-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Pvzl9z5aXRBrFpzVyO5AoygNlK0zIjtpExRmAavaZB2Q1VhKKDm0zFIAg4L9nlXo PciLxNEk448sfxLErkzwlg== 0000950144-01-502161.txt : 20010515 0000950144-01-502161.hdr.sgml : 20010515 ACCESSION NUMBER: 0000950144-01-502161 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 20010331 FILED AS OF DATE: 20010514 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NOVEN PHARMACEUTICALS INC CENTRAL INDEX KEY: 0000815838 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 592767632 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-17254 FILM NUMBER: 1633053 BUSINESS ADDRESS: STREET 1: 11960 SW 144TH ST CITY: MIAMI STATE: FL ZIP: 33186 BUSINESS PHONE: 3052535099 MAIL ADDRESS: STREET 1: 11960 SW 144TH STREET CITY: MIAMI STATE: FL ZIP: 33185 10-Q 1 g69008e10-q.txt NOVEN PHARMACEUTICALS, INC. 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended March 31, 2001 Commission file number 0-17254 NOVEN PHARMACEUTICALS, INC. STATE OF DELAWARE 59-2767632 --------------------- ---------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 11960 S.W. 144th Street, Miami, FL 33186 --------------------------------------------------- (Address of principal executive offices) (Zip Code) (305) 253-5099 ---------------------------------------------------- (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]. Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the last practicable date. Class Outstanding at April 30, 2001 ----------------------------- ----------------------------- Common stock $.0001 par value 22,275,890 2 NOVEN PHARMACEUTICALS, INC. INDEX
Page No. -------- PART I - FINANCIAL INFORMATION Item 1 - Financial Statements Statements of Operations for the Three Months Ended March 31, 2001 and 2000 3 Balance Sheets as of March 31, 2001 and December 31, 2000 4 Statements of Cash Flows for the Three Months Ended March 31, 2001 and 2000 5 Notes to Financial Statements 6 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations 10 Item 3 - Quantitative and Qualitative Disclosures About Market Risk 13 PART II - OTHER INFORMATION Item 6 - Exhibits and Reports on Form 8-K 14 SIGNATURES 15
2 3 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS NOVEN PHARMACEUTICALS, INC. Statements of Operations Three Months Ended March 31, (in thousands, except per share amounts) (unaudited)
2001 2000 ---------- ---------- Revenues: Product sales $ 12,022 $ 9,456 License revenue 667 147 ---------- ---------- Total revenues 12,689 9,603 Expenses: Cost of products sold 4,816 4,511 Research and development 2,227 1,825 Marketing, general and administrative 2,660 2,082 ---------- ----------- Total expenses 9,703 8,418 ---------- ----------- Income from operations 2,986 1,185 Equity in earnings of Novogyne 595 477 Interest income, net 619 200 ---------- ----------- Income before income taxes 4,200 1,862 Provision for income taxes 1,533 35 ---------- ----------- Net income $ 2,667 $ 1,827 ========== =========== Basic earnings per share $ .12 $ .08 ========== =========== Diluted earnings per share $ .11 $ .08 ========== =========== Weighted average number of common shares outstanding: Basic 22,236 21,682 ========== =========== Diluted 23,606 22,827 ========== ===========
The accompanying notes are an integral part of these statements. 3 4 NOVEN PHARMACEUTICALS, INC. Balance Sheets (in thousands, except share data)
MARCH 31, 2001 DECEMBER 31, 2000 -------------- ----------------- (unaudited) ASSETS Current Assets: Cash and cash equivalents $ 46,235 $ 40,976 Accounts receivable (less allowance for doubtful accounts of $78 in 2001 and $121 in 2000) 3,743 5,677 Due from Novogyne 42,534 2,917 Inventories 6,726 6,098 Net deferred income tax asset 4,400 4,500 Prepaid and other current assets 464 495 ----------- ----------- 104,102 60,663 Property, plant and equipment, net 15,058 15,154 Other Assets: Investment in Novogyne 18,076 15,431 Net deferred income tax asset 10,633 10,700 Patent development costs, net 1,994 1,972 Deposits and other assets 60 111 ----------- ----------- 30,763 28,214 ----------- ----------- $ 149,923 $ 104,031 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable $ 5,375 $ 6,522 Notes payable - current portion 291 340 Due to Aventis Pharmaceuticals 40,000 -- Accrued compensation and related liabilities 1,897 2,504 Other accrued liabilities 2,551 1,903 Deferred license revenue - current portion 3,010 2,660 ----------- ----------- 53,124 13,929 Long-Term Liabilities: Notes payable 222 265 Deferred license revenue 27,043 24,560 ----------- ----------- 80,389 38,754 Commitments and Contingencies Stockholders' Equity: Preferred stock - authorized 100,000 shares of $.01 par value; no shares issued or outstanding -- -- Common stock - authorized 40,000,000 shares, par value $.0001 per share; issued and outstanding 22,271,742 shares at March 31, 2001 and 22,177,598 at December 31, 2000 2 2 Additional paid-in capital 74,454 72,864 Accumulated deficit (4,922) (7,589) ----------- ----------- 69,534 65,277 ----------- ----------- $ 149,923 $ 104,031 =========== ===========
The accompanying notes are an integral part of these statements. 4 5 NOVEN PHARMACEUTICALS, INC. Statements of Cash Flows Three Months Ended March 31, (in thousands) (unaudited)
2001 2000 ------------ ------------ Cash flows from operating activities: Net income $ 2,667 $ 1,827 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 364 351 Amortization of patent costs 59 52 Deferred income tax provision 290 -- Recognition of deferred license revenue (667) (147) Equity in earnings of Novogyne (595) (477) Decrease in accounts receivable 1,934 567 Decrease (increase) in due from Novogyne 383 (1,305) Increase in inventories (628) (791) Decrease in prepaid and other current assets 31 6 Decrease in deposits and other assets 51 49 (Decrease) increase in accounts payable (1,147) 185 Decrease in accrued compensation and related liabilities (607) (316) Increase (decrease) in other accrued liabilities 1,266 (118) Increase in deferred license revenue 3,500 -- ------------ ------------ Cash flows provided by (used in) operating activities 6,901 (117) Cash flows from investing activities: Purchase of property, plant and equipment, net (268) (263) Investment in Novogyne (12,250) -- Distribution from Novogyne 10,200 -- Payments for patent development costs (81) (34) ------------- ------------- Cash flows used in investing activities (2,399) (297) Cash flows from financing activities: Issuance of common stock 849 407 Payments on notes payable (92) (84) ------------ ------------ Cash flows provided by financing activities 757 323 ------------- ------------ Net increase in cash and cash equivalents 5,259 (91) Cash and cash equivalents, beginning of period 40,976 15,338 ------------ ------------ Cash and cash equivalents, end of period $ 46,235 $ 15,247 ============ ============
The accompanying notes are an integral part of these statements. 5 6 NOVEN PHARMACEUTICALS, INC. NOTES TO UNAUDITED FINANCIAL STATEMENTS 1. Basis of Presentation: In management's opinion, the accompanying unaudited financial statements of Noven Pharmaceuticals, Inc. ("Noven") contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the financial position of Noven as of March 31, 2001, and the results of its operations for the three months ended March 31, 2001 and 2000. The results of operations and cash flows for the three months ended March 31, 2001 are not necessarily indicative of the results of operations or cash flows which may be reported for the remainder of 2001. The accompanying financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission for reporting on Form 10-Q. Pursuant to such rules and regulations, certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. The financial statements should be read in conjunction with the financial statements and the notes to the financial statements included in Noven's Annual Report on Form 10-K for the year ended December 31, 2000. The accounting policies followed for interim financial reporting are the same as those disclosed in Note 1 of the notes to the financial statements included in Noven's Annual Report on Form 10-K for the year ended December 31, 2000. Noven and Novartis Pharmaceuticals Corporation ("Novartis") entered into a joint venture, Vivelle Ventures LLC (d/b/a Novogyne Pharmaceuticals) ("Novogyne"), effective May 1, 1998, to market and sell women's healthcare products in the United States and Canada. These products include Noven's transdermal estrogen delivery systems marketed under the brand names Vivelle(R) and Vivelle-Dot(TM) and, effective March 30, 2001, Noven's transdermal combination estrogen/progestin delivery system marketed under the brand name CombiPatch(TM). Noven accounts for its 49% investment in Novogyne under the equity method and reports its share of Novogyne's earnings as "Equity in earnings of Novogyne" on its Statements of Operations. Noven defers the recognition of 49% of its profit on products sold to Novogyne that remain in Novogyne's inventory until the products are sold. 2. Inventories: The following are the major classes of inventories (in thousands): March 31, December 31, 2001 2000 ------------------ ------------------ Finished goods $ 915 $ 319 Work in process 1,765 1,567 Raw materials 4,046 4,212 --------- --------- Total $ 6,726 $ 6,098 ========= ========= 6 7 3. Income Taxes: Noven accounts for income taxes in accordance with the provisions of Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes". Provision for income taxes for the three months ended March 31, 2001 approximates the Federal statutory and state income tax rates. Provision for income taxes for the three months ended March 31, 2000 reflects provisions for the Federal alternative minimum tax and state income taxes. 4. Cash Flow Information (in thousands): Cash payments for income taxes were $450 in 2001 and $137 in 2000. Cash payments for interest were $12 in 2001 and $19 in 2000. In connection with the CombiPatch(TM) transaction described in Note 5 below, Noven recorded a $40 million receivable from Novogyne and a $40 million payable to Aventis. Accrued compensation and related liabilities for the year ended December 31, 1999 includes bonuses for employees and officers of $782 that were settled by issuance of 55,000 shares of common stock during the quarter ended March 31, 2000. Noven recorded a $741 income tax benefit to additional paid-in capital in 2001 derived from the exercise of non-qualified stock options and disqualifying dispositions of incentive stock options. 5. License Agreements: On March 30, 2001, Novogyne acquired the exclusive United States marketing rights to CombiPatch(TM) (estradiol/norethindrone acetate transdermal system) in a series of transactions involving Novogyne, Noven, Novartis and Aventis Pharmaceuticals, the U.S. pharmaceuticals business of Aventis Pharma AG ("Aventis"). Prior to the transaction, Aventis had been Noven's exclusive licensee for CombiPatch(TM) in the United States. The transaction was structured as (a) a direct purchase by Novogyne from Aventis of certain assets for $25 million, which was paid at closing, (b) a grant-back by Aventis to Noven of certain intellectual property rights relating to CombiPatch(TM), and (c) a simultaneous license by Noven to Novogyne of these intellectual property rights. The consideration payable by Noven to Aventis, and by Novogyne to Noven, is $40 million, due in four quarterly installments of $10 million each, payable beginning June 1, 2001. Novogyne agreed to indemnify Noven against Noven's obligation to Aventis. As a consequence of the transaction and under the terms of Noven's existing license agreement with Aventis, Noven received $3.5 million from Aventis, which amount was deferred and recognized as license revenue over ten years beginning in the first quarter of 2001. In a related transaction, Novartis Pharma AG ("Novartis AG") acquired from Aventis the development and marketing rights to future generations of Noven's combination estrogen/progestin patch in all markets other than Japan, and Novogyne expects to sublicense the United States rights to these product improvements. If and when any future generation combination products are commercialized, Novogyne will pay a royalty to Novartis AG on the United States sales of such products. Noven will manufacture CombiPatch(TM) and any future combination products and will supply such products to Novogyne and to Novartis AG. 7 8 Prior to closing of the transaction in March 2001, Novogyne distributed a total of $37.2 million to Noven and Novartis, and each joint venture member then contributed back to Novogyne its proportionate share of the $25 million up-front payment to Aventis, resulting in a net $2.1 million contribution from Noven to Novogyne at closing. 6. Investment in Novogyne: Noven shares in the earnings of Novogyne according to an established formula after satisfaction of an annual preferred return of $6.1 million to Novartis. Noven's share of earnings increases as product sales increase, subject to a cap of 49%. Novogyne produced sufficient income in the first quarters of 2001 and 2000 to meet Novartis' preferred return and for Noven to recognize earnings from Novogyne under the formula. During the three months ended March 31, 2001 and 2000, Noven had the following transactions with Novogyne (in thousands): 2001 2000 --------- -------- Revenue: Trade product $ 1,244 $ 4,435 Sample product and other 18 743 Royalty 816 792 --------- --------- $ 2,078 $ 5,970 ========= ========= Reimbursed Expenses: Services $ 2,954 $ 2,144 Product specific marketing expenses 625 383 --------- --------- $ 3,579 $ 2,527 ========= ========= As of March 31, 2001 and December 31, 2000, Noven had amounts due from Novogyne of $42.5 million and $2.9 million, respectively, representing $40 million related to the license of CombiPatch(TM) (see Note 5) for 2001 and the balance representing amounts due for products sold to and marketing expenses reimbursable by Novogyne. The condensed unaudited Statements of Operations of Novogyne for the three months ended March 31, 2001 and 2000 are as follows (in thousands): 2001 2000 -------- -------- Revenues $ 13,868 $ 13,249 Cost of sales 2,187 2,115 Selling, general and administrative expenses 4,799 4,176 -------- -------- Income from operations 6,882 6,958 Interest income 559 354 -------- -------- Net income $ 7,441 $ 7,312 ======== ======== 8 9 Subject to the approval of Novogyne's management committee, cash may be distributed to Novartis and Noven based upon a contractual formula. In March 2001, Noven received a distribution of $10.2 million from Novogyne based on the results of operations for the year ended December 31, 2000 and the three months ended March 31, 2001. In April 2000, Noven received a cash distribution of $2.2 million from Novogyne based upon the results of operations for the year ended December 31, 1999. These amounts were recorded as a reduction in the investment in Novogyne in the first quarter of 2001 and in the second quarter of 2000, respectively. In connection with the CombiPatch(TM) transaction described in Note 5 above, Noven contributed $12.3 million to Novogyne in March 2001. This amount was recorded as an increase in the investment in Novogyne in the first quarter of 2001. 7. Commitments: In September 2000, Noven entered into a Severance and Non-Competition Agreement with Steven Sablotsky, its Chairman of the Board of Directors. Pursuant to the agreement, Mr. Sablotsky's employment as an officer of Noven will terminate on June 1, 2001. Noven will pay Mr. Sablotsky $1.2 million on that date, which will be amortized over the period of his three-year non-competition agreement. 9 10 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis should be read in conjunction with the financial statements, the related notes and management's discussion and analysis of financial condition and results of operations included in Noven's Annual Report on Form 10-K for the year ended December 31, 2000 and the financial statements and related notes included in Item 1 of this Quarterly Report on Form 10-Q. Except for historical information contained herein, the matters discussed below are forward looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements involve risks and uncertainties, including but not limited to economic, competitive, governmental and technological factors affecting Noven's operations, markets, products, prices, and other factors. These factors, which are discussed elsewhere in this report and in the documents filed by Noven with the Securities and Exchange Commission ("SEC"), may cause Noven's results to differ materially from the forward looking statements made in this report or otherwise made by or on behalf of Noven. Substantially all of Noven's product sales were to its licensees, Novogyne, Novartis AG and Aventis. Revenues from product sales are recognized at the time of shipment. Certain license agreements provide for an adjustment to the price of the product based upon the licensee's actual sales price. Noven records such adjustments to revenues at the time that the information necessary to make the determination is received from the licensees. Royalty revenue consists of royalties payable by Novogyne and Novartis from sales of Vivelle(R) and Vivelle-Dot(TM) in the United States and Canada. Royalty revenue is recognized when earned and determinable and is included in product sales. License revenue consists of up-front, milestone and similar payments under license agreements and is recognized when earned under the terms of the applicable agreements. In some cases, license revenue will be deferred and recognized as license revenue over time. Certain license agreements entitle Noven to minimum fees. Noven records revenue related to minimum fees as soon as supporting data is provided by the licensee. If the minimum fees are not determinable, Noven records these fees on a cash basis. These fees are included in product revenue. Revenues from product sales to licensees may fluctuate from quarter to quarter depending on various factors not in Noven's control, including but not limited to, the marketing efforts of each licensee, the inventory requirements of each licensee, the impact of competitive products, the timing and scope of Estalis(R) and Estradot(TM) launches by Novartis AG, the product pricing of each licensee and the timing of certain royalty reconciliations and payments under Noven's license agreements. Noven shares in the earnings of Novogyne according to an established formula after satisfaction of an annual preferred return of $6.1 million to Novartis. In the first quarters of 2001 and 2000, Novartis' preferred return was satisfied. Noven reports its share of Novogyne's earnings as "Equity in earnings of Novogyne" on its Statements of Operations. RESULTS OF OPERATIONS THREE MONTHS ENDED MARCH 31, 2001 COMPARED TO THREE MONTHS ENDED MARCH 31, 2000 Total revenues for the three months ended March 31, 2001 were $12.7 million, an increase of $3.1 million, or 32%, over the same period in the prior year. The increase in revenues was primarily 10 11 attributable to an increase in product sales of $2.6 million, or 27%, for the three months ended March 31, 2001 over the same period in the prior year. Product sales in the 2001 period included $1.4 million in minimum fee payments related to sales of Menorest(R) in certain European countries in 2000. The remaining $1.2 million of the increase in product sales was primarily attributable to higher sales of Estalis(R) outside of the United States and, to a lesser extent, sales of CombiPatch(TM) in the United States. A decline in sales of Vivelle(R) and Vivelle-Dot(TM) to Novogyne partially offset the increased sales of Noven's other products. License revenue increased $0.5 million, or 354%, primarily due to the amortization of license fees received in connection with the license of Estradot(TM) to Novartis AG in the fourth quarter of 2000. Gross profit (product sales less cost of products sold) for the three months ended March 31, 2001 was $7.2 million (60% of product sales), compared to $4.9 million (52% of product sales) for the same period in the prior year. The increase in gross margin resulted from higher minimum fee payments, and lower profit deferral related to sales of product to Novogyne. Novogyne's inventory declined during the first quarter of 2001, which resulted in a decrease in the profit that Noven was required to defer with respect to product sold to Novogyne that remained in Novogyne's inventory at March 31, 2001. Noven expects its gross profit percentage to be in the mid-50 percent range in 2001. Research and development expenses increased approximately $0.4 million, or 22%, for the three months ended March 31, 2001 compared to the same period in the prior year, attributable primarily to clinical studies and related expenses for Noven's methylphenidate transdermal delivery system. The future level of research and development expenditures will depend on, among other things, the status of products under development and the outcome of clinical trials, strategic decisions by management, the consummation of new collaborative arrangements and Noven's liquidity. Further, such expenses may vary significantly from quarter to quarter depending on product development cycles and the timing of clinical studies. Marketing, general and administrative expenses increased approximately $0.6 million, or 28%, for the three months ended March 31, 2001 compared to the same period in the prior year. This increase was primarily due to higher outside consulting services related to the implementation of an enterprise resource planning system and to improvements in production efficiency, and to higher legal fees related to the CombiPatch(TM) transaction. For the three months ended March 31, 2001 and 2000, Noven reported equity in earnings of Novogyne of $0.6 million and $0.5 million, respectively. Novogyne's revenue increased from $13.2 million in the three months ended March 31, 2000 to $13.9 million in the comparable 2001 period. All of this increase was attributable to increased sales of Vivelle-Dot(TM) partially offset by decreased sales of Vivelle(R). For the first three months of 2001, Novogyne had net income of $7.4 million, compared to $7.3 million for the same period in the prior year. Interest income, net increased approximately $0.4 million, or 210%, for the three months ended March 31, 2001 compared to the same period in the prior year, primarily due to higher average balances in cash and cash equivalents. Noven's effective tax rate increased from 1.9% for the three months ended March 31, 2000 to 36.5% for the three months ended March 31, 2001. The provision for income taxes for the three months ended March 31, 2001 approximates the Federal statutory and state income tax rates. The provision for income taxes for the three months ended March 31, 2000 reflects provisions for the Federal alternative minimum tax and state income taxes. As of March 31, 2001, Noven had a net 11 12 deferred tax asset of $15 million. Realization of this deferred tax asset depends upon generating sufficient future taxable income. Although realization is not assured, management believes it is more likely than not that the deferred income tax asset will be realized based upon estimated future taxable income. Noven expects its effective tax rate to be between 34% and 38% in 2001. LIQUIDITY AND CAPITAL RESOURCES As of March 31, 2001 and December 31, 2000, Noven had $46.2 million and $41.0 million, respectively, in cash and cash equivalents. Working capital increased by $4.3 million from $46.7 million at December 31, 2000 to $51.0 million at March 31, 2001. Net cash of approximately $6.9 million was provided by operating activities during the first three months of 2001, compared to approximately $0.1 million used in operating activities during the same period in the prior year. Net cash generated by operating activities primarily resulted from the receipt of a license fee in the amount of $3.5 million from Aventis in connection with the CombiPatch(TM) license transaction. Changes in working capital and improved operating results accounted for most of the remaining fluctuation. Net cash of approximately $2.4 million was used in investing activities during the first three months of 2001, compared to approximately $0.3 million used in investing activities during the same period of the prior year. In March 2001, Noven received a distribution of $10.2 million from Novogyne based on Novogyne's results for the year ended December 31, 2000 and the three months ended March 31, 2001. In connection with the CombiPatch(TM) transaction, Noven contributed $12.3 million to Novogyne as its proportionate share of the $25 million up-front payment to Aventis. Net cash of approximately $0.8 million was provided by financing activities during the first three months of 2001, compared to approximately $0.3 million provided by financing activities during the same period of the prior year, primarily resulting from an increase in cash received from the issuance of common stock in connection with the exercise of stock options. In December 2000, Noven entered into a secured revolving credit facility (the "Credit Facility") providing for borrowings of up to the lesser of $10 million or eligible accounts receivable. The Credit Facility will terminate in April 2002 and bears interest at LIBOR plus 1.50% (6.6% at March 31, 2001). At March 31, 2001, there were no amounts outstanding under the Credit Facility. Terms of the Credit Facility include, among other things, minimum net worth, revenue and operating results requirements, as well as compliance with certain financial ratios, measured on a quarterly basis. Noven's principal sources of short term liquidity are existing cash, cash generated from product sales, fees and royalties under license agreements and borrowings under its Credit Facility. In November 2000, Noven entered into an exclusive license agreement with Novartis AG relating to Estradot(TM), pursuant to which Noven received an up-front license payment of $20 million and will receive an additional milestone payment upon registration by Novartis AG of the licensed product in certain European countries. There can be no assurance that Novartis AG's registration efforts will be successful, and therefore there can be no assurance that Noven will receive the additional milestone payment. 12 13 Over the next year, Noven expects to invest up to $5 million in plant and equipment and software to increase production capacity and to implement an enterprise resource planning system. Further, pursuant to a Severance and Non-Competition Agreement entered into with Steven Sablotsky, Noven's Co-Chairman of the Board of Directors, Noven is required to pay Mr. Sablotsky $1.2 million in June 2001 in consideration for, among other things, a three-year non-competition agreement. Cash requirements for federal and state income taxes are also expected to increase. Additionally, as part of the CombiPatch(TM) transaction entered into in March 2001, the consideration payable for certain intellectual property rights by Noven to Aventis, and by Novogyne to Noven, is $40 million, due in four quarterly installments of $10 million each, payable beginning June 1, 2001. Novogyne agreed to indemnify Noven against Noven's obligations to Aventis. Novogyne expects to fund most of these installment payments from cash flows from operations. There can be no assurance that Novogyne will be able to generate sufficient income and cash flows from operations to meet these installment obligations. To the extent that Novogyne pays these obligations from cash generated by operations, the cash available for distribution to the members will be reduced correspondingly. If Novogyne's cash generated by operations is not sufficient to fund all or a portion of the remaining installments, Noven and Novartis may contribute additional capital to Novogyne. If Noven and Novartis elect not to contribute the necessary additional capital, Novogyne would be required to raise additional funds in order to meet its obligation to Aventis, whether through the incurrence of indebtedness or otherwise. Noven believes that it will have sufficient cash available to meet its operating needs and anticipated short-term capital requirements, including any additional capital contributions to Novogyne. For the long term, Noven intends to utilize funds derived from the above sources, as well as funds generated through sales of products under development. Noven expects that such funds will be comprised of payments received pursuant to future licensing arrangements, as well as Noven's direct sales of its own products. Noven expects that its cash requirements will continue to increase, primarily to fund clinical studies for products under development and for plant and equipment to expand production capacity. There can be no assurance that Noven will successfully complete the development of such products, that Noven will obtain regulatory approval for any such products, that any approved product may be produced in commercial quantities, at reasonable costs, and be successfully marketed, or that Noven will successfully negotiate future licensing arrangements. To the extent that capital requirements exceed available capital, Noven will seek alternative sources of financing to fund its operations. In addition to the Credit Facility, alternative financing may be needed to fund further activities. No assurance can be given that alternative financing will be available, if at all, in a timely manner, or on favorable terms. If Noven is unable to obtain satisfactory alternative financing, Noven may be required to delay or reduce its proposed expenditures, including expenditures for research and development and plant and equipment, in order to meet its future cash requirements. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK Market risks relating to Noven's operations may result from changes in LIBOR interest rates if Noven borrows under its Credit Facility. Noven had no variable rate debt outstanding during the three months ended March 31, 2001. Therefore, changes in interest rates did not affect interest expense, earnings or cash flows in 2001. Noven cannot predict market fluctuations in interest rates and their impact on any variable rate debt that Noven may have outstanding from time to time, nor can there be any assurance that fixed rate long-term debt will be available at favorable rates, if at all. 13 14 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) EXHIBITS 10.1 License Agreement, dated as of March 29, 2001, between Noven Pharmaceuticals, Inc. and Vivelle Ventures LLC (with certain provisions omitted pursuant to Rule 24b-2).* 10.2 Amendment No. 2 to Amended and Restated License Agreement, dated as of March 29, 2001, between Rorer Pharmaceutical Products, Inc. and Noven Pharmaceuticals, Inc. (with certain provisions omitted pursuant to Rule 24b-2).* 10.3 Sublicense Agreement, dated as March 29, 2001, among Rorer Pharmaceutical Products, Inc., Rhone-Poulenc Rorer Inc., Aventis Pharmaceuticals Products Inc., Rhone-Poulenc Rorer International Holdings Inc., Novartis Pharma AG and Noven Pharmaceuticals, Inc. (with certain provisions omitted pursuant to Rule 24b-2).* 10.4 Purchase Agreement, dated as of March 29, 2001, among Rorer Pharmaceutical Products, Inc., Aventis Pharmaceuticals Products Inc. and Vivelle Ventures LLC (with certain provisions omitted pursuant to Rule 24b-2).* 10.5 Supply Agreement, dated as of March 29, 2001, between Vivelle Ventures LLC and Noven Pharmaceuticals, Inc. (with certain provisions omitted pursuant to Rule 24b-2).* 10.6 First Amendment to Marketing and Promotional Services Agreement, dated as of March 29, 2001, between Vivelle Ventures LLC and Noven Pharmaceuticals, Inc. 10.7 Amendment to Operating Agreement, dated as of March 29, 2001, between Novartis Pharmaceuticals Corporation and Noven Pharmaceuticals, Inc. (b) REPORTS ON FORM 8-K On April 4, 2001, Noven filed a Current Report on Form 8-K relating to the acquisition of CombiPatch(TM) by Novogyne and the results of Noven's preliminary analysis of the Phase III clinical study for its transdermal methylphenidate product. - ------------------ * Noven agrees to furnish a copy of the exhibits and schedules to this agreement to the Securities and Exchange Commission upon request. 14 15 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. NOVEN PHARMACEUTICALS, INC. Date: May 14, 2001 By: /s/ James B. Messiry -------------------------- James B. Messiry Vice President and Chief Financial Officer 15 EX-10.1 2 g69008ex10-1.txt LICENSE AGREEMENT 1 EXHIBIT 10.1 =============================================================================== LICENSE AGREEMENT Between NOVEN PHARMACEUTICALS, INC. and VIVELLE VENTURES LLC Dated as of March 29, 2001 (CombiPatch Product License) =============================================================================== 2 TABLE OF CONTENTS
PAGE ---- ARTICLE 1. INTERPRETATION..................................................................................1 ARTICLE 2. LICENSE GRANT...................................................................................3 ARTICLE 3. LICENSE FEE.....................................................................................4 3.1. License Fee.....................................................................................4 3.2. Manner of Payment of the License Fee............................................................4 3.3. ***.............................................................................................4 ARTICLE 4. INTELLECTUAL PROPERTY CLAIMS....................................................................4 4.1. Infringement or Other Actions Regarding the CombiPatch Technology...............................4 4.2. Other Third Party Claims........................................................................5 ARTICLE 5. CONFIDENTIALITY AND NONCOMPETITION..............................................................5 5.1. Confidentiality; Press Releases.................................................................5 5.2. Noncompetition..................................................................................7 5.3. Injunctive Relief...............................................................................7 ARTICLE 6. WARRANTIES......................................................................................8 ARTICLE 7. INDEMNITY......................................................................................10 7.1. Indemnification Obligations of Novogyne........................................................10 7.2. Indemnification Regarding Amendment Agreement..................................................10
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PAGE ---- 7.3. Indemnification Obligations of Noven...........................................................10 7.4. Procedure......................................................................................11 ARTICLE 8. MISCELLANEOUS..................................................................................12 8.1. Notices........................................................................................12 8.2. Force Majeure..................................................................................13 8.3. Assignment.....................................................................................13 8.4. Applicable Law.................................................................................13 8.5. Severability...................................................................................13 8.6. No Waiver......................................................................................14 8.7. Interpretation.................................................................................14 8.8. Entire Agreement...............................................................................14 8.9. Counterparts...................................................................................14 8.10. Dispute Resolution.............................................................................14
ii 4 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. LICENSE AGREEMENT LICENSE AGREEMENT dated as of March 29, 2001 (this "Agreement") by and among Noven Pharmaceuticals, Inc. a Delaware corporation ("Noven") and Vivelle Ventures, LLC, a Delaware limited liability company doing business as "Novogyne Pharmaceuticals" ("Novogyne"). W I T N E S S E T H: - - - - - - - - - - WHEREAS, Noven and Rhone-Poulenc Rorer Pharmaceuticals, Inc. have entered into an amended and restated license agreement dated as of September 30, 1999 (the "Noven License Agreement"), pursuant to which Noven granted Rhone-Poulenc Rorer Pharmaceuticals, Inc. an exclusive license in defined territories to, inter alia, the CombiPatch Product (as defined herein); and WHEREAS, Rhone-Poulenc Rorer Pharmaceuticals, Inc. assigned the Noven License Agreement as of September 30, 1999 to Rorer Pharmaceutical Products Inc. ("Aventis"); and WHEREAS, Noven and Aventis have entered into an Amendment Agreement ("Noven Amendment Agreement') dated as of March 29, 2001, with respect to the Noven License Agreement pursuant to which all rights to the CombiPatch Product in the Territory granted to Aventis in the Noven License Agreement have reverted to Noven; and WHEREAS, Noven desires to provide Novogyne with a royalty-free, non-terminable exclusive license of all those rights to the CombiPatch Product in the Territory which reverted to Noven pursuant to the Noven Amendment Agreement, and Novogyne desires to license said rights, all on the terms and subject to the conditions contained in this Agreement; NOW THEREFORE, in consideration of the agreements and covenants set forth above and herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: ARTICLE 1. INTERPRETATION 1.1. As used herein, the following capitalized terms shall have the following meanings: 1 5 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. "AFFILIATE" means, when used with respect to a Person, any other Person directly or indirectly controlling, controlled by, or under common control with the subject Person. For purposes of this License Agreement, "control" means the direct or indirect ownership of over 50% of the outstanding voting securities of a Person, or to control the management decisions of such Person. For the avoidance of doubt, for purposes of this Agreement, Novartis Pharmaceuticals Corporation and its Affiliates shall be considered Affiliates of Novogyne, and Noven and its Affiliates shall not be considered Affiliates of Novogyne. "CLAIMS" shall have the meaning set forth in Section 7.1 hereof. "CLOSING DATE" shall have the meaning set forth in the Purchase Agreement. "CONFIDENTIAL INFORMATION" means all proprietary data, know-how and related information, including all regulatory approvals and related filings, applications and data, the content of any unpublished patent applications, operating methods and procedures, marketing, distribution and sales methods and systems, sales figures and other business information. "COMBIPATCH PRODUCT" means the transdermal estrogen/progestin product which has been and is being developed by Aventis and its Affiliates and is marketed under the trademark CombiPatch(R) in the Territory at the date of the Purchase Agreement. "COMBIPATCH TECHNOLOGY" means any and all rights owned by Noven necessary to Develop, use, sell or otherwise dispose of the CombiPatch Product in the Territory, including, without limitation, the patents and patent applications listed in Schedule 6.1(b) attached hereto. "COMPETING PRODUCT" means ***. "DEVELOP" shall mean, with respect to the CombiPatch Product, to conduct any and all clinical development and commercialization activities, which activities shall not, in any event, include modifications to the structure or composition of the CombiPatch Product and shall not include any right to manufacture the CombiPatch Product. "DISTRIBUTION AND SERVICES AGREEMENT" shall mean the Distribution and Services Agreement between Novartis Pharmaceuticals Corporation and Novogyne dated as of May 1, 1998. "IMPROVEMENTS PRODUCTS" means any product to which Aventis has rights in the Territory under the Noven License Agreement as amended, now existing or developed or improved in the future by any Person, other than the CombiPatch Product, rights to which are to be offered to Novogyne in accordance with the Purchaser Improvements Letter Agreement. "LOSSES" shall have the meaning set forth in Section 7.1 hereof. "MARKETING AND PROMOTIONAL SERVICES AGREEMENT" shall mean the Marketing and Promotional Services Agreement between Noven and Novogyne dated as of May 1, 1998. 2 6 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. "NOVARTIS PHARMA IMPROVEMENTS SUBLICENSE AGREEMENT" means the Sublicense Agreement between Aventis and Novartis Pharma AG and executed on or about March 29, 2001. "NOVEN INDEMNITEES" shall have the meaning set forth in Section 7.1 hereof. "NOVOGYNE INDEMNITEES" shall have the meaning set forth in Section 7.3 hereof. "OPERATING AGREEMENT" means the Operating Agreement of Novogyne between Noven and Novartis Pharmaceuticals Corporation dated as of May 1, 1998. "PERSON" means any corporation, partnership, joint venture, other entity or natural person. "PURCHASE AGREEMENT" means the Purchase Agreement between Aventis and Novogyne dated March 29, 2001. "LICENSE FEE" has the meaning set forth in Section 3.1. "PURCHASER IMPROVEMENTS LETTER AGREEMENT" means the Letter Agreement between Noven, Novogyne, Novartis Pharmaceuticals Corporation and Novartis Pharma AG dated on or about March 29, 2001 pursuant to which Novartis Pharma AG shall offer to sublicense to Novogyne all of its rights under the Novartis Pharma Improvements Sublicense Agreement in the Territory on a product-by-product basis. "RELATED AGREEMENTS" means the Purchase Agreement, the Novartis Pharma Improvements Sublicense Agreement, the Purchaser Improvements Letter Agreement, the Noven Amendment Agreement and the Supply Agreement. "SUPPLY AGREEMENT" means the Supply Agreement between Novogyne and Noven dated on or about March 29, 2001 pursuant to which Noven will manufacture and supply to Novogyne CombiPatch Product and any Improvements Product. "TERRITORY" means the United States, its territories and possessions. ARTICLE 2. LICENSE GRANT 2.1. On the terms and conditions of this Agreement, with effect from the Closing Date, Noven hereby grants to Novogyne a royalty-free, perpetual, non-terminable, exclusive license to use the CombiPatch Technology solely to Develop, use, sell or otherwise dispose of the CombiPatch Product in the Territory. Notwithstanding the foregoing sentence, Noven shall have an unrestricted right to use CombiPatch Technology for Noven's non-Competing Products, including a right to license CombiPatch Technology to others for use in non-Competing Products. 3 7 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. 2.2. In the event that Novartis Pharmaceuticals Corporation or any of its Affiliates acquires Noven's Interest (as defined in the Operating Agreement) in Novogyne pursuant to Section 9.5 of the Operating Agreement, Novogyne shall use commercially reasonable efforts to Develop, use, sell or otherwise dispose of the CombiPatch Product in the Territory and this obligation shall be binding upon Novogyne's Successors and Assigns. "Novogyne's Successors and Assigns" shall mean any person to whom the CombiPatch Product or CombiPatch Technology is sold, licensed, or otherwise transferred or who acquires Novogyne by operation of law or through merger, acquisition or otherwise, and who is, or is controlled by, Novartis Pharmaceuticals Corporation, or any of its Affiliates. ARTICLE 3. LICENSE FEE 3.1. LICENSE FEE. In consideration for the rights granted in Article 2 above, Novogyne shall pay Noven forty million United States Dollars ($40,000,000) ("LICENSE FEE"). 3.2. MANNER OF PAYMENT OF THE LICENSE FEE. Novogyne shall pay to Noven the License Fee by payment of the following amounts by wire transfer to an account or accounts designated in writing by Noven, including but not limited to accounts of Aventis, on the dates set forth below: AMOUNT DUE DATE ------ -------- $10,000,000 June 1, 2001 $10,000,000 September 4, 2001 $10,000,000 December 3, 2001 $10,000,000 March 1, 2002 3.3. ***. ARTICLE 4. INTELLECTUAL PROPERTY CLAIMS 4.1. INFRINGEMENT OR OTHER ACTIONS REGARDING THE COMBIPATCH TECHNOLOGY. (a) If either party shall become aware of any infringement or threatened infringement of the CombiPatch Technology or any unfair competition, disparagement or other tortious act by any third party in relation to the CombiPatch Technology, then the party having such knowledge shall give prompt notice thereof to the other party. (b) Novogyne, its Affiliates and licensees, shall have the right to take such action as it deems appropriate to protect and enforce the CombiPatch Technology in the Territory against any Competing Product indicated for menopausal symptoms, osteoporosis, or any other indication for which the CombiPatch Product is then approved, including but not limited to, bringing an action, suit or other appropriate proceeding or threatening to bring an action 4 8 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. suit or other appropriate proceeding, to prevent or eliminate the infringement of such CombiPatch Technology with regard to any Competing Product, or the unfair competition, disparagement or other tortious act by any third party in relation to the CombiPatch Technology in the Territory with regard to any Competing Product. Subject to Section 4.1(c) below, Noven agrees to cooperate with Novogyne, its Affiliates and licensees, in any reasonable manner in any such action, suit or proceeding, at the expense of Novogyne, its Affiliates and licensees, including, without limitation, joining as a party to such action, suit or proceeding, if necessary to maintain standing. (c) ***. (d) ***. (e) ***. (f) All amounts awarded as damages, profits or otherwise in connection with any action specified in Section 4.1(b) taken by Novogyne, its Affiliates or licensees, shall be ***. If Novogyne, its Affiliates and licensees, elect not to take any action of the nature specified in Section 4.1(b) within sixty (60) days of becoming aware or receiving notice under Section 4.1(a) of any infringement, threatened infringement, unfair competition, disparagement or other tortious act identified in Section 4.1(a), Novogyne shall give Noven notice of such decision, and Noven thereafter shall have the right to take any action of the nature specified in Section 4.1(b). In such event, all amounts awarded as damages, profits or otherwise in connection with any action taken by Noven shall be ***. 4.2. OTHER THIRD PARTY CLAIMS. If either party becomes aware of any action, suit or proceeding or threat of action, suit or proceeding, by a third party alleging that the manufacture, use, import, sale or other disposal of CombiPatch Product in the Territory infringes or violates any other intellectual property right of any third party, such party shall promptly notify the other party of the same. ARTICLE 5. CONFIDENTIALITY AND NONCOMPETITION 5.1. CONFIDENTIALITY; PRESS RELEASES (a) Pursuant to the terms hereof, from time to time during the term of this Agreement, each of Noven and Novogyne and/or their respective Affiliates (in such capacity, the "DISCLOSING PARTY") have disclosed and will be disclosing to the other party and/or its Affiliates (in such capacity, the "RECEIVING PARTY") certain Confidential Information of the Disclosing Party. The Receiving Party shall make no use of such Confidential Information except in the exercise of its rights and performance of its obligations set forth in this Agreement and the Related Agreements. The Receiving Party shall use the same efforts to keep secret, and prevent the disclosure to third parties of, Confidential Information of the Disclosing Party as it would use with respect to its own Confidential Information. Confidential Information disclosed by the 5 9 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. Disclosing Party shall remain the sole and absolute property of the Disclosing Party, subject to the rights granted in this Agreement and the transactions contemplated herein. The above restrictions on the use and disclosure of Confidential Information shall not apply to any information which: (i) is already known to the Receiving Party at the time of disclosure by the Disclosing Party, as demonstrated by competent proof; (ii) is or becomes generally available to the public other than through any act or omission of the Receiving Party in breach of this Agreement; (iii) is acquired by the Receiving Party from a third party who is not, directly or indirectly, under an obligation of confidentiality to the Disclosing Party with respect to same; or (iv) is developed independently by the Receiving Party without use, direct or indirect, of information that is required to be held confidential hereunder. In the event the Receiving Party is required: (i) by law, rule or regulation to disclose Confidential Information of the Disclosing Party to regulatory authorities to obtain and maintain regulatory approval for the CombiPatch Product; (ii) to disclose Confidential Information of the Disclosing Party to respond to a regulatory or governmental inquiry concerning the CombiPatch Product; or (iii) to disclose Confidential Information of the Disclosing Party in a judicial, administrative or arbitration proceeding to enforce such party's rights under this Agreement, it may do so only if it: (A) provides the Disclosing Party with as much advance written notice as possible of the required disclosure; (B) cooperates with the Disclosing Party in any attempt to prevent or limit the disclosure; and (C) limits disclosure, if any, to the specific purpose at issue. (b) Notwithstanding the provisions of this Section 5.1: (i) Novogyne, its Affiliates and licensees, shall be permitted to disclose to their respective distributors, wholesalers and other direct customers such Confidential Information relating to the CombiPatch Product or any Improvements Product as Novogyne, its Affiliates and licensees, shall reasonably determine to be necessary or useful in order to effectively market and distribute the CombiPatch Product or any Improvements Product; (ii) Noven shall be permitted to disclose such Confidential Information relating to the CombiPatch Product or any Improvements Product as Noven shall reasonably determine to be necessary or useful in order to effectively perform its obligations under the Marketing and Promotional Services Agreement; and (iii) Novartis Pharmaceuticals Corporation shall be permitted to disclose such Confidential Information relating to the CombiPatch Product or any Improvements Product as it shall reasonably determine to be necessary or useful in order to effectively perform its obligations under the Distribution and Services Agreement; PROVIDED, HOWEVER, that in each such case any third party recipients of any Confidential Information undertake substantially the same confidentiality obligation as the parties hereunder with respect to such Confidential Information. 6 10 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. (c) Notwithstanding any other provision of this Agreement, for purposes of Section 5.1 hereof, Noven may disclose any of its Confidential Information within the CombiPatch Technology to any third party for any purpose other than in connection with the development or commercialization of any product which is not a Competing Product. This limitation on Noven's right to disclose its Confidential Information shall terminate upon termination of the Novartis Pharma Improvements Sublicense Agreement and the Purchaser Improvements Letter Agreement. Any disclosure of Noven's Confidential Information that relates exclusively to a Licensed Product (as defined in the Noven License Agreement) to a third party pursuant to this Section 5.1(c) shall be subject to confidentiality undertakings by any such third party disclosee which are no less stringent than those set forth in this Section 5.1. (d) Except as may be required by applicable laws, rules or regulations, no party will originate any publicity, press or news release, or other public announcement, written or oral, whether to the public press or otherwise, relating to this Agreement or the Related Agreements, the transactions contemplated hereby or thereby, or to the existence of an arrangement between the parties, without the prior written approval of the other party. In the event disclosure of this Agreement or any of the Related Agreements, any of the terms and conditions of this Agreement or such Related Agreements, or any of the transactions contemplated by this Agreement or such Related Agreements, is required by applicable law, rules or regulations, then the party required to so disclose such information shall, to the extent possible, provide to the other party for its prior approval (such approval not to be unreasonably withheld or delayed) a written copy of such public announcement. When practicable, the disclosing party will provide such copy to the other party at least five (5) business days prior to disclosure. (e) Neither party shall use the name of the other for marketing, advertising or promotional claims without the prior written consent of the other party. 5.2. NONCOMPETITION. (a) Noven covenants that for a period ***, neither it nor any of its Affiliates or sublicensees shall market, sell or distribute (or agree with any third party to do any of the foregoing) any Competing Product in the Territory, other than Improvements Products. Notwithstanding the foregoing, with respect to the marketing, sale or distribution of any Competing Product in the Territory solely to the extent that the marketing, sale or distribution of such Competing Product by Noven (or its Affiliates or sublicensees) is the result of Noven (or its Affiliates or sublicensees) having acquired the Competing Product from the acquisition of, or merger with another Person who at the time of acquisition possessed such Competing Product and/or was marketing, selling and/or distributing it in the Territory, Noven, its Affiliate or sublicensee shall ***. (b) Noven recognizes that the territorial, time and scope limitations set forth in this Section 5.2 are reasonable and are required for the protection of Novogyne and its Affiliates. 5.3. INJUNCTIVE RELIEF. Each party specifically recognizes that any breach by it of Section 5.1, and Noven specifically recognizes that any breach by it of Section 5.2, may cause irreparable injury to the other party and 7 11 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. that actual damages may be difficult to ascertain, and, in any event, may be inadequate. Accordingly (and without limiting the availability of legal or equitable, including injunctive, remedies under any other provisions of this Agreement), each party agrees that in the event of any such breach, notwithstanding the provisions of Section 8.10, the other party shall be entitled to seek, by way of private litigation in the first instance, injunctive relief and such other legal and equitable remedies as may be available. ARTICLE 6. WARRANTIES 6.1. Noven represents and warrants to Novogyne as of the date hereof and the Closing Date that: (a) Subject to the Noven Amendment Agreement, it has the right to enter into this Agreement, that there are no outstanding assignments, grants, licenses, encumbrances, obligations or agreements, either written, oral or implied, materially inconsistent with this Agreement, it owns all right, title and interest in the CombiPatch Technology, and has the right to grant the rights thereto granted hereunder. (b) To the extent indicated on Schedule 6.1(b), each patent within the CombiPatch Technology has been duly registered in, filed in or issued by the United States Patent and Trademark Office, and each such registration, filing and issuance remains in full force and effect. No patent within the CombiPatch Technology has been cancelled, abandoned or otherwise terminated and all renewal and maintenance fees in respect thereof have been duly paid. There are no interferences or other contested proceedings, either pending or, to the best knowledge of Noven, threatened, in the United States Patent and Trademark Office relating to any pending application with respect to any patent within the CombiPatch Technology. (c) Noven has the exclusive right to file, prosecute and maintain all patent applications and patents with respect to the CombiPatch Technology in the Territory. (d) Other than the agreements listed in Schedule 6.1(d) hereto, neither Noven nor any of its Affiliates is a party to, whether as licensor, licensee, or otherwise, or otherwise knows of, any license or agreement with respect to the CombiPatch Technology that covers a Licensed Product (as defined in the Noven License Agreement) or a Competing Product. (e) Based on Noven's actual and present knowledge, no use by Noven, any of its Affiliates or licensees, of any CombiPatch Technology (including, without limitation, the manufacture, development, marketing, sale or distribution of the CombiPatch Product) violates, infringes, misappropriates or misuses any intellectual property rights of any third party in the Territory. (f) Neither Noven nor any of its Affiliates or licensees has received any written notice or claim from any third party challenging the right of Noven or any of its Affiliates or licensees to use any CombiPatch Technology. To the best knowledge of Noven, there is no pending or threatened claim in 8 12 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. writing by any third party of a violation, infringement, misuse or misappropriation by Noven or any of its Affiliates or licensees of any intellectual property owned by any third party, or for the invalidity of any patent within the CombiPatch Technology, in any jurisdiction, and, to the best knowledge of Noven, there is no valid basis for any such claim. (g) Noven has secured valid written assignments or written agreements requiring inventors to execute and deliver a written assignment, from all consultants and employees who contributed to the creation or development of any CombiPatch Technology, of the rights to such contributions that Noven does not already own by operation of law. (h) Noven and its Affiliates, and to Noven's knowledge, its licensees and sublicensees, have taken all necessary and reasonable steps to protect and preserve the confidentiality of all know-how and trade secrets included in the CombiPatch Technology, and all use, disclosure or appropriation thereof by or to any third party has been pursuant to the terms of a written agreement between such third party and Noven. (i) Following the Closing Date, Novogyne, its Affiliates and licensees will be able to Develop, market, distribute, promote, use, sell and otherwise dispose of CombiPatch Product in the Territory without infringing any patent right of Noven or any Affiliate of Noven. (j) The rights granted pursuant to Section 2.1 hereof, together with the rights assigned to Novogyne pursuant to the Purchase Agreement, comprise all the rights required by Novogyne that Noven has to use, sell or otherwise dispose of the CombiPatch Product in the Territory. (k) The Noven License Agreement is and will remain in full force and effect for the term of the Novartis Pharma Improvements Sublicense Agreement and the Purchaser Improvements Letter Agreement, and there exists, and will exist, no default or event of default or event, occurrence, condition or act on the part of Noven or any of its Affiliates which, with the giving of notice, the lapse of time or the happening of any other event or condition would become a default or event of default thereunder or give rise to any right on the part of Aventis to terminate the Noven License Agreement or any part thereof in the Territory. 6.2. In connection with the acceptance of the license granted hereunder, Novogyne covenants on behalf of itself and its Affiliates and licensees, that neither it nor any of its Affiliates or licensees shall during the term of this Agreement (i) sell any CombiPatch Product outside the Territory and Canada, or (ii) sell any CombiPatch Product to any Person that Novogyne knows or has reason to know, or believes, will sell such CombiPatch Product outside the Territory and Canada, either during the term of this Agreement or after the expiration or termination hereof; PROVIDED, HOWEVER, that such refusal to sell is not in violation of any valid laws and regulations. 6.3. Where a representation or warranty contained in this Article 6 is stated to be to a party's knowledge, this shall mean to the actual knowledge of the party's executive officers and executives or those of the party's employees working specifically on the transactions contemplated by this Agreement and the Related Agreements. 9 13 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. 6.4. The foregoing representations and warranties shall survive for two years following the = Closing Date. ARTICLE 7. INDEMNITY 7.1. INDEMNIFICATION OBLIGATIONS OF NOVOGYNE. Without limiting Section 11.2 of the Operating Agreement, Article 8 of the Distribution and Services Agreement, or Article 7 of the Marketing and Promotional Services Agreement, Novogyne shall defend, indemnify and hold Noven, its Affiliates, and each of their respective officers, directors, agents, employees and shareholders (collectively, "NOVEN INDEMNITEES") harmless, from and against, any and all losses, obligations, liabilities, penalties and damages (including but not limited to compensatory damages), costs and expenses (including but not limited to reasonable attorneys' fees) (collectively, "LOSSES"), which the Noven Indemnitees may incur or suffer, and all deficiencies, actions (including without limitation, any proceedings to establish insurance coverage), claims, suits, legal, administrative, arbitration, governmental or other proceedings or investigations, and judgments (collectively, "CLAIMS"), with which any of them may be faced arising out of: (a) any material breach by Novogyne or any of its Affiliates or licensees of this Agreement, or material failure by any of them to comply with any covenants or obligations of Novogyne pursuant to this Agreement; (b) the enforcement by the Noven Indemnitees of their rights under this Section 7.1; (c) any gross negligence or willful misconduct by Novogyne or its Affiliates in Novogyne's performance pursuant to this Agreement; and (d) Novogyne's material violation of any applicable law or regulation; PROVIDED, HOWEVER, that Novogyne shall not be liable hereunder to the extent such Losses arise out of or relate to: (i) any willful misconduct or gross negligence of the Noven Indemnitees; (ii) the manufacture of CombiPatch Product by Noven under the Supply Agreement; or (iii) any material inaccuracy in or material breach of any representation and warranty made by Noven in this Agreement. 7.2. INDEMNIFICATION REGARDING AMENDMENT AGREEMENT. Novogyne will further indemnify Noven for any claim of Aventis that Noven has not made any payment required under Article 6 of the Noven Amendment Agreement, unless Novogyne has made the corresponding payment required under Section 3.2 of this Agreement to Noven or its designee. 7.3. INDEMNIFICATION OBLIGATIONS OF NOVEN. Without limiting Section 11.2 of the Operating Agreement, Article 8 of the Distribution and Services Agreement, or Article 7 of the Marketing and Promotional Services Agreement, Noven shall defend, indemnify and hold Novogyne, its Affiliates, and 10 14 each of their respective officers, directors, agents, employees and shareholders (collectively, "NOVOGYNE INDEMNITEES") harmless, from and against, any and all Losses, which the Novogyne Indemnitees may incur or suffer, and all Claims with which any of them may be faced arising out of: (a) any material inaccuracy in or material breach of any representation and warranty made by Noven in this Agreement; (b) any material breach by Noven or any of its Affiliates or licensees of this Agreement, or material failure by any of them to comply with any covenants or obligations of Noven pursuant to this Agreement; (c) the enforcement by the Novogyne Indemnitees of their rights under this Section 7.3; (d) any gross negligence or willful misconduct by Noven or its Affiliates in Noven's performance pursuant to this Agreement; and (e) Noven's material violation of any applicable law or regulation; PROVIDED, HOWEVER, that Noven shall not be liable hereunder to the extent such Losses arise from willful misconduct or gross negligence of the Novogyne Indemnitees. 7.4. PROCEDURE. If any action, claim, suit, proceeding or investigation arises as to which a right of indemnification provided in this Article 7 applies, the Person seeking indemnification (the "INDEMNIFIED PARTY"), shall promptly notify the party obligated under this Article 7 to indemnify the indemnified party (the "INDEMNIFYING PARTY") thereof in writing, and allow the indemnifying party and its insurers the opportunity to assume direction and control of the defense against such action, claim, suit, proceeding or investigation, at its sole expense, including without limitation, the settlement thereof at the sole option of the indemnifying party or its insurers; PROVIDED, HOWEVER, that the indemnifying party may not enter into any compromise or settlement without the prior written consent of the indemnified party unless such compromise or settlement includes as an unconditional term thereof the giving by each plaintiff or claimant to the indemnified party of a release from all liability in respect of such claim and only if such compromise or settlement does not include any admission of legal wrongdoing on the part of the indemnified party. The indemnified party shall fully cooperate with the indemnifying party and its insurer in the disposition of any such matter and the indemnified party will have the right and option to participate in (but not control) the defense of any third-party action, claim, suit, proceeding or investigation as to which this Article 7 applies, with separate counsel at its election and cost. If the indemnifying party fails or declines to assume the defense of any such third-party action, claim, suit, proceeding or investigation within thirty (30) days after notice thereof, the indemnified party may assume the defense thereof for the account and at the risk of the indemnifying party. The indemnifying party shall pay promptly to the indemnified party any losses, obligations, liabilities, Damages and judgments to which the indemnity under this Article 7 applies, as incurred. 11 15 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. ARTICLE 8. MISCELLANEOUS 8.1. NOTICES. Any notice or communication required or permitted to be given or made under this Agreement by one of the parties hereto shall be in writing and shall be deemed to have been sufficiently given or made for all purposes if mailed by certified mail, postage prepaid, addressed to such other party at its respective address as follows: (a) If to Noven, to: Noven Pharmaceuticals, Inc. 11960 S.W. 144th Street Miami, Florida 33186 Fax: (305) 232-1836 Attn: Robert C. Strauss, President and Jeffrey F. Eisenberg, Esq., General Counsel with copies to: Foley & Lardner 3000 K Street, N.W. Washington, DC 20007 Attention: Jay Varon, Esq. Telephone: 202-672-5380 Facsimile: 202-672-5399 or to such other person or address as Noven shall furnish to the other parties hereto in writing. (b) If to Novogyne, to: Vivelle Ventures LLC c/o Noven Pharmaceuticals, Inc. 11960 S.W. 144th Street Miami, FL 33186 Attention: Robert C. Strauss, President and Gordon DeMario, Esq., General Counsel Telephone: (305) 253-5099 Facsimile: (305) 232-1836 12 16 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. with copies to: Novartis Pharmaceuticals Corporation 59 Route 10 East Hanover, NJ 07936 Attention: Office of the CEO Telephone: (973) 781 8300 Facsimile: (973) 781-7036 and White & Case LLP 1155 Avenue of the Americas New York, NY 10036 Attention: Steven M. Betensky, Esq. Telephone: (212) 819-8200 Facsimile: (212) 354-8113 or to such other person or address as Novogyne shall furnish to the other parties hereto in writing. 8.2. FORCE MAJEURE. Neither party shall be responsible or liable to the other hereunder for failure or delay in performance of this Agreement due to any war, fire, accident or other casualty, or any labor disturbance or act of God, or any other unforeseeable contingency beyond such party's reasonable control. In addition, in the event of the applicability of this Section 8.2, the party affected by such force majeure shall immediately use its best efforts to eliminate, cure and overcome any of such causes and resume performance of its obligations. The party which is not performing its obligations under this Agreement as a result of any such event of force majeure will promptly notify the other party thereof and shall use commercially reasonable efforts to resume compliance with this Agreement as soon as possible. 8.3. ASSIGNMENT. This Agreement and all rights and obligations hereunder are personal to the parties hereto and may not be assigned, other than to Affiliates of Novogyne, without the express prior written consent of the other party Any assignment or attempt at same in the absence of such prior written consent shall be void and without effect. 8.4. APPLICABLE LAW. This Agreement shall be construed, and the rights of the parties determined, in accordance with the laws of the State of New York without regard to choice of law principles of the State of New York. 8.5. SEVERABILITY. If any one or more of the provisions of this Agreement shall be held to be invalid, illegal or unenforceable, the validity, legality or enforceability of the remaining provisions hereof shall not in any way be affected or impaired thereby. In the event any provisions shall be held invalid, illegal or unenforceable the parties shall use best efforts to substitute a valid, legal and enforceable provision, which insofar as possible, implements the purposes hereof. The same principle shall apply in respect of the filling of any contractual gap. 13 17 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. 8.6. NO WAIVER. No term or provision hereof will be considered waived by either party, and no breach excused by either party, unless such waiver or consent is in writing signed on behalf of the party against whom the waiver is asserted. No consent by either party to, or waiver of, a breach by either party, whether express or implied, will constitute a consent to, waiver of, or excuse of any other, different or subsequent breach by the other party. The failure of any party hereto at any time or times to require performance of any provisions hereof shall in no manner affect its right to enforce such provision at a later time. No waiver by any party hereto of any condition nor the breach of any term, covenant or representation contained in this Agreement whether by conduct or otherwise in any one or more instances shall be deemed to be or construed as a further or continuing waiver of such condition or breach or a waiver of any other condition or deemed to be or construed as the breach of any other term, covenant or representation in this Agreement. 8.7. INTERPRETATION. The article and section headings contained in this Agreement are for convenience of reference only and shall not affect the meaning or interpretation of this Agreement. This Agreement is the product of negotiations between the parties. In construing the terms hereof, no presumption shall operate in either party's favor as a result of its counsel's role in drafting the terms or provisions hereof. 8.8. ENTIRE AGREEMENT. This Agreement, together with the Related Agreements, constitutes the entire understanding among the parties relating to the subject matter hereof, and no amendment or modification to this Agreement shall be valid or binding upon the parties unless made in writing and signed by the representatives of such parties. 8.9. COUNTERPARTS. This Agreement and any amendments hereto may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together will constitute one and the same instrument. Delivery of an executed counterpart of a signature page to this Agreement by telecopier shall be as effective as delivery of a manually executed counterpart of this Agreement. 8.10. DISPUTE RESOLUTION. The parties agree that, other than as set forth in Section 5.3 hereof, unresolved disputes between them relating to this Agreement shall be resolved in accordance with Article XII of the Operating Agreement. 14 18 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their duly authorized representatives as of the day and year first written above. NOVEN PHARMACEUTICALS, INC. By: /s/ James B. Messiry ------------------------------------------------- Name: James B. Messiry Title: Vice President and Chief Financial Officer VIVELLE VENTURES LLC By: /s/ Robert C. Strauss ------------------------------------------------- Name: Robert C. Strauss Title: President 15 EX-10.2 3 g69008ex10-2.txt AMEND. #2 TO AMENDED & RESTATED LICENSE AGREEMENT 1 EXHIBIT 10.2 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. AMENDMENT NO. 2 TO AMENDED AND RESTATED LICENSE AGREEMENT This Amendment No. 2 (the "Amendment"), dated as of March 29, 2001, is by and between Rorer Pharmaceutical Products, Inc., a Delaware corporation having it principal place of business at 3711 Kennett Pike, Suite 200, Greenville, Delaware ("RPPI"), and Noven Pharmaceuticals, Inc., a Delaware corporation having its principal place of business at 11960 S.W. 144th Street, Miami, Florida ("Noven"), and amends the Amended and Restated License Agreement, dated as of September 30, 1999 between an Affiliate of RPPI and Noven relating to Estrogen, Progestin and Combination Products (the "Agreement"), a copy of which is attached as EXHIBIT A hereto, as amended by Amendment to the Amended and Restated License Agreement dated as of October 1, 1999, by and between RPR and Noven ("Amendment No. 1"), a copy of which is attached as EXHIBIT B hereto. All capitalized terms used in this Amendment without definition have the meanings given to such terms in the Agreement. RECITALS WHEREAS, pursuant to the Agreement, Noven initially granted to Rhone Poulenc Rorer Pharmaceuticals, Inc., an Affiliate of RPPI, among other things, an exclusive license under Noven's Patent Rights and Noven's Technology to use, sell or otherwise dispose of CombiPatch Product (as defined below) in the United States and its territories and possessions (the "United States"); WHEREAS, Rhone Poulenc Rorer Pharmaceuticals, Inc. assigned the Agreement to RPPI pursuant to an Assignment and Assumption Agreement dated September 30, 1999; WHEREAS, in the fourth quarter of 1999 the corporate parent of RPPI was a party to a merger that created Aventis Pharma SA and RPPI desires to change all references to it in the Agreement from "RPPI" to "Aventis"; WHEREAS, RPPI and Noven wish to amend the Agreement to grant back from RPR to Noven all rights granted under the Agreement with respect to the use, sale or other disposal of CombiPatch Product in the United States; WHEREAS, RPPI and Noven wish to amend the Agreement to grant back from RPPI to Noven all rights to use, sell or otherwise dispose of Progestin Transdermal Drug Delivery Systems in the Territory, effectively terminating the license granted by Noven to RPPI with respect to the Progestin Transdermal Drug Delivery System, which was not developed by RPPI, such grant-back not to be considered in any manner as a failure of RPPI to meet its obligations under the Agreement, all on the terms and conditions described herein; WHEREAS, pursuant to Amendment No. 1, RPPI granted an exclusive sublicense to Noven to use, sell and otherwise dispose of Licensed Products (as defined in the Agreement) solely for use in the Contraceptive Field (as defined in Amendment No. 1); 1 2 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. WHEREAS, RPPI and Noven wish to modify the terms of Amendment No. 1 to convert the exclusive sublicense granted therein to a grant-back, with only the continuing obligations of Noven in favor of RPPI that are specifically set forth herein; WHEREAS, Vivelle Ventures LLC, a Delaware limited liability company ("Vivelle") and RPPI desire to enter into a transaction pursuant to which, among other things, RPPI will assign, transfer and sell to Vivelle all of RPPI's right, title and interest in and to certain tangible and intangible assets related to the CombiPatch Product in the United States; WHEREAS, Noven and Vivelle desire to enter into an agreement pursuant to which Noven grants to Vivelle all rights granted back to Noven hereunder with respect to the use, sale or other disposal of CombiPatch Product in the United States; and WHEREAS, RPPI and Noven desire to enter into this Amendment to effect the grant-back rights to Noven; NOW, THEREFORE, in consideration of the mutual covenants and considerations set forth herein, the parties hereto, intending to be legally bound, hereby agree as follows: AGREEMENT 1. DEFINITIONS. Certain terms used herein and not defined have the meanings given to such terms in the Agreement. As used herein, the following terms shall have the following meanings: "Affiliate" means, when used with respect to a Person, any other Person directly or indirectly controlling, controlled by, or under common control with the subject Person. For purposes of this Agreement, "control" means the direct or indirect ownership of over 50% of the outstanding voting securities of a Person, or to control the management decisions of such Person. "Closing Date" has the meaning given in the Purchase Agreement among Aventis, an Affiliate of Aventis and Vivelle. "CombiPatch Product" means the transdermal estrogen/progestin patch product which has been developed by Aventis, solely or jointly with Noven, and/or their respective Affiliates, pursuant to the Agreement and is marketed under the trademark CombiPatch(TM) in the United States. "Contraceptive Field" means for the prevention of pregnancy. "Person" means any corporation, partnership, joint venture, other entity or natural person. 2. AMENDED DEFINITIONS. All references in the Agreement to "RPR" and in this Amendment to "RPPI" shall hereafter refer to and mean "Aventis". This reference to "Aventis" is for convenience and does not represent any transfer or 2 3 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. assignment by RPPI under the Agreement to Aventis Pharma SA or any of its subsidiaries. In addition, the following definitions in the Agreement are hereby deleted in their entirety and are hereby replaced with the following: "1.13 LICENSED PRODUCT(S). The term "Licensed Product" or "Licensed Products" shall mean individually and collectively any Estrogen Transdermal Drug Delivery System or any Combination Estrogen/Progestin Drug Delivery System. A Licensed Product relating to the Estrogen Transdermal Drug Delivery System shall be referred to as an "Estrogen Product" and a Licensed Product relating to the Combination Estrogen/Progestin Drug Delivery System shall be referred to as a "Combination Product." "1.25 TERRITORY. The term "Territory" shall mean all the countries and territories worldwide as to any Combination Product other than CombiPatch Product; shall mean all the countries and territories worldwide except the United States, its territories and possessions as to the CombiPatch Product; and shall mean Japan as to the Estrogen Product." And the following definition in the Agreement is hereby deleted in its entirety with respect to Combination Products and is hereby replaced with the following with respect to Combination Products: "1.16 NOVEN'S PATENT RIGHTS. The term "Noven's Patent Rights" shall mean any and all patents, including but not limited to reissues, extensions and patents of addition, and patent applications, continuations, divisionals and continuations-in-part that are owned or controlled by Noven and the claims of which cover the Licensed Products. Noven's Patent Rights include, without limitation, the United States patents and patent applications listed in EXHIBIT C attached hereto and all corresponding foreign patents and patent applications." 3. GRANT BACK OF RIGHTS RELATING TO COMBIPATCH PRODUCT. The exclusive right and license granted by Noven to Aventis pursuant to Section 3.1 of the Agreement to use, sell or otherwise dispose of Licensed Products is hereby terminated with respect to the use, sale or other disposal of CombiPatch Product as formulated as at the date hereof in the United States, its territories and possessions. For the avoidance of doubt, the right to make modifications and/or improvements to the CombiPatch Product and to develop, use, sell or otherwise dispose of any such modifications and/or improvements in the Territory, including, without limitation, the United States (in each case insofar as such rights are granted pursuant to the Noven License Agreement) are not terminated pursuant to the foregoing. 4. GRANT BACK OF RIGHTS RELATING TO PROGESTIN PRODUCT. (a) The license granted by Noven to Aventis in Section 3.1 of the Agreement to use, sell or otherwise dispose of Progestin Transdermal Drug Delivery Systems is hereby terminated. (b) Section 1.21 of the Agreement (the definition of Progestin Transdermal Drug Delivery System) shall be deleted in its entirety. 3 4 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. (c) All other references in the Agreement to Progestin Transdermal Drug Delivery System shall be deleted. (d) It is understood that notwithstanding anything contained in the Agreement to the contrary, neither Noven nor Aventis shall have any obligation of any kind under the Agreement, financial or otherwise, with respect to the development or commercialization of a Progestin Transdermal Drug Delivery System. Furthermore, each of Noven and Aventis hereby waives any claim it may have regarding the other party's performance of its obligations with respect to Progestin Transdermal Drug Delivery Systems under the Agreement. 5. GRANT BACK OF RIGHTS RELATING TO CONTRACEPTIVE FIELD. The Amendment No. 1 relating to Licensed Products for use in the Contraceptive Field is hereby terminated in its entirety and superseded by the following provisions: (a) The license granted by Noven to Aventis in Section 3.1 of the Agreement to use, sell or otherwise dispose of Licensed Products for use in the Contraceptive Field is hereby terminated, and Noven shall have the right to develop, use, sell or otherwise dispose of Licensed Products for use in the Contraceptive Field. (b) ***. (c) It is understood that notwithstanding anything contained in the Agreement to the contrary, neither Noven nor Aventis shall have any obligation of any kind under the Agreement, financial or otherwise, with respect to the development or commercialization of a Licensed Product for use in the Contraceptive Field. Furthermore, each of Noven and Aventis hereby waives any claim it may have regarding the other party's performance of its obligations with respect to Licensed Products for use in the Contraceptive Field under the Agreement. 6. CONSIDERATION. In consideration for the grant back of rights from Aventis to Noven under Section 3 above, Noven shall pay or cause to be paid to Aventis, by wire transfer to an account specified in writing by Aventis, an aggregate amount of Forty Million United States Dollars ($40,000,000) (the "Consideration"), payable as follows: AMOUNT DUE DATE ------ -------- $10,000,000 June 1, 2001 $10,000,000 September 4, 2001 $10,000,000 December 3, 2001 $10,000,000 March 1, 2002 ***. 7. NO LIABILITY FOR FUTURE PERFORMANCE. (a) As of the Closing Date, Aventis and Noven agree that Aventis shall have no liability to Noven for performance under the Agreement 4 5 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. with respect to the use, sale or other disposal of CombiPatch Product in the United States, including, without limitation: (i) payments for CombiPatch Product in the United States pursuant to Section 4.2 of the Agreement; (ii) payments for CombiPatch Product in the United States pursuant to Section 4.4(a)(i) of the Agreement; (iii) the transfer price established in Section 4.4(b)(B) of the Agreement; (iv) liability for any minimum sales of CombiPatch Product in the United States pursuant to Section 4.6; (v) meeting any obligation to purchase from Noven up to 90% of the previously forecasted quarterly requirements for CombiPatch Product pursuant to the Supply Agreement to the extent such forecasted amounts related to projected sales of CombiPatch Product in the United States; and (vi) reimbursement for any development or patent costs and expenses, including maintenance costs. (b) On the Closing Date Aventis and two of its Affiliates intend to enter into a Sublicense Agreement (the "2001 Sublicense Agreement") with Novartis Pharma AG ("Novartis") with respect to a sublicense under the Agreement for rights related to Licensed Product worldwide, except Japan. Aventis and Noven agree that following the execution of the 2001 Sublicense Agreement, Novartis shall be solely responsible for certain obligations identified on Schedule 2.2 to the 2001 Sublicense Agreement and those identified in Section 3.2 of the 2001 Sublicense Agreement arising under the Agreement out of the development, use, sale or other disposal of Licensed Product worldwide, except Japan. Noven hereby acknowledges and agrees that after the Closing Date, except as set forth in this Amendment, neither Aventis nor any of its Affiliates shall have any financial or diligence obligations under the Agreement except for those related to the development, use, sale or other disposal of Licensed Product in Japan. Without limiting the foregoing, Noven agrees that neither Aventis nor any of its Affiliates shall have any liability for any obligations under the Agreement that arise under the activities performed (or not performed) by Novartis under the sublicense granted to it, even if such obligations are not assumed by Novartis under the 2001 Sublicense Agreement. However, Aventis shall pay to Noven any remainder payments due under Section 4.4(c) of the Agreement as to all Licensed Product sold between January 1, 2001 and the Closing Date within sixty (60) days of the Closing Date. 8. SCHEDULE OF ACCRUED LIABILITIES TO NOVEN. Notwithstanding the foregoing Section 7 of this Amendment, all accrued liabilities to Noven listed in the attached Schedule A shall be paid by Aventis to Noven in immediately payable funds on the date indicated on Schedule A. 5 6 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. 9. SURVIVAL OF INDEMNIFICATION. Notwithstanding any provision of this Amendment, nothing will affect the indemnification provisions of Sections 10.1 and 10.2 of the Agreement. Without limiting the foregoing sentence, Sections 10.1 and 10.2 of the Agreement shall remain in full force and effect as between Noven and Aventis with respect to CombiPatch Product sold in the United States on or prior to the Closing Date. 10. AMENDMENT OF TERMINATION RIGHTS. (a) Section 8.1(c) of the Agreement is hereby amended and restated in its entirety as follows: "(c) Upon expiration of this License Agreement pursuant to this Article 8.1 in any country, Aventis shall have the right to elect to renew this License Agreement for successive five-year terms by giving Noven written notice of its intention to do so prior to the end of any such term; provided, however, that in the event of any such renewal the parties will negotiate in good faith the fees provided for in Articles 4.1 and 4.2(a) to take account of the expiration of the applicable patents." (b) With respect to Noven and Aventis, (i) the provisions of Section 8.2(a) of the Agreement shall, as of the Closing Date, give Aventis the right to terminate the Agreement only in Japan in the event Noven breaches its obligations under the Agreement; (ii) the provisions of Section 8.2(b) of the Agreement shall, as of the Closing Date, give each party hereto the right to terminate the Agreement only in Japan in the event of any occurrence contemplated by Section 8.2(b) with respect to the other party hereto; and (iii) the provisions of Section 8.2(e) of the Agreement shall, as of the Closing Date, give Aventis the right to terminate the Agreement only in Japan in the event of any occurrence contemplated by Section 8.2(e). (c) Section 8.2(d) of the Agreement is hereby amended and restated in its entirety as follows: "(d) (i) With respect to each Licensed Product, Noven shall have the right to terminate this License Agreement in Japan at any time upon thirty (30) days' notice if Aventis, its Sublicensee, or an Aventis Affiliate that Aventis controls, markets, sells or distributes any transdermal product that is identical or substantially similar to such Licensed Product, unless Aventis shall effect cessation of such activity or divestiture of such Affiliate, or take action towards such cessation or such divestiture within six (6) months of the commencement of such activity or Aventis' acquisition of such Affiliate. ***. (ii) Noven shall have the right to terminate this License Agreement at any time upon thirty (30) days' notice in any country of the Territory, except Japan, in which Novartis, or any of its Affiliates (other than Vivelle) or sublicensees, markets, sells or distributes any transdermal product, except for a Licensed Product, that is identical or substantially similar to any Licensed Product sublicensed to Novartis Pharma AG ("Novartis") pursuant to the Sublicense 6 7 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. Agreement dated September 30, 1999 between Aventis and Novartis (the "Sublicense Agreement"); PROVIDED, HOWEVER, that this right of termination does not apply (i) with respect to the countries in the European Economic Area, (ii) ***. (iii) During the term of this Agreement, if Novartis, or any of its Affiliates (other than Vivelle) or sublicensees, markets, sells or distributes any transdermal product, except for a Licensed Product, that is identical or substantially similar to the Licensed Product sublicensed to Novartis pursuant to the Sublicense Agreement in a country within the European Economic Area, then Noven, with regard to such country, shall have the right to convert the license granted under Article 3 with respect to such Licensed Product to a non-exclusive license; PROVIDED, HOWEVER, that this right shall not apply: ***. 11. EFFECTIVENESS OF THIS AMENDMENT. The parties acknowledge and agree that this Amendment is being entered into in connection with other agreements between Aventis, Noven and/or Novartis Pharma AG or Vivelle, including, but not limited to, the Supply Agreement between Noven and Vivelle and the Purchase Agreement among Aventis, an Aventis Affiliate and Vivelle. The parties further acknowledge and agree that this Amendment shall be deemed to be effective on the day prior to the closing contemplated by such other agreements, but that this Amendment will not be effective unless and until all such other agreements, including the Supply Agreement between Noven and Vivelle and those agreements defined as "Related Agreements" in the Purchase Agreement, are effective. 12. MISCELLANEOUS. (a) The parties agree that as of the Closing Date, notwithstanding anything contained in the Agreement to the contrary, neither Noven nor Aventis shall have any obligation to the other of any kind under the Agreement, financial or otherwise, except for those obligations expressed in this Amendment, with respect to the development or commercialization of CombiPatch Product in the United States. (b) Each party agrees to execute, acknowledge and deliver such further instruments, and to do all such other acts, as may be reasonably necessary or appropriate in order to carry out the purposes and intent of this Amendment. (c) In the event of any conflict between the terms of this Amendment and the terms of the Agreement, the terms of this Amendment shall control. (d) Except as expressly modified by this Amendment, the terms and provisions of the Agreement shall remain in full force and effect. 7 8 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 2 to be executed by their duly authorized representatives as of the date first written above. RORER PHARMACEUTICAL PRODUCTS, INC. By: /s/ Phillip R. Ridolfi ------------------------------------------------ Phillip R. Ridolfi President NOVEN PHARMACEUTICALS, INC. By: /s/ Robert C. Strauss ------------------------------------------------ Robert C. Strauss President, Chief Executive Officer and Co-Chairman 8 EX-10.3 4 g69008ex10-3.txt SUBLICENSE AGREEMENT 1 EXHIBIT 10.3 SUBLICENSE AGREEMENT among RORER PHARMACEUTICAL PRODUCTS, INC., RHONE-POULENC RORER INC., AVENTIS PHARMACEUTICALS PRODUCTS INC. RHONE-POULENC RORER INTERNATIONAL HOLDINGS INC. and NOVARTIS PHARMA AG and NOVEN PHARMACEUTICALS, INC. MARCH 29, 2001 2 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. TABLE OF CONTENTS
PAGE ---- ARTICLE I DEFINITIONS.................................................................................2 1.1. Definitions.................................................................................2 1.2. Product Formulated as of the Date Hereof....................................................5 ARTICLE II SUBLICENSE GRANT............................................................................5 2.1. Sublicense to Sublicensed Noven Intellectual Property.......................................5 2.2. Assumption of Obligations...................................................................6 2.3. Retention of Rights.........................................................................6 2.4. Right to Sublicense.........................................................................6 2.5. ***.........................................................................................6 2.6. ***.........................................................................................7 2.7. ***.........................................................................................7 ARTICLE III CONSIDERATION...............................................................................7 3.1. ***.........................................................................................7 3.2. Payment of Noven's Patent Costs.............................................................7 ARTICLE IV RIGHT OF REFERENCE..........................................................................7 4.1. ***.........................................................................................7 4.2. ***.........................................................................................7 4.3. ***.........................................................................................7 ARTICLE V TRADEMARKS AND DOMAIN NAMES.................................................................8 5.1. ***.........................................................................................8 5.2. ***.........................................................................................8 5.3. ***.........................................................................................8 5.4. ***.........................................................................................8
i 3 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions.
PAGE ---- ARTICLE VI INTELLECTUAL PROPERTY CLAIMS................................................................8 6.1. Infringement or Other Actions Regarding the Assigned Licensed Product Know-How..............8 6.2. Infringement or Other Actions Regarding Intellectual Property Rights........................8 6.3. ***.........................................................................................9 6.4. ***.........................................................................................9 6.5. Other Third Party Claims....................................................................9 ARTICLE VII CONFIDENTIALITY AND NONCOMPETITION..........................................................9 7.1. Confidentiality; Press Releases.............................................................9 7.2. ***........................................................................................11 7.3. ***........................................................................................11 7.4. ***........................................................................................11 7.5. Noncompetition by Noven....................................................................11 ARTICLE VIII INDEMNIFICATION............................................................................11 8.1. Indemnification............................................................................11 ARTICLE IX TERM AND TERMINATION; REMEDIES.............................................................13 9.1. Term.......................................................................................13 9.2. Termination for Bankruptcy.................................................................13 9.3. Noven Termination Right....................................................................13 9.4. Remedies for Breach........................................................................14 9.5. Effect of Termination......................................................................15 9.6. ***........................................................................................15 9.7. Remedies Reasonable........................................................................15 9.8. No Penalties...............................................................................15 9.9. Force Majeure..............................................................................15 ARTICLE X CERTAIN ADDITIONAL COVENANTS, REPRESENTATIONS AND AGREEMENTS.............................................................16 10.1. ***........................................................................................16 10.2. ***........................................................................................16
ii 4 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions.
PAGE ---- ARTICLE XI MISCELLANEOUS..............................................................................16 11.1. Disputes...................................................................................16 11.2. Independent Contractors....................................................................16 11.3. Assignment.................................................................................16 11.4. Binding Effect; Benefit....................................................................17 11.5. Amendment..................................................................................17 11.6. No Waiver..................................................................................17 11.7. Notices....................................................................................17 11.8. Counterparts...............................................................................18 11.9. Interpretation.............................................................................18 11.10. Governing Law..............................................................................19 11.11. Severability...............................................................................19 11.12. Entire Agreement...........................................................................19 11.13. Further Assurances.........................................................................19 11.14. Inconsistency..............................................................................19
iii 5 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. SUBLICENSE AGREEMENT THIS SUBLICENSE AGREEMENT (this "AGREEMENT"), dated as of March 29, 2001, is by and among RORER PHARMACEUTICAL PRODUCTS, INC, a Delaware corporation with its principal office at 3711 Kennett Pike, Suite 200, Greenville, Delaware U.S.A. 19807 (hereinafter referred to as "AVENTIS"), RHONE-POULENC RORER INC., a Pennsylvania corporation with its principal office at Route 202-206, Bridgewater, New Jersey, 08807 ("RPR"), AVENTIS PHARMACEUTICALS PRODUCTS INC., a Delaware corporation with its principal office at Route 202-206, Bridgewater, New Jersey , 08807 ("APPI"), Rhone-Poulenc Rorer International Holdings Inc., a Delaware corporation with its principal office at 3711 Kennett Pike, Suite 200, Greenville, Delaware U.S.A. 19807 ("RPRIH") and NOVARTIS PHARMA AG, a corporation organized under the laws of Switzerland with its principal office at Lichtstrasse 35, CH-4002 Basel, Switzerland ("NOVARTIS"), and NOVEN PHARMACEUTICALS, INC., a Delaware corporation with its principal office at 11960 S.W. 144th Street, Miami, Florida 33186 ("NOVEN"). For purposes of this Agreement, each of Aventis, RPR, APPI, RPRIH and Novartis are a "PARTY" to this Agreement, and collectively Aventis, RPR, APPI, RPRIH and Novartis are the "PARTIES" to this Agreement. Noven is a Party to this Agreement solely with respect to the following applicable provisions of the Agreement: Section 2.1 (Sublicense to the Sublicensed Noven Intellectual Property); Section 2.2 (Assumption of Obligations); Section 2.3 (Retention of Rights); Section 2.4 (Right to Sublicense); Section 3.2 (Payment of Noven's Patent Costs); Sections 6.1, 6.2 and 6.5 (Infringement and Other Third Party Claims); Section 7.2(e) (Noncompetition); Section 7.5 (Noncompetition by Noven); Article VIII (Indemnification); Sections 9.1, 9.2, 9.3, 9.4, 9.5, 9.7, 9.8 and 9.9 (relating generally to Term, Termination, Remedies and Penalties) and Article XI (Miscellaneous). RECITALS WHEREAS, Rhone-Poulenc Rorer Pharmaceuticals, Inc. and Noven are parties to an Amended and Restated License Agreement dated as of September 30, 1999, as amended by Amendment No. 2 thereto effective as of the day before the date hereof (collectively, the "NOVEN LICENSE AGREEMENT") attached hereto as EXHIBIT A, pursuant to which Noven granted Rhone-Poulenc Rorer Pharmaceuticals, Inc. an exclusive right and license under Noven's Patent Rights and Noven's Technology (each as defined in the Noven License Agreement) to develop, use, sell or otherwise dispose of Licensed Products (as defined in the Noven License Agreement); WHEREAS, Rhone-Poulenc Rorer Pharmaceuticals, Inc. assigned the Noven License Agreement to Aventis pursuant to an Assignment and Assumption Agreement dated September 30, 1999; WHEREAS, Novartis and Aventis have previously entered into a Sublicense Agreement (the "EXISTING NOVARTIS PHARMA SUBLICENSE AGREEMENT") dated as of September 30, 1999, pursuant to which Aventis granted to Novartis certain of its rights related to "licensed product" in the "territory" (each as defined in the Existing Novartis Pharma Sublicense Agreement); and 1 6 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. WHEREAS, the Parties and Noven desire to enter into a transaction pursuant to which, among other things, (a) Aventis will grant to Novartis an exclusive sublicense to develop, use, sell or otherwise dispose of any and all Licensed Product; (b) APPI and RPRIH, and RPR, will assign and transfer to Novartis the Trademarks and the Domain Names, respectively, (c) Aventis and Novartis will agree, effective as of the date hereof, to revise and replace certain rights and obligations under the Existing Novartis Pharma Sublicense Agreement, and (d) Novartis and Noven will agree to revise and replace certain rights and obligations under the Noven License Agreement, all on the terms and conditions contained in this Agreement; NOW, THEREFORE, in consideration of the mutual covenants and considerations set forth herein, the Parties hereto, intending to be legally bound, hereby agree as follows: ARTICLE I DEFINITIONS 1.1. DEFINITIONS. As used herein, the following capitalized terms shall have the following meanings: "AFFECTED PARTY" has the meaning set forth in Section 9.4 hereof. "AFFILIATE" means, when used with respect to a Person, any other Person directly or indirectly controlling, controlled by, or under common control with the subject Person. For purposes of this Agreement, "control" means the direct or indirect ownership of over 50% of the outstanding voting securities of a Person, or to control the management decisions of such Person. "AMENDMENT AGREEMENT" means Amendment No. 2 to the Noven License Agreement between Aventis and Noven executed prior to the Closing Date and effective as of the day before the Closing Date. ***. "AVENTIS INDEMNITEES" has the meaning set forth in Section 8.1(a) hereof. "CLAIMS" has the meaning set forth in Section 8.1(a) hereof. "CLOSING DATE" has the meaning set forth in the Purchase Agreement. "COMBIPATCH PRODUCT" means the transdermal estrogen/progestin product which has been developed by Noven, solely or jointly with Aventis or its Affiliates, and is marketed and sold by Aventis and its Affiliates under the trademark CombiPatchTM in the United States as of the Closing Date, and which, without limiting the foregoing, is sold, assigned and transferred to Vivelle under the Vivelle License Agreement and the Purchase Agreement. "COMPETING PRODUCT" means ***. 2 7 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. "CONFIDENTIAL INFORMATION" means all proprietary data, know-how and related information, including all regulatory approvals and related filings, applications and data, the content of any unpublished patent applications, operating methods and procedures, marketing, distribution and sales methods and systems, sales figures and other business information and the Noven Confidential Information disclosed to Aventis pursuant to the Noven License Agreement. "CONSIDERATION" has the meaning set forth in Section 3.1 hereof. "COURT" has the meaning set forth in Section 7.2(d) hereof. "DISCLOSING PARTY" has the meaning set forth in Section 7.1(a) hereof. ***. "ESTALIS(R)" has the meaning set forth in Section 5.3(a) hereof. "ESTALIS PRODUCT" means the product which is the Licensed Product as defined in the Existing Novartis Pharma Sublicense Agreement. "FDA ACT" means the United States Federal Food, Drug and Cosmetic Act, as amended, and the regulations promulgated thereunder, as amended from time to time. "IND" means an Investigational New Drug Application as defined in the FDA Act, or an equivalent application in another country or group of countries. "LICENSED PRODUCT" means any Combination Product (as defined in the Noven License Agreement) to which Aventis has any rights in the Territory under the Noven License Agreement as amended other than the Estalis Product, including, without limitation, any improvements or modifications, or proposed improvements or modifications, to the CombiPatch Product or the Estalis Product. "LOSSES" has the meaning set forth in Section 8.1(a) hereof. "NDA" means a New Drug Application as defined in the FDA Act, or an equivalent application for Regulatory Approval in another country or group of countries. "NOVARTIS INDEMNITEES" has the meaning set forth in Section 8.1(b) hereof. "NOVEN INDEMNITEES" has the meaning set forth in Section 8.1(c) hereof. "OFFENDING PRODUCT" has the meaning set forth in Section 9.3(a). "ONGOING OBLIGATIONS" has the meaning set forth in Section 9.6 hereof. ***. "PERSON" means any corporation, partnership, joint venture, other entity or natural person. 3 8 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. "PURCHASE AGREEMENT" means the Purchase Agreement between Aventis, APPI and Vivelle dated on the date hereof. "PURCHASER SUBLICENSE LETTER AGREEMENT" means the Letter Agreement between, inter alia, Vivelle and Novartis dated March 29, 2001 pursuant to which Novartis shall offer to sublicense to Vivelle all of its rights under this Agreement in the United States on a product-by-product basis. "RECEIVING PARTY" has the meaning set forth in Section 7.1(a) hereof. "REGULATORY APPROVAL" means filing for and receipt of all governmental and regulatory registrations and approvals (including, but not limited to, approvals of all final labeling and pricing approvals of any Licensed Product) required for the marketing and sale of any Licensed Product in the Territory existing at the Closing Date. ***. "REGULATORY AUTHORITY" means the U.S. Food and Drug Administration, and any equivalent regulatory agency in any country in the Territory. "RELATED AGREEMENTS" means the Purchase Agreement, the Amendment Agreement, the Purchaser Sublicense Letter Agreement and the Vivelle License Agreement. "SUBLICENSED NOVEN INTELLECTUAL PROPERTY" means Noven's Patent Rights and Noven's Technology (as each such term is defined in the Noven License Agreement) which are licensed to Aventis pursuant to the Noven License Agreement. Noven's Patent Rights at the date hereof include, without limitation, those patents and patent applications listed in SCHEDULE A attached hereto. "TERRITORY" means worldwide, except Japan. ***. ***. ***. "UNITED STATES" means the United States, its territories and possessions. "VIVELLE" means Vivelle Ventures LLC, a Delaware limited liability company and joint venture owned by Noven and Novartis Pharmaceuticals Corporation, which is the Purchaser under the Purchase Agreement. "VIVELLE LICENSE AGREEMENT" means the License Agreement between Noven and Vivelle dated on the Closing Date. ***. 4 9 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. 1.2. PRODUCT FORMULATED AS OF THE DATE HEREOF. Wherever, in this Agreement, reference is made to the Estalis Product or the CombiPatch Product "formulated as of the date hereof", such expression may include different dosage strengths of the Estalis Product or the CombiPatch Product, as the case may be. To be considered Estalis Product or the CombiPatch Product "formulated as of the date hereof", ***. ARTICLE II SUBLICENSE GRANT 2.1. SUBLICENSE TO SUBLICENSED NOVEN INTELLECTUAL PROPERTY. (a) Subject to the terms and conditions of this Agreement, with effect from the Closing Date, Aventis hereby grants to Novartis, and Novartis hereby accepts, during the term of this Agreement, an exclusive (even as to Aventis and its Affiliates) sublicense to all rights and benefits of Aventis and its Affiliates arising out of or under the Noven License Agreement in the Territory. For the avoidance of doubt, (i) the Parties acknowledge that the Amendment Agreement is effective in all respects prior to the grant of the sublicense granted hereunder; (ii) the foregoing sublicense includes, without limitation, the right to make modifications and/or improvements to the CombiPatch Product and to develop, use, sell or otherwise dispose of any such modifications and/or improvements in the Territory, including, without limitation, the United States (in each case insofar as such rights are granted pursuant to the Noven License Agreement as modified hereby), but shall not include the right to use, sell or otherwise dispose of the CombiPatch Product in the United States; and (iii) the foregoing sublicense shall include any of Noven's Patent Rights or Noven's Technology (each as defined in the Noven License Agreement) which relate to any improvement or proposed improvement to the CombiPatch Product or the Estalis Product including, without limitation, the improvements or proposed improvements described in SCHEDULE 2.1(A). (b) Novartis acknowledges and agrees that the sublicense granted pursuant to Section 2.1(a) is and shall be subordinate to, and subject to the terms and conditions of, the license granted to Aventis by Noven pursuant to the Noven License Agreement except as otherwise provided herein. Without limiting the foregoing, the Parties acknowledge that, pursuant to the Amendment Agreement and this Agreement; (i) Aventis has no right to terminate the rights under the Noven License Agreement in the Territory or the rights to the sublicense granted hereunder, and (ii) Noven has no right to terminate the Noven License Agreement in the Territory, but Noven shall, after the Closing Date, have the right to terminate the sublicense granted hereunder, in which event such termination shall operate as a termination of the Noven License Agreement in the Territory by Noven under Sections 8.2(a), (b) or (d) of the Noven License Agreement, and the Parties further agree that Novartis may enforce against Noven directly the rights granted hereunder to Novartis pursuant to the Noven License Agreement as amended hereby. (c) Noven hereby consents to the grant under this Section 2.1 of the sublicense from Aventis to Novartis in consideration for Novartis 5 10 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. assuming the obligations referenced in Section 2.2 and providing Noven a direct means of enforcing such obligations against Novartis, in Articles VIII and IX. 2.2. ASSUMPTION OF OBLIGATIONS. As between Novartis, its Affiliates and sublicensees on the one hand and Aventis, its Affiliates and sublicensees on the other hand, Novartis will be solely responsible for, and hereby assumes, following the Closing Date, those obligations under the Noven License Agreement with respect to the development, use, sale or other disposal of Licensed Product in the Territory, which are set forth in SCHEDULE 2.2 attached hereto; PROVIDED, HOWEVER, that, (a) in each case, Novartis shall be responsible, and hereby assumes, such obligations only to the extent that such obligations relate directly to the development, use, sale or other disposal of Licensed Product in the Territory, and only to the extent that they have not been modified herein; (b) Novartis, its Affiliates and sublicensees, shall not be bound by any Development Plan agreed between Noven and Aventis; and (c) Novartis, its Affiliates and sublicensees, shall not be bound by the provisions of the Supply Agreement which is incorporated into the Noven License Agreement. The Parties agree that, pursuant to the Amendment Agreement, Noven has relieved Aventis, its Affiliates and sublicensees from any financial and diligence obligations under the Noven License Agreement with respect to the development, use, sale or other disposal of Licensed Product in the Territory that are not assumed by Novartis hereunder. Novartis, its Affiliates and sublicensees, will negotiate, agree and enter into separate arrangements with Noven regarding their development obligations under the Noven License Agreement. Supply of any Licensed Product to Novartis, its Affiliates and sublicensees, shall be the subject of separate arrangements with Noven. With effect from not later than the Closing Date, Aventis hereby releases Noven from the obligations of Noven set forth in Article 5.4 of the Noven License Agreement. Further, Aventis undertakes that, notwithstanding any failure by Aventis to renew the Supply Agreement which is incorporated in the Noven License Agreement, the term of the Lease Agreement with respect to the Facility (as defined in the Noven License Agreement) shall not expire, and shall be automatically renewed on the same terms, for the term of this Agreement. Noven hereby consents to the foregoing provisions, and agrees to use commercially reasonable efforts to co-operate with Novartis, its Affiliates and sublicensees in the development of Licensed Products. 2.3. RETENTION OF RIGHTS. Nothing in this Agreement as between Aventis and Noven shall impair or limit the rights of Aventis under the Noven License Agreement outside the Territory. 2.4. RIGHT TO SUBLICENSE. The Parties agree that this Agreement grants to Novartis no right to grant any sublicense under the sublicense granted to Novartis pursuant to Section 2.1 hereof without the consent of Noven as required under Article 3.1(d) of the Noven License Agreement; PROVIDED, HOWEVER, that Novartis shall have the right to grant further sublicenses under the sublicense granted to Novartis pursuant to Section 2.1 hereof to Vivelle (and Persons acting on behalf of Vivelle) without obtaining prior approval from Noven. Affiliates, agents, distributors, wholesalers and other independent resellers shall not be considered sublicensees hereunder. Noven hereby consents to the foregoing provision. 2.5. ***. 6 11 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. 2.6. ***. 2.7. ***. ARTICLE III CONSIDERATION 3.1. ***. 3.2. PAYMENT OF NOVEN'S PATENT COSTS. Following the Closing Date Novartis shall assume Aventis' obligation, set forth in Articles 6.1 and 6.2 of the Noven License Agreement, to pay patent filing fees, costs and expenses incurred on a country by country basis in the Territory with respect to any such Licensed Product; PROVIDED, HOWEVER, that Novartis shall not be obliged to pay any patent filing fees, costs or expenses incurred in any country where neither Novartis nor Noven expects a Licensed Product covered by the claims of the applicable patent to be marketed. The Parties and Noven agree that Novartis will be entitled to the same offset rights set forth in Articles 6.1 and 6.2 of the Noven License Agreement as would otherwise be available to Aventis under such articles. Upon the first sale of a Licensed Product by Novartis or any of its Affiliates or sublicensees in a country in the Territory, Novartis' obligation under this Section 3.2 will be relieved for that country. On and after the Closing Date, and to the extent duplicative, this Section 3.2 shall supersede the obligation of Novartis set forth in Section 3.5 of the Existing Novartis Pharma Sublicense Agreement for all such patent expenses incurred after the Closing Date. Noven shall cooperate with Novartis in connection with Novartis' obligations under this Section 3.2, by, but not limited to, providing the necessary information to enable Novartis to come to an informed decision whether to pay expenses and providing an annual budget of costs which shall be discussed promptly should it be significantly exceeded. Pursuant to the Amendment Agreement, Noven has relieved Aventis, its Affiliates and sublicensees of all obligations set forth in Articles 6.1 and 6.2 of the Noven License Agreement in the Territory not assumed by Novartis hereunder. Noven hereby consents to the foregoing provisions. ARTICLE IV RIGHT OF REFERENCE 4.1. ***. 4.2. ***. 4.3. ***. 7 12 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. ARTICLE V TRADEMARKS AND DOMAIN NAMES 5.1. ***. 5.2. ***. 5.3. ***. 5.4. ***. ARTICLE VI INTELLECTUAL PROPERTY CLAIMS 6.1. INFRINGEMENT OR OTHER ACTIONS REGARDING THE ASSIGNED LICENSED PRODUCT KNOW-HOW. (a) If any Party shall become aware of any infringement or threatened infringement of the Assigned Licensed Product Know-How or any unfair competition, disparagement or other tortious act by any third party in relation to the Assigned Licensed Product Know-How, then the Party having such knowledge shall give prompt notice thereof to the other Party. (b) Novartis, its Affiliates and sublicensees, shall have the right to take such action as it deems appropriate to protect and enforce the Assigned Licensed Product Know-How in the Territory, including but not limited to, bringing an action, suit or other appropriate proceeding to prevent or eliminate the infringement of such Assigned Licensed Product Know-How, or the unfair competition, disparagement or other tortious act by any third party in relation to the Assigned Licensed Product Know-How in the Territory. Aventis and Noven each agree to cooperate with Novartis in any reasonable manner requested by Novartis in any such action, suit or proceeding, at the expense of Novartis, its Affiliates or sublicensees, as appropriate, including, without limitation, joining as a party to such action, suit or proceeding, if necessary to maintain standing. (c) All amounts awarded as damages, profits or otherwise in connection with any action taken by Novartis, its Affiliates or licensees, shall be ***. If Novartis, its Affiliates and licensees, elect not to take any action of the nature specified in Section 6.1(b), Novartis shall give Aventis notice of such decision, and Aventis thereafter shall have the right to take any action of the nature specified in Section 6.1(b) with respect to the use of the Assigned Licensed Product Know-How in the Territory. In such event, all amounts awarded as damages, profits or otherwise in connection with any action taken by Aventis shall be ***. 6.2. INFRINGEMENT OR OTHER ACTIONS REGARDING INTELLECTUAL PROPERTY RIGHTS. (a) If any Party becomes aware of any infringement or threatened infringement of (i) the Sublicensed Noven Intellectual Property or (ii) any 8 13 other intellectual property rights of the parties to the Noven License Agreement used in the development, manufacture or marketing of Licensed Product, (including, without limitation, by the filing of any certification in the United States claiming that any such intellectual property rights are invalid or will not be infringed by the manufacture, use or sale of a product by a third party) such Party shall provide notice to all interested parties in accordance with Article 6.4 of the Noven License Agreement, and comply with the provisions of Article 6.4 of the Noven License Agreement with respect to the determination of whether to prosecute the alleged infringement. (b) In the event Aventis is entitled to prosecute an infringement action pursuant to Article 6.4 of the Noven License Agreement, Novartis hereby assumes all such rights, and related obligations, after the Closing Date; PROVIDED, HOWEVER, that (i) Aventis shall cooperate with and assist Novartis, its Affiliates and sublicensees, in good faith with respect thereto; and (ii) in the event Novartis, its Affiliates or sublicensees, brings any such action, Noven shall, at the request of Novartis, provide Novartis, its Affiliates or sublicensees, with reasonable assistance at the expense of Novartis, its Affiliates or sublicensees, as appropriate, in accordance with Article 6.4 of the Noven License Agreement. (c) ***. 6.3. ***. 6.4. ***. 6.5. OTHER THIRD PARTY CLAIMS. If either Aventis or Noven becomes aware of any action, suit or proceeding or threat of action, suit or proceeding, by a third party alleging that the manufacture, use, import or sale of Licensed Product in the Territory infringes or violates any other intellectual property right of any third party, Aventis or Noven, as appropriate, shall promptly notify Novartis of the same. ARTICLE VII CONFIDENTIALITY AND NONCOMPETITION 7.1. CONFIDENTIALITY; PRESS RELEASES. (a) Pursuant to the terms hereof, from time to time during the term of this Agreement, each of Novartis and Aventis and/or their respective Affiliates and sublicensees (in such capacity, the "Disclosing Party") have disclosed and will be disclosing to the other Party and/or its Affiliates (in such capacity, the "Receiving Party") certain Confidential Information of the Disclosing Party. The Receiving Party shall make no use of such Confidential Information except in the exercise of its rights and performance of its obligations set forth in this Agreement and the Related Agreements. The Receiving Party shall use the same efforts to keep secret, and prevent the disclosure to third parties of, Confidential Information of the Disclosing Party as it would use with respect to its own Confidential Information. Confidential 9 14 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. Information disclosed by the Disclosing Party shall remain the sole and absolute property of the Disclosing Party, subject to the rights granted in this Agreement and the transactions contemplated herein. The above restrictions on the use and disclosure of Confidential Information shall not apply to any information which: (i) is already known to the Receiving Party at the time of disclosure by the Disclosing Party, as demonstrated by competent proof; (ii) is or becomes generally available to the public other than through any act or omission of the Receiving Party in breach of this Agreement; (iii) is acquired by the Receiving Party from a third party who is not, directly or indirectly, under an obligation of confidentiality to the Disclosing Party with respect to same; or (iv) is developed independently by the Receiving Party without use, direct or indirect, of information that is required to be held confidential hereunder. In the event the Receiving Party is required: (i) by law, rule or regulation to disclose Confidential Information of the Disclosing Party to regulatory authorities to obtain and maintain regulatory approval for any Licensed Product; (ii) to disclose Confidential Information of the Disclosing Party to respond to a regulatory or governmental inquiry concerning any Licensed Product; or (iii) to disclose Confidential Information of the Disclosing Party in a judicial, administrative or arbitration proceeding to enforce such Party's rights under this Agreement, it may do so only if it: (A) provides the Disclosing Party with as much advance written notice as possible of the required disclosure; (B) cooperates with the Disclosing Party in any attempt to prevent or limit the disclosure; and (C) limits disclosure, if any, to the specific purpose at issue. (b) Notwithstanding the provisions of this Section 7.1, but still subject to compliance with the terms of the Noven License Agreement, Novartis, its Affiliates and sublicensees, shall be permitted to disclose to their respective distributors, wholesalers and other direct customers such Confidential Information relating to Licensed Product or improvements thereto as Novartis, its Affiliates and sublicensees, shall reasonably determine to be necessary or useful in order to effectively market and distribute any Licensed Product; provided that such entities undertake substantially the same confidentiality obligation as Novartis has with respect to Aventis' Confidential Information. (c) *** (d) Except as may be required by applicable laws, rules or regulations, no Party will originate any publicity, press or news release, or other public announcement, written or oral, whether to the public press or otherwise, relating to this Agreement or the Related Agreements, the transactions contemplated hereby or thereby, or to the existence of an arrangement between the Parties, without the prior written approval of the other Party. In the event disclosure of this Agreement or any of the Related Agreements, any of the terms and conditions of this Agreement or such Related Agreements, or any of the transactions contemplated by this Agreement or such Related Agreements, is required by applicable law, rules or regulations, then the Party required to so disclose such information shall, to the extent possible, provide to the other Party for its prior approval (such approval not to be unreasonably withheld or delayed) a written copy of such public announcement. When practicable, the disclosing Party will provide such copy to the other Party at least five (5) business days prior to disclosure. 10 15 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. (e) Neither Party shall use the name of the other for marketing, advertising or promotional claims without the prior written consent of the other Party. 7.2. ***. 7.3. ***: 7.4. ***. 7.5. NONCOMPETITION BY NOVEN. (a) Noven covenants that for a period beginning on the date hereof and ending ***, neither it nor any of its Affiliates or sublicensees shall market, sell or distribute (or agree with any third party to do any of the foregoing) any Competing Product in the Territory, other than the Estalis Product, the CombiPatch Product and Licensed Product(s). Notwithstanding the foregoing, with respect to the marketing, sale or distribution of any Competing Product in the Territory solely to the extent that the marketing, sale or distribution of such Competing Product by Noven (or its Affiliates or sublicensees) is the result of Noven (or its Affiliates or sublicensees) having acquired the Competing Product from the acquisition of, or merger with another Person who at the time of acquisition possessed such Competing Product and/or was marketing, selling and/or distributing it in the Territory, Noven, its Affiliate or sublicensee shall ***. (b) Noven recognizes that the territorial, time and scope limitations set forth in this Section 7.5 are reasonable and are required for the protection of Novartis, its Affiliates and sublicensees. Further, Noven specifically recognizes that any breach by it of this Section 7.5 may cause irreparable injury to the Novartis, its Affiliates and sublicensees (including, without limitation, Vivelle) and that actual damages may be difficult to ascertain, and, in any event, may be inadequate. Accordingly (and without limiting the availability of legal or equitable, including injunctive, remedies under any other provisions of this Agreement), Noven agrees that in the event of any such breach, notwithstanding the provisions of Section 11.1, Novartis shall be entitled to seek, by way of private litigation in the first instance, injunctive relief and such other legal and equitable remedies as may be available. ARTICLE VIII INDEMNIFICATION 8.1. INDEMNIFICATION. In order to distribute among themselves the responsibility for claims arising out of this Agreement, and except as otherwise specifically provided for herein, the Parties agree as follows: (a) ***. (b) ***. (c) Novartis shall defend, indemnify and hold Noven, its Affiliates, and each of their respective officers, directors, agents, employees and shareholders (collectively, "NOVEN INDEMNITEES") harmless, from and against, 11 16 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. any and all Losses, which the Noven Indemnitees may incur or suffer, and all Claims, with which any of them may be faced arising out of: (i) any material inaccuracy in or material breach of any representation and warranty made by Novartis in this Agreement; (ii) any material breach by Novartis or any of its Affiliates or sublicensees, or material failure by any of them to comply with, any covenants or obligations of Novartis pursuant to this Agreement; (iii) the enforcement by the Noven Indemnitees of their rights under this Section 8.1(c); (iv) any gross negligence or willful misconduct by Novartis or its Affiliates in Novartis' performance pursuant to this Agreement; and (v) Novartis' material violation of any applicable law or regulation; provided, however, that Novartis shall not be liable hereunder to the extent such Losses arise from willful misconduct or gross negligence of the Noven Indemnitees. (d) Noven shall defend, indemnify and hold the Novartis Indemnitees harmless, from and against, any and all Losses, which the Novartis Indemnitees may incur or suffer, and all Claims with which any of them may be faced arising out of: (i) any material inaccuracy in or material breach of any representation and warranty made by Noven in the Noven License Agreement; (ii) any material breach by Noven or any of its Affiliates or sublicensees, or material failure by any of them to comply with, any covenants or obligations of Noven pursuant to this Agreement or the Noven License Agreement; (iii) the enforcement by the Novartis Indemnitees of their rights under this Section 8.1(d); (iv) any gross negligence or willful misconduct by Noven or its Affiliates in Noven's performance pursuant to this Agreement or the Noven License Agreement; and (v) Noven's material violation of any applicable law or regulation; provided, however, that Noven shall not be liable hereunder to the extent such Losses arise from willful misconduct or gross negligence of the Novartis Indemnitees. (e) If any Claim arises as to which a right of indemnification provided in this Article VIII applies, the Person seeking indemnification (the "indemnified party"), shall promptly notify the Party obligated under this Article VIII to indemnify the indemnified party (the "indemnifying party") thereof in writing, and allow the indemnifying party and its insurers the opportunity to assume direction and control of the defense against such Claim, at its sole expense, including, without limitation, the settlement thereof at the sole option of the indemnifying party or its insurers; PROVIDED, HOWEVER, that the indemnifying party may not enter into any compromise or settlement without the prior written consent of the indemnified party unless such compromise or settlement includes as an unconditional term thereof the giving by each plaintiff or claimant to the indemnified party of a release from all liability in respect of such claim and only if such compromise or settlement does not include any admission of legal wrongdoing on the part of the indemnified party. The indemnified party shall fully cooperate with the indemnifying party and its insurer in the disposition of any such matter and the indemnified party will have the right and option to participate in (but not control) the defense of any Claim as to which this Article VIII applies, with separate counsel at its election and cost. If the indemnifying party fails or declines to assume the defense of any such Claim within thirty (30) days after notice thereof, the indemnified party may assume the defense thereof for the account and at the risk of the indemnifying party. The indemnifying party shall pay promptly to the indemnified party any Losses to which the indemnity under this Article VIII applies, as incurred. 12 17 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. ARTICLE IX TERM AND TERMINATION; REMEDIES 9.1. TERM. The term of this Agreement shall commence on the Closing Date and, with respect to the sublicense granted pursuant to Section 2.1 shall expire, unless sooner terminated as set forth herein, upon the expiration or termination of the licenses granted to Aventis by Noven under the Noven License Agreement. For purposes of this Section 9.1: (a) the licenses granted to Aventis under the Noven License Agreement shall be deemed to include any licenses obtained by Aventis pursuant to Article 8.3(b) of the Noven License Agreement; and (b) Novartis shall have the benefit of, and the right to exercise, the rights and options granted to Aventis pursuant to Article 8.1(c) of the Noven License Agreement. Commencing on the first to expire of any patent in the United States included under Noven's Patent Rights (as defined in the Noven License Agreement), Novartis shall have the right, exercisable by notice in writing to Noven on a Licensed Product-by-Licensed Product basis upon the launch of any product on to the market in the United States which is "AB rated" to such Licensed Product, to require Noven to negotiate in good faith the fees provided for in any arrangement for supply of any Licensed Product to Novartis, its Affiliates or sublicensees in the United States. 9.2. TERMINATION FOR BANKRUPTCY. Any of Noven, Novartis or Aventis may terminate this Agreement with immediate effect in the event that any proceeding under a bankruptcy, liquidation or similar statute, or any insolvency, receivership or dissolution proceeding is filed against the other Party, and such proceeding is not dismissed within sixty (60) days after the filing thereof. 9.3. NOVEN TERMINATION RIGHT. (a) With respect to each Licensed Product, and for a period beginning on the date hereof and ending ***, Noven shall have the right to terminate this Agreement at any time upon thirty (30) days' notice in any country of the Territory in which Novartis, its sublicensee, or a Novartis Affiliate markets, sells or distributes any transdermal product that is identical or substantially similar to such Licensed Product ("OFFENDING PRODUCT"), unless Novartis shall effect cessation of such activity or divestiture of such Affiliate, or take action towards such cessation or such divestiture within 6 months of the commencement of such activity or Novartis' acquisition of such Affiliate; PROVIDED, HOWEVER, that this right of termination does not apply (i) with respect to the countries in the European Economic Area, ***. (b) With respect to each Licensed Product, and for a period beginning on the date hereof and ending ***, if Novartis or any Novartis Affiliate or sublicensee markets, sells or distributes any Offending Product in a country within the European Economic Area, then Noven, with regard to such country, shall have the right to convert the license granted under Article 3 of the Noven License Agreement with respect to such Licensed Product to a non-exclusive license; PROVIDED, HOWEVER, that this right shall not apply: (i) if Novartis shall effect cessation of such activity or divestiture of such Affiliate or take action towards such cessation or such divestiture within six months of the commencement of such activity or Novartis' acquisition of such Affiliate; ***. 13 18 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. (c) Notwithstanding Sections 9.3(a) and (b) above, with respect to the marketing, sale or distribution of any transdermal product that is identical or substantially similar to a Licensed Product in the Territory solely to the extent that the marketing, sale or distribution of such product by Novartis (or its Affiliates or sublicensees) is the result of Novartis (or its Affiliates or sublicensees) having acquired the products from the acquisition of, or merger with another Person who at the time of acquisition possessed such products and/or was marketing, selling and/or distributing them in the Territory, Novartis, its Affiliate or sublicensee may, instead of ceasing such activity or divesting such product or Person, elect to pay to Noven reasonable compensation agreed by the parties in good faith with respect thereto at the time of such acquisition or merger, in which event, Noven shall have no right to terminate this Agreement with respect to such Licensed Product or convert the license granted under Article 3 of the Noven License Agreement with respect to such Licensed Product to a non-exclusive license. (d) Novartis recognizes that the territorial, time and scope limitations set forth in this Section 9.3 are reasonable and are required for the protection of Noven, its Affiliates and sublicensees. (e) If Noven should terminate this Agreement against Novartis with respect to any Licensed Product under this Section 9.3, it will have the rights upon termination set forth in Section 8.3(a) of the Noven License Agreement with respect to such Licensed Product. 9.4. REMEDIES FOR BREACH. If either of Novartis or Aventis, RPR, RPRIH or APPI commits a material breach of this Agreement, or materially defaults in the performance or observance of any provision of this Agreement (including the obligations assumed by Novartis under Section 2.2), and (i) such Party fails, within sixty (60) days after receipt of notice of the material breach from the Party affected by the breach or default (the "AFFECTED PARTY"), to remedy such breach or default or to have agreed to a plan for remedy of such breach or default and (ii) the Parties shall have exhausted the dispute resolution procedures provided in Section 11.1 without resolving their dispute regarding the material breach; PROVIDED that the time periods contemplated by the foregoing clauses (i) and (ii) may run concurrently and need not be sequential, the Affected Party shall have the following rights: (a) REMEDIES FOR NOVARTIS. (i) Upon the breach of this Agreement by Aventis, RPR, RPRIH or APPI under this Section 9.4, Novartis shall then have the right to terminate this Agreement, exercisable by delivering written notice thereof to Aventis, and/or to pursue any and all remedies available to it at law or in equity including, without limitation, the right to seek to recover from Aventis any and all damages and losses of any nature whatsoever (but excluding consequential damages, lost profits and punitive damages). (ii) Without limiting any other provision of this Agreement, Noven acknowledges that the rights and benefits granted to Novartis pursuant to this Agreement include all rights of Aventis to terminate the Noven License Agreement in the Territory and all rights and benefits of Aventis upon any such termination in the Territory pursuant to the Noven License Agreement. 14 19 (b) REMEDIES FOR AVENTIS. ***. (c) REMEDIES FOR NOVEN. Upon the breach by Novartis under this Section 9.4 of any obligation owed by Novartis to Noven under this Agreement, and subject to compliance by Noven with the provisions of this Section 9.4, Noven shall have the right to pursue any and all remedies available to it at law or in equity including without limitation the right to seek to recover from Novartis any and all damages and losses of any nature whatsoever (but excluding consequential damages, lost profits and punitive damages) and the right to terminate this Agreement against Novartis. If Noven should terminate this Agreement against Novartis under this Section 9.4(c), it will have the rights upon termination set forth in Section 8.3(a) of the Noven License Agreement. 9.5. EFFECT OF TERMINATION. Rights and obligations set forth in Sections 7.1 (Confidentiality; Press Releases), 8.1 (Indemnification) and Articles VI (Intellectual Property Claims) and XI (Miscellaneous) shall survive the termination of this Agreement and/or the termination of the Ongoing Obligations, and otherwise, except as set forth in this Section 9.5, this Agreement shall become void and have no effect; PROVIDED, HOWEVER, that any termination of this Agreement will have no impact on the assignments pursuant to Sections 2.6, 4.1 or 5.1 hereof, and that any termination of this Agreement by Novartis will have no impact on the sublicense granted to Novartis pursuant to Section 2.1 hereof or pursuant to Section 2.1 of the Existing Novartis Pharma Sublicense Agreement. Noven hereby consents to the foregoing proviso. Nothing in this Section 9.5 shall relieve any Party to this Agreement of any liability for a breach of any provision of this Agreement. 9.6. ***. 9.7. REMEDIES REASONABLE. The Parties expressly acknowledge that the remedy provisions contained in this Article IX are reasonable, considering the intended nature and scope of this Agreement. 9.8. NO PENALTIES. Without limiting the indemnification rights set forth in Article VIII hereof, if either Party terminates this Agreement in accordance with the terms herein, the terminating Party shall owe no statutory termination penalty or indemnity or other similar payment that might otherwise be due under local law to the terminated Party on account of such termination. 9.9. FORCE MAJEURE. The obligations of the Parties under this Agreement shall be subject to any delays or non-performance caused by: acts of God, earthquakes, fires or floods; explosions, sabotage, riots or accidents; regulatory, governmental or military action or inaction; strikes, lockouts or labor trouble; perils of the sea; failure or delay in performance by third parties, including suppliers and service providers; or any other cause beyond the reasonable control of either Party. The Party which is not performing its obligations under this Agreement as a result of any such event of force majeure will promptly notify the other Party thereof and shall use commercially reasonable efforts to resume compliance with this Agreement as soon as possible. 15 20 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. ARTICLE X CERTAIN ADDITIONAL COVENANTS, REPRESENTATIONS AND AGREEMENTS 10.1. ***. 10.2. ***. ARTICLE XI MISCELLANEOUS 11.1. DISPUTES. Except as set forth in Sections 7.3, 7.4 and 7.5(b) and notwithstanding Article XI of the Noven License Agreement, in the event of any controversy or claim arising out of, relating to or in connection with any provision of this Agreement or the Noven License Agreement, or the rights or obligations of the Parties hereunder or thereunder, the Parties shall try to settle their differences amicably between themselves. Any Party may initiate such informal dispute resolution by sending written notice of the dispute to any other Party, and within ten (10) days after such notice appropriate representatives of the relevant Parties shall meet for attempted resolution by good faith negotiations. If such representatives are unable to resolve promptly such disputed matter, it shall be referred to the Chief Executive Officer of Novartis Pharma AG the Head of Commercial Operations of Aventis Pharma AG, and/or the Chief Executive Officer of Noven, as the case may be, or their respective designees, for discussion and resolution. If such personnel are unable to resolve such dispute within thirty (30) days of initiating such negotiations, the relevant Parties agree first to try in good faith to settle the dispute by mediation in New York under the Commercial Mediation Rules of the American Arbitration Association, before resorting to litigation. 11.2. INDEPENDENT CONTRACTORS. In making and performing this Agreement, the Parties are acting and shall act as independent contractors. Nothing in this Agreement shall be deemed to create an agency, joint venture or partnership relationship between the Parties hereto. Neither Party shall have the authority to obligate the other Party in any respect, and neither Party shall hold itself out as having any such authority. All personnel of Aventis, RPR, RPRIH and APPI shall be solely employees of Aventis, RPR, RPRIH or APPI, as the case may be, and shall not represent themselves as employees of Novartis or Noven. All personnel of Novartis shall be solely employees of Novartis, as applicable and shall not represent themselves as employees of Aventis, RPR, APPI, RPRIH or Noven. All personnel of Noven shall be solely employees of Noven as applicable and shall not represent themselves as employees of Aventis, RPR, APPI, RPRIH or Novartis. 11.3. ASSIGNMENT. Neither Aventis nor Novartis shall have a right to assign this Agreement without the prior written consent of the other (which consent shall not be unreasonably withheld or delayed); PROVIDED, HOWEVER, that 16 21 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. each of Aventis and Novartis may assign this Agreement to any of its Affiliates without the prior written consent of the other; PROVIDED, FURTHER, that no such assignment of this Agreement shall relieve the assignor of any of its obligations or liabilities under this Agreement. Notwithstanding the foregoing, each of Aventis and Novartis may assign this Agreement without the other's prior written consent in connection with the transfer or sale of all or substantially all of its assets or business or its merger or consolidation with another Person. 11.4. BINDING EFFECT; BENEFIT. This Agreement shall inure to the benefit of and be binding upon the Parties hereto, and their respective successors and permitted assigns. Nothing contained herein shall give to any other Person, other than Noven, any benefit or any legal or equitable right, remedy or claim. 11.5. AMENDMENT. This Agreement may only be modified, amended or supplemented by an instrument in writing executed by Aventis and Novartis, and, as applicable, consented to by Noven. 11.6. NO WAIVER. No term or provision hereof will be considered waived by any Party, and no breach excused by any Party, unless such waiver or consent is in writing signed on behalf of the Party against whom the waiver is asserted. No consent by any Party to, or waiver of, a breach by any Party, whether express or implied, will constitute a consent to, waiver of, or excuse of any other, different or subsequent breach by any other Party. 11.7. NOTICES. All notices, claims, certificates, requests, demands and other communications hereunder shall be in writing and shall be delivered personally or sent by facsimile transmission, air courier, or registered or certified mail, return receipt requested, addressed as follows: If to Novartis: If to Aventis: Novartis Pharma AG Rorer Pharmaceutical Products, Inc. Lichtstrasse 35 3711 Kennett Pike, Suite 200 CH-4002 Basel, Switzerland Greenville, Delaware, USA 19087 Fax: ++41 61 324 6859 Fax: (302) 777-7665 Attn: General Counsel Attn: President With copies to: With a copy to: Novartis Pharma AG Ballard Spahr Andrews & Ingersoll, LLP Lichtstrasse 35 1735 Market Street, 51st Floor CH-4002 Basel, Switzerland Philadelphia, PA 19103 Fax: ++41 61 324 2100 Fax: (215) 864-8999 Attn: Head BD & L Attn: Morris Cheston, Jr., Esq. and 17 22 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. White & Case LLP 1155 Avenue of the Americas New York, NY 10036 Fax: (212) 354-8113 Attn: Steven M. Betensky, Esq. If to Noven: If to APPI, RPRIH or RPR: Noven Pharmaceuticals, Inc. c/o Aventis Pharma 11960 S.W. 144th Street Route 202-206, P.O. Box 6880 Miami, Florida 33186 Bridgewater, NJ 08807-0800 Fax: (305) 232-1836 Fax: (908) 231-2243 Attn: Robert C. Strauss, President, Attn: General Counsel and Jeffrey F. Eisenberg, Esq., General Counsel With a copy to: In each case with a copy to: Foley & Lardner Ballard Spahr Andrews & Ingersoll, LLP Washington Harbour 1735 Market Street, 51st Floor 3000 K Street, N.W. Philadelphia, PA 19103 Washington, D.C. 20007-5109 Fax: (215) 864-8999 Fax: (202) 672-5399 Attn: Morris Cheston, Jr., Esq. Attn: Stephen B. Maebius, Esq. or to such other address as the Party to whom notice is to be given may have furnished to the other Parties in writing in accordance herewith. Any such communication shall be deemed to have been delivered (a) when delivered, if delivered personally, (b) when sent (with written confirmation received), if sent by facsimile transmission on a business day, (c) on the first business day after dispatch (with written confirmation received), if sent by facsimile transmission on a day other than a business day, (d) on the second business day after dispatch, if sent by air courier, and (e) on the fifth business day after mailing, if sent by mail. 11.8. COUNTERPARTS. This Agreement shall become binding when any one or more counterparts hereof, individually or taken together, shall bear the signatures of each of the Parties hereto. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original as against the Person whose signature appears thereon, but all of which taken together shall constitute but one and the same instrument. Each Party may execute this Agreement on a facsimile of the Agreement. In addition, facsimile signatures of authorized signatories of any Party shall be valid and binding and delivery of a facsimile signature by any Party shall constitute due execution and delivery of this Agreement. 11.9. INTERPRETATION. The article and section headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. This Agreement is the product 18 23 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. of negotiations between the Parties. In construing the terms hereof, no presumption shall operate in any Party's favor as a result of its counsel's role in drafting the terms or provisions hereof. 11.10. GOVERNING LAW. This Agreement and any claims, disputes or causes of action relating to or arising out of this Agreement shall be construed in accordance with and governed by the substantive laws of the State of New York, U.S.A. without giving effect to the conflict of laws principles thereof. 11.11. SEVERABILITY. If any provisions of this Agreement are determined to be invalid or unenforceable in any jurisdiction, such provisions shall be ineffective to the extent of such invalidity or unenforceability in such jurisdiction, without rendering invalid or unenforceable the remaining provisions hereof or affecting the validity or enforceability of any of such provisions of this Agreement in any other jurisdiction. The Parties will use their best efforts to substitute the invalid or unenforceable provision with a valid and enforceable one which conforms, as nearly as possible, with the original intent of the Parties. 11.12. ENTIRE AGREEMENT. This Agreement, including all exhibits and schedules and the Related Agreements, the Existing Novartis Pharma Sublicense Agreement and, with respect to Noven and Novartis only, the Purchaser Sublicense Letter Agreement, embody the entire agreement and understanding between the Parties hereto with respect to the subject matter hereof and supersede all prior agreements, commitments, arrangements, negotiations or understandings, whether oral or written, between the Parties hereto and their respective Affiliates with respect thereto. There are no agreements, covenants or undertakings with respect to the subject matter of this Agreement and the Related Agreements other than those expressly set forth or referred to herein or in such other agreements, and no representations or warranties of any kind or nature whatsoever, express or implied, are made or shall be deemed to be made herein by the Parties hereto except those expressly made in this Agreement and the Related Agreements. 11.13. FURTHER ASSURANCES. Each Party agrees to execute, acknowledge and deliver such further instruments, and to do all such other acts, as may be reasonably necessary or appropriate in order to carry out the purposes and intent of this Agreement. 11.14. INCONSISTENCY. In the event of any inconsistency between the terms of this Agreement and the Existing Novartis Pharma Sublicense Agreement, the terms of this Agreement shall prevail. 19 24 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. IN WITNESS WHEREOF, the Parties hereto have executed this Sublicense Agreement as of date first above written. RORER PHARMACEUTICAL PRODUCTS, INC. By: /s/ Phillip R. Ridolfi ------------------------------------------ Phillip R. Ridolfi President RHONE-POULENC RORER INC. By: /s/ Charles D. Dalton ------------------------------------------ Charles D. Dalton Vice President AVENTIS PHARMACEUTICALS PRODUCTS INC. By: /s/ Charles D. Dalton ------------------------------------------ Charles D. Dalton Vice President RHONE-POULENC RORER INTERNATIONAL HOLDINGS INC. By: /s/ Phillip R. Ridolfi ------------------------------------------ Phillip R. Ridolfi President NOVARTIS PHARMA AG By: /s/ Gerard Hazelzet ------------------------------------------ Gerard Hazelzet Head Licensing Europe, Business Development and Licensing By: /s/ Gisela Schelling ------------------------------------------ Gisela Schelling Legal Counsel 20 25 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. Consented to with respect to the following provisions: Section 2.1 (Sublicense to the Sublicensed Noven Intellectual Property); Section 2.2 (Assumption of Obligations); Section 2.3 (Retention of Rights); Section 2.4 (Right to Sublicense); Section 3.2 (Payment of Noven's Patent Costs); Sections 6.1, 6.2 and 6.5 (Infringement and Other Third Party Claims); Section 7.2(e) (Noncompetition); Section 7.5 (Noncompetition by Noven); Article VIII (Indemnification); Sections 9.1, 9.2, 9.3, 9.4, 9.5, 9.7, 9.8 and 9.9 (relating generally to Term, Termination, Remedies and Penalties) and Article XI (Miscellaneous). NOVEN PHARMACEUTICALS, INC. By: /s/ Robert C. Strauss -------------------------------------------- Robert C. Strauss President, Chief Executive Officer Co-Chairman 21 EX-10.4 5 g69008ex10-4.txt PURCHASE AGREEMENT 1 EXHIBIT 10.4 PURCHASE AGREEMENT among RORER PHARMACEUTICAL PRODUCTS, INC., AVENTIS PHARMACEUTICALS PRODUCTS INC. and VIVELLE VENTURES LLC March 29, 2001 (CombiPatch(TM) Product) 2 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. TABLE OF CONTENTS
PAGE ---- ARTICLE I. DEFINITIONS............................................................................2 1.1 Definitions............................................................................2 1.2 Rights and Obligations of the Purchaser................................................5 1.3 Product Formulated as of the Date Hereof...............................................6 ARTICLE II. PURCHASE AND SALE OF ASSETS............................................................6 2.1 Purchase and Sale of Assets............................................................6 2.2 The Purchased Assets...................................................................6 2.3 Excluded Assets........................................................................7 2.4 Disclaimer of Other Representations and Warranties.....................................7 2.5 Physical Transfer of Inventory and Certain Other Purchased Assets......................8 2.6 Physical Transfer of Other Purchased Assets............................................8 ARTICLE III. ASSUMPTION OF LIABILITIES..............................................................9 3.1 Assumption of Assumed Liabilities......................................................9 3.2 Excluded Liabilities..................................................................10 3.3 Retention of Rights...................................................................10 ARTICLE IV. PURCHASE PRICE, MANNER OF PAYMENT AND CLOSING.........................................11 4.1 Purchase Price and Service Fee........................................................11 4.2 Manner of Payment of the Purchase Price and Service Fee...............................11 4.3 Time and Place of Closing.............................................................11 4.4 Conditions to Closing.................................................................11 4.5 Closing Deliveries....................................................................11 4.6 Seller's Obligations Pending Closing..................................................12 ARTICLE V. REPRESENTATIONS AND WARRANTIES........................................................12 5.1 Purchaser's Representations and Warranties............................................12 5.2 Seller's and APPI's Representations and Warranties....................................13 5.3 Knowledge.............................................................................18 5.4 Disclosure Schedule...................................................................18
i 3 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. TABLE OF CONTENTS
PAGE ---- ARTICLE VI. POST-CLOSING AGREEMENTS...............................................................18 6.1 Transition Manager....................................................................18 6.2 Certain Assignments...................................................................18 6.3 Sales and Transfer Taxes and Fees.....................................................19 6.4 Overstickering........................................................................19 6.5 Additional Covenants Regarding Purchased Assets.......................................19 6.6 Further Assurances....................................................................20 6.7 Survival of Provisions................................................................20 6.8 Ongoing Obligations...................................................................20 ARTICLE VII. REGULATORY APPROVAL ISSUES............................................................20 7.1 Transfer of Regulatory Approvals......................................................20 7.2 Right of Reference and Access to Data.................................................21 7.3 Adverse Event Reports and Provision of Safety Information.............................21 ARTICLE VIII. TRADEMARKS............................................................................22 8.1 Trademarks Rights.....................................................................22 8.2 Use of the Trademarks by the Seller and APPI outside the Territory....................22 8.3 Registration of Trademarks............................................................23 ARTICLE IX. INTELLECTUAL PROPERTY CLAIMS..........................................................23 9.1 Infringement or Other Actions Regarding the CombiPatch Know-How.......................23 9.2 Infringement or Other Action Regarding the Trademarks.................................24 9.3 Third Party Claims Regarding the Trademarks...........................................24 9.4 Other Third Party Infringement Claims.................................................24 ARTICLE X. CONFIDENTIALITY AND NONCOMPETITION....................................................24 10.1 Confidentiality; Press Releases.......................................................24 10.2 Noncompetition........................................................................26 10.3 Injunctive Relief.....................................................................27 ARTICLE XI. INDEMNIFICATION.......................................................................27 11.1 General...............................................................................27 11.2 Indemnification Obligations of the Purchaser..........................................27 11.3 Indemnification Obligations of the Seller.............................................28 11.4 Procedure.............................................................................29
ii 4 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. TABLE OF CONTENTS
PAGE ---- 11.5 Certain Limitations...................................................................29 ARTICLE XII. MISCELLANEOUS.........................................................................30 12.1 Disputes..............................................................................30 12.2 Independent Contractors...............................................................30 12.3 Assignment............................................................................30 12.4 Binding Effect; Benefit...............................................................31 12.5 Amendments............................................................................31 12.6 No Waiver.............................................................................31 12.7 Notices...............................................................................31 12.8 Counterparts..........................................................................32 12.9 Interpretation........................................................................32 12.10 Governing Law.........................................................................33 12.11 Unenforceability......................................................................33 12.12 Entire Agreement......................................................................33 12.13 Expenses..............................................................................33
iii 5 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. PURCHASE AGREEMENT THIS PURCHASE AGREEMENT (the "PURCHASE AGREEMENT"), dated as of March 29, 2001, is by and among RORER PHARMACEUTICAL PRODUCTS, INC., a Delaware corporation with its principal office at 3711 Kennett Pike, Suite 200, Greenville, Delaware, 19807 (the "SELLER") and AVENTIS PHARMACEUTICALS PRODUCTS INC., a Delaware corporation with its principal office at Route 202-206, Bridgewater, New Jersey , 08807 ("APPI"), and VIVELLE VENTURES LLC, a Delaware limited liability company with an office c/o Noven Pharmaceuticals, Inc., 11960 S.W. 144th Street, Miami, Florida, 33186 (the "PURCHASER"). RECITALS WHEREAS, the Seller, as assignee, and Noven Pharmaceuticals, Inc. ("NOVEN") are parties to an Amended and Restated License Agreement dated as of September 30, 1999, as amended by Amendment No. 2 thereto effective as of the date hereof (collectively, the "NOVEN LICENSE AGREEMENT") pursuant to which Noven granted the Seller certain continuing rights in the Territory (as defined below) to use, sell or otherwise dispose of the CombiPatch Product (as defined below), and the Seller and its Affiliates are engaged in the process of distributing and selling the CombiPatch Product; and WHEREAS, the Seller, APPI and the Purchaser desire to enter into a transaction pursuant to which, among other things: (a) all of the Seller's rights in the Territory to use, sell or otherwise dispose of the CombiPatch Product will revert to Noven and Noven will assign those rights to the Purchaser in the Territory; (b) the Seller and APPI will sell to the Purchaser, and the Purchaser will purchase from the Seller and APPI, certain inventory of and other assets related to the CombiPatch Product, including, without limitation, the CombiPatch Know-How (as defined below) and the Trademarks (as defined below); and (c) the Purchaser will grant to the Seller a license to use the CombiPatch Know-How; all on the terms and subject to the conditions contained in this Purchase Agreement and the Related Agreements (as defined below) (collectively, the "TRANSACTION"); and WHEREAS, as part of the Transaction, the Seller and APPI desire to sell to the Purchaser certain inventory of and other assets relating to the CombiPatch Product, including, without limitation, the CombiPatch Know-How and the Trademarks, and the Purchaser desires to purchase said inventory and assets, all on the terms and subject to the conditions contained in this Purchase Agreement; NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, agree as follows: 1 6 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. ARTICLE I. DEFINITIONS 1.1 DEFINITIONS. As used herein, the following capitalized terms shall have the following meanings: "ACTIVITY DATE" means, in the case of all Rebates paid for the benefit of a customer (other than a wholesaler) that takes possession of CombiPatch Product, the date of sale of such CombiPatch Product by a wholesaler to such customer, and in the case of all Rebates paid for the benefit of a customer that does not take possession of CombiPatch Product, the date of dispensing of CombiPatch Product to the patient. "AFFILIATE" means, when used with respect to a Person, any other Person directly or indirectly controlling, controlled by, or under common control with the subject Person. For purposes of this Purchase Agreement, "control" means the direct or indirect ownership of over 50% of the outstanding voting securities of a Person, or to control the management decisions of such Person. Notwithstanding the foregoing, for purposes of this Purchase Agreement, Noven shall be considered an Affiliate of the Purchaser, and, for the avoidance of doubt, Novartis Pharmaceuticals Corporation shall also be considered an Affiliate of the Purchaser. "AMENDMENT AGREEMENT" means Amendment No. 2 to the Noven License Agreement between the Seller and Noven executed prior to the Closing Date and effective as of the Closing Date. "ASSUMED LIABILITIES" has the meaning set forth in Section 3.1 hereof. "CLOSING" has the meaning set forth in Section 4.3 hereof. "CLOSING DATE" means March 30, 2001, or such other date as the parties may agree for the Closing to take place. "COMBIPATCH BUSINESS" means the business of developing, marketing, advertising, promoting, distributing, selling and otherwise disposing of the CombiPatch Product. "COMBIPATCH KNOW-HOW" means any and all data, information, technology, know-how, processes, techniques, methods, skills, proprietary information, trade secrets, developments, discoveries, and inventions, whether or not patentable or reduced to practice, owned by the Seller or its Affiliates, solely or jointly with Noven, or controlled by the Seller or its Affiliates and related to the CombiPatch Product and existing as of the Closing Date. "COMBIPATCH PRODUCT" means the transdermal estrogen/progestin product which has and is being developed by Noven solely or jointly with the Seller and/or its Affiliates, and is marketed and sold by the Seller and its Affiliates under the trademark CombiPatch(TM) in the Territory as of the Closing Date. 2 7 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. "CONFIDENTIAL INFORMATION" means all proprietary data, know-how and related information, including all INDs, NDAs, Regulatory Approvals, the content of any unpublished patent applications, operating methods and procedures, marketing, distribution and sales methods and systems, sales figures and other business information and shall include, without limitation, information disclosed or accessed pursuant to Sections 7.2 (Right of Reference) and 7.3 (Adverse Event Reports and Provision of Safety Information) hereof. "CONSIDERATION" means twenty-five million United States Dollars ($25,000,000), being the aggregate of the Purchase Price and the Service Fee. "DAMAGES" means all liabilities, demands, obligations, assessments, judgments, levies, losses, fines, penalties, damages (including but not limited to compensatory damages), costs and expenses, including, without limitation, reasonable attorneys', accountants', investigators', and experts' fees and expenses, reasonably sustained or incurred in connection with the defense or investigation of any claims, actions or causes of action (including, without limitation, any proceedings to establish insurance coverage), suits, deficiencies, regulatory, legal, administrative, arbitration, legislative or judicial proceedings or investigations. "DISCLOSING PARTY" has the meaning set forth in Section 10.1(a) hereof. "EXCLUDED ASSETS" has the meaning set forth in Section 2.3 hereof. "FDA" means the United States Food and Drug Administration and any successor agency thereto. "FDA ACT" means the United States Federal Food, Drug and Cosmetic Act, as amended, and the regulations promulgated thereunder, as amended from time to time. "IND" means an Investigational New Drug Application as defined in the FDA Act. "INDEMNITY CAP AMOUNT" has the meaning set forth in Section 11.2(b) hereof. "INDEMNITY DEDUCTIBLE AMOUNT" has the meaning set forth in Section 11.2(b) hereof. "INVENTORY" has the meaning set forth in Section 2.2(a) hereof. "NDA" means a New Drug Application as defined in the FDA Act. "NOVARTIS PHARMA 2001 SUBLICENSE AGREEMENT" means the Sublicense Agreement among the Seller, Rhone-Poulenc Rorer Inc., Aventis Pharmaceuticals Products Inc., Rhone-Poulenc Rorer International Holdings Inc., Noven Pharmaceuticals, Inc. and Novartis Pharma AG and executed on the Closing Date. "NOVARTIS PHARMA SUBLICENSE AGREEMENT" means the Sublicense Agreement between the Seller and Novartis Pharma AG dated September 30, 1999. "ONGOING OBLIGATIONS" has the meaning set forth in Section 6.8 hereof. 3 8 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. "PERSON" means any corporation, partnership, joint venture, other entity or natural person. "PURCHASE PRICE" has the meaning set forth in Section 4.1(a) hereof. "PURCHASED ASSETS" has the meaning set forth in Section 2.2 hereof. "PURCHASER'S ANCILLARY DOCUMENTS" has the meaning set forth in Section 5.1(b) hereof. "PURCHASER INDEMNITEES" has the meaning set forth in Section 11.3 hereof. "PURCHASER SUBLICENSE LETTER AGREEMENT" means the Letter Agreement between, inter alia, the Purchaser and Novartis Pharma AG dated March 29, 2001 pursuant to which Novartis Pharma AG shall offer to sublicense to the Purchaser all of its rights under the Novartis Pharma 2001 Sublicense Agreement in the Territory on a product-by-product basis. "REBATES" has the meaning set forth in Section 3.1(d) hereof. "RECEIVING PARTY" has the meaning set forth in Section 10.1(a) hereof. "REGULATORY AND CLINICAL MATERIALS" means all documents, supporting materials and other materials relating to any Regulatory Approval or other matter required to be submitted to any regulatory authority in relation to the CombiPatch Product in the Territory, including, without limitation, the IND and NDA and documents, supporting materials and other materials relating to any drug master file, investigators' brochures, clinical study (including, without limitation, any Phase IV clinical study), safety data, adverse event reports, questionnaires, consultants reports, correspondence (including, without limitation, correspondence with any regulatory authority), batch reports, protocols, specifications, quality assurance, quality control, customer queries and any responses thereto, and any compilation or evaluations thereof, and question and answer scripts. "REGULATORY APPROVAL" means filing for and receipt of all governmental and regulatory registrations and approvals (including, but not limited to, approvals of all final labeling of the CombiPatch Product) required for the marketing and sale of the CombiPatch Product in the Territory. "REGULATORY AUTHORITY" means the U.S. Food and Drug Administration, and any equivalent regulatory agency in any other country. "RELATED AGREEMENTS" means the Novartis Pharma 2001 Sublicense Agreement, the Purchaser Sublicense Letter Agreement, the Amendment Agreement and the Vivelle License Agreement. "SAFETY AGREEMENT" has the meaning set forth in Section 7.3(b) hereof. "SALES AND PROMOTIONAL MATERIALS" means all sales and promotional materials, advertising literature, physical manifestations of all web site content and web site artwork associated with the domain name COMBIPATCH.COM, product support materials, reference materials, programs, trade exhibit materials, signage, training materials, promotional items and giveaways, 4 9 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. including, without limitation, all bluelines, artwork and other materials related to the development or production thereof, in each case relating exclusively to the CombiPatch Product or such parts thereof as relate exclusively to the CombiPatch Product. The parties agree to deal with Sales and Promotional Materials that bear the corporate name or corporate logo of the Seller or any of its Affiliates on a case-by-case basis. "SELLER INDEMNITEES" has the meaning set forth in Section 11.2 hereof. "SELLER'S ANCILLARY DOCUMENTS" has the meaning set forth in Section 5.2(b) hereof. "SERVICE FEE" has the meaning set forth in Section 4.1(a) hereof. "SUBLICENSED NOVEN INTELLECTUAL PROPERTY" means Noven's Patent Rights and Noven's Technology (as each such term is defined in the Noven License Agreement) which are licensed to the Seller pursuant to the Noven License Agreement. "TERRITORY" means the United States and its territories and possessions. "TRADE DRESS" means the total image of the CombiPatch Product and its packaging, including, without limitation, the color, color combinations, graphics and overall design of the CombiPatch Product packaging and the color and shape of the CombiPatch patch. Notwithstanding the foregoing, the Trade Dress shall not include the name "Aventis" or any corporate logo or corporate mark of the Seller. "TRADEMARKS" means the CombiPatch(TM), Estalis(R), and Estrelle(TM) trademarks, in each case including all pending applications and registrations therefor and all Trade Dress and goodwill associated with any of the foregoing. ***. "VIVELLE" means Vivelle Ventures LLC, a Delaware limited liability company and, for the purposes of this Agreement and the rights exercised by, actions taken by, deliveries made to and obligations performed by the Purchaser hereunder shall mean any Affiliate of Vivelle acting on behalf of or for the benefit of Vivelle. "VIVELLE LICENSE AGREEMENT" means the License and Assignment Agreement between Noven and the Purchaser dated on the Closing Date. 1.2 RIGHTS AND OBLIGATIONS OF THE PURCHASER. The rights granted to the Purchaser hereunder and the obligations assumed by the Purchaser hereunder may be exercised and performed by, and any actions to be taken by or deliveries to be made to the Purchaser may be taken by or delivered to, the Purchaser or any other Person acting on behalf of the Purchaser, including, without limitation, Noven and Novartis Pharmaceuticals Corporation. 5 10 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. 1.3 PRODUCT FORMULATED AS OF THE DATE HEREOF. Wherever, in this Purchase Agreement, reference is made to the CombiPatch Product "formulated as of the date hereof", such expression may include different dosage strengths of the CombiPatch Product. To be considered CombiPatch Product "formulated as of the date hereof", such formulation must ***. ARTICLE II. PURCHASE AND SALE OF ASSETS 2.1 PURCHASE AND SALE OF ASSETS. On the terms and conditions of this Purchase Agreement, at the Closing the Seller, and APPI, as the case may be, shall sell, transfer, convey, assign and deliver to the Purchaser, and the Purchaser shall purchase and accept, all right, title and interest in and to the Purchased Assets. The Purchased Assets shall be sold to the Purchaser free and clear of any liens, title claims, encumbrances or security interests. 2.2 THE PURCHASED ASSETS. The "PURCHASED ASSETS" consist of the following items and no others: (a) INVENTORY. All complete lots of the Seller's or its Affiliates' finished, packaged trade lot inventory and samples of the CombiPatch Product existing as of the date hereof which are labeled for sale, distribution or use in the Territory, and are in any of the Seller's or any of its Affiliate's distribution centers, any third party distribution centers or are in transit from the site of manufacturing to such distribution centers, excluding any of such CombiPatch Product held in quarantine and also excluding samples in the possession or control of the Seller's or its Affiliates' sales representatives (collectively, the "Inventory"), and all warranties regarding the Inventory provided by Noven pursuant to the Noven License Agreement and the related Supply Agreement, dated as of June 26, 1992, between an Affiliate of the Seller and Noven, and all placebos currently held for use by the Seller or its Affiliates in the Territory. The Inventory as at the Closing Date is listed in SCHEDULE 2.2(A); (b) CUSTOMER AND OTHER INFORMATION. Originals or duplicate copies of all customer lists, customer records and information, and books and records held by the Seller and its Affiliates on the Closing Date which relate to the marketing, advertising, promotion, sale and distribution of the CombiPatch Product in the Territory, in each case relating exclusively to the CombiPatch Product or such parts thereof as relate exclusively to the CombiPatch Product, and in each case, whether created before or after launch of the CombiPatch Product in the Territory; (c) CONTRACTS. To the extent assignable, all of the contracts listed in SCHEDULE 2.2(c) (d) SALES AND PROMOTIONAL MATERIALS. All Sales and Promotional Materials approved for use in the Territory, whether approved before or after launch of the CombiPatch Product in the Territory, and, if any, in draft form or currently subject to approval for use in the Territory, and held by the Seller or its Affiliates on the Closing Date, excluding Sales and Promotional Materials in the possession or control of the Seller's or its Affiliates' sales 6 11 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. representatives on the Closing Date, and all rights to such Sales and Promotional Materials, including, without limitation, all copyrights therein; PROVIDED, HOWEVER, that any original materials which are associated with both COMBIPATCH.COM and MENOPAUSEMATTERS.COM shall be transferred, assigned and delivered to Novartis Pharma AG pursuant to the Novartis Pharma 2001 Sublicense Agreement; (e) REGULATORY APPROVAL MATERIALS. The INDs, NDAs and other Regulatory Approvals listed in SCHEDULE 2.2(E) and all ongoing communications with regulatory agencies related thereto and the Regulatory and Clinical Materials; (f) COMBIPATCH KNOW-HOW. All of the Seller's and its Affiliates' right, title and interest in any CombiPatch Know-How existing as of the Closing Date, which CombiPatch Know-How is listed in SCHEDULE 2.2(F); and (g) TRADEMARKS. The Trademarks in the Territory, together with all goodwill associated with the CombiPatch Business in the Territory, including, but not limited to: (a) all registrations and pending applications for the Trademarks in the Territory, as set forth in SCHEDULE 2.2(G); (b) renewals thereof; (c) all income, royalties, damages and payments hereafter due and/or payable with respect thereto, including, without limitation, damages and payment for future infringements thereof; and (d) the right to sue for past, present or future infringement thereof. For the avoidance of doubt, the Purchased Assets do not include any rights to the Trademarks outside the Territory, including, without limitation: (y) all income, royalties, damages and payments hereafter due and/or payable with respect thereto outside the Territory, including, without limitation, damages and payment for future infringements thereof; and (z) the right to sue for past, present or future infringement thereof outside the Territory. 2.3 EXCLUDED ASSETS. Notwithstanding anything to the contrary contained herein, and subject to the transfer of any of the rights, title and interest in assets transferred or to be transferred by the Seller and its Affiliates under any of the Related Agreements, the Purchased Assets shall not include, and the Seller and its Affiliates shall retain all of its rights, title and interest in and to, all assets, properties or rights of the Seller and its Affiliates other than those specifically enumerated as Purchased Assets in Section 2.2 (the "EXCLUDED ASSETS"). Without limiting the generality of the foregoing, the Purchased Assets shall not include (a) any accounts receivable or other right to receive payment arising out of or relating to the CombiPatch Product sold by the Seller or its Affiliates on or before the Closing Date; or (b) any right, title or interest in the Seller's or any of its Affiliates' corporate name, corporate service mark or corporate logo or NDC numbers used with respect to the CombiPatch Product, other than as set forth in Section 6.4. 2.4 DISCLAIMER OF OTHER REPRESENTATIONS AND WARRANTIES. Except as expressly set forth in this Purchase Agreement, the Seller makes no representation or warranty, express or implied, at law or in equity, in respect of any of the Inventory or other Purchased Assets, and any such other representations or warranties are hereby expressly disclaimed. 7 12 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. 2.5 PHYSICAL TRANSFER OF INVENTORY AND CERTAIN OTHER PURCHASED ASSETS. On the Closing Date, the Seller and its Affiliates shall transfer to the Purchaser, or its designee, title to, and physical possession of: (a) the Inventory; PROVIDED, that the Seller shall provide physical possession to the Purchaser on the day after Closing of the amount of Inventory identified by the Purchaser as sufficient to meet its requirements for at least three (3) business days, with the remainder of the Inventory to be delivered within two (2) business days of the Closing and PROVIDED, FURTHER, that risk to the Inventory shall not pass to the Purchaser until delivery, on a lot by lot basis, to the Purchaser or its designee; (b) the customer lists, customer records and information identified in Section 2.2(b); (c) all INDs, NDAs, Regulatory Approvals and other material identified in Section 2.2(e); and (d) documents and other materials containing or evidencing the CombiPatch Know-How, and the Purchaser shall be responsible for all marketing, advertising, promotion, sale and distribution of the CombiPatch Product in the Territory after the Closing Date. From and after the Closing Date the Seller and its Affiliates shall refer to the Purchaser all orders, requests and inquiries regarding the CombiPatch Product. 2.6 PHYSICAL TRANSFER OF OTHER PURCHASED ASSETS. As soon as practicable after the Closing Date, but in no event later than one calendar month after the Closing Date, the Seller and its Affiliates shall transfer physical possession of: (a) the information, books and records described in Section 2.2(b), other than the information, books and records delivered on the Closing Date pursuant to Section 2.5 hereof; (b) the contracts listed in SCHEDULE 2.2(C); (c) the Sales and Promotional Materials; and (d) the Regulatory and Clinical Materials, other than as set forth in Section 2.5(c) hereof, to the Purchaser. Further, as soon practicable after the Closing Date, but in no event later than two (2) calendar months after the Closing Date, the Seller shall provide a written declaration to the Purchaser certifying that all Sales and Promotional Materials in the possession or control of the Seller's and its Affiliates' sales representatives on the Closing Date have been destroyed. 8 13 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. ARTICLE III. ASSUMPTION OF LIABILITIES 3.1 ASSUMPTION OF ASSUMED LIABILITIES. Subject to the terms and conditions of this Purchase Agreement, as of the Closing Date, the Purchaser shall assume, and shall be solely and exclusively liable with respect to, and shall pay, perform, discharge and satisfy when due, the following liabilities of the Seller (collectively, the "ASSUMED LIABILITIES"): (a) all liabilities of the Seller under any portion of any contract included in the Purchased Assets which according to such contract relate to periods after the Closing Date and are to be paid, performed, discharged or satisfied after the Closing Date; PROVIDED, HOWEVER the Seller shall retain the balance of the liabilities under such contracts including without limitation, all accounts payable as of the Closing Date; (b) all liabilities (i) arising out of the use, storage, handling, sale or other disposal of the CombiPatch Product sold or otherwise disposed of in the Territory following the Closing Date, including, without limitation, all liabilities for product liability, returned goods and Rebates; and (ii) arising from or relating to the storage, handling or use of any Inventory by or on behalf of the Purchaser or any of its Affiliates at any time after the delivery of the Inventory to the Purchaser pursuant to Section 2.5; PROVIDED, HOWEVER, that the Seller and its Affiliates shall retain all liabilities (A) arising out of the use, sale or other disposal of the CombiPatch Product sold or otherwise disposed of on or before the Closing Date, including, without limitation, all liabilities for product liability, returned goods and Rebates; and (B) arising from or relating to the storage, handling or use of any Inventory by or on behalf of the Seller or any of its Affiliates at any time prior to the delivery of the Inventory to the Purchaser pursuant to Section 2.5; (c) Subject to Section 3.1(b) above, all liabilities in respect of any CombiPatch Product warranties and any returned CombiPatch Product for any CombiPatch Product sold or otherwise disposed of after the Closing Date; PROVIDED, HOWEVER, that in respect of such liabilities attributable to any CombiPatch Product that is returned without solicitation or inducement by the Purchaser and in accordance with the Seller's returned goods policy and practices, and that was sold by the Seller or its Affiliates on or before the Closing Date, the Seller shall reimburse the Purchaser within thirty (30) days of being invoiced by the Purchaser for the costs of replacing such CombiPatch Product or the rebate or credit issued in lieu of such replacement; PROVIDED, FURTHER, that the cumulative total of such invoices shall not exceed ***, that the Seller shall not be liable for any CombiPatch Product returned more than *** after the Closing Date and that, on request by the Seller the Purchaser will provide the Seller with copies of such backup documentation as is reasonably necessary to the Seller to support Purchaser's reimbursement claims under this Section 3.1(c), including without limitation invoices showing the number of pieces returned and the lot number of each such piece. A copy of the Seller's returned goods policy is attached hereto as SCHEDULE 3.1(c); and 9 14 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. (d) all liabilities in respect of all governmental and non-governmental chargebacks, rebates or discounts with respect to the CombiPatch Product (collectively, "REBATES"); PROVIDED, HOWEVER, that the Purchaser shall not assume, and the Seller and its Affiliates shall retain: (i) in relation to any Rebate for which payment is referable to an event with an Activity Date, such liabilities with respect to Rebates with an Activity Date on or prior to the Closing Date; and (ii) in relation to all other Rebates, such liabilities with respect to Rebates which relate to any CombiPatch Product sold or otherwise disposed of by or on behalf of the Seller or its Affiliates; PROVIDED, HOWEVER, that, with respect to Rebates related to Contracts assigned by the Seller to the Purchaser that are billed on a quarterly basis the Seller shall only retain such liabilities, and will make all payments to the relevant parties for Rebates, for *** after the last day of the quarter in which the Closing Date falls. Notwithstanding the foregoing, the Purchaser shall reimburse the Seller, within forty-five (45) days of invoice or other written request for payment, for the amount of any such payments to the extent that they relate to Rebates which relate to any CombiPatch Product sold or otherwise disposed of by or on behalf of the Purchaser after the Closing Date; PROVIDED, HOWEVER, that on request by the Purchaser, the Seller will provide the Purchaser with copies of such backup documentation as is reasonably necessary to the Purchaser to support the Seller's reimbursement claims under this Section 3.1(d). 3.2 EXCLUDED LIABILITIES. Except for the Assumed Liabilities and the Purchaser's other obligations under this Purchase Agreement and the Related Agreements, the Seller and its Affiliates shall retain and the Purchaser is not assuming and will not in any way be liable or responsible for any liabilities, obligations or indebtedness of the Seller or its Affiliates, whether relating to the Purchased Assets or otherwise, of any kind or nature whatsoever, whether due or to become due, absolute or contingent, direct or indirect, asserted or unasserted, including, without limitation, claims relating to product defects, warranties and/or destruction of any CombiPatch Product. 3.3 RETENTION OF RIGHTS. Nothing in this Purchase Agreement shall impair or limit the right and ability of the Seller or any Affiliate or sublicensee of the Seller to make or have made CombiPatch Product in the Territory solely for the purpose of selling or transferring such CombiPatch Product to Affiliate(s), permitted sublicensees and/or unaffiliated third parties for development, marketing, distribution, sale or use in Japan, or pursuant to the Novartis Pharma Sublicense Agreement. 10 15 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. ARTICLE IV. PURCHASE PRICE, MANNER OF PAYMENT AND CLOSING 4.1 PURCHASE PRICE AND SERVICE FEE. (a) The purchase price (the "PURCHASE PRICE") of the Purchased Assets shall equal: (i) *** for the Purchased Assets (other than the Inventory); plus (ii) the Seller's standard costs for the Inventory which allocated value is *** as of the Closing Date. Further, in consideration of the transition services to be provided pursuant to Sections 6.1 (Transition Manager) and 7.1 (Transfer of Regulatory Approvals) hereof, the Purchaser shall pay to the Seller a service fee ("SERVICE FEE") of ***. (b) ***. 4.2 MANNER OF PAYMENT OF THE PURCHASE PRICE AND SERVICE FEE. On the Closing Date, the Purchaser shall pay to the Seller the Purchase Price and the Service Fee by payment of an amount equal to twenty-five million United States Dollars ($25,000,000) by wire transfer to an account or accounts designated in writing by the Seller. 4.3 TIME AND PLACE OF CLOSING. The closing of the Transaction contemplated by this Purchase Agreement shall be consummated (the "CLOSING") at 10:00 a.m. at the offices of White & Case LLP, 1155 Avenue of the Americas, New York, New York on the Closing Date or at such other place as the parties determine. The Closing shall be deemed to be effective as of 11:59 p.m. on the Closing Date. 4.4 CONDITIONS TO CLOSING. Each party's obligation to carry out the transactions contemplated by this Purchase Agreement shall be subject to: (a) receipt of all necessary consents from third parties, including governmental authorities other than the FDA for the transfer of the Regulatory Approvals; (b) the execution by the relevant parties thereto of each of the Related Agreements; and (c) the Seller's, APPI's and their respective Affiliates' compliance with their obligations pursuant to Section 4.6. 4.5 CLOSING DELIVERIES. In addition to the deliveries contemplated under Section 2.5, at the Closing, the parties shall execute and deliver such bills of sale, assignments, documents of title, instruments of assumption, closing certificates and other documents as are reasonably required in order to effectuate the consummation of the transaction contemplated hereby. All documents to be delivered by a party shall be in form and substance reasonably satisfactory to the other party. Without limiting the foregoing, at the Closing the Seller and/or APPI, as the case may be, shall deliver to the Purchaser: 11 16 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. (a) a bill of sale for the Inventory, in the form attached as EXHIBIT A hereto, which includes a schedule listing the Inventory as at the Closing Date; (b) a letter from the Seller to the FDA, in the form attached as EXHIBIT B hereto, notifying the FDA of the transfer of the Regulatory Approvals to the Purchaser; and (c) such duly executed forms and documentation as may be required by the Purchaser to effect the transfer of the Trademarks to the Purchaser in the Territory. 4.6 SELLER'S OBLIGATIONS PENDING CLOSING. Except as otherwise agreed in writing, from the date hereof until the Closing, the Seller, APPI, and their respective Affiliates shall: (a) conduct the CombiPatch Business only in accordance with its usual, regular and ordinary course of business in substantially the same manner as conducted prior to the date hereof, service all reasonable demand for the CombiPatch Product in the Territory, and take no actions to affect the price of the CombiPatch Product in the Territory; (b) maintain the Purchased Assets in good and workmanlike manner; (c) do nothing to damage the goodwill associated with the CombiPatch Business in the Territory or the Trademarks in the Territory; (d) maintain the Contracts in full force and effect, and comply with all material obligations under the Contracts; (e) not sell, transfer, lease, mortgage, encumber or otherwise dispose of any interest in any of the Purchased Assets other than in the ordinary course of business; and (f) allow the Purchaser and its representatives access to the books, records, and employees of the Seller at all times reasonably requested by the Purchaser to verify the Seller's and its Affiliates' compliance with the foregoing obligations. ARTICLE V. REPRESENTATIONS AND WARRANTIES 5.1 PURCHASER'S REPRESENTATIONS AND WARRANTIES. The Purchaser represents and warrants to the Seller as of the date hereof and the Closing Date that: (a) ORGANIZATION. The Purchaser is a limited liability company duly organized, existing and in good standing, under the laws of the State of Delaware. 12 17 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. (b) POWER, AUTHORITY AND ENFORCEABILITY. The Purchaser has full power and authority to enter into and perform this Purchase Agreement, the Related Agreements to which it is a party and all documents and instruments to be executed by the Purchaser pursuant to this Purchase Agreement (collectively, the "PURCHASER'S ANCILLARY DOCUMENTS"). This Purchase Agreement, the Related Agreements and the Purchaser's Ancillary Documents have been duly executed and delivered by duly authorized signatories of the Purchaser. This Purchase Agreement, the Related Agreements and the Purchaser's Ancillary Documents are valid and binding obligations of the Purchaser, enforceable against the Purchaser in accordance with their respective terms. (c) CONSENTS. Except for the consents obtained on or prior to the Closing Date pursuant to Section 4.4 hereof and the notice to the FDA described in Section 4.5 hereof, no consent, authorization, order or approval of, or filing or registration with, any governmental authority or other Person is required for the execution and delivery by the Purchaser of this Purchase Agreement, the Related Agreements to which it is a party and the Purchaser's Ancillary Agreements, and the consummation by the Purchaser of the Transaction contemplated by this Purchase Agreement, the Related Agreements and the Purchaser's Ancillary Documents. (d) NO VIOLATION. Neither the execution and delivery of this Purchase Agreement, the Related Agreements to which it is a party and the Purchaser's Ancillary Documents by the Purchaser, as the case may be, nor the consummation by the Purchaser of the Transaction contemplated hereby and thereby, will conflict with or result in a breach of any of the terms, conditions or provisions of the Purchaser's Operating Agreement or other governing or charter document, or of any statute or administrative regulation, or of any order, writ, injunction, judgment or decree of any court or governmental authority or of any arbitration award or any agreement binding upon the Purchaser or its assets. (e) NO DEFAULT. The Purchaser is not a party to any unexpired, undischarged or unsatisfied written or oral contract, agreement, indenture, mortgage, debenture, note or other instrument under the terms of which performance by the Purchaser according to the terms of this Purchase Agreement and the Related Agreements will be a default, or whereby timely performance by the Purchaser according to the terms of this Purchase Agreement and the Related Agreements may be prohibited, prevented or delayed. (f) LITIGATION. There is no action or proceeding pending or, to knowledge of the Purchaser, threatened against the Purchaser or any of its Affiliates before any court, arbitrator, administrative agency or other tribunal which could have a material adverse impact upon the Purchaser's right, power and authority to enter into this Purchase Agreement and the Related Agreements, to receive the rights granted to the Purchaser hereunder and thereunder, to grant the rights granted to the Seller hereunder or thereunder or to otherwise carry out its obligations hereunder or thereunder. 5.2 SELLER'S AND APPI'S REPRESENTATIONS AND WARRANTIES. The Seller and APPI, as the case may be, each represents and warrants to the Purchaser as of the date hereof and the Closing Date that: 13 18 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. (a) ORGANIZATION. Each of the Seller and APPI is a corporation duly organized, existing and in good standing, under the laws of the State of Delaware. The Seller and its Affiliates have all necessary corporate power and authority to market and sell the CombiPatch Product in the Territory as such activities are now being conducted. (b) POWER, AUTHORITY AND ENFORCEABILITY. Each of the Seller and APPI has full corporate power and authority to enter into and perform this Purchase Agreement, the Related Agreements to which it is a party and all documents and instruments to be executed by the Seller or APPI, as the case may be, pursuant to this Purchase Agreement (collectively, the "SELLER'S ANCILLARY DOCUMENTS"). This Purchase Agreement, the Related Agreements to which it is a party and the Seller's Ancillary Documents have been duly executed and delivered by duly authorized signatories of the Seller or APPI, as the case may be. This Purchase Agreement, the Related Agreements to which it is a party and the Seller's Ancillary Documents are valid and binding obligations of the Seller or APPI, as the case may be, enforceable against the Seller or APPI, as the case may be, in accordance with their respective terms. (c) COMPLIANCE WITH LAW. The Seller, and its operation of the CombiPatch Business, is and has been in compliance in all respects with any and all applicable law (statutory, judicial or otherwise), ordinances, regulations, judgments, orders, directives, injunctions, writs, decrees or awards of any governmental authority. (d) CONSENTS. Except for the consents obtained on or prior to the Closing Date pursuant to Section 4.4 hereof and the notice to the FDA described in Section 4.5 hereof, no consent, authorization, order or approval of, or filing or registration with, any governmental authority or other Person is required for the execution and delivery by the Seller or APPI, as the case may be, of this Purchase Agreement, the Related Agreements and the Seller's Ancillary Documents, and the consummation by the Seller and APPI of the Transaction contemplated by this Purchase Agreement, the Related Agreements and the Seller's Ancillary Documents. (e) NO VIOLATION. Neither the execution and delivery of this Purchase Agreement, the Related Agreements and the Seller's Ancillary Documents, as the case may be, nor the consummation by the Seller and APPI of the Transaction contemplated hereby and thereby, will conflict with or result in a breach of any of the terms, conditions or provisions of the Seller's or APPI's Certificate of Incorporation or By-laws, or of any statute or administrative regulation, or of any order, writ, injunction, judgment or decree of any court or governmental authority or of any arbitration award or any material agreement binding upon the Seller, APPI or their respective assets. (f) NO DEFAULT. Neither the Seller nor APPI is a party to any unexpired, undischarged or unsatisfied written or oral contract, agreement, indenture, mortgage, debenture, note or other instrument under the terms of which performance by the Seller or APPI according to the terms of this Purchase Agreement and the Related Agreements will be a default, or whereby timely performance by the Seller or APPI according to the terms of this Purchase Agreement and the Related Agreements may be prohibited, prevented or delayed. 14 19 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. (g) TITLE TO PURCHASED ASSETS. The Seller has good and marketable title to or, as the case may be, a valid contract right in, and the corporate power to sell, the Purchased Assets (except the Trademarks), free and clear of any liens, title claims, encumbrances and security interests. APPI has good and marketable title to or, and the corporate power to sell, the Trademarks, free and clear of any liens, title claims, encumbrances and security interests. No unreleased mortgage, trust deed, chattel mortgage, security agreement, financing statement or other instrument encumbering any of the Purchased Assets has been recorded, filed, executed or delivered. (h) NO INCONSISTENT RIGHTS. There are no outstanding assignments, grants, licenses, obligations or agreements, either written, oral or implied, materially inconsistent with this Purchase Agreement and the Seller and APPI have the right to assign the Purchased Assets. (i) CLAIMS. There is no claim, action or proceeding pending, or to the knowledge of the Seller or APPI, threatened against the Seller, APPI or any of their respective Affiliates, before any court, arbitrator, administrative agency or other tribunal which could have a material adverse impact upon the CombiPatch Business, any of the Purchased Assets, the Seller's and APPI's right, power and authority to enter into this Purchase Agreement and the Related Agreements, to receive the rights granted to the Seller hereunder or thereunder, to grant the rights granted to the Purchaser hereunder and thereunder or to otherwise carry out its obligations hereunder or thereunder, and to the knowledge of the Seller and APPI, there are no grounds for any such claim, action or proceeding. (j) CONTRACTS. The Seller has disclosed to the Purchaser all material contracts, agreements and arrangements related to the CombiPatch Product to which the Seller or any of its Affiliates is a party. Without limiting the foregoing, the Contracts include all contracts, agreements or arrangements of the Seller or any of its Affiliates with any city, state or federal agency, or any retail chain or managed care provider which relate to the CombiPatch Product. Except as specifically disclosed in SCHEDULE 2.2(C), no consent is required for the transfer or assignment of any of the Contracts from any third party, including, without limitation, any party to any of the Contracts. (k) BOOKS AND RECORDS. The books, records and other materials assigned under Sections 2.2(b), (d) and (e) contain a complete and accurate record of the Seller's and its Affiliates' operation of the CombiPatch Business, and do not contain any statement which is false or misleading in any material respect, or omit to state any material fact required to be stated in order to make the statements therein not misleading. (l) REGULATORY APPROVALS. The Regulatory Approvals listed in SCHEDULE 2.2(E) constitute all of the existing INDs and NDAs and other regulatory or governmental approvals regarding the CombiPatch Product in the Territory. (m) INVENTORY. The amount of Inventory at Closing (including any Inventory ordered and paid for by the Seller, which Inventory shall be delivered directly to the Purchaser) shall be as set forth in Schedule 5.2(m). The 15 20 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. Inventory as of the Closing Date consists of items of a quality, condition and quantity consistent with normal inventory levels of the Seller and its Affiliates and is usable and saleable in the ordinary and usual course of business for the purposes for which it is intended. ***. (n) WARRANTIES. Except as set forth in SCHEDULE 5.2(N), neither the Seller nor any of its Affiliates have made any oral or written warranties with respect to the quality or absence of defects in any CombiPatch Product sold in the Territory which warranties are in force as of the date hereof. (o) INTELLECTUAL PROPERTY. (i) To the extent indicated in SCHEDULE 2.2(G), each of the Trademarks has been duly registered in, filed in or issued by the United States Patent and Trademark Office, and each such registration, filing and issuance remains in full force and effect. No Trademark has been cancelled, abandoned or otherwise terminated and all renewal and maintenance fees in respect thereof have been duly paid. There are no oppositions or other contested proceedings, either pending or, to the best knowledge of the Seller or APPI, threatened, in the United States Patent and Trademark Office relating to any pending application with respect to any of the Trademarks. (ii) APPI has the exclusive right to file, prosecute and maintain all applications and registrations with respect to the Trademarks. (iii) Neither the Seller, APPI nor any of their respective Affiliates is a party to any license or agreement, whether as licensor, licensee, or otherwise, with respect to any Trademark or CombiPatch Know-How except for the Related Agreements and the Novartis Pharma Sublicense Agreement, and, as of the Closing Date, the Novartis Pharma 2001 Sublicense Agreement. (iv) All copies of all items of CombiPatch Know-How which have been reduced to writing or other tangible form will be or have been delivered by the Seller to the Purchaser at Closing. There are no issued patents, or any applications therefor, or licenses relating to any CombiPatch Know-How, except, to the extent applicable, the Noven License Agreement. (v) None of the Seller's or APPI's or any of their respective Affiliates' use of any of the Trademarks or CombiPatch Know-How (including, without limitation, the development, marketing, sale or distribution of the CombiPatch Product and the general conduct and operations of the CombiPatch Business) violates, infringes, misappropriates or misuses any intellectual property rights of any third party. (vi) Except as set forth in SCHEDULE 5.2(O), neither the Seller, APPI nor any of their respective Affiliates has received any written notice or claim from any third party challenging the right of the Seller, APPI or any of their respective Affiliates to use any of the Trademarks or CombiPatch Know-How. To the best knowledge of the 16 21 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. Seller and APPI, with respect to the CombiPatch Business there is no pending or threatened claims by any third party of a violation, infringement, misuse or misappropriation by the Seller or any of its Affiliates of any intellectual property owned by any third party, or for expungement of any of the Trademarks, and to the best knowledge of the Seller and APPI, there is no valid basis for any such claims. (vii) The Seller has secured valid written assignments, from all consultants and employees who contributed to the creation or development of any CombiPatch Know-How, of the rights to such contributions that the Seller does not already own by operation of law. (viii) The Seller and its Affiliates have disclosed the CombiPatch Know-How only in the ordinary course of business. The Seller, its Affiliates and, to the Seller's knowledge, its sublicensees, have taken all necessary and reasonable steps to protect and preserve the confidentiality of all CombiPatch Know-How and all customer lists related to the CombiPatch Business, and all use, disclosure or appropriation thereof by or to any third party has been pursuant to the terms of a written agreement between such third party and the Seller, its Affiliate or sublicensee or used by the Seller, its Affiliate or sublicensee in the Regulatory Approvals process. (ix) The Seller has no actual knowledge indicating that any use, sale or other disposal of the CombiPatch Product in the Territory by the Purchaser will infringe any issued third-party patent right or any patent right of the Seller or any Affiliate of the Seller. Should the CombiPatch Product fall within a valid claim of a patent right of the Seller or any Affiliate of the Seller, the Seller shall grant the Purchaser a royalty-free, fully paid-up, non-exclusive license sufficient to allow the Purchaser, its Affiliates and sublicensees, to use, sell or otherwise dispose of the CombiPatch Product in the Territory. (p) SUFFICIENCY. The Purchased Assets, together with the rights which revert to Noven pursuant to the Amendment Agreement, comprise all the intangible rights and tangible assets necessary for the conduct of the CombiPatch Business in the Territory and include all the intangible rights actually used in the conduct of the CombiPatch Business in the Territory in the twelve (12) month period ending on the Closing Date. (q) DUE DILIGENCE. All documents, materials, representations and other information provided or made by or on behalf of the Seller, APPI and their respective Affiliates to the Purchaser in the course of the Purchaser's due diligence on the CombiPatch Product, the Purchased Assets and the CombiPatch Business are complete and accurate, and, taken as a whole, do not contain any statement which is false or misleading in any material respect or omit to state any material fact required to be stated in order to make the statements therein not misleading. The Seller, APPI and their respective Affiliates have produced to the Purchaser, in the course of the Purchaser's due diligence, all documents in existence which relate to any category of materials requested by the Purchaser in the course of the Purchaser's due diligence. 17 22 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. (r) OTHER AGREEMENTS. Neither the Seller nor any of its Affiliates is a party to any agreement, arrangement or understanding which relates to the subject matter of the Noven License Agreement, other than: (i) agreements, arrangements or understandings which relate only to both Japan and Persons which are not a party to this Agreement or any Related Agreement, and (ii) the Noven License Agreement, this Agreement and the Related Agreements. 5.3 KNOWLEDGE. Where a representation or warranty contained in this Article V is stated to be to a party's knowledge, this shall mean to the actual knowledge of the party's executive officers and executives or those of the party's employees working specifically on the Transaction. 5.4 DISCLOSURE SCHEDULE. All exceptions noted in the applicable schedules to this Purchase Agreement shall be numbered to correspond to the applicable sections of this Purchase Agreement to which such exception refers; PROVIDED, HOWEVER, that any disclosure set forth on any particular schedule shall be deemed disclosed in reference to all applicable schedules. ARTICLE VI. POST-CLOSING AGREEMENTS 6.1 TRANSITION MANAGER. For a period of six (6) months commencing on the Closing Date, the Seller shall make available to the Purchaser its Head of Regulatory Liaison, or that person's designee, each of whom is familiar with the CombiPatch Product and the CombiPatch Business, to receive questions from the Purchaser and to coordinate the timely response (which, in any event, shall be given within seven (7) days) to such inquiries with regard to the CombiPatch Product, the Purchased Assets or the Seller's operation of the CombiPatch Business in the Territory and to assist the Purchaser by providing to the Purchaser such information in the possession of the Seller as may be reasonably required by the Purchaser to ensure an orderly transition of the operation of the CombiPatch Business in the Territory to the Purchaser 6.2 CERTAIN ASSIGNMENTS. Any other provision of this Purchase Agreement to the contrary notwithstanding, this Purchase Agreement shall not constitute an agreement to transfer or assign, or a transfer or assignment of, any claim, contract, lease, commitment, sales order or purchase order, or any benefit arising thereunder or resulting therefrom, if an attempt at transfer or assignment thereof without the consent required or necessary for such assignment, would constitute a breach thereof or in any way adversely affect the rights of the Purchaser or the Seller thereunder. The Seller shall use its best efforts to obtain all consents required under such contracts leases, commitments or orders prior to the Closing and for a period of sixty (60) days thereafter, and shall keep the Purchaser informed in relation to progress with respect thereto. The Seller's initial request for each consent shall be by way of a letter to the other party(s) to each such claim, contract, lease, commitment or order in substantially the form set forth in EXHIBIT E. During such period, the parties will cooperate in any arrangement mutually agreed in writing to provide 18 23 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. the Purchaser the benefits under such claim, contract, lease, commitment or order. If such a consent or agreement to transfer or assign is not obtained for any reason after such 60-day period, the Seller shall not be required to transfer or assign such claim, contract, lease, commitment or order. 6.3 SALES AND TRANSFER TAXES AND FEES. The parties shall share equally all sales, transfer and/or use taxes, recording fees and personal property title application fees on transfer of the Purchased Assets and the Assumed Liabilities arising by virtue of the sale of the Purchased Assets to the Purchaser, regardless of whether the liability for said taxes or fees is imposed by law upon the Seller or upon the Purchaser. The parties will cooperate to minimize all such sales, transfer and/or use taxes, recording fees and personal property title application fees. 6.4 OVERSTICKERING. The Purchaser shall not distribute any Sales and Promotional Materials or distribute, sell or otherwise dispose of Inventory of the CombiPatch Product bearing any corporate name, corporate mark or NDC number of the Seller; PROVIDED, HOWEVER, that for a period of six (6) months following the Closing Date, the Purchaser may distribute Sales and Promotional Materials and distribute, sell or otherwise dispose of Inventory of the CombiPatch Product which have been overstickered such that any corporate name and corporate mark of the Seller are not visible, and PROVIDED, FURTHER, that the Purchaser may distribute, sell and otherwise dispose of CombiPatch Product bearing the NDC number of the Seller until the later of: (a) depletion of the Inventory and all packaging for the CombiPatch Product assigned and transferred to the Purchaser hereunder; and (b) receipt by the Purchaser of a NDC number for the CombiPatch Product. 6.5 ADDITIONAL COVENANTS REGARDING PURCHASED ASSETS. The parties agree to handle post-Closing issues related to certain of the Purchased Assets as follows: (a) The Purchaser shall obtain a new NDC number for the CombiPatch Product promptly after the Closing, but in no event later than five (5) days after the Closing and shall use commercially reasonable efforts to have its labeling for CombiPatch Product approved by the FDA and to use such new NDC number on all invoices, orders and other communications with customers and regulatory authorities and to communicate such new NDC numbers to its customers by no later than September 1, 2001. (b) The Seller shall dispose of all CombiPatch Product trade lots (including, without limitation, any partial lots), samples and sample coupons not acquired by the Purchaser hereunder as part of the Inventory, including, without limitation, the collection and disposal of all samples and sample coupons in the possession of the Seller's and its Affiliates' sales representatives as of the Closing Date, and shall certify the results of such collection and disposal to the Purchaser within sixty (60) days of the Closing. (c) At or within two (2) days of the Closing, the Seller shall provide the Purchaser with all purchase orders for CombiPatch Product received by the Seller or any of its Affiliates: (i) prior to or on the Closing Date but not fulfilled prior to or on the Closing Date; or (ii) after the Closing Date. The Purchaser shall be entitled, in its sole discretion, to fulfill such orders in its own name or to contact the customers to cancel and replace such orders. 19 24 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. (d) The applicable representatives of the parties shall cooperate to transition the use of the CombiPatch website materials to minimize the disruption of any access to the website materials by the public. Without limiting the foregoing, the Seller shall maintain all such websites pending their transition to the Purchaser. 6.6 FURTHER ASSURANCES. The parties shall execute such further documents, and perform such further acts, as may be reasonably necessary to transfer and convey the Purchased Assets to the Purchaser on the terms herein contained, and to otherwise comply with the terms of this Purchase Agreement and consummate the transaction contemplated hereby. 6.7 SURVIVAL OF PROVISIONS. The rights of the respective parties to make a claim for breach of the representations and warranties made in this Purchase Agreement shall survive the Closing and remain in full force and effect: (a) for a period of *** thereafter for all representations and warranties other than those identified below; (b) *** for the representations and warranties contained in Section 5.2(o) (Intellectual Property); and (c) *** for the representations and warranties contained in Sections 5.1(a) (Purchaser's Organization) and 5.2(a) (Seller's Organization). The obligations of the parties to perform the covenants, duties and obligations contained in this Purchase Agreement shall survive the Closing and continue until such covenants, duties and obligations have been fully performed in accordance with their respective terms. The provisions of Articles IX (Intellectual Property Claims) , XI (Indemnification) and XII (Miscellaneous) inclusive and Section 10.1 (Confidentiality; Press Releases) shall also survive termination or expiration of the Ongoing Obligations. 6.8 ONGOING OBLIGATIONS. The rights and obligations set forth in Sections 7.2 (Right of Reference), 7.3 (Adverse Event Reports and Provision of Safety Information), 8.2 (Use of the Trademarks by the Seller and APPI outside the Territory) and 10.2 (Non-Competition) (collectively, the "ONGOING OBLIGATIONS") shall commence as of the Closing Date and shall survive until termination pursuant to this Section 6.8. If either party commits a material breach of any Ongoing Obligation, or materially defaults in the performance or observance of any Ongoing Obligation, and (i) such party fails, within sixty (60) days after receipt of notice of the material breach from the other party, to remedy such breach or default or to have agreed to a plan for remedy of such breach or default and (ii) the parties shall have exhausted the dispute resolution procedures provided in Section 12.1 without resolving their dispute regarding the material breach; PROVIDED that the time periods contemplated by the foregoing clauses (i) and (ii) may run concurrently and need not be sequential, the other party may terminate the rights and obligations of the parties under the Ongoing Obligations. ARTICLE VII. REGULATORY APPROVAL ISSUES 7.1 TRANSFER OF REGULATORY APPROVALS. On the Closing Date, the Seller shall transfer to the Purchaser or its designee the Regulatory Approvals set forth in SCHEDULE 2.2(E) hereto. Following such transfer, the Purchaser shall be solely responsible for obtaining all Regulatory Approvals regarding the 20 25 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. CombiPatch Product in the Territory, as well as all ongoing regulatory compliance relating to the CombiPatch Product in the Territory. As of the Closing Date, the Purchaser and its Affiliates shall retain all ownership of such Regulatory Approvals. For a period of up to six (6) months after the Closing Date, the Seller agrees that the Seller and/or its Affiliates shall reasonably assist the Purchaser by providing information regarding the regulatory compliance activities performed by the Seller and its Affiliates prior to the Closing Date in order to ensure an orderly transition of regulatory responsibilities regarding the CombiPatch Product in the Territory; PROVIDED, HOWEVER, that nothing in this Section 7.1 shall obligate the Seller to perform any regulatory-related activities with respect to the CombiPatch Product and/or the Regulatory Approvals following the Closing Date other than to provide the requested information. 7.2 RIGHT OF REFERENCE AND ACCESS TO DATA. (a) ***. (b) ***. 7.3 ADVERSE EVENT REPORTS AND PROVISION OF SAFETY INFORMATION. (a) Following the Closing Date, the Purchaser shall be solely responsible for complying with all legal and/or regulatory obligations in the Territory regarding the reporting of adverse events related to the CombiPatch Product after the Closing Date. (b) Each of the Purchaser and the Seller shall report to the other any potentially serious alleged adverse drug experiences with respect to the CombiPatch Product of which it becomes aware promptly, and in no event later than five (5) business days, after initial receipt of information regarding any such potentially serious alleged adverse drug experience by such party. Each such report shall identify lot numbers and customers affected, if known. Each of the Purchaser and the Seller will report to the other party summaries of any other adverse drug experiences with respect to the CombiPatch Product of which it becomes aware every twelve (12) months. The foregoing shall apply only until the parties establish and implement a procedure for the mutual exchange of adverse event reports and safety information associated with the CombiPatch Product. The parties agree that they shall promptly after the Closing Date (if not completed prior thereto) establish and implement a procedure for the mutual exchange of adverse event reports and safety information associated with the CombiPatch Product. Details of such procedure shall be the subject of a Safety Agreement to be attached to this Purchase Agreement as EXHIBIT C, agreed between the designated pharmacovigilance primary liaisons of the respective parties. The Safety Agreement shall be implemented at a time sufficient to permit compliance with applicable regulatory guidelines and regulations. The Safety Agreement may be updated by the parties from time to time and expanded in a manner sufficient to permit compliance with applicable regulatory authority guidelines and regulations. (c) Each of the Purchaser and the Seller agrees to supply the other party on an on-going basis with all necessary safety and stability data relating to the CombiPatch Product and not otherwise provided hereunder, and necessary to 21 26 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. such party or its Affiliates and sublicensees with respect to obtaining or maintaining regulatory approval for the marketing, use or sale of CombiPatch Product, in the Territory for the Purchaser and outside the Territory for the Seller. For the avoidance of doubt, nothing in this Section 7.3(c) shall obligate either party or, its respective Affiliates or sublicensees to provide the other party with data relating to any specific marketing or sales results. ARTICLE VIII. TRADEMARKS 8.1 TRADEMARKS RIGHTS. (a) OWNERSHIP. The Seller and APPI each acknowledge that after the Closing Date, the Trademarks in the Territory will belong solely to, and all goodwill shall inure to the benefit of, the Purchaser. Neither the Seller nor APPI shall challenge the Purchaser's ownership in or rights to the Trademarks in the Territory. (b) MAINTENANCE. The Purchaser will be responsible, in its sole discretion, for maintaining the registrations for the Trademarks in the Territory after the Closing Date. (c) RECORDATION. The assignment papers to be delivered to the Purchaser in accordance with Section 4.5(c) shall be in recordable form sufficient to allow Purchaser to record and complete the transfer of ownership of the Trademarks to Purchaser with the appropriate authorities. The Seller and APPI each further agree to timely execute any additional papers and cooperate with the Purchaser to enable the Purchaser to record and complete such transfer without undue delay. 8.2 USE OF THE TRADEMARKS BY THE SELLER AND APPI OUTSIDE THE TERRITORY. (a) Except as set forth in the Novartis Pharma Sublicense Agreement, the Seller and APPI each hereby agree that if they use the Trademarks at all, they shall use the Trademarks only in Japan, only with respect to the CombiPatch Product as formulated as of the date hereof and solely in a manner that does not disparage the Trademarks or the goodwill associated with them. All uses of the Trademarks by the Seller or APPI shall comply with all applicable laws and regulations. (b) The Seller and APPI each covenants on behalf of itself and its Affiliates and permitted sublicensees, that neither it nor any of its Affiliates or permitted sublicensees shall, other than as set forth in the Novartis Pharma Sublicense Agreement: (i) use or register the Trademarks outside Japan, (ii) sell, outside of Japan, any product bearing any Trademark which is a combination estrogen/progestin in a polymer adapted for transdermal delivery, including, without limitation, the CombiPatch Product, or (iii) sell any product bearing any Trademark which is a combination estrogen/progestin in a polymer adapted for transdermal delivery, including, without limitation, the CombiPatch Product, to 22 27 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. any Person (other than the Purchaser or its Affiliates) that Seller (or its applicable Affiliate or sublicensee) knows or has reason to know, or believes, will sell such combination estrogen/progestin in a polymer adapted for transdermal delivery outside Japan; PROVIDED, HOWEVER, that such refusal to sell is not in violation of any applicable valid laws and regulations. 8.3 REGISTRATION OF TRADEMARKS. The Seller and APPI each covenants on behalf of itself and its Affiliates and permitted sublicensees that neither it nor any of its Affiliates or sublicensees shall seek to: (i) register the Estalis Trademark in any country except for Japan and those countries in the "territory" as defined in the Novartis Pharma Sublicense Agreement; or (ii) register the CombiPatch or Estrelle Trademarks in any country outside of Japan. The Purchaser agrees that in the event the Seller or APPI seeks to register any Trademark in compliance with the foregoing, it shall, if required by the Seller or APPI, consent to, and shall not oppose, the registration of such Trademark by the Seller or APPI in any such country, provided that the Seller and APPI are each otherwise in full compliance with this Purchase Agreement. The Purchaser covenants on behalf of itself and its Affiliates and permitted sublicensees that neither it nor any of its Affiliates or sublicensees shall seek to: (i) register the Estalis Trademark in any country in the "territory" as defined in the Novartis Pharma Sublicense Agreement or in Japan; or (ii) register the CombiPatch or Estrelle Trademarks in Japan. The Seller and APPI each agree that in the event the Purchaser seeks to register any Trademark in compliance with the foregoing, they shall, if required by the Purchaser, consent to, and shall not oppose, the registration of such Trademark by the Purchaser in any such country, provided that the Purchaser is otherwise in full compliance with this Purchase Agreement. ARTICLE IX. INTELLECTUAL PROPERTY CLAIMS 9.1 INFRINGEMENT OR OTHER ACTIONS REGARDING THE COMBIPATCH KNOW-HOW. (a) If either party shall become aware of any infringement or threatened infringement of the CombiPatch Know-How or any unfair competition, disparagement or other tortious act by any third party in relation to the CombiPatch Know-How, then the party having such knowledge shall give prompt notice thereof to the other party. (b) The Purchaser, its Affiliates and sublicensees, shall have the right to take such action as it deems appropriate to protect and enforce the CombiPatch Know-How in the Territory, including but not limited to, bringing an action, suit or other appropriate proceeding to prevent or eliminate the infringement of such CombiPatch Know-How, or the unfair competition, disparagement or other tortious act by any third party in relation to the CombiPatch Know-How in the Territory. The Seller agrees to cooperate with the Purchaser in any reasonable manner requested by the Purchaser in any such action, suit or proceeding, at the expense of the Purchaser, its Affiliates or sublicensees, as appropriate, including, without limitation, joining as a party to such action, suit or proceeding, if necessary to maintain standing. (c) The Purchaser, its Affiliates and sublicensees, shall consult with the Seller with respect to its decision whether to take any action of the nature specified in Section 9.1(b), giving due consideration to the Seller's views with 23 28 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. respect to the necessity or desirability of taking such action. All amounts awarded as damages, profits or otherwise in connection with any action taken by the Purchaser, its Affiliates and sublicensees, shall be ***. If the Purchaser, its Affiliates and sublicensees, elect not to take any action of the nature specified in Section 9.1(b), the Purchaser shall give the Seller notice of such decision, and the Seller thereafter shall have the right to take any action of the nature specified in Section 9.1(b) with respect to the use of the CombiPatch Know-How in the Territory. In such event, all amounts awarded as damages, profits or otherwise in connection with any action taken by the Seller shall be ***. 9.2 INFRINGEMENT OR OTHER ACTION REGARDING THE TRADEMARKS. (a) If the Seller or APPI becomes aware of any infringement or threatened infringement of any of the Trademarks in the Territory, or of any unfair competition, disparagement or other tortious act by any third party in relation thereto, then the Seller and APPI shall give prompt notice thereof to the Purchaser. (b) The Purchaser shall have the exclusive right to take such action as it deems appropriate to protect and enforce the Trademarks in the Territory, including but not limited to, bringing an action, suit or other appropriate proceeding to prevent or eliminate the infringement or threatened infringement or the unfair competition, disparagement or other tortious act by any third party in relation to the Trademarks in the Territory. The Seller and APPI each agree to cooperate with the Purchaser in any reasonable manner requested by the Purchaser in any such action, suit or proceeding, at the Purchaser's expense, including, without limitation, joining as a party to such action, suit or proceeding, if necessary to maintain standing. 9.3 THIRD PARTY CLAIMS REGARDING THE TRADEMARKS. If the Seller or APPI becomes aware of any action, suit or proceeding or threat of action, suit or proceeding, by a third party alleging that the use of the Trademarks infringes or violates any other intellectual property right of any third party, they shall promptly notify the Purchaser of the same and fully disclose the basis therefor. 9.4 OTHER THIRD PARTY INFRINGEMENT CLAIMS. If either the Seller or APPI becomes aware of any action, suit or proceeding or threat of action, suit or proceeding, by a third party alleging that the manufacture, use, import or sale of the CombiPatch Product in the Territory infringes or violates any other intellectual property right of any third party, they shall promptly notify the Purchaser of the same. ARTICLE X. CONFIDENTIALITY AND NONCOMPETITION 10.1 CONFIDENTIALITY; PRESS RELEASES. (a) Each of the Purchaser and the Seller and/or their respective Affiliates (in such capacity, the "DISCLOSING PARTY") have disclosed and will be disclosing to the other party and/or its Affiliates (in such capacity, the "RECEIVING PARTY") certain Confidential Information of the Disclosing Party. The 24 29 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. Receiving Party shall make no use of such Confidential Information except as expressly permitted in this Purchase Agreement, or, in the case of the Purchaser only, in the conduct of the CombiPatch Business in the Territory. The Receiving Party shall use the same efforts to keep secret, and prevent the disclosure to third parties of, Confidential Information of the Disclosing Party as it would use with respect to its own Confidential Information. Confidential Information disclosed by the Disclosing Party shall remain the sole and absolute property of the Disclosing Party, subject to the rights granted in this Purchase Agreement and the transactions contemplated herein. The above restrictions on the use and disclosure of Confidential Information shall not apply to any information which: (i) is already known to the Receiving Party at the time of disclosure by the Disclosing Party, as demonstrated by competent proof; (ii) is or becomes generally available to the public other than through any act or omission of the Receiving Party in breach of this Purchase Agreement; (iii) is acquired by the Receiving Party from a third party who is not, directly or indirectly, under an obligation of confidentiality to the Disclosing Party with respect to same; or (iv) is developed independently by the Receiving Party without use, direct or indirect, of information that is required to be held confidential hereunder. In the event the Receiving Party is required: (i) by law, rule or regulation to disclose Confidential Information of the Disclosing Party to regulatory authorities to obtain and maintain Regulatory Approval for the CombiPatch Product; (ii) to disclose Confidential Information of the Disclosing Party to respond to a regulatory or governmental inquiry concerning the CombiPatch Product; or (iii) to disclose Confidential Information of the Disclosing Party in a judicial, administrative or arbitration proceeding to enforce such party's rights under this Purchase Agreement, it may do so only if it: (A) provides the Disclosing Party with as much advance written notice as possible of the required disclosure; (B) cooperates with the Disclosing Party in any attempt to prevent or limit the disclosure; and (C) limits disclosure, if any, to the specific purpose at issue. (b) Notwithstanding the provisions of this Section 10.1, the Purchaser shall be permitted to disclose to its distributors, wholesalers and other direct customers such Confidential Information relating to the CombiPatch Product as the Purchaser shall reasonably determine to be necessary or useful in order to effectively market and distribute the CombiPatch Product; PROVIDED that such entities undertake substantially the same confidentiality obligation as the Purchaser has with respect to the Seller's Confidential Information. (c) Notwithstanding any other provision of this Purchase Agreement, for purposes of this Section 10.1, the CombiPatch Know-How shall be treated by the parties as Confidential Information of the Purchaser; PROVIDED, HOWEVER, that the Purchaser hereby consents to the use of the CombiPatch Know-How by the Seller and its distributors and sublicensees in accordance with the Seller's right to use the Assigned Licensed Product Know-How (as defined in the Novartis Pharma 2001 Sublicense Agreement) pursuant to the Novartis Pharma 2001 Sublicense Agreement and PROVIDED, FURTHER, that the CombiPatch Know-How is disclosed only to Persons bound by obligations of confidentiality no less stringent than those of the Seller under this Section 10.1 with respect to the CombiPatch Know-How. 25 30 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. (d) Except as may be required by applicable laws, rules or regulations, no party will originate any publicity, press or news release, or other public announcement, written or oral, whether to the public press or otherwise, relating to this Purchase Agreement or the Related Agreements, the transactions contemplated hereby or thereby, or to the existence of an arrangement between the parties, without the prior written approval of the other party; PROVIDED, HOWEVER, that (i) the Seller hereby approves, for release by the Purchaser and its Affiliates, on or after the date of this Purchase Agreement, the press release attached hereto as EXHIBIT D; and (ii) the Seller shall not originate any such publicity, press or news release, or other public announcement, until after the release by the Purchaser or any of its Affiliates of the press release attached hereto as EXHIBIT D. In the event disclosure of this Purchase Agreement or any of the Related Agreements, any of the terms and conditions of this Purchase Agreement or such Related Agreements, or any of the transactions contemplated by this Purchase Agreement or such Related Agreements, is required by applicable law, rules or regulations, then the party required to so disclose such information shall, to the extent possible, provide to the other party for its prior approval (such approval not to be unreasonably withheld or delayed) a written copy of such public announcement. When practicable, the party required to disclose such information will provide such copy to the other party at least five (5) business days prior to disclosure. (e) Except as otherwise provided herein, neither party (nor their respective Affiliates) shall use the name of the other, or any of its Affiliates, for marketing, advertising or promotional claims without the prior written consent of the other party. (f) The parties agree that, with effect from the date hereof, the terms of Sections 10.1 and 10.3 hereof shall supersede the obligations of the parties under the Confidentiality Agreement between the Seller and the Purchaser dated as of February 5, 2001. 10.2 NONCOMPETITION. (a) The Seller covenants on behalf of itself, and its Affiliates and sublicensees, that, for a period of *** following the Closing Date, it shall not develop, market, sell or distribute in the Territory (or agree with any third party to do any of the foregoing) any ***. (b) Nothing in Section 10.2(a) shall be interpreted to prevent the Seller or its Affiliates from pursuing its rights and obligations under the Noven License Agreement with respect to the CombiPatch Product and improvements thereto in Japan or pursuant to the Novartis Pharma Sublicense Agreement and the Novartis Pharma 2001 Sublicense Agreement. (c) The Seller shall not be considered in breach of Section 10.2(a) by reason of an acquisition of a Person if (i) the activity of such Person which would cause such breach in the absence of this provision is not the primary business of such Person; (ii) prior to the closing of such acquisition the Seller commits in writing to the Purchaser, on terms acceptable to the Purchaser (not to be unreasonably withheld or delayed), to promptly divest itself of the offending assets and/or activity and (iii) the Seller diligently and reasonably pursues such divestiture and, in the event such divestiture is not completed within six (6) months after the date of such acquisition, such Person thereupon ceases all such activity. 26 31 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. (d) The Seller recognizes that the territorial, time and scope limitations set forth in this Section 10.2 are reasonable and are required for the protection of the Purchaser and its Affiliates. 10.3 INJUNCTIVE RELIEF. Each party specifically recognizes that any breach by it of Section 10.1, and the Seller specifically recognizes that any breach by it of Section 10.2, may cause irreparable injury to the other party and that actual damages may be difficult to ascertain, and in any event, may be inadequate. Accordingly (and without limiting the availability of legal or equitable, including injunctive, remedies under any other provisions of this Purchase Agreement), each party agrees that in the event of any such breach, notwithstanding the provisions of Section 12.1, the other party shall be entitled to seek, by way of private litigation in the first instance, injunctive relief and such other legal and equitable remedies as may be available. ARTICLE XI. INDEMNIFICATION 11.1 GENERAL. In order to distribute among themselves the responsibility for claims arising out of this Purchase Agreement and the conduct of the CombiPatch Business in the Territory, and except as otherwise specifically provided for herein, from and after the Closing Date, the parties shall indemnify each other as provided in this Article XI. 11.2 INDEMNIFICATION OBLIGATIONS OF THE PURCHASER. The Purchaser shall defend, indemnify and hold the Seller, APPI, their respective Affiliates, and each of their respective officers, directors, agents, employees and shareholders (collectively, "SELLER INDEMNITEES") harmless, from and against, any and all Damages which the Seller Indemnitees may incur or suffer, or with which any of them may be faced arising out of: (a) the storage, handling, use, marketing, advertising, promotion, distribution or sale of the CombiPatch Product by the Purchaser and/or its Affiliates, sublicensees, distributors or agents in the Territory, the conduct of the CombiPatch Business by the Purchaser and/or its Affiliates, sublicensees, distributors or agents in the Territory, or the Purchaser's ownership or use of the Purchased Assets, in each case, from and after the Closing Date, except, in each case, in so far as any such Damages relate to the storage, handling or use of any Inventory by or on behalf of the Seller or any of its Affiliates at any time prior to the delivery of the Inventory to the Purchaser pursuant to Section 2.5; (b) the breach by the Purchaser or any of its Affiliates of this Purchase Agreement including, without limitation, (i) any material inaccuracy in or material breach of any representation and warranty made by the Purchaser in this Purchase Agreement or in any the Purchaser's Ancillary Documents; PROVIDED, 27 32 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. HOWEVER, that (A) the Purchaser shall not have any liability under Section 11.2(b)(i) unless and until, and then only to the extent, the aggregate, cumulative amount of such Damages exceeds *** of the aggregate of the Purchase Price and the Service Fee under this Purchase Agreement (the "INDEMNITY DEDUCTIBLE AMOUNT") and (B) in no event shall the aggregate, cumulative liability of the Purchaser for Damages under this Section 11.2(b)(i) exceed *** of the aggregate of the Purchase Price and the Service Fee under this Purchase Agreement (the "INDEMNITY CAP AMOUNT"); and (ii) any material breach by the Purchaser of, or material failure by the Purchaser to comply with, any of its covenants or obligations pursuant to this Purchase Agreement, including, without limitation, those covenants and obligations which are a part of its responsibility for the Assumed Liabilities. (c) the enforcement by the Seller Indemnitees of their rights under this Section 11.2; (d) any gross negligence or willful misconduct by the Purchaser or its Affiliates in the conduct by the Purchaser or its Affiliates of the CombiPatch Business; and (e) the Purchaser's material violation of any applicable law or regulation related to this Purchase Agreement; PROVIDED, HOWEVER, that, in each such case, the Purchaser shall not be liable hereunder to the extent such Damages arise from willful misconduct or gross negligence of the Seller Indemnitees. 11.3 INDEMNIFICATION OBLIGATIONS OF THE SELLER. The Seller shall defend, indemnify and hold the Purchaser, its Affiliates, and each of their respective officers, directors, agents, employees, shareholders or members (collectively, "PURCHASER INDEMNITEES") harmless, from and against, any and all Damages, which the Purchaser Indemnitees may incur or suffer, or with which any of them may be faced arising out of: (a) the storage, handling, use, marketing, advertising, promotion, distribution or sale of the CombiPatch Product by the Seller and/or its Affiliates, permitted sublicensees, distributors or agents in the Territory, the conduct of the CombiPatch Business by the Seller and/or its Affiliates, permitted sublicensees, distributors or agents in the Territory, or the Seller's or APPI's ownership or use of the Purchased Assets, in each case, on or prior to the Closing Date, excluding all Assumed Liabilities and except, in each case, in so far as any such Damages relate to the storage, handling or use of any Inventory by or on behalf of the Purchaser or any of its Affiliates at any time after the delivery of the Inventory to the Purchaser pursuant to Section 2.5; (b) the development, storage, handling, use, marketing, advertising, promotion, distribution, or sale of any combination estrogen/progestin in a polymer adapted for transdermal delivery by or on behalf of the Seller, its Affiliates or sublicensees in Japan; (c) the breach by the Seller, APPI or any of their respective Affiliates of this Purchase Agreement including, without limitation, (i) any material inaccuracy in or material breach of any representation and warranty made by the Seller or APPI in this Purchase Agreement or in any of the Seller's Ancillary Documents; PROVIDED, HOWEVER, that (A) the Seller shall not have any liability under this Section 11.3(c)(i) unless and until, and then only to the extent, the aggregate, cumulative amount of such Damages exceed the Indemnity Deductible Amount and (B) in no event shall the aggregate, cumulative liability 28 33 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. of the Seller for Damages under this Section 11.3(c)(i) exceed the Indemnity Cap Amount; and (ii) any material breach by the Seller or APPI of, or material failure by the Seller or APPI to comply with, any of its covenants or obligations pursuant to this Purchase Agreement, including, without limitation, those covenants and obligations which are a part of its responsibility under Section 3.2; (d) the enforcement by the Purchaser Indemnitees of their rights under this Section 11.3; (e) any gross negligence or willful misconduct by the Seller or its Affiliates in the conduct by the Seller and its Affiliates of the CombiPatch Business; and (f) the Seller's or APPI's material violation of any applicable law or regulation related to this Purchase Agreement; PROVIDED, HOWEVER, that, in each such case, the Seller shall not be liable hereunder to the extent such Damages arise from willful misconduct or gross negligence of the Purchaser Indemnitees. 11.4 PROCEDURE. If any action, claim, suit, proceeding or investigation arises as to which a right of indemnification provided in this Article XI applies, the Person seeking indemnification (the "INDEMNIFIED party"), shall promptly notify the party obligated under this Article XI to indemnify the indemnified party (the "INDEMNIFYING PARTY") thereof in writing, and allow the indemnifying party and its insurers the opportunity to assume direction and control of the defense against such action, claim, suit, proceeding or investigation, at its sole expense, including without limitation, the settlement thereof at the sole option of the indemnifying party or its insurers; PROVIDED, HOWEVER, that the indemnifying party may not enter into any compromise or settlement without the prior written consent of the indemnified party unless such compromise or settlement includes as an unconditional term thereof the giving by each plaintiff or claimant to the indemnified party of a release from all liability in respect of such claim and only if such compromise or settlement does not include any admission of legal wrongdoing on the part of the indemnified party. The indemnified party shall fully cooperate with the indemnifying party and its insurer in the disposition of any such matter and the indemnified party will have the right and option to participate in (but not control) the defense of any third-party action, claim, suit, proceeding or investigation as to which this Article XI applies, with separate counsel at its election and cost. If the indemnifying party fails or declines to assume the defense of any such third-party action, claim, suit, proceeding or investigation within thirty (30) days after notice thereof, the indemnified party may assume the defense thereof for the account and at the risk of the indemnifying party. The indemnifying party shall pay promptly to the indemnified party any Damages to which the indemnity under this Article XI applies, as incurred. 11.5 CERTAIN LIMITATIONS. (a) After Closing the exclusive remedy of the Seller, APPI and Purchaser under this Purchase Agreement or otherwise for breaches of representations and warranties contained herein and/or for any of the other matters described in Sections 11.2(a), 11.2(b)(ii), 11.3(a) and 11.3(c)(ii) shall be the indemnification provided for in this Article XI. No party shall be entitled to recover any incidental or consequential damages whatsoever under this Article XI. 29 34 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. (b) Notwithstanding anything to the contrary contained herein, although a party may be entitled to make a claim for indemnification pursuant to more than one section of this Article XI, a party shall not be entitled to recover indemnification for the same claim under more than one section of this Article XI. (c) If any event shall occur which would otherwise entitle a party to assert a claim for indemnification under this Article XI, no Damages shall be deemed to have been sustained by such indemnified party to the extent of (i) any tax savings realized by such party as a result thereof or (ii) any net proceeds received by such indemnified party or its Affiliates from any insurance policy with respect thereto; provided, however, that nothing in this Section 11.5(c) shall require an indemnified party to make any claim for tax savings or any claim against any insurance policy. ARTICLE XII. MISCELLANEOUS 12.1 DISPUTES. Except as set forth in Section 10.3, in the event of any controversy or claim arising out of, relating to or in connection with any provision of this Purchase Agreement, or the rights or obligations of the parties hereunder, the parties shall try to settle their differences amicably between themselves. Either party may initiate such informal dispute resolution by sending written notice of the dispute to the other party, and within ten (10) days after such notice appropriate representatives of the parties shall meet for attempted resolution by good faith negotiations. If such representatives are unable to resolve promptly such disputed matter, it shall be referred to the President of the Purchaser and the Chief Executive Officer of Aventis Pharma AG, or their respective designees, for discussion and resolution. If such personnel are unable to resolve such dispute within thirty (30) days of initiating such negotiations, the parties agree first to try in good faith to settle the dispute by mediation in New York under the Commercial Mediation Rules of the American Arbitration Association, before resorting to litigation. 12.2 INDEPENDENT CONTRACTORS. In making and performing this Purchase Agreement, the parties are acting and shall act as independent contractors. Nothing in this Purchase Agreement shall be deemed to create an agency, joint venture or partnership relationship between the parties hereto. Neither party shall have the authority to obligate the other party in any respect, and neither party shall hold itself out as having any such authority. All personnel of the Seller and APPI shall be solely employees of the Seller or APPI, as the case may be, and shall not represent themselves as employees of the Purchaser. All personnel of the Purchaser shall be solely employees of the Purchaser and shall not represent themselves as employees of the Seller or APPI. 12.3 ASSIGNMENT. Neither party shall have a right to assign this Agreement without the prior written consent of the other party (which consent shall not be unreasonably withheld or delayed); PROVIDED, HOWEVER, that either party may assign this Purchase Agreement to any of its Affiliates without the prior written consent of the other party; PROVIDED, FURTHER that no such assignment of this Purchase Agreement shall relieve the assignor of any of its obligations or liabilities under this Purchase Agreement. Notwithstanding the 30 35 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. foregoing, either party may assign this Purchase Agreement without the other party's prior written consent in connection with the transfer or sale of all or substantially all of its assets or business or its merger or consolidation with another Person. 12.4 BINDING EFFECT; BENEFIT. This Purchase Agreement shall inure to the benefit of and be binding upon the parties hereto, and their successors and permitted assigns. Nothing in this Purchase Agreement, express or implied, is intended to confer on any Person other than the parties hereto, and their respective successors and permitted assigns any rights, remedies, obligations or liabilities under or by reason of this Purchase Agreement. 12.5 AMENDMENTS. This Purchase Agreement shall not be modified, amended or supplemented except pursuant to an instrument in writing executed and delivered on behalf of each of the parties hereto. 12.6 NO WAIVER. The failure in any one or more instances of a party to insist upon performance of any of the terms, covenants or conditions of this Purchase Agreement, to exercise any right or privilege conferred in this Purchase Agreement, or the waiver by said party of any breach of any of the terms, covenants or conditions of this Purchase Agreement, shall not be construed as a subsequent waiver of any such terms, covenants, conditions, right or privileges, but the same shall continue and remain in full force and effect as if no such forbearance or waiver had occurred. No waiver shall be effective unless it is in writing and signed by an authorized representative of the waiving party. 12.7 NOTICES. All notices, claims, certificates, requests, demands and other communications hereunder shall be in writing and shall be delivered personally or sent by facsimile transmission, air courier, or registered or certified mail, return receipt requested, addressed as follows: If to the Purchaser: If to the Seller: Vivelle Ventures LLC Rorer Pharmaceutical Products, Inc. c/o Noven Pharmaceuticals, Inc. 3711 Kennett Pike, Suite 200 11960 S.W. 144th Street Greenville, Delaware 19807 Miami, Florida 33186 Fax: (302) 777-7665 Fax: (305) 232-1836 Attn: President Attn: Robert C. Strauss, President With copies to: With a copy to: Novartis Pharmaceuticals Corporation Ballard Spahr Andrews & Ingersoll, LLP 59 Route 10 1735 Market Street, 51st Floor East Hanover, New Jersey 07936 Philadelphia, PA 19103 Fax: (973) 781-7036 Fax: (215) 864-8999 Attn: Office of the CEO Attn: Morris Cheston, Jr., Esq. and 31 36 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. White & Case LLP 1155 Avenue of the Americas If to APPI: New York, NY 10036 Aventis Pharmaceuticals Products Inc. Fax: (212) 354-8113 Route 202-206, P.O. Box 6880 Attn: Steven M. Betensky, Esq. Bridgewater, NJ 08807-0800 Fax: (908) 231-2243 and Attn: Head, BD&L Noven Pharmaceuticals, Inc. With a copy to: 11960 S.W. 144th Street Ballard Spahr Andrews & Ingersoll, LLP Miami, Florida 33186 1735 Market Street, 51st Floor Fax: (305) 232-1836 Philadelphia, PA 19103 Attn: Robert C. Strauss, President, Fax: (215) 864-8999 and Jeffrey F. Eisenberg, Attn: Morris Cheston, Jr., Esq. Esq. General Counsel With a copy to: Foley & Lardner Washington Harbour 3000 K Street, N.W. Washington, D.C. 20007-5109 Fax: (202) 672-5399 Attn: Stephen B. Maebius, Esq. or to such other address as the party to whom notice is to be given may have furnished to the other party in writing in accordance herewith. Any such communication shall be deemed to have been delivered (a) when delivered, if delivered personally, (b) when sent (with written confirmation received), if sent by facsimile transmission on a business day, (c) on the first business day after dispatch (with written confirmation received), if sent by facsimile transmission on a day other than a business day, (d) on the second business day after dispatch, if sent by air courier, and (e) on the fifth business day after mailing, if sent by mail. 12.8 COUNTERPARTS. This Purchase Agreement shall become binding when any one or more counterparts hereof, individually or taken together, shall bear the signatures of each of the parties hereto. This Purchase Agreement may be executed in any number of counterparts, each of which shall be deemed an original as against the party whose signature appears thereon, but all of which taken together shall constitute but one and the same instrument. Each party may execute this Purchase Agreement on a facsimile of the Purchase Agreement. In addition, facsimile signatures of authorized signatories of either party shall be valid and binding and delivery of a facsimile signature by either party shall constitute due execution and delivery of this Purchase Agreement. 12.9 INTERPRETATION. The article and section headings contained in this Purchase Agreement are for convenience of reference only and shall not affect the meaning or interpretation of this Purchase Agreement. This Purchase 32 37 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. Agreement is the product of negotiations between the parties. In construing the terms hereof, no presumption shall operate in either party's favor as a result of its counsel's role in drafting the terms or provisions hereof. 12.10 GOVERNING LAW. This Purchase Agreement and any claims, disputes or causes of action relating to or arising out of this Purchase Agreement shall be construed in accordance with and governed by the substantive laws of the State of New York, without giving effect to the conflict of laws principles thereof. 12.11 UNENFORCEABILITY. If any provisions of this Purchase Agreement are determined to be invalid or unenforceable in any jurisdiction, such provisions shall be ineffective to the extent of such invalidity or unenforceability in such jurisdiction, without rendering invalid or unenforceable the remaining provisions hereof or affecting the validity or enforceability of any of such provisions of this Purchase Agreement in any other jurisdiction. The parties will use their best efforts to substitute the invalid or unenforceable provision with a valid and enforceable one which conforms, as nearly as possible, with the original intent of the parties. 12.12 ENTIRE AGREEMENT. This Purchase Agreement, including all exhibits and schedules, and Related Agreements embody the entire agreement and understanding between the parties hereto with respect to the subject matter hereof and supersede all prior agreements, commitments, arrangements, negotiations or understandings, whether oral or written, between, the parties hereto and their respective Affiliates with respect thereto. There are no agreements, covenants or undertakings with respect to the subject matter of this Purchase Agreement and the Related Agreements other than those expressly set forth or referred to herein or therein and no representations or warranties of any kind or nature whatsoever, express or implied, are made or shall be deemed to be made herein by the parties hereto, except those expressly made in this Purchase Agreement and the Related Agreements. 12.13 EXPENSES. Except as expressly set forth herein, each party hereto shall bear all fees and expenses incurred by such party in connection with, relating to or arising out of the execution, delivery and performance of this Purchase Agreement and the consummation of the transaction contemplated hereby, including, without limitation, attorneys', accountants' and other professional fees and expenses. [SIGNATURES ON THE FOLLOWING PAGE.] 33 38 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. IN WITNESS WHEREOF, the parties hereto have executed this Purchase Agreement as of date first above written. RORER PHARMACEUTICAL PRODUCTS, INC. By: /s/ Phillip R. Ridolfi ------------------------------------- President AVENTIS PHARMACEUTICALS PRODUCTS INC. By: /s/ Charles D. Dalton ------------------------------------- Vice President By: /s/ Robert C. Strauss ------------------------------------- Robert C. Strauss President 34 EX-10.5 6 g69008ex10-5.txt SUPPLY AGREEMENT 1 EXHIBIT 10.5 =============================================================================== SUPPLY AGREEMENT Between VIVELLE VENTURES LLC and NOVEN PHARMACEUTICALS, INC. Dated as of March 29, 2001 =============================================================================== 2 TABLE OF CONTENTS
PAGE ---- ARTICLE I - INTERPRETATION........................................................................................2 1.01 Definition.........................................................................................2 1.02 Rights and Obligations of Novogyne.................................................................5 ARTICLE II - SUPPLY...............................................................................................5 2.01 Agreement to Supply................................................................................5 2.02 Fees for the CombiPatch Product....................................................................5 2.03 Minimum and Maximum Fee............................................................................6 2.04 Payment of Fees for the CombiPatch Product.........................................................7 2.05 Records............................................................................................8 2.06 Forecasts and Orders...............................................................................8 2.07 Delivery...........................................................................................9 2.08 CombiPatch Product Supplied........................................................................9 2.09 Manufacture for Third Parties......................................................................9 ARTICLE III - MANUFACTURING STANDARDS AND QUALITY ASSURANCE......................................................10 3.01 Manufacturing Standards; Release of CombiPatch Product............................................10 3.02 Specifications....................................................................................10 3.03 Changes to Control Procedures and Analytical Test Methods.........................................10 3.04 Materials.........................................................................................11 3.05 Extraordinary Events..............................................................................11 3.06 In-Process Testing................................................................................11 3.07 Validation of Manufacturing and Control Procedures................................................12 3.08 Batch Manufacturing Records.......................................................................12 3.09 Retention of Samples of CombiPatch Product........................................................12 3.10 Follow-Up Stability Testing and Annual Product Review.............................................12 3.11 Plant.............................................................................................12 3.12 Waste.............................................................................................12 3.13 GMP...............................................................................................12 3.14 Books and Records.................................................................................12 3.15 Production Equipment..............................................................................12 3.16 Customer Service and Complaint Handling...........................................................13 3.17 Regulatory Inspections............................................................................13 3.18 Re-Use or Issue of CombiPatch Product.............................................................13 3.19 Inspection by Novogyne............................................................................13 3.20 Changes...........................................................................................13 3.21 Annual Reports....................................................................................13 3.22 Quality Assurance.................................................................................14
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PAGE ---- ARTICLE IV - ACCEPTANCE OF LICENSED PRODUCT......................................................................14 4.01 Acceptance........................................................................................14 4.02 Non-Compliance....................................................................................14 ARTICLE V - AUDIT AND INSPECTION RIGHTS..........................................................................14 5.01 Inspection and Audit..............................................................................14 5.02 Inspection and Audit of Books and Records.........................................................14 5.03 Annual Questionnaire..............................................................................15 5.04 Inspections by Governmental or Regulatory Agencies................................................15 ARTICLE VI - WASTE DISPOSAL......................................................................................15 ARTICLE VII - SAFETY.............................................................................................15 ARTICLE VIII - ENVIRONMENTAL, HEALTH AND SAFETY WARRANTY INDEMNIFICATION.........................................16 ARTICLE IX - REPRESENTATIONS, WARRANTIES AND INDEMNITIES.........................................................16 9.01 No Infringement...................................................................................16 9.02 Right to Enter Agreement..........................................................................16 9.03 Product Warranties................................................................................16 9.04 Breach of Lease Agreement.........................................................................17 9.05 Indemnity for Breach of Warranties................................................................17 9.06 General Indemnities...............................................................................17 ARTICLE X - CONFIDENTIALITY OBLIGATIONS..........................................................................18 10.01 Confidentiality..................................................................................18 ARTICLE XI-- PRODUCT RECALL......................................................................................19 ARTICLE XII - TERM AND TERMINATION...............................................................................19 12.01 Term.............................................................................................19 12.02 Termination by Noven.............................................................................20 12.03 Default..........................................................................................20 12.04 Obligations on Termination.......................................................................21 12.05 Force Majeure....................................................................................21 12.06 No Waiver........................................................................................22
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PAGE ---- ARTICLE XIII - INSURANCE.........................................................................................22 ARTICLE XIV - PUBLICITY..........................................................................................22 ARTICLE XV - NOTICE..............................................................................................22 15.01 Notices...........................................................................................22 ARTICLE XVI - MISCELLANEOUS......................................................................................24 16.01 Relationship of Parties..........................................................................24 16.02 Entire Agreement.................................................................................24 16.03 Severability.....................................................................................24 16.04 Assignment.......................................................................................24 16.05 Dispute Resolution...............................................................................24 16.06 Governing Law....................................................................................24 16.07 Interpretation...................................................................................25
iii 5 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. SUPPLY AGREEMENT This SUPPLY AGREEMENT (the "Supply Agreement") is entered into as of March 29, 2001 (the "Effective Date"), by and between Vivelle Ventures LLC, a Delaware limited liability company ("Novogyne") and Noven Pharmaceuticals, Inc. a Delaware corporation ("Noven") (with each of Noven and Novogyne referred to individually as a "Party" or collectively as the "Parties"). WHEREAS, Noven and Rhone-Poulenc Rorer Pharmaceuticals, Inc. have entered into an amended and restated license agreement dated as of September 30, 1999 (the "Noven License Agreement") pursuant to which Noven granted Rhone-Poulenc Rorer Pharmaceuticals, Inc. an exclusive license in defined territories to the CombiPatch Product (as defined herein) and the Licensed Products (as defined in the Noven License Agreement); and WHEREAS, Rhone-Poulenc Rorer Pharmaceuticals, Inc. assigned the Noven License Agreement as of September 30, 1999 to Rorer Pharmaceutical Products Inc. ("Aventis"); and WHEREAS, Noven and Aventis have entered into an Amendment Agreement ("Noven Amendment Agreement') with respect to the Noven License Agreement dated as of the day before the date hereof, pursuant to which rights to the CombiPatch Product in the Territory and certain other rights have reverted to Noven; and WHEREAS, Noven and Novogyne have entered into a License Agreement ("Vivelle License Agreement") dated as of March 29, 2001, pursuant to which Noven has licensed to Novogyne those rights to the CombiPatch Product in the Territory which reverted to Noven pursuant to the Noven Amendment Agreement; and WHEREAS, Aventis, has as of March 29, 2001, entered into a Sublicense Agreement (the "Novartis Pharma Improvements Sublicense Agreement") with Novartis Pharma AG, a Swiss corporation ("Novartis"), granting Novartis an exclusive license to all rights and benefits of Aventis under the Noven License Agreement in the Territory (as defined in the Novartis Pharma Improvements Sublicense Agreement); and WHEREAS, Novartis, has as of March 29, 2001, entered into a Letter Agreement (the "Novogyne Improvements Sublicense Agreement") with Noven, Novogyne, and Novartis Pharmaceuticals Corporation pursuant to which Novartis shall offer to sublicense to Novogyne all of its rights under the Novartis Pharma Improvements Sublicense Agreement in the Territory on a product-by-product basis; and 1 6 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. WHEREAS, Novogyne desires to purchase all of Novogyne's requirements of the CombiPatch Product and Licensed Products from Noven pursuant to the terms of this Supply Agreement; and WHEREAS, Noven desires to supply Novogyne with all of its requirements of the CombiPatch Product and Licensed Products pursuant to the terms of this Supply Agreement. NOW, THEREFORE, in consideration of the premises and the mutual covenants and conditions contained herein, the Parties agree as follows: ARTICLE I - INTERPRETATION 1.01 DEFINITION. As used herein, the following capitalized terms have the following meanings. AFFILIATE. The term "Affiliate" shall mean, when used with respect to a Person, any other Person directly or indirectly controlling, controlled by, or under common control with the subject Person. For purposes of this Supply Agreement, "control" means the direct or indirect ownership of over 50% of the outstanding voting securities of a Person, or to control the management decisions of such Person. For the avoidance of doubt, for purposes of this Supply Agreement, the Parties hereto shall not be considered Affiliates. AVENTIS KNOW-HOW. The term "Aventis Know-How" shall mean any and all data, information, technology, know-how, processes, techniques, methods, skills, proprietary information, trade secrets, developments, discoveries, and inventions, whether or not patentable or reduced to practice, owned by Aventis or its Affiliates individually or jointly with Noven, or controlled by Aventis or its Affiliates and (a) related to any Sublicensed Noven Intellectual Property and existing as of the Closing Date or (b) related to the CombiPatch Product and existing as of the Closing Date or (c) related to any Licensed Product and existing as of the Closing Date. ***. COMBIPATCH PRODUCT. The term "CombiPatch Product" shall mean the transdermal estrogen/progestin patch product which has and is being developed by Noven solely or jointly with Aventis and its Affiliates and is marketed under the trademark CombiPatch(TM) in the Territory. CONFIDENTIAL INFORMATION. The term "Confidential Information" shall mean all proprietary data, know-how and related information, including all regulatory approvals and related filings, applications and data, the content of any unpublished patent applications, operating methods and procedures, marketing, distribution and sales methods and systems, sales figures and other business information. 2 7 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. COST(S). The term "Costs" and "Cost" shall mean Noven's fully allocated cost of manufacturing the CombiPatch Product, including the direct cost of any raw materials and Packaging Materials (other than any provided by Novogyne) utilized in manufacturing such CombiPatch Product, the direct labor utilized in manufacturing such CombiPatch Product plus an appropriate share of all factory overhead, both fixed and variable, allocated to the CombiPatch Product in accordance with generally accepted accounting principles and the normal accounting practices for all other products manufactured in the applicable facility. GMP. The term "GMP" shall mean the Current Good Manufacturing Practices as that term is defined by the FDA which are in force or hereafter adopted by the FDA in (a) its applicable regulations promulgated or issued thereunder, (b) guidelines or directives that Noven and Novogyne may mutually agree are applicable, as amended from time to time and (c) good manufacturing practice as required by GRB regulations. GRB. The term "GRB" means the U.S. Food and Drug Administration or any other government regulatory body of the Territory which has authority over clinical testing, manufacturing, marketing or sale of pharmaceutical products. INDEX. The term "Index" shall have the meaning set forth in Article 2.03(b). LICENSED PRODUCT. The term "Licensed Product" shall have the meaning set forth in the Noven License Agreement, as amended. MATERIALS. The term "Materials" shall mean all active ingredients and excipients used in the manufacture of the CombiPatch Product, as well as the primary and printed packaging materials, collectively. NET REVENUES. The term "Net Revenues" shall mean the gross amount invoiced by Novogyne, its Affiliates and sublicensees on all sales of any CombiPatch Product (but not including sales between Novogyne, its Affiliates and sublicensees) in the Territory, less (a) discounts actually allowed, (b) credits actually allowed for claims, allowances, retroactive price reductions or returned goods, (c) prepaid freight, and (d) sales taxes, value added taxes, duties and other governmental charges or rebates (including but not limited to Medicaid rebates) actually paid in connection with the sale, to the extent not reimbursed (but excluding what is commonly known as income taxes). NOVEN'S TECHNOLOGY. The term "Noven's Technology" shall have the meaning set forth in the Noven License Agreement in so far as it relates to any combination estrogen/progestin in a polymer adapted for transdermal delivery by application to the epidermis, other than combinations indicated for contraceptive use. NOVEN'S PATENT RIGHTS. The term "Noven's Patent Rights" shall have the meaning set forth in the Noven License Agreement in so far as it relates to any combination estrogen/progestin in a polymer adapted for transdermal delivery by application to the epidermis, other than combinations indicated for contraceptive use. 3 8 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. ORDER. The term "Order" shall have the meaning set forth in Article 2.06. PACKAGING MATERIAL COSTS. The term "Packaging Material Costs" shall mean ***. PACKAGING MATERIALS. The term "Packaging Materials" shall mean the cartons, labels, package inserts and patient package inserts that are used to package the CombiPatch Product. The term does not include the pouches. PERSON. The term "Person" shall mean any corporation, partnership, joint venture, other entity or natural person. PLANT. The term "Plant" shall mean (a) the Noven facility located at 11960 S.W. 144th Street, Miami, Florida 33186, and (b) any other Noven facility agreed to by Novogyne pursuant to Article 3.11 which has been qualified by all applicable GRBs for manufacture of the CombiPatch Product. PRODUCT APPLICATION. The term "Product Application" means a formal application seeking approval to manufacture, market and sell the CombiPatch Product within the Territory submitted by a Party to the FDA, or such application owned by a Party, including, without limitation, any Investigational New Drug Application (IND) or New Drug Application (NDA), as defined in the U.S. Federal Food, Drug and Cosmetic Act (FDA Act) and applicable regulations promulgated thereunder, as such are from time to time amended. PROJECT FACILITIES. The term "Project Facilities" shall mean the Plant and all facilities and equipment used by Noven to carry out the manufacture, storage, disposal and transportation of the CombiPatch Product, or any component thereof, including those of any Noven contractor or subcontractor of any rank (including, without limitation, environmental or health and safety consultant or waste management firm). SPECIFICATIONS. The term "Specifications" shall mean, collectively, the Noven manufacturing, packaging and standard testing procedures for the CombiPatch Product, including all applicable control procedures and analytical test methods contained therein, as described in Exhibit A attached hereto, as may be amended from time to time. SUBLICENSED NOVEN INTELLECTUAL PROPERTY. The term "Sublicensed Noven Intellectual Property" shall mean Noven's Patent Rights and Noven's Technology, certain rights to which were previously licensed to Aventis pursuant to the Noven License Agreement, and have been assigned to Novogyne pursuant to the Noven Assignment Agreement. TERM. The term "Term" shall have the meaning set forth in Article 12.01. TERRITORY. The term "Territory" shall mean the United States and its territories and possessions. 4 9 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. THIRD PARTY. The term "Third Party" shall mean any person or entity other than the Parties hereto, any of their respective Affiliates and, for the avoidance of doubt, shall include Aventis and its Affiliates. WASTE. The term "Waste" shall mean all materials, except any CombiPatch Product or component thereof, present at the Plant and produced or generated in connection with the manufacture of the CombiPatch Product. Waste shall include CombiPatch Product or any component thereof which does not meet the Specifications; waste water, recovered solvents, and other remainders and materials; and components of the CombiPatch Product, that are not used in the manufacture by Noven of the CombiPatch Product, or non-compliant CombiPatch Product which are returned to Noven pursuant to this Supply Agreement. 1.02 RIGHTS AND OBLIGATIONS OF NOVOGYNE. The rights granted to Novogyne hereunder and the obligations assumed by Novogyne hereunder may be exercised and performed by Novogyne or any other Person acting on behalf of Novogyne, including, without limitation, Novartis Pharmaceuticals Corporation and/or Noven. ARTICLE II - SUPPLY 2.01 AGREEMENT TO SUPPLY. (a) Noven shall supply to Novogyne, and Novogyne shall purchase from Noven all of Novogyne's requirements for the CombiPatch Product for sale in the Territory subject to the terms and conditions set forth herein. CombiPatch Product, at Novogyne's option, shall be supplied in finished, packaged and labeled form or in bulk rolls. (b) Noven shall supply pouched samples and placebos (clearly labeled as samples or placebos) of the CombiPatch Product as requested by Novogyne at a price of ***. These prices shall be adjusted annually as provided in Article 2.03. (c) During the term of this Supply Agreement, Noven shall also exclusively supply Novogyne, and Novogyne shall purchase from Noven all of Novogyne's requirements for Licensed Products other than the CombiPatch Product for sale in the Territory. The Parties agree that ***. 2.02 FEES FOR THE COMBIPATCH PRODUCT. With respect to the CombiPatch Product, Novogyne shall pay to Noven, subject to the provisions set forth in Article 2.03 hereof, a fee equal to *** of Novogyne's and its Affiliates' and sublicensees' Net Revenues from sales of the CombiPatch Product in the Territory. This fee shall include compensation for supplying pouched CombiPatch Product meeting the Specifications, but in each case shall not include Noven's further Packaging Material Costs, which shall be paid by Novogyne in accordance with Articles 2.03 and 2.04(c) hereof. In each case, the relevant fee shall be calculated by: ***. 5 10 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. 2.03 MINIMUM AND MAXIMUM FEE. (a) Notwithstanding anything else to the contrary in this Supply Agreement, but subject to any adjustments pursuant to Articles 2.03(b), (c), (d) and (e), the fees to be paid pursuant to Article 2.02 shall be ***. (b) On July 1 of each year during the term of this Supply Agreement, the minimum and maximum fees set forth in Article 2.03(a) shall be adjusted pursuant to the Producer Price Index - Commodities, Finished Goods Item, Series ID WPUSOP3000, published by the U.S. Department of Labor, Bureau of Labor Statistics (hereafter referred to as the "Index"). The minimum and maximum applicable after each such adjustment shall be determined by multiplying the minimums and maximums set forth in Article 2.03(a), by a fraction, the numerator of which shall be value of the Index set forth in this Article 2.03(b) for the month of December of the year prior to the year in which the computation is made, and the denominator of which is the value of the Index for the month of December 1999. For example, when adjusting the minimum and maximum prices in July 2001, the numerator is the Index value for December 2000 and the denominator is the Index value for December 1999. Should the publication of said Index be discontinued by said U.S. Department of Labor, then such other indexes as may be published by said Department most nearly approaching said discontinued Index shall be used in determining the adjustment hereunder. Should said Department discontinue the publication of any such index, then such index as may be published by another United States governmental agency, as most nearly approximating the Index, shall govern and be substituted as the Index hereunder. (c) Notwithstanding the foregoing, if Noven's Cost of any Licensed Product increases at a rate greater than the rate of increase of said Index, or if Novogyne's weighted average gross margin (computed excluding samples and sales at or below cost) for the CombiPatch Product is reduced to below ***, then Novogyne and Noven shall negotiate in good faith *** with respect to the CombiPatch Product; PROVIDE, HOWEVER, that if Novogyne is able to purchase any raw material or materials causing any such increase in Noven's cost at a lower cost than that available to Noven, Novogyne shall have the option of purchasing such raw material or materials and providing it to Noven, in which case the foregoing shall not apply and the price of the CombiPatch Product shall be decreased to reflect Novogyne's Cost of acquiring such raw material or materials. In the absence of the Parties being able to reach a mutually satisfactory agreement, Noven shall grant to Novogyne a non-exclusive license to make, have made, use, sell and have sold such CombiPatch Product under Confidential Information relating to the CombiPatch Product, including Noven's Technology, Noven's Patent Rights and any other patents, know-how, improvements, development studies and other information, and any trademarks related to the CombiPatch Product and owned by Noven, for a royalty of *** of Novogyne's Net Revenues from sales of the CombiPatch Product so manufactured, as set forth in Article 12.04(c) hereof, in addition to other terms and conditions as reasonably agreed between the Parties. (d) During the term of this Supply Agreement, the Parties shall work together to maximize the efficiency of the manufacturing processes and to minimize the Cost of the CombiPatch Product. To the extent economic benefits result from such efforts ***. 6 11 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. (e) Without limiting Article 2.03(d) above, during the Term of this Supply Agreement, Novogyne may propose making process improvements to manufacturing in order to maximize the efficiency of the manufacturing processes. Noven shall act in good faith to review any such proposal and, if implemented by Noven, the Parties shall negotiate a reduction in the pricing of the CombiPatch Product based upon the improvement, taking into account each Party's costs incurred in realizing such benefits, to ensure that the Parties share such benefits equally. 2.04 PAYMENT OF FEES FOR THE COMBIPATCH PRODUCT . With respect to the CombiPatch Product, the fees provided for in Article 2.02 shall be payable in immediately available funds as follows: (a) Novogyne shall make the following payments to Noven in immediately available funds, in each case within thirty (30) days after the later of: (i) receipt by Novogyne of Noven's invoice for a filled order of CombiPatch Product and, (ii) delivery of the CombiPatch Product to Novogyne, as of January 1, 2001, ***. Prior to the start of each calendar year, the Parties shall adjust the transfer price in the Territory based on ***. Novogyne shall notify Noven of its proposed adjusted transfer price no later than October 31st of each year, and the Parties shall use reasonable efforts to agree on such adjusted transfer price no later than November 30th of each year. (b) The remainder of any payment due under Article 2.02 hereof shall be due and payable within sixty (60) days of the end of each semi-annual calendar period (I.E., January 1 to June 30 and July 1 to December 31) in which Novogyne, its Affiliates or sublicensees invoice for the CombiPatch Product. If the amount paid by Novogyne for CombiPatch Product shipped in such semi-annual period is greater than the amount due under Article 2.02 hereof (including the amount due for Packaging Material Costs for such semi-annual period), Novogyne shall invoice Noven for such difference within sixty (60) days of the end of the semi-annual calendar period and Noven shall pay the amount of such invoice within thirty (30) days of its receipt of Novogyne's invoice. If the amount paid by Novogyne for CombiPatch Product shipped in such semi-annual period is less than the amount due under Article 2.02 hereof (including the amount due for Packaging Material Costs for such semi-annual period), Novogyne shall pay such difference within sixty (60) days after the end of the semi-annual calendar period. (c) As set forth in Articles 2.01(b) and 2.02 hereof, the price per unit paid by Novogyne includes an amount for Packaging Material Costs. For each semi-annual calendar period, Noven shall calculate its actual per unit Packaging Material Costs. To the extent that Noven's actual per unit Packaging Material Costs exceeded the amount paid by Novogyne for such period, Noven shall invoice Novogyne for such difference and Novogyne shall pay such amount in immediately available funds within thirty (30) days of Novogyne's receipt of Noven's invoice. The Parties agree that Novogyne shall reimburse Noven for the cost of all Packaging Materials purchased by Noven for use in packaging the CombiPatch Product for supply to Novogyne regardless of whether such Packaging Materials 7 12 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. are actually used in packaging the CombiPatch Product; PROVIDED that Novogyne shall not be responsible for reimbursing Noven for any Packaging Material Costs for Packaging Materials purchased by Noven in excess of the quantities required to meet Novogyne's forecast delivered pursuant to Article 2.06 for the *** following the date of purchase by Noven. Without limiting the foregoing, Novogyne shall reimburse Noven for any Packaging Material Costs for Packaging Materials rendered unusable because of a change in Novogyne's labeling or packaging specifications or requirements. (d) The price for samples and placebos provided for in Article 2.01(b) shall be payable in immediately available funds within thirty (30) days of the later of: (i) receipt by Novogyne of Noven's invoice for a filled order of such samples and placebos, and (ii) delivery of such samples and placebos to Novogyne. (e) Without limitation to Article 12.03(d) herein, in the event that Novogyne, with respect to any delivery of CombiPatch Product complying with Specifications, fails to make payment of undisputed amounts when due and payable, and fails to remedy such failure within thirty (30) days after Novogyne's receipt of written notice of such failure from Noven, Noven may suspend its obligation to deliver CombiPatch Product pursuant to an Order until such undisputed amount has been paid in full. In addition to the foregoing, upon written notice to Novogyne, interest shall accrue on any undisputed amount due and payable to Noven at the prime rate plus *** until such amount is paid. The prime rate shall be the rate specified as the prime rate in the Wall Street Journal on the date such undisputed amount was due and payable. 2.05 RECORDS. (a) Novogyne, its Affiliates and sublicensees shall keep complete and accurate records concerning sales of the CombiPatch Product in accordance with generally accepted accounting principles applied on a consistent basis. At Noven's request and expense, such records shall be made available for examination by independent certified public accountants or auditors designated by Noven and approved by Novogyne, which approval shall not be unreasonably withheld. (b) Noven shall keep complete and accurate records concerning Noven's production, packaging, assaying, and delivery of the CombiPatch Product supplied to Novogyne hereunder, including Noven's Costs. Such records shall be kept in accordance with generally accepted accounting principles applied on a consistent basis. At Novogyne's request and expense, such records shall be made available for examination by Novogyne or independent certified public accountants or auditors designated by Novogyne and approved by Noven, which approval shall not be unreasonably withheld. Notwithstanding the foregoing, the only time Novogyne can examine Noven's records is if Noven has invoked Article 2.03(c), (d) or (e). 2.06 FORECASTS AND ORDERS. At the beginning of each calendar quarter during the period that Noven is supplying CombiPatch Product hereunder, Novogyne shall provide Noven a 12-month rolling forecast of its expected requirements of CombiPatch Product. This forecast shall be updated on a calendar quarterly basis. With respect to each such forecast, the quantities set forth for the *** shall constitute a firm order ("Order"). Orders will be placed within *** of the quantity of CombiPatch Product previously forecasted by Novogyne in the most recent quarter; PROVIDED, HOWEVER, that Noven will use commercially reasonable 8 13 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. efforts to produce quantities in excess *** of such Orders if requested by Novogyne. Orders shall indicate the quantities to be delivered and specific delivery dates which shall be no sooner than ninety (90) days after receipt of an Order by Noven. 2.07 DELIVERY. Delivery of CombiPatch shall be ***, title to shipments of the CombiPatch Product *** to ensure that the viability of the CombiPatch Product is maintained in accordance with the Specifications; ***. 2.08 COMBIPATCH PRODUCT SUPPLIED. All CombiPatch Product supplied by Noven pursuant to an Order shall have been manufactured (a) no earlier than ninety (90) days prior to the agreed upon delivery date of the Order, and (b) from a full lot of CombiPatch Product dedicated to be delivered only to Novogyne, so that no portion of the lot from which the CombiPatch Product was manufactured shall have been delivered or planned to be delivered to a Third Party. 2.09 MANUFACTURE FOR THIRD PARTIES. (a) Noven shall not manufacture transdermal patch products containing both estrogen and progestin as active ingredients for any Third Party for sale within the Territory without the prior written consent of Novogyne, other than products indicated for contraceptive use; (b) All transdermal patch products containing estrogen and progestin as active ingredients manufactured in the United States for export by Noven or exported by Noven shall comply with all applicable laws and regulations in the United States relating thereto, including without limitation, GMPs; (c) Noven will provide Novogyne, in a timely manner, with (i) adverse drug experience data required to be disclosed by Novogyne under 21 C.F.R. ss. 314.80 and/or 21 C.F.R. ss. 314.81 within five (5) business days of receipt by Noven of the same as well as (ii) any additional information required to be submitted by Novogyne under 21 C.F.R. ss. 314.81, to the extent that such additional information relates to transdermal patch products containing estrogen and progestin as active ingredients, provided that Noven now or hereafter has the right to disclose the same under the terms of existing agreements with Third Parties; (d) Novogyne labels or labeling identifying Novogyne shall not accompany or be placed on transdermal patch products containing estrogen and progestin as active ingredients manufactured by Noven other than those manufactured for Novogyne; and (e) Except for the right to manufacture for export set forth above, nothing in this Supply Agreement confers any other rights upon Noven under the INDs, NDAs and Regulatory Approvals transferred or required to be transferred to Novogyne pursuant to the Purchase Agreement between Novogyne and Aventis dated as of March 29, 2001. 9 14 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. ARTICLE III - MANUFACTURING STANDARDS AND QUALITY ASSURANCE 3.01 MANUFACTURING STANDARDS; RELEASE OF COMBIPATCH PRODUCT. (a) Each lot of CombiPatch Product manufactured by Noven shall comply with the provisions of Article 9.03 hereof, and, without limiting the foregoing, shall meet the applicable release standards as set forth in the Specifications to assure the CombiPatch Product meets regulatory specifications at all times through the expiration date of that lot as defined in the applicable Product Application. Noven shall reject any lot which fails to meet the applicable release standards as set forth in the Specifications or which does not comply with the specifications set forth in the applicable Product Application; (b) Prior to release of any lot of CombiPatch Product (both samples and trade lots) Noven shall deliver to Novogyne: (i) a certificate of analysis setting out all analytical results and their specification limits for each lot in the shipment; and (ii) a certificate of conformance confirming such shipment's compliance with the provisions of Article 9.03(a) hereof and identifying, in summary, any deviations and/or investigations associated with any lot in the shipment. Noven shall not release any lot of CombiPatch Product for shipment to Novogyne, or for distribution on behalf of Novogyne in the case of samples, until such lot has been approved by Novogyne for release based upon Novogyne's review of the certificate of analysis and certificate of conformance for such lot. Noven shall address, in a timely manner, any concerns identified by Novogyne from its review of any certificate of analysis or certificate of conformance, and both parties shall make commercially reasonable efforts to expedite the release process. 3.02 SPECIFICATIONS. The Specifications may be amended by mutual agreement of Noven and Novogyne. In the event that such changes result in increased production costs to Noven, Noven and Novogyne shall mutually agree as to the allocation of such costs between the Parties. Additionally, Novogyne shall reimburse Noven for the costs of implementing any changes requested by Novogyne in labeling, packaging and preprinting of backing or pouch materials, and of discontinuing stock of same due to such changes, PROVIDED, HOWEVER, that Novogyne's obligation to reimburse Noven under this Article 3.02 shall be limited to such quantities of stock as would be necessary for Noven to fill Novogyne's requirements for a period of one hundred and fifty (150) days. Notwithstanding the foregoing, Novogyne, upon prior written notice to Noven, shall have the right to change unilaterally the Specifications if required by a GRB. In the event that change(s) required by a GRB result in increased costs to Noven, all cost increases due to such change(s) shall be shared equally between Noven and Novogyne. 3.03 CHANGES TO CONTROL PROCEDURES AND ANALYTICAL TEST METHODS. Noven shall employ appropriate change control procedures to ensure that the applicable release standards remain congruent with the applicable Product Application. 10 15 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. Control procedures and analytical test methods referenced in a given Product Application may not be modified or superseded without the express written consent of Noven and Novogyne and only, if necessary, after approval by the appropriate GRB. 3.04 MATERIALS. Noven shall be responsible for procuring all Materials and shall ensure, through applicable GMP testing, that at all times all Materials used in the manufacture of the CombiPatch Product are in compliance with their specifications and, as appropriate, are within the expiration dates printed on their labels or packaging. Noven shall ensure that all Materials are stored according to the precise storage conditions provided by their manufacturer or supplier. Noven shall carry out all Materials testing in accordance with GMP and all laboratory testing failures shall be promptly investigated and documented in reasonable detail. Noven may release Materials for processing only upon receipt of satisfactory test results. Noven shall ensure that all Materials released for processing are tested in accordance with agreed specifications and the filed Product Application. Noven will confirm that all batches of Materials correspond to the applicable specifications and GMP and are approved by Noven for incorporation into the CombiPatch Product. Noven shall retain samples of all Materials used to prepare a lot of a CombiPatch Product (except for water and volatile solvents) for a period of at least one year beyond the expiration date of the last lot of CombiPatch Product containing said component. Packaging components are represented by Noven's retention of samples of finished dosage forms. The amount of retained sample shall be sufficient for at least three complete and full testing analyses in accordance with the control procedures for that component. 3.05 EXTRAORDINARY EVENTS. Noven shall investigate, in accordance with GMP, and promptly notify Novogyne in writing of any extraordinary event occurring during the manufacture or packaging of a lot of CombiPatch Product that is shipped to Novogyne. An "extraordinary event" is defined as any deviation from the manufacturing and/or packaging procedures contained in the Specifications or from GMP which may have the potential to result in a CombiPatch Product outside the established test specifications. Novogyne reserves the right to review and evaluate all such investigations prior to acceptance of a given lot of the CombiPatch Product. 3.06 IN-PROCESS TESTING. In-process testing shall be performed by Noven as required by Noven's standard operating procedures but at all times consistent with the applicable Product Application. Representative samples from each lot of a CombiPatch Product shall be tested by Noven for conformance with the requirements of the applicable Product Application prior to shipment of the full lot unless shipment prior to testing is agreed to in writing by Novogyne. Any lot which fails to conform to release standards shall be rejected. All laboratory testing failures must be investigated and documented by the testing laboratory. Product Specification failures resulting in batch rejections, in-process production and environmental control specification failures, and critical equipment operating parameter failures, must be fully investigated by Noven in a timely manner to determine the possible root cause, and necessary follow-up actions must be conducted promptly. Noven shall notify Novogyne, in writing, at the completion of Noven's investigation of each such failure and in the annual product review referred to in Article 3.21 hereof. 11 16 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. 3.07 VALIDATION OF MANUFACTURING AND CONTROL PROCEDURES. Noven shall be responsible for validating all manufacturing and control procedures, including, without limitation, all applicable cleaning procedures. Noven will allow Novogyne to audit all relevant documents, as well as the documentation concerning the qualification and calibration of equipment, upon reasonable request. 3.08 BATCH MANUFACTURING RECORDS. Noven shall complete a batch manufacturing record for each lot of each CombiPatch Product manufactured, retain it for at least seven (7) years, and upon request shall provide a copy to Novogyne. Records for all Materials used in the manufacture of a particular lot of CombiPatch Product, as well as supporting documentation for the validation of equipment and processes, shall be retained for a period of one year beyond the expiration date of that lot. 3.09 RETENTION OF SAMPLES OF COMBIPATCH PRODUCT. Noven shall store retained samples of each lot of CombiPatch Product (in its marketed package configuration or final pouched configuration) as required by the applicable GRB. The amount retained shall be sufficient for at least three complete and full testing analyses in accordance with the control procedure and shall be held at labeled storage conditions for a minimum of at least 1 year past the finished product expiry date. 3.10 FOLLOW-UP STABILITY TESTING AND ANNUAL PRODUCT REVIEW. Noven shall perform follow-up stability testing and annual product review within established time frames, in accordance with its standard operating procedures and consistent with all applicable GRB regulations for each lot of CombiPatch Product. 3.11 PLANT. Upon Novogyne's written request, Noven, at Novogyne's expense, shall provide Novogyne with copies of any permits required by state and local governing authorities having jurisdiction over any Plant for the operation of any Plant or for the manufacture of the CombiPatch Product. Noven shall not change the manufacturing site for the CombiPatch Product from the Plant without the prior written approval of Novogyne, which approval shall not be unreasonably withheld. 3.12 WASTE. Without the prior written approval of Novogyne, which approval shall not be unreasonably withheld, Noven shall not rework or reprocess any Waste. 3.13 GMP. Noven acknowledges that it is familiar with and shall abide by GMPs. 3.14 BOOKS AND RECORDS. Noven shall keep accessible all books (including laboratory books) and records maintained in connection with the testing of the CombiPatch Product, including those books and records relating to cross-over cleaning, for a period of seven (7) years from the date of generation of such documents. 3.15 PRODUCTION EQUIPMENT. Noven shall inform Novogyne of any significant change in production equipment used to manufacture the CombiPatch Product prior to implementation of such change, and Novogyne shall review each change in equipment within thirty (30) days after notification in writing by 12 17 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. Noven. All such changes must be reviewed and approved in writing by Novogyne prior to being implemented, such approval not to be unreasonably withheld, and Noven shall validate the production equipment where required before production is initiated. 3.16 CUSTOMER SERVICE AND COMPLAINT HANDLING. Noven shall provide test data and other information as requested by Novogyne to enable Novogyne to evaluate and respond to customer service and complaint handling operations relating to the CombiPatch Product. In the case of customer complaints or reports of adverse incidents relating to the CombiPatch Product, Noven shall provide Novogyne, as promptly as possible, but in all cases within fifteen (15) days from Noven becoming aware of said complaint or incident, a written evaluation setting forth all relevant details applicable to the complaint and, to the extent applicable, a copy of each customer or regulatory complaint it receives concerning a CombiPatch Product. 3.17 REGULATORY INSPECTIONS. Each Party shall inform the other immediately upon becoming aware of an upcoming or underway inspection by any GRB relating in any way to a CombiPatch Product manufactured by Noven. Noven also shall inform Novogyne promptly upon becoming aware of any serious violation uncovered as a result of an inspection of its facilities or its procedures which may impact the CombiPatch Product or Novogyne's rights under this Supply Agreement. 3.18 RE-USE OR ISSUE OF COMBIPATCH PRODUCT. Re-use or issue by Noven of any returned CombiPatch Product bearing the Novogyne tradename or any trademark owned by or licensed to Novogyne requires the express written approval of Novogyne. Mis-shipments are not classified as returned goods and can be placed back in distribution. 3.19 INSPECTION BY NOVOGYNE. Upon reasonable notice and during normal business hours, Novogyne may inspect, on a confidential basis, Noven's facilities, batch records and testing records to assure that the manufacturing and control processes were carried out in accordance with GMP, the Specifications and all applicable GRB regulations. 3.20 CHANGES. Any changes which may have a quality or regulatory impact must be submitted to Novogyne for approval prior to implementation. These changes include but are not limited to changes or modifications to the existing: manufacturing process, equipment, formulation, batch size, Materials, suppliers, processing of Materials, analytical methods, Specifications, storage conditions, or transport conditions. 3.21 ANNUAL REPORTS. No later than two (2) months prior to the due date of the annual report required to be filed with any GRB for any CombiPatch Product, Noven will furnish to Novogyne information in reasonable detail relating to stability data, any changes to the Specifications made in accordance with this Supply Agreement and any chemistry-related data. The Parties acknowledge that the due date for the annual report required to be filed with the FDA for the product marketed under the CombiPatch(R) trademark is August 7 each year. 13 18 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. 3.22 QUALITY ASSURANCE. Without limiting any other provision of this Supply Agreement, responsibility for quality assurance matters related to the CombiPatch Product shall be allocated between the parties as set forth in Exhibit B hereto. ARTICLE IV - ACCEPTANCE OF LICENSED PRODUCT 4.01 ACCEPTANCE. Novogyne shall, within sixty (60) days after Novogyne receives delivery of each shipment of CombiPatch Product, notify Noven in the event of the non-compliance with the Specifications of all or any part of said shipment to the extent such non-compliance is not due to the fault of Novogyne, and shall immediately provide Noven with samples of the CombiPatch Product upon Noven's request. Failure to provide such notification to Noven shall constitute acceptance by Novogyne of the shipment, except for latent defects caused by the gross negligence or willful misconduct of Noven. 4.02 NON-COMPLIANCE. In the event of notification by Novogyne of any non-compliance with the Specifications of the shipment, and to the extent such non-compliance is not due to the fault of Novogyne, the particular shipment shall be set aside and held intact by Novogyne until all questions relating to the non-compliance of the shipment have been resolved, corrected, or remedied to Novogyne's satisfaction. Without limiting Article IX hereof, with respect to the purchase price and cost of transportation and disposal of CombiPatch Product that are not in compliance with the Specifications, to the extent such non-compliance is not due to the fault of Novogyne, Noven's liability to Novogyne with respect to the purchase price, cost of transportation and disposal of such CombiPatch Product shall be: (a) at Novogyne's option, (i) replacement of the CombiPatch Product, (ii) reimbursement of the purchase price of the CombiPatch Product, or (iii) credit to Novogyne for future orders of CombiPatch Product; and (b) payment of the reasonable cost of transportation and disposal of any non-compliant CombiPatch Product. ARTICLE V - AUDIT AND INSPECTION RIGHTS 5.01 INSPECTION AND AUDIT. During the term of this Supply Agreement, Novogyne and its authorized representatives shall have the right, at Novogyne's expense, to audit, inspect and observe the manufacture, storage, disposal and transportation of the CombiPatch Product or Waste during normal business hours upon five (5) days prior notice. All employees and representatives of Novogyne (a) shall comply with and observe all applicable rules and regulations governing their conduct while performing their audit, inspection, or observation, and (b) shall have no authority to manage, supervise, or control, any of Noven's employees. Noven agrees to respond to Novogyne's audit findings within thirty (30) days of receipt of the audit report and to be responsive to the recommendations contained therein. 5.02 INSPECTION AND AUDIT OF BOOKS AND RECORDS. Noven shall make available all records and reports relating to the manufacture, storage, disposal and transportation of CombiPatch Product and/or Waste to Novogyne, as well as those documents relating to analytical and stability data, for Novogyne's review during normal business hours and upon reasonable prior notice to Noven, and Novogyne shall have the right to copy these documents as required. In the event 14 19 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. that Novogyne supplies Materials to be used by Noven, Novogyne shall have the right to conduct inventory reconciliation audits and other audits as reasonably required for its internal control. 5.03 ANNUAL QUESTIONNAIRE. Noven agrees to fully respond within forty-five (45) days of receipt, to an annual questionnaire provided by Novogyne concerning Noven's safety, health and environmental practices and any changes thereto. 5.04 INSPECTIONS BY GOVERNMENTAL OR REGULATORY AGENCIES. Noven shall promptly give Novogyne advance notice, to the extent that advance notice is given to Noven, of any site visit to the Plant regarding the manufacture, storage, disposal or transportation of the CombiPatch Product or Waste by any governmental or regulatory agency; provided, however, that Noven shall notify Novogyne within eight (8) hours of notification to Noven of any site visits by the FDA or other GRB. Novogyne shall have the option of attending any such site visit by any governmental or regulatory agency, if the site visit relates, directly or indirectly, to the manufacturing, storage, disposal and transportation of the CombiPatch Product. Should Novogyne not participate in the site visit, Noven shall fully report in writing the substance and results of the visit to Novogyne within seven (7) days of the occurrence thereof. In the event that any such governmental or regulatory agency finds that a Plant is deficient or unsatisfactory in any respect, Novogyne shall have the option of (a) assisting Noven, at Noven's expense in correcting the deficiency, or (b) terminating this Supply Agreement if the violations materially impair Noven's capability to continue to produce CombiPatch Product in accordance with this Supply Agreement. ARTICLE VI - WASTE DISPOSAL Noven shall assume responsibility for disposing of all Waste in accordance with all applicable laws and regulations, and in accordance with all Novogyne requirements, standards and procedures provided in writing to Noven. Novogyne shall provide to Noven a list of disposal sites previously approved by Novogyne. If Novogyne and Noven cannot mutually agree upon a disposal method or site, Novogyne shall have the option of assuming the responsibility to dispose of such Waste itself at Noven's expense, such expense not to exceed that which would otherwise be incurred or expended by Noven if such Waste were lawfully disposed of by Noven. Copies of all documentation evidencing disposal by Noven shall be made available to Novogyne upon Novogyne's request and at Novogyne's expense. ARTICLE VII - SAFETY Noven shall comply with all applicable health and safety regulations policies and procedures relating to the manufacture and packaging of the CombiPatch Product including the transmission by Noven to its employees of health and safety information relating to the CombiPatch Product, and their manufacture, storage, disposal and transportation. 15 20 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. ARTICLE VIII - ENVIRONMENTAL, HEALTH AND SAFETY WARRANTY INDEMNIFICATION Noven represents and warrants that all Project Facilities shall be in full compliance with all applicable health, safety and environmental, laws, statutes, ordinances, regulations, rules and pronouncements. Noven agrees and warrants to indemnify, defend and hold harmless Novogyne, its officers and employees, from any and all liability (including strict and joint and several liability) or loss arising from or related to (including liability for threatened harm) Project Facilities and Waste disposal. Novogyne agrees and warrants to indemnify, defend and hold harmless Noven, its officers and employees, from any and all liability (including strict and joint and several liability) or loss arising from or related to Waste disposal for which Novogyne has assumed responsibility. ARTICLE IX - REPRESENTATIONS, WARRANTIES AND INDEMNITIES 9.01 NO INFRINGEMENT. Noven represents and warrants that, to its actual knowledge, neither the manufacture nor supply of the CombiPatch Product by Noven hereunder, nor any use, sale or other disposal of the CombiPatch Product in the Territory by Novogyne following the Closing Date will infringe any Third Party intellectual property right. 9.02 RIGHT TO ENTER AGREEMENT. Noven and Novogyne represent and warrant that they have the right to enter into this Supply Agreement, and that there are no outstanding assignments, grants, licenses, encumbrances, obligations or agreements, either written, oral or implied, materially inconsistent with this Supply Agreement. 9.03 PRODUCT WARRANTIES. Noven represents and warrants that: (a) it will manufacture, assay, package and deliver to Novogyne the CombiPatch Product in accordance with, and that the CombiPatch Product will conform with, the Specifications for such product, and all requirements set forth in any Product Approval pertaining to the CombiPatch Product in the Territory, including, without limitation, specifications and requirements relating to composition, purity, appearance and stability, and that the CombiPatch Product shall be capable of maintaining such until the applicable expiration date for such CombiPatch Product; (b) it will comply with all relevant and applicable rules, regulations and laws relating to the manufacture and packaging of such CombiPatch Product, including all then current GMPs, applicable to the manufacture, filling, labeling, packaging and storage of CombiPatch Product which are in force or hereafter adopted by the United States Food and Drug Administration or any successor agency thereto, and it will ship the CombiPatch Product in accordance with shipping directions provided by Novogyne; (c) the CombiPatch Product shall not be misbranded, adulterated, manufactured, packaged or transported in violation of 16 21 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. Articles 501, 502, 505 or 506A of the United States Food, Drug and Cosmetic Act, as amended from time to time; and (d) all CombiPatch Product supplied by Noven hereunder shall be transferred to Novogyne free and clear of all liens, title claims, encumbrances, security interests and other third party claims. 9.04 BREACH OF LEASE AGREEMENT. Noven represents and warrants that the Lease Agreement described in Articles 5.2 and 5.3 of the Noven License Agreement is in full force and effect, and that Noven has not caused any default or event of default, or any other event, occurrence, condition or act, which with the giving of notice, the lapse of time, or the happening of any other event or condition, would become a default or event of default under such Lease Agreement. ***. 9.05 INDEMNITY FOR BREACH OF WARRANTIES. Without limiting Article 9.06 below, Noven shall indemnify, defend, release and hold Novogyne and its Affiliates, subsidiaries, successors, officers and directors harmless from and against any and all Third Party claims, suits, actions or threats of action, liability, settlement amounts, costs or expenses (including reasonable attorneys' fees) to the extent that they are attributable to or result from Noven's breach of Articles 9.01, 9.02, 9.03 or 9.04 above; PROVIDED, HOWEVER, that Noven shall not be liable to indemnify Novogyne hereunder to the extent that any such Third Party claim, suit, action or threat of action, liability, settlement amount, cost or expense arises out of, or is directly attributed to, any asset acquired by Novogyne pursuant to the Purchase Agreement between Novogyne and Aventis dated as of March 29, 2001 or any negligence or willful misconduct of Novogyne. 9.06 GENERAL INDEMNITIES. Notwithstanding any other provision of this Supply Agreement, Noven agrees and warrants to indemnify, defend, and hold harmless Novogyne from and against any and all claims, damages, expenses, attorneys' fees, settlements, and judgments arising out of any injury or damage to a Third Party alleged to be caused by the CombiPatch Product supplied by Noven to Novogyne whether manufactured for or by Noven; PROVIDED, HOWEVER, that Novogyne notifies Noven within twenty (20) days of receipt of a claim or action, fully cooperates with Noven in the defense of such claim or action, and permits Noven and its insurers to control the defense of such claim or action at its sole expense, including, without limitation, the settlement thereof at the sole option of Noven or its insurers; PROVIDED, HOWEVER, that Noven may not enter into any compromise or settlement without the prior written consent of Novogyne unless such compromise or settlement includes as an unconditional term thereof the giving by each plaintiff or claimant to Novogyne of a release from all liability in respect of such claim and only if such compromise or settlement does not include any admission of legal wrongdoing on the part of Novogyne. Notwithstanding the above, Noven does not warrant and shall not be liable to indemnify Novogyne from and against any claims, damages, expenses, attorneys' fees, settlements and judgments to the extent arising out of any injury or damage to a Third Party caused by the negligence or willful misconduct on the part of Novogyne or breach by Novogyne of this Supply Agreement, for which 17 22 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. Novogyne shall have the right to control the defense and settle such claim or action. Novogyne agrees and warrants to indemnify and hold harmless Noven from and against any and all claims, damages, expenses, attorneys' fees, settlements and judgments for personal injury to a Third Party to the extent caused by the negligence or willful misconduct of Novogyne or breach by Novogyne of this Supply Agreement. This provision shall survive expiration or termination of this Supply Agreement. ARTICLE X - CONFIDENTIALITY OBLIGATIONS 10.01 CONFIDENTIALITY. (a) Except as specifically authorized by this Supply Agreement, each Party shall, for the term of this Supply Agreement and for ten (10) years after its expiration or termination, keep confidential, not disclose to others and use only for the purposes authorized herein, any and all data, information, and know-how including Noven's Technology and all Aventis Know-How (collectively, "Confidential Information") received from the other Party prior to or under this Supply Agreement; PROVIDED, HOWEVER, that the foregoing obligations shall not apply to the extent that such information is (i) already known to the recipient at the time of disclosure as evidenced by competent proof; (ii) publicly known prior to or after disclosure other than through unauthorized acts or omissions of the recipient; or (iii) disclosed in good faith to the recipient by a Third Party entitled to make such disclosure. Notwithstanding the foregoing, Noven acknowledges and agrees that all Aventis Know-How and any Confidential Information received by Noven from Novogyne or from Aventis or its Affiliates prior to or under this Supply Agreement, shall, for the purposes of this Supply Agreement, be deemed to be Confidential Information of Novogyne, and shall be treated by Noven as such. (b) In the event a Party who receives Confidential Information prior to or under this Supply Agreement is required: (i) by law, rule or regulation to disclose Confidential Information to regulatory authorities to obtain and maintain regulatory approval for a CombiPatch Product; (ii) to disclose Confidential Information to respond to a regulatory or governmental inquiry concerning CombiPatch Product; or (iii) to disclose Confidential Information in a judicial, administrative or arbitration proceeding to enforce such Party's rights under this Supply Agreement, it may do so only if it: (A) provides the Party who disclosed (or is deemed to have disclosed) the information hereunder ("Disclosing Party") with as much advance written notice as possible of the required disclosure; (B) cooperates with the Disclosing Party in any attempt to prevent or limit the disclosure; (C) limits disclosure, if any, to the specific purpose at issue; and (D) exercises commercially reasonable efforts to obtain assurances that appropriate confidential treatment will be accorded the Confidential Information. (c) Notwithstanding the provisions of Articles 10.01(a) and 10.01(b), Novogyne shall be permitted to disclose to its distributors, wholesalers, and other direct customers such Confidential Information of Noven relating to CombiPatch Product as Novogyne shall reasonably determine to be necessary or useful in order to effectively market and distribute CombiPatch Product. (d) The Parties recognize that the performance of the obligations under this Article X are special, unique and extraordinary in character, and that, notwithstanding Article 16.05 hereof, in the event of the breach by either Party or their Affiliates or their respective employees, officers, directors or advisors of the terms and conditions of this Article X, the Disclosing Party 18 23 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. shall be entitled, if it so elects, to institute and prosecute proceedings in any court of competent jurisdiction, either at law or in equity, to enforce the specific performance thereof by such Party or to enjoin such Party or their Affiliates or their respective employees, officers, directors or advisors from violating the provisions of this Article X. ARTICLE XI -- PRODUCT RECALL If an authorized government agency of the United States shall seize any CombiPatch Product or if Novogyne in its sole judgment deems it necessary to initiate a voluntary recall of any CombiPatch Product for any reason, Novogyne shall immediately notify Noven of such seizure or recall and shall consult with Noven regarding the timely compliance with all pertinent state or federal regulations pertaining thereto. Notification of the applicable GRB authorities by the Parties shall be coordinated. Furthermore, each Party shall make a permanent, complete and accurate record of all costs incurred by its connection therewith, a copy of which shall be delivered to the other Party as soon after the completion of such recall or seizure as practically may be done. If the cause of or reason for said recall or seizure arises from or is attributable to Noven's gross negligence or breach of this Supply Agreement, Noven shall reimburse Novogyne for all reasonable costs incurred by Novogyne in effecting such recall or seizure, including all reasonable credits extended to Novogyne's customers as a result thereof. If the cause of or reason for said recall or seizure is directly attributable to the failure of Novogyne to properly store, transport or care for any CombiPatch Product while such CombiPatch Product was in Novogyne's possession, Novogyne shall reimburse Noven for all reasonable costs incurred by Noven at Novogyne's request in effecting such recall or seizure. If the Parties cannot agree which Party is at fault, then an independent technical expert, acceptable to both Parties, will be designated to make the determination. The so designated technical expert shall not be an employee, consultant, officer, director or shareholder of or otherwise associated with either Party or an Affiliate. The technical expert's determination shall be, in the absence of fraud or manifest error, binding and conclusive upon both Parties. ARTICLE XII - TERM AND TERMINATION 12.01 TERM. This Supply Agreement shall continue in full force and effect until the date of expiration of the last to expire of Noven's Patent Rights in the Territory, unless earlier terminated in accordance with this Supply Agreement; PROVIDED, HOWEVER, that: (a) upon expiration of this Supply Agreement, Novogyne shall have the right to elect to renew this Supply Agreement for successive five-year terms by giving Noven written notice of its intention to do so prior to the end of any such term; PROVIDED, HOWEVER, that in the event of any such renewal the Parties will negotiate in good faith the fees provided for in Articles 2.02 and 2.03 to take account of the expiration of the applicable patents; (b) commencing on the first to expire of any patent in the Territory included under Noven's Patent Rights, Novogyne shall have the right, exercisable by notice in writing to Noven on a 19 24 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. product-by-product basis upon the launch of any product on to the market in the Territory which is "AB rated" to the CombiPatch Product or such Licensed Product, as the case may be, to require Noven to negotiate in good faith the price at which the CombiPatch Product or such Licensed Product is supplied to Novogyne, its Affiliates or sublicensees in the Territory. 12.02 TERMINATION BY NOVEN. Noven may not terminate this Supply Agreement except as otherwise provided herein. 12.03 DEFAULT. (a) If Noven or Novogyne shall be in default with respect to any material obligation hereunder and fail to cure such default within thirty (30) days after notice thereof, then the other Party may terminate this Supply Agreement during the Term by giving thirty (30) days' prior written notice to that effect. (b) Notwithstanding Article 12.03(a) above, Novogyne shall have the right to immediately terminate this Supply Agreement during the Term in the event of (i) a Change of Control event with respect to Noven as defined in that certain Limited Liability Company Operating Agreement (the "Operating Agreement") dated as of May 1, 1998 by and between NPC and Noven that, at such time, would permit NPC to dissolve the LLC pursuant to the terms of such Operating Agreement or (ii) an assignment or delegation of this Supply Agreement by Noven without the prior written consent of Novogyne. (c) In the event that Noven is not able to supply any portion of the CombiPatch Product pursuant to an Order, then Novogyne shall have the right to manufacture, or have a Third Party manufacture on its behalf, that portion of Novogyne's requirements of the CombiPatch Product which Noven is not able to supply. If Noven is not able to supply any portion of the CombiPatch Product ordered by Novogyne for more than one hundred and twenty (120) days, then Novogyne shall have the right (i) to source from another manufacturer, (ii) void the terms of Articles 2.01 and 2.06 in whole or in part, and/or (iii) terminate this Supply Agreement. (d) Noven shall also have the right to terminate this Supply Agreement if Novogyne fails to make payment(s) (i) upon undisputed amounts or (ii) upon any amounts exceeding *** due hereunder within the time provided therefor and continues in default for more than ninety (90) days after receiving notice from Noven, such termination to be effective upon further notice to Novogyne after failure by Novogyne to cure such default. (e) Without limiting Article 12.05, either Party may terminate this Supply Agreement with immediate effect with respect to any CombiPatch Product that is permanently and completely withdrawn from the market in the Territory for serious adverse health or safety reasons. 20 25 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. 12.04 OBLIGATIONS ON TERMINATION. Upon expiration or termination of this Supply Agreement: (a) Noven shall deliver to Novogyne, at Novogyne's request and expense, all CombiPatch Product and preprinted packaging, labeling and stock materials which are in the possession of Noven, for which Novogyne shall be obligated to make payment upon delivery. Novogyne shall have the right to sell all such CombiPatch Product and any other CombiPatch Product then in its inventory; (b) Except as otherwise agreed by the Parties, within thirty (30) days of the effective date of the expiration of this Supply Agreement or any termination pursuant to Article 12.03 where the grounds for such termination arose through no fault of Noven, including as a member of Novogyne: (i) Novogyne shall cease to use and deliver to Noven, upon written request all Confidential Information of Noven, except for any documents or records which Novogyne is required to retain by law, and (ii) Noven shall cease to use and deliver to Novogyne, upon written request all Confidential Information of Novogyne as set forth in Article 10.01(a) hereof, except for any documents or records which Noven is required to retain by law; (c) On termination of this Supply Agreement, other than any termination pursuant to Article 12.03 where the grounds for such termination arose through no fault of Noven, including as a voting member of Novogyne, if Novogyne so elects, Novogyne shall have, in addition to any other rights and remedies which may be available to Novogyne: (i) the right to make and have made the CombiPatch Product under all of Noven's Technology and Noven's Patent Rights; and (ii) the right to make, have made, use, import, sell, offer to sell and have sold the CombiPatch Product under all Confidential Information of Noven relating to the CombiPatch Product and any other patents, know- how, improvements, development studies and other information or trademarks relating to the CombiPatch Product and owned by Noven, for a royalty of *** of Net Revenues; PROVIDED, HOWEVER, that upon expiration of each of the various patents included in Noven's Patent Rights in the Territory the above royalty shall be reviewed in good faith by the Parties to reflect each such patent's expiration. Noven shall do all such acts, including, without limitation, delivery of such information and other materials and execution of such documents, as may be reasonably required by Novogyne pursuant to this Article 12.04(c). 12.05 FORCE MAJEURE. If the performance of this Supply Agreement or any obligation hereunder is prevented or hindered, by reason of any cause beyond the reasonable control of the affected Party, including, but not limited to, fire, flood, riot, war, labor disturbances or any governmental action, the Party so affected, upon notice to the other Party, shall be excused from such performance, provided that the Party so affected shall use diligent effort to avoid or remove such cause or causes of non-performance and shall continue to perform hereunder with the utmost dispatch whenever such cause or causes are removed. If, as a result of any such action, the performance of this Supply 21 26 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. Agreement is prevented for a continuous period of one hundred and twenty (120) days, either Party shall have the right to terminate this Supply Agreement by providing the other Party with written notice of termination. 12.06 NO WAIVER. The right of, either Party to terminate this Supply Agreement, as herein provided, shall not be affected in any way by its waiver of or failure to take action with respect to any previous defaults. ARTICLE XIII - INSURANCE Noven shall maintain, for the term of this Supply Agreement, the types and amounts of insurance set forth in Exhibit C, attached hereto, and agrees to make Novogyne a named insured under such insurance policies. ARTICLE XIV - PUBLICITY Without the prior written consent of Novogyne as to the text, intended date and time (EST time) of publication, Noven agrees not to issue any press release or other public statement disclosing the existence of or relating to this Supply Agreement; provided, however, that Noven shall not be prevented from complying with any duty of disclosure it may have pursuant to law or applicable stock exchange rules. ARTICLE XV - NOTICE 15.01 NOTICES. All notices, requests, demands and other communications hereunder shall be given in writing and shall be: (a) personally delivered; (b) sent by telecopier, facsimile transmission or other electronic means of transmitting written documents; or (c) sent to the Parties at their respective addresses indicated herein by registered or certified U.S. mail, return receipt requested and postage prepaid, or by private overnight mail courier service. The respective addresses to be used for all such notices, demands or requests are as follows: (a) If to Noven, to: Noven Pharmaceuticals, Inc. 11960 S.W. 144th Street Miami, FL 33186 Attention: President and Chief Executive Officer Telephone: (305) 253-5099 Facsimile: (305) 232-1836 22 27 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. with a copy to: Noven Pharmaceuticals, Inc. 11960 S.W. 144th Street Miami, FL 33186 Attention: Vice President and General Counsel Telephone: (305) 253-5099 Facsimile: (305) 232-1836 or to such other person or address as Noven shall furnish to Novogyne in writing. (b) If to Novogyne, to: Novartis Pharmaceuticals Corporation 59 Route 10 East Hanover, NJ 07936 Attention: Office of the CEO Telephone: (973) 781-8005 Facsimile: (973) 781-7036 with copies to: Novartis Pharmaceuticals Corporation 59 Route 10 East Hanover, NJ 07936 Attention: General Counsel Telephone: (973) 781-5230 Facsimile: (973) 781-5260 and White & Case LLP 1155 Avenue of the Americas New York, NY 10036 Attention: Steven M. Betensky, Esq. Telephone: (212) 819-8200 Facsimile: (212) 354-8113 or to such other address or in care of such other person as hereafter shall be designated in writing by either Party to the other. If personally delivered, such communication shall be deemed delivered upon actual receipt; if electronically transmitted pursuant to this paragraph, such communication shall be deemed delivered on the day transmitted unless it is received after 5:00 p.m., New York time, or on a day which is not a business day, in which case it shall be deemed delivered on the next business day after transmission (and sender shall bear the burden of proof of delivery); if sent by overnight courier 23 28 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. pursuant to this paragraph, such communication shall be deemed delivered upon receipt; and if sent by U.S. mail pursuant to this paragraph, such communication shall be deemed delivered as of the date of delivery indicated on the receipt issued by the relevant postal service, or, if the addressee fails or refuses to accept delivery, as of the date of such failure or refusal. Either Party may change its address for the purposes of this Supply Agreement by giving notice thereof in accordance with this Article. ARTICLE XVI - MISCELLANEOUS 16.01 RELATIONSHIP OF PARTIES. The Parties hereto have the relationship of independent contractors, and neither Party shall enter into any agreements, understandings or commitments on behalf of the other Party without the other Party's express permission in writing. 16.02 ENTIRE AGREEMENT. This Supply Agreement, represents the entire understanding between the Parties and supersedes any and all previous understandings, both oral and written, with respect to the subject matter hereof. The terms, conditions and provisions of this Supply Agreement shall prevail over any inconsistent statements, terms, conditions or provisions contained in any document passing between the Parties hereto including, but not limited to, any acknowledgment, confirmation or notice. The Supply Agreement may not be amended, supplemented, or otherwise modified except by an instrument in writing designated as an amendment, supplement, or modification which is signed by both Parties hereto. 16.03 SEVERABILITY. If any provision of this Supply Agreement shall be held invalid or unenforceable, such invalidity or unenforceability shall attach only to such provision and shall not in any manner affect or render invalid or unenforceable any other severable provision of this Supply Agreement. The Parties will use their best efforts to substitute the invalid or unenforceable provision with a valid and enforceable one which conforms, as nearly as possible, with the original intent of the Parties. 16.04 ASSIGNMENT. All of the terms and provisions of this Supply Agreement shall be binding upon and inure to the benefit of and be enforceable by the respective permitted successors and assigns of the Parties. This Supply Agreement, or any rights thereunder, shall not be sold, assigned, transferred or encumbered by either Party without first obtaining the consent of the other Party in writing, provided that Novogyne may assign or transfer any of its rights and obligations to any successors or assigns of that part of its business to which the subject matter of this Supply Agreement is related. 16.05 DISPUTE RESOLUTION. The parties agree that, other than as set forth in Article 10.01(d) hereof, unresolved disputes between them relating to this Agreement shall be resolved in accordance with Article XII of the Operating Agreement of Novogyne between Noven and Novartis Pharmaceuticals Corporation dated as of May 1, 1998. 16.06 GOVERNING LAW. This Supply Agreement shall be construed, and the respective rights of the Parties hereto determined, according to the substantive 24 29 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. laws of the State of New York, without reference to the conflict of law rules. Both Parties forever waive any defense or claim that New York law cannot be validly applied to this Supply Agreement. 16.07 INTERPRETATION. The article and section headings contained in this Supply Agreement are for convenience of reference only and shall not affect the meaning or interpretation of this Supply Agreement. This Supply Agreement is the product of negotiations between the Parties. In construing the terms hereof, no presumption shall operate in either Party's favor as a result of its counsel's role in drafting the terms or provisions hereof. IN WITNESS WHEREOF, the Parties hereto have duly executed this Supply Agreement as of the date and year first above written. VIVELLE VENTURES LLC By: /s/ Robert C. Strauss ----------------------------------------- Robert C. Strauss President NOVEN PHARMACEUTICALS, INC. By: /s/ James B. Messiry ----------------------------------------- James B. Messiry Vice President and Chief Financial Officer 25 EX-10.6 7 g69008ex10-6.txt AMEND. MARKETING & PROMOTIONAL SERVICES AGREEMENT 1 EXHIBIT 10.6 FIRST AMENDMENT TO MARKETING AND PROMOTIONAL SERVICES AGREEMENT FIRST AMENDMENT, dated as of March 29, 2001, (this "Amendment") to MARKETING AND PROMOTIONAL SERVICES AGREEMENT, dated May 1, 1998, by and between Noven Pharmaceuticals Inc., a Delaware corporation ("Noven") and Vivelle Ventures LLC, a Delaware limited liability company (the "Company" and, together with Noven, collectively, the "Parties" and individually, a "Party"). Terms used herein but not otherwise defined herein shall have the respective meanings given to such terms in the Services Agreement. W I T N E S S E T H: - - - - - - - - - - WHEREAS, Noven and the Company are parties to a Marketing and Promotional Services Agreement (the "Services Agreement"), dated as of May 1, 1998; and WHEREAS, Noven and the Company wish to amend certain provisions of the Services Agreement as herein provided. NOW, THEREFORE, it is agreed: 1. Section 1.1 of the Services Agreement is hereby amended by deleting the definition of "Product" contained therein and inserting in lieu thereof the following new definition: "Product" means Vivelle, Vivelle Dot and CombiPatch. And Section 1.1 of the Services Agreement is hereby further amended by inserting the following new definitions: "CombiPatch" means the transdermal estrogen/progestin patch product which is marketed under the trademark CombiPatch(R) in the Territory. "Vivelle Dot" means the 17(beta)-estradiol single active ingredient product in a matrix which is marketed under the trademark Vivelle Dot(R) in the Territory. 2. Section 3.1 of the Services Agreement is hereby amended by deleting said Section in its entirety and inserting in lieu thereof the following new Section: "Section 3.1 SERVICES. At the direction of Vivelle Ventures LLC, Noven shall provide, or cause a Noven Affiliate to provide, Vivelle Ventures LLC with Services in connection with the business of Vivelle Ventures LLC, as set forth in Schedule A, as may be amended from time to time. Noven agrees to provide the Services (or cause the Services to be provided by an Affiliate) in a competent manner consistent with industry standards for like services performed by third parties on their own behalf. The Parties agree that the Company shall not to enter into any contract with a third party sales force or approve any material amendments to any such contract without the written approval of both Noven -1- 2 and the Company. On an annual basis Vivelle Ventures LLC and Noven shall agree on a sales and marketing plan (the "Sales and Marketing Plan") (which shall include the related budget) for Vivelle Ventures LLC. In the absence of any such agreement, the previous year's Sales and Marketing Plan shall be employed until such time as a new plan is agreed upon. Material amendments to the Sales and Marketing Plan shall require written agreement of both parties." 3. This Amendment is limited as specified and shall not constitute a modification, acceptance or waiver of any other provision of the Services Agreement. 4. This Amendment may be executed in any number of counterparts and by the different parties hereto on separate counterparts, each of which counterparts when executed and delivered shall be an original, but all of which shall together constitute one and the same instrument. 5. This Amendment and the rights of the Parties hereunder shall be governed by, and interpreted in accordance with, the laws of the State of New York. 6. The headings of the several sections of this Amendment are inserted for convenience only and shall not in any way affect the meaning or construction of any provision hereof. 7. This Amendment shall become effective on the date (the "Amendment Effective Date") when each of the Parties shall have signed a counterpart hereof (whether the same or different counterparts). 8. From and after the Amendment Effective Date, all references in the Services Agreement shall be deemed to be references to the Services Agreement as amended hereby. -2- 3 IN WITNESS WHEREOF, the Parties hereto have duly executed this Amendment as of the date and year first above written. VIVELLE VENTURES LLC By: /s/ Robert C. Strauss ------------------------------------- Robert C. Strauss President NOVEN PHARMACEUTICALS INC. By: /s/ James B. Messiry ------------------------------------- James B. Messiry Vice President and Chief Financial Officer -3- EX-10.7 8 g69008ex10-7.txt AMENDMENT TO OPERATING AGREEMENT 1 EXHIBIT 10.7 AMENDMENT TO OPERATING AGREEMENT FIRST AMENDMENT, dated as of March 29, 2001, (this "Amendment"), to LIMITED LIABILITY COMPANY OPERATING AGREEMENT dated May 1, 1998, of Vivelle Ventures LLC (the "Company"), by and among Novartis Pharmaceuticals Corporation, a Delaware corporation ("Novartis"), as the successor-in-interest to the Pharmaceuticals Division of Ciba-Geigy Corporation, a New York corporation and Noven Pharmaceuticals, Inc., a Delaware corporation ("Noven"), as members of the Company (the "Members"). All capitalized terms used herein but not otherwise defined herein shall have the respective meanings given to such terms in the Operating Agreement. W I T N E S S E T H: - - - - - - - - - - WHEREAS, Novartis and Noven are parties to a Limited Liability Company Operating Agreement (the "Operating Agreement"), dated as of May 1, 1998, of the Company; and WHEREAS, Novartis and Noven wish to amend certain provisions of the Operating Agreement as herein provided. NOW, THEREFORE, it is agreed: 1. Section 1.1 of the Operating Agreement is hereby amended by (i) deleting the definition, "Annual Plan" in said Section in its entirety and (ii) deleting the definition, "Vivelle Business," in said Section and inserting in lieu thereof the following definition: "HRT Business" shall mean: (a) the manufacture, marketing and sale of the 17B-estradiol single active ingredient products in a matrix marketed in the Territory under the trademarks "Vivelle" and "Vivelle Dot" pursuant to the License Agreement; and (b) the development, use, sale and other disposal of the transdermal estrogen/progestin product which is marketed in the Territory under the trademark "CombiPatch" pursuant to the License Agreement between the Company and Noven dated March 29, 2001, (but, in each case, shall not include engaging in clinical development activities). And each reference in the Operating Agreement to the term "Vivelle Business" is hereby deleted and the term "HRT Business" is hereby inserted in lieu thereof. 2. Paragraphs (b) and (c) of Section 2.7 of the Operating Agreement are hereby deleted in their entirety and replaced by the following new paragraphs, respectively: "(b) The Members agree that in the event that Noven reasonably believes that Novartis has breached its obligations under the Distribution and Services Agreement, the Limited Assignment Agreement, the Trademark License or the Sublicense Agreement, Noven may, on behalf of the Company, assert a breach thereof and pursue all remedies at law or equity with respect thereto. The Members further agree that Noven may, on behalf of the -1- 2 Company, exercise the rights of the Company contained in Sections 5.4, 5.5, 5.6, 8.1 and 10.1 of the Distribution and Services Agreement and shall act on behalf of the Company in agreeing the Services Plan pursuant to Section 4.1 of the Distribution and Services Agreement. (c) The Members agree that in the event that Novartis reasonably believes that Noven has breached its obligations under the Marketing and Promotional Services Agreement, the Limited Assignment Agreement or the Sublicense Agreement, Novartis may, on behalf of the Company, assert a breach thereof and pursue all remedies at law or equity with respect thereto. The Members further agree that Novartis may, on behalf of the Company, exercise the rights of the Company contained in Sections 4.4, 4.5, 4.6, 7.1 and 9.1 of the Marketing and Promotional Services Agreement and shall act on behalf of the Company in agreeing the Sales and Marketing Plan pursuant to Section 3.1 of the Marketing and Promotional Services Agreement." 3. Section 2.7(d) of the Operating Agreement is hereby amended to delete references to "(c)" and "(d)" in said Section and replace them with "(b)" and "(c)", respectively. 4. Section 5.2 of the Operating Agreement is hereby amended by deleting said Section in its entirety and inserting in lieu thereof the following text: "Section 5.2 PRESIDENT. (a) The first individual to act as "President" of the Company shall be Robert C. Strauss. Upon the death, resignation or removal of Mr. Strauss pursuant to the terms hereof, each Member shall have the right to propose to the Management Committee a successor President. The successor President shall be appointed by a majority vote of the Management Committee provided that at least four (4) Members cast votes in connection with such appointment. The President shall have such authority as is set forth in this Agreement. The successor President shall hold office until his or her death, resignation or removal by a majority vote of the Management Committee, whereupon further successor Presidents shall be proposed and appointed as set forth above. (b) Mr. Strauss and each successor President, if any (collectively referred to as the "President" for purposes of this Section 5.2(b)), shall manage the day-to-day business operations and affairs of the Company subject to direction and oversight by the Management Committee. The President shall be responsible for the implementation of the decisions of the Management Committee and shall have the power to represent and bind the Company regarding the incurrence of monetary obligations or making of payments provided for under the Services Plan or the Sales and Marketing Plan, as defined in the Distribution and Services Agreement and the Marketing and Promotional Services Agreement, respectively. Decisions on matters hereunder requiring the express approval of the Members or which are set forth in Section 5.4, however, shall be made solely by the Management Committee. The President shall have such other powers and perform such other duties as usually pertain to the office of the President and as from time to time may be assigned to him or her by the Management Committee. The annual -2- 3 compensation of the President shall be determined by a majority vote of the Management Committee." 5. Section 5.4 of the Operating Agreement is hereby amended by deleting clauses (i) through (xiii) in their entirety and inserting in lieu thereof the following new clauses: "(i) the approval of any material amendment to the annual operating and capital budgets of the Company outside of the ordinary course of the HRT Business for each product line sold by the Company; (ii) the approval of any amendment to the Certificate of Formation of the Company; (iii) the approval of any material amendment to any of the Ancillary Agreements, the Sublicense Agreement, the Assignment Agreement, the Trademark License or the entry into any product supply contract, other than the Supply Agreement, with an alternative or second supplier; (iv) the creation by the Company of any indebtedness in excess of one million dollars ($1,000,000) or obligation to guaranty such indebtedness; (v) the entry into any technology transfer, licensing or sublicensing arrangement, other than the Sublicense Agreement and the Trademark License; (vi) the entry into any agreement regarding the contribution and subsequent marketing of new products not falling under the terms of the License Agreement, or the undertaking of any clinical development activities, which would create activities outside of the ordinary course of the HRT Business;" (vii) the purchase price of any new products not falling under the terms of the License Agreement; (viii) the admission of new Members; (ix) the acquisition of any asset by the Company outside the ordinary course of the HRT Business in one transaction or a series of related transactions for consideration in excess of five hundred thousand dollars ($500,000) or the acquisition by the Company in the ordinary course of the HRT Business of any asset in one transaction or a series of related transactions for consideration greater than twenty percent (20%) of the fair market value of the Company's assets immediately prior to such acquisition; (x) the disposition of any asset of the Company outside the ordinary course of the HRT Business in one transaction or a series of related transactions with an aggregate fair market value in excess of five hundred thousand dollars ($500,000) or the disposition by the Company in the ordinary course of the HRT Business of assets in one transaction or a series of related transactions for consideration greater than twenty percent (20%) of the fair market value of the Company's assets immediately prior to such disposition; and -3- 4 (xi) the settlement of any commercial litigation which would require a payment by the Company in excess of one million dollars ($1,000,000) or which involves injunctive relief or consent orders which would enjoin the Company from selling any of its products." 6. Section 8.2 of the Operating Agreement is hereby amended by deleting the last sentence in said Section and inserting in lieu thereof the following sentence: "The Tax Matters Member shall not file any annual income tax return of the Company, which income tax return would, in Noven's sole discretion, adversely affect the tax liability of the Company or any distribution made to Noven hereunder, prior to the review by, and the consent to the filing thereof by, Noven, which consent shall not be unreasonably withheld or delayed." 7. This Amendment is limited as specified and shall not constitute a modification, acceptance or waiver of any other provision of the Operating Agreement. 8. This Amendment may be executed in any number of counterparts and by the different parties hereto on separate counterparts, each of which counterparts when executed and delivered shall be an original, but all of which shall together constitute one and the same instrument. 9. This Amendment and the rights of the Members hereunder shall be governed by, and interpreted in accordance with, the laws of the State of Delaware. 10. The headings of the several sections of this Amendment are inserted for convenience only and shall not in any way affect the meaning or construction of any provision hereof. 11. This Amendment shall become effective on the date (the "Amendment Effective Date") when each of the Members shall have signed a counterpart hereof (whether the same or different counterparts). 12. From and after the Amendment Effective Date, all references in the Operating Agreement shall be deemed to be references to the Operating Agreement as amended hereby. -4- 5 IN WITNESS WHEREOF, the parties hereto have duly executed this Amendment as of the date and year first above written. NOVARTIS PHARMACEUTICALS CORPORATION /s/ Lawrence S. Perlow, M.D. --------------------------------------- Lawrence S. Perlow, M.D. Senior Vice President and General Manager, Commercial Operations NOVEN PHARMACEUTICALS, INC. /s/ Robert C. Strauss --------------------------------------- Robert C. Strauss President, Chief Executive Officer and Co-Chairman -5- -----END PRIVACY-ENHANCED MESSAGE-----