Medchem (P.R.), Inc. - Page 60




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                         2.3  Processing Method.  To assist Alcon                     
               [P.R.] in satisfying its obligations under this                        
               Agreement, MedChem [P.R.] shall grant to Alcon [P.R.]                  
               pursuant to the terms of Section 4 the right to use the                
               Equipment, without charge therefor.  Alcon [P.R.] shall                
               furnish all labor, variable and fixed overhead and                     
               quality assurance required for the processing of                       
               Avitene hereunder. MedChem [P.R.] will employ a plant                  
               manager and other appropriate personnel who will                       
               inspect, advise and make corrections when appropriate                  
               with respect to the Conversion Process; however,                       
               MedChem [P.R.] employees will not participate in the                   
               Alcon [P.R.] management process.  Alcon [P.R.] shall be                
               responsible for all maintenance of the Equipment used                  
               in the Conversion Process and for the compliance of                    
               such Equipment with applicable regulations of                          
               governmental agencies, including but not limited to                    
               regulations promulgated by the U.S. Food and Drug                      
               Administration and the Environmental Protection Agency;                
               the cost of such maintenance and compliance shall be                   
               borne initially by Alcon [P.R.] but shall be included                  
               in the Processing Cost (as such term is defined in                     
               Section 9).  Alcon [P.R.] shall also be responsible for                
               required validation studies on devices, formulae or                    
               processes used in the Conversion Process.  In the event                
               that Alcon [P.R.] is required by a regulatory authority                
               to perform additional validation studies for purposes                  
               of validating new devices, new manufacturing procedures                
               and/or new raw material and finished product assay                     
               procedures in order to continue lawfully to engage in                  
               the processing of Avitene for MedChem [P.R.] (and                      
               MedChem [P.R.], after notice from Alcon that such                      
               additional validation studies are required, directs                    
               Alcon [P.R.] to continue such processing), all expenses                
               borne by Alcon [P.R.] in the conduct of any such                       
               validation studies shall be paid by Alcon [P.R.] and                   
               shall be included in the Processing Cost.  To the                      
               extent that MedChem [P.R.] makes direct expenditures                   
               (not described in the preceding sentence) with regard                  
               to (a) the purchase of machinery or equipment, (b) the                 
               compliance of existing machinery or equipment with all                 
               applicable laws and regulations or (c) the performance                 
               of validation studies or any matter relating to the                    
               Conversion Process, such expenditures shall not be                     
               included in the Processing Cost.                                       








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