BIOSANTE PHARMACEUTICALS INC
EXHIBIT 10.1
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>2
<FILENAME>ex-10_1.txt
<DESCRIPTION>EXHIBIT 10.1
<TEXT>

<PAGE>

                                LICENSE AGREEMENT

                                     BETWEEN

                            PERMATEC TECHNOLOGIE, AG

                                       AND

                         BIOSANTE PHARMACEUTICALS, INC.


            [PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED PURSUANT TO A
         REQUEST FOR CONFIDENTIALITY UNDER RULE 24b-2 OF THE SECURITIES
            EXCHANGE ACT OF 1934, AS AMENDED. A COPY OF THIS EXHIBIT
            INTACT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND
                              EXCHANGE COMMISSION.]

<PAGE>

                                      INDEX

             [PORTIONS OF THIS INDEX HAVE BEEN OMITTED PURSUANT TO A
         REQUEST FOR CONFIDENTIALITY UNDER RULE 24b-2 OF THE SECURITIES
          EXCHANGE ACT OF 1934, AS AMENDED. A COPY OF THIS EXHIBIT WITH
              THIS INDEX INTACT HAS BEEN FILED SEPARATELY WITH THE
                      SECURITIES AND EXCHANGE COMMISSION.]

<TABLE>
<S>                                                                                  <C>
Background............................................................................1

1.      Definitions...................................................................1

        1.1       Affiliate...........................................................1

        1.2       Approval............................................................1

        1.3       Develop or Development..............................................1

        1.4       Development Plan....................................................2

        1.5       FDA.................................................................2

        1.6       Know-How............................................................2

        1.7       Market or Marketing.................................................2

        1.8       Net Sales...........................................................2

        1.9       Patents.............................................................2

        1.10      Products............................................................2

        1.11      Regulatory Authority................................................3

        1.12      Specifications......................................................3

        1.13      Supply Agreement....................................................3

        1.14      Territory...........................................................3

        1.15      U. S. Good Manufacturing Practices or GMP...........................3

2.      License Grant.................................................................3

        2.1       License.............................................................3

        2.2       Sub-Licenses........................................................3

        2.3       Assistance..........................................................4


                                                                               i
<PAGE>

        2.4       No further or Trademark License.....................................4

        2.5       E2-XXXXX Combi Gel..................................................4

3.      Consideration.................................................................4

        3.1       Initial Payment.....................................................4

        3.2       Royalty Payments....................................................5

        3.3       Milestone Payments..................................................5

                  3.3.1    Manufacture of first Product...............................5

                  3.3.2    Manufacture of second Product..............................5

                  3.3.3    Start of Clinical Trial of E-2-XXXXX Combi Gel.............5

                  3.3.4    Filings for Approvals......................................5

                           3.3.4.1  First tier........................................6

                           3.3.4.2   Second tier......................................6

                           3.3.4.3  Third tier........................................6

                           3.3.4.4   E2-XXXXX Combi Gel...............................6

                  3.3.5    Approvals..................................................6

                           3.3.5.1  Gel Testosterone..................................6

                           3.3.5.2 Gel E2.............................................6

                           3.3.5.3  Patch E2..........................................6

                           3.3.5.4 E2-XXXXX Combi Gel.................................6

                  3.3.6    BIOSANTE failure to order..................................7

                  3.3.7    BIOSANTE failure to file...................................7

        3.4       Sub-licensee payments...............................................7

        3.5       Mode of Payments, related reports...................................8

                  3.5.1    Initial and Milestone payments.............................8


                                                                              ii
<PAGE>

                  3.5.2    Royalty payments...........................................8

                           3.5.2.1  Withholding.......................................8

                           3.5.2.2  Calculation of royalties..........................8

                           3.5.2.3  Reports...........................................8

                           3.5.2.4  Books and records.................................9

4.      PERMATEC production of Products...............................................9

        4.1       Production of Clinical Batches......................................9

                  4.1.1    Orders.....................................................9

                  4.1.2    Production costs...........................................9

                  4.1.3    Further provisions........................................10

                  4.1.4    Repayment of production milestones........................10

        4.2       Production of Commercial Supply....................................10

5.      Development Obligations of BIOSANTE and PERMATEC.............................10

        5.1       Non-Territory development..........................................10

        5.2       Data sharing.......................................................10

        5.3       BIOSANTE's development and marketing obligations/Untied States.....11

        5.4       BIOSANTE's development and marketing obligations/Non-US............11

        5.5       Protocol review....................................................11

        5.6       Development plan...................................................12

                  5.6.1    Agreed development plan...................................12

                  5.6.2    Material deviations.......................................12

        5.7       Development Reporting..............................................12

6.      Representations, warranties and covenants; indemnification...................12

        6.1       PERMATEC's.........................................................12


                                                                             iii
<PAGE>

                  6.1.1    Right to license..........................................12

                  6.1.2    No inability to receive approval..........................13

                  6.1.3    Clear rights..............................................13

                  6.1.4    Right to execute and perform..............................13

                  6.1.5    Compliance with law.......................................13

                  6.1.6    No further representation.................................13

        6.2       BIOSANTE's.........................................................14

                  6.2.1    Right to execute and perform..............................14

                  6.2.2    Compliance with law.......................................14

                  6.2.3    Best efforts..............................................14

                  6.2.4    Compliance with Approvals.................................14

                  6.2.5    No further representation.................................14

        6.3       Indemnification by BIOSANTE........................................15

        6.4       Indemnification by PERMATEC........................................15

7.      Confidentiality    ..........................................................15

        7.1       Obligation of confidentiality......................................15

        7.2       Exceptions.........................................................16

        7.3       When consent needed................................................16

8.      Proprietary Right and Patents................................................16

        8.1       Title    ..........................................................16

        8.2       Infringement by third parties......................................16

                  8.2.1    Notice....................................................16

                  8.2.2    Independent decisions to act..............................17

                  8.2.3    Reduction in Royalty......................................17


                                                                              iv
<PAGE>

                  8.2.4    Cooperation...............................................17

9.      Term and Termination.........................................................17

        9.1       Term     ..........................................................17

        9.2       Termination........................................................18

        9.3       No prejudice to rights.............................................19

        9.4       Termination of license, return of information......................19

        9.5       Partial termination................................................20

        9.6       Remedies not limited...............................................20

10.     Options to extend Territory or Products......................................20

        10.1      Option to extend Territory.........................................20

        10.2      Right of first offer...............................................21

        10.3      Option regarding the XXXXX Combi Gel...............................21

                  10.3.1   License Agreement.........................................21

                  10.3.2   Terms.....................................................22

                  10.3.3   Payments..................................................22

                           10.3.3.1 Execution of License Agreement...................22

                           10.3.3.2 Manufacturing of clinical batches................22

                           10.3.3.3 Filing of the Product............................22

                           10.3.3.4 Approval.........................................23

        10.4.     Termination of option rights.......................................23

11.     Miscellaneous      ..........................................................23

        11.1      Governing Law......................................................23

        11.2      Dispute Resolution.................................................23

        11.3      Notice   ..........................................................24


                                                                               v
<PAGE>

        11.4      Entirety ..........................................................25

        11.5      Modification.......................................................25

        11.6      Severability.......................................................25

        11.7      Waiver   ..........................................................26

        11.8      Relationship of Parties............................................26

        11.9      Assignment.........................................................26

        11.10     Force Majeure......................................................26

        11.11     Interest ..........................................................26

        11.12     Interpretation.....................................................26

Signature Page             ..........................................................27

Exhibit A                  ..........................................................28

Exhibit B                  ..........................................................31

Exhibit C                  ..........................................................32
</TABLE>


                                                                              vi
<PAGE>

                                LICENSE AGREEMENT

This agreement is entered into, effective this 13th day of June, 2000, by and
between PERMATEC TECHNOLOGIE, AG, a corporation of Switzerland ("PERMATEC"), and
BIOSANTE PHARMACEUTICALS, INC., a Wyoming corporation ("BIOSANTE").


                                   BACKGROUND

WHEREAS, PERMATEC has begun formulation and development of several new
pharmaceutical products based on proprietary know-how, and desires to grant
BIOSANTE an exclusive license in defined geographical areas under the terms and
conditions set forth hereinafter to continue the development of and to market
these products;

WHEREAS, BIOSANTE desires to take from PERMATEC such a license to continue the
development and to market these products;

THE PARTIES ARE HEREBY AGREED AS FOLLOWS:


1.       DEFINITIONS

1.1      "AFFILIATE" shall mean, with respect to either party hereto, any
corporation, partnership or other entity controlled by, controlling or under
common control with, such party, with "control" meaning direct or indirect
beneficial ownership of more than 50% of the voting power of, or more than 50%
of ownership interest in, such corporation, partnership or other entity.

1.2      "APPROVAL" shall mean the first effective date on which sales of a new
drug may begin, in accordance with a new drug approval received from FDA, and
any equivalent approval from the respective Regulatory Authority in any other
country of the Territory.

1.3      "DEVELOP" or "DEVELOPMENT" shall mean and include to undertake any and
all activities to investigate, research, conduct clinical trials, perform market
research, prepare and submit applications for Approval, negotiate with
government entities (including the FDA and Regulatory Authorities), or conduct
any other activities ordinarily undertaken, or necessary or required or
advisable to be undertaken, by the sponsor of a pharmaceutical product in the
process of being prepared for marketing or being marketed and to be granted
Approvals, on the same basis as if it were the owner of the Products.



                                                                               1
<PAGE>

1.4      "DEVELOPMENT PLAN" shall mean the Development Plan for each Product
pursuant to Section 5.6 below.

1.5      "FDA" shall mean the US Food and Drug Administration.

1.6      "KNOW-HOW" shall mean all information and data, which are not generally
known including, but not limited to, patent claims and related information not
yet disclosed to the public, formulae, procedures, protocols, techniques and
results of experimentation and testing, which (a) relate to any of the Products,
and (b) are necessary or useful to the Development or Marketing of any of the
Products in the Territory, all to the extent as of the effective date of this
Agreement owned or otherwise controlled by and at the free disposition of
PERMATEC.

1.7      "MARKET" or "MARKETING" shall mean any and all activities ordinarily
associated with efforts to interest a given market in a product and to induce
and further sales, including, but not limited to, sales, sales support,
continuing medical education, advertising, promotion, publicity and media
relations.

1.8      "NET SALES" shall mean the aggregate arms-length gross price invoiced
by BIOSANTE and, if applicable, invoiced by the sublicensees of BIOSANTE, for
the sale for commercial use of Products to non-affiliated third parties during
the relevant period, less deductions for (i) normal and customary trade and cash
discounts, credits and allowances (for rejection or return of Products), rebates
or refunds incurred or granted; and (ii) sales, use or excise taxes and duties,
and freight and insurance, to the extent included in the gross price charged.

1.9      "PATENTS" shall mean all patents and patent applications filed or
having presently or in the future legal force in any country in the Territory
owned by PERMATEC which claim any of the Products, or the process to manufacture
any of the Products, including but not limited to the patents and patent
applications listed in EXHIBIT A hereto, together with all patents that in the
future issue therefrom in any country of the Territory, including utility, model
and design patents and certificates of invention, and all divisionals,
continuations, continuations-in-part, reissues, renewals, extensions,
substitutions, confirmations or additions to any such patents and patent
applications.

1.10     "PRODUCTS" shall mean the four pharmaceutical products developed by
PERMATEC, either dermal gel or patch, for application on the skin, intended for
pharmaceutical use with humans for any indication now known or known in the
future, and with defined active compounds, all as listed in EXHIBIT B.

1.11     "REGULATORY AUTHORITY" shall mean any governmental authority in any
country of the Territory competent to approve pharmaceutical products for
manufacturing, marketing, distribution and sale in any country of the Territory
and/or to approve the price for pharmaceutical products to be sold in any
country of the Territory.


                                                                               2
<PAGE>

1.12     "SPECIFICATIONS" shall mean the specifications, recipes and
manufacturing instructions for Products as known at the effective date of this
Agreement and from time to time during the term of this Agreement changed,
altered, amended or repealed by mutual consent of the parties.

1.13     "SUPPLY AGREEMENT" shall mean the written agreement between BIOSANTE
PHARMACEUTICALS, INC. and PERMATEC TECHNOLOGIE, AG, executed by the parties at
or about the same time as this License Agreement.

1.14     "TERRITORY" shall mean the United States of America and those of its
territories and possessions over which the FDA has regulatory authority (the
"USA"); Canada; Australia; New Zealand; South Africa; Israel; Mexico; The
People's Republic of China (including Hong Kong) ("China"); Malaysia; and
Indonesia. The countries are classified according to EXHIBIT C in three tiers.

1.15     "GOOD MANUFACTURING PRACTICES" or "GMP" shall mean the then-current
requirements of FDA relating to the manufacture of pharmaceutical products and
related activities in the United States, as set forth in applicable FDA
regulations and Guidance Documents, and any and all equivalent rules and
regulations applicable to such activities in any other country of the Territory.


2.       LICENSE GRANT

2.1      LICENSE: PERMATEC hereby grants to BIOSANTE an exclusive license, with
the right to grant sublicenses as provided in this Agreement, to Develop the
Products in the Territory (except for the E2-XXXXX Combi Gel or any other
product substituted under section 2.5 of this Agreement, the Territory for which
is restricted to USA and Canada) as "applicant" and "owner" of Products, as
those terms are defined in applicable regulations, for purposes of obtaining
Approvals, and upon receipt of the Approvals, to Market and sell the Products,
in the Territory, and to use the Patents and Know-How exclusively for that
purpose, all in accordance with the provisions contained in this Agreement. It
is the parties' intention that any product characterized by its marketing
approval, as opposed to Products, developed by BIOSANTE and based on PERMATEC's
technology will be and remain the property of BIOSANTE but BIOSANTE will not be
allowed to use or market the products in case the License Agreement between
PERMATEC and BIOSANTE is terminated. [PORTIONS OF THIS SECTION HAVE BEEN OMITTED
PURSUANT TO A REQUEST FOR CONFIDENTIALITY UNDER RULE 24b-2 OF THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED. A COPY OF THIS AGREEMENT WITH THIS SECTION
INTACT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.]

2.2      SUB-LICENSES: In the event that BIOSANTE grants a sublicense under its
license to any Affiliate or third party for any part of the Territory, then
BIOSANTE shall be responsible for any and all acts, deeds and undertakings of
its sub-licensee(s) and shall continue to be bound by all terms and provisions
under this Agreement throughout its


                                                                               3
<PAGE>

term. BIOSANTE shall assume any and all obligations and undertakings in lieu and
place of its sub-licensee(s) and shall be held responsible for these
obligations, including but not limited to the confidentiality obligations set
forth hereinafter. Furthermore, BIOSANTE undertakes that any and all sub-license
agreements shall provide for inspection and audit provisions identical to the
provisions set forth below in order to enable PERMATEC to control and audit and
receive any and all payments due as provided in this Agreement. BIOSANTE shall
provide PERMATEC promptly with copies of all agreements with such
sub-licensee(s) (with only the commercial terms redacted).

2.3      ASSISTANCE: PERMATEC agrees during the term of this Agreement to
provide technical and scientific assistance to BIOSANTE (i) without any
additional charge to the extent mutually agreed upon in the Development Plan,
and (ii) against reimbursement applying a rate of USD 150 per man-hour spent by
PERMATEC personnel in addition to the mutually agreed upon assistance pursuant
to sub-section (i) hereinabove, provided in each case that BIOSANTE undertakes
and agrees to reimburse any and all reasonable out-of-pocket expenses incurred
by PERMATEC in connection with any such assistance. Such assistance shall be
provided by PERMATEC within a reasonable time in response to requests in
connection with BIOSANTE's efforts to obtain Approvals for the Products,
including, without limitation, providing the chemistry, manufacturing and
control components of any application needed to obtain Approvals.

2.4      NO FURTHER OR TRADEMARK LICENSE: It is understood and acknowledged by
BIOSANTE that the license granted hereunder shall under no circumstances
encompass any further license grant, including without limitation any further
license with respect to the Know-How or the Patents or any products other than
Products, or with respect to any trademark or trade-name of PERMATEC, including
without limitation its internationally registered trademark "Permatec".

2.5      E2-XXXXX COMBI GEL: BIOSANTE has ninety (90) days to exchange the
E2-XXXXX Combi Gel with another progestative from the following list: XXXXX,
XXXXX or XXXXX. BIOSANTE shall use its best efforts to decide on a change in
a shorter period of time. Without written notice from BIOSANTE requesting a
change, PERMATEC will assume that E2-XXXXX Combi Gel remains the originally
selected progestative. In the meantime, the Development Plan will be
established based on E2-XXXXX Combi Gel. If PERMATEC has a potential
interested party for one of the mentioned Combi gels, excluding E2-XXXXX
Combi Gel, with proposed commercial terms, PERMATEC shall inform BIOSANTE in
writing and BIOSANTE has fifteen (15) business days to decide on a change.
[PORTIONS OF THIS SECTION HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIALITY UNDER RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED. A COPY OF THIS AGREEMENT WITH THIS SECTION INTACT HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.]

                                                                               4
<PAGE>

3.       CONSIDERATION

3.1      INITIAL PAYMENT: Upon the mutual execution of this Agreement, BIOSANTE
shall pay to PERMATEC the sum of One Million Dollars (USD 1,000,000) of which
XXXXX Dollars (USD XXXXX) is creditable against future royalty payments and/or
sublicense up front payments as described in Section 3.4 of this Agreement,
pursuant to section 3.5.2 below. [PORTIONS OF THIS SECTION HAVE BEEN OMITTED
PURSUANT TO A REQUEST FOR CONFIDENTIALITY UNDER RULE 24b-2 OF THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED. A COPY OF THIS AGREEMENT WITH THIS SECTION
INTACT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.]

3.2      ROYALTY PAYMENTS: Commencing with the first commercial sale of any of
the Products, and thereafter during the entire term of this Agreement, BIOSANTE
shall pay a royalty of XXXXX percent (XXXXX%) of the aggregate Net Sales
invoiced for sales of the Products, calculated on a country-by-country basis as
described in Section 3.5.2.2. PERMATEC and BIOSANTE agree that BIOSANTE will
make royalty payments for each respective Product during a period (the "Royalty
Term") computed on a country-by-country basis starting with the first commercial
sale of such Product in such country and ending upon the later of (i) the
expiration of the last to expire Patents applicable to such Product in such
country, and (ii) the tenth (10th) anniversary of the first commercial sale of
such Product in such country. However, if PERMATEC obtains a patent during the
term of this Agreement that achieves exclusivity in the market for any Product,
then the Royalty obligation regarding that Product shall continue for the life
of that patent. Upon the expiration of the Royalty Term in any given country for
any Product, BIOSANTE shall have a fully paid-up exclusive license regarding the
applicable Product in such country. [PORTIONS OF THIS SECTION HAVE BEEN OMITTED
PURSUANT TO A REQUEST FOR CONFIDENTIALITY UNDER RULE 24b-2 OF THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED. A COPY OF THIS AGREEMENT WITH THIS SECTION
INTACT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.]

3.3      MILESTONE PAYMENTS: In addition, BIOSANTE shall pay to PERMATEC the
milestone payments described below in the amounts and at the occurrence of the
events described below [PORTIONS OF THIS SECTION HAVE BEEN OMITTED PURSUANT TO A
REQUEST FOR CONFIDENTIALITY UNDER RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF
1934, AS AMENDED. A COPY OF THIS AGREEMENT WITH THIS SECTION INTACT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.]:

         3.3.1    XXXXXXXXXXXXXXX: Upon the XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
                  XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
                  XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX, or pursuant to
                  Section 3.3.6 below, BIOSANTE shall pay to PERMATEC the sum of
                  XXXXX Dollars (USD XXXXX).

         3.3.2    XXXXXXXXXXXXXXX: Upon the XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX


                                                                               5
<PAGE>

                  XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
                  XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX, or pursuant to
                  Section 3.3.6 below, BIOSANTE shall pay to PERMATEC the sum of
                  XXXXX Dollars (USD XXXXX).

         3.3.3    XXXXXXXXXXXXXXX: Upon the XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
                  XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
                  XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX,, BIOSANTE shall
                  pay to PERMATEC the sum of XXXXX Dollars (USD XXXXX).

         3.3.4    XXXXXXXXXXXXXXX: Upon the XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
                  XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
                  XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX, or pursuant to
                  Section 3.3.7 below, BIOSANTE shall pay to PERMATEC up to
                  XXXXX Dollars (USD XXXXX), XXXXXXXXXXXX, as follows:

                  3.3.4.1  XXXXXXXXXXXXXXXXX. BIOSANTE shall pay up to PERMATEC
                           USD XXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXX (depending
                           upon whether payments have previously been made
                           pursuant to paragraphs 3.3.4.2 and/or 3.3.4.3).

                  3.3.4.2  XXXXXXXXXXXXXXXXXXXXXXXXXX, BIOSANTE shall pay
                           PERMATEC USD XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
                           XXXXXXX.

                  3.3.4.3  XXXXXXXXXXXXXXXXXXXXXXXXXX, BIOSANTE shall pay
                           PERMATEC USD XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
                           XXXXXXXXXXX.

                  3.3.4.4  XXXXXXXXXXXXXXXXXXXXXXXXXX, BIOSANTE shall pay
                           PERMATEC USD XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
                           XXXXXXXXXX.

         3.3.5.   XXXXXXXXXXX: XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
                  XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX,
                  as follows:


                                                                               6
<PAGE>

                  3.3.5.1           Gel Testosterone          up to USD XXXXX

                  3.3.5.2           Gel E2                    up to USD XXXXX

                  3.3.5.3           Patch E2                  up to USD XXXXX

                  3.3.5.4           E2-XXXXX Combi Gel        up to USD XXXXX


                  The following payments shall be made:

                  XXXXXXXXX:        Up to USD XXXXX for Gel Testosterone, USD
                                    XXXXX for Gel E2 and USD XXXXX for Patch E2,
                                    USD XXXXX for E2-XXXXX Combi Gel, depending
                                    upon whether payments have previously been
                                    made for XXXXXXXXXXXX as set forth below.

                  XXXXXXXXXXXX:     USD XXXXX XXXXXXXXXXXXXXXXX
                                    XXXXXXXXXXXXXXXXXXXXXXXXX
                                    XXXXXXXXXXXXXXXXXXXXXXXXX

                  XXXXXXXXXXXX:     USD XXXXX XXXXXXXXXXXXXXXXX
                                    XXXXXXXXXXXXXXXXXXXXXXXXX
                                    XXXXXXXXXXXXXXXXXXXXXXXXX

                                    If a patent exists that prevents BIOSANTE
                                    from introducing any Product into commercial
                                    sale, notwithstanding Approval, the
                                    XXXXXXXXX payments described in this
                                    subsection will be delayed until such time
                                    as the patent in issue ceases to prevent
                                    such sale.

         3.3.6    XXXXXXXXXXXXXXX: In the event that BIOSANTE fails to XXXX
                  XXXXXXXXXXXXXXXXXXXXX pursuant to Section 3.3.1 or 3.3.2 above
                  at the time as provided in the Development Plan for the
                  respective Product, and such failure to XXXXXXXXXXXX continues
                  for more than thirty (30) days after BIOSANTE receives from
                  PERMATEC the respective notice to do so, then the respective
                  milestone payment under Section 3.3.1 and 3.3.2 above,
                  respectively, shall nonetheless become due and payable upon
                  the expiration of the thirty (30) day period provided for in
                  PERMATEC's notice.

         3.3.7    XXXXXXXXXXXXXXX: In the event that BIOSANTE fails to XXXX
                  XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX


                                                                               7
<PAGE>

                  XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
                  XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
                  XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
                  continues for more than thirty (30) days after BIOSANTE
                  receives from PERMATEC the respective notice to do so, then
                  the respective milestone payment under Section 3.3.4 above
                  shall nonetheless become due and payable upon the expiration
                  of such thirty (30) day period provided for in PERMATEC's
                  notice.

3.4      SUB-LICENSEE PAYMENTS: Should BIOSANTE in its sole discretion, but
         always in accordance with Section 2.2 above, sub-license any of the
         Products, in any portion of the Territory, BIOSANTE shall pay to
         PERMATEC XXXXX percent (XXXXX%) of any up-front or sublicense or
         milestone payments received from such sub-licensees, in addition to
         royalties, except for up-front or milestone or sublicense payments
         related to a sublicense in China, Hong Kong, Malaysia or Indonesia for
         which BIOSANTE will pay PERMATEC XXXXX percent (XXXXX%) of such
         payments from sub-licensees. [PORTIONS OF THIS SECTION HAVE BEEN
         OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIALITY UNDER RULE 24b-2 OF
         THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. A COPY OF THIS
         AGREEMENT WITH THIS SECTION INTACT HAS BEEN FILED SEPARATELY WITH THE
         SECURITIES AND EXCHANGE COMMISSION.]

3.5      MODE OF PAYMENTS, RELATED REPORTS

         3.5.1    INITIAL AND MILESTONE PAYMENTS: The initial payment and all
                  milestone payments due PERMATEC under this Agreement shall be
                  paid in U.S. Dollars (USD), within thirty (30) days of the
                  triggering event of the initial payment and each milestone,
                  respectively, by confirmed wire transfer to a bank account of
                  PERMATEC reasonably notified to BIOSANTE.

         3.5.2    ROYALTY PAYMENTS: All royalty payments due to PERMATEC under
                  this Agreement shall accrue and be paid to PERMATEC quarterly,
                  in U.S. Dollars (USD), within sixty (60) days of the end of
                  each calendar quarter (each quarter being a period of three
                  consecutive calendar months commencing January, April, July
                  and October), by confirmed wire transfer to a bank account of
                  PERMATEC reasonably notified to BIOSANTE from time to time.

                  3.5.2.1  WITHHOLDING: Any and all withholding taxes or similar
                           charges assessable to BIOSANTE on royalties payable
                           hereunder for sales outside of the United States will
                           be deducted from such amount due, will be paid by the
                           payer to the proper taxing authority, and proof of
                           payment of said tax, as well as any other documents
                           or confirmations reasonably required by PERMATEC to
                           recover any such withholding taxes or parts thereof
                           from the proper tax authorities, will be secured and
                           sent to PERMATEC as evidence of such payment.


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<PAGE>

                  3.5.2.2  CALCULATION OF ROYALTIES: Any conversions into U.S.
                           Dollars (USD) from the currency in which the
                           corresponding Net Sales for any royalties were made,
                           are to be made by applying an exchange rate equal to
                           the applicable buying rate reported by The Wall
                           Street Journal for the currency of the country in
                           question for the last business day of the calendar
                           quarter in question.

                  3.5.2.3  REPORTS: Each such royalty payment shall be
                           accompanied by a statement showing on a
                           country-by-country and Product-by-Product basis the
                           amount of Net Sales of each Product achieved during
                           such quarter and the amounts of royalty due on such
                           Net Sales of Products. With respect to any calendar
                           quarter for which no payment is due for any given
                           Product in any given country, BIOSANTE shall
                           nonetheless include such Product and/or country in
                           each such quarterly statements. Each such statement
                           shall be certified by the CFO or other authorized
                           officer of BIOSANTE to be complete, true and
                           accurate.

                  3.5.2.4  BOOKS AND RECORDS: BIOSANTE shall keep full, true and
                           accurate books of account containing all particulars
                           and reasonable supporting documentation which may be
                           necessary for the purpose of determining the Net
                           Sales of Products, royalties due thereon and the
                           statements provided by BIOSANTE pursuant to Section
                           3.5.2.3 above. Such records shall be kept at
                           BIOSANTE's principal place of business, and shall be
                           open at all reasonable times and upon reasonable
                           advance notice to the inspection of PERMATEC or an
                           independent certified public accounting firm retained
                           by PERMATEC, and reasonably acceptable to BIOSANTE,
                           for the purpose of verifying any payment made under
                           this Agreement. PERMATEC shall bear the full cost of
                           any such audit, unless the audit discloses that the
                           amount due during any period audited exceeds the
                           amount paid by (i) ten percent (10%) or more during
                           the first two (2) years following first commercial
                           sale of a Product in any country; or (ii) five
                           percent (5%) or more thereafter, in which case
                           BIOSANTE shall bear the full cost of such audit. Any
                           additional royalty found in such audit to be due
                           PERMATEC shall be paid by BIOSANTE within thirty (30)
                           days after such finding.


                                                                               9
<PAGE>

4.       PERMATEC PRODUCTION OF PRODUCTS

4.1      PRODUCTION OF CLINICAL BATCHES: PERMATEC will formulate and produce and
supply the Products in sufficient quantities for all purposes of Development as
reasonably needed for BIOSANTE to perform its Development obligations under this
Agreement, as follows:

         4.1.1    ORDERS: PERMATEC will supply Products for clinical studies in
                  response to written orders from BIOSANTE to be issued in
                  accordance with the Development Plan for each Product. Any
                  order for such clinical batch shall provide for lead times of
                  at least one-hundred-eighty (180) days, and will allow for
                  quantities of +/- 10% of the quantity of Product ordered.
                  BIOSANTE agrees to purchase from PERMATEC all supplies of
                  Products so ordered for all Development purposes hereunder.

         4.1.2    PRODUCTION COSTS: PERMATEC shall bear the costs, up to an
                  aggregate of XXXXX Dollars (USD XXXXX) per Product (for a
                  potential aggregate maximum of XXXXX Dollars (USD XXXXX) for
                  all four products), associated with the formulation and
                  production of such clinical batches of the Products including,
                  without limitation, the preparation of the chemistry,
                  manufacturing and control components of any application needed
                  to obtain Approval(s), with any additional cost of the
                  formulation and production of such clinical batches of
                  Products in excess of USD XXXXX per Product to be borne
                  exclusively by BIOSANTE. [PORTIONS OF THIS SECTION HAVE BEEN
                  OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIALITY UNDER RULE
                  24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. A
                  COPY OF THIS AGREEMENT WITH THIS SECTION INTACT HAS BEEN FILED
                  SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.]

         4.1.3    FURTHER PROVISIONS: Any and all further provisions governing
                  the production and supply of clinical batches of Products
                  shall be mutually agreed upon by the parties at the
                  appropriate time and, absent such mutual agreement, the
                  respective provisions of the Supply Agreement shall apply
                  mutatis mutandis to such production and supply of clinical
                  batches.

         4.1.4    REPAYMENT OF PRODUCTION MILESTONES: In the event that
                  PERMATEC, within the one-hundred-eighty (180) days minimum
                  lead time for the order of any Product for clinical studies
                  from BIOSANTE under Section 4.1.1 above, may not reasonably
                  demonstrate its ability to produce or have produced the
                  ordered clinical batch of the respective Product in time and
                  in compliance with applicable GMP, then BIOSANTE may request
                  PERMATEC to repay the respective production milestone payment
                  paid by BIOSANTE for the production of the clinical batches of
                  such Product under Section 3.3.1 and 3.3.2, respectively, upon
                  receipt of which request PERMATEC shall be fully released from
                  its obligation under Sections


                                                                              10
<PAGE>

                  4.1.1 through 4.1.3, but with respect to the affected Product
                  only. In that case, PERMATEC shall repay to BIOSANTE 25% of
                  USD XXXXX per product up to a total of XXXXX Dollars (USD
                  XXXXX). [PORTIONS OF THIS SECTION HAVE BEEN OMITTED PURSUANT
                  TO A REQUEST FOR CONFIDENTIALITY UNDER RULE 24b-2 OF THE
                  SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. A COPY OF THIS
                  AGREEMENT WITH THIS SECTION INTACT HAS BEEN FILED SEPARATELY
                  WITH THE SECURITIES AND EXCHANGE COMMISSION.]

4.2      PRODUCTION OF COMMERCIAL SUPPLY: The terms and conditions governing the
         ordering, manufacturing and supply of any Product for commercial use
         shall be mutually agreed upon by the parties in a separate Supply
         Agreement.


5.       DEVELOPMENT OBLIGATIONS OF BIOSANTE AND PERMATEC

5.1      NON-TERRITORY DEVELOPMENT: PERMATEC shall retain all rights to the
Products, the Know-How and the Patents in geographical areas not included within
the Territory, and PERMATEC shall have all rights, but no obligation whatsoever,
to develop, market and sell or license out to a third party any Product with
respect to any and all countries outside the Territory.

5.2      DATA SHARING: BIOSANTE and PERMATEC agree to provide one another
immediate, full and free access to the clinical data and results generated by or
on behalf of each with respect to the Products, and each agrees that the other
may utilize all such data and results, directly or through permitted (sub-)
licenses in pursuit of Product Approval in their respective geographical areas
(the Territory for BIOSANTE, all other areas for PERAMATEC), provided that (i)
BIOSANTE undertakes to include such obligation in any and all of its sub-license
agreements in accordance with Section 2.2 above, and (ii) PERMATEC will use its
best efforts to obtain access to such data from other licensees or sublicensees,
but PERMATEC shall have no obligation to share or provide any such information
and data regarding Products with BIOSANTE under this Section 5.2, if such
information and data is not freely available to PERMATEC.

5.3      BIOSANTE'S DEVELOPMENT AND MARKETING OBLIGATIONS/UNITED STATES:
BIOSANTE agrees and undertakes to diligently use all its commercially reasonable
efforts to (1) Develop the Products in the Territory, and to (2) obtain Approval
from the FDA to market the Products as applicant and owner, consistent with the
Development efforts undertaken by other companies similarly situated within the
industry for similar drug products used for similar indications, all in
accordance with the respective Development Plan for each Product. As Approvals
for each respective Product are obtained, BIOSANTE shall proceed diligently to
(1) use all its commercially reasonable efforts to sell the Product[s] in the
applicable jurisdictions of the Territory, (2) Market, advertise and promote the
sale of and otherwise employ marketing and sales techniques


                                                                              11
<PAGE>

reasonably designed to develop a demand for the Product[s] in order to achieve
the projected sales. Toward these ends, BIOSANTE shall take appropriate steps
including but not limited to:

         (a)      preparation and filing of an Investigational New Drug
                  Application with FDA concerning each Product as applicant; and

         (b)      establishing and maintaining a program reasonably designed and
                  funded to obtain information adequate to enable BIOSANTE to
                  file a New Drug Application or Abbreviated New Drug
                  Application, as applicable, for each Product; and

         (c)      investing and making available any and all necessary
                  financial, Marketing, sales and human resources required to
                  achieve in time the projected sales of each Product as
                  provided for in the Development Plan.

5.4      BIOSANTE'S DEVELOPMENT AND MARKETING OBLIGATIONS/NON-US: In all other
countries of the Territory, BIOSANTE agrees to use all its commercially
reasonable efforts to Develop and Market, or have Developed and Marketed by
sub-licensees in accordance with Section 2.2 above, the Products and to obtain
the necessary Approvals, consistent with the Development and Marketing efforts
undertaken by other companies similarly situated within the industry for similar
drug products used for similar indications in any country of the Territory, all
in accordance with the respective Development Plan for each Product, in order to
achieve in time the projected sales of each Product as provided for in the
Development Plan.

5.5      PROTOCOL REVIEW: The parties agree that before either begins a clinical
trial of a Product, whether conducted by or on behalf of such party, it will
give the other party the opportunity to review the protocol for such trial,
along with the opportunity to provide comments. The reviewing party shall have
fourteen (14) days to complete such review. Notwithstanding any such
consultation, the party conducting such clinical trial shall maintain full and
sole responsibility regarding any such study protocol.


5.6      DEVELOPMENT PLAN

         5.6.1    AGREED DEVELOPMENT PLAN: As soon as possible, but in any event
                  within ninety (90) days of entering into this Agreement,
                  BIOSANTE shall prepare and provide to PERMATEC, for each
                  Product, a Development Plan containing sales projections, its
                  best good faith projection of a Development timetable
                  (including projected timetables for clinical studies and the
                  FDA new drug application process), and projected date of
                  launch. BIOSANTE and PERMATEC will consult and agree on this
                  Development Plan by written acknowledgement by each party on a
                  copy of the plan, provided to the other party.

         5.6.2    MATERIAL DEVIATIONS: Material deviations from the Development
                  Plans, including without limitation deviations from the
                  timetable contained therein, shall require the prior written
                  consent by PERMATEC, which


                                                                              12
<PAGE>

                  consent shall not be unreasonably withheld, except that in no
                  event shall PERMATEC's approval be withheld if BIOSANTE may
                  demonstrate that such deviation is required, due to, or caused
                  by, any material technical, scientific or clinical reason
                  encountered by BIOSANTE during the Development of such
                  Product.

5.7      DEVELOPMENT REPORTING:  BIOSANTE undertakes to provide PERMATEC
regularly, but at least twice yearly (within sixty (60) days of the start of the
calendar year and July 1, respectively), with an update reasonably detailing the
steps and actions performed and results achieved or gained by BIOSANTE in
pursuing the Development pursuant to the Development Plan, including without
limitation information on the status of any filing for Approvals for each
Product.


6.       REPRESENTATIONS, WARRANTIES AND COVENANTS; INDEMNIFICATION

6.1      PERMATEC'S: PERMATEC, as an inducement to BIOSANTE to enter into this
Agreement, represents, warrants and covenants to BIOSANTE as follows:

         6.1.1    RIGHT TO LICENSE: PERMATEC has full right, power and authority
                  to grant an exclusive license to BIOSANTE in the Territory
                  pursuant to the terms of this Agreement to practice the
                  technology covered by any and all patents listed in Exhibit A,
                  and Know-How, and to Develop, Market and sell the Products,
                  free and clear of any mortgage, lien, encumbrance or other
                  third-party interest of any kind. As of the effective date of
                  this Agreement, PERMATEC is not aware of any fact or
                  circumstances that the Products are, in or with respect to the
                  Territory, subject to any restrictions, covenants, licenses
                  other than this Agreement, or judicial and administrative
                  orders of any kind, which detract in any material respect from
                  the value of the Products, or which could interfere with the
                  use thereof by BIOSANTE in the Territory as contemplated by
                  this Agreement.

         6.1.2    NO INABILITY TO RECEIVE APPROVAL: As of the effective date of
                  this Agreement, PERMATEC is aware of no facts that would
                  reasonably lead it to conclude that any of the Products will
                  be unable to receive the contemplated Approval from the FDA or
                  Approval from any other Regulatory Authority upon satisfactory
                  completion of clinical trials, and PERMATEC has no knowledge
                  of any facts which would reasonably lead it to conclude that
                  satisfactory completion of clinical trials is not likely.

         6.1.3    CLEAR RIGHTS: As of the effective date of this Agreement,
                  PERMATEC has not received any notice and has no knowledge that
                  (i) the rights to Develop, Market and sell the Products have
                  been challenged in any


                                                                              13
<PAGE>

                  judicial or administrative proceeding, or (ii) any person,
                  entity or product has infringed or will infringe any patent
                  rights encompassed by the Patents and applicable to the
                  Products, or (iii) any patent rights or other intellectual
                  property rights, including but not limited rights of trade
                  mark, trade dress and copyright, have been infringed by
                  PERMATEC or will be infringed by BIOSANTE by virtue of
                  performing the activities contemplated by this Agreement.

         6.1.4    RIGHT TO EXECUTE AND PERFORM: PERMATEC has full right, power
                  and authority to execute and deliver this Agreement, and to
                  perform its obligations under it, and has taken all necessary
                  action to authorize such execution, delivery and performance.
                  This Agreement constitutes the legal, valid and binding
                  obligation of PERMATEC, enforceable against it in accordance
                  with its terms.

         6.1.5    COMPLIANCE WITH LAW: PERMATEC will comply with all applicable
                  laws in connection with performance of its obligations under
                  this Agreement. The execution, delivery and performance of
                  this Agreement by PERMATEC does not violate any provision of
                  applicable law or of any regulation, order, decree of any
                  court, arbitration or governmental authority, or any other
                  agreement to which PERMATEC is a party. No consents, approvals
                  or authorizations, registrations or filings are required in
                  connection with the execution, delivery, performance, validity
                  or enforceability of this Agreement, except as have been
                  obtained or set forth in this Agreement.

         6.1.6    NO FURTHER REPRESENTATION: Except for the specific
                  representations and warranties given by PERMATEC in this
                  Section 6.1, PERMATEC does not give any further or other
                  warranty and makes no other or further representation, whether
                  express or implied. IN PARTICULAR, BUT WITHOUT LIMITATION OF
                  THE GENERALITY OF THE PRECEDING SENTENCE, PERMATEC DOES NOT
                  GIVE ANY WARRANTY AND MAKES NO REPRESENTATION WITH RESPECT TO
                  THE PRODUCTS AND/OR THE KNOW-HOW, INCLUDING WITHOUT
                  LIMITATION, ANY WARRANTY OF COMPLETENESS, ACCURACY,
                  MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE THEREOF,
                  IN PARTICULAR WITH RESPECT TO THE INTENDED PURPOSE OF
                  SUCCESSFUL APPLICATION FOR APPROVAL(S) IN ANY COUNTRY OF THE
                  TERRITORY.

6.2      BIOSANTE'S: As an inducement to PERMATEC to enter into this Agreement,
BIOSANTE represents and warrants to PERMATEC as follows:

         6.2.1    RIGHT TO EXECUTE AND PERFORM: BIOSANTE has full right, power
                  and authority to execute and deliver this Agreement, and to
                  perform its


                                                                              14
<PAGE>

                  obligations under it, and has taken all necessary action to
                  authorize such execution, delivery and performance. This
                  Agreement constitutes the legal, valid and binding obligation
                  of BIOSANTE, enforceable against it in accordance with its
                  terms.

         6.2.2    COMPLIANCE WITH LAW: BIOSANTE will comply with all applicable
                  laws in connection with performance of its obligations under
                  this Agreement. The execution, delivery and performance of
                  this Agreement by BIOSANTE does not and will not violate any
                  provision of applicable law or of any regulation, order,
                  decree of any court, arbitration or governmental authority, or
                  any other agreement to which BIOSANTE is a party. No consents,
                  approvals or authorizations, registrations or filings are
                  required in connection with the execution, delivery,
                  performance, validity or enforceability of this Agreement,
                  except as have been obtained or set forth in this Agreement.

         6.2.3    BEST EFFORTS: BIOSANTE represents and warrants that it will
                  use its best efforts to perform and pursue all steps and
                  actions required for, and apply for and pursue the Approvals
                  for Product in accordance with the Development Plans and
                  within the time-limits set forth therein, and, upon such
                  granting of any such Approvals, to Market the Products
                  throughout the Territory during the term of and in accordance
                  with this Agreement.

         6.2.4    COMPLIANCE WITH APPROVALS: BIOSANTE represents and warrants
                  that in addition to complying with and respecting any and all
                  applicable laws, rules, regulations and orders, it shall also
                  comply with all terms and conditions of the Approvals (if
                  any), when Developing, Marketing and selling Products in any
                  country of the Territory.

         6.2.5    NO FURTHER REPRESENTATION: Except for the specific
                  representations and warranties given by BIOSANTE in this
                  Section 6.2, BIOSANTE does not give any further or other
                  warranty and makes no other or further representation, whether
                  express or implied. IN PARTICULAR, BUT WITHOUT LIMITATION OF
                  THE GENERALITY OF THE PRECEDING SENTENCE, BIOSANTE DOES NOT
                  GIVE ANY WARRANTY AND MAKES NO REPRESENTATION WITH RESPECT TO
                  THE PRODUCTS AND/OR THE KNOW-HOW, INCLUDING WITHOUT
                  LIMITATION, ANY WARRANTY OF COMPLETENESS, ACCURACY,
                  MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE THEREOF,
                  IN PARTICULAR WITH RESPECT TO THE INTENDED PURPOSE OF
                  SUCCESSFUL APPLICATION FOR APPROVAL(S) IN ANY COUNTRY OF THE
                  TERRITORY.

6.3      INDEMNIFICATION BY BIOSANTE: Without affecting any other remedies
available under this Agreement, BIOSANTE shall defend, indemnify and hold
PERMATEC and


                                                                              15
<PAGE>

its directors, officers and employees, harmless from and against any and all
claims, suits or demands for liability, damages, costs and expenses (including
reasonable fees, costs and expenses of attorneys and other professionals and
court costs, but excluding consequential damages for lost profits) arising from
or relating to the negligence or willful misconduct of BIOSANTE or its
Affiliates or its sub-licensees in connection with the subject matter of this
Agreement.

6.4      INDEMNIFICATION BY PERMATEC: Without affecting any other remedies
available under this Agreement, PERMATEC shall defend, indemnify and hold
BIOSANTE and its directors, officers and employees, harmless from and against
any and all claims, suits or demands for liability, damages, costs and expenses
(including reasonable fees, costs and expenses of attorneys and other
professionals and court costs, but excluding consequential damages for lost
profits) arising from or relating to the negligence or willful misconduct of
PERMATEC in connection with the subject matter of this Agreement.


7.       CONFIDENTIALITY

7.1      OBLIGATION OF CONFIDENTIALITY: Except to the extent expressly
authorized by this Agreement, or otherwise agreed in writing, the parties agree
that, at all times during the term of this Agreement and for five (5) years
thereafter, the receiving party shall keep completely confidential, shall not
publish or otherwise disclose and shall not use directly or indirectly for any
purpose, any information furnished, disclosed, delivered or otherwise made
available to it by the other party pursuant to this Agreement (including without
limitation Know-How), except to the extent that it can be established by the
receiving party by competent proof that such information:

         (a)      was already known to the receiving party, other than under an
                  obligation of confidentiality, at the time of disclosure by
                  the other party;

         (b)      was generally available to the public or otherwise part of the
                  public domain at the time of its disclosure to the receiving
                  party;

         (c)      became generally available to the public or otherwise part of
                  the public domain after its disclosure, other than through any
                  act or omission of the receiving party in breach of this
                  Agreement; or

         (d)      was disclosed to the receiving party, other than under an
                  obligation of confidentiality, by a third party who had no
                  obligation to the disclosing party not to disclose such
                  information to others.

7.2      EXCEPTIONS: Each party may disclose the other's information to the
extent such disclosure is reasonably necessary in filing or prosecuting patent
applications, pursuing or defending litigation, or complying with applicable
governmental regulations, provided that if a party intends to make any such
disclosure, it shall give reasonable advance written notice to the other party
of such intended disclosure, and shall take reasonable steps to restrict or
limit such disclosure or require confidential treatment thereof.


                                                                              16
<PAGE>

7.3      WHEN CONSENT NEEDED: Except as otherwise provided in Section 7.2 above,
neither party shall disclose any terms or conditions of this Agreement to any
third party without the prior consent of the other party. Notwithstanding the
foregoing, prior to the execution of this Agreement, the parties shall agree
upon the substance of information that can be used to describe the terms of this
transaction, and the parties may disclose only such information without the
other party's consent.


8.     PROPRIETARY RIGHT AND PATENTS

8.1      TITLE: PERMATEC shall retain title to and full ownership in the
Products, the Patents and the Know-How including, but not limited to, any and
all developments and inventions related thereto, if any (hereinafter
collectively referred to as "PERMATEC IPR"). BIOSANTE does not by virtue of this
Agreement, directly or indirectly through its officers, directors, employees,
agent, Affiliates, customers or other controlled or associated third parties,
acquire any proprietary interest in or other right to PERMATEC IPR, other than
provided in this Agreement.

8.2      INFRINGEMENT BY THIRD PARTIES: PERMATEC and BIOSANTE recognize that
they each have an interest in the protection of the PERMATEC IPR. Either or both
may wish to take steps to protect or defend their respective interests in
specific circumstances. In addition:

         8.2.1    NOTICE: If either PERMATEC or BIOSANTE becomes aware of (i)
                  any product or activity of any kind that involves or may
                  involve an infringement or violation of PERMATEC IPR with
                  respect to Products and/or the Territory, or (ii) any
                  third-party action, claim or dispute (including, but not
                  limited to, actions for declaratory judgement alleging
                  invalidity or non-infringement) based upon or arising out of
                  PERMATEC IPR with respect to Products and/or the Territory,
                  then each agrees to promptly so notify the other in writing.

         8.2.2    INDEPENDENT DECISIONS TO ACT: Each party shall, in its sole
                  discretion, have the right but no obligation to determine the
                  most commercially appropriate course of action, if any, for it
                  to follow to enforce, or otherwise abate the infringement of,
                  or defend third-party actions regarding, PERMATEC IPR with
                  respect to Products and the Territory, including whether to
                  request status as an additional party to any such action. Each
                  party deciding to take any such course of action shall do so
                  at its own risk, benefit, cost and expense. Notwithstanding
                  anything contained herein, BIOSANTE shall not accept any
                  settlement or award in any such action which has or may have a
                  negative impact on the proprietary or other legitimate rights
                  of PERMATEC in any of the PERMATEC IPR, without the prior
                  written consent of PERMATEC, which consent shall not be
                  withheld unreasonably.


                                                                              17
<PAGE>

         8.2.3    REDUCTION IN ROYALTY: In the instance in which an A/B rated
                  generic equivalent or substitute of a Product on sale in any
                  part of the Territory is reasonably notified by either party
                  under Section 8.2.1 above to infringe a Patent available for
                  such Product in such country of the Territory, and PERMATEC
                  takes no action against the third party, but BIOSANTE does,
                  and BIOSANTE may give evidence that the marketing of such
                  competitive product has led to a reduction in sales of the
                  affected Product in such country of the Territory of more then
                  fifteen percent (15%), then the Royalty payable by BIOSANTE to
                  PERMATEC for that Product after such reasonable notice
                  pursuant to Section 8.2.1 in that country of the Territory
                  will be XXXX percent (XXXX%) for as long as (1) such competing
                  product is on sale, and (2) BIOSANTE's Royalty obligation
                  exists under this Agreement. [PORTIONS OF THIS SECTION HAVE
                  BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIALITY UNDER
                  RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
                  A COPY OF THIS AGREEMENT WITH THIS SECTION INTACT HAS BEEN
                  FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.]

         8.2.4    COOPERATION: In addition to the above, each party, regardless
                  of whether it joins in a legal action, agrees to cooperate
                  with the other to provide reasonable assistance in the
                  prosecution or defense of any actions regarding PERMATEC's
                  IPR. Each party shall keep the other regularly informed on
                  developments in any such action in which it participates or
                  obtains information, if the other party is not involved.


9.       TERM AND TERMINATION

9.1      TERM: This Agreement shall be effective on the date first written above
and shall expire, unless earlier terminated by either party pursuant to this
Section 9, on a country-by-country and Product-by-Product basis upon the
expiration of the respective Royalty Term, subject to BIOSANTE's continuing
fully-paid up exclusive license pursuant to Section 3.2 above.

9.2      TERMINATION: At any time, this Agreement may be terminated by giving
written notice to that effect, as follows:

         (a)      by either party, if the other party is in material default or
                  in material breach of any term or provision hereof, including
                  without limitation to the terms and deadlines incorporated
                  into the parties' agreed Development Plan, which termination
                  shall apply only to the Product(s) and Country(ies) involved,
                  or material breach of any representation or warranty in this
                  Agreement or material breach of the confidentiality
                  obligations hereof, and such material default or material
                  breach continues and is not remedied within thirty (30) days
                  upon the other party's written request to remedy such default
                  or breach; or


                                                                              18
<PAGE>

         (b)      by either party, if the other party goes into liquidation,
                  voluntarily or otherwise, other than for the sole purpose of
                  reorganisation, or goes into bankruptcy or makes an assignment
                  for the benefit of creditors, or in the event of a receiver
                  being appointed of a substantial part of the other party's
                  property; or

         (c)      by either party in its sole discretion, with respect only to
                  the involved Product or Products, or country or countries of
                  the Territory, respectively, and without prejudice to any
                  other rights conferred on it by this Agreement and in addition
                  to any other remedies available to it by law or in equity, if
                  such party terminates the Supply Agreement for material breach
                  or insolvency or other material reason caused or set by the
                  other party as provided for in such Supply Agreement, with the
                  effect of such being the termination of this Agreement upon
                  the effective date of the termination of the Supply Agreement;
                  or

         (d)      by PERMATEC, with respect only to the involved Product or
                  Products, or country or countries of the Territory,
                  respectively, if BIOSANTE, (A) within six (6) months after the
                  delivery of clinical supplies has not initiated with respect
                  to each Product and for each country of the Territory
                  reasonable steps, including sub-licensing in case BIOSANTE
                  shall not wish to Develop and Market itself the Product in
                  certain countries of the Territory, to Develop and thereafter
                  Market such Product pursuant to the provisions of this
                  Agreement, it being understood the development work done in
                  the USA may be applicable in all countries of the Territory or
                  (B) within three (3) months after receipt of commercial
                  quantities after receipt of any Approval for a Product in any
                  given country of the Territory has not launched such Product
                  in such country of the Territory, or (C) within eighteen (18)
                  months after receipt of the first Approval for any given
                  Product by any Regulatory Authority, does not either (i) file
                  a request for Approval for such Product in all countries of
                  the Territory only if the first approval is useful for
                  approval purposes, or (ii) sublicense such Product in such
                  other country(ies) of the Territory, or (D) ceases the
                  Marketing and sale of any Product in any country of the
                  Territory after the Approval from the respective Regulatory
                  Authority has been received, in each case with respect to the
                  affected Product and the affected country(ies) only, and in
                  each case only if BIOSANTE does not cure such situation within
                  three (3) months after PERMATEC's written request to do so,
                  subject always to Section 11.10 below; or

         (e)      by BIOSANTE prior to the granting of an Approval for any given
                  Product in any given country of the Territory, in case of
                  material technical, scientific or regulatory problems or, if
                  the results and data achieved and generated during the
                  Development of any given Product in reasonable determination
                  show that Approval for such Product will be unlikely to be
                  granted, with respect to the affected Product only and in a
                  specific country of the Territory, and provided that prior to
                  such termination, the parties have discussed in all details
                  the problems encountered and not agreed on a mutually
                  acceptable change of the Development Plan pursuant to Section
                  5.6.2 above; or


                                                                              19
<PAGE>

         (f)      by BIOSANTE, if any Regulatory Authority has finally denied
                  the Approval (or any material part thereof) for any given
                  Product in any country of the Territory, with respect to the
                  affected Product and such country or countries only; or

         (g)      by BIOSANTE if in its reasonable discretion it determines that
                  it would not be economically viable to develop and market a
                  Product in any country of the Territory, with respect to a
                  specific product and country only. In this case, BIOSANTE
                  shall inform PERMATEC immediately of this decision and shall
                  provide in writing and within 30 days a detailed explanation
                  including market research data and projections and calculation
                  for such a decision. Following this decision and on a
                  country-by-country basis, PERMATEC has the right to use free
                  of charge all the development data, registration file for
                  marketing or licensing purposes in that specific country and
                  for that specific Product. In that case the repayment of the
                  costs to generate data by PERMATEC to BIOSANTE as defined in
                  paragraph 9.4 does not apply. The approvals obtained by
                  BIOSANTE in these countries will be transferred free of charge
                  to PERMATEC upon request.

9.3      NO PREJUDICE TO RIGHTS: The termination of this Agreement shall be
without prejudice to any rights and obligations of either party accrued prior to
the effective date of such termination, unless explicitly otherwise agreed.
BIOSANTE shall forthwith make all payments due and outstanding to PERMATEC at
the date of termination. Except as explicitly otherwise stated in this Agreement
or otherwise agreed in writing, PERMATEC shall not be obliged to refund upon
termination of this Agreement to BIOSANTE any payments, including without
limitation the milestone payments or royalties made by BIOSANTE to PERMATEC
prior to such termination pursuant to the provisions of this Agreement.

9.4      TERMINATION OF LICENSE, RETURN OF INFORMATION: In the event of
termination of this Agreement for whatsoever reason, then the license granted
hereunder shall immediately be terminated and BIOSANTE shall immediately refrain
from using directly or indirectly in any way the Patents, Know-How and
confidential information of PERMATEC. Furthermore, BIOSANTE shall return to
PERMATEC all materials, documentation, information, data and other things
furnished by PERMATEC in connection with this Agreement, including without
limitation any and all information on PERMATEC IPR, together with all copies
thereof in BIOSANTE's possession or under its control, which were achieved,
produced or received hereunder, all free of any charge. Furthermore, BIOSANTE
shall deliver to PERMATEC any and all studies, data, results and protocols
achieved, produced or gained by BIOSANTE in performing the Development and not
previously delivered to PERMATEC pursuant to Section 5.2 above. PERMATEC shall
have the right, but no obligation, to use, at its sole discretion, any and all
such material for its own purposes. In case PERMATEC shall use such information
in applying and receiving marketing approval and launching the Product, then at
launch, PERMATEC shall reimburse the costs to generate such information to
BIOSANTE excluding development costs that were paid by BIOSANTE to PERMATEC
under this Agreement. In case PERMATEC shall use such information to enter a
license


                                                                              20
<PAGE>

agreement with a third party, then PERMATEC shall reimburse the costs to
generate such information to BIOSANTE excluding development costs that were paid
by BIOSANTE to PERMATEC under this agreement. The reimbursement to BIOSANTE will
occur at the execution of the license agreement and shall not exceed the net
payments (upfront, milestones and royalty payments excluding development costs)
received by PERMATEC from a third party under a license agreement. BIOSANTE's
costs to generate such information which is to be reimbursed by PERMATEC is to
be agreed between BIOSANTE and PERMATEC at the time of termination or when the
information is to be transferred to PERMATEC

9.5      PARTIAL TERMINATION: In the event that any termination hereunder is
limited to one or more, but not all, countries of the Territory and/or to one
Product only, but not all Products, as provided for in Sections 9.2(d), (e) and
(f) above, then the effects of such termination shall only apply to such country
or countries and/or the affected Product, but shall not affect in any way the
validity of this Agreement with respect to any other country of the Territory
with respect to the affected Product and/or any other Product.

9.6      REMEDIES NOT LIMITED: The termination of this Agreement by either party
shall not limit remedies which may be otherwise available under this Agreement
or in law or equity to either party.


10.      OPTIONS TO EXTEND TERRITORY OR PRODUCTS

10.1     OPTION TO EXTEND TERRITORY: During a period of 180 days after the
effective date of this Agreement (the "Exercise Period"), BIOSANTE shall have a
free option, exercisable in its sole discretion, to add any or all of the
nations of XXXXX, XXXXX, XXXXX, XXXXX and XXXXX (the "Option Countries") to the
Territory that is the subject of this Agreement, with respect to the Products
provided and to the extent that the Products are available for license for the
considered countries. The option may be exercised by BIOSANTE during the
Exercise Period by giving written notice of exercise to PERMATEC as provided in
this Agreement. The parties recognizing that they may or may not desire to abide
by identical terms to those in this Agreement with respect to the extended
portions of the Territory, upon receipt by PERMATEC of BIOSANTE's written notice
of exercise, the parties agree to negotiate in good faith and determine the
specific terms to apply to BIOSANTE's Development and Marketing in the extended
portions of the Territory. Notwithstanding anything contained in this Section
10.1, PERMATEC, during the Exercise Period, if it has negotiated with a third
party commercial terms of a license (including, without limitation license fees,
milestone payments, royalties and allocation of development costs) in any Option
Country, may request BIOSANTE in writing to elect whether or not to exercise its
option under this Section 10.1 with respect to the same country or countries
that are the subject of the terms negotiated with the third party, in which case
BIOSANTE shall have thirty (30) days from such notice from PERMATEC to exercise
that option. In the event that BIOSANTE does not exercise its option under this
Section 10.1 within the thirty (30) day period after receipt of


                                                                              21
<PAGE>

PERMATEC's notice hereunder, then the option under this Section 10.1 shall lapse
and fall away, irrespective of any part of the Exercise Period remaining.
[PORTIONS OF THIS SECTION HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIALITY UNDER RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED. A COPY OF THIS AGREEMENT WITH THIS SECTION INTACT HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.]

10.2     RIGHT OF FIRST OFFER: During a period starting on the XXXXX (XXXXX) day
after the effective date of this Agreement and ending on the XXXXX (XXXXX)
anniversary of the effective date of this Agreement (the "Offering Period"),
BIOSANTE shall have an exclusive right of first offer to Develop and Market in
the United States, Canada, Japan, and any other country of the Territory not
already licensed to third parties or subject to a third party's right of first
refusal, and to enter into a respective license therefor, any non-proprietary
sexual hormone product or related hormonal product, including XXXXX and its
derivatives, that PERMATEC may have formulated, invented, developed, licensed or
otherwise obtained rights with respect to, and which PERMATEC intends to, but
has not prior to such Offering Period committed to, license out for the
Territory or parts thereof. Exercise of the right of first offer shall commence
with PERMATEC notifying BIOSANTE at any time during the Offering Period of its
intention to license out such product, which notice shall in reasonable detail
describe the product and Territory or parts thereof in question and the
commercial terms of such license (including without limitation license fees,
milestone payments, royalties and allocation of development cost). BIOSANTE
shall have XXXXX (XXXXX) days to accept the offer on identical terms as
contained in such notice, during which XXXXX (XXXXX) days PERMATEC and BIOSANTE
agree to negotiate in good faith all terms of such contemplated license and
development agreement on the basis of PERMATEC's notice, unless otherwise agreed
by the Parties. Notice and exercise under this Section 10.2 shall be made by
written notice. In the event that BIOSANTE shall not accept the commercial terms
notified by PERMATEC, then PERMATEC shall be free to grant such license to any
third party, irrespective of any part of the Offering Period remaining. In the
event that PERMATEC has the ability to license the products described to a third
party within the first XXXXX (XXXXX) days of this Agreement, PERMATEC shall
immediately so notify BIOSANTE, and BIOSANTE shall have fifteen (15) business
days within which to exercise its right of first offer as described elsewhere in
this paragraph. [PORTIONS OF THIS SECTION HAVE BEEN OMITTED PURSUANT TO A
REQUEST FOR CONFIDENTIALITY UNDER RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF
1934, AS AMENDED. A COPY OF THIS AGREEMENT WITH THIS SECTION INTACT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.]

10.3     Option regarding the XXXXX Combi Gel

         10.3.1   LICENSE AGREEMENT: PERMATEC will not license XXXXX Combi Gel
                  to any company other than the one company identified by
                  PERMATEC to BIOSANTE during negotiation of this Agreement in
                  the first XXXXX (XXXXX) days of the effectiveness of this
                  Agreement. If no license agreement is reached in that XXXXX
                  (XXXXX) day period with the


                                                                              22
<PAGE>

                  company described, then during a period starting on the XXXXX
                  (XXXXXt) day after the effective date of this Agreement and
                  ending on the XXXXX (XXXXXt) anniversary of the effective date
                  of this Agreement (the "Offering Period") PERMATEC will offer
                  and BIOSANTE hereby agrees to accept an exclusive license on
                  the XXXXX Combi Gel pursuant to the terms and conditions set
                  forth below. . [PORTIONS OF THIS SECTION HAVE BEEN OMITTED
                  PURSUANT TO A REQUEST FOR CONFIDENTIALITY UNDER RULE 24b-2 OF
                  THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. A COPY OF
                  THIS AGREEMENT WITH THIS SECTION INTACT HAS BEEN FILED
                  SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.]

         10.3.2   TERMS: PERMATEC will license to BIOSANTE XXXXX Combi Gel in
                  the countries of the United States of America and Canada and
                  any other part of the Territory not already licensed to third
                  parties except Japan on the following basic terms: for a
                  license fee of XXXXX Dollars (USD XXXXX), which license fee is
                  not refundable, non-recoverable and payable as set forth
                  below, and a XXXXX percent (XXXXX%) royalty on Net Sales of
                  XXXXX Combi Gel, calculated in the same manner as royalties
                  for the Products under this Agreement, and BIOSANTE to bear
                  all costs of development (including without limitation
                  clinical study cost), and otherwise on substantially identical
                  terms as set forth in this Agreement. The costs associated
                  with the production of clinical batches of XXXXX Combi Gel
                  will be borne equally by PERMATEC and BIOSANTE up to XXXXX
                  Dollars (USD XXXXX), with any amounts in excess thereof to be
                  borne by BIOSANTE. [PORTIONS OF THIS SECTION HAVE BEEN OMITTED
                  PURSUANT TO A REQUEST FOR CONFIDENTIALITY UNDER RULE 24b-2 OF
                  THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. A COPY OF
                  THIS AGREEMENT WITH THIS SECTION INTACT HAS BEEN FILED
                  SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.]


         10.3.3 PAYMENTS: [PORTIONS OF THIS SECTION HAVE BEEN OMITTED PURSUANT
         TO A REQUEST FOR CONFIDENTIALITY UNDER RULE 24b-2 OF THE SECURITIES
         EXCHANGE ACT OF 1934, AS AMENDED. A COPY OF THIS AGREEMENT WITH THIS
         SECTION INTACT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND
         EXCHANGE COMMISSION.]

                  10.3.3.1 EXECUTION OF LICENSE AGREEMENT: Upon execution of a
                  separate license agreement concerning XXXXX Combi Gel,
                  BIOSANTE shall pay to PERMATEC a milestone payment of XXXXX
                  Dollars (USD XXXXX).

                  10.3.3.2 XXXXXXXXXXXXX: Upon XXXXXXXXXX XXXXXXXXXXXXXXXXXXX,
                  BIOSANTE shall pay to PERMATEC a milestone payment of XXXXX
                  Dollars (USD XXXXX).


                                                                              23
<PAGE>

                  10.3.3.3. XXXXXXXXXXXXX: Upon XXXXXXXXXX XXXXXXXXXXXXXXXXXXX,
                  BIOSANTE shall pay to PERMATEC a milestone payment of up to
                  XXXXX Dollars (USD XXXXX), as follows:
                  XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXX.

                  10.3.3.4 XXXXXXXXXXXXX: Upon XXXXXXXXXX XXXXXXXXXXXXXXXXXXX,
                  BIOSANTE shall pay to PERMATEC a milestone payment of up to
                  XXXXX Dollars (USD XXXXX), as follows:
                  XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXX.

10.4     TERMINATION OF OPTION RIGHTS: In the event that this Agreement is
terminated by PERMATEC pursuant to Section 9.2 above prior to the expiration of
any of the rights contained in this Section 10, then all such rights shall
terminate and fall away as per the effective date of such termination without
any liability on the side of PERMATEC.


11.      MISCELLANEOUS

11.1     GOVERNING LAW: This Agreement is governed by and construed in all
respects in accordance with the laws of the State of Illinois, USA and the
United States of America (without regard to conflicts of laws principles),
excluding the United Nations Convention on Contracts for the International Sale
of Goods.

11.2     DISPUTE RESOLUTION:

         (a)      CONCILIATION. The parties wish first to seek an amicable
                  settlement of all disputes, controversies or claims arising
                  out of or relating to this Agreement by conciliation in
                  accordance with the UNCITRAL Conciliation Rules now in force.
                  The conciliation shall take place in Chicago, Illinois (USA)
                  before a conciliator. If assistance is needed in connection
                  with the appointment of a conciliator or other administrative
                  matters, JAMS Endispute, Inc., 222 S. Riverside Plaza,
                  Chicago, Illinois, USA (telephone 312-739-0200), shall be the
                  institution to render such assistance. The language to be used
                  in the conciliation proceedings shall be English.

         (b)      ARBITRATION. Subject to possible court proceedings under
                  Section 11.2(d) of this Agreement, if any conciliation
                  proceedings under Section 11.2(a) of this Agreement are
                  terminated in accordance with Article 15 of the UNCITRAL
                  Conciliation Rules or rejected in accordance with Article 2 of
                  those Rules, without resolution of the disputes, controversies
                  or claims, then all said disputes, controversies or claims
                  shall be determined by arbitration in accordance with the
                  UNCITRAL Arbitration Rules now in


                                                                              24
<PAGE>

                  force, as supplemented by the IBA Rules on the Taking of
                  Evidence in International Commercial Arbitration, as adopted
                  June 1, 1999, insofar as said IBA Rules are not inconsistent
                  with the express provisions of this Agreement. The language to
                  be used in the arbitral proceedings shall be English. There
                  shall be three (3) arbitrators, the place of arbitration shall
                  be Chicago, Illinois (USA) and the appointing authority shall
                  be JAMS Endispute, Inc. In rendering the award, the arbitrator
                  shall follow and apply the substantive laws of the State of
                  Illinois (without regard to conflict or choice of laws
                  principles). The arbitrator shall have the authority to award
                  compensatory damages only, subject to the limitations
                  described in this Agreement. Each party shall pay the fees of
                  its own attorneys, expenses of witnesses and all other
                  expenses and costs in connection with the presentation of such
                  party's case (collectively, "Attorneys' Fees"). The remaining
                  costs of the arbitration, including without limitation, fees
                  of the arbitrator, costs of records or transcripts and
                  administrative fees (collectively, "Arbitration Costs") shall
                  be borne equally by the parties. Notwithstanding the
                  foregoing, the arbitrator in the award may apportion said
                  Attorneys' Fees and Arbitration Costs, pursuant to articles 38
                  through 40 of the UNCITRAL Arbitration Rules. The award
                  rendered by the arbitrator shall be final, and judgment may be
                  entered in accordance with the applicable law by any court
                  having jurisdiction thereof.

         (c)      CONFIDENTIALITY. The existence and resolution of any
                  conciliation and/or arbitration shall be kept confidential,
                  and the parties, the conciliator and the arbitrator shall not
                  disclose to any person any information about such arbitration.

         (d)      COURT PROCEEDINGS. Notwithstanding the arbitration provisions
                  in Section 11.2(c) of this Agreement, PERMATEC shall have the
                  right to sue in any court of competent jurisdiction to collect
                  from BIOSANTE funds due and owing PERMATEC hereunder. Section
                  11.2(c) of this Agreement shall not be construed to prevent
                  either party from seeking injunctive relief against the other
                  party from any judicial or administrative authority of
                  competent jurisdiction to enjoin that party from breaching
                  this Agreement pending the resolution of a dispute by
                  arbitration, pursuant to said Section 11.2(c). Any action to
                  confirm an arbitration award or any other legal action related
                  to this Agreement between the parties may be instituted in any
                  court of competent jurisdiction. PERMATEC and BIOSANTE each
                  waive their right to a trial by jury in any such court
                  proceedings.

11.3     NOTICE: All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally or by facsimile
transmission, mailed by registered or certified mail (return receipt requested,
postage prepaid) or sent by overnight courier service to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):


                                                                              25
<PAGE>

                  If to PERMATEC

                  Permatec Technologie, AG
                  c/o Permatec Pharma AG
                  Hardstrasse 18
                  CH-4132 Muttenz, Switzerland
                  Attn.: PRESIDENT
                  Fax No: +41 61 465 92 91

WITH COPY TO:     Rinderknecht Klein & Stadelhofer
                  Beethovenstrasse 7
                  CH-8022 Zurich, Switzerland
                  Fax No: ++41 1 287 24 00

                  If to BIOSANTE:

                  Stephen M. Simes
                  President and CEO
                  BioSante Pharmaceuticals, Inc.
                  175 Olde Half Day Road
                  Lincolnshire, Illinois  60069
                  Tel:     (847) 793-2434
                  Fax:     (847) 793-2435

WITH COPY TO:     Eric F. Greenberg
                  Ungaretti & Harris
                  3500 Three First National Plaza
                  Chicago, Illinois  60602-4283
                  Tel:     (312) 977-4647
                  Fax:     (312) 977-4405

11.4     ENTIRETY: The terms and conditions of this Agreement, together with the
Exhibits referred to herein, constitute the entire agreement and understanding
of the parties, and supersede all previous communications whether oral or
written between the parties, including any previous agreement or understanding
varying or extending the same.

11.5     MODIFICATION: This Agreement may be released, discharged, abandoned,
changed or modified only by an instrument in writing of equal formality, signed
by the duly authorized officer or representative of each of the parties.

11.6     SEVERABILITY: Each party hereby acknowledges that it does not intend to
violate any public policy, statutory or common laws, rules, regulations, treaty
or decision of any government agency or executive body thereof of any country or
community or association of countries. Should one or more provisions of this
Agreement be or become invalid, the parties agree that it is their intent that
the remainder of the Agreement shall


                                                                              26
<PAGE>

continue in effect, and shall substitute, by mutual consent, valid provisions
for such invalid provisions which valid provisions in their economic effect are
sufficiently similar to the invalid provisions that it can be reasonably assumed
that the parties would have entered into this Agreement with such valid
provisions.

11.7     WAIVER: The failure of either party at any time or from time to time to
exercise any of its rights or to enforce any of the terms, conditions or
provisions under this Agreement shall not be deemed to be a waiver of any such
rights nor shall it prevent such party from subsequently asserting or exercising
any such rights.

11.8     RELATIONSHIP OF PARTIES: Nothing in this Agreement is intended or shall
be deemed to constitute a partnership, agency or joint venture relationship
between the parties.

11.9     ASSIGNMENT: Neither this Agreement nor any interest hereunder shall be
assignable by either party without the prior written consent of the other party
(provided that this shall not restrict or prevent BIOSANTE from sublicensing its
rights or responsibilities hereunder). Notwithstanding the foregoing, PERMATEC
may subcontract any and all of its obligations hereunder to any third party, and
the parties may assign this Agreement or any of its respective rights or
obligations hereunder to any Affiliate or successor by merger or sale of
substantially all of their business; provided in each case, however, that such
party shall remain jointly and severally liable for the performance of all of
its duties and obligations hereunder.

11.10    FORCE MAJEURE: Neither party hereto shall be held liable or responsible
to the other party nor be deemed to have defaulted under or breached this
Agreement for failure or delay in fulfilling or performing any term of this
Agreement when such failure or delay is caused by or results from causes beyond
the reasonable control of the affected party, including but not limited to fire,
floods, embargos, war, acts of war (whether war be declared or not),
insurrections, riots, civil commotions, strikes, lockouts or other labour
disturbances, acts of God, omissions or delays in acting by any governmental
authority (including the FDA and Regulatory Authorities) or the other party
hereto.

11.11    INTEREST: In the event any amount due and payable under this Agreement
is not paid by the due date, then the party owing such amount shall pay to the
other party, without being requested by such other party, interest on the total
outstanding amount at the rate equal to the U.S. Prime Rate, as reported by the
Wall Street Journal on the date that such payment falls due, increased by three
percent (3%), in United States Dollars and adjusted on the first day of every
subsequent calendar quarter.

11.12    INTERPRETATION: The Parties will execute or have executed a Supply
Agreement at or about the same time as this License Agreement, which has as its
initial subject matter the same Products that are the subject of this License
Agreement. It is the Parties' intent and understanding that there are no
conflicts or contradictions between the two Agreements, as the License Agreement
is intended to control the licensing (including supply of products for
development), Development and Marketing of the Products, and the Supply
Agreement is intended to control the supply of commercial quantities of


                                                                              27
<PAGE>

Products. In the event and to the extent any direct conflict or contradiction
between the two Agreements is identified, it is the Parties' intent that the
terms of the License Agreement shall govern.


                                                                              28
<PAGE>

         IN WITNESSETH WHEREOF, the parties hereto have caused this instrument
to be executed by their duly authorized officers with effect as of the date
first above written.



PERMATEC TECHNOLOGIE, AG




  /s/ Dr. Jacques Gonella
-------------------------------
By: Dr. Jacques Gonella
Its: Executive Chairman




  /s/ Dr. Philippe Dro
-------------------------------
By: Dr. Philippe Dro
Its:  President and COO





BIOSANTE PHARMACEUTICALS, INC.




  /s/ Stephen M. Simes
-------------------------------
By:      Stephen M. Simes
Its:     President and CEO


                                                                              29
<PAGE>

                                    EXHIBIT A

                                     PATENTS

A NOVEL COMPOSITION FOR TRANSDERMAL ADMINISTRATION OF AN ESTROGEN, A PROGESTIN
OR A MIXTURE THEREOF (COMBI GEL)

Ref.:                  PRE.001

<TABLE>
<CAPTION>
COUNTRY                  APPLICATION          NUMBER             PATENT            NUMBER         EXPIRATION
                             DATE                                 DATE                               DATE

<S>                    <C>              <C>                 <C>               <C>              <C>
Argentina              06.06.1997       P970102497                                             06.06.2017
Australia              05.06.1997       24729/97                                               05.06.2017
Canada                 05.06.1997       2,207,144                                              05.06.2017
Europe                 04.06.1997       97108989.1                                             04.06.2016
Italy                  06.06.1996       MI96A001152         07.04.1998        1283102          06.06.2016
Japan                  05.06.1997       9-185695                                               05.06.2017
Korea, Rep.            04.06.1997       97-236704                                              04.06.2017
New Zealand            05.06.1997       328021              19.03.1998        328021           05.06.2017
South Africa           05.06.1997       974981              25.03.1998        97/4981          05.06.2017
Taiwan                 06.06.1997       86107807
U.S.A                  05.06.1997       08/869.982          06.04.1999               5,891,462 05.06.2017
</TABLE>


                                                                              30
<PAGE>

ADMINISTRATION SYSTEM FOR ESTRADIOL (ESTRADIOL PATCH)

Ref.:                 GPH.001

<TABLE>
<CAPTION>
COUNTRY                   APPLICATION            NUMBER            PATENT           NUMBER         EXPIRAT.
                              DATE                                  DATE                             DATE

<S>                   <C>                  <C>                <C>               <C>            <C>
Australia             07.05.1993           38459/93           05.11.1996        670273         07.05.2013
Austria               07.05.1993           93810336.3         05.08.1998        0569338        07.05.2013
Belgium               07.05.1993           93810336.3         05.08.1998        0569338        07.05.2013
Denmark               07.05.1993           93810336.3         05.08.1999        0569338        07.05.2013
Europe                07.05.1993           93810336.3         05.08.1999        0569338        07.05.2013
Europe/It.            07.05.1993           93810336.3         05.08.1999        0569338        07.05.2013
France                07.05.1993           93810336.3         05.08.1999        0569338        07.05.2013
Germany               07.05.1993           93810336.3         05.08.1999        0569338        07.05.2013
Greece                07.05.1993           93810336.3         05.08.1999        0569338        07.05.2013
Ireland               07.05.1993           93810336.3         05.08.1999        0569338        07.05.2013
Japan                 28.04.1993           102325/1993        30.07.1999        2960832        28.04.2013
Korea, Rep.           07.05.1993           93-7877                                             07.05.2013
Luxembourg            07.05.1993           93810336.3         05.08.1998        0569338        07.05.2013
Netherlands           07.05.1993           93810336.3         05.08.1998        0569338        07.05.2013
New Zealand           05.05.1993           247549             11.04.1996        247549         05.05.2013
Portugal              07.05.1993           93810336.3         05.08.1998        569338         07.05.2013
South Africa          06.05.1993           93/3180            31.08.1994        93/3180        06.05.2013
Spain                 07.05.1993           93810336.3         05.08.1998        0569338        07.05.2013
Sweden                07.05.1993           93810336.3         05.08.1998        0569338        07.05.2013
Switzerland           07.05.1993           93810336.3         05.08.1998        0569338        07.05.2013
Taiwan                08.05.1993           82103602           27.11.1995        NI072551       07.05.2013
U.K.                  07.05.1993           93810336.3         05.08.1998        569338         07.05.2013
Canada                07.05.1993           2,095,789                                           07.05.2013
U.S.A.                03.05.1993           08/058,517


                                                                              31
<PAGE>

ADMINISTRATION SYSTEM FOR ESTRADIOL                        (FOLLOWED)

Ref.:                GPH.001/A und /CON1

<CAPTION>
COUNTRY                 APPLICATION          NUMBER             PATENT            NUMBER            EXPIRAT.
                           DATE                                  DATE                                 DATE
<S>                   <C>                  <C>                <C>               <C>            <C>
GPH.001/A
Switzerland           08.05.1992           1487/92                                             08.05.2012

GPH.001/CON 1

U.S.A.                19.12.1994           08/358,897         09.09.1997        5,665,377      09.09.2014
</TABLE>


                                                                              32
<PAGE>

                                    EXHIBIT B

                                    PRODUCTS

[PORTIONS OF THIS SECTION HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIALITY UNDER RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED. A COPY OF THIS AGREEMENT WITH THIS SECTION INTACT HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.]


Gel E2 (where estradiol is the sole active ingredient, and where the gel is
applied to the skin)

Gel Testosterone (where testosterone is the sole active ingredient and where the
gel is applied to the skin)

Patch E2 (where estradiol is the sole active ingredient and where the patch is
applied to the skin)

E2-XXXXX Combi Gel (where estradiol and XXXXX XXXXX are the two active
                  ingredients and where the gel is applied to the skin)


Option regarding XXXXX Combi gel

XXXXX Combi Gel (where XXXXX and XXXXX are the two active ingredients and where
                  the gel is applied to the skin)


                                                                              33
<PAGE>

                                    EXHIBIT C

                             COUNTRY CLASSIFICATION


<TABLE>
         <S>                        <C>
         First Tier:                USA

         Second Tier                Canada; China

         Third Tier:                All other countries of the Territory
</TABLE>


                                                                              34
</TEXT>
</DOCUMENT>
