Exhibit
10.20


 


 


EXCLUSIVE
LICENSE AND DISTRIBUTION AGREEMENT FOR RECTOGESICTM


 


BETWEEN


 


STRAKAN
INTERNATIONAL LIMITED


 


AND


 


CELLEGY
PHARMACEUTICALS, INC.


 


 


CONFIDENTIAL


 


 










[*]                                 designates
portions of this document that have been omitted pursuant to a request for
confidential treatment filed seperately with the Commission


 


 


Confidential


 





















 


TABLE
OF CONTENTS


 


	
  ARTICLE 1
  DEFINITIONS

  	
   

  
	
   

  	
   

  
	
  Affiliates

  	
   

  
	
  Agreement

  	
   

  
	
  Approvals

  	
   

  
	
  Baseline
  Price

  	
   

  
	
  Cellegy Information

  	
   

  
	
  Cellegy
  Marks

  	
   

  
	
  Cellegy
  Patents

  	
   

  
	
  Commercially Reasonable and Diligent
  Efforts

  	
   

  
	
  Competing Licensed Products

  	
   

  
	
  Development

  	
   

  
	
  Dollars
  or $

  	
   

  
	
  Effective
  Date

  	
   

  
	
  Euros or
  €

  	
   

  
	
  Field

  	
   

  
	
  GMP

  	
   

  
	
  Initial Indication

  	
   

  
	
  Intellectual Property Rights

  	
   

  
	
  Know-How

  	
   

  
	
  Launch
  Date

  	
   

  
	
  Licensed
  Product

  	
   

  
	
  Licensee
  Product

  	
   

  
	
  Loss

  	
   

  
	
  Major European Countries

  	
   

  
	
  Manufacturer

  	
   

  
	
  Marketing Authorization

  	
   

  
	
  Minimum
  Sales

  	
   

  
	
  M.R.P

  	
   

  
	
  Net
  Sales

  	
   

  
	
  Party

  	
   

  
	
  Patent
  Rights

  	
   

  
	
  Relevant Regulatory Authority

  	
   

  
	
  Steering Committee

  	
   

  
	
  Sublicensee

  	
   

  
	
  Subsequent Indication

  	
   

  
	
  Technical Agreement

  	
   

  
	
  Territory

  	
   

  
	
  Third
  Party

  	
   

  



 


i





















 


	
  ARTICLE 2
  GRANT OF LICENSE

  	
   

  
	
   

  	
   

  	
   

  
	
  2.1

  	
  Grant

  	
   

  
	
  2.2

  	
  Right
  to sub-license

  	
   

  
	
  2.3

  	
  Acceptance of Appointment; Sales Outside Territory

  	
   

  
	
  2.4

  	
  Competing Products

  	
   

  
	
  2.5

  	
  Right
  of First Negotiation Regarding Licensee Product in North America

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 3
  REPRESENTATIONS AND WARRANTIES

  	
   

  
	
   

  	
   

  
	
  3.1

  	
  Representations and Warranties of Cellegy

  	
   

  
	
  3.2

  	
  Representations and Warranties of Licensee

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 4
  MANAGEMENT OF THE COLLABORATION

  	
   

  
	
   

  	
   

  
	
  4.1

  	
  Steering Committee

  	
   

  
	
  4.2

  	
  Responsibilities of the Steering Committee

  	
   

  
	
  4.3

  	
  Voting;
  Deadlocks

  	
   

  
	
  4.4

  	
  Approval
  Plan; Marketing Plan

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 5
  REGULATORY MATTERS; APPROVALS

  	
   

  
	
  5.1

  	
  Regulatory Matters; Approvals

  	
   

  
	
  5.2

  	
  Reversion of Product Rights in Certain Circumstances

  	
   

  
	
  5.3

  	
  Cooperation Regarding Material Events

  	
   

  
	
  5.4

  	
  Copies
  of Documents

  	
   

  
	
  5.5

  	
  Approval Application in the United Kingdom

  	
   

  
	
  5.6

  	
  Meetings With Regulatory Authorities

  	
   

  
	
  5.7

  	
  Inspection

  	
   

  
	
  5.8

  	
  Clinical
  Trials

  	
   

  
	
  5.9

  	
  Cellegy Obligations

  	
   

  
	
  5.10

  	
  Approvals

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 6
  POST- APPROVAL RESPONSIBILITIES

  	
   

  
	
   

  	
   

  
	
  6.1

  	
  Responsibility

  	
   

  
	
  6.2

  	
  Collaboration

  	
   

  
	
  6.3

  	
  Insurance

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 7
  INFORMATION; DATA; PHARMACOVIGILENCE

  	
   

  
	
   

  	
   

  
	
  7.1

  	
  Clinical
  Data

  	
   

  
	
  7.2

  	
  Safety
  Data Base

  	
   

  
	
  7.3

  	
  Adverse
  Events

  	
   

  
	
  7.4

  	
  Product Complaints

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 8
  MILESTONE PAYMENTS; ROYALTIES AND RELATED PAYMENTS

  	
   

  
	
   

  	
   

  
	
  8.1

  	
  Milestone Payments

  	
   

  
	
  8.2

  	
  Sales
  Milestones

  	
   

  
	
  8.3

  	
  Fee
  Conditions

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 9
  SALES REPORTS AND ACCOUNTING

  	
   

  
	
   

  	
   

  
	
  9.1

  	
  Quarterly
  Reports; Records

  	
   

  
	
  9.2

  	
  Payment
  Due Dates

  	
   

  
	
  9.3

  	
  Right
  to Audit Licensee

  	
   

  
				



 


ii





















 


	
  9.4

  	
  Disagreement with Auditor Findings

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 10
  MARKETING

  	
   

  
	
   

  	
   

  
	
  10.1

  	
  General Promotional Duties

  	
   

  
	
  10.2

  	
  Marketing Effort; Minimum Expenditures for Commercialization

  	
   

  
	
  10.3

  	
  Licensee’s Failure to Commercialize in the Territory

  	
   

  
	
  10.4

  	
  Minimum
  Sales

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 11
  MANUFACTURING; SUPPLY OF LICENSED PRODUCT

  	
   

  
	
   

  	
   

  
	
  11.1

  	
  Production and Supply of Product

  	
   

  
	
  11.2

  	
  Forecasts

  	
   

  
	
  11.3

  	
  Product Packaging and Labeling

  	
   

  
	
  11.4

  	
  Pricing

  	
   

  
	
  11.5

  	
  Cellegy
  Report

  	
   

  
	
  11.6

  	
  Timing
  of Firm Orders

  	
   

  
	
  11.7

  	
  Delivery

  	
   

  
	
  11.8

  	
  Title
  and Risk of Loss

  	
   

  
	
  11.9

  	
  Export
  Controls

  	
   

  
	
  11.10

  	
  Manufacture and Supply Warranty

  	
   

  
	
  11.11

  	
  Defective
  Product

  	
   

  
	
  11.12

  	
  Recalls

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 12 PATENT RIGHTS

  	
   

  
	
   

  	
   

  
	
  12.1

  	
  No
  Ownership By Licensee

  	
   

  
	
  12.2

  	
  New Cellegy Inventions/Improvements to the Licensed Product

  	
   

  
	
  12.3

  	
  Improvements by Licensee

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 13 CELLEGY MARKS

  	
   

  
	
   

  	
   

  
	
  13.1

  	
  Use of Cellegy Marks by Licensee

  	
   

  
	
  13.2

  	
  Acknowledgment of Ownership

  	
   

  
	
  13.3

  	
  Marking

  	
   

  
	
  13.4

  	
  Registration

  	
   

  
	
  13.5

  	
  Termination
  of Use

  	
   

  
	
  13.6

  	
  Trademarks

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 14 INFRINGEMENT;
  INDEMNIFICATION AND OTHER CLAIMS

  	
   

  
	
   

  	
   

  
	
  14.1

  	
  Infringement of Intellectual Property Rights

  	
   

  
	
  14.2

  	
  Alleged Infringement of Third Party Intellectual Property Rights

  	
   

  
	
  14.3

  	
  Product Liability Claims

  	
   

  
	
  14.4

  	
  Notice from Licensee

  	
   

  
	
  14.5

  	
  Indemnification

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 15 CONFIDENTIALITY

  	
   

  
	
   

  	
   

  
	
  15.1

  	
  Treatment of Confidential Information

  	
   

  
	
  15.2

  	
  Right
  to Disclose

  	
   

  
	
  15.3

  	
  Release From Restrictions

  	
   

  
	
  15.4

  	
  Confidentiality of Agreement

  	
   

  



 


iii





















 


	
  15.5

  	
  Return of Confidential Information

  	
   

  
	
  15.6

  	
  Previous Confidentiality Agreements

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 16 TERM; TERMINATION

  	
   

  
	
   

  	
   

  
	
  16.1

  	
  Term

  	
   

  
	
  16.2

  	
  Bilateral Termination Rights

  	
   

  
	
  16.3

  	
  Cellegy’s Right to Terminate

  	
   

  
	
  16.4

  	
  Licensee’s Right to Terminate

  	
   

  
	
  16.5

  	
  Rights Upon Termination or Expiration

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 17 REGISTRATION OF
  LICENSE; LIMITATION OF LIABILITY

  	
   

  
	
   

  	
   

  
	
  17.1

  	
  Registration

  	
   

  
	
  17.2

  	
  Limitation
  of Liability

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 18 GENERAL PROVISIONS

  	
   

  
	
   

  	
   

  
	
  18.1

  	
  Force
  Majeure

  	
   

  
	
  18.2

  	
  Further Assurances

  	
   

  
	
  18.3

  	
  Severability

  	
   

  
	
  18.4

  	
  Notices

  	
   

  
	
  18.5

  	
  Assignment

  	
   

  
	
  18.6

  	
  Amendment

  	
   

  
	
  18.7

  	
  Entire
  Agreement

  	
   

  
	
  18.8

  	
  Waiver

  	
   

  
	
  18.9

  	
  No Implied Licenses

  	
   

  
	
  18.10

  	
  Injunctions

  	
   

  
	
  18.11

  	
  Independent Contractors

  	
   

  
	
  18.12

  	
  No Third Party Beneficiaries

  	
   

  
	
  18.13

  	
  Governing
  Law

  	
   

  
	
  18.14

  	
  Resolution
  of Disputes

  	
   

  
	
  18.15

  	
  Headings

  	
   

  
	
  18.16

  	
  Counterparts

  	
   

  
	
  18.17

  	
  Late Payment

  	
   

  
	
  18.18

  	
  ProStrakan Group Limited Guarantee

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SIGNATURES

  	
   

  
	
   

  	
   

  
	
  EXHIBIT A

  	
  LICENSED PRODUCT

  	
   

  
	
  EXHIBIT B

  	
  COUNTRIES IN THE TERRITORY

  	
   

  
	
  EXHIBITC

  	
  PATENT RIGHTS

  	
   

  
	
  EXHIBIT D

  	
  CELLEGY MARKS

  	
   

  
	
  EXHIBIT E

  	
  PROSTRAKAN GROUP GUARANTEE

  	
   

  
				



 


iv





















 


EXCLUSIVE LICENSE
AND DISTRIBUTION AGREEMENT


 


THIS EXCLUSIVE LICENSE AND DISTRIBUTION
LICENSE AGREEMENT (this “Agreement”)
is made and entered into as of December 9, 2004 (the “Effective Date”), by
and between Cellegy Pharmaceuticals, Inc., a Delaware corporation having its
principal place of business at 349 Oyster Point Boulevard, San Francisco,
California 94080, US (“Cellegy”),
and Strakan International Limited, a company organized and existing under the
laws of Bermuda with a branch office at Buckholm Mill, Galashiels, TD1 2HB, UK
(“Licensee”“).


 


BACKGROUND


 


A.                                   Cellegy owns or
possesses certain intellectual property rights with respect to the Licensed
Product (as hereinafter defined) and certain rights pertaining to Cellegy’s
Marks (as hereinafter defined).


 


B.                                     Licensee desires
to obtain an exclusive license to certain rights to the Licensed Product under
such intellectual property rights, and to Cellegy’s Marks within the Territory
(as hereinafter defined) .


 


C.                                     Cellegy is willing
to grant an exclusive license to Licensee under such intellectual property
rights, and is willing to grant an exclusive license to Cellegy’s Marks to
Licensee, each within the Territory, all as more particularly described in, and
subject to the terms and conditions of, this Agreement.


 


AGREEMENT


 


NOW THEREFORE, in consideration of the
foregoing and of the mutual covenants hereinafter set forth and other good and
valuable consideration, the receipt of which is hereby acknowledged, the
Parties (as hereinafter defined) mutually agree as follows:


 


ARTICLE 1

DEFINITIONS


 


As used in this Agreement, the following
terms, whether used in the singular or the plural, shall have the following
meanings:


 


“Affiliates” shall mean, with respect to
any party, any person, which, directly or indirectly, is controlled by,
controls or is under common control with such party. For purposes of this
definition, the term control (including with correlative meanings, the terms
controlled by and under common control with) means having the power, whether
held directly or indirectly and by whatever means (and whether or not
enforceable at law or in equity) to:


 


(i)                                     exercise or control the right to vote attached to 50% or more of the
issued shares in the party;


 


(ii)                                  dispose of or exercise a right of disposal in respect of 50% or more of
the issued voting shares in the party;


 


1





















 


(iii)                               appoint one half or more of the number of directors to the board of the
party; or


 


(iv)                              determine substantially the conduct of the party’s business activities.


 


“Agreement”
means this Exclusive License Agreement.


 


“Approvals”
are registration approvals, registrations or authorizations provided by the
Relevant Regulatory Authority in the Territory for the importation, storage,
Development, promotion, marketing, distribution or sale of the Licensed
Product, but excluding any pricing approvals that may be required by any
Relevant Regulatory Authority of a country within the Territory.


 


“Baseline Price” has the meaning set forth in Section 11.4


 


“Cellegy Information”
means the technical and clinical information concerning the Licensed Product
that is developed by Cellegy and that is included in the new drug application
filed with the Relevant Regulatory Authority in the United Kingdom, and Cellegy’s
European common technical document format, and which may include, without
limitation, data in support of indications, bioequivalency data and
information, clinical data, pharmaco-toxicological data, analytical methods,
stability and pharmaceutical data concerning the Licensed Product, and any
other of Cellegy’s related supporting documentation or other information or
materials of Cellegy in Cellegy’s possession from time to time that Cellegy may
in its discretion from time to time develop before the date that all required
Approvals are obtained and that may be necessary for, or useful in connection
with obtaining and maintaining Approvals for the Licensed Product in the
Territory.


 


“Cellegy Marks”
means the trademarks, service marks and/or trade names owned by Cellegy or that
Cellegy has the right to use in connection with the Licensed Product as set
forth on Exhibit D hereto and as further described in Section 13.1,
that are used by Licensee, its Affiliates or Sublicensees in connection with
the importation, storage, Development, promotion, marketing, distribution and
sale of the Licensed Product.


 


“Cellegy Patents”
means the patents identified on Exhibit D hereto.


 


“Commercially Reasonable and Diligent Efforts”
shall mean with respect to Development and commercialization of the Licensed
Product, a Party’s reasonable efforts no less than those efforts used by the Party
in its other development, commercialization or marketing projects with other
technologies and products having comparable commercial potential.


 


“Competing Licensed Products” has the
meaning set forth in Section 2.4.


 


“Development”
(including variations such as “Develop” and the like) shall mean all
appropriate measures, steps and the like that are necessary to prepare and
compile dossiers appropriate for obtaining Approvals for the Licensed Product
in the Territory and conducting clinical trials in the Territory (if
required).  As it relates to Cellegy, “Development”
shall mean


 


2





















 


that Cellegy shall provide Licensee a copy of the dossier concerning
the Licensed Product filed by Cellegy with the Relevant Regulatory Authority in
the United Kingdom, and such other materials relating thereto or to obtaining
other Approvals for the Licensed Product in the Territory as Cellegy may in its
discretion from time to time develop before the date that all required Approvals
are obtained.


 


“Dollars”
or “$”
means United States dollars.


 


“Effective Date” means the date set forth at the
beginning of this Agreement.


 


“Euros”
or “€”
shall mean currency denominated in Euros.


 


“Field”
shall mean the use of the Licensed Product for the treatment of the pain
associated with chronic anal fissure and for the treatment of one (1) or more
of the symptoms associated with or related to hemorrhoids.


 


“GMP”
means good manufacturing practices in conformity with the regulations and
regulatory interpretations of the Relevant Regulatory Authorities in each
country in the Territory, including without limitation EU cGMP such regulations
covering good manufacturing practices set forth in the relevant legislation or
guidelines and applicable to the Territory, as such regulations may be amended
and interpreted by the Relevant Regulatory Authorities from time to time.


 


“Initial Indication”
means the treatment of the pain associated with chronic anal fissure.


 


“Intellectual Property Rights” means all rights
and interests, vested or arising out of any industrial or intellectual
property, whether protected at common law or under statute, which includes
(without limitation) the Patent Rights, Trade Marks and Know-How and any rights
and interests in inventions (both patentable and unpatentable), patents,
copyrights, moral rights, designs (whether registered or unregistered), trade
marks (whether registered or unregistered), trade secrets, goodwill, samples,
materials, data, , results and Confidential Information.


 


“Know-How”
means all data, information, methods, procedures, processes and materials,
which is or comes to be possessed, acquired, licensed or owned by Cellegy as of
the Effective Date and from time to time thereafter of this Agreement, to the
extent that such data, information, methods, procedures, processes and
materials specifically relates to the manufacture, development, testing or use
of the Licensed Product, including but not limited to, biological, chemical,
biochemical, toxicological, pharmacological, metabolic, formulation, clinical,
analytical and stability information and data (other than such Know-How which
is the subject of a patent or of a provisional or filed patent application),
and for which Cellegy has the right to license, disclose or provide to
Licensee.


 


“Launch
Date” means following Approval the date upon which the
Licensed Product is first commercially offered for sale in a country in the
Territory, determined on a country by country basis.


 


3





















 


“Licensed Product” means the pharmaceutical product
known as RectogesicTM ointment – a 0.4% nitroglycerin ointment for the treatment
of pain associated with chronic anal fissure and, if Approvals are obtained,
for the treatment of one or more of the symptoms associated with or related to
hemorrhoids, in the pharmaceutical presentation described in Exhibit A.


 


“Licensee Product” means one (1) of either (i)
Licensee’s orally delivered estradiol glucoside product, which is currently in
Phase 1 clinical studies, or, at Cellegy’s option if it elects to accept such
product in lieu of the product specified in the preceding clause “(i)”, (ii)
any future product, product candidate or potential product developed or
acquired by Licensee in the therapeutic area of gastroenterology.


 


“Loss”
means any and all loss, liability, damage, fee, cost, (including without
limitation actual reasonable court costs and reasonable attorneys’ fees
regardless of outcome) expense, suit, claim, demand, judgment and prosecution.


 


“Major European Countries” shall mean
France, Germany, Italy, Spain and the United Kingdom.


 


“Manufacturer”
means Cellegy’s nominated Third Party manufacturer of the Licensed Product.


 


“Marketing Authorization”
means any approval (including any applicable
pricing and governmental reimbursement approvals) in Licensee’s name required
to Develop, market and sell the
Licensed Product in a particular country in the Territory.


 


“Minimum Sales”
means agreed targets for unit sales of Licensed Product in the Territory, as
determined in accordance with Section 10.4.


 


“M.R.P”
means the mutual recognition procedure as defined in Article 28 of
European Directive 2001/83/EC.


 


“Net
Sales” means the gross proceeds from sales of the Licensed
Product that is due, or otherwise received by, Licensee, or its Affiliates or
its Sublicensees from Third Party customers for such Licensed Product, less:


 


(i)                                     reasonable
credited allowances actually granted to such Third Party customers for spoiled,
damaged, rejected, recalled, outdated or returned Licensed Product,


 


(ii)                                  the amounts of
reasonable trade and cash discounts actually allowed, to the extent such trade
and cash discounts are specifically allowed on account of the purchase of such
Licensed Product,


 


(iii)                               sales taxes, excise
taxes, use taxes and import/export duties and any other government charges
(other than taxes on income) actually due or incurred or paid by Licensee, or
its Affiliates or Sublicensees, in connection with the sales of the Licensed
Product to any Third Party, and


 


4





















 


(iv)                              reasonable allowances,
adjustments, reimbursements, discounts, chargebacks and rebates actually
granted to Third Parties, including, but not limited to, rebates given to
health care organizations or other Third Parties, and any bona fide payment
made in respect of any sales of Licensed Product to any governmental or
quasi-governmental body or agency, whether during the actual Sales Period or
not.


 


“Party”
means Cellegy or Licensee and Parties shall mean both Cellegy and Licensee.


 


“Patent
Rights” means (i) the patents and patent applications listed
in Exhibit C hereto and any patents and patent applications existing as
of the Effective Date; (ii) any patent or patent application hereafter which is
acquired by Cellegy or under which Cellegy becomes licensed and with the right
to sublicense to Licensee, during the term of this Agreement, in each case of
(i) and (ii) above relating to the Licensed Product, its manufacture, use or
sale, including methods of use and screening or processes that use the Licensed
Product; (iii) any divisionals, continuations and continuations-in-part defined
in (i) or (ii); (iv) any extension, renewal or reissue or patent identified in
any reissue or re-examination of any patent or patent application identified in
(i) through (iv), in each case, to the extent that such items relate to the
Licensed Product.  Such items set forth
in sub-items (i) through (iv) will be identified and added by the Parties to Exhibit
C from time to time during the term of this Agreement.


 


“Relevant Regulatory Authority”, in relation
to a country or region in the Territory, means the governmental authority,
regulating the use, importation, storage, Development, promotion, marketing,
distribution or sale of therapeutic substances and the grant of Approvals in
such country or region.


 


“Steering Committee” means the Steering Committee, as
described in Article 4 of this Agreement.


 


“Sublicensee”
means any person to whom Licensee sublicenses the rights, or any portion
thereof, granted by Cellegy to Licensee pursuant to Section 2.1 hereof.


 


“Subsequent Indication”
means the treatment of one (1) or more of the symptoms associated with or
related to hemorrhoids.


 


“Technical
Agreement” means the agreement between
Cellegy and any Manufacturer defining the roles and responsibilities for all parties
in relation to, inter alia, (i) manufacture and supply of the Licensed Product
to GMP; and (ii) regarding regulatory, safety and pharmacovigilence issues, as
separately provided by Cellegy to Licensee as of the date of this Agreement.


 


“Territory”
means the countries listed on Exhibit B hereto.


 


“Third
Party” means any party other than Cellegy or Licensee, or
Licensee’s Affiliates or Sublicensees.


 


5





















 


ARTICLE 2

GRANT OF LICENSE


 


2.1                                 Grant.  Cellegy hereby grants to Licensee an
exclusive license, with a right to sublicense as set forth herein, under all of
Cellegy’s Intellectual Property Rights to import, store, Develop, have
Developed (through agreements with contract research organizations or similar
Third Parties, performing work on behalf of and for the benefit of Licensee),
promote, market, distribute, offer for sale, and sell the Licensed Product in
the Field within the Territory, and to use Cellegy’s Intellectual Property
Rights in connection with the importation, storage, Development, promotion,
marketing,  distribution and sale of
Licensed Product in the Field within the Territory and obtaining any Approvals
hereunder.  Licensee’s rights to the
Licensed Product and the Intellectual Property Rights are limited to those
expressly granted, and all others are reserved to Cellegy.


 


2.2                                 Right to sub-license.  Subject to Section 2.5 below, Licensee
may sub-license any of its rights or obligations under this Agreement, directly
or indirectly, in whole or in part:


 


(a)                                  to
Third Parties approved by Cellegy in writing, which approval will not be
unreasonably withheld and delayed; and


 


(b)                                 to any of its
Affiliates that are engaged primarily in the business of importation, storage,
Development, promotion, marketing, distribution and sale of pharmaceutical
products, as Licensee sees fit.


 


Any such sublicense shall not relieve Licensee of any of its
obligations hereunder, and Licensee shall remain responsible and liable for
compliance by any such Third Party, Affiliate or Sublicensee with this
Agreement, all relevant laws, regulations and requirements relating to the
importation, distribution, marketing, promotion and sale of the Licensed
Product in the Territory, and any acts or omissions by any such Third Party, Affiliate
or Sublicensee that would constitute a breach of this Agreement if such
sublicense had not been entered into and the actions or omissions were those of
Licensee rather than the Third Party, Affiliate or Sublicensee.  Any sublicense agreement shall contain terms
and conditions that are not inconsistent with those of this Agreement.


 


2.3                                 Acceptance
of Appointment; Sales
Outside Territory.


 


(a)                                  Licensee hereby
accepts appointment as Cellegy’s exclusive licensee of Licensed Product in the
Territory, as provided in Section 2.1 above.


 


(b)                                 Licensee shall not,
and Licensee shall use all Commercially Reasonable and Diligent Efforts to
ensure that its officers, directors, employees, Affiliates, agents or
representatives (collectively, “Agents”) shall not, without the prior written consent of
Cellegy, directly or indirectly promote, sell, distribute or otherwise make
available (for remuneration or gratuitously) Licensed Product outside the
Territory or sell, distribute or otherwise make available (for remuneration or
gratuitously)  Licensed Product to
persons outside the Territory for the purpose of resale or distribution
(whether for remuneration or gratuitously) outside the


 


6





















 










[*] 
designates portions of this document that have been omitted pursuant to
a request for confidential treatment filed seperately with the Commission


 


Territory.  Without limiting the
foregoing, Licensee agrees to use all Commercially Reasonable and Diligent
Efforts to ensure compliance with the preceding sentence, including without
limitation placing appropriate notices on the labels or Licensed Products;
provided, however, that Licensee shall not be obligated to include any notices
in a particular country in the Territory that would conflict with any relevant
requirements of the Relevant Regulatory Authority for such country, and
Licensee’s failure or refusal to include any such notices in such circumstances
shall not constitute a breach of any provision of this Agreement.


 


2.4                                 Competing Products.  During the term of this Agreement, or, if
earlier, the maximum period of time permitted by applicable European Union
regulations, Licensee shall not, and shall use all Commercially Reasonable and
Diligent Efforts to ensure that its officers, directors, employees, Affiliates,
Sublicensees, agents or representatives (collectively, “Agents”) shall not,
directly or indirectly, promote, sell or distribute products within the
Territory that are directly competitive in the treatment of anal fissures or hemorrhoids
or such other indications for the Licensed Product as may be added to this
Agreement (the “Competing
Licensed Products”). If applicable law or applicable European
Union regulations provide that the foregoing covenant is unenforceable or
require that the duration of the foregoing covenant be shorter than the term of
this Agreement, then if at any time during the term of this Agreement when such
covenant is not effective Licensee or its Agents directly or indirectly
promote, sell or distribute Competing Licensed Products, Cellegy may terminate
this Agreement with respect to any country where such Competing Licensed
Products are being promoted, sold or distributed by delivery of written notice
to Licensee.


 


2.5                                 Right of First
Negotiation Regarding Licensee Product in North America.  Before Licensee enters into any agreement
with any Third Party which includes the right to develop, promote, distribute
or sell a Licensee Product in territories that include the United States of
America or Canada (“North
America”), or any agreement with any Third Party which includes
worldwide rights to develop, promote, distribute or sell a Licensee Product,
Licensee shall first offer to Cellegy in writing (the “Negotiation Notice”)
a one time right of exclusive first negotiation to negotiate with Licensee
concerning exclusive development, marketing and/or distribution rights in North
America (or worldwide, as the case may be) for one (1) such Licensee Product,
for a negotiation period not to exceed [*] (the “Negotiation Period”).  Cellegy shall exercise the Right of First
Negotiation granted herein by providing written notice of its election (the “Exercise Notice”) to
Licensee within [*] after the date of delivery of the Negotiation Notice to
Cellegy.  The Negotiation Period shall
commence upon delivery to Licensee of the Exercise Notice.  During the Negotiation Period, Licensee shall
not enter into any agreement with any person other than Cellegy with respect to
the development, promotion, distribution or sale of the applicable Licensee
Product within any country in North America (or worldwide, as the case may
be).  During the Negotiation Period, the
Parties shall negotiate in good faith; provided, however, that nothing in this Article shall
be deemed to create a legal obligation on the part of Licensee to enter into
any such agreement.  This one (1) time
Right of First Negotiation shall terminate upon the first to occur of (i)
Cellegy’s failure to timely deliver its Exercise Notice following receipt of
the Negotiation Notice; (ii) the expiration of the Negotiation Period; (iii)
the mutual termination of negotiations by the Parties conducted under this
Article; (iv) the effective date of termination of this Agreement by either
Party as provided elsewhere in this Agreement; or (v) such time as Cellegy and
Licensee enter into a definitive


 


7





















 


agreement regarding such a license for one (1) such Licensed
Product.  In addition, the right of first
negotiation will also include a one time right on the part of Cellegy to be
granted a license to one Licensee Product if, within thirty (30) days after
Licensee delivers to Cellegy a notice containing all significant terms of the
offer, Cellegy notifies Licensee that it is willing to match in all material
respects (i) the financial terms (including financially in terms of upfront,
milestone and royalty payments, and (ii) the key obligations and timelines
(including regulatory, development and commercial) contained in any bona fide
offer that Licensee has received for the Licensed Product from a Third Party.


 


ARTICLE 3

REPRESENTATIONS AND WARRANTIES


 


3.1                                 Representations and Warranties
of Cellegy.  Cellegy hereby represents and warrants to
Licensee that:


 


(a)                                  Cellegy is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware, with the corporate power and authority to enter
into this Agreement and to perform its obligations hereunder.  The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by all requisite corporate action on the part of Cellegy.  This Agreement has been duly executed and
delivered by Cellegy and constitutes the valid, binding and enforceable
obligation of Cellegy, subject to applicable bankruptcy, reorganization,
insolvency, moratorium and other laws affecting creditors’ rights generally
from time to time in effect and to general principles of equity.


 


(b)                                 Cellegy is not subject
to, or bound by, any provision of: (i) its articles of incorporation or
by-laws, (ii) any mortgage, deed of trust, lease, note, shareholders’
agreement, bond, indenture, license, permit, trust, custodianship, or other
instrument, agreement or restriction, or (iii) any judgment, order, writ,
injunction or decree of any court, governmental body, administrative agency or
arbitrator, that would prevent, or be violated by, or under which there would
be a default as a result of, nor is the consent of any person required for, the
execution, delivery and performance by Cellegy of this Agreement and the
obligations contained herein, including without limitation, the grant to
Licensee of the license described in Section 2.1 hereof.


 


(c) 
Subject to the final sentence of this Section 3.1 (c): (i) Cellegy
is the exclusive owner of all right, title and interest in the Patent Rights in
the applicable countries in the Territory; (ii) the patent applications
included in the Patent Rights have been duly filed and contain no material
errors; and (iii) Cellegy shall maintain all Patent Rights for the full
duration of this Agreement.  Attached
hereto as Exhibit C is a complete and accurate list of all patents and patent
applications included in the Patent Rights. 
Notwithstanding the foregoing, as Cellegy has disclosed in its filings
with the Securities and Exchange Commission, the Board of Opposition of the
European Patent Office rendered a verbal decision revoking Cellegy’s European
patent relating to the Licensed Product; and although Cellegy has appealed this
decision, Cellegy makes no representation or warranty regarding the outcome of
the opposition and appeal process, the Cellegy Patent Rights may be held to be
invalid or revoked, and any representation or warranty


 


8





















 


of Cellegy made herein regarding Cellegy Patent Rights is qualified in
its entirety by the foregoing matters.


 


(d) 
Cellegy is the exclusive owner of all right, title and interest in the
Cellegy Marks in the Territory. Cellegy shall maintain at its sole expense
where applicable all Cellegy Marks for the full duration of this
Agreement.  Attached hereto as Exhibit D
is a complete and accurate list of all trade marks and trade mark applications
included in the Cellegy Marks.


 


(e) To the best of Cellegy’s knowledge,
neither the development, use or sale of the Licensed Product or the practice of
any of the inventions included in the Patent Rights or the use of the Cellegy
Marks or the use of the Know-How by Licensee as contemplated by this Agreement
infringes upon any Third Party’s know-how, patent, trade mark or other
intellectual property rights in the Territory.


 


(f) To the best of Cellegy’s knowledge, there
is no Third Party using or infringing any or all of the Patent Rights or the
Cellegy Marks in derogation of the rights granted to Licensee in this
Agreement.


 


(g) Cellegy represents and warrants that, to
the best of its knowledge, it has furnished or will furnish (in accordance with
the terms of this Agreement) to Licensee all of the Know-How which Cellegy owns
or possesses.


 


(h) 
CELLEGY MAKES NO REPRESENTATION OR WARRANTY OTHER THAN THOSE EXPRESSLY
PROVIDED HEREUNDER, AND CELLEGY HEREBY DISCLAIMS ALL SUCH OTHER WARRANTIES,
EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION ANY WARRANTIES OF
MERCHANTABILITY, OR THE FITNESS FOR A PARTICULAR PURPOSE, OF THE LICENSED
PRODUCT OR THE KNOW-HOW.  EXCEPT AS MAY
BE EXPRESSLY PROVIDED ELSEWHERE HEREIN, CELLEGY MAKES NO REPRESENTATION OR
WARRANTY THAT THE LICENSED PRODUCT IS OR WILL BE SHOWN TO BE SAFE OR EFFECTIVE
FOR ANY INDICATION.  THE FOREGOING SHALL
NOT REDUCE THE SCOPE OF ANY REPRESENTATION OR WARRANTY OF CELLEGY EXPRESSLY
MADE TO LICENSEE HEREIN.


 


(i) Cellegy will use all Commercially
Reasonable and Diligent Efforts to ensure that Cellegy will provide reasonable
notice to Licensee of any significant changes to the Cellegy Information
supplied to Licensee or the materials or processes described in that
information in relation to any of the Licensed Product.


 


3.2                                 Representations
and Warranties of Licensee.  Licensee hereby represents and warrants to
Cellegy as follows:


 


(a)                                  Licensee is a
corporation duly incorporated, validly existing and in good standing under the
laws of Bermuda, having a branch office in the UK with the corporate power and
authority to enter into this Agreement and to perform its obligations
hereunder.  The execution and delivery of
this Agreement and the consummation of the transactions


 


9





















 










[*] 
designates portions of this document that have been omitted pursuant to
a request for confidential treatment filed seperately with the Commission


 


 


contemplated hereby have been duly authorized by all requisite
corporate action on the part of Licensee. 
This Agreement has been duly executed and delivered by Licensee and
constitutes the valid, binding and enforceable obligation of Licensee, subject
to applicable bankruptcy, reorganization, insolvency, moratorium and other laws
affecting creditors’ rights generally from time to time in effect and to
general principles of equity.


 


(b)                                 Licensee’s Affiliates
shall not conduct themselves in such a way that Licensee will be in breach of
any term or condition of this Agreement.


 


(c)                                  Licensee currently is
in compliance in all material respects with all applicable laws and has
received, or will receive where relevant, all applicable pharmaceutical product
certifications and registrations from appropriate governmental entities that
are necessary to perform its obligations under this Agreement.  Licensee agrees that during the term of this
Agreement it will comply in all material respects with all applicable laws and
regulations regarding the export, sale and distribution of the Licensed Product
in the Territory.


 


ARTICLE 4

MANAGEMENT OF THE COLLABORATION


 


4.1                                 Steering Committee.


 


(a)                                  Upon execution of
this Agreement, Cellegy and Licensee shall establish a Steering Committee (the “Steering Committee”)
which shall have the responsibilities described in this Article 4.  The Steering Committee shall be initially
comprised of a total of six (6) members, of which three (3) members shall be
appointed by Licensee and three (3) members shall be appointed by Cellegy.  The total number of Steering Committee
members may be changed by the Steering Committee from time to time as
appropriate, but in all cases it will be comprised of an equal number of
members designated by each of Cellegy and Licensee, and in no event shall the
Steering Committee be comprised of an aggregate of less than six (6) members.  Each of Cellegy and Licensee may substitute
its representatives from time to time and the substitution shall be effective
upon notice to the other Party.  The
Steering Committee shall meet once every quarter during the first year of the
term of this Agreement and thereafter at such other times as the Steering
Committee may agree (but at least one time each year), on such dates and at
such places as to be agreed upon between the Parties.  In any event, the Steering Committee will
meet thirty (30) days after the execution of this Agreement or as soon as
practicable as mutually agreed by the Parties. 
Each representative on the Steering Committee will have one vote in
decisions submitted to the Steering Committee. 
The meetings of the Steering Committee may be held in person or in any
other reasonable manner, including, without limitation, by telephone, video
conference or e-mail.


 


(b)                                 [*] shall designate a
Chairperson who will serve as such.  The
Chairperson shall send notices (not less than 15 business days in advance of
such meetings) and agendas for all regular Steering Committee meetings to all
Steering Committee members.  The location
of regularly scheduled Steering Committee meetings shall alternate among the
offices of the Parties, unless otherwise agreed.  Meetings may be held telephonically or by
video conference, but each member shall attend at least one meeting in person
each year.  The Party hosting any


 


10





















 


Steering Committee meeting shall appoint one person (who need not be a
member of the Steering Committee) to attend the meeting and record the minutes
of the meeting.  Such minutes shall be
circulated to the Parties promptly following the meeting for review, comment
and approval.


 


4.2                                 Responsibilities
of the Steering
Committee. 
The Steering Committee will be primarily responsible for activities
relating to implementation of the activities contemplated by this
Agreement.  The Steering Committee shall,
subject to the provisions set forth in this Agreement (including the dispute
resolution procedures hereof), be the primary vehicle for interaction between
the Parties with respect to the Development and commercialization of the
Licensed Product in the Territory.  In
particular, the Steering Committee shall perform the following functions:


 


(a)                                  exchange of
information and facilitation of cooperation and coordination between the
Parties as they exercise their respective rights and meet their respective
obligations under this Agreement;


 


(b)                                 perform
such other functions as appropriate to further the purposes of this Agreement,
as determined by the mutual agreement of the Parties;


 


(c)                                  with the exception of
the Approval that Cellegy has already obtained in the United Kingdom, prior to
submitting any Approval application, the Steering Committee shall discuss the
scope and content of such Approval application. 
The Steering Committee may review and comment on all Approval
applications, and such comments will be considered by the Parties as long as
such comments are provided in a timely manner. In the event of a dispute within
the Steering Committee or between the Parties directly or indirectly relating
to the choice of countries within the Territory where Approval applications
shall be filed and Approvals
shall be obtained then clause 4.3 shall not apply. Licensee shall have
final decision-making authority with respect to such Approval application
issues; however, any such decisions shall be based on Licensee’s good faith
belief that such decision is consistent with commercialization requirements of
the Territory; and


 


(d)                                 review and approve the
Marketing Plans, such approval not to be unreasonably withheld or delayed.


 


4.3                                 Voting; Deadlocks.  Each member of the Steering Committee shall
have one vote, and all the decisions of the Steering Committee shall be made by
a simple majority of the members of such committee; provided, however,
that in the event the members of the Steering Committee are deadlocked and
cannot reach a decision within three (3) days after notice of a deadlock with regard
to any decision required to be made by such committee (each, a “Dispute”), then the
Dispute shall be referred to the Chief Executive Officer of each Party.  If such Dispute is not resolved by the Chief
Executive Officers within five (5) working days of such referral, then (i)
Cellegy’s Chief Executive Officer (or such other officer as Cellegy determines)
will have the authority to cast the tie-breaking vote with regard to such
Dispute if, and only if, the Dispute relates to clinical studies or trials where,
in Cellegy’s good faith opinion, the conduct or results of the studies or
activities could have a detrimental effect on the


 


11





















 


commercial viability of the Licensed Product outside of the Territory,
and (ii) for other kinds of Disputes, if the Chief Executive Officers cannot
agree within such time period, then the Dispute shall be resolved by means of
the dispute resolution procedures set forth in Section 18.14 of this
Agreement.


 


4.4                                 Approval Plan; Marketing
Plan.  The overall
timetable to obtain Approvals for the Licensed Product in the Territory shall
be set forth in a written plan (the “Approval Plan”).  In addition, Licensee shall prepare a
marketing plan, including details of promotional effort, size of sales force,
associated budget in connection with the promotion, marketing and distribution
of the Licensed Product in the Major European Countries (the “Marketing Plan”).  The initial Marketing Plan for the United
Kingdom shall be submitted no later than six (6) weeks after the Effective Date
of this Agreement.  The initial Marketing
Plans for the Major European Countries shall be submitted no later than three
(3) months after the Effective Date of this Agreement, and the initial
Marketing Plans for the other countries in the Territory shall be submitted no
later than one (1) year after the Effective Date of this Agreement.  The Marketing Plans shall be consistent in
all material respects with the provisions of this Agreement.  Subsequent revisions and updates to the
Marketing Plan shall be delivered annually and no later than the end of the
first week in January (or, if Licensee makes interim revisions or updates,
then as soon as reasonably practicable after Licensee prepares such revisions
or updates).


 


ARTICLE 5

REGULATORY MATTERS; APPROVALS


 


5.1                                 Regulatory Matters;
Approvals.


 


(a)          Licensee
shall use Commercially Reasonable and Diligent Efforts, subject to this
Agreement, to obtain at its sole expense all Approvals that are necessary for
the sale of the Licensed Product within the Territory for the Initial
Indication only: without limitation any additional clinical trials, studies or
data in addition to the Cellegy Information that may be required in order to
obtain or maintain Approvals for the Licensed Product in each country in the
Territory for the Initial Indication, and comply with any and all applicable
statutory, administrative or regulatory requirements of the Territory or any
governmental or political subdivisions thereof (collectively, “Laws”) in relation to
the importation, storage, Development, promotion, marketing, distribution or
sale of the Licensed Product in the Territory under this Agreement, including,
without limitation, Licensed Product documentation such as Licensed Product
tracking, samples, Licensed Product complaints, adverse event reporting
requirements, post-marketing surveillance activities, and documentation of
recalls, which documentation shall be maintained by the Licensee for the period
required by the Relevant Regulatory Authorities in the Territory
notwithstanding termination or expiration of this Agreement, any Licensed
Product registrations with any government agency or health authority, or any
registration, approvals, or filing of this Agreement. Licensee shall inform
Cellegy on at least a semi-annual basis (and more frequently if Cellegy so
reasonably requests) about the progress of such registration work, and will
promptly provide Cellegy with a copy of all presentations and documents
submitted by Licensee to any Relevant Regulatory Authority with respect to the
Licensed Product.  Cellegy shall, upon
Licensee’s written request, provide reasonable assistance to Licensee, at
Licensee’s sole cost, regarding obtaining such Approvals in the Territory,
including allowing Licensee


 


12





















 










[*] designates portions of this document that
have been omitted pursuant to a request for confidential treatment filed
seperately with the Commission


 


 


reasonable
access to relevant experts in relation to the Cellegy Information for the
purpose of obtaining Approvals.


 


(b)         With
respect to the Subsequent Indication, Cellegy shall be responsible for the
conduct of such clinical trials or studies as Cellegy may in its discretion
undertake.  If Cellegy determines to
pursue Approvals for the Licensed Product for the Subsequent Indication in the
Territory, Cellegy shall submit to Licensee the information and data that it
has developed to be included in the initial application for Approval, such
information and data shall be agreed between the parties as adequate and
appropriate for an application for Approval of the Subsequent Indication for
the Licensed Product in a Major European Country.  Licensee shall use Commercially Reasonable
and Diligent Efforts, subject to this Agreement, to seek Approval for the
Licensed Product for the Subsequent Indication in the United Kingdom (or such
other country in the Territory as the Steering Committee may approve) and to
obtain at its sole expense all Approvals that are necessary for the sale of the
Licensed Product within the Territory for the Subsequent Indication, including
without limitation: any additional clinical trials, studies or data that may be
required in order to obtain or maintain Approvals for the Licensed Product in
each country in the Territory for the Subsequent Indication, comply with any
and all applicable Laws in relation to the importation, storage, Development,
promotion, marketing, distribution or sale of the Licensed Product in the
Territory under this Agreement for the Subsequent Indication, including,
without limitation, Licensed Product documentation such as Licensed Product
tracking, samples, Licensed Product complaints, adverse event reporting
requirements, post-marketing surveillance activities, and documentation of
recalls, which documentation shall be maintained by the Licensee for the period
required by the Relevant Regulatory Authorities in the Territory
notwithstanding termination or expiration of this Agreement, and any Licensed
Product registrations with any government agency or health authority, or any
registration, approvals, or filing of this Agreement.  Licensee shall inform Cellegy on at least a
semi-annual basis (and more frequently if Cellegy so reasonably requests) about
the progress of such registration work, and will promptly provide Cellegy with
a copy of all presentations and documents submitted by Licensee to any Relevant
Regulatory Authority with respect to the Licensed Product.  Cellegy shall, upon Licensee’s written request,
provide reasonable assistance to Licensee, at Licensee’s sole cost, regarding
obtaining such Approvals in the Territory for the Subsequent Indication,
including allowing Licensee reasonable access to relevant experts in relation
to the Cellegy Information for the purpose of obtaining Approvals.  The other provisions of this Agreement shall,
as nearly as possible, apply with respect to the Licensed Product for the
Subsequent Indication.


 


(c)          Licensee
agrees that it will make all filings that are required to seek and obtain
Approvals for the Licensed Product in each Major European Country by initiating
the M.R.P. no later than [*] after the date on which Licensee is assigned the
Approval of the Licensed Product from the Relevant Regulatory Authority in the
United Kingdom provided that the dossier used in the United Kingdom is
acceptable for use in an M.R.P application. 
If the Relevant Regulatory Authority in a country other than the United
Kingdom determines that such dossier is not complete or acceptable for the
initiation of an M.R.P. application in such country, then the Steering
Committee shall promptly meet and attempt to agree on an appropriate course of
action, and recommend an appropriate modification to the above deadline as
applied to such country.  Licensee agrees
that it will make all filings that are required to seek and obtain Approvals
for the


 


13





















 










[*] 
designates portions of this document that have been omitted pursuant to
a request for confidential treatment filed seperately with the Commission


 


 


Licensed
Product in other countries in the Territory no later than [*] after the
completion of the M.R.P. application and to use Commercially Reasonable and
Diligent Efforts to take such actions as may be required to promptly obtain
Approvals in all of the foregoing countries. 
If Licensee desires to not seek Approvals in one or more countries in
the Territory because Licensee concludes in good faith that for regulatory or
marketing reasons it would not be in the parties’ best interests to pursue
Approvals in such countries, it shall notify the Steering Committee and the
Steering Committee shall decide whether Approvals will be sought in such
country or countries.  If alteration by Cellegy
of the Cellegy Information after the date of this Agreement requires additional
time to submit or revise regulatory filings relating to Approvals, then the
time periods set forth above for making filings and obtaining Approvals shall
be extended by the additional period of time required to submit or revise such
filings.


 


(d)         With
the exception of the assignment of the Approval that Cellegy has obtained in
the United Kingdom and such other materials as Cellegy in its discretion may
provide to Licensee pursuant to this Agreement, Licensee shall pay all costs in
connection with the filing, prosecution, meetings, communications, and review
by Relevant Regulatory Authorities of Approval applications and Approvals
relating to the Licensed Product in the Territory and complying with applicable
laws and regulations.


 


5.2                                 Reversion of Product Rights
in Certain Circumstances.  If further clinical development is required
for Approval of the Initial Indication in a given country (or countries) within
the Territory and Licensee elects not to conduct any required clinical studies
within twenty-four (24) months after the need for further clinical studies is
identified, then the rights in the Licensed Product in any such country shall
revert to Cellegy at no further cost to Licensee. If, after the initial
application for Approval for the License Product for the Subsequent Indication
is filed, further clinical development is required for Approval of the
Subsequent Indication in a given country (or countries) within the Territory
and Licensee elects not to conduct any required clinical studies within
twenty-four (24) months after the need for further clinical studies is
identified, then the rights in the Licensed Product with respect to the
Subsequent Indication in any such country shall revert to Cellegy at no further
cost to Licensee.


 


5.3                                 Cooperation
Regarding Material
Events. 
Each Party will immediately notify the other Party of any material
events relating to the Development of the Licensed Product in the Territory,
including, without limitation, any material comments or concerns raised by any
Relevant Regulatory Authority.


 


5.4                                 Copies of Documents.  Each Party agrees to provide to the other
Party a copy of (i) any documents or reports relating to the Licensed Product
that are filed with any Relevant Regulatory Authority in the Territory under
this Agreement, including any Approval applications; and (ii) all data,
database information and safety reports from clinical trials conducted by or on
behalf of Licensee.  In particular,
Licensee acknowledges that Cellegy has provided to Licensee a copy of the
dossier concerning the Licensed Product filed in the United Kingdom.  All such documents and reports shall be
centralized and held at Licensee or by a Third Party selected by Licensee and
agreed to by Cellegy, provided however, that Cellegy shall be entitled to
obtain and keep copies of any such documents and records but only for the uses
specifically set forth in this Agreement.


 


14





















 


5.5                                 Approval Application in the
United Kingdom.  Cellegy
shall do all that is necessary to assign or transfer the Approval (by itself or
Cellegy’s Affiliate holding the Approval) in the United Kingdom to Licensee,
including (if required) notifying the Relevant Regulatory Authority in the
United Kingdom of such a change.


 


5.6                                 Meetings
With Regulatory Authorities.  Licensee shall
be responsible for conducting all meetings and discussions and routine
telephone communications with any Relevant Regulatory Authority, related to
clinical studies, Approval applications and Approvals for the Licensed Product
in the Territory; provided that Licensee shall use Commercially Reasonable and
Diligent Efforts to conduct such meetings and discussions to facilitate the
Approval of the Licensed Product in the Territory.  Licensee will inform Cellegy and the Steering
Committee early in advance of all meetings with such Relevant Regulatory
Authorities and will keep Cellegy and the Steering Committee apprised of all
material communications with such Relevant Regulatory Authorities.  Cellegy or its designee shall be entitled to
attend all meetings with Relevant Regulatory Authorities. If appropriate
Cellegy, or Cellegy’s designee, will provide reasonable assistance and
technical support for the preparation of and attendance at any relevant meeting
with a Relevant Regulatory Authority.


 


5.7                                 Inspection.  Licensee and Cellegy, and Cellegy shall use
all Commercially Reasonable and Diligent efforts to procure that Manufacturer,
shall cooperate in good faith with respect to the conduct of any inspections by
any Relevant Regulatory Authority of Licensee’s or Manufacturer’s site and
facilities related to the Licensed Product, and each Party shall be given the
opportunity to attend such site inspection and the summary, or wrap up, meeting
related to the Licensed Product with such Relevant Regulatory Authority at the
conclusion of such site inspection.  To
the extent either Party receives written or material oral communication from
any Relevant Regulatory Authority relating to the Licensed Product in the
Territory, the party receiving such communication shall notify the other
parties and provide a copy of any written communication as soon as reasonably
practicable.


 


5.8                                 Clinical Trials.  Licensee shall at its own cost be responsible
for the conduct of all studies and clinical trials that may be necessary or
appropriate to obtain all required Approvals for the Initial Indication (with
the exception of the Approval for the United Kingdom that has been obtained)
(and, if Cellegy conducts the clinical studies described in Section 5.1
above with respect to the Subsequent Indication, then Approvals for the
Subsequent Indication) and any post-Approval Clinical Trials and for the grant
of all necessary approvals and maintaining in effect all appropriate policies
of insurance for clinical trials for the use of the Licensed Product in the
Initial Indication (and/or Subsequent Indication, as the case may be) in the
Territory.  All clinical trials for use
of the Licensed Product in the Initial Indication (and/or Subsequent
Indication, as the case may be) in the Territory that are initiated after the
date of this Agreement shall be performed in compliance with and in conformity
to ICH and E.U. good clinical practice guidelines.  Licensee shall provide Cellegy with the study
plans and/or protocols relating to any such clinical trial before the trial is
started, and Cellegy shall have the right to review and comment on such trial
plans or protocols.  At the completion of
each clinical trial initiated by Licensee after the Effective Date of this
Agreement, Licensee shall prepare a written report, in compliance with the
relevant ICH guidelines summarizing the results of such clinical trial, and


 


15





















 


containing an analysis of the clinical significance of such results,
which reports shall be submitted to Cellegy as soon as is reasonably
practicable after completion of the relevant clinical trial.  Licensee agrees to provide such data and
materials regarding any such studies or trials as Cellegy may reasonably
request, and Cellegy may use such materials for its own business purposes in
connection with obtaining or maintaining Approvals for the Licensed Product in
other jurisdictions outside the Territory. 
Cellegy will use Commercially Reasonable and Diligent Efforts to provide
the clinical supplies of the Licensed Product that Licensee may reasonably
request, at Licensee’s expense at a purchase price to Licensee determined on a
pass-through cost basis based on Cellegy’s manufacturing cost per unit.  Cellegy may enter into one or more
manufacturing and supply agreement(s) (or similar arrangements) with Third
Party contract manufacturer(s) for such clinical supplies, and such agreements
or arrangements shall provide for reasonable rights of access by Licensee’s
quality representatives to inspect the premises of such manufacturer(s)
relating to such pharmacovigilence and quality issues as Licensee reasonably
considers appropriate.


 


5.9                                 Cellegy Obligations.  Promptly following entering into this
Agreement Cellegy shall:


 


(a)                                  provide Licensee with a
complete copy of the Cellegy Information as well as copies of clinical data,
analysis and reports of Cellegy or its other licensees of the Licensed Product
in other countries (to the extent in Cellegy’s possession and that Cellegy is
permitted to provide such information under the terms of its agreements with
such licensees, with Cellegy agreeing to use commercially reasonable efforts
after the date of this Agreement to include provisions in agreements with other
licensees of the Licensed Product to permit the sharing of such data, analysis
and reports from licensees);


 


(b)                                 provide Licensee with
any information in its possession that is reasonably likely to jeopardize or
otherwise have a material adverse impact on the application, or any grant,
maintenance, variation or renewal of the Approvals;


 


(c)                                  except as provided in
Section 5.8 above, at its cost promptly provide to Licensee a sufficient
quantity of the Licensed Product as is reasonably necessary for Licensee to
prepare and submit the application, and the grant, maintenance, variation or
renewal of Approvals;


 


(d)                                 use Commercially
Reasonable and Diligent Efforts to assist Licensee and to procure the
assistance of any third party supplier of raw materials to Cellegy, in meeting
the demands of the Relevant Regulatory Authority relating to any application
and any grant, maintenance, variation or renewal of Approvals;


 


(e)                                  deliver to Licensee
the Technical Agreement that Cellegy has entered into with the Manufacturer;
and


 


(f)                                    notify Licensee and
promptly provide all relevant assistance and supporting documentation to
Licensee, should Cellegy make any alteration to the Licensed Product, or the
manufacture, or packing of the Licensed Product that needs to be notified to a
Relevant Regulatory Authority.


 


16





















 


5.10                           Approvals.


 


(a)                                  All Approvals by any
Relevant Regulatory Authority which are necessary to sell the Licensed Product
within the Territory shall be issued to, and held in the name of Licensee for
the benefit of Cellegy; provided, however, that all such Approvals shall
constitute the sole property of Cellegy.


 


(b)                                 Licensee shall
promptly provide to Cellegy, upon Cellegy’s request, such evidence that Cellegy
shall reasonably require, confirming that all Approvals necessary to import,
store, Develop, promote, market, distribute and sell the Licensed Product in
the Territory have been obtained.


 


(c)                                  Cellegy hereby acknowledges that, except as may otherwise be required by
law, Licensee has no obligation to verify the Cellegy Information.


 


ARTICLE 6

POST- APPROVAL RESPONSIBILITIES


 


6.1                                 Responsibility.  Each Party acknowledges that Licensee or the
Affiliate or Sublicensee named by Licensee as the holder of the Approvals bears
the ultimate responsibility vis-à-vis
the Relevant Regulatory Authorities for complying with the regulatory
requirements applicable to the manufacture, importation, storage, Development,
promotion, marketing, distribution and sale of the Licensed Product in the
Territory: Cellegy represents and warrants that it shall bear the
responsibility vis-à-vis Licensee
and/or the Affiliate and/or the Sublicensee named by Licensee as the holder of
the Approvals for complying with the regulatory requirements applicable to the
manufacture and storage (until such time as the Licensed Product is delivered
to Licensee or such Affiliate or Sublicensee) of the Licensed Product in the
Territory.


 


6.2                                 Collaboration.  The Parties shall collaborate with each other
and each Party agrees to provide the other Party with any reasonable assistance
it may require to ensure compliance with the Approvals.


 


6.3                                 Insurance.  To the extent commercially available, both
Parties shall maintain in full force and effect for the term of this Agreement
and for five (5) years thereafter product liability insurance and property
damage insurance on its operations naming the other Party as an additional
insured, with terms reasonably satisfactory to the other Party.  The amount and extent of coverage of the
insurance required hereunder, if any, shall be not less than a single limit
liability of not less than U.S. $5 million in one claim and in the aggregate,
and each Party shall furnish to the other Party copies of policies of insurance
or certificates evidencing the existence and amounts of such insurance within
thirty (30) days of the other Party’s request for such copies.  Each Party shall provide the other Party with
written notice of any cancellation of any insurance hereunder at least thirty
(30) days prior to such cancellation. 
Cellegy shall use all Commercially Reasonable and Diligent efforts to
notify Licensee of the relevant insurance policies maintained by any
Manufacturer of raw materials used in the manufacture of the Licensed Product,
to the extent such information is available.


 


17





















 


ARTICLE 7

INFORMATION; DATA; PHARMACOVIGILENCE


 


7.1                                 Clinical Data.  All clinical
data and reports related to clinical trials for the Licensed Product in the
Territory shall be owned by the Party funding such clinical trial(s).  Other than to a Sublicensee in connection
with the transactions contemplated by this Agreement, Licensee shall not sell,
disclose to or share with any Third Party, or grant any Third Party right to
use, any clinical data arising owned by Licensee as a result of the preceding
sentence.  Each Party shall have access
to, and copies of, all such data and reports related to clinical trials for the
Licensed Product in the Territory, and each Party may use such data without any
additional payments to the other Party. 
Each Party shall treat such data and reports as Confidential Information
of the other Party, and neither Party shall disclose or use such data or
reports for any purpose other than performing its obligations under this
Agreement or as otherwise expressly authorized in writing by the Steering
Committee, and except for such disclosures as a Party reasonably believes is
required by securities or regulatory laws or regulations.  If a Party itself obtains data from a clinical
trial hereunder, it shall promptly transfer all of the clean, final data for
such trial to Licensee or to such Third Party, as the case may be.  The Steering Committee shall coordinate the
transfers of any such data.


 


7.2                                 Safety Data Base.  The Parties will, as soon as
practical, organize a serious adverse event data base (the “SAE Data Base”).  Cellegy and Licensee shall jointly own the
SAE Data Base and all data contained therein, and the data from the SAE Data
Base shall be made available to both Parties. 
Licensee shall be responsible for, and bear the costs of, data for the
SAE Data Base related to the Territory. 
Cellegy shall be responsible for, and bear the costs of, data for the
SAE Data Base related to territories outside the Territory.


 


7.3                                 Adverse Events.  The Parties recognize that as the holder of
the Approvals, Licensee will be required to submit information and file reports
to various governmental agencies on compounds under clinical investigation,
compounds proposed for marketing, or marketed drugs.  The process and responsibilities for such
reports will be governed by the Adverse Event Reporting Addendum separately
agreed to by the Parties.


 


7.4                                 Product Complaints.  Each Party will maintain a record of all
non-medical and medical Licensed Product-related complaints and will notify the
other Party of any complaint in a sufficient time to allow the other Party to
comply with any regulatory requirements it may have with respect to such
complaint.


 


ARTICLE 8

MILESTONE PAYMENTS; ROYALTIES AND RELATED PAYMENTS


 


8.1                                 Milestone Payments.  Licensee shall pay Cellegy a milestone
payment in the particular amounts specified below (with all payments to be made
in U.S. Dollars):


 


(a)                                  One Million Dollars
($1,000,000), within five (5) business days after the date this Agreement is
executed and delivered by both parties hereto.


 


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[*] 
designates portions of this document that have been omitted pursuant to
a request for confidential treatment filed seperately with the Commission


 


 


(b)                                 With respect to [*] the
amounts set forth below, payable [*]


 


	
  Event

  	
   

  	
  Amount

  
	
  [*]

  	
   

  	
  [*]

  
	
  [*]

  	
   

  	
  [*]

  
	
  [*]

  	
   

  	
  [*]

  
	
  [*]

  	
   

  	
  [*]

  
	
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  [*]

  
	
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  [*]

  
	
  [*]

  	
   

  	
  [*]

  
	
  [*]

  	
   

  	
  [*]

  
	
  [*]

  	
   

  	
  [*]

  



 


8.2                                 Sales Milestones.  In addition, Licensee shall pay Cellegy the
following amounts, within [*] after the end of the month in which the relevant
milestone is achieved:


 


(a)                                  [*]


 


(b)                                 [*]


 


(c)                                  [*]


 


8.3                                 Fee Conditions.  Each and every
payment made under this Article shall be independent, non-refundable, and
shall not be considered an advance or credit on any royalties or other
obligation received or owed.


 


ARTICLE 9

REPORTS AND ACCOUNTING


 


9.1                                 Quarterly Reports;
Records. 
During the term of this Agreement after the first Launch Date,  Licensee shall furnish or cause to be
furnished to Cellegy a written report within sixty (60) days following the end
of each preceding calendar quarter (the “Sales Report”) covering such preceding
calendar quarter (the “Sales
Period”) showing:


 


(a)                                  the Net Sales of the
Licensed Product in each country of the Territory during the Sales Period, on a
country-by-country and unit basis; and


 


(b)                                 the exchange rates
used in determining the amount of Net Sales in Dollars, using the exchange
rates normally used by Licensee in its management and financial reporting, provided,
however, that the exchange rates used by Licensee in preparation of the
Sales Report shall not be materially different from the exchange rates posted
in the London edition of the Financial Times
published on the last day of such Sales Period.


 


With respect to sales of Licensed Product invoiced in Dollars, the Net
Sales and sales prices shall be expressed in Dollars.  With respect to sales of Licensed Product
invoiced in a currency other than Dollars, the Net Sales and sales prices shall
be expressed in the domestic currency of the


 


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[*] 
designates portions of this document that have been omitted pursuant to
a request for confidential treatment filed seperately with the Commission


 


 


country where such sale was made together with the Dollar equivalent
calculated using the exchange rates as described in clause (c) above.  Licensee, and its Affiliates and Sublicensees
shall keep contemporaneous, legible, verifiable and accurate records in
sufficient detail to enable the royalties payable hereunder to be determined
and substantiated.  A final Sales Report
shall be due upon the expiration or termination of this Agreement.  Any income or other tax which Licensee is
requested to pay or withhold on behalf of Cellegy with respect to any upfront
or milestone payment shall be deducted from the amount of such upfront and
milestone payments due, provided, however, that in regard to any such deduction
Licensee shall give Cellegy such assistance as may reasonably be necessary to
enable or assist Cellegy to claim appropriate tax credits or exemptions
threrefrom and shall upon request give Cellegy proper evidence from time to
time as to the withholding and payment of the tax.  If Cellegy is unable to claim such an
exemption or recover such amounts that have been deducted or withheld, or if
any restrictions are imposed by a governmental entity in a particular country
in the Territory regarding the payment of milestones or Royalties to companies
outside of such countries, then the Steering Committee shall promptly meet to
agree upon a suitable response.  If the
Steering Committee is unable to agree on a suitable response, then Cellegy may,
in its discretion, discontinue the supply of the Licensed Product to Licensee
for sale in such country.


 


9.2                                 Payment Due Dates.  Amounts shown to have accrued by each Sales
Report provided for hereunder shall be due and payable on the date such Sales
Report is due.  Payment may be made in
advance of such due date.  All payments
due to Cellegy hereunder shall be made in Dollars, delivered to the account(s)
specified by Cellegy from time to time.


 


9.3                                 Right to Audit Licensee.


 


(a)                                  Upon the written
request of Cellegy, at Cellegy’s expense and not more than once in each year,
Licensee and its Affiliates shall permit an independent public accountant
selected by Cellegy or auditor selected by Cellegy and having an obligation of
confidentiality (the “Auditor”)
to have access during normal business hours to those records of Licensee and
its Affiliates as may be reasonably necessary to verify the accuracy of the
Sales Reports furnished by Licensee hereunder in respect of any year ending not
more than twenty four (24) months prior to the date of such request.  Cellegy acknowledges that the Auditor shall
conduct its audit in such a manner so as to not unreasonably interfere with
Licensee’s, its Affiliates’, or Sublicensees’ business.


 


(b)                                 Licensee shall include
in each written sublicense granted by it pursuant to this Agreement a provision
requiring the Sublicensee to keep and maintain records of sales made pursuant
to such Sublicense and to grant access to such records by the Auditor subject to
the same terms and conditions as stated herein.


 


(c)                                  If the Auditor’s
report shows any underpayment of amounts due to Cellegy, Licensee shall remit,
or shall cause its Affiliates or Sublicensees to remit, to Cellegy the amount
of such underpayment within thirty (30) days after Licensee’s receipt of the
Auditor’s report assuming there is no disagreement as to the Auditor’s
calculation; if there is such a disagreement, the result shall be resolved
under Section 18.14 of this Agreement. 
In the event that the amount of any underpayment is in excess of [*] of
the total due to Cellegy with respect


 


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[*] 
designates portions of this document that have been omitted pursuant to
a request for confidential treatment filed seperately with the Commission


 


 


to the period covered by the Auditor’s report, Licensee shall reimburse
Cellegy for the reasonable cost of the audit in which the underpayment was
discovered.  In addition, in the event
that the amount of any underpayment is in excess of [*] of the total amount due
to Cellegy with respect to the period covered by the Auditor’s report, Licensee
shall reimburse Cellegy for the reasonable cost of the next subsequent audit.


 


9.4                                 Disagreement
with Auditor Findings.  If either Party disagrees with the
determination made above by the Auditor and such disagreement over the amount
in question is in excess of [*] then the Party who disagrees with such amount
shall (i) provide written notice to the other Party within thirty (30) days
(ii) discuss such disagreement with the other Party; and (iii) reserve all
rights under Section 18.14 and Article 16 of this Agreement.


 


ARTICLE 10

MARKETING


 


10.1                           General
Promotional Duties.


 


(a)                                  Licensee shall:  (i) at all times display, demonstrate and
otherwise represent the Licensed Product fairly in comparison with other
competitive products or therapies, (ii) shall not make false or misleading
representations to customers or other persons with regard to the Licensed
Product or Cellegy, and (iii) subject to sub-clause (ii), shall not make any
representations with respect to the specifications, features or capabilities of
the Licensed Product which are not consistent with the relevant Approvals.  Licensee, its Affiliates and Sublicensees
shall promote, market and sell the Licensed Product only for the therapeutic
indications for which Approvals are granted in the Territory.


 


10.2                           Marketing
Effort; Minimum Expenditures
for Commercialization.


 


(a)                                  Licensee agrees to
exert its Commercially Reasonable and Diligent Efforts to introduce, promote
and, sell the Licensed Product within the Territory, including, without
limitation, the attainment of the Minimum Sales, and to commence sales of the
Licensed Product in all Major European Countries within [*] following receipt
of Marketing Authorization in such Countries, subject to Section 10.3
below.


 


(b)                                 Licensee shall detail
commercialization expenditures relating to the Development and marketing of the
Licensed Product in the Territory in the Marketing Report as described at Section 4.4
of this Agreement.


 


10.3                           Licensee’s Failure to Commercialize
in the Territory.


 


(a)                                  If Licensee fails to
make commercial sales of the Product in a particular country within the
Territory within (i) [*] in Major European Countries, and (ii) [*] for other
countries in the Territory, for commercial sale in such country, other than
failures caused by (i) the Relevant Regulatory Authority approving a minimum
reimbursement price for sale of the Product in such country that does not permit
the Licensed Product to be economically sold in such country; or (ii) Cellegy’s
inability to supply Licensed Product in a timely manner, or


 


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[*] 
designates portions of this document that have been omitted pursuant to
a request for confidential treatment filed seperately with the Commission


 


(iii) Cellegy’s material breach
of any relevant obligation under this Agreement; (iv) health or safety reasons
relating to the Licensed Product; or (v) the assertion of a proceeding or
lawsuit brought against Licensee by any Third Party that the Intellectual
Property Rights infringe such Third Party’s patent, trade mark, protected
know-how or other intellectual property right that prevents sales of the
Licensed Product in a particular country of the Territory, then Cellegy may,
upon notice to Licensee, terminate all of Licensee’s rights under this
Agreement with respect to the Licensed Product in such country and recapture
all rights granted to Licensee with respect to the Licensed Product in such
country hereunder.  In the event that
rights to the Licensed Product are returned to Cellegy due to a failure to
launch within a particular country within the time frames specified above, a
minimum payment of the Baseline Price multiplied by the number of units of the
Licensed Product equivalent to [*] (based on [*] will be due with respect to
the Major European Countries, and a minimum payment of [*] will be due in any
other country in the Territory. Should price reimbursement approval for the
Licensed Product not be achieved in any country of the Territory the Parties
shall meet to discuss how to proceed.


 


(b)                                 If Licensee decides in
good faith for commercial reasons not to file an application for Approval in a
particular country within the Territory or to pursue commercial launch in that
country following receipt of Marketing Authorization, it shall notify Cellegy
and the Parties shall discuss in good faith the termination of the license
granted in Section 2.1 and the return of all rights to the Licensed
Product to Cellegy within such country.


 


10.4                           Minimum Sales.


 


(a)                                  Licensee shall
achieve agreed annual minimum unit sales of Licensed Product in the Territory representing
[*] (“Minimum Sales”).  The first year’s agreed annual Minimum Sales
figure is set forth in the relevant Marketing Plan in the form delivered by
Licensee to Cellegy as of the Effective Date. 
In the event that all Approvals pursuant to the MRP are not obtained
within [*] following the Launch Date in the first country of the Territory the
Parties shall meet to discuss the Minimum Sales accordingly.


 


(b)                                  If Licensee fails to
achieve the Minimum Sales in a given year then Licensee shall pay to Cellegy [*],
such amount to be paid within [*] following the end of the relevant year.  For the avoidance of doubt this shall be
Cellegy’s sole remedy for Licensee’s failure to achieve the Minimum Sales in
any year, except as provided in paragraph (d) below.  However, in the event Licensee fails to pay
the amount described in the first sentence of this subparagraph within sixty
(60) days following the end of the relevant year this shall constitute material
breach and Cellegy shall be entitled to terminate this Agreement in accordance
with Section 16.2(c).


 


(c)                                  The
Minimum Sales amounts are subject to review and revision as described in Section 11.4
below.


 


(d)                                 At
any time commencing with “Year 3”, if Licensee fails to achieve the minimum sales
set out in the Marketing Plan for any particular country in the Territory, for any
[*] consecutive years, then if the Steering Committee cannot agree (without the
occurrence of a deadlock) on mutually satisfactory modifications to the minimum
sales amounts for such


 


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[*] 
designates portions of this document that have been omitted pursuant to
a request for confidential treatment filed seperately with the Commission


 


 


country, then
Cellegy may, at its option, make the exclusive license granted pursuant to
Sections 2.1 and 2.2 herein a nonexclusive license for the remainder of the
term of this Agreement as it relates to such country in the Territory, except
for the right to use Cellegy Marks granted to Licensee hereunder, which shall
continue to be exclusive for Cellegy’s Mark actually being used in connection
with the Licensed Product, and without limiting the above may import, store,
Develop, have Developed, promote, market, distribute, offer for sale, and sell
the Licensed Product in such country on its own or through a Third Party licensee.


 


ARTICLE 11

MANUFACTURING; SUPPLY OF LICENSED PRODUCT


 


11.1                           Production and Supply of
Product.


 


(a)                                   During the term of
this Agreement or thereafter, Cellegy reserves the right, without obligation or
liability to Licensee, to manufacture, have manufactured, produce, assemble,
warehouse or source the Licensed Product at any worldwide location, including
Canada or any other locations outside of the United States of America and
locations within or outside the Territory as long as such site is EU cGMP approved
and can manufacture according to the Approvals. The Manufacturer shall not
change following Approval without Licensee’s consent, which consent shall not
be unreasonably withheld or delayed, with Licensee being given no less than [*]
notice of any such proposed change.


 


(b)                                   During the term of
this Agreement, Cellegy shall use Commercially Reasonable and Diligent Efforts
to provide an adequate supply of raw materials to Manufacture in order to
fulfill its obligations under this Agreement and supply the Licensed Product to
Licensee in accordance with Licensee’s orders. 
Cellegy agrees to solicit and to allow Licensee’s input and advice on
manufacturing issues that may arise from time to time in relation to the
Licensed Product and will not take any intentional action with regard to the
manufacturing of the Licensed Product that will disadvantage Licensee’s ability
to Develop, use, promote, distribute or sell the Licensed Product in the
Territory.


 


(c)                                  Cellegy shall be
solely responsible for conducting, or having conducted, at its own expense, all
manufacturing activities relating to the Licensed Product.  Licensee agrees that, until terminated by
Licensee as set forth herein, Licensee will purchase from Cellegy (and will not
make or have made) all units of the Licensed Product distributed in the
Territory.


 


(d)                                 If Cellegy is unable
to supply any of the Licensed Product ordered by Licensee in accordance with
the terms of this Agreement for two consecutive requested deliveries, then
Licensee may enter into direct arrangements with the Manufacturer for supply of
the Licensed Product, until such time as Cellegy is able to resume supplying
the Licensed Product.


 


11.2                           Forecasts.


 


(a)                                  Licensee shall, at
least [*] before the Launch Date, provide Cellegy for each country in the
Territory with a first forecast of its estimated requirements for the Product
until


 


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[*] 
designates portions of this document that have been omitted pursuant to
a request for confidential treatment filed seperately with the Commission


 


 


the end of the following calendar year. 
Such forecast shall set forth the quantity of Licensed Product that
Licensee intends to purchase in the current and the following calendar year.  Thereafter, during the term of this
Agreement, Licensee shall provide Cellegy with a quarterly written forecast of
its requirements for the Licensed Product for a rolling [*] period, setting
forth the quantity of Licensed Product (including total unit volume, on a
country-by-country basis), that Licensee intends to purchase in the following [*]
period.  Each such first quarter
projection in the [*] forecast shall constitute a firm commitment order by
Licensee for such quantities of Licensed Product.


 


(b)                                 The forecasts are
subject to review and revision as described in Section 11.3 below.


 


11.3                           Product Packaging and Labeling.


 


(a)                                  Licensee agrees to
provide Cellegy (or, if Cellegy requests, Manufacturer) with all artwork and
package design desired for the Licensed Product in the Territory, and Cellegy
shall procure the Manufacturer’s agreement to pack and label the Licensed
Product pursuant to Licensee’s standard export procedure.


 


(b)                                 Both parties will
cooperate and use Commercially Reasonable and Diligent efforts with the Relevant
Regulatory Authorities to minimize variation between country specific packaging
and labeling requirements.


 


11.4                            Pricing.  In addition to the other payments set forth
above, for so long as Licensee purchases Licensed Product from Cellegy,
Licensee will pay Cellegy the purchase price for Licensed Product as set forth
below.  For each order of Licensed
Product, Licensee shall pay Cellegy within [*] of the receipt by Licensee of
the invoice for such order, such invoice not to be received before the date of delivery
FCA Manufacturer’s premises (Incoterms 2000). 
The purchase price that License shall pay Cellegy for units of the
Licensed Product shall be determined as follows:


 


(a) 
Licensee agrees to pay to Cellegy the greater of either (i) [*] of
Licensee’s Net Sales price for Licensed Product sales in the Territory to Third
Parties (or, where Licensee sells a Licensed Product to an Affilliate or
Sublicensee that resells the Licensed Product to a Third Party at a higher
price, then [*] of such entity’s Net Sales price to such other Third Party) in
arm’s-length transactions, or (ii) [*]  (USD) per [*] tube of Licensed Product (such [*]
price referred to as the “Baseline
Price”).  Licensee agrees
to provide a list of Net Sales prices on a country-by-country and unit basis
within the Territory.  When Licensee
places an order, Cellegy’s invoice for such order shall reflect the Baseline
Price.  Licensee shall include sufficient
information in the Sales Report regarding Licensed Product sales to enable
Cellegy and Licensee to determine whether the amounts described in clause “(i)”
of the first sentence of this subparagraph for sales in the various countries
in the Territory of the Licensed Product purchased in such order were higher,
or lower, than the Baseline Price.  If
such amount for such units of Licensed Product in such countries were higher
than the Baseline Price, then Licensee shall deliver with the Sales Report the
difference between such amount and the Baseline Price.


 


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[*] 
designates portions of this document that have been omitted pursuant to
a request for confidential treatment filed seperately with the Commission


 


 


Conversion of prices into U.S. dollars shall be made as of the end of
the quarter in which the Net Sales occurred.


 


(b)                                  At Licensee’s
request, in the event an equivalent product containing nitroglycerin as the
only active ingredient is launched in any country of the Territory that is in
direct competition with the Licensed Product and is likely to have an adverse
impact on the sales of the Licensed Product, the Parties shall meet to review
the Baseline Price and the Minimum Sales.


 


(c)                                   At Licensee’s
request, the Baseline Price and Minimum Sales will be subject to review by
Cellegy in the event of material fluctuations in currency exchange rates that
become a significant obstacle to the ongoing commercialization of the Licensed
Product within one or more countries in the Territory.


 


(d)                                 The Parties may, by
mutual agreement, such agreement not to be unreasonably withheld, change the
price of the Licensed Product to reflect:


 


(i)                                     a
decrease in any government subsidy for the Licensed Products; or


 


(ii)                                  any change in Cellegy’s
costs of manufacture of Licensed Products (including labor, rent and overheads).


 


The Parties agree to provide such information
as the other Party may reasonably request relating to requests made pursuant to
this Section to change the price of the Licensed Product.


 


(e)                                  Each Party will use
reasonable commercial efforts to notify the other on reasonable notice of any
circumstances, which may give rise to any change to the purchase price for
Licensed Product and provide full details of the circumstances and the proposed
new price.


 


(f)                                    A change to the
price of Licensed Product will be effective [*] or more, as agreed between the
parties, after both parties have agreed in writing to such price change;
provided, however, that if the new Price is higher than the then-current price,
the then-current price will apply to any orders during such [*] period only for
the quantity of Licensed Product that in the aggregate does not exceed the
average monthly quantity of Licensed Product sold during the [*] preceding the
month in which the parties agreed in writing to the new price, and the new price
shall apply to any quantities ordered during such period that are in excess of
such monthly average.


 


(g)                                  Both Parties agree to work in mutual cooperation to
manage the cost, production, packaging, delivery and availability of the
Licensed Product for sale in the Territory.


 


(h)                                 If the Parties
mutually agree in writing to additional package size(s) or to replace the 30gm
tube, then the Parties shall in good faith mutually agree on a pricing formula
and purchase prices for such additional or different package size(s) similar to
that established for the 30gm tube, utilizing assumptions similar to those
underlying the pricing determinations set


 


25





















 


forth above.  If the Parties are
unable to agree, then the dispute shall be resolved by binding arbitration as
provided in this Agreement at Section 18.14.


 


11.5                           Cellegy Report.  Cellegy
agrees to provide an inventory status report on a monthly basis that details
the number of units of the Licensed Product in manufacturing, finished goods,
in-transit and on order.


 


11.6                           Timing of Firm
Orders. 
Firm orders from Licensee for the Licensed Product shall be placed at
least four (4) months before delivery date by fax or email indicating the
ordered quantities of the Licensed Product, the designated country, labeling,
packaging the desired date and place of delivery.  Licensee and Cellegy will use all
Commercially Reasonable and Diligent Efforts to agree to establish ordering
quantities that will facilitate minimum ordering patterns to suit manufacturing
requirements so that orders are placed in minimum quantities that are set to
match reasonable minimum lots sizes announced by Manufacturer of the Licensed
Product.  An order shall not be
cancelable by Licensee, and if Licensee fails to make purchases provided for in
an order, Licensee shall be responsible for the price of the order except in
the case of Defective Product under Section 11.11.


 


11.7                            Delivery.  Licensee shall promptly provide to Cellegy,
upon Cellegy’s request, confirmation that all Approvals necessary to import and
sell the Licensed Product in the Territory have been obtained.  If such evidence is not received by Cellegy
upon request, Cellegy shall be entitled to hold shipment of the Licensed
Product until such evidence is received. 
Cellegy shall use Commercially Reasonable and Diligent Efforts to
deliver the quantity of the Licensed Product ordered firm and properly
according to this Agreement by Licensee as far as the ordered quantities comply
with the respective forecast and provided that Cellegy did not reject the
respective forecast within one month after receipt of the respective
forecast.  However, notwithstanding
anything else in this Agreement, Cellegy shall not be bound to deliver
quantities exceeding twenty-five percent (25%) of the respective forecast for
the second quarter of each projection period, but shall use all Commercially
Reasonable and Diligent Efforts to deliver in the required quantities.  The Licensed Product required to be supplied by Cellegy during a
particular month shall be shipped no later than the last day of that month and
in accordance with a schedule agreed upon in writing between Licensee and
Cellegy. In the event that Cellegy anticipates a forward supply
issue and/or experiences a back order, Cellegy will promptly notify Licensee
and provide written notice of the delay, projected time to remedy the issue and
any impact the back order is expected to have on Cellegy’s ability to maintain
adequate supply of the Licensed Product to meet demand in the Territory.


 


11.8                           Title and Risk of
Loss. 
All Licensed Product shall be delivered F.C.A.  Manufacturer’s premises (Incoterms
2000).  Title to Licensed Product and all
risk of loss shall pass from Cellegy to Licensee at the time and place of such
delivery by Cellegy, notwithstanding that Cellegy may retain rights of
possession or repossession to ensure collection of the purchase price
thereof.  Licensee shall be solely
responsible for insuring Licensed Product after such delivery.


 


11.9                           Export Controls.  Cellegy’s obligation to sell and deliver
Licensed Product to Licensee shall be subject in all respects to such laws and
regulations of the United States of


 


26





















 


America, Canada and the Territory as shall from time to time govern,
respectively, the sale and delivery of goods abroad by persons subject to the
jurisdiction of the United States of America and Canada and the sale and
delivery of goods in the Territory. 
Subject to the right of the Licensee to export, re-export or transship
any of the Licensed Product to another country within the Territory, Licensee
shall not directly or indirectly export, re-export or transship any of the
Licensed Product, except as shall be permitted by the laws and regulations of
the United States of America, Canada and the Territory in effect from time to
time.  Upon the reasonable request by
Cellegy, Licensee shall give written assurances against such export, re-export
or transshipment.


 


11.10                     Manufacture
and Supply Warranty.


 


(a)                                  Cellegy represents
and warrants to Licensee that the Licensed Product manufactured and supplied
under this Agreement will upon delivery and for the duration of shelf life: (1)
conform to the approved specifications for the Licensed Product contained in
the relevant Approvals; (2) be manufactured, tested, and (subject to Licensee’s
contributions under (11.3) labeled and packaged in accordance with the
Approvals relating to the manufacture, labeling, packaging and testing of the
Licensed Product; and (3) will be manufactured in accordance with GMP.


 


(b)                                 Warranty
Limitation; Disclaimer.  Except as
expressly set forth in this Agreement, the sole warranty given by Cellegy
regarding any Licensed Product shall be that written limited warranty, if any,
which shall accompany such Licensed Product or which shall otherwise be
designated in writing by Cellegy as applicable to such Licensed Product, as the
same may be revised by Cellegy from time to time.  After the initial commercial launch of the
Licensed Product, subsequent changes to the written limited warranty must be
approved by Licensee, which approval shall not be unreasonably withheld.  THE WRITTEN
LIMITED WARRANTY, IF ANY, APPLICABLE TO ANY PARTICULAR PRODUCT SHALL STATE THE
FULL EXTENT OF CELLEGY’S LIABILITY, WHETHER DIRECT OR INDIRECT, SPECIAL OR
CONSEQUENTIAL, RESULTING FROM ANY BREACH OF SUCH WARRANTY.  EXCEPT AS EXPRESSLY SET FORTH IN THIS
AGREEMENT WITH RESPECT TO WARRANTIES MADE TO LICENSEE, CELLEGY FURTHER
DISCLAIMS ALL EXPRESS, STATUTORY AND IMPLIED WARRANTIES APPLICABLE TO THE
LICENSED PRODUCT.


 


11.11                     Defective Product.


 


(a)                                  If Licensee notifies
Cellegy within forty-five (45) days of the date of arrival in the Territory of
any shipment of the Licensed Product that Licensee believes any of the Licensed
Product does not conform to the warranties set out in Section 11.10, as
limited by Section 3.1, on QC inspection on arrival in the Territory (the “Defective Product”),
the Parties agree to consult with each other in order to resolve the issue. If
a recall is based upon any Relevant Regulatory Authority objection or concern,
Cellegy will cooperate fully and expediently to assist Licensee in meeting the
objections and concerns of such Relevant Regulatory Authority.


 


27





















 


(b)                                 If such consultation
does not resolve the discrepancy within a further forty-five (45) days from
receipt of the notice, the parties agree to nominate an independent analyst,
acceptable to both parties (the “Independent Analyst”), that will carry out
tests on representative samples taken from such shipment, and the results of
such tests will be binding on the parties.


 


(c)                                  If the Independent
Analyst determines that the Defective Product does not conform to the
warranties set out in Section 11.10 (as limited by Article 3.1),
Cellegy will, at its expense, replace any such Defective Product and reimburse
Licensee for the costs of the Independent Analyst.


 


(d)                                 If the Independent
Analyst determines that the Defective Product does conform to the warranties
set out in Section 11.10 (as limited by Section 3.1), then Licensee
will reimburse Cellegy for the costs of the Independent Analyst.


 


(e)                                  In the case of
Defective Product being supplied to Licensee Cellegy shall use Commercially
Reasonable and Diligent Efforts to ensure that Licensee is provided with
replacement Licensed Product to ensure the continued supply of Licensed Product
in the Territory.


 


11.12                     Recalls.


 


(a)                                  Subject to Licensee’s
right to initiate a Licensed Product recall pursuant to subparagraph (b) below,
the Parties may by mutual written agreement recall any quantity of Licensed
Product at any time, and Licensee will administer any such recall in the
Territory.


 


(b)                                 If the Relevant Regulatory Authority requires or otherwise initiates a
recall of the Licensed Product for any reason whatsoever, Licensee will
immediately administer the recall.


 


(c)                                  The parties may submit a sample of the Licensed Product to an
Independent Analyst for a report.  The
cost of the report of the Independent Analyst will be paid by the party against
which the report is unfavorable.


 


(d)                                 If
an Independent Analyst finds that the sole reason for the recall of the
Licensed Product is the action or inaction of Cellegy, then Cellegy will be
liable for the cost of the recall and will reimburse Licensee for all
reasonable costs and expenses of such recall and will provide replacement
quantities of Licensed Product, free of charge. 
If an Independent Analyst finds that the sole reason for the recall of
the Licensed Product is the action or inaction of Licensee, then Licensee will
be liable for all such costs and expenses and will reimburse Cellegy for all
reasonable costs and expenses (and the cost of any replacement quantities of
Licensed Product) incurred by Cellegy in connection with such recall.  If an Independent Analyst finds that the
action or inaction of both Cellegy and Licensee were reasons for the recall,
then Cellegy and Licensee will each be responsible for one-half of such costs
of the recall unless the report of the Independent Analyst allocates
responsibility in a different proportion.


 


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ARTICLE 12

PATENT RIGHTS


 


12.1                           No Ownership By Licensee.  Licensee shall not be deemed by anything
contained in this Agreement or done pursuant to it to acquire any right, title
or interest in or to the Cellegy Patent Rights or any patent owned by or licensed
to Cellegy now or hereafter covering or applicable to any Licensed Product, nor
in or to any invention or improvement, owned by Cellegy, now or hereafter
embodied in the Licensed Product, whether or not such invention or improvement
is patentable under the laws of any country.


 


12.2                           New
Cellegy Inventions/Improvements
to the Licensed Product.  If Cellegy develops and commercially offers:


 


(a)                                  any
improvements in terms of dosage, route of administration or formulation of the
Licensed Product for the same indication; or


 


(b)                                 any improvement in
terms of dosage, route of administration or formulation of any product derived
from the Licensed Product for the same indication; then


 


such improvements shall be included within the definition of Licensed
Product herein at no additional costs to Licensee.


 


12.3                           Improvements
by Licensee.  If, during the term of this Agreement or
within one (1) year after the date of its termination, Licensee or any
Sublicensee invents or designs any improved Licensed Product or any associated
method, apparatus, equipment or process related to or having application to the
Licensed Product, or makes an improvement thereon, whether or not patented or
patentable in any jurisdiction, Licensee shall make or cause a prompt and full
disclosure to Cellegy of such invention, design or improvement (“Licensee Improvement”),
and hereby irrevocably transfers, conveys and assigns to Cellegy all of its
right, title and interest therein. 
Licensee shall execute such documents, render such assistance, and take
such other action as Cellegy may reasonably request, at Cellegy’s expense, to
apply for, register, perfect, confirm, and protect Cellegy’s rights
therein.  Cellegy shall have the
exclusive right to apply for or register any patents or other proprietary
protections with respect thereto.  Such
Licensee Improvements shall be licensed back from Cellegy to Licensee as, and
shall be deemed part of, the Licensed Product, at no additional cost to
Licensee.


 


ARTICLE 13

CELLEGY MARKS 


 


13.1                           Use of Cellegy Marks by
Licensee. 
Licensee, its Affiliates and Sublicensees will have the exclusive right
to use Cellegy’s Mark RectogesicTM in the Territory in connection with the
importation, storage, Development, promotion, marketing, distribution and sale
of Licensed Product.  In such event,
Licensee and its Affiliates (and Sublicensees) shall use Cellegy’s Marks only
in the form and manner prescribed by Cellegy. 
In no event shall Licensee use any of Cellegy’s Marks or any similar
mark or term as part of its business name. 
Should RectogesicTM not be registered or registerable by Cellegy in all
countries of the Territory, then Cellegy may


 


29





















 


notify Licensee that another Cellegy trademark will be used; and if no
such marks are registered or registerable by Cellegy in all countries of the
Territory, then Licensee may propose an alternative trade mark/s for Cellegy’s
approval, such approval not to be unreasonably withheld or delayed. Cellegy
shall apply for and maintain such alternative trade mark at Cellegy’s sole
expense and such alternate trade mark shall become a Cellegy Mark under the terms
of this Agreement.


 


13.2                           Acknowledgment
of Ownership.  Licensee acknowledges that


 


(a)                                  Cellegy owns Cellegy’s
Marks and all goodwill associated with or symbolized by Cellegy’s Marks;


 


(b)                                 Licensee has no
ownership right in or to any of Cellegy’s Marks; and


 


(c)                                  Licensee shall
acquire no ownership interest in or to any of Cellegy’s Marks by virtue of this
Agreement.  Licensee shall do nothing
inconsistent with Cellegy’s ownership of Cellegy’s Marks and related goodwill,
shall not directly or indirectly contest the validity of or Cellegy’s rights in
the Cellegy Marks, and agrees that all use of Cellegy’s Marks by Licensee shall
inure to the benefit of Cellegy.  Nothing
in this Agreement shall be deemed to constitute or result in an assignment of
any of Cellegy’s Marks to Licensee or the creation of any equitable or other
interests therein.  Licensee shall not
use any of Cellegy’s Marks in any manner as a part of its business, corporate
or trade name.


 


13.3                           Marking.  Licensee shall mark all advertising, promotional
or other materials created by it and bearing any of Cellegy’s Marks (the “Licensee Material”)
with such notices as Cellegy may reasonably require, including, but not limited
to, notices that Cellegy’s Marks are trademarks of Cellegy and are being used
with the permission of Cellegy.


 


13.4                           Registration.  Cellegy shall have the sole right to take
such action as it deems appropriate to obtain trademark registration in the
Territory for any of Cellegy’s Marks.  If
it shall be necessary for Licensee to be the applicant to effect any such
registrations, Licensee shall cooperate with Cellegy to effect any such
registrations, and hereby does assign all of its right, title and interest in
and to each such application, and any resulting registration, to Cellegy, and
shall execute all papers and documents necessary to effectuate or confirm any
such assignment.  Licensee shall perform
all reasonable and necessary acts and execute all necessary documents to affect
the registration of Cellegy’s Marks as Cellegy may request, all at Cellegy’s
sole expense.  Licensee shall not obtain
or attempt to obtain in the Territory, or elsewhere, any right, title or
interest, registration, or otherwise, in or to Cellegy’s Marks, or any of
them.  In the event that any such right,
title or interest should be obtained by Licensee in contravention hereof,
Licensee shall hold the same on behalf of Cellegy and shall transfer the same
to Cellegy upon request and without expense to Cellegy.


 


13.5                           Termination of Use.  Upon expiration or earlier termination of
this Agreement, Licensee shall cease using Cellegy’s Marks in any manner,
either similar or dissimilar to the use enumerated above.


 


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13.6                           Trademarks.  Licensee further agrees not to use any
Cellegy marks in connection with any products other than the Licensed
Product.  Licensee also will include the
appropriate trademark notices when referring to any Licensed Product in
advertising and promotional materials. 
Licensee covenants and warrants that Licensee’s use of Cellegy’s Marks
or other trademarks, trade names, logos and designations of Cellegy on any
Licensed Product, Licensed Product packaging or labels, or related materials
that Licensee or its Agents prepare or use will be in accordance with Cellegy’s
reasonable intellectual property policies in effect from time to time,
including but not limited to trademark usage and cooperative advertising
policies.  Licensee agrees not to attach
any additional trademarks, trade names, logos or designations to any Licensed
Product except in compliance with such policies or otherwise with Cellegy’s
prior written consent, which shall not be unreasonably delayed or
withheld.  Licensee will include on each
Licensed Product that it distributes, and on all containers and storage media
therefor, all trademark, copyright and other notices of proprietary rights
included by Cellegy on such Licensed Product. 
Licensee agrees not to alter, erase, deface or overprint any such notice
on anything provided by Cellegy. 
Licensee also will include the appropriate trademark notices when
referring to any Licensed Product in advertising and promotional
materials.  Licensee shall submit to Cellegy
for its prior written approval (which shall not be unreasonably delayed or
withheld) and before any use is made thereof, representative samples of the
initial Licensed Product, packages, containers, and advertising or promotional
materials bearing any of Cellegy’s Marks which Licensee or its Sublicensees
prepare, but need not seek prior approval for subsequent uses of such materials
that are in compliance with Cellegy’s policies. 
Licensee shall also submit to Cellegy for its prior written approval
(which shall not be unreasonably delayed or withheld) any such materials that
may not be consistent with Cellegy’s intellectual property policies in effect
from time to time, and Cellegy shall use all reasonable efforts to respond
promptly to give its approval or indicate the respects in which changes are
required in light of Cellegy’s policies. 
Cellegy and Licensee shall cooperate with each other and use reasonable
efforts to protect the Cellegy Marks from infringement by Third Parties.


 


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ARTICLE 14

INFRINGEMENT; INDEMNIFICATION AND OTHER CLAIMS


 


14.1                           Infringement
of Intellectual Property
Rights.  In the event Cellegy or Licensee have reason
to believe that a Third Party may be infringing or diluting, as the case may
be,  Intellectual Property Rights or
misappropriating the Licensed Product, such Party shall promptly notify the
other Party.  Cellegy may, in its
discretion, elect to enforce the Intellectual Property Rights through legal
action or otherwise, and Licensee agrees to reasonably cooperate with Cellegy
in such enforcement subject to reimbursement of its reasonable out-of-pocket
expenses together with any reasonable attorneys fees incurred in connection
therewith.  In the event Cellegy elects
not to enforce the Patent Rights relating to the Licensed Product within sixty
(60) days after notice of the possible infringement or dilution, and Licensee
can demonstrate that the potential infringement or dilution is reasonably
likely to result in material lost sales of the Licensed Product within the
applicable country, then Licensee may institute a lawsuit or other such actions
at its expense to prevent continuation of such potential infringement or
dilution, and then Licensee will retain all award, damages or compensation
obtained by Licensee in such suit, except that Cellegy shall receive a portion
equivalent to the amounts it would have received in accordance with the terms
of this Agreement as if such amount were Net Sales by Licensee of units of
Licensed Product ordered by Licensee from Cellegy.  Cellegy will provide reasonable cooperation
with respect to any lawsuit which Licensee may bring pursuant to this Article,
subject to reimbursement of its reasonable out-of-pocket expenses and
reasonable attorneys fees in connection therewith.  Licensee shall not enter into any settlement
or compromise of any such claim without the prior written consent of Cellegy,
which shall not be unreasonably delayed or withheld.


 


14.2                           Alleged
Infringement of Third Party
Intellectual Property Rights.


 


(a)                                  If a claim or lawsuit is brought against
Licensee alleging infringment of any patent or infringement or dilution of any
trademark owned by a Third Party arising from Licensee’s importation, storage,
Development, promotion, marketing, distribution and sale of the Licensed
Product or use of proprietory rights, Licensee shall provide to Cellegy all
information in Licensee’s possession regarding such claim or lawsuit. Within a
reasonable time after receiving notice of such claim or lawsuit, but in any
event within sixty (60) days after receiving such notice, Cellegy shall advise
Licensee of Cellegy’s decision as what action it plans to take to dispose of
such claim or defend such lawsuit.


 


(b)                                 If Cellegy elects not to dispose of such
claim or defend such lawsuit, Licensee may defend the claim or lawsuit.  Licensee shall not enter into any settlement
or compromise of any such claim or lawsuit without the prior written consent of
Cellegy, which shall not be unreasonably delayed or withheld.  For the purpose of Licensee’s conduct of the
claim or defense, Cellegy shall furnish to Licensee such reasonable assistance
as Licensee may need and from time to time reasonably request.


 


14.3                           Product Liability Claims.  Licensee shall immediately notify Cellegy in
writing of any product liability claim or action brought with respect to the
Licensed Product based on alleged defects in the manufacture or supply of the
Licensed Product or other adverse claim


 


32





















 


regarding the Licensed Product (a “Product Liability Claim”).  Upon receiving such written notice, Cellegy
shall assume and have sole control of the defense of any such claim or action,
including the power to conduct and conclude any and all negotiations,
compromises or settlements.  Licensee
shall comply with all reasonable requests from Cellegy for information,
materials or assistance, with respect to the conduct of such defense at Cellegy’s
expense.  Cellegy shall be responsible
for payment of all claims, except those arising from the negligence or willful
default of Licensee, and all legal expenses and costs incurred in that
regard.  Nothing in this Article shall
be construed as requiring Cellegy to conduct and/or assume Licensee’s
independent defense against any claim or action, if such claim or action
involves the independent conduct, acts or omissions of Licensee for Product
Liability Claims or actions brought with respect to design or manufacturing
defects in the Licensed Product.


 


14.4                           Notice from Licensee.  Licensee shall promptly notify Cellegy of any
potential or actual litigation or governmental activity in the Territory
relating to the Licensed Product or the business operations of Licensee or
Cellegy.  Licensee shall provide such
notice within ten (10) days from the time that Licensee learns of such
litigation or activity.


 


14.5                           Indemnification.


 


(a)                                  Cellegy assumes all
risk of loss and indemnifies and holds harmless Licensee, its Affiliates,
Sublicensees and their respective directors, officers and employees from and
against any and all Loss arising from or incidental to or relating to any
claim, demand, lawsuit, action or proceeding (a “Claim”) arising from or relating to:


 


(i)                                     any claim or
lawsuit which relates to or arises out of the alleged infringement by Licensee
of any patent or trademark owned by a Third Party to the extent that the
alleged infringement relates to actions covered by the Exclusive License
granted to Licensee under Section 2.1 of this Agreement;


 


(ii)                                  the importation,
storage, Development, promotion, marketing, distribution or sale of the Licensed
Product based on action or inaction of Cellegy;


 


(iii)                               a Product Liability
Claim based on action or inaction of Cellegy; or


 


(iv)                                any negligence or
willful default of Cellegy relating to the Licensed Product or this Agreement;
or any material breach by Cellegy of any representation or warranty given in
this Agreement.


 


(b)                                 Licensee assumes all
risk of loss and indemnifies and holds harmless Cellegy from all Loss arising
from or incidental to or relating to any claim, action or proceeding arising
from or relating to:


 


(i)                                       the importation,
storage, Development, promotion, marketing, distribution, or sale, of the
Licensed Product based on action or inaction of Licensee, Affiliates,


 


33





















 


Sublicensees or their respective directors, officers and employees
(Licensee and such other Persons sometimes referred to as “Licensee Indemnified Persons”);


 


(ii)                                  any
Product Liability claim based on action or inaction of any Licensee Indemnified
Person;


 


(iii)                               any
breach by any Licensee Indemnified Person of any representation or warranty
given in this Agreement; any negligence or willful default of any Licensee
Indemnified Person relating to the Licensed Product or this Agreement; or


 


(iv)                              any
material breach by Licensee of any representation or warranty given in this
Agreement.


 


(b)                                 Licensee
shall give Cellegy written notice (a “Notice of Claim”) promptly after Licensee
becomes aware of the assertion, whether orally or in writing, of a Claim
brought by a Third Party (in each such case, a “Third-Party Claim”) that may require
indemnification pursuant to this Agreement. Each Notice of Claim by a party
hereunder will contain the following information:


 


(i)                                     that
the Person has incurred, paid or accrued or, in good faith, believes it will
have to incur, pay or accrue, Losses and, if reasonably determinable at the
time, a good faith estimate of the aggregate amount of Losses arising from such
Claim (which amount may be the amount of damages claimed by a third party in
the Claim); and


 


(ii)                                    A
BRIEF DESCRIPTION, IN REASONABLE DETAIL (TO THE EXTENT REASONABLY AVAILABLE TO
THE PARTY), OF THE FACTS, CIRCUMSTANCES OR EVENTS GIVING RISE TO THE ALLEGED
LOSSES BASED ON THE PARTY’S GOOD FAITH BELIEF THEREOF, INCLUDING THE IDENTITY
AND ADDRESS OF ANY THIRD-PARTY CLAIMANT AND COPIES OF ANY FORMAL DEMAND OR
COMPLAINT, THE AMOUNT OF LOSSES, THE DATE EACH SUCH ITEM WAS INCURRED, PAID OR
ACCRUED, OR THE BASIS FOR SUCH ANTICIPATED LIABILITY, AND THE SPECIFIC NATURE
OF THE BREACH TO WHICH SUCH ITEM IS RELATED.


 


ARTICLE 15

CONFIDENTIALITY


 


15.1                           Treatment
of Confidential Information.  Except as otherwise provided in this Article 15,
during the term of this Agreement and for a period of five (5) years
thereafter, Licensee and its Affiliates will retain in confidence and use only
for purposes of this Agreement any information, data, and materials supplied by
Cellegy or on behalf of Cellegy to Licensee and its Affiliates under this
Agreement, and Cellegy will retain in confidence and use only for purposes of
this Agreement any information, data, and materials supplied by Licensee or on
behalf of Licensee to Cellegy under this Agreement.  For purposes of this Agreement, all such
information and data which a party is obligated to retain in confidence shall
be called


 


34





















 


“Confidential
Information.”  For the
avoidance of doubt, Cellegy Information shall constitute Confidential
Information of Cellegy.


 


15.2                           Right to Disclose.  To the extent it is reasonably necessary or appropriate
to fulfill its obligations or exercise its rights under this Agreement or any
rights which survive termination or expiration hereof, Licensee may disclose
Confidential Information to its Affiliates, Sublicensees, consultants, outside
contractors, clinical investigators or other Third Parties on condition that
such entities or persons agree in writing (a) to keep the Confidential
Information confidential for the same time periods and to the same extent as
Licensee is required to keep the Confidential Information confidential and (b)
to use the Confidential Information only for such purposes as Licensee is
entitled to use the Confidential Information. 
Each Party or its Affiliates or sublicensees may disclose such
Confidential Information to government or other regulatory authorities to the
extent that such disclosure (i) is reasonably necessary to obtain Approvals; or
(ii) is otherwise legally required.


 


15.3                           Release
From Restrictions.  The foregoing obligations in respect of
disclosure and use of Confidential Information shall not apply to any part of
such Confidential Information that the non-disclosing party, or its Affiliates
(all collectively referred to as the “Receiving Party”) can demonstrate by
contemporaneously prepared written evidence:


 


(a)                                  is or becomes part of
the public domain other than by acts of the Receiving Party in contravention of
this Agreement;


 


(b)                                 is disclosed to the
Receiving Party or its Affiliates or Sublicensees by a Third Party, provided
such Confidential Information was not obtained by such Third Party directly or
indirectly from the other party under this Agreement;


 


(c)                                  prior to disclosure
under this Agreement, was already in the possession of the Receiving Party or
its Affiliates or Sublicensees, provided such Confidential Information was not
obtained, directly or indirectly, from the other party under this Agreement; or


 


(d)                                 results from research
and development by persons who have not had access to the disclosures made to
Receiving Party under this Agreement, including any information obtained
through the testing, manufacturing regulatory approval, or distribution of the
Licensed Product, or other activities undertaken in connection with this
Agreement by the Receiving Party.


 


15.4                           Confidentiality
of Agreement.  Except as otherwise required by law or the
terms of this Agreement or mutually agreed upon by the Parties, each Party
shall treat as confidential the terms, conditions and existence of this
Agreement, except that each Party may disclose such terms and conditions and
the existence of this Agreement to its Affiliates,  sublicensees, 
and shareholders to the extent required by the any corporate laws, and
provided, that each Party shall seek confidential treatment of the key business
terms contained in this Agreement, including but not limited to all payments
owed hereunder.  Upon the execution of
this Agreement, the Parties shall draft a joint press release, the text of such
shall be mutually agreeable to each Party, announcing the execution of the
Agreement.


 


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15.5                           Return
of Confidential Information.  Upon termination of this Agreement with
respect to the entire Territory, the Parties and Affiliates and sublicensees
shall return all Confidential Information of the other Party, in their
possession along with a certification that they no longer possess any such
Confidential Information.


 


15.6                           Previous
Confidentiality Agreements.  Confidential information disclosed by either
Party to the other Party or its Affiliates prior to the Effective Date of this
Agreement under any written agreement executed by Cellegy and Licensee shall be
treated as Confidential Information under Section 15.1 notwithstanding
expiration of such prior Confidentiality Agreement.


 


ARTICLE 16

TERM; TERMINATION


 


16.1                           Term.  Unless terminated sooner pursuant to this Article 16,
this Agreement shall become effective as of the Effective Date and shall
continue in full force and effect in each country until the later of (i) the
date of expiration of the last to expire of the Cellegy Patent Rights in a
particular country (or, for countries in which none of Cellegy’s Patents are
filed or in which Cellegy Patents have been revoked or are otherwise not in
effect, the date of the last to expire of Cellegy’s Patents in the last country
in the Territory) or (ii) ten years from the Launch Date, determined on a
country-by-country basis and by indication. 
Such termination may be made with respect to one or more countries of
the Territory without affecting the rest of this Agreement or the Exclusive
License granted hereunder in any other country of the Territory.


 


16.2                           Bilateral
Termination Rights.  Either Party may terminate this Agreement in
whole or in part upon the occurrence of any of the following:


 


(a) The other Party becomes the subject of
voluntary bankruptcy or insolvency case; or


 


(b) The other Party becomes the subject of an
involuntary bankruptcy or insolvency case that is not dismissed within ninety
(90) days; or


 


(c) Upon or after the material breach of any
provision of this Agreement by the other Party, if such material breach is not
cured (if such default is capable of cure) within thirty (30) days after
written notice thereof to the Party in default.


 


16.3                            Cellegy’s Right to Terminate.  Cellegy may terminate this Agreement with
immediate effect upon written notice to Licensee if a Change in Control of
Licensee shall occur, PROVIDED THAT this shall not apply in the case whereby
Licensee or its Affiliates undergoes an initial public offering of its stock on
a recognized stock exchange.  Subject to
the aforesaid provision, for purposes of this Article, a “Change in Control”
means (i) any reorganization, consolidation, merger, tender offer, purchase of
stock or similar transaction or series of related transactions (each, a “combination transaction”)
in which Licensee (or any direct or indirect parent entity of Licensee (a “Parent”)) is a
constituent corporation or is a party if, as a result of


 


36





















 










[*] 
designates portions of this document that have been omitted pursuant to
a request for confidential treatment filed seperately with the Commission


 


 


such combination transaction, the voting securities of Licensee (or any
Parent) that are outstanding immediately before the consummation of such
combination transaction (other  than any such securities that are
held by an “Acquiring Stockholder”, as defined below) do not represent, or are not converted into,
securities of the surviving corporation of such combination transaction (or
such surviving corporation’s parent or other Affiliate)  that, immediately after the consummation of
such combination transaction, together possess at least a majority of the total
voting power of all outstanding securities of such surviving corporation (or
its parent or other Affiliate, if applicable) that are outstanding immediately
after the consummation of such combination transaction,
including securities of such surviving corporation (or its parent or other
Affiliate, if applicable) that are held by the Acquiring Stockholder; or (ii) a
sale of all or substantially all of the assets or the business of the Licensee
(or any Parent), if, and only if, in each of the above cases, the acquiring
entity (or its parent or other Affiliate) engages in the development,
distribution, or sale of Competing Licensed Products.  For purposes of this Article, an “Acquiring Stockholder”
means a stockholder or stockholders of the Licensee (or any Parent) that (i)
merges or combines with the Licensee (or any Parent) in such combination
transaction or (ii) owns or controls a majority of another corporation that
merges or combines with the Licensee (or Parent) in such combination
transaction.  Licensee agrees to use its
Commercially Reasonable and Diligent Efforts to notify Cellegy at least thirty
(30) days before any such Change in Control.


 


16.4                           Licensee’s Right to Terminate.  Licensee may terminate this Agreement; (i)
immediately on written notice on health or safety grounds in relation to the
Licensed Product; (ii) immediately on written notice if Approvals is not
obtained, through no fault of Licensee, in all Major European Countries within [*]
of MRP being initiated; (iii) on [*] written notice to Cellegy should it no
longer be economically viable to market the Licensed Product, based on Licensee’s
reasonable opinion and determined on a country by country basis; or (iv) [*] if
a claim by any Third Party that the Intellectual Property Rights infringe such
Third Party’s patent, trade mark, protected know-how or other intellectual
property right is made against Licensee and which either (A) prevents use of
the Licensed Product in any country of the Territory for a period of [*] or
(B)  is not being challenged by either
Party pursuant to Article 14 in relation to such country.


 


16.5                           Rights
Upon Termination or Expiration.  Termination of this Agreement shall not
extinguish debts and other obligations created or arising between the Parties
by virtue of contracts or arrangements entered into hereunder before the
effective date of termination of this Agreement (the “Termination Date”).  Without limiting the generality of the
foregoing, upon and following the Termination Date:


 


(a)                                  Licensee shall not be
relieved of its obligation to (i) pay for Licensed Product delivered by Cellegy
prior to the Termination Date, or (ii) accept and pay for all Licensed Product
covered by orders received and accepted by Cellegy prior to the Termination
Date.  Cellegy shall be obligated to
complete all orders received and accepted prior to the Termination Date,
provided that Cellegy receives reasonable assurance of payment.  In each such case, Licensee shall be
permitted to store, promote, sell and distribute such Licensed Product as well
as any Licensed Product in Licensee’s inventory within the Territory, subject
to the provisions of paragraph (h) below and provided that Licensee shall not
sell or otherwise dispose


 


37





















 


any of the Licensed Product in bulk, in any non-customary manner or
otherwise circumvent its regular customers.


 


(b)                                 Licensee
shall cooperate with Cellegy to allow for the orderly transfer of Approvals
within the Territory to Cellegy or its designee upon request and without
expense to Cellegy.  Licensee shall
provide Cellegy with (i) full and immediate access to and copies of all
marketing and sales information and other materials pertaining to the Licensed
Product, including, without limitation, customer lists, past sales history and
Licensed Product pricing information, 
and (ii) any inventions or other materials or rights required to be
assigned to Cellegy pursuant to this Agreement. 
Notwithstanding any other term or provision of this Agreement, effective
upon the Termination Date, Licensee shall execute any documents that are necessary
to transfer to Cellegy, or Cellegy’s designee, all Approvals or intellectual
property which are then in the name of and/or held by Licensee and which relate
to the marketing or sale of the Licensed Product (the “Relevant Documents”).  In the event that full Approvals for any
Licensed Product in the Territory are not completed before any transfer of
operations pursuant to this Article, Licensee shall also transfer to Cellegy or
Cellegy’s designee, free of any charge, the Cellegy Information and all the
data submitted to the Relevant Regulatory Authorities therefor.  At Cellegy’s request, Licensee shall
authorize Cellegy’s nominee, without any delay, to perform all the required
activities in order to obtain the transfer of such permits and registration rights.  If Licensee fails to execute the Relevant
Documents, it hereby appoints Cellegy as its agent and authorizes Cellegy to
act on its behalf, in order to execute all Relevant Documents.  Licensee, its Affiliates and Sublicensees
shall terminate any use of the Cellegy Marks and shall, at Cellegy’s option,
either destroy or return to Cellegy at Licensee’s cost all literature, labels,
or other materials, incorporation or bearing same.


 


(c)                                  Each party shall
cease to use any of the other party’s Confidential Information relating to or
in connection with its continued business operations and shall promptly return
or assign to the other party any and all physical, written and descriptive
matter (including all reproductions and copies thereof) containing that party’s
Confidential Information,
provided that each party may:


 


(i)                                     provide one copy of the other party’s
Confidential Information to its legal advisers to be held by them solely for
the purpose of determining the scope of that party’s obligations under this
clause;


 


(ii)                                  retain one copy of such of the other
party’s Confidential Information that is required by the Relevant Regulatory
Authorities in the Territory, to be retained by that party; and


 


(iii)                               retain
any documents confidential to it (including board papers, strategic plans and
operational reviews) in which the other party’s Confidential Information is
incorporated, provided that such confidential information shall continue to be
treated as Confidential Information hereunder.


 


38





















 


(e)                                  Upon expiration or
termination for any reason, the obligations of confidentiality and use of
Confidential Information under Article 15 shall survive for the period
provided therein;


 


(f)                                    Upon expiration or
termination for any reason, Articles 14 and 16 of this Agreement shall survive
for the maximum duration permitted by law;


 


(g)                                 Articles 5, 8 and 9
shall survive until all outstanding payment obligations and reporting
obligations of Licensee and its Affiliates and Sublicensees have been
fulfilled, and Sections 9.3 and 9.4 shall survive for two years following the
year in which such or expiration became effective; and


 


(h)                                 Cellegy shall have the
right to repurchase all then-current inventory of the Licensed Product then in
Licensee’s possession, at the landed cost paid by Licensee for such inventory
(including delivery, insurance and any applicable import/export taxes paid
thereon).


 


ARTICLE 17

REGISTRATION OF LICENSE; LIMITATION OF LIABILITY


 


17.1                           Registration.  Licensee may, at its expense, register the
exclusive license granted under this Agreement in any country of the Territory
where the government of such country would require one for use, sale or
distribution of the Licensed Product in such country and Cellegy shall reasonably
cooperate in such registration at Licensee’s expense.  Upon request by Licensee, Cellegy agrees
promptly to execute any “short form” licenses developed in a form reasonably
acceptable to both Licensee and Cellegy and reasonably submitted to it by Licensee
from time to time in order to effect the foregoing registration in such country
at no cost to Licensee.


 


17.2                           Limitation of Liability.  NEITHER PARTY SHALL BE LIABLE TO THE OTHER
FOR ANY SPECIAL, INDIRECT, OR CONSEQUENTIAL DAMAGES, WHETHER BASED ON BREACH OF
CONTRACT, WARRANTY, TORT (INCLUDING NEGLIGENCE) OR OTHERWISE, AND WHETHER OR
NOT SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGE.  NOTHWITHSTANDING ANYTHING TO THE CONTRARY,
NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY WITH RESPECT TO ANY SUBJECT
MATTER OF THIS AGREEMENT UNDER ANY CONTRACT, NEGLIGENCE, STRICT LIABILITY OR
OTHER LEGAL OR EQUITABLE THEORY FOR ANY AMOUNTS IN EXCESS OF THE AMOUNTS
RECEIVED BY CELLEGY FROM LICENSEE HEREUNDER. 
THIS LIMITATION WILL APPLY NOTWITHSTANDING ANY FAILURE OF ESSENTIAL
PURPOSE OF ANY LIMITED REMEDY PROVIDED HEREIN.


 


ARTICLE 18

GENERAL PROVISIONS


 


18.1                           Force Majeure.  Neither Party shall be held liable or
responsible to the other Party nor be deemed to have defaulted under or
breached this Agreement for failure or delay in fulfilling or performing any
term of this Agreement, other than an obligation to make payments


 


39





















 


hereunder, when such failure or delay is caused by or results from
fire, floods, embargoes, government regulations, prohibitions or interventions,
war, acts of war (whether war be declared or not), insurrections, riots, civil
commotions, strikes, lockouts, acts of God or any other cause beyond the
reasonable control of the affected party to anticipate, prevent, avoid or
mitigate (a “Force
Majeure Event”); provided, however, that any failure or delay in
fulfilling a term of this Agreement shall not be considered a result of a Force
Majeure Event if it arises from a failure of Licensee or Cellegy to comply with
applicable laws and regulations.  In the
event of force majeure lasting more than sixty days (60) days, the Parties
agree to meet and discuss how this Agreement can be justly and fairly implemented
under the circumstances prevailing in such Country or Countries and if the
Parties are unable to agree upon how the Agreement can be implemented then
either Party may terminate the Agreement in relation to such country or
countries upon sixty (60) days written notice.


 


18.2                           Further Assurances.  Each Party to agrees to perform such acts,
execute such further instruments, documents or certificates, and provide such
cooperation in proceedings and actions as may be reasonably requested by the
other Party in order to carry out the intent and purpose of this Agreement,
including without limitation the registration or recordation of the rights
granted hereunder.


 


18.3                           Severability.  Both Parties hereby expressly acknowledge and
agree that it is the intention of neither party to violate any public policy,
statutory or common law, rules, regulations, treaty or decision of any
government agency or executive body thereof of any country or community or
association of countries and specifically agree that if any word, sentence,
paragraph, clause or combination thereof in this Agreement is found by a court
or executive body with judicial powers having jurisdiction over this Agreement
or any of the parties hereto in a final unappealed order, to be in violation of
any such provisions in any country or community or association of countries,
then in such event such words, sentences, paragraphs, clauses or combination
shall be inoperative in such country or community or association of countries
and the remainder of this Agreement shall remain binding upon the parties
hereto.


 


18.4                           Notices.  Any notice required or permitted to be given
hereunder shall be in writing and shall be deemed to have been properly given
if delivered in person, or by an internationally recognized overnight courier,
or by facsimile (and promptly confirmed by overnight courier), to the addresses
given below or such other addresses as may be designated in writing by the
parties from time to time during the term of this Agreement.  Any notice sent by overnight courier as
aforesaid shall be deemed to have been given two (2) working days after
sending.


 


	
  In the case of
  Cellegy:

  Cellegy Pharmaceuticals, Inc.

  349 Oyster Point Boulevard

  San Francisco, California 94080

  Attention: John Chandler

  Telephone No.:  (650) 616-2200

  Facsimile No.:   (650)616-2222

  	
  With a required copy to:

  Weintraub Genshlea Chediak Sproul

  400 Capitol Mall, 11th floor

  Sacramento, CA 95814

  Attention: Kevin Kelso, Esq.

  Telephone No.:  (916) 558-6110

  Facsimile No.:   (916)
  446-1611

  



 


40





















 


	
  In the case of
  Licensee:

  Strakan International Limited

  Buckholm Mill

  Galashiels

  TD 1 2HB, UK

  Attention:   Mr. Andrew McLean,

                     Corporate
  Director

  Telephone No.:  44-1896-668060

  Facsimile No.:   44-1896-668061

  	
   

  



 


18.5                           Assignment.  This Agreement may not be assigned or
otherwise transferred by either Party without the written consent of the other
Party; provided, however, that either Party may, without such
consent, assign this Agreement (i) in connection with the transfer or sale of
all or substantially all of its business related to this Agreement; or (ii) in
the event of the merger or consolidation of such Party with another
corporation; or (iii) to an Affiliate. Any permitted assignee shall assume all
obligations of its assignor under this Agreement.


 


18.6                           Amendment.  The parties hereto may amend, modify or alter
any of the provisions of this Agreement, but only by a written instrument duly
executed by both parties hereto.


 


18.7                           Entire Agreement.  This Agreement contains the entire understanding
of the parties with respect to the subject matter hereof and supersedes and
replaces all previous negotiations, understandings and representations whether
written or oral including, but not limited to, the Heads of Agreement dated November 12,
2004 between the Parties.  This Agreement
shall not be modified, altered or amended except by a written document signed
on behalf of and delivered by both Parties.


 


18.8                           Waiver.  The failure of a party to enforce, at any
time or for any period, any of the provisions hereof shall not be construed as
a waiver of such provisions or of the rights of such party thereafter to
enforce each such provision.


 


18.9                           No Implied Licenses.  Except as expressly and specifically provided
under this Agreement, the parties agree that neither party is granted any
implied rights to or under any of the other party’s current or future patents,
trade secrets, copyrights, moral rights, trade or service marks, trade dress,
or any other intellectual property rights.


 


18.10                     Injunctions.
 The parties agree that any breach or
threatened breach by one party of the confidentiality provisions contained in
this Agreement may cause substantial harm to the other party that cannot be
remedied by monetary damages, and therefore each party agrees that either party
shall have the right to apply for equitable remedies, without bond, including
injunctions and repossession of Confidential Information, to abate actual or
threatened breaches of this Agreement.


 


18.11                     Independent
Contractors.  The parties agree that the relationship of
Cellegy and Licensee established by this Agreement is that of independent
licensee and licensor.


 


41





















 


Furthermore, the parties agree that this Agreement does not, is not
intended to, and shall not be construed to, establish a partnership or joint
venture, and nor shall this Agreement create or establish an employment, agency
or any other relationship.  Except as may
be specifically provided herein, neither party shall have any right, power or
authority, nor shall they represent themselves as having any authority to
assume, create or incur any expense, liability or obligation, express or
implied, on behalf of the other party, or otherwise act as an agent for the
other party for any purpose.


 


18.12                     No Third Party
Beneficiaries. 
All rights, benefits and remedies under this Agreement are solely
intended for the benefit of Cellegy and Licensee, and no Third Party shall have
any rights whatsoever to (i) enforce any obligation contained in this Agreement
(ii) seek a benefit or remedy for any breach of this Agreement, or (iii) take
any other action relating to this Agreement under any legal theory, including
but not limited to, actions in contract, tort (including but not limited to
negligence, gross negligence and strict liability), or as a defense, setoff or
counterclaim to any action or claim brought or made by the parties.


 


18.13                     Governing Law.  This Agreement shall be governed by and
construed in accordance with the laws of the State of California, exclusive of
its choice-of-law rules.


 


18.14                     Resolution of Disputes.  All disputes arising out of or related to the
terms and conditions of this Agreement, or the breach thereof, will be settled
as follows.


 


(a)                                  If a dispute arises
under this Agreement, a representative of each party must, following whatever
investigation each considers appropriate, promptly discuss the dispute.


 


(b)                                 If the dispute is not
resolved as a result of the discussions in paragraph (a), either party may give
written notice to the other party requesting the commencement of negotiations
in good faith.  The notice shall:


 


(i)                                     set out the issues
in dispute and any other relevant circumstances; and


 


(ii)                                  designate a senior
representative with the appropriate authority to negotiate the dispute.


 


(c)                                  Within ten (10)
business days of receipt of the notice referred to in paragraph (b) the
recipient shall notify the other party of a senior representative with similar
authority to negotiate the dispute and specify a reasonable time and place to
meet within the following fourteen business days.


 


(d)                                 The representatives
must meet in accordance with the notice referred to in paragraph (b) and, using
all reasonable endeavors, commence negotiations in good faith to resolve the
dispute.


 


(e)                                  If the dispute is not
resolved within thirty (30) days of notification under paragraph (b), then the
dispute shall be settled by binding arbitration in San Francisco,


 


42





















 










[*] 
designates portions of this document that have been omitted pursuant to
a request for confidential treatment filed seperately with the Commission


 


 


California, in
accordance with the then existing rules of International Chamber of Commerce.
In any arbitration pursuant to this Section the award shall be rendered by
a single arbiter if the Parties agree to one or a majority of three (3)
arbiters, one (1) of whom shall be appointed by each Party and the third of
whom shall be appointed by mutual agreement of the two Party-appointed arbitrators.
Either Party may initiate such an arbitration by giving written notice to the
other Party of such arbitration, specifying, in reasonable detail, the dispute
to be resolved thereby.  The
determination of the arbitrators with respect to any dispute will be conclusive
and binding on the Parties, and the arbitrators will have right to award
attorneys’ fees and costs, including but not limited to the costs of the
arbitration, to the prevailing Party. 
Judgment upon the award rendered in any arbitration may be entered in
any court of competent jurisdiction in any country.  The Parties agree to the exclusive
jurisdiction and venue of any state or federal court located in San Francisco,
California for purposes of any action arising out of or relating to this
Agreement that is not subject to mandatory arbitration, and agree that service
of process in any such action may be made in the manner provided for in this
Agreement for the delivery of notices.


 


(f)            Neither Party shall be
prevented from applying to a court
at any stage for urgent injunctive or other relief.


 


18.15                     Headings.  The Article and section headings
contained in this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this Agreement.


 


18.16                     Counterparts.  This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same document.


 


18.17                     Late Payment.  If Licensee fails to pay to Cellegy any amount
when due, Licensee agrees to pay interest on the overdue balance at the rate of
the LIBOR rate (as quoted in the London edition of the Financial Times and in
effect from time to time) plus [*] of such rate or, if such rate exceeds the
maximum rate permitted by law, the maximum rate permitted by law.  Payments received from Licensee when any
overdue balance exists shall be applied first against accrued interest.  Licensee shall pay all collection charges and
expenses, and including, but not limited to, attorneys’ fees, which are
incurred by Cellegy in connection with Cellegy’s collection of any amounts
under or relating to this Agreement, or otherwise in connection with the
enforcement of this Agreement.


 


18.18                     ProStrakan
Group Limited Guarantee.  ProStrakan Group Limited, of which Licensee
is a wholly-owned subsidiary, hereby guarantees the performance of Licensee
under this Agreement to the extent, and pursuant to the terms of, the Guarantee
attached hereto as Exhibit E.


 


 


[Remainder
of this page intentionally left blank]


 


43





















 


IN WITNESS HEREOF,
the parties have executed this Agreement as of the Effective Date.


 


 


	
  STRAKAN INTERNATIONAL
  LIMITED

  	
   

  	
  CELLEGY PHARMACEUTICALS,
  INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Its:

  	
   

  	
   

  	
  Its:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  PROSTRAKAN GROUP LIMITED,
  only as to

  

  Section 18.18 and the Guarantee

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Its:

  	
   

  	
   

  	
   

  
											



 


44





















 










[*] 
designates portions of this document that have been omitted pursuant to
a request for confidential treatment filed seperately with the Commission


 


 


EXHIBIT A


LICENSED
PRODUCT


 


 


Packaged in a [*] tube.


 


 


A-1





















 


EXHIBIT B


COUNTRIES
IN THE TERRITORY


 


TERRITORIES


	
  1. Europe

  
	
  Andorra

  
	
  Albania

  
	
  Austria

  
	
  Belgium

  
	
  Bosnia-Herzegovina

  
	
  Bulgaria

  
	
  Croatia

  
	
  Cyprus

  
	
  Czech
  Republic

  
	
  Denmark

  
	
  Estonia

  
	
  Finland

  
	
  France

  
	
  Germany

  
	
  Gibraltar

  
	
  Greece

  
	
  Hungary

  
	
  Ireland

  
	
  Italy

  
	
  Latvia

  
	
  Liechtenstein

  
	
  Lithuania

  
	
  Luxembourg

  
	
  Republic
  of Macedonia

  
	
  Malta

  
	
  Monaco

  
	
  Netherlands

  
	
  Norway

  
	
  Poland

  
	
  Portugal

  
	
  Romania

  
	
  Slovak
  Republic

  
	
  Slovenia

  
	
  Spain

  
	
  Sweden

  
	
  Switzerland

  
	
  United
  Kingdom

  
	
  Republic
  of Yugoslavia

  



 


B-1





















 


EXHIBIT C


PATENTS
RIGHTS


 


“Cellegy Patents”


 


	
  Cellegy
  Ref. No.

  	
   

  	
  Description or Title

  	
   

  	
  Country

  	
   

  	
  Application No.

  	
   

  	
  Filing Date

  	
   

  	
  Patent or

  Publication

  No.

  	
   

  	
  Issue/Pub

  Date

  	
   

  	
  Status

  	
   

  	
  Summary

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  C045-4510-

  	
   

  	
  AT

  	
   

  	
  Nitric oxide
  donor composition for treatment of anal disorders

  	
   

  	
  Austria

  	
   

  	
  95916264.5

  	
   

  	
  04/10/95

  	
   

  	
  AT 0719145

  	
   

  	
  9/6/00

  	
   

  	
  On Appeal

  	
   

  	
  National Phase of
  European application 95916264.5

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  C045-4510-

  	
   

  	
  BE

  	
   

  	
  Nitric oxide
  donor composition for treatment of anal disorders

  	
   

  	
  Belgium

  	
   

  	
  95916264.5

  	
   

  	
  04/10/95

  	
   

  	
  BE 0719145

  	
   

  	
  9/6/00

  	
   

  	
  On Appeal

  	
   

  	
  National Phase of
  European application 95916264.5

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  C045-4510-

  	
   

  	
  CH

  	
   

  	
  Nitric oxide
  donor composition for treatment of anal disorders

  	
   

  	
  Switzerland

  	
   

  	
  95916264.5

  	
   

  	
  04/10/95

  	
   

  	
  CH 0719145

  	
   

  	
  9/6/00

  	
   

  	
  On Appeal

  	
   

  	
  National Phase of
  European application 95916264.5

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  C045-4510-

  	
   

  	
  DE

  	
   

  	
  Nitric oxide
  donor composition for treatment of anal disorders

  	
   

  	
  Germany

  	
   

  	
  95916264.5

  	
   

  	
  04/10/95

  	
   

  	
  DE 0719145

  	
   

  	
  9/6/00

  	
   

  	
  On Appeal

  	
   

  	
  German
  translation filed 11/9/00. National Phase of European application 95916264.5

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  C045-4510-

  	
   

  	
  DK

  	
   

  	
  Nitric oxide
  donor composition for treatment of anal disorders

  	
   

  	
  Denmark

  	
   

  	
  95916264.5

  	
   

  	
  04/10/95

  	
   

  	
  DK 0719145

  	
   

  	
  9/6/00

  	
   

  	
  On Appeal

  	
   

  	
  Danish
  translation filed 11/00. National Phase of European application 95916264.5

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  C045-4510-

  	
   

  	
  EP

  	
   

  	
  Nitric oxide
  donor composition and method for treatment of anal disorders

  	
   

  	
  Europe

  	
   

  	
  95916264.5

  	
   

  	
  04/10/95

  	
   

  	
  0719145

  	
   

  	
  9/6/00

  	
   

  	
  On Appeal

  	
   

  	
  On Appeal

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  C045-4510-

  	
   

  	
  ES

  	
   

  	
  Nitric oxide
  donor composition for treatment of anal disorders

  	
   

  	
  Spain

  	
   

  	
  95916264.5

  	
   

  	
  04/10/95

  	
   

  	
  ES 0719145

  	
   

  	
  9/6/00

  	
   

  	
  On Appeal

  	
   

  	
  National Phase of
  European application 95916264.5

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  C045-4510-

  	
   

  	
  FR

  	
   

  	
  Nitric oxide
  donor composition for treatment of anal disorders

  	
   

  	
  France

  	
   

  	
  95916264.5

  	
   

  	
  04/10/95

  	
   

  	
  FR 0719145

  	
   

  	
  9/6/00

  	
   

  	
  On Appeal

  	
   

  	
  National Phase of
  European application 95916264.5

  	
   

  



 


C-1





















 


	
  C045-4510-

  	
   

  	
  GB

  	
   

  	
  Nitric oxide
  donor composition for treatment of anal disorders

  	
   

  	
  United Kingdom

  	
   

  	
  95916264.5

  	
   

  	
  04/10/95

  	
   

  	
  GB 0719145

  	
   

  	
  9/6/00

  	
   

  	
  On Appeal

  	
   

  	
  National Phase of
  European application 95916264.5.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  C045-4510-

  	
   

  	
  GR

  	
   

  	
  Nitric oxide
  donor composition for treatment of anal disorders

  	
   

  	
  Greece

  	
   

  	
  95916264.5

  	
   

  	
  04/10/95

  	
   

  	
  GR 0719145

  	
   

  	
  9/6/00

  	
   

  	
  On Appeal

  	
   

  	
  National Phase of
  European application 95916264.5

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  C045-4510-

  	
   

  	
  IE

  	
   

  	
  Nitric oxide
  donor composition for treatment of anal disorders

  	
   

  	
  Ireland

  	
   

  	
  95916264.5

  	
   

  	
  04/10/95

  	
   

  	
  IE 0719145

  	
   

  	
  9/6/00

  	
   

  	
  On Appeal

  	
   

  	
  National Phase of
  European application 95916264.5

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  C045-4510-

  	
   

  	
  IT

  	
   

  	
  Nitric oxide
  donor composition for treatment of anal disorders

  	
   

  	
  Italy

  	
   

  	
  95916264.5

  	
   

  	
  04/10/95

  	
   

  	
  51262BE/2000

  	
   

  	
  9/6/00

  	
   

  	
  On Appeal

  	
   

  	
  National Phase of
  European application 95916264.5

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  C045-4510-

  	
   

  	
  LU

  	
   

  	
  Nitric oxide
  donor composition for treatment of anal disorders

  	
   

  	
  Luxembourg

  	
   

  	
  95916264.5

  	
   

  	
  04/10/95

  	
   

  	
  LU 0719145

  	
   

  	
  9/6/00

  	
   

  	
  On Appeal

  	
   

  	
  National Phase of
  European application 95916264.5

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  C045-4510-

  	
   

  	
  MC

  	
   

  	
  Nitric oxide
  donor composition for treatment of anal disorders

  	
   

  	
  Monaco

  	
   

  	
  95916264.5

  	
   

  	
  04/10/95

  	
   

  	
  MC 0719145

  	
   

  	
  9/6/00

  	
   

  	
  On Appeal

  	
   

  	
  National Phase of
  European application 95916264.5

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  C045-4510-

  	
   

  	
  NL

  	
   

  	
  Nitric oxide
  donor composition for treatment of anal disorders

  	
   

  	
  Netherlands

  	
   

  	
  95916264.5

  	
   

  	
  04/10/95

  	
   

  	
  NL 0719145

  	
   

  	
  9/6/00

  	
   

  	
  On Appeal

  	
   

  	
  National Phase of
  European application 95916264.5

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  C045-4510-

  	
   

  	
  PT

  	
   

  	
  Nitric oxide
  donor composition for treatment of anal disorders

  	
   

  	
  Portugal

  	
   

  	
  95916264.5

  	
   

  	
  04/10/95

  	
   

  	
  PT 0719145

  	
   

  	
  9/6/00

  	
   

  	
  On Appeal

  	
   

  	
  Portuguese
  translation filed 10/27/00. National Phase of European application 95916264.5

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  C045-4510-

  	
   

  	
  SE

  	
   

  	
  Nitric oxide
  donor composition for treatment of anal disorders

  	
   

  	
  Sweden

  	
   

  	
  95916264.5

  	
   

  	
  04/10/95

  	
   

  	
  SE 0719145

  	
   

  	
  9/6/00

  	
   

  	
  On Appeal

  	
   

  	
  National Phase of
  European application 95916264.5

  	
   

  



 


C-2





















 


EXHIBIT D


 


CELLEGY
MARKS


 


	
  Name

  	
   

  	
  Status

  	
   

  	
  Country

  	
   

  	
  Registration Date

  	
   

  	
  Renewal

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Rectogesic

  	
   

  	
  Registered

  	
   

  	
  European Union

  	
   

  	
  10/25/02

  	
   

  	
  9/13/10

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Rectogesic

  	
   

  	
  Registered

  	
   

  	
  Switzerland

  	
   

  	
  3/8/01

  	
   

  	
  9/8/10

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Rectogesic

  	
   

  	
  no filing

  	
   

  	
  Andorra

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Rectogesic

  	
   

  	
  no filing

  	
   

  	
  Albania

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Rectogesic

  	
   

  	
  no filing

  	
   

  	
  Bosnia-Herzegovina

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Rectogesic

  	
   

  	
  no filing

  	
   

  	
  Bulgaria

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Rectogesic

  	
   

  	
  no filing

  	
   

  	
  Croatia

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Rectogesic

  	
   

  	
  no filing

  	
   

  	
  Gibraltar

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Rectogesic

  	
   

  	
  no filing

  	
   

  	
  Republic of Yugoslavia

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Rectogesic

  	
   

  	
  no filing

  	
   

  	
  Republic of Macedonia

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Rectogesic

  	
   

  	
  no filing

  	
   

  	
  Monaco

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


D-1





















 


EXHIBIT E


PROSTRAKAN
GROUP LIMITED GUARANTEE


 


ProStrakan Group Limited (“Group”) hereby
unconditionally guarantees and undertakes to Cellegy that Licensee will duly
and punctually observe and perform all the undertakings, covenants and
obligations of Licensee under this Agreement (including the payment of any
damages becoming due to Cellegy as a result of any breach by Licensee of such
undertakings, covenants and obligations) and under any agreements between the
Parties (or any of them) which are expressly supplemental to this Agreement or
which this Agreement requires to be executed (the “Obligations”) to the
intent that if Licensee shall fail for whatever reason so to observe and
perform any Obligations, Group shall be liable to perform the same in all
respects as if Group was the party principally bound thereby in place of
Licensee on demand from Cellegy.


 


E-1