Exhibit 10.2

 

DEVELOPMENT AND LICENSE AGREEMENT

 

between

 

TEVA PHARMACEUTICALS USA, INC.

1090 Horsham Road, North Wales, PA 19454

(“Teva”)

 

and

 

BIOSANTE PHARMACEUTICALS, INC.

111 Barclay Boulevard, Lincolnshire, IL 60069

(“BioSante”)

 

WHEREAS, BioSante is engaged in the development of pharmaceutical products and
has in development the pharmaceutical product listed in Annex A hereto (the
“Product” as defined further below);

 

WHEREAS, Teva, together with its Affiliates (as defined below), is engaged in
the development, manufacture, sale, marketing and distribution of pharmaceutical
products;

 

WHEREAS, BioSante desires to grant to Teva an exclusive license to the Product
Know-How (as defined below) so that Teva may register, obtain Approval for,
manufacture, market, sell and distribute the Product in the United States, all
in accordance with and subject to the conditions set forth in this Agreement;

 

NOW THEREFORE, intending to be legally bound hereby and in consideration of the
mutual representations, warranties and covenants set forth herein and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, IT IS HEREBY AGREED BY THE PARTIES AS FOLLOWS:

 

1.                                      INTERPRETATION AND DEFINITIONS

 

1.1                               The preamble to this Agreement forms an
integral part hereof.

 

1.2                               Section headings in this Agreement are
intended solely for convenience of reference and should be given no effect in
the interpretation of this Agreement.

 

1.3                               All annexes to this Agreement, signed by both
Parties, whether attached at the time of signature hereof or at any time
thereafter, should be construed as an integral part of this Agreement.

 

1.4                               For the purposes of this Agreement, the
following words and phrases shall bear the respective meanings assigned to them
below (and cognate expressions shall bear corresponding meanings):

 

1

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

 

1.4.1                     “Affiliates” — shall mean with respect to either
Party, any Person that is controlled by, controls, or is under common control
with that Party. For this purpose, “control” of a corporation or other business
entity shall mean direct or indirect beneficial ownership of more than fifty
percent (50%) of the voting interest in, or more than fifty percent (50%) in the
equity of, or the right to appoint more than fifty percent (50%) of the
directors or management of such corporation or other business entity.

 

1.4.2                     “ANDA” — shall mean an Abbreviated New Drug
Application filed with the FDA pursuant to its rules and regulations.

 

1.4.3                     “Applicable Law” — shall mean the applicable laws,
rules, regulations, guidelines and requirements related to the development,
registration, manufacture, importation and Marketing of the Product in the
Territory.

 

1.4.4                     “Approval(s)” — shall mean any and all approvals,
licenses, registrations or authorizations of the applicable Regulatory Authority
necessary for the Marketing of the Product and reimbursement, if applicable, in
the Territory.

 

1.4.5                     “Calendar Quarter” — shall mean a three
(3) consecutive month period ending on March 31, June 30, September 30 or
December 31.

 

1.4.6                     “Competing Product” — shall mean any finished
pharmaceutical product for sale in the prescription drug marketplace that
contains the same active ingredient in the same dosage form and strength as the
Product.

 

1.4.7                     “Confidential Information” — shall mean all
information, data and/or know-how disclosed by either Party and/or its
Affiliates to the other Party and/or its Affiliates in writing (or if disclosed
orally, visually and/or in another non-written form, identified as confidential
at the time of disclosure, and summarized in reasonable detail in writing as to
its general content within thirty (30) days after original disclosure)
concerning the Product or concerning the technology, marketing strategies or
business of the disclosing Party (whether disclosed prior to or subsequent to
the Effective Date). Confidential Information shall not include information,
data or know-how that the receiving Party can show:

 

(a)                                 was in the public domain at the time of the
disclosure by the disclosing Party, or thereafter becomes part of the public
domain without any fault of the receiving Party;

 

(b)                                 rightfully was in its possession prior to
the disclosure by the disclosing Party;

 

(c)                                  was lawfully obtained from a third party,
who had the right to make such disclosures as evidenced by written records; or

 

2

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

 

(d)                                 was developed by it independently of such
disclosure as evidenced by written records.

 

1.4.8                     “Effective Date” — shall mean the date on which this
Agreement is signed by the latter of the Parties to sign this Agreement.

 

1.4.9                     “FDA” — shall mean the United States Food and Drug
Administration and all agencies under its direct control or any successor
organization.

 

1.4.10              “Force Majeure Events” — shall have the meaning set forth in
Section 16.

 

1.4.11              “Launch Date” — shall mean the date on which Teva makes its
first commercial sale of the Product to an unrelated third party in an
arms-length transaction in the Territory.

 

1.4.12              “Market” — shall mean to promote, distribute, market,
advertise and/or sell.

 

1.4.13              “Marketing Term” — shall mean a period of ten (10) years
from the Launch Date of the Product in the Territory, unless terminated prior to
such date as expressly provided for in this Agreement.

 

1.4.14              “Net Sales” — shall mean the gross amount invoiced for the
Product by Teva or Teva’s Affiliates sold on an arms-length basis in the
Territory, less the sum of: (a) trade, quantity and/or cash discounts,
allowances, rebates, retroactive price adjustments, free goods, bad debts, cash
incentive payments (e.g. slotting allowance), and chargebacks; (b) credits or
refunds for rejected, outdated or returned Product; (c) any tax, duty or other
government charge upon or related to the sale, delivery or use of that Product;
(d) cost of short dated Product, which is destroyed by Teva or its Affiliates;
and (e) other specifically identifiable amounts included in the Product’s gross
sales that will have been or ultimately will be credited and are substantially
similar to those listed above; in each case determined in accordance with U.S.
GAAP.

 

1.4.15              “Party”, “Parties” — shall mean Teva and/or BioSante, as
applicable.

 

1.4.16              “Person” — shall mean any individual, partnership,
association, corporation, limited liability company, trust, or other legal
person or entity.

 

1.4.17              “Product” — shall mean the finished pharmaceutical product
listed in Annex A developed by BioSante.

 

1.4.18              “Product Know-How” — shall mean the Regulatory
Documentation, Technical Package and any and all other proprietary methods,
devices, technology, trade secrets, inventions, patent applications, patents,

 

3

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

 

compositions, designs, formulae, know-how, show-how, technical and training
manuals and documentation and other information, including processes and
analytical methodologies used in development, testing, analysis and manufacture,
and medical, clinical testing as well as other scientific testing, related to or
used in connection with the Product or any ingredient thereof, and/or the
formulation, development, registration, manufacture, use or sale thereof, in
BioSante’s (or its Affiliates’) possession or under its control whether now
known or hereafter developed or otherwise acquired, directly or indirectly.

 

1.4.19              “Regulatory Authority” — shall mean any and all governmental
bodies, organizations and agencies whose approval is necessary to develop,
manufacture, import, use, and/or Market the Product in the Territory.

 

1.4.20              “Regulatory Documentation” — shall mean all submissions to
Regulatory Authorities, including clinical studies, tests, and biostudies
relating to the Product, including, without limitation, all ANDAs,
505(b)(2) applications, and DMFs, as well as all correspondence with Regulatory
Authorities (registration and licenses, regulatory drug lists, advertising and
promotion documents), adverse event files, complaint files, manufacturing
records and inspection reports.

 

1.4.21              “Regulatory Expenses” — shall mean all reasonable
out-of-pocket direct costs and expenses in connection with preparing,
submitting, obtaining and maintaining Approvals of the Product.

 

1.4.22              “Royalties” — shall mean an amount equal to seven and one
half percent (7.5%) of Net Sales; provided, however, that during the period of
time that Teva is the sole marketer of a generic 1% testosterone gel AB-rated to
AndroGel® in the Territory such amount shall be equal to ten percent (10%) of
Net Sales.

 

1.4.23              “Technical Package” — shall have the meaning set forth in
Section 2.4.

 

1.4.24              “Term” — shall mean the duration of this Agreement starting
on the Effective Date and continuing until the end of the Marketing Term, unless
terminated prior to such date pursuant to Section 12.

 

1.4.25              “Territory” — shall mean the U.S.

 

1.4.26              “U.S.” — shall mean the United States of America and its
territories, districts and possessions.

 

1.4.27              “U.S. GAAP” — shall mean generally accepted accounting
principles in the U.S., consistently applied.

 

4

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

 

2.                                      GRANT OF RIGHTS

 

2.1                               BioSante, for itself and its Affiliates,
grants to Teva and its Affiliates in accordance with the terms and conditions of
this Agreement, the exclusive right (even as to BioSante and its Affiliates),
under all of the existing or future Product Know-How owned or controlled by
BioSante or its Affiliates, to register, make or have made, develop,
import/export or have imported/exported, use or have used, Market, offer for
sale or have sold, and otherwise exploit the Product on a sole and exclusive
basis (even as to BioSante and its Affiliates) in or for the Territory.

 

2.2                               Neither BioSante nor its Affiliates shall,
directly or indirectly, during the Term, Market the Product or cause or permit
the Product to be Marketed in or for the Territory, except as otherwise may be
specifically permitted by the terms of this Agreement.

 

2.3                               BioSante and its Affiliates shall not,
directly or indirectly, during the Term, disclose to any third party any Product
Know-How, if such third party may or has the ability to use such Product
Know-How to directly or indirectly Market a Competing Product in or for the
Territory.

 

2.4                               BioSante shall provide to Teva by no later
than the Effective Date (a) all Regulatory Documentation in BioSante’s (or its
Affiliates’) possession or under its control; and (b) all technical information,
data and know-how in BioSante’s (or its Affiliates’) possession or under its
control with respect to the Product, including, without limitation, any and all
raw material, work in process and samples related to the Product, useful or
necessary for Teva or its nominee to continue the development of the Product and
to set up a facility for the commercial manufacture of the Product (the
“Technical Package”). BioSante shall promptly forward to Teva any such
Regulatory Documentation and/or Technical Package materials that should later
become available to BioSante during the Term of this Agreement.

 

2.5                               Teva shall have the right to subcontract, in
whole or in part, the manufacturing of the Product to a third party.

 

3.                                      REGULATORY APPROVAL

 

3.1                               Teva shall prepare the necessary Approval
applications for the Product to obtain Approval of the Product in the Territory
from the applicable Regulatory Authorities.

 

3.2                               Teva shall use its commercially reasonable
efforts customarily employed by Teva with respect to other generic drug products
to conduct all tests and studies reasonably required to enable Teva to apply
for, obtain and maintain Approval for the Product in the Territory.

 

3.3                               Teva shall be responsible for all
communications with the Regulatory Authorities relating to the Approval for the
Product in the Territory. Teva shall provide to

 

5

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

 

BioSante copies of all Regulatory Documentation submitted to the Regulatory
Authorities with respect to obtaining Approval for the Product.

 

3.4                               Upon the request of BioSante, Teva shall
provide BioSante with periodic updates (no more often than once per Calendar
Quarter) concerning the development of the Product.

 

3.5                               The Approval applications shall be filed in
Teva’s name and Teva shall be the sole and exclusive owner of such Approval
applications and all Regulatory Documentation in connection therewith.

 

3.6                               BioSante shall grant Teva reasonable and
unrestricted access, without any charges, costs or expense, to any and all
relevant documentation, data, information, tests, studies or know-how related to
the Product, in its possession or under its control, and provide free of charge
any and all assistance that Teva may reasonably request in order for Teva to
obtain Approval for the Product in the Territory, and as necessary in connection
with the manufacture and Marketing of the Product in or for the Territory.

 

3.7                               Teva or its Affiliates shall be responsible
for filing the Product, and thereafter processing such filing, with appropriate
federal, state or private formularies in the Territory.

 

3.8                               Each Party shall perform, or cause to be
performed, its activities in furtherance of the provisions of this Section 3 in
a good scientific manner, in compliance in all material respects with all
requirements of Applicable Law, and in an efficient and expeditious manner.

 

3.9                               Teva agrees that it will use its commercially
reasonable efforts customarily used by Teva with respect to other generic drug
products to Market the Product in the Territory.

 

3.10                        Teva has the sole and exclusive right to determine
all terms and conditions for the sale of the Product in the Territory, including
the determination of timing of launch of the Product in the Territory, which
timing of launch shall be consistent with that customarily used by Teva for
other generic products.

 

3.11                        Subject to pre-approval by Teva, Teva shall bear all
Regulatory Expenses incurred by BioSante after July 1, 2002. Payments with
respect to Regulatory Expenses shall be made by Teva within thirty (30) days
following the end of each month and upon receipt of an invoice and all
supporting documentation from BioSante.

 

3.12                        Upon the request of BioSante, the Parties will
discuss in good faith how Teva may provide assistance to BioSante in
manufacturing the Product for sale outside the Territory.

 

6

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

 

4.                                      TRADE MARK(S)

 

Teva and its Affiliates shall have the right, in their respective sole
discretion and at their expense, to select and to register any of their
trademarks, as they wish to employ in connection with the Marketing of the
Product in the Territory and to Market Product using such trademarks. Teva or
its Affiliates shall own all right, title and interest in and to all such
trademarks, and BioSante hereby agrees it shall have no right, title or interest
in same.

 

5.                                      ROYALTIES

 

5.1                               Commencing on the Launch Date for the Product
in the Territory, Teva shall pay to BioSante the Royalties as set forth in
Section 5.2 below.

 

5.2                               No later than thirty (30) days after the end
of each Calendar Quarter, Teva shall report to BioSante the Net Sales for the
Product sold by Teva and/or its Affiliates in the Territory and the Royalties
due to BioSante for such period. The payment of Royalties by Teva to BioSante
shall be made within thirty (30) days after the end of each Calendar Quarter.

 

6.                                      AUDITS

 

6.1                               Teva and its Affiliates shall permit an
independent certified public accounting firm selected by BioSante, and
reasonably acceptable to Teva, to have access, during normal business hours and
upon reasonable prior notice (not more often than once in any calendar year), to
those books and records maintained by Teva necessary for BioSante to verify the
accuracy of Teva’s calculation of any Net Sales and Royalties hereunder for any
period ending not more than two (2) years prior to the date of such request. All
such information shall be retained on a confidential basis by the accounting
firm, and such accounting firm’s use of such information shall be limited to the
aforementioned verification.

 

6.2                               BioSante and its Affiliates shall permit an
independent certified public accounting firm selected by Teva, and reasonably
acceptable to BioSante, to have access, during normal business hours and upon
reasonable prior notice (not more often than once in any calendar year), to
those books and records maintained by BioSante necessary for Teva to verify the
accuracy of BioSante’s calculation of any Regulatory Expenses hereunder for any
period ending not more than two (2) years prior to the date of such request. All
such information shall be retained on a confidential basis by the accounting
firm, and such accounting firm’s use of such information shall be limited to the
aforementioned verification.

 

6.3                               Teva shall calculate and record Net Sales and
Royalties in accordance with U.S. GAAP, and shall maintain all books and records
related thereto in accordance with standard cost accounting policies and
practices, in accordance with U.S. GAAP for the Term plus an additional three
(3) years thereafter.

 

6.4                               Each Party shall promptly supply the other
Party with a copy of any notices or reports received from any Regulatory
Authority related to an audit or other

 

7

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

 

investigation by the Regulatory Authority with respect to the Product. Each
Party shall use its commercially reasonable best efforts to provide such
Regulatory Authority with a prompt, accurate and complete response to any
deficiencies noted, and to promptly address, and if necessary correct, any and
all such deficiencies to the satisfaction of the Regulatory Authority.

 

7.                                      MILESTONE PAYMENTS

 

In partial consideration of the rights granted herein and subject to the terms
and conditions set forth in this Agreement, Teva shall be obligated to BioSante
for the following milestone payments:

 

(a)                                 One Million Five Hundred Thousand U.S.
Dollars (U.S. $1,500,000) upon the Effective Date;

 

(b)                                 One Million U.S. Dollars (U.S. $1,000,000)
within thirty (30) days following acceptance by the FDA of the ANDA for the
Product;

 

(c)                                  One Million U.S. Dollars (U.S. $1,000,000)
within thirty (30) days following final Approval by the FDA for the Product; and

 

(d)                                 provided that Teva is the sole marketer in
the Territory of a generic 1% testosterone gel AB-rated to AndroGel® for at
least one hundred and eighty (180) days immediately following the Launch Date in
the Territory, then, in such event, Teva shall pay to BioSante, within thirty
(30) days following such one hundred and eighty (180) day period, an amount
equal to Four Million U.S. Dollars (U.S. $4,000,000).

 

8.                                      ADDITIONAL REPRESENTATIONS, WARRANTIES
AND COVENANTS OF BIOSANTE

 

8.1                               BioSante hereby represents and/or warrants
and/or undertakes to Teva that:

 

8.1.1                     it has the corporate authority to enter into this
Agreement and to perform its obligations hereunder;

 

8.1.2                     neither the execution and delivery of this Agreement
by BioSante nor its performance hereunder conflicts with or results in any
violation or breach of, or constitutes (with or without due notice or lapse of
time or both) a default under any of the terms or conditions of any note, bond,
mortgage, indenture, license, agreement or other instrument or obligation to
which it or any of its Affiliates is a party or by which it or any of its
Affiliates or any of their respective properties or assets may be bound, or to
its best knowledge, violate any statute, law, rule, regulation, writ,
injunction, judgment, order or decree of any court, administrative agency or
governmental authority binding on it or any of its Affiliates or any of their
respective properties or assets, excluding any such breaches or defaults that,
individually and in the aggregate, would not have a material adverse effect on
its business or financial condition;

 

8

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

 

8.1.3                     this Agreement is a legal, valid and binding agreement
of BioSante enforceable in accordance with its terms;

 

8.1.4                     neither it nor any of its Affiliates have or will,
directly or indirectly, enter into any contract or any other transaction with
any third party or Affiliate that conflicts or derogates from its undertakings
hereunder;

 

8.1.5                     neither the Product nor the process for making the
Product violates, infringes, or otherwise conflicts or interferes with the
intellectual property rights of any third party in the Territory;

 

8.1.6                     BioSante has furnished Teva with a complete copy of
the Regulatory Documentation and Technical Package for the Product, and BioSante
is and was, at all times prior to the Effective Date, the lawful holder of all
rights under the Product Know-How; and

 

8.1.7                     BioSante has the right, power and authority to grant
the rights to Teva hereunder.

 

9.                                      ADDITIONAL REPRESENTATIONS, WARRANTIES
AND COVENANTS OF TEVA

 

9.1                               Teva hereby represents and/or warrants and/or
undertakes to BioSante that:

 

9.1.1                     it has the corporate authority to enter into this
Agreement and to perform its obligations hereunder;

 

9.1.2                     neither the execution and delivery of this Agreement
by Teva nor its performance hereunder conflicts with or results in any violation
or breach of, or constitutes (with or without due notice or lapse of time or
both) a default under any of the terms or conditions of any note, bond,
mortgage, indenture, license, agreement or other instrument or obligation to
which it is a party or by which it or any of its properties or assets may be
bound, or to its best knowledge, violate any statute, law, rule, regulation,
writ, injunction, judgment, order or decree of any court, administrative agency
or governmental authority binding on it or any of its properties or assets,
excluding any such breaches or defaults that, individually and in the aggregate,
would not have a material adverse effect on its business or financial condition;

 

9.1.3                     this Agreement is a legal, valid and binding agreement
of Teva, enforceable in accordance with its terms; and

 

9.1.4                     it has not and will not, directly or indirectly, enter
into any contract or any other transaction with any third party or Affiliate
that conflicts or derogates from its undertakings hereunder.

 

9

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

 

10.                               INDEMNIFICATIONS AND LIABILITY

 

10.1                        BioSante shall indemnify, defend and hold Teva, its
Affiliates, and their respective officers, directors, employees, and
representatives harmless from and against any and all losses, liabilities,
damages, costs and expenses, including reasonable attorney’s fees and
disbursements, (collectively, “Damages”) in connection with any and all suits,
investigations, claims or demands by third parties resulting from or arising out
of: (a) any breach or alleged breach by BioSante (or its Affiliates) of any
representation, warranty, undertaking or covenant in this Agreement ; or (b) any
negligence or willful misconduct by BioSante (or its Affiliates).

 

10.2                        Teva shall indemnify, defend and hold BioSante, its
Affiliates, and their respective officers, directors, employees, and
representatives harmless from and against any and all Damages as defined above
in connection with any and all suits, investigations, claims or demands by third
parties resulting from or arising out of: (a) any breach or alleged breach by
Teva (or its Affiliates) of any representation, warranty, undertaking or
covenant in this Agreement; (b) any negligence or willful misconduct by Teva (or
its Affiliates); or (c) any claims of strict product liability, whether based on
allegations of design defect or unreasonable dangerousness, if allegedly arising
out of Teva’s or its designees’ actions related to the Product, including but
not limited to the manufacturing or Marketing of the Product.

 

10.3                        In the event that in determining the respective
obligation of indemnification under this Section 10, it is found that the fault
of BioSante, Teva or their respective Affiliates, contributes to any Damages
relating to the Product supplied and/or distributed or sold hereunder, then each
of BioSante and Teva shall be responsible for that portion of the Damages to
which its fault contributed.

 

10.4                        As soon as a Party becomes aware of the possibility
of a claim involving indemnification under this Section 10, the indemnified
Party shall give the indemnifying Party prompt written notice in writing and
shall permit the indemnifying Party to have control over the defense of such
claim or suit. The indemnified Party agrees to provide all reasonable
information and assistance to the indemnifying Party in such defense. No such
claims shall be settled other than by the Party defending the same, and then
only with the consent of the other Party, which shall not be unreasonably
withheld or delayed; provided, however, that the indemnified Party shall have no
obligation to consent to any settlement of any such claim which imposes on the
indemnified Party any liability or obligation which cannot be assumed and
performed in full by the indemnifying Party.

 

10.5                        Except in the event of and to the extent of Damages
awarded to a third party in connection with the indemnification provisions set
forth in Sections 10.1 and 10.2, above, neither Teva nor BioSante shall be
liable to the other for special, indirect, incidental or consequential damages,
whether in contract, warranty, negligence, tort, strict liability or otherwise.

 

10

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

 

11.                               CONFIDENTIALITY

 

11.1                        Each of the Parties agrees that: (a) it will not
disclose any Confidential Information of the other to any third party at any
time during the Term without the prior written consent of the disclosing Party;
(b) it will not make use of any Confidential Information of the other Party for
any purpose other than for the purposes set forth in, or in furtherance of the
transactions contemplated by this Agreement; and/or (c) it will use all
reasonable efforts to prevent unauthorized publication or disclosure by any
person of such Confidential Information including requiring its employees,
consultants or agents to enter into confidentiality agreements that require them
to maintain Confidential Information in confidence to the same degree as its own
confidential information.

 

11.2                        Notwithstanding the foregoing, either Party may upon
reasonable prior written notice to the other Party disclose Confidential
Information as required by law or court order, except that upon receipt of any
such request or requirement of law or court order, each Party agrees to promptly
notify the other in order to give the other a reasonable opportunity to seek a
protective order in the appropriate forum.

 

11.3                        All Confidential Information in any form must be
returned to the Party who disclosed the Confidential Information within thirty
(30) days of the termination or expiration of this Agreement, save for the
retention of one (1) copy of the Confidential Information by the receiving Party
as a record of the receiving Party’s ongoing confidentiality obligations under
this Agreement.

 

11.4                        Each of the Parties agrees that all Confidential
Information that it receives from the other Party and/or its Affiliates in
connection with the Product is the sole property of the disclosing Party and
shall be used by it only in accordance with the terms and provisions of this
Agreement.

 

11.5                        This Section 11 shall be in effect during the Term
and for a period of five (5) years following the termination or expiration
thereof.

 

11.6                        The Parties acknowledge that it is their intention
to limit the disclosure of Confidential Information hereunder to the Product and
matters directly related thereto.

 

12.                               TERM AND TERMINATION

 

12.1                        Upon expiration of the Term, BioSante shall grant to
Teva and its Affiliates a perpetual, fully paid, royalty free, exclusive license
to manufacture and Market the Product in or for the Territory and to use any
Product Know-How existing as of the date of such expiration necessary to enable
Teva and/or its Affiliates to manufacture and/or Market the Product in or for
the Territory.

 

12.2                        This Agreement may be terminated by either Party by
written notice provided to the other Party at any time during the Term if the
other Party (the “Breaching Party”) is in material breach or default of any of
its obligations hereunder

 

11

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

 

(including, without limitation, any payment obligations) or any of its
representations or warranties hereunder were untrue in a material respect when
made, as follows: (i) the terminating Party shall send written notice of the
material breach or material default to the Breaching Party, and (ii) the
termination shall become effective sixty (60) days after written notice thereof
was provided to the Breaching Party, unless the Breaching Party has cured any
such material breach or default prior to the expiration of the sixty (60) day
period or if such material breach or material default is not capable of being
cured within such sixty (60) day period, and the Breaching Party has commenced
activities reasonably expected to cure such material breach or material default
within such sixty (60) day period and thereafter uses diligent efforts to
complete the cure as soon as practicable, but in no event shall such period
exceed ninety (90) days.

 

12.3                        Subject to the provisions of Section 13.3 hereof,
BioSante may terminate this Agreement effective upon issuance of written notice
if, at any time, Teva files a petition in bankruptcy, or enters into an
arrangement with its creditors, or applies for or consents to the appointment of
a receiver or trustee, or makes an assignment for the benefit of creditors, or
suffers or permits the entry of an order adjudicating it to be bankrupt or
insolvent.

 

13.                               CONSEQUENCES OF TERMINATION

 

13.1                        Termination of this Agreement for whatever reason
shall not affect the liabilities or obligations of the Parties hereunder in
respect of matters accrued at the time of such termination, and shall be without
prejudice to any other right or remedies available at law or in equity.

 

13.2                        In the event of early termination of this Agreement
by BioSante pursuant to Section 12.2 and without derogating from any other
rights or remedies available to BioSante, all rights, Approvals and data shall
be promptly returned to BioSante without charge, and Teva agrees to execute
without delay all documentation necessary to effectuate this purpose.

 

13.3                        All rights and licenses granted pursuant to this
Agreement are, and shall otherwise be deemed to be, for purposes of
Section 365(n) of 11 U.S.C. §101 et seq. (the “Bankruptcy Code”), licenses of
rights to “intellectual property” as defined under Section 101(35A) of the
Bankruptcy Code. The Parties agree that Teva, as a licensee of such rights under
this Agreement, shall retain and may fully exercise all of its rights
(including, without limitation, any right to enforce any exclusivity provision
of this Agreement (including any embodiment of such “intellectual property”)),
remedies and elections under the Bankruptcy Code. To the fullest extent
permitted by Applicable Law, the Parties further agree that, in the event of the
commencement of a bankruptcy proceeding by or against BioSante under the
Bankruptcy Code, Teva shall be entitled to all applicable rights under
Section 365 of the Bankruptcy Code, including but not limited to, a complete
duplicate of (or complete access to, as appropriate) any such intellectual
property and all

 

12

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

 

embodiments of such intellectual property upon written request therefore by
Teva, and such, if not already in its possession, shall be promptly delivered to
Teva.

 

14.                               INDEPENDENT CONTRACTORS

 

The status of the Parties under this Agreement shall be that of independent
contractors. Nothing is this Agreement shall be construed as establishing a
partnership or joint venture relationship between the Parties hereto. No Party
shall have the right to enter into any agreements on behalf of the other Party,
nor shall it represent to any person that it has any such right or authority.
All persons employed by a Party shall be employees of such Party and not of the
other Party and all costs and obligations incurred by reason of any such
employment shall be for the account and expense of such Party.

 

15.                               SUCCESSORS AND ASSIGNS

 

The terms and provisions hereof shall inure to the benefit of, and be binding
upon, Teva, BioSante and their respective successors and permitted assigns.
Neither Party shall assign this Agreement or any part of it to any third party
without the prior written consent of the other Party, such consent not to be
unreasonably withheld; provided, however, that either party may, without
obtaining the consent of the other Party but upon written notice to the other
Party, assign this Agreement or delegate any of its rights or obligations
hereunder to any of its Affiliates.

 

16.                               FORCE MAJEURE

 

16.1                        Neither Party shall be liable for non-performance or
delay in the fulfillment of its obligations when any such non-performance or
delay shall be occasioned by any unforeseeable cause beyond the reasonable
control of Teva or BioSante, as the case may be, including without limitation,
acts of God, fire, flood, earthquakes, explosions, sabotage, strikes, or labor
disturbances (regardless of the reasonableness of the demands of the labor
force), civil commotion, riots, military invasions, wars, failure of utilities,
failure of carriers, or any acts, restraints, requisitions, regulations, or
directives issued by a competent government authority not engendered by any act
or omission of the Party (“Force Majeure Events”).

 

16.2                        In the event that either Party is prevented from
discharging its obligations under this Agreement on account of a Force Majeure
Event, such Party shall notify the other forthwith, and shall nevertheless make
every endeavor, in the utmost good faith, to discharge its said obligations,
even if in a partial or compromised manner.

 

17.                               CURRENCY

 

All payments under this Agreement shall be made in U.S. Dollars and, as
applicable, the calculation of exchange rates shall be based upon the average
over a twenty (20) business day period preceding the date that payment is due of
the applicable rate of exchange as published in the Wall Street Journal.

 

13

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

 

18.                               PUBLICITY AND DISCLOSURE OF AGREEMENT

 

Concurrently with the execution of this Agreement, the Parties shall agree in
good faith on a form of press release that BioSante may release.  The Parties
agree that no future press releases or other public announcements concerning the
transactions contemplated hereby shall be issued without the advance written
consent of the other Party, which consent shall not be unreasonably withheld, to
the extent such release or announcement includes statements concerning terms of
this Agreement and/or explicitly includes the Product or either Parties’
name(s), except to the extent such release or announcement may be required by
Applicable Law.  For releases or announcements required by law, the Party making
the release or announcement shall, before making any such release or
announcement, afford the other Party a reasonable opportunity to review and
comment.  Any copy of this Agreement to be filed with the Securities and
Exchange Commission or any other Regulatory Authority shall be redacted to the
fullest extent permitted by Applicable Law and to the reasonable satisfaction of
both Parties; provided, however, in the event that the Securities and Exchange
Commission or Regulatory Authority, as applicable, objects to the redaction of
any portion of the Agreement after the initial submission, the filing Party
shall inform the other Party of the objections and shall in good faith respond
to the objections in an effort to limit the disclosure required by the
Securities and Exchange Commission or Regulatory Authority, as applicable.

 

19.                               SEVERABILITY

 

Should any part or provision of this Agreement be held unenforceable or in
conflict with Applicable Law, the invalid or unenforceable part or provision
shall, provided that it does not go to the essence of this Agreement, be
replaced with a revision which accomplishes, to the extent possible, the
original commercial purpose of such part or provision in a valid and enforceable
manner, and the balance of this Agreement shall remain in full force and effect
and binding upon the Parties hereto.

 

20.                               ENTIRE AGREEMENT

 

This Agreement (including its Annexes) constitutes the entire agreement between
the Parties with respect to its subject matter and supersedes all prior
agreements, arrangements, dealings or writings between the Parties.  This
Agreement may not be amended or modified except in writing executed by the duly
authorized representatives of both Parties.

 

21.                               WAIVER

 

No waiver of a breach or default hereunder shall be considered valid unless in
writing and signed by the Party giving such waiver, and no such waiver shall be
deemed a waiver of any subsequent breach or default of the same or similar
nature.

 

22.                               GOVERNING LAW

 

This Agreement shall be governed, interpreted and construed in accordance with
the laws of the Commonwealth of Pennsylvania, without regard to principles of
conflicts of law.  To the extent that it may otherwise be applicable, the
Parties hereby expressly agree to exclude from the operation of this Agreement
the United Nations Convention on Contracts for the International

 

14

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

 

Sale of Goods, concluded at Vienna, on 11 April 1980, as amended and as may be
amended further from time to time.

 

23.                               NOTICES

 

Notices provided for under this Agreement shall be given in writing, in English,
by facsimile; by first-class mail, federal express or similar service to the
mailing address or facsimile numbers set out below:

 

If to Teva

TEVA PHARMACEUTICALS USA, INC.

 

1090 Horsham Road

 

North Wales, PA 19454

 

Attention: President

 

Telephone:

215-591-3000

 

Facsimile:

215-591-8846

 

 

 

With a copy to:

TEVA NORTH AMERICA

 

1090 Horsham Road

 

North Wales, Pennsylvania 19454

 

Attention:

Vice President and General Counsel

 

 

Teva North America

 

Telephone:

(215) 591-3000

 

Facsimile:

(215) 591-8813

 

 

 

If to BioSante

BIOSANTE PHARMACEUTICALS, INC.

 

Stephen Simes

 

111 Barclay Boulevard

 

Lincolnshire, IL 60069

 

Telephone:

847 478-0500, ext 100

 

Facsimile:

847 478-9260

 

 

 

With a copy to:

GARY I. LEVENSTEIN

 

Ungaretti & Harris

 

3500 Three First National Plaza

 

Chicago, Illinois 60602-4283

 

Telephone:

312 977-4400

 

Facsimile:

312 977-4405

 

or to such other addresses or facsimile numbers as a Party shall designate by
notice, similarly given, to the other Party. Notices shall be deemed to have
been sufficiently given and served the day transmitted by facsimile (with
confirmed transmission) or a date five (5) business days after the date of
express mail or by mail courier.

 

24.                               RESOLUTION OF DISAGREEMENTS

 

If disagreements should arise under this Agreement, both BioSante and Teva agree
to make good faith efforts to resolve the disagreements by discussion and
negotiation. Any disagreements in

 

15

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

 

connection with this Agreement or a Party’s alleged breach of this Agreement
that either Party believes has not been satisfactorily resolved through
discussion and negotiation shall be resolved upon the written notice of either
Party to the other requesting final and binding arbitration. If initially
requested by Teva, the arbitration shall be held in Chicago, Illinois. If
initially requested by BioSante, the arbitration shall be held in a location of
Teva’s selection within the Commonwealth of Pennsylvania. Such arbitration shall
be before three (3) arbitrators, where each Party shall select one
(1) arbitrator and the two (2) selected shall choose the third, and conducted
under the Commercial Arbitration Rules of the American Arbitration Association.
The prevailing Party in any such arbitration shall be entitled to recover only
reasonable out-of-pocket costs of the arbitration (not attorney’s fees) in
addition to any award determined by the arbitrators. Any award rendered in such
arbitration may be entered and enforced by either Party in any court having
jurisdiction.

 

25.                               STEERING COMMITTEE

 

The Parties agree that a Steering Committee, comprised of two
(2) representatives of each Party, shall be formed within thirty (30) days of
the Effective Date and shall work cooperatively, and meet from time to time as
it shall deem desirable, with the goals of effectuating smooth and prompt
implementation of the Parties’ obligations under this Agreement and avoidance
and resolution of disagreements between the Parties; and to provide updates of
information as provided for in this Agreement.

 

IN WITNESS WHEREOF, each of the Parties has executed this Agreement and Annexes
as of the date below.

 

TEVA PHARMACEUTICALS USA, INC.

 

BIOSANTE PHARMACEUTICALS, INC.

 

 

 

Signature:

/s/ George S. Barrett

 

Signature:

/s/ Stephen M. Simes

 

 

 

 

 

Name:

George S. Barrett

 

Name:

Stephen M. Simes

 

 

 

 

 

Title:

President & CEO

 

Title:

President & CEO

 

 

 

 

 

Date:

December 23, 2002

 

Date:

12/27/02

 

16

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

 

ANNEX A

 

The Product

 

1% testosterone gel AB-rated to AndroGel®

 

17

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