Document:

AFTER RECORDING RETURN TO:

Suzanne H. Johnson, Esq.
Jenner & Block, LLC
One IBM Plaza
Chicago, Illinois 60611

PERMANENT INDEX NUMBER:

3216203013
3216203014

PROPERTY ADDRESS:

500 State Street
Chicago Heights, Illinois 60411

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

                        EIGHTH AMENDMENT TO MORTGAGE AND
                         ASSIGNMENT OF RENTS AND LEASES

     THIS EIGHTH  AMENDMENT TO MORTGAGE AND ASSIGNMENT OF RENTS AND LEASES (this
"Instrument")  dated as of January 31, 2003 is between CFC  INTERNATIONAL,  INC.
(the  "Mortgagor"),   and  LASALLE  BANK  NATIONAL  ASSOCIATION  (f/k/a  LaSalle
Northwest National Bank), a national banking association (the "Mortgagee").

                                R E C I T A L S:

     A. The Mortgagor  executed a Mortgage (the "Mortgage")  dated June 10, 1986
and  recorded  on June 11, 1986 as  Document  No.  86236291 in the Office of the
Recorder  of  Deeds  of  Cook  County,   Illinois  (the  "Recorder's   Office"),
encumbering  certain  property  commonly  known  as 500  State  Street,  Chicago
Heights,  Illinois  and as more  particularly  described  in  Exhibit A attached
hereto (the "Premises").

     B.  The  Mortgagor   executed  an  Assignment  of  Rents  and  Leases  (the
"Assignment" and, together with the Mortgage, the "Collateral  Documents") dated
as of June 10, 1986 and  recorded on June 11, 1986 as Document  No.  86236292 in
the Recorder's Office and relating to the Premises.

     C. The Collateral Documents were amended pursuant to:

     (i) First Amendment dated May 4, 1987 and recorded in the Recorder's Office
on May 6, 1987 as Document No. 87244769;

     (ii)  Second  Amendment  dated  December  16,  1988  and  recorded  in  the
Recorder's Office on December 21, 1988 as Document No. 88587863;

     (iii) Third  Amendment  dated March 31, 1992 and recorded in the Recorder's
Office on May 5, 1992 as Document No. 92305060;

     (iv) Fourth  Amendment  dated June 1, 1996 and  recorded in the  Recorder's
Office on June 21, 1996 as Document No. 96479606;

<PAGE>

     (v) Fifth  Amendment  dated April 1, 1998 and  recorded  in the  Recorder's
Office on November 9, 1998 as Document No. 08010241;

     (vi) Sixth Amendment dated November 13, 1998 and recorded in the Recorder's
Office on July 20, 2000, 1998 as Document No. 00543598; and

     (vii) Seventh  Amendment  dated May 17, 2001 and recorded in the Recorder's
Office on May 25, 2001 as Document No. 0010448755.

     D.  Mortgagee  extended  to the  Mortgagor  a term loan (the "Term  Loan"),
pursuant to that certain Amended and Restated Loan and Security  Agreement dated
as of April 1, 1998, as amended,  the outstanding  principal amount of which was
$2,349,162 as of January 31, 2003.  The Term Loan bears  interest as provided in
the Loan Agreement (as defined  below) and is evidenced by that certain  Amended
and Restated Term Note dated January 31, 2003 (the "Term Note").

     E. Mortgagor and the Mortgagee  then entered into that certain  Amended and
Restated Loan and Security  Agreement  dated as of May 17, 2001 (as the same may
have been heretofore amended, restated,  supplemented or otherwise modified from
time to time, the "Loan Agreement"), pursuant to which the Mortgagee extended to
the Mortgagor,  among other things, (i) a revolving loan (the "Revolving Loan"),
the outstanding  principal amount of which is not to exceed $5,500,000,  bearing
interest as provided in the Loan Agreement and evidenced by that certain Amended
and Restated Revolving Note dated as of January 31, 2003 (the "Revolving Note");
and (ii) a second term loan (the "Second Term Loan"), the outstanding  principal
amount of which was  $4,806,574  as of January  31,  2003.  The Second Term Loan
bears  interest as  provided  in the Loan  Agreement  and is  evidenced  by that
certain  Amended and Restated  Second Term Note dated as of the date hereof (the
"Second Term Note,"  together  with the Term Note and the  Revolving  Note,  the
"Notes").

     F. Mortgagor  intends to enter into a First Amendment to the Loan Agreement
dated the date hereof (the "First Amendment")  pursuant to which Mortgagee will,
among other things,  (i) extend the maturity of the Revolving  Loan, (ii) extend
the  maturity  of the Term Loan and the  Second  Term  Loan,  (iii)  change  the
interest  rate payable on the Term Loan and the Second Term Loan and (iv) modify
certain other terms of the Loan Agreement.

     G.  Mortgagee  is willing to enter into the First  Amendment  only upon the
condition  that the  Mortgagor  execute and deliver this  Instrument in favor of
Mortgagee.

<PAGE>

     NOW, THEREFORE, FOR GOOD AND VALUABLE CONSIDERATION, the mutual receipt and
sufficiency of which are hereby  acknowledged,  Mortgagor and Mortgagee agree as
follows:

     1. Recitals.

     The  Recitals  set forth above are  incorporated  herein by this  reference
thereto as if fully set forth herein.

     2. Amendment to Mortgage.

     Effective as of the date hereof, the Mortgage shall be amended as follows:

     "Note". All references in the Collateral Documents to the "Note" or "Notes"
shall be deemed to be a reference to the Term Note,  the Revolving  Note and the
Second Term Note as defined herein and any  extensions  and renewals  thereof in
whole or in part.

     3. No Further Amendment.

     This  Instrument  is given  solely to amend and modify the  Mortgage as set
forth herein.  No further  amendment or  modification of the Mortgage is made or
intended,  and the respective  terms and provisions  thereof shall, as expressly
amended and  modified  hereby,  continue in full force and effect after the date
hereof. The warranties,  representations,  covenants and agreements contained in
the Mortgage as herein  expressly  amended,  are hereby  ratified,  approved and
confirmed in every  respect.  Mortgagor  also hereby (i) expressly  ratifies and
confirms, as of the date of the Mortgage and as of the date hereof, the grant by
Mortgagor of the liens,  charges,  security interests and encumbrances on and in
all of the property and interests in property  created or intended to be created
by the Mortgage, in each case as amended and modified hereby and (ii) represents
and warrants  that  Mortgagor  has not created or suffered or permitted to exist
any other lien,  charge,  security  interest or encumbrance  upon or in any such
property or interests in property  subsequent  to the  execution and delivery of
the  Mortgage,  other  than as  expressly  permitted  pursuant  to the terms and
provisions thereof.

     4. No Release.

     The indebtedness, liabilities and other Liabilities secured by the Mortgage
are  continuing  obligations  and nothing  contained  herein  shall be deemed to
release,   terminate  or  subordinate  any  lien,  charge,   security  interest,
assignment or other encumbrance created or evidenced thereby and all such liens,
charges,  security  interests,  assignments  and  encumbrances  and the priority
thereof shall relate back to the respective  recordation  dates for the Mortgage
as referenced herein. This Instrument is not intended and shall not be deemed or
construed to in any way effect the enforceability or priority of the Mortgage or
constitute  a novation,  termination  or  replacement  of all or any part of the
indebtedness, liabilities or other obligations secured thereby.

<PAGE>

     5. Successors and Assigns; Agents; Captions.

     The covenants and  agreements  contained  herein shall bind, and the rights
thereunder  shall inure to, the  respective  successors and assigns of Mortgagor
and Mortgagee. In exercising any rights under the Collateral Documents or taking
any actions  provided  for  therein,  Mortgagee  may act through its  employees,
agents or independent  contractors as authorized by Mortgagee.  The captions and
headings of the paragraphs of this Instrument are for  convenience  only and are
not to be used to interpret or define the provisions hereof.

     6. Recordation; Expenses.

     Mortgagor  shall cause this  Instrument  to be  recorded  in the  recording
office  applicable  to the  Mortgage  and/or  such  other  places as  reasonably
requested by  Mortgagee,  and Mortgagor  shall pay to Mortgagee  all  reasonable
expenses  incurred by Mortgagee in connection with the  preparation,  execution,
filing  and  recordation  of  this  Instrument,  including  without  limitation,
reasonable attorneys' fees.

     7. Counterparts.

     This  Instrument  may be executed  in any number of original  counterparts,
each of  which  when so  executed  shall be  deemed  to be an  original  for all
purposes,  and all  counterparts  shall  together  constitute  one and the  same
instrument.

     8. Governing Law; Severability.

     THIS  INSTRUMENT  SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS OF THE STATE OF ILLINOIS,  EXCEPT THAT THE  PROVISIONS OF THE LAWS
OF THE  JURISDICTION  IN WHICH THE LAND IS LOCATED  SHALL BE  APPLICABLE  TO THE
CREATION, PERFECTION AND ENFORCEMENT OF THE LIEN CREATED BY THE MORTGAGE AND THE
EXERCISE OF REMEDIES HEREUNDER OR THEREUNDER MANDATORILY GOVERNED BY THE LAWS OF
THE  STATE  IN  WHICH  THE  LAND  IS  LOCATED.  THE  INVALIDITY,  ILLEGALITY  OR
UNENFORCEABILITY  OF ANY PROVISION OF THIS INSTRUMENT SHALL NOT AFFECT OR IMPAIR
THE VALIDITY, LEGALITY OR ENFORCEABLITY OF THE REMAINDER OF THIS INSTRUMENT, AND
TO THIS END, THE PROVISIONS OF THIS INSTRUMENT ARE DECLARED TO BE SEVERABLE.

                  -Remainder of Page Intentionally Left Blank-
                            [SIGNATURE PAGE FOLLOWS]

<PAGE>

     IN WITNESS WHEREOF, this Amendment has been duly executed as of the day and
year first above written.

LASALLE BANK NATIONAL                       CFC INTERNATIONAL, INC.
ASSOCIATION

By:___________________________                By:___________________________
Its:__________________________                Its:__________________________

This Document Prepared by:

Suzanne H. Johnson, Esq.
Jenner & Block, LLC
One IBM Plaza
Chicago, Illinois 60611

<PAGE>

STATE OF ILLINOIS          )
                           )       SS
COUNTY OF COOK             )

     I, the  undersigned,  a Notary Public in and for said County,  in the State
aforesaid do hereby certify that ___________________ of CFC INTERNATIONAL, INC.,
who is personally  known to me to be the same person whose name is subscribed to
the foregoing instrument as such __________________, appeared before me this day
in person and acknowledged  that he/she signed and delivered the said instrument
as his/her own free and  voluntary act and as the free and voluntary act of said
corporation, for the uses and purposes therein set forth.

     GIVEN under my hand and notarial seal this __ day of January, 2003.

                                                  --------------------
                                                     Notary Public

SEAL:

<PAGE>

STATE OF ILLINOIS          )
                           )       SS
COUNTY OF COOK             )

     I, the  undersigned,  a Notary Public in and for said County,  in the State
aforesaid,  do hereby certify that  ___________________ of LASALLE BANK NATIONAL
ASSOCIATION,  who is personally  known to me to be the same person whose name is
subscribed to the foregoing instrument as such  _____________________,  appeared
before me this day in person and  acknowledged  that he/she signed and delivered
the said  instrument  as his/her own free and  voluntary act and as the free and
voluntary act of said Bank, for the uses and purposes therein set forth.

     GIVEN under my hand and notarial seal this __ day of January, 2003.

                                               ------------------------
                                                      Notary Public

SEAL:

<PAGE>

                   EXHIBIT A TO SEVENTH AMENDMENT TO MORTGAGE
                               (Legal Description)

THOSE PARTS OF THE SOUTHEAST 1/4 OF THE NORTHEAST 1/4 OF SECTION 16, TOWNSHIP 35
NORTH, RANGE 14 EAST OF THE THIRD PRINCIPAL MERIDIAN, DESCRIBED AS FOLLOWS:

BEGINNING AT A POINT IN THE EAST AND WEST CENTER LINE OF SECTION 16, TOWNSHIP 35
NORTH,  RANGE  14,  EST OF THE  THIRD  PRINCIPAL  MERIDIAN,  50 FEET  WESTWARDLY
MEASURED  ALONG SAID CENTER LINE FROM THE SOUTHEAST  CORNER OF THE NORTHEAST 1/4
OF SECTION  16;  THENCE  CONTINUING  WESTWARDLY  ALONG SAID EAST AND WEST CENTER
LINE,  557.73  FEET;  THENCE  NORTHWARDLY  PARALLEL  WITH THE EAST  LINE OF SAID
SECTION 16, A DISTANCE OF 162.00 FEET; THENCE EASTWARDLY PARALLEL WITH SAID EAST
AND WEST CENTER LINE, 92.00 FEET; THENCE NORTHWARDLY PARALLEL WITH THE EAST LINE
OF SAID SECTION 16, A DISTANCE OF 161.00 FEET; THENCE  EASTWARDLY  PARALLEL WITH
SAID EAST AND WEST CENTER LINE, 48.50 FEET; THENCE NORTHWARDLY PARALLEL WITH THE
EAST LINE OF SAID  SECTION 16, A DISTANCE  OF 230.30  FEET;  THENCE  EASTWARDLY,
PARALLEL WITH SAID EAST AND WEST CENTER LINE,  417.23 FEET;  THENCE  SOUTHWARDLY
PARALLEL WITH THE EAST LINE OF SAID SECTION 16, A DISTANCE OF 553.30 FEET TO THE
POINT OF BEGINNING, IN COOK COUNTY, ILLINOIS.

        P.I.N. #: 3216-203013

COMMENCING  AT A POINT 1N THE EAST AND WEST CENTER LINE OF SECTION 16,  TOWNSHIP
35 NORTH, RANGE 14, EAST OF THE THIRD PRINCIPAL MERIDIAN, 607.73 FEET WESTWARDLY
MEASURED  ALONG SAID EAST AND WEST CENTER LINE FROM THE SOUTHEAST  CORNER OF THE
NORTHEAST 1/4 OF SAID SECTION 16; THENCE NORTHWARDLY PARALLEL WITH THE EAST LINE
OF SAID SECTION 16, A DISTANCE OF 162.00 FEET; THENCE  EASTWARDLY  PARALLEL WITH
SAID EAST AND WEST CENTER LINE, 92.00 FEET;  THENCE  NORTHWARDLY,  PARALLEL WITH
THE EAST LINE OF SAID  SECTION  16, A  DISTANCE  OF 161.00  FEET TO THE POINT OF
BEGINNING  OF THE  HEREINAFTER  DESCRIBED  PARCEL  OF  LAND;  THENCE  EASTWARDLY
PARALLEL  WITH SAID EAST AND WEST CENTER LINE, A DISTANCE OF 48.50 FEET;  THENCE
NORTHWARDLY PARALLEL WITH THE EAST LINE OF SAID SECTION 16, A DISTANCE OF 230.30
FEET; THENCE WESTWARDLY  PARALLEL WITH THE EAST AND WEST CENTER LINE, A DISTANCE
OF 48.50 FEET;  THENCE  SOUTHWARDLY  PARALLEL WITH THE EAST LINE OF SAID SECTION
16, A  DISTANCE  OF  230.30  FEET TO THE  POINT OF  BEGINNING,  IN COOK  COUNTY,
ILLINOIS.

        P.I.N. #:3216203-014================================================================================
                                                                   EXHIBIT 10.10

                   EXCLUSIVE LICENSE AGREEMENT FOR TOSTREX(TM)

                                     BETWEEN

                                    PDI, INC.

                                       AND

                          CELLEGY PHARMACEUTICALS, INC.

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

================================================================================
<PAGE>

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

ARTICLE 1 DEFINITIONS....................................................      1

           "Affiliates"..................................................      1
           "Agreement"...................................................      1
           "Approvals"...................................................      2
           "Auditor".....................................................      2
           "Cellegy Information "........................................      2
           "Dollars" or "$"..............................................      2
           "Defective Product"...........................................      2
           "Exclusive License"...........................................      2
           "Effective Date"..............................................      2
           "FDA".........................................................      2
           "FD&C Act"....................................................      2
           "Good Manufacturing Practice".................................      2
           "Improved Product"............................................      2
           "Intellectual Property Rights"................................      2
           "Joint Management Committee"..................................      2
           "Launch Date".................................................      3
           "Loss"........................................................      3
           "Licensed Product"............................................      3
           "Know-How"....................................................      3
           "Net Sales"...................................................      3
           "Patent Rights"...............................................      3
           "Proprietary Rights"..........................................      3
           "Relevant Regulatory Authority"...............................      4
           "Territory"...................................................      4
           "Third Party".................................................      4
           "Trademark"...................................................      4
           "Sublicensee".................................................      4

ARTICLE 2 REPRESENTATIONS AND WARRANTIES.................................      4

   2.1     "Representations and Warranties of Cellegy"...................      4
   2.2     "Representations and Warranties of Licensee"..................      6

ARTICLE 3 GRANT OF LICENSE...............................................      6

   3.1     "Grant".......................................................      6
   3.2     "Addition to the Territory"...................................      6
   3.3     "Restrictions on Territory "..................................      6
   3.4     "Right to sub-license in the Territory".......................      6
   3.5     "[*]".........................................................      7
   3.6     "Marketing Effort"............................................      7
   3.7     "Maintenance of Exclusivity ".................................      7
   3.8     "Covenant not to Compete".....................................      8
   3.9     "Notice of Other Testosterone Product Deals"..................      8

                                                                   REDACTED COPY
<PAGE>

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

                           Table of Contents (Cont'd)

                                                                            Page
                                                                            ----

ARTICLE 4 LICENSE FEE AND MILESTONE PAYMENTS.............................      8

   4.1     "License Fee".................................................      8
   4.2     "Milestone Payments ".........................................      8
   4.3     "Fee Conditions ".............................................      8

ARTICLE 5 ROYALTIES AND PAYMENTS FOR ORDERED GOODS.......................      8

   5.1     "Royalties in General"........................................      8
   5.2     "Royalty Defined".............................................      9
   5.3     "Burdened Costs ".............................................      9
   5.4     "Minimum Royalty".............................................      9

ARTICLE 6 ROYALTY REPORTS AND ACCOUNTING.................................     10

   6.1     "Royalty Reports; Records"....................................     10
   6.2     "Payment Due Dates"...........................................     10
   6.3     "Right to Audit Licensee".....................................     11
   6.4     "Right to Audit Cellegy"......................................     11
   6.5     "Overpayment or Underpayment of Burdened Cost"................     11
   6.6     "Disagreement with Auditor Findings"..........................     11

ARTICLE 7 SUPPLY OF LICENSED PRODUCT BY CELLEGY..........................     12

   7.1     "Purchasing Commitment".......................................     12
   7.2     "Forecasts and Ordering Procedure"............................     12
   7.3     "Orders"......................................................     13
   7.4     "Production and Supply of Licensed Product "..................     13
   7.5     "Defective Product"...........................................     13
   7.6     "Product Packaging "..........................................     14
   7.7     "Title and Risk of Loss ".....................................     14
   7.8     "United States Export Controls "..............................     14
   7.9     "Supply Warranty and Disclaimer ".............................     14
   7.10    "Remedy for Failure to Supply Licensed Product"...............     15

ARTICLE 8 PATENT RIGHTS..................................................     16

   8.1     "No Ownership by Licensee "...................................     16
   8.2     "New Cellegy Inventions/Improvements "........................     17
   8.3     "Improvements by Licensee "...................................     17
   8.4     "[*]".........................................................     17

ARTICLE 9 INFRINGEMENT AND OTHER CLAIMS..................................     18

   9.1     "Infringement by Third Person"................................     18
   9.2     "Alleged Infringement of Third Party Patents".................     18
   9.3     "By Cellegy"..................................................     19

                                                                   REDACTED COPY
<PAGE>

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

                           Table of Contents (Cont'd)

                                                                            Page
                                                                            ----

   9.4     "By Licensee".................................................     19
   9.5     "Conditions to Indemnification"...............................     19
   9.6     "Control of Proceedings"......................................     20
   9.7     "Indemnification Claim".......................................     20
   9.8     "Assumption of Defense by Cellegy"............................     20

ARTICLE 10 CONFIDENTIALITY...............................................     20

   10.1    "Treatment of Confidential Information".......................     20
   10.2    "Right to Disclose"...........................................     20
   10.3    "Release From Restrictions"...................................     21
   10.4    "Confidentiality of Agreement"................................     21
   10.5    "Return of Confidential Information"..........................     21

ARTICLE 11 TRADEMARKS....................................................     22

   11.1    "Cellegy's Marks".............................................     22
   11.2    "Use of Cellegy's Marks by Licensee ".........................     22
   11.3    "Acknowledgment of Ownership".................................     22
   11.4    "Marking "....................................................     22
   11.5    "Registration "...............................................     22
   11.6    "Infringement Information "...................................     22
   11.7    "Termination of Use ".........................................     22
   11.8    "Trademarks"..................................................     22

ARTICLE 12 TERM; TERMINATION.............................................     23

   12.1    "Term"........................................................     23
   12.2    "Bilateral Termination Rights"................................     23
   12.3    "Bankruptcy Rights"...........................................     23
   12.4    "Rights Upon Termination or Expiration".......................     24

ARTICLE 13 REGULATORY MATTERS............................................     24

   13.1    "Licensee's Obligations ".....................................     24
   13.2    "Cellegy's Obligations "......................................     25
   13.3    "Adverse Drug Events and Recalls "............................     25
   13.4    "Approvals "..................................................     26
   13.5    "Cellegy Information Warranties ".............................     26
   13.6    "Insurance "..................................................     27

ARTICLE 14 REGISTRATION OF LICENSE; LIMITATION OF LIABILITY..............     27

   14.1    "Registration of License "....................................     27
   14.2    "Limitation of Liability "....................................     27

ARTICLE 15 [*]...........................................................     27

                                                                   REDACTED COPY
<PAGE>

                           Table of Contents (Cont'd)

                                                                            Page
                                                                            ----

ARTICLE 16 GENERAL PROVISIONS............................................     28

   16.1    "Force Majeure"...............................................     28
   16.2    "Further Assurances"..........................................     28
   16.3    "Severability"................................................     28
   16.4    "Notices".....................................................     28
   16.5    "Assignment"..................................................     29
   16.6    "Amendment"...................................................     29
   16.7    "Entire Agreement"............................................     29
   16.8    "Waiver"......................................................     29
   16.9    "No Implied Licenses".........................................     29
   16.10   "Injunctions".................................................     29
   16.11   "Independent Contractors".....................................     29
   16.12   "No Third Party Beneficiaries"................................     30
   16.13   "Governing Law"...............................................     30
   16.14   "Headings"....................................................     30
   16.15   "Counterparts"................................................     30
   16.16   "Publicity"...................................................     30
   16.17   "Resolution of Disputes"......................................     30

SIGNATURES

EXHIBIT A  -  REPORTING OF ADVERSE DRUG EVENTS

EXHIBIT B  -  MINIMUM SALES REQUIREMENTS

EXHIBIT C  -  PATENT RIGHTS

EXHIBIT D  -  OTHER TESTOSTERONE PRODUCTS

EXHIBIT E  -  BURDENED COSTS

EXHIBIT F  -  TRADEMARKS

                                                                   REDACTED COPY
<PAGE>

                           EXCLUSIVE LICENSE AGREEMENT

      THIS EXCLUSIVE  LICENSE  AGREEMENT (this  "Agreement") is made and entered
into as of December 31st,  2002 (the "Effective  Date"),  by and between Cellegy
Pharmaceuticals,  Inc., a California corporation  ("Cellegy"),  and PDI, Inc., a
Delaware corporation ("Licensee").

                              W I T N E S S E T H:

      WHEREAS,  Cellegy owns or possesses certain  intellectual  property rights
current  and  pending  with  respect to the  Licensed  Product  (as  hereinafter
defined)  and  certain  rights  pertaining  to  the  Trademark  (as  hereinafter
defined);

      WHEREAS, Licensee desires to obtain an exclusive license to certain rights
current and pending to the Licensed  Product  under such  intellectual  property
rights, and to the Trademark within the Territory (as hereinafter defined);

      WHEREAS,  Cellegy  is willing to grant an  exclusive  license to  Licensee
under such current and pending  intellectual  property rights, and is willing to
grant an  exclusive  license  to the  Trademark  to  Licensee,  each  within the
Territory,  all as more particularly  described in, and subject to the terms and
conditions of, this 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 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;

            (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.

                                                                           --1--
                                                                   REDACTED COPY
<PAGE>

      "Agreement" means this Exclusive License Agreement.

      "Approvals" are registration  approvals,  registrations or  authorizations
provided  by  the  Relevant  Regulatory  Authority  in  the  Territory  for  the
manufacturing,  importation,  storage,  promotion,  sale or  distribution of the
Licensed Product.

      "Auditor" shall mean an independent public accountant and auditor that has
not been  employed  or had been  employed  by  Licensee,  Cellegy  or PanGeo and
possesses no beneficial ownership of Cellegy, Licensee or PanGeo.

      "Cellegy   Information"  means  the  technical  and  clinical  information
concerning  the Licensed  Product that is developed by Cellegy or licensed in by
Cellegy (with the right to grant  sublicense  rights to  Licensee),  and that is
included in the new drug application filed with the FDA, and Cellegy's  European
common technical  document format,  and which may include,  without  limitation,
data in support of registered indications,  bioequivalency data and information,
clinical data,  pharmaco-toxicological  data, analytical methods,  stability and
pharmaceutical  data  concerning the Licensed  Product,  Know How, and any other
related supporting  documentation in the possession of Cellegy from time to time
relating to such package.

      "Dollars" or "$" means United States dollars.

      "Defective Product" means any condition that violates the warranty defined
in Section 7.9 or  conditions  to the  Licensed  Product in packaging or utility
that  prevents it from being sold to a Third Party up to and  including  any FDA
concerns with compliance to regulatory and manufacturing guidelines.

      "Exclusive  License"  means a  license  whereby  Licensee's  rights in the
Licensed  Product in the Territory shall be sole and exclusive and shall operate
to exclude all others, including Cellegy.

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

      "FDA"  means  the  United  States  Food  and Drug  Administration,  or any
successor entity thereto.

      "FD&C Act" means the Federal Food, Drug and Cosmetic Act, as amended.

      "Good Manufacturing  Practice" means manufacturing practices in conformity
with the FDA's  regulations and regulatory  interpretations  of such regulations
covering  good  manufacturing  practices set forth in the FD&C Act and any other
applicable law or regulation, as such regulations may be amended and interpreted
by the appropriate government authorities from time to time.

      "Improved  Product" means any and all new  developments or versions of the
Licensed Product delivered to Licensee under this Agreement.

      "Intellectual Property Rights" means all rights and interests, current and
pending,  vested or arising  out of any  industrial  or  intellectual  property,
whether  protected  at common  law or under  statute,  which  includes  (without
limitation)  the Proprietary  Rights,  Patent Rights 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, know-how, results and Confidential Information.

                                                                           --2--
                                                                   REDACTED COPY
<PAGE>

      "Joint  Manufacturing  Committee"  means  a  committee  consisting  of two
designees of each of Cellegy and Licensee;  such committee shall work jointly to
manage the process of supplying the Licensed Product to the License,  as further
set forth in Section 7.1(a).

      "Launch  Date" means the date upon which the first arms length  commercial
sale of the Licensed Product in finished product form,  packaged and labeled for
sale to a Third Party in the Territory occurs after securing regulatory Approval
required to promote, manufacturer,  sell, and distribute the Licensed Product in
the applicable country in the Territory.

      "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.

      "Licensed  Product" means the testosterone  based  transdermal gel product
for the treatment of male  hypogonadism  and low levels of  testosterone  in men
developed by Cellegy and generally referred to as Tostrex(TM) testosterone gel.

      "Know-How"  means any  technology or  information  developed by Cellegy or
licensed  in by  Cellegy  (with  the  right to grant  sub-license  rights to the
Licensee)  used for  manufacturing  or  formulating  the Licensed  Product or in
exercise of the rights granted to Licensee hereunder, including, but not limited
to:  manufacturing  data;  formulation  or  production  technology;  methods  of
synthesis,   isolation  and   purification   methods  and  other   manufacturing
information  and any  proprietary  reagents  and  other  materials  required  to
manufacture the Licensed  Product;  and any data developed by Cellegy related to
pharmacology, toxicology, pathology, clinical data, results of clinical efficacy
studies, clinical effects and indications for use of the Licensed Product.

      "Net Sales"  means the gross sales of a 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  and   returned   Licensed   Product  and  for   reasonable
            retroactive price reductions,

                  (ii)  the  amounts  of  reasonable  trade,  quantity  and cash
            discounts actually allowed,  to the extent such trade,  quantity 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 in connection with the manufacture,  use or
            sales of the Licensed Product to any Third Party, and

                  (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 royalty
            period or not.

      "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 but  inadvertently  omitted  from  Exhibit C; (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

                                                                           --3--
                                                                   REDACTED COPY
<PAGE>

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 divisions,  continuations and  continuations-in-part
defined  in (i) or (ii);  (iv) any  extension,  renewal  or  reissue or a patent
identified    in   (i),   (ii)   or   (iii);    and   (v)   any    continuation,
continuation-in-part, or divisional or any patent application and any reissue or
reexamination  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
its manufacture, use or sale including methods of use and screening or processes
that use the Licensed Product. Such items set forth in subitems (i) through (iv)
will be  identified  and  added by the  parties  to  Exhibit C from time to time
during the term of this Agreement.

      "Proprietary Rights" means all of Cellegy's  Intellectual  Property Rights
and interests in, to, or covering the Licensed Product, or the manufacture,  use
or sale,  including  methods of use and  screening,  or processes,  that use the
Licensed Product,  to the extent that such  Intellectual  Property Rights are of
such legal status and nature as to permit the same to be lawfully  licensed and,
without  limiting  the  generality  thereof,   specifically  include  unpatented
inventions,  ideas, data, Know-How,  technology,  trade secrets and Confidential
Information;  but only to the extent that the  foregoing  relate to the Licensed
Product within the scope of the License granted under this Agreement.

      "Relevant Regulatory Authority", in relation to a country or region in the
Territory,   means  the  governmental  authority,   whether  Federal,  State  or
municipal, regulating the use, importation,  manufacture, marketing, sale and/or
distribution  of  therapeutic  substances  and the  grant of  Approvals  in such
country or region.

      "Territory" means the United States, its territories,  Puerto Rico, Mexico
and Canada.

      "Third  Party"  means  any  party  other  than  Cellegy  or  Licensee,  or
Licensee's Affiliates or Sublicensees, or Cellegy's Affiliates or sublicensees.

      "Trademark"  means  Tostrex  (R)  and any  other  trademark  developed  or
acquired by Cellegy for use in connection with the sale of the Licensed  Product
in the Territory, as further set forth in Exhibit F.

      "Sublicensee" means any person to whom Licensee sublicenses the rights, or
any portion thereof, granted by Licensee pursuant to Section 3.1 hereof.

                                    ARTICLE 2
                         REPRESENTATIONS AND WARRANTIES

      2.1 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  California,  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,

                                                                           --4--
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<PAGE>

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
Article 3.1 hereof.

            (c) Cellegy is the exclusive owner of all right,  title and interest
in the Patent Rights that have been granted in the  applicable  countries in the
Territory, the claims in the patents included in the Patent Rights are valid and
enforceable, and the patent applications included in the Patent Rights have been
duly filed and contain no  material  errors.  Attached  hereto as Exhibit C is a
complete and accurate  list of all patents and patent  applications  included in
the Patent Rights as of the Effective Date.

            (d) Cellegy is the exclusive owner of all right,  title and interest
in the  Trademark  in the  Territory,  and has taken those  measures  reasonably
necessary to secure its interest in the Trademark.  Attached hereto as Exhibit F
is a complete and accurate list of all  trademarks  and  trademark  applications
included in the Trademark, and their status, as of the Effective Date.

            (e)   Cellegy   has  taken   reasonable   measures  to  protect  the
confidentiality  of the Know-How.  On occasions where Cellegy has granted access
to Third Parties with respect to material elements of either the Know-How or the
confidential  information  concerning  the  Licensed  Product,  to the  best  of
Cellegy's  knowledge,  such access has been granted  pursuant to an  enforceable
confidentiality   agreement  that  has  not  been  materially  breached  by  the
appropriate Third Party.

            (f) To the best of Cellegy's  knowledge,  as of the Effective  Date,
neither the manufacture,  use or sale of the Licensed Product or the practice of
any of the inventions  included in the Patent Rights nor the use of the Know-How
by Licensee as contemplated  by this Agreement  infringes upon any Third Party's
know-how, patent or other intellectual property rights in the Territory.

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

            (h) Cellegy has  obtained  the  assignment  of all  interests of all
rights of Cellegy's  employees,  and to the best of its  knowledge,  Cellegy has
obtained the  assignment  of all  interests  and all rights of any and all other
Third  Parties with respect to the Patent  Rights and to the  Trademark.  To the
best of Cellegy's  knowledge,  Cellegy has obtained all interests and all rights
of any and all Third Parties (including, but not limited to Cellegy's employees)
with respect to confidential or proprietary portions of the Know-How.

            (i) To the best of Cellegy's knowledge,  there is no interference or
opposition actions or litigations pending or any communication,  which threatens
interference or opposition  actions,  or other litigation  before any patent and
trademark office,  court or any other governmental entity in any jurisdiction in
regard to the Patent Rights or the Trademark.

            (j)  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.

            (k)  Nothing  has  come to the  attention  of  Cellegy  which  would
indicate  the   existence  of  any  material  side  effect,   toxicity   effect,
carcinogenicity  effect, adverse effect or any instances of

                                                                           --5--
                                                                   REDACTED COPY
<PAGE>

deleterious  physical effects or reactions  resulting from, or alleged to result
from, the Licensed Product,  which are not identified in the Know-How  delivered
to the Licensee under this Agreement,  or which has not been otherwise disclosed
to the Licensee by Cellegy.

            (l) Cellegy has or will maintain access to manufacturing  facilities
capable of producing a sufficient  quantity of the Licensed Product,  under Good
Manufacturing Practices, to meet market demand.

            (m) Cellegy,  its Affiliates and sublicensees,  and their respective
employees,  agents and contractors,  will manufacture the Licensed Product under
Good Manufacturing  practices,  in compliance with all applicable laws, statues,
rules and regulations.

            (n) Cellegy,  its  Affiliates  and  sublicensees  will  manufacture,
transport,  distribute and dispose,  if applicable,  of the Licensed  Product in
compliance with all applicable laws, statues, rules and regulations.

            (o) Cellegy shall provide  Licensee  promptly in writing all adverse
events and safety data that Cellegy or its  Affiliates  or  sublicensees  obtain
concerning the Licensed Product and Improved Products.

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

            (a)  that  Licensee  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 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) the compliance of its  Affiliates,  and  Sublicensees  with this
Agreement and obligations  such Affiliates and Sublicensees may have to Cellegy,
including, but not limited to payment of any fees or royalties.

                                    ARTICLE 3
                                GRANT OF LICENSE

      3.1 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 make or have made, manufacture,  market, use, offer for sale,
import and export  Licensed  Product within the Territory,  and to use Cellegy's
Intellectual Property Rights in connection with the storage, promotion, sale and
distribution  of Licensed  Product and obtaining any Approvals under Section 13.
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.

      3.2 Addition to the  Territory.  The parties may mutually  agree to add to
the  Territory   other   countries   and  their   respective   territories   and
principalities.

      3.3  Restrictions  on  Territory.   Licensee  will  use  its  commercially
reasonable  efforts not to  knowingly  directly  distribute  or  otherwise  make
available Licensed Product outside the Territory or

                                                                           --6--
                                                                   REDACTED COPY
<PAGE>

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

knowingly  sell,  distribute or otherwise  make  available  Licensed  Product to
persons  for the  purpose  of  resale or  distribution  outside  the  Territory,
exclusive of government,  or military customers,  and (inside the Territory) for
charitable organizations. Without limiting the foregoing, Licensee agrees to use
all  reasonable  commercial  efforts  to ensure  compliance  with the  preceding
sentence,  including (i) placing  appropriate  notices on the labels on Licensed
Products,  and (ii) enforcing the foregoing restrictions against any Third Party
to which Licensee,  or any Affiliate of Licensee,  sells Licensed  Products that
Licensee  learns is violating such  restriction and stop selling or distributing
Licensed Products to such Third Party. Cellegy agrees that in any other licenses
to Third Parties to distribute the Licensed  Product outside the Territory,  and
in any  manufacturing  and  distribution  of the  Licensed  Product  on its  own
account,  Cellegy will institute  materially  similar  restrictions to those set
forth in this Section 3.3.

      3.4 Right to sub-license  in the Territory.  Subject to Section 3.5 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,  provided the third party  agreement does not
impact on Sections 3.3, 3.7,  Article 4 and Article 5 hereof,  and that Licensee
gives Cellegy reasonable prior notice of such an arrangement,  and will consider
Cellegy's advice about such third parties in good faith; and

            (b) to any of its  Affiliates  that  are  engaged  primarily  in the
business of  distribution  of  pharmaceutical  products,  as Licensee  sees fit;
provided  that any such Third  Party or  Affiliate  must  agree in writing  with
Cellegy, in form and substance  reasonably  satisfactory to Cellegy, to be bound
by the provisions of this Agreement.

      3.5 [*]

      3.6  Marketing  Effort.  Licensee  agrees  to exert  its  best  reasonable
efforts,  consistent with the profit  opportunity  relative to other products in
Licensee's  pipeline and market  conditions  in the  Territory to introduce  and
diligently promote,  sell and service the Licensed Product within the Territory,
including,  without limitation,  the full and complete attainment of the Minimum
Sales Requirements as set forth below in Section 3.7.

      3.7 Maintenance of Exclusivity.

            (a) [*]

            (b) [*]

      3.8 Covenant Not To Compete. Cellegy hereby covenants and agrees that, for
the term of this  Agreement,  Cellegy  shall not, nor shall it permit any of its
affiliates, nor any of their respective officers,  employees,  agents, or wholly
owned  subsidiaries,  nor  authorize  any  of  its  Affiliates,   directors,  or
Sublicensees  to,  individually  or  jointly  with other  persons,  manufacture,
develop, test, sell, market or distribute any product within the Territory which
contains testosterone for the treatment of male hypogonadism.

      3.9 Notice  Regarding  other  Testosterone  Product Deals.  Cellegy hereby
covenants and agrees to provide Licensee with prompt written notice in the event
that  Cellegy  executes  a license  agreement,  development  agreement  or other
collaboration   agreement  with  respect  to  the   development,   marketing  or
distribution of any testosterone products within the Territory.

                                                                           --7--
                                                                   REDACTED COPY
<PAGE>

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

                                    ARTICLE 4
                        LICENSE FEE AND RELATED PAYMENTS

      4.1 License  Fee. As  consideration  of the rights  granted to Licensee by
Cellegy  under  Article 3 and  Section 8.4  hereof,  Licensee  shall pay Cellegy
Fifteen  Million  Dollars  ($15,000,000)  in cash on the Effective  Date Cellegy
hereby agrees to use its commercially reasonable efforts to take, or cause to be
taken,  all  action,  and to do, or cause to be done,  all things  necessary  to
expeditiously  as  possible  seek all FDA  Approvals  for the  Licensed  Product
required to  manufacture,  label,  promote,  sell and  distribute  the  Licensed
Product in the United States,  and acknowledges  that obtaining FDA Approval for
the Licensed Product is a primary corporate priority.

      4.2 Milestone  Payment.  Licensee shall pay Cellegy a milestone payment of
ten million dollars  ($10,000,000)  in cash no later than thirty (30) days after
Cellegy  certifies in writing to Licensee that the Licensed  Product has all FDA
Approvals  required to promote,  sell and distribute the Licensed Product in the
United States.

      4.3 Fee Conditions. Each and every payment made under this Article 4 shall
be independent,  non-refundable and shall not be considered an advance or credit
on any royalties or other obligation received or owed.

                                    ARTICLE 5
                    ROYALTIES AND PAYMENTS FOR ORDERED GOODS

      5.1  Royalties  in General.  In  consideration  of the  exclusive  license
granted to Licensee hereunder, Licensee shall pay or cause to be paid to Cellegy
the Royalty set forth in this Section 5.

      5.2  Royalty  Defined.  The  "Royalty"  shall be  equal  to the  following
amounts:

            (a) [*]

            (b) [*]

            (c) [*]

            (d) [*]

      5.3 Burdened  Costs.  In addition to the Royalty set forth  above,  for so
long as Licensee  purchases  Licensed  Product from  Cellegy,  Licensee will pay
Cellegy the Burdened Cost, as set forth  pursuant to Exhibit E hereof,  which is
subject to adjustment  at the end of each calendar year to reflect  actual costs
incurred  during such year,  as reviewed by the Joint  Manufacturing  Committee.
Such  adjustment  (if  necessary)  will be  communicated  by Cellegy to Licensee
during the first calendar quarter of the subsequent year together with a payment
representing  a refund of an  overpayment  by  Licensee,  or an invoice  for any
shortfall  in payments by  Licensee.  For each order of Licensed  Product  under
Section 7, Licensee will pay Cellegy the Burdened  Costs within thirty (30) days
of the receipt of the invoice for such order.

      5.4 Minimum Royalty.

            (a) [*]

            (b) [*]

                                                                           --8--
                                                                   REDACTED COPY
<PAGE>

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

            (c) [*]

                                    ARTICLE 6
                         ROYALTY REPORTS AND ACCOUNTING

      6.1 Quarterly Royalty Reports;  Records. During the term of this Agreement
after the Launch Date of the Licensed  Product,  Licensee shall furnish or cause
to be  furnished  to Cellegy  within a thirty  (30) day period from the end of a
calendar quarter a written report or reports (the "Royalty Report") covering the
preceding calendar quarter (each such quarter being sometimes referred to herein
as a "royalty period") showing:

            (a) the Net Sales of the  Licensed  Product  in each  country of the
Territory during the royalty period;

            (b) the  Royalties,  payable in Dollars,  which  shall have  accrued
hereunder in respect to such Net Sales; and

            (c) the exchange rate used in determining the amount of Dollars.

With respect to sales of Licensed Product invoiced in Dollars, the Net Sales and
royalty payable shall be expressed in Dollars. With respect to sales of Licensed
Product  invoiced in a currency  other than  Dollars,  the Net Sales and royalty
payable  shall be expressed in the domestic  currency of the country  where such
sale was made  together  with the  Dollar  equivalent  of the  royalty  payable,
calculated  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 Royalty Report shall not be materially  different
from the exchange rates posted in the Wall Street Journal  published on the last
day of such royalty period. Royalty Reports shall be due on the thirtieth (30th)
day following the close of each  respective  royalty period.  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 Royalty Report shall be due upon the
expiration or termination of this  Agreement.  Licensee agrees that it shall pay
all Royalties otherwise owed during a particular royalty period hereunder, which
are allowable by the law,  provided that any restrictions that may be imposed by
the government of any applicable country in the Territory  regarding the payment
of  royalties  to  companies  outside  of said  countries  shall  not  eliminate
Licensee's  overall  obligation to pay Royalties  owed,  either from  Licensee's
headquarters or elsewhere.

      6.2 Payment Due Dates.  Royalties  shown to have  accrued by each  royalty
report  provided for under Article 6 of this Agreement  shall be due and payable
on the date such Royalty Report is due. Payment of royalties in whole or in part
may be made in advance of such due date.  All royalty and other  payments due to
Cellegy  hereunder,  shall  be  made in  Dollars,  delivered  to the  account(s)
specified by Cellegy from time to time.

      6.3 Right to Audit Licensee.

            (a) Upon the written  request of Cellegy,  at Cellegy's  expense and
not more than twice in each year,  Licensee and its  Affiliates  shall permit an
Auditor selected by Cellegy 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 Royalty Reports  furnished by Licensee  hereunder in respect
of any year ending not more than one (1) year  following the end of any Licensee
fiscal year, the calculation of royalties  payable to respect of such year shall
be binding and conclusive upon Cellegy and Licensee and

                                                                           --9--
                                                                   REDACTED COPY
<PAGE>

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

its  Affiliates  shall be released  from any  liability or  accountability  with
respect to royalties  for such fiscal year.  Cellegy's  Auditors  will provide a
copy of their audit to Licensee at the time it provides it to Cellegy.

            (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 Cellegy's Auditor subject to the same terms and conditions as
stated in Article 6.3(a) hereof.

            (c) [*]

      6.4 Right to Audit  Cellegy.  Upon the  written  request of  Licensee,  at
Licensee's  expense  and not more  than  twice  in each  year,  Cellegy  and its
Affiliates  shall permit an Auditor  selected by Licensee to have access  during
normal business hours to those records of Cellegy as may be reasonably necessary
to verify the accuracy of the Burdened Costs  furnished by Cellegy  hereunder in
respect  of any year  ending  not more  than one (1) year  following  the end of
Cellegy's  fiscal year, the  calculation of Burdened costs payable to respect of
such year shall be binding and  conclusive  upon  Licensee,  its  Affiliates and
Cellegy shall be released from any liability or  accountability  with respect to
royalties for such fiscal year. Licensee's auditors will provide a copy of their
audit to Cellegy at the time it provides it to Licensee.

      6.5 Overpayment or Underpayment of Burdened Costs. [*]

      6.6 Disagreement with Auditor  Findings.  If either party hereto disagrees
with the determination  made above by the Auditor and such disagreement over the
amount in question is in excess of $1,000,000, then the party who disagrees with
such amount shall (i) provide  written  notice to the other party within  thirty
days,  (iii) discuss such  disagreement  with the other party hereto;  and (iii)
reserve all rights under Section 16.17 (Dispute Resolution) and Article 12 (Term
and Termination) hereof.

                                    ARTICLE 7
                      SUPPLY OF LICENSED PRODUCT BY CELLEGY

      7.1 Purchasing Commitment. [*]

            (a) [*]

            (b) [*]

            (c) [*]

            (d) [*]

      7.2 Forecasts and Ordering Procedure.

            (a) Within sixty (60) days after the Effective  Date,  Licensee will
provide to Cellegy an initial sales forecast for orders of the Licensed  Product
by Licensee for the following year ("Forecast").  Thereafter,  commencing on the
first  day  of  the  following  calendar  quarter,  and  each  calendar  quarter
thereafter during the term of the Purchase  Commitment,  Licensee will provide a
rolling  three  month  update  to the  Forecast.  The  Forecasts  will be deemed
nonbinding estimates.

            (b) Purchases and sales of the Licensed Product between Licensee and
Cellegy  under this  Agreement  shall be made by means of  purchase  orders (the
"Orders") submitted from time to time by

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

Licensee to Cellegy, specifying, among other things, the number of units of each
Licensed  Product  ordered  under each Order,  and the desired date and place of
delivery (the "Delivery Date"). The terms and provisions of this Agreement shall
govern  and  control  each Order  submitted  by  Licensee  to  Cellegy,  and any
different  terms or  provisions  contained in any such Order shall have no force
and affect whatsoever.

      7.3 Orders. In order to facilitate manufacturing planning requirements:

            (a) [*]

            (b) [*]

            (c) [*]

      7.4  Production  and Supply of Licensed  Product.  During the term of this
Agreement or thereafter,  Cellegy  reserves the right after Joint  Manufacturing
Committee approval, to manufacture,  produce, assemble,  warehouse or source the
Licensed Product at any worldwide  location,  including locations outside of the
United States of America and locations within or outside the Territory.  Subject
to the  remainder  of this  Agreement,  Cellegy will use  reasonable  commercial
efforts to provide an adequate  supply of raw materials to the  manufacturer  of
Licensed  Product in order to fulfill its  obligations  under this Agreement and
supply the Licensed  Product to Licensee in accordance with the 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 materially  disadvantage  Licensee's  ability to use,
promote or sell the Licensed Product.

      7.5 Defective Product

            (a) If Licensee  notifies Cellegy within forty-five (45) days of the
receipt of any shipment of the Licensed Product and Licensee believes any of the
Licensed Product does not conform to the warranties for the Licensed Product set
out in Section 7.9 (the  "Defective  Product") the parties agree to consult with
each  other in order to  resolve  the  issue.  If a recall  is the  basis of FDA
directives,  Cellegy will cooperate  fully and expediently to assist Licensee in
meeting the objections and concerns of the FDA.

            (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 promptly an independent analyst,  reasonably 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 7, 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 7, Licensee  will  reimburse
Cellegy for the costs of the Independent Analyst.

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            (e) Except with  respect to  Defective  Product  arising  from gross
negligence or willful  misconduct of Cellegy or its  suppliers,  with respect to
indemnification obligations hereunder, and except with respect to the remedy for
failure to supply the  Licensed  Product  as set forth in Section  7.10  hereof,
replacement  of Defective  Product  shall be  Licensee's  sole remedy under this
Agreement with respect to Defective  Products.  For the avoidance of doubt,  the
parties acknowledge and agree that Defective Product issues contemplated in this
Section 7.5 could trigger a Stockout  period,  subject to the terms set forth in
Section 7.10.

      7.6 Product Packaging. Licensee agrees to provide Cellegy with all artwork
desired for packaging and labeling of the Licensed  Product,  and Cellegy agrees
to pack and label the  Licensed  Product in a manner  approved by  Licensee  and
pursuant to Licensee's standard export procedure.

      7.7 Title and Risk of Loss. All Licensed Product shall be delivered F.O.B.
Licensee at a location in the Territory set forth in writing by Licensee.  Title
to Licensed Products and all risk of loss shall pass from Cellegy to Licensee at
the time and place of such  delivery by Cellegy to a location  in the  Territory
designated  by  Licensee.  Licensee  shall be solely  responsible  for  insuring
Licensed Product after such delivery.

      7.8 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 America 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 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,  excluding  the  actions of any  government  or  military
purchaser,  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 and the Territory in effect from
time to time.  Upon Cellegy's  reasonable  request,  Licensee shall give written
assurances against such export, re-export, or transshipment.

      7.9 Supply Warranty and Disclaimer.

            (a) Cellegy  represents  and warrants to Licensee  that Cellegy will
use its best efforts to ensure that the Product  supplied  under this  Agreement
will upon  delivery  and for the  duration  of shelf  life:  (1)  conform in all
respects to the approved product  specifications;  (2) be manufactured,  tested,
and (subject to Licensee's  contributions  under Section 7.5 above)  labeled and
packaged  in  accordance  with  the  Laws  in  the  Territory  relating  to  the
manufacture,  labeling,  packaging and testing of the Licensed Product;  and (3)
will be manufactured in accordance with the Good Manufacturing Practice.

            (b) Warranty Limitation;  Disclaimer. Except as set forth in Section
7.9(a) above, the sole warranty given by Cellegy  regarding any Licensed Product
shall be that written  limited  warranty,  if any,  which shall  accompany  such
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 Launch Date of the Licensed Product,  subsequent changes
to the limited  warranty must be approved by Licensee,  which approval shall not
be unreasonably withheld. Licensee agrees to provide to its customers within the
Territory a written  warranty  for each  Licensed  Product on terms which are at
least as favorable to such customers as that provided by the applicable  limited
warranty  provided by Cellegy,  if any,  for such  Licensed  Product.  EXCEPT AS
EXPRESSLY  SO  WARRANTED  AND  REPRESENTED  IN THIS  AGREEMENT,  CELLEGY  HEREBY
DISCLAIMS ALL  WARRANTIES,  EXPRESS,  STATUTORY  AND IMPLIED,  APPLICABLE TO THE
LICENSED PRODUCT INCLUDING, BUT NOT LIMITED TO, ANY WARRANTY OF MERCHANTABILITY,
DESIGN,  AND/OR FITNESS FOR A PARTICULAR PURPOSE AND/OR AGAINST  INFRINGEMENT OR
THE

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<PAGE>

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

LIKE.  EXCEPT TO THE EXTENT ARISING FROM CELLEGY'S  GROSS  NEGLIGENCE OR WILLFUL
MISCONDUCT  OR ANY  BREACH  OF  THIS  AGREEMENT,  AND  EXCEPT  WITH  RESPECT  TO
INDEMNIFICATION  OBLIGATIONS  HEREUNDER,  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 ARTICLE 2, CELLEGY
FURTHER DISCLAIMS ALL EXPRESS,  STATUTORY AND IMPLIED  WARRANTIES  APPLICABLE TO
THE LICENSED PRODUCT, WHICH ARE NOT MANUFACTURED BY CELLEGY, OR BY A LICENSEE OR
SUBLICENSEE  OF CELLEGY.  EXCEPT AS  EXPRESSLY  SET FORTH IN ARTICLE 2, THE ONLY
WARRANTIES  APPLICABLE TO LICENSED  PRODUCT NOT  MANUFACTURED BY CELLEGY OR BY A
LICENSEE  OR  SUBLICENSEE  THEREOF  SHALL  BE THE  WARRANTIES,  IF  ANY,  OF THE
MANUFACTURERS OF THOSE ITEMS.

            (c) EXCEPT  FOR SUCH  WARRANTIES  SET FORTH IN  ARTICLE 2,  LICENSEE
HEREBY  DISCLAIMS ALL  REPRESENTATIONS  AND WARRANTIES,  EXPRESS,  STATUTORY AND
IMPLIED,  APPLICABLE TO THE LICENSED PRODUCT INCLUDING,  BUT NOT LIMITED TO, ANY
WARRANTY OF  MERCHANTABILITY,  DESIGN,  FITNESS FOR A PARTICULAR  PURPOSE AND/OR
AGAINST  INFRINGEMENT OR THE LIKE.  EXCEPT TO THE EXTENT ARISING FROM LICENSEE'S
GROSS  NEGLIGENCE  OR WILLFUL  MISCONDUCT OR ANY BREACH OF THIS  AGREEMENT,  AND
EXCEPT  WITH  RESPECT TO  INDEMNIFICATION  OBLIGATIONS  HEREUNDER,  THE  WRITTEN
LIMITED WARRANTY,  IF ANY,  APPLICABLE TO ANY PARTICULAR PRODUCT SHALL STATE THE
FULL EXTENT OF  LICENSEE'S  LIABILITY,  WHETHER  DIRECT OR INDIRECT,  SPECIAL OR
CONSEQUENTIAL, RESULTING FROM ANY BREACH OF SUCH WARRANTY.

      7.10 Remedy for Failure to Supply Licensed Product.

            (a) In the event that Cellegy  breaches its obligation to supply the
Licensed Product in accordance with Section 7.1 through Section 7.5, and [*]

            (b) For the purposes of this Section 7.10, the following definitions
shall apply:

                  (i) [*]

                  (ii) [*]

                  (iii) [*]

                  (iv) [*]

                  (v) [*]

                                    ARTICLE 8
                                  PATENT RIGHTS

      8.1 No Ownership By Licensee. Subject to Section 8.2 below, Licensee shall
not be deemed by anything  contained in this Agreement or done pursuant to it to
acquire any right, title or interest in the Patent Rights or any patent owned by
or licensed to Cellegy now or hereafter  covering or  applicable to any Product,
nor in or to any invention or  improvement,  owned by Cellegy under Section 8.2,
now or

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

hereafter embodied in any Product,  whether or not such invention or improvement
is patentable under the laws of any country.

      8.2 New Cellegy Inventions/Improvements. [*]

      8.3 Improvements by Licensee. [*]

      8.4 [*]

                                    ARTICLE 9
                          INFRINGEMENT AND OTHER CLAIMS

      9.1  Infringement  by Third Person.  In the event Cellegy or Licensee have
reason  to  believe  that a Third  Person  may be  infringing  Patent  Rights or
Proprietary  Rights  or  misappropriating  any  of  the  Licensed  Products,  or
infringing,  misappropriating  or diluting  any Licensed  Trademark,  such party
shall promptly notify the other party. Cellegy may, in its discretion,  elect to
enforce the Licensed Products, Proprietary Rights or Cellegy Trademarks, through
legal action or  otherwise,  and Licensee  agrees to reasonably  cooperate  with
Cellegy  in such  enforcement.  At all  times  in any such  enforcement  action,
Cellegy  shall be  entitled  to retain  recovery  which may be  obtained  in any
lawsuit  brought by  Cellegy.  In the event  Cellegy  elects not to enforce  the
Patent Rights relating to the Licensed Product within one (1) month after notice
of the possible infringement is given between Cellegy and Licensee, and Licensee
can  demonstrate  that the  potential  infringement  may 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,  and then (1)  Licensee  may  discontinue  the
payment  in  such  country  by 50%  during  the  suit,  until  such  time as the
infringement of the Patent Rights relating to the Licensed  Patents ceases,  (2)
Licensee will retain all award, damages or compensation  obtained by Licensee in
such suit in full,  and (3) Cellegy will  provide  reasonable  cooperation  with
respect to any lawsuit which Licensee may bring pursuant to this Article.

      9.2 Alleged Infringement of Third Person Patents.

            (a) If a claim or  lawsuit  is  brought  against  Licensee  alleging
infringement of any patent or infringement or dilution of any trademark owned by
a Third Person arising from Licensee's  use, sale,  offer for sale, or importing
of the Licensed  Product or any improved  Product or use of Proprietary  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  forty five (45) days after
receiving such notice, Cellegy shall advise Licensee of Cellegy's decision as to
what action it plans to take to dispose of such claim or defend such lawsuit.

            (b) Cellegy  shall  defend,  indemnify  and hold  Licensee  harmless
against any judgment, damage, liability, loss, cost or other, expense (including
reasonable  legal fees)  resulting from any claim or lawsuit which relates to or
arises out of the alleged  infringement  by  Licensee  of any patent  owned by a
Third  Person to the extent  that the  alleged  infringement  relates to actions
covered by the Exclusive License granted to Licensee.

            (c) If Cellegy  elects  not to dispose of such claim or defend  such
lawsuit,  Licensee may defend the claim or lawsuit.  For purposes of  Licensee's
conduct of the  disposition  or defense,  Cellegy shall furnish to Licensee such
reasonable  assistance  as  Licensee  may need and from time to time  reasonable
request. If Licensee takes on the disposition of a claim or defense of a lawsuit
for which Cellegy is obligated to indemnify  Licensee  pursuant to this Article,
then the payments for such Licensed

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Product in such country,  which would otherwise be payable to Cellegy hereunder,
shall be reduced by 50% during the  pendency of such lawsuit or any appeal taken
from it,  provided that such reduction shall not occur in the event that, in the
opinion of Cellegy's  counsel,  the defense of such claim is  unwarranted.  Upon
final resolution of the above-described  claim, lawsuit and/or appeal,  Licensee
shall resume paying Cellegy any royalties or license payments payable hereunder,
but in no event shall  Licensee be liable for back royalties  otherwise  reduced
hereunder during the suit.

            (d) If Licensee  becomes  obligated  to pay  royalties  to any Third
Person,  in order to make,  have  made,  or sell  the  Licensed  Product  in the
Territory,  said  royalties  shall be  creditable  against  royalties  otherwise
payable to Cellegy  hereunder;  provided,  that no such credit  shall be allowed
with respect to any royalty paid for the use of any technology, method, process,
device,  or  equipment  in  connection  with  manufacturing,  packaging  or  any
container or delivery system, or the use of any trademark, that was developed by
Licensee, any Affiliate of Licensee or any sublicensee, or obtained from a Third
Person.

      9.3 By Cellegy. Cellegy shall defend, indemnify and hold Licensee harmless
against any liability, damage, loss, cost or expense, including reasonable legal
fees  ("Liability")  arising out of or resulting from any Third Person claims or
lawsuits  made or  brought  against  Licensee,  any  Affiliate  of  Licensee  or
sublicensee,  or any of their respective employees,  agents, or contractors,  to
the extent such Liability arises out off or relates to (i) negligence or willful
misconduct of Cellegy,  or any of this employees,  agents or  contractors,  with
regard to clinical  trials or testing of the  Licensed  Product or any  Improved
Product,  the  preparation  and filing of FDA  Applications,  the maintenance of
NDAs, product labeling, reporting required by the FDA, or any other negligent or
wrongful act or omission of Cellegy; (ii) the manufacture,  storage,  promotion,
sale or  distribution  or use of the  Licensed  Product,  (iii) any  claim  that
Licensee's  use of the Licensed  Product  violated the patent  rights of a Third
Party in any country of the Territory in which Cellegy has a patent  application
filed or granted covering the Licensed  Product;  (iv) a Product Liability Claim
based on action or inaction of Cellegy,  (iv) Cellegy's breach of, or failure to
comply with any  representations,  warranties,  covenants or obligations or this
Agreement  and (v) any  material  failure of  Cellegy  or any of its  employees,
agents or contractors to comply with any applicable law, rule or regulation.

      9.4 By  Licensee.  Licensee  shall  defend,  indemnify  and  hold  Cellegy
harmless  against  any  liability,  damage,  loss,  cost or  expense,  including
reasonable legal fees  ("Liability"),  arising out of or resulting from: (i) any
Third Person claims or lawsuits made or brought against  Cellegy,  or any of its
employees,  agents or contractors, to the extent such Liability arises out of or
relates to  negligence  or willful  misconduct  of  Licensee,  any  Affiliate of
Licensee  or  sublicensee,  or any of  their  respective  employees,  agents  or
contractors,  with regard to the promotion,  labeling,  distribution or sale of,
the  Licensed  Product,  and  Improved  Product,  or the use of the  Proprietary
Rights;  or  (ii)breach  of, or failure to  perform or comply  with,  any of its
representations,  warranties, covenants and obligations under this Agreement, or
(iii) any  material  failure  of  Licensee  or any of its  employees,  agents or
contractors to comply with any applicable law, rule or regulation.

      9.5 Conditions to Indemnification. The indemnified party shall: (i) advise
the indemnifying party of any claim or lawsuit,  in writing promptly,  after the
indemnified  party has received  notice of said claim or lawsuit and (ii) assist
the indemnifying party and its  representatives in the investigation and defense
of any claim and/or lawsuit for which indemnification is provided. The agreement
of the parties to indemnify  each other shall not be valid as to any  settlement
of a claim or lawsuit or offer of  settlement  or  compromise  without the prior
written approval of the indemnifying party.  Failure of the indemnified party to
provide  the  notice  described  in (i) shall  affect the  indemnifying  party's
obligation  to  indemnify  the   indemnified   party  only  to  the  extent  the
indemnifying party's rights are prejudiced by such failure.

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      9.6  Control of  Proceedings.  In actions in which one or both of Licensee
and Cellegy is named as a defendant,  neither party shall assert a crossclaim or
third-party  claim against the other party for either  contribution or indemnity
in that action,  but each agrees and reserves the right to fully  litigate  such
claims for indemnity and  contribution at a later time.  Further,  neither party
will  pursue a  litigation  strategy  of  affirmatively  asserting  the fault or
liability of the other party as opposed to simply  demonstrating  the absence of
their own fault.  Each party will  provide its own defense;  provided,  however,
that Cellegy has the right,  at any time,  subject to the rights and obligations
set forth below, to assume the defense of any action against Licensee.

      9.7  Indemnification  Claim.  If, at the  conclusion of an action,  either
party  believes it is  entitled to  contribution  or  indemnification  under the
provisions  above,  such party shall give the other written  notice of its claim
for contribution or indemnification (the "Indemnification Claim"). The party who
receives the Indemnification Claim shall have thirty (30) business days in which
to respond.  In the event the parties  cannot agree on the validity or amount of
the  Indemnification  Claim,  then the parties  shall  submit  their  dispute to
confidential  mediation,  in accordance  with Section  16.17.  Neither party may
assert the statute of limitations as a defense to the claim for  contribution or
indemnification unless the limitations period had already expired and would have
barred the  underlying  action  against  that  party at the time the  underlying
action was filed.

      9.8 Assumption of Defense by Cellegy.  In the event Cellegy  exercises its
right to assume the defense of an action  against  Licensee,  Cellegy shall have
the exclusive right to control the defense  (including all decisions relating to
litigation, defense and appeal) of any Claim related to Licensee as described by
Section  9.6.In such  instances the Licensee  shall have the right to retain its
own counsel at its sole cost and expense and  participate in such defense.  With
respect to settlement, Cellegy shall obtain Licensee's consent to any settlement
of a Claim, related to Licensee as described in Section 9.6, prior to settlement
of such claim,  which consent  shall not be  unreasonably  withheld.  If Cellegy
requests  Licensee's  cooperation,  Licensee  shall  reasonably  cooperate  with
Cellegy in its defense of the Claim, related to Licensee as described in Section
9.6 (including,  without limitation,  making documents and records available for
review  and  copying  and  making  persons  within  its  control  available  for
interview,  trial  preparation  assistance  and  testimony) and Cellegy shall be
responsible for all costs and expenses associated with Licensee's cooperation.

                                   ARTICLE 10
                                 CONFIDENTIALITY

      10.1 Treatment of Confidential  Information.  Except as otherwise provided
in this Article 10, during the term of this  Agreement and for a period of three
(3) 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  "Confidential  Information."  For the  avoidance of
doubt, Cellegy Information shall constitute Confidential Information of Cellegy.

      10.2  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

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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.

      10.3 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.

      10.4 Confidentiality of Agreement.  Except as otherwise required by law or
the terms of this Agreement or mutually agreed upon by the parties hereto,  each
party shall treat as  confidential  the terms,  conditions and existence of this
Agreement,  except  that  Cellegy  and  Licensee  may  disclose  such  terms and
conditions   and  the  existence  of  this   Agreement  to  its  Affiliates  and
Sublicensees,  and that  Cellegy  and  Licensee  may  disclose  the terms to its
shareholders  to  the  extent  required  by the  federal  securities  laws,  and
provided,  that Cellegy  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.

      10.5  Return  of  Confidential  Information.   Upon  termination  of  this
Agreement with respect to the entire Territory,  the parties hereto shall return
to the respective  party all of such parties  confidential  information in their
respective  possession  along  with a  certification  that such  party no longer
possesses any such Confidential Information of such other party.

                                   ARTICLE 11
                                   TRADEMARKS

      11.1  Cellegy's  Marks.  Cellegy  owns or has  the  right  to use  certain
Trademarks,   and  certain  of  the   Trademarks   may  be   registered  in  the
jurisdiction(s) which comprise the Territory.

      11.2 Use of Cellegy's Marks by Licensee.  Licensee will have the exclusive
right to use the Trademark in the Territory in  connection  with the  promotion,
marketing,  sale and  distribution of Licensed  Product.  Licensee shall

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not use The  Trademark  only in the form and manner  prescribed  by Cellegy  and
shall  further  have the  right to use a  different  trademark  on the  Licensed
Product, provided, that Licensee shall not use the Trademark in conjunction with
a different  trademark in accordance with Section 11.8 hereof. In no event shall
Licensee  use any of the  Trademark  or any similar  mark or term as part of its
business  name. In the event that Licensee does not desire to use the Trademark,
Licensee will notify Cellegy within twelve (12) months after the Effective Date,
and Cellegy  shall have the right to terminate  the license to the  Trademark in
its entirety. A termination of the Licensee to the Trademark shall not be deemed
to terminate the License to the Licensed Product granted in Section 3 hereof.

      11.3 Acknowledgment of Ownership. Licensee acknowledges that

            (a) Cellegy owns the Trademark and all goodwill  associated  with or
symbolized by the Trademark;

            (b) Licensee has no ownership  right in or to any of the  Trademark;
and

            (c) Licensee shall acquire no ownership interest in or to any of the
Trademark by virtue of this  Agreement.  Licensee shall do nothing  inconsistent
with Cellegy's  ownership of the Trademark and related  goodwill and agrees that
all use of the  Trademark  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 the Trademark to Licensee or the creation of any equitable
or other interests  therein.  Licensee shall not use any of the Trademark in any
manner as a part of its business, corporate or trade name.

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

      11.5  Registration.  Cellegy shall have the sole right to take such action
as it deems  appropriate to obtain  trademark  registration in the Territory for
the  Trademark.  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 the
Trademark 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 the Trademark, 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.

      11.6. Infringement Information.  Licensee shall notify Cellegy promptly of
any  unauthorized  use of the  Trademark  or of any  mark  confusingly  similar,
thereto  which  comes to its  attention.  Cellegy  shall  have the sole right to
determine   whether  or  not  any  action  shall  be  taken   against  any  such
infringement,  and Licensee  shall not  institute any suit or take any action on
account of any such  infringement  or  imitation  without  first  obtaining  the
written consent of Cellegy to do so.

      11.7  Termination of Use. Upon  expiration or earlier  termination of this
Agreement,  Licensee  shall cease  using the  Trademark  in any  manner,  either
similar or dissimilar to the use enumerated above.

      11.8  Trademarks.  Licensee  covenants and warrants that Licensee's use of
the  Trademark or other  trademarks,  trade  names,  logos and  designations  of
Cellegy on any and all Licensed  Product,

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Licensed Product packaging or labels, stationery, invoices, catalogs, brochures,
packages, containers, and advertising or promotional materials which Licensee or
its Agents  prepare or use will be in  accordance  with  Cellegy's  intellectual
property  policies  in effect  from time to time,  including  but not limited to
trademark usage and cooperative advertising policies.  Cellegy agrees to provide
copies  of  such  policies  to  Licensee.  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 will not be  unreasonably  withheld or  delayed..
Licensee  further agrees not to use any Cellegy  trademark,  trade name, logo or
designation  in connection  with any products  other than the Licensed  Product.
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  and  before  any use is made  thereof,  representative  samples of the
initial Licensed Product, stationery,  invoices, catalogs, brochures,  packages,
containers,  and  advertising  or  promotional  materials  bearing  any  of  the
Trademark 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  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.

                                   ARTICLE 12
                                TERM; TERMINATION

      12.1 Term.  Unless  terminated  sooner  pursuant to Articles 12.2, 12.3 or
12.4 below,  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 (a)
the date of  expiration  of the last to  expire  of the  Patent  Rights  in such
country, on a country-by-country basis, or (b) the end of the commercial life of
the Licensed Product,  as determined by Licensee,  country by country,  with one
(1) year written notice from Licensee to Cellegy for each country. For countries
in which none of the Patent Rights are filed,  the date set forth in subitem (a)
above shall be deemed to be the date of the last to expire of the Patent  Rights
in the last applicable country. Such termination may be made with respect to one
or more regions of the Territory without effecting the rest of this Agreement or
the Exclusive License granted hereunder in any other region of the Territory.

      12.2  Bilateral  Termination  Rights.  Either  party  may  terminate  this
Agreement upon the occurrence of any of the following:

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

            (b) The other party becomes the subject of an involuntary bankruptcy
or insolvency case that is not dismissed within 60 days; or

            (c) Upon or after  the  material  breach  of any  provision  of this
Agreement by the other party  (other than an actual or claimed  breach of 3.7(a)
by Licensee, which shall instead be governed by the provisions of Section 3.7(b)
hereof)  if such  material  breach is not cured  within  ninety  (90) days after
written notice thereof to the party in default.

      12.3 Bankruptcy Rights.

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            (a) If Licensee  terminates this Agreement based on Article 12.2(a),
the  License  rights  will remain  intact  pursuant to Section  365(n) of the US
Bankruptcy Code.

            (b) If Cellegy plans to seek  bankruptcy or  reorganization  relief,
Cellegy will notify Licensee of such intent prior to filing,  and Cellegy at its
option  may offer to  Licensee  all rights to the  Licensed  Product at the fair
market value of the Licensed Product to Cellegy.

            (c) If Licensee plans to seek bankruptcy or  reorganization  relief,
Licensee will notify Cellegy of such intent prior to filing, and Licensee at its
option  may  offer  to  Cellegy  those  assets  and  personnel  relating  to the
performance  of this  Agreement  at the  fair  market  value of such  assets  to
Licensee.

      12.4 Rights Upon Termination or Expiration. Upon expiration or termination
of this  Agreement,  the rights and  obligations  of the  parties  shall  cease,
including without limitation all licenses, except as follows:

            (a) Upon expiration or termination  for any reason,  the obligations
of  confidentiality  and use of Confidential  Information under Article 10 shall
survive for the period provided therein;

            (b) Upon expiration or termination for any reason, Articles 9 and 12
of this Agreement shall survive for the maximum duration permitted by law;

            (c)  Articles  4, 5,  6.1 6.2  and  7.10  shall  survive  until  all
outstanding  payment  obligations and reporting  obligations of Licensee and its
Affiliates and Sublicensees  have been fulfilled,  and Article 6.3 shall survive
for three  years  following  the year in which such  termination  or  expiration
became effective; and

            (d) Expiration or  termination  of this Agreement  shall not relieve
the parties of any other obligation accruing prior to such termination.

            (e) To the extent that the  then-current  inventory was purchased by
Licensee from Cellegy  under  Article 7 hereof,  Cellegy shall have the right to
repurchase all then-current inventory of the Licensed Product then in Licensee's
possession, at the Burdened Cost originally paid by Licensee for such inventory.

                                   ARTICLE 13
                               REGULATORY MATTERs

      13.1. Licensee's Obligations.  Licensee shall be responsible to, and shall
use all reasonable commercial efforts to do the following:

            (a) Upon  Approval of the  Licensed  Product,  Licensee,  at its own
cost,  will  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,  resale,  promotion  or  distribution  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

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expiration  of this  Agreement,  any  Licensed  Product  registrations  with any
government agency or health authority, or any registration, approvals, or filing
of this Agreement.

            (b) Upon Approval of the Product,  Licensee  shall inform Cellegy on
at least a semi-annual basis about the progress of such  registration  work, and
will provide Cellegy with a copy of all presentations and documents submitted by
Licensee to any regulatory authority with respect to the Licensed Product.

            (c) As  between  the  parties,  Cellegy  shall  be  responsible  for
regulatory  costs  relating  to  Approval  in the United  States,  and for those
mutually  agreed  clinical costs  necessary for Approvals in the Territory,  and
Licensee  will be  responsible  for  regulatory  costs  relating to Approvals in
Canada and Mexico,  and for conducing and bearing the costs of all post-Approval
regulatory monitoring and reporting in the Territory.

      13.2. Cellegy's Obligations. Cellegy shall:

            (a) use its commercially  reasonable efforts to expeditiously obtain
FDA Approval  necessary for the sale of the Licensed  Product  within the United
States, including without limitation, any additional clinical trials, studies or
data in  addition to the  Cellegy  Information  that may be required in order to
obtain  Approvals for Licensed  Product in the United  States at Cellegy's  sole
expense;  Cellegy shall  provide  Licensee  with all  information  regarding the
obtainment of such Approval and shall seek Licensee's  input prior to taking any
actions for seeking the Approval with the Relevant Regulatory Authorities;

            (b)  provide  to  Licensee  within  one (1)  month  from the date of
execution of this  Agreement a  then-current  and  complete  copy of the Cellegy
Information;

            (c) not  intentionally  withhold any  information  in its possession
regarding the Licensed Product;

            (d) at its cost,  promptly  provide  a  sufficient  quantity  of the
Licensed  Product  reasonably  necessary  for  Cellegy to prepare and submit the
application, and the grant, maintenance, variation or renewal of Approvals;

            (e) use reasonable  commercial endeavors to procure raw materials to
meet  the  demands  of  the  Relevant  Regulatory   Authority  relating  to  any
application and any grant, maintenance, variation or renewal of Approvals; and

            (f) at the request of  Licensee,  at  Cellegy's  expense  supply all
customary  documentation  (e.g.,  free  sale  certification,   certification  of
analysis,  etc.) that is  normally  necessary  to gain an import  pharmaceutical
product license in the Territory.

            (g)  assist  Licensee  in  the  preparation  and  execution  of  any
post-Approval  trials  in the  United  States  that  Licensee  reasonably  deems
appropriate   for  the  Licensed   Product.   All  costs   associated  with  the
post-Approval trials will be borne by Licensee.

      13.3. Adverse Drug Events and Recalls.

            (a) The parties  will comply with the adverse  drug event  reporting
guidelines  as set out in Exhibit A or modified  from time to time in accordance
with that Exhibit.

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            (b)  Subject to  Licensee's  right to  initiate  a Licensed  Product
recall pursuant to subparagraph  (c) below,  Licensee will notify Cellegy of any
product  recalls on any quantity of Licensed  Product at any time,  and Licensee
will administer any such recall in the Territory.

            (c) 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.

            (d) 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.

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.

      13.4 Approvals

            (a) All  Approvals by any  governmental  agency or health  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) Cellegy  shall  promptly  provide to Licensee,  upon  Licensee's
request,  such  evidence  that  Licensee  shall  require,  confirming  that  all
Approvals  necessary  to import and sell the Licensed  Product in the  Territory
have been obtained.  If such evidence is not received by Licensee  within thirty
(30) days of the request, Licensee shall be entitled to not take shipment of the
Licensed Product until such evidence is received.

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

      13.5. Cellegy Information  Warranties.  Cellegy represents and warrants to
Licensee that:

            (a) to its knowledge,  the Cellegy Information  supplied to Licensee
under this  Agreement in relation to the Licensed  Product will be true and that
it will be legally entitled to supply this information to Licensee;

            (b) it will use all  reasonable  commercial  efforts to ensure  that
Cellegy  will not alter the  Cellegy  Information  supplied  to  Licensee or the
materials or processes described in that information in relation to the Licensed
Product without the prior written notification to and approval of Licensee; and

            (c) it will use all reasonable  commercial efforts to ensure that in
no event will Cellegy implement any alteration to the Cellegy Information or the
materials or processes  described in the Cellegy  Information in relation to any
of the Licensed Product supplied to Licensee under this

                                                                          --22--
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[*]  designates  portions of this document that have been omitted  pursuant to a
request  for  confidential   treatment  filed  separately  wit  the  Commission.

Agreement until the Relevant Regulatory  Authority in the Territory has approved
all requisite amendments to the applicable Approvals.

      13.6 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, and shall make a copy of such policy
available to the other party upon request.  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.

                                   ARTICLE 14
                REGISTRATION OF LICENSE; LIMITATION OF LIABILITY

      14.1 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 Cellegy and submitted to it by Licensee from time to time in order
to affect the foregoing registration in such country.

      14.2 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.

                                   ARTICLE 15
                                       [*]

                                   ARTICLE 16
                               GENERAL PROVISIONS

      16.1 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 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,  terrorism,  civil commotions,  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.

      16.2 Further  Assurances.  Each party hereto  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.

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      16.3  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.

      16.4 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 if mailed by registered or certified mail (return receipt  requested)
postage  prepaid,  or  by a  nationally  recognized  overnight  courier,  or  by
facsimile  (and promptly  confirmed by  registered,  certified mail or 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 registered, certified mail or overnight courier as
aforesaid shall be deemed to have been given when mailed.

      In the case of Cellegy:               With a required copy to:
         Cellegy Pharmaceuticals, Inc.         Fenwick & West LLP
         349 Oyster Point Boulevard            815 Connecticut Avenue, Suite 200
         San Francisco, California 94080       Washington, DC 20006
         Attention:  John Chandler             Attention: Kevin Kelso, Esq.
         Telephone No.: (650) 616-2200         Telephone No.: (202) 261-0405
         Facsimile No.: (650) 616-2222         Facsimile No.: (202) 463-6520

      In the case of Licensee:              With a required copy to:
         PDI, Inc.
         10 Mountainview Road, Suite C-200     PDI, Inc.
                                               10 Mountainview Road, Suite C-200
         Upper Saddle River, NJ 07458          Upper Saddle River, NJ 07458
         Attention:  Charles T. Saldarini      Attention: Beth R. Jacobson
                                               Telephone No.: (201) 574-8383
         Telephone No.: (201) 258-8456         Facsimile No.: (201) 258-8445
         Facsimile No.: (201) 258-8445

      16.5  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 in connection with the transfer or sale of all or substantially all of
its  business  related  to this  Agreement  or in the  event  of the  merger  or
consolidation  of  such  party  with  another  corporation,  or in the  case  of
Licensee,  in the event of a sale by Licensee of all or substantially all of its
business;  and further provided that Cellegy may assign,  transfer or pledge its
rights to receive any payments due Cellegy hereunder without Licensee's consent;
provided,  however,  that Licensee's  consent shall be required for any payments
due to  Cellegy  under this  Agreement  that are to be  divided  among  separate
entities.  Any purported assignment in violation of the preceding sentence shall
be void.  Any permitted  assignee  shall assume all  obligations of its assignor
under this Agreement.

      16.6 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.

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      16.7 Entire Agreement. This Agreement contains the entire understanding of
the parties with respect to the subject  matter  hereof.  All express or implied
agreements  and  understandings,  either  oral or written,  heretofore  made are
expressly merged in and made a part of this Agreement.

      16.8 Waiver.  The failure of a party to enforce at any time 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
provisions.

      16.9 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.

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

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

      16.12 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.

      16.13  Governing Law. This Agreement shall be governed by and construed in
accordance  with  the  laws  of  the  State  of  New  York,   exclusive  of  its
choice-of-law rules, except that questions affecting the construction and effect
of any  patent  shall be  determined  by the laws of the  country  in which such
patent has been granted.

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

      16.15  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.

      16.16  Publicity.  The parties  agree that  subsequent to the execution of
this Agreement,  a press release approved by both parties will be issued. Except
for  such  press  releases  and  for  periodic  disclosures  required  by law or
regulation or in the ordinary course of its SEC filings, neither party shall (i)
originate any publicity,  news release or other public announcement,  written or
oral, whether to the public

                                                                          --25--
                                                                   REDACTED COPY
<PAGE>

press,  stockholders  or otherwise,  relating to this  Agreement,  any amendment
hereto  or  performance  hereunder,  or (ii)  use the  name of the  other in any
publicity, news release or other public announcement,  except (a) with the prior
written consent of the other party, or (b) as required by law, in which case the
originating  party  will  give to the other  party at least  two (2) days  prior
notice  of such  proposed  disclosure  to  complete  a review  in order to offer
comments and modifications. Consistent with applicable law, the other party will
have the right to request  reasonable  changes to the  disclosure to protect its
interests.  In all other cases, the originating  party shall give the consenting
party at least two (2) days to  complete  a review  in order to offer  comments,
modifications or to give such consent.  The party required to give consent shall
respond in less than two (2) days if practicable

      16.17 Dispute Resolution; Venue

            (a) Mediation.  If a controversy or claim arising out of or relating
to  this  Agreement  (hereinafter  "Controversy")  cannot  be  resolved  through
negotiations,  Cellegy  and  Licensee  agree to try in good  faith to settle the
Controversy through mediation before resorting to litigations.

                  (1)  Either  Party may  invoke  mediation  at any time  during
negotiations  by notifying the other party in writing (the  "Mediation  Notice")
that it wishes to appoint a mediator.  If the Parties cannot agree on a mediator
within 30 days of the  receipt of the  Mediation  Notice (or such longer time as
may be mutually  agreed),  the Parties  agree to submit the  Controversy  to the
American  Arbitration  Association  (hereinafter  "AAA") for mediation under its
Commercial  Mediation Rules, to the extent that those rules are not inconsistent
with this Section.

                  (2)  Mediation  shall  be  conducted  within  30  days  of the
agreement of the mediator to conduct the  mediation,  or such longer time as may
be agreed by the parties.  It shall be  conducted  in Chicago,  Illinois at such
location as may be mutually  agreeable to the Parties and shall  continue for no
longer than two consecutive business days, ending by 5 pm of the second day.

                  (3) The parties  agree that each will be  represented  at each
mediation session by a person with full authority to settle the Controversy.

                  (4) All fees and expenses of the  mediation  shall be borne by
the  parties  equally.  However,  each party  shall bear the  expense of its own
counsel, representatives, preparation and attendance.

                  (5) Neither  party may commence  litigation  until the parties
have  conducted and ended  mediation.  In the event that the  provisions of this
subsection  (b) would  result in an  otherwise  timely  claim being barred by an
applicable statue of limitations, then the parties agree to toll the application
of the  statute of  limitations  for a period  equal to the delay  caused by the
mediation.

                  (6) In the event that a controversy cannot be resolved through
mediation,  each  Party  shall  thereafter  have the right to pursue any and all
remedies available at law or in equity.

      (b) Venue. Any court proceeding  instituted my one party against the other
with respect to this Agreement may be commenced in the federal  courts  residing
in the Southern District of New York or in the Northern District of California.

                  [remainder of page left intentionally blank]

                                                                          --26--
                                                                   REDACTED COPY
<PAGE>

                 [Signature Page to Exclusive License Agreement]

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

PDI, INC.                                 CELLEGY PHARMACEUTICALS, INC.

By:                                       By:
   --------------------------                 -------------------------
<PAGE>

                                    EXHIBIT A
                REPORTING OF ADVERSE DRUG EVENTS FOR THE PRODUCT

1.    This  Schedule  describes the manner in which each of Cellegy and Licensee
      will meet  their  legal  obligations  of  reporting  adverse  drug  events
      connected with the product to each other.

2.    DEFINITIONS

In this document the following terms have the meanings set out below:

"Adverse Drug Event" is any untoward medical occurrence in a patient or clinical
investigation subject administered with a pharmaceutical  product. This includes
any unfavorable and unintended sign (including an abnormal laboratory  finding),
symptom,  or disease temporally  associated with the use of a medicinal product,
whether or not considered related to the medicinal product.

"Minimum  Criteria" means the minimum  criteria for an Adverse Drug Event report
and must include the following:

            (a)   name of the drug;

            (b)   a description of the adverse drug event;

            (c)   patient  identifiers  (any  one or more of name,  initials  or
                  clinical investigation number, age, sex or weight); and

            (d)   an identifiable source of the report;

"Non-serious  Adverse Drug Event" is any Adverse Drug Event other than a Serious
Adverse Drug Event;

"Serious  Adverse  Drug Event" is any Adverse Drug Event that  satisfies  one or
more of the following criteria:

            (a)   fatal; or

            (b)   life-threatening; or

            (c)   causing disability or incapacity; or

            (d)   causing or prolonging hospitalization; or

            (e)   congenital anomaly or cancer; or

            (f)   requiring medical intervention to prevent permanent impairment
                  or damage;

"Spontaneous reports" are reports from any non-clinical trial source,  including
regulatory agencies, consumers and literature;

"Unexpected  Adverse  Drug  Event" is any  Adverse  Drug  Event,  the  nature or
severity of which is not consistent with the applicable product information.

3.    COMMENCEMENT OF REPORTING TIME PERIOD

In this  Schedule,  where a time is  specified  within which any report is to be
forwarded by either party to the other party,  that period of time will commence
when anyone  representing the reporting party first learns of enough information
to satisfy the Minimum Criteria.

4.    REGULATORY REPORTING

      4.1 Licensee will:

<PAGE>

            (a) be  responsible  for all  reporting  under this  Schedule to the
relevant  regulatory  authority  in the  Territory  including  reporting,  where
applicable, of any international case reports forwarded by Cellegy;

            (b) send to Cellegy a copy of all mail  exchanges  with the relevant
regulatory authority in the Territory; and

            (c) give Cellegy timely notice of any meetings or  discussions  with
the relevant regulatory  authority in the Territory concerning the safety of any
of the Licensed Products.

      4.2 Cellegy will:

            (a) be responsible for all reporting to other regulatory authorities
and the other licensees/distributors outside the Territory;

            (b) notify Licensee of any action taken by any regulatory  authority
concerning the safety of any of the Licensed Products within one (1) working day
(references in this Schedule to working days refer to U.S.  calendar days, other
than a Saturday  or  Sunday,  on which  Citibank's  San  Francisco,  California,
offices are open for commercial banking business during normal banking hours) of
that action  being taken and will provide  Licensee  with  complete  information
concerning that action;

            (c)  provide  to  Licensee  an EU PSUR on an annual  basis for three
years  following  all relevant  Approvals  (four  quarterly  or two  six-monthly
reports are acceptable as an annual  report).  Thereafter  provide to Licensee a
half yearly  summary of all  spontaneous  reports in  relation  to the  Licensed
Products; and

5.    SPONTANEOUS SERIOUS or UNEXPECTED ADVERSE DRUG EVENTS

      5.1 Licensee will forward to Cellegy any spontaneous Serious or Unexpected
Adverse Drug Event  report  within 72 hours of receipt of these by Licensee on A
CIOMS 1 form.

      5.2 All reports from Licensee on Adverse Drug Events shall be addressed to
Cellegy as follows:

            Cellegy Pharmaceuticals, Inc.
            349 Oyster Point Boulevard
            San Francisco, California  94080
            Telephone No.: (650) 616-2200
            Facsimile No.: (650)616-2222

      5.3 Cellegy will  acknowledge  receipt of any such report within 5 working
days of that receipt.

6.    SPONTANEOUS NON-SERIOUS ADVERSE DRUG EVENT REPORT

      6.1 Licensee will forward to Cellegy any spontaneous  Non-serious  Adverse
Drug Event reports on a CIOMS 1 form on a monthly basis.

      6.2 All reports from Licensee on Adverse Drug Events shall be addressed to
Cellegy as follows:

<PAGE>

            Cellegy Pharmaceuticals, Inc.
            349 Oyster Point Boulevard
            San Francisco, California  94080
            Telephone No.: (650) 616-2200
            Facsimile No.: (650) 616-2222

      6.3 Cellegy will  acknowledge  receipt of any such report within 5 working
days of that receipt.

7.    ARCHIVING OF REPORTS

      7.1 Licensee will maintain all reports in accordance  with any  regulatory
requirements in Territory.

      7.2  Notwithstanding  clause 7.1,  Licensee will maintain a record of each
report for at least 5 years from  Licensee's  receipt or creation of each report
and such maintenance will include:

            (a) a copy  (hard  copy or  electronically  available  copy)  of the
report;

            (b) the date of the  initial  receipt or  creation  of the report by
Licensee; and

            (c) for Serious or Unexpected  Adverse Drug Event reports,  the date
the report was forwarded to and received by Cellegy.

8.    CLINICAL TRIAL REPORTS

      8.1  Licensee  will forward to Cellegy any Serious or  Unexpected  Adverse
Drug Event  report  that is  considered  to be drug  related  and occurs  during
clinical trials within 72 hours of receipt of such report by Licensee.

      8.2 Any Serious  Adverse  Drug Event  report  based upon  clinical  trials
forwarded to Cellegy according to clause 8.1 will:

            (a) be  reported  on the  Serious  Adverse  Event form from the case
report form;

            (b) include an assessment of causality by the  investigator  with an
indication on the case report form; and

            (c)  if  blinded  studies  are  carried  out,  a  disclosure  of the
randomization  code by a person  not  directly  involved  in the  study if it is
ongoing, in order to permit entry of that data into a central database.

      8.3 Licensee  will forward to Cellegy any  Non-serious  Adverse Drug Event
report  from  clinical  trials  as part of the end of  study  reports,  provided
however,  that at least the safety  sections of the end of study reports will be
forwarded to Cellegy within 30 days of completion of the end of study reports.

      8.4 All reports from Licensee on Adverse Drug Events from clinical  trials
shall be addressed to Cellegy as follows:

<PAGE>

            Cellegy Pharmaceuticals, Inc.
            349 Oyster Point Boulevard
            San Francisco, California  94080
            Telephone No.: (650) 616-2200
            Facsimile No.: (650) 616-2222

      8.5 Cellegy will  acknowledge  receipt of any such report within 5 days of
that receipt.

9.    VARIATION OF THIS SCHEDULE

      9.1 This  Schedule  may be  amended by mutual  consent  of the  parties as
evidenced in writing and the amended  Schedule will then prevail as the Schedule
to the Agreement.

<PAGE>

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

                                    EXHIBIT B
                           MINIMUM SALES REQUIREMENTS
                                       [*]

<PAGE>

                                    EXHIBIT C
                       PATENT RIGHTS FOR LICENSED PRODUCT

A.    U.S.  Patent  Number  6,319,913  B1 entitled  "Penetration  Enhancing  and
      Irritation Reducing Systems" issued November 20, 2001

B.    U.S. Patent  Application  Number  09/963,287 (U.S.  Publication  Number US
      2002/0058650 A1), a continuation of US 6,319,913 B1, entitled "Penetration
      Enhancing and Irritation Reducing Systems"

C.    Canadian  Patent  Application   Number  2,309,688  entitled   "Penetration
      Enhancing  and  Irritation   Reducing  System"   (National  Phase  of  PCT
      Application  Number  PCT/US98/23750,  Publication  Number WO  99/24041)

D.    Mexican Patent  Application Number 4513 (National Phase of PCT Application
      Number PCT/US98/23750, Publication Number WO 99/24041)

E.    U.S.  Patent  Application  (number not yet assigned)  entitled  "Semisolid
      Topical Hormonal Compositions and Methods for Treatment", filed October 4,
      2002, claiming priority to U.S. Provisional Application Number 60/327,423,
      filed October 4, 2001

F.    PCT  Application  Number   PCT/US02/31997  (not  yet  published)  entitled
      "Semisolid  Topical  Hormonal  Compositions  and Methods  for  Treatment",
      designated states include Canada and Mexico

G.    U.S. Patent Application Number 10/197,627  entitled "Taper Well Meter Dose
      Pump"

H.    PCT Application yet to be filed  corresponding to U.S.  Application Number
      10/197,627, filing deadline June 4, 2003

<PAGE>

                                    EXHIBIT D
                  OTHER TESTOSTERONE PRODUCTS OWNED BY CELLEGY

Tostrelle(R) testosterone gel

<PAGE>

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

                                    EXHIBIT E

                                  BURDENED COST

"Burdened Cost" means [*]

Cellegy's estimated Burdened Cost for 2003 is as follows: [*]

<PAGE>

                                    EXHIBIT F
                                   TRADEMARKS

Tostrex(TM)

A.    US: Filed, second request; Application Number 75/866,691, class IN 5

B.    Canada: Filed, pending; Application Number 1128610, class IN

C.    Mexico: Registered, Registration Number 737847 issued 2/28/02, class IN 5

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