-----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, D+pEADXOQZpdixoF/6r0cABwOd8XQNcqz//RQ8eAT91zc6K2IX5lFANn3mPp1I5A nmphw62rJVDBswEdTc7qTA== 0000950144-99-013189.txt : 19991117 0000950144-99-013189.hdr.sgml : 19991117 ACCESSION NUMBER: 0000950144-99-013189 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19990930 FILED AS OF DATE: 19991115 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: 99753645 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 NOVEN PHARMACEUTICALS 10-Q FOR 9/30/99 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 September 30, 1999 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 October 29, 1999 ----------------------------- ------------------------------- Common stock $.0001 par value 21,515,530 2 NOVEN PHARMACEUTICALS, INC. INDEX
Page No. -------- PART I - FINANCIAL INFORMATION Item 1- Financial Statements Statements of Operations for the Three and Nine Months Ended September 30, 1999 and 1998 3 Balance Sheets as of September 30, 1999 and December 31, 1998 4 Statements of Cash Flows for the Nine Months Ended September 30, 1999 and 1998 5 Notes to Financial Statements 6 - 7 Item 2- Management's Discussion and Analysis of Financial Condition and Results of Operations 8 - 11 Item 3- Quantitative and Qualitative Disclosures About Market Risk 11 PART II - OTHER INFORMATION Item 5- Other Information 12 Item 6- Exhibits and Reports on Form 8-K 12 SIGNATURES 13
2 3 PART I. FINANCIAL INFORMATION Item 1. Financial Statements NOVEN PHARMACEUTICALS, INC. Statements of Operations Three and Nine Months Ended September 30, (in thousands, except per share amounts) (unaudited)
Three Months Nine Months -------------------- --------------------- 1999 1998 1999 1998 ------- ------- ------- -------- Revenues: Product sales $ 8,004 $ 3,962 $22,861 $ 12,789 License revenue 56 1,057 169 1,172 ------- ------- ------- -------- Total revenues 8,060 5,019 23,030 13,961 Expenses: Cost of products sold 3,464 1,576 10,069 5,803 Research and development 1,585 1,352 4,727 5,333 Marketing, general and administrative 1,800 2,038 5,446 7,881 ------- ------- ------- -------- Total operating costs and expenses 6,849 4,966 20,242 19,017 ------- ------- ------- -------- Income (loss) from operations 1,211 53 2,788 (5,056) Interest income, net 78 87 193 362 ------- ------- ------- -------- Net income (loss) before income taxes 1,289 140 2,981 (4,694) Income taxes 50 -- 68 -- ------- ------- ------- -------- Net income (loss) $ 1,239 $ 140 $ 2,913 $ (4,694) ======= ======= ======= ======== Basic and diluted income (loss) per share $ 0.06 $ .01 $ 0.14 $ (0.23) ======= ======= ======= ======== Basic weighted average of common stock 21,511 21,475 21,501 20,855 ======= ======= ======= ======== Diluted weighted average of common stock 21,783 21,475 21,673 20,855 ======= ======= ======= ========
The accompanying notes are an integral part of these statements. 3 4 NOVEN PHARMACEUTICALS, INC. Balance Sheets (in thousands, except share data)
September 30, 1999 December 31, 1998 (unaudited) (audited) ------------------ ----------------- Assets Current Assets: Cash and cash equivalents $ 9,633 $ 5,573 Accounts receivable (less allowance for doubtful accounts of $153 in 1999 and $268 in 1998) 4,471 3,044 Due from Vivelle Ventures LLC 1,882 3,489 Inventories 3,138 2,733 Prepaid and other current assets 274 421 -------- -------- 19,398 15,260 Property, Plant and Equipment: Property, plant and equipment, at cost 21,318 20,376 Less: accumulated depreciation and amortization 5,907 4,859 -------- -------- 15,411 15,517 Other Assets: Investment in Vivelle Ventures LLC 6,878 7,500 Patent development costs, net 1,801 1,765 Deposits and other assets 415 114 -------- -------- 9,094 9,379 -------- -------- $ 43,903 $ 40,156 ======== ======== Liabilities and Stockholders' Equity Current Liabilities: Accounts payable $ 3,233 $ 4,954 Notes payable 375 179 Accrued compensation and related liabilities 1,681 913 Other accrued liabilities 678 141 -------- -------- 5,967 6,187 Long Term Liabilities: Deferred license revenue 5,475 5,644 Notes payable 772 -- -------- -------- 6,247 5,644 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 21,515,530 shares at September 30, 1999 and 21,482,423 at December 31, 1998 2 2 Additional paid-in capital 66,457 66,669 Accumulated deficit (34,770) (37,683) Treasury stock, 97,100 shares, at cost -- (663) -------- -------- 31,689 28,325 -------- -------- $ 43,903 $ 40,156 ======== ========
The accompanying notes are an integral part of these statements. 4 5 NOVEN PHARMACEUTICALS, INC. Statements of Cash Flows Nine Months Ended September 30, (in thousands) (unaudited)
1999 1998 ------- ---------- Cash flows from operating activities: Net Net income (loss) $ 2,913 $ (4,694) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 1,047 905 Amortization of patent costs 156 156 (Increase) in inventories (405) (621) Decrease in prepaid and other current assets 147 52 (Increase) in accounts receivable (811) (2,604) Decrease in due from Vivelle Ventures LLC 991 -- (Decrease) increase in accounts payable (1,721) 1,613 Increase in accrued compensation and related liabilities 1,096 633 Increase in other accrued liabilities 538 88 (Decrease) in deferred license revenue (169) (169) (Increase) in deposits and other assets (300) (390) ------- -------- Cash flows provided by (used in) operating activities 3,482 (5,031) Cash flows from investing activities: Investment in Vivelle Ventures LLC -- (7,500) Distribution from Vivelle Ventures LLC 622 -- Maturity of securities, net -- 5,880 Purchase of fixed assets (941) (691) Payments for patent development costs (192) (181) ------- -------- Cash (used in) investing activities (511) (2,492) Cash flows from financing activities: Notes payable 968 -- Sale of common stock 121 2,523 ------- -------- Cash flows provided by financing activities 1,089 2,523 ------- -------- Net increase (decrease) in cash and cash equivalents 4,060 (5,000) Cash and cash equivalents - beginning of period 5,573 11,268 ------- -------- Cash and cash equivalents - end of period $ 9,633 $ 6,268 ======= ========
In accrued compensation and related liabilities, the 1998 bonuses for employees and officers of $329 were settled by issuance of common stock. Cash payments for interest were $29 in 1999; no interest payments were made in prior year. 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 September 30, 1999, and the results of its operations for the three and nine months ended September 30, 1999 and 1998. The results of operations and cash flows for the nine months ended September 30, 1999 are not necessarily indicative of the results of operations or cash flows which may be reported for the remainder of 1999. 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 generally accepted accounting principles 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, 1998. 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, 1998. Certain amounts presented in the financial statements for prior periods have been reclassified to the current period's presentation. 2. Inventories: The following are the major classes of inventory (in thousands): September 30, December 31, 1999 1998 ------------- ------------ Finished goods $ 206 $ 685 Work in process 787 337 Raw materials 2,145 1,711 ------- ------- Total $ 3,138 $ 2,733 ======= ======= 3. Income Taxes: Income taxes for the three and nine months ended September 30, 1999 is a provision for the alternative minimum tax. 6 7 4. Investment in Vivelle Ventures LLC: Noven shares in the income of Vivelle Ventures LLC d/b/a Novogyne Pharmaceuticals (the "Joint Venture") according to an established formula after an annual preferred return of $6.1 million to Novartis Pharmaceuticals Corporation ("Novartis"). Noven's share of income increases as product sales increase, subject to a cap of 50%. The Joint Venture did not produce sufficient income in the nine months ended September 30, 1999 for Noven to recognize income from the Joint Venture under the established formula. During the nine months ended September 30, 1999 Noven sold $6.1 million of products to, and earned $1.8 million in royalties from, the Joint Venture and was reimbursed for $10.4 million of sales and marketing expenses incurred on behalf of the Joint Venture. As of September 30, 1999 Noven's receivable from the Joint Venture was $1.9 million, representing products sold to and marketing expenses reimbursable from the Joint Venture. All intercompany balances are generally paid by the 15th day of the following month. Subject to the approval of the Joint Venture's management committee, cash may be distributed quarterly to Novartis and Noven based upon a contractual formula. In April 1999, Noven received a cash distribution of $622,000 from the Joint Venture based upon the results of operations for the year ended December 31, 1998. This distribution was recorded as a return of capital in the second quarter of 1999. 5. Notes Payable: In May 1999, Noven entered into a Master Finance Lease Agreement (the "Master Lease") with SunTrust Bank, Miami for a maximum principal amount of $1 million with a base lease term of three or four years depending upon the equipment type. The Master Lease contains certain financial covenants. Transactions under the Master Lease have been accounted for as financial arrangements. Under the Master Lease, Noven has entered into one lease in the amount of $624,000 with an expiration date of May 2003. 6. Stockholders' Equity: In January 1999, Noven issued approximately 62,000 shares of its common stock to certain officers and employees as a bonus for their performance during 1998. The value of the shares issued was based upon market price at the time of grant. The bonus amount was recognized as compensation expense in 1998. In April 1999, Noven retired 97,100 shares of treasury stock valued at $663,000. 7. Subsequent Events: In October 1999, Novartis Pharma AG sublicensed from Rhone-Poulenc Rorer, Inc. and its affiliates ("RPR") RPR's rights to market (1) Noven's combination estrogen/progestin transdermal system under the name Estalis(R) in all countries other than the U.S. and Japan, and (2) Noven's first generation estrogen transdermal system under the name Menorest(R) in all countries other than the U.S., Canada and Japan. In connection with the sublicense transaction, and pursuant to Noven's license agreement with RPR, Noven received $2.7 million in cash from RPR as Noven's share of the sublicense fees paid to RPR. 7 8 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, 1998 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 and 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. Noven recognizes revenues from product sales at the time of shipment. Noven accrues royalty revenue, which is included in product sales, based on its best estimates of its licensee's product sales. When no reasonable basis for estimating exists because the information is not in Noven's control, Noven will recognize royalty revenue when actual results are available. Because substantially all of Noven's product sales are to its licensees, Noven's product sales may fluctuate from quarter to quarter depending on various factors not in Noven's control, including but not limited to, inventory requirements of each licensee, the product pricing of each licensee and the timing of certain royalty reconciliations and payments under Noven's license agreements. Royalty reconciliations and payments under the license agreements are generally made once or twice a year for product sales made in the prior period. Results of Operations NINE MONTHS ENDED SEPTEMBER 30, 1999 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30, 1998 Total revenues for the nine months ended September 30, 1999 were $23.0 million, an increase of $9.1 million, or 65%, over the same period in the prior year. This increase in revenues was primarily attributable to the launch of Vivelle-Dot(TM) by Vivelle Ventures LLC (the "Joint Venture") in May 1999 and sales of CombiPatch(TM), which was launched in the U.S. by Rhone-Poulenc Rorer, Inc. ("RPR") in September 1998, partially offset by lower licensing revenue due to milestone payments received during the 1998 period. Revenues for the 1999 period included $1.2 million in royalty payments related to sales of Menorest(R) in certain European countries through 1998. Gross profit for the nine months ended September 30, 1999 was $12.8 million (56% of product sales), compared to $7.0 million (55% of product sales) for the same period in the prior year. The increase in gross margins resulted primarily from a shift in product mix. Research and development expenses decreased approximately $0.6 million, or 11%, for the nine months ended September 30, 1999, compared to the same period in the prior year. This decrease was attributable to fewer clinical studies in 1999 as a result of completion of studies relating to Vivelle-Dot(TM). 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 license agreements and Noven's liquidity. 8 9 Marketing, general and administrative expenses decreased approximately $2.4 million, or 31%, for the nine months ended September 30, 1999 from the same period in the prior year. This decrease was primarily due to lower sales and marketing expenses associated with Dentipatch(R). Interest income, net decreased approximately $0.2 million, or 47%, for the nine months ended September 30, 1999 compared to the same period in 1998, primarily due to lower average balances in cash and cash equivalents and an increase in debt associated with a Master Lease facility entered into in May 1999. Income taxes for the nine months ended September 30, 1999 is a provision for the alternative minimum tax. THREE MONTHS ENDED SEPTEMBER 30, 1999 COMPARED TO THREE MONTHS ENDED SEPTEMBER 30, 1998 Total revenues for the three months ended September 30, 1999 were $8.1 million, an increase of $3.0 million, or 61%, over the same period in the prior year. This increase in revenues was primarily attributable to the launch of Vivelle-Dot(TM) in May 1999 and sales of CombiPatch(TM), which was launched in the U.S. by RPR in September 1998, partially offset by lower licensing revenue due to milestone payments received during the 1998 period. Revenues for the 1999 period included $1.2 million in royalty payments related to sales of Menorest(R) in certain European countries through 1998. Gross profit for the three months ended September 30, 1999 was $4.5 million (57% of product sales), compared to $2.4 million (60% of product sales) for the same period in the prior year. The decrease in gross margins resulted primarily from a shift in product mix and an increase in the number of units packaged by Noven. Research and development expenses increased approximately $0.2 million, or 17%, for the three months ended September 30, 1999 compared to the same period in the prior year. This increase was attributable to an increase in clinical studies and normal operating expenses. Marketing, general and administrative expenses decreased approximately $0.2 million, or 12%, for the three months ended September 30, 1999 compared to the same period in the prior year. This decrease was primarily due to lower sales and marketing expenses associated with Dentipatch(R). Income taxes for the three months ended September 30, 1999 is a provision for the alternative minimum tax. Liquidity and Capital Resources As of September 30, 1999 and December 31, 1998, Noven had $9.6 million and $5.6 million, respectively, in cash and cash equivalents. Net cash of approximately $3.5 million was provided by operating activities during the first nine months of 1999, compared to approximately $5.0 million used in operating activities during the same period in the prior year. This increase primarily resulted from growth in income from operations before depreciation and amortization. 9 10 Net cash of approximately $0.5 million was used in investing activities during the first nine months of 1999, compared to approximately $2.5 million used in investing activities during the same period of the prior year. In 1998, the investment in the Joint Venture was partially offset by the maturity of securities. Net cash used in investing activities during 1999 resulted from the purchase of fixed assets and payment of patent development costs, partially offset by a cash distribution from the Joint Venture. Net cash of approximately $1.1 million was provided by financing activities during the first nine months of 1999, compared to approximately $2.5 million provided by financing activities during the same period of the prior year. The 1998 period was affected by sales of common stock from the exercise of certain warrants. In May 1999, Noven entered into a Master Lease with SunTrust Bank, Miami for a maximum principal amount of $1.0 million with a base lease term of three or four years depending upon the equipment type. The Master Lease contains certain financial covenants. Under the Master Lease, Noven has entered into one lease in the amount of $624,000 with an expiration date of May 2003. Noven's principal sources of short term liquidity are existing cash and cash generated from product sales, royalties under license agreements and distributions from the Joint Venture, which Noven believes will be sufficient to meet its operating needs and anticipated capital requirements. For the long term, Noven intends to utilize funds derived from these 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. There can be no assurance that Noven will successfully complete the development of products under development, 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. Other than the Master Lease, Noven has no credit facility and no assurance can be given that alternative financing will be available, if at all, in a timely manner, 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, or sell assets in order to meet its future obligations. Year 2000 Compliance Noven believes that its Year 2000 project is essentially complete. The project has addressed potential problems in certain computer programs and embedded chips, which represent the calendar year with only the last two digits. There is a risk that, with respect to the change in calendar year from 1999 to 2000, some programs or chips could interpret "00" as "2000", "1900", or some other input. The project addressed issues in critical business areas related to information technology ("IT") systems, such as computer equipment and software, as well as non-IT systems, such as communication systems, alarm and security systems, manufacturing and distribution equipment and control systems, and laboratory testing and environmental control equipment and systems. 10 11 Status Noven initiated its Year 2000 project in early 1998 and engaged an independent consulting company to assist in coordinating its Year 2000 project. The initial inventory, assessment and prioritization and planning phases were completed by May 1998. Noven has also completed the testing and remediation of its IT and non-IT systems. None of Noven's other IT projects have been materially delayed or impacted by the Year 2000 Project. Noven also undertook efforts to determine the extent to which it may be affected by Year 2000 issues of third parties, including suppliers, customers, service providers and certain agencies and regulatory organizations. Noven has reviewed and continues to review with its critical suppliers and major customers the status of their Year 2000 readiness. Some third parties have either declined to provide the requested information or have limited the scope of their assurances. Noven has established a plan for the continued monitoring of critical business partners during 1999. Noven can provide no assurance that these third parties will not experience business disruption. Costs The estimated total cost of the Year 2000 project is $200,000. As of September 30, 1999, Noven had incurred costs of approximately $195,000 related to this project. The project is being funded by cash on hand and from internally generated funds, which Noven expects to be adequate to complete the project. Risks Noven believes that the Year 2000 issue will not have a material adverse effect on its results of operations, liquidity or financial condition. While Noven believes it is difficult to specifically identify the most reasonable worst case Year 2000 scenario, a reasonable worst case scenario would be the failure of third parties with which Noven conducts significant business, including critical supplies and major customers, to be Year 2000 compliant. Accordingly, a contingency plan has been developed for dealing with possible third-party failures, to the extent reasonably possible, including adjusting certain purchasing decisions and putting alternative processes and systems in place to address potential system failures. Noven plans to continue to analyze, develop and implement contingency plans throughout the remainder of 1999. No contingency plan can fully mitigate the impact of significant business disruptions among these third parties, and such plans cannot guarantee that no material adverse effects will occur. The costs of Noven's Year 2000 project are based upon management's best estimates, which were derived using numerous assumptions regarding future events, including the continued availability of certain resources, third-party remediation plans and other factors. There can be no assurance that these estimates will prove to be accurate, and actual results could differ materially from those currently anticipated. Item 3. Quantitative and Qualitative Disclosure About Market Risk. Noven does not believe that it has material exposure to market rate risk. Noven has no material debt obligations. Noven may, however, require additional financing to fund future obligations and no assurance can be given that the terms of future sources of financing will not expose Noven to material market rate risk. 11 12 PART II - OTHER INFORMATION Item 5. Other Information In October 1999, Novartis Pharma AG sublicensed from Rhone-Poulenc Rorer Inc. and its affiliates ("RPR"), RPR's rights to market (1) Noven's combination estrogen/progestin transdermal system under the name Estalis(R) in all countries other than the U.S. and Japan, and (2) Noven's first generation estrogen transdermal system under the name Menorest(R) in all countries other than the U.S., Canada and Japan. In connection with the sublicense transaction, and pursuant to Noven's license agreement with RPR, Noven received $2.7 million in cash from RPR as Noven's share of the sublicense fees paid to RPR. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits 10.1 Amended and Restated License Agreement, dated as of September 30, 1999, between Rhone-Poulenc Rorer, Inc. and Noven (with certain provisions omitted pursuant to rule 24 b-2). 10.2 Amended and Restated License Agreement, dated as of September 30, 1999, between Rhone-Poulenc Rorer Pharmaceuticals, Inc. and Noven (with certain provisions omitted pursuant to rule 24 b-2). 27 Financial Data Schedule (b) Reports on Form 8-K No reports on Form 8-K were filed by the Registrant during the three months ended September 30, 1999. 12 13 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: November 15, 1999 By: /s/ James B. Messiry ---------------------------- James B. Messiry Vice President and Chief Financial Officer 13 14 Exhibits 10.1 Amended and Restated License Agreement, dated as of September 30, 1999, between Rhone-Poulenc Rorer, Inc. and Noven (with certain provisions omitted pursuant to rule 24 b-2). 10.2 Amended and Restated License Agreement, dated as of September 30, 1999, between Rhone-Poulenc Rorer Pharmaceuticals, Inc. and Noven (with certain provisions omitted pursuant to rule 24 b-2). 27 Financial Data Schedule 15 EX-10.1 2 LICENSE AGREEMENT W/RHONE-POULENC INC. 1 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. EXHIBIT 10.1 AMENDED AND RESTATED LICENSE AGREEMENT BETWEEN RHONE-POULENC RORER INC. (as successor to RORER GROUP INC.) AND NOVEN PHARMACEUTICALS, INC. SEPTEMBER 30, 1999 (Menorest Product) 2 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. TABLE OF CONTENTS
Page ---- RECITALS............................................................................1 ARTICLE I - DEFINITIONS.............................................................1 1.1 Affiliates........................................................1 1.2 ***...............................................................1 1.3 Clinical and Product Development Program..........................2 1.4 Control...........................................................2 1.5 Costs.............................................................2 1.6 Estrogen Transdermal Drug Delivery System.........................2 1.7 European Economic Area............................................2 1.8 Excluded Countries................................................2 1.9 Final Processing..................................................2 1.10 Licensed Product..................................................2 1.11 Machine...........................................................2 1.12 Net Sales.........................................................2 1.13 Noven's Machine Patent Rights.....................................3 1.14 Noven's Patent Rights.............................................3 1.15 Noven's Processing Technology.....................................3 1.16 Noven's Technology................................................3 1.17 Packaging Materials...............................................3 1.18 Packaging Material Costs..........................................3 1.19 Standard Packaging................................................3 1.20 Sublicensee.......................................................3 1.21 Territory.........................................................3 ARTICLE II - OBLIGATIONS OF NOVEN...................................................4 2.1 Supply and Use of Information.....................................4 ARTICLE III - ONGOING DEVELOPMENT OBLIGATIONS.......................................4 3.1 Governmental Approvals............................................4 3.2 Supply of Information.............................................4 3.3 Diligence.........................................................4 3.4 Completion of Clinical and Product Development Program............4 ARTICLE IV - GRANT..................................................................5 4.1 License...........................................................5 4.2 Sublicense........................................................5 ARTICLE V - PAYMENTS................................................................5 5.1 Initial Payments..................................................5 5.2 Fee...............................................................5
i 3 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions.
5.3 Minimum Fee.......................................................7 5.4 Payments..........................................................8 5.5 Currency..........................................................8 5.6 Records...........................................................8 5.7 One Royalty.......................................................8 5.8 Compulsory License................................................8 5.9 Samples and Placebos..............................................8 ARTICLE VI - SUPPLY.................................................................9 6.1 Agreement to Supply...............................................9 6.2 Final Processing of Licensed Product..............................9 6.3 Bulk Rolls........................................................9 6.4 Processing Technology and Equipment..............................10 6.5 Packaging........................................................11 ARTICLE VII - PATENTS..............................................................12 7.1 Noven Inventions.................................................12 7.2 Joint Inventions.................................................12 7.3 Reciprocal Rights to Exploit Data................................12 ARTICLE VIII - CONFIDENTIALITY OBLIGATIONS.........................................12 8.1 Confidentiality..................................................12 ARTICLE IX - TERM AND TERMINATION..................................................13 9.1 Term.............................................................13 9.2 Termination......................................................13 ARTICLE X - NOVEN WARRANTIES.......................................................14 10.1 Ownership........................................................14 10.2 Right to Enter Agreement.........................................14 10.3 Product Warranty.................................................14 10.4 Foreign Product Warranty.........................................14 10.5 Patent Infringement Warranty.....................................15 10.6 Limitation on Damages............................................15 ARTICLE XI - ARBITRATION...........................................................15 11.1 Arbitration......................................................15 11.2 Notification of Breach...........................................15 ARTICLE XII - MISCELLANEOUS........................................................15 12.1 Relationship of Parties..........................................15 12.2 Inspection of Facilities.........................................15 12.3 Entire Agreement.................................................15 12.4 Force Majeure....................................................15
ii 4 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions.
12.5 Severability.....................................................16 12.6 Assignment.......................................................16 12.7 Governing Law....................................................16 12.8 Notices..........................................................16 12.9 Counterparts.....................................................17
iii 5 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. EXHIBIT A - NOVEN'S PATENT RIGHTS EXHIBIT B - TRANSDERMAL ESTROGEN SKIN PATCH PRODUCT SPECIFICATIONS EXHIBIT C - SUPPLY AGREEMENT EXHIBIT D - MENOREST BULK SPECIFICATIONS iv 6 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. AMENDED AND RESTATED LICENSE AGREEMENT THIS AMENDED AND RESTATED LICENSE AGREEMENT ("License Agreement") originally made as of April 27, 1989 (the "Original Execution Date"), and amended as of June 22, 1990, July 27, 1990, May 13, 1993, June 9, 1994, May 6, 1996, is amended and restated as of September 30, 1999 (the "Restatement Date") and is by and between RHONE-POULENC RORER INC. (as successor to RORER GROUP INC.), a Pennsylvania corporation having a place of business at 500 Arcola Road, Collegeville, Pennsylvania 19426 (hereinafter "RPR"), and NOVEN PHARMACEUTICALS, INC., a Delaware corporation having a place of business at 11960 Southwest 144th Street, Miami, Florida 33186 (hereinafter "Noven"). W I T N E S S E T H: WHEREAS, as of the Original Execution Date the parties entered into this License Agreement and a related supply agreement, pursuant to which they agreed to collaborate on the development and marketing of a Transdermal Estrogen Drug Delivery System (hereinafter defined as "Licensed Product"); and WHEREAS, Noven represents and warrants that it has developed certain information relating to, and is the owner of the entire right, title and interest in and to, certain patents and patent applications having claims covering the Licensed Product; and WHEREAS, on several occasions since the Original Execution Date and prior to the Restatement Date, the parties have amended this License Agreement in various respects to reflect various amendments in their collaborative venture; and WHEREAS, the parties desire to amend and restate the License Agreement to reflect the current status of the relationship between the parties. NOW THEREFORE, it is mutually agreed between the parties hereto as follows: ARTICLE I - DEFINITIONS 1.1 AFFILIATES. The term "Affiliate" or "Affiliates" shall mean any entity that is Controlled directly or indirectly by the party referred to, or any entity that directly or indirectly Controls the party referred to, or any entity that is directly or indirectly Controlled by an entity which also directly or indirectly Controls the party referred to, so that the term shall include any parent of the entity referred to or a directly or indirectly held subsidiary of the parent or of the entity referred to, and entities in common control with the entity referred to. 1.2 ***. 1 7 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. 1.3 CLINICAL AND PRODUCT DEVELOPMENT PROGRAM. The term "Clinical and Product Development Program" shall mean a plan previously prepared by the parties and performed under this License Agreement. 1.4 CONTROL. The term "Control," "Controls" or "Controlled" shall mean the ownership, directly or indirectly, of at least fifty percent (50%) of the voting rights attached to issued voting shares or the power to control decisions made by any person or entity other than entities having shares. In addition if any company or its Affiliate, which is one of the fifty largest in terms of pharmaceutical sales, in the United States acquires sufficient shares of Noven to exert de facto control, then such shall be considered control hereunder. 1.5 COSTS. The term "Costs" shall mean the fully allocated costs of the party referred to including but not limited to the fully allocated cost of goods and services and the manufacturing overhead related thereto. Cost shall be determined by generally accepted accounting principles, applied on a consistent basis, as determined by the independent certified public accountant retained by the entity whose costs are being accounted for. 1.6 ESTROGEN TRANSDERMAL DRUG DELIVERY SYSTEM. The term "Estrogen Transdermal Drug Delivery System" shall mean an estrogen in a multipolymer comprising an acrylate and an ethylene/vinyl acetate polymer and a rubber, adapted for transdermal delivery by application to the epidermis. 1.7 EUROPEAN ECONOMIC AREA. The term "European Economic Area" shall mean the European Union and Iceland, Liechtenstein and Norway. 1.8 EXCLUDED COUNTRIES. The term "Excluded Countries" shall mean the United States and Canada. 1.9 FINAL PROCESSING. The term "Final Processing" has the meaning set forth in Article 6.2. 1.10 LICENSED PRODUCT. The term "Licensed Product" shall mean any Estrogen Transdermal Drug Delivery System embodying any part of Noven's Technology or covered in whole or in part by any of Noven's Patent Rights or which meet the product specifications set forth in EXHIBIT B, said EXHIBIT B being part of this License Agreement. 1.11 MACHINE. The term "Machine" has the meaning set forth in Article 6.4(a). 1.12 NET SALES. The term "Net Sales" shall mean the gross amount invoiced by RPR, its Affiliates and Sublicensees on all sales of Licensed Product 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, duties and other governmental charges actually paid in connection with the sale, to the extent not reimbursed, (but excluding what is commonly known as income taxes). 2 8 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. 1.13 NOVEN'S MACHINE PATENT RIGHTS. The term "Noven's Machine Patent Rights" has the meaning set forth in Article 6.4(b). 1.14 NOVEN'S PATENT RIGHTS. The term "Noven's Patent Rights" shall mean any and all patents and patent applications the claims of which cover the Licensed Product including reissues, extensions and patents of addition, which are owned by Noven or to which Noven has any right to control or to license third parties (whether in whole or in part) at any time during the term of this License Agreement. Patents on inventions made after December 31, 1994 are included only to the extent based on inventions which were conceived or reduced to practice by either party hereto during and under the Clinical and Product Development Program. Noven's Patent Rights include, without limitation, the United States patents and patent applications listed in Exhibit A attached hereto and all corresponding foreign patents and patent applications. 1.15 NOVEN'S PROCESSING TECHNOLOGY. The term "Noven's Processing Technology" has the meaning set forth in Article 6.4(b). 1.16 NOVEN'S TECHNOLOGY. The term "Noven's Technology" shall mean any and all data, information, technology, know-how, process, technique, method, skill, proprietary information, trade secret, development, discovery, and inventions, owned or controlled by Noven and specifically related to an Estrogen Transdermal Drug Delivery System existing as of Original Execution Date or developed under and during the course of the Clinical and Product Development Program. Noven's Technology shall not include information related to the manufacture of Licensed Product and specifications and procedures related thereto, except to the extent required for health registration of Licensed Product and except to the extent of any license to manufacture granted under this License Agreement. 1.17 PACKAGING MATERIALS. The term "Packaging Materials" shall mean the cartons, labels, package inserts and patient package inserts that are used to package the Licensed Product. The term does not include the pouches. 1.18 PACKAGING MATERIAL COSTS. The term "Packaging Material Costs" shall mean ***. 1.19 STANDARD PACKAGING. The term "Standard Packaging" shall mean an Estrogen Transdermal Drug Delivery System Licensed Product meeting the specifications set forth in Exhibit B packaged in individual pouches and in individual folding cartons consisting of eight (8) pouch units per carton and containing any labels and labeling required by the applicable regulatory authority. 1.20 SUBLICENSEE. The term "Sublicensee" and "Sublicensees" shall mean any entity to whom RPR shall grant any right or license to use Noven's Technology or to make, use or sell under all or any part of Noven's Patent Rights or to make, use or sell any product which meets the specifications set forth in EXHIBIT B. 1.21 TERRITORY. The term "Territory" shall mean all countries and territories worldwide except Japan, Canada and the United States. 3 9 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. ARTICLE II - OBLIGATIONS OF NOVEN 2.1 SUPPLY AND USE OF INFORMATION. Noven shall promptly provide to RPR, for RPR's exclusive use, all Noven's Technology relating to Licensed Product, subject only to the concurrent right of Noven and Noven's Affiliates to use the same in the Excluded Countries. The parties shall, as promptly as possible, provide to each other with any information that comes to the knowledge of a responsible officer of any party relating to any adverse reaction occasioned during research on or use of a Licensed Product. In countries where RPR needs manufacturing information to obtain a product license, Noven shall supply the necessary information solely for use in obtaining such license and subject to the confidentiality obligations of Article VIII. ARTICLE III - ONGOING DEVELOPMENT OBLIGATIONS 3.1 GOVERNMENTAL APPROVALS. RPR shall file requests with the appropriate government agencies within the Territory for approval of Licensed Product, except as to the Excluded Countries. The decision regarding the timing of said filings within the Territory shall be in RPR's sole discretion. RPR shall have full and complete ownership of all governmental approvals, except for the Excluded Countries, relating to Licensed Product. Noven shall provide RPR with full copies of and a right of reference to any application for registrations and any registration in the Excluded Countries. 3.2 SUPPLY OF INFORMATION. RPR shall promptly and on a continuing basis provide Noven, for use by Noven, with all information regarding RPR's technology related to Licensed Product, on a royalty-free basis. 3.3 DILIGENCE. RPR shall use its commercially reasonable efforts to file and obtain approval of appropriate governmental agencies for the sale of Licensed Product, and to sell Licensed Product, in ***. RPR shall use such commercially reasonable efforts to file and obtain approval of appropriate governmental agencies, and sell Licensed Product, as it would for its own products. ***. 3.4 COMPLETION OF CLINICAL AND PRODUCT DEVELOPMENT PROGRAM. The parties agree that as of the Restatement Date each party has fully performed all its obligations and paid for and/or reimbursed the other party with respect to the Clinical and Product Development Program previously set forth in or provided for pursuant to this License Agreement. The parties further agree that except as expressly and specifically set forth herein, the provisions contained in this License Agreement prior to the Restatement Date governed and shall continue to govern any activities, obligations and/or disputes related to the Clinical and Product Development Program, the development and approval of Licensed Product thereunder and all intellectual property accruing therefrom. In addition, if the parties elect to work together with respect to improvements to and/or the development of second generation Licensed Product, they shall negotiate in good faith a license or similar agreement to set forth the terms of such development effort. 4 10 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. ARTICLE IV - GRANT 4.1 LICENSE. (a) Noven hereby grants to RPR, with the right to sublicense RPR's Affiliates and Sublicensees subject to the provisions of Article 4.2 hereof, the exclusive right and license in the Territory to use, sell, or otherwise dispose of Licensed Product under Noven's Patent Rights and Noven's Technology. (b) No right or license to make, use or sell under Noven's Technology or Noven's Patent Rights is granted herein except as provided herein and with reference to Licensed Product. No right of RPR, its Affiliates or Sublicensees to manufacture Licensed Product is granted except to the extent stated herein. (c) The term "exclusive" used here means that Noven shall not voluntarily grant a right to any third parties under Noven's Technology or Noven's Patent Rights and RPR shall have the benefit of Article 5.8 hereof with respect to such grant. 4.2 SUBLICENSE. As part of the rights granted in Article 4.1, RPR shall have the right throughout the Territory to grant sublicenses to Sublicensees, only with the prior written approval of Noven, which approval shall not be unreasonably withheld. Such written approval by Noven shall not be required for sublicenses to RPR Affiliates. Any such Sublicensee shall agree to assume the duties of RPR hereunder with respect to the Territory involved, provided, however, that such sublicense shall not release RPR from any liability for performance under this License Agreement, except as set forth in the sublicense agreement. Noven shall have no duty to approve any such sublicense until it receives a copy of the proposed sublicense agreement, from which RPR shall have the right to delete the financial terms. ARTICLE V - PAYMENTS 5.1 INITIAL PAYMENTS. The parties agree that, as of the Restatement Date, all initial payments, and related credits, required to be made or given, as the case may be, under this License Agreement have been made or given. 5.2 FEE. (a) RPR shall pay Noven with respect to each unit of Licensed Product for which RPR performs the Final Processing a fee of *** of RPR's, its Affiliates' and Sublicensees' Net Sales, subject to the provisions set forth in this Article 5.2. RPR shall pay Noven with respect to each unit of Licensed Product for which Noven performs the Final Processing a fee of *** of RPR's, its Affiliates' and Sublicensees' Net Sales, plus all Packaging Material Costs used in packaging the Licensed Product as set forth in Article 6.5 hereof, subject to the provisions set forth in this Article 5.2. For any country with respect to which RPR performs the Final Processing of any Licensed Product at any time during a semi-annual period described in Article 5.4, RPR shall pay Noven the fee of *** of RPR's, its Affiliates' and Sublicensees' Net Sales for all 5 11 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. Licensed Product sold in such country during such semi-annual period. For any country with respect to which Noven performs the Final Processing of all Licensed Product during a semi-annual period described in Article 5.4, RPR shall pay Noven the fee of *** of RPR's, its Affiliates' and Sublicensees' Net Sales for all Licensed Product sold in such country during such semi-annual period, with such fee calculated by: ***. (b) Notwithstanding anything else to the contrary, the fee to be paid under subparagraph 5.2(a) with respect to Licensed Product for which RPR performs Final Processing shall be no less than *** per unit of Licensed Product; provided, however, that for purposes of calculating such minimum fee, RPR shall be deemed to obtain a fixed production yield of ***, regardless of the yield RPR actually obtains. Such minimum fee shall therefore equate to a minimum fee of *** per square yard of bulk material provided by Noven. The fee to be paid under subparagraph 5.2(a) with respect to Licensed Product for which Noven performs Final Processing shall be no less than *** per unit of Licensed Product, plus all Packaging Material Costs as set forth in Article 6.5 hereof. (c) Notwithstanding the foregoing, if Noven's Cost of Licensed Product increases such that it is no longer commercially viable for Noven to manufacture Licensed Product for the fee provided for in this Article 5.2, or if RPR's weighted average gross margin for Licensed Product with respect to any country, computed excluding samples and sales at or below cost, is reduced to a point that it is no longer commercially viable for RPR to continue to market Licensed Product in that country, then RPR and Noven shall negotiate in good faith for a revised fee under this Article 5.2 with respect to Licensed Product. In the absence of the parties being able to reach a mutually satisfactory agreement, Noven shall grant RPR a non-exclusive license to manufacture Licensed Product under Noven's Technology and Noven's Patent Rights in return for a ***, in addition to other terms and conditions as reasonably agreed by the parties. Such license shall only be for sales of Licensed Product in the country or countries that occasioned the negotiation. (d) The country-specific annual minimum fees payable by RPR to Noven under Articles 5.3(a) and 5.3(b) shall be subject to reduction on a country by country basis as follows: for any particular country with respect to which RPR performs the Final Processing of any Licensed Product at any time during a semi-annual period (as described in Article 5.4), one-half of the minimum fee for that country for the year in which such semi-annual period falls shall be reduced by 20%. (For the avoidance of doubt, this provision would result in the reduction of the annual minimum fee for a given country in a given year (i) by 10% if RPR performs Final Processing of any Licensed Product with respect to such country at any time during only one semi-annual period in such year and (ii) by 20% if RPR performs any such Final Processing at any time during both semi-annual periods in such year. See the sample calculation in Article 5.3(b). (e) Notwithstanding any other provision of this License Agreement, if RPR and Noven so agree, a sublicense agreement may provide that a Sublicensee of RPR shall pay Noven directly the applicable fees set forth in this Article 5.2 for Net Sales made by such Sublicensee. All calculation, adjustment and payment term provisions of this License Agreement shall be applicable to any such payments by a Sublicensee. 6 12 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. 5.3 MINIMUM FEE. (a) RPR shall pay Noven a minimum fee per year beginning with the first calendar year after product registration in the following countries as follows: MINIMUM FEE PER CALENDAR YEAR FROM PRODUCT REGISTRATION (YEAR 1 = YEAR OF PRODUCT REGISTRATION) (U.S. $ in thousands)
COUNTRY YEAR 1 YEAR 1$ YEAR 2$ YEAR 3$ YEAR 4$ YEAR 5$ - ------- ------ ------- ------- ------- ------- -------
*** (b) For year 6 and subsequent years the minimum royalty shall be the same as for Year 5 multiplied by a number, the numerator of which is the total transdermal estrogen market in the country in question for which the calculation is made and the denominator of which is the total transdermal estrogen market in the country in question in Year 5. For the avoidance of doubt, the parties agree that the applicable fee accrued in any given year is due and paid in the following year once Licensed Product sales for such prior year can be determined. (By way of example, the minimum fee with respect to *** for 2000 (which is year 6 for that country) would be calculated as follows, assuming that (i) RPR performed Final Processing for some Licensed Product for *** during the first six-month period, but not during the second six-month period and (ii) the total transdermal estrogen market in *** in 2000 was 5% larger than it was in 1999: Step 1: multiply the year 5 minimum fee by 105% - $*** x 1.05 = $*** Step 2: subtract 20% of one-half of this number - (i) one-half of $*** is $*** (ii) 20% of $*** is $*** (iii) $*** - $*** = $*** (The minimum fee would be $***) (c) To the extent there is a difference in any country at the end of each calendar year between any amount set forth in Article 5.3(a) and the amounts set forth in Article 5.2(a), RPR shall pay the difference between the 7 13 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. minimums and the amount actually paid within sixty (60) days of year end or this License Agreement will become non-exclusive in that country. The parties acknowledge that, as of the Restatement Date, the licenses granted hereunder are exclusive in the Territory. 5.4 PAYMENTS. The fee due under Article 5.2(a) shall be payable as follows: (a) the minimum fee under Article 5.2(b), plus an amount equal to *** per unit for Packaging Material Costs, shall be due and payable within thirty (30) days of Noven's invoice for the applicable Licensed Product, which invoice shall be delivered simultaneously with the delivery of the Licensed Product; and (b) within thirty (30) days after the end of each semi-annual calendar period (i.e., January 1 to June 30 and July 1 to December 31), RPR shall make a payment to Noven of the remaining fee, if any, due under Article 5.2(a) with respect to such semi-annual period, based on Net Sales during the semi-annual period. The parties agree that in any country where RPR performs any Final Processing in such country during a semi-annual period, then no additional fee is due under Article 5.2(a) with respect to sales in such period. The price for samples and placebos provided for in Article 5.9 shall be payable in immediately available funds within thirty (30) days of RPR's receipt of Noven's invoice for such samples and placebos. 5.5 CURRENCY. Fees and royalties based on sales in a currency other than United States dollars shall be converted to United States dollars at the closing spot rate for the purchase of United States dollars on the last business date of the calendar quarter for which payments are being accounted as published by the Chase Manhattan Bank, New York. 5.6 RECORDS. RPR, its Affiliates and Sublicensees shall keep accurate records in any way related to Licensed Product in accordance with generally accepted accounting practices uniformly applied. At Noven's request, such records shall be made available for examination by independent certified public accountants or auditors designated by Noven and approved by RPR which approval shall not be unreasonably withheld. 5.7 ONE ROYALTY. Only one royalty shall be paid on any Sale of Licensed Product, namely the sale by RPR, its Affiliate or Sublicensee to an unrelated third party. 5.8 COMPULSORY LICENSE. As an alternative, but not in addition to this License Agreement, RPR shall have the benefit of the royalty provided for in any compulsory license but to the exclusion of the benefits or rights under this License Agreement for such country. 5.9 SAMPLES AND PLACEBOS. Noven shall supply pouched samples and placebos of Licensed Product (clearly labeled as samples or placebos) as requested by RPR at a price of *** per unit, ex works Noven's factory (Incoterms 1990) (as of July 1, 1999) plus *** per unit for Packaging Material Costs. On July 1 of each year during the term of this License Agreement, the price set forth in this Article 5.9 for samples and placebos shall be adjusted pursuant to the Producer Price Index for finished goods published by the U.S. Department of Labor, Bureau of Labor Statistics (hereafter referred to as the "Index"). The price applicable after each such adjustment shall be determined by multiplying the price set forth above by a fraction, the numerator of which shall be value of the Index for the month and year in which the computation is made, and the 8 14 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. denominator of which shall be the value of the Index on January 1, 1999. Should the publication of the Index be discontinued by said U.S. Department of Labor ("DOL"), then such other indexes as may be published by the DOL most nearly approaching the discontinued Index shall be used in determining the adjustment hereunder. Should the DOL 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. ARTICLE VI - SUPPLY 6.1 AGREEMENT TO SUPPLY. Noven shall use its best efforts to supply and RPR shall purchase all of RPR's, its Affiliates' and Sublicensees' requirements of Licensed Product from Noven according to the terms and conditions set forth in the Supply Agreement set forth in EXHIBIT C, which forms a part of this License Agreement; however, should Noven be unable to meet RPR's requirements of Licensed Product or by reason of force majeure is unable to import Licensed Product into a country and if the parties, after having consulted in good faith to resolve the matter, are unable to do so, RPR's sole remedy for Noven's failure to supply shall be the right to a non-exclusive license to make or have made Licensed Product under Noven's Technology and Noven's Patent Rights under all other terms and conditions of this License Agreement in return for a ***. 6.2 FINAL PROCESSING OF LICENSED PRODUCT. Noven shall (a) manufacture the Licenced Product through the stage of production of bulk rolls of active pharmaceutical product, (b) test, prepare and package such bulk rolls, and (c) supply and deliver them to RPR's facility in Nenagh, Ireland, or such other RPR facility as RPR shall designate. Noven shall perform all such activities in accordance with the terms of the Supply Agreement and this License Agreement, the bulk laminate roll specifications attached hereto as EXHIBIT D and made a part hereof (as may be amended by the parties from time to time), and all applicable laws and regulations. RPR shall complete the processing of Licensed Product in final form in accordance with the terms of the Supply Agreement and this License Agreement. Specifically, RPR shall be responsible for die cutting and scoring the bulk laminate rolls received from Noven and pouching, labeling, cartoning, performing analytical testing of and releasing Licensed Product (hereafter referred to as "Final Processing"). The price for Licensed Product delivered by Noven to RPR under this Article 6.2 shall be as set forth in the Supply Agreement and this License Agreement, and shall be ex works Noven's factory. Title to and risk of loss to the bulk rolls shall pass to RPR ex works Noven's factory, and RPR shall bear all costs and expenses for delivery of the bulk rolls including, but not limited to, freight, insurance and duties. 6.3 BULK ROLLS. (a) RPR shall cause its Affiliate in Ireland to purchase bulk rolls of Licensed Product from Noven at a price equal to the minimum fee under Article 5.2(b) hereof. (b) Noven will invoice the RPR Affiliate in Ireland based on the number of square yards of bulk rolls delivered by Noven to RPR pursuant to Article 6.2. 9 15 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. (c) In the event that Noven supplies bulk laminate rolls of placebo material for educational or promotional purposes, such material shall be supplied by Noven at an agreed upon price and no other fee or royalty shall be due from RPR with respect to such material. (d) Notwithstanding anything else to the contrary contained in this License Agreement, Noven shall remain liable in accordance with the terms and pricing of this License Agreement and the Supply Agreement to manufacture and supply all Licensed Product processed in final form that RPR is unable, or has inadequate capacity, or other conditions mutually agreed between RPR and Noven, to process in final form pursuant to the terms of this License Agreement. 6.4 PROCESSING TECHNOLOGY AND EQUIPMENT. (a) Noven grants RPR a non-exclusive license to use the die cutting and pouch packaging machine (the "Machine") in RPR's Nenagh Ireland facility under Noven's Processing Technology and Noven's Machine Patent Rights (each as defined below), solely for RPR to perform Final Processing operations under this License Agreement with respect to Licensed Product. (b) The term "Noven's Processing Technology" shall mean any and all data, information, technologies, know-how, processes, techniques, methods, skills, proprietary information, trade secrets, developments and discoveries, that are owned or controlled by Noven and specifically related to the Machine and packaging operations with respect to Licensed Product, now existing or developed in the future. The term "Noven's Machine Patent Rights" shall mean any and all patents conceived or reduced to practice prior to December 31, 1998, including but not limited to reissues, extensions and patents of addition, and patent applications, continuations, divisionals and continuations-in-part thereon that are owned or controlled by Noven and the claims of which cover the Machine with respect to the Licenced Product. No right or license to make, use or sell under Noven's Processing Technology or Noven's Machine Patent Rights or right of resale, lease or transfer of any kind with respect to the Machine is granted herein except as provided herein or with reference to Licensed Product. No right to make or manufacture, or have made or manufactured, Licensed Product is granted to RPR except to the extent stated herein. (c) Noven represents and warrants that it has no actual and present knowledge of any rightful claim of any third party by way of infringement or the like of any patent or other intellectual property rights related to the Machine. Noven shall defend at its own cost and hold RPR harmless from any such claims provided that RPR provides it prompt notice and an opportunity to defend. (d) Noven's Processing Technology and Noven's Machine Patent Rights shall be subject to the confidentiality obligations of Article VIII. RPR shall undertake all reasonable actions to restrict access to the Machine and Noven's Processing Technology to its employees on a need to know basis and who are bound to its obligations of confidentiality to the same extent as RPR is bound to Noven. 10 16 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. (e) In the event that RPR wishes to sell, lease or otherwise transfer or dispose of the Machine, Noven shall have an exclusive right of first refusal on such terms as may be mutually agreed upon by the parties acting in good faith. If Noven does not agree to such terms within forty-five (45) days of receipt of a written offer from RPR, then RPR may sell, lease or otherwise transfer or dispose of the Machine to a third party on terms no less favorable to RPR than those proposed to Noven. (f) RPR shall not move the Machine from its manufacturing facility in Nenagh, Ireland, to another facility without having first given written notice to Noven. (g) RPR shall not copy, duplicate or otherwise reproduce the Machine or components thereof. 6.5 PACKAGING. (a) In the case in which Noven engages in Final Processing of the Licensed Product, Noven shall supply and deliver Licensed Product in finished, packaged form to such facilities as RPR shall designate. Noven shall perform manufacturing and packaging activities in accordance with the terms of this License Agreement, as amended, including the approved specifications and all applicable laws and regulations. The price for Licensed Product supplied in finished, packaged form shall be as set forth in Article 5.2, and shall be ex works Noven's factory. Title to and risk of loss to the Licensed Product shall pass to RPR ex works Noven's factory, and RPR shall bear all costs and expenses for delivery of the Licensed Product including, but not limited to, freight, insurance and duties. (b) As set forth in Article 5.4, the fee per unit paid by RPR pursuant to Article 5.2 and the price per unit paid by RPR pursuant to Article 5.9 each includes *** for Packaging Material Costs used by Noven in packaging Licensed Product for supply to RPR. Commencing July 1, 1999, and each six months thereafter, Noven shall calculate its actual per unit Packaging Material Costs for the six-month period then ended. To the extent that Noven's actual per unit Packaging Material Costs exceeded *** for such period, Noven shall invoice RPR for such difference and RPR shall pay such amount in immediately available funds within thirty (30) days of RPR's receipt of Noven's invoice. The parties agree that RPR shall reimburse Noven for the cost of all Packaging Material Costs purchased by Noven for use in packaging Licensed Product for supply to RPR, regardless of whether such Packaging Materials are actually used in packaging Licensed Product; provided that RPR 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 RPR's forecast delivered pursuant to the Supply Agreement for the six months following the date of purchase by Noven. Without limiting the foregoing, RPR shall reimburse Noven for any Packaging Material Costs for Packaging Materials rendered unusable because of a change in RPR's labeling or packaging specifications or requirements. 11 17 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. ARTICLE VII - PATENTS 7.1 NOVEN INVENTIONS. On all inventions conceived or made under and during the scope of the Clinical and Product Development Program for which Noven (through its employees and consultants) is the sole inventor, Noven shall obtain, at its own expense, and own any patents in the countries requested by RPR and these inventions shall become a part of Noven's Patent Rights. RPR shall decide unilaterally in which countries RPR wishes patent protection and Noven shall, at Noven's expense, file patent applications in such countries in the name of Noven, and Noven shall have all right, title and interest therein, subject to the other provisions of this License Agreement. RPR shall have the duty to pay all costs and fees for such filings in any and all said countries in the Territory for so long as RPR is not selling Licensed Product in such country or is not paying the minimum royalties with respect to such countries. 7.2 JOINT INVENTIONS. On all inventions conceived or made under and during the scope of the Clinical and Product Development Program which are joint inventions of an employee(s) or consultant(s) of Noven and an employee(s) or consultant(s) of RPR, or an Affiliate of RPR, the parties to this License Agreement shall have joint ownership of any patent applications and patents obtained thereon, and RPR shall pay all costs and expenses of obtaining and maintaining such patent rights within the Territory, provided, however, that one-half (1/2) of all such expenses in a country payable by RPR shall be a credit against one-half (1/2) of any royalties otherwise due Noven in such country. RPR shall have the sole right to decide in which countries RPR wishes patent protection on an invention developed hereunder. RPR shall keep Noven fully and promptly informed with respect to the countries in which RPR elects to obtain patent protection, and Noven may, at its own expense, apply for and obtain patent protection in any country in which RPR does not elect to obtain such patent protection. 7.3 RECIPROCAL RIGHTS TO EXPLOIT DATA. RPR shall have the unrestricted right to use any data derived from any existing or future study on Licensed Product, whether conducted by RPR, Noven or a third party, in any country or area of the Territory. Noven shall similarly have the unrestricted right to use any such data, but only in the United States, Canada and Japan. ARTICLE VIII - CONFIDENTIALITY OBLIGATIONS 8.1 CONFIDENTIALITY. Except to the extent that any of the data, information or know-how developed by either party, including but not limited to Noven's Technology, is in the public domain at the time of disclosure or subsequently enters the public domain without fault on the part of a party hereto, each party shall hold all such data, information, or know-how received from the other prior to or during the term of this License Agreement in confidence and shall not disclose it to any other entities during the term of this License Agreement or thereafter without the other party's permission in writing. Such permission shall not be withheld (a) to the extent disclosure is required by legal process to which process the generating party is permitted to object; or (b) to information required to be submitted to governmental authorities in order to obtain any necessary health registration or price reimbursement. Such permission shall not be unreasonably withheld as to other information reasonably required for obtaining health registration or insurance reimbursement approval or in marketing Licensed Product. Notwithstanding the foregoing, RPR shall have the right to use and disclose after the year 2010 Noven's Technology existing on the Original Execution Date or twenty (20) years after its disclosure as to data generated after the Original Execution Date, if this License Agreement expires by its normal terms, as set forth in Article 9.1 hereof. 12 18 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. ARTICLE IX - TERM AND TERMINATION 9.1 TERM. (a) This License Agreement shall take effect as of the Original Execution Date and continue in full force and effect in each country throughout the Territory until the date of expiration of the last to expire of Noven's Patent Rights in such country. (b) In countries where Noven has no Patent Rights, the term of this License Agreement shall be for fifteen (15) years from the date of first commercial sale in such country. Termination of this License Agreement shall take place on a country-by-country basis. (c) Upon expiration of this License Agreement pursuant to this Article 9.1 in any country, RPR 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 Article 5.2 to take account of the expiration of the applicable patents. (d) Notwithstanding any other provision of this License Agreement, for those countries within the European Economic Area, any pure know-how license granted hereunder under Noven's Technology will remain exclusive only for a period of ten (10) years following the first sale of Licensed Product in any country within the European Economic Area, and following the expiration of such ten-year period, the license to the applicable know-how under the Noven Technology shall automatically convert to a non-exclusive license to use, sell or otherwise dispose of Licensed Product in the European Economic Area for the remainder of the term; provided, however, that in such event the parties will negotiate in good faith the fees provided for in Article 5.2 to take account of the non-exclusive nature of the license in the European Economic Area. 9.2 TERMINATION. (a) If either RPR or Noven should fail to discharge fully and promptly any of its obligations under this License Agreement, including but not limited to the Supply Agreement, attached as EXHIBIT C, including the obligation to make payments, and should such party failing to discharge any of its obligations fail to rectify such failure within ten (10) days in the case of failure to make payments or within sixty (60) days for other failures after notice in writing thereof by the other party, this License Agreement can thereupon be terminated at the other party's option upon receipt of notice to that effect. 13 19 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. (b) Any one party hereto shall have the right to terminate this License Agreement with immediate effect in the event of any proceeding under a Bankruptcy Act or any insolvency, receivership or dissolution proceeding directed against the other party. (c) Noven shall have the right to terminate this License Agreement at any time upon thirty (30) days' notice in the event that RPR or any RPR Affiliate or Sublicensee or any entity to whom RPR sells its ethical pharmaceutical business markets, sells or distributes any Estrogen Transdermal Drug Delivery System other than Licensed Product; provided, however, that this right of termination does not apply (i) with respect to the countries in the European Economic Area, (ii) ***. During the term of this Agreement, if RPR or any RPR Affiliate or Sublicensee or any entity to whom RPR sells its ethical pharmaceutical business markets, sells or distributes any Estrogen Transdermal Drug Delivery System other than Licensed 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 4 to a non-exclusive license; provided, however, that this right shall not apply ***. (d) Upon termination, all information and data, relating to Licensed Product including but not limited to Noven's Technology, and information obtained from, incorporating or based on Noven's Technology shall be returned to Noven. RPR, its Affiliates and Sublicensees shall make no further use of the same. The foregoing shall not apply to information solely generated by RPR, if termination is by RPR for cause of Noven or by expiration of the term specified in Article 9.1. ARTICLE X - NOVEN WARRANTIES 10.1 OWNERSHIP. Noven represents and warrants that it has developed Noven's Technology and it owns the entire right, title and interest in the patent and patent applications now set forth in EXHIBIT A. 10.2 RIGHT TO ENTER AGREEMENT. Noven warrants that it has the right to enter into this License Agreement, and that there are no outstanding assignments, grants, licenses, encumbrances, obligations or agreements, either written, oral or implied, inconsistent with this License Agreement. 10.3 PRODUCT WARRANTY. Noven represents and warrants that Licensed Product in the form delivered to RPR shall conform to specifications for any such product, including composition, purity, appearance and stability and shall be capable of maintaining such until any expiration date for such Licensed Product; and shall not be misbranded in violation of Sections 501, 502 and 505 of the Federal Food, Drug and Cosmetic Act, as amended from time to time. 10.4 FOREIGN PRODUCT WARRANTY. Noven will use its best efforts to comply with manufacturing specifications of foreign countries of which RPR has given Noven specific notice, provided that RPR pays all Cost of such compliance. 14 20 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. 10.5 PATENT INFRINGEMENT WARRANTY. Noven represents and warrants that it has no present knowledge of any patent, the claims of which cover Licensed Product. 10.6 LIMITATION ON DAMAGES. In the event of any breach of any representation and warranty of Noven under this Article X damages shall be limited to actual damages and shall not exceed the royalty payable to Noven hereunder in any calendar year or in the case of the warranty against patent infringement, shall not exceed fifty (50%) percent of the royalties paid to Noven in any such calendar year for the country in question. ARTICLE XI - ARBITRATION 11.1 ARBITRATION. Any claim or controversy arising between the parties hereto in connection with this License Agreement or the breach hereof which cannot be settled satisfactorily by correspondence or by mutual conference shall be determined by arbitration in New York, New York, by three arbitrators in accordance with the then prevailing rules of the American Arbitration Association upon the request by either party. Judgment upon the award rendered may be entered in any court having jurisdiction thereof. 11.2 NOTIFICATION OF BREACH. In the event one party notifies the other party of a breach of this License Agreement, and such breach is not cured within the applicable notice period, such other party shall have the right within said sixty (60) day period to bring such dispute to arbitration. ARTICLE XII - MISCELLANEOUS 12.1 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. 12.2 INSPECTION OF FACILITIES. At any time during the term of this License Agreement and any extension thereof, RPR may from time to time during normal working hours have employees of its choosing visit and inspect the facilities of Noven, and may discuss with Noven employees the progress of projects under development by Noven. 12.3 ENTIRE AGREEMENT. This License 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 License 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. This License 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. 12.4 FORCE MAJEURE. If the performance of this License Agreement or any obligation reasonably related thereto is prevented or hindered, by reason of any cause beyond the control of the affected party, including but not limited to, 15 21 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. fire, flood, riot, strikes or any governmental action, then the party so affected, upon notice to the other party, shall be excused from such performance, provided that the party so affected shall use its best efforts to avoid or remove such cause or causes of non-performance and shall continue to perform thereunder with the utmost dispatch whenever such cause or causes are removed. If, as a result of any such action, the performance of this License Agreement is prevented for a continuous period of one hundred eighty (180) days, either party shall have the right to terminate this License Agreement as to the country or countries involved by providing the other party with written notice of termination. 12.5 SEVERABILITY. If any provision of this License 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 License Agreement, and this License Agreement shall be carried out as if any such invalid or unenforceable provision were not contained herein. 12.6 ASSIGNMENT. This License Agreement shall inure to the benefit of the parties and to the successors and assigns of that part of the business of RPR to which the subject matter of this License Agreement is related. This License Agreement, or any rights hereunder, shall not otherwise be sold, assigned, transferred or encumbered by either party without first obtaining the consent of the other party in writing; provided, that RPR may assign or transfer any of its rights and obligations to any of its Affiliates and to any successors or assigns of that part of its business to which the subject matter of this License Agreement is related. 12.7 GOVERNING LAW. This License Agreement shall be interpreted in accordance with and governed by the laws of the State of New York, without references to the conflict of law rules. Both parties forever waive any defense or claim that New York law cannot be validly applied to this License Agreement. 12.8 NOTICES. Any notice or report required or permitted hereunder shall be given in writing, hand delivered or by registered or certified mail, to the following addresses: (1) Noven Pharmaceuticals, Inc. 11960 Southwest 144th Street Miami, Florida 33186 Attention: President With a copy to: Noven Pharmaceuticals, Inc. 11960 Southwest 144th Street Miami, Florida 33186 Attention: General Counsel 16 22 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. (2) Rhone-Poulenc Rorer Inc. 500 Arcola Road Collegeville, Pennsylvania 19426 Attention: President With a copy to: General Counsel Rhone-Poulenc Rorer Inc. 500 Arcola Road Collegeville, Pennsylvania 19426 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, and shall be deemed to have been given as of the date of mailing. 12.9 COUNTERPARTS. This License Agreement and any amendments 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. 17 23 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. IN WITNESS WHEREOF, the parties hereto have caused this Amended and Restated License Agreement to be executed in duplicate and their seals to be hereunto affixed as of the day and year first written above. RHONE-POULENC RORER INC. (as successor to RORER GROUP INC.) By: /s/ Michel de Rosen ---------------------------------------- Michel de Rosen Chairman and Chief Executive Officer NOVEN PHARMACEUTICALS, INC. By: /s/ Robert C. Strauss ---------------------------------------- Robert C. Strauss President and Chief Executive Officer 18 24 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. EXHIBIT A NOVEN'S PATENT RIGHTS *** A-1 25 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. EXHIBIT B TRANSDERMAL ESTROGEN SKIN PATCH PRODUCT SPECIFICATIONS *** B-1 26 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. EXHIBIT C SUPPLY AGREEMENT C-1 27 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. EXHIBIT D MENOREST BULK SPECIFICATIONS *** D-1 EX-10.2 3 LICENSE AGREEMENT W/RHONE-POULENC PHARMACEUTICALS 1 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. EXHIBIT 10.2 AMENDED AND RESTATED LICENSE AGREEMENT BETWEEN RHONE-POULENC RORER PHARMACEUTICALS INC. AND NOVEN PHARMACEUTICALS, INC. SEPTEMBER 30, 1999 (Estrogen, Progestin and Combination Products) 2 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. TABLE OF CONTENTS
PAGE ---- RECITALS..........................................................................................1 ARTICLE I - DEFINITIONS...........................................................................2 1.1 Affiliates......................................................................2 1.2 ***.............................................................................2 1.3 Combination Estrogen/Progestin Transdermal Drug Delivery System.................2 1.4 Control.........................................................................2 1.5 Cost(s).........................................................................2 1.6 Cost(s) of Investment...........................................................2 1.7 Development Plan................................................................2 1.8 European Economic Area..........................................................3 1.9 Estrogen Transdermal Drug Delivery System.......................................3 1.10 Facility........................................................................3 1.11 IMS Data........................................................................3 1.12 IND.............................................................................3 1.13 Licensed Product(s).............................................................3 1.14 NDA.............................................................................3 1.15 Net Revenues....................................................................3 1.16 Noven's Patent Rights...........................................................4 1.17 Noven's Technology..............................................................4 1.18 Packaging Materials.............................................................4 1.19 Packaging Material Costs........................................................4 1.20 Pharmaceutical Development Report...............................................4 1.21 Progestin Transdermal Drug Delivery System......................................4 1.22 Rorer Group Agreement...........................................................4 1.23 Standard Specification(s).......................................................5 1.24 Sublicensee.....................................................................5 1.25 Territory.......................................................................5 ARTICLE II - DEVELOPMENT OBLIGATIONS..............................................................5 2.1 Completion of Development Plan..................................................5 2.2 Continuing Development Plan and Licensed Products Obligations...................5 ARTICLE III - GRANT...............................................................................7 3.1 License.........................................................................7 ARTICLE IV - PAYMENTS.............................................................................8 4.1 Payments for Estrogen Product...................................................8 4.2 Payments for Progestin Product and Combination Product..........................8 4.3 Minimum and Maximum Fee.........................................................8 4.4 Payments........................................................................9
-i- 3 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions.
4.5 Samples and Placebos...........................................................10 4.6 Minimum Sales..................................................................10 4.7 Currency.......................................................................10 4.8 Records........................................................................10 4.9 One Royalty....................................................................11 4.10 Compulsory License.............................................................11 4.11 Pass-through Compensation......................................................11 ARTICLE V - SUPPLY...............................................................................11 5.1 Agreement to Supply............................................................11 5.1A Packaging......................................................................11 5.2 The Facility...................................................................12 5.3 Lease Agreement Terms..........................................................12 5.4 Priority.......................................................................12 5.5 Additional Documents...........................................................12 ARTICLE VI - PATENTS.............................................................................13 6.1 Noven Inventions...............................................................13 6.2 Joint Inventions...............................................................13 6.3 RPR Inventions.................................................................13 6.4 Notice of Possible Infringement or Unauthorized Use............................13 6.5 Notice of Possible Third Party Infringement....................................14 ARTICLE VII - CONFIDENTIALITY OBLIGATIONS........................................................14 7.1 Confidentiality................................................................14 ARTICLE VIII - TERM AND TERMINATION..............................................................15 8.1 Term...........................................................................15 8.2 Termination....................................................................15 8.3 Rights Upon Termination........................................................16 ARTICLE IX - NOVEN WARRANTIES....................................................................17 9.1 Ownership......................................................................17 9.2 Right to Enter Agreement.......................................................17 9.3 Product Warranty...............................................................17 9.4 Foreign Product Warranty.......................................................18 9.5 Patent Infringement Warranty...................................................18 9.6 Product Warranty...............................................................18 ARTICLE X - INDEMNIFICATION......................................................................18 10.1 Indemnity......................................................................18 10.2 Indemnity Procedure............................................................18 10.3 Insurance......................................................................19
-ii- 4 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions.
ARTICLE XI - ARBITRATION.........................................................................19 11.1 Arbitration....................................................................19 11.2 Notification of Breach.........................................................19 ARTICLE XII - MISCELLANEOUS......................................................................19 12.1 Relationship of Parties........................................................19 12.2 Inspection of Facilities.......................................................19 12.3 Entire Agreement...............................................................19 12.4 Force Majeure..................................................................19 12.5 Severability...................................................................20 12.6 Assignment.....................................................................20 12.7 Governing Law..................................................................20 12.8 Notices........................................................................20 12.9 Counterparts...................................................................21 12.10 Publicity......................................................................21
-iii- 5 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. EXHIBIT A - U.S. AND FOREIGN PATENTS AND PATENT APPLICATIONS EXHIBIT B - STANDARD SPECIFICATIONS EXHIBIT C - SUPPLY AGREEMENT -iv- 6 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. AMENDED AND RESTATED LICENSE AGREEMENT This AMENDED AND RESTATED LICENSE AGREEMENT (the "License Agreement") originally made as of the 26th day of June, 1992 (the "Original Execution Date") is amended and restated as of September 30, 1999 (the "Restatement Date") and is by and between RHONE-POULENC RORER PHARMACEUTICALS INC., a Delaware corporation having its principal place of business at 500 Arcola Road, Collegeville, Pennsylvania 19426 (hereinafter "RPR"), and NOVEN PHARMACEUTICALS, INC., a Delaware corporation having its principal place of business at 11960 Southwest 144th Street, Miami, Florida 33186 (hereinafter "Noven"). WITNESSETH: WHEREAS, as of the Original Execution Date, the parties entered into this License Agreement and a related supply agreement, pursuant to which they agreed to collaborate on the development and marketing of (1) an Estrogen Transdermal Drug Delivery System, as hereinafter defined; (2) a Progestin Transdermal Drug Delivery System, as hereinafter defined; and (3) a Combination Estrogen/Progestin Transdermal Drug Delivery System, as hereinafter defined (hereinafter defined collectively as "Licensed Products" and each individually as a "Licensed Product"); WHEREAS, Noven has developed certain information relating to and is the owner of record or under an unrecorded assignment of certain patents and patent applications having claims covering the Licensed Products; WHEREAS, Noven wishes to provide for the development and regulatory approval of the Licensed Products and for their marketing; WHEREAS, RPR is willing and able to pursue regulatory approval for and to market the Licensed Products, in accordance with the terms of this License Agreement; WHEREAS, Noven has previously licensed to Rorer Group Inc., a Pennsylvania corporation having since changed its name to Rhone-Poulenc Rorer Inc., of which RPR is a wholly-owned subsidiary, and maintaining a place of business at 500 Arcola Road, Collegeville, Pennsylvania 19426, an Estrogen Transdermal Drug Delivery System for sale outside the United States, Canada and Japan; and WHEREAS, the parties desire to amend and restate the License Agreement to reflect the current status of the relationship between the parties. NOW, THEREFORE, for good and valuable consideration and intending to be legally bound, the parties hereto agree as follows: 1 7 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. ARTICLE I - DEFINITIONS 1.1 AFFILIATES. The term "Affiliate" or "Affiliates" shall mean any entity that is Controlled, as hereinafter defined, directly or indirectly by the party referred to, or any entity that directly or indirectly Controls, as hereinafter defined, the party referred to, or any entity that is directly or indirectly Controlled, as hereinafter defined, by an entity which also directly or indirectly Controls, as hereinafter defined, the party referred to, so that the term shall include any parent of the entity referred to or a directly or indirectly held subsidiary of the parent or of the entity referred to, and entities in common control with the entity referred to. 1.2 ***. 1.3 COMBINATION ESTROGEN/PROGESTIN TRANSDERMAL DRUG DELIVERY SYSTEM. The term "Combination Estrogen/Progestin Transdermal Drug Delivery System" shall mean a combination estrogen/progestin in a polymer adapted for transdermal delivery by application to the epidermis. 1.4 CONTROL. The term "Control," "Controls" or "Controlled" shall mean the ownership, directly or indirectly, of fifty percent (50%) or more of the voting rights attached to issued and outstanding voting shares or such lesser percentage as represents the maximum percentage of voting rights allowed to be owned by a foreign-controlled corporation in a particular jurisdiction. 1.5 COST(S). The term "Costs" and "Cost" shall mean Noven's fully allocated cost of manufacturing the Licensed Product, including the direct cost of any raw materials and Packaging Materials (other than any provided by RPR) utilized in manufacturing such Licensed Product, the direct labor utilized in manufacturing such Licensed Product plus an appropriate share of all factory overhead, both fixed and variable, allocated to the Licensed Product in accordance with generally accepted accounting principles and the normal accounting practices for all other products manufactured in the applicable facility. 1.6 COST(S) OF INVESTMENT. The term "Costs of Investment" and "Cost of Investment" shall mean (1) RPR's fully allocated cost of obtaining IND and NDA approvals (or equivalent regulatory approvals in foreign countries), including the direct cost of raw materials and labor utilized plus an appropriate allocable share of all research overhead, both fixed and variable, but not including any general or administrative overhead, in accordance with generally accepted accounting principles and the normal accounting practices for all other services provided for in the applicable facility, plus (2) payments made to Noven under the provisions of Articles 4.2(a) and 4.2(b) of this License Agreement prior to the Restatement Date and under Article 1 of the Warrant Agreement between RPR and Noven dated as of the Original Execution Date, less ***. 2 8 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. 1.7 DEVELOPMENT PLAN. The term "Development Plan" shall mean a plan previously prepared by the parties and performed under this License Agreement. 1.8 EUROPEAN ECONOMIC AREA. The term "European Economic Area" shall mean the European Union and Iceland, Liechtenstein and Norway. 1.9 ESTROGEN TRANSDERMAL DRUG DELIVERY SYSTEM. The term "Estrogen Transdermal Drug Delivery System" shall mean an estrogen in a polymer adapted for transdermal delivery by application to the epidermis. 1.10 FACILITY. The term "Facility" shall mean a facility for the manufacture of Licensed Products as described in Article V and designed to enable Noven to manufacture the Licensed Products pursuant to this License Agreement and the attached Supply Agreement. 1.11 IMS DATA. The term "IMS Data" shall mean the audit conducted by IMS International, Inc. or its Affiliates of retail sales in the Territory, of the products indicated or, if such audit is not available, an audit of such sales data conducted by a market share research company internationally known in the pharmaceutical industry and mutually agreed upon by Noven and RPR. 1.12 IND. The term "IND" shall mean an Investigational New Drug Application as defined in the Federal Food Drug and Cosmetic Act of the United States of America and applicable regulations promulgated thereunder, as amended from time to time. 1.13 LICENSED PRODUCT(S). The term "Licensed Product" or "Licensed Products" shall mean individually and collectively any Estrogen Transdermal Drug Delivery System, any Progestin Transdermal Drug Delivery System or any Combination Estrogen/Progestin Transdermal Drug Delivery System. A Licensed Product relating to the Estrogen Transdermal Drug Delivery System shall be referred to as an "Estrogen Product", a Licensed Product relating to the Progestin Transdermal Drug Delivery System shall be referred to as a "Progestin Product" and a Licensed Product relating to the Combination Estrogen/Progestin Transdermal Drug Delivery System shall be referred to as a "Combination Product." 1.14 NDA. The term "NDA" shall mean a New Drug Application as defined in the Federal Food Drug and Cosmetic Act of the United States of America and applicable regulations promulgated thereunder, as amended from time to time. 1.15 NET REVENUES. The term "Net Revenues" shall mean the gross amount invoiced by RPR, its Affiliates and Sublicensees on all sales of any Licensed Product, (but not including sales between or among RPR, its Affiliates and Sublicensees) in all countries of the Territory applicable with respect to such Licensed Product under this License Agreement, 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). 3 9 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. 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. Patents on and applications claiming inventions conceived after December 31, 1998 shall be included only to the extent that such inventions are made by either party during work on Licensed Products and performed under this License Agreement. Noven's Patent Rights include, without limitation, the United States patents and patent applications listed in Exhibit A attached hereto and all corresponding foreign patents and patent applications. 1.17 NOVEN'S TECHNOLOGY. The term "Noven's Technology" shall mean any and all data, information, technology, know-how, processes, techniques, methods, skills, proprietary information, trade secrets, developments, discoveries, and inventions, owned or controlled by Noven or its Affiliates and specifically related to one or more of its Estrogen Transdermal Drug Delivery System, Progestin Transdermal Drug Delivery System and Combination Estrogen/Progestin Transdermal Drug Delivery System, now existing or developed in the future. Noven's Technology related to the Estrogen Transdermal Drug Delivery System shall be referred to as "Noven's Estrogen Technology," Noven's Technology related to the Progestin Transdermal Drug Delivery System shall be referred to as "Noven's Progestin Technology" and Noven's Technology related to the Combination Estrogen/Progestin Transdermal Drug Delivery shall be referred to as "Noven's Combination Technology". Notwithstanding the foregoing, Noven's Technology shall not include information related to the manufacture of Licensed Products and specifications and procedures related thereto, except to the extent required for obtaining health or governmental registration or both of Licensed Products and except to the extent of any license to manufacture granted to RPR under this License Agreement. 1.18 PACKAGING MATERIALS. The term "Packaging Materials" shall mean the cartons, labels, package inserts and patient package inserts that are used to package the Licensed Products. The term does not include the pouches. 1.19 PACKAGING MATERIAL COSTS. The term "Packaging Material Costs" shall mean ***. 1.20 PHARMACEUTICAL DEVELOPMENT REPORT. The term Pharmaceutical Development Report shall mean a report prepared as provided for in Article 2.2(b)(i). 1.21 PROGESTIN TRANSDERMAL DRUG DELIVERY SYSTEM. The term "Progestin Transdermal Drug Delivery System" shall mean a progestin in a polymer adapted for transdermal delivery by application to the epidermis. 1.22 RORER GROUP AGREEMENT. The term "Rorer Group Agreement" shall mean the Agreement between Rorer Group, Inc. and Noven Pharmaceuticals, Inc. dated as of April 27, 1989, as amended and relating to the Estrogen Product. 4 10 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. 1.23 STANDARD SPECIFICATION(S). The term "Standard Specifications" and "Standard Specification" shall mean any Licensed Product meeting the specifications set forth in Exhibit B, which Exhibit B is attached hereto and incorporated herein by reference, packaged in individual pouches in individual folding cartons consisting of a mutually agreed to number of pouch units per carton and in a mutually agreed to number of folding cartons per shipping container, and containing as to Licensed Product for use in the United States alone any labels and labeling required therefor by the United States Food and Drug Administration. Said Licensed Product shall be produced at a mutually agreed to facility operated by Noven, the grade and quality of the Licensed Product, its labels, labeling and Packaging Materials being as specified in the approved NDA or IND. 1.24 SUBLICENSEE. The term "Sublicensee" and "Sublicensees" shall mean any entity to whom RPR shall grant any right or license to use Noven's Technology or Noven's Patent Rights or to make, use or sell any Licensed Product under all or any part of Noven's Technology and Noven's Patent Rights. 1.25 TERRITORY. The term "Territory" shall mean all the countries and territories worldwide as to the Progestin Product and the Combination Product; and shall mean Japan as to the Estrogen Product. ARTICLE II - DEVELOPMENT OBLIGATIONS 2.1 COMPLETION OF DEVELOPMENT PLAN. The parties agree that as of the Restatement Date each party has fully performed all its obligations and paid for and/or reimbursed the other party with respect to the Development Plan previously set forth in or provided for pursuant to this License Agreement, except for those obligations set forth in Article 2.2 hereof. The parties further agree that except as expressly and specifically set forth herein, the provisions contained in this License Agreement prior to the Restatement Date governed and shall continue to govern any activities, obligations and/or disputes related to the Development Plan, the development and approval of Licensed Product thereunder and all intellectual property accruing therefrom. In addition, if the parties elect to work together with respect to improvements to and/or the development of any second generation Licensed Products, they shall negotiate in good faith an amendment to this License Agreement to set forth the terms of such development effort. 2.2 CONTINUING DEVELOPMENT PLAN AND LICENSED PRODUCTS OBLIGATIONS. (a) ASSIGNMENT OF INVENTION RIGHTS. It is understood and agreed that: (i) all employees and, to the extent reasonably practicable, agents and consultants of Noven employed in or for the work to be performed pursuant to this License Agreement shall execute written agreements acceptable to both parties requiring assignment to Noven of all developments, discoveries, improvements or inventions relating to any Licensed Product made by such employees, agents or consultants under and during the course of such work; and (ii) all employees and, to the extent practicable, agents and consultants of RPR employed in or for the work to be performed pursuant to this License Agreement 5 11 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. shall execute written agreements acceptable to both parties requiring assignment to RPR of all developments, discoveries, improvements or inventions relating to any Licensed Product made by such employees, agents or consultants under and during the course of such work. (b) NOVEN'S OBLIGATIONS. Noven will continue to pursue the following development work in accordance with the Development Plan: (i) With respect to each Licensed Product, Noven will prepare a Pharmaceutical Development Report that is sufficient to enable RPR to file an NDA or the equivalent regulatory approval application for each such Licensed Product in those countries in the Territory agreed to by the parties including, but not necessarily limited to, the United States, Canada, Japan, Germany, France, United Kingdom, Italy, and Spain. In addition, Noven will supplement and update each such Pharmaceutical Development Report as it becomes necessary or appropriate in light of regulatory review to achieve marketing approval for each such Licensed Product in the applicable countries. Each Pharmaceutical Development Report shall: (A) be prepared in accordance with all applicable regulatory requirements; and (B) contain all information necessary to conform to applicable Committee for Proprietary Medicinal Products (CPMP) guidelines. (ii) Noven shall promptly and on a continuing basis provide to RPR, for RPR's and its Affiliates use in the Territory and solely in connection with Licensed Product, all Noven's Technology and Noven's Patent Rights provided that no license is granted hereunder (A) outside the Territory, (B) for any use other than with Licensed Product, or (C) for any uses of the Estrogen Product in the United States, its territories and possessions and Canada. In countries where RPR requires manufacturing information to obtain a product license, Noven shall supply the necessary information solely for use in obtaining such license and subject to the confidentiality obligations of Article VII. (c) RPR'S OBLIGATIONS. With respect to the Estrogen Product, whether it be the currently existing formulation or a new formulation that the parties agree on for the Japan market, RPR will conduct all supplemental toxicology, stability (other than that which Noven was required to do under the Development Plan) and clinical work necessary to support the filing of a regulatory marketing approval application in Japan and any additional supplemental toxicology, stability (other than that which Noven was required to do under the Development Plan) and clinical work necessary in light of regulatory review to achieve marketing approval in Japan. For purposes of this subparagraph, "supplemental" work shall mean all work that Noven has not already completed itself, or that Noven is not otherwise obligated to complete under the Rorer Group Agreement. (d) GOVERNMENTAL APPROVALS. RPR shall file in its own name applications with the appropriate government agencies for approval of the Progestin Product and the Combination Product in each country in the Territory specified in the Development Plan and in Japan for the Estrogen Product. The 6 12 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. timing of said filings shall be in accordance with the Development Plan. RPR shall have full and complete ownership of all such applications and of all governmental approvals relating to the Licensed Products. Noven shall have a right of reference to the same, under and in accordance with the terms of this License Agreement, and shall retain ownership of the underlying data contained therein. RPR shall file and use diligent effort to obtain approval from appropriate governmental agencies for the sale of Licensed Products, and to sell Licensed Products, consistent with those efforts used for RPR's own ethical pharmaceutical products with similar market potential. (e) SUPPLY OF INFORMATION. RPR shall promptly and on a continuing basis provide Noven, for use under the terms of this License Agreement throughout the world by Noven and its Affiliates with all information regarding RPR's technology relating to Licensed Products, on a royalty-free basis during the term of this License Agreement. (f) ADVERSE REACTIONS. Each party shall, as promptly as possible, provide to the other any information that a responsible officer of such party becomes aware of relating to any adverse reaction occasioned during research on or use of any Licensed Product. ARTICLE III - GRANT 3.1 LICENSE. (a) Noven hereby grants to RPR an exclusive right and license in the Territory, under Noven's Patent Rights and Noven's Technology, to use, sell or otherwise dispose of Licensed Products. (b) No right or license to make, use or sell under Noven's Technology or Noven's Patent Rights is granted herein except as provided herein and with reference to the Licensed Products. Notwithstanding the foregoing, no right of RPR, its Affiliates or Sublicensees to manufacture Licensed Products is granted except to the extent specifically hereinafter provided. (c) The term "exclusive" as used in this Article means that the rights conferred on RPR are to the exclusion of all other persons and entities, including but not limited to Noven, and that Noven shall not voluntarily grant any rights in the Territory to any third party to use, sell or otherwise dispose of Licensed Products and that, with respect to any involuntary grant, RPR shall have the rights set forth in Article 4.10 hereof. 7 13 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. (d) As part of the rights granted in this Article 3.1, RPR shall have the right to grant sublicenses to Sublicensees, only with the prior written approval of Noven, which approval shall not be unreasonably withheld; provided, however, that such written approval by Noven shall not be required for sublicenses to RPR Affiliates. Any such Sublicensee shall agree in writing to assume the duties of RPR hereunder with respect to the country and Licensed Product involved, provided, however, that no such sublicense shall release RPR from any liability for performance under this License Agreement, except as set forth in the sublicense agreement. Noven shall have no duty to approve any such sublicense until it receives a copy of the proposed sublicense agreement, from which RPR shall have the right to delete the financial terms. ARTICLE IV - PAYMENTS 4.1 PAYMENTS FOR ESTROGEN PRODUCT. RPR shall pay to Noven, subject to the provisions set forth in Article 4.3 hereof, a fee equal to *** of RPR's and its Affiliates' and Sublicensees' Net Revenues from sales of the Estrogen Product in Japan. This fee shall include compensation for the rights licensed to RPR hereunder and compensation for supplying Estrogen Product meeting Standard Specifications (such Estrogen Product to be supplied in pouched packages), but shall not include Noven's Packaging Material Costs, which shall be paid by RPR in accordance with Articles 4.3 and 4.4 hereof. Such fee shall be calculated by: ***. 4.2 PAYMENTS FOR PROGESTIN PRODUCT AND COMBINATION PRODUCT. (a) With respect to the Progestin Product and the Combination Product, RPR shall pay to Noven, subject to the provisions set forth in Article 4.3 hereof, a fee equal to (i) *** of RPR's and its Affiliates' and Sublicensees' Net Revenues from sales of the Progestin Product and the Combination Product in each of the United States of America and Japan for a period of thirty-six (36) months from the date of first commercial sale of the Progestin Product or the Combination Product in such country and (ii) *** of RPR's and its Affiliates' and Sublicensees' Net Revenues from sales of the Progestin Product and the Combination Product in the United States of America and Japan following such thirty-six (36) month period. Subject to the provisions set forth in Article 4.3 hereof, the fee shall be equal to *** of RPR's and its Affiliates' and Sublicensees' Net Revenues from sales of the Progestin Product and the Combination Product in each country in the remainder of the Territory. In each case, this fee shall include compensation for the rights licensed to RPR hereunder and compensation for supplying pouched Progestin Product and pouched Combination Product meeting Standard Specifications, but in each case shall not include Noven's further Packaging Material Costs, which shall be paid by RPR in accordance with Articles 4.3 and 4.4 hereof. In each case, the relevant fee shall be calculated by: ***. (b) The parties agree that as of the Restatement Date, all of the initial and development payments previously set forth in and due to Noven under this License Agreement have been paid, except for ***. 4.3 MINIMUM AND MAXIMUM FEE. (a) Notwithstanding anything else to the contrary in this License Agreement, but subject to any adjustments pursuant to Articles 4.3(b), (c) and (e), the fees to be paid pursuant to Articles 4.1 and 4.2(a) shall be ***. (b) On July 1 of each year during the term of this License Agreement, the minimum and maximum fees set forth in Article 4.3(a) shall be adjusted pursuant to the Producer Price Index for finished goods published by the U.S. Department of Labor, Bureau of Labor Statistics (hereafter referred to as the "Index"). The minimum and the maximum applicable after each such 8 14 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. adjustment shall be determined by multiplying the minimums and maximums set forth in Article 4.3(a), by a fraction, the numerator of which shall be value of the Index set forth in this Article 4.3(b) for the month and year in which the computation is made, and the denominator of which shall be the value of the Index on January 1, 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 RPR's weighted average gross margin computed excluding samples and sales at or below cost for any Licensed Product *** with respect to any country, then RPR and Noven shall negotiate in good faith *** with respect to the affected Licensed Product and the country or countries involved. In the absence of the parties being able to reach a mutually satisfactory agreement, Noven shall grant to RPR a non-exclusive license to make, have made, use, sell and have sold such Licensed Product under Confidential Information relating to the Licensed Products, 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 Licensed Products and owned by Noven, for a royalty of ***. (d) INTENTIONALLY OMITTED. (e) During the term of this License Agreement, the parties shall work together to maximize the efficiency of the manufacturing processes and to minimize the Cost of the Licensed Products. To the extent economic benefits result from such efforts ***. 4.4 PAYMENTS. With respect to each Licensed Product, the fees provided for in Articles 4.1 and 4.2(a) shall be payable in immediately available funds as follows: (a) With respect to Estrogen Product, ***, shall be due and payable within thirty (30) days of RPR's receipt of Noven's invoice for such Licensed Product. With respect to Combination Product, RPR shall make the following payments to Noven in immediately available funds, in each case within thirty (30) days of RPR's receipt of Noven's invoice for such Licensed Product: (i) for Combination Product shipped to RPR for sale in the United States, ***; and (ii) for Combination Product shipped to RPR for sale outside of the United States, ***. (b) The parties agree that the transfer price for Combination Product: ***. (c) The remainder of any payment due under Article 4.1 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 RPR, its Affiliates or Sublicensees invoice for such Licensed Product. For each country in which RPR, its Affiliates or Sublicensees invoice for Combination 9 15 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. Product, (i) if the amount paid by RPR for Licensed Products shipped in such semi-annual period is greater than the amount due under Article 4.2(a) hereof (including the amount due for Packaging Material Costs for such semi-annual period), RPR 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 RPR's invoice; and (ii) if the amount paid by RPR for Licensed Products shipped in such semi-annual period is less than the amount due under Article 4.2(a) hereof (including the amount due for Packaging Material Costs for such semi-annual period), RPR shall pay such difference within sixty (60) days after the end of the semi-annual calendar period. (d) The price for samples and placebos provided for in Article 4.5 shall be payable in immediately available funds within thirty (30) days of RPR's receipt of Noven's invoice for such samples and placebos. (e) Notwithstanding any other provision of this License Agreement, if RPR and Noven so agree, a sublicense agreement may provide that a Sublicensee of RPR shall pay Noven directly the applicable fees set forth in Articles 4.1 and 4.2(a) for the sales by such Sublicensee of Licensed Products. All calculation, adjustment and payment term provisions of this License Agreement shall be applicable to any such payments by a Sublicensee. 4.5 SAMPLES AND PLACEBOS. Noven shall supply pouched samples and placebos (clearly labeled as samples or placebos) of Progestin Product and Combination Product as requested by RPR at a price of ***. Noven shall supply pouched samples and placebos of Estrogen Product (clearly labeled as samples or placebos) for Japan as requested by RPR at a price of ***. 4.6 MINIMUM SALES. ***. 4.7 CURRENCY. Fees and royalties based on sales in a currency other than United States dollars shall be converted to United States dollars at the closing spot rate for the purchase of United States dollars on the last business date of the calendar quarter for which payments are being accounted as published by the Chase Manhattan Bank, New York, or its successor. 4.8 RECORDS. (a) RPR, its Affiliates and Sublicensees shall keep complete and accurate records concerning sales of all Licensed Products on a product-by-product and country-by-country basis 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 RPR, which approval shall not be unreasonably withheld. 10 16 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. (b) Noven shall keep complete and accurate records concerning Noven's production, packaging, assaying, and delivery of all Licensed Product supplied to RPR hereunder, including Noven's Costs. Such records shall be kept in accordance with generally accepted accounting principles applied on a consistent basis. At RPR's request and expense, such records shall be made available for examination by RPR or independent certified public accountants or auditors designated by RPR and approved by Noven, which approval shall not be unreasonably withheld. 4.9 ONE ROYALTY. Only one royalty shall be paid on any sale of any Licensed Product, namely the sale by RPR, its Affiliate or Sublicensee to an unrelated third party. 4.10 COMPULSORY LICENSE. RPR shall have the benefit of the royalty provided for in any compulsory license issued by Noven with respect to any Licensed Product in any country. 4.11 PASS-THROUGH COMPENSATION. To the extent RPR or its Affiliates receive any up front, cash payment for a sublicense of any Licensed Product, RPR shall pay Noven: ***. ARTICLE V - SUPPLY 5.1 AGREEMENT TO SUPPLY. Noven shall supply, and RPR and at RPR's option up to five (5) designated Affiliates or Sublicensees of RPR shall purchase all of RPR's, its Affiliates' and Sublicensees' requirements of all Licensed Products. The Licensed Products shall be supplied and purchased according to the terms and conditions set forth in the Supply Agreement set forth in Exhibit C, which Exhibit C is attached hereto and incorporated herein by reference. Licensed Product, at RPR's option, shall be supplied in finished, packaged and labelled form or in bulk rolls. 5.1A PACKAGING. (a) Noven shall supply and deliver Licensed Product in finished, packaged form to such facilities as RPR shall designate. Noven shall perform manufacturing and packaging activities in accordance with the terms of this License Agreement, as amended, including the specifications attached hereto (as may be amended by the parties from time to time) and all applicable laws and regulations. The price for Licensed Product shall be as set forth in Articles 4.1, 4.2 and 4.5, and shall be ex works Noven's factory. Title to and risk of loss to the Licensed Product shall pass to RPR ex works Noven's factory, and RPR shall bear all costs and expenses for delivery of the Licensed Product, including, but not limited to, freight, insurance and duties. (b) As set forth in Articles 4.4 and 4.5 hereof, the price per unit paid by RPR includes an amount for Packaging Material Costs. Commencing July 1, 1999, and each six months thereafter, Noven shall calculate its actual per unit Packaging Material Costs for the six-month period then ended. To the extent that Noven's actual per unit Packaging Material Costs exceeded the amount 11 17 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. paid by RPR for such period, Noven shall invoice RPR for such difference and RPR shall pay such amount in immediately available funds within thirty (30) days of RPR's receipt of Noven's invoice. The parties agree that RPR shall reimburse Noven for the cost of all Packaging Materials purchased by Noven for use in packaging Licensed Product for supply to RPR, regardless of whether such Packaging Materials are actually used in packaging Licensed Product; provided that RPR 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 RPR's forecast delivered pursuant to the Supply Agreement for the six months following the date of purchase by Noven. Without limiting the foregoing, RPR shall reimburse Noven for any Packaging Material Costs for Packaging Materials rendered unusable because of a change in RPR's labeling or packaging specifications or requirements. 5.2 THE FACILITY. In order to enable Noven to manufacture the Licensed Products pursuant to this Article V and the attached Supply Agreement, the parties cooperated in good faith to provide for an appropriate Facility. Such Facility is owned by RPR and leased to Noven pursuant to a lease agreement negotiated between the parties in good faith. 5.3 LEASE AGREEMENT TERMS. The Lease Agreement with respect to the Facility contains the following terms: (a) the rent for the Facility is U.S. ***, payable in advance; (b) the term of the lease coincides with the term of the Supply Agreement and is automatically renewed on the same terms by renewal of the Supply Agreement at the expiration of any term thereof; and (c) the lease contains such other terms and conditions as were mutually agreed upon by Noven and RPR and consistent with the terms of the Supply Agreement, and includes a provision giving Noven the right to buy the Facility or equipment within the Facility or both at any time at RPR's net book value or, when fully depreciated, for U.S. $1.00. 5.4 PRIORITY. In manufacturing at the Facility, Noven shall give priority to RPR's and its Affiliates' and permitted Sublicensees' requirements for the Licensed Products. 5.5 ADDITIONAL DOCUMENTS. Noven shall, upon request from RPR, execute from time to time reasonable documents to establish and affirm RPR's ownership of the Facility. 12 18 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. ARTICLE VI - PATENTS 6.1 NOVEN INVENTIONS. If Noven (through its employees, agents or consultants) makes or conceives any inventions or discoveries in the course of the work to be performed by it pursuant to this License Agreement, Noven shall own such inventions and discoveries and they shall become part of Noven's Technology and be subject to the terms of this License Agreement. Noven shall file and pursue all patent applications requested by RPR in its name and at RPR's expense as to any national filings and country designation fees and at Noven's expense as to any PCT filings. Any patents so obtained shall be owned by Noven and become part of Noven's Patent Rights and be subject to the terms of this License Agreement. Any patent applications or patents issuing therefrom for which RPR does not pay all expenses in accordance with this Article VI shall not be included in Noven's Patent Rights and shall not be licensed hereunder. Any expenses borne by RPR hereunder shall be deducted from any fees due under Article 4.1 and Article 4.2(a) based on sales of Licensed Products in an amount of up to 5% of such fees until the total patent expenses incurred by RPR hereunder are reimbursed. 6.2 JOINT INVENTIONS. If Noven and RPR jointly (through their respective employees, agents or consultants) make or conceive any inventions or discoveries in the course of the work to be performed pursuant to this License Agreement, RPR and Noven shall have joint ownership of such inventions or discoveries and any patent applications and patents obtained thereon, and RPR shall pay all costs and expenses of obtaining and maintaining such patent rights, provided, however, that in each affected country one-half (1/2) of all such expenses paid by RPR shall be credited against one-half (1/2) of any fees due under Article 4.1 and Article 4.2(a) with respect to such country. RPR shall have the sole right to decide what patent rights, if any, to apply for with respect to the joint inventions or discoveries described in this Article 6.2. RPR shall keep Noven fully and promptly informed with respect to patent rights, if any, that RPR elects to apply for, and Noven may, at its own expense, apply for and obtain patent protection in any country in which RPR does not elect to obtain such patent protection. Each party shall have full right to use, pursuant to the terms of this License Agreement, any discoveries, inventions or patent rights described in this Article 6.2. 6.3 RPR INVENTIONS. If RPR (through its employees, agents or consultants) makes or conceives any inventions or discoveries in the course of the work to be performed by it pursuant to this License Agreement, RPR shall own such inventions or discoveries. Noven and its Affiliates shall have a royalty-free right to use throughout the world all such inventions and discoveries, and any patent rights that result from them, in connection with the Licensed Products and pursuant to and during the term of this License Agreement. 6.4 NOTICE OF POSSIBLE INFRINGEMENT OR UNAUTHORIZED USE. Each party shall promptly notify the other following the discovery of any infringement or unauthorized use of the other party's intellectual property rights used in the development, manufacture or marketing of Licensed Products which may come to its attention. The party whose rights are infringed shall determine within sixty (60) days following such notice whether to prosecute the alleged infringement and whether to enforce its intellectual property rights against the alleged 13 19 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. infringer. If the party whose rights are infringed determines to prosecute the infringement, that party shall bear the costs and expenses of the prosecution. Should the party whose rights are infringed fail to determine whether to prosecute within the sixty-day period set forth above, or determine not to initiate any action against the alleged infringer, the other party shall have the right to initiate any action at its own expense. In the event either party brings an action pursuant to this Article 6.4, the other party shall provide the party bringing such action with reasonable assistance at the prosecuting party's expense. Any recovery from any such action shall first be applied in satisfaction of expenses and legal fees incurred by the party bringing the action, and any balance remaining from any such recovery shall be divided between the parties according to their respective damages sustained in connection with the infringement. 6.5 NOTICE OF POSSIBLE THIRD PARTY INFRINGEMENT. Either party shall notify the other promptly in the event of the receipt of notice of any action, suit or claim alleging infringement of any intellectual property rights held by a third party, which relates to Licensed Products or Noven's Patent Rights or Noven's Technology. ARTICLE VII - CONFIDENTIALITY OBLIGATIONS 7.1 CONFIDENTIALITY. (a) Except as specifically authorized by this License Agreement, each party shall, for the term of this License 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, (collectively "Confidential Information") received from the other party prior to or under this License 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. (b) Notwithstanding the foregoing, the recipient may disclose Confidential Information to (i) government agencies to the extent such information is reasonably necessary or required to obtain approval to market Licensed Product; and (ii) vendors, contractors and clinical investigators having a need to know, but only if (1) such disclosure to vendors, contractors and clinical investigators is in accordance with a written agreement imposing essentially the same obligations of confidentiality on such party as is imposed on the recipient hereunder and a copy of such agreement is provided to the other party to this License Agreement prior to such disclosure, and (2) adequate notice is given to the other party to this License Agreement prior to disclosure to any governmental agency (except in connection with an NDA or IND) so that such other party may seek a protective order or other appropriate remedy concerning any such disclosure. Notwithstanding the foregoing, RPR shall have the right to use and disclose after the year 2010 Noven's Technology existing on the Original Execution Date and the right to use and disclose data generated after the Original Execution Date, twenty (20) years after its generation; provided that this License Agreement expires by its normal terms, as set forth under Article 8.1 hereof. 14 20 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. ARTICLE VIII - TERM AND TERMINATION 8.1 TERM. (a) This License Agreement shall take effect as of the Original Execution Date and continue in full force and effect in each country throughout the Territory until the date of expiration of the last to expire of Noven's Patent Rights in such country. (b) In countries where Noven has no Patent Rights, the term of this License Agreement shall be for fifteen (15) years from the date of first commercial sale in such country. Termination of this License Agreement shall take place on a country-by-country basis. (c) Upon expiration of this License Agreement pursuant to this Article 8.1 in any country, RPR 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. In addition, RPR shall have the option to terminate this License Agreement as to the United States on the expiration of the first to expire of any patent of the United States of America included under Noven's Patent Rights, and such termination shall be considered a termination by Noven under Article 8.2(a) for purposes of Article 8.3 hereof. (d) Notwithstanding any other provision of this License Agreement, for those countries within the European Economic Area, any pure know-how license granted hereunder under Noven's Technology will remain exclusive only for a period of ten (10) years following the first sale of a Licensed Product in any country within the European Economic Area, and following the expiration of such ten-year period, the license to the applicable know-how under the Noven Technology shall automatically convert to a non-exclusive license to use, sell or otherwise dispose of such Licensed Product in the European Economic Area for the remainder of the term; provided, however, that in such event the parties will negotiate in good faith the fees provided for in Article 4.2(a), to take account of the non-exclusive nature of the license in the European Economic Area. 8.2 TERMINATION. (a) If either RPR or Noven should fail to discharge fully and promptly any of its material obligations under this License Agreement, including but not limited to the Supply Agreement attached as Exhibit C, and including its obligation to make payments, and should such party failing to discharge any of its material obligations fail to cure such failure within thirty (30) days in the case of failure to make payments or within sixty (60) days for other failures after notice in writing thereof by the other party, which period to 15 21 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. cure may be extended for up to thirty (30) days, upon written request, if such additional time is reasonably necessary to effect such cure and provided that such party is using diligent effort to pursue such cure, this License Agreement can thereupon be terminated at the other party's option upon receipt of notice to that effect. (b) Either party hereto may terminate this License Agreement with immediate effect in the event that any proceeding under a Bankruptcy Act 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. (c) Either party may terminate this License Agreement with immediate effect with respect to any Licensed Product that is permanently and completely withdrawn from all markets in the Territory for serious adverse health or safety reasons. (d) With respect to each Licensed Product, Noven shall have the right to terminate this License Agreement at any time upon thirty (30) days' notice in any country of the Territory in which RPR, its Sublicensee, or an RPR Affiliate that RPR controls, markets, sells or distributes any transdermal product that is identical or substantially similar to such Licensed Product, unless RPR 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 RPR's 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, (ii) ***. During the term of this Agreement, if RPR or any RPR Affiliate (that RPR controls) or Sublicensee markets, sells or distributes any transdermal product that is identical or substantially similar to a particular Licensed 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 with respect to such Licensed Product to a non-exclusive license; provided, however, that this right shall not apply: ***. (e) Either party shall have the right to terminate this License Agreement upon the occurrence of the right to terminate under a force majeure event described in Article 12.4 or at any time upon thirty (30) days' notice as to any affected country of the Territory and any affected Licensed Product in the absence of an agreement under Article 4.3(e) hereof. 8.3 RIGHTS UPON TERMINATION. (a) Upon expiration of this License Agreement with respect to any Licensed Product in any country or termination of this License Agreement with respect to any Licensed Product in any country by Noven pursuant to Article 8.2(a), (b) or (d), all information and data relating solely to such Licensed Product for such country, including but not limited to Noven's Technology, and information obtained from, incorporating or based on Noven's Technology, shall be returned to Noven, and RPR, its Affiliates and Sublicensees shall make no further use of the same with respect to such Licensed Product and such country, and shall (i) assign to Noven or its designee all INDs and NDAs relating to such 16 22 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. Licensed Product in such country; (ii) have no further right or license to Noven's Technology or Patent Rights with respect to such Licensed Product in such country; and (iii) reasonably cooperate with Noven in connection with the transfer of data, registrations and applications related to such Licensed Product in such country. ***. (b) Upon termination of this License Agreement by RPR for any reason provided for in Articles 8.2(a) or 8.2(b) hereof, then, in addition to any other rights and remedies which may be available to RPR, Noven shall: (1) grant RPR a license to make, have made, use, sell and have sold, the Licensed Products under all confidential information relating to the Licensed Products, including Noven's Technology, Noven's Patent Rights and any other patents, know-how, improvements, development studies and other information, and any trademarks relating to the Licensed Products and owned by Noven, for a royalty of ***; provided, upon expiration of the various patents, this royalty shall be reviewed in good faith by the parties to reflect the patent's expiration; and (2) assure RPR an adequate, uninterrupted supply of the Licensed Products by either (A) returning to RPR all Noven's rights to the Facility, upon RPR's reimbursing Noven for Noven's net book value of its investment for the funding, construction and equipment of the Facility in accordance with the funding and construction provisions of this License Agreement prior to the Restatement Date; or (B) otherwise providing RPR with adequate access to, and rights to use, the Facility to permit RPR, in RPR's reasonable judgment, to manufacture sufficient quantities of the Licensed Products to meet RPR's demand. (c) Upon termination of this License Agreement by RPR or Noven under 8.2(e), RPR's sole remedy shall be to make, have made, use, sell and have sold, the Licensed Products under all Confidential Information relating to the Licensed Products, including Noven's Technology, Noven's Patent Rights and any other patents, know-how, improvements, development studies and other information, and any trademarks relating to the Licensed Products and owned by Noven, for a royalty of ***. ARTICLE IX - NOVEN WARRANTIES 9.1 OWNERSHIP. Noven represents and warrants that, to the extent the same is confidential, it has developed and has the right to license Noven's Technology and that it owns all right, title and interest in Noven's Patent Rights, as set forth in Exhibit A. 9.2 RIGHT TO ENTER AGREEMENT. Noven represents and warrants that it has the right to enter into this License Agreement, and that there are no outstanding assignments, grants, licenses, encumbrances, obligations or agreements, either written, oral or implied, materially inconsistent with this License Agreement. 9.3 PRODUCT WARRANTY. Noven represents and warrants that all Licensed Products manufactured by Noven in the form delivered to RPR for use in the United States of America shall be manufactured in accordance with and conform to the specifications for such Licensed Product set forth in Exhibit B, all requirements set forth in any NDA or IND pertaining to such Licensed Product, including but not limited to requirements relating to composition, purity, 17 23 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. appearance and stability and shall be capable of maintaining such until any expiration date for such Licensed Product, and all applicable laws and regulations relating to the manufacture and packaging of such Licensed Product, including but not limited to, Sections 501, 502 and 505 of the Federal Food, Drug and Cosmetic Act, as amended from time to time. 9.4 FOREIGN PRODUCT WARRANTY. Noven represents and warrants that Licensed Products supplied by Noven for sale in any country other than the United States shall conform with the standards and specifications and all applicable laws and regulations applicable with respect to such country and shall be manufactured in a facility approved for that purpose by the proper authorities of such country to the extent RPR specifically notifies Noven of the applicable standards, specifications, laws and regulations. 9.5 PATENT INFRINGEMENT WARRANTY. Noven represents and warrants, that to its actual and present knowledge, no United States patent contains any claims which cover any Licensed Product now being clinically tested by Noven. 9.6 PRODUCT WARRANTY. RPR represents and warrants that, in the event it ever exercises any contingent right to manufacture Licensed Product granted hereunder, all Licensed Products manufactured by RPR shall be manufactured in accordance with and conform to the specifications for such Licensed Product, all requirements set forth in any NDA or IND pertaining to such Licensed Product, including but not limited to requirements relating to composition, purity, appearance and stability and shall be capable of maintaining such until any expiration date for such Licensed Product, and all applicable laws and regulations relating to the manufacture and packaging of such Licensed Product, including but not limited to, Sections 501, 502 and 505 of the Federal Food, Drug and Cosmetic Act, as amended from time to time and the equivalent thereof in foreign countries. ARTICLE X - INDEMNIFICATION 10.1 INDEMNITY. Each party shall indemnify, defend, release and hold the other party and its affiliates, subsidiaries, successors, officers and directors harmless against any and all third party claims, suits, actions or threats of action, liabilities, settlement amounts, expenses or costs, including without limitation reasonable attorneys' fees and costs, which result from or arise out of any breach of the representations and warranties of such party set forth under Article IX of this License Agreement. 10.2 INDEMNITY PROCEDURE. Upon receiving notice of any claim or suit under Article 10.1 hereof, the indemnified party shall immediately notify the indemnifying party and shall allow the indemnifying party, its insurer or both the opportunity to assume direction and control of the defense of such claim, including without limitation, the settlement thereof at the sole option of the indemnifying party or its insurer. The indemnified party agrees to cooperate with the indemnifying party in the conduct of any negotiations, dispute resolution or litigation of any such claim or suit; and the indemnifying party shall inform the indemnified party of the progress of the claim or suit at such times and in such manner as is reasonable under the circumstances. 18 24 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. 10.3 INSURANCE. To the extent each party has such insurance for the applicable term of this License Agreement, such party agrees to make the other party a named insured under its product liability insurance and clinical trial/malpractice insurance. ARTICLE XI - ARBITRATION 11.1 ARBITRATION. Any claim or controversy arising between the parties hereto in connection with this License Agreement or the breach thereof which cannot be settled satisfactorily by correspondence or by mutual conference or conciliation shall be determined by arbitration in New York, New York, by three arbitrators in accordance with the then prevailing rules of the American Arbitration Association upon the request by either party. Judgment upon the award rendered may be entered in any court having jurisdiction thereof. 11.2 NOTIFICATION OF BREACH. In the event one party notifies the other party of a breach of this License Agreement, and such breach is not cured within the applicable grace period, such other party shall have the right within said sixty (60) day period to bring such dispute to arbitration. ARTICLE XII - MISCELLANEOUS 12.1 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. 12.2 INSPECTION OF FACILITIES. At any time during the term of this License Agreement and any extension thereof, RPR may from time to time during normal working hours have employees of its choosing visit and inspect the facilities of Noven and the Facility, and may discuss with Noven employees the progress of projects under development by Noven. 12.3 ENTIRE AGREEMENT. This License Agreement represents the entire understanding between the parties with respect to the matters set forth herein and supersedes any and all previous understandings, both oral and written, with respect to the subject matter hereof, except for the Rorer Group Agreement as amended. The terms, conditions and provisions of this License 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. This License 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. 12.4 FORCE MAJEURE. If the performance of this License Agreement or any obligation reasonably related thereto 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, strikes or any governmental action, then the party so affected, upon notice to the other party, shall be excused from such 19 25 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. 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 thereunder with the utmost dispatch whenever such cause or causes are removed. If, as a result of any such action, the performance of this License Agreement is prevented for a continuous period of one hundred eighty (180) days, either party shall have the right to terminate this License Agreement as to the country or countries involved by providing the other party with written notice of termination. 12.5 SEVERABILITY. If any provision of this License 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 License Agreement, and this License Agreement shall be carried out as if any such invalid or unenforceable provision were not contained herein. 12.6 ASSIGNMENT. All of the terms and provisions of this License 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 License 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 RPR may assign or transfer any of its rights and obligations to any of its Affiliates and to any successors or assigns of that part of its business to which the subject matter of this License Agreement is related. 12.7 GOVERNING LAW. This License Agreement shall be interpreted in accordance with and governed by the laws of the State of New York, without references to the conflict of law rules. Both parties forever waive any defense or claim that New York law cannot be validly applied to this License Agreement. 12.8 NOTICES. Any notice or report required or permitted hereunder shall be given in writing, hand delivered or by registered or certified mail, to the following addresses: (1) Noven Pharmaceuticals, Inc. 11960 Southwest 144th Street Miami, Florida 33186 Attention: President With a copy to: Noven Pharmaceuticals, Inc. 11960 Southwest 144th Street Miami, Florida 33186 Attention: General Counsel 20 26 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. (2) Rhone-Poulenc Rorer Pharmaceuticals Inc. 500 Arcola Road Collegeville, Pennsylvania 19426 Attention: President With a copy to: General Counsel Rhone-Poulenc Rorer Pharmaceuticals Inc. 500 Arcola Road Collegeville, Pennsylvania 19426 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, and shall be deemed to have been given as of the date of mailing. 12.9 COUNTERPARTS. This License Agreement and any amendments 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. 12.10 PUBLICITY. Noven and RPR shall not issue any press release or other public statement regarding, or disclosing the existence of, this License Agreement without the prior written consent of the other party; provided, however, that Noven and RPR shall not be prevented from complying with any duty of disclosure it may have pursuant to law. 21 27 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. IN WITNESS WHEREOF, the parties hereto have caused this Amended and Restated License Agreement to be executed in duplicate and their seals to be hereunto affixed as of the day and year first written above. RHONE-POULENC RORER PHARMACEUTICALS INC. By: /s/ John R. Leone ----------------------------------------- John R. Leone Senior Vice President and General Manager NOVEN PHARMACEUTICALS, INC. By: /s/ Robert C. Strauss ----------------------------------------- Robert C. Strauss President and Chief Executive Officer 22 28 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. EXHIBIT A NOVEN'S PATENT RIGHTS *** A-1 29 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. EXHIBIT "B" TO THE AMENDED AND RESTATED LICENSE AGREEMENT BETWEEN RHONE-POULENC RORER PHARMACEUTICALS INC. AND NOVEN PHARMACEUTICALS, INC. STANDARD SPECIFICATIONS *** B-1 30 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. EXHIBIT "C" TO THE AMENDED AND RESTATED LICENSE AGREEMENT BETWEEN RHONE-POULENC RORER PHARMACEUTICALS INC. AND NOVEN PHARMACEUTICALS, INC. SUPPLY AGREEMENT C-1 EX-27 4 FINANICAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY UNAUDITED FINANCIAL INFORMATION EXTRACTED FROM NOVERM PHARMACEUTICALS, INC. FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS DEC-31-1999 DEC-31-1998 SEP-30-1999 9,633 0 4,624 153 3,138 19,398 21,318 5,907 43,903 5,967 0 2 0 0 31,689 43,903 22,861 23,030 10,069 20,242 0 0 29 2,981 68 2,913 0 0 0 2,913 .14 .14
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