Document:

licenseagreementmcdonald.htm

    
      

      

    
EXHIBIT 10.42

    EXCLUSIVE LICENSE
AGREEMENT

     

    This
Agreement is made effective the 24th day of  November, 1998 (the
“Effective Date”), by and between George B. McDonald, M.D. (hereinafter called
the “LICENSOR”), located at 1815 102nd Place S.E., Bellevue, WA 98004, and
Enteron Pharmaceuticals, Inc. (hereinafter called “LICENSEE”), located at 787
Seventh Avenue, 48th Floor, New York, NY 10019.

     

    WHEREAS,
LICENSOR owns the “Licensed Patents” defined below and is willing to grant a
license to LICENSEE under the Licensed Patents; and

     

    WHEREAS,
LICENSEE desires to obtain a license to the Licensed Patents upon the terms and
conditions hereinafter set forth.

     

    NOW,
THEREFORE, it is agreed as follows:

     

    Section
1. Definitions.

     

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

     

    A. “Affiliate”
means any corporation or other business entity controlled by, controlling, or
under common control with LICENSEE, but only for so long as such control
exists.  For purposes of this definition, “control” means (a) direct
or indirect beneficial ownership of at least fifty percent (50%) of the voting
stock of another corporation; or (b) the power, whether or not normally
exercised, to direct or cause the direction of the management, affairs and
policies of another corporation or other legal entity by contract, resolution,
or otherwise.

     

    B. “Clinical
Trial” means the enrollment of patients with graft-versus-host disease or
patients who have had (or will have had) a bone marrow transplant and,
therefore, are susceptible to graft-versus-host disease into a treatment
protocol whose primary endpoints are the safety and efficacy of the
treatment.

     

    C. “Calendar
Quarter” means each three-month period ending March 31, June 30, September 30
and December 31.

     

    D. “Confidential
Information” means all nonpublic technical and commercial information, including
all inventions, inventor or laboratory notebooks and records, formulae, methods,
plans, processes, specifications, experience and trade secrets relating to the
Technology (a) disclosed by one party to the other or (b) developed as a result
of research development or other activity conducted by either party prior to or
during the term of this Agreement,

     

    E. “Development
Report” means a written account of LICENSEE’s progress under a development plan
identified in Section 3A and Appendix C that contains the information specified
in Appendix B.

     

    F. “FDA”
means the United States Food and Drug Administration or any successor agency
having the administrative and regulatory authority to approve testing and
marketing of human pharmaceutical or biological prophylactic, therapeutic or
diagnostic products in the United States.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    G. “Know-how”
means all tangible information and data that is owned or controlled by either
party at any time before or during the term of the Agreement and that is related
to the Licensed Process(es) or is necessary or useful in the development,
registration, manufacture, use or sale of the Licensed Product(s), including,
but not limited to, items listed on Appendix D, pharmacological, toxicological,
clinical, analytical, and quality control data, and formulations, materials,
drawings and sketches, designs, testing and test results, and other regulatory
information.

     

    H. “Licensed
Field’’ means research and development of products for the prevention and
treatment of human diseases.

     

    I. “Licensed
Patents” shall mean (i) all U.S. and foreign patents and patent applications set
forth in Appendix I; (ii) any later-filed United States and/or foreign patent
applications based on the patent applications and/or patents listed in Appendix
I, or corresponding thereto, including any continuations, continuations-in-part,
divisional, reissues, reexaminations, or extensions thereof; and (iii) any
United Stales and/or foreign patents issuing from any of the
foregoing-

     

    J. “Licensed
Product” means (i) any product the relevant manufacture, use, sale or
importation of which would, in the applicable country and in the absence of this
License, infringe upon a Valid Claim under the Licensed Patents; or (ii) any
product that is manufactured or used according to any Licensed
Process.

     

    K. “Licensed
Process” means any method or process the practice of which would, in the
applicable country and in the absence of this License, infringe upon a Valid
Claim under the Licensed Patents.

     

    L. “NDA”
means a New Drug Application filed with the FDA.

     

    M. “Net
Sales” means the gross amounts actually received for the sale of Licensed
Product(s) less only the sum of the following:

     

    (i) Trade
discounts actually allowed to customers on Licensed Product(s);

     

    (ii) Sales,
tariff duties and/or use taxes directly imposed and paid with reference to sales
of Licensed Product(s) (excluding what is commonly known as income
taxes);

     

    (iii) Freight,
postage, and insurance charges and additional packaging charges for Licensed
Product(s);

     

    (iv) Amounts
actually allowed or credited on returns of Licensed Product(s);

     

    (v) Bad debt
deductions actually written off during the accounting period that directly
relate to Licensed Product(s); and

     

    (vi) Sales
commissions on sales of Licensed Product(s).

     

    N. “Orphan
Drug” means a product that is used to treat disease that affects relatively few
people and for which U.S. and foreign government authorities or agencies provide
tax credits or other incentives to make it possible to provide a safe and effect
medical product for the treatment of the disease.

     

    O. “Regulatory
Approval” means the receipt of notice by a party of approval by the FDA of a NDA
that is effective to permit the introduction of a Licensed Product into
interstate commerce pursuant to 21 U.S.C. 355.  “Regulatory Approval”
also includes the equivalent approval or licensure in a country other than the
United States.

     

    P. “Technology”
means the Know-how and the inventions disclosed or claimed in the Licensed
Patents.

     

    Q. ‘Third
Party” means any individual, corporation or other legal entity other than
LICENSOR, LICENSEE or an Affiliate.

     

    R. “Valid
Claim” means a claim of any pending patent application or unexpired patent, or
one whose expiration date has been extended by law, so long as such claim shall
withdrawn, canceled, disclaimed, nor held invalid by a court of competent
jurisdiction in an unappealed or unappealable decision.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Section
2. Grant of
License.

     

    A. Grant to
LICENSEE

     

    Subject
to the terms and conditions of this Agreement, LICENSOR hereby grants to
LICENSEE and LICENSEE accepts the following:

     

    (i) an
exclusive license under the Licensed Patents, including the right to grant
sublicenses to both Affiliates and Third Parties, to practice the Licensed
Process(es) and to make, have made, use, import and sell Licensed Product(s), in
each case worldwide, for use in the Licensed Field.

     

    (ii) an
exclusive license to the Know-how, including the right to grant sublicenses to
both Affiliates and Third Parties, to practice the Licensed Process(es) and to
make, have made, use, import and sell Licensed Product(s), in each case
worldwide, for use in the Licensed Field.

     

    B. Limitations

     

    The grant
in Section 2A shall be subject to, restricted by and non-exclusive with respect
to the following:

     

    (i) LICENSEE
shall use reasonable effort to introduce the Licensed Products for the
prevention of graft-versus-host disease and host-versus-graft disease into the
commercial market as soon as practicable, consistent with sound and reasonable
business practices and judgment, and thereafter endeavor to keep Licensed
Products reasonably available to the public.

     

    (ii) If
LICENSEE does not have to conduct any Clinical Trials prior to FDA approval of
the first LICENSEE-sponsored NDA for Licensed Product, LICENSOR shall have the
right to terminate or render this Agreement nonexclusive at any time after
eighteen (18) months from the effective date of this Agreement if, in LICENSOR’s
reasonable judgment, LICENSEE:

     

    a) is not
demonstrably and actively engaged in a research, development, manufacturing,
marketing or licensing program, as appropriate, and obtaining appropriate
Regulatory Approvals that are directed toward putting and keeping Licensed
Product(s) into the commercial market, or

     

    b) has not,
directly or through a sublicense, put Licensed Product(s) into commercial use or
kept Licensed Product(s) reasonably available to the public in a country or
countries where licensed.

     

    In making
this determination, LICENSOR shall take into account the normal course of such
programs conducted with sound and reasonable business practices and judgment and
shall take into account the reports provided hereunder by LICENSEE.

     

    (iii) If
LICENSEE does have to conduct Clinical Trials to obtain FDA approval of the
first LICENSEE-sponsored NDA for Licensed Product, LICENSOR shall have the right
to terminate or render this Agreement nonexclusive at any time after five (5)
years from the effective date of this Agreement if, in LICENSOR’s reasonable
judgment, LICENSEE:

     

    a) is not
demonstrably and actively engaged in a research, development, manufacturing,
marketing or licensing program, as appropriate, and obtaining appropriate
Regulatory Approvals that are directed toward putting and keeping Licensed
Product(s) into the commercial market, or

     

    b) has not,
directly or through a sublicense, put Licensed Product(s) into commercial use or
kept Licensed Product(s) reasonably available to the public in a country or
countries where licensed.

     

    In making
this determination, LICENSOR shall take into account the normal course of such
programs conducted with sound and reasonable business practices and judgment and
shall take into account the reports provided hereunder by LICENSEE.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (iv) LICENSEE
shall, at least thirty (30) days prior to granting any sublicense to any
Affiliate or Third Party, identify such Affiliate or Third Party to
LICENSOR.  Concurrent with identifying such Affiliate or Third Parry,
LICENSEE shall provide to LICENSOR a copy of the sublicense
agreement.  Any sublicense shall be granted in a sublicense agreement
that is consistent with the terms of this Agreement and is in form and substance
acceptable to LICENSOR; provided, however, that a sublicense agreement that is
verified by Licensor to contain the relevant provisions of Sections 1, 2B, 3A,
3C, 4D, 4E, 5, 6, 7, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20 and 21 shall
not require the pre-approval of LICENSOR.  In a sublicense agreement,
LICENSEE shall not grant any sublicensee the right to sublicense the Licensed
Patents or Know-how licensed in this Agreement.  LICENSEE shall be
liable to LICENSOR for performance by any sublicensee of such sublicenseers
obligations under the sublicense agreement.  Any sublicense agreement
shall provide for termination or assignment to LICENSOR, at the option of
LICENSOR, of LICENSEE’s interest therein upon the termination of this
Agreement.

     

    (v) If
LICENSEE is unable or unwilling to grant sublicenses, either as suggested by
LICENSOR or a potential sublicensee or otherwise, LICENSOR has the right to
directly license such potential sublicensee unless LICENSEE reasonably satisfies
LICENSOR that the granting of such license or sublicense would result in direct
or indirect competition with Licensed Product(s) sold, marketed, or under active
research and development by LICENSEE or would not materially increase the
availability to the general public of Licensed Products.

     

    (vi) A
nonexclusive, worldwide right to make and use the Technology by LICENSOR solely
for research purposes.

     

    (vii) It is
understood that if the United States Government (through any of its agencies or
otherwise) has funded research, during the course of or under which any of the
inventions of the Licensed Patents were conceived or made, the United States
Government is entitled, as a right, under the provisions of 35 U.S.C. §§200-212
and applicable regulations of Chapter 37 of the Code of Federal Regulations, to
a nonexclusive, nontransferable, irrevocable, paid up license to practice or
have practiced the invention of such Licensed Patents for government
purposes.  Any license granted to LICENSEE in this Agreement will be
subject to such right.

     

    Section
3. Consideration.

     

    A. Development.

     

    LICENSEE
agrees that it will (i) independently evaluate the Licensed Patents; (ii)
establish and actively pursue the development of the Licensed Patents to enable
Licensed Products to be sold and (iii) supply LICENSOR with a written
Development Report within one month following the end of each semi-annual period
ending on June 30 and December 31 during the term of this Agreement until
LICENSEE (a) obtains Regulatory Approvals of Licensed Product(s) for the
treatment of graft-versus-host disease and host-versus-graft disease and (b)
begins international commercial sales of such Licensed
Product(s).  All development activities and all aspects of Licensed
Product design and decisions to market are entirely at the discretion of
LICENSEE, and LICENSEE will rely entirely on its own
expertise.  LICENSOR’s review of LICENSEE’s development plan is solely
to verify the existence of LICENSEE’s commitment to Licensed Product development
activity.

     

    B. License
Fee.

     

    In
partial consideration for the grant of licenses in this Agreement to LICENSEE,
LICENSEE agrees to pay to LICENSOR a nonrefundable license fee of twenty
thousand dollars ($20,000) within seven (7) calendar days of the execution of
this agreement.

     

    C. Royalty.

     

    In
partial consideration for the grant of licenses in this Agreement to LICENSEE
and during the term of this Agreement, LICENSEE agrees to pay the following as
running royalties, which shall not be returnable in any event, to LICENSOR on a
country-by-country basis:

     

    (i) If
LICENSEE does have to conduct Clinical Trials to obtain FDA approval of the
first LICENSEE-sponsored NDA for Licensed Product, then LICENSEE shall pay to
LICENSOR within forty-five (45) days of the end of each Calendar Quarter in an
amount equal to twenty-five percent (25%) of:  (a) any non-recurring
sublicense fees (including, but not limited to, signing, up-front, and lump-sum
fees) and annual license maintenance fees, if any, received from any Affiliate
or Third Party for the right to practice the Licensed Process(es) or make, use,
sell, or import Licensed Product(s); and (b) all royalties received by LICENSEE
from the sale of Licensed Product(s) by any sublicensed Third
Party.

     

    (ii) If
LICENSEE does not have to conduct any Clinical Trials prior to FDA approval of
the first LICENSEE-sponsored NDA for Licensed Product, then LICENSEE shall pay
to LICENSOR within forty-five (45) days of the end of each Calendar Quarter in
an amount equal to thirty-three percent (33%) of:  (a) any
non-recurring sublicense fees (including, but not limited to, signing, up-front,
and lump-sum fees) and annual license maintenance fees, if any, received from
any Affiliate or Third Party for the right to practice the Licensed Process(es)
or make, use, sell, or import Licensed Product(s); and (b) all royalties
received by LICENSEE from the sale of Licensed Product(s) by any sublicensed
Third Party,

     

    (iii) If
LICENSEE does have to conduct Clinical Trials to obtain FDA approval of the
first LICENSEE-sponsored NDA for Licensed Product, then LICENSEE shall pay
LICENSOR within forty-five (45) days from the end of each Calendar Quarter six
percent (6%) of all Net Sales of Licensed Products by LICENSEE or a sublicensed
Affiliate.

     

    (iv) If
LICENSEE does not have to conduct any Clinical Trials prior to FDA approval of
the first LICENSEE-sponsored NDA for Licensed Product, then LICENSEE shall pay
LICENSOR within forty-five (45) days from the end of each Calendar Quarter eight
percent (8%) of all Net Sales of Licensed Products by LICENSEE or a sublicensed
Affiliate.

     

    (v) The
royalty rates in (i), (ii), (iii) and (iv) above shall be reduced by fifty
percent (50%) in any country where a competitor is selling any oral formulation
of the Licensed Product(s) for any indication.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (vi) No
royalty shall accrue on sales among LICENSEE, its sublicensed Affiliates or
sublicensed Third Parties.  Royalties shall only accrue on sales by
LICENSEE, its sublicensed Affiliates or sublicensed Third Parties to parties
other than LICENSEE, its sublicensed Affiliates or sublicensed Third Parties and
shall be payable only once for any given unit of Licensed Product
sold.

     

    (vii) To the
extent that LICENSEE or any Affiliate of LICENSEE is required, by order or
judgment of any court, to obtain in any country any license from a Third Party
in order to practice the rights purported to be granted hereunder to LICENSEE by
LICENSOR under the Third Party’s issued patents in such country, then fifty
percent (50%) of the royalties payable under such license in such jurisdiction
may be deducted from royalties otherwise payable to LICENSOR hereunder, provided
that in no event shall the aggregate royalties payable to LICENSOR in any
Calendar Quarter in such country be reduced by more than fifty per cent (50%) as
a result of any such deduction.

     

    D. Milestone
Payments.

     

    LICENSEE
agrees to pay to LICENSOR three hundred thousand dollars ($300,000) within seven
(7) calendar days of the FDA’s approval of the first LICENSEE-sponsored NDA
incorporating the Technology.

     

    E. Equity
Participation.

     

    (i) In
partial consideration for the grant of licenses in this Agreement to LICENSEE,
LICENSEE shall issue to LICENSOR a number of shares (the “Initial Shares”) of
common stock (the “Common Stock”) of LICENSEE, par value $.001 per share,
representing eight percent (8%) of the outstanding Common Stock as of the date
of execution of the License Agreement, LICENSEE shall issue the Initial Shares
to LICENSOR pursuant to the exemption from registration provided by Section 4(2)
under the Securities Act of 1933, as amended (the “Securities
Act”).  The Initial Shares shall be protected from dilution in
connection with any financing transaction by LICENSEE until such time as
LICENSEE has received at least two million dollars ($2,000,000) in gross
proceeds from the issuance of equity securities of LICENSEE.  LICENSOR
shall be entitled to receive, in partial consideration for the grant of licenses
this Agreement to LICENSEE, additional shares of Common Stock so as to maintain
his respective percentage ownership of LICENSEE immediately prior to the
applicable financing.

     

    (ii) If
LICENSEE does not have to conduct any Clinical Trials prior to FDA approval of
the first LICENSEE sponsored NDA for Licensed Product, then LICENSEE also shall
issue to LICENSOR, in partial consideration for the grant of licenses in this
Agreement to LICENSEE, a number of new shares of Common Stock of LICENSEE equal
to the Initial Shares, which shall have the same dilution protection as the
Initial Shares set forth in E(i) above.

     

    F. Penalty
Payments.

     

    In the
event LICENSEE has not (i) initiated recruitment of patients for a Phase III
Clinical Trial for the Licensed Products, or (ii) initiated the filing of a NDA
within six (6) months of signing this Agreement, LICENSEE shall pay LICENSOR one
hundred thousand dollars ($100,0,00) within seven (7) calendar days of the six
(6) month anniversary of the Effective Date of this Agreement.

     

    G. Payments by
Equity.

     

    (i) Upon the
request of LICENSOR, LICENSEE shall have the obligation to fulfill any of
LICENSEE’s payment obligations due under this Section 3 through the issuance of
an amount of shares of Common Stock equal to the cash value of any such payment
obligation.  Any such issuances of Common Stock shall be made only to
the extent that an exemption from the registration requirements of the
Securities Act exists or the shares are duly registered under the Securities
Act.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (ii) For
purposes of calculating the cash value of the Common Stock under Section 3G(i),
the then-current market price of the Common Stock will be deemed to be the
average closing price of the Common Stock for the ten (10) consecutive trading
days prior to the date on which any payment pursuant to this Section 3 accrues,
on the principal national securities exchange on which the Common Stock is
admitted to trading or listed, or if not listed or admitted to trading on any
such national exchange, then the representative average closing bid price of the
Common Stock as reported by the National Association of Securities Dealers, Inc.
Automated Quotations System (“Nasdaq”) or other similar organization, or, if the
Common Stock is not reported on Nasdaq or by a similar organization, then the
average per share bid price for the Common Stock in the over-the-counter market
as reported by the National Quotation Bureau or similar organization, or if not
so available, then the fair market price of the Common Stock as determined in
good faith by the Board of Directors of LICENSEE.  In connection with
this calculation, LICENSOR, or his representative, shall have access to the
books and records of LICENSEE at any time upon twenty-four (24) hour notice to
LICENSEE.  Such access shall occur during normal business hours of
LICENSEE.

     

    (iii) LICENSEE
agrees that, at any time, and from time to time during the period commencing two
(2) years after the Effective Date hereof, or one (1) year after LICENSEE’S
initial public offering of Common Stock registered under the Securities Act,
whichever is later, and ending on the date that is five (5) years after the
Effective Date hereof, if the Board of Directors of LICENSEE authorizes the
filing of a registration statement under the Securities Act (other than the
initial public offering of LICENSEE’s Common Stock, or a registration statement
on Form S-8, Form S-4 or any other form that does not include substantially the
same information as would be required in a form for the general registration of
securities) in connection with the proposed offer of any of its securities by it
or any of its stockholders, then LICENSEE shall (a) promptly notify LICENSOR
that such registration statement will be filed and that the Common Stock then
held by LICENSOR will be included in such registration statement at LICENSOR’s
request, (b) cause such registration statement to cover all of such Common Stock
issued to LICENSOR and requested for inclusion, (c) use its reasonable best
efforts to cause such registration statement to become effective as soon as
practicable and (d) take all other action necessary under any federal or state
law or regulation of any governmental authority to permit all such Common Stock
that has been issued to LICENSOR and requested by LICENSOR for inclusion in such
proposed registration statement to be sold or otherwise disposed of and shall
maintain such compliance with each such federal and state law and regulation of
any governmental authority for the period necessary to effect the proposed sale
or other disposition of any Common Stock that has been issued to LICENSOR and
requested by LICENSOR for inclusion in the proposed registration
statement.

     

    To the
extent that officers or directors of LICENSEE are permitted to have registered
shares of Common Stock held by any of them included in an initial public
offering of LICENSEE’S Common Stock, LICENSOR shall also have the right to
include the Common Stock then held by LICENSOR in the registration statement
prepared in connection with such an offering.

     

    (iv) In the
event that LICENSEE grants to any investor(s) the right to require LICENSEE to
effect a registration of Common Stock held by such investors, LICENSOR shall
have the right to require LICENSEE to include the Common Stock held by LICENSOR
in any such registration on the same terms applicable to such
investor(s).

     

    a) If the
Common Stock owned by LICENSOR is or becomes freely tradable, then LICENSOR
shall have no right to the above described registration rights.

     

    b) LICENSEE
may at any time, abandon or delay any registration commenced by
LICENSEE.

     

    c) LICENSOR
represents to LICENSEE that the Common Stock will be acquired by LICENSOR for
investment purposes only, for an indefinite period of time, for its own account,
not as a nominee or agent for any other entity, and not with a view to the sale
or distribution of all or any part thereof, and LICENSOR has no present
intention of selling, granting any participation in, or otherwise distributing,
any or all of the Common Stock.  LICENSOR does not have any contract,
undertaking, agreement or arrangement with any entity to sell, transfer or grant
participation to such person, firm or corporation, with respect to any or all of
the Common Stock.

     

    d) LICENSEE
represents to LICENSOR that LICENSEE shall rely on Section 4(2) under the
Securities Act in connection with the issuance of the Initial Shares to
LICENSOR.  In addition, LICENSEE represents to LICENSOR that LICENSEE
shall conduct any further issuances of Common Stock to LICENSOR (under this
Section 3) only in compliance with registration under the Securities Act or an
available exemption from such registration requirements.

     

    e) The
parties agree to execute such further instruments and to take such further
action as may reasonably be necessary to carry out the intent of this Section
3G.

     

    f) LICENSOR
agrees that, in connection with each underwritten public offering of shares of
Common Stock or other equity securities of LICENSEE registered under the
Securities Act by or on behalf of LICENSEE, LICENSOR will not sell or transfer,
or offer to sell or transfer, any equity securities of LICENSEE, to the extent
all officers, directors and greater than five percent (5%) shareholders of
LICENSEE are also subject to this restriction for such period as the managing
underwriter of such offering determines is necessary to effect the underwritten
public offering, not to exceed one hundred and eighty (180) days, and LICENSOR
further agrees that it will sign an agreement as requested by the managing
underwriter of such offering to effect the requirements of this Section
3G(iv)(f).

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Section
4. Certain Warranties of
LICENSOR and LICENSEE.

    
       

    

    A. To
LICENSOR’s knowledge and belief, LICENSOR has all right, title, and interest in
and to the Licensed Patents and Know-How, including exclusive, absolute,
irrevocable right, title and interest thereto, free and clear of all liens,
charges, encumbrances or other restrictions or limitations of any kind
whatsoever and to LICENSOR’s knowledge and belief there are no licenses,
options, restrictions, liens, rights of third parties, disputes, royalty
obligations, proceedings or claims relating to, affecting, or limiting
LICENSOR’s rights licensed to LICENSEE under this Agreement.

     

    B. As of the
Effective Date, to LICENSOR’s knowledge and belief, there is no claim pending or
threatened, of infringement, interference or invalidity regarding any part or
all of the Licensed Patents or the use of the inventions as contemplated in the
underlying patent applications as presently drafted.

     

    C. LICENSOR,
by this License Agreement, makes no representations or warranties as to the
validity and/or scope of the claims contained in the Licensed Patents or that
such Licensed Patents may be exploited by LICENSEE or its sublicensees without
infringing other patents and LICENSEE so acknowledges.

     

    D. EXCEPT AS
MAY BE EXPRESSLY PROVIDED IN THIS SECTION 4, LICENSOR DOES NOT MAKE, AND
EXPRESSLY DISCLAIMS ANY AND ALL WARRANTIES, EITHER EXPRESS OR IMPLIED, ORAL OR
WRITTEN, AS TO ANY OF THE LICENSED PATENTS, KNOW-HOW, OR TECHNOLOGY, INCLUDING
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.

     

    E. LICENSEE
represents and warrants to LICENSOR the following:

     

    (i) LICENSEE
is a corporation duly organized„ validly existing and in good standing under the
laws of the State of New York and has all necessary corporate power to enter
into and perform its obligations under this Agreement.

     

    (ii) The
execution, delivery and performance of this Agreement by LICENSEE have been duly
authorized and approved by all necessary corporate action, and that the
Agreement is binding upon and enforceable against LICENSEE in accordance with
its terms (subject to bankruptcy and similar laws affecting the rights of
creditors generally).

     

    (iii) At all
times during the term of this Agreement, LICENSEE and all its sublicensees will
obtain, maintain and comply with all licenses, permits and authorizations
necessary to LICENSEE’S complete and timely performance of its obligations under
this Agreement, which are required under any applicable statutes, laws,
ordinances, rules and regulations of the United States as well as those of all
applicable foreign governmental bodies, agencies and subdivisions, having,
asserting or claiming jurisdiction over LICENSEE or any sublicensee or
LICENSEE’s sublicensee’s performance of the terms of this
Agreement.  In particular, LICENSEE.

     

    (iv) LICENSEE
will be responsible for obtaining all necessary United States FDA approvals and
all approvals required by similar governmental bodies or agencies of all
applicable foreign countries.

     

    (v) LICENSEE
understands and acknowledges that the transfer of certain commodities and
technical data is subject to United States laws and regulations controlling the
export of such commodities and technical data, including all Export
Administration Regulations of the United States Department of
Commerce.  These laws and regulations, among other things, prohibit or
require a license for the export of certain types of technical data to certain
specified countries.  LICENSEE hereby agrees and gives written
assurance that it will comply with all United States laws and regulations
controlling the export of commodities and technical data, that it will be solely
responsible for any violation of such by LICENSEE or its AFFILIATES or
sublicensees, and that LICENSEE will defend and hold LICENSOR harmless of any
legal action of any nature occasioned by such violation.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Section
5. Record Keeping, Reporting,
Accounting and Payments.

     

    A. LICENSEE
shall report to LICENSOR the date of first sale of each Licensed Product in each
country within thirty (30) days of occurrence.

     

    B. LICENSEE
will keep, maintain and require each of its sublicenses to keep and maintain, in
accordance with generally accepted accounting principles, proper and complete
books and records sufficient to verify the accuracy and completeness of
LICENSEE’s and each sublicensee’s accounting of all sales of Licensed
Product.  The books and records will be preserved for a period not
less than three years after they are created.

     

    C. Amounts
owing to LICENSOR under Section 3C will be paid on a quarterly basis for the
periods ending March 31, June 30, September 30 and December 31, within
forty-five days of the end of the Calendar Quarter.  The balance of
any such amounts that remain unpaid more than thirty days after they are due to
LICENSOR will accrue interest until paid at the rate of one percent (1%) per
month.  In no event, however, will this interest provision be
construed as a grant of permission for any payment delays.

     

    D. All
amounts owing to LICENSOR under this Agreement will be paid in U.S. dollars to
LICENSOR at the address provided in Section 13.  All royalties owing
with respect to Net Sales stated in currencies other than U.S. dollars will be
converted at the rate shown in the Federal Reserve Noon Valuation - Value of
Foreign Currencies on the last day of the Calendar Quarter for which payment is
due or, if the last day is not a business day, the closest preceding business
day.  All amounts payable by LICENSEE to LICENSOR shall be made
without any deduction for conversion or remittance fees or other charges imposed
outside of the United States or any taxes levied on such amounts by non-U.S. tax
authorities, all of which shall be borne by LICENSEE.  LICENSOR shall
pay any conversion or remittance fees or other charges imposed in the United
States or any taxes levied by U.S. tax authorities.

     

    E. With each
payment due under Section 3C, the accounting will be summarized on the form
shown in Appendix A of this Agreement on a country-by-country basis for each
Licensed Product sold by LICENSEE or a sublicensed Affiliate or sublicensed
Third Party.  Such accounting summaries shall be certified as correct
by an officer of LICENSEE and shall include a detailed listing of all deductions
from gross sales and be accompanied by a listing of all payments made by each
sublicensee to LICENSOR.  In the event no payment is owed to LICENSOR,
a statement setting forth that fact will be supplied to LICENSOR and certified
as correct by an officer of LICENSEE.

     

    F. LICENSEE
will take all steps necessary so that LICENSOR may, within thirty (30) days of
LICENSOR’s request, review the books and records at a single U.S. location to
verify the accuracy of LICENSEE’s and each sublicensee’s
accounting.  The review may be performed by any attorney or registered
CPA mutually agreed upon by LICENSOR and LICENSEE with the cost being borne
solely by LICENSOR, upon reasonable notice and during regular business hours and
not more than twice per calendar year.  If a royalty payment
deficiency is determined, LICENSEE will pay the royalty deficiency outstanding
within thirty (30) days of receiving written notice thereof, plus interest on
outstanding amounts as described in Section 5C.  If a royalty payment
deficiency for a calendar year exceeds five percent (5%) of the royalties paid
for any consecutive twelve (12) months, then LICENSEE will be responsible for
paying LICENSOR’s out-of-pocket expenses incurred with respect to such
review.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Section
6. Term and
Termination.

     

    A. If not
terminated sooner pursuant to Sections 2B, 8C, 10B, or the provisions in this
Section 6, this Agreement shall terminate:  (i) on the date of the
last to expire claim contained in the Licensed Patents; or (ii) in the event
that no patent shall issue, upon the expiration of the Orphan Drug status, if
achieved.

     

    B. Subject
to the provisions of the federal bankruptcy laws that limit rights of
termination, if LICENSEE shall become bankrupt, or shall file a petition in
bankruptcy, or if the business of LICENSEE shall he placed in the hands of a
receiver, assignee or trustee for the benefit of creditors, whether by the
voluntary act of LICENSEE or otherwise, this License Agreement shall
automatically terminate.

     

    C. Should
LICENSEE fail to make payment to LICENSOR of royalties due in accordance with
the terms of this Agreement that are not the subject of a bona fide dispute
between LICENSOR and LICENSEE, LICENSOR shall have the right to terminate this
License Agreement within thirty (30) days after giving said notice of
termination unless LICENSEE shall pay to LICENSOR, within the 30-day period, all
such royalties and interest due.  Upon the expiration of the 30-day
period, if LICENSEE shall not have paid all such royalties and interest due, the
rights, privileges and license granted hereunder shall, at the option of
LICENSOR, immediately terminate.

     

    D. Upon any
material breach or default of this Agreement by LICENSEE, other than as set
forth in Section 6C herein above, LICENSOR shall have the right to terminate
this Agreement and the rights, privileges and licenses granted hereunder upon
giving thirty (30) days written notice to LICENSEE.

     

    E. LICENSEE
shall have the right at any time to terminate this Agreement in whole by giving
ninety (90) days notice thereof in writing to LICENSOR.

     

    F. Upon
termination of this Agreement for any reason, nothing herein shall be construed
to release either party from any obligation that matured prior to the effective
date of such termination or obligations under Sections 3, 5, 10, 11, 15, and 16
hereof.  LICENSEE and/or any sublicensee thereof may, however, after
the effective date or such termination and continuing for a period not to exceed
three (3) months thereafter, sell all Licensed Products completed as of the date
of notice of such termination and sell any Licensed Products in the process of
manufacture as of the date of notice of such termination, provided that LICENSEE
shall pay or cause to be paid to LICENSOR the royalties thereon as required by
Article 3 of this License Agreement and shall submit the reports and
certifications required on the sales of Licensed Products outlined in Section 5E
hereof.

     

    G. LICENSOR
shall have the right to terminate this Agreement upon termination of the
Consulting Agreement entered into by and between LICENSOR and LICENSEE that
relates to LICENSOR’s providing consulting services to LICENSEE in connection
with LICENSEE’s business.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Section
7. Binding Effect and
Assignability.

     

    The
rights, benefits, duties and obligations under this Agreement shall inure to,
and be binding upon LICENSOR and LICENSEE and their respective successors,
assigns, and legal representatives, This Agreement and the rights and duties
hereunder may not be assigned by either party without first obtaining the
written consent of the other, which consent will not be unreasonably
withheld.  Any such purported assignment, without the written consent
of the other party, will be null, void and of no effect, Notwithstanding the
foregoing, LICENSEE may assign this Agreement, without the written consent of
LICENSOR, to either (i) a purchaser, merging or consolidating corporation, or
acquirer of substantially all of LICENSEE’s assets or business and/or pursuant
to any reorganization qualifying under section 368 of the internal Revenue Code
of 1986 as amended and may be in effect at such time, or (ii) an Affiliate of
LICENSER

     

    Section
8. Patent
Prosecution.

     

    A. Subject
to the provisions of section 8(C) hereof, LICENSEE, within ninety (90) days from
receipt of appropriate documentation, shall reimburse LICENSOR in the
approximate amount of Six Thousand Eight Hundred Thirty-Three Dollars and Three
Cents ($6,833.03) representing all reasonable out-of-pocket expenses LICENSOR
has incurred for the preparation, filing, prosecution and maintenance of
Licensed Patents for to execution of this Agreement and shall reimburse LICENSOR
for all such future reasonable out-of-pocket expenses within sixty (60) days
from receipt by LICENSEE of appropriate documentation of such expenses by
LICENSOR.

     

    B. LICENSOR
shall diligently prosecute and maintain the Licensed Patents as set forth
Section 1 hereof and Appendix I (as the same may be amended or supplemented from
time to time after the Effective Date), utilizing such patent counsel as
LICENSOR is using as of the Effective Date of this Agreement or patent counsel
as may be mutually agreed upon by the parties hereto.  LICENSOR agrees
to keep LICENSEE reasonably well informed with respect to the status and
progress of any such applications, prosecutions and maintenance activities,
including consulting in good faith with LICENSEE and taking into account
LICENSEE’s comments and requests with respect thereto.  Both parties
agree to provide reasonable cooperation to each other to Facilitate the
application and prosecution 01-patents pursuant to this Agreement.

     

    C. LICENSEE
may, in its discretion, elect to not reimburse LICENSOR for reasonable
out-of-pocket expenses of patent prosecution set forth in Section 8B, in which
case LICENSEE shall provide LICENSOR with at least ninety (90) days notice
thereof and LICENSOR shall have the right to treat such notice as a notice of
termination of this Agreement under Section 6E hereof.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Section
9. Infringement and Other
Actions.

     

    A. LICENSEE
and LICENSOR shall promptly provide written notice, to the other party, of any
alleged infringement by a Third Party of the Licensed Patents and provide such
other party with any available evidence of such
infringement.  LICENSOR and the officers of LICENSEE shall confer to
determine in good faith an appropriate course of action to enforce such Licensed
Patents or other wise abate the infringement thereof.  LICENSEE and
LICENSOR shall promptly provide written notice, to the other party, of any
potential or actual declaratory judgment challenge to the Licensed Patents and
shall confer to determine in good faith an appropriate course of action in
response to such challenge.

     

    B. During
the term of this Agreement, LICENSEE will have the right, but not the obligation
at its own expense and utilizing counsel of its choice, to prosecute any
infringement of and/or defend any declaratory judgment challenge to, the
Licensed Patents.  In furtherance of such right, LICENSOR hereby
agrees that LICENSEE may join LICENSOR as a party in any such suit, without
expense to LICENSOR, No settlement, consent judgment or other voluntary final
disposition of any such suit that would adversely affect the rights of LICENSOR
may be entered into without the written consent of LICENSOR, which consent shall
not be unreasonably withheld.  LICENSEE will indemnify and hold
LICENSOR harmless against any and all damages, settlements, costs, expenses,
penalties, tines or liability (including, without limitation, reasonable
attorneys’ fees) that may be found or assessed against LICENSOR in any such suit
other than those resulting from LICENSOR’s gross negligence or willful
misconduct,

     

    C. Any
recovery, award or damages for infringement or other moneys derived by LICENSEE
in any suit under Section 9B, whether by judgment or settlement, shall be
applied first in satisfaction of any unreimbursed expenses and legal fees of
LICENSEE relating to the suit and then to LICENSOR for any royalties credited in
accordance with Section 9D.  The balance remaining from any such
recovery will be treated as royalties received by LICENSEE from a sublicensee
and shared by LICENSOR and LICENSEE in accordance with Section 3C(i)
hereof.

     

    D. LICENSEE
may credit up to fifty percent (50%) of any out-of-pocket litigation costs
incurred by LICENSEE in any country pursuant to Section 9B against royalties
thereafter payable to LICENSOR hereunder for such country and apply the same
toward one-half of its actual, reasonable out-of-pocket litigation
costs.  If fifty percent (50%) of such out-of-pocket litigation costs
in such country exceeds fifty percent (50%) of royalties payable to LICENSOR for
such country in any year in which such costs are incurred, then the portion of
the fifty percent (50%) of the out-of-pocket litigation costs in excess of’ such
fifty percent (50%) of the royalties payable will be carried over and credited
against royalty payments in future years for such country.

     

    E. If within
two (2) months after receiving notice of any alleged infringement of the
Licensed Patents, LICENSEE has not notified in writing LICENSOR of LICENSEE’S
intended action, or if LICENSEE notifies LICENSOR at any time prior thereto, of
its intention not to bring suit against the alleged infringer or to defend the
Licensed Patents in a declaratory judgment action, then, and in those events
only, LICENSOR will have the right, but not the obligation, at its own expense
and utilizing counsel of its choice, prosecute any infringement of, and/or
defend any declaratory judgment challenge to, the Licensed
Patents.  LICENSOR may, for such purposes, join LICENSEE as a party
plaintiff.  LICENSOR will keep any recovery, award or damages for
infringement or other moneys derived therefrom, whether by judgment or
settlement, and such will not be applicable to any royalty obligation of
LICENSEE.

     

    F. In any
suit to enforce and/or defend the Licensed Patents pursuant to this Section 9,
the party not in control of such suit shall, at the request and expense of the
controlling party, cooperate in all respects and, to the extent possible, have
its employees testify when requested and make available relevant records,
papers, information, samples, specimens, and the like.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Section
10. Product Liability; Conduct
of Business.

     

    A. LICENSEE
will, at all times during the term of this Agreement and thereafter, indemnify,
defend and hold LICENSOR, his successors and assigns, harmless from and against
all liabilities, damages, losses, settlements, claims, actions, suits,
penalties, fines, costs or expenses, including without limitation, legal
expenses and reasonable attorneys fees (any of the foregoing, a “Claim”)
incurred by or asserted against LICENSOR, his successors and assigns of whatever
kind or nature, including, without limitation, any Claim based upon negligence,
warranty, strict liability, violation of government regulation, arising from or
occurring as a result of (i) the use of the Technology by LICENSEE or any of its
Affiliates, agents or sublicensees or (ii) the production, manufacture, sale,
use, consumption or advertisement of Licensed Product(s) or the practice of
Licensed Process(es), except to the ex-tent such Claims are the result of
LICENSOR’s gross negligence or willful misconduct No settlement, consent
judgment or other voluntary final disposition of any such Claim may be entered
into without the written consent of the LICENSOR, which consent shall not be
unreasonably withheld.  LICENSOR at all times reserves the right to
select and retain, at LICENSOR’s sole expense, counsel of its own to defend
LICENSOR’s interests,

     

    B. No later
than the earlier of (i) testing or use of Licensed Product in human subjects or
(ii) sale of a Licensed Product, LICENSEE shall obtain and maintain product
liability insurance policies in amounts acceptable to LICENSOR and have LICENSOR
named as an additional insured on such policies.  LICENSEE shall
provide LICENSOR with evidence of such coverage at least ten (10) days before
the commencement of the earlier of (i) or (ii) of this Section 10B and from time
thereafter upon LICENSOR’s request.  If LICENSOR’s insurance costs can
be shown to have increased solely because of this Agreement, and such increases
are verified by an independent certified public accountant, LICENSEE shall
reimburse LICENSOR for such increase within thirty (30) days of receiving
written notice from LICENSOR requesting such reimbursement.  If
LICENSEE does not reimburse LICENSOR, LICENSOR shall have the right to terminate
this Agreement thirty (30) days after written notice of termination unless
LICENSEE shall reimburse LICENSOR within the 30-day period.  This
Section 10B shall survive any termination of this Agreement.

     

    Section
11. Use of
Names.

     

    Nothing
contained in this Agreement shall be construed as granting any right to LICENSEE
or its Affiliates to use in advertising, publicity, or other commercial or
promotional activities any name, trade name, trademark, or other designation of
LICENSOR (including contraction, abbreviation or simulation of any of the
foregoing) without the prior written consent of LICENSOR; provided, however,
that LICENSOR acknowledges and agrees that LICENSEE may use the names of
LICENSOR in various documents used by LICENSER for capital raising and financing
without such prior written consent or where the use of such names may be
required by law.

     

    Section
12. Independent Contractor
Status.

     

    The
parties to this Agreement recognize and agree that each is operating as an
independent contractor and nothing herein shall be deemed to establish a
relationship of principal and agent between LICENSOR and LICENSEE, nor any of
their agents or employees for any purpose whatsoever.  This Agreement
shall not be construed as creating a partnership or joint venture between
LICENSOR and LICENSEE, or as creating any other form of legal association or
arrangement that would impose liability upon one party for the act or failure to
act of the other party.

     

    Section
13. Notices.

     

    Any
notice required to be given pursuant to the provisions of this Agreement will be
in writing and will be deemed to have been given at the earlier
of:  when delivered personally against receipt therefor; one (1) day
after being sent by Federal Express or similar overnight delivery; or three (3)
days after being mailed registered or certified mail, postage prepaid, to a
party hereto at the address set forth below, or to such other address as such
party shall give by notice hereunder to the other party to this
Agreement

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    If to
LICENSOR:

     

    George B.
McDonald, M.D.

     

    1815
102nd Place,
S.E.

     

    Bellevue,
WA 98004

     

    Phone:  425-453-9936

     

    If to
LICENSEE:

     

    Enteron
Pharmaceuticals, Inc.

     

    787
Seventh Avenue, 48th
Floor

     

    New York,
NY 10019

     

    Attn:  Baruch
Runner, M.D.

     

    Phone:  212-554-4543

     

    Fax:  212-554-4338

     

    Section
14. Governing Law and
Severability.

     

    This
Agreement will be construed in accordance with the laws of the State of New
York.  If any provisions of this Agreement conflicts with the laws or
regulations of any jurisdiction or any governmental entity having jurisdiction
over the parties or this Agreement, those provisions will he deemed
automatically waived in that jurisdiction but shall not affect the validity,
legality or enforceability of such provision in any other
jurisdiction.  If the waiver is allowed by relevant law, the remaining
terms and conditions of this Agreement will remain in full force and
effect.  If a waiver is not so allowed or if a waiver leaves terms and
conditions clearly illogical or inappropriate in effect, the parties agree to
substitute new terms as similar in effect to the present terms of this Agreement
as may be allowed under the applicable laws and regulations.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Section
15. Confidentiality.

     

    A. LICENSEE
and LICENSOR agree that they will not use the Confidential Information for any
purpose unrelated to this Agreement, and will hold it in confidence during the
term of this Agreement and for a period of five (5) years after the termination
or expiration date of this Agreement.  Each party will exercise with
respect to such Confidential Information the same degree of care as that party
exercises with respect to its own confidential or proprietary information of a
similar nature, and will not disclose it or permit its disclosure to any Third
Party (except to those of its employees, consultants, agents, Third Party
sublicensees and potential sublicensees, and Affiliates who are bound by the
same obligation of confidentiality as the party is bound by pursuant to this
Agreement and who need the Confidential Information to carry out the purposes of
this Agreement).  However, such undertaking of confidentiality will
not apply to any information or data that:

     

    (i) was known
to receiving parry prior to the receipt of the Confidential Information; or is
developed independently without breach of this Agreement by the receiving
party;

     

    (ii) becomes
known to the public not as a result of any action or inaction by the receiving
party;

     

    (iii) receiving
party receives at any time from a Third Party who is lawfully in possession of
same and has the right to disclose same; or

     

    (iv) is
required to be disclosed by law, regulation or order in a judicial or
administrative proceedings, provided that the receiving party, to the fullest
extent permitted or reasonably feasible under the circumstances, shall have
secured confidential treatment of the Confidential Information
disclosed.

     

    B. Notwithstanding
the provisions of Section 15A hereof, a party may, to the extent necessary,
disclose and use Confidential Information disclosed to it by the other
party:

     

    (i) for
purposes of securing institutional or government approval to clinically test or
market any Licensed Product(s) or practice any Licensed Process(es), provided
that the party that originally disclosed the Confidential Information shall have
been notified of such disclosure; or

     

    (ii) where the
disclosure and use of the Confidential Information will be useful or necessary
to the application or prosecution of patents for any Licensed Process(es),
Licensed Product(s), or Technology, provided that the party that originally
disclosed the Confidential Information shall have been notified of such
disclosure.

     

    (iii) where the
disclosure and use of the Confidential Information is in the opinion of outside
counsel for the Company, required for financial reporting and disclosure under
applicable securities laws.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Section
16. Mediation and
Arbitration.

     

    If any
dispute arises from or relating to this Agreement, the parties must submit the
dispute to mediation in Seattle, Washington, by a sole mediator who is selected
by the parties or, at any time, to mediation by the American Arbitration
Association (“AAA”).  If not thus resolved, the dispute will be
determined before a sole arbitrator selected by the parties or in accordance
with the rules of the AAA.  The arbitration shall be in Seattle,
Washington, and governed by the Federal Arbitration Act.  The
requirement for mediation and arbitration shall not be deemed a waiver of any
right of termination under this Agreement and the arbitrator is not empowered to
act or make any award other than based solely on the rights and obligations of
the parties prior to any such termination.  The arbitrator shall not
limit, expand or modify the terms of the Agreement nor award damages in excess
of compensatory damages, and each party waives any claim to such excess
damages.  Any arbitration award made (i) shall be a bare award limited
to, a holding for or against a party and affording such remedy as is deemed
equitable, just and within the scope of this Agreement; (ii) shall be without
findings as to issues (including, but not limited to patent validity and/or
infringement); (iii) may in appropriate circumstances (other than patent
disputes) include injunctive relief; (iv) shall be made within four (4) months
of the appointment of the arbitrator and (v) may be entered by any court of
competent jurisdiction.  A request by a party to a court for interim
protection shall not affect either party’s obligation hereunder to mediate or
arbitrate.  Each party shall bear its own expenses and an equal share
of all cost and fees of the mediation and/or arbitration.  Any
arbitrator selected shall be competent in the legal and technical aspects of the
subject matter of this Agreement.  The existence, content and result
of mediation and/or arbitration shall be held in confidence by all participants,
each of whom shall be bound by an appropriate confidentiality
agreement.

     

    Section
17. Integration and
Modification.

     

    This
Agreement constitutes the full understanding between the parties with reference
to the subject matter hereof, and no statements or agreements by or between the
parties, whether orally or in writing, made prior to or at the signing hereof,
will vary or modify the written terms of this Agreement.  Neither
party can claim any amendment, modification, or release from any provisions of
this Agreement by mutual agreement, acknowledgment, or otherwise, unless such
mutual agreement is in writing, signed by the other party, and specifically
states that it is an amendment to this Agreement.

     

    Section
18. Non-Waiver.

     

    The
failure of either party to insist upon the strict performance of any of the
terms, conditions and provisions of this Agreement shall not he construed as a
waiver or relinquishment of future compliance therewith, and said terms,
conditions and provisions shall remain in full force and effect.  No
waiver of any term or condition of this Agreement on the part of either party
shall be effective for any purpose whatsoever unless such waiver is in writing
and signed by such party.

     

    Section
19. Remedies For Breach of
Confidentiality.

     

    A. The
parties agree that any breach of Section 15 of this Agreement by either
LICENSOR, or LICENSEE could cause irreparable damage to the non-breaching party,
and that monetary damages alone would not be adequate and, if such breach or
threat of breach occurs, the non-breaching party shall have, in addition to any
and all remedies at law and without the posting of a bond or other security, the
right to an injunction, specific performance or other equitable relief necessary
to prevent or redress the violation of the confidentiality obligations of
Section 15..  If a proceeding is brought in equity to enforce Section
15, the breaching party shall not urge as a defense that there is an adequate
remedy at law nor shall the non-breaching parry be prevented from seeking any
other remedies that may be available to it,

     

    B. If either
party is required to bring suit or otherwise seek enforcement of its rights
under Sections 15 and 19 hereof, the prevailing parry in any such action or
proceeding shall be entitled to recover reasonable attorneys’ fees and expenses
incurred in such action or proceeding.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Section
20. Headings.

     

    The
headings of the sections are inserted for convenience of reference only and
shall not affect any interpretation of this Agreement.

     

    Section
21. Contract Formation and
Authority.

     

    A. No
agreement between the parties exists unless a duly authorized representative of
LICENSEE and of LICENSOR have signed this document.

     

    B. The
persons signing on behalf of LICENSOR and LICENSEE warrant and represent that
they have authority to execute this Agreement on behalf of the party for whom
they have signed.

     

    IN
WITNESS WHEREOF, the parties hereto have duly executed this Agreement on the
dates indicated below.

     

    George
B. McDonald, M.D.

     

    /s/ George B.
McDonald                                                                Date:    November
23,
1998                                                                

     

    LICENSEE

     

    

     

    ENTERON
PHARMACEUTICALS, INC.

     

    
      	
              By:
      /s/ Steve H.
      Kanzer

            	
              Date:
        November
      24, 1998

            	 	 

    

     

    
      	
               
      

            	
              Steve
      H. Kanzer, Chairman

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    APPENDIX
A

     

    ROYALTY
REPORT

     

    LICENSEE:                                                                Agreement No.:

     

    Inventor:                                                      Technology:

     

    Period
Covered:  From      /  /
1999                                                                           Through:   /  /
199

     

    Prepared
By:                                                                Date:

     

    Approved
By:                                                                Date:

     

    If
license covers several major product lines, please prepare a separate report for
each line.

     

    Then
combine all product lines into a summary report.

     

    Report
Type:                                                      Single Product Line
Report:

     

     Multiproduct Summary
Report.  Page 1
of                                                                                                           
Pages

     

     Product Line
Detail.  Line:                                                                             Tradename:                                             Page:

     

    Report
Currency:                                                                            U.S.
Dollars                                            Other

     

    
      	 
      	
              Gross

            	
              *
      Less:

            	
              Net

            	
              Royalty

            	
              Period
      Royalty Amount

            
	
              Country

            	
              Sales

            	
              Allowances

            	
              Sales

            	
              Rate

            	
              This
      Year

            	
              Last
      Year

            
	
              U.S.A.

            	 
      	 
      	 
      	 
      	 
      	 
      
	
              Canada

            	 
      	 
      	 
      	 
      	 
      	 
      
	
              Europe:

               

            	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
              Japan

               

            	 
      	 
      	 
      	 
      	 
      	 
      
	
              Other:

               

            	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
              TOTAL:

            	 
      	 
      	 
      	 
      	 
      	 
      

    

    Total
Royalty:                                 Conversion
Rate:                                                      
Royalty in U.S Dollars:  $

     

    * Provide
a detailed listing of all deductions from Gross Sales.

     

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    APPENDIX
B

     

    DEVELOPMENT
REPORT

     

    Development
Report (4-8 paragraphs) including time period covered by this
report.

     

    
      	
              1.  

            	
              Pertinent
      information since last report including progress of the research and
      development and completed results.

            

    

     

    
      	
              2.  

            	
              Activities
      currently under investigation and projected date of
      completion.

            

    

     

    
      	
              3.  

            	
              Status
      of regulatory compliance, approvals and permits or licenses for using
      Licensed Product(s) for the prevention and treatment of graft-versus-host
      disease and host-versus-graft
disease.

            

    

     

    Future
Development Activities (4-8 paragraphs).

     

    
      	
              1.  

            	
              Activities
      to be undertaken before next report and their projected starting and
      completion dates.

            

    

     

    
      	
              2.  

            	
              Estimated
      total development time remaining before Licensed Product(s) will be
      commercialized for the prevention and treatment of graft-versus-host
      disease and host-versus-graft
disease.

            

    

     

    Changes
to initial development plan (2-4 paragraphs).

     

    
      	
              3.  

            	
              Reasons
      for change.

            

    

     

    
      	
              4.  

            	
              Variables
      that may cause additional changes.

            

    

     

    Items to
be provided if applicable:

     

    
      	
              5.  

            	
              Information
      relating to Licensed Product(s) that has become publicly available, e.g.,
      published articles, competing products, patents,
  etc.

            

    

     

    
      	
              6.  

            	
              Descriptions
      and result of any research or development work being performed by Third
      Parties or Affiliates (including name of such Third Party or Affiliate and
      reasons for use of Third Parties or Affiliates) and planned future uses of
      Third Parties or Affiliates (including name of such Third Parties or
      Affiliates, reasons for use of Third Parties or Affiliates, and
      description of type of work).

            

    

     

    
      	
              7.  

            	
              Update
      of each of the following:  competitive information trends in
      industry, sublicensing activity, changes in government compliance
      requirements (if applicable) and market
plan.

            

    

     

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    APPENDIX
C

     

    DEVELOPMENT
PLAN

     

    The plan
should provide LICENSOR with an overview of the activities that LICENSEE
believes arc necessary to bring Licensed Products to the marketplace
worldwide.  Include estimated start date and completion date for each
item.

     

    
      	
              I.  

            	
              Development
      program for international Regulatory Approvals and sales of Licensed
      Product(s) for the prevention and treatment of graft-versus-host disease
      and host-versus-graft disease.

            

    

     

    
      	
              A.  

            	
              Development
      activities to be undertaken, including major
  milestones.

            

    

     

    1.

     

    2.

     

    
      	
              B.  

            	
              Estimated
      Total Development Time

            

    

     

    
      	
              II.  

            	
              Governmental
      approvals, if required, including types of submissions required by each
      government agency (e.g. FDA, EPA,
etc.).

            

    

     

    
      	
              III.  

            	
              Proposed
      marketing approach for international sales of Licensed Product(s) for the
      prevention and treatment of graft-versus-host disease and
      host-versus-graft disease.

            

    

     

    
      	
              IV.  

            	
              Competitive
      information including potential competitors, potential competitive devices
      or compositions, developments, technical achievements, anticipated dates
      of LICENSEE’s and competitor’s respective products launches for the
      prevention and treatment of graft-versus-host disease, host-versus-graft
      disease or other diseases.

            

    

     

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    APPENDIX
D

     

    KNOW-HOW

     

    
      	
              1.

            	
              IND#
      20,212

            

    

     

    
      	
               
      

            	
              Oral
      Formulations of Beclomethasone Dipropionate for the treatment of
      inflammatory, diseases of the intestinal
tract.

            

    

     

    
      	
              2.

            	
              Orphan
      Drug Designation Application
#98-1111

            

    

     

    
      	
               
      

            	
              FDA’s
      acknowledgment of an orphan drug designation for oral administration of
      beclomethasone dipropionate for the treatment of intestinal
      graft-versus-host disease is attached hereto as “Appendix
      D—Attachment.”

            

    

     

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    APPENDIX
I

     

    LICENSED
PATENTS

     

    
      	
              1.

            	
              U.S.
      Patent Application Serial Number 09/103,762, entitled “Method for
      preventing tissue damage following hematopoietic cell transplantation” and
      filed June 24, 1998.

            

    

     

    
      	
              2.

            	
              U.S.
      Patent Application Serial Number 09/151,388, entitled “Method for
      preventing tissue damage associated with graft-versus-host or
      host-versus-graft disease following transplantation” and filed September
      10, 1998.collaborationagreementst.htm

    EXHIBIT
10.43

    EXECUTED VERSION

    Portions of
this Exhibit have been omitted pursuant to a request for confidential treatment.

    The omitted
portions are marked ***** and have been filed separately with the
Commission

     

    COLLABORATION
AND SUPPLY AGREEMENT

     

    This
COLLABORATION AND SUPPLY AGREEMENT (this “AGREEMENT”) is made and entered into
as of February 11, 2009 (the “EFFECTIVE DATE”).

     

    by and
between

     

    DOR BioPharma Inc., a Delaware
corporation having its principal office at 850 Bear Tavern Road, Suite 201,
Ewing, New Jersey 08628 (the “COMPANY”), and Enteron Pharmaceuticals, Inc.,
a wholly owned subsidiary of the COMPANY, (“ENTERON”, and together with the
COMPANY, “DOR”), each

     

    and

     

    SIGMA-TAU Pharmaceuticals,
Inc., a Nevada corporation having its principal office at 9841
Washingtonian Blvd., Suite 500, Gaithersburg, MD 20878 (hereinafter referred to
as “STPI”).

     

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

    
      	
              WHEREAS,

            	
              DOR
      has developed and is developing, through its research activities,
      Beclomethasone Dipropionate (orBec®)
      and owns and/or controls the related KNOW-HOW and PATENT RIGHTS (as
      hereinafter respectively defined in Article 1);
  and

            

    

     

    
      	
              WHEREAS,

            	
              DOR
      and STPI signed on January 3, 2007 a Letter of Intent and on November 26,
      2008 a Letter of Intent, each of which is related, inter alia, to
      Beclomethasone Dipropionate (orBec®),
      both of which are superseded by this AGREEMENT;
  and

            

    

     

    
      	
              WHEREAS,

            	
              STPI
      desires to obtain from DOR the right to market, distribute and sell the
      PRODUCT and AG PRODUCT in the FIELD in the TERRITORY (as hereinafter
      respectively defined in Article 1);
and

            

    

     

    
      	
              WHEREAS,

            	
              DOR
      is willing to grant to STPI such rights in the TERRITORY, under the terms
      and conditions hereinafter set forth;
and

            

    

     

    
      	
              WHEREAS,

            	
              both
      DOR and STPI are interested in the further development of Beclomethasone
      Dipropionate in all therapeutic areas, diseases or conditions and in the
      commercial exploitation of the results of such further
      development.

            

    

     

    
      
        CONFIDENTIAL

      

      
        
        

        
          

        

      

      
         

      

    

    NOW, THEREFORE, in
consideration of the foregoing premises and of the mutual covenants of the
parties hereinafter contained, the parties hereto agree as follows:

     

    
      	
              1
      -  

            	
              DEFINITIONS

            

    

     

    The
following terms as used in this AGREEMENT have the meanings set forth
below:

     

    
      	
              1.1  

            	
              “AFFILIATED COMPANIES” or
      “AFFILIATES”
      means: (i) an organization more than fifty percent (50%) of the voting
      stock of which is owned and/or controlled directly or indirectly by either
      party; (ii) an organization which directly or indirectly owns and/or
      controls more than fifty percent (50%) of the voting stock of either
      party; (iii) an organization which is directly or indirectly under common
      control of either party through common
  shareholdings.

            

    

     

    
      	
              1.2  

            	
              “AGENCY” means any
      regulatory authority, including the FDA, responsible for granting any
      marketing registration or pricing approval, if applicable, necessary so
      the PRODUCT and AG PRODUCT may be marketed and sold in the
      TERRITORY.

            

    

     

    
      	
              1.3  

            	
              “AG PRODUCT” means a
      generically-labeled version of the PRODUCT (i.e., such
      product does not bear the TRADEMARK) supplied by DOR and sold by STPI
      and/or its sub-distributors or permitted
  sublicensees.

            

    

     

    
      	
              1.4  

            	
              “AGREEMENT” has the
      meaning set forth in the introductory
paragraph.

            

    

     

    
      	
              1.5  

            	
              “APPROVAL” or “APPROVED” means all
      necessary approvals granted by the appropriate AGENCY for any country in
      the TERRITORY for the manufacture, sale and distribution of the PRODUCT
      and AG PRODUCT for an indication(s), which may include the FDA for the
      U.S.

            

    

     

    
      	
              1.6  

            	
              “APPROVED NEW INDICATION”
      means a NEW INDICATION that, pursuant to Article 5.2, each of the parties,
      in its sole discretion, has agreed to
develop.

            

    

     

    
      	
              1.7  

            	
              “ARBITRATOR” has the
      meaning set forth in Appendix C.

            

    

     

    
      	
              1.8  

            	
              “cGMP” means the current
      standards for the manufacture of drugs, as set forth in the U.S. Food,
      Drug and Cosmetics Act and applicable FDA regulations (including 21 C.F.R.
      Parts 210 and 211) and guidances promulgated thereunder, as amended from
      time to time.

            

    

     

    
      	
              1.9  

            	
              “CODE” has the meaning
      set forth in Article 15.2.

            

    

     

    
      	
              1.10  

            	
              “COMMERCIALIZATION” or “COMMERCIALIZE” means any
      and all activities directed to the distribution, promotion, offer for sale
      and sale of an APPROVED PRODUCT and AG PRODUCT, including marketing,
      promoting, detailing, distributing, offering to sell and selling,
      importing for sale, conducting post-marketing human clinical studies and
      interacting with any AGENCY regarding the foregoing.  For the
      avoidance of doubt, the term “Commercialization” or “Commercialize” does
      not include the right to manufacture or use.  When used as a
      verb, “to Commercialize” and “Commercializing” means to engage in
      Commercialization and “Commercialized” has a corresponding
      meaning.

            

    

     

    
      	
              1.11  

            	
              “COMPANY” has the meaning
      set forth in the introductory
paragraph.

            

    

     

    
      	
              1.12  

            	
              “CONFIDENTIAL
      INFORMATION” has the meaning set forth in Article
    3.3.

            

    

     

    
      	
              1.13  

            	
              “CONTROL” means
      possession of the ability, whether by ownership or license, to grant a
      license or sublicense as provided for herein without violating the terms
      of any agreement, securing consent or other arrangements with any third
      party.

            

    

     

    
      
        CONFIDENTIAL

      

      
        2

        
          

        

      

      
         

      

    

    
      	
              1.14  

            	
              “DEVELOPMENT PLAN” means
      the schedule, attached hereto as Appendix A describing all future
      activities, relevant budget and timelines related to the development of
      the PRODUCT for the treatment of GI GVHD, including the preclinical,
      safety, clinical, technical, manufacturing (CMC) and regulatory
      development of the PRODUCT.

            

    

     

    
      	
              1.15  

            	
              “DILIGENT EFFORTS” means,
      with respect to a party, the carrying out of obligations in a diligent and
      sustained manner  using efforts not less than the efforts that a
      US based pharmaceutical company of similar size to such party devotes to a
      product of similar market potential, profit potential or strategic value
      resulting from its own research efforts, based on conditions then
      prevailing, but excluding consideration of any obligation to the other
      party under this AGREEMENT but in no event less than the efforts of a US
      based pharmaceutical company of similar size to such
      party.  DILIGENT EFFORTS requires, inter alia, that each
      party:  (i) promptly assign responsibility for such obligations
      to specific employee(s) who are held accountable for progress and monitor
      such progress on an on-going basis, (ii) set and consistently seek to
      achieve specific and meaningful objectives for carrying out such
      obligations, and (iii) consistently make and implement decisions and
      allocate resources designed to advance progress with respect to such
      objectives.

            

    

     

    
      	
              1.16  

            	
              “DISCLOSING PARTY” has
      the meaning set forth in Article
3.3.

            

    

     

    
      	
              1.17  

            	
              “DOR” has the meaning set
      forth in the introductory
paragraph.

            

    

     

    
      	
              1.18  

            	
              “EFFECTIVE DATE” has the
      meaning set forth in the introductory
paragraph.

            

    

     

    
      	
              1.19  

            	
              “ENTERON” has the meaning
      set forth in the introductory
paragraph.

            

    

     

    
      	
              1.20  

            	
              “ESTIMATED QUANTITIES”
      has the meaning set forth in Article
8.2.

            

    

     

    
      	
              1.21  

            	
              “EUROPEAN TERRITORY”
      means Austria, Belgium, Cyprus, Czech Republic, Denmark, Estonia, Finland,
      France, Germany, Greece, Hungary, Ireland, Italy (including the Republic
      of San Marino and the Vatican City), Latvia, Lithuania, Luxembourg, Malta,
      Poland, Portugal, Slovakia, Slovenia, Spain, Sweden, The Netherlands and
      the United Kingdom, as well as any other country entering the European
      Union, Iceland, Norway and Switzerland (including
      Liechtenstein).

            

    

     

    
      	
              1.22  

            	
              “EXECUTIVE COMMITTEE” has
      the meaning set forth in Article
4.3.

            

    

     

    
      	
              1.23  

            	
              “FDA” means the United
      States Food and Drug Administration and any successor agency
      thereto.

            

    

     

    
      	
              1.24  

            	
              “FIELD” means the
      diagnosis, treatment and/or prevention of any and all diseases and
      conditions.

            

    

     

    
      	
              1.25  

            	
              “FIRM ORDER” has the
      meaning set forth in Article 8.3.

            

    

     

    
      	
              1.26  

            	
              “FIRST COMMERCIAL SALE”
      shall mean the first commercial sale by STPI or any of its AFFILIATES or
      its distributors of a PRODUCT to an independent third party in the
      TERRITORY.  A sale or transfer which is not for value, including
      for clinical trial purposes, shall not constitute a FIRST COMMERCIAL
      SALE.

            

    

     

    
      	
              1.27  

            	
              “FIRST PRODUCT” means the
      PRODUCT for the treatment of GI GVHD in
humans.

            

    

     

    
      	
              1.28  

            	
              “FIXED COMPONENT” has the
      meaning set forth in Appendix C.

            

    

     

    
      	
              1.29  

            	
              “FULLY BURDENED MANUFACTURING
      COST” means with respect to the PRODUCT and AG PRODUCT the
      fully-burdened cost of manufacturing, assembling, filling, and secondary
      packaging of the PRODUCT and AG PRODUCT packaged for shipment to the
      receiving party expressed on a per unit manufactured basis, including the
      cost of:

            

    

     

    
      	
              1.29.1  

            	
              material,
      excipients, primary and secondary packaging and labeling material,
      and

            

    

     

    
      	
              1.29.2  

            	
              direct
      labor of supplying party employees (including basic wages, labor and
      related payroll taxes and benefits) incurred or spent in the actual
      production, filling, packaging and labeling of the PRODUCT and AG PRODUCT,
      including for reasonable and normal quality assurance, purchasing and
      manufacturing facility operations,
and

            

    

     

    
      	
              1.29.3  

            	
              overhead
      of supplying party (including operating expenses, indirect labor and
      related payroll taxes and benefits, depreciation, taxes, insurance, rent,
      repairs and maintenance, and supplies) incurred or spent in support of the
      actual production, filling, packaging and labeling of the PRODUCT and AG
      PRODUCT, but not for any cost of any unused manufacturing capacities that
      supplying party or its third party sub-contract manufacturer may have in
      excess of the requirements contained in the forecasts provided by
      receiving party in connection with this AGREEMENT,
  and

            

    

     

    
      	
              1.29.4  

            	
              interim
      transportation, or any related transportation cost including tertiary
      packaging and storage of the PRODUCT and AG PRODUCT (for greater clarity,
      such storage cost does not include the cost of inventory) or any part
      thereof as incurred or spent by supplying party in connection with the
      supply of the PRODUCT and AG PRODUCT pursuant to the terms of this
      AGREEMENT, and

            

    

     

    
      	
              1.29.5  

            	
              any
      third party sub-contract manufacturer as invoiced to supplying
      party.  Supplying party shall provide to receiving party (within
      one month of the EFFECTIVE DATE) the prices in effect for each
      sub-contract manufacturer.

            

    

     

    For the
avoidance of doubt, the term “Fully Burdened Manufacturing Cost” does not
include any so called “profit margin” for DOR, such profit margin on the sale of
PRODUCT to STPI being represented by the PERCENTAGE COMPONENT as set forth in
Appendix C attached hereto.

     

    
      
        CONFIDENTIAL

      

      
        3

        
          

        

      

      
         

      

    

    
      	
              1.30  

            	
              “GENERIC COMPETITION”
      shall exist for a given PRODUCT when a GENERIC PRODUCT with the same
      labeled indication as the PRODUCT COMMERCIALIZED by STPI in a given
      country of the TERRITORY enters the market and the NET SALES of the
      PRODUCT during any three (3) month rolling period are at least ten percent
      (10%) lower than the amount of NET SALES of that PRODUCT in that same
      country during the three (3) month period preceding the APPROVAL of such
      GENERIC PRODUCT (in terms of US Dollar, or equivalent legal currency of
      the given country).

            

    

     

    
      	
              1.31  

            	
              “GENERIC PRODUCT” means
       a product that is APPROVED by an AGENCY (or successor agency) that
      contains the SUBSTANCE or salts or esters of the SUBSTANCE and utilizes
      the same route of administration as the
PRODUCT.

            

    

     

    
      	
              1.32  

            	
              “GI GVHD” means
      gastrointestinal graft vs. host
disease.

            

    

     

    
      	
              1.33  

            	
              “IMPROVEMENT” means any
      change, improvement, development or modification of the PATENT RIGHTS or
      KNOW-HOW in the FIELD that is made or created after the EFFECTIVE DATE and
      relates to the PRODUCT, AG PRODUCT or the SUBSTANCE or any method of use
      or manufacture related thereto.

            

    

     

    
      	
              1.34  

            	
              “INITIAL TERM” has the
      meaning set forth in Article 14.1

            

    

     

    
      	
              1.35  

            	
              “INSOLVENT PARTY” has the
      meaning set forth in Article 15.2.

            

    

     

    
      	
              1.36  

            	
              “JOINT DEVELOPMENT
      COMMITTEE” means a committee with the authority to review,
      recommend and coordinate any research, development and regulatory
      activities related to the PRODUCT in the FIELD in the
      TERRITORY.

            

    

     

    
      	
              1.37  

            	
              “JOINT COMMERCIALIZATION
      COMMITTEE” means a committee with the authority to review,
      recommend and coordinate any COMMERCIALIZATION activities related to the
      PRODUCT and AG PRODUCT in the
TERRITORY.

            

    

     

    
      	
              1.38  

            	
              “KNOW-HOW” means all
      information and data, technical information, trade secrets,
      specifications, instructions, processes, formulae, expertise and
      information relating to the SUBSTANCE and the PRODUCT and its sale in the
      FIELD owned by or under the CONTROL of DOR or any AFFILIATE thereof as of
      the EFFECTIVE DATE or during the term of this AGREEMENT. Such KNOW-HOW
      shall include all biological, chemical, pharmacological, biochemical,
      toxicological, pharmaceutical, physical and analytical, safety, quality
      control, manufacturing, preclinical and clinical data, instructions,
      processes, formulae, expertise and information, relevant to the sale of
      the SUBSTANCE which may be useful in the sale of the SUBSTANCE or the
      PRODUCT.

            

    

     

    
      	
              1.39  

            	
              “MARKETING
      AUTHORIZATIONS” mean the authorizations issued by the AGENCY which
      are necessary for the marketing, use, distribution and sale of the PRODUCT
      and AG PRODUCT in the TERRITORY.

            

    

     

    
      	
              1.40  

            	
              “MCDONALD” has the
      meaning set forth in Article 2.7.

            

    

     

    
      	
              1.41  

            	
              “MCDONALD LICENSE” has
      the meaning set forth in Article
2.7.

            

    

     

    
      	
              1.42  

            	
              “NDA” means the New Drug
      Application and all amendments and supplements thereto for the PRODUCT
      submitted by DOR to the FDA, including all documents, data and other
      information included in an accepted NDA submission for APPROVAL to market
      and sell the PRODUCT in the
TERRITORY.

            

    

     

    
      	
              1.43  

            	
              “NET SALES” mean, with
      respect to each PRODUCT and AG PRODUCT, the gross invoiced sales price of
      such PRODUCT and AG PRODUCT billed by or on behalf of STPI, its
      AFFILIATES, sub-licensees (if permitted), distributors or agents to third
      parties on sales of a PRODUCT and AG PRODUCT in bona fide arm’s
      length transactions in the TERRITORY, less the following deductions,
      determined in accordance with U.S. generally accepted accounting
      principles as then in effect and consistently applied, to the extent
      included in the gross invoiced sales price for such PRODUCT or AG PRODUCT
      or otherwise directly paid or incurred by STPI, its AFFILIATES or
      sub-licensees (if permitted), distributors or agents with respect to the
      sale of such PRODUCT and AG
PRODUCT:

            

    

     

    
      	
              1.43.1  

            	
              normal
      and customary trade and quantity discounts actually allowed and properly
      taken directly with respect to sales of such PRODUCT and AG
      PRODUCT;

            

    

     

    
      	
              1.43.2  

            	
              normal
      and customary amounts repaid or credited by reason of rejections, returns
      and allowances;

            

    

     

    
      	
              1.43.3  

            	
              normal
      and customary third party cash rebates and chargebacks related to sales of
      the PRODUCT and AG PRODUCT, if and to the extent allowed under applicable
      laws of the TERRITORY (including shelf stock adjustments in the case of an
      AG PRODUCT);

            

    

     

    
      	
              1.43.4  

            	
              tariffs,
      duties, excise, sales, value-added or other taxes (other than taxes based
      on income);

            

    

     

    
      	
              1.43.5  

            	
              normal
      and customary cash discounts for timely
payment;

            

    

     

    
      	
              1.43.6  

            	
              normal
      and customary discounts pursuant to indigent patient programs and patient
      discount programs, including without limitation coupon discounts and
      co-pay assistance programs; and

            

    

     

    
      	
              1.43.7  

            	
              any
      other normal and customary specifically identifiable costs or charges
      included in the gross invoiced sales price of such PRODUCT falling within
      categories substantially equivalent to those listed
  above.

            

    

     

    Sales
from STPI to its AFFILIATES or sub-licensees (if permitted), distributors or
agents shall be disregarded for purposes of calculating NET
SALES.  Any of the items set forth above that would otherwise be
deducted from the invoice price in the calculation of NET SALES but which are
separately charged to third parties shall not be deducted from the invoice price
in the calculation of NET SALES.  No sale of PRODUCT or AG PRODUCT
will be for any consideration other than cash.

     

    
      
        CONFIDENTIAL

      

      
        4

        
          

        

      

      
         

      

    

    
      	
              1.44  

            	
              “NEW INDICATION” means
      any indication other than for the treatment of GI GVHD which the JOINT
      DEVELOPMENT COMMITTEE agrees to develop and for which STPI or its
      AFFILIATES are granted exclusive COMMERCIALIZATION rights
      hereunder.

            

    

     

    
      	
              1.45  

            	
              “PATENT RIGHTS” means all
      the patents and the patent applications claiming the SUBSTANCE and/or the
      PRODUCT (as the case may be) or its use and manufacture in the FIELD owned
      and/or under the CONTROL of DOR as listed in Appendix B to this AGREEMENT,
      as well as: (i) all patents arising from said applications; (ii) any
      additions, divisions, continuations, continuations-in-part, amendments,
      amalgamations and reissues of such applications or patents; (iii) any
      confirmation, importation or registration patents thereof or therefor; and
      (iv) any extensions and renewals of all such patents and/or patent
      applications in whatever legal form and/or by whatever legal title they
      are granted, including Supplementary Protection Certificate(s) or
      equivalent.

            

    

     

    
      	
              1.46  

            	
              “PERCENTAGE COMPONENT”
      has the meaning set forth in Appendix
C.

            

    

     

    
      	
              1.47  

            	
              “PHARMACOVIGILANCE
      AGREEMENT” means the agreement that defines how the parties are to
      cooperate to enable each of them to comply with its respective obligations
      under applicable laws, regulations and guidelines with regard to the
      adverse event collection, evaluation, reporting and communicating any
      safety issues for the PRODUCT, both pre- and post-marketing and to enable
      each party to satisfy its duty of care, which the parties hereto shall
      negotiate in good faith and enter into within sixty (60) days of the
      EFFECTIVE DATE.

            

    

     

    
      	
              1.48  

            	
              “PHASE 3 TRIAL” means the
      clinical study BDP-GVHD-03 entitled, “A Phase 3, Randomized, Double-Blind,
      Placebo-Controlled, Multi-Center Study of the Safety and Efficacy of
      orBec®
      (Oral Beclomethasone 17,21-Dipropionate) in Conjunction with Ten Days of
      High-Dose Prednisone Therapy in the Treatment of Patients with
      Gastrointestinal Graft vs. Host
Disease”.

            

    

     

    
      	
              1.49  

            	
              “PRODUCT” means any
      product in finished pharmaceutical form APPROVED for use, manufacture and
      sale in the FIELD containing the
SUBSTANCE.

            

    

     

    
      	
              1.50  

            	
              “QUALITY ASSURANCE
      AGREEMENT” shall have the meaning set forth in Article 6.3 of
      this AGREEMENT, which the parties hereto shall negotiate in good faith and
      enter within sixty (60) days of the EFFECTIVE
  DATE.

            

    

     

    
      	
              1.51  

            	
              “RECEIVING PARTY” has the
      meaning set forth in Article 3.3.

            

    

     

    
      	
              1.52  

            	
              “ROFN NOTICE” has the
      meaning set forth in Article 2.2.

            

    

     

    
      	
              1.53  

            	
              “SOLVENT PARTY” has the
      meaning set forth in Article 15.2.

            

    

     

    
      	
              1.54  

            	
              “SPECIFIED INDICATION”
      has the meaning set forth in Article
2.8.

            

    

     

    
      	
              1.55  

            	
              “SUBSTANCE” means
      Beclomethasone Dipropionate.

            

    

     

    
      	
              1.56  

            	
              “SUPPLY PRICE” means the
      supply price for the PRODUCT and AG PRODUCT as set forth in
      Appendix C attached hereto.

            

    

     

    
      	
              1.57  

            	
              “TERRITORY” means the
      United States of America (including its territories and possessions, as
      well as Puerto Rico), Canada and
Mexico.

            

    

     

    
      	
              1.58  

            	
              “TRADEMARK” means
      orBec® as
      well as any and all trademark/s, their back-ups and clones, which shall be
      owned or under the CONTROL of DOR or of any of its AFFILIATED COMPANIES
      and shall be used to identify the PRODUCT in the TERRITORY, including
      domain names.

            

    

     

    
      	
              1.59  

            	
              “VALID CLAIM” means, on a
      country-by-country basis, a granted claim within the PATENT RIGHTS which
      has not been held invalid and/or unenforceable in a decision of a patent
      office, court or other government agency of competent jurisdiction,
      unappealable or unappealed within the time frame allowed for
      appeal.

            

    

     

    It is
understood that the definitions above shall have the same meaning regardless of
whether a term is used in the singular or plural form.  Additionally,
as used in this AGREEMENT, unless the context otherwise requires: Section,
Schedule, Article and Exhibit references are intended to refer to this
AGREEMENT; the words “hereof”, “herein” and “hereunder”, and words of similar
import, shall refer to this AGREEMENT as a whole, and not to any particular
provision of this AGREEMENT; and the term “include” and derivations thereof are
not intended to apply any limitation to the item(s) specified.

     

    
      
        CONFIDENTIAL

      

      
        5

        
          

        

      

      
        
           

           

        

      

    

    (The information below marked by ***** has been
omitted by a request for confidential treatment. The omitted portion has been
separately filed with the Commission.)

     

    
      	
              2
      -  

            	
              GRANT
      OF RIGHTS

            

    

     

    
      	
              2.1  

            	
              Subject
      to the terms and conditions hereof, DOR hereby appoints STPI as its
      exclusive distributor of PRODUCTS and AG PRODUCTS in the FIELD in the
      TERRITORY (even as to DOR), and, in connection therewith and to support
      the distribution rights granted hereunder, grants to STPI and STPI hereby
      accepts an exclusive (even as to DOR) license, with no right to grant
      sub-licenses, to COMMERCIALIZE the PRODUCT and AG PRODUCT in the FIELD in
      the TERRITORY, under the TRADEMARK, the PATENT RIGHTS and under the
      KNOW-HOW, including marketing, detailing, conducting post-marketing human
      clinical studies and interacting with any AGENCY regarding the
      foregoing.  For purposes of clarification, STPI shall not have
      the right to develop, modify, manufacture or have manufactured the
      SUBSTANCE or the PRODUCT or AG PRODUCT, except as authorized by the JOINT
      DEVELOPMENT COMMITTEE and agreed between the parties and subject to
      Article 8.9 below.  Subject to the terms and conditions hereof
      and solely in support of the rights granted hereunder in the remainder of
      the AGREEMENT, DOR hereby agrees that, with respect to any third party, it
      will exclusively manufacture and supply STPI with all STPI’s requirements
      of the PRODUCT and AG PRODUCT in the FIELD in the
      TERRITORY.  STPI shall have the right to appoint distributors of
      the PRODUCT and AG PRODUCT, provided, however, in
      each case such distributor agrees in writing to abide by the terms of this
      AGREEMENT and, in the case of a distributor that is not an AFFILIATE of
      STPI, such distributor is approved in advance by DOR, which approval shall
      not be unreasonably withheld or delayed.  STPI shall notify DOR
      of any AFFILIATED distributor promptly upon their
    appointment.

            

    

     

    
      	
              2.2  

            	
              ***** 

            

    

     

    
      	
              2.3  

            	
              Regulatory.  DOR
      shall be the holder of the MARKETING
      AUTHORIZATIONS.  DOR  shall provide to STPI copies of
      any Investigational New Drug or other health registration documents and
      amendments or supplements thereto filed with the FDA (or other similar
      AGENCY) by DOR and all correspondence to and from such AGENCY (or other
      similar AGENCY) relevant to the SUBSTANCE or the PRODUCT in the FIELD in
      the TERRITORY.

            

    

     

    
      	
              2.4  

            	
              Assignment of
      Improvements.  Subject to the terms and conditions
      hereof, STPI hereby assigns to DOR the IMPROVEMENTS made, invented or
      conceived by STPI (and its AFFILIATES but only if such AFFILIATES are
      appointed as distributors hereunder or receive any CONFIDENTIAL
      INFORMATION of DOR) after the EFFECTIVE DATE and agreed to take any and
      all actions, make and execute any and all assignments and make any filings
      in order to facilitate the
foregoing.

            

    

     

    
      	
              2.5  

            	
              No Sale Outside
      Territory.

            

    

     

    
      	
              2.5.1  

            	
              During
      the term hereof, STPI shall not and shall cause its AFFILIATES not to,
      directly or indirectly, including through the use of one or more agents or
      persons with whom STPI and/or its Affiliates are in privity of contract:
      (i) sell, distribute or otherwise dispose of; or (ii) grant any license or
      other right or otherwise distribute or dispose of, PRODUCT in the FIELD
      outside the TERRITORY.

            

    

     

    
      	
              2.5.2  

            	
              During
      the term hereof, DOR shall not and shall cause its AFFILIATES not to,
      directly or indirectly, including through the use of one or more agents or
      persons with whom DOR and/or its Affiliates are in privity of contract:
      (i) sell, distribute or otherwise dispose of; or (ii) grant any license or
      other right or otherwise distribute or dispose of, PRODUCT in the FIELD
      within the TERRITORY.

            

    

     

    
      	
              2.6  

            	
              Exclusive Relationship
      in GI GVHD.

            

    

     

    
      	
              2.6.1  

            	
              Except
      pursuant to terms of this Agreement, during the term hereof, STPI shall
      not, itself or through any AFFILIATE, COMMERCIALIZE (i) a product for the
      treatment or prevention of GI GVHD or any APPROVED NEW INDICATION in the
      TERRITORY or (ii) a PRODUCT in the TERRITORY in the
  FIELD.

            

    

     

    
      	
              2.6.2  

            	
              Except
      pursuant to terms of this Agreement, during the term hereof, DOR shall
      not, itself or through any AFFILIATE, COMMERCIALIZE (i) a product for the
      treatment or prevention of GI GVHD or any NEW INDICATION in the TERRITORY
      or (ii) a PRODUCT in the TERRITORY in the
FIELD.

            

    

     

    
      	
              2.7  

            	
              McDonald
      License.  STPI acknowledges that the certain of the
      rights granted hereunder are rights which DOR has received through the
      Exclusive License Agreement dated as of November 24, 1998 (the “MCDONALD
      LICENSE”) by and between George McDonald (“MCDONALD”) and ENTERON, a copy
      of which is attached hereto as Appendix E, and which contains certain
      terms and conditions set forth therein.  Without limiting the
      foregoing, STPI expressly acknowledges the reservation of rights of
      MCDONALD set forth in Sections 2B(vi) and (vii).  STPI further
      acknowledges and agrees that any information provided herein to DOR by
      STPI hereunder may be included in one or more development reports made to
      MCDONALD pursuant to Section 3A of the MCDONALD LICENSE.  STPI
      further acknowledges that all representations and warranties made in this
      AGREEMENT are made by DOR and not MCDONALD, who has specifically
      disclaimed representations as set forth in Section 4D of the MCDONALD
      LICENSE.  STPI agrees to reasonably cooperate with DOR to enable
      DOR to fulfill its obligations under Section 5 of the MCDONALD
      LICENSE.  Neither STPI nor any distributor of STPI shall use the
      trade names or marks of MCDONALD (including any contraction, abbreviation
      or simulation of the foregoing) in connection with the COMMERCIALIZATION
      of any PRODUCT except where required by law.  STPI agrees that
      it shall not enter into any discussions or communications with MCDONALD,
      directly or indirectly, during the term of this AGREEMENT regarding any
      license or transaction under this AGREEMENT, except in respect of
      COMMERCIALIZATION of the PRODUCT.  STPI shall not
      intentionally take any action or
      omit to take any action which would cause DOR to be in default under the
      MCDONALD LICENSE.  Notwithstanding anything to the contrary
      contained in this AGREEMENT, during the term of this AGREEMENT, (i) DOR
      shall provide STPI with copies of any notices provided by DOR to MCDONALD
      which relate to any claim or action by DOR to terminate the MCDONALD
      LICENSE and (ii) DOR shall not terminate the MCDONALD LICENSE pursuant to
      Section 6E of the MCDONALD LICENSE, as such Section may be
      amended.  The parties agree that irreparable damage would occur
      in the event the obligations set forth in the preceding sentence were not
      performed in accordance with the terms thereof and that STPI shall be
      entitled to specific performance of the terms thereof in addition to any
      other remedy at law or in equity, including monetary damages, that may be
      available to it.  The COMPANY agrees that ENTERON shall remain a
      wholly owned subsidiary of the COMPANY during the term of this AGREEMENT,
      provided,
      however,
      the COMPANY may merge ENTERON with and into the COMPANY at its
      discretion.

            

    

     

    
      	
              2.8  

            	
              Notwithstanding
      the rights provided in Article 2.1, STPI (i) shall have the right to
      market, sell, offer for sale, and have sold AG PRODUCT for a labeled
      indication (the “SPECIFIED INDICATION”) only beginning (A) on the date on
      or, with DOR’s prior written consent, not to be unreasonably withheld,
      prior to the anticipated date that a third party sells or offers for sale
      a generically-labeled version of the PRODUCT APPROVED for the SPECIFIED
      INDICATION for which such PRODUCT is APPROVED or (B) if applicable, upon
      (or as part of) settlement of a litigation under Article 10.3 that allows
      a third party to sell or offer for sale a generically-labeled version of
      the PRODUCT APPROVED for the SPECIFIED INDICATION and (ii) shall not
      have a general right to sublicense, but shall have the limited right to
      grant sublicenses only under its rights to market, sell, offer for sale,
      and have sold AG PRODUCT for the SPECIFIED INDICATION and only in
      connection with settlement of a litigation under Article 10.3 that allows
      a third party to sell or offer for sale a generically-labeled version of
      the PRODUCT APPROVED for the SPECIFIED INDICATION, provided that STPI has
      obtained the consent of DOR and MCDONALD to such settlement to the extent
      required under Article 10.3.  STPI will at all times remain
      responsible to DOR for all of its obligations under this AGREEMENT and
      shall be responsible for the acts or omissions of its sublicensees in
      exercising rights granted hereunder.  Each sublicense granted by
      STPI shall be consistent with the terms of this AGREEMENT, and STPI shall
      furnish DOR a copy of any such sublicense it
  grants.

            

    

     

    
      
        CONFIDENTIAL

      

      
        6

        
          

        

      

      
         

      

    

    
      	
              3
      -  

            	
              EXCHANGE
      OF INFORMATION, CONFIDENTIALITY,
  PHARMACOVIGILANCE.

            

    

     

    
      	
              3.1  

            	
              DOR
      shall promptly disclose, at its own cost, to STPI on an ongoing basis
      during the term of this AGREEMENT, in writing, or via mutually acceptable
      electronic media, copies or reproductions of all PRODUCT-related
      information under the CONTROL of DOR, but only to the extent not
      previously disclosed to STPI, that are reasonably necessary or useful for
      STPI and its sub-distributors to COMMERCIALIZE the PRODUCT in the
      TERRITORY, including any KNOW-HOW and PATENT RIGHTS under the CONTROL of
      DOR.

            

    

     

    
      	
              3.2  

            	
              Furthermore,
      each party shall promptly disclose to the other through the JOINT
      DEVELOPMENT COMMITTEE on an ongoing basis during the term of this
      AGREEMENT any and all progress made on development and regulatory
      activities relating to the SUBSTANCE and/or the PRODUCT. STPI shall be
      informed in advance of any FDA meeting/request related to such development
      and shall have the right to send up to two (2) representatives to attend
      to such FDA meetings.

            

    

     

    
      	
              3.3  

            	
              Both
      DOR and STPI agree to keep and have kept in strict confidence all
      confidential information and data (hereinafter “CONFIDENTIAL INFORMATION”)
      received from the other party under the terms of this AGREEMENT. DOR and
      STPI agree to use CONFIDENTIAL INFORMATION only for the purposes of this
      AGREEMENT and pursuant to the rights granted by the recipient under this
      AGREEMENT. In particular DOR and STPI agree not to disclose such
      information and data to any third party other
  than:

            

    

     

    
      	
              3.3.1  

            	
              their
      respective AFFILIATED COMPANIES; or

            

    

     

    
      	
              3.3.2  

            	
              a
      third party solely to the extent necessary for furthering the purposes of
      this AGREEMENT, provided that the third party agrees in writing to
      maintain the confidentiality of the CONFIDENTIAL INFORMATION in a manner
      consistent with the confidentiality provisions of this AGREEMENT;
      or

            

    

     

    
      	
              3.3.3  

            	
              in
      connection with seeking MARKETING AUTHORIZATIONS outside the
      TERRITORY.

            

    

     

    Notwithstanding
the foregoing, each party may disclose CONFIDENTIAL INFORMATION to any AGENCY to
the extent that such disclosure (i) is necessary for the purposes of this
AGREEMENT and/or (ii) is legally required.

     

    The party
receiving CONFIDENTIAL INFORMATION (the “RECEIVING PARTY”) may do so only if it
limits disclosure to that purpose, after giving the party disclosing
CONFIDENTIAL INFORMATION (the “DISCLOSING PARTY”) prompt written notice of any
instance of such a requirement in reasonable time for the DISCLOSING PARTY to
take steps to object to or to limit such disclosure.  In the event of
disclosures required by law, the RECEIVING PARTY shall cooperate with the
DISCLOSING PARTY as reasonably requested thereby.

     

    
      	
              3.4  

            	
              The
      secrecy obligations herein shall last during and for a period of five (5)
      years, and ten (10) years with respect to KNOW-HOW, after any termination
      of this AGREEMENT, subject to the exceptions set forth
      herein.  The obligations of confidentiality and use of
      information and data above shall not apply with regard to that information
      and those data which:

            

    

     

    
      	
              3.4.1  

            	
              the
      RECEIVING PARTY can show in writing were known to it or to its AFFILIATES
      at the time of disclosure, and/or

            

    

     

    
      	
              3.4.2  

            	
              are
      public knowledge at the time of disclosure to the RECEIVING PARTY,
      and/or

            

    

     

    
      	
              3.4.3  

            	
              become
      public knowledge at a later date without any fault of the RECEIVING PARTY,
      and/or

            

    

     

    
      	
              3.4.4  

            	
              are
      independently developed by the RECEIVING PARTY or its AFFILIATES, as
      competently proven.

            

    

     

    
      	
              3.5  

            	
              DOR
      and STPI agree that they shall refer any serious adverse event or
      significant clinical safety information which they have knowledge thereof
      to the other party according to the procedure to be agreed upon separately
      and documented in the PHARMACOVIGILANCE
  AGREEMENT.

            

    

     

    
      	
              3.6  

            	
              Any
      proposed written publications of a party relating to PRODUCT and AG
      PRODUCT shall be cleared for release by the other party.  The
      disclosing party shall provide a copy of the proposed written publication
      to the reviewing party at least thirty (30) days prior to the intended
      date of release. The reviewing party shall have thirty (30) days from
      receipt of the proposed written publication to provide comments and/or
      proposed changes to the disclosing party. These timelines will be reduced
      to respectively ten (10) and five (5) working days in the case of
      abstracts. In the event the disclosing party does not accept the comments
      and/or proposed changes, DOR and STPI shall further discuss, and mutually
      agree upon, the final wording of the written publication. Thereby, due
      regard shall be given to the receiving party’s legitimate interests, e.g., obtaining
      optimal patent protection, coordinating and maintaining the proprietary
      nature of submissions to AGENCIES, and protection of confidential data and
      information. The review period may be extended for an additional two (2)
      months to permit the reviewing party to file one or more patent
      applications as it deems appropriate. While publications and presentations
      by outside investigators may be difficult to control, both STPI and DOR
      shall use reasonable efforts to gain the right to review publications and
      presentations relating to the PRODUCT and AG PRODUCT by such outside
      investigators. This Article 3.6 shall not apply to disclosures to the
      financial community, including investor conferences and analysts’
      meetings/reports, provided that such disclosure does not undermine the
      validity of any claims in a prospective patent
  application.

            

    

     

    
      
        CONFIDENTIAL

      

      
        7

        
          

        

      

      
         

      

    

    
      	
              4
      -  

            	
              JOINT
      DEVELOPMENT COMMITTEE

            

    

     

    
      	
              4.1  

            	
              As
      soon as possible after the EFFECTIVE DATE, DOR and STPI shall appoint a
      JOINT DEVELOPMENT COMMITTEE in which both parties are equally represented
      by three (3) members designated by each party. A party may change one or
      more of its representatives to the JOINT DEVELOPMENT COMMITTEE at any
      time.  The Chairman of the JOINT DEVELOPMENT COMMITTEE shall be
      a representative appointed by DOR.

            

    

     

    
      	
              4.2  

            	
              Meetings
      of the JOINT DEVELOPMENT COMMITTEE shall be held at locations designated
      by the parties approximately every three (3) months or as the JOINT
      DEVELOPMENT COMMITTEE may deem necessary. At these meetings, progress of
      the work over the preceding period shall be discussed and the parties will
      discuss, formulate and agree to plans, including plans and strategy for
      the regulatory dossiers, to achieve the goals of the
      collaboration.  Also, at these meetings DOR will supply STPI
      with progress reports summarizing any and all clinical, technical and
      manufacturing activities conducted over the prior three-month period. At
      these meetings either party shall be entitled to ask and to receive from
      the other party any detail on any and all aspects of the activities
      performed by the other party. The Chairman shall prepare or have prepared
      the minutes reporting in reasonable detail the actions taken by the JOINT
      DEVELOPMENT COMMITTEE, the issues requiring resolution and resolutions of
      previously reported issues, which minutes are to be signed by a
      representative of each party, promptly after each meeting. In the first
      meeting of the JOINT DEVELOPMENT COMMITTEE the parties shall discuss and
      agree upon a common policy to be used in answering any inquiries from
      and/or in making any communications to any AGENCY in the
      TERRITORY.

            

    

     

    
      	
              4.3  

            	
              Any
      decision by the JOINT DEVELOPMENT COMMITTEE shall be taken on a consensus
      basis, by the majority of the elected members. In the event the JOINT
      DEVELOPMENT COMMITTEE is unable to reach a decision by consensus, the
      matter(s) in dispute shall be referred to an executive committee
      (hereinafter “EXECUTIVE COMMITTEE”) for decision. The EXECUTIVE COMMITTEE
      shall consist of the President of STPI (or its designee) and the President
      of DOR (or its designee), provided however any final determination shall
      be made by DOR.

            

    

     

    
      	
              4.4  

            	
              DOR
      shall use DILIGENT EFFORTS to carry out development of the PRODUCT in
      accordance with the DEVELOPMENT PLAN.  If DOR determines that it
      will be unable to accomplish any of the key clinical events identified in
      the DEVELOPMENT PLAN, it shall promptly notify the JOINT DEVELOPMENT
      COMMITTEE at the next regularly scheduled meeting, and if necessary, DOR
      shall develop a revised DEVELOPMENT PLAN for the PRODUCT, to be agreed
      upon in good faith between the
parties.

            

    

     

    
      	
              4.5  

            	
              Each
      party shall bear all expenses of its representatives related to their
      participation in the JOINT DEVELOPMENT
  COMMITTEE.

            

    

     

    
      
        CONFIDENTIAL

      

      
        8

        
          

        

      

      
         

      

    

    
      	
              5
      -  

            	
              DEVELOPMENT

            

    

     

    
      	
              5.1  

            	
              DOR
      shall use DILIGENT EFFORTS in connection with, and shall be responsible
      for conducting or having conducted through a Contract Research
      Organization, the development of the PRODUCT according to the DEVELOPMENT
      PLAN, at DOR’s sole costs and expenses, which development includes the
      completion of the PHASE 3 TRIAL and the assemblage of the registration
      dossier so that the MARKETING AUTHORIZATIONS can be filed by DOR with the
      competent AGENCY in the TERRITORY.

            

    

     

    
      	
              5.2  

            	
              It
      is expected that the PRODUCT development will be related first to the use
      of the PRODUCT in the treatment of GI GVHD.  If either DOR or STPI
      determines that additional development may yield new indications for
      PRODUCT, the parties agree to negotiate in good faith, without obligation,
      the potential for a sharing of costs, milestones, or any other mutually
      acceptable arrangement that would encourage such development. In the event
      the parties reach an agreement, this AGREEMENT would be amended in writing
      accordingly.

            

    

     

    
      	
              5.3  

            	
              DOR
      agrees to supply, free of charge, the PRODUCT necessary to conduct the
      PHASE 3 TRIAL as well as any clinical trial as approved by the JOINT
      DEVELOPMENT COMMITTEE in order to pursue the fullest
      development.  Any PRODUCT  required for any Phase 4
      studies that are required by or negotiated with the FDA as a condition to
      obtaining or maintaining APPROVAL of the PRODUCT shall be supplied by DOR
      free of charge.  Any PRODUCT required for any Phase 4 studies
      requested by STPI that are not required by or negotiated with the FDA as a
      condition to obtaining or maintaining APPROVAL of the PRODUCT shall be
      supplied by DOR at DOR’s FULLY BURDENED
COST.

            

    

     

    
      	
              5.4  

            	
              DOR
      shall promptly supply STPI with the results of the PHASE 3 TRIAL as well
      as with any and all results and documentation arising from any studies
      conducted by DOR. DOR grants STPI the right to use these results and
      documentation for COMMERCIALIZATION and pharmacovigilance purposes for the
      PRODUCT in the FIELD in the
TERRITORY.

            

    

     

    
      	
              5.5  

            	
              As
      supplier of the PRODUCT and AG PRODUCT, DOR shall be responsible for
      filing or having applicable vendors/suppliers file drug master files with
      respect to the SUBSTANCE and PRODUCT with all relevant AGENCIES in the
      TERRITORY in accordance with the DEVELOPMENT
  PLAN.

            

    

     

    
      	
              5.6  

            	
              The
      parties shall cooperate in good faith with respect to the conduct of any
      inspections by an AGENCY of a party’s site and facilities related to the
      PRODUCT and AG PRODUCT.  To the extent either party receives any
      material written or oral communication from an AGENCY relating to the
      APPROVAL process with respect to the PRODUCT in the TERRITORY, the party
      receiving such communication shall promptly notify the other party and
      provide a copy of such written communication and/or a written summary of
      such oral communication as soon as reasonably practicable.  The
      parties shall cooperate in good faith with respect to all regulatory
      filings required under this
AGREEMENT.

            

    

     

    
      	
              5.7  

            	
              DOR
      acknowledges that certain PRODUCT-related activities undertaken by DOR
      outside of the TERRITORY may trigger material reporting obligations to an
      AGENCY and may materially affect the COMMERCIALIZATION of the PRODUCT by
      STPI in the TERRITORY, and with respect to such activities that DOR
      determines in good faith are likely to trigger such material reporting
      obligations and/or are likely to materially affect such COMMERCIALIZATION
      by STPI, DOR shall disclose such PRODUCT-related activities outside of the
      TERRITORY to STPI and permit STPI to promptly review them and provide
      comments and suggestions that would enable both parties to achieve their
      objectives under this AGREEMENT.  Similarly, STPI shall disclose
      any PRODUCT-related activities within the TERRITORY to DOR and permit DOR
      to promptly review them and provide comments and suggestions that would
      enable both parties to achieve their objectives under this
      AGREEMENT.  If the parties are unable to reach mutual agreement
      regarding a fair and reasonable approach that would avoid or minimize any
      material reporting obligations and material effects on COMMERCIALIZATION
      of the PRODUCT by STPI, such dispute or disagreement shall be resolved
      pursuant to Article 17.

            

    

     

    
      	
              5.8  

            	
              DOR
      shall conduct any post-APPROVAL development programs for the PRODUCT in
      the TERRITORY, including Phase 4 studies, that are required by or
      negotiated with the FDA as a condition to obtaining or maintaining
      APPROVAL of the PRODUCT.  The cost and expense of any such
      programs related to treatment of GI GVHD shall be borne by
      DOR.  The cost and expense of any Phase 4 studies requested by
      STPI that are not required by or negotiated with the FDA as a condition to
      obtaining or maintaining APPROVAL of the PRODUCT shall be borne by
      STPI.

            

    

     

    
      
        CONFIDENTIAL

      

      
        9

        
          

        

      

      
         

      

    

    
      	
              6
      -  

            	
              REGISTRATION,
      COMMERCIALIZATION.

            

    

     

    
      	
              6.1  

            	
              DOR
      will own the NDA or submission filed by DOR with any AGENCY to obtain the
      MARKETING AUTHORIZATIONS in any country of the TERRITORY.  DOR
      will also own all MARKETING
AUTHORIZATIONS.

            

    

     

    
      	
              6.2  

            	
              DOR
      shall file applications for and maintain MARKETING AUTHORIZATIONS for the
      PRODUCT in the FIELD in the TERRITORY with the competent AGENCY in the
      TERRITORY in DOR’s own name and costs. DOR shall at its own cost and
      expense obtain and comply with all authorizations, licenses, permits and
      regulations which may from time to time be required from any AGENCY in the
      TERRITORY to enable DOR to obtain and maintain MARKETING
      AUTHORIZATIONS.

            

    

     

    
      	
              6.3  

            	
              DOR,
      directly and/or through the manufacturer/s of the PRODUCT and AG PRODUCT,
      and STPI will enter into the QUALITY ASSURANCE AGREEMENT, which will set
      forth in detail the responsibilities of the parties concerning
      manufacturing, control, and release of the PRODUCT and AG
      PRODUCT.  The QUALITY ASSURANCE AGREEMENT will also address, but
      not be limited to, preliminary specifications, raw material purchasing and
      controls, analytical documentation, costs of quality assurance and other
      matters relating to compliance with cGMP in the
  TERRITORY.

            

    

     

    
      	
              6.4  

            	
              STPI
      shall be responsible for the promotion, marketing and distribution of the
      PRODUCT and AG PRODUCT in the FIELD in the TERRITORY, and the creation, if
      any, of associated marketing collaterals, inserts, advisory information or
      material or the like.

            

    

     

    
      	
              6.5  

            	
              Joint
      Commercialization Committee.

            

    

     

    
      	
              6.5.1  

            	
              Promptly
      after the EFFECTIVE DATE, the parties shall appoint a JOINT
      COMMERCIALIZATION COMMITTEE in which both parties are equally represented
      by three (3) members designated by each party. A party may change one or
      more of its representatives to the JOINT COMMERCIALIZATION COMMITTEE at
      any time.  The Chairman of the JOINT COMMERCIALIZATION COMMITTEE
      shall be a representative appointed by
STPI.

            

    

     

    
      	
              6.5.2  

            	
              Any
      decision by the JOINT COMMERCIALIZATION COMMITTEE shall be taken on a
      consensus basis, by the majority of the elected members. In the event the
      JOINT COMMERCIALIZATION COMMITTEE is unable to reach a decision by
      consensus, the matter(s) in dispute shall be referred to the EXECUTIVE
      COMMITTEE for decision, provided however any final determination shall be
      made by STPI.

            

    

     

    
      	
              6.5.3  

            	
              Meetings
      of the JOINT COMMERCIALIZATION COMMITTEE shall be held at locations
      designated by the parties approximately every three (3) months; via
      teleconferencing or as the JOINT COMMERCIALIZATION COMMITTEE may deem
      necessary.  In furtherance of its responsibility for overseeing
      the COMMERCIALIZATION of the PRODUCT, the JOINT COMMERCIALIZATION
      COMMITTEE shall perform the following
  activities:

            

    

     

    
      	
              (i)  

            	
              review
      strategy for COMMERCIALIZATION of PRODUCT, including product
      positioning;

            

    

     

    
      	
              (ii)  

            	
              coordinate
      with the JOINT DEVELOPMENT COMMITTEE as
  appropriate;

            

    

     

    
      	
              (iii)  

            	
              review
      and comment on marketing plans;

            

    

     

    
      	
              (iv)  

            	
              facilitate
      the flow of information with respect to the COMMERCIALIZATION of the
      PRODUCT and AG PRODUCT;

            

    

     

    
      	
              (v)  

            	
              coordinate
      plans for labeling and selecting TRADEMARKS for PRODUCT and AG PRODUCT in
      the TERRITORY;

            

    

     

    
      	
              (vi)  

            	
              review
      and comment on advertising and promotional materials, including medical
      education, symposia, opinion leader development, peer-to-peer development,
      publications and journal ads;

            

    

     

    
      	
              (vii)  

            	
              design,
      in collaboration with the JOINT DEVELOPMENT COMMITTEE, Phase 4 studies,
      and review use and dissemination of such resulting
  data;

            

    

     

    
      	
              (viii)  

            	
              review
      and comment on final packaging, and plan and oversee educational and
      professional symposia and speaker and peer-to-peer activity
      programs;

            

    

     

    
      	
              (ix)  

            	
              recommend
      to the JOINT DEVELOPMENT COMMITTEE whether to seek NEW INDICATIONS,
      formulations or uses for the PRODUCT and AG PRODUCT, such as for PRODUCT
      and AG PRODUCT life cycle
management;

            

    

     

    
      	
              (x)  

            	
              work
      with the JOINT DEVELOPMENT COMMITTEE for approval of early access and
      compassionate use programs.

            

    

     

    On or
before the filing of the NDA for a PRODUCT in the FIELD in the TERRITORY, the
JOINT COMMERCIALIZATION COMMITTEE shall prepare and approve a detail marketing
plan which shall set forth market development activities and expenditures by
STPI and the steps that will be taken in order to COMMERCIALIZE the
PRODUCT.  Following the APPROVAL, the parties shall communicate regularly
in order to review the activities taken in connection with the COMMERCIALIZATION
of the PRODUCT in the TERRITORY.

     

    
      	
              6.6  

            	
              STPI
      shall at all times use DILIGENT EFFORTS in the COMMERCIALIZATION in the
      TERRITORY of the PRODUCT and AG
PRODUCT.

            

    

     

    
      	
              6.7  

            	
              Each
      party shall bear all expenses of its representatives related to their
      participation in the JOINT COMMERCIALIZATION
  COMMITTEE.

            

    

     

    
      
        CONFIDENTIAL

      

      
        10

        
          

        

      

      
         

      

    

     

    
      	
              7
      -  

            	
              TRADEMARK

            

    

     

    
      	
              7.1  

            	
              STPI
      agrees that the TRADEMARK shall be owned, controlled and maintained
      (including filing, watching, renewals) by DOR, at DOR’s sole costs and
      expenses, for the duration of this
AGREEMENT.

            

    

     

    
      	
              7.2  

            	
              DOR
      agrees to take promptly all reasonable legal action necessary to protect
      the TRADEMARK against any infringement by third parties. If within sixty
      (60) days following notice of a possible infringement of the TRADEMARK,
      DOR decides not to take action to restrain such infringement, STPI shall,
      in its sole discretion, have the right to take such action as it deemed
      necessary or desirable. Each party agrees to render such reasonable
      assistance the other party may reasonably request (e.g. necessary Powers
      of Attorney). Costs of any action brought by either party here under and
      recovery achieved as a result thereof, shall belong to
  DOR.

            

    

     

    
      	
              7.3  

            	
              Should
      any settlement or judicial finding which is reviewable by a higher
      authority arise as a result of such action, then STPI and DOR shall
      reasonably consult before accepting any settlement or judicial finding
      which is reviewable by a higher
authority.

            

    

     

    
      	
              7.4  

            	
              STPI
      agrees to comply with the trademark usage standards attached to this
      AGREEMENT as Appendix D.  From time to time, or upon the request
      of DOR, STPI agrees to supply DOR with a sample of advertisements,
      marketing material and the promotional material bearing the TRADEMARKS
      prior to their use for the purpose of enabling DOR to have thirty (30)
      days to examine and approve the
foregoing.

            

    

     

    
      	
              8
      -  

            	
              MANUFACTURING
      AND SUPPLY OF THE PRODUCT

            

    

     

    
      	
              8.1  

            	
              In
      order to ensure that the manufacture of the PRODUCT and AG PRODUCT
      conforms to the highest quality standards: (i) STPI undertakes to purchase
      all its requirements of the PRODUCT and AG PRODUCT from DOR at the SUPPLY
      PRICE set forth in Appendix C to this AGREEMENT; and (ii) DOR undertakes
      to manufacture and supply STPI with all STPI’s requirements of the PRODUCT
      and AG PRODUCT.

            

    

     

    
      	
              8.2  

            	
              Forecasts.  In
      order to assist DOR in its production planning, STPI shall submit to DOR
      as soon as possible before the launching of the PRODUCT and AG PRODUCT by
      STPI, its best estimates of its purchase requirements of PRODUCT and AG
      PRODUCT for the first twelve (12) months, together with projected delivery
      dates.  Thereafter, not later than the 10th
      working day of each calendar month, STPI shall submit to DOR its best
      estimates of its purchase requirements (“ESTIMATED QUANTITIES”) and
      delivery dates of PRODUCT and AG PRODUCT for the following twelve (12)
      calendar months, broken down into requirements for each calendar
      month.

            

    

     

    
      	
              8.3  

            	
              Firm
      Orders.  Not less than ninety (90) calendar days prior to
      the beginning of each calendar month, STPI shall submit to DOR a binding
      purchase order for its requirements of PRODUCT and AG PRODUCT in such
      month (“FIRM ORDER”).   The quantity in each FIRM ORDER for
      PRODUCT and AG PRODUCT shall not be less than seventy-five percent (75%)
      nor more than one hundred twenty-five percent (125%) of the ESTIMATED
      QUANTITY for such PRODUCT and AG PRODUCT for any calendar month as most
      recently updated.  Notwithstanding the foregoing, DOR shall use
      DILIGENT EFFORTS to fill requested revisions of FIRM ORDERS that are in
      excess of one hundred twenty-five percent (125%) of the ESTIMATED
      QUANTITY.  DOR shall deliver the PRODUCT and AG PRODUCT at the
      requested delivery dates set forth in the FIRM ORDER, which dates shall
      have been agreed upon by the parties in advance as commercially
      reasonable.

            

    

     

    
      	
              8.4  

            	
              Delivery.  DOR
      shall deliver or arrange for the delivery of PRODUCT and AG PRODUCT
      ordered by STPI CIP (ICC Incoterms 2000) to STPI’s warehouses in the
      U.S.  DOR shall provide STPI with certificates of analysis
      related to the PRODUCT and AG PRODUCT for each batch released for delivery
      hereunder.  These certificates will document that each batch
      received by STPI conforms to the agreed upon specifications and is
      otherwise in conformity with Article 8.6.  A copy of each
      certificate shall be included with each batch delivered to
      STPI.

            

    

     

    
      	
              8.5  

            	
              At
      STPI’s expense, DOR shall allow STPI’s employees, consultants or other
      representatives upon prior written notification, at all reasonable
      business times, to visit and inspect the premise(s) used directly or
      indirectly by DOR or its subcontractors or AFFILIATES for the
      manufacturing (e.g. processing, packing, etc.) of the SUBSTANCE, PRODUCT
      and/or AG PRODUCT, but in any event not more than once annually unless DOR
      has received a warning letter from the FDA and then such visits may be
      conducted more frequently as reasonably necessary to provide assurances to
      STPI until the defects listed in such warning letter are
      remedied.  STPI warrants that all such inspections and audits
      shall be carried out in a manner so as not to unreasonably interfere with
      DOR’s, its subcontractors’ or its AFFILIATES’ conduct of business and to
      insure the continued confidentiality of DOR’s business and technical
      information.  Further, STPI agrees to comply with all of DOR’s
      safety and security requirements during any visits to the DOR, its
      subcontractors’, or AFFILIATES’ facilities.  STPI agrees to make
      promptly available to DOR any external reports from such facility
      visit(s).

            

    

     

    
      	
              8.6  

            	
              DOR
      represents and warrants that the PRODUCT and AG PRODUCT manufactured by or
      on behalf of DOR shall (i) meet the specifications set forth in the
      registration dossier and MARKETING AUTHORIZATIONS and (ii) be manufactured
      and packaged in compliance with applicable law, including
      cGMP.  DOR will be responsible for labeling and packaging of
      PRODUCT and AG PRODUCT for final distribution, utilizing TRADEMARKS and
      artwork provided by STPI to DOR in accordance with the terms
      hereof.  Any claim under this representation and warranty shall
      be governed by Article 8.8.  The provisions of this Article 8.6
      shall not in any way limit DOR’s indemnification obligations under Article
      13.2.

            

    

     

    
      
        CONFIDENTIAL

      

      
        11

        
          

        

      

      
         

      

    

     

    
      	
              8.7  

            	
              The
      SUPPLY PRICE for the PRODUCT and AG PRODUCT supplied and delivered to STPI
      in accordance with this AGREEMENT shall be paid to DOR in accordance with
      the provisions of Appendix C
hereof.

            

    

     

    
      	
              8.8  

            	
              Claims.  All
      claims made concerning quality, loss or other defects in any PRODUCT must
      be made to DOR in writing within thirty (30) days following delivery of
      the PRODUCT and AG PRODUCT to STPI; provided, however, that
      other than with respect to defects or other non-compliance plainly
      observable from a visual inspection, any acceptance or deemed acceptance
      shall not adversely affect or otherwise diminish STPI’s rights to receive
      shipments of the PRODUCT and AG PRODUCT in compliance with the
      requirements of Article 8.6 or its rights in respect of Article
      13.  At DOR’s request, STPI shall forward for inspection a
      representative sampling of the PRODUCT and AG PRODUCT or any part thereof
      that is the subject of STPI’s claim.  DOR shall inspect such
      samples and, if it concurs with STPI’s claim, shall promptly replace the
      defective PRODUCT and AG PRODUCT without any cost to STPI.  If
      the parties are unable to resolve their differences within sixty (60) days
      of STPI’s claim, then either party may refer the matter to an independent
      specialized firm of international reputation agreeable to both the parties
      for final analysis, which shall be a final resolution of such issue,
      binding on both parties hereto. If the PRODUCT and AG PRODUCT is
      determined to be in compliance or if there is a nonconformity with respect
      to such PRODUCT and AG PRODUCT but the nonconformity occurred after
      delivery by DOR, then STPI shall bear the cost of the independent
      laboratory testing and pay for the PRODUCT and AG PRODUCT in accordance
      with this AGREEMENT and DOR shall have no liability.  If the
      PRODUCT and AG PRODUCT is determined not to be in compliance, then DOR
      shall bear the cost of independent laboratory testing, and shall, at its
      election, either replace the rejected PRODUCT and AG PRODUCT at no cost to
      STPI, or credit STPI for the SUPPLY PRICE paid by STPI with respect to the
      defective PRODUCT and AG PRODUCT. STPI shall provide prompt assistance to
      DOR in connection with any recall including without limitation
      notification of the customers and recalling the PRODUCT and AG PRODUCT
      supplied to such customers, at DOR’s cost.  Each party shall act
      in good faith and shall cooperate with the other party, with any qualified
      independent third-party laboratory in connection with an investigation,
      and with the arbitrator, as to the existence of or source of nonconformity
      with respect to a batch of PRODUCT and AG PRODUCT supplied under this
      AGREEMENT.  In testing the batch of PRODUCT and AG PRODUCT, any
      independent third-party laboratory shall use analytical testing methods as
      agreed upon by the parties. This shall be the sole remedy for the
      resolution of any claims STPI or its AFFILIATES related to any defective
      or non conforming PRODUCT.  The provisions of this Article 8.8
      shall not in any way limit DOR’s indemnification obligations under Article
      13.2.

            

    

     

    
      	
              8.9  

            	
              DOR
      undertakes to appoint at least one back up manufacturer. Should DOR expect
      to be unable, directly or indirectly, to timely and accurately supply STPI
      with STPI’s total requirement of the PRODUCT and AG PRODUCT, it will
      promptly inform STPI in advance and the parties will promptly convene to
      agree in good faith how best to proceed, including using alternate
      manufacturer/s to fulfill DOR’s obligation to supply PRODUCT and AG
      PRODUCT. This Article 8.9 is without prejudice for STPI to claim any and
      all damages resulting from DOR’s inability to timely and accurately
      fulfill its obligation to supply STPI with all STPI’s requirements of the
      PRODUCT and AG PRODUCT in the
TERRITORY.

            

    

     

    
      	
              8.10  

            	
              OTHER
      THAN AS SET FORTH IN THIS AGREEMENT, ALL OTHER WARRANTIES OF EITHER PARTY,
      BOTH EXPRESS AND IMPLIED, ARE HEREBY EXPRESSLY DISCLAIMED, INCLUDING ANY
      WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OF THE
      DRUG SUBSTANCE OR THE SERVICES PROVIDED HEREUNDER.  IN NO EVENT
      SHALL DOR OR STPI BE LIABLE FOR CONSEQUENTIAL DAMAGES, INCIDENTAL DAMAGES,
      LOST PROFITS, LOST PRODUCTS, PUNITIVE DAMAGES OR LOSS OF
      OPPORTUNITY.

            

    

     

    
      	
              8.11  

            	
              DOR
      shall maintain true and accurate books, records, test and laboratory data,
      reports and all other information relating to manufacturing and packaging
      under this AGREEMENT, including all information required to be maintained
      by the specifications and all applicable laws.  Such information
      shall be maintained in forms, notebooks and records for a period as
      required under applicable laws and/or as outlined in the QUALITY ASSURANCE
      AGREEMENT.

            

    

     

    
      
        CONFIDENTIAL

      

      
        12

        
          

        

      

      
         

      

    

    
      (The information below marked by ***** has been
omitted by a request for confidential treatment. The omitted portion has been
separately filed with the Commission.)

    

     

    
      	
              9
      -  

            	
              CONSIDERATION

            

    

     

    
      	
              9.1  

            	
              STPI
      shall pay to DOR the following amounts plus VAT, if
      applicable:

            

    

     

    
      	
              9.1.1  

            	
              one
      million U.S. Dollars (U.S. $1,000,000) to be paid within thirty (30) days
      of receipt of a report, certified by DOR, stating that the first patient
      in the PHASE 3 TRIAL has been administered the PRODUCT;
  and

            

    

     

    
      	
              9.1.2  

            	
              *****
      to be paid within thirty (30) days of receipt of a report from DOR showing
      that the PHASE 3 TRIAL has successfully achieved its primary endpoint
      consistent with the FDA’s Special Protocol Assessment (SPA) feedback in
      support of an NDA; and

            

    

     

    
      	
              9.1.3  

            	
              *****
       to be paid within thirty (30) days upon the cumulative NET SALES in
      the TERRITORY having achieved twenty-five million U.S. Dollars (U.S.
      $25,000,000); and

            

    

     

    
      	
              9.1.4  

            	
              ***** to
      be paid within thirty (30) days upon the NET SALES in the TERRITORY for
      any twelve (12) month period (i.e., any twelve (12) consecutive months)
      exceeding fifty million U.S. Dollars (U.S.
  $50,000,000).

            

    

     

    For the
avoidance of doubt, (i) each of the above milestones will be payable only once
for each event described and (ii) the aggregate of all milestone payments under
this Article 9.1 during the term of this AGREEMENT shall not exceed an
amount equal to ten million U.S. Dollars (U.S. $10,000,000).

     

    The above
milestones payments are to be considered STPI’s contribution to and
reimbursement of the costs and expenses related to the PHASE 3 TRIAL and other
activities necessary to obtain and maintain the MARKETING AUTHORIZATIONS.
Accordingly, DOR undertakes to utilize such milestones payments received prior
to the granting of the MARKETING AUTHORIZATIONS only for the furtherance of the
PHASE 3 TRIAL and other PRODUCT development activities necessary to obtain and
maintain the MARKETING AUTHORIZATIONS in the TERRITORY; DOR shall send to STPI
quarterly reports showing the proper allocation of the above milestones
payments.

     

    
      	
              9.2  

            	
              Supply
      Price.

            

    

     

    
      	
              9.2.1  

            	
              STPI
      shall pay DOR a certain SUPPLY PRICE, starting from the FIRST COMMERCIAL
      SALE of the PRODUCT and AG PRODUCT by STPI during the term of this
      AGREEMENT, as specified by the provisions of Appendix C attached
      hereto.

            

    

     

    
      	
              9.2.2  

            	
              Upon
      the ninety (90) days prior to the date where DOR will be required to
      supply PRODUCT to STPI, DOR shall inform STPI of the amount of the FIXED
      COMPONENT of the SUPPLY PRICE.  DOR shall reasonably cooperate
      with any request by STPI to review DOR’s determination of the FIXED
      COMPONENT, but barring any clear error in calculation, the determination
      of DOR shall be conclusive.  DOR shall inform STPI of any
      adjustment to the FIXED COMPONENT at least thirty (30) days prior to
      making such adjustment.  DOR shall reasonably cooperate with any
      request by STPI to review DOR’s determination of the adjustment to FIXED
      COMPONENT, but barring any clear error in calculation, the determination
      of DOR shall be conclusive and
STPI.

            

    

     

    
      	
              9.2.3  

            	
              STPI
      shall keep accurate books and records setting forth the sales in unit and
      value, the selling prices, the NET SALES and the amount of SUPPLY PRICE
      payable to DOR hereunder, for each country of the TERRITORY with regard to
      the PRODUCT and AG PRODUCT sold. DOR, at its discretion, shall be
      permitted either: to have performed by an independent certified public
      accounting firm of nationally recognized standing selected by DOR and
      reasonably acceptable to STPI, at DOR’s expense, yearly audits of STPI
      records and books related to the PRODUCT and AG PRODUCT, provided such
      audits are reasonably conducted at STPI convenience and during STPI
      regular business hours.  DOR’s representative or agent will be
      required to execute a reasonable and commercially customary
      confidentiality agreement with STPI prior to commencing any audit. Such
      auditor shall report to DOR only on the accuracy of the information
      provided by STPI (without taking any copies of STPI records and books) and
      whether additional amounts are owed.  Such audits may be
      conducted for any calendar year ending not more than twenty-four (24)
      months prior to the date of each request. The right to audit with respect
      to any calendar year shall terminate three (3) years after the end of any
      such calendar year. In the event that a discrepancy arises between the
      SUPPLY PRICE paid to DOR and STPI records and books, STPI shall be given
      thirty (30) days from the receipt of the notice to either explain
      such discrepancy and/or remedy such discrepancy, as
      appropriate.  Further, in the event of a discrepancy of more
      than five percent (5%) between the amount owed and the actual amount
      received by DOR, STPI shall reimburse all the actual expenses and costs
      incurred by DOR in performing such
audit.

            

    

     

    
      	
              9.2.4  

            	
              The
      obligation to pay SUPPLY PRICE hereunder shall be imposed only once with
      respect to each unit of the PRODUCT and AG PRODUCT.  No payments
      shall accrue on the sales of STPI to its AFFILIATED COMPANIES or
      sublicensees (if permitted) or distributors or agents as well as on any
      transactions between such entities.  Payments shall accrue only
      on sales to unrelated third parties in arm’s length
      transactions.

            

    

     

    
      	
              9.2.5  

            	
              Any
      taxes (other than value added or income  taxes) STPI is required
      by the local authorities to pay or withhold on behalf of DOR with respect
      to the money payable to DOR under this AGREEMENT shall be deducted from
      the amount of such payments, provided, however, that
      with regard to any such deduction STPI shall give DOR such assistance as
      may be necessary to enable or assist DOR to claim exception therefore
      (under US or other applicable laws as well as any applicable treaties or
      conventions) and shall give DOR proper evidence as to payment of the
      tax.  Any other taxes due in the TERRITORY and arising out of or
      in connection with STPI exercise of the rights granted herein shall be
      borne by STPI.  STPI shall not be responsible for paying DOR’s
      income tax.

            

    

     

    
      
        CONFIDENTIAL

      

      
        13

        
          

        

      

      
        (The information below marked by ***** has been
omitted by a request for confidential treatment. The omitted portion has been
separately filed with the Commission.)

      

       

      
         

      

    

    
      	
              9.3  

            	
              In
      the event of GENERIC COMPETITION in any country of the TERRITORY, the
      SUPPLY PRICE due in said country pursuant to Appendix C hereof shall be
      reduced (and may be subsequently increased, not to exceed the SUPPLY PRICE
      agreed to as of the date hereof) from time to time by the same percentage
      of the decrease (and may be subsequently increased, not to exceed the
      SUPPLY PRICE agreed to as of the date hereof) in the NET SALES during
      any three (3) month rolling period, provided, however, that
      in no event shall the SUPPLY PRICE be reduced to below ***** of the FULLY
      BURDENED MANUFACTURING COST.  Such reduction/s shall commence
      with the beginning of the next month following STPI’s written notification
      to DOR.

            

    

     

    
      	
              9.4  

            	
              In
      the event it is necessary due to the claim of a third party or a court
      order to obtain a license from any unaffiliated third party under any
      patent or other intellectual property right having claims that the
      APPROVED PRODUCT that is currently subject to the PHASE 3 TRIAL or its
      use, sale or manufacture infringes, DOR shall have the sole and exclusive
      right to negotiate a license to such third party intellectual
      property.  If after six (6) months (or one (1) month if there is
      an injunction in place), DOR is unable to secure a license or other
      settlement, then STPI shall have the right to secure such a license or
      obtain other settlement provided that such terms are commercially
      reasonable within the applicable industry.  In the event that
      STPI is obligated to pay a royalty due to such infringement to such
      unaffiliated third party or parties in any country in order to
      COMMERCIALIZE the APPROVED
      PRODUCT in the TERRITORY in the FIELD, then STPI shall have the right to
      deduct the amount of such royalties which STPI pays to such unaffiliated
      party or parties for such product, in such country in a calendar quarter,
      from the PERCENTAGE COMPONENT of the SUPPLY PRICE to be paid to DOR as set
      forth in Appendix C for such PRODUCT in such country in a calendar
      quarter; provided, however, that
      in no event shall the PERCENTAGE COMPONENT of the SUPPLY PRICE for any
      PRODUCT payable hereunder to DOR be less than fifty percent (50%) of the
      amounts payable to DOR pursuant to Appendix C immediately prior to the
      initiation of STPI’s obligation to pay such third party
      royalty.  This provision shall also apply to any other APPROVED
      PRODUCT which is mutually agreed by the parties to be COMMERCIALIZED by
      STPI.

            

    

     

    
      	
              9.5  

            	
              Without
      limiting the generality of the foregoing, DOR shall remain responsible for
      any royalty obligations due to third parties under the PATENT RIGHTS
      and/or the KNOW-HOW and/or the TRADEMARK which have been licensed to STPI
      hereunder. DOR will not be entitled to add such royalties due to third
      parties to the SUPPLY PRICE.

            

    

     

    
      	
              10
      -  

            	
              PATENT
      RIGHTS

            

    

     

    
      	
              10.1  

            	
              For
      the entire term of this AGREEMENT, DOR shall prosecute and maintain the
      PATENT RIGHTS at its own expense.

            

    

     

    
      	
              10.2  

            	
              Each
      party shall advise the other promptly upon its becoming aware of any third
      party infringement of the PATENT RIGHTS. After discussing its intentions
      with STPI, DOR may at its option take such action as is required to
      restrain such infringement, STPI having the right to cooperate in its
      attempt to restrain such infringement. STPI may be represented by counsel
      of its own choice, at its own expense at any suit or proceeding brought to
      restrain such infringement. If, however, within forty-five (45) days of
      the notice of a third party infringement, DOR fails to institute an
      infringement suit that STPI feels is reasonably required, STPI shall have
      the right at its own discretion to institute an action for infringement of
      any of the claim or claims of  the  PATENT RIGHTS in
      question and DOR agrees to use DILIGENT EFFORTS under the MCDONALD LICENSE
      to protect STPI’s rights set forth herein. After MCDONALD has been paid
      any and all amounts owed under Section 9 of the MCDONALD LICENSE, to the
      extent applicable, and after both parties have been reimbursed for their
      expenses in bringing such suit or proceeding, any further recovery
      obtained as a result of such action, whether by judgment, award, decree or
      settlement, shall be split as follows: (i) if DOR brings the action, then
      DOR retains 65% and STPI retains 35% and (ii) if STPI brings the action,
      then DOR retains 35% and STPI retains
65%.

            

    

     

    
      	
              10.3  

            	
              Should
      any settlement or judicial finding which is reviewable by a higher
      authority arise as a result of such action, then STPI and DOR shall
      reasonably consult before accepting any settlement or judicial finding
      which is reviewable by a higher
authority.

            

    

     

    
      	
              10.4  

            	
              MCDONALD
      has certain rights to participate in any action for infringement and other
      rights as set forth in Section 9 of the MCDONALD LICENSE and to the extent
      applicable, the rights of the parties in respect thereof are subject to
      such rights of MCDONALD as set forth in the MCDONALD LICENSE as if fully
      set forth herein.

            

    

     

    
      	
              11
      -  

            	
              REPRESENTATIONS
      AND WARRANTIES

            

    

     

    
      	
              11.1  

            	
              Each
      of DOR and STPI warrant and represent to the other that, (i) it has the
      full corporate right and authority to enter into the AGREEMENT, (ii)
      except as specifically provided in Section 2B(iv) of the MCDONALD LICENSE,
      the restrictions of which MCDONALD has waived, no contractual impediment
      conflicts, and during the term of this AGREEMENT it will not permit to
      exist any contractual impediment that would conflict, its ability to
      perform the terms and conditions imposed on it by this AGREEMENT, (iii)
      the execution, delivery and performance of this AGREEMENT by either party
      have been duly authorized and approved by all necessary corporate action,
      (iv) the AGREEMENT is binding upon and enforceable against either party in
      accordance with its terms (subject to bankruptcy and similar laws
      affecting the rights of creditors generally), and (v) to the knowledge of
      such party, as of the EFFECTIVE DATE (without undertaking any special
      investigation), there is no claim, action, suit, proceeding or
      investigation pending or threatened against or affecting the transaction
      contemplated hereby.

            

    

     

    
      	
              11.2  

            	
              DOR
      warrants and represents that, to the best of its knowledge, based on the
      current best knowledge of its officers, after inquiry of the attorneys of
      DOR, it is not aware of any third party patents which would be infringed
      by the import, manufacture, development, use, sale, or offer for sale of
      the PRODUCT or that has been asserted to cover the import, manufacture,
      development, use, sale, or offer for sale of the PRODUCT. DOR further
      represents and warrants that, to its knowledge, based on the current best
      knowledge of its officers, after inquiry of the attorneys of DOR, it is
      not aware that any third party is infringing the PATENT
      RIGHTS.

            

    

     

    
      	
              11.3  

            	
              DOR
      warrants and represents that all of its PATENT RIGHTS claiming the
      SUBSTANCE and/or the PRODUCT have been disclosed to STPI and are listed in
      Appendix B of this AGREEMENT. DOR warrants and represents that it owns or
      is in CONTROL of all right, title and interest in and to the PATENT RIGHTS
      and, and to the best of its knowledge, based on the current knowledge of
      its officers, after inquiry of the patent attorneys of DOR, the KNOW-HOW,
      in the sense of being able to convey to STPI, in accordance with this
      AGREEMENT, the exclusive rights hereunder in the FIELD in the TERRITORY,
      to the extent conveyed. Without limiting the generality of the foregoing
      (subject to the right of the U.S. Government to use any licensed patent
      developed using government funding pursuant to the MCDONALD LICENSE), DOR
      represents and warrants that none of the PATENT RIGHTS or KNOW-HOW have
      been pledged, assigned or otherwise conveyed, in whole or in part, to a
      third party.

            

    

     

    
      	
              11.4  

            	
              DOR
      warrants and represents that the PATENT RIGHTS constitute all of the
      patents and patent applications owned or CONTROLLED by DOR as of the
      EFFECTIVE DATE that are necessary or are useful to use or COMMERCIALIZE
      the PRODUCT in the TERRITORY (as the PRODUCT is known to DOR as of the
      EFFECTIVE DATE, and if such PRODUCT were to be COMMERCIALIZED as of the
      EFFECTIVE DATE).

            

    

     

    
      	
              11.5  

            	
              DOR
      warrants and represents that, to its knowledge, all the PATENT RIGHTS
      listed on Appendix B are in full force and effect and have been maintained
      to date, and all fees required to be paid by DOR in order to maintain the
      PATENT RIGHTS have been paid to date, and none such PATENT RIGHT has been
      abandoned or cancelled for failure to prosecute or maintain
      it.

            

    

     

    
      	
              11.6  

            	
              DOR
      warrants and represents that it has made available to STPI copies of all
      material correspondence with the FDA related to the PRODUCT in DOR’s
      CONTROL.  DOR further represents and warrants that none of the
      PATENT RIGHTS applicable to the PRODUCT is currently involved in any
      interference, reissue, reexamination proceeding, or litigation, and
      neither DOR nor any of its AFFILIATES has received any written notice from
      any person of such actual or threatened
  proceeding.

            

    

     

    
      	
              11.7  

            	
              DOR
      warrants and represents that DOR has used its DILIGENT EFFORTS to
      make  available to or provide STPI with copies of all
      information in DOR’s CONTROL regarding the PRODUCT in the TERRITORY, the
      PATENT RIGHTS and the KNOW-HOW which could reasonably be expected to be
      material to assessing the commercial potential for the PRODUCT, the
      ability to timely gain regulatory approval of the PRODUCT, and/or the
      risks of infringing third party intellectual property through use or
      COMMERCIALIZATION of the PRODUCT.

            

    

     

    
      
        CONFIDENTIAL

      

      
        14

        
          

        

      

      
         

      

    

    
      	
              11.8  

            	
              To
      DOR’s knowledge, the Data Room maintained by DOR and made available to
      STPI contains copies of all material information in the possession or
      CONTROL of DOR relating to quality, toxicity, safety and/or efficacy which
      would materially impair the utility and/or safety of the PRODUCT or the
      development, manufacture and COMMERCIALIZATION of the PRODUCT in the
      TERRITORY.

            

    

     

    
      	
              11.9  

            	
              Except
      for MCDONALD, whose inventions relate to the PATENT RIGHTS, DOR warrants
      and represents that all current, former and future employees and
      consultants of DOR and its AFFILIATES who are, have been or will be
      substantively involved in the design, review, evaluation or development of
      the PATENT RIGHTS, the KNOW-HOW, the SUBSTANCE or the PRODUCT have
      executed (or with respect to future employees or consultants will execute)
      written contracts or are otherwise obligated to protect the confidential
      information of STPI, DOR, and of any third party received through their
      position with DOR, and to vest in DOR or its AFFILIATES exclusive
      ownership of the PATENT RIGHTS and KNOW-HOW they have invented or
      developed.

            

    

     

    
      	
              11.10  

            	
              DOR
      represents and warrants that at all times during the term of this
      AGREEMENT, it will, and it will require its distributors and if permitted,
      sublicensees to, obtain, maintain and comply with all licenses, permits
      and authorizations necessary to it to complete and timely perform its
      obligations under this AGREEMENT, which are required under any applicable
      statutes, laws, ordinances, rules and regulations of the United States as
      well as those of all applicable foreign governmental bodies, agencies and
      subdivisions, having, asserting or claiming jurisdiction over DOR or any
      of such distributors or sublicensee.  DOR understands and
      acknowledges that the transfer of certain commodities and technical data
      is subject to United States laws and regulations controlling the export of
      such commodities and technical data, including all Export Administration
      Regulations of the United States Department of Commerce.  These
      laws and regulations, among other things, prohibit or require a license
      for the export of certain types of technical data to certain specified
      countries.  DOR hereby agrees and gives written assurance that
      it will comply with all United States laws and regulations controlling the
      export of commodities and technical data, that it will be solely
      responsible for any violation of such by DOR or its AFFILIATES,
      distributors or sublicensees (if permitted), and that DOR will defend and
      hold STPI harmless if of any legal action of any nature occasioned by such
      violation).

            

    

     

    
      	
              11.11  

            	
              STPI
      represents and warrants that at all times during the term of this
      AGREEMENT, it will, and it will require its distributors and if permitted,
      sublicensees will obtain, maintain and comply with all licenses, permits
      and authorizations necessary to it to complete and timely perform its
      obligations under this AGREEMENT, which are required under any applicable
      statutes, laws, ordinances, rules and regulations of the United States as
      well as those of all applicable foreign governmental bodies, agencies and
      subdivisions, having, asserting or claiming jurisdiction over STPI or any
      of such distributors or sublicensee.  STPI understands and
      acknowledges that the transfer of certain commodities and technical data
      is subject to United States laws and regulations controlling the export of
      such commodities and technical data, including all Export Administration
      Regulations of the United States Department of Commerce.  These
      laws and regulations, among other things, prohibit or require a license
      for the export of certain types of technical data to certain specified
      countries.  STPI hereby agrees and gives written assurance that
      it will comply with all United States laws and regulations controlling the
      export of commodities and technical data, that it will be solely
      responsible for any violation of such by STPI or its AFFILIATES,
      distributors or sublicensees (if permitted), and that STPI will defend and
      hold DOR harmless if of any legal action of any nature occasioned by such
      violation.   STPI agrees not to repackage any PRODUCT or
      add, modify or remove any labels on or product inserts in any PRODUCT,
      except as authorized by the JOINT COMMERCIALIZATION
    COMMITTEE.

            

    

     

    
      	
              11.12  

            	
              DOR
      represents and warrants that it has the rights to grant the sublicense and
      other rights granted to STPI
herein.

            

    

     

    
      	
              12
      -  

            	
              FORCE
      MAJEURE

            

    

     

    Neither
of the parties shall be liable for failure to perform its obligations under this
AGREEMENT when occasioned by contingencies unavoidable or beyond its control,
which may include without limitation, strikes or other work stoppages, lock
outs, riots, wars, delay of carriers, governmental laws or enactments, provided
that such contingencies are unavoidable or beyond the control of any party
hereto. The party so affected shall give notice promptly to the other party in
writing of the event of force majeure, and, thereupon, the affected party shall
be excused from those of its obligations hereunder which it is unable to perform
because of that event of force. Should one party fail to perform and fulfill its
obligations stated above for more than ninety (90) consecutive days or more, the
parties agree to negotiate in good faith either (i) to resolve the
contingencies or find an alternative solution, if possible; (ii) to extend
by mutual agreement the time period to resolve, eliminate, cure or overcome such
contingencies; or (iii) to terminate this AGREEMENT upon the terms and
conditions agreed upon at that time.

     

    
      	
              13
      -  

            	
              LIABILITY
      AND INDEMNIFICATION

            

    

     

    
      	
              13.1  

            	
              STPI
      hereby agrees to save, defend, indemnify and hold DOR and its officers,
      directors, employees, independent contractors, agents, and assigns,
      harmless from and against any and all third party suits, claims, actions,
      demands, liabilities, expenses or loss (including reasonable attorneys’
      fees) resulting from:

            

    

     

    
      	
              13.1.1  

            	
              STPI’s
      handling, storage, distributing, marketing or selling of the PRODUCT and
      AG PRODUCT;

            

    

     

    
      	
              13.1.2  

            	
              STPI’s
      negligence or willful misconduct in its performance pursuant to this
      AGREEMENT;

            

    

     

    
      	
              13.1.3  

            	
              STPI’s
      material breach of any of its covenants, warranties and representations
      under this AGREEMENT; or

            

    

     

    
      	
              13.1.4  

            	
              STPI’s
      violation of any applicable law or
regulations.

            

    

     

    STPI
shall only be obligated to so indemnify and hold DOR harmless under this Article
13.1 to the extent that DOR does not have an obligation to indemnify STPI
pursuant to Article 13.2.

     

    
      	
              13.2  

            	
              DOR
      hereby agrees to save, defend, indemnify and hold STPI and its AFFILIATES,
      and their respective officers, directors, employees, independent
      contractors, agents, and assigns, harmless from and against any and all
      third party suits, claims, actions, demands, liabilities, expenses or loss
      (including reasonable attorneys’ fees) resulting
  from:

            

    

     

    
      	
              13.2.1  

            	
              DOR’s
      (itself or pursuant to a contract with third party) development,
      manufacturing, storage or handling of SUBSTANCE manufactured by or on
      behalf of DOR and registration, development manufacturing, storage or
      handling of the PRODUCT and AG PRODUCT manufactured by or on behalf of
      DOR;

            

    

     

    
      	
              13.2.2  

            	
              DOR’s
      negligence or willful misconduct in its performance pursuant to this
      AGREEMENT or the MCDONALD LICENSE;

            

    

     

    
      	
              13.2.3  

            	
              DOR’s
      material breach of any of its covenants, warranties and representations
      made under this AGREEMENT or the MCDONALD LICENSE;
  or

            

    

     

    
      	
              13.2.4  

            	
              DOR’s
      violation of any applicable law or
regulations.

            

    

     

    DOR shall
only be obligated to so indemnify and hold STPI harmless under this Article 13.2
to the extent that STPI does not have an obligation to indemnify DOR pursuant to
Article 13.1.

     

    
      	
              13.3  

            	
              STPI
      and DOR shall promptly notify each other of any claims or suits as to
      which this indemnification applies. Neither STPI nor DOR shall agree to
      any settlement terms with respect to such claim or suit without the prior
      written consent of the other, such consent not to be unreasonably
      withheld.  STPI and DOR may, at their own expense, retain their
      own counsel in connection with such claim or
  suit.

            

    

     

    
      	
              13.4  

            	
              If
      STPI or one of its AFFILIATES brings an action or proceeding challenging
      the validity or enforceability of any PATENT RIGHTS, then STPI shall
      reimburse DOR for any reasonable and documented attorneys’ fees, costs and
      expenses incurred by DOR (including any reimbursement under the MCDONALD
      LICENSE) in connection with such action or proceeding; provided, however, that
      DOR's right to receive reimbursement from STPI pursuant to this Article
      13.4 shall be waived upon exercise of DOR’s termination right pursuant to
      Article 15.3.

            

    

     

    
      	
              13.5  

            	
              EXCEPT
      IN RESPECT OF THIRD PARTY CLAIMS, IN NO EVENT SHALL EITHER PARTY BE LIABLE
      TO THE OTHER PARTY FOR ANY INDIRECT, INCIDENTAL, SPECIAL OR CONSEQUENTIAL
      LOSSES OR DAMAGES, INCLUDING LOSS OF PROFITS OR REVENUE, INCURRED BY THE
      OTHER PARTY OR ANY THIRD PARTY, WHETHER IN AN ACTION IN CONTRACT OR TORT,
      EVEN IF THE OTHER PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH
      DAMAGES.

            

    

     

    
      	
              13.6  

            	
              Each
      party shall maintain product liability insurance as is usual customary for
      this industry and type of PRODUCT and AG
  PRODUCT.

            

    

     

    
      
        CONFIDENTIAL

      

      
        15

        
          

        

      

      
         

      

    

    
      	
              14
      -  

            	
              TERM
      AND RULES POST EXPIRATION

            

    

     

    
      	
              14.1  

            	
              This
      AGREEMENT shall enter into full force and effect at the EFFECTIVE DATE.
      This AGREEMENT shall remain in force on a country-by-country basis until
      the later of the two following dates (the “INITIAL TERM”): (i) ten (10)
      years from the date of the FIRST COMMERCIAL SALE of the PRODUCT by STPI in
      such country of the TERRITORY; or (ii) until the expiration of the last to
      expire of the PATENT RIGHTS in such country of the TERRITORY having at
      least one VALID CLAIM covering the PRODUCT, its use or manufacture, to the
      extent such VALID CLAIM could be enforced against STPI’s activities if not
      for the rights granted hereunder.

            

    

     

    
      	
              14.2  

            	
              Upon
      the INITIAL TERM and on a country-by-country basis this AGREEMENT shall be
      automatically renewed for periods of five (5) years each provided that
      during such renewal period/s:

            

    

     

    
      	
              14.2.1  

            	
              STPI
      has the right to terminate for convenience this AGREEMENT after the
      INITIAL TERM upon six (6) months prior written notice to
    DOR;

            

    

     

    
      	
              14.2.2  

            	
              DOR
      has the right to terminate for convenience this AGREEMENT after the
      INITIAL TERM upon eighteen (18) months prior written notice to
      STPI.  In this case DOR shall transfer free of charge to STPI or
      its designee the MARKETING AUTHORIZATIONS and all relevant data and
      KNOW-HOW necessary to manufacture and COMMERCIALIZE the PRODUCT in the
      TERRITORY and shall grant to STPI a royalty-free, fully paid up, perpetual
      and irrevocable license, with the right to sublicense, to the TRADEMARK
      and the KNOW-HOW.  Termination of this AGREEMENT shall be
      effective only after such transfers and license grant have been
      executed.

            

    

     

    
      	
              15
      -  

            	
              TERMINATION
      AND RULES POST TERMINATION

            

    

     

    
      	
              15.1  

            	
              In
      the event either party shall be in breach of any material obligation
      hereunder, the non breaching party may give written notice to the other
      party specifying the claimed particulars of such breach, and in the event
      such material breach is not cured, or effective steps to cure such
      material breach have not been initiated or are not thereafter diligently
      pursued, within sixty (60) days following the date of such written
      notification, the non breaching party shall have the right thereafter to
      terminate the AGREEMENT by giving thirty (30) days prior written notice to
      the other party to such effect.

            

    

     

    
      	
              15.2  

            	
              Each
      party (the “INSOLVENT PARTY”) shall promptly notify the other party (the
      “SOLVENT PARTY”) in writing upon the initiation of any proceeding in
      bankruptcy (voluntary or involuntary), reorganization, dissolution,
      liquidation or arrangement for the appointment of a receiver or trustee to
      take possession of the assets of the INSOLVENT PARTY or similar proceeding
      under the law for release of creditors by or against the INSOLVENT PARTY
      or if the INSOLVENT PARTY shall make a general assignment for the benefit
      of its creditors.  If any of the applicable circumstances
      described above, besides a voluntary bankruptcy petition, shall have
      continued for one hundred twenty (120) days undismissed, unstayed,
      unbonded and undischarged, the SOLVENT PARTY may terminate this AGREEMENT
      upon written notice to the INSOLVENT PARTY upon notice of the
      circumstances referenced above; provided, however, if the
      INSOLVENT PARTY provides for the cure of all of its defaults under this
      AGREEMENT (if any) and provides adequate assurance of its future
      performance of its obligations to the SOLVENT PARTY’s reasonable
      satisfaction, then the SOLVENT PARTY shall not have the right to terminate
      this AGREEMENT pursuant to this Article 15.2.  If the INSOLVENT
      PARTY shall initiate any voluntary bankruptcy proceeding, then the SOLVENT
      PARTY may terminate this AGREEMENT upon written notice to the INSOLVENT
      PARTY.  All licenses and rights to licenses granted under or
      pursuant to this AGREEMENT and the Supply Agreement are, and shall
      otherwise be deemed to be, for purposes of Section 365(n) of the United
      States Bankruptcy Code (the “CODE”), licenses of rights to “intellectual
      property” as defined under Section 101(35A) of the CODE.  STPI,
      as the licensee of such rights under this AGREEMENT, shall retain and may
      fully exercise all of its rights and elections under the
      CODE.  The foregoing provisions of this Article 15.2 are without
      prejudice to any rights STPI may have arising under the CODE or other
      applicable law.

            

    

     

    
      	
              15.3  

            	
              DOR
      shall have the right to terminate this Agreement in the event that STPI,
      directly or indirectly, challenges or assists any third party in the
      challenge of the validity of any of the PATENT
  RIGHTS.

            

    

     

    
      	
              15.4  

            	
              Upon
      any termination of this AGREEMENT other than for breach by STPI, STPI
      shall be allowed to process and sell the inventory of PRODUCT at its
      disposal for a period not to exceed three (3) months following the date of
      termination, subject to the payment of the amounts owed hereunder to DOR
      and continued compliance with the terms of this AGREEMENT.  Upon
      termination of this AGREEMENT by STPI in accordance with Article 14.2.1 or by DOR
      in accordance with this Article 15, STPI shall destroy all of DOR’s
      CONFIDENTIAL INFORMATION received hereunder.  After the
      execution of this AGREEMENT, DOR will use commercially reasonable efforts
      (which shall exclude the obligation to pay any additional monies) to amend
      the MCDONALD LICENSE to extend the post termination sale period from three
      (3) months to one (1) year.

            

    

     

    
      	
              15.5  

            	
              The
      right of either party to terminate this AGREEMENT as provided hereinabove
      shall not be affected in any way by its waiver of or failure to take
      actions with respect to any previous
default.

            

    

     

    
      	
              15.6  

            	
              Upon
      any early termination of this AGREEMENT, RECEIVING PARTY shall return to
      DISCLOSING PARTY all of its CONFIDENTIAL INFORMATION and transfer to
      DISCLOSING PARTY all reports, records, customer lists, regulatory
      correspondence and other materials in RECEIVING PARTY’s or its AFFILIATES’
      possession or control relating to the pre-clinical and clinical
      development, APPROVAL, manufacture, distribution and sale of PRODUCTS,
      including without limitation the safety database and such reports,
      records, regulatory correspondence and other materials related to the
      COMMERCIALIZATION of the PRODUCT, if any.  In addition all
      sublicenses (if any) or distributorships shall terminate provided however
      that at DOR’s request, STPI shall use its commercially reasonable efforts
      to assign to DOR any third party distributor contract relating to such
      PRODUCTS to which STPI or any of its AFFILIATES is a party (or the
      applicable provisions thereof, as the case may be).  If STPI
      terminates this AGREEMENT other than for cause or if this AGREEMENT is
      terminated by DOR for cause or pursuant to Article 15.3, STPI and its
      AFFILIATE and distributors will immediately (i) cease any sale of PRODUCT
      and AG PRODUCT and destroy or return all PRODUCT and AG
      PRODUCT and (ii) provide an accurate and up to date list of purchasers of
      the PRODUCT and AG PRODUCT along with quantities and purchase
      price.  STPI shall provide evidence reasonably satisfactory to
      DOR regarding its compliance with the foregoing
  sentence.

            

    

     

    
      	
              15.7  

            	
              The
      termination or expiration of this AGREEMENT for any reason shall be
      without prejudice to any rights which shall have accrued to the benefit of
      either party prior to such termination or expiration, including any
      damages arising from any breach hereunder.  Such termination or
      expiration shall not relieve either party from obligations which are
      expressly indicated to survive termination or expiration of this
      AGREEMENT.

            

    

     

    
      
        CONFIDENTIAL

      

      
        16

        
          

        

      

      
         

      

    

    
      	
              16
      -  

            	
              MISCELLANEOUS

            

    

     

    
      	
              16.1  

            	
              Modifications.  No
      amendments, changes, modifications or alterations of the terms and
      conditions of this AGREEMENT shall be binding upon either party hereto
      unless in writing and signed by both
parties.

            

    

     

    
      	
              16.2  

            	
              Captions.  All
      titles and captions in this AGREEMENT are for convenience only and shall
      not be interpreted as having any substantive
  meaning.

            

    

     

    
      	
              16.3  

            	
              Assignment.  Unless
      consent in writing is first obtained from the other party, this AGREEMENT
      and the rights granted herein shall not be assignable by either party
      hereto, except to a successor to all or substantially all of its
      business.  Any attempted assignment without consent shall be
      void. Any permitted assignee shall assume all obligations of its assignor
      under the AGREEMENT. Notwithstanding the foregoing, either party may
      assign this AGREEMENT to any of its AFFILIATES without the consent of the
      other party provided that (i) the assignor party shall be responsible for
      the performance by the assignee of any of its obligations provided for
      herein and severally and jointly liable with such assignee for the failure
      to perform its obligations provided for herein, including minimum royalty
      obligations and (ii) prior written notice of such assignment is given to
      the other party.

            

    

     

    
      	
              16.4  

            	
              Survivability.  Expiration
      or termination of this AGREEMENT shall not relieve the parties of any
      obligation accruing prior to such expiration or termination. Without
      limiting the foregoing, the obligations pursuant to Article 1
      (Definitions) (to the extent applicable), Article 3.3 (Confidentiality),
      Article 3.4 (Confidentiality), Article 3.5 (Notification of Serious
      Adverse Events and Safety Information), Article 3.6 (Written
      Publications), Article 8.10 (Disclaimer of Warranties), Article 9.1
      (Milestone Payments), Article 9.2 (Supply Price), Article 13 (Liability
      and Indemnification), Article 14 (Term and Rules Post Expiration), Article
      15 (Termination and Rules Post Termination), Article 16 (Miscellaneous),
      and Article 17 (Law, Dispute Resolution and Jurisdiction) shall survive
      termination of this AGREEMENT.

            

    

     

    
      	
              16.5  

            	
              Entire
      Understanding.  This AGREEMENT and its Appendixes
      constitute the entire agreement between the parties hereto with respect to
      the subject matter hereof and supersedes all previous agreements and
      representations, whether written or
oral.

            

    

     

    
      	
              16.6  

            	
              Notices.  Any
      notice required to be given hereunder shall be considered properly given
      if sent by registered air-mail, telecopier, or by personal courier
      delivery to the respective address of each party as
    follows:

            

    

     

    Sigma-Tau
Pharmaceuticals, Inc.

     

    Attn.:
Gregg Lapointe, CEO

     

    Fax:
(301) 354-5319

     

    

     

    and

     

    DOR
BioPharma Inc.

     

    Attn.:
Christopher J. Schaber, Ph.D., President and CEO

     

    Fax:
(609) 538-8205

     

    or to
such other address as a party may designate in writing. Such notice will be
considered received at the date of the receipt by the addressee.

     

    
      	
              16.7  

            	
              Violation.  If
      any of the provisions of this AGREEMENT are held to be void or
      unenforceable with regard to any particular country or all countries of
      the TERRITORY, then such void or unenforceable provisions shall be
      replaced by valid and enforceable provisions which will achieve as far as
      possible the economic business intentions of the
  parties.

            

    

     

    
      	
              16.8  

            	
              Press
      Releases.  All press releases regarding this AGREEMENT
      shall be jointly planned and coordinated in detail by and between DOR and
      STPI. Each party agrees not to issue any press release or other public
      statement, whether oral or written, disclosing the existence of this
      AGREEMENT or any information relating to this AGREEMENT without the prior
      written consent of the other party; provided, however, that
      neither party will be prevented from complying with any duty of disclosure
      it may have pursuant to law or governmental regulation. The parties shall
      consult with each other reasonably and in good faith and agree with
      respect to the text and timing of such press releases prior to the
      issuance thereof, provided that a party may not unreasonably withhold
      consent to or delay such releases.

            

    

     

    
      	
              16.9  

            	
              Counterparts.  This
      AGREEMENT may be executed in two or more counterparts, each of which shall
      be deemed an original, but all of which together shall constitute one and
      the same instrument.

            

    

     

    
      	
              16.10  

            	
              No
      Waiver.  The waiver of and relief from any breach or
      non-fulfillment of any term and condition of this AGREEMENT does not
      constitute a waiver of or relief from any other breach or non-fulfillment
      of that or any other term and
condition.

            

    

     

    
      	
              16.11  

            	
              Third-Party
      Beneficiaries.  None of the provisions of this AGREEMENT
      shall be for the benefit of or enforceable by any third party including,
      without limitation, any creditor of any party hereto. No such third party
      shall obtain any right under any provision of this AGREEMENT or shall by
      reason of any such provision make any claim in respect of any debt,
      liability or obligation (or otherwise) against any party
      hereto.

            

    

     

    
      	
              16.12  

            	
              Relationship of the
      parties.  Each party shall bear its own costs incurred in
      the performance of its obligations hereunder without charge or expense to
      the other except as expressly provided in this AGREEMENT. Neither DOR nor
      STPI shall have any responsibility for the hiring, termination or
      compensation of the other party’s employees or for any employee
      compensation or benefits of the other party’s employees. No employee or
      representative of a party shall have any authority to bind or obligate the
      other party to this AGREEMENT for any sum or in any manner whatsoever, or
      to create or impose any contractual or other liability on the other party
      without said party’s approval. For all purposes, and notwithstanding any
      other provision of this AGREEMENT to the contrary, STPI’s legal
      relationship under this AGREEMENT to DOR shall be that of independent
      contractor.  Nothing in this AGREEMENT shall be construed to
      establish a relationship of partners or joint
  ventures.

            

    

     

    
      	
              17
      -  

            	
              LAW,
      DISPUTE RESOLUTION AND JURISDICTION

            

    

     

    
      	
              17.1  

            	
              This
      AGREEMENT shall be governed, construed and interpreted in accordance with
      the laws of New Jersey, other than those provisions which govern conflict
      of laws.

            

    

     

    
      	
              17.2  

            	
              All
      disputes between the parties arising out of or in relation to this
      AGREEMENT shall be exclusively and finally resolved by the Courts of New
      Jersey.

            

    

     

    [Signature
Page Follows]

     

    

    
      
        
          
             

            CONFIDENTIAL

             

          

          CONFIDENTIAL

        

        
          17

          
            

          

        

        
           

          
            EXECUTION
VERSION

            

          

        

      

    

    

    

     

    IN WITNESS WHEREOF, the
parties have caused this AGREEMENT to be executed in duplicate by their duly
authorized officers effective as of the EFFECTIVE DATE.

     

    

    
      	 
      	
              DOR
      BIOPHARMA INC.

            
	 
      	
              By:                   
      /s/   Christopher
      J. Schaber, Ph.D.  

              Name:                Christopher
      J. Schaber, Ph.D.

              Title:                   President
      and CEO

            
	 
      	 
      
	 
      	 
      
	 
      	
              ENTERON
      PHARMACEUTICALS, INC.

            
	 
      	
              By:                    
      /s/   Christopher
      J. Schaber, Ph.D.  

                Name:                Christopher
      J. Schaber, Ph.D.

                Title:                   President
      and CEO

              

            
	 
      	 
      
	 
      	 
      
	 
      	
              SIGMA-TAU
      PHARMACEUTICALS, INC.

            
	 
      	
              By:                       /s/  Gregg
      Lapointe

              Name:                  Gregg
      Lapointe

              Title:                    Chief
      Executive Officer

            
	 
      	 
      

    

    

     

    

    
      
        
          
             

            CONFIDENTIAL

             

          

          CONFIDENTIAL

        

        
          18

          
            

          

        

        
           

        

      

    

    
      
        EXECUTION
VERSION

        

      

    

    (The information below marked by ***** has been
omitted by a request for confidential treatment. The omitted portion has been
separately filed with the Commission.)

    

    Appendix
A

     

    
      DEVELOPMENT
PLAN

    

    *****

    
      
        
          
             

            CONFIDENTIAL

             

          

          CONFIDENTIAL

        

        
          19

          
            

          

        

        
           

        

      

    

    
      
        EXECUTION
VERSION

        

      

    

    (The information below marked by ***** has been
omitted by a request for confidential treatment. The omitted portion has been
separately filed with the Commission.)

    

    

    

    Appendix
B

     

    

    PATENT
RIGHTS

    

    

    

    
      	
              CLG
      Ref. No.

            	
              Title

            	
              Serial
      No.

            	
              Filing
      Date

            	
              Status

            	
              Patent
      No.

            
	
              8105-006-US-CIP

            	
              METHOD
      FOR PREVENTING TISSUE DAMAGE FOLLOWING HEMATOPOIETIC CELL
      TRANSPLANTATION

            	
              09/151,388

            	
              September
      10, 1998

            	
              Issued

            	
              6,096,731

            
	
              8105-008-CA

            	
              METHOD
      FOR PREVENTING TISSUE DAMAGE ASSOCIATED WITH GRAFT-VERSUS-HOST OR
      HOST-VERSUS-GRAFT

            	
              2,413,883

            	
              November
      22, 2002

            	
              Granted

            	
              2,413,883

            
	
              8105-008-WO

            	
              METHOD
      FOR PREVENTING TISSUE DAMAGE ASSOCIATED WITH GRAFT-VERSUS-HOST OR
      HOST-VERSUS-GRAFT

            	
              PCT/US00/14064

            	
              May
      22, 2000

            	
              Published

            	 
      
	
              8105-009-US-CON

            	
              METHOD
      FOR LONG TERM TREATMENT OF GRAFT-VERSUS-HOST DISEASE USING TOPICAL ACTIVE
      CORTICOSTER

            	
              10/613,788

            	
              July
      3, 2003

            	
              Pending/

              published

            	 
      
	
              8105-010-AU

            	
              METHOD
      OF TREATING INFLAMMATORY DISORDERS OF THE GASTRO INTESTINAL TRACT USING
      TOPICAL ACTIVE CORTICOSTEROIDS

            	
              2002254205

            	
              May
      10, 2007

            	
              Granted

            	
              2002254205

               

               

               

               

               

            
	
              8105-010-CA

            	
              METHOD
      OF TREATING INFLAMMATORY DISORDERS OF THE GASTRO INTESTINAL TRACT USING
      TOPICAL ACTIVE CORTICOSTEROIDS

            	
              2,441,007

            	
              March
      15, 2002

            	
              Granted

            	
              2,441,007

            
	
              8105-010-EP

            	
              METHOD
      OF TREATING INFLAMMATORY DISORDERS OF THE GASTRO INTESTINAL TRACT USING
      TOPICAL ACTIVE CORTICOSTEROIDS

            	
              02723424.1

            	
              March
      15, 2002

            	
              Published

            	 
      
	
              8105-010-IL

            	
              METHOD
      OF TREATING INFLAMMATORY DISORDERS OF THE GASTRO INTESTINAL TRACT USING
      TOPICAL ACTIVE CORTICOSTEROIDS

            	
              157921

            	
              March
      15, 2002

            	
              Published

            	 
      
	
              8105-010-JP

            	
              METHOD
      OF TREATING INFLAMMATORY DISORDERS OF THE GASTRO INTESTINAL TRACT USING
      TOPICAL ACTIVE CORTICOSTEROIDS

            	
              2002573023

            	
              March
      15, 2002

            	
              Published

            	 
      
	
              8105-010-NZ

            	
              METHOD
      OF TREATING INFLAMMATORY DISORDERS OF THE GASTRO INTESTINAL TRACT USING
      TOPICAL ACTIVE CORTICOSTEROIDS

            	
              528,607

            	
              March
      15, 2002

            	
              Issued

            	
              528,607

            
	
              8105-010-US

            	
              METHOD
      OF TREATING INFLAMMATORY DISORDERS OF THE GASTRO INTESTINAL TRACT USING
      TOPICAL ACTIVE CORTICOSTEROIDS

            	
              10/098,968

            	
              March
      15, 2002

            	
              Pending/

              published

            	 
      
	
              8105-010-WO

            	
              METHOD
      OF TREATING INFLAMMATORY DISORDERS OF THE GASTRO INTESTINAL TRACT USING
      TOPICAL ACTIVE CORTICOSTEROIDS

            	
              PCT/US02/07676

               

               

            	
              March
      15, 2002

            	
              Completed

            	 
      
	
              8105-011-CIP

            	
              METHOD
      OF TREATMENT OF CANCER BY CONTROLLING
GRAFT-VERSUS-LEUKEMIA

            	
              12/186,492

            	
              *****

            	
              Pending

            	 
      
	
              8105-012-AU

            	
              TREATMENT
      OF GRAFT-VERSUS-HOST DISEASE AND LEUKEMIA WITH BECLOMETHASONE DIPROPIONATE
      AND PREDNISONE

            	
              2005321826

            	
              April
      3, 2007

            	
              Pending

            	 
      
	
               

              8105-012-CA

            	
              TREATMENT
      OF GRAFT-VERSUS-HOST DISEASE AND LEUKEMIA WITH BECLOMETHASONE DIPROPIONATE
      AND PREDNISONE

            	
              2583244

            	
              April
      4, 2007

            	
              Pending

            	 
      
	
              8105-012-CN

            	
              TREATMENT
      OF GRAFT-VERSUS-HOST DISEASE AND LEUKEMIA WITH BECLOMETHASONE DIPROPIONATE
      AND PREDNISONE

            	
              200580039395.5

            	
              May
      17, 2007

            	
              Pending/

              published

            	 
      
	
              8105-012-EP

            	
              TREATMENT
      OF GRAFT-

              VERSUS-HOST
      DISEASE AND LEUKEMIA WITH BECLOMETHASONE DIPROPIONATE AND
      PREDNISONE

            	
              05856121.8

            	
              December
      30, 2005

            	
              Pending/

              published

            	 
      
	
              8105-012-ID

            	
              TREATMENT
      OF GRAFT-

              VERSUS-HOST
      DISEASE AND LEUKEMIA WITH BECLOMETHASONE DIPROPIONATE AND
      PREDNISONE

            	
              WO
      07/02004

            	
              June
      22, 2007

            	
              Pending

            	 
      
	
              8105-012-IL

            	
              TREATMENT
      OF GRAFT-VERSUS-HOST DISEASE AND LEUKEMIA WITH BECLOMETHASONE DIPROPIONATE
      AND PREDNISONE

            	
              182462

            	
              April
      11, 2007

            	
              Pending

            	 
      
	
              8105-012-IN

            	
              TREATMENT
      OF GRAFT-VERSUS-HOST DISEASE AND LEUKEMIA WITH BECLOMETHASONE DIPROPIONATE
      AND PREDNISONE

            	
              2783/KOLNP/2007

            	
              June
      30, 2007

            	
              Pending

            	 
      
	
              8105-012-JP

            	
              TREATMENT
      OF GRAFT-VERSUS-HOST DISEASE AND LEUKEMIA WITH BECLOMETHASONE DIPROPIONATE
      AND PREDNISONE

            	
              2007-599693

            	
              June
      4, 2007

            	
              Pending/

              published

            	 
      
	
              8105-012-KR

            	
              TREATMENT
      OF GRAFT-VERSUS-HOST DISEASE AND LEUKEMIA WITH BECLOMETHASONE DIPROPIONATE
      AND PREDNISONE

            	
              10-2007-7013835

            	
              June
      19, 2007

            	
              Pending

            	 
      
	
              8105-012-MY

            	
              TREATMENT
      OF GRAFT-VERSUS-HOST DISEASE AND LEUKEMIA WITH BECLOMETHASONE DIPROPIONATE
      AND PREDNISONE

            	
              PI
      20070515

            	
              April
      2, 2007

            	
              Pending

            	 
      
	
              8105-012-NZ

            	
              TREATMENT
      OF GRAFT-VERSUS-HOST DISEASE AND LEUKEMIA WITH BECLOMETHASONE DIPROPIONATE
      AND PREDNISONE

            	
              554326

            	
              June
      30, 2007

            	
              Pending

            	 
      
	
              8105-012-PH

            	
              TREATMENT
      OF GRAFT-VERSUS-HOST DISEASE AND LEUKEMIA WITH BECLOMETHASONE DIPROPIONATE
      AND PREDNISONE

            	
              1-2007-501177

            	
              June
      6, 2007

            	
              Pending

            	 
      
	
              8105-012-SG

            	
              TREATMENT
      OF GRAFT-VERSUS-HOST DISEASE AND LEUKEMIA WITH BECLOMETHASONE DIPROPIONATE
      AND PREDNISONE

            	
              200704692-3

            	
              June
      21, 2007

            	
              Pending

            	 
      
	
              8105-012-VN

            	
              TREATMENT
      OF GRAFT-VERSUS-HOST DISEASE AND LEUKEMIA WITH BECLOMETHASONE DIPROPIONATE
      AND PREDNISONE

            	
              1-2007-01557

            	
              June
      30, 2007

            	
              Pending/

              published

            	 
      
	
              8105-012-US

            	
              TREATMENT
      OF GRAFT-VERSUS-HOST DISEASE AND LEUKEMIA WITH BECLOMETHASONE DIPROPIONATE
      AND PREDNISONE

            	
              11/320,564

            	
              December
      30, 2005

            	
              Pending/

              published

            	 
      
	
              8105-012-WO

            	
              TREATMENT
      OF GRAFT-VERSUS-HOST DISEASE AND LEUKEMIA WITH BECLOMETHASONE DIPROPIONATE
      AND PREDNISONE

            	
              PCT/US05/047666

            	
              December
      30, 2005

            	
              Pending/

              published

            	 
      
	
              8105-018-PR2

            	
              TOPICALLY
      ACTIVE STEROIDS FOR USE IN RADIATION AND CHEMOTHERAPEUTICS
      INJURY

            	
              61/120,785

            	
              *****

            	
              Pending

            	 
      
	
              8105-019-WO

            	
              TOPICALLY
      ACTIVE CORTICOSTEROIDS FOR USE IN INTERSTITIAL PULMONARY
      FIBROSIS

            	
              PCT/US09/32015

            	
              *****

            	
              Pending

            	 
      
	
              N/A

            	
              TREATMENT
      OF IRRITABLE BOWEL SYNDROME AND RELATED BOWEL DISEASES

            	
              10/665,770

            	
              September
      19, 2003

            	
              Pending

            	 
      

    

    

    

    

    

    
      
        
          
             

            CONFIDENTIAL

             

          

          CONFIDENTIAL

        

        
          20

          
            

          

        

        
           

        

      

    

    
      
        EXECUTION
VERSION

        

      

    

     

    (The information below marked by ***** has been
omitted by a request for confidential treatment. The omitted portion has been
separately filed with the Commission.)

    

    Appendix
C

     

    

    SUPPLY
PRICE

     

     

    DOR shall
sell and deliver to STPI the PRODUCT and AG PRODUCT at a SUPPLY PRICE equal to
thirty-five percent (35%) of the NET SALES of the PRODUCT and AG
PRODUCT.

     

    For the
sake of good order, DOR declares that such thirty-five percent (35%) SUPPLY
PRICE is to be allocated as follows:

     

    
      	
              (i)  

            	
              FULLY
      BURDENED MANUFACTURING COST as a transfer price for the PRODUCT and AG
      PRODUCT, to be paid within thirty (30) days of receipt of the relevant
      invoice (the “FIXED COMPONENT”);
and

            

    

     

    
      	
              (ii)  

            	
              The
      remaining amount (representing the remainder of the purchase price for the
      PRODUCT)  to be paid within thirty (30) days of the end of each
      calendar quarter (the “PERCENTAGE
COMPONENT”).

            

    

     

    STPI
agrees that, while it has the discretion to set the pricing for the PRODUCT and
AG PRODUCT, the SUPPLY PRICE shall in no event be less than ***** of the FIXED
COMPONENT.

     

    For the
avoidance of doubt, in no case shall the SUPPLY PRICE (i.e. the FIXED COMPONENT
plus the PERCENTAGE COMPONENT) exceed thirty-five percent (35%) of the NET SALES
of the PRODUCT.

     

    Notwithstanding
the foregoing, but subject to Article 9.3, upon the expiration of the last to
expire VALID CLAIM covering the PATENT RIGHTS, the SUPPLY PRICE shall be reduced
to a percentage of NET SALES of the PRODUCT or AG PRODUCT to be mutually agreed
upon by the parties.  If the parties are
unable to agree, either party may, by written notice to the other party, have
such dispute referred to the respective officers designated below, or their
successors, for attempted resolution by good faith negotiation within thirty
(30) days after such notice is received.  Such designated officers are
as follows:

     

    For
DOR:               Christopher
J. Schaber, Ph.D., President and CEO

     

    
      	
               
      

            	
              For
      STPI:

            	
              Gregg
      Lapointe, Chief Executive Officer

            

    

     

    In the
event that the designated officers are not able to resolve the dispute within
such thirty (30)-day period, or such other period of time as the parties
may mutually agree to in writing, the dispute shall be referred to and finally
and exclusively resolved as follows:

     

    (i)           Each
party shall appoint an independent expert with reasonably significant and
demonstrable experience in the pharmaceutical industry.  Such
appointees shall reasonably collaborate and appoint an independent expert who
they reasonably believe is capable of determining the amount of the reduction in
SUPPLY PRICE (such person, the “ARBITRATOR”).

     

    (ii)           The
ARBITRATOR shall be instructed to deliver a decision in respect of the foregoing
reduction amount that is not above or below each of the parties’ last best offer
and that otherwise takes into consideration applicable legal, regulatory,
commercialization and customary marketing concerns related to the PRODUCT and AG
PRODUCT.  The ARBITRATOR shall be instructed that its decision with
respect to the reduction shall be delivered in ten (10) business days (or such
time as the parties may mutually agree or the ARBITRATOR may reasonably
request), in writing and shall include a statement describing in reasonable
detail the decision of the ARBITRATOR.  The decision of the ARBITRATOR
shall be final and binding and conclusive upon the parties for all purposes
under this AGREEMENT (absent fraud or manifest bad faith by the
ARBITRATOR).  The fees and expenses of the ARBITRATOR shall be shared
equally by the parties.

     

    

     

    //////////

     

    

    
      
        
          
             

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          21

          
            

          

        

        
           

          
            EXECUTION
VERSION

            

          

        

      

    

    

    Appendix
D

     

    

    TRADEMARK
POLICY

     

    DOR
BIOPHARMA, Inc. Trademark Policy

     

    The Marks
and Trademarks of DOR BioPharma, Inc. (“DOR”) include without limitation: “DOR
BioPharma” and “orBec®”, and accompanying logos and trade dress, which is
subject to modification by DOR from time to time.  These marks as of
June 24, 2008 are set forth on Exhibit A to this policy.

     

    The
foregoing and attached are either registered trademarks or trademarks of DOR, in
the United States and worldwide.  All rights are
reserved.

     

    All use
and appearance of Marks and accompanying logos and trade dress shall be in
accordance with the DOR’s Trademark Policy.  Any use of any DOR Marks,
other DOR related names and/or logos, or variations of DOR Marks from those
presented herein shall be pre-approved by DOR.  Any use of images or
statements of DOR’s employees shall be pre-approved by DOR.

     

    DOR
Policy on Use of DOR Marks, Trademarks and Official Logo:

     

    
      	
              ·

            	
              Christopher
      J. Schaber, Ph.D., President and CEO, is the key and only official
      spokesperson for and representative of DOR.  Any use or
      appearance of any another spokesperson for or representative of DOR is
      subject to its prior written approval.  Any use or appearance of
      any other person’s image, name, or statements in representation of DOR is
      subject to its prior written
approval.

            

    

     

    
      	
              ·

            	
              All
      Products that include DOR technology, and related product packaging,
      advertising, promotional and marketing materials, shall display DOR’s
      Official Logo in a size and prominence previously approved by
      DOR.

            

    

     

    
      	
              ·

            	
              Use
      of DOR’s Official Logo (the Logo) shall maintain the integrity of the
      Logo’s design.  Unless provided or authorized in advance in
      writing by DOR, no deviations from the then current Logo design or
      appearance are allowed.  All use of the Logo shall maintain its
      visual effectiveness.  No design elements may be appended to the
      Logo.  The Logo shall not be presented with any alternative font
      or type style, change in letter spacing, or linear dropped
      shadows.   Distortion of the logo’s shape and lettering is
      not permitted.  Reproduction of the Logo shall be consistent,
      accurate, sharp, clear, and undistorted, and shall maintain the Logo’s
      correct colors.

            

    

     

    
      	
              ·

            	
              The
      color used in the DOR’s Marks, including the Official Logo, is as follows:
      Pantone 281 (for the blue) and Pantone 871 (for the
  gold).

            

    

     

    
      	
              ·

            	
              DOR’s
      Marks, including its name, orBec® and Official Logo shall be displayed in
      a size and prominence at least equal to similar marks, names and logos for
      similar products or methods on any product, packaging, documentation,
      advertising, promotional, marketing, and related materials in accordance
      with industry standards.  The elements of the DOR trade dress
      cannot be separated without the prior permission of
  DOR.

            

    

     

    

    
      
        
          
             

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          22

          
            

          

        

        
           

          
            EXECUTION
VERSION

            

          

        

      

    

    

    Appendix
E

    
 

    McDonald
License Agreement

    
 

    
      EXCLUSIVE LICENSE
AGREEMENT

       

      This
Agreement is made effective the 24th day of  November, 1998 (the
“Effective Date”), by and between George B. McDonald, M.D. (hereinafter called
the “LICENSOR”), located at 1815 102nd Place S.E., Bellevue, WA 98004, and
Enteron Pharmaceuticals, Inc. (hereinafter called “LICENSEE”), located at 787
Seventh Avenue, 48th Floor, New York, NY 10019.

       

      WHEREAS,
LICENSOR owns the “Licensed Patents” defined below and is willing to grant a
license to LICENSEE under the Licensed Patents; and

       

      WHEREAS,
LICENSEE desires to obtain a license to the Licensed Patents upon the terms and
conditions hereinafter set forth.

       

      NOW,
THEREFORE, it is agreed as follows:

       

      Section
1. Definitions.

       

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

       

      A. “Affiliate”
means any corporation or other business entity controlled by, controlling, or
under common control with LICENSEE, but only for so long as such control
exists.  For purposes of this definition, “control” means (a) direct
or indirect beneficial ownership of at least fifty percent (50%) of the voting
stock of another corporation; or (b) the power, whether or not normally
exercised, to direct or cause the direction of the management, affairs and
policies of another corporation or other legal entity by contract, resolution,
or otherwise.

       

      B. “Clinical
Trial” means the enrollment of patients with graft-versus-host disease or
patients who have had (or will have had) a bone marrow transplant and,
therefore, are susceptible to graft-versus-host disease into a treatment
protocol whose primary endpoints are the safety and efficacy of the
treatment.

       

      C. “Calendar
Quarter” means each three-month period ending March 31, June 30, September 30
and December 31.

       

      D. “Confidential
Information” means all nonpublic technical and commercial information, including
all inventions, inventor or laboratory notebooks and records, formulae, methods,
plans, processes, specifications, experience and trade secrets relating to the
Technology (a) disclosed by one party to the other or (b) developed as a result
of research development or other activity conducted by either party prior to or
during the term of this Agreement,

       

      E. “Development
Report” means a written account of LICENSEE’s progress under a development plan
identified in Section 3A and Appendix C that contains the information specified
in Appendix B.

       

      F. “FDA”
means the United States Food and Drug Administration or any successor agency
having the administrative and regulatory authority to approve testing and
marketing of human pharmaceutical or biological prophylactic, therapeutic or
diagnostic products in the United States.

       

      
        
          
          

        

        
          23

          
            

          

        

        
          
          

        

      

      G. “Know-how”
means all tangible information and data that is owned or controlled by either
party at any time before or during the term of the Agreement and that is related
to the Licensed Process(es) or is necessary or useful in the development,
registration, manufacture, use or sale of the Licensed Product(s), including,
but not limited to, items listed on Appendix D, pharmacological, toxicological,
clinical, analytical, and quality control data, and formulations, materials,
drawings and sketches, designs, testing and test results, and other regulatory
information.

       

      H. “Licensed
Field’’ means research and development of products for the prevention and
treatment of human diseases.

       

      I. “Licensed
Patents” shall mean (i) all U.S. and foreign patents and patent applications set
forth in Appendix I; (ii) any later-filed United States and/or foreign patent
applications based on the patent applications and/or patents listed in Appendix
I, or corresponding thereto, including any continuations, continuations-in-part,
divisional, reissues, reexaminations, or extensions thereof; and (iii) any
United Stales and/or foreign patents issuing from any of the
foregoing-

       

      J. “Licensed
Product” means (i) any product the relevant manufacture, use, sale or
importation of which would, in the applicable country and in the absence of this
License, infringe upon a Valid Claim under the Licensed Patents; or (ii) any
product that is manufactured or used according to any Licensed
Process.

       

      K. “Licensed
Process” means any method or process the practice of which would, in the
applicable country and in the absence of this License, infringe upon a Valid
Claim under the Licensed Patents.

       

      L. “NDA”
means a New Drug Application filed with the FDA.

       

      M. “Net
Sales” means the gross amounts actually received for the sale of Licensed
Product(s) less only the sum of the following:

       

      (i) Trade
discounts actually allowed to customers on Licensed Product(s);

       

      (ii) Sales,
tariff duties and/or use taxes directly imposed and paid with reference to sales
of Licensed Product(s) (excluding what is commonly known as income
taxes);

       

      (iii) Freight,
postage, and insurance charges and additional packaging charges for Licensed
Product(s);

       

      (iv) Amounts
actually allowed or credited on returns of Licensed Product(s);

       

      (v) Bad debt
deductions actually written off during the accounting period that directly
relate to Licensed Product(s); and

       

      (vi) Sales
commissions on sales of Licensed Product(s).

       

      N. “Orphan
Drug” means a product that is used to treat disease that affects relatively few
people and for which U.S. and foreign government authorities or agencies provide
tax credits or other incentives to make it possible to provide a safe and effect
medical product for the treatment of the disease.

       

      O. “Regulatory
Approval” means the receipt of notice by a party of approval by the FDA of a NDA
that is effective to permit the introduction of a Licensed Product into
interstate commerce pursuant to 21 U.S.C. 355.  “Regulatory Approval”
also includes the equivalent approval or licensure in a country other than the
United States.

       

      P. “Technology”
means the Know-how and the inventions disclosed or claimed in the Licensed
Patents.

       

      Q. ‘Third
Party” means any individual, corporation or other legal entity other than
LICENSOR, LICENSEE or an Affiliate.

       

      R. “Valid
Claim” means a claim of any pending patent application or unexpired patent, or
one whose expiration date has been extended by law, so long as such claim shall
withdrawn, canceled, disclaimed, nor held invalid by a court of competent
jurisdiction in an unappealed or unappealable decision.

       

      
        
          
          

        

        
          24

          
            

          

        

        
          
          

        

      

      Section
2. Grant of
License.

       

      A. Grant to
LICENSEE

       

      Subject
to the terms and conditions of this Agreement, LICENSOR hereby grants to
LICENSEE and LICENSEE accepts the following:

       

      (i) an
exclusive license under the Licensed Patents, including the right to grant
sublicenses to both Affiliates and Third Parties, to practice the Licensed
Process(es) and to make, have made, use, import and sell Licensed Product(s), in
each case worldwide, for use in the Licensed Field.

       

      (ii) an
exclusive license to the Know-how, including the right to grant sublicenses to
both Affiliates and Third Parties, to practice the Licensed Process(es) and to
make, have made, use, import and sell Licensed Product(s), in each case
worldwide, for use in the Licensed Field.

       

      B. Limitations

       

      The grant
in Section 2A shall be subject to, restricted by and non-exclusive with respect
to the following:

       

      (i) LICENSEE
shall use reasonable effort to introduce the Licensed Products for the
prevention of graft-versus-host disease and host-versus-graft disease into the
commercial market as soon as practicable, consistent with sound and reasonable
business practices and judgment, and thereafter endeavor to keep Licensed
Products reasonably available to the public.

       

      (ii) If
LICENSEE does not have to conduct any Clinical Trials prior to FDA approval of
the first LICENSEE-sponsored NDA for Licensed Product, LICENSOR shall have the
right to terminate or render this Agreement nonexclusive at any time after
eighteen (18) months from the effective date of this Agreement if, in LICENSOR’s
reasonable judgment, LICENSEE:

       

      a) is not
demonstrably and actively engaged in a research, development, manufacturing,
marketing or licensing program, as appropriate, and obtaining appropriate
Regulatory Approvals that are directed toward putting and keeping Licensed
Product(s) into the commercial market, or

       

      b) has not,
directly or through a sublicense, put Licensed Product(s) into commercial use or
kept Licensed Product(s) reasonably available to the public in a country or
countries where licensed.

       

      In making
this determination, LICENSOR shall take into account the normal course of such
programs conducted with sound and reasonable business practices and judgment and
shall take into account the reports provided hereunder by LICENSEE.

       

      (iii) If
LICENSEE does have to conduct Clinical Trials to obtain FDA approval of the
first LICENSEE-sponsored NDA for Licensed Product, LICENSOR shall have the right
to terminate or render this Agreement nonexclusive at any time after five (5)
years from the effective date of this Agreement if, in LICENSOR’s reasonable
judgment, LICENSEE:

       

      a) is not
demonstrably and actively engaged in a research, development, manufacturing,
marketing or licensing program, as appropriate, and obtaining appropriate
Regulatory Approvals that are directed toward putting and keeping Licensed
Product(s) into the commercial market, or

       

      b) has not,
directly or through a sublicense, put Licensed Product(s) into commercial use or
kept Licensed Product(s) reasonably available to the public in a country or
countries where licensed.

       

      In making
this determination, LICENSOR shall take into account the normal course of such
programs conducted with sound and reasonable business practices and judgment and
shall take into account the reports provided hereunder by LICENSEE.

      
        
          
          

        

        
          25

          
            

          

        

        
          
          

        

      

       

      (iv) LICENSEE
shall, at least thirty (30) days prior to granting any sublicense to any
Affiliate or Third Party, identify such Affiliate or Third Party to
LICENSOR.  Concurrent with identifying such Affiliate or Third Parry,
LICENSEE shall provide to LICENSOR a copy of the sublicense
agreement.  Any sublicense shall be granted in a sublicense agreement
that is consistent with the terms of this Agreement and is in form and substance
acceptable to LICENSOR; provided, however, that a sublicense agreement that is
verified by Licensor to contain the relevant provisions of Sections 1, 2B, 3A,
3C, 4D, 4E, 5, 6, 7, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20 and 21 shall
not require the pre-approval of LICENSOR.  In a sublicense agreement,
LICENSEE shall not grant any sublicensee the right to sublicense the Licensed
Patents or Know-how licensed in this Agreement.  LICENSEE shall be
liable to LICENSOR for performance by any sublicensee of such sublicenseers
obligations under the sublicense agreement.  Any sublicense agreement
shall provide for termination or assignment to LICENSOR, at the option of
LICENSOR, of LICENSEE’s interest therein upon the termination of this
Agreement.

       

      (v) If
LICENSEE is unable or unwilling to grant sublicenses, either as suggested by
LICENSOR or a potential sublicensee or otherwise, LICENSOR has the right to
directly license such potential sublicensee unless LICENSEE reasonably satisfies
LICENSOR that the granting of such license or sublicense would result in direct
or indirect competition with Licensed Product(s) sold, marketed, or under active
research and development by LICENSEE or would not materially increase the
availability to the general public of Licensed Products.

       

      (vi) A
nonexclusive, worldwide right to make and use the Technology by LICENSOR solely
for research purposes.

       

      (vii) It is
understood that if the United States Government (through any of its agencies or
otherwise) has funded research, during the course of or under which any of the
inventions of the Licensed Patents were conceived or made, the United States
Government is entitled, as a right, under the provisions of 35 U.S.C. §§200-212
and applicable regulations of Chapter 37 of the Code of Federal Regulations, to
a nonexclusive, nontransferable, irrevocable, paid up license to practice or
have practiced the invention of such Licensed Patents for government
purposes.  Any license granted to LICENSEE in this Agreement will be
subject to such right.

       

      Section
3. Consideration.

       

      A. Development.

       

      LICENSEE
agrees that it will (i) independently evaluate the Licensed Patents; (ii)
establish and actively pursue the development of the Licensed Patents to enable
Licensed Products to be sold and (iii) supply LICENSOR with a written
Development Report within one month following the end of each semi-annual period
ending on June 30 and December 31 during the term of this Agreement until
LICENSEE (a) obtains Regulatory Approvals of Licensed Product(s) for the
treatment of graft-versus-host disease and host-versus-graft disease and (b)
begins international commercial sales of such Licensed
Product(s).  All development activities and all aspects of Licensed
Product design and decisions to market are entirely at the discretion of
LICENSEE, and LICENSEE will rely entirely on its own
expertise.  LICENSOR’s review of LICENSEE’s development plan is solely
to verify the existence of LICENSEE’s commitment to Licensed Product development
activity.

       

      B. License
Fee.

       

      In
partial consideration for the grant of licenses in this Agreement to LICENSEE,
LICENSEE agrees to pay to LICENSOR a nonrefundable license fee of twenty
thousand dollars ($20,000) within seven (7) calendar days of the execution of
this agreement.

       

      C. Royalty.

       

      In
partial consideration for the grant of licenses in this Agreement to LICENSEE
and during the term of this Agreement, LICENSEE agrees to pay the following as
running royalties, which shall not be returnable in any event, to LICENSOR on a
country-by-country basis:

       

      (i) If
LICENSEE does have to conduct Clinical Trials to obtain FDA approval of the
first LICENSEE-sponsored NDA for Licensed Product, then LICENSEE shall pay to
LICENSOR within forty-five (45) days of the end of each Calendar Quarter in an
amount equal to twenty-five percent (25%) of:  (a) any non-recurring
sublicense fees (including, but not limited to, signing, up-front, and lump-sum
fees) and annual license maintenance fees, if any, received from any Affiliate
or Third Party for the right to practice the Licensed Process(es) or make, use,
sell, or import Licensed Product(s); and (b) all royalties received by LICENSEE
from the sale of Licensed Product(s) by any sublicensed Third
Party.

       

      (ii) If
LICENSEE does not have to conduct any Clinical Trials prior to FDA approval of
the first LICENSEE-sponsored NDA for Licensed Product, then LICENSEE shall pay
to LICENSOR within forty-five (45) days of the end of each Calendar Quarter in
an amount equal to thirty-three percent (33%) of:  (a) any
non-recurring sublicense fees (including, but not limited to, signing, up-front,
and lump-sum fees) and annual license maintenance fees, if any, received from
any Affiliate or Third Party for the right to practice the Licensed Process(es)
or make, use, sell, or import Licensed Product(s); and (b) all royalties
received by LICENSEE from the sale of Licensed Product(s) by any sublicensed
Third Party,

       

      (iii) If
LICENSEE does have to conduct Clinical Trials to obtain FDA approval of the
first LICENSEE-sponsored NDA for Licensed Product, then LICENSEE shall pay
LICENSOR within forty-five (45) days from the end of each Calendar Quarter six
percent (6%) of all Net Sales of Licensed Products by LICENSEE or a sublicensed
Affiliate.

       

      (iv) If
LICENSEE does not have to conduct any Clinical Trials prior to FDA approval of
the first LICENSEE-sponsored NDA for Licensed Product, then LICENSEE shall pay
LICENSOR within forty-five (45) days from the end of each Calendar Quarter eight
percent (8%) of all Net Sales of Licensed Products by LICENSEE or a sublicensed
Affiliate.

       

      (v) The
royalty rates in (i), (ii), (iii) and (iv) above shall be reduced by fifty
percent (50%) in any country where a competitor is selling any oral formulation
of the Licensed Product(s) for any indication.

       

      
        
          
          

        

        
          26

          
            

          

        

        
          
          

        

      

      (vi) No
royalty shall accrue on sales among LICENSEE, its sublicensed Affiliates or
sublicensed Third Parties.  Royalties shall only accrue on sales by
LICENSEE, its sublicensed Affiliates or sublicensed Third Parties to parties
other than LICENSEE, its sublicensed Affiliates or sublicensed Third Parties and
shall be payable only once for any given unit of Licensed Product
sold.

       

      (vii) To the
extent that LICENSEE or any Affiliate of LICENSEE is required, by order or
judgment of any court, to obtain in any country any license from a Third Party
in order to practice the rights purported to be granted hereunder to LICENSEE by
LICENSOR under the Third Party’s issued patents in such country, then fifty
percent (50%) of the royalties payable under such license in such jurisdiction
may be deducted from royalties otherwise payable to LICENSOR hereunder, provided
that in no event shall the aggregate royalties payable to LICENSOR in any
Calendar Quarter in such country be reduced by more than fifty per cent (50%) as
a result of any such deduction.

       

      D. Milestone
Payments.

       

      LICENSEE
agrees to pay to LICENSOR three hundred thousand dollars ($300,000) within seven
(7) calendar days of the FDA’s approval of the first LICENSEE-sponsored NDA
incorporating the Technology.

       

      E. Equity
Participation.

       

      (i) In
partial consideration for the grant of licenses in this Agreement to LICENSEE,
LICENSEE shall issue to LICENSOR a number of shares (the “Initial Shares”) of
common stock (the “Common Stock”) of LICENSEE, par value $.001 per share,
representing eight percent (8%) of the outstanding Common Stock as of the date
of execution of the License Agreement, LICENSEE shall issue the Initial Shares
to LICENSOR pursuant to the exemption from registration provided by Section 4(2)
under the Securities Act of 1933, as amended (the “Securities
Act”).  The Initial Shares shall be protected from dilution in
connection with any financing transaction by LICENSEE until such time as
LICENSEE has received at least two million dollars ($2,000,000) in gross
proceeds from the issuance of equity securities of LICENSEE.  LICENSOR
shall be entitled to receive, in partial consideration for the grant of licenses
this Agreement to LICENSEE, additional shares of Common Stock so as to maintain
his respective percentage ownership of LICENSEE immediately prior to the
applicable financing.

       

      (ii) If
LICENSEE does not have to conduct any Clinical Trials prior to FDA approval of
the first LICENSEE sponsored NDA for Licensed Product, then LICENSEE also shall
issue to LICENSOR, in partial consideration for the grant of licenses in this
Agreement to LICENSEE, a number of new shares of Common Stock of LICENSEE equal
to the Initial Shares, which shall have the same dilution protection as the
Initial Shares set forth in E(i) above.

       

      F. Penalty
Payments.

       

      In the
event LICENSEE has not (i) initiated recruitment of patients for a Phase III
Clinical Trial for the Licensed Products, or (ii) initiated the filing of a NDA
within six (6) months of signing this Agreement, LICENSEE shall pay LICENSOR one
hundred thousand dollars ($100,0,00) within seven (7) calendar days of the six
(6) month anniversary of the Effective Date of this Agreement.

       

      G. Payments by
Equity.

       

      (i) Upon the
request of LICENSOR, LICENSEE shall have the obligation to fulfill any of
LICENSEE’s payment obligations due under this Section 3 through the issuance of
an amount of shares of Common Stock equal to the cash value of any such payment
obligation.  Any such issuances of Common Stock shall be made only to
the extent that an exemption from the registration requirements of the
Securities Act exists or the shares are duly registered under the Securities
Act.

       

      
        
          
          

        

        
          27

          
            

          

        

        
          
          

        

      

      (ii) For
purposes of calculating the cash value of the Common Stock under Section 3G(i),
the then-current market price of the Common Stock will be deemed to be the
average closing price of the Common Stock for the ten (10) consecutive trading
days prior to the date on which any payment pursuant to this Section 3 accrues,
on the principal national securities exchange on which the Common Stock is
admitted to trading or listed, or if not listed or admitted to trading on any
such national exchange, then the representative average closing bid price of the
Common Stock as reported by the National Association of Securities Dealers, Inc.
Automated Quotations System (“Nasdaq”) or other similar organization, or, if the
Common Stock is not reported on Nasdaq or by a similar organization, then the
average per share bid price for the Common Stock in the over-the-counter market
as reported by the National Quotation Bureau or similar organization, or if not
so available, then the fair market price of the Common Stock as determined in
good faith by the Board of Directors of LICENSEE.  In connection with
this calculation, LICENSOR, or his representative, shall have access to the
books and records of LICENSEE at any time upon twenty-four (24) hour notice to
LICENSEE.  Such access shall occur during normal business hours of
LICENSEE.

       

      (iii) LICENSEE
agrees that, at any time, and from time to time during the period commencing two
(2) years after the Effective Date hereof, or one (1) year after LICENSEE’S
initial public offering of Common Stock registered under the Securities Act,
whichever is later, and ending on the date that is five (5) years after the
Effective Date hereof, if the Board of Directors of LICENSEE authorizes the
filing of a registration statement under the Securities Act (other than the
initial public offering of LICENSEE’s Common Stock, or a registration statement
on Form S-8, Form S-4 or any other form that does not include substantially the
same information as would be required in a form for the general registration of
securities) in connection with the proposed offer of any of its securities by it
or any of its stockholders, then LICENSEE shall (a) promptly notify LICENSOR
that such registration statement will be filed and that the Common Stock then
held by LICENSOR will be included in such registration statement at LICENSOR’s
request, (b) cause such registration statement to cover all of such Common Stock
issued to LICENSOR and requested for inclusion, (c) use its reasonable best
efforts to cause such registration statement to become effective as soon as
practicable and (d) take all other action necessary under any federal or state
law or regulation of any governmental authority to permit all such Common Stock
that has been issued to LICENSOR and requested by LICENSOR for inclusion in such
proposed registration statement to be sold or otherwise disposed of and shall
maintain such compliance with each such federal and state law and regulation of
any governmental authority for the period necessary to effect the proposed sale
or other disposition of any Common Stock that has been issued to LICENSOR and
requested by LICENSOR for inclusion in the proposed registration
statement.

       

      To the
extent that officers or directors of LICENSEE are permitted to have registered
shares of Common Stock held by any of them included in an initial public
offering of LICENSEE’S Common Stock, LICENSOR shall also have the right to
include the Common Stock then held by LICENSOR in the registration statement
prepared in connection with such an offering.

       

      (iv) In the
event that LICENSEE grants to any investor(s) the right to require LICENSEE to
effect a registration of Common Stock held by such investors, LICENSOR shall
have the right to require LICENSEE to include the Common Stock held by LICENSOR
in any such registration on the same terms applicable to such
investor(s).

       

      a) If the
Common Stock owned by LICENSOR is or becomes freely tradable, then LICENSOR
shall have no right to the above described registration rights.

       

      b) LICENSEE
may at any time, abandon or delay any registration commenced by
LICENSEE.

       

      c) LICENSOR
represents to LICENSEE that the Common Stock will be acquired by LICENSOR for
investment purposes only, for an indefinite period of time, for its own account,
not as a nominee or agent for any other entity, and not with a view to the sale
or distribution of all or any part thereof, and LICENSOR has no present
intention of selling, granting any participation in, or otherwise distributing,
any or all of the Common Stock.  LICENSOR does not have any contract,
undertaking, agreement or arrangement with any entity to sell, transfer or grant
participation to such person, firm or corporation, with respect to any or all of
the Common Stock.

       

      d) LICENSEE
represents to LICENSOR that LICENSEE shall rely on Section 4(2) under the
Securities Act in connection with the issuance of the Initial Shares to
LICENSOR.  In addition, LICENSEE represents to LICENSOR that LICENSEE
shall conduct any further issuances of Common Stock to LICENSOR (under this
Section 3) only in compliance with registration under the Securities Act or an
available exemption from such registration requirements.

       

      e) The
parties agree to execute such further instruments and to take such further
action as may reasonably be necessary to carry out the intent of this Section
3G.

       

      f) LICENSOR
agrees that, in connection with each underwritten public offering of shares of
Common Stock or other equity securities of LICENSEE registered under the
Securities Act by or on behalf of LICENSEE, LICENSOR will not sell or transfer,
or offer to sell or transfer, any equity securities of LICENSEE, to the extent
all officers, directors and greater than five percent (5%) shareholders of
LICENSEE are also subject to this restriction for such period as the managing
underwriter of such offering determines is necessary to effect the underwritten
public offering, not to exceed one hundred and eighty (180) days, and LICENSOR
further agrees that it will sign an agreement as requested by the managing
underwriter of such offering to effect the requirements of this Section
3G(iv)(f).

       

      
        
          
          

        

        
          28

          
            

          

        

        
          
          

        

      

      Section
4. Certain Warranties of
LICENSOR and LICENSEE.

      
         

      

      A. To
LICENSOR’s knowledge and belief, LICENSOR has all right, title, and interest in
and to the Licensed Patents and Know-How, including exclusive, absolute,
irrevocable right, title and interest thereto, free and clear of all liens,
charges, encumbrances or other restrictions or limitations of any kind
whatsoever and to LICENSOR’s knowledge and belief there are no licenses,
options, restrictions, liens, rights of third parties, disputes, royalty
obligations, proceedings or claims relating to, affecting, or limiting
LICENSOR’s rights licensed to LICENSEE under this Agreement.

       

      B. As of the
Effective Date, to LICENSOR’s knowledge and belief, there is no claim pending or
threatened, of infringement, interference or invalidity regarding any part or
all of the Licensed Patents or the use of the inventions as contemplated in the
underlying patent applications as presently drafted.

       

      C. LICENSOR,
by this License Agreement, makes no representations or warranties as to the
validity and/or scope of the claims contained in the Licensed Patents or that
such Licensed Patents may be exploited by LICENSEE or its sublicensees without
infringing other patents and LICENSEE so acknowledges.

       

      D. EXCEPT AS
MAY BE EXPRESSLY PROVIDED IN THIS SECTION 4, LICENSOR DOES NOT MAKE, AND
EXPRESSLY DISCLAIMS ANY AND ALL WARRANTIES, EITHER EXPRESS OR IMPLIED, ORAL OR
WRITTEN, AS TO ANY OF THE LICENSED PATENTS, KNOW-HOW, OR TECHNOLOGY, INCLUDING
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.

       

      E. LICENSEE
represents and warrants to LICENSOR the following:

       

      (i) LICENSEE
is a corporation duly organized„ validly existing and in good standing under the
laws of the State of New York and has all necessary corporate power to enter
into and perform its obligations under this Agreement.

       

      (ii) The
execution, delivery and performance of this Agreement by LICENSEE have been duly
authorized and approved by all necessary corporate action, and that the
Agreement is binding upon and enforceable against LICENSEE in accordance with
its terms (subject to bankruptcy and similar laws affecting the rights of
creditors generally).

       

      (iii) At all
times during the term of this Agreement, LICENSEE and all its sublicensees will
obtain, maintain and comply with all licenses, permits and authorizations
necessary to LICENSEE’S complete and timely performance of its obligations under
this Agreement, which are required under any applicable statutes, laws,
ordinances, rules and regulations of the United States as well as those of all
applicable foreign governmental bodies, agencies and subdivisions, having,
asserting or claiming jurisdiction over LICENSEE or any sublicensee or
LICENSEE’s sublicensee’s performance of the terms of this
Agreement.  In particular, LICENSEE.

       

      (iv) LICENSEE
will be responsible for obtaining all necessary United States FDA approvals and
all approvals required by similar governmental bodies or agencies of all
applicable foreign countries.

       

      (v) LICENSEE
understands and acknowledges that the transfer of certain commodities and
technical data is subject to United States laws and regulations controlling the
export of such commodities and technical data, including all Export
Administration Regulations of the United States Department of
Commerce.  These laws and regulations, among other things, prohibit or
require a license for the export of certain types of technical data to certain
specified countries.  LICENSEE hereby agrees and gives written
assurance that it will comply with all United States laws and regulations
controlling the export of commodities and technical data, that it will be solely
responsible for any violation of such by LICENSEE or its AFFILIATES or
sublicensees, and that LICENSEE will defend and hold LICENSOR harmless of any
legal action of any nature occasioned by such violation.

       

      
        
          
          

        

        
          29

          
            

          

        

        
          
          

        

      

      Section
5. Record Keeping, Reporting,
Accounting and Payments.

       

      A. LICENSEE
shall report to LICENSOR the date of first sale of each Licensed Product in each
country within thirty (30) days of occurrence.

       

      B. LICENSEE
will keep, maintain and require each of its sublicenses to keep and maintain, in
accordance with generally accepted accounting principles, proper and complete
books and records sufficient to verify the accuracy and completeness of
LICENSEE’s and each sublicensee’s accounting of all sales of Licensed
Product.  The books and records will be preserved for a period not
less than three years after they are created.

       

      C. Amounts
owing to LICENSOR under Section 3C will be paid on a quarterly basis for the
periods ending March 31, June 30, September 30 and December 31, within
forty-five days of the end of the Calendar Quarter.  The balance of
any such amounts that remain unpaid more than thirty days after they are due to
LICENSOR will accrue interest until paid at the rate of one percent (1%) per
month.  In no event, however, will this interest provision be
construed as a grant of permission for any payment delays.

       

      D. All
amounts owing to LICENSOR under this Agreement will be paid in U.S. dollars to
LICENSOR at the address provided in Section 13.  All royalties owing
with respect to Net Sales stated in currencies other than U.S. dollars will be
converted at the rate shown in the Federal Reserve Noon Valuation - Value of
Foreign Currencies on the last day of the Calendar Quarter for which payment is
due or, if the last day is not a business day, the closest preceding business
day.  All amounts payable by LICENSEE to LICENSOR shall be made
without any deduction for conversion or remittance fees or other charges imposed
outside of the United States or any taxes levied on such amounts by non-U.S. tax
authorities, all of which shall be borne by LICENSEE.  LICENSOR shall
pay any conversion or remittance fees or other charges imposed in the United
States or any taxes levied by U.S. tax authorities.

       

      E. With each
payment due under Section 3C, the accounting will be summarized on the form
shown in Appendix A of this Agreement on a country-by-country basis for each
Licensed Product sold by LICENSEE or a sublicensed Affiliate or sublicensed
Third Party.  Such accounting summaries shall be certified as correct
by an officer of LICENSEE and shall include a detailed listing of all deductions
from gross sales and be accompanied by a listing of all payments made by each
sublicensee to LICENSOR.  In the event no payment is owed to LICENSOR,
a statement setting forth that fact will be supplied to LICENSOR and certified
as correct by an officer of LICENSEE.

       

      F. LICENSEE
will take all steps necessary so that LICENSOR may, within thirty (30) days of
LICENSOR’s request, review the books and records at a single U.S. location to
verify the accuracy of LICENSEE’s and each sublicensee’s
accounting.  The review may be performed by any attorney or registered
CPA mutually agreed upon by LICENSOR and LICENSEE with the cost being borne
solely by LICENSOR, upon reasonable notice and during regular business hours and
not more than twice per calendar year.  If a royalty payment
deficiency is determined, LICENSEE will pay the royalty deficiency outstanding
within thirty (30) days of receiving written notice thereof, plus interest on
outstanding amounts as described in Section 5C.  If a royalty payment
deficiency for a calendar year exceeds five percent (5%) of the royalties paid
for any consecutive twelve (12) months, then LICENSEE will be responsible for
paying LICENSOR’s out-of-pocket expenses incurred with respect to such
review.

       

      
        
          
          

        

        
          30

          
            

          

        

        
          
          

        

      

      Section
6. Term and
Termination.

       

      A. If not
terminated sooner pursuant to Sections 2B, 8C, 10B, or the provisions in this
Section 6, this Agreement shall terminate:  (i) on the date of the
last to expire claim contained in the Licensed Patents; or (ii) in the event
that no patent shall issue, upon the expiration of the Orphan Drug status, if
achieved.

       

      B. Subject
to the provisions of the federal bankruptcy laws that limit rights of
termination, if LICENSEE shall become bankrupt, or shall file a petition in
bankruptcy, or if the business of LICENSEE shall he placed in the hands of a
receiver, assignee or trustee for the benefit of creditors, whether by the
voluntary act of LICENSEE or otherwise, this License Agreement shall
automatically terminate.

       

      C. Should
LICENSEE fail to make payment to LICENSOR of royalties due in accordance with
the terms of this Agreement that are not the subject of a bona fide dispute
between LICENSOR and LICENSEE, LICENSOR shall have the right to terminate this
License Agreement within thirty (30) days after giving said notice of
termination unless LICENSEE shall pay to LICENSOR, within the 30-day period, all
such royalties and interest due.  Upon the expiration of the 30-day
period, if LICENSEE shall not have paid all such royalties and interest due, the
rights, privileges and license granted hereunder shall, at the option of
LICENSOR, immediately terminate.

       

      D. Upon any
material breach or default of this Agreement by LICENSEE, other than as set
forth in Section 6C herein above, LICENSOR shall have the right to terminate
this Agreement and the rights, privileges and licenses granted hereunder upon
giving thirty (30) days written notice to LICENSEE.

       

      E. LICENSEE
shall have the right at any time to terminate this Agreement in whole by giving
ninety (90) days notice thereof in writing to LICENSOR.

       

      F. Upon
termination of this Agreement for any reason, nothing herein shall be construed
to release either party from any obligation that matured prior to the effective
date of such termination or obligations under Sections 3, 5, 10, 11, 15, and 16
hereof.  LICENSEE and/or any sublicensee thereof may, however, after
the effective date or such termination and continuing for a period not to exceed
three (3) months thereafter, sell all Licensed Products completed as of the date
of notice of such termination and sell any Licensed Products in the process of
manufacture as of the date of notice of such termination, provided that LICENSEE
shall pay or cause to be paid to LICENSOR the royalties thereon as required by
Article 3 of this License Agreement and shall submit the reports and
certifications required on the sales of Licensed Products outlined in Section 5E
hereof.

       

      G. LICENSOR
shall have the right to terminate this Agreement upon termination of the
Consulting Agreement entered into by and between LICENSOR and LICENSEE that
relates to LICENSOR’s providing consulting services to LICENSEE in connection
with LICENSEE’s business.

       

      
        
          
          

        

        
          31

          
            

          

        

        
          
          

        

      

      Section
7. Binding Effect and
Assignability.

       

      The
rights, benefits, duties and obligations under this Agreement shall inure to,
and be binding upon LICENSOR and LICENSEE and their respective successors,
assigns, and legal representatives, This Agreement and the rights and duties
hereunder may not be assigned by either party without first obtaining the
written consent of the other, which consent will not be unreasonably
withheld.  Any such purported assignment, without the written consent
of the other party, will be null, void and of no effect, Notwithstanding the
foregoing, LICENSEE may assign this Agreement, without the written consent of
LICENSOR, to either (i) a purchaser, merging or consolidating corporation, or
acquirer of substantially all of LICENSEE’s assets or business and/or pursuant
to any reorganization qualifying under section 368 of the internal Revenue Code
of 1986 as amended and may be in effect at such time, or (ii) an Affiliate of
LICENSER

       

      Section
8. Patent
Prosecution.

       

      A. Subject
to the provisions of section 8(C) hereof, LICENSEE, within ninety (90) days from
receipt of appropriate documentation, shall reimburse LICENSOR in the
approximate amount of Six Thousand Eight Hundred Thirty-Three Dollars and Three
Cents ($6,833.03) representing all reasonable out-of-pocket expenses LICENSOR
has incurred for the preparation, filing, prosecution and maintenance of
Licensed Patents for to execution of this Agreement and shall reimburse LICENSOR
for all such future reasonable out-of-pocket expenses within sixty (60) days
from receipt by LICENSEE of appropriate documentation of such expenses by
LICENSOR.

       

      B. LICENSOR
shall diligently prosecute and maintain the Licensed Patents as set forth
Section 1 hereof and Appendix I (as the same may be amended or supplemented from
time to time after the Effective Date), utilizing such patent counsel as
LICENSOR is using as of the Effective Date of this Agreement or patent counsel
as may be mutually agreed upon by the parties hereto.  LICENSOR agrees
to keep LICENSEE reasonably well informed with respect to the status and
progress of any such applications, prosecutions and maintenance activities,
including consulting in good faith with LICENSEE and taking into account
LICENSEE’s comments and requests with respect thereto.  Both parties
agree to provide reasonable cooperation to each other to Facilitate the
application and prosecution 01-patents pursuant to this Agreement.

       

      C. LICENSEE
may, in its discretion, elect to not reimburse LICENSOR for reasonable
out-of-pocket expenses of patent prosecution set forth in Section 8B, in which
case LICENSEE shall provide LICENSOR with at least ninety (90) days notice
thereof and LICENSOR shall have the right to treat such notice as a notice of
termination of this Agreement under Section 6E hereof.

       

      
        
          
          

        

        
          32

          
            

          

        

        
          
          

        

      

      Section
9. Infringement and Other
Actions.

       

      A. LICENSEE
and LICENSOR shall promptly provide written notice, to the other party, of any
alleged infringement by a Third Party of the Licensed Patents and provide such
other party with any available evidence of such
infringement.  LICENSOR and the officers of LICENSEE shall confer to
determine in good faith an appropriate course of action to enforce such Licensed
Patents or other wise abate the infringement thereof.  LICENSEE and
LICENSOR shall promptly provide written notice, to the other party, of any
potential or actual declaratory judgment challenge to the Licensed Patents and
shall confer to determine in good faith an appropriate course of action in
response to such challenge.

       

      B. During
the term of this Agreement, LICENSEE will have the right, but not the obligation
at its own expense and utilizing counsel of its choice, to prosecute any
infringement of and/or defend any declaratory judgment challenge to, the
Licensed Patents.  In furtherance of such right, LICENSOR hereby
agrees that LICENSEE may join LICENSOR as a party in any such suit, without
expense to LICENSOR, No settlement, consent judgment or other voluntary final
disposition of any such suit that would adversely affect the rights of LICENSOR
may be entered into without the written consent of LICENSOR, which consent shall
not be unreasonably withheld.  LICENSEE will indemnify and hold
LICENSOR harmless against any and all damages, settlements, costs, expenses,
penalties, tines or liability (including, without limitation, reasonable
attorneys’ fees) that may be found or assessed against LICENSOR in any such suit
other than those resulting from LICENSOR’s gross negligence or willful
misconduct,

       

      C. Any
recovery, award or damages for infringement or other moneys derived by LICENSEE
in any suit under Section 9B, whether by judgment or settlement, shall be
applied first in satisfaction of any unreimbursed expenses and legal fees of
LICENSEE relating to the suit and then to LICENSOR for any royalties credited in
accordance with Section 9D.  The balance remaining from any such
recovery will be treated as royalties received by LICENSEE from a sublicensee
and shared by LICENSOR and LICENSEE in accordance with Section 3C(i)
hereof.

       

      D. LICENSEE
may credit up to fifty percent (50%) of any out-of-pocket litigation costs
incurred by LICENSEE in any country pursuant to Section 9B against royalties
thereafter payable to LICENSOR hereunder for such country and apply the same
toward one-half of its actual, reasonable out-of-pocket litigation
costs.  If fifty percent (50%) of such out-of-pocket litigation costs
in such country exceeds fifty percent (50%) of royalties payable to LICENSOR for
such country in any year in which such costs are incurred, then the portion of
the fifty percent (50%) of the out-of-pocket litigation costs in excess of’ such
fifty percent (50%) of the royalties payable will be carried over and credited
against royalty payments in future years for such country.

       

      E. If within
two (2) months after receiving notice of any alleged infringement of the
Licensed Patents, LICENSEE has not notified in writing LICENSOR of LICENSEE’S
intended action, or if LICENSEE notifies LICENSOR at any time prior thereto, of
its intention not to bring suit against the alleged infringer or to defend the
Licensed Patents in a declaratory judgment action, then, and in those events
only, LICENSOR will have the right, but not the obligation, at its own expense
and utilizing counsel of its choice, prosecute any infringement of, and/or
defend any declaratory judgment challenge to, the Licensed
Patents.  LICENSOR may, for such purposes, join LICENSEE as a party
plaintiff.  LICENSOR will keep any recovery, award or damages for
infringement or other moneys derived therefrom, whether by judgment or
settlement, and such will not be applicable to any royalty obligation of
LICENSEE.

       

      F. In any
suit to enforce and/or defend the Licensed Patents pursuant to this Section 9,
the party not in control of such suit shall, at the request and expense of the
controlling party, cooperate in all respects and, to the extent possible, have
its employees testify when requested and make available relevant records,
papers, information, samples, specimens, and the like.

       

      
        
          
          

        

        
          33

          
            

          

        

        
          
          

        

      

      Section
10. Product Liability; Conduct
of Business.

       

      A. LICENSEE
will, at all times during the term of this Agreement and thereafter, indemnify,
defend and hold LICENSOR, his successors and assigns, harmless from and against
all liabilities, damages, losses, settlements, claims, actions, suits,
penalties, fines, costs or expenses, including without limitation, legal
expenses and reasonable attorneys fees (any of the foregoing, a “Claim”)
incurred by or asserted against LICENSOR, his successors and assigns of whatever
kind or nature, including, without limitation, any Claim based upon negligence,
warranty, strict liability, violation of government regulation, arising from or
occurring as a result of (i) the use of the Technology by LICENSEE or any of its
Affiliates, agents or sublicensees or (ii) the production, manufacture, sale,
use, consumption or advertisement of Licensed Product(s) or the practice of
Licensed Process(es), except to the ex-tent such Claims are the result of
LICENSOR’s gross negligence or willful misconduct No settlement, consent
judgment or other voluntary final disposition of any such Claim may be entered
into without the written consent of the LICENSOR, which consent shall not be
unreasonably withheld.  LICENSOR at all times reserves the right to
select and retain, at LICENSOR’s sole expense, counsel of its own to defend
LICENSOR’s interests,

       

      B. No later
than the earlier of (i) testing or use of Licensed Product in human subjects or
(ii) sale of a Licensed Product, LICENSEE shall obtain and maintain product
liability insurance policies in amounts acceptable to LICENSOR and have LICENSOR
named as an additional insured on such policies.  LICENSEE shall
provide LICENSOR with evidence of such coverage at least ten (10) days before
the commencement of the earlier of (i) or (ii) of this Section 10B and from time
thereafter upon LICENSOR’s request.  If LICENSOR’s insurance costs can
be shown to have increased solely because of this Agreement, and such increases
are verified by an independent certified public accountant, LICENSEE shall
reimburse LICENSOR for such increase within thirty (30) days of receiving
written notice from LICENSOR requesting such reimbursement.  If
LICENSEE does not reimburse LICENSOR, LICENSOR shall have the right to terminate
this Agreement thirty (30) days after written notice of termination unless
LICENSEE shall reimburse LICENSOR within the 30-day period.  This
Section 10B shall survive any termination of this Agreement.

       

      Section
11. Use of
Names.

       

      Nothing
contained in this Agreement shall be construed as granting any right to LICENSEE
or its Affiliates to use in advertising, publicity, or other commercial or
promotional activities any name, trade name, trademark, or other designation of
LICENSOR (including contraction, abbreviation or simulation of any of the
foregoing) without the prior written consent of LICENSOR; provided, however,
that LICENSOR acknowledges and agrees that LICENSEE may use the names of
LICENSOR in various documents used by LICENSER for capital raising and financing
without such prior written consent or where the use of such names may be
required by law.

       

      Section
12. Independent Contractor
Status.

       

      The
parties to this Agreement recognize and agree that each is operating as an
independent contractor and nothing herein shall be deemed to establish a
relationship of principal and agent between LICENSOR and LICENSEE, nor any of
their agents or employees for any purpose whatsoever.  This Agreement
shall not be construed as creating a partnership or joint venture between
LICENSOR and LICENSEE, or as creating any other form of legal association or
arrangement that would impose liability upon one party for the act or failure to
act of the other party.

       

      Section
13. Notices.

       

      Any
notice required to be given pursuant to the provisions of this Agreement will be
in writing and will be deemed to have been given at the earlier
of:  when delivered personally against receipt therefor; one (1) day
after being sent by Federal Express or similar overnight delivery; or three (3)
days after being mailed registered or certified mail, postage prepaid, to a
party hereto at the address set forth below, or to such other address as such
party shall give by notice hereunder to the other party to this
Agreement

       

      
        
          
          

        

        
          34

          
            

          

        

        
          
          

        

      

      If to
LICENSOR:

       

      George B.
McDonald, M.D.

       

      1815
102nd Place,
S.E.

       

      Bellevue,
WA 98004

       

      Phone:  425-453-9936

       

      If to
LICENSEE:

       

      Enteron
Pharmaceuticals, Inc.

       

      787
Seventh Avenue, 48th
Floor

       

      New York,
NY 10019

       

      Attn:  Baruch
Runner, M.D.

       

      Phone:  212-554-4543

       

      Fax:  212-554-4338

       

      Section
14. Governing Law and
Severability.

       

      This
Agreement will be construed in accordance with the laws of the State of New
York.  If any provisions of this Agreement conflicts with the laws or
regulations of any jurisdiction or any governmental entity having jurisdiction
over the parties or this Agreement, those provisions will he deemed
automatically waived in that jurisdiction but shall not affect the validity,
legality or enforceability of such provision in any other
jurisdiction.  If the waiver is allowed by relevant law, the remaining
terms and conditions of this Agreement will remain in full force and
effect.  If a waiver is not so allowed or if a waiver leaves terms and
conditions clearly illogical or inappropriate in effect, the parties agree to
substitute new terms as similar in effect to the present terms of this Agreement
as may be allowed under the applicable laws and regulations.

       

      
        
          
          

        

        
          35

          
            

          

        

        
          
          

        

      

      Section
15. Confidentiality.

       

      A. LICENSEE
and LICENSOR agree that they will not use the Confidential Information for any
purpose unrelated to this Agreement, and will hold it in confidence during the
term of this Agreement and for a period of five (5) years after the termination
or expiration date of this Agreement.  Each party will exercise with
respect to such Confidential Information the same degree of care as that party
exercises with respect to its own confidential or proprietary information of a
similar nature, and will not disclose it or permit its disclosure to any Third
Party (except to those of its employees, consultants, agents, Third Party
sublicensees and potential sublicensees, and Affiliates who are bound by the
same obligation of confidentiality as the party is bound by pursuant to this
Agreement and who need the Confidential Information to carry out the purposes of
this Agreement).  However, such undertaking of confidentiality will
not apply to any information or data that:

       

      (i) was known
to receiving parry prior to the receipt of the Confidential Information; or is
developed independently without breach of this Agreement by the receiving
party;

       

      (ii) becomes
known to the public not as a result of any action or inaction by the receiving
party;

       

      (iii) receiving
party receives at any time from a Third Party who is lawfully in possession of
same and has the right to disclose same; or

       

      (iv) is
required to be disclosed by law, regulation or order in a judicial or
administrative proceedings, provided that the receiving party, to the fullest
extent permitted or reasonably feasible under the circumstances, shall have
secured confidential treatment of the Confidential Information
disclosed.

       

      B. Notwithstanding
the provisions of Section 15A hereof, a party may, to the extent necessary,
disclose and use Confidential Information disclosed to it by the other
party:

       

      (i) for
purposes of securing institutional or government approval to clinically test or
market any Licensed Product(s) or practice any Licensed Process(es), provided
that the party that originally disclosed the Confidential Information shall have
been notified of such disclosure; or

       

      (ii) where the
disclosure and use of the Confidential Information will be useful or necessary
to the application or prosecution of patents for any Licensed Process(es),
Licensed Product(s), or Technology, provided that the party that originally
disclosed the Confidential Information shall have been notified of such
disclosure.

       

      (iii) where the
disclosure and use of the Confidential Information is in the opinion of outside
counsel for the Company, required for financial reporting and disclosure under
applicable securities laws.

       

      
        
          
          

        

        
          36

          
            

          

        

        
          
          

        

      

      Section
16. Mediation and
Arbitration.

       

      If any
dispute arises from or relating to this Agreement, the parties must submit the
dispute to mediation in Seattle, Washington, by a sole mediator who is selected
by the parties or, at any time, to mediation by the American Arbitration
Association (“AAA”).  If not thus resolved, the dispute will be
determined before a sole arbitrator selected by the parties or in accordance
with the rules of the AAA.  The arbitration shall be in Seattle,
Washington, and governed by the Federal Arbitration Act.  The
requirement for mediation and arbitration shall not be deemed a waiver of any
right of termination under this Agreement and the arbitrator is not empowered to
act or make any award other than based solely on the rights and obligations of
the parties prior to any such termination.  The arbitrator shall not
limit, expand or modify the terms of the Agreement nor award damages in excess
of compensatory damages, and each party waives any claim to such excess
damages.  Any arbitration award made (i) shall be a bare award limited
to, a holding for or against a party and affording such remedy as is deemed
equitable, just and within the scope of this Agreement; (ii) shall be without
findings as to issues (including, but not limited to patent validity and/or
infringement); (iii) may in appropriate circumstances (other than patent
disputes) include injunctive relief; (iv) shall be made within four (4) months
of the appointment of the arbitrator and (v) may be entered by any court of
competent jurisdiction.  A request by a party to a court for interim
protection shall not affect either party’s obligation hereunder to mediate or
arbitrate.  Each party shall bear its own expenses and an equal share
of all cost and fees of the mediation and/or arbitration.  Any
arbitrator selected shall be competent in the legal and technical aspects of the
subject matter of this Agreement.  The existence, content and result
of mediation and/or arbitration shall be held in confidence by all participants,
each of whom shall be bound by an appropriate confidentiality
agreement.

       

      Section
17. Integration and
Modification.

       

      This
Agreement constitutes the full understanding between the parties with reference
to the subject matter hereof, and no statements or agreements by or between the
parties, whether orally or in writing, made prior to or at the signing hereof,
will vary or modify the written terms of this Agreement.  Neither
party can claim any amendment, modification, or release from any provisions of
this Agreement by mutual agreement, acknowledgment, or otherwise, unless such
mutual agreement is in writing, signed by the other party, and specifically
states that it is an amendment to this Agreement.

       

      Section
18. Non-Waiver.

       

      The
failure of either party to insist upon the strict performance of any of the
terms, conditions and provisions of this Agreement shall not he construed as a
waiver or relinquishment of future compliance therewith, and said terms,
conditions and provisions shall remain in full force and effect.  No
waiver of any term or condition of this Agreement on the part of either party
shall be effective for any purpose whatsoever unless such waiver is in writing
and signed by such party.

       

      Section
19. Remedies For Breach of
Confidentiality.

       

      A. The
parties agree that any breach of Section 15 of this Agreement by either
LICENSOR, or LICENSEE could cause irreparable damage to the non-breaching party,
and that monetary damages alone would not be adequate and, if such breach or
threat of breach occurs, the non-breaching party shall have, in addition to any
and all remedies at law and without the posting of a bond or other security, the
right to an injunction, specific performance or other equitable relief necessary
to prevent or redress the violation of the confidentiality obligations of
Section 15..  If a proceeding is brought in equity to enforce Section
15, the breaching party shall not urge as a defense that there is an adequate
remedy at law nor shall the non-breaching parry be prevented from seeking any
other remedies that may be available to it,

       

      B. If either
party is required to bring suit or otherwise seek enforcement of its rights
under Sections 15 and 19 hereof, the prevailing parry in any such action or
proceeding shall be entitled to recover reasonable attorneys’ fees and expenses
incurred in such action or proceeding.

       

      
        
          
          

        

        
          37

          
            

          

        

        
          
          

        

      

      Section
20. Headings.

       

      The
headings of the sections are inserted for convenience of reference only and
shall not affect any interpretation of this Agreement.

       

      Section
21. Contract Formation and
Authority.

       

      A. No
agreement between the parties exists unless a duly authorized representative of
LICENSEE and of LICENSOR have signed this document.

       

      B. The
persons signing on behalf of LICENSOR and LICENSEE warrant and represent that
they have authority to execute this Agreement on behalf of the party for whom
they have signed.

       

      IN
WITNESS WHEREOF, the parties hereto have duly executed this Agreement on the
dates indicated below.

       

      George
B. McDonald, M.D.

       

      /s/ George B.
McDonald                                                                Date:    November
23,
1998                                                                

       

      LICENSEE

       

      

       

      ENTERON
PHARMACEUTICALS, INC.

       

      
        	
                By:
      /s/ Steve H.
      Kanzer

              	
                Date:
        November
      24, 1998

              	 	 

      

       

      
        	
                 
      

              	
                Steve
      H. Kanzer, Chairman

              

      

       

      
        
           

        

        
          38

          
            

          

        

        
           

        

      

      APPENDIX
A

       

      ROYALTY
REPORT

       

      LICENSEE:                                                                Agreement No.:

       

      Inventor:                                                      Technology:

       

      Period
Covered:  From      /  /
1999                                                                           Through:   /  /
199

       

      Prepared
By:                                                                Date:

       

      Approved
By:                                                                Date:

       

      If
license covers several major product lines, please prepare a separate report for
each line.

       

      Then
combine all product lines into a summary report.

       

      Report
Type:                                                      Single Product Line
Report:

       

       Multiproduct Summary
Report.  Page 1
of                                                                                                           
Pages

       

       Product Line
Detail.  Line:                                                                             Tradename:                                             Page:

       

      Report
Currency:                                                                            U.S.
Dollars                                            Other

       

      
        	 
      	
                Gross

              	
                *
      Less:

              	
                Net

              	
                Royalty

              	
                Period
      Royalty Amount

              
	
                Country

              	
                Sales

              	
                Allowances

              	
                Sales

              	
                Rate

              	
                This
      Year

              	
                Last
      Year

              
	
                U.S.A.

              	 
      	 
      	 
      	 
      	 
      	 
      
	
                Canada

              	 
      	 
      	 
      	 
      	 
      	 
      
	
                Europe:

                 

              	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                Japan

                 

              	 
      	 
      	 
      	 
      	 
      	 
      
	
                Other:

                 

              	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                TOTAL:

              	 
      	 
      	 
      	 
      	 
      	 
      

      

      Total
Royalty:                                 Conversion
Rate:                                                      
Royalty in U.S Dollars:  $

       

      * Provide
a detailed listing of all deductions from Gross Sales.

       

      

       

      
        
           

        

        
          39

          
            

          

        

        
           

        

      

      APPENDIX
B

       

      DEVELOPMENT
REPORT

       

      Development
Report (4-8 paragraphs) including time period covered by this
report.

       

      
        	
                1.  

              	
                Pertinent
      information since last report including progress of the research and
      development and completed results.

              

      

       

      
        	
                2.  

              	
                Activities
      currently under investigation and projected date of
      completion.

              

      

       

      
        	
                3.  

              	
                Status
      of regulatory compliance, approvals and permits or licenses for using
      Licensed Product(s) for the prevention and treatment of graft-versus-host
      disease and host-versus-graft
disease.

              

      

       

      Future
Development Activities (4-8 paragraphs).

       

      
        	
                1.  

              	
                Activities
      to be undertaken before next report and their projected starting and
      completion dates.

              

      

       

      
        	
                2.  

              	
                Estimated
      total development time remaining before Licensed Product(s) will be
      commercialized for the prevention and treatment of graft-versus-host
      disease and host-versus-graft
disease.

              

      

       

      Changes
to initial development plan (2-4 paragraphs).

       

      
        	
                3.  

              	
                Reasons
      for change.

              

      

       

      
        	
                4.  

              	
                Variables
      that may cause additional changes.

              

      

       

      Items to
be provided if applicable:

       

      
        	
                5.  

              	
                Information
      relating to Licensed Product(s) that has become publicly available, e.g.,
      published articles, competing products, patents,
  etc.

              

      

       

      
        	
                6.  

              	
                Descriptions
      and result of any research or development work being performed by Third
      Parties or Affiliates (including name of such Third Party or Affiliate and
      reasons for use of Third Parties or Affiliates) and planned future uses of
      Third Parties or Affiliates (including name of such Third Parties or
      Affiliates, reasons for use of Third Parties or Affiliates, and
      description of type of work).

              

      

       

      
        	
                7.  

              	
                Update
      of each of the following:  competitive information trends in
      industry, sublicensing activity, changes in government compliance
      requirements (if applicable) and market
plan.

              

      

       

      

       

      
        
           

        

        
          40

          
            

          

        

        
           

        

      

      APPENDIX
C

       

      DEVELOPMENT
PLAN

       

      The plan
should provide LICENSOR with an overview of the activities that LICENSEE
believes arc necessary to bring Licensed Products to the marketplace
worldwide.  Include estimated start date and completion date for each
item.

       

      
        	
                I.  

              	
                Development
      program for international Regulatory Approvals and sales of Licensed
      Product(s) for the prevention and treatment of graft-versus-host disease
      and host-versus-graft disease.

              

      

       

      
        	
                A.  

              	
                Development
      activities to be undertaken, including major
  milestones.

              

      

       

      1.

       

      2.

       

      
        	
                B.  

              	
                Estimated
      Total Development Time

              

      

       

      
        	
                II.  

              	
                Governmental
      approvals, if required, including types of submissions required by each
      government agency (e.g. FDA, EPA,
etc.).

              

      

       

      
        	
                III.  

              	
                Proposed
      marketing approach for international sales of Licensed Product(s) for the
      prevention and treatment of graft-versus-host disease and
      host-versus-graft disease.

              

      

       

      
        	
                IV.  

              	
                Competitive
      information including potential competitors, potential competitive devices
      or compositions, developments, technical achievements, anticipated dates
      of LICENSEE’s and competitor’s respective products launches for the
      prevention and treatment of graft-versus-host disease, host-versus-graft
      disease or other diseases.

              

      

       

      

       

      
        
           

        

        
          41

          
            

          

        

        
           

        

      

      APPENDIX
D

       

      KNOW-HOW

       

      
        	
                1.

              	
                IND#
      20,212

              

      

       

      
        	
                 
      

              	
                Oral
      Formulations of Beclomethasone Dipropionate for the treatment of
      inflammatory, diseases of the intestinal
tract.

              

      

       

      
        	
                2.

              	
                Orphan
      Drug Designation Application
#98-1111

              

      

       

      
        	
                 
      

              	
                FDA’s
      acknowledgment of an orphan drug designation for oral administration of
      beclomethasone dipropionate for the treatment of intestinal
      graft-versus-host disease is attached hereto as “Appendix
      D—Attachment.”

              

      

       

      

       

      
        
           

        

        
          42

          
            

          

        

        
           

        

      

      APPENDIX
I

       

      LICENSED
PATENTS

       

      
        	
                1.

              	
                U.S.
      Patent Application Serial Number 09/103,762, entitled “Method for
      preventing tissue damage following hematopoietic cell transplantation” and
      filed June 24, 1998.

              

      

       

      
        	
                2.

              	
                U.S.
      Patent Application Serial Number 09/151,388, entitled “Method for
      preventing tissue damage associated with graft-versus-host or
      host-versus-graft disease following transplantation” and filed September
      10, 1998.

              

      

       

      

       

      

       

      
        
           

        

        
          43

          
            

          

        

        
           

        

      

    

    EXHIBIT
A

     

    DOR BIOPHARMA,
INC. 

    
      
        
          
             

            CONFIDENTIAL

             

          

          CONFIDENTIAL

        

        
          44

          
            

          

        

        
           

          
            EXECUTION
VERSION

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