Promotion and Cooperation Agreement

(a)

Territory. During the term of this Agreement, Primus grants to CollaGenex the right to promote the Products to dermatologists, physician’s assistants who can write prescriptions and work in dermatologists’ offices, nurse practitioners who can write prescriptions and work in dermatologists’ offices and Doctors of Osteopathy who are characterized as having a prevailing dermatology specialization, within the United States. The United States shall include the 50 states and the District of Columbia (the “Territory”). The Territory may be expanded at any time by mutual agreement to include the territories, possessions and commonwealths of the United States.

(b)

Review of Prescriber Data. The determination of which prescribers are within the Territory shall initially be based on how a practitioner is characterized in a

(i)

that such prescriber is not properly part of the Territory, in which case CollaGenex shall not receive credit for any future prescriptions written by such prescriber, or

(ii)

that such prescriber is properly part of the Territory, in which case CollaGenex shall receive credit for all future prescriptions written by such prescriber.

(c)

Guiding Principles. In making such determinations the Steering Committee shall be guided by the following principles:

(i)

The prevailing nature of the prescriber’s practice shall be dermatology;

(ii)

Primus is not liable to compensate any third party in connection with prescriptions written by the prescriber.

(d)

Non-Compete; Non-solicitation. Each Party agrees that, in consideration for receiving and acquiring the limited right to use market and other proprietary information of the other Party, it will not, for the term of this Agreement and for a period of [**] thereafter, market or sell any product which, in the case of Primus, is an oral systemic therapy for dermatological conditions containing chemically modified tetracyclines, and in the case of CollaGenex is a topical steroid or topical anaesthetic that is a direct competitor to Novacort, or a topical antifungal or topical antifungal steroid combination that is a direct competitor to Alcortin. Furthermore, unless the soliciting party can demonstrate contact with such employee prior to their employment by the other party, during the term of this Agreement and for a period of one year thereafter, neither Party shall solicit the employment of any employee of the other Party that is at such time working for the other Party.

(e)

Subcontractors. CollaGenex shall have the right to appoint agents or co-promoters, at its own cost, to promote the Products or to satisfy its obligations under this Agreement, with the prior written consent of Primus, which shall not be unreasonably withheld.

(f)

Trademarks. Primus grants CollaGenex the right to use trademarks and trade names belonging to Primus which relate to the Products for the purpose of promoting the Products according to the guidelines agreed by the Steering

(a)

Committee Responsibilities. Various roles and decisions under this Agreement shall be assigned to a joint committee (the “Steering Committee”) for the purpose of giving each Party equal voice in decisions relating to the marketing of the Products, ensuring open communication between the parties and optimizing sales of the Products.

(b)

Make Up of Steering Committee. The Steering Committee will be formed by two voting representatives of each Party. The co-chairs of the Steering Committee may request the input or attendance of others at Steering Committee meetings, but such invitees shall not have a vote on any matter before the Committee. The co-chairs of the Steering Committee shall be each Party’s head of marketing.

(c)

Process of the Steering Committee . The Steering Committee will meet as often as necessary and no less often than once in each quarter, within the ten day period beginning 50 days of the end of each calendar quarter (or at whatever time necessary to ensure timely approval of CollaGenex’s invoices), in order to review each of the matters referred to it under this Agreement (all of which are listed on Exhibit A, for ease of reference, and in order to provide an example of the agenda items that the Steering Committee will address). At least two meetings each year shall be attended in person, one at the premises of each Party. Each party shall pay their own costs for attending each meeting.

(d)

Coordination with Plan of Action Meetings . Notwithstanding the calendaring guidelines set out in the preceding paragraph, the Steering Committee will use its best efforts to coordinate its meetings and the execution of its plans with the CollaGenex Plan of Action (POA) schedule, and to that end may reschedule meetings outside the calendaring guidelines or schedule additional meetings, in order to ensure that marketing plans are timely defined, timely completed and timely communicated.

(e)

Decisions of the Steering Committee . Decisions of the Steering Committee shall be taken by unanimous vote, and shall be reflected in written minutes of each meeting. Such minutes shall be circulated to the co-chairs after each meeting, for amendment and approval as appropriate. Any decision on which the Parties are not able to agree shall not be taken. If not taking such a decision inhibits either

(f)

Basis for Steering Committee Decisions. All Steering Committee decisions shall be based on ROI analysis using all such data and market research as the Committee determines necessary and advisable to request. Where such data is already provided to the Parties by IMS, Verispan or an industry standard commercially available data base approved by the Steering Committee, the Steering Committee shall base its decisions on the average of such data points. All decisions will be driven by the desire to leverage marketing and sample expenditures in an optimal way, and to allocate resources to programs that optimize long term sales volume, sales force efficiency and profitability of the Products and marketing initiatives.

(g)

Right to Audit. Either Party my request that it have the opportunity to audit any information presented by the other Party to the Steering Committee, and the Steering Committee shall arrange a mutually convenient time for such audit, which shall be within normal business hours, shall be at the audited Party’s place of business, shall not exceed three days in duration and shall be entirely at the auditing Party’s expense.

(a)

Sales Force. CollaGenex will, at its own expense, maintain, manage and compensate a Dermatologist Direct Sales Force sufficient at all times to achieve primary detail equivalents for the Products within the following frequency ranges, which shall assume that a secondary detail is equivalent to [**] primary details, and a tertiary detail is equivalent to [**] primary details:

(b)

Training. CollaGenex will ensure that all the Dermatologist Direct Sales Force are trained in the promotion and sale of the Products according to the guidelines agreed by the Steering Committee. Primus shall, at its own expense, cooperate with and contribute to such training. All other direct costs related to the training of the sales force shall be borne by CollaGenex.

(c)

Promotion. CollaGenex shall use all reasonable efforts to sell and to increase the sales of the Products in the Territory by detailing physicians, calling on

(d)

Sales Force Automation. The Products will be included on the CollaGenex Sales Force Automation (SFA) system to facilitate physician profiling and targeting and sampling of the Products in a manner consistent with any guidelines agreed by the Steering Committee. Automated sales aids for the Products will also be created and placed on the representative’s laptop computers to facilitate promotional activity.

(e)

Forecasting. CollaGenex shall provide to the Steering Committee a rolling twelve month forecast of anticipated prescription demand and sample usage in the Territory. Such forecast shall be updated and submitted quarterly, together with CollaGenex’s Quarterly Report.

(f)

Sample Ordering. CollaGenex shall order samples according to the procedure and with the lead times and payment terms set out on Exhibit B, and shall track its distribution of such samples according to the requirements of the PDMA. CollaGenex shall share with the Steering Committee all suggestions to lower the cost of samples.

(g)

Sales Targets . CollaGenex shall achieve at least the following combined levels of sales of the Products in the Territory, calculated with reference to prescriptions filled data available from industry standard and commercially available sources approved by the Steering Committee and assuming sales at Net Sales Price (as defined on Exhibit D), during the following time periods:

(h)

Incentive Program. CollaGenex will establish an incentive program that reflects the primary detail position of the Products in the First Year and the secondary detail position in the Second Year for the Products. The incentive compensation in the second and third years will be sufficient to ensure that the Products attain a reasonable level of sustained focus from the sales force. The incentive compensation in the third year will reflect any agreement of CollaGenex and Primus with respect to the detail position for the Products during such year. CollaGenex will share with the Steering Committee, those aspects of its incentive plan that relate to the promotion of the Products.

(i)

Reports. Within 50 days of the end of each calendar quarter, CollaGenex shall submit to Primus and the Steering Committee a report referencing all the items listed on Exhibit C (the “Quarterly Report”).

(j)

Professional Affairs. CollaGenex will be responsible for collecting information pertaining to all product inquiries as required by the appropriate Code of Federal Regulations. All such information, together with AE reports and other product information collected by CollaGenex, will be made available to Primus within 72 hours of receipt by CollaGenex, or at such earlier time as may be appropriate under applicable regulations.

(k)

Insurance CollaGenex shall at all times maintain product liability insurance covering the Products and naming Primus as an additional insured, in an amount not less than $5 million aggregate and per occurrence.

(l)

Customer Service. CollaGenex shall field and refer to Primus any Product questions and Product issues that arise from the marketplace, and cannot be adequately and promptly answered. It shall instruct customers that such questions and issues should be referred to Primus.

(m)

Access. CollaGenex shall grant to Primus such reasonable access to its sales events and sales personnel as Primus shall request, including the right to participate in sales events related to the Products and to ride along with representatives promoting the Products.

(a)

Purchase of the Products. Primus will have the Products contract-manufactured, and purchase them for a price (“COGS”) which shall be made known to CollaGenex. Primus shall use its reasonable efforts to reduce the COGS on an ongoing basis.

(b)

Quality Control. Primus shall ensure that it, or its contract manufacturer, maintains all necessary quality controls, and that the Products are manufactured in accordance with GMP.

(c)

Distribution. Primus shall be responsible for ensuring that the Products are timely distributed to wholesalers and that sufficient inventories of the Products are maintained at all points in the supply chain to the wholesale level, to ensure that the Products are readily available for delivery to customers at all times.

(d)

Recalls . Primus shall be solely responsible for managing Product returns and for taking all decisions and actions relating to the recall or proposed recall of any of the Products. All third party or out of pocket costs of recall will be borne by Primus. CollaGenex will assist in any recall activities and Primus shall reimburse such reasonable out of pocket expenses as it incurs in doing so.

(e)

Relations with Payors. Primus shall be primarily responsible, with support and cooperation from CollaGenex, for negotiating agreements with providers, managed care organizations, payors, wholesalers, group purchasing organizations, and the like, regarding the Products.

(f)

Samples All samples shall be [**] supplied to CollaGenex [**]% in accordance with the procedure outlined in Exhibit C. Primus will continually work to decrease the overall cost of samples. The Steering Committee will define a sample plan to determine allocations of samples and to minimize cost of samples. Primus will be responsible for submitting sample forecasts to their manufacturer and assuring that samples are available to support the sample plan determined by the Steering Committee. The combined sample costs shall not exceed:

(g)

Promotional Materials. Primus shall provide reasonable quantities of all necessary and available promotional materials, including electronic PDF files, that may be reasonably requested by CollaGenex in connection with the training of CollaGenex’s Dermatologist Direct Sales Force and its promotion of the Products in the manner approved by the Steering Committee. Primus shall own all right, title and interest in and to such promotional materials, but CollaGenex has the right to use the promotional materials for promotion and detailing of the Products. Use of any new promotional materials, or any change or development to any promotional materials, requires the approval of the Steering Committee.

(h)

Booking of Sales. Primus shall book all sales of the Products, and shall be solely responsible for handling all aspects of order processing, invoicing and collection of all receivables.

(i)

Customer Service. Primus shall be responsible for all customer service support, including handling medical queries, responding to Product complaints, processing all product returns and performing other functions that CollaGenex is unable to handle promptly itself, which are consistent with customary practice for prescription pharmaceuticals. CollaGenex shall refer all requests for such support to Primus within the time frames outlined above.

(j)

Regulatory Compliance. Primus shall be responsible for all communicating with any governmental agencies and for satisfying their regulatory requirements relating to the promotion and sale of the Products in the Territory, provided, however, that CollaGenex shall promptly inform Primus of any adverse or other event that might be reportable, as soon as it may become aware of the same.

(k)

Defense of Intellectual Property. Primus will, to the extent it is authorized or permitted by its licensors, vigorously assert and defend the patents relating to the Products, and will take all reasonable measures, taking into account the cost and potential commercial benefit of such actions at its sole discretion, to seek to enjoin the entry into the market of any generic product that might infringe such patents.

(l)

Insurance Primus shall at all times maintain product liability insurance covering the Products and naming CollaGenex as an additional insured, in an amount not less than $5 million aggregate and per occurrence.

(m)

Reports. Within 50 days of the end of each calendar quarter, Primus shall submit to CollaGenex and the Steering Committee a report referencing its marketing expenses, its COGS and its pro forma calculation of Gross Profit (as defined below) for such quarter.

(a)

Steering Committee. The Steering Committee shall have responsibility for setting and approving the marketing strategy, as well as individual marketing programs and budgets relating to the Products prior to implementation, and for monitoring the same on an ongoing basis.

(b)

Marketing Budget. The budget for marketing expenses shall not exceed the following for the following time periods:

(c)

Allocation of Marketing Expenses. All Product specific incremental Marketing Expenses (excluding samples, field sales expenses and any other matters specifically made the financial responsibility of one Party or the other under this Agreement) shall be paid for [**]% by Primus and [**]% by CollaGenex. Preexisting expenses of either Party that are not specific to the generation of prescriptions for the Products, such as expenses related to the acquisition of non-Product specific market data from IMS, Verispan or an industry standard commercially available data base approved by the Steering Committee, shall no