Document:

Unassociated Document

    

       

      First
        Amended and Restated Exclusive License Agreement For
        Tostrex®

       

      Between

       

      STRAKAN
        INTERNATIONAL LIMITED

       

      And

       

      Cellegy
        Pharmaceuticals, Inc.

       

      

       

      Confidential

       

      

       

      

       

      

       

      ________________________________

       

      
        	 	
                [*]

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

              

      

       

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    TABLE
      OF
      CONTENTS 

       

    

    
      	 	 	PAGE 
	
              ARTICLE
                1 DEFINITIONS

            	 	
              1

            
	 	
              Affiliates

            	
              1

            
	 	
              Agreement

            	
              2

            
	 	
              Approvals

            	
              2

            
	 	
              Cellegy
                Information

            	
              2

            
	 	
              Cellegy
                Marks

            	
              2

            
	 	
              Cellegy
                Patents

            	
              2

            
	 	
              Cellegy
                Supply Agreement

            	
              2

            
	 	
              Cellegy
                Surcharge

            	
              2

            
	 	
              Commercially
                Reasonable and Diligent Efforts

            	
              3

            
	 	
              Competing
                Licensed Products

            	
              3

            
	 	
              Current
                SmPC”

            	
              3

            
	 	
              Development”

            	
              3

            
	 	
              Dollars”
                or “$”

            	
              3

            
	 	
              Effective
                Date”

            	
              3

            
	 	
              Euros”
                or “€

            	
              3

            
	 	
              GMP”

            	
              3

            
	 	
              Intellectual
                Property Rights”

            	
              3

            
	 	
              Know-How

            	
              3

            
	 	
              Launch
                Date

            	
              5

            
	 	
              Licensed
                Product”

            	
              5

            
	 	
              Licensee
                Product

            	
              5

            
	 	
              Licensee
                Supply Agreement

            	
              5

            
	 	
              Loss

            	
              5

            
	 	
              Major
                European Countries

            	
              5

            
	 	
              Manufacturer

            	
              5

            
	 	
              Minimum
                Sales

            	
              5

            
	 	
              M.R.P

            	
              5

            
	 	
              Net
                Sales

            	
              5

            
	 	
              Party

            	
              6

            
	 	
              Patent
                Rights

            	
              6

            
	 	
              Relevant
                Regulatory Authority

            	
              6

            
	 	
              Steering
                Committee

            	
              6

            
	 	
              Sublicensee

            	
              6

            
	 	
              Technical
                Agreement

            	
              6

            
	 	
              Territory

            	
              6

            
	 	
              Third
                Party

            	
              6

            
	
              ARTICLE
                2 GRANT OF LICENSE

            	
              7

            
	 	
              2.1

            	
              Grant

            	
              7

            
	 	
              2.2

            	
              Right
                to sub-license

            	
              7

            
	 	
              2.3

            	
              Acceptance
                of Appointment; Sales Outside Territory

            	
              8

            
	 	
               

            	 	 

    

     

    
      
        
        

      

      
        i

        
          

        

      

      
        
        

      

    

    
      	 	 	 	 
	 	
              2.4

            	
              Competing
                Products

            	
              8

            
	 	
              2.5

            	
              Right
                of First Negotiation Regarding Licensee Product in North
                America

            	
              9

            
	
              ARTICLE
                3 REPRESENTATIONS AND WARRANTIES

            	
              9

            
	 	
              3.1

            	
              Representations
                and Warranties of Cellegy

            	
              9

            
	 	
              3.2

            	
              Representations
                and Warranties of Licensee

            	
              13

            
	
              ARTICLE
                4 MANAGEMENT OF THE COLLABORATION

            	
              13

            
	 	
              4.1

            	
              Steering
                Committee.

            	
              13

            
	 	
              4.2

            	
              Responsibilities
                of the Steering Committee

            	
              14

            
	 	
              4.3

            	
              Voting;
                Deadlocks

            	
              16

            
	 	
              4.4

            	
              Approval
                Plan; Marketing Plan.

            	
              16

            
	
              ARTICLE
                5 REGULATORY MATTERS; APPROVALS

            	
              17

            
	 	
              5.1

            	
              Regulatory
                Matters; Approvals

            	
              17

            
	 	
              5.2

            	
              Reversion
                of Product Rights in Certain Circumstances

            	
              19

            
	 	
              5.3

            	
              Cooperation
                Regarding Material Events

            	
              19

            
	 	
              5.4

            	
              Copies
                of Documents

            	
              19

            
	 	
              5.5

            	
              Approval
                Application in Sweden

            	
              19

            
	 	
              5.6

            	
              Meetings
                With Regulatory Authorities

            	
              20

            
	 	
              5.7

            	
              Inspection

            	
              20

            
	 	
              5.8

            	
              Clinical
                Trials

            	
              20

            
	 	
              5.9

            	
              Cellegy
                Obligations

            	
              21

            
	 	
              5.10

            	
              Approvals

            	
              22

            
	
              ARTICLE
                6 POST- APPROVAL RESPONSIBILITIES

            	
              22

            
	 	
              6.1

            	
              Responsibility

            	
              22

            
	 	
              6.2

            	
              Collaboration

            	
              23

            
	 	
              6.3

            	
              Insurance

            	
              23

            
	
              ARTICLE
                7 INFORMATION; DATA; PHARMACOVIGILENCE

            	
              23

            
	 	
              7.1

            	
              Clinical
                Data

            	
              23

            
	 	
              7.2

            	
              Safety
                Data Base

            	
              23

            
	 	
              7.3

            	
              Adverse
                Events

            	
              25

            
	 	
              7.4

            	
              Product
                Complaints

            	
              25

            
	
              ARTICLE
                8 MILESTONE PAYMENTS; ROYALTIES AND RELATED PAYMENTS

            	
              25

            
	 	
              8.1

            	
              Milestone
                Payments

            	
              25

            
	 	
              8.2

            	
              Sales
                Milestones

            	
              25

            
	 	
              8.3

            	
              Fee
                Conditions.

            	
              25

            
	 	
              8.4

            	
              Royalties
                in General

            	
              26

            
	 	
              8.5

            	
              Period
                for Royalty Payments; Residual Payments

            	
              26

            
	
              ARTICLE
                9 ROYALTY REPORTS AND ACCOUNTING

            	
              26

            
	 	
              9.1

            	
              Quarterly
                Royalty Reports; Records

            	
              26

            
	 	
              9.2

            	
              Payment
                Due Dates

            	
              27

            
	 	
              9.3

            	
              Right
                to Audit Licensee

            	
              27

            
	 	
               

            	 	 

    

     

    
      
        
        

      

      
        ii

        
          

        

      

      
        
        

      

    

    
      	 	 	 	 
	 	 	 	 
	
              ARTICLE
                10 MARKETING

            	
              30

            
	 	
              10.1

            	
              General
                Promotional Duties

            	
              30

            
	 	
              10.2

            	
              Marketing
                Effort; Minimum Expenditures for Commercialization

            	
              30

            
	 	
              10.3

            	
              Licensee’s
                Failure to Commercialize in the Territory

            	
              30

            
	 	
              10.4

            	
              Minimum
                Sales

            	
              31

            
	
              ARTICLE
                11 MANUFACTURING; SUPPLY OF LICENSED PRODUCT

            	
              33

            
	 	
              11.1

            	
              Production
                and Supply of Product

            	
              33

            
	 	
              11.2

            	
              Forecasts

            	
              33

            
	 	
              11.3

            	
              [*]

            	
              33

            
	 	
              11.4

            	
              Pricing

            	
              33

            
	 	
              11.5

            	
              Warranty
                Limitiation; Disclaimer

            	
              24

            
	 	
              11.6

            	
              Recalls

            	
              24

            
	
              ARTICLE
                12 PATENT RIGHTS

            	
              35

            
	 	
              12.1

            	
              No
                Ownership By Licensee

            	
              35

            
	 	
              12.2

            	
              New
                Cellegy Inventions/Improvements to the Licensed Product

            	
              35

            
	 	
              12.3

            	
              Improvements
                by Licensee

            	
              35

            
	
              ARTICLE
                13 CELLEGY MARKS

            	
              36

            
	 	
              13.1

            	
              Use
                of Cellegy Marks by Licensee

            	
              36

            
	 	
              13.2

            	
              Acknowledgment
                of Ownership

            	
              36

            
	 	
              13.3

            	
              Marking

            	
              36

            
	 	
              13.4

            	
              Registration

            	
              36

            
	 	
              13.5

            	
              Termination
                of Use

            	
              38

            
	 	
              13.6

            	
              Trademarks

            	
              38

            
	
              ARTICLE
                14 INFRINGEMENT; INDEMNIFICATION AND OTHER CLAIMS

            	
              38

            
	 	
              14.1

            	
              Infringement
                of Intellectual Property Rights

            	
              38

            
	 	
              14.2

            	
              Alleged
                Infringement of Third Party Intellectual Property Rights

            	
              40

            
	 	
              14.3

            	
              Product
                Liability Claims

            	
              40

            
	 	
              14.4

            	
              Notice
                from Licensee

            	
              41

            
	 	
              14.5

            	
              Indemnification

            	
              41

            
	
              ARTICLE
                15 CONFIDENTIALITY

            	
              42

            
	 	
              15.1

            	
              Treatment
                of Confidential Information

            	
              42

            
	 	
              15.2

            	
              Right
                to Disclose

            	
              42

            
	 	
              15.3

            	
              Release
                From Restrictions

            	
              44

            
	 	
              15.4

            	
              Confidentiality
                of Agreement

            	
              44

            
	 	
              15.5

            	
              Return
                of Confidential Information

            	
              44

            
	 	
              15.6

            	
              Previous
                Confidentiality Agreements

            	
              44

            
	
              ARTICLE
                16 TERM; TERMINATION

            	
              45

            
	 	
               

            	 	 

    

     

    
      
        
        

      

      
        iii

        
          

        

      

      
        
        

      

    

    
      	 	 	 	 
	 	
              16.1

            	
              Term

            	
              45

            
	 	
              16.2

            	
              Bilateral
                Termination Rights

            	
              45

            
	 	
              16.3

            	
              Cellegy’s
                Right to Terminate

            	
              45

            
	 	
              16.4

            	
              Licensee’s
                Right to Terminate

            	
              47

            
	 	
              16.5

            	
              Rights
                Upon Termination or Expiration

            	
              47

            
	
              ARTICLE
                17 REGISTRATION OF LICENSE; LIMITATION OF LIABILITY

            	
              50

            
	 	
              17.1

            	
              Registration

            	
              50

            
	 	
              17.2

            	
              Limitation
                of Liability

            	
              50

            
	
              ARTICLE
                18 GENERAL PROVISIONS

            	
              50

            
	 	
              18.1

            	
              Force
                Majeure

            	
              50

            
	 	
              18.2

            	
              Further
                Assurances

            	
              52

            
	 	
              18.3

            	
              Severability

            	
              52

            
	 	
              18.4

            	
              Notices

            	
              52

            
	 	
              18.5

            	
              Assignment

            	
              53

            
	 	
              18.6

            	
              Amendment

            	
              53

            
	 	
              18.7

            	
              Entire
                Agreement

            	
              53

            
	 	
              18.8

            	
              Waiver

            	
              53

            
	 	
              18.9

            	
              No
                Implied Licenses

            	
              53

            
	 	
              18.10

            	
              Injunctions

            	
              54

            
	 	
              18.11

            	
              Independent
                Contractors

            	
              54

            
	 	
              18.12

            	
              No
                Third Party Beneficiaries

            	
              54

            
	 	
              18.13

            	
              Governing
                Law

            	
              54

            
	 	
              18.14

            	
              Resolution
                of Disputes

            	
              54

            
	 	
              18.15

            	
              Headings

            	
              55

            
	 	
              18.16

            	
              Counterparts

            	
              55

            
	 	
              18.17

            	
              Late
                Payment

            	
              56

            
	 	
              18.18

            	
              Strakan
                Group Limited Guarantee

            	
              56

            

    

     

     

    
      SIGNATURES
        

      

      EXHIBIT
        A
        LICENSED PRODUCT

      EXHIBIT
        B
        COUNTRIES IN THE TERRITORY

      EXHIBIT
        C
        MINIMUM SALES REQUIREMENTS

      EXHIBIT
        D
        PATENT RIGHTS

      EXHIBIT
        E
        CELLEGY MARKS

      EXHIBIT
        F
        STRAKAN GROUP GUARANTEE 

      EXHIBIT
        G
        ADVERSE EVENT REPORTING ADDENDUM

      
        

        
          
            
              
              

            

            
              iv

              
                

              

            

            
              
              

            

          

        

        

        FIRST
          AMENDED AND RESTATED EXCLUSIVE LICENSE AGREEMENT

        

        THIS
          FIRST AMENDED AND RESTATED EXCLUSIVE LICENSE AGREEMENT (this "Agreement")
          is
          made and entered into as of January 16, 2006 (the “Agreement
          Date”),
          by
          and between Cellegy Pharmaceuticals, Inc., a Delaware corporation having
          its
          principal place of business at 1800 Byberry Road, Building 13, Huntingdon
          Valley, PA, 19006-3525 USA ("Cellegy"),
          and
          Strakan International Limited,
          a
          company organized and existing under the laws of Bermuda with a branch
          office at
          Buckholm Mill, Galashiels, TD1 2HB, UK ("Licensee”").
          

        

        BACKGROUND

        

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

        

        B. The
          Parties previously entered into an Exclusive License and Distribution Agreement
          (“Prior
          Agreement”)
          dated
          as of July 9, 2004 (the “Effective
          Date”),
          pursuant to which Licensee obtained an exclusive license to certain rights
          to
          the Licensed Product under such intellectual property rights, and to Cellegy’s
          Marks within the Territory (as hereinafter defined).

        

        C. The
          Parties desire to amend the Prior Agreement in various respects, as reflected
          in
          this Agreement.

        

        AGREEMENT

        

        Commencing
          with the Agreement Date, this Agreement shall amend, restate and supersede
          in
          its entirety the Prior Agreement. In consideration of the foregoing and
          of the
          mutual covenants hereinafter set forth and other good and valuable
          consideration, the receipt of which is hereby acknowledged, the Parties
          (as
          hereinafter defined) mutually agree as follows:

        

        ARTICLE
          1

        DEFINITIONS

        

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

        

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

        

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

        

        
          
            
              
              

            

            
              1

              
                

              

            

            
              
              

            

          

        

        

        

        (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.

        

        “Agreement”
means
          this First Amended and Restated Exclusive License Agreement.

        

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

        

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

        

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

        

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

        

        “Cellegy
          Supply Agreement”
means
          the supply agreement between Cellegy and Manufacturer to Licensee governing
          the
          supply of the Licensed Product to Cellegy or Cellegy’s nominees or licensees
          outside the Territory and incorporating the terms and conditions of a relevant
          Technical Agreement.

        

        “Cellegy
          Surcharge”
means
          10% of the per unit cost. 

        

        
          
            
              
              

            

            
              2

              
                

              

            

            
              
              

            

          

        

        

        

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

        

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

        

        “Current
          SmPC”
has
          the
          meaning set forth in Section 11.4.

        

        “Development”
          (including variations such as “Develop” and the like) shall mean all appropriate
          measures, steps and the like that are necessary to prepare and compile
          dossiers
          appropriate for obtaining Approvals for the Licensed Product in the Territory
          and conducting clinical trials in the Territory (if required). As it relates
          to
          Cellegy, “Development” shall mean that Cellegy shall provide Licensee a copy of
          the dossier concerning the Licensed Product filed by Cellegy with the Relevant
          Regulatory Authority in Sweden, and such other materials relating thereto
          or to
          obtaining other Approvals for the Licensed Product in the Territory as
          Cellegy
          may in its discretion from time to time develop before the date that all
          required Approvals are obtained.

        

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

        

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

        

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

        

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

        

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

        

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

        

        
          
            
              
              

            

            
              3

              
                

              

            

            
              
              

            

          

        

        

        

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

        

        “Licensed
          Product”
means
          the pharmaceutical product known as Tostrex® (testosterone) 2% topical
          testosterone gel for the treatment of male hypogonadism, in the pharmaceutical
          presentation described in Exhibit
          A.
          

        

        “Licensee
          Product”
has
          the
          meaning set forth in Section 2.4.

        

        “Licensee
          Supply Agreement”
means
          the supply agreement between Licensee and Manufacturer governing the supply
          of
          the Licensed Product to Licensee by Manufacturer for the Territory and
          incorporating the terms and conditions of a relevant Technical Agreement.
          

        

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

        

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

        

        “Manufacturer”
          means
          Cellegy’s nominated Third Party manufacturer of the Licensed Product or any
          other manufacturer nominated by Cellegy or by Licensee. 

        

        “Minimum
          Sales”
          means
          agreed targets for unit sales of Licensed Product in the Territory, as
          set forth
          on Exhibit
          C
          hereto.

        

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

        

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

        

        (i) reasonable
          credited allowances actually granted to such Third Party customers,

        

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

        

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

        

        
          
            
              
              

            

            
              4

              
                

              

            

            
              
              

            

          

        

        

        

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

        

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

        

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

        

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

        

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

        

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

        

        “Technical
          Agreement”
          means
          the agreements between Cellegy and Manufacturer for Licensed Product supplied
          outside the Territory, and between Licensee and Manufacturer for Licensed
          Product supplied within the Territory, defining the roles and responsibilities
          for the parties to the Technical Agreements in relation to, inter alia,
          (i)
          manufacture and supply of the Licensed Product pursuant to GMP; and (ii)
          regarding regulatory, safety and pharmacovigilence issues, the terms and
          conditions of which are incorporated into any supply agreement for the
          Licensed
          Product.

        

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

        

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

        

        
          
            
              
              

            

            
              5

              
                

              

            

            
              
              

            

          

        

        

        

        ARTICLE
          2

        GRANT
          OF
          LICENSE

        

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

        

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

        

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

        

        (b) to
          a
          Cellegy approved Third Party Manufacturer in the case of Licensee sub-licensing
          the rights to manufacture the Licensed Product and subject to appropriate
          confidential disclosure by Cellegy of the Cellegy Information and Know-How
          which
          Cellegy shall disclose to allow the manufacture of the Licensed Product
          by such
          Manufacturer; and 

        

        

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

        

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

        

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

        

        
          
            
              
              

            

            
              6

              
                

              

            

            
              
              

            

          

        

        

        

        2.3 Acceptance
          of Appointment; Sales Outside Territory.

        

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

        

        (b) Licensee
          shall not, and Licensee shall use all Commercially Reasonable and Diligent
          Efforts to ensure that its officers, directors, employees, Affiliates,
          agents or
          representatives (collectively, "Agents")
          shall
          not, without the prior written consent of Cellegy, directly or indirectly
          promote, sell, distribute or otherwise make available (for remuneration
          or
          gratuitously) Licensed Product outside the Territory or sell, distribute
          or
          otherwise make available (for remuneration or gratuitously) Licensed Product
          to
          persons outside the Territory for the purpose of resale or distribution
          (whether
          for remuneration or gratuitously) outside the Territory. Without limiting
          the
          foregoing, Licensee agrees to use all Commercially Reasonable and Diligent
          Efforts to ensure compliance with the preceding sentence, including without
          limitation placing appropriate notices on the labels of Licensed Products;
          provided, however, that Licensee shall not be obligated to include any
          notices
          in a particular country in the Territory that would conflict with any relevant
          requirements of the Relevant Regulatory Authority for such country, and
          Licensee’s failure or refusal to include any such notices in such circumstances
          shall not constitute a breach of any provision of this Agreement. 

        

        2.4 Competing
          Products.
          During
          the term of this Agreement, or, if earlier, the maximum period of time
          permitted
          by applicable European Union regulations, Licensee shall not, and shall
          use all
          Commercially Reasonable and Diligent Efforts to ensure that its officers,
          directors, employees, Affiliates, Sublicensees, agents or representatives
          (collectively, "Agents")
          shall
          not, directly or indirectly, promote, sell or distribute products within
          the
          Territory that are directly competitive in the treatment of male hypogonadism
          or
          such other indications for the Licensed Product as may be added to this
          Agreement (the “Competing
          Licensed Products”),
          excluding Licensee’s [*] (the “Licensee
          Product”).
          For
          the avoidance of doubt, this shall not preclude Licensee from conducting
          research and development in relation to projects or products 

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

        

        

        that
          may
          be associated with the treatment of male hypogonadism or such other indication
          for the Licensed Product added to this Agreement. If applicable law or
          applicable European Union regulations provide that the foregoing covenant
          is
          unenforceable or require that the duration of the foregoing covenant be
          shorter
          than the term of this Agreement, then if at any time during the term of
          this
          Agreement when such covenant is not effective Licensee or its Agents directly
          or
          indirectly promote, sell or distribute Competing Licensed Products, Cellegy
          may
          terminate this Agreement with respect to any country where such Competing
          Licensed Products are being promoted, sold or distributed by delivery of
          written
          notice to Licensee.

        

        
          
            
              
              

            

            
              7

              
                

              

            

            
              
              

            

          

        

        

        

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

        

        ARTICLE
          3

        REPRESENTATIONS
          AND WARRANTIES

        

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

        

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

        

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

        

        
          
            
              
              

            

            
              8

              
                

              

            

            
              
              

            

          

        

        

        

        (c) Cellegy
          is the exclusive owner of all right, title and interest in the Patent Rights
          in
          the applicable countries in the Territory, and the patent applications
          included
          in the Patent Rights have been duly filed and contain no material errors.
          Cellegy shall maintain all Patent Rights for the full duration of this
          Agreement. Attached hereto as Exhibit
          D
          is a
          complete and accurate list of all patents and patent applications included
          in
          the Patent Rights.

        

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

        

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

        

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

        

        (g) 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 litigation before any patent and trade mark office,
          court
          or any other governmental entity in any jurisdiction in regard to the Patent
          Rights or the Cellegy Marks.

        

        (h) 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.

        

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

        

        (j) Cellegy
          will use all Commercially Reasonable and Diligent 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 any of the Licensed
          Product without the prior written notification to Licensee.

        

        
          
            
              
              

            

            
              9

              
                

              

            

            
              
              

            

          

        

        

        

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

        

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

        

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

        

        (c) Licensee
          currently is in compliance in all material respects with all applicable
          laws and
          has received, or will receive where relevant, all applicable pharmaceutical
          product certifications and registrations from appropriate governmental
          entities
          that are necessary to perform its obligations under this Agreement.

        

        ARTICLE
          4

        MANAGEMENT
          OF THE COLLABORATION

         

        4.1 Steering
          Committee.

        

        (a) Upon
          execution of the Prior Agreement, Cellegy and Licensee established a Steering
          Committee (the “Steering
          Committee”)
          which
          shall have the responsibilities described in this Article 4. The Steering
          Committee shall be initially comprised of a total of six (6) members, of
          which
          three (3) members shall be appointed by Licensee and three (3) members
          

        

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

        

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

        

        
          
            
              
              

            

            
              10

              
                

              

            

            
              
              

            

          

        

        

        

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

        

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

        

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

        

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

        

        (c) with
          the
          exception of the Approval application that Cellegy has already submitted
          in
          Sweden, prior to submitting any Approval application, the Steering Committee
          shall discuss the scope and content of such Approval application. The Steering
          Committee may 

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

        

        

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

        

        (d) In
          the
          event that the Current SmPC requires substantial and significant changes
          as
          described in Section 11.4(b), then the Steering Committee shall review
          the
          timetable and the Approval Plan, and if it so determines to revise and
          modify
          such timetable and Approval Plan, then the time periods for obtaining Approvals
          (as set out in Section 5.1(b)) and consequently commercializing the Licensed
          Product (as set out in Sections 10.3(i) and (ii)) shall be extended by
          the
          amount of time determined by the Steering Committee.

        

        
          
            
              
              

            

            
              11

              
                

              

            

            
              
              

            

          

        

        

        

        (e) at
          the
          end of [*] review and attempt to agree on the Minimum Sales for
          [*].

        

        4.3 Voting;
          Deadlocks.
          Each
          member of the Steering Committee shall have one vote, and all the decisions
          of
          the Steering Committee shall be made by a simple majority of the members
          of such
          committee; provided,
          however,
          that in
          the event the members of the Steering Committee are deadlocked and cannot
          reach
          a decision within three (3) days after notice of a deadlock with regard
          to any
          decision required to be made by such committee (each, a “Dispute”),
          then
          the Dispute shall be referred to the Chief Executive Officer of each Party..
          If
          such Dispute is not resolved by the Chief Executive Officers within five
          (5)
          working days of such referral, then (i) Cellegy’s Chief Executive Officer (or
          such other officer as Cellegy determines) will have the authority to cast
          the
          tie-breaking vote with regard to such Dispute if, and only if, the Dispute
          relates to clinical studies or trials where, in Cellegy’s good faith opinion,
          the conduct or results of the studies or activities could have a detrimental
          effect on the commercial viability of the Licensed Product outside of the
          Territory, and (ii) for other kinds of Disputes, if the Chief Executive
          Officers
          cannot agree within such time period, then the Dispute shall be resolved
          by
          means of the dispute resolution procedures set forth in Section 18.14 of
          this
          Agreement.

        

        4.4 Approval
          Plan; Marketing Plan. The
          overall timetable to obtain Approvals for the Licensed Product in the Territory
          shall be set forth in a written plan (the “Approval Plan”). In addition,
          Licensee shall prepare a marketing plan, including details of promotional
          effort, size of sales force, associated budget in connection with the promotion,
          marketing and distribution of the Licensed Product in the Major European
          Countries (the “Marketing Plan”). The initial Marketing Plan for Sweden shall be
          submitted no later than six (6) weeks after the Effective Date of this
          Agreement. The initial Marketing Plans for the Major European Countries
          shall be

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

        

        submitted
          no later than three (3) months after the Effective Date, and the initial
          Marketing Plans for the other countries in the Territory shall be submitted
          no
          later than one (1) year after the Effective Date. Such initial Marketing
          Plans
          shall be subject to review and approval by Cellegy, such approval not to
          be
          unreasonably withheld or delayed. The Marketing Plans shall be consistent
          in all
          material respects with the provisions of this Agreement. Subsequent revisions
          and updates to the Marketing Plan shall be delivered annually and no later
          than
          the end of the first week in January (or, if Licensee makes interim revisions
          or
          updates, then as soon as reasonably practicable after Licensee prepares
          such
          revisions or updates).

        

        
          
            
              
              

            

            
              12

              
                

              

            

            
              
              

            

          

        

        

        

        ARTICLE
          5

        REGULATORY
          MATTERS; APPROVALS

        

        5.1 Regulatory
          Matters; Approvals.

        

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

        

        (b) Licensee
          agrees that it will make all filings that are required to seek and obtain
          Approvals for the Licensed Product in each Major European Country by initiating
          the M.R.P. no later than [*] after the date of Approval of the variation
          dealing
          with impurities in the 

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

        

        

        Licensed
          Product which variation was filed 18 May 2005 with the Relevant Regulatory
          Authority in Sweden, provided that the dossier used in Sweden is acceptable
          for
          use in an M.R.P. application.
          If the
          Relevant Regulatory Authority in a country other than Sweden determines
          that
          such dossier is not complete or acceptable for the initiation of an M.R.P.
          application in such country, then the Steering Committee shall promptly
          meet and
          attempt to agree on an appropriate course of action, and recommend an
          appropriate modification to the above deadline as applied to such country.
          Licensee agrees that it will make all filings that are required to seek
          and
          obtain Approvals for the Licensed Product in other countries in the Territory
          no
          later than [*] after the completion of the M.R.P. and to use Commercially
          Reasonable and Diligent Efforts to take such actions as may be required
          to
          promptly obtain Approvals in all of the foregoing countries. If Licensee
          desires
          to not seek Approvals in one or more countries in the Territory because
          Licensee
          concludes in good faith that for regulatory or marketing reasons it would
          not be
          in the parties’ best interests to pursue Approvals in such countries, it shall
          notify the Steering Committee and the Steering Committee shall decide whether
          Approvals will be sought in such country or countries. If alteration by
          Cellegy
          of the Cellegy Information after the date of this Agreement requires additional
          time to submit or revise regulatory filings relating to Approvals, then
          the time
          periods set forth above for making filings and obtaining Approvals shall
          be
          extended by the additional period of time required to submit or revise
          such
          filings. 

        

        
          
            
              
              

            

            
              13

              
                

              

            

            
              
              

            

          

        

        

        

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

        

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

        

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

        

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

        

        5.5 Approval
          Application in Sweden. Cellegy
          agrees to continue the ongoing Approval process in Sweden; provided, however,
          that the foregoing shall not obligate Cellegy to conduct any additional
          studies
          or trials. Cellegy shall provide Licensee with a copy of such other reports,
          analysis and clinical data relating to the Licensed Product in a timely
          manner
          as Cellegy may from time to time develop before the date that all required
          Approvals are obtained. 

        

        
          
            
              
              

            

            
              14

              
                

              

            

            
              
              

            

          

        

        

        

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

         

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

        

        5.8 Clinical
          Trials.
          Licensee shall at its own cost be responsible for the conduct of all studies
          and
          clinical trials that may be necessary or appropriate to obtain all required
          Approvals (excluding Sweden) and any post-Approval Clinical Trials and
          for the
          grant of all necessary approvals and maintaining in effect all appropriate
          policies of insurance for clinical trials for the Licensed Product in the
          Territory. All clinical trials for the Licensed Product in the Territory
          that
          are initiated after the date of this Agreement shall be performed in compliance
          with and in conformity to ICH and E.U. good clinical practice guidelines.
          Licensee shall provide Cellegy with the study plans and/or protocols relating
          to
          any such clinical trial before the trial is started, and Cellegy shall
          have the
          right to review and comment on such trial plans or protocols. It will be
          the
          responsibility of the Party conducting the trial to register such trial,
          unless
          by law Cellegy as the originator of the Licensed Product is required to
          register
          it in which circumstance if Licensee is conducting the trial it shall supply
          Cellegy with the appropriate information to enable the trial to be registered.
          At the completion of each clinical trial initiated after the Effective
          Date,
          Licensee shall prepare a written report, in compliance with the relevant
          ICH
          guidelines summarizing the results of such clinical trial, and containing
          an
          analysis of the clinical significance of such results, which reports shall
          be
          submitted to Cellegy as soon as is reasonably practicable after completion
          of
          the relevant clinical trial. Licensee may enter into one or more manufacturing
          and supply agreement(s) (or similar arrangements) with Third Party contract
          manufacturer(s) for such clinical supplies, providing that use of the Third
          Party contract manufacturer(s) has been approved by Cellegy .

        

        5.9 Cellegy
          Obligations.
          Promptly following entering into this Agreement Cellegy shall, to the extent
          it
          has not already done so pursuant to the Prior Agreement:

        

        (a) provide
          Licensee with a complete copy of the Cellegy Information;

        

        
          
            
              
              

            

            
              15

              
                

              

            

            
              
              

            

          

        

        

        

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

        

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

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

        

        (e) use
          commercially reasonable efforts to assist Licensee to enter into Licensee
          Supply
          Agreement and Technical Agreement with the Manufacturer; and

        

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

        

        5.10 Approvals.

        

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

        

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

        

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

        

        ARTICLE
          6

        POST-
          APPROVAL RESPONSIBILITIES

        

        6.1 Responsibility.
          Each
          Party acknowledges that Licensee or the Affiliate or Sublicensee named
          by
          Licensee as the holder of the Approvals bears the ultimate responsibility
          vis-à-vis
          the
          Relevant Regulatory Authorities for complying with the regulatory requirements
          applicable to the manufacture, importation, storage, Development, promotion,
          marketing, distribution and sale of the Licensed Product in the Territory.
          

        

        
          
            
              
              

            

            
              16

              
                

              

            

            
              
              

            

          

        

        

        

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

        

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

        

        ARTICLE
          7

        INFORMATION;
          DATA; PHARMACOVIGILENCE

        

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

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

        

        regulations.
          If a Party itself obtains data from a clinical trial hereunder, it shall
          promptly transfer all of the clean, final data for such trial to Licensee
          or to
          Cellegy, as the case may be. The Steering Committee shall coordinate the
          transfers of any such data. 

        

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

        

        
          
            
              
              

            

            
              17

              
                

              

            

            
              
              

            

          

        

        

        

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

        

        7.4 Product
          Complaints.
          Each
          Party will maintain a record of all non-medical and medical Licensed
          Product-related complaints and will notify the other Party of any complaint
          in a
          sufficient time to allow the other Party to comply with any regulatory
          requirements it may have with respect to such complaint.The details and
          responsibilities governing the management of such Licensed Product-related
          complaints shall be detailed in Exhibit
          G.

        

        ARTICLE
          8

        MILESTONE
          PAYMENTS; ROYALTIES AND RELATED PAYMENTS

        

        8.1 Milestone
          Payments.
          Licensee shall pay Cellegy a milestone payment in the particular amounts
          specified below:

        

        (a) Five
          Hundred Thousand Dollars ($500,000), within five (5) business days after
          the
          date the Prior Agreement was executed and delivered by both parties hereto,
          receipt of which amount is hereby acknowledged by Cellegy. 

        

        (b) With
          respect to [*], the amounts set forth below, payable on the earlier to
          occur of
          (i) [*], or (ii) [*]: 

        

        [*]

        

        8.2 [*]

        

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

        

        

        (a) [*]

        

        (b) [*]

        

        (c) [*]

        

        (d) [*]

        

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

        

        
          
            
              
              

            

            
              18

              
                

              

            

            
              
              

            

          

        

        

        

        8.4 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 herein.
          The
“Royalty”
shall
          be equal to the following amounts:

        

        (a) For
          aggregate, annual Net Sales of the Product in the Territory up to [*] Million
          Euros [*], the Royalty shall be equal to [*] Percent [*] of Net
          Sales.

        

        (b) For
          aggregate, annual Net Sales of the Licensed Product in the Territory in
          excess
          of [*] Million Euros [*], the Royalty shall be equal to [*] Percent [*]
          of Net
          Sales. (For example, Net Sales of [*] would accrue Royalties equal to [*]
          of [*]
          and [*] of [*], which is equal to [*].)

        

        8.5 Period
          for Royalty Payments; Residual Payments.
          Royalty
          payments will continue as set forth above, on a country by country basis,
          until
          the later of (i) ten years from the 

        Launch
          Date for the Licensed Product in such country, or (ii) expiration, lapse
          or
          invalidation by a final, non appealable order or judgment of a court or
          other
          governmental authority of competent jurisdiction, of the last valid claim
          included within any of the Cellegy Patents covering such country in the
          Territory relating to the Licensed Product. Thereafter, following the period
          of
          time described in the preceding sentence, Licensee will pay Cellegy a [*]
          royalty with respect to Net Sales in such country for ongoing use of Cellegy’s
          trademark Tostrex® and know-how relating to the Licensed Product. 

        

        ARTICLE
          9

        ROYALTY
          REPORTS AND ACCOUNTING

        

        9.1 Quarterly
          Royalty Reports; Records.
          During
          the term of this Agreement after the first Launch Date, Licensee shall
          furnish
          or cause to be furnished to Cellegy a written report within sixty (60)
          days
          following the end of each preceding calendar quarter (the “Royalty
          Report”)
          covering such preceding calendar quarter (the “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 rates used in determining the amount of Dollars, using the exchange
          rates normally used by Licensee in its management and financial reporting,
          provided,
          however,
          that
          the exchange rates used by Licensee in preparation of the Royalty Report
          shall
          not be materially different from the exchange rates posted in the London
          edition
          of the Financial
          Times published
          on the last day of such Royalty Period. 

        

        
          
            
              
              

            

            
              19

              
                

              

            

            
              
              

            

          

        

        

        

        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 as described in clause (c) above. Licensee,
          and its Affiliates and Sublicensees shall keep contemporaneous, legible,
          verifiable and accurate records in sufficient detail to enable the royalties
          payable hereunder to be determined and substantiated. A final Royalty Report
          shall be due upon the expiration or termination of this Agreement. Any
          income or
          other tax which Licensee is requested to pay or withhold on behalf of Cellegy
          with respect to any upfront or milestone payment and Royalties shall be
          deducted
          from the amount of such upfront and milestone payments and Royalties due,
          provided, however, that in regard to any such deduction Licensee shall
          give
          Cellegy such assistance as may reasonably be necessary to enable or assist
          Cellegy to claim appropriate tax credits or exemptions threrefrom and shall
          upon
          request give Cellegy proper evidence from time to time as to the withholding
          and
          payment of the tax. If Cellegy is unable to claim such an exemption or
          recover
          such amounts that have been 

        deducted
          or withheld, or if any restrictions are imposed by a governmental entity
          in a
          particular country in the Territory regarding the payment of milestones
          or
          Royalties to companies outside of such countries, then the Steering Committee
          shall promptly meet to agree upon a suitable response. If the Steering
          Committee
          is unable to agree on a suitable response, then Cellegy may, in its discretion,
          discontinue the supply of the Licensed Product to Licensee for sale in
          such
          country. 

        

        9.2 Payment
          Due Dates.
          Royalties shown to have accrued by each Royalty Report provided for hereunder
          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.

        

        9.3 Right
          to Audit Licensee.

        

        (a) Upon
          the
          written request of Cellegy, at Cellegy’s expense and not more than once in each
          year, Licensee and its Affiliates shall permit an independent public accountant
          and auditor bound to strict secrecy (the “Auditor”),
          selected by Cellegy to have access during normal business hours to those
          records
          of Licensee and its Affiliates as may be reasonably 

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

        

        

        necessary
          to verify the accuracy of the Royalty Reports furnished by Licensee hereunder
          in
          respect of any year ending not more than twenty four (24) months prior
          to the
          date of such request. Cellegy acknowledges that the Auditor shall conduct
          its
          audit in such a manner so as to not unreasonably interfere with Licensee’s, its
          Affiliates’, or Sublicensees’ business. 

        

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

        

        
          
            
              
              

            

            
              20

              
                

              

            

            
              
              

            

          

        

        

        

        (c) If
          the
          Auditor’s report shows any underpayment of royalties, Licensee shall remit, or
          shall cause its Affiliates or Sublicensees to remit, to Cellegy the amount
          of
          such underpayment within thirty (30) days after Licensee’s receipt of the
          Auditor’s report assuming there is no disagreement as to the Auditor’s
          calculation; if there is such a disagreement, the result shall be resolved
          under
          Section 18.14 of this Agreement. In the event that the amount of any
          underpayment of royalties is in excess of [*] percent [*] of the total
          royalties
          due to Cellegy with respect to the period covered by the Auditor’s report,
          Licensee shall reimburse Cellegy for the reasonable cost of the audit in
          which
          the underpayment was discovered. In addition, in the event that the amount
          of
          any underpayment of royalties is in excess of [*] percent [*] of the total
          royalties due to Cellegy with respect to the period covered by the Auditor’s
          report, Licensee shall reimburse Cellegy for the reasonable cost of the
          next
          subsequent audit.

        

        

        
          
            
              
              

            

            
              21

              
                

              

            

            
              
              

            

          

        

        

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

        

         

        ARTICLE
          10

        MARKETING

         

        

        10.1 General
          Promotional Duties.

        

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

        

        10.2 Marketing
          Effort; Minimum Expenditures for Commercialization.
          

        

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

        

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

        

        10.3 Licensee’s
          Failure to Commercialize in the Territory.

        

        (a) If
          Licensee fails to make commercial sales of the Product in a particular
          country
          within the Territory within (i) [*] in Major European Countries, and (ii)
          [*]
          for other countries in the Territory, after Approval has been obtained
          (including price reimbursement approval where applicable) for commercial
          sale in
          such country, other than failures caused by (i) the Relevant Regulatory
          Authority approving a minimum reimbursement price for sale of the Product
          in
          such country that does not permit the Licensed Product to be economically
          sold
          in such country; or (ii) Cellegy’s inability to supply Licensed Product in a
          timely manner, or (iii) Cellegy’s material breach of any relevant obligation
          under this Agreement; (iv) health or safety reasons relating to the Licensed
          Product, or (v) the assertion of a proceeding or lawsuit brought against
          Licensee by any Third Party that the Intellectual Property Rights infringe
          such
          Third Party’s patent, trade mark, protected know-how or other intellectual
          property right that prevents sales of the Licensed Product in a particular
          country of the Territory, then Cellegy may, upon notice to Licensee, terminate
          all of Licensee’s rights under this Agreement with respect to the Licensed
          Product in such country and recapture all rights granted to Licensee with
          respect to the 

        

        
          
            
              
              

            

            
              22

              
                

              

            

            
              
              

            

          

        

        

        

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

        

        Licensed
          Product in such country hereunder. In
          the
          event that rights to the Licensed Product are returned to Cellegy due to
          a
          failure to launch within a particular country within the time frames specified
          above, a minimum royalty for [*] will be due with respect to the Major
          European
          Countries, and a minimum royalty for [*] will be due in any other country
          in the
          Territory. Should price reimbursement approval for the Licensed Product
          not be
          achieved in any country of the Territory the Parties shall meet to discuss
          how
          to proceed.

        

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

        

        10.4 Minimum
          Sales.

        

        (a) Exhibit
          C
          hereto
          sets forth certain targets for the agreed minimum unit sales of Licensed
          Product
          in the Territory (“Minimum
          Sales”)
          for a
          period of [*]. It is acknowledged by the Parties that all Approvals pursuant
          to
          the MRP will not be obtained within [*] following the Launch Date in the
          first
          country of the Territory through no fault of Licensee and the Parties have
          agreed to vary the Minimum Sales accordingly. 

        

        (b) If
          Licensee fails to achieve the Minimum Sales in a given year then Licensee
          shall
          pay to Cellegy the Royalties that would have been due to Cellegy had the
          Minimum
          Sales for that particular year been achieved, such shortfall in the Royalties
          to
          be paid within sixty (60) days following the end of the relevant year.
          For the
          avoidance of doubt this shall be Cellegy’s sole remedy for Licensee’s failure to
          achieve the Minimum Sales in any year, except as provided in paragraph
          (d)
          below. However in the event Licensee fails to pay the relevant shortfall
          within
          sixty (60) days following the end of the relevant year this shall constitute
          material breach and Cellegy shall be entitled to terminate this Agreement
          in
          accordance with Section 16.2(c).

        

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

        

        (d) At
          any
          time commencing with “Year 3” Minimum Sales as set forth on Exhibit
          C,
          if
          Licensee fails to achieve, in any particular country, the annual Minimum
          Sales
          amounts for such country as set forth on Exhibit
          C
          for any
          [*] consecutive years, and if the Relevant Regulatory Authority for such
          country
          has not required any substantial and significant changes to the Current
          SmPC
          that can reasonably be expected to materially and adversely affect Licensee’s
          competitive position and ability to market and sell the Licensed Product
          in such
          country, then if the Steering Committee cannot agree (without the occurrence
          of
          a deadlock) on mutually satisfactory modifications to the Minimum Sales
          amounts
          for such country, then Cellegy may, at its option, make the exclusive license
          granted pursuant to Sections 2.1 and 2.2 

        

        
          
            
              
              

            

            
              23

              
                

              

            

            
              
              

            

          

        

        

        

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

        

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

         

        ARTICLE
          11

        MANUFACTURING;
          SUPPLY OF LICENSED PRODUCT

         

        11.1 Production
          and Supply of Product.

        

        (a) Without
          limitation on Cellegy’s other rights, during the term of this Agreement and
          thereafter, Cellegy may, without obligation or liability to Licensee,
          manufacture, have manufactured, produce, assemble, warehouse or source
          the
          Licensed Product for sale outside of the Territory at any worldwide location,
          including Canada or the United States of America and locations within or
          outside
          the Territory. 

        

        (b) Cellegy
          agrees to use all Commercially Reasnoable and Diligent Efforts to (i) maintain
          its existing Cellegy Supply Agreement with the existing Manufacturer until
          at
          least March 31, 2006, (ii) cooperate with Licensee with the goal that,
          prior to
          the establishment of the Licensee Supply Agreement, Licensee may purchase
          Licensed Product directly from the Manufacturer, and (iii) until Licensee
          enters
          into a Licensee Supply Agreement, cooperate with Licensee to involve Licensee
          in
          discussions between Cellegy and Manufacturer concerning produt pricing
          or other
          material terms of the Cellegy Supply Agreement. 

        

        11.2 Forecasts.
          Until
          such time as Licensee enters into a Licensee Supply Agrement, Licensee
          shall be
          responsible for combining (if practicable in Licensee’s sole opinion) its
          forecast for Licensed Product in the Territory and Cellegy’s forecast for
          Licensed Product outside the Territory and for delivering all combined
          forecasts
          for the Parties to the Manufacturer providing that both Cellegy and Licensee
          are
          utilizing the same Manufacturer. Should the Parties decide to utilize separate
          manufacturers, each Party will be responsible for providing their Manufacturer
          with its own forecasts. 

        

        11.3 [*]

        

        11.4 Pricing.
          For
          each
          order of Licensed Product delivered to Licensee by Manufacturer, Licensee
          will
          pay Cellegy the Cellegy Surcharge (plus, if applicable, the additional
          percentage of total Licensed Product cost and Cellegy Surcharge as set
          forth
          below) within forty-five (45) days of the receipt of the invoice for such
          order
          from Manufacturer. Licensee
          will pay Cellegy the Cellegy Surcharge multiplied by the number of Licensed
          Product units on the relevant Manufacturer invoice for supply of the Licensed
          Product to Licensee. 

        

        
          
            
              
              

            

            
              24

              
                

              

            

            
              
              

            

          

        

        

        

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

        

        (a) If
          the
          royalty paid to Cellegy for each unit of Licensed Product sold is equal
          to or
          greater than [*], Licensee shall pay Cellegy the Cellegy Surcharge multiplied
          by
          the number of Licensed Product units. 

        

        (b) If
          the
          royalty paid to Cellegy for each unit of Licensed Product sold is between
          [*],
          Licensee shall pay Cellegy the Cellegy Surcharge multiplied by the number
          of
          Licensed Product units, plus [*] of the total of the invoiced purchase
          price
          from the Manufacturer and the Cellegy Surcharge.

        

        (c) If
          the
          royalty paid to Cellegy for each unit of Licensed Product sold is less
          than [*],
          Licensee shall pay Cellegy the Cellegy Surcharge multiplied by the number
          of
          Licensed Product units, plus [*] of the total of the invoiced purchase
          price
          from the Manufacturer and the Cellegy Surcharge..

        

        (d) Both
          Parties agree to work in mutual cooperation and in collaboration with
          Manufacturer to manage the purchase price, production, packaging, delivery
          and
          availability of the Licensed Product for sale in the Territory. The Parties
          agree to explore arrangements for Cellegy to contract with a secondary
          Manufacturer as a back-up manufacturer of Licensed Product as soon as reasonably
          possible. Cellegy agrees to inform Licensee of any amendments to any
          Manufacturer contract that may have any material effect on the purchase
          price of
          the Licensed Product. 

        

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

        

        11.6 Recalls. 

        

        (a) Licensee
          may recall any quantity of Licensed Product at any time, and Licensee will
          administer any such recall in the Territory.

        

        
          
            
              
              

            

            
              25

              
                

              

            

            
              
              

            

          

        

        

        

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

         

        ARTICLE
          12

        PATENT
          RIGHTS

        

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

        

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

        

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

         

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

        

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

        

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

        

        

        
          
            
              
              

            

            
              26

              
                

              

            

            
              
              

            

          

        

        

        

        ARTICLE
          13

        CELLEGY
          MARKS 

        

        13.1 Use
          of
          Cellegy Marks by Licensee.
          Licensee, its Affiliates and Sublicensees will have the exclusive right
          to use
          Cellegy’s Mark Tostrex in the Territory in connection with the importation,
          storage, Development, promotion, marketing, distribution and sale of Licensed
          Product. In such event, Licensee and its Affiliates (and Sublicensees)
          shall use
          Cellegy’s Marks only in the form and manner prescribed by Cellegy. In no event
          shall Licensee use any of Cellegy’s Marks or any similar mark or term as part of
          its business name. Should Tostrex not be registered or registerable by
          Cellegy
          in all countries of the Territory, then Cellegy may notify Licensee that
          one of
          the other “Cellegy’s Marks” will be used; and if no such marks are registered or
          registerable by Cellegy in all countries of the Territory, then Licensee
          may
          propose an alternative trade mark/s for Cellegy’s approval, such approval not to
          be unreasonably withheld or delayed Cellegy shall apply for and maintain
          such
          alternative trade mark at Cellegy’s sole expense and such alternate trade mark
          shall become a Cellegy Mark under the terms of this Agreement. 

        

        13.2 Acknowledgment
          of Ownership.
          Licensee acknowledges that 

        

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

        

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

        

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

        

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

        

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

        

        
          
            
              
              

            

            
              27

              
                

              

            

            
              
              

            

          

        

        

        

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

        

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

        

        ARTICLE
          14

        INFRINGEMENT;
          INDEMNIFICATION AND OTHER CLAIMS

        

          14.1
          Infringement
          of Intellectual Property Rights.
          In the
          event Cellegy or Licensee have reason to believe that a Third Party may
          be
          infringing or diluting, as the case may be, Intellectual Property Rights
          or
          misappropriating the Licensed Product, such Party shall promptly notify
          the
          other Party. Cellegy may, in its discretion, elect to enforce the Intellectual
          Property Rights through legal action or otherwise, and Licensee agrees
          to
          reasonably cooperate with Cellegy in such enforcement subject to reimbursement
          of its reasonable out-of-pocket expenses together with any reasonable attorneys
          fees incurred in connection therewith. In the event Cellegy elects not
          to
          enforce the Patent Rights relating to the Licensed Product within sixty
          (60)
          days after notice of the possible infringement or dilution, and Licensee
          can
          demonstrate that the potential infringement or dilution is reasonably likely
          to
          result in material lost sales of the Licensed Product within the applicable
          country, then Licensee may institute a lawsuit or other such actions at
          its
          expense to prevent continuation of such potential infringement or dilution,
          and
          then (i) during the pendency of such action, Licensee shall be entitled
          to defer
          the payment of 50% of the royalties due to Cellegy on Net Sales under Section
          8.4 in the relevant country or countries, with such deferred amount being
          paid
          to Cellegy at the successful conclusion of such action, and (ii) Licensee
          will
          retain all award, damages or compensation obtained by Licensee in such
          suit,
          except that Cellegy shall receive a portion equivalent to the royalties
          it would
          have received in accordance with the terms of this Agreement as if such
          amount
          were Net Sales of Licensee. Cellegy will provide reasonable cooperation
          with
          respect to any lawsuit which Licensee may bring pursuant to this Article,
          subject to reimbursement of its reasonable out-of-pocket expenses and reasonable
          attorneys fees in connection therewith. Licensee shall not enter into any
          settlement or compromise of any such claim without the prior written consent
          of
          Cellegy, which shall not be unreasonably delayed or withheld.

          

        
          
             

          

          
            28

            
              

            

          

          
             

          

        

         

          14.2
          Alleged
          Infringement of Third Party Intellectual Property Rights.

         

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

         

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

         

        14.3 Product
          Liability Claims.
          Licensee shall immediately notify Cellegy in writing of any product liability
          claim or product liability action brought against Licensee with respect
          to the
          Licensed Product based on any reason other than (i) alleged defects in
          the
          manufacture or supply of the Licensed Product or (ii) any action or inaction
          in
          relation to the manufacture or supply of the Licensed Product on the part
          of
          Licensee or any of its employees, affiliates or sublicensees (a “Product
          Liability Claim”).
          Upon
          receiving such written notice, Cellegy shall assume and have sole control
          of the
          defense of any such claim or action, including the power to conduct and
          conclude
          any and all negotiations, compromises or settlements. Licensee may participate
          in (but not control) the defense of any such Product Liability Claim, but
          at its
          own expense. Licensee shall comply with all reasonable requests from Cellegy
          for
          information, materials or assistance, with respect to the conduct of such
          defense at Cellegy's expense. Cellegy shall be responsible for payment
          of all
          Product Liability Claims. Nothing in this Article shall be construed as
          requiring Cellegy to conduct and/or assume Licensee's independent defense
          against any claim or action, if such claim or action involves the independent
          conduct, acts or omissions of Licensee for Product Liability Claims or
          actions
          brought with respect to the manufacture or supply of the Licensed
          Product.

        

        
          
            
              
              

            

            
              29

              
                

              

            

            
              
              

            

          

        

        

        

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

        

        14.5 Indemnification.
          

        

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

         

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

        

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

        

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

        

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

        

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

        

        (i) the
          manufacture, importation, storage, Development, promotion, marketing,
          distribution, or sale, of the Licensed Product based on action or inaction
          of
          Licensee, Affiliates, Sublicensees or their respective directors, officers
          and
          employees (Licensee and such other Persons sometimes referred to as
“Licensee
          Indemnified Persons”);
          

        

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

        

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

        

        
          
            
              
              

            

            
              30

              
                

              

            

            
              
              

            

          

        

        

        

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

         

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

        

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

        

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

        

        ARTICLE
          15

        CONFIDENTIALITY

        

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

        

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

        

        
          
            
              
              

            

            
              31

              
                

              

            

            
              
              

            

          

        

        

        

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

        

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

        

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

        

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

        

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

        

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

        

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

        

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

        

        
          
            
              
              

            

            
              32

              
                

              

            

            
              
              

            

          

        

        

        

        ARTICLE
          16

        TERM;
          TERMINATION

        

        16.1 Term.
          Unless
          terminated sooner pursuant to this Article 16, this Agreement shall become
          effective as of the Effective Date and shall continue in full force and
          effect
          in each country until the later of (i) the date of expiration of the last
          to
          expire of Licensee’s obligation to make royalty payments in a particular
          country, or (ii) ten years from the Launch Date. For countries in which
          none of
          Cellegy’s Patents are filed, the Agreement shall terminate upon the date of the
          last to expire of Cellegy’s Patents in the last applicable country. Such
          termination may be made with respect to one or more countries of the Territory
          without affecting the rest of this Agreement or the Exclusive License granted
          hereunder in any other country of the Territory. 

        

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

        

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

        

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

        

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

         

        16.3 Cellegy’s
          Right to Terminate.
          Cellegy
          may terminate this Agreement with immediate effect upon written notice
          to
          Licensee if a Change in Control of Licensee shall occur, PROVIDED THAT
          this
          shall not apply in the case whereby Licensee or its Affiliates undergoes
          an
          initial public offering of its stock on a recognized stock exchange. Subject
          to
          the aforesaid provision, for purposes of this Article, a “Change
          in Control”
means
          (i) any reorganization, consolidation, merger, tender offer, purchase of
          stock
          or similar transaction or series of related transactions (each, a "combination
          transaction")
          in
          which Licensee (or any direct or indirect parent entity of Licensee (a
          “Parent”))
          is a
          constituent corporation or is a party if, as a result of such combination
          transaction, the voting securities of Licensee (or any Parent) that are
          outstanding immediately before the consummation of such combination transaction
          (other than
          any such
          securities that are held by an "Acquiring Stockholder", as defined below)
          do
          not
          represent, or are not converted into, securities of the surviving corporation
          of
          such combination transaction (or such surviving corporation’s parent or other
          Affiliate) that, immediately after the consummation of such combination
          transaction, together possess at least a majority of the total voting power
          of
          all outstanding securities of such surviving corporation (or its parent
          or other
          Affiliate, if applicable) that are outstanding immediately after the
          consummation of such
          combination transaction, including securities of such surviving corporation
          (or
          its parent or other Affiliate, if applicable) that are held by the Acquiring
          Stockholder; or (ii) a sale of all or substantially all of the assets or
          the
          business of the Licensee (or any Parent), if, and only if, in each of the
          above
          cases, the acquiring entity (or its parent or other Affiliate) engages
          in the

        

        

        
          
            
              
              

            

            
              33

              
                

              

            

            
              
              

            

          

        

        

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

        

        development,
          distribution, or sale of Competing Licensed Products. For purposes of this
          Article, an "Acquiring
          Stockholder"
          means a
          stockholder or stockholders of the Licensee (or any Parent) that (i) merges
          or
          combines with the Licensee (or any Parent) in such combination transaction
          or
          (ii) owns or controls a majority of another corporation that merges or
          combines with the Licensee (or Parent) in such combination transaction.
          Licensee
          agrees to use its Commercially Reasonable and Diligent Efforts to notify
          Cellegy
          at least thirty (30) days before any such Change in Control. 

        

        16.4 Licensee’s
          Right to Terminate.
          Licensee
          may terminate this Agreement; (i) immediately on written notice on health
          or
          safety grounds in relation to the Licensed Product; (ii) immediately on
          written
          notice if Approval is not obtained by Cellegy in Sweden; (iii) immediately
          on
          written notice if Approvals is not obtained, through no fault of Licensee,
          in
          all Major European Countries within [*] of MRP being initiated; (iv) on
          one (1)
          year’s written notice to Cellegy should it no longer be economically viable
          to
          market the Licensed Product, based on Licensee’s reasonable opinion and
          determined on a country by country basis; or (v) immediately upon written
          notice
          if a claim by any Third Party that the Intellectual Property Rights infringe
          such Third Party’s patent, trade mark, protected know-how or other intellectual
          property right is made against Licensee and which either (A) prevents use
          of the
          Licensed Product in any country of the Territory for a period of sixty
          (60)
          consecutive days, or (B) is not being challenged by either Party pursuant
          to
          Article 14 in relation to such country. 

        

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

        

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

        

        
          
            
              
              

            

            
              34

              
                

              

            

            
              
              

            

          

        

        

        

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

         

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

        

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

        

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

        

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

        

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

        

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

        

        
          
            
              
              

            

            
              35

              
                

              

            

            
              
              

            

          

        

        

        

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

        

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

        

        ARTICLE
          17

        REGISTRATION
          OF LICENSE;
          LIMITATION OF LIABILITY

        

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

        

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

        

        ARTICLE
          18

        GENERAL
          PROVISIONS

        

        18.1 Force
          Majeure.
          Neither
          Party shall be held liable or responsible to the other Party nor be deemed
          to
          have defaulted under or breached this Agreement for failure or delay in
          fulfilling or performing any term of this Agreement, other than an obligation
          to
          make payments hereunder, when such failure or delay is caused by or results
          from
          fire, floods, embargoes, government regulations, prohibitions or interventions,
          war, acts of war (whether war be declared or not), insurrections, riots,
          civil
          commotions, strikes, lockouts, acts of God or any other cause beyond the
          reasonable control of the affected party to anticipate, prevent, avoid
          or
          mitigate (a “Force
          Majeure Event”);
          provided, however, that any failure or delay in fulfilling a term of this
          Agreement shall not be considered a result of a Force Majeure Event if
          it arises
          from a failure of Licensee or Cellegy to comply with applicable laws and
          regulations. In the event of force majeure lasting more than sixty days
          (60)
          days, the Parties agree to meet and discuss how this Agreement can be justly
          and
          fairly implemented under the circumstances prevailing in such Country or
          Countries and if the Parties are unable to agree upon how the Agreement
          can be
implemented
          then either Party may terminate the Agreement in relation to such country
          or
          countries upon sixty (60) days written notice.

        

        
          
            
              
              

            

            
              36

              
                

              

            

            
              
              

            

          

        

        

        

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

        

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

        

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

        

        
          	
                  In
                    the case of Cellegy:

                  Cellegy
                    Pharmaceuticals, Inc.

                  1000
                    Marina Boulevard, Ste. 300

                  Brisbane,
                    California 94005 

                  Attention:
                    John Chandler

                  Telephone
                    No.: (650)
                    616-2200

                  Facsimile
                    No.: (650)616-2222;
                    and, 

                   

                  Cellegy
                    Pharmaceuticals, Inc.

                  1800
                    Byberry Road, Building 13

                  Huntingdon
                    Valley, PA, 19006-3523

                  Attention:
                    Chief Financial Officer

                  Telephone
                    No.: (215) 914-0900

                  Facsimile
                    No.: (215) 914-0914

                	
                  With
                    a required copy to:

                  Weintraub
                    Genshlea Chediak 

                  400
                    Capitol Mall, 11th
                    floor

                  Sacramento,
                    CA 95814 

                  Attention:
                    Kevin Kelso, Esq.

                  Telephone
                    No.: (916)
                    558-6110

                  Facsimile
                    No.: (916)
                    446-1611

                
	 	 

        

        

        

        
          
            
              
              

            

            
              37

              
                

              

            

            
              
              

            

          

        

        

        

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

        

        

        
          	
                   

                  In
                    the case of Licensee:

                  Strakan
                    International Limited

                  Buckholm
                    Mill

                  Galashiels

                  TD
                    1 2HB, UK

                  Attention:
                    Mr. Andrew McLean,

                  Corporate
                    Director

                  Telephone
                    No.: 44-1896-668060

                  Facsimile
                    No.: 44-1896-667061

                	
                   

                   

                   

                   

                   

                   

                

        

        

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

        

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

        

        18.7 Entire
          Agreement.
          This
          Agreement contains the entire understanding of the parties with respect
          to the
          subject matter hereof and supersedes and replaces all previous negotiations,
          understandings and representations whether written or oral including, but
          not
          limited to, the Heads of Agreement dated [*], the Agreement dated [*],
          and the
          Addendum dated [*] between the Parties and the Confidentiality Agreement
          described at Section 15.6. This Agreement shall not be modified, altered
          or
          amended except by a written document signed on behalf of and delivered
          by both
          Parties. 

        

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

        

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

        
          
            
              
              

            

            
              38

              
                

              

            

            
              
              

            

          

        

         

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

        

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

        

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

        

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

        

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

        

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

         

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

        

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

        

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

        

        
          
            
              
              

            

            
              39

              
                

              

            

            
              
              

            

          

        

        

         

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

         

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

         

        (e) If
          the
          dispute is not resolved within thirty (30) days of notification under
          paragraph (b), then the dispute shall be settled by binding arbitration in
          Philadelphia, Pennsylvania, in accordance with the then existing rules
          of
          International Chamber of Commerce. In any arbitration pursuant to this
          Section
          the award shall be rendered by a single arbiter if the Parties agree to
          one or a
          majority of three (3) arbiters, one (1) of whom shall be appointed by each
          Party
          and the third of whom shall be appointed by mutual agreement of the two
          Party-appointed arbitrators. Either Party may initiate such an arbitration
          by
          giving written notice to the other Party of such arbitration, specifying,
          in
          reasonable detail, the dispute to be resolved thereby. The determination
          of the
          arbitrators with respect to any dispute will be conclusive and binding
          on the
          Parties, and the arbitrators will have right to award attorneys’ fees and costs,
          including but not limited to the costs of the arbitration, to the prevailing
          Party. Judgment upon the award rendered in any arbitration may be entered
          in any
          court of competent jurisdiction in any country. The Parties agree to the
          exclusive jurisdiction and venue of any state or federal court located
          in
          Philadelphia, Pennsylvania for purposes of any action arising out of or
          relating
          to this Agreement that is not subject to mandatory arbitration, and agree
          that
          service of process in any such action may be made in the manner provided
          for in
          this Agreement for the delivery of notices. 

        

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

        

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

        

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

         

        
          
            
              
              

            

            
              40

              
                

              

            

            
              
              

            

          

        

        

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

        

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

        

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

        

        [Remainder
          of this page intentionally left blank]

        

        
          
            
              
              

            

            
              41

              
                

              

            

            
              
              

            

          

        

        

        

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

        

        

        
          	
                   STRAKAN
                    INTERNATIONAL LIMITED

                   By:    

                   

                   
                    Its: ____________________________

                  ProStrakan
                    Group plc, only as to

                  Section
                    18.18 and the Guarantee

                   

                  By_____________________________

                  Its:
                    _____________________________

                	
                  CELLEGY
                    PHARMACEUTICALS, INC.

                   By:    

                   

                   
                    Its: _____________________________

                

        

        

         

        

        
          
            
              
              

            

            
              42

              
                

              

            

            
              
              

            

          

        

        

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

        

        EXHIBIT
          A

        LICENSED
          PRODUCT

        

        [*]
          gram
          metered dosing canister.

        [*]
          gram
          metered dosing canister.

        

         

        
          
            
              
              

            

            
              A

              
                

              

            

            
              
              

            

          

        

        

        EXHIBIT
          B

        COUNTRIES
          IN THE TERRITORY

        

        TERRITORIES

        
          	
                  1.
                    Europe

                	
                  1.
                    Europe (continued)

                
	
                  Andorra

                	
                  Slovak
                    Republic

                
	
                  Albania

                	
                  Slovenia

                
	
                  Austria

                	
                  Spain

                
	
                  Belgium

                	
                  Sweden

                
	
                  Bosnia-Herzegovina

                	
                  Switzerland

                
	
                  Bulgaria

                	
                  Turkey

                
	
                  Croatia

                	
                  United
                    Kingdom

                
	
                  Cyprus

                	
                  Republic
                    of Yugoslavia

                
	
                  Czech
                    Republic

                	 
	
                  Denmark

                	 
	
                  Estonia

                	 
	
                  Finland

                	 
	
                  France

                	 
	
                  Germany

                	 
	
                  Gibraltar

                	 
	
                  Greece

                	 
	
                  Hungary

                	 
	
                  Ireland

                	 
	
                  Italy

                	 
	
                  Latvia

                	 
	
                  Liechtenstein
                    

                	 
	
                  Lithuania

                	 
	
                  Luxembourg

                	 
	
                  Republic
                    of Macedonia

                	 
	
                  Malta

                	 
	
                  Monaco

                	 
	
                  Netherlands

                	 
	
                  Norway
                    

                	 
	
                  Poland
                    

                	 
	
                  Portugal

                	 
	
                  Romania

                	 

        

        

         

        
          
            
              
              

            

            
              B

              
                

              

            

            
              
              

            

          

        

        

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

        

        EXHIBIT
          C

        MINIMUM
          SALES REQUIREMENTS

        

        [*]

         

        

        
          
            
              
              

            

            
              C

              
                

              

            

            
              
              

            

          

        

        

        EXHIBIT
          D

        PATENTS
          RIGHTS

        

        “Cellegy
          Patents”

        

        WO
          99/24041 - Entitled ‘Penetration enhancing and irritation reducing systems,
          including improvements thereto, relating to the Licensed Product in the
          Field
          and Territory.

        

        
          	
                  Country

                	
                  Application
                    No.

                	
                  Filing
                    Date

                	
                  Patent
                    or
                    Publication No.

                	
                  Issue/Pub
                    Date

                	
                  Status

                
	
                  Europe:
                    AT, BE, CH, CY, DE, DK, ES, FI, FR, GB, GR, IE, IT, LU, MC, NL,
                    PT,
                    SE*

                	
                  98956663.3

                	
                  11/09/98

                	
                  Pub.
                    No. EP 1030668A1

                	
                  Pub.
                    8/30/00

                	
                  Pending

                
	
                  Norway

                	
                  20002422

                	
                  11/09/98

                	
                  TBD

                	
                  TBD

                	
                  Pending

                
	 	 	 	 	 	 
	
                  PCT

                	
                  PCT/US98/23750

                	
                  11/09/98

                	
                  WO
                    99/24041

                	
                  5/20/99

                	
                  National
                    Phase

                

        

        

         

        

        
          
            
              
              

            

            
              D

              
                

              

            

            
              
              

            

          

        

        

        EXHIBIT
          E

        CELLEGY
          MARKS

        

        

        
        

         

        
          	
                  Name

                	
                  Status

                	
                  Country

                	
                  Registration
                    Date

                	
                  Renewal

                

        

        
          	
                  Tostrex

                	
                  Registered
                    as EU community mark

                	
                  Austria

                	
                  6/20/2003

                	
                  1/21/2012

                
	
                  Tostrex

                	
                  Registered
                    as EU community mark

                	
                  Belgium

                	
                  6/20/2003

                	
                  1/21/2012

                
	
                  Tostrex

                	
                  Registered
                    as EU community mark

                	
                  Cyprus

                	
                  6/20/2003

                	
                  1/21/2012

                
	
                  Tostrex

                	
                  Registered
                    as EU community mark

                	
                  Czech
                    Republic

                	
                  6/20/2003

                	
                  1/21/2012

                
	
                  Tostrex

                	
                  Registered
                    as EU community mark

                	
                  Denmark

                	
                  6/20/2003

                	
                  1/21/2012

                
	
                  Tostrex

                	
                  Registered
                    as EU community mark

                	
                  Estonia

                	
                  6/20/2003

                	
                  1/21/2012

                
	
                  Tostrex

                	
                  Registered
                    as EU community mark

                	
                  Finland

                	
                  6/20/2003

                	
                  1/21/2012

                
	
                  Tostrex

                	
                  Registered
                    as EU community mark

                	
                  France

                	
                  6/20/2003

                	
                  1/21/2012

                
	
                  Tostrex

                	
                  Registered
                    as EU community mark

                	
                  Germany

                	
                  6/20/2003

                	
                  1/21/2012

                
	
                  Tostrex

                	
                  Registered
                    as EU community mark

                	
                  Greece

                	
                  6/20/2003

                	
                  1/21/2012

                
	
                  Tostrex

                	
                  Registered
                    as EU community mark

                	
                  Hungary

                	
                  6/20/2003

                	
                  1/21/2012

                
	
                  Tostrex

                	
                  Registered
                    as EU community mark

                	
                  Ireland

                	
                  6/20/2003

                	
                  1/21/2012

                
	
                  Tostrex

                	
                  Registered
                    as EU community mark

                	
                  Italy

                	
                  6/20/2003

                	
                  1/21/2012

                
	
                  Tostrex

                	
                  Registered
                    as EU community mark

                	
                  Latvia

                	
                  6/20/2003

                	
                  1/21/2012

                
	
                  Tostrex

                	
                  Registered
                    as EU community mark

                	
                  Liechtenstein

                	
                  6/20/2003

                	
                  1/21/2012

                
	
                  Tostrex

                	
                  Registered
                    as EU community mark

                	
                  Lithuania

                	
                  6/20/2003

                	
                  1/21/2012

                
	
                  Tostrex

                	
                  Registered
                    as EU community mark

                	
                  Luxemburg

                	
                  6/20/2003

                	
                  1/21/2012

                
	
                  Tostrex

                	
                  Registered
                    as EU community mark

                	
                  Malta

                	
                  6/20/2003

                	
                  1/21/2012

                
	
                  Tostrex

                	
                  Registered
                    as EU community mark

                	
                  Netherlands

                	
                  6/20/2003

                	
                  1/21/2012

                
	
                  Tostrex

                	
                  Registered
                    as EU community mark

                	
                  Norway

                	
                  6/20/2003

                	
                  1/21/2012

                

        

        

        
          
            
              
              

            

            
              E-1

              
                

              

            

            
              
              

            

          

        

        

        
          
            	
                    Name

                  	
                    Status

                  	
                    Country

                  	
                    Registration
                      Date

                  	
                    Renewal

                  

          

        

        
          	
                  Tostrex

                	
                  Registered
                    as EU community mark

                	
                  Poland

                	
                  6/20/2003

                	
                  1/21/2012

                
	
                  Tostrex

                	
                  Registered
                    as EU community mark

                	
                  Portugal

                	
                  6/20/2003

                	
                  1/21/2012

                
	
                  Tostrex

                	
                  Registered
                    as EU community mark

                	
                  Romania

                	
                  6/20/2003

                	
                  1/21/2012

                
	
                  Tostrex

                	
                  Registered
                    as EU community mark

                	
                  Slovak
                    Republic

                	
                  6/20/2003

                	
                  1/21/2012

                
	
                  Tostrex

                	
                  Registered
                    as EU community mark

                	
                  Slovenia

                	
                  6/20/2003

                	
                  1/21/2012

                
	
                  Tostrex

                	
                  Registered
                    as EU community mark

                	
                  Spain

                	
                  6/20/2003

                	
                  1/21/2012

                
	
                  Tostrex

                	
                  Registered
                    as EU community mark

                	
                  Sweden

                	
                  6/20/2003

                	
                  1/21/2012

                
	
                  Tostrex

                	
                  Registered
                    as EU community mark

                	
                  United
                    Kingdom

                	
                  6/20/2003

                	
                  1/21/2012

                
	 	 	 	 	 
	
                  Tostrex

                	
                  Registered

                	
                  Switzerland

                	
                  1/22/2002

                	
                  1/22/2012

                
	
                  Tostrex

                	
                  No
                    application pending

                	
                  Andorra

                	
                  -

                	
                  -

                
	
                  Tostrex

                	
                  No
                    application pending

                	
                  Albania

                	
                  -

                	
                  -

                
	
                  Tostrex

                	
                  No
                    application pending

                	
                  Bosnia-Herzegovina

                	
                  -

                	
                  -

                
	
                  Tostrex

                	
                  No
                    application pending

                	
                  Bulgaria

                	
                  -

                	
                  -

                
	
                  Tostrex

                	
                  No
                    application pending

                	
                  Croatia

                	
                  -

                	
                  -

                
	
                  Tostrex

                	
                  No
                    application pending

                	
                  Gibraltar

                	
                  -

                	
                  -

                
	
                  Tostrex

                	
                  No
                    application pending

                	
                  Republic
                    of Yugoslavia

                	
                  -

                	
                  -

                
	
                  Tostrex

                	
                  No
                    application pending

                	
                  Republic
                    of Macedonia

                	
                  -

                	
                  -

                
	
                  Tostrex

                	
                  No
                    application pending

                	
                  Monaco

                	
                  -

                	
                  -

                

        

        

        
          	
                  Name

                	
                  Status

                	
                  Country

                	
                  Registration
                    Date

                	
                  Renewal

                
	
                  Tostran

                	
                  Registered
                    as EU community mark

                	
                  Austria

                	
                  2/4/2004

                	
                  5/102012

                
	
                  Tostran

                	
                  Registered
                    as EU community mark

                	
                  Belgium

                	
                  2/4/2004

                	
                  5/102012

                

        

        

        
          
            
              
              

            

            
              E-2

              
                

              

            

            
              
              

            

          

        

        

        
          
            	
                    Name

                  	
                    Status

                  	
                    Country

                  	
                    Registration
                      Date

                  	
                    Renewal

                  

          

        

        
          	
                  Tostran

                	
                  Registered
                    as EU community mark

                	
                  Cyprus

                	
                  2/4/2004

                	
                  5/102012

                
	
                  Tostran

                	
                  Registered
                    as EU community mark

                	
                  Czech
                    Republic

                	
                  2/4/2004

                	
                  5/102012

                
	
                  Tostran

                	
                  Registered
                    as EU community mark

                	
                  Denmark

                	
                  2/4/2004

                	
                  5/102012

                
	
                  Tostran

                	
                  Registered
                    as EU community mark

                	
                  Estonia

                	
                  2/4/2004

                	
                  5/102012

                
	
                  Tostran

                	
                  Registered
                    as EU community mark

                	
                  Finland

                	
                  2/4/2004

                	
                  5/102012

                
	
                  Tostran

                	
                  Registered
                    as EU community mark

                	
                  France

                	
                  2/4/2004

                	
                  5/102012

                
	
                  Tostran

                	
                  Registered
                    as EU community mark

                	
                  Germany

                	
                  2/4/2004

                	
                  5/102012

                
	
                  Tostran

                	
                  Registered
                    as EU community mark

                	
                  Greece

                	
                  2/4/2004

                	
                  5/102012

                
	
                  Tostran

                	
                  Registered
                    as EU community mark

                	
                  Hungary

                	
                  2/4/2004

                	
                  5/102012

                
	
                  Tostran

                	
                  Registered
                    as EU community mark

                	
                  Ireland

                	
                  2/4/2004

                	
                  5/102012

                
	
                  Tostran

                	
                  Registered
                    as EU community mark

                	
                  Italy

                	
                  2/4/2004

                	
                  5/102012

                
	
                  Tostran

                	
                  Registered
                    as EU community mark

                	
                  Latvia

                	
                  2/4/2004

                	
                  5/102012

                
	
                  Tostran

                	
                  Registered
                    as EU community mark

                	
                  Liechtenstein

                	
                  2/4/2004

                	
                  5/102012

                
	
                  Tostran

                	
                  Registered
                    as EU community mark

                	
                  Lithuania

                	
                  2/4/2004

                	
                  5/102012

                
	
                  Tostran

                	
                  Registered
                    as EU community mark

                	
                  Luxemburg

                	
                  2/4/2004

                	
                  5/102012

                
	
                  Tostran

                	
                  Registered
                    as EU community mark

                	
                  Malta

                	
                  2/4/2004

                	
                  5/102012

                
	
                  Tostran

                	
                  Registered
                    as EU community mark

                	
                  Netherlands

                	
                  2/4/2004

                	
                  5/102012

                
	
                  Tostran

                	
                  Registered
                    as EU community mark

                	
                  Norway

                	
                  2/4/2004

                	
                  5/102012

                
	
                  Tostran

                	
                  Registered
                    as EU community mark

                	
                  Poland

                	
                  2/4/2004

                	
                  5/102012

                
	
                  Tostran

                	
                  Registered
                    as EU community mark

                	
                  Portugal

                	
                  2/4/2004

                	
                  5/102012

                
	
                  Tostran

                	
                  Registered
                    as EU community mark

                	
                  Romania

                	
                  2/4/2004

                	
                  5/102012

                
	
                  Tostran

                	
                  Registered
                    as EU community mark

                	
                  Slovak
                    Republic

                	
                  2/4/2004

                	
                  5/102012

                
	
                  Tostran

                	
                  Registered
                    as EU community mark

                	
                  Slovenia

                	
                  2/4/2004

                	
                  5/102012

                

        

        

        
          
            
              
              

            

            
              E-3

              
                

              

            

            
              
              

            

          

        

         

        
          	
                  Name

                	
                  Status

                	
                  Country

                	
                  Registration
                    Date

                	
                  Renewal

                

        

        
          	
                  Tostran

                	
                  Registered
                    as EU community mark

                	
                  Spain

                	
                  2/4/2004

                	
                  5/102012

                
	
                  Tostran

                	
                  Registered
                    as EU community mark

                	
                  Sweden

                	
                  2/4/2004

                	
                  5/102012

                
	
                  Tostran

                	
                  Registered
                    as EU community mark

                	
                  United
                    Kingdom

                	
                  2/4/2004

                	
                  5/102012

                
	 	 	 	 	 
	
                  Tostran

                	
                  Registered

                	
                  Switzerland

                	
                  9/3/2002

                	
                  5/3/2012

                
	
                  Tostran

                	
                  No
                    application pending

                	
                  Andorra

                	
                  -

                	
                  -

                
	
                  Tostran

                	
                  No
                    application pending

                	
                  Albania

                	
                  -

                	
                  -

                
	
                  Tostran

                	
                  No
                    application pending

                	
                  Bosnia-Herzegovina

                	
                  -

                	
                  -

                
	
                  Tostran

                	
                  No
                    application pending

                	
                  Bulgaria

                	
                  -

                	
                  -

                
	
                  Tostran

                	
                  No
                    application pending

                	
                  Croatia

                	
                  -

                	
                  -

                
	
                  Tostran

                	
                  No
                    application pending

                	
                  Gibraltar

                	
                  -

                	
                  -

                
	
                  Tostran

                	
                  No
                    application pending

                	
                  Republic
                    of Yugoslavia

                	
                  -

                	
                  -

                
	
                  Tostran

                	
                  No
                    application pending

                	
                  Republic
                    of Macedonia

                	
                  -

                	
                  -

                
	
                  Tostran

                	
                  No
                    application pending

                	
                  Monaco

                	
                  -

                	
                  -

                

        

        

        

        
          	
                  Name

                	
                  Status

                	
                  Country

                	
                  Registration
                    Date

                	
                  Renewal

                
	
                  Fortigel

                	
                  Pending
                    approval

                	
                  Austria

                	
                  4/28/2003

                	
                  Unknown

                
	
                  Fortigel

                	
                  Pending
                    approval

                	
                  Belgium

                	
                  4/28/2003

                	
                  Unknown

                
	
                  Fortigel

                	
                  Pending
                    approval

                	
                  Cyprus

                	
                  4/28/2003

                	
                  Unknown

                
	
                  Fortigel

                	
                  Pending
                    approval

                	
                  Czech
                    Republic

                	
                  4/28/2003

                	
                  Unknown

                
	
                  Fortigel

                	
                  Pending
                    approval

                	
                  Denmark

                	
                  4/28/2003

                	
                  Unknown

                
	
                  Fortigel

                	
                  Pending
                    approval

                	
                  Estonia

                	
                  4/28/2003

                	
                  Unknown

                
	
                  Fortigel

                	
                  Pending
                    approval

                	
                  Finland

                	
                  4/28/2003

                	
                  Unknown

                
	
                  Fortigel

                	
                  Pending
                    approval

                	
                  France

                	
                  4/28/2003

                	
                  Unknown

                
	
                  Fortigel

                	
                  Pending
                    approval

                	
                  Germany

                	
                  4/28/2003

                	
                  Unknown

                

        

        

        
          
            
              
              

            

            
              E-4

              
                

              

            

            
              
              

            

          

        

        

        
          
            	
                    Name

                  	
                    Status

                  	
                    Country

                  	
                    Registration
                      Date

                  	
                    Renewal

                  

          

        

        
          	
                  Fortigel

                	
                  Pending
                    approval

                	
                  Greece

                	
                  4/28/2003

                	
                  Unknown

                
	
                  Fortigel

                	
                  Pending
                    approval

                	
                  Hungary

                	
                  4/28/2003

                	
                  Unknown

                
	
                  Fortigel

                	
                  Pending
                    approval

                	
                  Ireland

                	
                  4/28/2003

                	
                  Unknown

                
	
                  Fortigel

                	
                  Pending
                    approval

                	
                  Italy

                	
                  4/28/2003

                	
                  Unknown

                
	
                  Fortigel

                	
                  Pending
                    approval

                	
                  Latvia

                	
                  4/28/2003

                	
                  Unknown

                
	
                  Fortigel

                	
                  Pending
                    approval

                	
                  Liechtenstein

                	
                  4/28/2003

                	
                  Unknown

                
	
                  Fortigel

                	
                  Pending
                    approval

                	
                  Lithuania

                	
                  4/28/2003

                	
                  Unknown

                
	
                  Fortigel

                	
                  Pending
                    approval

                	
                  Luxemburg

                	
                  4/28/2003

                	
                  Unknown

                
	
                  Fortigel

                	
                  Pending
                    approval

                	
                  Malta

                	
                  4/28/2003

                	
                  Unknown

                
	
                  Fortigel

                	
                  Pending
                    approval

                	
                  Netherlands

                	
                  4/28/2003

                	
                  Unknown

                
	
                  Fortigel

                	
                  Pending
                    approval

                	
                  Norway

                	
                  4/28/2003

                	
                  Unknown

                
	
                  Fortigel

                	
                  Pending
                    approval

                	
                  Poland

                	
                  4/28/2003

                	
                  Unknown

                
	
                  Fortigel

                	
                  Pending
                    approval

                	
                  Portugal

                	
                  4/28/2003

                	
                  Unknown

                
	
                  Fortigel

                	
                  Pending
                    approval

                	
                  Romania

                	
                  4/28/2003

                	
                  Unknown

                
	
                  Fortigel

                	
                  Pending
                    approval

                	
                  Slovak
                    Republic

                	
                  4/28/2003

                	
                  Unknown

                
	
                  Fortigel

                	
                  Pending
                    approval

                	
                  Slovenia

                	
                  4/28/2003

                	
                  Unknown

                
	
                  Fortigel

                	
                  Pending
                    approval

                	
                  Spain

                	
                  4/28/2003

                	
                  Unknown

                
	
                  Fortigel

                	
                  Pending
                    approval

                	
                  Sweden

                	
                  4/28/2003

                	
                  Unknown

                
	
                  Fortigel

                	
                  Pending
                    approval

                	
                  United
                    Kingdom

                	
                  4/28/2003

                	
                  Unknown

                
	 	 	 	 	 
	
                  Fortigel

                	
                  No
                    application pending

                	
                  Switzerland

                	
                  -

                	
                  -

                
	
                  Fortigel

                	
                  No
                    application pending

                	
                  Andorra

                	
                  -

                	
                  -

                
	
                  Fortigel

                	
                  No
                    application pending

                	
                  Albania

                	
                  -

                	
                  -

                
	
                  Fortigel

                	
                  No
                    application pending

                	
                  Bosnia-Herzegovina

                	
                  -

                	
                  -

                
	
                  Fortigel

                	
                  No
                    application pending

                	
                  Bulgaria

                	
                  -

                	
                  -

                

        

        

        
          
            
              
              

            

            
              E-5

              
                

              

            

            
              
              

            

          

        

        
          	
                  Name

                	
                  Status

                	
                  Country

                	
                  Registration
                    Date

                	
                  Renewal

                

        

        
          	
                  Fortigel

                	
                  No
                    application pending

                	
                  Croatia

                	
                  -

                	
                  -

                
	
                  Fortigel

                	
                  No
                    application pending

                	
                  Gibraltar

                	
                  -

                	
                  -

                
	
                  Fortigel

                	
                  No
                    application pending

                	
                  Republic
                    of Yugoslavia

                	
                  -

                	
                  -

                
	
                  Fortigel

                	
                  No
                    application pending

                	
                  Republic
                    of Macedonia

                	
                  -

                	
                  -

                
	
                  Fortigel

                	
                  No
                    application pending

                	
                  Monaco

                	
                  -

                	
                  -

                

        

         

        
          
            
              
              

            

            
              E-6

              
                

              

            

            
              
              

            

          

        

        

        EXHIBIT
          F

        STRAKAN
          GROUP LIMITED GUARANTEE

        

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

         

        

        
          
            
              
              

            

            
              F

              
                

              

            

            
              
              

            

          

        

        

        EXHIBIT
          G 

        

        ADVERSE
          EVENT REPORTING

        

        
          
            
            

          

          
            GEXHIBIT
      10.9

     

    EMPLOYMENT
      AGREEMENT

    
       

      This
        Employment Agreement (the “Agreement”), made and entered into this [___] day of
        July, 2005, by and between Wako Logistics Group, Inc, a Delaware corporation
        (the “Company”), and David L. Koontz (the
        “Executive”). 

       

      WITNESSETH

       

      WHEREAS,
        the
        Company desires to hire the Executive and the Executive desires to become
        employed by the Company; and

       

      WHEREAS,
        the
        Company and the Executive have determined that it is in their respective
        best
        interest to enter into this Agreement on the terms and conditions as set
        forth
        herein.

       

      NOW,
        THEREFORE,
        in
        consideration of the premises and the mutual covenants and promises contained
        herein, and for other good and valuable consideration, the receipt and
        sufficiency of which are hereby acknowledged, the parties hereto hereby agree
        as
        follows: 

       

      1.  Employment.
        The
        Company hereby agrees to employ the Executive, and the Executive hereby agrees
        to serve the Company, upon the terms and conditions set forth
        herein.

       

      2.  Term.
        The
        employment of the Executive by the Company pursuant to this Agreement as
        provided in Section 1 will commence on [___], 2005 (the “Effective Date”), and
        continue until [________], 2008, unless the Executive’s employment is terminated
        earlier as provided in Section 6 (the “Initial Term”). This Agreement, and the
        Executive’s employment with the Company, may be renewed for additional
        successive one (1) year periods, upon the mutual agreement of the Company
        and
        the Employee (the “Renewal Period”). The Initial Term and any Renewal Period is
        hereby collectively referred to as the “Term.” 

       

      3.  Position
        and Duties.
        The
        Executive shall serve as the Chief Financial Officer (“CFO”), and shall have
        such responsibilities, duties and authority as are generally associated with
        such office and as may from time to time be assigned to the Executive by
        the
        Company’s Board of Directors (the “Board”) and the Company’s President and Chief
        Executive Officer that are consistent with such responsibilities, duties
        and
        authority, including, but not limited to, responsibility for the overall
        financial health and day-to-day financial operations of the Company on a
        worldwide basis. The Executive shall perform his duties diligently and
        faithfully and shall devote substantially all his working time and efforts
        to
        the business and affairs of the Company and its subsidiaries and
        affiliates.
        The
        Executive shall, at all times during the Term, report directly to the President
        and Chief Executive Officer. Notwithstanding anything in this Section 3 to
        the
        contrary, the Executive shall not be required to perform any duties or
        responsibilities that would result in a violation of, or noncompliance with,
        any
        law, regulation, regulatory pronouncement or any other regulatory requirement
        applicable to the Company and the conduct of the Company’s business or to the
        Executive in his capacity as CFO of
        the
        Company.

       

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

       

      4.  Compensation
        and Related Matters.

       

      4.1  Base
        Salary.
        In
        consideration of the services rendered to the Company hereunder by the Executive
        and the Executive’s covenants hereunder, the Company shall, during the Term, pay
        to the Executive an annual base salary at a rate of $185,000 (the “Base
        Salary”), less statutory deductions and withholdings, payable in accordance with
        the Company’s normal payroll practices. At least annually, the Company will
        review the Base Salary for competitiveness, the stage of development of the
        Company and appropriateness in the industry.

       

      4.2  Annual
        Bonus.
        For
        each calendar
        year during the Term, the Executive shall be eligible to receive a cash bonus
        of
        up to
        100% of the Base Salary (the “Bonus”).
        Such
        Bonus shall be determined and payable at the sole discretion of the
        Board.

       

      4.3  Stock
        Options.
        The
        Company shall grant to Executive an option to purchase 200,000 shares of
        the
        Company’s common stock (the “Options”).
        The
        Options shall vest over 2 years in accordance with the following vesting
        schedule: (i) 25%
        upon
        commencement of Employment, and (ii) the
        remaining 75%
        at
        the rate of 3.26% each month thereafter until fully vested. The
        term
        of the Options shall be ten years from the Effective Date. The Options shall
        be
        issued pursuant to the Company’s 2005 Stock Incentive Plan and will be evidenced
        by a Stock Option Grant Agreement, consistent with the terms of this
        Agreement.
        The
        exercise price for the Options shall be $1.00 per share.
        Irrespective of the date of grant, the vesting commencement date for any
        Options
        issued in accordance with this Section 4.3 will be the Effective Date. The
        Options will be granted, to the maximum amount of shares currently permitted
        by
        law, in the form of incentive stock options and the remainder in non-qualified
        options.

       

      Notwithstanding
        the foregoing, all Options shall vest 100% immediately upon a Change in Control
        as defined below. For purposes of this Section, a “Change in Control” shall be
        deemed to occur in the event of a change in ownership or control of the Company
        effected through any of the following transactions: (i) the acquisition,
        directly or indirectly, by any person or related group of persons (other
        than
        the Company or a person that immediately
        before the Change of Control directly
        or indirectly controls, or is controlled by, or is under common control with,
        the Company) of beneficial ownership (within the meaning of Rule 13d-3 of
        the
        Securities Exchange Act of 1934, as amended) of outstanding
        securities possessing more than fifty percent (50%) of the total combined
        voting
        power of the Company’s outstanding securities;
        or (ii)
        the sale, transfer or other disposition of all or substantially all of the
        Company’s assets; or (iii) the consummation of a merger or consolidation of the
        Company with or into another entity or any other corporate reorganization,
        if
        more than fifty percent (50%) of the combined voting power of the continuing
        or
        surviving entity’s securities outstanding immediately after such merger,
        consolidation or other reorganization is owned by persons who were not
        stockholders of the Company immediately prior to such merger, consolidation
        or
        other reorganization.

       

      4.4  Expenses.
        The
        Executive shall be entitled to receive prompt reimbursement for all reasonable
        and customary expenses incurred by the Executive in performing services
        hereunder, provided that such expenses are incurred and accounted for in
        accordance with the policies and procedures established by the Company.
For
        the
        sake of clarity, reimbursable expenses shall include payment of cell phone
        billings and high speed access computer lines.

       

      
        
           

        

        
          -2-

          
            

          

        

        
           

        

      

       

      4.5  Benefits.
        

       

      (a)  The
        Executive shall be entitled to receive full reimbursement for the premium
        costs
        of any medical and dental plans under which Executive is covered during the
        Term.

       

      (b)  The
        Executive shall be entitled to a car allowance of $750 per month during the
        Term.

       

      (c)  The
        Executive shall be provided with a laptop computer with appropriate software,
        as
        well as a cell phone capable of making international calls. All cell phone
        billings and high speed access line costs shall be reimbursed by the
        Company.

       

      (d)  The
        Executive shall be entitled to reasonable vacation time to be determined
        in
        consultation with the President/Chief Executive Officer.

       

      (e) The
        Executive shall be reimbursed for all costs incurred in connection with
        relocating from the East Coast to the West Coast of the United States, including
        temporary living costs in the new location, which shall not exceed thirty
        (30)
        days.

       

      5.  Director
        and Officer of the Company; D&O Insurance.
        

       

      (a)  As
        an
        officer and, if elected or appointed as a director of the Company, the Executive
        will be covered under all of the Company’s Director’s and Officer’s liability
        insurance policies, which are in place and updated over time. The Company
        shall
        indemnify Executive to the full extent permitted under Delaware law for claims
        relating to his service as a director or officer of the Company.

       

      (b)  Reserved.

       

      6.  Termination.
        The
        Executive’s employment hereunder may be terminated under the following
        circumstances:

       

      6.1  Death
        or Disability.
        In the
        event of the Executive’s death or Disability during the Term of this Agreement,
        the Executive’s employment hereunder shall immediately and automatically
        terminate, and the Company shall have no further obligation or duty to the
        Executive or his estate or beneficiaries other than for the Base Salary earned
        under this Agreement to the date of termination, reimbursement of corporate
        expenses incurred through the date of termination, and any payments or benefits
        due under Company policies or benefit plans
        which
        shall be paid within a reasonable time following death or
        Disability.
        For
        purposes of this Agreement, "Disability" shall mean
        the
        physical or mental infirmity of which infirmity causes him to be substantially
        unable to perform his duties hereunder for any period of one hundred and
        eighty
        (180) consecutive days; provided,
        however, that notwithstanding anything to the contrary herein and despite
        any
        termination of Executive’s employment under this Section 6, Executive shall be
        entitled in the event of a termination on account of death or
        Disability: (i) to retain his disability benefits, which amounts shall not
        be
        offset by any disability benefits received by Executive from any other source,
        (ii) to receive his Base Salary until such time as he has commenced receiving
        disability payments under the Company's policies,
        (iii) to
        receive a prorated portion of the Bonus to
        which
        Executive would otherwise have been entitled for the calendar year through
        the
        date of termination (as
        determined by
        the
        Board),
        and
        (iv) accrued but unused vacation.
        Executive, or his legal representative, as the case may be, shall have a
        period
        of one (1) year following the termination of his employment
        pursuant
        to
this
        Section 6.1 to exercise any vested Options. 

       

      
        
           

        

        
          -3-

          
            

          

        

        
           

        

      

       

      6.2  Cause,
        Without Cause Termination by the Executive.
        Notwithstanding the provisions of Section 2 of this Agreement, the Executive’s
        employment hereunder may terminate prior to the expiration of the Initial
        Term,
        or any Renewal Period thereafter, under the following
        circumstances:

       

      (a)  Termination
        by the Company for Cause.
        The
        Board may terminate this Agreement for Cause at any time, upon written notice
        to
        the Executive setting forth in reasonable detail the nature of such Cause.
        For
        purposes of this Agreement, Cause is defined as (i) the Executive’s material
        breach of Sections 7,
        8, or 10
        of this
        Agreement; (ii) the Executive’s commission of any felony or any crime involving
        moral turpitude; or (iii) gross neglect
        or
        willful misconduct by the Executive in connection with the performance of
        his
        material
        duties
        hereunder, or his refusal to perform such material
        duties
        reasonably requested
        in the
        ordinary course;
        provided, however, that the Company shall give Executive thirty (30) days’
written notice and opportunity to cure prior to any termination for Cause
        based
        on the grounds specified (iii) above. Upon
        the
        termination for Cause of Executive’s employment, the Company shall have no
        further obligation or liability to the Executive other than for Base Salary
        earned under this Agreement prior to the date of termination, and reimbursement
        for corporate expenses incurred through the date of termination. Executive’s
        vested but unexercised Options shall expire immediately upon his termination
        for
        Cause pursuant to this Section 6.2(a).

       

      (b)  Termination
        by the Company Without Cause.
        The
        Executive’s employment hereunder may be terminated without Cause by the Company
        upon written notice to the Executive, provided, however, that if the Company
        terminates the Executive’s employment without Cause,
        or
        the
        Executive terminates his employment for Good Reason, as defined below, the
        Company shall (i) (A) continue to pay the Executive the Base Salary and shall
        reimburse medical and dental premiums, under the same conditions as exist
        at the
        time of termination, for a severance period of 9 months, provided termination
        occurs after six months and before the completion of 12 months from the
        Effective Date or (B) continue to pay the Executive the Base Salary and shall
        reimburse medical and dental premiums, under the same conditions as exist
        at the
        time of termination, for a severance period until the end of the Initial
        Term or
        the then current Renewal Period, provided termination occurs after of twelve
        (12) months from the Effective Date; (ii) reimburse Executive for corporate
        expenses incurred through the date of termination, (iii)
        cause any unvested Options granted to the Executive to immediately
        vest,
        (iv) in
the
        event
        the board had approved a bonus, such amount would be paid in the case of
        a
        termination without cause
        and
        (v) pay Executive for any accrued but unused vacation.
        The
        Company's obligations under this Section 6.2(b) are not subject to any right
        of
        setoff and impose no duty to mitigate on Executive. As a condition of receiving
        severance benefits pursuant to this Agreement, the Executive shall execute
        and
        deliver to the Company prior to his receipt of such benefits a general
        release
        in
        substantially the form set forth in Annex A hereto. The
        obligations of the Company under this Section 6.2(b) are subject to Executive's
        compliance with Sections 7 and 8 hereof.

       

      
        
           

        

        
          -4-

          
            

          

        

        
           

        

      

       

      (c)  Termination
        by the Executive.
        The
        Executive may terminate his employment hereunder for any reason
        upon one
        (1) month’s written notice to the Company
        (the
“Notice Period”).
        In the
        event Executive provides notice of termination pursuant to this subsection
        6.2(c), the Company may elect to terminate Executive at any time during the
        Notice Period without such termination being deemed a termination by the
        Company
        under this Agreement; provided that the Company shall nevertheless
        pay the
        Executive for
        any
        remaining portion of the
        Notice Period an amount equal to
        the Base
        Salary and benefits at the rate of compensation the Executive was receiving
        immediately before the
        Notice Period.   The
        Executive may also terminate his employment hereunder for “Good Reason,” within
sixty
        (60)
        days
        after the occurrence of any of the following events (i) a material breach
        of
        this Agreement by the Company; (ii) a material change
        in the
        Executive’s duties or responsibilities
        inconsistent with his position as CFO,
        including any reduction in Base Salary; or (iii) a change in the Executive’s
        reporting relationship so that he no longer reports
        directly to the President and/or Chief Executive Officer.
        The
        Executive shall give the Company thirty (30) days’ written notice and
        opportunity to cure prior to any termination for Good Reason based on the
        grounds specified in (i) through (iii) above. 

       

      7.  Confidentiality,
        Disclosure of Information.
        (a) The
        Executive recognizes and acknowledges that the Executive has had and will
        have
        access to Confidential Information (as defined below) relating to the business
        or interests of the Company or of persons with whom the Company may have
        business relationships. Except as permitted herein, the Executive will not
        during the Term, or at any time thereafter, use, disclose or permit to be
        known
        by any other person or entity, any Confidential Information of the Company
        (except as required by applicable law or as Executive deems
        necessary
        in
        connection with the performance of the Executive’s duties and responsibilities
        hereunder). The term “Confidential Information” means information relating to
        the Company’s business affairs, proprietary technology, trade secrets, patented
        processes, research and development data, know-how, market studies and
        forecasts, competitive analyses, pricing policies, employee lists, employment
        agreements (other than this Agreement), personnel policies, the substance
        of
        agreements with customers, suppliers and others, marketing arrangements,
        customer lists, commercial arrangements,
        or
        any
        other information relating to the Company’s business that is not generally known
        to the public or to actual or potential competitors of the Company (other
        than
        through a breach of this Agreement). This obligation shall continue until
        such
        Confidential Information becomes publicly available, other than pursuant
        to a
        breach of this Section 7 by the Executive, regardless of whether the Executive
        continues to be employed by the Company.

       

      (b) It
        is
        further agreed and understood by and between the parties to this Agreement
        that
        all “Company Materials,” which include, but are not limited to, computers,
        computer software, computer disks, tapes, printouts, source, HTML and other
        code, flowcharts, schematics, designs, graphics, drawings, photographs, charts,
        graphs, notebooks, customer lists, sound recordings, other tangible or
        intangible manifestation of content, and all other documents whether printed,
        typewritten, handwritten, electronic, or stored on computer disks, tapes,
        hard
        drives, or any other tangible medium, as well as samples, prototypes, models,
        products and the like, shall be the exclusive property of the Company and,
        upon
        termination of Executive’s employment with the Company, and/or upon the request
        of the Company, all Company Materials, including copies thereof, as well
        as all
        other Company property then in the Executive’s possession or control, shall be
        returned to and left with the Company. 

       

      
        
           

        

        
          -5-

          
            

          

        

        
           

        

      

       

      8.  Non-Competition
        and Non-Solicitation.
        The
        Executive acknowledges that the Company has invested substantial time, money
        and
        resources in the development and retention of its inventions, improvements,
        discoveries, processes, formulae, methods and other intellectual property,
        whether or not patentable or copyrightable (collectively, “Inventions”),
        Confidential Information (including trade secrets), customers, accounts and
        business partners, and further acknowledges that during the course of the
        Executive’s employment with the Company the Executive will have access to the
        Company’s Inventions and Confidential Information (including trade secrets), and
        will be introduced to existing and prospective customers, accounts and business
        partners of the Company. The Executive acknowledges and agrees that any and
        all
“goodwill” associated with any existing or prospective customer, account or
        business partner belongs exclusively to the Company, including, but not limited
        to, any goodwill created as a result of direct or indirect contacts or
        relationships between the Executive and any existing or prospective customers,
        accounts or business partners. Additionally, the parties acknowledge and
        agree
        that Executive possesses skills that are special, unique or extraordinary
        and
        that the value of the Company depends upon his use of such skills on its
        behalf.

       

      In
        recognition of this, the Executive covenants and agrees that:

       

      (a)  During
        the Term, and for a period of eighteen (18) months thereafter, the Executive
        may
        not, without the prior written consent of the Board, (whether as an employee,
        agent, owner, partner, consultant, independent contractor, representative,
        stockholder or in any other capacity whatsoever) participate
        in any business that offers products or services competitive in any way to
        those
        offered by the Company or that were under active development by the Company
        during the Term, provided that nothing herein shall prohibit the Executive
        from
        owning securities of corporations which are listed on a national securities
        exchange or traded in the national over-the-counter market in an amount which
        shall not exceed 2% of the outstanding shares of an such
        corporation.

       

      (b)  During
        the Term, and for a period of eighteen (18) months thereafter, the Executive
        may
        not entice, solicit or encourage any Company employee to leave the employ
        of the
        Company or any independent contractor to sever its engagement with the Company,
        absent prior written consent to do so from the Board.

       

      (c)  During
        the Term, and for a period of eighteen (18) months thereafter, the Executive
        may
        not, directly or indirectly, entice, solicit or encourage any customer or
        prospective customer of the Company to cease doing business with the Company,
        reduce its relationship with the Company or refrain from establishing or
        expanding a relationship with the Company.

       

      Provided,
        however, that this Section 8 shall not apply if the Company terminates the
        Executive Without Cause or Executive terminates this Agreement for Good
        Reason.

       

      9.  Provisions
        Necessary and Reasonable.
        (a) The
        Executive agrees that (i) the provisions of Sections 7 and 8 of this Agreement
        are necessary and reasonable to protect the Company’s Confidential Information,
        Inventions, and goodwill; (ii) the specific temporal, geographic and substantive
        provisions set forth in Section 8 of this Agreement are reasonable and necessary
        to protect the Company’s business interests; and (iii) in the event of any
        breach of any of the covenants set forth herein, the Company would suffer
        substantial irreparable harm and would not have an adequate remedy at law
        for
        such breach. In recognition of the foregoing, the Executive agrees that in
        the
        event of a breach or threatened breach of any of these covenants, in addition
        to
        such other remedies as the Company may have at law, without posting any bond
        or
        security, the Company shall be entitled to seek and obtain equitable relief,
        in
        the form of specific performance, and/or temporary, preliminary or permanent
        injunctive relief, or any other equitable remedy which then may be available.
        The seeking of such injunction or order shall not affect the Company’s right to
        seek and obtain damages or other equitable relief on account of any such
        actual
        or threatened breach.

       

      
        
           

        

        
          -6-

          
            

          

        

        
           

        

      

       

      (b) If
        any of
        the covenants contained in Sections 7or 8 hereof, or any part thereof, are
        hereafter construed to be invalid or unenforceable, the same shall not affect
        the remainder of the covenant or covenants, which shall be given full effect
        without regard to the invalid portions.

       

      (c) If
        any of
        the covenants contained in Sections 7or 8 hereof, or any part thereof, are
        held
        to be unenforceable by a court of competent jurisdiction because of the temporal
        or geographic scope of such provision or the area covered thereby, the parties
        agree that the court making such determination shall have the power to reduce
        the duration and/or geographic area of such provision and, in its reduced
        form,
        such provision shall be enforceable.

       

      10.  Representations
        Regarding Prior Work and Legal Obligations.
        (a) The
        Executive represents that the Executive has no agreement or other legal
        obligation with any prior employer, or any other person or entity, which
        restricts the Executive’s ability to accept employment with, or to perform any
        function for, the Company. 

       

      (b) The
        Executive has been advised by the Company that at no time should the Executive
        divulge to or use for the benefit of the Company any trade secret or
        confidential or proprietary information of any previous employer. The Executive
        expressly acknowledges that the Executive has not divulged or used any such
        information for the benefit of the Company.

       

      (c) The
        Executive acknowledges that the Executive has not and will not misappropriate
        any Invention that the Executive played any part in creating while working
        for
        any former employer.

       

      (d) The
        Executive acknowledges that the Company is basing important business decisions
        on these representations, and affirms that all of the statements included
        herein
        are true.

       

      11.  Successors;
        Binding Agreement.
        This
        Agreement and all rights of the Executive hereunder shall inure to the benefit
        of and be enforceable by the Executive’s personal or legal representatives,
        executors, administrators, successors, heirs, distributees, devisees and
        legatees. If the Executive should die, all amounts due following the Executive’s
        death, unless otherwise provided herein, shall be paid in accordance with
        the
        terms of this Agreement to the Executive’s devisee, legatee, or other designee
        or, if there is no such designee, to the Executive’s estate.

       

      12.  Notice.
        For the
        purposes of this Agreement, notices, demands and all other communications
        provided for in this Agreement shall be in writing and shall be deemed to
        have
        been duly given when delivered or (unless otherwise specified) mailed by
        United
        States certified or registered mail, return receipt requested, postage prepaid,
        addressed as follows:

       

      
        
           

        

        
          -7-

          
            

          

        

        
           

        

      

       

      If
        to the
        Executive:

      

      David
        L.
        Koontz

      Address
        to be advised

      

      PERSONAL
        AND CONFIDENTIAL

       

      If
        to the
        Company:

       

      Wako
        Logistics Group, Inc.

      Address
        to be advised 

       

       

      Attn:
        Corporate Secretary

       

      or
        to
        such other address as any party may have furnished to the other in writing
        in
        accordance herewith, except that notices of change of address shall be effective
        only upon receipt.

       

      13.  Miscellaneous.
        No
        provisions of this Agreement may be amended, modified, waived or discharged
        unless such amendment, waiver, modification or discharge is agreed to in
        writing
        signed by the Executive and such officer of the Company as may be specifically
        designated by the Board. No waiver by either party hereto at any time of
        any
        breach by the other party hereto of, or compliance with, any condition or
        provision of this Agreement to be performed by such other party shall be
        deemed
        a waiver of similar or dissimilar provisions or conditions at the same or
        at any
        prior or subsequent time. No agreements or representations, oral or otherwise,
        express or implied, with respect to the subject matter hereof have been made
        by
        either party which are not set forth expressly in this Agreement. This Agreement
        shall be binding on all successors to the Company.

       

      14.  Severability.
        The
        invalidity or unenforceability of any provision or provisions of this Agreement
        shall not affect the validity or enforceability of any other provision of
        this
        Agreement, which shall remain in full force and affect.

       

      15.      Dispute
        Resolution.
        Any
        controversy or claim arising out of this Agreement or any aspect of the
        Executive’s relationship with the Company including the cessation thereof (other
        than disputes with respect to alleged violations of the covenants contained
        in
        Sections 7, 8, or 9 hereof), shall be resolved by arbitration in accordance
        with
        the then existing Employment Dispute Resolution Rules of the American
        Arbitration Association, in Arlington, Virginia, and judgment upon the award
        rendered may be entered in any court having jurisdiction thereof. The parties
        shall split equally the costs of arbitration, except that each party shall
        pay
        its own attorneys’ fees. The parties agree that the award of the arbitrator
        shall be final and binding..

       

      
        
           

        

        
          -8-

          
            

          

        

        
           

        

      

       

      16.      
        Governing Law.
        The
        validity, interpretation, construction and performance of this Agreement
        shall
        be governed by and construed and enforced in accordance with the internal
        laws
        of the State of Delaware without regard to the principle of conflicts of
        laws.

       

      17.  Counterparts.
        This
        Agreement may be executed in two counterparts, each of which shall be deemed
        to
        be an original but both of which together will constitute one and the same
        instrument.

       

      18.  Survivorship.
        The
        respective rights and obligations of the parties to this Agreement shall
        survive
        the termination of this Agreement or the Executive’s employment hereunder for
        any reason to the extent necessary to the intended preservation of such rights
        and obligations.

       

      19.  Representation.
        The
        Company represents and warrants that it is fully authorized and empowered
        to
        enter into this Agreement and that the performance of its obligations hereunder
        shall not violate any agreement between the Company and any other person,
        firm
        or organization.

       

      20.  Entire
        Agreement.
        This
        Agreement sets forth the entire agreement of the parties hereto in respect
        of
        the subject matter contained herein and supersedes all prior agreements,
        promises, covenants, arrangements, communications, representations or
        warranties, whether oral or written, by any officer, employee or representative
        of any party hereto; and any prior agreement of the parties hereto in respect
        of
        the subject matter contained herein is hereby terminated and
        cancelled.

       

      21.  Headings.
        The
        parties acknowledge that the headings in this Agreement are for convenience
        of
        reference only and shall not control or affect the meaning or construction
        of
        this Agreement.

       

      22.  Advice
        of Counsel.
        The
        Executive and the Company hereby acknowledge that each party has had adequate
        opportunity to review this Agreement, to obtain the advice of counsel with
        respect to this Agreement, and to reflect upon and consider the terms and
        conditions of this Agreement. The parties further acknowledge that each party
        fully understands the terms of this Agreement and has voluntarily executed
        this
        Agreement.

       

      [Signatures
        appear on following page]

       

      
        
           

        

        
          -9-

          
            

          

        

        
           

        

      

       

      IN
        WITNESS WHEREOF,
        the
        parties have executed this Agreement as of the date and year first above
        written.

    

    

    
      	
              EXECUTIVE

            	 	Wako
              Logistics Group, Inc
	 	 	 	 
	 	 	 	 
	         
	 	By:	
                      
                

            
	
              David
                L. Koontz

            	 	 	
               

            
	 	 	Title:	
                  

            
	 	 	 	 
	
              Dated:
                __________________, 2005

            	 	 	
              Dated:
                _______________, 2005

            

    

     

     

    SIGNATURE
      PAGE TO EMPLOYMENT AGREEMENT

    OF
      DAVID L. KOONTZ

     

    
      
         

      

      
        -10-

        
          

        

      

      
         

      

    

    Annex
      A
      -- Form of Release

     

    Employee
      hereby expressly waives, releases, acquits and forever discharges the Company
      and its divisions, subsidiaries, affiliates, parents, related entities,
      partners, officers, directors, shareholders, investors, executives, managers,
      employees, agents, attorneys, representatives, successors and assigns
      (hereinafter collectively referred to as “Releasees”), from any and all claims,
      demands, and causes of action which Employee has or claims to have, whether
      known or unknown, of whatever nature, which exist or may exist on Employee’s
      behalf from the beginning of time up to and including the date of this
      Agreement. As used in this paragraph, “claims,” “demands,” and “causes of
      action” include, but are not limited to, claims based on contract, whether
      express or implied, fraud, stock fraud, defamation, wrongful termination,
      estoppel, equity, tort, retaliation, intellectual property, personal injury,
      spoliation of evidence, emotional distress, public policy, wage and hour law,
      statute or common law, claims for severance pay, claims related to stock options
      and/or fringe benefits, claims for attorneys’ fees, vacation pay, debts,
      accounts, compensatory damages, punitive or exemplary damages, liquidated
      damages, and any and all claims arising under any federal, state, or local
      statute, law, or ordinance prohibiting discrimination on account of race, color,
      sex, age, religion, sexual orientation, disability or national origin, including
      but not limited to, the Age Discrimination in Employment Act, Title VII of
      the
      Civil Rights Act of 1964 as amended, the Americans with Disabilities Act, the
      Family and Medical Leave Act or the Employee Retirement Income Security
      Act.

     

    
      
         

      

      
        -11-

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