**Exhibit 10.1**

Confidential Materials omitted and filed separatelywith theSecurities and Exchange Commission. Asterisks denote omissions.

 

**SUB-LICENSE AGREEMENT**

**THISSUB-LICENSE AGREEMENT** (this “Agreement”) is made effectivethe 15th day of May, 2007 (the “Effective Date”), byand between QuatRx Pharmaceuticals Company, a Delaware corporation, withoffices at 777 East Eisenhower Parkway, Suite 100, Ann Arbor, Michigan 48108(hereinafter “QuatRx”), and Collagenex Pharmaceuticals Inc., a Delawarecorporation, with offices at 41University Drive, Suite 200, Newtown, PA 18940 (hereinafter “Collagenex”).  QuatRx and Collagenex are each individuallyreferred to herein as a “Party” and collectively as the “Parties”.

**WHEREAS,**QuatRx has licensed from Deltanoid Pharmaceuticals, Inc. (“Deltanoid”) certainintellectual property rights, and QuatRx is willing to grant a sublicense toCollagenex under such intellectual property rights and Collagenex desires alicense under all of them;

**NOW, THEREFORE,** in considerationof the mutual covenants and agreements set forth below, the parties covenantand agree as follows:

**Section1.              Definitions.**

“Affiliate” shall mean each and every business entitycontrolling, controlled by or under common control with a Party.  For purposes of this definition, “control”shall mean ownership, directly or indirectly, of more than fifty percent (50%)of the voting or income interest of the applicable business entity.

“Agreement” has the meaning set forth in the firstparagraph.

“Claim” has the meaning set forth in Section 9.1.

“Collagenex” has the meaning set forth in the firstparagraph.

“Collagenex Technology” shall mean all inventions,discoveries, know-how, trade secrets, data, reports and information, of atechnical nature specifically relating to any Product or potential Product,which is owned or controlled by 

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Collagenex at any time after the Effective Date, andwhich is necessary or useful in furtherance of the development, manufacture ormarketing of such Product or potential Product, and all patents, patentapplications and other intellectual rights covering any of the foregoing.

“Combination Product” shall mean a Product containingthe Compound and at least one other active pharmaceutical ingredient.

“Compound” shall mean (20S)-2-methylene-19-nor-bis-homo-1ahydroxypregnacalciferol, also referred to as “becocalcidiol” or “QRX-101”.

“Confidential Information” has the meaning set forthin Section 7.1.

“Deltanoid” shall mean Deltanoid Pharmaceuticals, Inc.

“Deltanoid License” shall mean that certain ExclusiveLicense Agreement dated effective November 7, 2001 by and between Deltanoid andQuatRx.

“Development” shall mean the development of anyProduct from and after the Effective Date through, and including, productregistration.

“Development Plan” shallmean the plan for the Development attached hereto as Exhibit B. TheDevelopment Plan shall include projected dates by which certain developmentactivities shall be completed as well as the underlying assumptions upon whichsuch projections are based.

“Diligence Milestones” shall mean the requirements setforth on Exhibit C, attached hereto

“Disclosing Party” has the meaning set forth inSection 7.1.

“Effective Date” shall mean the date first abovewritten as the effective date of this Agreement.

“FDA” shall mean the United States Food and DrugAdministration or any successor entity.

“First Commercial Sale” shall mean the first sale of aProduct to a third party (other than an Affiliate or sublicensee) in anyjurisdiction in the Territory 

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after regulatory approval for such sale has beenobtained from the appropriate regulatory authorities in such jurisdiction.

“IND” shall mean an Investigational New DrugApplication as that term is defined in applicable FDA regulations.

“Invention” has the meaning set forth in Section 8.1.

“Inventor” has the meaning set forth in Section 8.1.

“Major EU Country” shall mean any of France, Germany,Italy, Spain or the United Kingdom.

“Marketing Approval” shall mean approval by theapplicable FDA equivalent governmental entity with authority to approve thesale of pharmaceutical products for human use in the applicable jurisdiction.

“NDA” shall mean a New Drug Application as defined byFDA regulations.

“Net Sales” shall mean the gross receipts from salesin any country less deductions for: (i) transportation and insurance charges;(ii) sales and excise taxes, tax, tariff, duty or any other governmentalcharges or duties paid; (ii) normal and customary trade, quantity and cashdiscounts and rebates allowed;  (iii)allowances on account of rejection or return by customers; (iv) credits,rebates, charge-back rebates, reimbursements or similar payments actuallygranted or given to wholesalers and other distributors, buying groups, healthcare insurance carriers, governmental agencies and other institutions; (v)payments or rebates actually paid in connection with state or federal Medicare,Medicaid or similar programs.  However,except where the sublicensee or Affiliate is the end-user, any sale to asublicensee or Affiliate shall be excluded from the computation of Net Sales,but any subsequent sale by the sublicensee or Affiliate to a third party otherthan another sublicensee or Affiliate shall be included in the computation ofNet Sales.

“Party” or “Parties” has the meaning set forth in thefirst paragraph.

“Product” shall mean any product which contains theCompound as one of its active ingredients, which product is being developed oris approved for topical treatments (topical treatments do not include patchdelivery systems or mucous membrane delivery systems, such as a suppository,intended for systemic treatment) of skin diseases (including treatments ofskin, hair and nails).

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“Progress Report” shall mean a written report preparedby Collagenex that includes a detailed summary, as of the submission date, ofthe following topics at a level that enables QuatRx to determine the progressof the development of Products and to determine whether or not Collagenex hasmet its diligence obligations set forth in Article 3:

·                                          summaryof work completed with respect to Development and commercialization ofProducts;

·                                          adescription of key scientific discoveries relating to Products;

·                                          asummary of work in progress with respect to Development and commercializationof Products;

·                                          acurrent schedule of anticipated events and milestones with respect toDevelopment and commercialization of Products, including the DiligenceMilestones and those events and milestones specified in the Development Plan;

·                                          Marketplans for introduction of Products including the anticipated and actual marketintroduction dates of each Product;

·                                          adescription of sublicensees’ and/or development partners’ activities relatingto the above items, if there are any sublicensees or development partners;

·                                          asummary of resources (dollar value) spent in the reporting period with respectto Development and commercialization of Products; and

·                                          if sublicenses are grantedpursuant toArticle 2 of this Agreement, the identity and number of all Products underdevelopment by each sublicensee for each Product in development.

“QuatRx” has the meaning set forth in the firstparagraph.

“QuatRx Inlicensed Patents” shall mean the patentapplications and patents listed in Exhibit A, which is attached hereto and isincorporated herein by 

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reference and any foreign counterparts thereof, andany continuations, continuations-in-part, divisions, re-issues, additions,renewals and extensions thereof, and any patents issuing therefrom all to theextent licensed by QuatRx from Deltanoid under the Deltanoid License.

“QuatRx Owned Patents” shall mean the patents andpatent applications listed on Exhibit A as QuatRx Owned Patents and any foreigncounterparts of the foregoing, and any continuations, continuations-in-part,divisions, re-issues, additions, renewals and extensions thereof, and anypatents issuing therefrom.

“Representatives” shall mean, as to any person, itsshareholders, employees, agents (such word including, without limitation, anyperson acting on behalf of such person), consultants, independent contractors,officers and directors.

“Royalty Term” shall mean, with respect to aparticular Product in any jurisdiction in the Territory, the period of timecommencing on the date of the First Commercial Sale of such Product in suchjurisdiction and ending upon the later of (a) the ten year anniversary of suchdate of First Commercial Sale and (b) the date of expiration of the last toexpire QuatRx Owned Patent or QuatRx Inlicensed Patent containing a Valid Claimwhich would be infringed by the manufacture, use, importation, offer for sale,or sale of such Product in such jurisdiction.

“Steering Committee” has the meaning set forth inSection 3.3.

“Technical Information” shall mean any and allknow-how, trade secrets and other information of a technical or scientificnature specifically relating to any Product or potential Product which isnecessary or useful in furtherance of the development, manufacture or marketingof such Product or potential Product.

“Territory” shall mean all jurisdictions worldwideother than Japan.

“Valid Claim” shall mean a claim contained in anissued patent or patent application, which claim has not expired and has notbeen held unenforceable, unpatentable or invalid by an unappealable decision ofa court or other governmental agency of competent jurisdiction.

“WARF” shall mean Wisconsin Alumni ResearchFoundation, a nonstock, nonprofit Wisconsin corporation.

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** **

**Section2.              Grant.**

2.1.          Sub-License.  QuatRx hereby grants to Collagenex anexclusive (even as to QuatRx) license in the Territory, with the right to grantsublicenses, under the QuatRx Inlicensed Patents and the QuatRx Owned Patentsto the extent necessary to make, have made, use, sell, have sold, and importthe Compound for topical treatments (topical treatments do not include patchdelivery systems or mucous membrane delivery systems, such as a suppository,intended for systemic treatment) of skin diseases (including treatments ofskin, hair and nails).  The foregoing licensespecifically excludes the right to, and the right to license others to, make,have made, use, sell, have sold, or import (a) any treatment of cancer or renalosteodystrophy, (b) products approved, made, use, sold, and marketed forsystemic applications, and (c) products other than Products. Collagenexacknowledges and agrees that Collagenex’s rights in this Agreement are subjectto the terms and conditions of the Deltanoid License.

**Section3.              Development.**

3.1.          Development Responsibility.  Asof the Effective Date and subject to the terms of this Article 3, Collagenexshall assume responsibility for the performance and funding of the Developmentand shall conduct the Development in accordance with the requirements and timeschedules set forth in the Development Plan and in accordance with the DiligenceMilestones.  The Steering Committee shallmeet within 30 days of the Effective Date to coordinate the transfer ofresponsibility for the Development to Collagenex. Except to the extent setforth in Section 3.3, QuatRx shall not be required to incur any research ordevelopment costs or otherwise conduct research or development relating to theCompound or any Products.

3.2.          Technology Transfer.  Except to the extent necessary to permitQuatRx to perform its obligations under Section 3.3, within 90 days of theEffective Date, QuatRx shall deliver to Collagenex copies of all materialsconsisting of the Technical Information in its possession as of the EffectiveDate. In addition, within one year of the Effective Date, QuatRx will provide to Collagenex, uponwritten request from Collagenex, all existing quantities of Compound API(approximately [**]) in QuatRx’s possession or control. Collagenex will payQuatRx a $[**] fee for such Compound API upon exercise of Collagenex’s optionto receive such Compound API.

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3.3.          SteeringCommittee.

3.3.1 Formation.  Within 30 days of the Effective Date,Collagenex and QuatRx shall each appoint two representatives to a SteeringCommittee (the “Steering Committee”). Such representatives will includeindividuals with expertise and responsibilities in the area of clinicaldevelopment. The Steering Committee shall agree on modifications and amendmentsto the Development Plan, shall monitor execution of the Development Plan, andshall oversee all aspects of the Development of each Product through the filingof an NDA or its foreign equivalent. The Steering Committee will meet on asemi-annual basis and will otherwise communicate on an as-needed basis bytelephone, facsimile and video conference. At least 3 business days prior to eachmeeting of the Steering Committee, Collagenex shall deliver to QuatRx aProgress Report. Each party recognizes the importance of the Steering Committeein the success of the Development and will use diligent efforts to cause all ofits representatives to the Steering Committee to attend all meetings of theSteering Committee. A party may change any of its appointments to the SteeringCommittee at any time upon giving written notice to the other Party. Anydisputes or disagreements within the Steering Committee (other than withrespect to modifications or amendments to the Development Plan) shall beresolved pursuant to Section 3.3.3.

3.3.2.****Meetings  Subjectto Section 3.3.1, the Steering Committee may meet by telephone or videoconference or in person at such times as are agreeable to the members of suchcommittee. Attendance at meetings shall be at the respective expense of theparticipating parties. The Steering Committee shall assure that agendas andminutes are prepared for each of its meetings. All actions taken and decisionsmade by the Steering Committee shall be by unanimous agreement.  If personal attendance is not possible forvalid reasons, voting by proxy is permissible.

3.3.3. Committee DisputeResolution.  Notwithstanding theprovisions of Section 10.1, any disputes or disagreements arising in theSteering Committee will be referred to the chief executives of each ofCollagenex and QuatRx.  In the event thatafter good faith discussion, the chief executives are unable to resolve suchdispute, Collagenex shall have the right to make a final determination on theoutcome of such dispute (other than any dispute regarding the modification oramendment to the Development Plan, which shall require the unanimous agreementof the Steering Committee).

3.4. Diligenceand Termination.  Collagenex shallearnestly and diligently develop, seek approval for, commercialize, market,sell and meet the commercial 

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demand for all Products in accordance with theDiligence Milestones and the time schedule and requirements set forth in theDevelopment Plan.  The Partiesacknowledge and agree that the Development Plan shall be regularly reviewed andmodified to reflect the actual experience of Collagenex in conductingdevelopment of the Compound. In the event that Collagenex notifies QuatRx inwriting that it will not pursue commercialization in a particular country orregion (including, without limitation, by failure to include such country orregion in the notice required in the first sentence of milestone 8 of ExhibitC), then QuatRx shall have the right to terminate the license rights grantedhereunder with respect to such country or region .  In addition, QuatRx shall have the right toterminate the license rights granted hereunder with respect to any country orregion which (a) is identified in a CollaGenex Diligence Milestone on Exhibit Cor (b) is identified in the notice described in the second sentence ofmilestone number 8 on Exhibit C and, in the case of either (a) or (b), inrelation to which Collagenex has failed to fulfill its diligence obligationsset forth herein, or in any plan proposed pursuant hereto, including, withoutlimitation, failure to file for approval to sell Products in any country orregion within the applicable time frames set forth in the Diligence Milestones.In the event that Collagenex’s rights are terminated with respect to anycountry or region per this Section 3.4, the provisions of Section 6.7 shallapply with respect to the terminated country or region.

If, at any time, QuatRx provides Collagenex withwritten notice that Collagenex has failed to adhere to the Diligence Milestonesor the milestones contained in the Development Plan for reasons unrelated tothe safety or efficacy of the Products, the availability of clinical supplies orpatient recruitment, or other reasons beyond the reasonable control ofCollagenex, then Collagenex shall have up to [**] days to provide a detailedwritten response to these concerns, highlighting additional steps to be taken,if appropriate. In the event that at the end of such [**] day period,Collagenex still has not met the Diligence Milestones or the milestones setforth in the Development Plan for reasons unrelated to the safety or efficacyof the Products, the availability of clinical supplies or patient recruitment,or other reasons beyond the reasonable control of Collagenex, QuatRx mayterminate, at its option, this Agreement or the license rights granted toCollagenex in the jurisdictions affected by such default.

3.5. Collagenex Manufacturing Responsibility.  Collagenex shall be responsible for theperformance and cost of all manufacturing, storage, shipment, disposal and allactivities related thereto, regarding the Compound and all Products andpotential Products.

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3.6. Regulatory Approvals. Collagenex, by itself or with or through its sublicensees or developmentpartners, shall obtain all necessary Regulatory Approvals in each country whereProducts are manufactured, used, sold, offered for sale or imported.

3.7. Japan.  Any QuatRxsublicensee in Japan shall have the right to access and use, without cost, anyand all data, information, records, drug master files, reports and otherinformation developed, prepared or created by Collagenex at any time regardingthe Compound to the extent necessary for obtaining regulatory approval for andto make, have made, use, sell, have sold, offer to sell and import Products inJapan, provided, however, that if compliance with this undertaking involvesmore than [**] hours of work by CollaGenex personnel, CollaGenex shall beentitled to receive a reasonable fee per hour of work in which its personnelengage in fulfillment of this obligation*.* Collagenexshall further negotiate in good faith with any such Japanese sublicensee for alicense under any patents and patent applications owned or controlled byCollagenex to the extent necessary to make, have made, use, sell, have sold,offer to sell and import Products in Japan, provided that the consideration tobe offered to such sublicensee shall not exceed [**]% of the totalout-of-pocket costs paid by Collagenex (and/or its Affiliates) in connectionwith the generation and creation of such patents and patent applications.

**Section4.              Consideration.**

4.1.          License Fee.  Collagenex agrees to pay to QuatRx a licensefee of $1,500,000, due within 5 business days of the full execution of thisAgreement.

4.2.          Milestones.  Collagenex shall make the following milestonepayments to QuatRx within 30 days after the achievement of each correspondingmilestone:
| Milestone                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | ** ** | **Payment** |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|-------------|
| 1. Dosing of the  first patient in the first Phase III trial for a Product.                                                                                                                                                                                                                                                                                                                                                                                                         |       | $1,500,000  |
| 2. Acceptance  for review by the FDA of the first NDA for a Product.                                                                                                                                                                                                                                                                                                                                                                                                                |       | $2,000,000  |
| 3. Approval by  the FDA of the first NDA for a Product which is entitled to the protections  described in section 505(c)(3)(E)(ii) of the Federal Food Drug and Cosmetic  Act (21 USC 355(c)(3)(E)(ii)) or any amendment thereto or successor provision  thereof (provided that if such section, amendment or successor provision  shall be repealed, rescinded or terminated, then this milestone shall be due  upon any such approval by the FDA of the first NDA for a Product). |       | $3,000,000  |
| 4. First  Commercial Sale of the first Product to be sold.                                                                                                                                                                                                                                                                                                                                                                                                                          |       | $[**]       |
| 5. The date in  the first calendar year in which annual Net Sales of a Product exceed $[**]  million.                                                                                                                                                                                                                                                                                                                                                                               |       | $[**]       |
| 6. First  Commercial Sale of a Product using a formulation different from the  formulation used in the first Product to receive NDA approval.                                                                                                                                                                                                                                                                                                                                       |       | $[**]       |
| 7. First  Commercial Sale of a Combination Product.                                                                                                                                                                                                                                                                                                                                                                                                                                 |       | $[**]       |
| 8. Submission of  an application in a Major EU Country for Marketing Approval for the first  Product.                                                                                                                                                                                                                                                                                                                                                                               |       | $[**]       |
| 9. First  Commercial Sale of the first Product in a Major EU Country.                                                                                                                                                                                                                                                                                                                                                                                                               |       | $[**]       |

 

The milestone paymentsreceived by QuatRx under this Section 4 shall be non-refundable andnon-creditable. Each milestone payment referred to in this Section 4 shall bemade only once, regardless of whether more than one Product achieves suchmilestone.

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4.3.                              Royalty.

4.3.1.           StandardRates.  During the Royalty Termapplicable to each Product in each jurisdiction in the Territory, Collagenexshall pay to QuatRx a royalty payment on annual Net Sales of such Product soldby Collagenex and its Affiliates and permitted sublicensees in each calendaryear in such jurisdiction according to the following table.
| **Total Combined Annual Net Sales of all Products  (whether Single Agent or Combination  Products) in the Territory** | ** ** | **Royalty % on  US Sales of  Single Agent  Products** | ** ** | **Royalty %  on US Sales  of Combination  Products** | ** ** | **Royalty % on  Non-US Sales  of all Products** | ** ** |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|--------------------------------------------------------------------------------|------------|--------------------------------------------------------------------------|------------|--------------------------------------------------------------------------|------------|
| $0 up to $[**]  million                                                                                                                                                      |       | [**]%                                                                          |       | [**]%                                                                    |       | [**]%                                                                    |       |
| Greater than  $[**] million and up to $[**] million                                                                                                                          |       | [**]%                                                                          |       | [**]%                                                                    |       | [**]%                                                                    |       |
| Greater than  $[**] million and up to $[**] million                                                                                                                          |       | [**]%                                                                          |       | [**]%                                                                    |       | [**]%                                                                    |       |
| Greater than  $[**] million and up to $[**] million                                                                                                                          |       | [**]%                                                                          |       | [**]%                                                                    |       | [**]%                                                                    |       |
| Greater than $[**]  million                                                                                                                                                  |       | [**]%                                                                          |       | [**]%                                                                    |       | [**]%                                                                    |       |

4.3.2.           Royalty Stacking.  In the event that Collagenex obtains anopinion from a nationally recognized patent law firm that its manufacture, useor sale of one or more Products in any jurisdiction infringes on the patentrights of any un-affiliated third party in such jurisdiction, and Collagenexthereafter obtains a license to such third party patent rights, then Collagenexmay reduce the foregoing royalties on Net Sales by [**] of the royalties duesuch third party, provided that in no event shall the royalty rate due toQuatRx fall below [**]%.

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4.4.          Minimum Royalty.  Collagenex further agrees to pay to QuatRx aminimum royalty on the sale of Products of (i) $[**] for the first consecutive12 month period following the First Commercial Sale of the first Product in theUnited States, (ii) $[**] for the second such 12 month period, (iii) $[**] forthe third such 12 month period, (iv) $[**] for the fourth such 12 month period,and (v) $[**] for the fifth such 12 month period and all subsequent 12 monthperiods during the Royalty Term applicable to such Products.  Royalties paid to QuatRx pursuant to Section4.3 for Net Sales in the 12 month period applicable to each minimum royaltyamount shall be credited against each such minimum royalty.  The minimum royalty amounts shall be due andowing within 20 days of the end of the 12 month period applicable to each suchminimum royalty amount.

4.5. Accounting; Payments.

4.5.1. Collagenex shallkeep and maintain complete books and records containing an accurate accountingof all data in sufficient detail to enable verification of earned royalties andother payments due hereunder.

4.5.2. Collagenex shallreport to QuatRx the date of First Commercial Sale within [**] business days ofsuch First Commercial Sale.  Thereafterand within [**] days after the end of each calendar quarter, Collagenex shallremit to QuatRx a statement of Net Sales by Collagenex and by its sublicenseeson account for such quarter, which statement shall be accompanied by thepayment due to QuatRx pursuant to Section 4.3. With each such quarterly payment, Collagenex shall furnish QuatRx aroyalty statement setting forth, on a country-by-country basis, thetotal number of units of each royalty-bearing Product sold hereunder forthe quarterly period for which the royalties are due, the exchange ratesapplied, and the gross amount of all receipts and the specific deductionsapplied in arriving at Net Sales.  QuatRxshall be free to provide such statement to Deltanoid and WARF.

4.5.3. Collagenex shall keep, and shall cause it sublicenseesto keep, accurate books and records showing all Products under development,manufactured, used, offered for sale, imported, sold and/or otherwiseexploited; all Net Sales and other amounts upon which payments are duehereunder; and all sublicenses granted under the terms of this Agreement. Suchbooks and records will be preserved for at least five years after the date ofthe payment to which they pertain. During the term of this Agreement andfor three years thereafter, QuatRx 

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and/or WARF and Deltanoid may request that thefinancial statements of Collagenex and of its sublicensees relating to the saleof Products be audited, at QuatRx and/or WARF and Deltanoid’s expense, by anationally recognized independent certified public accountant reasonablyacceptable to Collagenex for the purpose of verifying the amount of royaltypayments due.  Such examination of booksand records of Collagenex and its sublicensees shall take place during regularbusiness hours.  Such an examinationshall not take place more than once a year and shall not cover records for morethan the preceding three years.  Theauditing accountant shall agree to keep confidential all the informationobtained by such accountant during such audit and shall report to QuatRx onlyas to the accuracy of the royalty statements and payments.  If such accountant shall find an underpaymentto QuatRx, presentation of a written statement substantiating the underpaymentshall be provided to Collagenex.  IfCollagenex is not in agreement with the findings of the accountant selected byQuatRx, then Collagenex shall so notify QuatRx in writing within 20 days ofreceipt by Collagenex of said findings, in which case the parties shall jointlyappoint, within a further period of 20 days, an independent certified public accountantto validate, at Collagenex’s expense, QuatRx’s accountant’s findings, and thedecision of said independent accountant shall be final.  If said independent accountant verifies thatan underpayment has occurred, the amount due and interest (accruing at theprevailing prime rate of interest for commercial loans published in the WallStreet Journal, Eastern Edition, from the date payment was due through the dateof actual payment to QuatRx) shall be paid to QuatRx within 20 days. If the amount of the underpayment is greater than 5% of the requiredpayment, then Collagenex shall reimburse QuatRx the out-of-pocket costs for theaudit in question.

4.5.4. All payments dueto QuatRx under this Agreement shall be made in United States dollars and shallbe sent by Collagenex to QuatRx to the attention of “President” at the addressshown in Section 10.  If Collagenexreceives Net Sales in currency other than United States dollars, royaltypayments due to QuatRx on account of Net Sales shall be converted into UnitedStates dollars at the conversion rate for the foreign currency as published inthe eastern edition of The Wall Street Journal as of the last business day ofthe applicable calendar quarter.

4.5.5. Any income orother tax that Collagenex hereunder, its Affiliates or sublicensees arerequired to withhold and pay on behalf of QuatRx hereunder with respect to theroyalties payable under this Agreement shall be deducted from and offsetagainst said royalties prior to remittance to QuatRx; provided, however, thatin regard to any tax so deducted, Collagenex shall give or cause to be given toQuatRx such assistance as may reasonably be necessary to 

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enable QuatRx to claim exemption therefrom or credittherefor, and in each case shall furnish QuatRx proper evidence of the taxespaid on its behalf.

4.6.          PatentInvalidity; Royalty Due.

(a) In the event that any patent, patent applicationor claim thereof included within the QuatRx Inlicensed Patents or QuatRx OwnedPatents is held invalid in a final decision by a court of competentjurisdiction and last resort and from which no appeal has or can be taken, thenall obligation to pay royalties based on that patent or claim will cease as ofthe date of such final decision.  Collagenexwill not, however, be relieved from paying any royalties that accrued beforesuch final decision and the foregoing shall not limit Collagenex’s obligationto pay the full amount of royalties due hereunder if any other QuatRxInlicensed Patents or QuatRx Owned Patents covers the Products that are sold orif royalties are otherwise due hereunder.

(b) In the event that (i) U.S. Patent 6,627,622 hasnot, at any time that royalties would be due pursuant to paragraph 4.3,reissued, (ii) QuatRx does not owe to Deltanoid under the Deltanoid Agreementany royalties on sales of Products in the United States, and (iii) one or morethird parties are selling “Generic Competitor Products” (as defined below) inthe United States then the amount of royalties due hereunder in connection withsales of the Products in the United States shall be reduced during such periodby one half of the amount that would otherwise be payable pursuant to paragraph4.3. For purposes of this Agreement, “Generic Competitor Products” shall meanproducts that are substantially similar to the applicable Product being sold byCollagenex and which (a) contain the Compound as an active ingredient in thesame or similar dose as the applicable Product being sold by Collagenex, (b)are labeled for the same use for which such Product is labeled, and (c) thesales of such product constitute more than [**]% of the total combined sales ofsuch product and the applicable Product being sold by Collagenex.

**Section 5.              Representationsand Warranties.**

5.1.          QuatRx Representation. QuatRxrepresents and warrants that it is the owner or licensee of the QuatRx Inlicensed Patents and QuatRx OwnedPatents or otherwise has the right to grant the licenses granted toCollagenex in this Agreement.

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5.2.          Deltanoid/WARFPatent Prosecution.  QuatRx shallrequest that Deltanoid request that WARF prepare, file, prosecute and maintainpatents and patent applications claiming the inventions claimed in the QuatRx Inlicensed Patents licensed toQuatRx from Deltanoid in jurisdictions requested by Collagenex. Collagenex shallnotify QuatRx in writing indicating those jurisdictions in which Collagenexdesires QuatRx to make or maintain such patents or patent applications. QuatRxshall provide CollaGenex with such updates regarding the prosecution of anypatents related to the Products as QuatRx shall receive from Deltanoid.  QuatRx reserves the right to request thatWARF file a patent application, at its own expense, in any countries notrequested by Collagenex pursuant to this Section 5.

5.3.          Mutual Representations.  Each of the Parties hereby represents andwarrants to the other Party as follows:

5.3.1. ThisAgreement is a legal and valid obligation binding upon such Party andenforceable in accordance with its terms. The execution, delivery andperformance of this Agreement by such Party does not conflict with anyagreement, instrument or understanding, oral or written, to which it is a Partyor by which it is bound, nor violate any law or regulation of any court,governmental body or administrative or other agency having jurisdiction overit.

5.3.2. Such Partyhas not granted, and during the term of this Agreement will not grant, anyright to any third party relating to its respective patents and know-how whichwould conflict with the rights granted to the other Party hereunder.

5.3.3.During the course of development of Products, neither such Party nor any of itsemployees or agents,shall be, or shall be the subject of a proceeding that could lead to that partybecoming, as applicable, a Debarred Entity or Individual, an Excluded Entity orIndividual or a Convicted Entity or Individual. For purposes of this provision, the following definitions shall apply:

(a)         A “Debarred Individual” is an individual who has beendebarred by the FDA pursuant to 21 U.S.C. §335a (a) or (b) from providingservices in any capacity to a person that has an approved or pending drugproduct application.

(b)         A “Debarred Entity” is a corporation,partnership or association that has been debarred by the FDA pursuant to 21 

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U.S.C.§335a (a) or (b) from submitting or assisting in the submission of anyabbreviated drug application, or a subsidiary or affiliate of a DebarredEntity.

(c)         An “Excluded Individual” or “Excluded Entity” is (i) anindividual or entity, as applicable, who has been excluded, debarred, suspendedor is otherwise ineligible to participate in federal health care programs suchas Medicare or Medicaid by the Office of the Inspector General (OIG/HHS) of theU.S. Department of Health and Human Services, or (ii) is an individual or entity,as applicable, who has been excluded debarred, suspended or is otherwiseineligible to participate in federal procurement and non-procurement programs,including those produced by the U.S. General Services Administration (GSA); and

(d)         a “Convicted Individual” or “Convicted Entity” is anindividual or entity, as applicable, who has been convicted of a criminaloffense that falls within the ambit of 42 U.S.C. §1320a — 7(a), but has not yetbeen excluded, debarred, suspended or otherwise declared ineligible.

5.3.4. The Partiesrecognize that each may perform some or all of its obligations under thisAgreement through Affiliates. Each Party shall remain responsible for, andhereby guarantees, the performance by its Affiliates and shall cause itsAffiliates to comply with the provisions of this Agreement in connection withsuch performance. In the event of any dispute arising from the performance byan Affiliate under this Agreement, the Party having such a dispute may proceeddirectly against the other Party, without any obligation to first proceedagainst the Affiliate.

5.4.          Collagenex Compliance.  Collagenex represents and warrants that itshall comply with all applicable laws, rules and regulations regarding theresearch, development, commercialization, marketing, manufacture, import,export and sale of Products in the Territory. Collagenex shall not take any action or fail to take any action that itknows will result in a breach by QuatRx of the Deltanoid License.

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5.5.          Expertise and Financial Resources.  Collagenex has sufficient expertise andfinancial resources to enter into this Agreement and perform its obligationshereunder.

5.6.          Sublicenses. Collagenex shall ensure that all of its sublicensees shall comply withthe terms of this Agreement.

5.7.          Disclaimer.****Except as otherwise expressly stated herein, QuatRx herebydisclaims any warranty, expressed or implied, as to the merchantability orfitness for any purpose of any Product or the Compound sold or placed incommerce by or on behalf of Collagenex.

5.8           Non-Competition.  For the term of this Agreement, QuatRx willnot to the extent its consent may be required, consent to WARF or Deltanoidgranting any rights in any of its or their technology estate to any person orcompany that would permit such person or company to make, use or sell anytopical vitamin D analog product for psoriasis (a “Competing Product”) thatwould compete with the Products in the Territory, and neither will QuatRxitself develop any such Competing Product. The parties acknowledge and agreethat such QuatRx consent is not currently required for WARF or Deltanoid togrant such rights. Nothing in this paragraph shall prevent or inhibit QuatRxfrom merging with or being acquired by another company that has a CompetingProduct in its portfolio. In addition, nothing in this paragraph shall preventor inhibit QuatRx from acquiring a Competing Product as part of an acquisitionby QuatRx of another entity, provided that for a period of 5 years from theEffective Date, QuatRx shall not acquire a Competing Product as part of anysuch acquisition if such Competing Product has annual sales in the UnitedStates in excess of $[**] million unless QuatRx divests itself of suchCompeting Product promptly after such acquisition.

**Section 6.              Termand Termination.**

6.1. Term.The term of this Agreement shall begin on the Effective Date of and continueuntil the earlier of (a) payment of the last royalty due hereunder afterexpiration of the Royalty Term in all jurisdictions in the Territory, (b)termination of this Agreement pursuant to the terms hereof or (c) terminationof QuatRx’s rights under the QuatRx Inlicensed Patents to the extent suchQuatRx Inlicensed Patents are necessary to make, have made, use, sell, havesold or import any Products.

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6.2. VoluntaryTermination. Collagenex may terminate this Agreement at any time by givingat least 120 days prior written and unambiguous notice of such termination toQuatRx. Such a notice shall be accompanied by a statement of the reasons fortermination.

6.3. Terminationfor Default. If Collagenex at any time defaults in the timely payment ofany monies due to QuatRx hereunder or commits any breach of any otherrepresentation, warranty, term, provision or covenant herein contained, andCollagenex fails to follow the dispute resolution procedure set out in section10.1 to contest such breach or default, or fails to remedy any such breach ordefault, within 30 days after written notice thereof by QuatRx, QuatRx may, atits option, terminate this Agreement by giving written notice of termination toCollagenex. QuatRx shall also have the right to termination this Agreement asset forth in Section 3.4.

6.4.Insolvency. This Agreement shall be automatically terminated upon thecommencement of an involuntary case or other proceeding against Collagenexseeking liquidation, reorganization or other relief with respect to Collagenexor its debts under any applicable bankruptcy, insolvency or other similar lawnow or hereafter in effect, and such case or proceeding remains unstayed andundismissed for a period of 45 days, or an order for relief is entered againstCollagenex under the federal bankruptcy laws as now or hereafter in effect.

6.5. Bankruptcy.This Agreement shall be automatically terminated if Collagenex commences avoluntary case under any applicable bankruptcy, insolvency or other similar lawnow or hereafter in effect, or consents to the entry of an order for relief inan involuntary case under any such law, or consents to the appointment ortaking possession by a receiver, liquidator, assignee, custodian, trustee,sequestrator (or similar official) of Collagenex or for any substantial part ofCollagenex’s property, or Collagenex makes any general assignment for thebenefit of creditors, or takes any corporate action to authorize any of theforegoing.

6.7. Effectof Termination.

6.7.1.       Termination of Entire Agreement.  Upon the termination of this Agreement, (a)Collagenex shall remain obligated to provide an accounting for and to paymilestones and royalties earned up to the date of the termination and any 

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minimum royalties shall be prorated as of the date oftermination by the number of days elapsed in the applicable 12 month period;(b) Collagenex shall promptlytransfer to QuatRx ownership of all INDs, NDAs and all other regulatory filings(including, without limitation, all foreign equivalents thereof) relating toall Products; and (c) Collagenex shall deliver on the effective date oftermination, all Technical Information and all know-how, trade secrets,materials, drug supplies, study reports and study data and all otherinformation, records and data created, derived or manufactured by or on behalfof Collagenex that relates to any Product or potential Product. Upon terminationof this Agreement, Collagenex shall further grant to QuatRx an exclusive,worldwide, royalty-free, sublicensable license, in the applicable country whereCollagenex’s rights have been terminated, to all intellectual property owned byCollagenex or licensed from third parties by Collagenex to the extent necessaryto make, use, sell, have sold, import and export all Products and potentialProducts.

6.7.2.  Termination of Rights with Respect to aCountry.  In the case of atermination of Collagenex’s rights with respect to one or more countries (butnot the entire Agreement),

(a) Collagenex shall promptly transfer to QuatRx ownership of allINDs, NDAs and all other regulatory filings (or foreign equivalents thereof)relating to all Products in such country,

(b) Collagenex shalldeliver on the effective date of termination, copies of all TechnicalInformation and all know-how, trade secrets, materials, study reports and studydata and all other information, records and data created or derived by or on behalfof Collagenex that relates to any Product or potential Product, and

(c) Collagenex shallgrant to QuatRx an exclusive, royalty-free, sublicensable license, in theapplicable country where Collagenex’s rights have been terminated, to allintellectual property owned by Collagenex or licensed from third parties byCollagenex all to the extent necessary to make, use, sell, have sold, importand export all Products and potential Products in such country.

6.8. Survival.The terms of Sections 1, 6, 7, 8, 9, and subsections 3.7, 4.5, 10.1, 10.2.3,10.3, 10.4, 10.6 thru 10.10, and 10.13 thru 10.16 shall survive the terminationor expiration of this Agreement.

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#### **Section 7. Confidentiality.**

7.1. ConfidentialityObligation. Except as specifically permitted hereunder or as required toresearch, develop, manufacture or market Products or potential Products, eachParty hereby agrees to hold in confidence and not use on behalf of itself orothers all data, samples, technical and economic information (including the economicterms hereof), commercialization, clinical and research strategies and know-howprovided by the other Party or its Affiliates (the “Disclosing Party”) for aperiod of five years from the date of disclosure and all data, results andinformation developed hereunder and solely owned by the other Party(collectively the “Confidential Information”). Each Party may discloseConfidential Information to its licensors, representatives, employees,officers, directors and agents. The term “Confidential Information” shall notinclude:

(i) informationthat is or becomes part of the public domain through no fault of thenon-Disclosing Party or its Affiliates;

(ii) informationthat is obtained after the date hereof by the non-Disclosing Party or one ofits Affiliates from any third party which is lawfully in possession of suchConfidential Information and not in violation of any contractual or legalobligation to the Disclosing Party with respect to such ConfidentialInformation;

(iii) informationthat is known to the non-Disclosing Party or one or more of its Affiliatesprior to disclosure by the Disclosing Party, as evidenced by the non-DisclosingParty’s written records; and

(iv) informationthat is necessary to be disclosed to any governmental authorities or pursuantto any regulatory filings (including any securities filings), provided that insuch case the non-Disclosing Party notifies the Disclosing Party reasonably inadvance of such disclosure and cooperates with the Disclosing Party to minimizethe scope or content of such disclosure.

7.2. Publications.The Parties shall cooperate with each other and Deltanoid in the publication ofthe results of the Development. With respect to any publications proposed byQuatRx or Collagenex, in no event shall any such publication that includes anyconfidential information be published without giving all Parties at least 30days to review and adequately protect the intellectual property that may beincorporated in such information. The Parties acknowledge and agree that a publicationof the results of the most recent Phase II clinical trial 

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using the Compound is being prepared by aninvestigator from such study and Collagenex agrees that QuatRx may proceed withsuch publication without restriction.

7.3. Survival.The obligations of Section 7.1 shall survive the expiration or termination ofthis Agreement for a period of 5 years.

#### **Section 8. Intellectual Property Rights.**

8.1. Inventorship.Inventorship of any invention that is developed, discovered or made by a Party,solely or jointly with the other Party (as applicable, the “Inventor”) pursuantto work conducted under this Agreement (an “Invention”) shall be determined inaccordance with United States laws of inventorship. Subject only to the licenserights granted under this Agreement, each Party shall own the entire right,title and interest in and to any Invention made solely by such Party’semployees or agents, and all intellectual property rights therein and shall ownan undivided one-half interest in and to any Invention made jointly by theemployees or agents of both Parties, and all intellectual property rightstherein. Each Party shall promptly notify the other Party if it determines thatan Invention has been made, including any such jointly owned Invention.

8.2. Prosecutionof Solely-Owned Patents. With respect to any patent that only claimsInventions that are solely-owned by one Party hereunder, the Inventor shallhave the right, at its option and expense, to prepare, file and prosecute inits own name any patents with respect to any such Invention and to maintain anypatents issued thereon. In connection with any such prosecution efforts, theother Party agrees to cooperate reasonably with the Inventor at the Inventor’sexpense in the preparation and prosecution of all such patents and in themaintenance of any patents issued. This obligation shall survive the expirationor termination of this Agreement.

8.3. Prosecutionof Joint Patents. Collagenex will have first right to control thepreparation, filing and prosecution of joint patents and patent applicationsand the maintenance of patents issuing thereon, and QuatRx shall cooperatereasonably with Collagenex in such prosecution efforts. Collagenex shall payall expenses in connection with its preparation, filing and prosecution of suchpatents. Collagenex shall, from time to time (no more often than once percalendar quarter), notify QuatRx of the actual amount of out-of-pocket expensesincurred in such efforts, and QuatRx shall promptly thereafter pay Collagenex50% of such out-of-pocket 

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expenses. Notwithstanding the foregoing, QuatRx shallhave no obligation to pay any fees in connection with the prosecution of anyjoint patent unless the filing of such joint patent is agreed to in writing byQuatRx, provided, however, that if QuatRx refuses to agree to or pay for theprosecution of a joint patent in any jurisdiction, QuatRx shall assign andshall be deemed to have assigned to Collagenex all of QuatRx’s right, title andinterest in such patent and patent application in such jurisdiction. In theevent that Collagenex fails to fulfill its obligations to prepare, file,prosecute and maintain joint patents, QuatRx shall have the right, upon writtennotice to Collagenex, to take over such activities, and Collagenex shall bedeemed to have assigned, and shall assign, all of its rights, title andinterest in and to such joint patents and patent applications to QuatRx. Asused in this Section 8, “out-of-pocket expenses” shall mean direct costs,excluding internal labor costs (and any indirect costs associated therewith).

8.4. CrossLicense to Inventions. Each Party hereby grants to the other an exclusive(except as to the licensing Party), worldwide, sublicensable, right and licenseunder all Inventions, know-how and all patents owned or controlled by suchParty to the extent necessary to make, have made, use, import and exportProducts to the extent necessary to conduct the Development under thisAgreement. In addition, Collagenex hereby grants to QuatRx a non-exclusive, worldwide,sublicensable, right and license under all Inventions, know-how and all patentsowned or controlled by Collagenex to the extent necessary to make, have made,use, import and export Products outside the Territory .

8.5. Enforcement. Collagenex acknowledges and agrees that allprosecution, maintenance and enforcement of QuatRx Inlicensed Patents owned byWARF or Deltanoid shall be the responsibility of WARF. QuatRx hereby grants toCollagenex such rights as QuatRx may have or obtain with respect to theprosecution or enforcement of QuatRx Inlicensed Patents, including the right toprosecute patents related to the Products if WARF declines to do so (to theextent QuatRx obtains such right). Collagenex shall promptly notify QuatRx ofany actual or threatened infringement of the QuatRx Inlicensed Patents and anyjointly owned patents.

8.6. Prosecution and Maintenance of QuatRx Owned Patents. QuatRxshall have sole control and responsibility for prosecution, maintenance andenforcement of all QuatRx Owned Patents. Collagenex shall cooperate with QuatRxin such prosecution, maintenance and enforcement. Collagenex shall promptlynotify QuatRx of any actual or threatened infringement of the QuatRx OwnedPatents.

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####  

#### **Section 9. Indemnification.**

9.1.  Collagenex Indemnification  Collagenex hereby agrees and shall cause itssublicensees to agree to indemnify, defend and hold harmless QuatRx, itsAffiliates and licensees (including, without limitation, WARF and Deltanoid) andtheir respective officers, directors, shareholders, agents, representatives andemployees (“QuatRx Indemnitees”) from and against any and all costs, expenses(including reasonable attorneys’ fees and amounts paid in settlement), damagesand liabilities (including, without limitation, product liability claims)arising out of claims by a third party (a “Claim”) resulting directly orindirectly from Collagenex’s or its Affiliates or sublicensees or theirrespective officers, directors, shareholders, agents, representatives and employeesor any other party acting on their behalf (a) research, development, sale,manufacture, commercialization or marketing of Products and potential Productsor any exercise of the license rights granted hereunder, (b) negligence,willful misconduct or breach of any term, representation or warranty of thisAgreement or (c) failure to adhere to any applicable law, rule or regulation,except to the extent such Claim results from the negligence or willfulmisconduct or breach of this Agreement by a QuatRx Indemnitee.

9.2  QuatRx Indemnification.  QuatRx hereby agrees to indemnify, defend andhold harmless Collagenex, its Affiliates and their respective officers,directors, shareholders, agents, representatives and employees (“CollagenexIndemnitees”) from and against any and all costs, expenses (includingreasonable attorneys’ fees and amounts paid in settlement), damages andliabilities arising out of Claims resulting directly or indirectly from QuatRx’sor its Affiliates’ or their respective officers, directors, shareholders,agents, representatives and employees or any other party acting on their behalf(a) research, development, or manufacture of Products and potential Products,(b) negligence, willful misconduct or breach of any term, representation orwarranty of this Agreement or (c) failure to adhere to any applicable law, ruleor regulation, except to the extent such Claim results from any act for whichCollagenex is obligated to indemnify QuatRx Indemnitees under Section 9.1.

9.3. ClaimManagement.  In the event that aParty is seeking indemnification under this Section 9, it shall inform theother Party of a Claim as soon as reasonably practicable after it receivesnotice of the Claim, shall permit the indemnifying Party to assume directionand control of the defense of the Claim (including the right to settle theClaim solely for monetary consideration), and shall 

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cooperate as requested in the defense and settlementof the Claim. The indemnified Party shall not voluntarily make any payment orincur any expense in connection with any claim or suit without the consent ofthe indemnifying Party, provided that if the indemnifying Party does not assumedirection and control of the defense of the Claim, the indemnified Party mayassume direction and control of the defense of the Claim and, if successful,shall be reimbursed by the indemnifying Party for costs incurred in connectionwith such defense.

9.4. Insurance.  Beginning on the Effective Date, Collagenex shall, at its sole cost andexpense, procure and maintain Product and General Liability Insurance(contractual liability included) with limits as follows:

| ***Each Occurrence — Product***  | *** *** | ***$10,000,000*** |
|---------------------------------------|--------------|-------------------|
| ***Each  Occurrence — General*** | *** *** | ***$1,000,000***  |
| ***Aggregate  — Product***       | *** *** | ***$10,000,000*** |
| ***Aggregate  — General***       | *** *** | ***$2,000,000***  |
| *** ***                          | *** *** | *** ***      |
| ***General  Umbrella / Excess***      | *** *** | ***$10,000,000*** |

 

9.5.  Evidence of Insurance. Collagenex shall provide QuatRx withwritten evidence of such insurance upon request. Collagenex shall provideQuatRx with written notice at least 45 days prior to the cancellation,non-renewal, or material change in such insurance; if Collagenex does notobtain replacement insurance providing comparable coverage within such 45 dayperiod, QuatRx shall have the right to terminate this Agreement effective atthe end of such 45 day period without notice or any additional waiting periods.

9.6.  Insurance RetentionPeriod.  Collagenex shall maintainsuch comprehensive, general liability insurance beyond the expiration ortermination of this Agreement during: (i) the period that any Product is beingcommercially distributed or sold (other than for the purpose of obtainingregulatory approvals) by Collagenex or by an Affiliate or sublicensee ofCollagenex and (ii) a reasonable period after the period referred above, but inno event less than 5 (five) years.

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#### **Section 10. Miscellaneous.**

10.1. DisputeResolution.

10.1.1. Informal Resolution Procedure. The Parties recognize that disputes as tocertain matters may from time to time arise during the term of this Agreementwhich relate to either Party’s rights and/or obligations. It is the objectiveof the Parties to establish procedures to facilitate the resolution of disputesarising under this Agreement in an expedient manner by mutual cooperation andwithout resort to litigation, if possible. To accomplish this objective, theParties agree to follow the procedures set in this Section 10.1 if and when anissue or dispute arises under this Agreement

10.1.2. Chief Executive Discussion. In the event of any claim, controversy,issue or dispute arising out of, or related to, this Agreement which theparties are unable or unwilling to resolve on an informal basis (collectivelyreferred to hereafter as a “Dispute”), the aggrieved Party shall submit writtennotice thereof to the other Party. If representatives of both Parties, otherthan their respective chief executive officers, are unable to resolve any suchDispute arising within their authority within thirty (30) days after receipt ofwritten notice of same, either Party may, by written notice to the other (the “ExecutiveReferral Notice”), require that such Dispute be referred to the Parties’respective chief executive officers for attempted resolution by good faithnegotiations. Within thirty (30) days of the date of the Executive ReferralNotice, such chief executive officers shall meet at a mutually agreeable timeand place and shall use good faith efforts to attempt to resolve such disputeor issue.

10.1.3. BindingArbitration.  If the Dispute is still not resolved 30 daysafter the date of the Executive Referral Notice, the Dispute shall be decidedby arbitration before the American Arbitration Association in accordance withthe Commercial Arbitration Rules (“Rules”) of the American ArbitrationAssociation, unless the Parties agree otherwise. This agreement to arbitrateshall be specifically enforceable under the Federal Arbitration Act. Within 60days of the date of the Executive Referral Notice, each Party shall select anarbitrator and give written notice to the other Party of the identity of sucharbitrator. Within 90 days of the date of the Executive Referral Notice, thearbitrators shall select a neutral arbitrator. The arbitration shall beconducted by such panel of three arbitrators selected in accordance with thisAgreement.  In the event the twoParty-selected arbitrators are unable to agree on the identity of the thirdarbitrator, such third 

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arbitrator shall be a neutral arbitrator selected inaccordance with the Rules. The award rendered by the arbitrators shall be a “reasonedaward”, including findings of fact and conclusions of law. Such award shall befinal and binding on all Parties, and judgment may be entered thereon in anycourt having jurisdiction thereof, except that either Party shall be entitledto de novo review of said award, including the findings of fact and conclusionsof law, in a court of competent jurisdiction in Chicago, Illinois.  The arbitration shall be held in Chicago,Illinois.

10.2. Assignment.

10.2.1. Affiliates.Either Party may assign any of its rights or obligations under this Agreementin any country in the Territory to any Affiliates; provided, however, that suchassignment shall not relieve the assigning Party of its responsibilities forperformance of its obligations under this Agreement, and further provided thatif a proposed assignment would have an adverse financial impact upon the otherParty (e.g., by reason of changed tax treatment of payments due under thisAgreement), such assignment shall be subject to the other Party’s prior writtenconsent.

10.2.2. Merger,Acquisition Or Sale Of Assets. Subject to the terms hereof, either Partymay assign its rights or obligations under this Agreement to a non-Affiliateonly in connection with a merger or similar reorganization or the sale of allor substantially all of its assets or the sale of all or substantially all ofits pharmaceutical and/or healthcare assets, or otherwise without the priorwritten consent of the other Party. This Agreement shall survive any suchmerger or reorganization of either Party with or into, or such sale of assetsto, another party and no consent for such merger, reorganization or sale shallbe required hereunder; provided, that in the event of such merger,reorganization or sale, no intellectual property rights of the acquiringcorporation shall be included in the technology licensed hereunder.

10.2.3. BindingUpon Successors And Assigns. This Agreement shall be binding upon and inureto the benefit of the successors and permitted assigns of the Parties. Anyassignment not in accordance with this Agreement shall be void.

10.3. FurtherActions. Each Party agrees to execute, acknowledge and deliver such furtherinstruments, and to do all such other acts, as may be necessary or appropriatein order to carry out the purposes and intent of this Agreement.

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10.4. NoTrademark Rights. Except as otherwise provided herein, no right, express orimplied, is granted by this Agreement to use in any manner the name QuatRx,Collagenex or any other trade name or trademark of the other Party or itsAffiliates in connection with the performance of this Agreement.

10.5. Notices.All notices hereunder shall be in writing and shall be deemed given ifdelivered personally or by facsimile transmission (receipt verified), telexed,mailed by registered or certified mail (return receipt requested), postageprepaid, or sent by express courier service, to the Parties at the followingaddresses (or at such other address for a Party as shall be specified by likenotice; provided, that notices of a change of address shall be effective onlyupon receipt thereof).

If to QuatRx, addressedto:

QuatRxPharmaceuticals Company777 East Eisenhower Parkway, Suite 100Ann Arbor, MI 48108 Attention:  President and CEOTelephone:  734-913-9900Telecopy:  734-913-0743

If to Collagenex,addressed to:

CollagenexPharmaceuticals, Inc.41 University Drive Suite200Newtown, PA Attention:  President and ChiefExecutive OfficerTelephone:  215-579-7388Telecopy:  215-579-8577

10.6. LimitationOf Liability.  IN NO EVENT SHALLEITHER PARTY OR ITS RESPECTIVE AFFILIATES AND PERMITTED SUBLICENSEES BE LIABLEFOR SPECIAL, EXEMPLARY, CONSEQUENTIAL OR PUNITIVE DAMAGES, WHETHER IN CONTRACT,WARRANTY, TORT, STRICT LIABILITY OR OTHERWISE, except to the extent such Partymay be required to indemnify the other Party from such damages claimed by thirdparties under Article 9.

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10.7. Waiver. Except as specifically provided forherein, the waiver from time to time by either of the Parties of any of theirrights or their failure to exercise any remedy shall not operate or beconstrued as a continuing waiver of same or of any other of such Party’s rightsor remedies provided in this Agreement.

10.8. Severability. If any term, covenant or condition ofthis Agreement or the application thereof to any Party or circumstance shall,to any extent, be held to be invalid or unenforceable, then (i) the remainderof this Agreement, or the application of such term, covenant or condition tothe Parties or under circumstances other than those as to which it is heldinvalid or unenforceable, shall not be affected thereby and each term, covenantor condition of this Agreement shall be valid and be enforced to the fullestextent permitted by law; and (ii) the Parties hereto covenant and agree torenegotiate any such term, covenant or application thereof in good faith inorder to provide a reasonably acceptable alternative to the term, covenant orcondition of this Agreement or the application thereof that is invalid orunenforceable, it being the intent of the Parties that the basic purposes ofthis Agreement are to be effectuated.

10.9. Ambiguities. Ambiguities, if any, in this Agreementshall not be construed against any Party, irrespective of which Party may bedeemed to have authored the ambiguous provision.

10.10. GoverningLaw.  This Agreement is made pursuantto and shall be governed by and construed in accordance with the laws of theState of Michigan, United States, without reference to conflicts of laws’ rulesor principles.

10.11.Bankruptcy Provision.  All rightsand licenses granted by QuatRx to Collagenex under or pursuant to this Agreementare, and shall otherwise be deemed to be, for purposes of Section 365(n) of theU.S. Bankruptcy Code, licenses of rights to “intellectual property” as definedin Section 101 of the Bankruptcy Code. The Parties agree that Collagenex, asexclusive licensee of such rights under this Agreement, shall retain and mayfully exercise all of its rights and elections under the Bankruptcy Code. TheParties further agree that, in the event of the commencement of a bankruptcyproceeding by or against QuatRx under the Bankruptcy Code, Collagenex shall beentitled to a complete duplicate of (or complete access to, as appropriate) anysuch intellectual property and all embodiments of such intellectual property,and same, if not already in its possession, shall be promptly delivered toCollagenex (i) upon such commencement of a bankruptcy proceeding, unless QuatRxelects to continue to 

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perform all of its obligations under this Agreement;or (ii) if not delivered under (i) above, upon rejection of this Agreement byor on behalf of QuatRx.

10.12. Headings. The section headings contained hereinare for the purposes of convenience only and are not intended to define orlimit the contents of said sections.

10.13. Counterparts. This Agreement may be executed in two ormore counterparts, each of which shall be deemed an original, but all of whichtogether shall constitute one and the same instrument.

10.14. EntireAgreement.  This Agreement and allexhibits attached hereto, and all documents delivered concurrently herewith, setforth all the covenants, promises, agreements, warranties, representations,conditions and understandings between the Parties hereto with respect to thesubject matter hereof and supersede and terminate all prior agreements andunderstandings between the Parties as to such subject matter. There are nocovenants, promises, agreements, warranties, representations, conditions orunderstandings, either oral or written, between the Parties with respect tosuch subject matter other than as set forth herein and therein. No subsequentalteration, amendment, change or addition to this Agreement shall be bindingupon the Parties hereto unless reduced to writing and signed by the respectiveauthorized officers of the Parties.

10.15. IndependentContractors.  Each Party acknowledgesthat neither it nor any of its employees are employees of the other Party andthat neither it nor any of its employees are eligible to participate in anyemployee benefit plans of the other Party. Each Party further acknowledges thatneither it nor any of its employees are eligible to participate in any suchbenefit plans even if it is later determined that its or any of its employees’status during the period of this Agreement was that of an employee of the otherParty. In addition, each Party hereby waives any claim that it may have underthe terms of any such benefit plans or under any law for participation in orbenefits under any of the other Party’s benefit plans.

10.16. Use OfNames.  Neither Party shall use thename of the other Party in relation to this transaction in any publicannouncement, press release or other public document without the writtenconsent of such other Party, which consent shall not be unreasonably withheldor delayed; provided, however, that either Party may use the name of the otherParty in any document required to be filed to obtain regulatory approval forProduct or to comply with applicable laws, rules or regulations, including,without limitation, applicable securities laws. The Parties 

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agree that the press release set forth in Exhibit10.16 shall be issued on an agreed upon date and time within five business daysof the execution of this Agreement (or such earlier date on which a Form 8-Kwith respect thereto is required to be filed under U.S. federal securitieslaws).

10.17. ForceMajeure.  Neither Party shall loseany rights hereunder or be liable to the other Party for damages or losses onaccount of failure of performance by the defaulting Party if the failure isoccasioned by government action, war, fire, earthquake, explosion, flood,strike, lockout, embargo, act of God, or any other similar or dissimilar causebeyond the control of the defaulting Party, provided that the Party claimingforce majeure has exerted all reasonable efforts to avoid or remedy such forcemajeure. If such force majeure event cannot be remedied within 120 days ofoccurrence, then the non-defaulting Party shall have the right to terminatethis Agreement upon written notice to the other Party.

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**IN WITNESS WHEREOF**,the parties hereto have duly executed this Sub-License Agreement as of theEffective Date.
| **QUATRX PHARMACEUTICALS  COMPANY** | ** **               | **COLLAGENEX  PHARMACEUTICALS, INC.** |       |                |
|-------------------------------------|--------------------------|---------------------------------------|------------|---------------------|
| ** **                          | ** **               | ** **                            | ** ** | ** **          |
| By:                                 | /s/ C. I.  Nicholas      |                                  | By:        | /s/ Colin Stewart   |   |   |
|                                | (Signature)              |                                  |       | (Signature)         |   |   |
|                                | C. I. Nicholas           |                                  |       | Colin Stewart       |   |   |
|                                | (Print Name)             |                                  |       | (Print Name)        |   |   |
| Title:                              | Chief Operating  Officer |                                  | Title:     | President & CEO |   |   |
|                                |                     |                                  |       |                |   |   |

 

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**EXHIBIT A**

**TOSUB-LICENSE AGREEMENT**

QuatRx Owned Patents:

U.S.Provisional No. [**].

U.S. Provisional No. [**].

QuatRx In-Licensed Patents:

See attachedschedule 1 to Exhibit A

 

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**SCHEDULE1 TO EXHIBIT ATO SUB-LICENSE AGREEMENT**

** **

Confidential Materialsomitted and filed separately with the Securities and Exchange Commission.Asterisks denote omissions. 

                                   [**]

 

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#  

**EXHIBIT B**

**TO SUB-LICENSEAGREEMENT**

COLLAGENEXBECOCALCIDIOL DEVELOPMENT PLAN

The following is abroadly defined development plan for becocalcidiol given what is known aboutthe compound to date. As future requirements of regulatory agencies anddecisions based upon safety, efficacy, and supply of compound cannot bedetermined at this time, this plan should be used as a general outline.

*Process Development:*[**].

*Clinical:*Phase II study — [**].

Phase II study — [**].

Phase III studies — [**].

[**].

*Preclinical:*[**]

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**EXHIBIT C**

**TOSUB-LICENSE AGREEMENT**

COLLAGENEXDILIGENCE MILESTONES

1.               Dosethe first patient in a Phase II trial of a Product within [**] of the EffectiveDate.

2.               Initiatecarcinogenicity toxicology studies to support a Product NDA within [**] yearsof the Effective Date.

3.               Dosethe first patient in a Phase III trial of a Product within [**] years of theEffective Date.

4.               Submitan NDA for a Product with the FDA within [**] years of the Effective Date.

5.               Submitan application for marketing approval in the European Union to a foreignequivalent of the FDA within [**] years of the Effective Date.

6.               Achievethe First Commercial Sale of a Product in the United States within [**] monthsafter approval by the FDA.

7.               Launchand market each subsequent Product in the United States within [**] months ofreceiving approval for such Product from the FDA.

8.               Atleast [**] months prior to submission for approval of an NDA for a Product,prepare and submit to QuatRx in writing a list of countries, other than theUnited States and European Union, in which CollaGenex intends to file formarketing approval for sale of such Product. Within [**] months from NDAapproval of a Product in the United States, prepare and submit to QuatRx forapproval a schedule of milestone dates by which CollaGenex intends to file formarketing approval for sale of a Product for human use in those countries orregions other than the USA or the European Union that are in the Territory,which dates, once approved by QuatRx, shall be considered Diligence Milestones.

9.               Fillthe market demand for Products following commencement of marketing.

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**EXHIBIT 10.16**

**TOSUB-LICENSE AGREEMENT**

Press Release
|        |   | CollaGenex Company      |
|--------|--------|-------------------------|
|   |   | Contact:                |
|   |   | Nancy Broadbent         |
|   |   | Chief Financial Officer |
|   |   | (215) 579-7388          |
|   |   |                    |
|   |   | QuatRx Company Contact: |
|   |   | Julia Owens             |
|   |   | (734) 913-9900          |

 

CollaGenexPharmaceuticals and QuatRx Pharmaceuticals Announce Agreement for theDevelopment and Commercialization of Becocalcidiol

Newtown,PA and Ann Arbor, MI, May   , 2007—CollaGenex Pharmaceuticals, Inc. (Nasdaq:CGPI) and QuatRx Pharmaceuticals Company today announced a licensing agreementto develop and commercialize becocalcidiol, a patented Vitamin D analoguecurrently in Phase II clinical trials for the topical treatment of mild tomoderate psoriasis. Unlike all other Vitamin D-based treatments for psoriasis,becocalcidiol does not appear to induce hypercalcemia, a significantdose-limiting toxicity. According to the National Institutes of Health, approximately7.5 million Americans have psoriasis, a non-contagious, chronic skin diseasecharacterized by itching and red, scaly patches of skin.

Colin Stewart, president andchief executive officer of CollaGenex, said, “We have been in discussions withQuatRx for a number of months and have been very impressed with the quality oftheir research and development efforts. This license is another important stepin executing our strategy to become a leader in therapeutic dermatology bydeveloping a broad portfolio of innovative, proprietary products. The marketfor non-biological treatments of psoriasis is currently $600 million. Thiscompound has great potential as a unique treatment for psoriasis and is anexcellent fit for CollaGenex.”

Dr. Klaus Theobald, Chief MedicalOfficer of CollaGenex, commented, “Becocalcidiol has shown efficacy in theclinic and appears to be a non-irritating formulation for the treatment ofpsoriasis. It is unique among available Vitamin D analogues because it does notseem to promote hypercalcemia. If successfully developed, this product couldprovide significant advances in the topical treatment of psoriasis.”

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Robert Zerbe, M.D.,president and chief executive officer of QuatRx, said, “QuatRx is extremelypleased to have CollaGenex continue the development of becocalcidiol. With itsstrong development team and expertise in dermatology, we believe CollaGenex isthe ideal strategic partner to maximize the potential of this important newproduct candidate.”

The license provides for theright to practice various patents, patent applications and related technologycovering the compound and methods of using it topically to treat psoriasis andother skin diseases. Under the terms of the agreement, CollaGenex will pay anupfront licensing fee of $1.5 million to QuatRx and will be responsible for allfurther development costs. Additional fees are payable upon the achievement ofvarious development and sales milestones. The agreement also provides forroyalty payments linked to future product sales.

**AboutQuatRx**

QuatRx Pharmaceuticals Company is a privately-held biopharmaceuticalcompany focused on the discovery, development and commercialization ofcompounds to treat endocrine, metabolic and cardiovascular disorders. Inaddition to becocalcidiol, QuatRx has three other product candidates inclinical development and two in preclinical development. OphenaTM, being studiedin a large Phase 3 trial, is a potential estrogen-free therapy forpost-menopausal vaginal syndrome, a common problem that results from thinningof vaginal tissues associated with estrogen deficiency of menopause.Fispemifene is a new, selective estrogen receptor antagonist that is in Phase 2studies as an oral treatment for testosterone deficiency and associateddisorders in men. QRX-431, a novel, selective thyroid receptor beta antagonist,is in Phase 1 studies as a potential treatment for lipid disorders and obesity.QuatRx’s two preclinical small molecule drug programs are designed to addresscommon endocrine disorders in women.

**About CollaGenex**

CollaGenex Pharmaceuticals, Inc. is a specialty pharmaceutical companycurrently focused on developing and marketing proprietary, innovative medicaltherapies to the dermatology market. In July 2006, CollaGenex launched Oracea,the first FDA-approved systemic product for the treatment of rosacea. CollaGenex’sprofessional dermatology sales force also markets Pandel, a prescriptiontopical corticosteroid licensed from Altana, Inc., Alcortin(R) (1% iodoquinoland 2% hydrocortisone), a prescription topical antifungal steroid combination,and Novacort(R) (2% hydrocortisone acetate and 1% pramoxine HCl), aprescription topical steroid and anesthetic. Alcortin and Novacort are marketedby the Company under a Promotion and Cooperation agreement with PrimusPharmaceuticals, Inc. CollaGenex is conducting two Phase II dose-findingstudies to evaluate its second dermatology candidate, incyclinide, for thetreatment of acne and rosacea, respectively. CollaGenex is also conductingPhase II clinical trials to evaluate COL-118, a topical compound based on theSansRosa technology, for the treatment of redness associated with rosacea andother skin disorders.

Research has shown that compounds can be created by chemicallymodifying certain tetracyclines and that these new compounds have propertiesthat may make them effective in treating diseases involving inflammation and/ordestruction of the body’s connective tissues. 

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CollaGenex is evaluating various chemically modifiedtetracyclines (so called “IMPACS”(TM) compounds because they are Inhibitors ofMultiple Proteases And CytokineS) to assess whether they are safe and effectivein these applications. The Company has a pipeline of innovative productcandidates with possible applications in dermatology and other disease states. Inaddition, CollaGenex has acquired the SansRosa(TM) technology, which consistsof a class of compounds that have shown promise in reducing the rednessassociated with rosacea, and the Restoraderm(R) technology, a unique,proprietary dermal drug delivery system. CollaGenex plans to leverage theseplatforms to develop a range of topical dermatological products with enhancedpharmacologic and cosmetic properties.

To receive additional information on the Company, please visit ourWebsite at www.collagenex.com, which does not form part of this press release.

Statements in this press release regarding management’s futureexpectations, beliefs, intentions, goals, strategies, plans or prospects,including statements relating to the Company’s plans to develop becocalcidioland its future research and development efforts relating to Oracea, incyclinideand COL-118 and its dermatology franchise, product pipeline and intellectual,property, may constitute forward-looking statements within the meaning of thePrivate Securities Litigation Reform Act of 1995. Forward-looking statementscan be identified by terminology such as “anticipate,” “believe,” “could,” “couldincrease the likelihood,” “estimate,” “expect,” “intend,” “is planned,” “may,” “should,”“will,” “will enable,” “would be expected,” “look forward,” “may provide,” “would”or similar terms, variations of such terms or the negative of those terms. Suchforward-looking statements involve known and unknown risks, uncertainties andother factors including those risks, uncertainties and factors referred to inthe Company’s Annual Report on Form 10-Q for the quarter ended March 31, 2007filed with the Securities and Exchange Commission under the section “RiskFactors,” as well as other documents that may be filed by CollaGenex from timeto time with the Securities and Exchange Commission. As a result of such risks,uncertainties and factors, the Company’s actual results may differ materiallyfrom any future results, performance or achievements discussed in or implied bythe forward-looking statements contained herein. CollaGenex is providing theinformation in this press release as of this date and assumes no obligations toupdate the information included in this press release or revise anyforward-looking statements, whether as a result of new information, futureevents or otherwise.

**Periostat(R), Restoraderm(R) and Oracea(R) areregistered trademarks and IMPACS(TM) and SansRosa(TM)****aretrademarks of CollaGenex Pharmaceuticals, Inc.**

**Novacort(R) and Alcortin(R) are trademarks of PrimusPharmaceuticals, Inc.**

**Pandel(R) is a trademark of Taisho Pharmaceuticals.**

**Atridox(R), Atrisorb(R) and Atrisorb-D(R) areregistered trademarks of Tolmar, Inc.**

**Ophena**TM **is a trademark of QuatRxPharmaceuticals Company.**

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**All other trade names, trademarks or service marks are theproperty of their respective owners and are not the property of CollaGenexPharmaceuticals, Inc. or any of our subsidiaries.**

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