country that
could be made, used and sold without infringing such patent.

4.6 If royalties are not paid when due, interest shall be accrued on the
unpaid royalties from the date due until paid, at a rate per annum which
shall be the lesser of either:

a) the prime rate of the Citibank, N.A., New York, then in force for
short-term borrowing; or

b) the maximum legal rate then permitted under the laws of the
Commonwealth of Massachusetts.

4.7 All amounts due hereunder shall be payable in United States dollars.
All royalty due as a result of sales in countries foreign to the United
States shall be converted for calculation purposes into equivalent United
States dollars at the exchange rate of Citibank, N.A., New York, at the close
of business on the last business day of the quarterly reporting period.

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<PAGE>

ARTICLE 5

MILES' PATENTS

5.1 MILES shall pay for all expenses in prosecuting, maintaining, and
litigating the LICENSED PATENTS and LICENSED PATENT APPLICATIONS. MILES shall
maintain the LICENSED PATENTS in all countries in which CIBA CORNING is
selling LICENSED PRODUCT and paying MILES royalty therefor.

5.2 CIBA CORNING shall provide MILES with any reasonable assistance in
furtherance of MILES' performance in Paragraph 5.1 above, provided that MILES
requests such assistance in writing and is willing to either pay CIBA CORNING
or credit CIBA CORNING against royalties for CIBA CORNING's reasonable
expenses in providing such assistance.

5.3 MILES warrants that it has good, clear title to the LICENSED PATENTS
and LICENSED PATENT APPLICATIONS.

5.4 MILES shall retain the exclusive right and power to institute and
prosecute, at its sole discretion, actions for infringement of any LICENSED
PATENT and to seek and receive any relief appropriate under the governing
law. However, if during the term of the license granted to CIBA CORNING
hereunder CIBA CORNING notifies MILES in writing of infringement by a third

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<PAGE>

party of any LICENSED PATENT in a particular country on account of the
manufacture, use or sale of a product substantially competitive with a then
existing LICENSED PRODUCT sold by CIBA CORNING in such country, and MILES
does not within a period of one (1) year from the date of such notice
(a) institute legal action to attempt to abate such infringement or cause it
to cease, or (b) cause such infringement to cease by means deemed appropriate
by MILES other than legal action and including the grant of a license, then
CIBA CORNING shall have the right to withhold any and all royalties due
thereunder for sales of such LICENSED PRODUCT in such country after the end
of such one (1) year period; provided, however, that if MILES shall institute
legal action against one infringer of its LICENSED PATENTS, it shall not be
obligated to institute legal action against a second or subsequent infringers
during the pending of such action. If after CIBA CORNING has rightfully
begun withholding royalty to MILES the infringement ceases for whatever
reason, MILES shall have the right to reinstate the royalty due hereunder by
written notice to CIBA CORNING, and if such cessation occurred as the result
of legal action taken by MILES, CIBA CORNING shall, within ninety (90) days
of such notice, pay MILES fifty-percent (50%) of all royalty withheld because
of such infringement.

5.5 Except as provided expressly above, nothing in this Agreement shall
be construed as:

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<PAGE>

(a) A warranty or representation by MILES as to the scope or validity of
any CLAIM in any LICENSED PATENT;

(b) A warranty or representation by MILES that any product made, used, or
sold by CIBA CORNING under any license granted hereunder is or will be
free from infringement of patents of any third parties;

(c) An obligation or requirement on the part of MILES to bring or prosecute
any action or suit against any third party for infringement of any
LICENSED PATENT;

(d) Conferring a right to CIBA CORNING to use in advertising, publicity,
or any other manner any trademark or trade name of MILES without
specific written consent; or

(e) A warranty or representation by MILES as to the safety or efficacy of
any LICENSED PRODUCT made, used, or sold by CIBA CORNING.

5.6 CIBA CORNING shall mark LICENSED PRODUCTS with the appropriate patent
numbers of the covering LICENSED PATENTS in compliance with the laws of
the country in which such PRODUCTS are sold.

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<PAGE>

[Confidential Treatment Requested]

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<PAGE>

[Confidential Treatment Requested]

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<PAGE>

[Confidential Treatment Requested]

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<PAGE>

[Confidential Treatment Requested]

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<PAGE>

[Confidential Treatment Requested]

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<PAGE>

[Confidential Treatment Requested]

<PAGE>

[Confidential Treatment Requested]

<PAGE>

[Confidential Treatment Requested]

<PAGE>

[Confidential Treatment Requested]

<PAGE>

[Confidential Treatment Requested]

8.1 All information and materials exchanged between the parties
in performing hereunder shall be deemed CONFIDENTIAL MATTER as
provided below.

8.2 CONFIDENTIAL MATTER received by a party from the other
shall not be disclosed by such receiving party to any third party,
or used by such receiving party for its benefit, or that of a third
party, except as expressly provided herein.

8.3 To be accorded treatment as CONFIDENTIAL MATTER, however,
such MATTER;

<PAGE>

(a) must be first disclosed to the receiving party in
writing and plainly marked "Confidential", or similar
words: or

(b) if first disclosed orally, must be reduced to writing
by the disclosing party and plainly marked "Confidential",
or similar words, and delivered to the receiving party
within ninety (90) days of its first oral disclosure to
the receiving party; or

(c) if a physical thing, must be marked "Confidential", or
similar words, or be accompanied by a writing
specifically identifying such thing as "Confidential".

Information and material provided by one party to the other
hereunder which is not identified as "Confidential" as provided
above shall be considered as given and received without any
obligation of confidentiality or nonuse and the receiving party
shall be free to use such information in any way it sees fit,
subject only to any rights that the disclosing party may have under
the Patent Laws.

8.4 The terms of this Agreement, including all Exhibits, shall
be considered CONFIDENTIAL MATTER.

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<PAGE>

8.5 This Agreement shall supersede the Letter of Confidentiality dated
May 13, 1986 between the parties, attached hereto as Exhibit C, and all
information protected thereunder shall be considered CONFIDENTIAL MATTER
hereunder and subject to the terms and conditions hereof.

8.6 The obligations of confidentiality and nonuse of this ARTICLE 8 shall
not apply to information or material:

(a) Which is known by the receiving party prior to receipt from the
disclosing party as evidenced by documents in the possession of
the receiving party at the time of disclosure,

(b) Which, after receipt from the disclosing party, is disclosed to the
receiving party by a third party having the legal right to do so,

(d) Which becomes available to the public after receipt from the
disclosing party through no fault of the receiving party,

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<PAGE>

(e) Which is required, in the opinion of legal counsel of the receiving
party, to be disclosed for securing approval of governmental health
regulatory agencies, including but not limited to the U.S. Food and
Drug Administration, to market products contemplated hereunder,
provided that the receiving party shall use its reasonable efforts to
seek to obtain from such agencies such protection for such information
against public disclosure as may be legally available,

(f) Which is required, in the opinion of legal counsel for the receiving
party, to be disclosed for the filing of patent applications by the
receiving party, provided that the disclosing party is timely advised
of the receiving party's intention to include such information in a
patent application of the receiving party and the disclosing party
does not notify the receiving party within thirty (30) days of its
objection to such disclosure,

(g) Which is reasonably necessary to be disclosed by the receiving party
to its individual agents or third parties who require knowledge hereof
in order to perform their normal duties or services, such as legal
counsel, certified public accountants, and the like.

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<PAGE>

provided that such agents and third parties are advised of and
acknowledge the confidential nature of such disclosure, or

(h) Which is otherwise reasonably necessary to be disclosed in order to
perform hereunder, including marketing and promotional activities
relating to successfully developed Assays.

8.7 Each party shall use the same level of care in complying with the
obligations hereof respecting CONFIDENTIAL MATTER as it does with respect to
its own information of similar nature. The parties mutually represent and
warrant that each and every employee who will have access to the other
party's CONFIDENTIAL MATTER hereunder shall be under contractual obligation
not to disclose or use such CONFIDENTIAL MATTER except as directed by such
party.

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<PAGE>

ARTICLE 9

TERM AND TERMINATION

9.1 Either party may terminate this Agreement at anytime if the other
party fails to perform any material covenant, condition, or limitation
herein, provided such other party shall not have remedied its failure within
sixty (60) days after receipt of written notice of such failure.

9.2 If performance of this Agreement or any part hereof by either party
shall be rendered unenforceable or impossible under, or in conflict with any
law, regulation, or official action by any government agency having
jurisdiction over such party; then such party shall not be considered in
default by reason of failure to perform and the validity of all remaining
provisions hereof shall not be affected by such result.

9.3 CIBA CORNING may terminate that portion of this Agreement consisting
of ARTICLES 2, 3, 4 and 5 concerning the nonexclusive license grant by MILES
at any time for any reason upon ninety (90) days written notice to MILES,
provided that any such termination shall not relieve CIBA CORNING of the
obligation to pay royalties or make any other payments accruing to MILES
prior to the effective termination date and further that the remaining

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<PAGE>

portion hereof, particularly the provision of ARTICLES 6, 7 and 8 shall be
unaffected and continue in full force and effect.

9.4 Unless earlier terminated by CIBA CORNING as provided in Paragraph
9.1 or 9.3 above, the provisions of ARTICLES 2, 3, 4 and 5 shall continue
until the expiration of the last patent to expire in the LICENSED PATENTS.

9.5 The provisions of ARTICLES 6 and 7 shall remain in full force and
effect until the parties mutually agree in writing to their termination,
unless earlier terminated under the provisions of Paragraph 9.1 above,
provided, however, that the provisions of ARTICLES 6 and 7 shall terminate
upon written notice by CIBA CORNING if MILES does not approach CIBA CORNING
to negotiate for the commercialization of a MILES Assay under Paragraph 6.6
hereof within six (6) years of the effective date hereof or thereafter if no
MILES Assays are sold for a continuous period of two (2) years. All
obligations of confidentiality and nonuse created under ARTICLE 8 shall
survive the termination of the provisions of ARTICLES 6 and 7 for three (3)
years.

9.6 Neither party shall be liable to the other for any failure to perform
or any delay in performance hereunder where such delay is occasioned by
strikes or other labor difficulties, civil disorders, armed conflict,
embargoes, fires, floods,

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<PAGE>

accidents or other causes or any kind or extent beyond the control of such
party.

ARTICLE 10

NOTICES

10.1 Any notice required or permitted by this Agreement shall be in
writing. A notice shall be considered served when deposited in the national
postal system in a sealed envelope with sufficient postage affixed,
registered, or certified with return receipt requested, and addressed to the
party to whom such notice is directed at its post office address given below:

If to MILES: Miles Laboratories, Inc.
P.O. Box 40
Elkhart, IN 46515

Attention: (Official Correspondent)
and Director of Patents, Trademarks and Licensing

If to CIBA CORNING: Ciba Corning Diagnostics Corp.
67 North Street
Medfield, MA 02051

Attention: (Official Correspondent)

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<PAGE>

ARTICLE 11

INTERPRETATION

11.1 This Agreement shall be construed and the rights of the parties
hereunder shall be determined in the Commonwealth of Massachusetts, in
accordance with the laws of the Commonwealth of Massachusetts.

11.2 All section captions or titles are inserted herein for ready
reference only and are without contractual significance or effect.

ARTICLE 12

ASSIGNMENT

12.1 Except where the assignee is a successor in business, CIBA CORNING
must have written consent from MILES in order to assign this Agreement.

12.2 Except where the assignee is a successor in business, MILES must
have written consent from CIBA CORNING in order to assign this Agreement.

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<PAGE>

ARTICLE 13

ENTIRE AGREEMENT

13.1 This writing constitutes the entire agreement between MILES and CIBA
CORNING relating to the subject matter hereof. There are no understandings,
representations, or warranties of any kind except as expressly set forth
herein.

13.2 The Agreement may NOT be waived, altered, extended, or modified
except by written agreement of the parties.

ARTICLE 14

INDEPENDENT CONTRACTORS

14.1 The performance of each party thereunder is undertaken as an
independent contractor and not as an agent or partner of the other party.
Neither party shall enter into or incur, or hold itself out to third parties
as having authority to enter into or incur on behalf of the other party, any
contractual obligation, expense, or liability whatsoever.

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<PAGE>

IN WITNESS WHEREOF, CIBA CORNING and MILES have duly signed and have made
delivery to the other.

MILES LABORATORIES, INC.

By_______________________________

Executive Vice President
Title _________________________________

December 18, 1986
Date ___________________________________

CIBA CORNING DIAGNOSTICS CORP.

By_______________________________________

Vice President and General Manager
Special Chemistry Systems
Title ___________________________________

December 4, 1986
Date ____________________________________

ALK/mc

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<PAGE>

[CIBA-CORNING LETTERHEAD]

December 18, 1992

CERTIFIED MAIL
RETURN RECEIPT REQUESTED

Miles Laboratories, Inc.
P.O. Box 40
Elkhart, IN 46515

Attention: Director of Patents, Trademarks and Licensing

RE: Licensing Agreement between Miles Laboratories, Inc. and
Ciba Corning Diagnostics Corp.

Dear Sir or Madam:

Pursuant to Article 9.5 of our Agreement of December 18, 1986, Ciba
Corning Diagnostics Corp. hereby gives Miles Laboratories, Inc. notice of
termination of the provisions of ARTICLES 6 and 7 of that Agreement.

Sincerely,

Jeffrey Rudin
Vice President and
General Counsel

JR/gg

<PAGE>

EXHIBIT 10.66

[CONFIDENTIAL TREATMENT REQUESTED]

[Certain information has been omitted herein pursuant to a request for
confidential treatment pursuant to Rule 24b-2.]

MAGNETOCLUSTER BINDING ASSAY TECHNOLOGY AGREEMENT
- -------------------------------------------------------------------------------

by and between

BIOCLINICAL GROUP, INC.

and

CORNING GLASS WORKS

Dated as of January 21, 1983

MAGNETOCLUSTER BINDING ASSAY TECHNOLOGY AGREEMENT
-------------------------------------------------

Dated as of January 21, 1983

BIOCLINICAL GROUP, INC. (herein called "BioClinical"), a Delaware
corporation, having its principal place of business at 767-B Concord
Avenue, Cambridge, Massachusetts 02138, and CORNING GLASS WORKS (herein
called "Corning"), a New York corporation, having its principal place of
business at Houghten Park, Corning, New York 14831, acting for and on
behalf of its CORNING MEDICAL & SCIENTIFIC DIVISION, having its offices
at Medfield Industrial Park, Medfield, Massachusetts 02052, hereby agree
as follows:

1. BASIS FOR AGREEMENT. BioClinical has advised Corning (a) that
BioClinical has developed methods and techniques for producing what are
believed to be new and unique magnetically separable particles
containing substances capable of binding other substances which, in
turn, can be used for IN VITRO immunoassay and binding protein assay
systems (the "BioClinical Magnetocluster Binding Assay Technology"); and
(b) that this development encompasses trade secrets and confidential
information (the "BioClinical Confidential Information") as well as
certain inventions on which BioClinical is applying for United States
and foreign counterpart patent protection (the "BioClinical Patent
Rights"). Corning has developed and markets world-wide a number of IN
VITRO immunoassays and binding protein assay

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<PAGE>

medical diagnostic products which Corning believes has advised
BioClinical could benefit from use of the BioClinical Magnetocluster
Binding Assay Technology. Upon verification of the applicability of the
BioClinical Magnetocluster Binding Assay Technology to Corning's medical
diagnostic products, Corning desires to acquire from BioClinical the
exclusive right and license to use the BioClinical Confidential
Information and BioClinical Patent Rights and to apply the BioClinical
Magnetocluster Binding Assay Technology to IN VITRO diagnostic
immunoassay and binding protein assay systems developed or to be
developed by Corning. The purpose of this Magnetocluster Binding Assay
Technology Agreement is to set forth the terms and conditions under
which BioClinical is willing to grant such exclusive rights and licenses
to Corning, and under which Corning is willing to receive such rights
and licenses, for this field-of-use.

2. DEFINITIONS. For the purposes of this Agreement, the
following terms, whether used in the singular or in the plural, shall
have the following meanings:

2.1. AFFILIATE. The term "Affiliate" shall mean any entity in
which a party owns or controls fifty percent (50%) or more of the voting
securities, equity participation or beneficial interest.

2.2. BINDING ASSAY. The term "Binding Assay" shall mean a
test to detect or measure the presence or amount of an analyte in a
solution using as a mechanism the

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binding properties of the analyte and another substance for IN VITRO
diagnostic testing.

2.3. BIOCLINICAL CONFIDENTIAL INFORMATION. The term
"BioClinical Confidential Information" shall mean and collectively
include all technical information which is owned by BioClinical,
disclosed to Corning hereunder from time to time and which is included
in the BioClinical Magnetocluster Binding Assay Technology, to the
extent that such information: (a) as of the date of disclosure to
Corning, was not (1) known to Corning; or (2) disclosed in published
literature; or (b) becomes generally available to industry; or (c) is
subsequently obtained by Corning from a third party without binder of
secrecy upon Corning, provided that Corning has no reason to believe
that such third party is in breach of any confidentiality obligations to
BioClinical. The term "BioClinical Confidential Information" does not
include any confidential information relating solely to the Excluded
Technology.

2.4. BIOCLINICAL IMPROVEMENTS. The term "BioClinical
Improvements" shall mean and collectively include all improvements in or
modifications to the BioClinical Magnetocluster Binding Assay Technology

(a) which are made apart from any collaboration with
Corning at any time either by BioClinical, by any BioClinical Affiliate,
by any third party under contract to or for the benefit of

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<PAGE>

BioClinical or any BioClinical Affiliate, or by any two or more of such
parties; or

(b) which are acquired by BioClinical or by any
BioClinical Affiliate; or

(c) which are licensed by any third party to BioClinical
or to any BioClinical Affiliate with the right to grant sublicenses to
non-affiliates without accounting to others.

2.5. BIOCLINICAL MAGNETIC PARTICLE TECHNOLOGY. The term
"BioClinical Magnetic Particle Technology" shall mean and collectively
include all technical information, including all inventions, methods,
plans, processes, specifications, characteristics, raw material data,
equipment design, know-how, experience, and trade secrets, (a) which was
developed by or for BioClinical or any BioClinical Affiliate; and (b)
which pertain to the production, processing and/or finishing of
Uncoupled Magnetic Particles.

2.6. BIOCLINICAL MAGNETOCLUSTER BINDING ASSAY TECHNOLOGY. The term
"BioClinical Magnetocluster Binding Assay Technology" shall mean and
collectively include all technical information, including all inventions,
methods, plans, processes, specifications, characteristics, raw material data,
equipment design, know-how, experience and trade secrets (a) which was or which
may be developed by or for BioClinical or any BioClinical Affiliate; and
(b) which

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<PAGE>

pertains to (1) the production of magnetocluster particles used in
Binding Assays or magnetically separable particles used in Binding
Assays and/or (2) the use of such magnetocluster particles or
magnetically separable particles in diagnostic kits and/or in components
thereof, for IN VITRO immunoassays and/or protein-binding assays. The
term "BioClinical Magnetocluster Binding Assay Technology" shall not
include any technical information which relates solely to any of the
Excluded Technology.

2.7. BIOCLINICAL PATENT RIGHTS. The term "BioClinical Patent
Rights" shall mean and collectively include

(a) all patentable inventions specifically pertaining to
the BioClinical Magnetocluster Binding Assay Technology (1) which are
subject to protection under the provisions of the Patent Act
[Title 35, United States Code] and/or any foreign patent laws; (2) which
were in existence on the effective date of this Agreement and/or which
may be made at any time during the Contract Period prior to December 31,
1992; and (3) which are legally and/or beneficially owned and/or
controlled by BioClinical; and

(b) any and all applications for United States Letters
Patent which may be filed at any time covering such patentable
inventions, as well as any

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<PAGE>

and all divisions, continuations, continuations-in-part and renewals
thereof, any and all United States Letters Patent which may be granted
thereon, any and all reissues and extensions thereof, and any and all
foreign counterpart applications and/or Letters Patent granted thereon.

The term "BioClinical Patent Rights" shall not include any patentable
inventions and/or patent rights relating solely to any of the Excluded
Technology.

2.8. CONTRACT PERIOD. The term "Contract Period" shall mean
the period beginning with the effective date of this Agreement and
ending on the date on which this Agreement terminates in accordance with
the provisions of Section 19 hereof.

2.9. CORNING CONFIDENTIAL INFORMATION. The term "Corning
Confidential Information" shall mean and collectively include

(a) all business information pertaining to Corning or to
any Corning Affiliate which BioClinical may learn in connection with any
audit of Corning's and/or any Corning Affiliate's records pursuant to
the provisions hereof; and

(b) all technical information which is disclosed by
Corning to BioClinical to the extent that such information: (1) as of
the date of disclosure to BioClinical, was not (i) known to BioClinical;
or (ii)

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<PAGE>

disclosed in published literature; or (2) becomes generally available to
industry; or (3) is subsequently obtained by BioClinical from a third
party without binder of secrecy upon BioClinical, provided that
BioClinical has no reason to believe that such third party is in breach
of any confidentiality obligations to Corning.

2.10. CORNING QUARTER. The term "Corning Quarter" shall
mean the time encompassed by Period 1-3, 4-6, 7-10, and 11-13 of a
Corning fiscal year, which approximates the calendar year. A Period
shall mean a Corning standard four-week accounting period.

2.11. DESIGNATED BINDING ASSAYS. The term "Designated
Binding Assays" shall mean and collectively include the Binding Assays
listed in Schedule A.

2.12. EFFECTIVE DATE. The term "effective date of this
Agreement" shall mean January 21, 1983.

2.13. EXCLUDED TECHNOLOGY. The term "Excluded Technology"
shall mean and collectively include all technical information, including
all inventions, methods, plans, processes, specifications,
characteristics, raw material data, equipment design, know-how,
experience, and trade secrets (a) which was or may be developed by or
for BioClinical or any BioClinical Affiliate; and (b) which solely
pertains to the use of Magnetocluster particles for any products
(including any Excluded Products) other than

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<PAGE>

for use as Magnetocluster Binding Assay Products. The term "Excluded
Technology" shall not include any technical information which is
contained in the BioClinical Magnetocluster Binding Assay Technology.

2.14. EXCLUDED PRODUCTS. The term "Excluded Products"
shall mean and collectively include any products made by coupling an
organic or inorganic moiety to Uncoupled Magnetic Particles, to form
Magnetocluster particles which are not Magnetocluster Binding Assay
Products.

2.15. MAGNETOCLUSTER. The term "magnetocluster" shall
mean those magnetic-gradient-dependent colloidal suspensions, within an
appropriate solvent or carrier liquid, of ferrospinel compounds in which
an organic and/or inorganic moiety is coupled by adsorptive and/or
covalent bonding to a ferrospinel having the structure

Fe(I)(I)(I)M(I)(I)(I)M(I)(I)M(o)(I)(I)O(4)

where the trivalent and divalent metal cations M(I)(I)(I) and M(o)(I)(I)
each represents transition metals having an ionic radius small enough to
fit within the interstitial sites located within such ferrospinel, the
inorganic and/or organic moiety coupled to the ferrospinel being
sufficiently insoluble in the solvent and/or carrier liquid to permit
the magnetocluster to be separated from such solvent and/or carrier
liquid by the application of a strong magnetic field gradient.

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<PAGE>

2.16. MAGNETOCLUSTER BINDING ASSAY PRODUCTS. The term
"Magnetocluster Binding Assay Products" shall mean and collectively
include all products (a) which include Magnetoclusters used in a Binding
Assay; and (b) which are used solely in diagnostic kits or components
thereof for IN VITRO immunoassays and/or protein-binding assays. The
term "Magnetocluster Binding Assay Products" shall not include any
Excluded Products.

2.17. NET ROYALTIES. The term "Net Royalties" shall mean
the net royalties actually received by Corning from non-affiliated third
party licensees under any of the BioClinical Confidential Information
and/or BioClinical Patent Rights after deduction of all reasonable legal
costs actually incurred by Corning in the licensing of such BioClinical
Confidential Information and/or BioClinical Patent Rights to such
non-affiliated third party licensees.

2.18. NET SALES. The term "Net Sales" shall mean sales at
the invoiced price of Magnetocluster Binding Assay Products after
deduction of (a) all trade and quantity discounts actually allowed; (b)
allowance or credits for returns; (c) sales commissions actually paid to
non-affiliated third parties; and (d) sales or purchase or turnover
taxes (if any) borne by Corning and its Affiliates but before any
deduction for cash or prompt payment discounts.

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<PAGE>

2.19. PRIOR AGREEMENT. The term "Prior Agreement" shall
mean the Agreement to Supply Information in Confidence, dated September
10, 1982, by and between Corning and BioClinical.

2.20. UNCOUPLED MAGNETIC PARTICLES. The term "Uncoupled
Magnetic Particles" shall mean all magnetic ferrospinel particles (a)
which embody or are made in accordance with the BioClinical Magnetic
Particle Technology; and (b) which are suitable for utilization in
Binding Assays.

3. REPRESENTATIONS AND WARRANTIES. The following provisions
relate to representations and warranties by the parties:

3.1. BY BIOCLINICAL. BioClinical represents and warrants to
Corning as follows:

3.1.1. CORPORATE STANDING. BioClinical is a corporation
duly organized, validly existing, and in good standing under the laws of
the State of Delaware.

3.1.2. CORPORATE POWER AND AUTHORIZATION. BioClinical
has all necessary corporate power to enter into and perform its
obligations under this Agreement and has taken all necessary corporate
action under the laws of the State of Delaware and its certificate of
incorporation and by-laws to authorize the execution and consummation of
this Agreement.

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<PAGE>

3.1.3. OWNERSHIP. BioClinical either legally or
beneficially owns or controls the entire right, title, and interest in
and to

(a) the BioClinical Confidential Information,
including the right (1) to grant licenses under any of the BioClinical
Confidential Information; and (2) to preclude the unauthorized
disclosure of any of the BioClinical Confidential Information; and

(b) the BioClinical Patent Rights, including the
right (1) to grant licenses under any of the BioClinical Patent Rights;
and (2) to enforce any issued patent or patents of the BioClinical
Patent Rights against any third parties infringing any claim or claims
of any patents including in such Patent Rights.

3.1.4. NO LITIGATION. To the best of BioClinical's
knowledge, there is no action, suit, claim, proceeding or governmental
investigation pending or threatened against BioClinical with respect to
the BioClinical Confidential Information or the BioClinical Patent
Rights, either at law or in equity, before any court or administrative
agency or before any governmental department, commission, board, bureau,
agency or instrumentality, whether United States or foreign.

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<PAGE>

3.1.5. NO OPTIONS. There are no outstanding options or
rights in any third party to acquire any of the BioClinical Confidential
Information, BioClinical Improvements or the BioClinical Patent Rights
to be licensed to Corning hereunder.

3.1.6. NO DEFAULT. To the best of BioClinical's
knowledge, BioClinical is not in default with respect to any term or
provision of any charter, by-law, mortgage, indenture, statute, rule or
regulation applicable to it, or with respect to any order, writ,
injunction, decree, rule or regulation of any court or administrative
agency, which will preclude the performance of its obligations under
this Agreement.

3.1.7. NO CONFLICT. Neither the execution nor delivery
of this Agreement, nor the consummation of the transactions herein
contemplated, nor the fulfillment of or compliance with the terms and
provisions hereof will, to the best of BioClinical's knowledge, (1)
violate any provisions of law, administrative regulation or court decree
applicable to BioClinical; or (2) conflict with or result in a breach of
any of the terms, conditions or provisions of or constitute a default
under the certificate of incorporation or by-laws of

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<PAGE>

BioClinical, or of any agreement or instrument to which BioClinical is a
party or by which it is bound.

3.1.8. NO PRIOR DISCLOSURES. There have been no
disclosures of BioClinical Magnetocluster Binding Assay Technology to
any third parties whomsoever, and each employee of BioClinical having
access to BioClinical Binding Assay Technology has executed and
delivered to BioClinical an effective agreement whereby such employee
will not disclose any such Technology except as directed by BioClinical.

3.2. BY CORNING. Corning represents and warrants to
BioClinical, as follows:

3.2.1. CORPORATE STANDING. Corning is a corporation
duly organized, validly existing, and in good standing under the laws of
the State of New York.

3.2.2. CORPORATE POWER AND AUTHORIZATION. Corning has
all necessary corporate power to enter into and perform its obligations
under this Agreement and has taken all necessary corporate action under
the laws of the State of New York and its certificate of incorporation
and by-laws to authorize the execution and consummation of this
Agreement.

3.2.3. NO DEFAULT. To the best of its knowledge,
Corning is not in default with respect to any term or provision of any
charter, by-law, mortgage, indenture, statute, rule or regulation

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<PAGE>

applicable to it, or with respect to any order, writ, injunction,
decree, rule or regulation of any court or administrative agency, which
will preclude the performance of its obligations under this Agreement.

3.2.4. NO CONFLICT. Neither the execution nor the
delivery of this Agreement, nor the consummation of the transactions
herein contemplated, nor the fulfillment of or compliance with the terms
and provisions hereof will, to the best of Corning's knowledge and
belief, (1) violate any provision of law, administrative regulations or
court decree applicable to Corning; or (2) conflict with or result in a
breach of any of the terms, conditions or provisions of or constitute a
default under the certificate of incorporation or by-laws of Corning, or
any agreement or instrument to which Corning is a party or by which it
is bound.

4. GRANT OF LICENSE. The following provisions relate to the
licenses to be granted by BioClinical to Corning hereunder:

4.1 EXCLUSIVE LICENSE. Subject to the terms and conditions
hereunder contained, BioClinical hereby grants to Corning the exclusive
right and license throughout the world, with the right to grant
sublicenses to others,

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<PAGE>

(a) to produce, process or otherwise manufacture, to
use, and to sell, Magnetocluster Binding Assay Products embodying or
made in accordance with any of the BioClinical Confidential Information
and/or BioClinical Patent Rights;

(b) to preclude the unauthorized disclosure of such
BioClinical Confidential Information to any third parties; and

(c) to enforce any issued patent or patents of such
BioClinical Patent Rights against any third-party infringers who utilize
such Patent Rights for the manufacture, use and/or sale of
Magnetocluster Binding Assay Products.

4.2 EXCLUSIONS. Nothing contained in this Agreement shall be
construed as granting Corning any right or license:

(a) to produce, process or otherwise manufacture, to
use, and to sell, any products other than Magnetocluster Binding Assay
Products under the BioClinical Confidential Information and/or
BioClinical Patent Rights;

(b) to use the Excluded Technology and related
confidential information and/or patent rights for any purpose
whatsoever; and

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<PAGE>

manufacture, to use, and to sell, Uncoupled Magnetic Particles for any
purpose other than for the manufacture, use and/or sale of
Magnetocluster Binding Assay Products by Corning or any sublicensed
Corning Affiliate in accordance with the provisions of Sections 4.1 and
4 hereof.

4.3 IRREVOCABILITY. After Corning has paid BioClinical all
of the basic payments required pursuant to the provisions of Section 10
hereof, the exclusive license granted by BioClinical to Corning pursuant
to the provisions of Section 4.1 and 4 hereof shall become irrevocable.

5. TECHNICAL DEMONSTRATIONS. The following provisions relate to
technical demonstrations by BioClinical and Corning's acceptance of the
feasibility of using the BioClinical Magnetocluster Binding Assay
Technology:

5.1. CORNING'S SPECIFICATIONS. Corning has established
performance specifications for the Designated Binding Assays listed in
Schedule A, and Schedule B sets forth these performance specifications,
the dates for completion of the documentation and the format for the
documentation, by which Corning shall require BioClinical to certify
that it has met such performance specifications pursuant to the
provisions of Section 5.2 hereof.

5.2. PERFORMANCE. As a condition precedent to the
effectiveness of the license granted by BioClinical to Corning pursuant
to the provisions of Section 4.1 hereof

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and as a condition concurrent to Corning's obligations to pay
BioClinical pursuant to the provisions of Section 10 hereof, BioClinical
shall demonstrate that it can meet the performance specifications for
the Binding Assays listed in Schedule B within the time periods set
forth in such schedule, using materials for such Binding Assays
furnished to it by Corning. BioClinical shall document that is has met
each performance specification for Binding Assays on Schedule B to
Corning in accordance with the data format provided to it by Corning and
shall certify to Corning that it has met the performance specifications
for such Magnetocluster Binding Assay Product established by Corning
pursuant to the provisions of Section 5.1 hereof.

5.3. ACCEPTANCE AND VALIDATION. Within twenty (20) days of
receipt of BioClinical's certified documentation that it has met
performance specifications for each particular Binding Assay in
accordance with the provisions of Section 5.2 hereof, Corning shall
notify BioClinical in writing either (a) that it has accepted the
results set forth in such certified documentation as meeting its
performance specifications for such Binding Assay; or (b) that it has
rejected such results, particularly specifying the reasons for such
rejection. In the event Corning rejects such results, BioClinical shall
have sixty (60) days from the date of such notice of rejection to submit
further documentation that it has

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complied with the Corning performance specification for such
Magnetocluster Binding Assay Product to Corning's reasonable
satisfaction.

5.4. DISCLOSURE OF EXISTING TECHNOLOGY. Upon the execution of
this Agreement, BioClinical agrees to disclose promptly to Corning all
existing BioClinical Magnetocluster Binding Assay Technology which
BioClinical deems necessary or useful to enable Corning to produce,
process or otherwise manufacture, to use, and to sell, Magnetocluster
Binding Assay Products.

5.5. CONSULTING SERVICES. Recognizing that Corning
contemplates the continuing development of Magnetocluster Binding Assay
Products during the Contract Period after Corning's acceptance of
BioClinical's documentation pursuant to the provisions of Sections 5.2
and 5.3 hereof, during the period between January 1, 1984 and December
31, 1988 BioClincial shall make available to Corning the consulting
services of a competent senior scientist and technologist employed by
BioClinical, without charge to Corning, for an aggregate of one man-year
time for each BioClinical employee. Corning agrees to reimburse
BioClinical the reasonable travel costs and living expenses incurred by
BioClinical in making such BioClinical employees available to Corning
outside the area of Eastern Massachusetts.

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6. DISCLOSURE OF IMPROVEMENTS BY BIOCLINICAL. Throughout that
part of the Contract Period commencing with the effective date of this
Agreement and ending December 31, 1992, BioClinical agrees to disclose
to Corning in writing all BioClinical Improvements.

7. BIOCLINICAL'S RIGHT TO ACQUIRE SUBLICENSES. Whenever
BioClinical or any BioClinical Affiliate hereafter successfully develops
a new Magnetocluster Binding Assay Product for other than a Designated
Binding Assay, BioClinical shall disclose to Corning in writing all data
concerning such coupling. Within one hundred twenty (120) days
following the date of such disclosure, Corning shall notify BioClinical
in writing either (a) that it rejects the resultant product for
inclusion in its product line of clinical immunoassays; or (b) that it
desires to manufacture, to use, and to sell, such product or products
under its licenses on enumerated terms and conditions (the "Corning
Proposal") proposed by Corning, which proposal shall be either accepted
or rejected by BioClinical within sixty (60) days after receipt. If
Corning rejects such product or if BioClinical rejects the Corning
Proposal, then Corning shall grant to BioClinical such royalty-free
sub-licenses under BioClinical Confidential Information, BioClinical
Improvements and BioClinical Patent Rights as may be necessary to enable
BioClinical to make, use and sell such product throughout the world for
the life of such rights.

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<PAGE>

8. RESTRICTIONS ON DISCLOSURE AND USE OF CONFIDENTIAL
INFORMATION. The following provisions relate to restrictions on the
disclosure and the use of Confidential Information by the parties:

8.1. RESTRICTIONS BINDING ON BIOCLINICAL. BioClinical agrees
as follows:

8.1.1. CONFIDENTIALITY. BioClinical agrees to treat as
confidential and to use only in the conduct of its business (a) all
BioClinical Confidential Information which BioClinical has disclosed to
Corning under the Prior Agreement and this Agreement; and (b) all Corning
Confidential Information disclosed to it by Corning, except insofar as this
Agreement authorizes the use of such BioClinical Confidential Information for
other purposes.

8.1.2. NON-DISCLOSURE AND NON-USE OF BIOCLINICAL
CONFIDENTIAL INFORMATION. Unless this Agreement is terminated prior to
December 31, 1992, BioClinical agrees until December 31, 2002 (a) not to
disclose any of the BioClinical Confidential Information to any
unauthorized third parties; and (b) not to use any of the BioClinical
Confidential Information (1) except in its continuing program to create
BioClinical Improvements to the BioClinical Magnetocluster Binding Assay
Technology, and (2)

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except as otherwise permitted under the provisions of Sections 7 and
11.5 hereof.

8.1.3. NON-DISCLOSURE AND NON-USE OF CORNING
CONFIDENTIAL INFORMATION. Until either (1) December 31, 1992, or (2)
ten (10) years from the date of initial disclosure to BioClinical of
Corning Confidential Information, whichever occurs later, BioClinical
agrees (a) not to disclose any of the Corning Confidential Information
to any unauthorized third parties; and (b) not to use any of the Corning
Confidential Information for the manufacture, use and/or sale of any
products or for any other purpose whatsoever absent an express license
from Corning.

8.2. RESTRICTIONS BINDING UPON CORNING. To protect
BioClinical's remainderman rights to the BioClinical Confidential
Information in the event of termination of this Agreement in accordance
with Section 19, and to protect BioClinical's confidential information
on the Excluded Technology, Corning agrees as follows:

8.2.1. CONFIDENTIALITY. Until December 31, 1992,
Corning agrees to treat as confidential and to use only in the conduct
of its business all BioClinical Confidential Information disclosed to
Corning under the Prior Agreement and this Agreement, except insofar as
this Agreement authorizes its use for other purposes.

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8.2.2. NON-DISCLOSURE AND NON-USE. In the event this
Agreement is terminated prior to December 31, 1992, Corning covenants
that it will cease and refrain from disclosing or using any BioClinical
Confidential Information disclosed to it by BioClinical under the
provisions of the Prior Agreement or this Agreement until December 31,
2002.

9. FURTHER PROVISIONS CONCERNING THE FILING, PROSECUTION, AND
MAINTENANCE OF PATENT RIGHTS. The following further provisions relate
to the filing, prosecution and maintenance of the licensed BioClinical
Patent Rights:

9.1. DOMESTIC PATENTS. BioClinical shall at its sole expense
diligently pursue (a) filing and prosecuting any United States patent
applications covering the BioClinical Patent Rights based on inventions
made on or before its completion of the performance specifications for
the Designated Binding Assays listed on Schedule B and the filing and
prosecution of all divisions, continuations, continuations-in-part,
reissues or re-examinations thereof; (b) prosecuting and defending any
interference involving such domestic applications or any United States
Letters Patent granted thereon; and (c) upon and after the grant of any
Letters Patent on any of such applications, maintaining such Letters
Patent in force and paying all fees and filing all necessary papers
required for such purposes, provided that if the invention covered by
any Letters Patent of such

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Patent Rights has become obsolete or has for any other reason become
commercially unimportant, then BioClinical, at its sole option but
subject to Section 9.4 may discontinue all further expenditures in
connection with maintaining such Letters Patent in force. Within thirty
(30) days after the filing by BioClinical of each United States patent
application relating to BioClinical's Patent Rights, BioClinical shall
provide a copy of such application to Corning.

9.2. FOREIGN PATENTS. Subject to the provisions of Section
9.3 hereof, BioClinical shall at its sole expense diligently pursue (a)
filing any foreign counterpart applications and all divisions,
continuations, and continuations-in-part thereof in Canada, France,
Federal German Republic, Japan and the United Kingdom; (b) prosecuting
such foreign applications and defending against conflicts or oppositions
filed by third parties against such foreign applications; and (c) upon
and after the grant of any Letters Patent on any of such applications,
maintaining such Letters Patent in force and paying all taxes and filing
all necessary papers required for such purposes by the patent laws of
the particular country in which such Letters Patent were granted,
provided that if the invention covered by any Letters Patent for such
Patent Rights has become obsolete or has for any other reason become
commercially unimportant, then BioClinical, at its

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sole option but subject to Section 9.4, may discontinue all further
expenditures in connection with maintaining such Letters Patent in force.

9.3. FOREIGN PATENTS REQUESTED BY CORNING. Within one hundred
eighty (180) days after the filing by BioClinical of each such United
States patent application relating to BioClinical's Patent Rights, BioClinical
shall inform Corning of the additional countries (over those referred to in
Section 9.2), if any, in which BioClinical intends to file corresponding patent
applications. Upon written request by Corning, BioClinical agrees to file,
prosecute and maintain foreign counterpart patent rights in any country or
countries not covered by the provisions of Section 9.2 hereof. Whenever Corning
requests BioClinical to perform such services, Corning agrees to bear all
reasonable costs incurred in the filing, prosecution and maintenance of
such foreign Patent Rights.

9.4. TRANSFER TO CORNING. In the event BioClinical exercises
its right to discontinue all further expenses in connection with
maintaining any such domestic or foreign patent applications or Letters
Patent in force in accordance with Sections 9.1 and 9.2 hereof, then
BioClinical shall provide notice thereof to Corning at least 120 days
prior to the lapse of such rights. Upon timely written request,
BioClinical shall timely assign such Letters Patent to Corning or to its
nominee at least 90 days prior to the lapse of any such rights.

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10. BASIC PAYMENTS. Subject to the terms and conditions herein
contained, in consideration for the exclusive license granted by
BioClinical pursuant to the provisions of Section 4.1 hereof, Corning
agrees to pay BioClinical basic payments in the aggregate amount of
[Confidential Treatment Requested] Dollars, as follows:

10.1. INITIAL BASIC PAYMENT. Upon the acceptance by
Corning pursuant to the provisions of Section 5.3 hereof of, BioClinical's
certified documentation that it has met the performance specifications
for free thyroxine (T(4)) as set forth in Schedule B, Corning shall pay
BioClinical the sum of [Confidential Treatment Requested] Dollars.

10.2. SECOND BASIC PAYMENT. Upon acceptance by Corning
pursuant to the provisions of Section 5.3 hereof of BioClinical's
certified documentation that it has met the performance specifications
for thyroid stimulating hormone (TSH) as set forth in Schedule B,
Corning shall pay BioClinical the sum of [Confidential Treatment Requested]
Dollars.

10.3. ENSUING BASIC PAYMENTS. Following the First and
Second Basic Payments to BioClinical, subject to the prepayment provisions
of Section 10.4 hereof and the provisions of Section 16 hereof, Corning
agrees to pay the remaining [Confidential Treatment Requested] Dollars to
BioClinical at the rate of [Confidential Treatment Requested]

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[Confidential Treatment Requested] Dollars and [Confidential Treatment
Requested] Cents [Confidential Treatment Requested] a month
for forty-eight (48) consecutive months beginning the first month
Corning receives and accepts certified documentation from BioClinical
pursuant to the provisions of Section 5.3 relating to the remaining
Binding Assays in accordance with the performance specifications set
forth in Schedule B. All such monthly payments shall be made on the
last day of each month on which such monthly payment is due.

10.4. PREPAYMENT. Upon giving ten (10) days' written
notice to BioClinical, Corning may at any time prepay the remaining
amount due under Section 10.3 hereof at the net present value of such
amount computed by applying the prime rate established by Citibank,
N.A., New York, New York, in effect on the first day of the month on
which Corning gives BioClinical notice of its election to prepay such
remainder.

11. EARNED AND MINIMUM ROYALTIES. In further consideration for
the exclusive license granted by BioClinical pursuant to the provisions
of Section 4.1 hereof, Corning agrees to pay BioClinical earned and
minimum royalties as follows:

11.1. EARNED ROYALTIES. In addition to the basic payments
due BioClinical pursuant to the provisions of Section 10 hereof, Corning
Agrees to pay BioClinical earned royalties at the rate set forth in the
following

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Royalty Schedule on all Net Sales of Magnetocluster Binding Assay
Products sold by Corning and by its sublicensed Affiliates which embody
or are made in accordance with the BioClinical Confidential Information
(including all BioClinical Improvements) and/or BioClinical Patent
Rights:

ROYALTY SCHEDULE

[A] With respect to the Magnetocluster Binding Assay Products based on
Binding Assays listed in Schedule A, the royalty rates shall be as
follows:

[1] On the first [Confidential Treatment Requested] of Net Sales of such
Magnetocluster Binding Assay Products, the royalty rate shall be [Confidential
Treatment Requested];

[2] On the next [Confidential Treatment Requested] of Net Sales of such
Magnetocluster Binding Assay Products, the royalty rate shall be [Confidential
Treatment Requested];

[3] On the next [Confidential Treatment Requested] of Net Sales of such
Magnetocluster Binding Assay Products, the royalty rate shall be [Confidential
Treatment Requested]; and

[4] On all Net Sales of such Magnetocluster Binding Assay Products
in excess of [Confidential Treatment Requested], prior to [Confidential
Treatment Requested] the royalty rate shall be [Confidential Treatment
Requested].

[B] With respect to the Magnetocluster Binding Assays other than those
listed in Schedule A and which have been independently developed by
Corning in accordance with the Corning Improvements, the royalty rate
shall be either (1)

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three percent (3%) of the Net Sales of such Magnetocluster Binding Assay
Products through December 31, 1992; or (2) the prevailing royalty rate
set forth in subparagraph [A] above, whichever rate is higher.

[C] With respect to Magnetocluster Binding Assays other than those
listed in Schedule A and which have been independently developed by
BioClinical in accordance with the BioClinical Improvements and accepted
by Corning pursuant to the provisions of Paragraph 7 hereof, the royalty
rate shall be that mutually agreeable to BioClinical and Corning based
on BioClinical's acceptance of the Corning Proposal.

11.2. CONVERSION TO DOLLAR AMOUNTS. For the purposes of
computing the applicable royalty payments in accordance with the
provisions of Section 1.1 hereof, all Net Sales of Magnetocluster
Binding Assay Products which are invoiced in currencies other than
United States funds shall be converted to dollar amounts by multiplying
the unit sales represented by each such transaction times the average
dollar-denominated value of such unit sales during the same period.

11.3. SUBLICENSES. In the event Corning grants any
sublicenses to any non-affiliated third parties under the BioClinical
Magnetocluster Binding Assay Technology (including any BioClinical
Improvements), BioClinical Confidential Information and/or BioClinical
Patent Rights

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at any time during the Contract period, then for each such sublicense
Corning further agrees to pay BioClinical additional earned royalties at
a rate equal to three-fourths (3/4) of the Net Royalties collected by
Corning under such sublicense.

11.4. WHEN SALE MADE. For the purposes of this Agreement,
Magnetocluster Binding Assay Products made by Corning shall be
considered sold (a) when billed out to a customer other than to a
Corning Affiliate; or (b) when transferred or sold by Corning to a
Corning Affiliate, except that upon the termination of this Agreement in
accordance with the provisions of Section 19 hereof, all Magnetocluster
Binding Assay Products manufactured and placed in inventory on or prior
to the date of such termination which shall not have been billed out
prior thereto shall be considered sold and therefore subject to royalty.
Royalties paid on Magnetocluster Binding Assay Products not accepted by
the customer and returned to Corning or to the particular sublicensed
Corning Affiliate shall be credited against and deducted from future
royalties, PROVIDED, HOWEVER, that if such returned Magnetocluster
Binding Assay Products are resold by Corning or by any sublicensed
Corning Affiliate, royalties shall be paid thereon.

11.5. MINIMUM ROYALTIES. In the event that the earned
royalties paid by Corning to BioClinical pursuant to

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the provisions of Section 11.1 hereof in any calendar year of the
Contract Period do not equal or exceed the Minimum Royalty Schedule set
forth in Schedule C, then Corning may elect either

(a) to continue its exclusive license under the
provisions of Section 4.1 hereof by paying BioClinical the difference
between the Earned Royalty paid BioClinical for such calendar year
and the amount for such calendar year set forth in Schedule C, such
difference to be paid to BioClinical within sixty (60) days after the
end of such calendar year; or

(b) to grant BioClinical and its Affiliates an
irrevocable, royalty-free right and license, with no right to grant
sublicenses to others, to produce, process or otherwise manufacture, to
use, and to sell, throughout the world, Magnetocluster Binding Assay
Products embodying or made in accordance with the BioClinical
Confidential Information (including BioClinical Improvements) and/or
BioClinical Patent Rights.

11.6. CARRYOVER CREDIT. If for any calendar year the
earned royalty paid or payable by Corning exceeds the minimum royalty
for that year, such excess shall be available to Corning in later years
as a credit against minimum royalties due BioClinical.

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12. RECORDS, REPORTS, AND ROYALTY PAYMENTS. The following
provisions relate to records, reports, and royalty payments:

12.1. RECORDS. Corning agrees to keep adequate and
complete records showing all Magnetocluster Binding Assay Products sold
with respect to which royalty is due under this Agreement. Such records
shall include all information necessary to verify the total amount and
computation of royalties due hereunder, and shall be open to inspection
by BioClinical during reasonable business hours to the extent necessary
to verify the amount thereof. Such inspection shall be made not more
often than once each calendar year at the expense of BioClinical by a
Certified Public Accountant appointed by BioClinical and to whom Corning
has no reasonable objection, PROVIDED, HOWEVER, that if such inspection
reveals that BioClinical was entitled to receive more than ten percent
(10%) in excess of the amount reported by Corning to be due and payable
to BioClinical during the period covered by such inspection, then
Corning shall pay the cost of such audit. Corning shall not be required
to retain said records for more than three (3) years after the close of
any Corning Quarter.

12.2. REPORTS. Within sixty (60) days from the close of
any Corning Quarter throughout the Contract Period until December 31,
1992, Corning shall furnish BioClinical

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with a written report, signed by an authorized employee of Corning,
showing (a) the dollar value of each Magnetocluster Binding Assay
Product sold by Corning and by each of its sublicensees (if any) during
the preceding Corning Quarter; (b) the dollar value of all
Magnetocluster Binding Assay Products sold by Corning and by its
sublicensees (if any) during the preceding calendar quarter-year; and
(c) the amount of earned royalties due on Magnetocluster Binding Assay
Products sold by Corning and its sublicensees (if any) during the
preceding Corning Quarter, computed pursuant to the provisions of
Sections 11.1 and 11.2 hereof.

12.3. ROYALTY PAYMENTS. With each such quarterly report,
Corning shall remit to BioClinical the total amount of earned royalties
shown thereby to be due and payable. If such earned royalties are
unpaid when due and payable, interest shall be payable on the unpaid
royalties from the due date until paid at a rate per annum which shall
be at all times be the lesser of either (a) one percent (1%) in excess
of the prime rate of the Citibank, N.A., New York, New York, then in
force for short-term borrowings; or (b) the maximum legal rate then
permitted under the laws of the State of New York.

13. SUPPLY OF UNCOUPLED MAGNETIC PARTICLES. To enable Corning to
manufacture Magnetocluster Binding Assay Products in accordance with the
exclusive license granted by

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BioClinical to Corning pursuant to the provisions of Section 4.1 hereof,
BioClinical agrees to supply Corning's requirements for such Uncoupled
Magnetic Particles as follows:

13.1. INITIAL REQUIREMENTS. Throughout the calendar year
1983, BioClinical agrees to sell to Corning, and Corning agrees to
purchase from BioClinical, all of Corning's requirements of Uncoupled
Magnetic Particles at a price of [Confidential Treatment Requested] Dollars
per gram, dry-weight basis, f.o.b. Cambridge, Massachusetts. All Uncoupled
Magnetic Particles furnished by BioClinical to Corning pursuant to the
provisions of this Section 13.1 shall meet mutually agreed
specifications.

13.2. SUBSEQUENT SUPPLY ARRANGEMENTS. During each
calendar year of the Contract Period commencing January 1, 1984, and
ending December 31, 1992, BioClinical and Corning agree to negotiate an
annual requirements contract, satisfactory in form and substance to each
party, under which INTER ALIA, BioClinical would sell to Corning, all of
Corning's requirements of Uncoupled Magnetic Particles for such calendar
year at a price not to exceed BioClinical's direct manufacturing cost
for the next preceding year plus [Confidential Treatment Requested] as
determined in accordance with generally accepted accounting principles
consistently applied by BioClinical. Corning shall have the right through
an auditor, who shall be reasonably acceptable to BioClinical, to verify
BioClinical's

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manufacturing cost from original records no more frequently than once
annually. Corning shall bear the cost of such audit and shall reimburse
BioClinical for out of pocket costs reasonably incurred thereby.

13.3. CORNING'S ELECTION TO MANUFACTURE. Corning may
give written notice to BioClinical (i) whenever control of the
management of BioClinical shall change prior to January 1, 1993, by
transfer of capital stock, merger, consolidation, amalgamation or
otherwise, or (ii) at any time on or after December 1, 1991, that
Corning elects to manufacture or have manufactured its requirements of
Uncoupled Magnetic Particles and BioClinical agrees thereafter to
disclose and license its Magnetic Particle Technology to Corning in
accordance with the provisions of Section 13.4 hereof.

13.4. CONTINGENT DISCLOSURE AND LICENSE OF BIOCLINICAL MAGNETIC
PARTICLE TECHNOLOGY. In the event either (1) that BioClinical is unable (for
any reason, whether or not such inability may be a result of an event of force
majeure) or unwilling to meet Corning's requirements for Uncoupled Magnetic
Particles during any calendar year of the Contract Period commencing January 1,
1984, or (2) that Corning elects to manufacture or have manufactured its own
requirements for Uncoupled Magnetic Particles pursuant to the provisions of
Section 13.3 hereof, then BioClinical agrees

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(a) to disclose to Corning within 30 days after
Corning's written request therefore BioClinical Magnetic Particle
Technology in sufficient detail to enable Corning to construct or to
have constructed a turn-key plant to manufacture its requirements of
Uncoupled Magnetic Particles; and

(b) if the exclusive license granted pursuant to the
provisions of Section 4.1 hereof has not been terminated, to grant
Corning a non-exclusive, royalty-free right and license, with the right to
grant sublicenses solely to the Corning Affiliates, to produce, process
or otherwise manufacture, and to use, Uncoupled Magnetic Particles in
accordance with BioClinical's Magnetic Particle Technology and/or any related
confidential information and/or patent rights, solely for Corning's and for
Corning's sublicensed Affiliate's manufacture of Magnetocluster Binding Assay
Products and for no other purpose whatsoever.

14. EXTENSION OF SUBLICENSES. All sublicenses extended by Corning
under any of the BioClinical Confidential Information and/or BioClinical
Patent Rights shall include the following provisions:

14.1. RECORDS. The sublicensee shall (a) keep adequate
and complete records showing the place of manufacture, and the net sales
at each place, of all Magnetocluster Binding Assay Products sold by it
pursuant

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to its sublicensee; (b) allow such records to be inspected at reasonable
business hours by Corning; and (c) furnish Corning on or before the last
day of each January , April, July and October with a signed written
report, showing the places of manufacture and sale and the net sales at
each place of all Magnetocluster Binding Assay Products sold or used by
the sublicensee during the preceding calendar quarter-year.

14.2. CONFIDENTIALITY. The sublicensee shall agree to
treat as confidential and to use only in the conduct of its business all
BioClinical Confidential Information disclosed to it by Corning. The
sublicensee shall further covenant that it will exercise every
reasonable precaution to preclude the disclosure by any of its
directors, officers, employees or agents to other parties of BioClinical
Confidential Information disclosed to it by Corning.

14.3. NON-DISCLOSURE AND NON-USE. In the event that the
sublicense agreement is terminated prior to December 31, 1992, the
sublicensee shall agree that it will cease and refrain from disclosing
or using any BioClinical Confidential Information disclosed to it by
Corning until December 31, 2002.

15. INFRINGEMENT CHARGES AGAINST CORNING. The following
provisions relate to infringement charges against Corning:

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15.1. CORNING'S OPTIONS. In the event any claim is made
against Corning during the first five (5) calendar years of the Contract
Period alleging that its manufacture of Magnetocluster Binding Assay
Products in accordance with the BioClinical Confidential Information
and/or BioClinical Patent Rights infringes any United States Letters
Patent of a third party, Corning shall promptly notify BioClinical in
writing and BioClinical shall grant Corning the option for a period of
one hundred twenty (120) days from the date of such claim either

(a) to negotiate directly with such third party for a
license under the third party's patent, upon the election of which
BioClinical will agree to reduce Corning's royalty payments pursuant to
the provisions of Section 15.2 hereof; or

(b) to have BioClinical, at BioClinical's own expense,
undertake to settle such claim or to defend any legal proceedings based
thereon, upon the election of which option BioClinical will agree (1) to
undertake to settle such claim or defend such legal proceeding pursuant
to the provisions set forth in Section 15.3 hereof; and (2) to reimburse
Corning pursuant to the provisions set forth in Section 15.4 hereof.

15.2. CORNING'S RIGHT TO NEGOTIATE. In the event Corning
elects to negotiate directly with such third

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party for a license under the third party's patent, BioClinical agrees
to reduce Corning's royalty payments to BioClinical by the amount which
Corning has to pay such third party for such patent license, provided
that such reduction does not reduce the continuing royalties to be paid
to BioClinical under this Agreement below seventy-five (75%) percent of
the rates set forth in Section 11.1 of this Agreement and provided
further that any royalty payments made by Corning to any such third
parties shall be credited to Corning against Earned Royalties for the
purpose of determining whether Corning has met the minimum royalty
payment as provided in Schedule C.

15.3. BIOCLINICAL'S OBLIGATIONS TO DEFEND. In the event
that Corning elects to have BioClinical undertake to settle such claim
or to defend any legal proceedings based thereon, BioClinical agrees at
its own expense to undertake to settle such claim or to defend any legal
proceeding based thereon in the event settlement cannot be reached
permitting Corning to manufacture Magnetocluster Binding Assay Products
in accordance with the BioClinical Confidential Information and/or
BioClinical Patent Rights, PROVIDED, HOWEVER, that if Corning declines
to make any reasonable modifications (i.e., that do not materially and
adversely affect the utility, marketability or value of the product) to
the Magnetocluster Binding Assay Product(s) which BioClinical proposes
be made to avoid the alleged

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infringement or to minimize the risk of liability therefor,
BioClinical's obligations to settle such claim or to defend such legal
proceeding shall thereupon terminate. Throughout the pendency of such
legal proceedings, Corning shall continue to pay royalties to
BioClinical in accordance with the terms of this Agreement. Corning
shall cooperate fully in any defense of such legal proceedings and
shall, among other things, furnish information and evidence, including
testimony by Corning, its agents and employees, as BioClinical may
request with respect to the acts of Corning allegedly constituting
infringement.

15.4. CORNING'S RIGHT IF INFRINGEMENT UPHELD. If any such
legal proceedings are finally determined against Corning by a court of
competent jurisdiction from which no appeal is taken within the time
permitted for appeals, and if the adjudication is such that Corning
cannot make, use or sell Magnetocluster Binding Assay Products in
accordance with the BioClinical Confidential Information and/or
BioClinical Patent Rights licensed hereunder without infringing the
United States Letters Patent held infringed in such legal proceedings,
then Corning may elect either

(a) to terminate this Agreement forthwith by written
notice to BioClinical, in which event BioClinical shall reimburse
Corning for damages assessed against and paid by Corning in such legal

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proceedings to the extend of royalties theretofore paid under Section
11.1 of this Agreement; or

(b) to continue this Agreement, in which event (1)
BioClinical shall reimburse Corning for damages assessed against and
paid by Corning in such legal proceedings to the extent of royalties
theretofore paid under Section 11.1 of this Agreement; and (2)
thereafter, Corning shall continue to pay royalties to BioClinical
throughout the remainder of the Contract Period at fifty percent (50%)
of the rates set forth in Section 11.1 of this Agreement.

16. CONTINGENT REDUCTION OF ROYALTIES. If no United States patent
covering BioClinical Magnetocluster Binding Assay Technology issues on
or before December 31, 1986 or if such patent issues but is declared
invalid or unenforceable during the Contract Period, or if Corning is
not using such patent, or if a substantial amount of the BioClinical
Confidential Information licensed hereby to Corning shall become public
information without breach of this Agreement, and a third party is using
or selling Magnetocluster Binding Assay Products in the United States
that compete with Magnetocluster Binding Assay Products sold by Corning
resulting in gross revenues to such party in excess of (i) One Million
Dollars ($1,000,000) per year for all such Magnetocluster Binding Assay
Products, or (ii) Five Hundred Thousand Dollars ($500,000) with respect
to Magnetocluster Binding Assay Products for a single Binding

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Assay and as to which Products payments are being made by Corning to
BioClinical under Sections 10 and 11 hereof, then future payments to be
made under Sections 10 and 11 shall be reduced to one-half of the
amounts therein provided.

17. PRODUCT LIABILITY INDEMNIFICATIONS. Neither BioClinical nor
any of its subsidiaries or other affiliates assume any responsibility
for the manufacture or product specifications or end-use of any products
which are manufactured by or for or sold by Corning or by any
sublicensed Corning Affiliate under the BioClinical Magnetocluster
Binding Assay Technology, BioClinical Confidential Information and/or
BioClinical Patent Rights. All warranties in connection with such
products shall be made by Corning (or by the particular Corning
Affiliate involved) as manufacturer and/or seller and shall not directly
or impliedly obligate BioClinical or any of its subsidiaries or other
affiliates. Corning hereby indemnifies and hold harmless BioClinical,
its subsidiaries and other affiliates rom any claim by third parties
alleging that the manufacture, recommended use, deliver or operating
performance of any Magnetocluster Binding Assay Products have failed to
comply with any warranty or contract between Corning (or the Corning
Affiliates) and such third party.

18. ARBITRATION. In the event any dispute shall arise between
BioClinical and Corning with respect to any of the terms and conditions
of this Agreement, then such dispute shall be submitted and finally
settled by arbitration which

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shall be held in Boston, Massachusetts, pursuant to the prevailing Rules
of the American Arbitration Association. The arbitrators shall include
one nominee of BioClinical and nominee of Corning and a third person
jointly selected by said nominees. In the vent the respective nominees
of BioClinical and Corning are unable to jointly select such third
person, then BioClinical and Corning shall request the American
Arbitration Association at Philadelphia, Pennsylvania, to designate the
third arbitrator.

19. TERM AND TERMINATION. The following provisions shall relate
to the term and termination of this Agreement:

19.1. TERM. Unless sooner terminated in a manner herein
provided, this Agreement shall continue in force until either (a) the
last-to-expire of any patent included in BioClinical Patent Rights; or
(b) December 31, 1997 if no patents are included in BioClinical Patent
Rights.

19.2. TERMINATION. This Agreement may be terminated at
any time prior to the term set forth in Paragraph 19.1 hereof, as
follows:

19.2.1. BY CORNING. In the event either that
BioClinical fails to meet performance specifications for each of the
Binding Assays in Schedule B in accordance with the provisions of
Section 5.2 or Section 5.3 hereof, then Corning may terminate this
Agreement by giving BioClinical sixty

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(60) days' written notice setting forth the effective date of such
termination.

19.2.2. BY BREACH. In the event either party shall
materially breach any of the terms, conditions and agreements contained
herein to be kept, observed and performed b y it, then the other party
may terminate this Agreement, at its option and without prejudice to any
of its other legal and equitable fights and remedies, by giving the
party which committed the breach sixty (60) days' notice in writing,
particularly specifying the breach, unless the notified party within
such sixty (60) day period shall have cured the breach.

19.2.3. BY BANKRUPTCY. In the event (1) BioClinical
shall become insolvent or shall suspend business, or shall file a
voluntary petition or any answer admitting the jurisdiction of the Court
and the material allegations of, or shall consent to an involuntary
petition pursuant to or purporting to be pursuant to any reorganization
or insolvency law of any jurisdiction, or shall make an assignment for
the benefit of creditors, or shall apply for or consent to the
appointment of a receiver or trustee of a substantial part of its
property, and (2) no BioClinical Affiliate shall undertake to assume
BioClinical's obligation under the provisions of this

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Agreement within ninety (90) days from the date on which BioClinical
becomes so disabled, then to the extent permitted by law Corning may
thereafter immediately terminate this Agreement by giving written notice
of termination to BioClinical.

20. MISCELLANEOUS PROVISIONS. The following miscellaneous
provisions shall apply to this Agreement:

20.1. INDEPENDENT CONTRACTORS. No agency, partnership or
joint venture is hereby established. Neither BioClinical nor Corning
shall enter into, or incur, or hold itself out to third parties as
having authority to enter into or incur on behalf of the other party any
contractual obligations, expenses or liabilities whatsoever.

20.2. NOTICES. All notices and communications provided
for hereunder shall be in writing and shall be mailed or delivered to the
business address of the respective parties aforementioned, or to such
other address as either party shall designate in writing to the other.

20.3. BENEFITS. All terms and provisions of this
Agreement shall bind and inure to the benefit of the parties hereto and
to their respective successors and assignees.

20.4. GOVERNING LAW. This Agreement shall be executed
within, governed by and interpreted in accordance with the laws of the
State of New York.

20.5. COUNTERPARTS. This Agreement shall be

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<PAGE>

executed simultaneously in multiple counterparts, each of which shall be deemed
to be an original but all of which together shall constitute one and the same
agreement.

20.6. ENTIRE UNDERSTANDING. This Agreement constitutes
the entire understanding between the parties hereto with respect to the
subject matter hereof. No modifications, extensions, or waiver of any
provisions hereof or any release of any right hereunder shall be valid,
unless the same is in writing, contains reference to this Agreement and
sets forth the plan or intention to modify same, and is consented to by
all parties hereto.

20.7. HEADINGS. The headings of this Agreement are
intended solely for convenience of reference and shall be given no
effect in the construction or interpretation of this Agreement.

IN WITNESS WHEREOF, BioClinical and Corning have caused their
respective corporate seals to be hereto affixed and duly witnessed and
these presents to be signed by their respective corporate officers
thereunto duly authorized.

BIOCLINICAL GROUP, INC.

By ------------------------------------

Signed at Norwood, Mass.
on the 21st day of January, 1983

ATTEST: [SEAL]

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

-46-

<PAGE>

CORNING GLASS WORKS

By ------------------------------------

Signed at Norwood, Mass.
on the 21st day of January, 1983

ATTEST: [SEAL]

- ---------------------------
Assistant Secretary

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<PAGE>

EXHIBIT 10.67

[CONFIDENTIAL TREATMENT REQUESTED]

[Certain information has been omitted herein pursuant to a request for
confidential treatment pursuant to Rule 24b-2.]

TURN-BACK LICENSE AGREEMENT

by and between

CIBA CORNING DIAGNOSTICS CORP.

and

ADVANCED MAGNETICS, INC.

Dated as of May 30, 1986

<PAGE>

TURN-BACK LICENSE AGREEMENT

Dated as of May 30, 1986

CIBA CORNING DIAGNOSTICS CORP. (herein called "Ciba Corning"), a Delaware
corporation, having its principal place of business at 63 North Street,
Medfield, Massachusetts 02052, and ADVANCED MAGNETICS, INC. (formerly
BioClinical Group, Inc. and herein called "Advanced Magnetics"), a Delaware
corporation, having its principal place of business at 45 Spinelli Place,
Cambridge, Massachusetts 02138, hereby agree as follows:

1. BASIS FOR AGREEMENT. Effective January 21, 1983, BioClinical
Group, Inc. (now Advanced Magnetics) and Corning Glass Works ("Corning"), as the
predecessor-in-interest hereunder to Ciba Corning, entered into the
Magnetocluster Binding Assay Technology Agreement (herein called the
"Magnetocluster Binding Assay Technology Agreement"), under which, INTER ALIA,
Advanced Magnetics granted to Corning the exclusive right and license to use the
BioClinical Confidential Information and BioClinical Patent Rights and to apply
the BioClinical Magnetocluster Binding Assay Technology to IN VITRO diagnostic
immunoassay and binding assay systems. Pursuant to Section 7 of the
Magnetocluster Binding Assay Technology Agreement, whenever Advanced Magnetics
or any BioClinical Affiliate successfully develops a new Magnetocluster Binding
Assay Product (other than the Designated Binding Assays), Advanced Magnetics
agreed to disclose to Corning in writing all data concerning such new product
and Corning agreed to notify Advanced Magnetics in writing either (a) that it
rejected the resultant product for inclusion in its product line of clinical
immunoassays; or (b) that it desired to manufacture, to use, and to sell such
product or products under definitive terms to be proposed to Advanced Magnetics.
Under the provisions of Section 7, if Corning were to reject such product or
Advanced Magnetics were to reject the Corning Proposal (as such term is defined
in Section 7 of the Magnetocluster Binding Assay Technology Agreement) made with
respect to such product, then Corning agreed to grant Advanced Magnetics a
sublicense under the BioClinical Confidential Information, BioClinical
Improvements and BioClinical Patent Rights to enable Advanced Magnetics to make,
use and sell such product throughout the world for the life of such rights.

The purpose of this Agreement is to set forth the terms and conditions
under which Ciba Corning as successor to Corning shall grant such turn-back
rights to Advanced Magnetics, to establish a procedure for reaching agreement on
any Corning Proposal which is rejected by Advanced Magnetics, and to confirm
certain other matters with respect to the parties' intentions and performance
under the Magnetocluster Binding Assay Technology Agreement.

<PAGE>

2. DEFINITIONS. Except as otherwise indicated below or in Section 1
of this Agreement, the terms used in the Magnetocluster Binding Assay Technology
Agreement shall have the same meanings when used in this Agreement:

2.1. CONTRACT PERIOD. The term "Contract Period" shall mean the
period beginning with the Effective Date of this Agreement and ending on
the date on which this Agreement terminates in accordance with the
provisions of Section 10 hereof.

2.2. EFFECTIVE DATE. The term "Effective Date of this
Agreement" shall mean May 30, 1986.

2.3. MAGNETOCLUSTER BINDING ASSAY TECHNOLOGY AGREEMENT. The
term "Magnetocluster Binding Assay Technology Agreement" shall mean (a) the
Magnetocluster Binding Assay Technology Agreement, dated as of January 21,
1983, by and between Advanced Magnetics and Corning; and (b) all amendments
thereto, in accordance with the provisions of Section 20.6 of the
Magnetocluster Binding Assay Agreement.

2.4. NET SALES. The term "Net Sales" shall mean sales, at the
invoiced price, of Turn-Back Products after deduction of (a) all trade and
quantity discounts actually allowed; (b) allowance or credits for returns;
c) sales commissions actually paid to non-affiliated third parties; and (d)
sales or purchase or turnover taxes (if any) borne by Advanced Magnetics
and BioClinical Affiliates but before any deduction for cash or prompt
payment discounts.

2.5. NEW ADVANCED MAGNETICS PRODUCTS. The term "New Advanced
Magnetics Products" shall mean Magnetocluster Binding Assay Products, other
than Designed Binding Assays and New Ciba Corning Products, developed by
Advanced Magnetics or any BioClinical Affiliate after January 21, 1983 but
prior to the end of the Contract Period, and as to which Advanced Magnetics
has begun product development and notified Ciba Corning thereof prior to
the development of a similar New Ciba Corning Product.

2.6. NEW CIBA CORNING PRODUCTS. The term "New Ciba Corning
Products" shall mean Magnetocluster Binding Assay Products, other than
Designated Binding Assays and New Advanced Magnetics Products, developed by
Ciba Corning after January 21, 1983 but prior to the end of the Contract
Period, and as to which Ciba Corning has budgeted resources to begin
development and notified Advanced Magnetics thereof prior to the
development of a similar New Advanced Magnetics Product.

-2-

<PAGE>

2.7. TURN-BACK PRODUCTS. The term "Turn-Back Products" shall
mean and collectively include (a) all New Advanced Magnetics Products which
are rejected by Ciba Corning pursuant to the provisions of Section 7 of the
Magnetocluster Binding Assay Technology Agreement, and (b) any Designated
Binding Assays which Ciba Corning notifies Advanced Magnetics shall
constitute "Turn-Back Products." Without limiting the generality of the
foregoing, "Turn-Back Products" as of May 30, 1986 shall be the
immunoassays for screening blood for HTLV-III antibody and Hepatitis B
surface antigen, currently under development by Advanced Magnetics.

3. GRANT OF SUBLICENSE FOR TURN-BACK PRODUCTS.

3.1. GRANT OF SUBLICENSE. Subject to the terms and conditions
herein contained, Ciba Corning hereby grants to Advanced Magnetics the
exclusive right and sublicense throughout the world (and Ciba Corning shall
no longer have the right and license):

(a) to produce, process or otherwise manufacture, to use,
and to sell Turn-Back Products embodying or made in accordance with
any of the BioClinical Confidential Information and/or BioClinical
Patent Rights;

(b) to preclude the unauthorized disclosure of BioClinical
Confidential Information contained in such Turn-Back Products to any
third parties;

(c) to enforce any issued patent or patents of BioClinical
Patent Rights contained in such Turn-Back Products against any third-
party infringers who utilize such Patent Rights for the manufacture,
use and/or sale of Turn-Back Products.

3.2. RIGHTS OF CIBA CORNING TO DEVELOP SIMILAR PRODUCTS.
Nothing in this Agreement shall be deemed to prohibit Ciba Corning from
producing, manufacturing, using and selling Magnetocluster Binding Assay
Products (other than Turn-Back Products) to test for or measure the same
analytes as are tested for or measured by the Turn-Back Products.

4. PROCEDURE UPON REJECTION OF CORNING PROPOSAL. If Advanced
Magnetics rejects a Corning Proposal for a New Product under Section 7 of the
Magnetocluster Binding Assay Technology Agreement, the procedure set forth in
this Section 4 shall apply.

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<PAGE>

Advanced Magnetics shall notify Ciba Corning of its rejection of a Corning
Proposal during the sixty (60) day period provided for in Section 7 of the
Magnetocluster Binding Assay Technology Agreement. During the thirty (30) day
period following such rejection, Advanced Magnetics and Ciba Corning shall
negotiate in an attempt to agree upon the terms and conditions relating to such
New Product (including without limitation payments, if any, for development
costs, royalty rates and royalty period and license fees). If Advanced
Magnetics and Ciba Corning are able to reach agreement within such thirty (30)
day period, determination of the terms and conditions relating to such New
Product shall be submitted to arbitration in accordance with Section 9 of this
Agreement.

5. RESTRICTIONS ON ADVANCED MAGNETICS' DISCLOSURE AND USE OF
CONFIDENTIAL INFORMATION. The following provisions relate to restrictions on
Advanced Magnetics' disclosure and use of the BioClinical Confidential
Information:

5.1. CONFIDENTIALITY. Advanced Magnetics agrees to treat as
confidential and to use only in the conduct of its business as authorized
herein (a) all BioClinical Confidential Information which Advanced
Magnetics has disclosed or licensed to Corning under the Prior Agreement
and the Magnetocluster Binding Assay Technology Agreement, except insofar
as this Agreement authorizes the use of such BioClinical Confidential
Information for other purposes.

5.2. NON-DISCLOSURE AND NON-USE OF BIOCLINICAL CONFIDENTIAL
INFORMATION. Unless this Agreement is terminated prior to December 31,
1992, Advanced Magnetics agrees that, until December 31, 2002 (by which
time the parties agree that the useful life of the BioClinical Confidential
Information will have ended), Advanced Magnetics will not: (a) disclose
any of the BioClinical Confidential Information to any unauthorized third
parties; or (b) use any of the BioClinical Confidential Information (1)
except in its continuing program to create BioClinical Improvements to the
Magnetocluster Binding Assay Technology, and (2) except as otherwise
permitted under the provisions of Sections 3 and 4 hereof.

6. ROYALTIES. In consideration of the exclusive sublicense granted
by Ciba Corning to Advanced Magnetics pursuant to the provisions of Section 3
hereof, Advanced Magnetics agrees to pay Ciba Corning royalties as follows:

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<PAGE>

6.1. EARNED ROYALTIES. Advanced Magnetics agrees to pay Ciba
Corning a royalty of [Confidential Treatment Requested] of Net Sales of all
Turn-Back Products sold by Advanced Magnetics prior to [Confidential
Treatment Requested] (the date after which Ciba Corning no longer owes
earned royalties on Designated Binding Assays under the Magnetocluster
Binding Assay Technology Agreement) which embody or are made in accordance
with the BioClinical Confidential Information (including all BioClinical
Improvements) and/or BioClinical Patent Rights.

6.2. WHEN SALE MADE. For the purposes of this Agreement, Turn-
Back Products made by Advanced Magnetics shall be considered sold (a) when
billed out to a customer other than to a BioClinical Affiliate; or (b)
when transferred or sold by Advanced Magnetics to a BioClinical Affiliate,
except that upon the termination of this Agreement in accordance with the
provisions of Section 10 hereof, all Turn-Back Products manufactured and
placed in inventory on or prior to the date of such termination which shall
not have been billed out prior thereto shall be considered sold and
therefore subject to royalty. Royalties paid on Turn-Back Products not
accepted by the customer and returned to Advanced Magnetics or to the
particular sublicensed BioClinical Affiliate shall be credited against and
deducted from future royalties, PROVIDED, HOWEVER, that if such returned
Turn-Back Products are resold by Advanced Magnetics or by any sublicensed
BioClinical Affiliate, royalties shall be paid thereon.

7. RECORDS, REPORTS, AND ROYALTY PAYMENTS. The following provisions
relate to records, reports, and royalty payments:

7.1. RECORDS. Advanced Magnetics agrees to keep adequate and
complete records showing all Turn-Back Products sold with respect to which
royalty is due under this Agreement. Such records shall include all
information necessary to verify the total amount and computation of
royalties due thereunder, and shall be open to inspection by Ciba Corning
during reasonable business hours to the extent necessary to verify the
amount thereof. Such inspection shall be made not more often than once
each calendar year at the expense of Ciba Corning by a Certified Public
Accountant appointed by Ciba Corning and to whom Advanced Magnetics has no
reasonable objection, PROVIDED, HOWEVER, that if such inspection reveals
that Ciba Corning was entitled to receive more than ten percent (10%) in
excess of the amount reported by Advanced Magnetics to be due and payable
to Ciba Corning during the period covered by such inspection, then Advanced

-5-

<PAGE>

Magnetics shall pay the cost of such audit. Advanced Magnetics shall not be
required to retain said records for more than three (3) years after the close of
any calendar quarter-year.

7.2. REPORTS. Within sixty (60) days from the close of any
calendar quarter-year throughout the Contract Period until December 31,
1992, Advanced Magnetics shall furnish Ciba Corning with a written report,
signed by an authorized employee of Advanced Magnetics, showing (a) the
dollar value of each Turn-Back Product sold by Advanced Magnetics and by
each of its sublicensees (if any) during the preceding calendar quarter-
year; and (c) the amount of earned royalties due on Turn-Back Products sold
by Advanced Magnetics and its sublicensees (if any) during the preceding
calendar quarter-year, computed pursuant to the provisions of Section 6.1
hereof.

7.3. ROYALTY PAYMENTS. With each such quarterly report,
Advanced Magnetics shall remit to Ciba Corning the total amount of earned
royalties shown thereby to be due and payable. If such earned royalties
are unpaid when due and payable, interest shall be payable on the unpaid
royalties from the due date until paid at a rate per annum which shall at
all times be the lesser of either (a) one percent (1%) in excess of the
prime rate of Citibank, N.A., New York, New York, then in force for short-
term borrowings; or (b) the maximum legal rate then permitted under the
laws of the State of New York.

8. PRODUCT LIABILITY INDEMNIFICATION. Neither Ciba Corning nor any
or its subsidiaries or other affiliates assumes any responsibility for the
manufacture or product specifications or end-use of any products which are
manufactured by or for or sold by Advanced Magnetics or by any sublicensed
BioClinical Affiliate under the BioClinical Magnetocluster Binding Assay
Technology, BioClinical Confidential Information and/or BioClinical Patent
Rights. Advanced Magnetics shall indemnify and hold Ciba Corning harmless from
all liabilities and expenses (including reasonable attorneys' fees) ensuing out
of claims that a product manufactured by Advanced Magnetics or any Sublicensee
hereunder caused injury to the person or property of any third party whomsoever,
provided that Ciba Corning shall promptly notify Advanced Magnetics of the
existence of such claim. All warranties in connection with such products shall
be made by Advanced Magnetics (or by the particular BioClinical Affiliate
involved) as manufacturer and/or seller and shall not directly or impliedly
obligate Ciba Corning or any of its subsidiaries or other affiliates. Advanced
Magnetics hereby indemnifies and holds

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<PAGE>

harmless Ciba Corning, its subsidiaries and other affiliates, from any claim by
third parties alleging that the manufacture, recommended use, delivery or
operating performance of any Turn-Back Products have failed to comply with any
warranty or contract between Advanced Magnetics and such third party.

9. ARBITRATION. In the event any dispute shall arise between
Advanced Magnetics and Ciba Corning with respect to any of the terms and
conditions of this Agreement or in the event that the parties cannot reach
agreement with respect to a Turn-Back Product which Ciba Corning wishes to
manufacture, use or sell pursuant to subsection 3.2 or with respect to a Corning
Proposal in the time period set forth in Section 4, then such dispute or
determination shall be submitted to arbitration which shall be held in Boston,
Massachusetts, pursuant to the prevailing Rules of the American Arbitration
Association. The arbitrators shall include one nominee of Advanced Magnetics
and one nominee of Ciba Corning and a third person jointly selected by said
nominees. In the event the respective nominees of Advanced Magnetics and Ciba
Corning are unable to jointly select such third person, then Advanced Magnetics
and Ciba Corning shall request the American Arbitration Association at Boston,
Massachusetts to designate the third arbitrator. The decision of a majority of
the arbitrators shall be binding upon the parties and shall finally settle the
dispute or determination. Judgment on any award rendered may be entered in any
court having jurisdiction, or application may be made to such court for a
judicial acceptance of the award and an order of enforcement, as the case may
be. The decision, award or settlement may allocate the costs of such
arbitration to one of the parties or disproportionately between the parties. In
rendering a determination of the license terms applicable to a Turn-Back Product
under subsection 3.2 or a New Advanced Magnetics Product under Section 4, the
arbitrators shall consider, among other things, the fixed payments and
royalties payable for Designated Binding Assays and other Magnetocluster Binding
Assay Products being marketed, the amounts expended by Advanced Magnetics on
developing such product, projected additional development costs (if any)
required to bring such product to market, profitability of such product, the
market for such product, and the marketing efforts and costs incurred (if any)
by Advanced Magnetics with respect to such product.

10. TERM. This Agreement shall be co-terminous with the
Magnetocluster Binding Assay Technology Agreement. The parties acknowledge and
confirm that, based on the issuance of U.S. Patent No. 4,544,088 on November 19,
1985, paragraph (b) of Section 19.1 of the Magnetocluster Binding Assay
Technology Agreement (relating to the termination of certain of Ciba

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<PAGE>

Corning's royalty obligations and certain other obligations of the parties under
said agreement) is no longer of any force and effect and that, therefore,
subject to Section 19.2 thereof, the Magnetocluster Binding Assay Technology
Agreement shall continue in full force and effect until the last-to-expire of
any patent included in BioClinical Patent Rights.

11. MISCELLANEOUS PROVISIONS. The following miscellaneous provisions
shall apply to this Agreement:

11.1. INDEPENDENT CONTRACTORS. No agency, partnership or joint
venture is hereby established. Neither Advanced Magnetics nor Ciba Corning
shall enter into, or incur, or hold itself out to third parties as having
authority to enter into or incur on behalf of the other party any
contractual obligations, expenses or liabilities whatsoever.

11.2. NOTICES. All notices and communications provided for
hereunder shall be in writing and shall be mailed or delivered to the
business address of the respective parties aforementioned, or to such other
address as either party shall designate in writing to the other.

11.3. BENEFITS. All terms and provisions of this Agreement
shall bind and inure to the benefit of the parties hereto and to their
respective successors and assignees.

11.4. GOVERNING LAW. This agreement shall be executed within,
governed by and interpreted in accordance with the laws of the State of New
York.

11.5. COUNTERPARTS. This Agreement shall be executed
simultaneously in multiple counterparts, each of which shall be deemed to
be an original but all of which together shall constitute one and the same
agreement.

11.6. ENTIRE UNDERSTANDING. This Agreement constitutes the
entire understanding between the parties hereto with respect to the subject
matter hereof. No modifications, extensions, or waiver of any provisions
hereof or any release of any right hereunder shall be valid, unless the
same is in writing, contains reference to this Agreement and sets forth the
plan or intention to modify same, and is consented to by all parties
hereto. In the event of a conflict between the terms of this Agreement and
the terms of the Magnetocluster Binding Assay Technology Agreement, the
terms of this Agreement shall govern.

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<PAGE>

11.7. HEADINGS. The headings of this Agreement are intended
solely for convenience of reference and shall be given no effect in the
construction or interpretation of this Agreement.

IN WITNESS WHEREOF, Ciba Corning and Advanced Magnetics have caused their
respective corporate seals to be hereto affixed and duly witnessed and these
presents to be signed by their respective corporate officers thereunto duly
authorized.

CIBA CORNING DIAGNOSTICS CORP.

By /s/ May 30th, 1986
--------------------------------------

ATTEST:

/s/
- ----------------------------------------

ADVANCED MAGNETICS, INC.

By /s/
-------------------------------------

ATTEST:

/s/
- ----------------------------------------

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<PAGE>

EXHIBIT 10.68

[CONFIDENTIAL TREATMENT REQUESTED]

[Certain information has been omitted herein pursuant to a request for
confidential treatment pursuant to Rule 24b-2.]

SETTLEMENT AGREEMENT

WHEREAS, Ciba Corning Diagnostics Corp. ("CCD"), commenced Civil Action No.
89-5127 against Advanced Magnetics, Inc. ("AMI") in the Superior Court of
Middlesex County in the Commonwealth of Massachusetts setting forth certain
claims against AMI arising out of a Magnetocluster Binding Assay Technology
Agreement entered into between CCD, by its predecessor corporation, and AMI
dated as of January 21, 1983 (the "1983 Agreement").

WHEREAS, CCD and AMI have been unable to agree as to the correct
interpretation of certain provisions of the 1983 Agreement; and

WHEREAS, it is the intention of the parties hereto to fully, finally and
forever resolve certain disputes which exist between them arising out of the
1983 Agreement;

NOW, THEREFORE, it is hereby agreed by and between CCD and AMI as follows:

1. AMI hereby grants to CCD a credit in the amount of [Confidential
Treatment Requested] against future royalty payments due from CCD to AMI under
the 1983 Agreement. It is anticipated that this credit will be used by CCD
prior to September 30, 1989. CCD agrees that royalty payments due under the
1983 Agreement shall be made on Net Sales as defined therein.

2. AMI hereby grants to CCD a non-exclusive right and license throughout
the world, with the right to grant sublicenses to others on the terms specified
in the 1983 Agreement, to use Uncoupled Magnetic Particles, BioClinical
Confidential Information and BioClinical Patent Rights (as such terms are
defined in the 1983 Agreement) to produce, process or otherwise manufacture, to
use and to sell diagnostic assays in which Uncoupled Magnetic Particles are used
for the purpose of detecting or measuring the presence or amount of nucleic acid
in a solution.

3. In consideration for the license granted pursuant to paragraph 2
hereof, CCD shall pay to AMI by September 30, 1989 the sum of [Confidential
Treatment Requested].

4. Pursuant to certain agreements between AMI and [Confidential Treatment
Requested] and between AMI and [Confidential Treatment Requested], AMI has
granted to such parties non-exclusive licenses to use certain confidential
information and/or patent rights of AMI to produce, process or otherwise
manufacture, to use and to sell diagnostic assays in which magnetic particles
are used to measure nucleic

<PAGE>

acids. AMI contemplates entering into an agreement with [Confidential
Treatment Requested] for a similar license. CCD agrees that it will not
bring any actions against [Confidential Treatment Requested],
[Confidential Treatment Requested] or [Confidential Treatment Requested]
relating to their utilization of such licenses for the measurement of nucleic
acids.

5. CCD agrees not to bring any action under the 1983 Agreement against
AMI for any non-clinical product used solely for research purposes. AMI agrees
not to bring any actions against CCD under the 1983 Agreement for any prior CCD
use of Uncoupled Magnetic Particles, BioClinical Confidential Information or
BioClinical Patent Rights.

6. AMI may grant in the future non-exclusive licenses to third parties
for the use of Uncoupled Magnetic Particles, BioClinical Confidential
Information and/or BioClinical Patent Rights to produce, process or otherwise
manufacture, to use and to sell diagnostic assays in which Uncoupled Magnetic
Particles are used to measure nucleic acids, with the consent of CCD, which
consent shall not be unreasonably withheld. In connection with any such grant,
AMI shall be responsible for the costs of negotiating and implementing such
agreement. License fees and royalties received by AMI under any such license,
and all license fees and royalties received by AMI under the proposed license
with [Confidential Treatment Requested] will be divided between AMI and CCD, at
[Confidential Treatment Requested], and [Confidential Treatment Requested],
respectively.

7. AMI will turn over to CCD within 30 days, BioClinical Magnetic
Particle Technology (as defined in the 1983 Agreement) in sufficient detail to
enable CCD to manufacture Uncoupled Magnetic Particles. The expenses incident
to this transfer of technology shall be at AMI's expense. Any additional
assistance or consultation requested by CCD from AMI solely with regard to the
production technology transfer will be provided for a reasonable fee to be
mutually determined at a later date. CCD agrees that it will purchase from AMI
all of its requirements for Uncoupled Magnetic Particles for the remainder of
1989 at a price of [Confidential Treatment Requested] per gram. CCD further
agrees to purchase from AMI a minimum of 36 kilograms of Uncoupled Magnetic
Particles during calendar year 1990, at a price of [Confidential Treatment
Requested] per gram, and to purchase from AMI a minimum of [Confidential
Treatment Requested] kilograms of Uncoupled Magnetic Particles between
January 1, 1991 and June 30, 1991, at a price of [Confidential Treatment
Requested] per gram.

8. Except as specifically provided in paragraph 7, CCD shall be free to
exercise its rights provided in Sections 13.3 and 13.4 of the 1983 Agreement to
manufacture Uncoupled Magnetic Particles for its own use, or to purchase such
products from AMI. Any such purchases shall be at a price of [Confidential
Treatment Requested] per gram through June 30, 1991, and shall be at prices to
be negotiated thereafter.

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<PAGE>

9. Counsel for the parties shall file with the court a stipulation
dismissing Civil Action No. 89-5127.

CIBA CORNING DIAGNOSTICS CORP.

WITNESSED:

/s/ By:
- ------------------------------------ ------------------------------------

Title:
---------------------------------

Date: Aug. 30, 1989
----------------------------------

ADVANCED MAGNETICS, INC.

WITNESSED:

/s/ By:
- ------------------------------------ ------------------------------------

Title: /s/ President
---------------------------------

Date: Aug. 30, 1989
----------------------------------

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<PAGE>

LEASE

LEASE made and entered into this 17 day of December, 1984, between BGR
Associates, a California limited partnership ("Lessor") and CETUS
CORPORATION, a Delaware corporation ("Lessee").

1.0 BASIC LEASE TERMS.

1.1 COMMENCEMENT OF LEASE: The term of this Lease shall commence as
of the date of this Lease shown above.

1.2 INITIAL LEASE TERM: Through June 30, 1990.

1.3 MONTHLY RENT: $47,085.25.

1.4 ANNUAL RENT ADJUSTMENT: See Paragraph 4.2.

1.5 LESSEE'S INITIAL PRO RATA SHARE: 30.77%

1.6 USE: All uses consistent with the activities of a biotechnology
company, including without limitation laboratory, manufacturing and office
uses and other uses reasonably ancillary thereto.

2.0 PREMISES

2.1 DESCRIPTION. Lessor hereby leases to Lessee all of Building R
constituting approximately 34,175 square feet of floor area and a portion of
Buildings N and Q constituting approximately 5,822 square feet of floor area
(together, the "Premises"). The Premises constitute a portion of a larger
piece of real property owned by Lessor, commonly known as Buildings N, Q and
R at 4560 Horton Street, Emeryville, California and which constitutes
approximately 130,000 square feet of floor area (the "Property"). The
Premises are further delineated as the space cross-hatched in Exhibit A
attached hereto. The Premises may be enlarged, reduced or changed in
accordance with the terms of Paragraphs 2.3, 2.5, 2.6, and 2.7 below.

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<PAGE>

2.2 POSSESSION. It is understood that Lessee occupies the Premises as
of the date of this Lease. Lessor shall secure to Lessee the quiet, peaceful
and undisturbed possession of the Premises during the Term of this Lease
against any persons who claim any title to or interest in the Premises.

2.3 OPTION TO LEASE ADDITIONAL SPACE. Lessee is hereby granted an option
to lease additional space in Building Q as designated on Exhibit B attached
hereto (the "Option Space"), at $.75 per square foot (subject to adjustment
under Paragraph 4.2) and on such other terms and conditions applicable to the
Premises as set forth in this Lease. It is understood that the Option Space
is currently occupied by other tenants pursuant to existing leases, and that
Lessee shall be entitled to exercise such option from time to time as
existing leases for the Option Space expire. Lessor agrees not to make any
commitments to lease any or all of the Option Space to third parties
(including to existing tenants who may wish to remain in their premises)
other than as in effect as of the date hereof without complying with the
option provided for herein. Lessee has received a list updated as of the date
of this Lease of all leases covering the Option Space, the termination dates
of such leases and all existing options with regard to the Option Space. In
addition, Lessor shall notify Lessee in writing, no later than 60 days prior
to the expiration of any such lease, of the scheduled expiration date of such
lease. Lessee may exercise its option with respect to all (but not a part of)
the Option Space being vacated by another tenant by serving written notice upon
Lessor no later than 45 days prior to the scheduled expiration of the existing
lease in effect for the Option Space being vacated (the "Prior Lease") or
within 60 days after Lessee receives written notice from Lessor that the Prior
Lease has been terminated effective as of a date before its scheduled
expiration date. Notwithstanding anything to the contrary above, if Lessee is
in default in the payment of rent or in making other payments required to be
made by Lessee hereunder at any time between and including the date notice of
exercise of the option is delivered to Lessor and the date occupancy of the
Option Space commences, then the option may be voided by Lessor and if so
voided shall be of no effect.

2.4 CONSTRUCTION. Upon due exercise of Lessee's option for a portion of
the Option Space, Lessor shall promptly commence construction of the
improvements to such portion of the Option Space as described in Exhibit C
attached hereto, unless as to Option Space which is being leased by Lessee as
the result of the termination of a Prior Lease before its scheduled
expiration date, Lessee elects by written notice to Lessor to delay
construction of the improvements until the originally scheduled expiration
date of

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the Prior Lease. Rent owing on Option Space for which a written election to
delay construction is made shall prior to the scheduled expiration date of
the Prior Lease be at the rent which would have been payable by the tenant
under the Prior Lease. Lessor shall expend all funds and do all acts required
to have the improvements constructed in a first class and timely manner.
Lessee shall vacate the Option Space to be improved during construction.
Regardless of when the construction work is performed, Lessee shall not be
obligated to pay rent with respect to Option Space during construction and
until substantial completion. Substantial completion shall occur when the
Option Space is in such condition as to permit Lessee to occupy the Option
Space for Lessee's intended use of the Premises. At the time Lessee exercises
its option with respect to any Option Space, Lessee and Lessor shall mutually
agree in writing on the approximate number of days that will be required to
perform all of Lessor's improvements for such Option Space. Delay in
completing construction of the improvements in any Option Space beyond the
number of days previously agreed upon shall not effect the validity of this
Lease nor shall it extend the Term or render Lessor liable to Lessee for any
loss or damage resulting therefrom; provided that if such delay continues for
60 days or longer Lessee shall have the right to terminate the Lease as to
such Option Space and to recover any loss or damage resulting from such
delay. Notwithstanding anything to the contrary above, if Lessee requests
changes in the construction requirements shown on Exhibit C, and Lessor
consents to such changes, Lessee shall be obligated to pay rent at $.75 per
square foot for the period of the delay caused by the request changes.

2.5 VACATING EXISTING SPACE. When Lessee takes possession of Option
Space as provided in Paragraph 2.3 above, it will vacate space on the first
floor of Building N which is approximately equivalent in floor area to the
Option Space in Building Q for which it has exercised its option, until such
time as Lessee has vacated all of its space on the first floor of Building
N. Notice of the space to be vacated shall be given by Lessee to Lessor at
the time Lessee serves Lessor with notice of its exercise of the option.
Lessee's lease obligations with respect to the vacated space shall terminate
as of the date Lessee's rental obligations commence for the space of
equivalent square footage in Building Q for which Lessee has exercised its
option. After receiving notice of Lessee's exercise of its option, Lessor
shall have the right to show the Premises to be vacated in Building N to
prospective new tenants during Lessee's normal business hours and upon
reasonable advance oral or written notice.

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2.6 OPTION TO TERMINATE SPACE. Lessee shall have the option at any time
during the Term to terminate this Lease as to any or all of that portion of
the Premises located on the first floor of Building N by serving no less than
90 days' prior written notice upon Lessor. Lessee's obligations under this
Lease shall terminate as to such space only on the later of (a) the date the
space is actually vacated by Lessee or (b) the date specified in a notice
served upon Lessor in accordance with the requirements above.

2.7 STORAGE SPACE. Lessee shall have the right from the Commencement
Date through 30 days after the Commencement Date to store furniture in (a)
Building No. 23 and (b) the approximately 1,300 square feet of storage space
on the first floor of Building N as designated on Exhibit D attached hereto.
Such storage space shall be subject to this Lease but shall during such 30
days be without charge to Lessee. If Lessee remains in possession of such
space after 30 days from the Commencement Date, with Lessor's consent, then a
tenancy from month to month will be created with respect to such space at a
rental of $.40 per square foot and on such other terms and conditions as set
forth herein.

2.8 ACCESS. At all times during the Term of this Lease Lessee shall
have unrestricted access between the various portions of the Premises via the
interior corridors and interior stairwells of Buildings N and Q, and the
exterior walkway between Buildings N and Q, all of which are marked "Access
Route" on Exhibit A. Lessor further grants Lessee unrestricted ingress and
egress to the Premises from Horton Street and 53rd Street via existing
driveways and parking areas or replacements thereof.

2.9 BRIDGEWAY. Lessee shall have exclusive access to the bridgeway over
53rd Street from Building N; provided that Lessee acknowledges that Lessor
makes no representations as to Lessee's right as against third parties to use
the bridgeway, and that a third party may assert title to the bridgeway.
Lessee shall at its cost and expense take reasonable steps to maintain the
bridgeway in its condition existing on the Commencement Date, excepting
reasonable wear and tear and repair of damage caused by act of God, Fire or
other casualty. Lessor has no responsibility to maintain the bridgeway. Lessee
shall be responsible for monitoring access to the bridgeway from Building N,
and may take any steps it deems necessary or desirable to restrict access to
the bridgeway to persons authorized by Lessee, including placing a lock on the
entry to such bridgeway. Lessee shall maintain liability insurance, with a
coverage limit equivalent to the policy specified in Paragraph 6.4, covering
injury resulting from

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Lessee's use of the bridgeway. Notwithstanding anything to the contrary
herein, Lessee shall in no event be obligated to repair or replace the
bridgeway if it is damaged or destroyed. Lessee shall indemnify and hold
harmless Lessor from any claims arising from injury to persons using the
bridgeway (other than persons gaining access to the bridgeway through the
negligence or willful misconduct of Lessor) or other injuries caused by the
bridgeway, or relating to damage to Building N caused by damage to the
bridgeway. Lessee and Lessor acknowledge that the bridgeway is not attached
structurally to Building N.

3.0 TERM.

3.1 INITIAL TERM. The Lease shall commence on the date specified
in Paragraph 1.1 above (the "Commencement Date") and shall continue
thereafter through the date specified in Paragraph 1.2 above (the "Initial
Term"), unless sooner terminated pursuant to this Lease.

3.2 OPTION TO EXTEND TERM. Lessee is hereby granted an option to
extend the Term for a 14 year period following expiration of the Initial Term
by giving written notice to Lessor of Lessee's intent to exercise such option
(the "Option Notice") at least 150 days before the expiration of the
Initial Term, subject to the following sentence. Notwithstanding anything to
the contrary in the foregoing sentence, if Lessee does not give the Option
Notice within 150 days before the expiration of the Initial Term, Lessor will
request Lessee in writing, not later than 140 days before the expiration of
the Initial Term, to indicate whether it intends to exercise its option to
extend the term, and Lessee may effectively exercise such option by giving
the Option Notice not later than 10 days after receipt of Lessor's written
request. Notwithstanding anything to the contrary in this Lease, Lessee may
terminate this Lease effective as of the second, fourth, sixth, eighth, tenth
or twelfth anniversary of the commencement of the extended term by serving
written notice upon Lessor of its intent to terminate no later than 90 days
prior to such applicable anniversary date. The extended term shall be on the
same terms and conditions set forth herein, with the rent continuing to be
adjusted on an annual basis as set forth in Paragraph 4.2 below. All
references to the "Term" in this Lease shall include the Initial Term set
forth in Paragraph 3.1 plus any extensions pursuant to this Paragraph.
Notwithstanding anything to the contrary above, if Lessee is in default in
the payment of rent, or in making other payments required to be made by
Lessee under this Lease, on the date the Option Notice is delivered to Lessor
or on the date the extended term is to commence, the extended term shall not
commence and this Lease shall expire at the end of the Initial Term.

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4.0 RENT.

4.1 MONTHLY RENT. Lessee shall pay to Lessor as rent for the
Premises in advance on the first day of each calendar month of the Term
without deduction, offset, prior notice or demand, in lawful money of the
United States, the sum specified in Paragraph 1.3 above, which monthly rent
is calculated at $1.25 per square foot for space in Building R and $.75 per
square foot for space in Buildings N and Q. If the Commencement Date is not
the first day of a calendar month, the monthly rent for the first fractional
month shall be prorated. Concurrent with Lessee's execution of this Lease,
Lessee is paying to Lessor the first monthly installment of rent. If any
Option Space is taken pursuant to Paragraph 2.3 above, the rent for such
space shall be determined in accordance with the terms of Paragraphs 2.3 and
2.4.

4.2 ANNUAL RENT ADJUSTMENT. The rent owning hereunder pursuant to
Paragraph 4.1 (as adjusted by Paragraphs 2.3, 2.4, 2.5 and 2.6) shall be
adjusted upwards on the first, second, third and fourth anniversaries of the
Commencement Date, or if the Commencement Date is not the first day of a
calendar month, then the anniversary of the first day of the first full
calendar month following the Commencement Date (each anniversary of such date
being referred to as the "Adjustment Date"), by adding to the rent in
effect immediately before the Adjustment Date the GREATER of (a) an amount
determined by multiplying the rental payable on the commencement of this Lease
(the "Base Rental") by 2/3 of the percentage increase, if any, occurring
between the Adjustment Date and the immediately preceding Adjustment Date (or
the Commencement Date, in the case of the first Adjustment Date) in the
Consumer Price Index (all items) for all urban consumers (1967 = 100) for the
San Francisco-Oakland metropolitan area as published by the United States
Department of Labor, Bureau of Labor Statistics (the "CPI") or (b) 5% of the
Base Rental. Notwithstanding anything to the contrary above, in no case shall
the annual rent adjustment exceed 7% of the Base Rental. On the fifth through
tenth Adjustment Dates, the rent then in effect shall be adjusted upwards by
the LESSER of the amounts determined under (a) and (b) above. For purposes of
determining the Base Rental, the "rental payable on the commencement of this
Lease" shall mean the monthly rental set forth in Paragraph 1.3, subject to
increase or decrease at the rate of $.75 per square foot as space is added or
subtracted pursuant to Paragraphs 2.3, 2.4, 2.5 and 2.6. On the eleventh
Adjustment Date and each subsequent Adjustment Date during the Term and any
extension thereof, the monthly rent may be increased by adding to the rent in
effect immediately before the Adjustment Date an amount determined by
multiplying the rental in effect immediately prior to such

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Adjustment Date by 2/3 of the percentage increase in the CPI, if any,
occurring between the Adjustment Date and the immediately preceding Adjustment
Date. For purposes of computing percentage increases in the CPI, CPI figures
reported immediately prior to the Commencement Date and the respective
Adjustment Dates shall be utilized. Should the Bureau of Labor Statistics
discontinue the publication of said index numbers, then Lessor and Lessee
shall mutually adopt a substitute index or substitute procedure which
reasonably reflects and monitors consumer prices.

4.3 MODE OF PAYMENT. Lessee shall pay all rent due Lessor at
Lessor's address set forth on the signature page hereof, or any such other
place as Lessor may designate from time to time in writing.

4.4 PRO RATA SHARE. Lessee shall pay its pro rata share of
property taxes and insurance, and allocable portions of utilities, in
accordance with the terms of this Lease. All references herein to Lessee's
pro rata share of any expense shall mean the total expense to any such item
multiplied by a fraction, the numerator of which shall be the total floor
area of the Premises and the denominator of which shall be the total floor
area of leaseable space included in the Property. Lessee's initial pro rata
share is set forth in Paragraph 1.5 and is based upon the areas specified in
Paragraph 2.1. For purposes of determining the pro rata share with respect to
additions or reductions to the Premises, "floor area" shall be measured by
(i) the interior surface of all exterior walls and from the center of all
walls separating the Premises from adjacent premises or common areas; or (ii)
if Lessee occupies an entire building or an entire floor of a building, by
the exterior surface of exterior walls. In the event of nonpayment of all or
any portion of such charges, costs and expenses, Lessor shall have the same
rights and remedies as provided in this Lease for failure of Lessee to pay
rent. Lessee may in addition pay its pro rata share of the costs of certain
other services as Lessor and Lessee shall in their reasonable judgment agree
from time to time. By way of example and not by way of limitation, Lessee
shall not be under any obligation to agree to pay Lessor for services if
Lessee has (a) determined to provide such services on its own either through
its own work force or through independent contractors; (b) determined that
such services are not necessary or desirable for Lessee's use of the
Premises; or (c) determined that the cost of such services as proposed by
Lessor is excessive.

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4.5 LATE CHARGES. Lessee hereby acknowledges that late payment
by Lessee to Lessor of rent will cause Lessor to incur costs not contemplated
by this Lease, the exact amount of which will be extremely difficult to
ascertain. Such costs include, but are not limited to, processing and
accounting charges, and late charges which may be imposed on the Lessor by
the terms of any mortgage or trust deed covering the Premises. Accordingly, if
any installment of rent due from Lessee shall not be received by Lessor or
Lessor's designee within 10 days after such amount shall be due, Lessee shall
pay to Lessor a late charge equal to 5% of such overdue amount. The parties
hereby agree that such late charge represents a fair and reasonable estimate
of the costs Lessor will incur by reason of late payment by Lessee.

5.0 TAXES.

5.1 REAL PROPERTY TAXES. Lessor shall pay prior to delinquency the
real property taxes and assessments levied throughout the Term of this Lease
against the Property. Lessee shall pay to Lessor its pro rata share (in
accordance with Paragraph 4.4) of such taxes and assessments no later than 15
days prior to the date payment must be made by Lessor; provided that Lessor
delivers to Lessee at least 30 days prior to such payment date a written
invoice for Lessee's share of such taxes together with a copy of the
applicable bills from taxing authorities, and provided further that (i)
Lessee shall in no event be required to pay any portion of taxes or
assessments that are based upon or derived from Lessor's income; and (ii)
Lessee shall pay its pro rata share of only one-half of any increase in real
property taxes arising from or triggered by a transfer after the date of this
Lease of all or any portion of any interest in the Property.

5.2 PERSONAL PROPERTY TAXES. Lessee shall pay before delinquency
all taxes levied or assessed on Lessee's trade fixtures, furnishings,
merchandise, equipment and other personal property in and on the Premises. If
at any time after any tax or assessment has become due or payable Lessee or
its legal representative neglects to pay such tax or assessment, Lessor shall
be entitled, but not obligated, to pay the same at any time thereafter and
such amount so paid by Lessor shall be repaid by Lessee to Lessor with
Lessee's next rent installment.

6.0 INSURANCE

6.1 PROPERTY INSURANCE. Lessor shall at all times during the term
hereof, procure and continue in force standard form policies of earthquake
insurance, flood insurance and business interruption insurance, and a policy
of "all risk" property

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insurance (including sprinkler, vandalism and malicious mischief coverage)
for full replacement value (replacement cost new, including debris removal
and demolition, if applicable) of the Property with a "guaranteed replacement
cost endorsement" or its equivalent. Lessor shall also maintain boiler and
machinery insurance on all boilers, heating and air conditioning equipment and
other standard equipment in, on or about the Property routinely covered by
such insurance, if any of these items and the damage that may be caused by
them are not covered by the "all risk" insurance referred to above. The
boiler and machinery insurance shall have limits of not less than $100,000
per occurrence. Lessee shall within 30 days following Lessor's annual
notification thereof (which notification shall be accompanied by copies of
applicable premium bills), but not earlier than 15 days prior to the date
premiums for such insurance are due to be paid by Lessor, pay to Lessor
Lessee's pro rata share of the cost of such insurance.

6.2 PROPERTY INSURANCE - FIXTURES AND INVENTORY. During the Term,
Lessee shall, at its sole expense, maintain insurance with "all risk"
coverage on any of Lessee's trade fixtures, furnishings, merchandise,
equipment or other personal property in or on the Premises, whether in place
as of the date hereof or installed hereafter, for the full replacement value
thereof.

6.3 LESSOR'S LIABILITY INSURANCE. During the Term, Lessor shall,
at its sole cost and expense, maintain a policy or policies of comprehensive
general liability insurance insuring Lessor (and such others as designated by
Lessor) against liability for bodily injury, death and property damage on or
about the Property, with combined single limit coverage of not less than Two
Million Dollars ($2,000,000). The limits of such insurance shall not limit
the liability of Lessor. Such insurance shall name Lessee as an additional
insured. Lessor shall furnish to Lessee prior to the Commencement Date, and at
least 10 days prior to the expiration date of any policy, certificates
indicating that the insurance policies required to be maintained by Lessor
under Paragraph 6.3 and Paragraph 6.1 are in full force and effect; that
Lessee has been named an additional insured on Lessor's general liability
policy, and that all such policies will not be cancelled unless 30 days'
prior within notice of the proposed cancellation has been given to Lessee.
Such policies shall provide that Lessee, although an additional insured, may
recover under the insurance policy for any loss suffered by Lessee by reason
of Lessor's negligence, and shall include a broad form liability endorsement.

6.4 LESSEE'S LIABILITY INSURANCE. During the Term, Lessee shall,
at its sole cost and expense, maintain comprehensive general liability
insurance insuring Lessee against liability for bodily injury, death or
property damage arising out of Lessee's use or

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occupancy of the Premises, with combined single limit coverage of not less
than Two Million Dollars ($2,000,000). The limits of such insurance shall not
limit the liability of Lessee. Such insurance shall name Lessor as an
additional insured. Lessee shall furnish to Lessor prior to the Commencement
Date, and at least 10 days prior to the expiration date of any policy,
certificates indicating that the liability insurance required by Lessee above
is in full force and effect; that Lessor has been named as an additional
insured, and that all such policies will not be cancelled unless 30 days'
prior written notice of the proposed cancellation has been given to Lessor.
The insurance shall be with insurers approved by Lessor, which approval shall
not be unreasonably withheld and with policies in form reasonably
satisfactory to Lessor. Said policies shall provide that Lessor, although an
additional insured, may recover under the insurance policy for any loss
suffered by Lessor by reason of Lessee's negligence, and shall include a
broad form liability endorsement.

6.5 WAIVER OF SUBROGATION. Lessor and Lessee each hereby releases
the other from any and all liability or responsibility to the other or anyone
claiming through or under the other by way of subrogation or otherwise for any
loss or damage to property or injury to persons covered by any policy of
insurance carried by the other party, even if such loss, damage or injury was
caused by the other party. Lessor and Lessee shall each obtain a waiver of
subrogation from its insurer with respect to any policy of insurance covering
the Premises, the Property or any activities taking place therein. If either
party shall fail to obtain a waiver of subrogation as required hereunder, such
party shall indemnify, defend and save the other party harmless from and against
any and all claims, demands, actions, suits, losses, damages, costs, expenses
and liabilities attributable to such failure.

6.6 WORKERS' COMPENSATION INSURANCE. Lessee shall, at its sole
expense, maintain and keep in force during the Term a policy or policies of
Workers' Compensation Insurance and any other employee benefit insurance
sufficient to comply with all laws, statutes, ordinances and governmental
rules, regulations or requirements applicable to Lessee.

7.0 MAINTENANCE

7.1 PREMISES - LESSEE'S OBLIGATIONS. Lessee shall at its sole cost
and expense keep and maintain the Premises and all appurtenances and
improvements therein in good order, condition and repair, except for
reasonable wear and tear; provided, however, that Lessee shall not be
responsible for (i) maintenance to those portions of the

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Premises for which Lessor is responsible under Paragraph 7.2; (ii) repair of
damage to the Premises due to acts of God, fire or other casualty; or (iii)
damage caused by negligence or willful misconduct of Lessor or any of its
agents, employees, contractors, licensees or concessionaires. Lessee agrees
to keep the Premises clean and in sanitary condition as required by the
health, sanitary and police ordinances and regulations of any political
subdivision having jurisdiction. Lessee further agrees to keep the interior
of the Premises, such as the windows, floors, walls, doors and fixtures clean
and neat in appearance and to remove all trash and debris which may be found
in the Premises. If Lessor reasonably deems any repairs and/or maintenance to
be made by Lessee necessary and Lessee refuses or neglects to commence such
repairs and/or maintenance and complete the same with reasonable dispatch
upon demand, Lessor may upon reasonable notice enter the Premises and cause
such repairs and/or maintenance to be made. Lessee agrees that within 30 days
after demand, it shall pay to Lessor the cost of any such repairs.

7.2 PREMISES - LESSOR'S OBLIGATIONS. Lessor shall at its sole cost
and expense keep and maintain in good order, condition and repair (excluding
reasonable wear and tear and damage caused by the negligence or willful
misconduct of Lessee or any of its agents, employees, contractors, licensees
or concessionaries) the roof, exterior walls, foundation and all structural
portions of the Premises and the buildings in which the Premises are located,
and all service facilities including without limitation elevators and the
following, up to the point where they enter the Premises: main plumbing
lines, sewer connections, main electrical systems and heating systems. For
the purpose of the foregoing sentence, the parties acknowledge that the
boiler located on the roof of Building R is not located within the Premises
and is to be maintained by Lessor. If Lessee reasonably deems any repairs
and/or maintenance to be made by Lessor necessary and Lessor refuses or
neglects to commence such repairs and/or maintenance and complete the same
with reasonable dispatch upon demand, Lessee may cause such repairs and/or
maintenance to be made. Lessor agrees that within 30 days after demand, it
shall pay to Lessee the cost of any such repairs.

7.3 COMMON AREAS. Lessor shall at its sole cost and expense
maintain the common areas of the Property, including without limitation
common hallways, bathrooms and entrances, and maintain landscaping, sidewalks
and parking areas outside the buildings included in the Property, in good
order and condition, except that damage occasioned by the act of Lessee shall
be repaired by Lessor at Lessee's expense. Such common hallways, bathrooms,
entrances, landscaping, parking areas and similar areas are referred to
herein as the "common areas". Lessee shall notify Lessor, orally or in

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writing, of any repairs or maintenance to the common areas of which Lessee
becomes aware which may be required, and Lessor shall make all repairs in a
prompt and timely manner. Lessor shall also provide first-class landscaping,
janitorial and security services for the common areas. Prior to retaining any
person or entity to provide any such service, Lessor shall notify Lessee in
writing of the identity of such person or entity and the cost of such
service. If, within 20 days after receipt of such notice from Lessor, Lessee
notifies Lessor in writing giving the name of one or more alternative,
comparably-qualified providers of such service, together with a cost
quotation for such service which is lower than the cost proposed by
Lessor, then Lessor shall at its option (i) retain the lower cost provider
of such service as suggested by Lessee, in which case Lessee shall pay its
pro rata share of the cost of such service as set forth below; or (ii) not
retain such lower-cost provider, in which case Lessee shall not be required
to pay its pro rata share of the cost of such service. With respect to each
service for which Lessor chooses alternative (i) above or for which Lessee
does not propose alternative providers within such 20-day period, Lessee
shall pay its pro rata share of the actual cost of such service within 10
days after receipt of Lessor's monthly statement thereof, accompanied by
copies of invoices covering the costs referred to in the statement.

7.4 ALTERATIONS, CHANGES AND ADDITIONS BY LESSEE. No structural
changes, alterations, or additions, the estimated cost of which exceeds
$10,000 within one year, shall be made by Lessee to the Premises without the
prior written consent of Lessor which Lessor will not unreasonably withhold.
Lessor hereby consents to all such improvements specified in Cetus Plans R-1
through R-4 dated May 15, 1984 which Lessor has reviewed and approved. As
used herein, alterations include utility installations such as ducting, power
panels, flourescent fixtures, base heaters, conduit and wiring. As a
condition to giving such consent Lessor may require at the time of giving its
consent to certain alterations, additions or improvements, that Lessee agree
to remove such alterations, additions or improvements at the expiration
of the Term and to repair any damage caused by such removal. All changes,
alterations or additions to be made to the Premises for which consent is
required hereunder shall be made substantially in accordance with plans and
specifications which have been furnished to and approved by Lessor prior to
commencement of work. If the written consent of Lessor to any proposed
alterations by Lessee shall have been obtained, Lessee agrees to advise
Lessor in writing of the date upon which such alterations will commence in
order to permit Lessor to post a notice of nonresponsibility. All such
alterations, changes and additions shall be constructed in a good and
workmanlike manner in accordance with all ordinances and laws relating
thereto. Any such structural changes, alterations or additions to or on the
Premises shall remain for the benefit of and become the property of Lessor
upon termination of this Lease except for improvements for which Lessor has
required removal at the time of consenting thereto. Nothing in this Lease is
intended to amend or affect in any way the obligation of Lessor to reimburse
Lessee for improvements to

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Building R and for roofing costs in accordance with the terms of the Purchase
and Sale Agreement, dated November 8, 1984, between Lessee and Lessor.

7.5 LESSOR'S IMPROVEMENTS. Lessor shall at its sole cost and
expense perform in a first-class timely manner all the improvements as set
forth in Exhibit C hereto on the Premises and on the Property, in accordance
with more detailed plans and specifications to be approved by Lessee in
writing prior to commencement of any such improvements. Such Lessor
improvements shall be performed in accordance with the time schedule set
forth in Exhibit C, and (except for improvements in the Option Space) shall
be completed in no event later than 18 months after the Commencement Date. The
improvements shall be performed with minimal disruption of Lessee's use of
the Premises. All such improvements shall be constructed in a good and
workmanlike manner and in accordance with all ordinances and laws relating
thereto.

7.6 PLUMBING. Lessee shall not use the plumbing facilities for any
purpose other than uses reasonably consistent with Lessee's intended use of
the Premises. The expense of any breakage, stoppage or other damage relating
to the plumbing and resulting from the introduction by Lessee, its agents,
employees or invitees of substances not normally used or disposed of in the
business of Lessee into the plumbing facilities shall be borne by Lessee.

7.7 LIENS. Lessee shall keep the Premises and any building of
which the Premises are a part free from any liens arising out of work
performed, materials furnished or obligations incurred by Lessee and shall
indemnify, hold harmless and defend Lessor from any liens and encumbrances
arising out of any work performed or materials furnished by or at the
direction of Lessee. In the event that Lessee shall not, within 20 days
following the imposition of any such lien, cause such lien to be released of
record by payment or posting of a property bond, Lessor shall have, in
addition to all other remedies provided herein and by law, the right, but not
the obligation, to cause the same to be released by such means as it shall
deem proper, including payment of the claim giving rise to such lien. All
such sums paid by Lessor shall be payable to Lessor by Lessee on demand.
Lessor shall have the right at all times to post and keep posted on the
Premises any notices permitted or required by law, or which Lessor shall deem
proper, for the protection of Lessor and the Premises, and any other party
having an interest therein, from mechanics' and materialmen's liens, and
Lessee shall give to Lessor at least 10 business days' prior written notice
of the expected date of commencement of any work relating to alterations or
additions to the Premises that could legally give rise to such liens.

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8.0 UTILITIES

Lessee shall pay prior to delinquency throughout the term the cost
of water, gas, heating, cooling, sewer, telephone, electricity, garbage,
janitorial services, and all other materials and utilities supplied to the
Premises excluding those services supplied pursuant to Paragraph 7.3. If any
such services are not separately metered, Lessee shall pay a proportionate
share of such utilities allocable to Lessee's usage, the determination of
such share to be made jointly and in good faith by Lessee and Lessor on the
basis of proportionate use of such utilities by occupants of the Property
whose use is metered jointly. Payment is to be made by Lessee within 15 days
of receipt from Lessor of the statement for such charges.

9.0 USE OF PREMISES

9.1 USE. The Premises shall be used and occupied by Lessee for
only the purposes specified in Paragraph 1.6 and for no other purposes
without obtaining the prior written approval of Lessor, which consent Lessor
shall not unreasonably withhold. This Lease shall be subject to all
applicable zoning ordinances and to any municipal, county and state laws and
regulations governing and relating to the use of the Premises. Lessee
acknowledges that neither Lessor nor Lessor's agent has made any
representation or warranty as to the suitability of the Premises for the
conduct of Lessee's business.

9.2 USES PROHIBITED.

a. INSURANCE. Lessee shall not do or permit anything to be done
in or about the Premises which will cause an increase in the existing rate of
insurance upon the Premises (unless Lessee shall pay an increased premium as
a result of such use or acts) or cause the cancellation of any insurance
policy covering said Premises or any building of which the Premises may be a
part, nor shall Lessee sell or permit to be kept, used or sold in or about
such Premises any articles which may be prohibited by a standard form policy
of fire insurance.

b. INTERFERE WITH OTHER TENANTS. Lessee shall not do or
permit anything to be done in or about the Premises which will in any way
obstruct or interfere with the rights of other tenants or occupants of any
building of which the Premises may be a part or injure or annoy them or use
or allow the Premises to be used for any unlawful or objectionable purpose,
nor shall Lessee cause, maintain or permit any nuisance in or about the
Premises. Lessee shall not commit or suffer to be committed any waste in or
upon the Premises.

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c. COMPLIANCE WITH LAW. Lessee shall at its sole cost and
expense promptly comply with all laws, statutes, ordinances and governmental
rules, regulations or requirements now in force or which may hereafter be in
force and with any direction or occupancy certificate issued pursuant to any
law by any public officer or officers, insofar as they relate to the
condition, use or occupancy of the Premises, excluding requirements of code
compliance and/or structural changes not related to Lessee's acts.

d. SIGNS. Lessee shall not place any sign upon the Premises
without Lessor's prior written consent, which consent shall not be
unreasonably withheld.

10. DEFAULT PROVISIONS

10.1 INSOLVENCY. If, during the Term, Lessee shall be declared
insolvent or bankrupt; or if any assignment of Lessee's property shall be
made for the benefit of creditors or otherwise; or if Lessee's leasehold
interest herein shall be levied upon under execution or seized by virtue of
any writ of any court of law, where such writ is not dismissed, stayed or
vacated within 60 days after the date of entry thereof; or a trustee in
bankruptcy or a receiver be appointed for the property of Lessee, where
possession of the property is not restored to Lessee within 60 days; any such
occurrence shall be a material default of this Lease, and entitle Lessor at
its election to terminate the Lease.

10.2 NON-PAYMENT, BREACH. Lessee shall be in default if it fails
to pay the rental or to make any other payment required to be made by Lessee
hereunder, if such failure continues for a period of five days after receipt
of written notice thereof from Lessor, or if Lessor fails to perform any
other obligation required of Lessee within 30 days after written notice by
Lessor, specifying such failure to perform; provided that if the nature of
Lessee's obligation is such that more than 30 days are required for
performance, then Lessee shall not be in default if Lessee commences
performance within such 30 day period and thereafter diligently prosecutes
the same to completion. In the event of such default, the Lease and all
rights, title and interest of Lessee hereunder shall, at the option of
Lessor, terminate, and Lessee will then quit and surrender the Premises to
Lessor, or Lessor may pursue any other remedy available at law or equity.

10.3 RIGHT TO TERMINATE. Notwithstanding any such reletting
without termination after a default by Lessee, Lessor may at any time
thereafter during the Term elect to terminate the Lease. In the event that
Lessor shall at any time terminate

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<PAGE>

this Lease by reason of breach thereof by Lessee, then Lessor, in addition to
any other remedy it may have, may recover from Lessee any damages provided
for in California Civil Code Sections 1951.2 incurred by reason of such
breach including, without limitation, the amount by which the rent then
unpaid for the balance of the Term exceeds the amount of such rental loss for
the same period which the Lessee proves could be reasonably avoided by Lessor.

10.4 DEFAULT BY LESSOR. Lessor will be in default if Lessor fails
to perform any obligation required of Lessor within 30 days after written
notice by Lessee, specifying such failure to perform; provided that if the
nature of Lessor's obligation is such that more than 30 days are required for
performance, then Lessor shall not be in default if Lessor commences
performance within such 30 day period and thereafter diligently prosecutes the
same to completion. In the event of such default, Lessee may at its option
terminate this Lease and/or pursue any other remedy available at law or equity.

11.0 EXPIRATION OR TERMINATION

11.1 SURRENDER OF POSSESSION. Lessee agrees to deliver up and
surrender to Lessor possession of the Premises and all improvements thereon,
subject to the terms of Paragraph 7.4 above, in as good order and condition
as when possession was taken by Lessee, excepting only ordinary wear and
tear. Upon termination of this Lease, Lessor may reenter the Premises and
remove all persons and property therefrom. If Lessee shall fail to remove
any effects which it is entitled to remove from the Premises upon the
termination of this Lease, Lessor, at its option, may remove the same and
store or dispose of them, and Lessee agrees to pay to Lessor on demand any
and all expenses incurred in such removal and in making the Premises free
from all litter, debris and obstruction, including all storage and insurance
charges. If the Premises are not surrendered at the end of the Term, Lessee
shall indemnify Lessor against loss or liability resulting from delay by
Lessee in so surrendering the Premises, including, without limitation, any
claims made by any succeeding Lessee founded on such delay.

11.2 HOLDING OVER. If Lessee, with Lessor's consent, remains in
possession of the Premises after expiration of the Term and if Lessor and
Lessee have not executed an express written agreement as to such holding
over, then such occupancy shall be a tenancy from month to month at a monthly
rental equivalent to the monthly rental in

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effect immediately prior to such expiration, such payments to be made as
herein provided. In the event of such holding over all of the terms of this
Lease including the payment of all charges owing hereunder shall remain in
force and effect on said month to month basis.

11.3 VOLUNTARY SURRENDER. The voluntary or other surrender of this
Lease by Lessee, or a mutual cancellation thereof, shall not work a merger,
but shall, at the option of Lessor, terminate all or any existing subleases
or subtenancies, or operate as an assignment to Lessor of any or all such
subleases or subtenancies.

12.0 CONDEMNATION OF PREMISES

12.1 TOTAL CONDEMNATION. If the entire Premises, whether by
exercise of governmental power or the sale or transfer by Lessor to any
condemnor under threat of condemnation at any time during the Term, shall
be taken by condemnation such that there does not remain a portion suitable
for occupation, this Lease shall then terminate as of the date transfer of
possession is required. Upon such condemnation, all rent shall be paid up to
the date transfer of possession is required, and Lessee shall have no claim
against Lessor for the value of the unexpired term of this Lease.

12.2 PARTIAL CONDEMNATION. If any portion of the Premises is taken
by condemnation during the Term, whether by exercise of governmental power or
the sale or transfer by Lessor to any condemnor under threat of condemnation
this Lease shall remain in full force and effect; except that in the event of
a partial taking which exceeds 20% of the floor area of the Premises or
otherwise materially interferes with Lessee's operations on the Premises, then
Lessee shall have the right to terminate this Lease effective upon the date
of transfer of title. Moreover, Lessor shall have the right to terminate this
Lease as to any building in which the Premises are located effective on the
date of transfer of title if more than 33% of the total floor area of such
building is taken by condemnation. Lessee and Lessor may elect to exercise
their respective rights to terminate this Lease pursuant to this Paragraph by
serving written notice to the other within 30 days of their receipt of notice
of condemnation. All rent shall be paid up to the date of termination, and
Lessee shall have no claim against Lessor for the value of any unexpired
term of this Lease. If this Lease shall not be terminated, the rent after
such partial taking shall be reduced in proportion to the value of the
portion of the Premises taken. Any sums owing hereunder which are calculated
on the basis of Lessee's

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pro rata share shall also be adjusted to reflect the decreased square footage
of the Premises due to the condemnation. If Lessee's continued use of the
Premises requires alterations and repairs by reason of a partial taking, all
such alterations and repairs shall be made by Lessor at Lessor's expense;
provided that if Lessee receives compensation for such alterations or repairs
from the Condemnor, Lessee shall pay the amount of such compensation to
Lessor and such alterations and repairs shall be made by Lessor.

12.3 AWARD TO LESSEE. If all or any part of the Premises is taken
by condemnation during the Term, whether by exercise of governmental power or
the sale or transfer by Lessor to any condemnor under threat of condemnation,
Lessee shall be entitled to any and all compensation, damages, income, rents,
awards, or any interest whatsoever which may be awarded by the condemning
authority in connection with the value of Lessee's leasehold interest, its
leasehold improvements and fixtures, or with loss of or damage to Lessee's
personal property on the Premises or with moving expenses and other severance
damages.

13.0 ENTRY BY LESSOR

Lessee shall permit Lessor and its agents to enter the Premises at
reasonable times and after reasonable advance notice for any of the following
purposes: to inspect the Premises; to maintain the buildings in which the
Premises are located; to make such repairs to the Premises as Lessor is
obligated or may elect to make; to make repairs, alterations or additions to
any other portion of the buildings in which the Premises are located; to show
the Premises and post "To Lease" signs for the purposes of reletting during the
last 90 days of the Term; to show the Premises as part of a prospective sale by
Lessor or to post notices of nonresponsibility. If such entry (other than entry
to repair the Premises after a casualty loss) shall interfere with Lessee's use
and enjoyment of 25% or more of the floor area of the Premises for more than 5
consecutive business days, Lessee shall have the right to abate the rent
otherwise payable under this Lease in proportion to the degree of interference
for as long as such interference continues. If such interference shall continue
for more than 45 consecutive business days, Lessee shall have the right to
terminate this Lease if Lessor can be shown not to have exercised due diligence
in alleviating such interference.

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14.0 INDEMNIFICATION

Except as may arise from Lessor's negligence or willful
misconduct, or that of Lessor's agents, contractors, employees, servants, or
licensees (collectively, Lessor's "authorized agents"), Lessee shall
indemnify, defend and hold Lessor harmless from any and all claims arising
from Lessee's use of the Premises or from any activity or work which may be
permitted or suffered by Lessee in or about the Premises (other than
activity or work performed by Lessor or its authorized agents) and shall
further indemnify, defend and hold Lessor harmless from and against any and
all claims arising from any breach or default in the performance of any of
Lessee's obligations under this Lease or arising from any negligence or
willfull misconduct of Lessee or any of its agents, contractors, employees,
servants, or licensees (collectively, Lessee's "authorized agents"), and from
any and all costs, attorneys' fees, expenses and liabilities incurred in the
defense of any such claim or any action or proceeding brought thereon.

Except as may arise from Lessee's negligence or willful misconduct,
or that of Lessee's authorized agents, Lessor shall indemnify, defend and
hold Lessee harmless from any and all claims arising from any activity or
work which may be permitted or suffered by Lessor in or about the Property
(other than activity or work performed on the Premises which is not
performed by Lessor or its authorized agents) and shall further indemnify,
defend and hold Lessee harmless from and against any and all claims arising
from any breach or default in the performance of any of Lessor's obligations
under this Lease or arising from any negligence or willful misconduct of
Lessor or any of its authorized agents, and from any and all costs,
attorneys' fees, expenses and liabilities incurred in defense of any claim or
action or proceeding brought thereon.

15.0 ASSIGNMENT AND SUBLETTING

Lessee shall not assign this Lease in whole or in part, or sublet
the Premises or any part thereof, or license the use of all or any portion of
the Premises or business conducted thereon, or encumber or hypothecate this
Lease, without first obtaining the written consent of Lessor, which consent
will not be unreasonably withheld; provided that no consent shall be required
if Lessor shall assign or transfer this Lease or sublet all (but not a part
of) the Premises to any person or entity resulting from the consolidation,
merger or liquidation of Lessee into or with such person or entity, or to any
Affiliate of Lessee, or to any person or entity acquiring all or
substantially all of its assets and

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assuming or agreeing to perform all of the obligations of Lessee under this
Lease. For purposes of this paragraph a person or entity shall be an
"Affiliate" of Lessee if it controls, is controlled by, or is under common
control with, Lessee. "Control" for this purpose means ownership of at least
50% of the shares of stock entitled to vote for the election of directors in
the case of a corporation, and at least 50% of the beneficial interests in the
case of an entity other than a corporation. If Lessee proposes to sublet the
Premises and such subletting requires Lessor's consent, Lessee shall submit in
writing to the Lessor: (a) the name and legal composition of the proposed
sublessee; (b) the nature of the proposed sublessee's business to be carried
on in the Premises; (c) the terms and provisions of the proposed sublease; and
(d) such financial and other reasonable information as Lessor may request
concerning the proposed sublessee. Any assignment, subletting, licensing,
encumbering, or hypothecating of this Lease without such prior written
consent as required herein shall, at the option of Lessor, constitute a
breach of this Lease. Lessor's consent to any assignment or sublease shall
not constitute a waiver of the necessity for such consent to any subsequent
assignment or sublease. Notwithstanding any subletting or assignment with
Lessor's consent, or any subletting or assignment to an Affiliate, Lessee
shall remain fully liable on this Lease and shall not be released from its
obligations hereunder without Lessor's prior written consent.

16.0 DAMAGE OR DESTRUCTION

16.1 RIGHT TO TERMINATE ON DESTRUCTION OF PREMISES. Lessor shall
have the right to terminate this Lease as to any building in which the
Premises are located if, during the Term, such building is damaged to an
extent exceeding 33% of the then reconstruction cost of the building as a
whole. If any portion of the Premises is damaged by an uninsured peril to an
extent exceeding 20% of the then reconstruction cost of the Premises as a
whole, then Lessor shall have a right to terminate this Lease as to the
portion of the Premises so damaged or, if a major portion of the Premises is
affected, as to the entire Premises. However, notwithstanding the foregoing,
if any such damage described in this Paragraph occurs, Lessee shall have the
right to elect, by written notice within 20 days after Lessor notifies Lessee
of Lessor's determination to terminate the Lease under this Paragraph, to
repair such damage at its cost and expense and thereby continue the Lease in
force and effect. Lessor shall notify Lessee in writing of its determination
to terminate this Lease due to such damage or destruction within 30 days
after the occurrence of such damage or destruction, and the termination shall
become effective as of the date of such notice if Lessee does not elect to
perform the repairs as

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set forth above within 20 days after such notice. If Lessee does elect to
perform the repairs, then Lessor shall pay to Lessee to use for such purpose
all of the insurance proceeds Lessor has received for such damage or
destruction to the extent of costs actually incurred by Lessee in performing
the repairs.

16.2 REPAIRS BY LESSOR. If Lessor shall not elect to terminate this
Lease pursuant to Paragraph 16.1 (or if Lessor has no right to terminate
pursuant to such paragraph) Lessor shall, immediately upon receipt of
insurance proceeds paid in connection with such casualty, if any, but in no
event later than 30 days after such damage has occurred, proceed diligently
and promptly to repair or rebuild the Premises, on the same plan and design
as existed immediately before such damage or destruction occurred, subject to
such delays as may be reasonably attributable to governmental restrictions or
failure to obtain materials or labor, or other causes beyond the control of
Lessor. Lessee shall be liable for the repair or replacement of Lessee's
fixtures and leasehold improvements (except those which Lessor may require
Lessee to remove on termination) not covered by the property insurance
described in Paragraph 6.2.

16.3 REDUCTION OF RENT DURING REPAIRS. In the event Lessee is able to
continue to conduct its business after any damage or destruction or during
the making of repairs, the rent then prevailing will be equitably reduced in
proportion to the degree of interference with Lessee's use and occupancy of
the Premises. No rent shall be payable while the Premises are wholly
unuseable due to casualty damage.

16.4 LESSEE'S RIGHT TO TERMINATE. If the Premises are damaged and
Lessee determines, based on a bona fide and reasonable estimate, that the
time required for substantial completion of the restoration exceeds 180 days
from the date of the damage, then Lessee may at its option terminate the
Lease upon 30 days written notice; provided, however, that Lessee will not
have a right to terminate this Lease in such event if within 20 days after
receipt of Lessee's termination notice, Lessor commits in writing to provide
comparable temporary quarters which Lessee reasonably approves, at a
reasonable rental (not to exceed the rent payable under this Lease for the
same amount of space), within 60 days after the date of the damage or
destruction, and Lessor restores the Premises in a timely manner so that
Lessee may reoccupy the Premises within one year after it commences occupying
the temporary quarters. Additionally, if Lessor fails to proceed with
reasonable diligence to restore the Premises after 30 days have elapsed from
the date the damage occurred, and does not take reasonable steps to correct
such

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failure within five days after written notice thereof by Lessee, Lessee may
terminate the Lease immediately by further written notice.

16.5 LESSOR'S OVERRIDING RIGHT TO TERMINATE. Notwithstanding anything
to the contrary herein, in the event of any damage or destruction of the
Premises, if (i) the discounted present value of the rent due hereunder for
the balance of the Term, using as the discount rate the prime commercial
lending rate in effect at the Bank of America as of the date Lessor is to
commence repairs pursuant to Paragraph 16.2 hereof (but in no event to exceed
18 percent per annum), is less than (ii) the discounted present value
(discounted on the same basis) of the cost of repairing the damage to the
Premises based upon a bona fide reasonable estimate; then Lessor may at its
option terminate this Lease upon 30 days' written notice subject to Lessee's
rights as set forth below. Lessor shall deliver to Lessee written notice of
its intention to terminate pursuant to this Paragraph within 30 days after
the date of damage or destruction to the Premises, together with all relevant
information relating to Lessor's calculation of items (i) and (ii) above.
Lessee within 30 days after receipt of such notice may at its option, by
written notice to Lessor, (i) extend the period for which the discounted
present value of rent is determined under this Paragraph by committing to
extend the term for all or a portion of the 14-year option term (in
increments of two years), in which case such present value shall be
recalculated accordingly; or (ii) elect to make the repairs necessary to
restore the Premises at Lessee's own cost and expense and thereby prevent
termination of this Lease under this Paragraph. If Lessee elects to make such
repairs in order to prevent termination of this Lease pursuant to this
Paragraph, Lessee shall not be entitled to use of Lessor's insurance proceeds.

17.0 PARKING

During the Term, Lessee and its employees, customers, invitees and
licensees shall have the exclusive use of 90 parking spaces adjacent to the
Property as designated by Lessor from time to time, provided that Lessor
shall locate a block of 70 of such spaces in close proximity to Building R
and a block of 20 of such spaces in close proximity to Building N. Lessee
shall also have the exclusive right during the Term to use the parking lot on
53rd Street as designated on Exhibit E attached hereto. For two months after
the Commencement Date Lessor shall also permit Lessee to continue to use
without any additional charge all of the parking area which Lessee is using
prior to the Commencement Date, provided that Lessee will cooperate in making
portions of such

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parking area accessible for making improvements during that time. Pursuant to
Paragraph 7.5, Lessor shall complete the parking lot improvements included in
Exhibit C no later than June 30, 1985. All parking rights granted hereunder
shall be deemed a part of this Lease and shall continue during the Term
without additional consideration owing by Lessee. Lessor shall at its sole
cost and expense keep and maintain the parking areas in good condition and
repair, and shall enforce parking regulations to ensure the exclusivity of
Lessee's 90 parking spaces. Lessee shall maintain the visitor's parking lot
on 53rd Street.

18.0 MISCELLANEOUS PROVISIONS

18.1 WAIVER. No waiver of any breach of any of the covenants or
conditions of this Lease shall be construed to be a waiver of any other
breach or to be a consent to any further or succeeding breach of the same or
other covenant or condition.

18.2 SUCCESSORS AND ASSIGNS. Except as otherwise provided
herein, the provisions hereof shall be binding upon and shall inure to the
benefit of the heirs, personal representatives, successors and assigns of the
parties.

18.3 NOTICES. All notices, requests, demands and other
communications required or permitted to be given hereunder shall be in
writing and either personally delivered or sent by certified mail, return
receipt requested, postage prepaid, properly addressed to the other party at
the address set forth next to its signature below, or at such other address
or addresses as may from time to time be designated in like manner by one
party to the other. Any such notice shall be deemed given when personally
delivered or on the date indicated on the Post Office's certified mail
receipt.

18.4 NUMBER AND GENDER. All terms in this Lease shall be
construed to include either the singular or the plural, masculine, feminine
or neuter, as the situation may demand.

18.5 DESCRIPTIVE HEADINGS. The heading used herein and in any of
the documents attached hereto as schedules, lists or exhibits are descriptive
only and for the convenience of identifying provisions, and are not
determinative of the meaning or effect of any such provisions.

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18.6 TIME IS OF THE ESSENCE. In all matters time is of the essence
in the performance of all obligations under this Lease.

18.7 ENTIRE AGREEMENT. This Lease and the documents attached
hereto as schedules, lists or exhibits, constitute the entire agreement and
understanding between the parties with respect to the subject matter herein
and therein, and supersede and replace any prior agreements and
understandings, whether oral or written, between and among them with respect
to such subject matter. The provisions of this Lease may be waived, altered,
amended or repealed in whole or in part only upon the written consent of
Lessor and Lessee.

18.8 MEMORANDUM OF LEASE. In the event Lessor or Lessee request
a recording, Lessor and Lessee shall execute and acknowledge a memorandum of
this Lease in a form approved by the parties setting forth in said memorandum
the description of the Premises, the date of the Lease, the Commencement Date
and the Term. Said memorandum of Lease may be recorded in the Recorder's
Office of the County in which the Premises are located.

18.9 APPLICABLE LAW. This Lease Agreement shall be construed and
interpreted in accordance with the laws of the State of California.

18.10 CORPORATE AUTHORITY. Each individual executing this Lease
on behalf of a corporation represents and warrants that he is duly authorized
to execute and deliver this Lease on behalf of the corporation in accordance
with a duly adopted resolution of the Board of Directors of the corporation,
and that this Lease is binding upon said corporation in accordance with its
terms.

18.11 LITIGATION EXPENSE. If any party shall bring an action
against any other party hereto by reason of the breach of any covenant,
warranty, representation or condition hereof, whether for declaratory or
other relief, the prevailing party in such suit shall be entitled to such
party's cost of suit and reasonable attorney's fees, as fixed by the court.

18.12 SUBORDINATION OF LEASEHOLD. Lessee agrees that this Lease is
and shall be, at all times, subject and subordinate to the lien of any
mortgage or other encumbrances which Lessor may create against the Premises
including all renewals,

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replacements and extensions thereof; provided, however, that regardless of
any default under any such mortgage or encumbrance or any sale of the
Premises under such mortgage, so long as Lessee performs all covenants and
conditions of this Lease and continues to make all payments hereunder, this
Lease and Lessee's possession and rights hereunder shall not be disturbed by
the mortgagee or anyone claiming under or through such mortgagee. Lessee
agrees to execute any reasonable instruments in writing which may be
reasonably required by Lessor to subordinate Lessee's rights to the lien of
such mortgage.

18.13 LESSEE'S CERTIFICATE. Within 15 days following Lessor's
request, Lessee shall complete, execute and deliver to Lessor a Lessee's
Certificate, setting forth the information reasonably requested therein, to
the effect that Lessor is not in default under the Lease and that the Lease
is unmodified (except as described) and is in full force and effect, all to
Lessee's best knowledge. It is intended that such Certificate may be relied
upon by any prospective purchaser, lender or assignee of any lender of the
Premises. Any such Certificate shall contain language such that nothing
therein shall be deemed a waiver of any right or cause of action based on any
fact of which Lessee has no knowledge due to Lessor's concealment or failure
to disclose such fact.

18.15 ATTORNMENT. Lessee shall, in the event of any sale of the
Premises or if proceedings are brought for the foreclosure of, or in the
event of exercise of the power of sale under, any mortgage, installment land
contact or deed of trust made by Lessor covering the Premises, attorn to the
mortgagee or the purchaser upon any such foreclosure or sale and recognize
such mortgagee or purchaser as Lessor under this Lease.

18.6 ARBITRATION. In the event of any dispute concerning a
factual determination under Paragraph 12.0 or 16.0 then such dispute shall be
settled by arbitration in accordance with the rules of the American
Arbitration Association as then in effect, and judgment upon any award
rendered by the arbitration may be entered in any court having jurisdiction.
The expenses of arbitration shall be borne by the parties as allocated by the
arbitrators.

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18.7 INTEREST. Any sums owing by one party to the other under
this Lease, other than rent payable under Paragraphs 4.1 and 4.2, shall bear
interest from the date of written demand for such sum at a rate per annum
equal to the prime rate of the Bank of America in effect on the date of such
demand.

IN WITNESS WHEREOF, the parties have executed this Lease on the day and
year first written above.

LESSOR: LESSEE:

BGR ASSOCIATES CETUS CORPORATION
- -----------------------------
1120 Nye Street, Suite 400
San Rafael, CA 94915 1400 53rd Street
------------------------------

Emeryville, CA 94526
------------------------------
Address

By /s/ Richard K. Robbins By /s/ Robert E. Havranek
--------------------------- ----------------------------
(Signature) (Signature)

RICHARD K. ROBBINS /S/ ROBERT E. HAVRANEK
GENERAL PARTNER VICE PRESIDENT
- ----------------------------- ------------------------------
(Print Name and Title) (Print Name and Title)

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AMENDMENT TO LEASE
------------------

AMENDMENT to that certain Lease (the "Lease") dated December 17, 1984
between BGR ASSOCIATES, A CALIFORNIA LIMITED PARTNERSHIP ("LESSOR") and CETUS
CORPORATION, a Delaware corporation ("LESSEE"), which Amendment is made and
entered into effective the ____1_____ day of ___February___, 198_6_.

R E C I T A L:
--------------

LESSOR and LESSEE desire to amend certain terms of the Lease as set
forth herein.

A G R E E M E N T:
------------------

NOW, THEREFORE, the parties hereby agree to amend the Lease as set forth
below. All paragraph references relate to the Lease, and unless otherwise
defined, all defined terms shall have the meaning set forth in the Lease.

PARAGRAPH 2.1. In addition to the Premises, LESSEE shall in
conjunction with Chiron Corporation share the use of 480 square feet of space on
N-2 which is designated in Exhibit A attached to this Amendment and incorporated
herein.

PARAGRAPH 4.0. There is added a new Paragraph 4.6 as follows:

"Commencing February 1, 1986, LESSEE shall pay to LESSOR
in addition to all other charges owing hereunder and without
deduction, offset, prior notice or demand, the sum of
$108.00 per month, as rent for 240 square feet of the 480
square feet on N-2 (the "N-2 Common Area"), which is
outlined on Exhibit A attached hereto and incorporated
herein. Rent for the N-2 Common Area is being split equally
between LESSEE and Chiron Corporation. On June 1, 1986 and
thereafter the monthly rent for the N-2 Common Area shall be
$156.00, which sum is calculated at $.65 per square foot per
month, subject as of

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June 1, 1986 to adjustment by adding to such amount the
GREATER of, (a) an amount determined by multiplying such
amount by 2/3 of the percentage increase in the CPI, as
defined in Paragraph 4.2 below, occurring between June 1,
1986 and the same date of the preceding year or (b) seven
percent of such amount. Further adjustments shall be made
each succeeding June 1 of the term in the same manner as set
forth above, except that the CPI increase shall be measured
by comparing the CPI on the date of the adjustment to the
CPI on the same date of the preceding year."

PARAGRAPH 4.0 There is added a new Paragraph 4.7 as follows:

"Commencing February 1, 1986, LESSEE shall pay to LESSOR in
addition to all other charges owing hereunder a portion of the rent
owing (as calculated below) for the entry area on the first floor of
Building Q, which area is outlined in red on Exhibit B attached hereto
(the "Entry Area"). The rent for the Entry Area shall be calculated
at $.65 per square foot, and LESSEE shall be responsible for 30.77% of
the rent so calculated for the Entry Area. (Rider 1 attached) LESSEE
shall pay its share of the rent for the Entry Area to LESSOR in
advance on the first day of each calendar month during the Term,
commencing February 1, 19 without deduction, offset,
prior notice or demand."

Except an specifically amended herein, the Lease shall remain in full
force and effect.

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

LESSOR: LESSEE:

BGR ASSOCIATES CETUS CORPORATION
A CALIFORNIA LIMITED PARTNERSHIP
1120 Nye Street, Suite 400 ------------------------------
San Rafael, CA 94915
------------------------------
(Address)

By /s/ RICHARD K. ROBBINS By /s/ ROBERT E. HAVRANEK
------------------------------ ----------------------------
RICHARD K. ROBBINS, Robert E. Havranek
General Partner ----------------------------
Vice President

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<PAGE>

EXHIBIT 10.70

[CONFIDENTIAL TREATMENT REQUESTED]

[Certain information has been omitted herein pursuant to a request for
confidential treatment pursuant to Rule 24b-2.]

AGREEMENT

THIS AGREEMENT made effective as of the 21st day of December, 1988 by and
between Hoffmann-La Roche Inc., a corporation of New Jersey having offices at
340 Kingsland Street, Nutley, N.J. 07110 (hereafter "Roche"), and Cetus
Corporation, a corporation of Delaware having offices at 1400 - 53rd Street,
Emeryville, CA 94608 (hereafter "Cetus").

W I T N E S S E T H:

WHEREAS Roche has for many years been active in the field of producing and
clinically testing interleukin-2, in particular utilizing recombinant DNA
methods to provide an interleukin-2 molecule having an amino acid sequence
thought to be the same as native human interleukin-2 except for an optional
N-terminal methionine which may or may not be present in the recombinant
compound;

WHEREAS Cetus has for many years been active in the field of producing and
clinically testing interleukin-2, in particular utilizing recombinant DNA
methods to provide an interleukin-2 analog molecule in which the cysteine
residue corresponding to amino acid 125 of the native molecule has been
replaced;

WHEREAS both Roche and Cetus own or control patent rights which each
believes would render the manufacture, use or sale of recombinant human
interleukin-2 by the other party an act of infringement;

WHEREAS it is understood and represented that to the extent that either
party's patent rights licensed hereunder are derived by license from a third
party, that such license expressly grants the right to grant sublicenses to
the other party to this Agreement;

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<PAGE>

WHEREAS both Roche and Cetus have recognized that each other's respective
patent position is of a nature which, in the absence of licenses from the
respective patent holder, could create a negative impact on potential
competition between the parties and could block any commercial activities of
the parties with their respective recombinant interleukin-2 products and
therefore would be to the substantial detriment of both companies and the
patients needing treatment with the respective recombinant interleukin-2
products;

WHEREAS apart from anything else which is provided for in this Agreement,
both parties intend to further develop and commercially market their
respective recombinant interleukin-2 products fully independently from each
other;

WHEREAS it is understood that, as of the effective date of this Agreement,
F. Hoffmann-La Roche Ltd., Cetus and EuroCetus International, N.V., are
entering into an agreement corresponding to this Agreement but covering the
territory outside of the United States of America;

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

ARTICLE I - DEFINITIONS

As used herein

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<PAGE>

having the right to vote for election of directors in the case of a
corporation and at least fifty percent (50%) of the beneficial interests in
the case of a business entity other than a corporation.

2. The term "Cetus IL-2" means interleukin-2 analog molecules in which,
among other possible modifications, the cysteine residue corresponding to
amino acid 125 of the native human molecule has been replaced.

3. The term "Cetus Patent Rights" means those patents and patent
applications relating to human recombinant interleukin-2 owned or controlled
by Cetus or an Affiliate of Cetus or which Cetus or an Affiliate of Cetus has
a right to sublicense, in each case as of the date of this Agreement,
including, without limitation, those patent rights set forth in Attachment 1,
which attachment is made a part hereof, and shall further include all
divisions, extensions, renewals, reexamination certificates, continuations
and continuations-in-part thereof and all patents and reissues issuing
therefrom; provided, however, that Cetus PEG Patent Rights shall not be
included in Cetus Patent Rights, and provided further that rights under the
Mertelsmann patent rights licensed to Cetus by Sloan Kettering Center for
Cancer Research are not included in Cetus Patent Rights and are not licensed
hereunder.

4. The term "Cetus PEG Patent Rights" means those patents and patent
applications directed to the conjugation of interleukin-2 to a water soluable
polymer selected from polyethylene glycol homopolymers or polyoxyethylated
polyols, which are owned or controlled by Cetus or an Affiliate of Cetus or
which Cetus or an Affiliate of Cetus has a right to sublicense, in each case
as of the date of this Agreement, including, without limitation, those patent
rights set forth in Attachment 2, which attachment is made a part hereof, and
shall further include all divisions, extensions, renewals,

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<PAGE>

reexamination certificates, continuations and continuations-in-part thereof
and all patents and reissues issuing therefrom.

5. The term "Licensed Cetus IL-2 Product" means any product (including
hybrids, conjugates and formulations) containing, by molecular combination or
admixture. Cetus IL-2 as the only interleukin-2 ingredient (including without
limitation any such product containing Cetus IL-2 conjugated to a water
soluble polymer selected from polyethylene glycol homopolymers or
polyoxyethylated polyols), the manufacture, use or sale of which, in the
absence of the licenses granted herein, would infringe one or more Valid
Claims of any issued patent included within the Roche Patent Rights.

6. The term "Licensed Roche IL-2 Product" means any product (including
hybrids, conjugates and formulations) containing, by molecular combination or
admixture, Roche IL-2 as the only interleukin-2 ingredient, the manufacture,
use or sale of which, in the absence of the licenses granted herein, would
infringe one or more Valid Claims of any issued patent included within the
Cetus Patent Rights; provided that the term "Licensed Roche IL-2 Product"
shall not include any Licensed Roche PEG IL-2 Product.

7. The term "Licensed Roche PEG IL-2 Product" means any product
(including hybrids, conjugates and formulations) containing, by molecular
combination or admixture, Roche IL-2 as the only interleukin-2 ingredient,
the manufacture, use or sale of which, in the absence of the licenses granted
herein, would infringe one or more Valid Claims of any issued patent included
within the Cetus PEG Patent Rights, including without limitation any such
product containing Roche IL-2 conjugated to a water soluble polymer selected
from polyethylene glycol homopolymers of polyoxyethylated polyols.

8. The term "Net Sales" means the gross invoice price for the sales by
Roche and its Affiliates or by Cetus and its Affiliates, as the case may be,
less deductions for returns (including withdrawals and recalls), sales
rebates (price

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<PAGE>

reductions and chargebacks), volume (quantity) discounts (to the extent not
reflected in the invoice price), sales taxes and other taxes linked to the
sales. All other expenses such as customs duties, transportation costs, cash
payment discounts, insurance, bad debts, agent commissions and other direct
expenses shall be considered by an additional lump deduction of 8% (eight
percent) of the gross invoice price.

9. The term "Patent Rights" shall mean some or all of the Cetus Patent
Rights, the Cetus PEG Patent Rights and the Roche Patent Rights, as the
context indicates.

10. The term "Roche IL-2" means an interleukin-2 molecule having the same
amino acid sequence and structure as native human interleukin-2 except for an
optional N-terminal methionine which may or may not be present in the
recombinantly produced compound.

11. The term "Roche Patent Rights" means those patents and patent
applications relating to human recombinant interleukin-2 owned or controlled
by Roche or an Affiliate of Roche or which Roche or an Affiliate of Roche has
a right to sublicense, in each case as of the date of this Agreement,
including, without limitation, those patent rights set forth in Attachment 3,
which attachment is made a part hereof, and shall further include all
divisions, extensions, renewals, reexamination certificates, continuations
and continuations-in-part thereof and all patents and reissues issuing
therefrom.

12. The term "Territory" means the United States of America, including
its territories and possessions and the Commonwealth of Puerto Rico, and is
coterminous with the definition now present in 35 U.S.C. 100(c) and, for the
purposes of this Agreement, that definition as it may be amended by new
legislation.

13. The term "Valid Claim" means a claim of an issued patent under each
party's respective Patent Rights which has not been

-5-

<PAGE>

held invalid or unenforceable by a governmental agency or court of competent
jurisdiction from which no appeal has been or may be taken.

ARTICLE II - LICENSE GRANTS

1. Roche hereby grants to Cetus and its Affiliates under the Roche
Patent Rights a nonexclusive, nontransferable license and sublicense within
the Territory, with no right to grant sublicenses to others, to make, have
made or use Licensed Cetus IL-2 Product, or sell through their own employees
only Licensed Cetus IL-2 Product.

2. Cetus hereby grants to Roche and its Affiliates under the Cetus
Patent Rights and Cetus PEG Patent Rights a nonexclusive, nontransferable
license and sublicense within the Territory, with no right to grant
sublicenses to others, to make, have made, use or sell only Licensed Roche
IL-2 Product and Licensed Roche PEG IL-2 Product.

3. Roche and Cetus agree to keep each other currently advised in writing
of any substantial changes in the status of their respective Patent Rights in
the Territory including but not limited to notice of the issuance of patents
on pending patent applications included therein, and notice of allowances and
reissues.

4. Notwithstanding anything contained herein to the contrary, it is
expressly agreed that the licenses and sublicenses granted in paragraph 1.
and 2. above shall not extend to patent rights specifically directed to
products containing IL-2 linked to functional moieties.

5. The licenses granted herein to each party are expressly limited to
the Patent Rights, and no licenses are granted herein either expressly or by
implication or otherwise to any other

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<PAGE>

rights, including but not limited to other patent rights, know-how, clinical
data, trademarks or tradenames. No royalties shall be payable hereunder
except under circumstances that would, in the absence of the licenses
granted hereunder, constitute an infringement of any Valid Claim under the
applicable Patent Rights.

6. Each party disclaims any express or implied warranty as to the
validity of any Patent Rights licensed by such party under this Agreement, or
that the licensed party in practicing such Patent Rights for the purposes of
this Agreement will be free from infringement of any third party proprietary
rights.

7. The Patent Rights licensed hereunder, include patent rights which are
licensed or sublicensed from third parties and which are in turn sublicensed
under this Agreement. Each party warrants and agrees that with respect to
each patent right which is sublicensed by such party to the other, (i) the
license underlying such sublicense is or shall be when it is created in full
force and effect, (ii) such underlying license shall continue in effect until
the expiration of the patent rights licensed thereunder, and (iii) the
licensee shall maintain such license in full force and effect through to its
expiration. Without in any way limiting the generality of the foregoing,
Roche represents and warrants that it has the rights under its license from
[Confidential Treatment Requested] to sublicense to Cetus rights in the
Territory under the Taniguchi patents, and that the license from [Confidential
Treatment Requested] is terminable by [Confidential Treatment Requested] only
based upon a breach of its terms or conditions. Roche acknowledges that its
sublicense under the License Agreement dated August 21, 1986 between Cetus and
Research Corporation (the "Research Corp. Agreement") is subject to the terms
of such License Agreement (including its termination provisions), a copy of
which has been provided to Roche.

-7-

<PAGE>

8. The parties understand that [Confidential Treatment Requested]
corporation ([Confidential Treatment Requested]) has filed patent
applications in the United States, Japan and other countries which purport to
claim certain subject matter that is similar to subject matter claimed in
certain Patent Rights of the parties. Notwithstanding anything to the
contrary contained in this Agreement, if either party determines that it is
advisable to obtain a license under such patent rights of
[Confidential Treatment Requested], and obtains such a license on a basis
that would exclude the other party from also obtaining such a license, then
such party shall sublicense to the other party the right to practice under
such [Confidential Treatment Requested] patent rights on the same terms as
apply to the party licensing such rights from
[Confidential Treatment Requested].

9. Nothing set forth above is intended to restrict Cetus from
designating a related party to sell licensed Cetus IL-2 Product on its behalf
or from engaging in ordinary commercial activities with respect to
advertising, marketing and selling its products on its own behalf, including
but not limited to contracting with third parties for advertising, sales
training or telemarketing services.

ARTICLE III - ROYALTIES AND REPORTS

1. Roche shall pay royalties to Cetus on Net Sales of Licensed Roche PEG
IL-2 Product at the rate of [Confidential Treatment Requested] of such Net
Sales. In addition, Roche agrees to pay Cetus [Confidential Treatment Requested]
of any royalty amounts which are payable by Cetus to Research Corporation
pursuant to the Research Corp. Agreement with respect to Net Sales of Licensed
Roche PEG IL-2 Product; provided, however, that Roche's maximum additional
royalty rate under this sentence shall be [Confidential Treatment Requested]
of Net Sales of Licensed Roche PEG IL-2 Product. Cetus will certify to Roche in
writing the applicable royalty rate for Licensed Roche PEG IL-2 Product Net
Sales under the Research Corp. Agreement prior to Roche's first commercial sales
of Licensed Roche PEG IL-2 Product and at any future time

-8-

<PAGE>

during the term of the Agreement that there is a change in such applicable
royalty rate.

2. The License to Roche with respect to Licensed Roche IL-2 Product,
but, not Licensed Roche PEG IL-2 Product, is [Confidential Treatment Requested]
and Roche shall be under no obligation to account to Cetus in respect of the
Cetus Patent Rights licensed hereunder for any commercial activity with respect
to such Licensed Roche IL-2 Product.

3. Cetus shall pay Roche a royalty on Net Sales of Licensed Cetus IL-2
Product at a rate determined as follows:

a) [Confidential Treatment Requested] on the first [Confidential
Treatment Requested] million of annual worldwide Net Sales

b) [Confidential Treatment Requested] on annual worldwide Net Sales
between [Confidential Treatment Requested] million and
[Confidential Treatment Requested] million;

c) [Confidential Treatment Requested] on annual worldwide Net Sales
of [Confidential Treatment Requested] million and above.

For the purposes of this provision only, Cetus shall aggregate its Net Sales
of Licensed Cetus IL-2 Product worldwide (applying the currency conversion
methods then in effect for Cetus' internal reporting purposes) in order to
determine the effective royalty rate but will account to Roche based on
multiplying such effective royalty rates by the Net Sales within the
Territory. Cetus shall determine its annual Net Sales for purposes of this
paragraph 3 based on its fiscal year, beginning with the fiscal year
commencing July 1, 1989.

4. No royalty shall be payable by Roche or by Cetus respectively, at the
time of sales to its Affiliates or related parties, or between their
respective Affiliates or related parties. In such event, the royalty shall be
computed by the

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<PAGE>

party in question and royalty paid upon the Net Sales of the Affiliates or
related parties upon the resale by such Affiliates or related parties to a
non-affiliated party. If law or regulation require a party paying a royalty
to withhold income taxes owed by the other party on account of such
royalties, such taxes will be deducted by the seller from such remittable
royalty and will be paid by the seller to the proper taxing authority, with
proof of payment secured and sent to the other party as evidence of such
payment.

5. Each party agrees to provide semi-annual reports to the other within
sixty (60) days of the end of each calendar half year, such reports stating
the description and gross invoice amount for sales of the Licensed Cetus IL-2
Product, or Licensed Roche PEG IL-2 Product, as the case may be, sold by that
party and its Affiliates hereunder and showing the deductions made in
accordance with the computation of Net Sales. The first report by each party
shall cover the period beginning on the date of the first commercial sales
for which rights are granted and shall end on the last day of the calendar
half-year in question.

6. All royalties due hereunder shall be paid by each party to the other
simultaneously with the submission of the semi-annual reports in Paragraph 5
above. In the event of termination or expiration of this Agreement, each
party shall submit to the other a final report within sixty (60) days after
termination or expiration and all royalties due through the effective date of
such termination or expiration shall be paid with the submission of such
final report. Royalties shall be due on any sales of Licensed Cetus IL-2
Product and Licensed Roche PEG IL-2 Product respectively prior to the date of
termination or expiration and on sales within one year thereafter of any
material in inventory on the date of termination or expiration.

7. All payments made by each party hereunder shall be made, in U.S.
dollars, to Cetus at its offices at the address provided

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<PAGE>

herein and to Roche at Hoffmann-La Roche Inc., P.O. Box 12069, Newark, N.J.
07101 or any other address the respective party may designate in writing.

8. Each party agrees to keep records of commercial activities with
respect to licensed product to which rights have been granted under Article
II above to it and its Affiliates in sufficient detail to permit the
determination of the royalties due and payable to the other party hereunder.
At the request and expense of a party, the other party shall permit an
independent certified public accountant appointed by the first party and
reasonably acceptable to the other party to examine abstracts of those
records during ordinary business hours to the extent necessary to verify the
royalties due and payable under this Agreement. Such examination shall be
made no later than three (3) years after the end of the year being examined
and neither party shall be required to keep any records for a longer period
of time. Results of any such examination shall be made available to both
parties, but the data from which such results are determined shall otherwise
be maintained in confidence by such independent accountant.

9. If, after the effective date hereof, either party licenses any of the
Patent Rights licensed by it hereunder to a third party on terms more
favorable than the terms provided to the other party hereunder, such terms
shall be offered promptly to the licensed party under this Agreement, and
upon written acceptance thereof the terms of this Agreement shall be adjusted
as to the license of such Patent Rights to reflect such more favorable terms.
If the terms of such other license include consideration other than cash
payments or royalties, the terms of this Agreement shall be adjusted, if at
all, based on a reasonable appraisal of the fair market value of the entire
consideration received for the other license as compared with the value of
the entire consideration received for the license under this Agreement as of
the date of this Agreement.

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<PAGE>

ARTICLE IV - MISCELLANEOUS PROVISIONS

1. Except as provided in this paragraph, neither this Agreement nor any
interest hereunder shall be assignable by either party without the written
consent of the other; provided, however, that either party without obtaining
the consent of the other party may assign this Agreement along with any
Patent Rights beneficially owned by it to any Affiliate or to any corporation
with which it may merge or consolidate, or to which it may transfer
substantially all of its assets. This Agreement shall be binding upon the
successors and assigns of the parties hereto and the name of a party
appearing herein shall be deemed to include the names of such party's
successors and assigns to the extent necessary to carry out the intent of
this Agreement, and the performance of the rights and obligations of such
successors and assigns shall be deemed guaranteed by such party; but nothing
herein shall be deemed to permit any assignment by either party except as
expressly provided herein.

2. Except for warranties and representations made expressly herein, the
parties expressly disclaim all other warranties, express or implied,
including without limitation warranties of merchantability, fitness for a
particular purpose, or non-infringement.

3. This Agreement constitutes and contains the entire Agreement of the
parties with respect to the subject matter covered hereby and supersedes any
and all prior negotiations, correspondence, understandings and agreements,
written or oral, between the parties respecting the subject matter hereof. If
any provision of this Agreement is held to be invalid or unenforceable, it
shall be adjusted rather than voided, if possible, in order to achieve the
intent of the parties to the extent possible. In any event, all other
provisions of this Agreement shall be deemed valid and enforceable to the
extent

-12-

<PAGE>

possible to give effect to the understanding of the parties expressed herein.
This Agreement may be amended or modified or one or more provisions hereof
waived only by a written instrument signed by the parties.

4. The captions in this Agreement are for convenience only, and are to be
of no force or effect in construing and interpreting the provisions of this
Agreement.

5. Each party on whose behalf this Agreement is executed warrants that
it has the full rights and authorization to enter into this Agreement and to
grant the rights specified herein.

6. This Agreement shall expire upon expiration of the last to expire
Patent Right. This Agreement may be terminated by either party if the other
party is in breach of a material term of this Agreement and such breach is
not cured within ninety (90) days after delivery of written notice of such
breach.

7. In the event of a suit by either party arising from this Agreement, if
Roche brings such suit against Cetus the jurisdiction and venue for such suit
shall be in the United States District Court for the Northern District of
California, and if Cetus brings such suit against Roche the jurisdiction and
venue for such suit shall be in the United States District Court for the
Southern District of New York.

8. Roche will indemnify and hold Cetus and its directors, officers,
employees, agents and shareholders harmless against any and all liability,
damage, loss, cost or expense arising out of third party suits based upon or
arising out of Roche's or Roche's Affiliates' commercial activities with
respect to Licensed Roche IL-2 Product or Licensed Roche PEG IL-2 Product
hereunder. Cetus will indemnify and hold Roche and its directors, officers,
employees, agents and shareholders harmless against any and all liability,
damage, loss, cost or expense arising out of third

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<PAGE>

party suits based upon or arising out of Cetus' or Cetus' Affiliates'
commercial activities with respect to Licensed Cetus IL-2 Product hereunder.
In the event either party is sued or threatened with suit under circumstances
that give rise to the indemnity obligations hereunder, then the sued or
threatened party shall promptly notify the other party thereof, and at the
other party's cost, will permit the other party's attorneys to handle and
control such claims or suits and to provide counsel for such claims or suits.
The sued or threatened party may elect to be represented in such suit by
counsel of its own choice at its own expense. It is understood that neither
party shall be obligated to indemnify and hold harmless the other party for
such other party's negligent acts of commission or omission.

10. Any notice or communication required to be given hereunder shall be
deemed to have been duly given if delivered to, or sent by prepaid first
class mail, express mail or by telefax to the parties as follows:

To Roche: HOFFMANN-LA ROCHE INC.
340 Kingsland Street
Nutley, New Jersey 07110
Attn: Corporate Secretary
Telefax: 201-235-3500

To Cetus: CETUS CORPORATION
1400 - 53rd Street
Emeryville, California 94608
Attn: President
Telefax: 415-658-5239

or to such address as a party may subsequently request in writing.

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<PAGE>

11. Except as contemplated by this Agreement, any information supplied by
one party to the other pursuant to, or in contemplation of, this Agreement
(including without limitation projected or actual Net Sales information, the
pendency of patent applications and the terms of this Agreement) shall be
retained in confidence and not used or disclosed by the party receiving such
information (the "Receiving Party") during the term of this Agreement and
for three (3) years thereafter. However, to the extent the Receiving Party
has the obligation to report to a licensor, such information as is required
may be supplied to such licensor of the Receiving Party with similar
confidentiality restriction. The confidentiality obligations provided herein
shall not apply to information which

(a) is or becomes known publicly through no fault of the Receiving
Party;

(b) is learned by the Receiving Party from a third party entitled to
disclose it;

(c) was already known by the Receiving Party at the time of
disclosure hereunder as shown by prior written records of the
Receiving Party;

(d) is developed by the Receiving Party independently of information
obtained or disclosed hereunder; or

(e) is required to be disclosed under applicable law or regulation
in the good faith opinion of the Receiving Party, in which case
the other party will be notified in advance.

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<PAGE>

ARTICLE VI - RELATIONSHIP OF THE PARTIES

1. Nothing in this Agreement is intended or shall be deemed to constitute
a partnership, agency, employer-employee, or joint venture relationship between
the parties.

ARTICLE VII - EFFECTIVE DATE

1. This Agreement shall enter into force and effect as of the date first
set forth above.

HOFFMANN-LA ROCHE INC.

By ____________________________________________
Title Pres. Pharmaceuticals
-------------------------------------------

CETUS CORPORATION

By R A Fildes
--------------------------------------------
Title President
-----------------------------------------

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<PAGE>

ATTACHMENT 1

CETUS PATENT RIGHTS
(Non-exclusive list)

Issued Patents

Patent Holder Country Number Issue Date
- ------------- ------- ------ ----------
<S> <C> <C> <C>
Cetus United States 4,530,787 7/23/85
Cetus United States 4,569,790 2/11/86
Cetus United States 4,572,798 2/25/86
Cetus United States 4,604,377 8/5/86
Cetus United States 4,656,132 4/7/87
Cetus United States 4,745,180 5/17/88
Cetus United States 4,748,234 5/31/88

</TABLE>

Also includes numerous applications and reissues, divisionals, continuations
and foreign counterparts to such patents and patent applications.

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<PAGE>

ATTACHMENT 2

"PEG RIGHTS"
(Non-exclusive list)

Issued Patents

Patent Holder Country Number Issued Date
- ------------- ------- ------ -----------
<S> <C> <C> <C>
Cetus United States 4,766,106 8/23/88
Research Corp. United States 4,179,337 12/18/79

</TABLE>

Also includes reissues, divisionals, continuations and foreign counterparts
of such patents.

Research Corp. patent rights are licensed for IL-2 to Cetus for the following
territories: U.S., Canada, West Germany, France, U.K., Switzerland, Sweden,
Japan.

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<PAGE>

ATTACHMENT 3

ROCHE PATENT RIGHTS
(Non-exclusive list)

Patents

Patent Holder Country Number Issue Date
- ------------- ------- ------ ----------
<S> <C> <C> <C>
Roche United States 4,490,289 12/84
Ajinomoto United States 4,738,927 4/19/88
Ajinomoto *Europe 91,539 7/13/88

Patent Applications Publication Date
- ------------------- ----------------

[Confidential Treatment Requested]

<FN>

* This Agreement applies to United States equivalents to the indicated
European Patents.
</TABLE>

Includes reissues, divisionals, continuations

<PAGE>

EXHIBIT 10.71

[CONFIDENTIAL TREATMENT REQUESTED]

[Certain information has been omitted herein pursuant to a request for
confidential treatment pursuant to Rule 24b-2.]

AGREEMENT

THIS AGREEMENT made effective as of the 21st day of December, 1988 by and
among F. Hoffmann-La Roche Ltd., a corporation of Switzerland having offices
at Grenzacherstrasse 124, CH-4002 Basle, Switzerland (hereafter "Roche"),
Cetus Corporation, a Delaware corporation having offices at 1400 - 53rd
Street, Emeryville, CA 94608 (hereafter "Cetus"), and EuroCetus
International, N.V., a Netherlands Antilles Corporation having offices at
Schottegatweg-Oost 130, Curacao, Netherlands Antilles (hereafter "ECI").
Cetus and ECI may be collectively referred to herein as the "Cetus Parties",
and the term "Party" as used herein shall mean either Roche or the Cetus
Parties, as the context indicates.

W I T N E S S E T H:

WHEREAS both Roche and the Cetus Parties own or control patent rights
which each believes would render the manufacture, use or sale of recombinant
human interleukin-2 by the other Party an act of infringement;

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<PAGE>

WHEREAS, ECI, a corporation all of whose stock is owned indirectly by
Cetus, has the right to grant licenses to certain Cetus patent rights for the
ECI Territory, as defined herein;

WHEREAS both Roche and the Cetus Parties have recognized that each other's
respective patent position is of a nature which, in the absence of licenses
from the respective patent holder, could create a negative impact on
potential competition between Roche and the Cetus Parties and could block
any commercial activities of the parties with their respective recombinant
interleukin-2 products and therefore would be to the substantial detriment of
the parties and the patients needing treatment with the respective
recombinant interleukin-2 products;

WHEREAS apart from anything else which is provided for in this Agreement,
Roche and the Cetus Parties intend to further develop and commercially market
their respective recombinant interleukin-2 products fully independently from
each other;

WHEREAS it is understood that, as of the effective date of this Agreement,
Hoffmann-La Roche Inc. and Cetus are entering into an agreement corresponding
to this Agreement but covering the territory of the United States of America;

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

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<PAGE>

ARTICLE I - DEFINITIONS

As used herein

1. The term "Affiliate" means any corporation or other business entity
that directly, or indirectly through one or more intermediaries, controls, is
controlled by or is under common control with, Roche, Cetus or ECI, as the
case may be, or as may be specifically included herein by written agreement
of the parties. For this purpose "control" means ownership directly or
indirectly of at least fifty percent (50%) of the equity capital having the
right to vote for election of directors in the case of a corporation and at
least fifty percent (50%) of the beneficial interests in the case of a
business entity other than a corporation.

-3-

<PAGE>

4. The term "Cetus PEG Patent Rights" means those patents and patent
applications directed to the conjugation of interleukin-2 to a water soluble
polymer selected from polyethylene glycol homopolymers or polyoxyethylated
polyols, which are owned or controlled by Cetus or an Affiliate of Cetus or
which Cetus or an Affiliate of Cetus has a right to sublicense, in each case
as of the date of this Agreement, including, without limitation, those patent
rights set forth in Attachment 2, which attachment is made a part hereof,
and shall further include all divisions, extensions, renewals, reexamination
certificates, continuations and continuations-in-part thereof and all patents
and reissues issuing therefrom.

5. The term "ECI Territory" means the countries set forth in Schedule A
of this Agreement.

6. The term "Licensed Cetus IL-2 Product" means any product (including
hybrids, conjugates and formulations) containing, by molecular combination or
admixture, Cetus IL-2 as the only interleukin-2 ingredient (including without
limitation any such product containing Cetus IL-2 conjugated to a water
soluble polymer selected from polyethylene glycol homopolymers or
polyoxyethylated polyols), the manufacture, use or sale of which, in the
absence of the licenses granted herein, would infringe one or more Valid
Claims of any issued patent included within the Roche Patent Rights.

7. The term "Licensed Roche IL-2 Product" means any product (including
hybrids, conjugates and formulations) containing, by molecular combination or
admixture, Roche IL-2 as the only interleukin-2 ingredient, the manufacture,
use or sale of which, in the absence of the licenses granted herein, would
infringe one or more Valid Claims of any issued patent included within the
Cetus Patent Rights; provided that the term "Licensed Roche IL-2 Product"
shall not include any Licensed Roche PEG IL-2 Product.

-4-
<PAGE>

8. The term "Licensed Roche PEG IL-2 Product" means any product
(including hybrids, conjugates and formulations) containing, by molecular
combination or admixture, Roche IL-2 as the only interleukin-2 ingredient,
the manufacture, use or sale of which, in the absence of the licenses granted
herein, would infringe one or more Valid Claims of any issued patent included
within the Cetus PEG Patent Rights, including without limitation any such
product containing Roche IL-2 conjugated to a water soluble polymer selected
from polyethylene glycol homopolymers or polyoxyethylated polyols.

9. The term "Net Sales" means the gross invoice price of the sales by
Roche and its Affiliates or by Cetus or ECI and their Affiliates, as the case
may be, less deductions for returns (including withdrawals and recalls),
sales rebates (price reductions and chargebacks), volume (quantity) discounts
(to the extent not reflected in the invoice price), sales taxes and other
taxes linked to the sales. All other expenses such as customs duties,
transportation costs, cash payment discounts, insurance, bad debts, agent
commissions and other direct expenses shall be considered by an additional
lump deduction of 8% (eight percent) of the gross invoice price.

10. The term "Non-ECI Territory" means all parts of the Territory except
for those countries included in the ECI Territory.

11. The term "Patent Rights" shall mean some or all of the Cetus Patent
Rights, the Cetus PEG Patent Rights and the Roche Patent Rights, as the
context indicates.

12. The term "Roche IL-2" means an interleukin-2 molecule having the same
amino acid sequence and structure as native human interleukin-2 except for an
optional N-terminal methionine which may or may not be present in the
recombinantly produced compound.

-5-

<PAGE>

13. The term "Roche Patent Rights" means those patents and patent
applications relating to human recombinant interleukin-2 owned or controlled
by Roche or an Affiliate of Roche or which Roche or an Affiliate of Roche has
a right to sublicense, in each case as of the date of this Agreement,
including, without limitation, those patent rights set forth in Attachment 3,
which attachment is made a part hereof, and shall further include all
divisions, extensions, renewals, reexamination certificates, continuations
and continuations-in-part thereof and all patents and reissues issuing
therefrom.

14. The term "Territory" means the entire world except for the United
States of America (including its territories and possessions and the
Commonwealth of Puerto Rico), such exception being coterminous with the
definition now present in 35 U.S.C. 100(c) and, for the purposes of this
Agreement, that definition as it may be amended by new legislation.

15. The term "Valid Claim" means a claim of an issued patent under a
party's respective Patent Rights which has not been held invalid or
unenforceable by a governmental agency or court of competent jurisdiction
from which no appeal has been or may be taken.

ARTICLE II - LICENSE GRANTS

1. Roche hereby grants to Cetus and its Affiliates under the Roche Patent
Rights a nonexclusive, nontransferable license and sublicense within the
Non-ECI Territory, with no right to grant sublicenses to others, to make,
have made or use Licensed Cetus IL-2 Product, or to sell only Licensed Cetus
IL-2 Product through their own employees or through one selected distributor
in each country of the Non-ECI Territory.

2. Roche hereby grants to ECI and its Affiliates under the Roche Patent
Rights a nonexclusive, nontransferable license and

-6-

<PAGE>

sublicense within the ECI Territory, with no right to grant sublicenses to
others, to make, have made or use Licensed Cetus IL-2 Product, or to sell only
Licensed Cetus IL-2 Product through their own employees or through one
selected distributor in each country of the ECI Territory.

3. Cetus hereby grants to Roche and its Affiliates under the Cetus
Patent Rights and Cetus PEG Patent Rights a nonexclusive, nontransferable
license and sublicense within the Non-ECI Territory, with no right to grant
sublicenses to others, to make, have made, use or sell only Licensed Roche
IL-2 Product and Licensed Roche PEG IL-2 Product.

4. ECI hereby grants to Roche and its Affiliates under the Cetus Patent
Rights and Cetus PEG Patent Rights a nonexclusive, nontransferable license
and sublicense within the ECI Territory, with no right to grant sublicenses to
others, to make, have made, use or sell only Licensed Roche IL-2 Product and
Licensed Roche PEG IL-2 Product.

5. Roche and Cetus agree to keep each other currently advised in writing
of any substantial changes in the status of their respective Patent Rights in
the Territory including but not limited to notice of the issuance of patents
on pending patent applications included therein, and notice of allowances and
reissues.

6. Notwithstanding anything contained herein to the contrary, it is
expressly agreed that the licenses and sublicenses granted in paragraphs 1,
2, 3 and 4 above shall not extend to patent rights specifically directed to
products containing IL-2 linked to functional moieties.

7. The licenses granted herein to each party are expressly limited to the
Patent Rights, and no licenses are granted herein either expressly or by
implication or otherwise to any other

-7-

<PAGE>

rights, including but not limited to other patent rights, knowhow, clinical
data, trademarks or tradenames. No royalties shall be payable hereunder
except under circumstances that would, in the absence of the licenses granted
hereunder, constitute an infringement of any Valid Claim under the applicable
Patent Rights.

8. Each party disclaims any express or implied warranty as to the
validity of any Patent Rights licensed by such party under this Agreement, or
that the licensed party in practicing such Patent Rights for the purposes of
this Agreement will be free from infringement of any third party proprietary
rights.

9. The Patent Rights licensed hereunder include patent rights which are
licensed or sublicensed from third parties and which are in turn sublicensed
under this Agreement. Each party warrants and agrees that with respect to
each patent right which is sublicensed by such party to the other, (i) the
license underlying such sublicense is or shall be when it is created in full
force and effect, (ii) such underlying license shall continue in effect until
the expiration of the patent rights licensed thereunder, and (iii) the
licensee shall maintain such license in full force and effect through to its
expiration. Without in any way limiting the generality of the foregoing,
Roche represents and warrants that it has the right under its license from
[Confidential Treatment Requested] Company to sublicense to Cetus and ECI
rights under the Taniguchi patents in all countries of the Territory except
Japan, South Korea, Taiwan and the People's Republic of China, and that the
license from [Confidential Treatment Requested] is terminable by [Confidential
Treatment Requested] only based upon a breach of its terms or conditions.
Roche acknowledges that its sublicense under the License agreement dated
August 21, 1986 between Cetus and Research Corporation (the "Research Corp.
Agreement") is subject to the terms of such License Agreement (including its
termination provisions), a copy of which has been provided to Roche.

-8-

<PAGE>

10. The parties understand that [Confidential Treatment
Requested] corporation ([Confidential Treatment Requested]) has
filed patent applications in the United States, Japan and other
countries which purport to claim certain subject matter that is
similar to subject matter claimed in certain Patent Rights of the
parties. Notwithstanding anything to the contrary contained in
this Agreement, if either Party determines that it is advisable
to obtain a license under such patent rights of [Confidential
Treatment Requested], and obtains such a license on a basis that
would exclude the other Party from also obtaining such a license,
then such Party shall sublicense to the other Party the right to
practice under such [Confidential Treatment Requested] patent
rights on the same terms as apply to the Party licensing such
rights from [Confidential Treatment Requested].

11. Nothing set forth above is intended to restrict Cetus or
ECI from designating a related party to sell Licensed Cetus IL-2
Product on its behalf or from engaging in ordinary commercial
activities with respect to advertising, marketing and selling its
products on its own behalf, including but not limited to
contracting with third parties for advertising, sales training or
telemarketing services.

ARTICLE III - ROYALTIES AND REPORTS

1. Roche shall pay royalties to Cetus on Net Sales of Licensed
Roche PEG IL-2 Product at the rate of [Confidential Treatment Requested]
of such Net Sales. In addition, Roche agrees to pay Cetus [Confidential
Treatment Requested] of any royalty amounts which are payable by Cetus to
Research Corporation pursuant to the Research Corp. Agreement with respect
to Net Sales of Licensed Roche PEG IL-2 Product; provided, however, that
Roche's maximum additional royalty rate under this sentence shall be
[Confidential Treatment Requested] of Net Sales. Cetus will certify to Roche
in writing the applicable royalty rate for Licensed Roche PEG IL-2 Product Net
Sales under the Research Corp. Agreement prior to Roche's first commercial
sales of Licensed Roche PEG IL-

-9-

<PAGE>

2 Product and at any future time during the term of the Agreement
that there is a change in such applicable royalty rate.

2. The license to Roche with respect to Licensed Roche IL-2
Product, but not Licensed Roche PEG IL-2 Product, is [Confidential
Treatment Requested] and Roche shall be under no obligation to account to
Cetus in respect of the Cetus Patent Rights licensed hereunder for any
commercial activity with respect to such Licensed Roche IL-2
Product.

3. Cetus and ECI shall pay Roche a royalty on Net Sales of
Licensed Cetus IL-2 Product in their respective territories at a
rate determined as follows:

a) [Confidential Treatment Requested] on the first [Confidential
Treatment Requested] million of annual worldwide Net Sales;

b) [Confidential Treatment Requested] on annual worldwide Net Sales
between [Confidential Treatment Requested] million and [Confidential
Treatment Requested] million;

c) [Confidential Treatment Requested] on annual worldwide Net Sales of
[Confidential Treatment Requested] million and above.

For purposes of this provision only, Cetus and ECI shall aggregate
their Net Sales of Licensed Cetus IL-2 Product worldwide (applying
the currency conversion methods then in effect for Cetus' internal
reporting purposes) in order to determine the effective royalty
rate but Cetus and ECI will account to Roche based on multiplying
such effective royalty rates by the Net Sales within their
respective territories. Annual Net Sales shall be determined for
purposes of this paragraph 3 based on Cetus' fiscal year, beginning
with the fiscal year commencing July 1, 1989.

4. No royalty shall be payable by Roche or by Cetus or ECI
respectively, at the time of sales to their respective

-10-

<PAGE>

Affiliates, or between their respective Affiliates or related
parties. In such event, the royalty shall be computed by the party
in question and royalty paid upon the Net Sales of the Affiliates or
related parties upon the resale by such Affiliates or related
parties to a non-affiliated party. If law or regulation require a
party paying a royalty to withhold income taxes owed by the other
party on account of such royalties, such taxes will be deducted by
the seller on a country-by-country basis from such remittable
royalty and will be paid by the seller to the proper taxing
authority, with proof of payment secured and sent to the party
receiving the royalty as evidence of such payment. The parties will
reasonably assist each other in avoiding double taxation problems.

5. Each Party agrees to provide semi-annual reports to the
other Party within sixty (60) days of the end of each calendar half
year, such reports stating the description and gross invoice amount
for sales of the Licensed Cetus IL-2 Product, or Licensed Roche PEG
IL-2 Product, as the case may be, sold by that Party and its
Affiliates hereunder and showing the deductions made in accordance
with the computation of Net Sales. The first report by each party
shall cover the period beginning on the date of the first
commercial sales for which rights are granted and shall end on the
last day of the calendar half-year in question.

Roche maintains "Central Swiss Francs Sales Statistics" ("CSFSS")
for all countries of the Territory whereby the amount of sales in
foreign currencies is converted monthly into Swiss Francs at the
average rate of exchange for the said month. Such CSFSS shall be
used as the basis of Net Sales by Roche and its Affiliates. Should
Roche's present system change in the future, the parties shall then
discuss and agree upon any other reasonable mode for conversion of
foreign sales by Roche.

Cetus and ECI maintain dollar sales statistics for all countries
of the Territory, whereby the amount of sales in foreign

-11-

<PAGE>

currencies is converted monthly into United States Dollars at the
average rate of exchange for the said month. Such dollar sales
statistics shall be used as the basis of Net Sales by Cetus, ECI
and their Affiliates. Should Cetus' and ECI's system change in the
future, the parties shall then discuss and agree upon any other
reasonable mode for conversion of foreign sales by Cetus and ECI.

6. All royalties due hereunder shall be paid by each Party
simultaneously with the submission of the semi-annual reports in
Paragraph 5 above. In the event of termination or expiration of
this Agreement, each Party shall submit to the other Party a final
report within sixty (60) days after termination or expiration and
all royalties due through the effective date of such termination or
expiration shall be paid with the submission of such final report.
Royalties shall be due on any sales of Licensed Cetus IL-2 Product
and Licensed Roche PEG IL-2 Product respectively prior to the date
of termination or expiration and on sales within one year thereafter
of any material in inventory on the date of termination or
expiration.

7. All payments from Roche under this Agreement will be made
to ECI in Swiss francs at the following address:

EuroCetus International, N.V.
Paasheuvelweg 30
1105 BJ
Amsterdam Southeast
The Netherlands
Attention: Director of Finance

All payments from Cetus and ECI under this Agreement shall be
made to Roche in Swiss francs at the address shown in Paragraph 10
of Article IV, or such other address as Roche may designate. The
total amount in United States dollars which is determined under
Cetus' and ECI's dollar sales statistics described in paragraph 5
of Article III will be converted into Swiss francs for payment to
Roche in the following manner: At

-12-

<PAGE>

9:00 a.m. New York time on the last business day of each month during the
calendar half-year reporting period, the U.S. dollar/Swiss franc exchange
rate prevailing in the foreign exchange market (middle rate) as reported by
Reuters Information Service will be identified and verified by both parties.
These six (6) exchange rates will be averaged (totalled and divided by
six (6)) to produce an average rate of exchange for the reporting period.

8. Each Party agrees to keep records of commercial activities with
respect to licensed product to which rights have been granted under Article
II above to it and its Affiliates in sufficient detail to permit the
determination of the royalties due and payable to the other Party hereunder.
At the request and expense of a Party, the other Party shall permit an
independent certified public accountant appointed by the first Party and
reasonably acceptable to the other Party to examine abstracts of those
records during ordinary business hours to the extent necessary to verify the
royalties due and payable under this Agreement. Such examination shall be
made no later than three (3) years after the end of the year being examined
and neither Party shall be required to keep any records for a longer period
of time. Results of any such examination shall be made available to each
Party but the data from which such results are determined shall otherwise be
maintained in confidence by such independent accountant.

9. If, after the effective date hereof, either Party licenses any of the
Patent Rights licensed by it hereunder to a third party on terms more
favorable than the terms provided to the other Party hereunder, such terms
shall be offered promptly to the licensed Party under this Agreement, and
upon written acceptance thereof the terms of this Agreement shall be adjusted
as to the license of such Patent Rights to reflect such more favorable terms.
If the terms of such other license include consideration other than cash
payments or royalties, the terms of

-13-

<PAGE>

this Agreement shall be adjusted, if at all, based on a reasonable appraisal
of the fair market value of the entire consideration received for the other
license as compared with the value of the entire consideration received for
the license under this Agreement as of the date of this Agreement.

ARTICLE IV - MISCELLANEOUS PROVISIONS

1. Except as provided in this paragraph, neither this Agreement nor any
interest hereunder shall be assignable by either Party without the written
consent of the other Party; provided, however, that either Party without
obtaining the consent of the other Party may assign this Agreement along with
any Patent Rights beneficially owned by it to any Affiliate or to any
corporation with which it may merge or consolidate, or to which it may
transfer substantially all of its assets. This Agreement shall be binding
upon the successors and assigns of the parties hereto and the name of a party
appearing herein shall be deemed to include the names of such party's
successors and assigns to the extent necessary to carry out the intent of
this Agreement, and the performance of the rights and obligations of such
successors and assigns shall be deemed guaranteed by such party; but nothing
herein shall be deemed to permit any assignment by either party except as
expressly provided herein.

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<PAGE>

provision of this Agreement is held to be invalid or unenforceable, it shall
be adjusted rather than voided, if possible, in order to achieve the intent
of the parties to the extent possible. In any event, all other provisions of
this Agreement shall be deemed valid and enforceable to the extent possible
to give effect to the understanding of the parties expressed herein. This
Agreement may be amended or modified or one or more provisions hereof waived
only by a written instrument signed by the parties.

4. The captions in this Agreement are for convenience only, and are to be
of no force or effect in construing and interpreting the provisions of this
Agreement.

5. Each party on whose behalf this Agreement is executed warrants that it
has the full rights and authorization to enter into this Agreement and to
grant the rights specified herein.

6. This Agreement shall expire upon expiration of the last to expire
Patent Right. This Agreement may be terminated by either Party if the other
Party is in breach of a material term of this Agreement and such breach is
not cured within ninety (90) days after delivery of written notice of such
breach.

7. In the event of a suit by any party arising out of this Agreement, if
Roche brings such suit against Cetus or ECI the venue for such suit shall be
in Amsterdam, the Netherlands, and if Cetus or ECI bring such suit the venue
for such suit shall be in Basle, Switzerland.

8. Roche will indemnify and hold Cetus, ECI and their directors, officers,
employees, agents and shareholders harmless against any and all liability,
damage, loss, cost or expense arising out of third party suits based upon or
arising out of Roche's or Roche's Affiliates' commercial activities with
respect to Licensed Roche IL-2 Product or Licensed Roche PEG IL-2 Product

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<PAGE>

hereunder. Cetus and ECI, jointly and severally, will indemnify and hold
Roche and its directors, officers, employees, agents and shareholders
harmless against any and all liability, damage, loss, cost or expense arising
out of third party suits based upon or arising out of Cetus' or Cetus'
Affiliates' commercial activities with respect to Licensed Cetus IL-2 Product
hereunder. In the event either Party is sued or threatened with suit under
circumstances that give rise to the indemnity obligations hereunder, then the
sued or threatened Party shall promptly notify the other Party thereof, and
at the other Party's cost, will permit the other Party's attorneys to handle
and control such claims or suits and to provide counsel for such claims or
suits. The sued or threatened Party may elect to be represented in such suit
by counsel of its own choice at its own expense. It is understood that
neither Party shall be obligated to indemnify and hold harmless the other
Party for such other Party's negligent acts of commission or omission.

9. The parties may each make a press release concerning this Agreement
but agree that prior to making such release, they will submit the text
thereof each to the other and make the release only after receiving approval
from the other, which approval shall not be unreasonably withheld. For
purposes of this paragraph, Cetus and ECI shall be entitled to rely on any
approval of such a release by Hoffmann-La Roche Inc., and Roche shall be
entitled to rely on any approval of such a release by Cetus.

10. Any notice or communications required to be given hereunder shall be
deemed to have been duly given if delivered to, or sent by prepaid first
class mail, express mail or by telefax to the parties as follows:

To Roche: F. HOFFMANN-LA ROCHE Ltd
Grenzacherstrasse 124
CH-4002 Basle, Switzerland
Attn: Law Department
Telefax: 00 41 61 681 06 69

-16-
<PAGE>

To Cetus: CETUS CORPORATION
1400 - 53rd Street
Emeryville, California 94608
Attn: President
Telefax: 415-658-5239

To ECI: EuroCetus International, N.V.
Paasheuvelweg 30
1105 BJ
Amsterdam Southeast
The Netherlands
Attn: Managing Director
Telefax: 31-20-911461

or to such address as a party may subsequently request in writing.

11. Except as contemplated by this Agreement, any information supplied by
one Party to the other pursuant to, or in contemplation of, this Agreement
(including without limitation projected or actual Net Sales information, the
pendency of patent applications and the terms of this Agreement) shall be
retained in confidence and not used or disclosed by the Party receiving such
information (the "Receiving Party") during the term of this Agreement and for
three (3) years thereafter. However, to the extent the Receiving Party has
the obligation to report to a licensor, such information as is required may
be supplied to such licensor of the Receiving Party with similar
confidentiality restriction. The confidentiality obligations provided herein
shall not apply to information which

(a) is or becomes known publicly through no fault of the Receiving
Party;

(b) is learned by the Receiving Party from a third party entitled to
disclose it;

(c) was already known by the Receiving Party at the time of disclosure
hereunder as shown by prior written records of the Receiving Party;

-17-
<PAGE>

(d) is developed by the Receiving Party independently of information
obtained or disclosed hereunder; or

(e) is required to be disclosed under applicable law or regulation in
the good faith opinion of the Receiving Party, in which case the
other party will be notified in advance.

ARTICLE VI - RELATIONSHIP OF THE PARTIES

1. Nothing in this Agreement is intended or shall be deemed to constitute
a partnership, agency, employer-employee, or joint venture relationship
between the parties.

ARTICLE VII - EFFECTIVE DATE

1. This Agreement shall enter into force and effect as of the date first
set forth above.

F. HOFFMANN-LA ROCHE LTD. CETUS CORPORATION

By By R. A. Fildes
------------------------------- ----------------------------
Title Attorney-at-Law Title President
---------------------------- --------------------------

EUROCETUS INTERNATIONAL, N.V.

By By Michael Ostrach
------------------------------- -----------------------------
Title Head of Corporate Licensing Title Managing Director
---------------------------- ---------------------------

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<PAGE>

SCHEDULE A

ECI TERRITORY

Albania
Andorra
Austria
Belgium
Bulgaria
Cyprus
Czechoslovakia
Denmark
Finland
France
Germany, East
Germany, West
Gibraltar
Greece
Hungary
Iceland
Ireland
Italy
Liechtenstein
Luxembourg
Maltga
Monaco
Netherlands
Norway
Poland
Portugal
Romania
San Marino
Spain
Sweden
Switzerland
Turkey
United Kingdom
United Soviet Socialist Republics
Vatican City
Yugoslavia
Africa
Middle East

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<PAGE>

ATTACHMENT 1

CETUS PATENT RIGHTS
(Non-exclusive list)

ISSUED PATENTS

<TABLE>
<CAPTION>
PATENT HOLDER COUNTRY NUMBER ISSUE DATE
- ------------- ------- ------ ----------
<S> <C> <C> <C>
(This Agreement
applies to foreign
equivalents of the
indicated U.S.
Patents.)

Cetus United States 4,530,787 7/23/85

Cetus United States 4,569,790 2/11/86

Cetus United States 4,572,798 2/25/86

Cetus United States 4,604,377 8/5/86

Cetus United States 4,656,132 4/7/87

Cetus United States 4,745,180 5/17/88

Cetus United States 4,748,234 5/31/88
</TABLE>

Also includes numerous applications and reissues, divisionals, continuations
and foreign counterparts to such patents and patent applications.

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<PAGE>

ATTACHMENT 2

"PEG RIGHTS"
(Non-exclusive list)

ISSUED PATENTS
<TABLE>
<CAPTION>
PATENT HOLDER COUNTRY NUMBER ISSUED DATE
- ------------- ------- ------ -----------
<S> <C> <C> <C>
(This Agreement applies
to foreign equivalents
of the indicated U.S.
Patents.)

Cetus United States 4,766,106 8/23/88

Research Corp. United States 4,179,337 12/18/79
</TABLE>

Also includes reissues, divisionals, continuations and foreign counterparts
of such patents.

Research Corp. patent rights are licensed for IL-2 to Cetus for the following
territories: U.S., Canada, West Germany, France, U.K., Switzerland, Sweden,
Japan.

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<PAGE>

ATTACHMENT 3

ROCHE PATENT RIGHTS
(Non-exclusive list)

PATENTS

<TABLE>
<CAPTION>
PATENT HOLDER COUNTRY NUMBER ISSUE DATE
- ------------- ------- ------ ----------
<S> <C> <C> <C>
Roche *United States 4,490,289 12/84

Ajinomoto *United States 4,738,927 4/19/88

Ajinomoto Europe 91539 7/13/88

PATENT APPLICATIONS PUBLICATION DATE
- ------------------- ----------------

[Confidential Treatment Requested]

<FN>
* This Agreement applies to foreign equivalents of the indicated
U.S. Patents.
</TABLE>

Includes reissues, divisionals, continuations and foreign counterparts of
such patents and applications.

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<PAGE>

EXHIBIT 10.72

[CONFIDENTIAL TREATMENT REQUESTED]

[Certain information has been omitted herein pursuant to a request
for confidential treatment pursuant to Rule 24b-2.]

AGREEMENT

by and between

CETUS ONCOLOGY CORPORATION, 1400 Fifty-third Street, Emeryville, CA 94608, USA,

EUROCETUS INTERNATIONAL, N.V., Schottetagatweg-Oost 130, Curacao, Netherlands
Antilles,

(hereinafter collectively referred to as "CETUS PARTIES"),

on the one hand

and

F.HOFFMANN-LA ROCHE Ltd, Grenzacherstr.124, CH-4002 Basel, Switzerland,
(hereinafter referred to as "ROCHE"),

on the other hand.

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

INTRODUCTION

Effective as of April 17, 1990 the Parties hereto have entered into a duly
executed Heads of Agreement covering a collaborative commercialization
arrangement for interleukin-2 products and ROCHE's Interferon product
respectively in some European countries.

Based on the above-mentioned Heads of Agreement the parties subsequently entered
into duly executed full text agreements covering the detailed terms and
conditions of the subject matter. The following Agreements were executed:

- Co-Promotion Agreement for IL-2 and IFN: April 17, 1990
(CETUS CORPORATION, EUROCETUS INTERNATIONAL N.V. AND F.HOFFMANN-LA
ROCHE) - ("CO-PROMOTION AGREEMENT"

<PAGE>

- 2 -

- Co-Marketing Agreement for IL-2 (Italy): April 17, 1990
(EUROCETUS INTERNATIONAL N.V. AND F.HOFFMANN-LA ROCHE) - ("CO-
MARKETING AGREEMENT")

- Exclusive Distribution Agreement: April 17, 1990
(EUROCETUS INTERNATIONAL N.V. AND F.HOFFMANN-LA ROCHE) -
("DISTRIBUTION AGREEMENT")

With respect to the particular commissions to be paid under the Co-Promotion
Agreement, the Co-Marketing Agreement and the Distribution Agreement
respectively, the parties executed a separate letter agreement dated as of May
17/July 1, 1993 ("Letter Agreement").

The parties hereto now mutually agree to terminate the collaborative
commercialization as agreed upon in both the Co-Promotion Agreement and the Co-
Marketing Agreement. However, the Distribution Agreement shall continue to
remain in full force and effect.

The respective understanding reached by the parties hereto and the proceeding
for the formal termination of the Co-Promotion Agreement and the Co-Marketing
Agreement have been agreed upon in two letters of Roche dated as of May 17, 1993
and accepted by the Cetus Parties on June 2, 1993.

For good orders sake it is herewith noted that with certificate dated March 4,
1992 the former Cetus Corporation, one of the CETUS PARTIES, has changed its
name into Cetus Oncology Corporation.

Now, Therefore, the parties hereto agreed as follows:

I. CO-PROMOTION AGREEMENT

1. The parties herewith jointly agree to formally terminate the Co-Promotion
Agreement.

<PAGE>

- 3 -

2. The co-promotion activities as agreed upon under Art.3 of the Co-Promotion
Agreement have already been terminated as follows:

a) in the United Kingdom, Ireland and Spain effective as of March 30,
1993
b) in France, Germany, The Netherlands, Belgium and Luxembourg effective
as of May 31, 1993.

3. With respect to the commissions to be paid according to Art.4.1 and 4.2 and
the Letter Agreement respectively, the parties reached the following
understanding:

a) as far as the United Kingdom, Ireland and Spain are concerned,
commissions will be paid as agreed upon up to March 30, 1993.

b) with respect to France, Germany, The Netherlands, Belgium and
Luxembourg, commissions will be paid as agreed upon up to December 31,
1993, despite of the fact that co-promotion activities have been
terminated as of May 31, 1993.

The reporting obligations as per Art.4.3 of the Co-Promotion Agreement
shall remain in full force and effect, on a country-by-country basis, until
the last commission due as agreed hereunder is paid.

4. As a consequence of the termination of the Co-Promotion Agreement, the
obligation of the Cetus Parties to pay royalties on Net Sales of Cetus IL-2
as per the Non-U.S. Licence Agreement (defined in Art.1.1 of the Co-
Promotion Agreement) will become again effective.

a) With respect to the United Kingdom, Ireland and Spain, royalties will
become again due by the Cetus Parties on Net Sales effectuated from
April 1, 1993 onward.

<PAGE>

- 4 -

b) With respect to France, Germany, The Netherlands, Belgium and
Luxembourg, royalties will again become due by the Cetus Parties on
Net Sales effectuated from January 1, 1994 onward.

c) In modification of Art.III Section 3 of the Non-U.S. Licence
Agreement, the royalty rate shall be [Confidential Treatment
Requested] on all Net Sales of Cetus IL-2 in France, Germany, U.K.,
Ireland, Spain, The Netherlands, Belgium and Luxembourg until
[Confidential Treatment Requested]. Thereafter, the royalty rate
shall be as originally stated in Art.III.3 of the Non-U.S. License
Agreement.

5. As far as the cost sharing relative to the joint development work according
to Art.9 of the Co-Promotion Agreement is concerned, the parties have
reached a final understanding as to all outstanding issues. Such final
understanding is contained in Appendix 1 attached hereto.

6. The parties recognize that there are some ongoing clinical trials despite
the fact that the Co-Promotion Agreement is herewith terminated. A
clinical expert plan dealing with the phasing out of ongoing clinical
trials is attached as Appendix 2 hereto.

7. Except as expressly otherwise stated herein, all rights and obligations as
per the Co-Promotion Agreement shall be deemed terminated effective as of
the date this Agreement has been fully executed by all parties concerned.

II. CO-MARKETING AGREEMENT

1. The parties herewith jointly agree to formally terminate the Co-Marketing
Agreement.

2. The effective date of the termination shall be December 31, 1993.
Effective as of this date all rights and licences granted by the CETUS
PARTIES to ROCHE as per the Co-Marketing Agreement shall elapse.

<PAGE>

- 5 -

3. It is the understanding of the parties hereto that the respective
affiliated companies of the parties in Italy shall discuss and agree on
specific operative measures so that the commercialization of the Product by
ROCHE's affiliated companie will be phased out in a appropriate manner.

4. Commissions due according to Art.7.5 of the Co-Marketing Agreement and the
Letter Agreement respectively, will be paid by both parties as agreed upon
up to December 31, 1993.

5. Roche shall be in any case entitled to sell any remaining amount of the
Product Roche will have on stock.

6. As a consequence of the termination of the Co-Marketing Agreement the
obligation of the CETUS PARTIES to pay royalties on Net Sales of the
Product will again become due on Net Sales effectuated from January 1, 1994
onward.

7. In modification of Art.III.3 of the Non-U.S. Licence Agreement the royalty
rate shall be [Confidential Treatment Requested] on all Net Sales of the
Product in Italy until [Confidential Treatment Requested]. Thereafter,
the royalty rate shall be as originally stated in Art.III.3 of the
Non-U.S. License Agreement.

III. LETTER AGREEMENT

1. The parties herewith jointly agree to formally terminate the Letter
Agreement as far as the provisions relating to the Co-Promotion Agreement
and the Co-Marketing Agreement respectively are concerned.

2. The Letter Agreement shall remain in full force and effect with respect to
all terms and conditions relating to the Distribution Agreement.

<PAGE>

- 6 -

IV. MISCELLANEOUS

1. This Agreement constitutes the entire understanding between the parties
hereto with respect to the termination of the Co-Promotion Agreement and
the Co-Marketing Agreement respectively and supersedes all previous
understandings, whether written or oral.

2. In the event of any conflict between any provisions of this Agreement and
the Co-Promotion Agreement and the Co-Marketing Agreement respectively, the
provisions of this Agreement shall prevail.

Emeryville, December 22, 1993 CETUS ONCOLOGY CORPORATION

/s/
----------------------------------

Emeryville, December 22, 1993 EUROCETUS INTERNATIONAL N.V.

/s/
----------------------------------

Basel, August 30, 1993 F.Hoffmann-La Roche LTD

/s/
----------------------------------

<PAGE>

APPENDIX 1: CLINICAL TRIAL COSTS

The following agreement regarding the conclusion of clinical trial programs
has been reached between the two parties i.e. EuroCetus and Roche in a meeting
held in Amsterdam on June 29, 1993.

- EuroCetus will pay back Roche 800'000 US$ as a compensation of the
upfront payment.

- Each party will bear all of its own expenses with respect to clinical
trials conducted in 1993 and 1992.

- Except for the 800'000 US$ payment referenced above, neither party
will have any obligation to make any payments to the other in support
of any clinical trial costs pursuant to the Co-Development Program.

- The Virology Report (Hepatitis B study) will be written by EuroCetus.
Roche will only have to provide EuroCetus with case report forms, data
bank access and all statistical analysis existing.

<PAGE>

APPENDIX 2: CLINICAL TRIAL ARRANGEMENTS

The following phase out was decided for the clinical co-development plan in a
meeting held in Amsterdam on June 29, 1993.

- The co-development program will end by September 1st, 1993.

- If one company wishes after that date to continue any new development
(including modifications to the existing protocols) it will be
possible but under its own responsibility and at its own expenses
(even for the drug costs). In such event, all data from such new
development shall be the sole property of such company.

- To phase out in the best manner a number of conditions have to be
fulfilled:

-Patient recruitment will stop by August 31, 1993 (for AML not
more than 20 new patients are agreed.

-Each party will bear its own expenses in connection with
performance to that date and all that is necessary after it to
the end of the common program.

-Enough free drug will be provided by both companies to allow all
the patients enrolled or to be enrolled until September 1993 to
get full treatment as stated in the protocols. Exact
calculations will be provided by both clinical teams but under
the assumptions that the drug already on stock plus 1 to 2'000
vials of Proleukin-TM- or respectively Roferon-TM- should be
sufficient to cover the needs.

The parties further agree as follows:

- Each party will have full access to, and the right to use for its own
business purposes, all data, reports and information pertaining to the
objectives of the protocols as originally designed under the clinical
co-development program.

- Prior to January 31, 1994, Roche will provide to EuroCetus a list of
all clinical study protocols which have been part of the clinical co-
development program, identifying those studies for which Roche has
prepared or intends to prepare the

<PAGE>

APPENDIX 2
Page 2

final report, and those studies for which Roche proposes that
EuroCetus prepare the final report.

- By February 28, 1994, the parties will mutually agree upon the
allocation of responsibility for preparation of final reports, and on
procedures for exchanging information and data, to the extent such
exchange is not then completed.

<PAGE>

EXHIBIT 11

CHIRON CORPORATION
STATEMENT OF COMPUTATION OF EARNINGS PER SHARE

<TABLE>
<CAPTION>
Three Months Ended
-------------------------------
March 31, March 31,
1995 1994
-------------- -------------

<S> <C> <C>
Net Income(loss) $(385,778,000) $ 4,817,000
-------------- -------------

Primary Computation of:

Weighted average number
of common shares outstanding 40,013,000 32,831,000

Weighted average dilutive
incremental common shares
issuable from exercise of
warrants -- 104,000

Weighted average dilutive
incremental common shares
issuable under employee
stock option programs -- 1,671,000
-------------- -------------

Total weighted average
primary common shares 40,013,000 34,606,000
-------------- -------------

Net income(loss) per share $ (9.64) $ 0.14
-------------- -------------
-------------- -------------
</TABLE>

<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CHIRON
CORPORATION'S CONSOLIDATED BALANCE SHEET DATED MARCH 31, 1995 AND
CONSOLIDATED STATEMENT OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31,
1995 AND NOTES THERETO AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<CASH> 91,122
<SECURITIES> 245,590<F1>
<RECEIVABLES> 221,189
<ALLOWANCES> 0
<INVENTORY> 159,229
<CURRENT-ASSETS> 620,819
<PP&E> 561,292
<DEPRECIATION> 90,297
<TOTAL-ASSETS> 1,483,943
<CURRENT-LIABILITIES> 393,351
<BONDS> 494,258<F2>
<COMMON> 400
0
0
<OTHER-SE> 632,199<F3>
<TOTAL-LIABILITY-AND-EQUITY> 1,483,943
<SALES> 183,909
<TOTAL-REVENUES> 218,246
<CGS> 90,282
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 504,047<F4>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,621
<INCOME-PRETAX> (377,472)
<INCOME-TAX> 8,306
<INCOME-CONTINUING> (385,778)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (385,778)
<EPS-PRIMARY> (9.64)
<EPS-DILUTED> (9.64)
<FN>
<F1>CONSISTS OF BOTH NONCURRENT AND SHORT-TERM INVESTMENTS IN MARKETABLE DEBT
SECURITIES.
<F2>CONSISTS OF CONVERTIBLE SUBORDINATED DEBENTURES, CAPITAL LEASES, NOTES
PAYABLE AND SHORT-TERM DEBT.
<F3>CONSISTS OF ADDITIONAL PAID-IN CAPITAL, ACCUMULATED DEFICIT, CUMULATIVE
FOREIGN CURRENCY TRANSLATION ADJUSTMENT AND UNREALIZED LOSS FROM
INVESTMENTS.
<F4>CONSISTS OF RESEARCH, DEVELOPMENT, SELLING, GENERAL, ADMINISTRATIVE,
WRITE-OFF OF PURCHASED IN-PROCESS TECHNOLOGY, COSTS RELATED TO CIBA
TRANSACTION, RESTRUCTURING AND REORGANIZATION COSTS, AND OTHER OPERATING
EXPENSES.
</FN>

</TABLE>