Article 1. Definitions  1        Article 2. Supply of Product  10        2.01 Obligation  10 2.02 Exclusivity of Supply  11 2.03 Shelf Life  11 2.04 Regulatory Compliance  12 2.05 Child Labor and Forced Labor  12 2.06 Shipment  13 2.07 Environmental Standards  15 2.08 Documentation  15 2.09 Supply Of Materials  15 2.10 Supply Assurance/Business Continuity Planning  17 2.11 Funding for Purchase of Equipment  17 2.12 Notification of Supply Issues  19 2.13 Reporting Requirements  19 2.14 Labeling and Packaging of Supplied Products  19        Article 3. Quality Control and Testing  19        3.01 Quality Assurance Agreement  19 3.02 Testing and Certificate of Analysis  20 3.03 Preservation Samples/Retained Samples  20 3.04 Quality Disputes; Acceptance and Return  20 3.05 Stability Testing  23 3.06 Customer Complaints  23 3.07 Inquiries and Requests for Inspection  24 3.08 Inspections  24 3.09 Validations  24 3.10 Cross Contamination Risk  24 3.11 Quality Assurance Key Elements  24        Article 4. Forecasts and Ordering  25        4.01 Forecasting  25 4.02 Launch Order  27 4.03 Firm Orders  27 4.04 Batch Size  27 4.05 Annual Installed Capacity  29 4.06 Customer Service  29 4.07 Shortfalls  31 4.08 Failure to Deliver  32 4.09 Notice of Delay  32 4.10 Technical Assistance  32 4.11 Site Level Execution Agreement  32 
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              Article 5. Prices and Payment Terms  33        5.01 Price  33 5.02 Invoicing  33 5.03 Payment Terms  33 5.04 Adjustment Pursuant to Producer Price Index  33 5.05 Adjustment for Low Volume  34 5.06 Unprofitable Supply Terms  35 5.07 Adjustment for Modification of Specifications  36 5.08 Transfer Taxes  39 5.09 Continuous Improvement  40 5.10 Right to Audit  40        Article 6. Change Management  42        Article 7. Authorizations  43        Article 8. Liabilities  43        8.01 Warranties; Disclaimer  43 8.02 NOVEN Indemnity  44 8.03 P&GP Indemnity  44 8.04 Certain Limitations  45 8.05 Disclaimer of Incidental Damages  46 8.06 Product Recalls  46 8.07 Notice and Opportunity to Defend  46        Article 9. Term and Termination  47        9.01 Term  47 9.02 Certain Termination Events  47 9.03 Consequences of Termination  50 9.04 Survival  51        Article 10. Confidentiality, Public, Announcements, Intellectual Property  51        10.01 Confidentiality  51 10.02 Public Announcements  54 10.03 License to Products  54        Article 11. Alternative Suppliers  55        11.01 Qualification of Alternative Suppliers  55 11.02 Reasonable Assistance; Limited License  56 11.03 Royalties  58        Article 12. Steering Committee  58        Article 13. General Provisions  59        13.01 Force Majeure  59 13.02 Notices  60 13.03 Governing Law  60 13.04 Non-Waiver of Rights  60 13.05 Entire Agreement — Modifications  61 13.06 Agreement Precedence  61 13.07 Assignment  61 13.08 Partial Invalidity  62 13.09 Contractor Status  62 13.10 Disputes  63 13.11 Audits  64 13.12 Time Periods  64 13.13. Expenses  64 13.14 Binding Effect; No Third Party Beneficiaries  65 13.15 Interpretation  65 13.16 Counterparts  65 
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**SUPPLY AGREEMENT**This Supply Agreement (together with the Schedules hereto, this “Agreement”) is entered into as ofthis 14th day of August 2008 (the “Effective Date”), by and between:SELLER: Noven Pharmaceuticals, Inc., a company organized and existing under the laws of Delaware,with a place of business at 11960 SW 144th Street, Miami, FL 33186 (hereinafter“NOVEN”); andBUYER: Procter & Gamble Pharmaceuticals, Inc., a company organized and existing under the laws ofOhio, with a place of business at One Procter and Gamble Plaza, Cincinnati, OH 45202 (hereinafter,“P&GP Inc.”), and Procter & Gamble Pharmaceuticals, S.A.R.L., a company organized and existingunder the laws of Switzerland, with a place of business at 47, Route de Saint-Gorges 1213Petit-Lancy 1, Switzerland (hereinafter “P&GP SARL” and, together with P&GP Inc., “P&GP”), onbehalf of themselves and their Affiliates.**Background**0.01 P&GP intends to market and sell the Products (as defined herein) for use in humanprescription pharmaceuticals. 0.02 Subject to the terms and conditions hereof, the parties have agreed that NOVEN willmanufacture and supply such Products to P&GP for use and sale. The NOVEN manufacturing siteas of the date of this Agreement designated for manufacture of Products is the NOVEN addressabove (11960 SW 144th Street, Miami, FL 33186). 0.03 NOVEN and P&GP are parties to the Development and License Agreement, dated as of June 30,2008 (the “License Agreement”).**Article 1.** **Definitions** 1.01 *** **Batch**” has the meaning set forth in Section 4.04(d).  1.02 **“Action Plan”**has the meaning set forth in Section 4.06(b).  1.03 **“Additional Charges”**has the meaning set forth in Section 4.04(c).
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 1.04 **“Additional Products**” has the meaning set forth in the License Agreement.  1.05 **“Affiliate”**means, when used with respect to a Person, any other Persondirectly or indirectly controlling, controlled by or under common control with thesubject Person. For purposes of this Agreement, “control” means the direct orindirect ownership of over 50% of the outstanding voting securities of a Person orthe possession, direct or indirect, of the power to direct or cause the directionof the management or policies of such Person whether through the ownership ofsecurities, contract or otherwise.  1.06 “**Agreement”**has the meaning set forth in the Preamble.  1.07 **“Alternate Supplier”**has the meaning set forth in Section 11.01.  1.08 **“Annual Installed Capacity”**has the meaning set forth in Section 4.05.  1.09 **“Annual MA”**has the meaning set forth in the Quality AssuranceAgreement.  1.10 **“Applicable Law”**means, with respect to any Person, any domestic orforeign, federal, state or local statute, treaty, law, ordinance, rule, regulation,administrative interpretation, order, writ, injunction, judicial decision, decreeor other requirement of any Governmental Authority applicable to such Person or anyof such Person’s respective properties, assets, officers, directors, employees,consultants or agents (in connection with such officers’, directors’, employees’,consultants’ or agents’ activities on behalf of such Person).  1.11 **“Audited Party”**and **“Auditing Party”**have the meanings set forth inSection 5.10(a).  1.12 **“Batch”**means, as to each Product, the actual number of complete andusable units of such Product yielded from a standard size kettle *** of rawmaterials as determined by applicable Regulatory Authority validation requirementsand blended for production of such Product, it being understood and agreed that theactual yield obtained by NOVEN from any such Batch will vary from time to time.The estimated number of units of the T-Patch expected to be yielded fromeach Batch produced thereof, as of the Effective Date, shall be as describedin **Schedule 2**hereto, as such schedule may be amended, modified or otherwisesupplemented from time to time in accordance with the terms of this Agreement.
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 1.13 **“Business Continuity Plan”**has the meaning set forth in Section 2.10.  1.14 **“Business Day”**means a day other than a Saturday, Sunday or other dayon which commercial banks in New York, New York; Miami, Florida or Cincinnati, Ohioare authorized or required by law to close.  1.15 **“cGMP”**means (i) the current Good Manufacturing Practices as that termis defined in 21 C.F.R. Parts 210 and 211, as amended from time to time, andapplicable guidance documents, and (ii) good manufacturing practices as required byapplicable regulations of any Regulatory Authority.  1.16 **“Complaint Notice”**has the meaning set forth in Section 3.04(a).  1.17 **“Confidential Information”**means all secret, confidential orproprietary data, know-how and related information, including (i) all INDs, NDAs,Regulatory Applications, Regulatory and Clinical Materials and related filings,applications and data, the content of any unpublished patent applications,operating methods and procedures, marketing, manufacturing, distribution and salesmethods and systems, sales figures, pricing policies and price lists and otherbusiness information, (ii) all information disclosed or accessed by the partiespursuant to the provisions of this Agreement or the other Transaction Documents,(iii) information learned, observed or otherwise acquired through site visits anddiscussions between NOVEN and P&GP at each other’s facilities, including plantsize, crew shifts, number of lines, product shipments, lab procedures, new productdevelopment testing and manufacturing processes and (iv) the terms and conditionsof this Agreement and the other Transaction Documents.  1.18 **“Damages”**means all liabilities, demands, obligations, assessments,judgments, levies, losses, fines, penalties, damages (including compensatorydamages),costs and expenses, including reasonable attorneys’, accountants’,investigators’, and experts’ fees and expenses, reasonably sustained orincurred in connection with the defense or investigation of any Proceedings(including any Proceedings to establish insurance coverage).
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 1.19 **“Development Agreement”**has the meaning set forth in the LicenseAgreement.  1.20 **“Disclosing Party”**has the meaning set forth in Section 10.01(a).  1.21 **“Discretionary Change”**has the meaning set forth in Section 5.07(a).  1.22 “**Effective Date”**has the meaning set forth in the Preamble.  1.23 **“FDA”**means the United States Food and Drug Administration and anysuccessor agency thereto.  1.24 **“Fixed Order Date”**has the meaning set forth in Section 4.01(a).  1.25 **“Fixed Zone”**has the meaning set forth in Section 4.01(c).  1.26 **“GAAP”**means, as of any time of determination, accounting principlesgenerally accepted in the United States, as in effect at such time.  1.27 **“Governmental Authority”**means any foreign, domestic, federal,territorial, state or local governmental authority, quasi-governmental authority,instrumentality, court, government or self-regulatory organization (including anynational or international securities exchange), commission, tribunal ororganization or any regulatory, administrative or other agency, or any political orother subdivision, department or branch of any of the foregoing.  1.28 **“Grace Period”**has the meaning set forth in Section 5.05.  1.29 **“Gross Margin”**means, with respect to any Product and with respect toany period of determination, (i) the aggregate Purchase Price actually received byNOVEN for such Product during such period, less (ii) NOVEN’s aggregate,fully allocated cost of Raw Materials, labor and manufacture of such Productduring such period, as determined in accordance with GAAP.
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 1.30 **“IND”**means an Investigational New Drug Application, as defined in 21C.F.R. § 312.3(b), filed by a Person with the FDA to obtain authorization todevelop, test and perform clinical trials of a product, together with anyamendments, correspondence or supplements thereto and incorporated therein.  1.31 **“Indemnified Party”**has the meaning set forth in Section 8.07.  1.32 **“Indemnifying Party”**has the meaning set forth in Section 8.07.  1.33 *******has the meaning set forth in the License Agreement.  1.34 **“Label Changes”**has the meaning set forth in Section 5.07(d).  1.35 **“License Agreement”**has the meaning set forth in the Recitals.  1.36 **“Manufacturing Audit”**has the meaning set forth the Quality AssuranceAgreement.  1.37 **“Milestone Payments”**has the meaning set forth in the LicenseAgreement.  1.38 **“Monthly Targets”**has the meaning set forth in Section 4.06(b).  1.39 **“NDA”**means a New Drug Application, as defined in 21 C.F.R. § 314,filed by a Person with the FDA to obtain FDA approval of a new drug or therapy, asthe context indicates, together with any amendments, correspondence or supplementsthereto and incorporated therein.  1.40 **“Net Outside Sales”**has the meaning set forth in the License Agreement.  1.41 **“NOVEN”**has the meaning set forth in the Preamble.  1.42 **“NOVEN Indemnitees”**has the meaning set forth in Section 8.03.  1.43 **“NOVEN Patents”**has the meaning set forth in the License Agreement.  1.44 **“NOVEN Transfer Taxes”**has the meaning set forth in Section 5.08.
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 1.45 **“Other Required Change”**has the meaning set forth in Section 5.07(c).  1.46 **“P&GP”**has the meaning set forth in the Preamble.  1.47 **“P&GP Inc.”**has the meaning set forth in the Preamble.  1.48 **“P&GP SARL”**has the meaning set forth in the Preamble.  1.49 **“P&GP Transfer Taxes”**has the meaning set forth in Section 5.08.  1.50 **“Partial Batch Charges”**has the meaning set forth in Section 4.04(c).  1.51 **“Person”**means an individual, a corporation, a general partnership, alimited partnership, a limited liability company, a limited liability partnership,an association, a trust or any other entity or organization, including aGovernmental Authority.  1.52 **“Planning Horizon”**has the meaning set forth in Section 4.01(d).  1.53 **“PPI”**has the meaning set forth in Section 5.04.  1.54 **“Printed Matter”**means all printed materials, including labeling andpackage inserts, affixed to and/or packaged with any Products delivered to P&GP,including any labeling or other printed matter required to be affixed to and/orpackaged with any of the Products by any Applicable Law or Regulatory Authority, aswell as any discretionary labeling or other printed matter designated by P&GP to beaffixed to and/or packaged with any of the Products.  1.55 **“Proceedings”**means governmental, judicial, administrative oradversarial proceedings (public or private), litigation, suits, arbitration,disputes, claims, causes of action or investigations.  1.56 **“Product”**or **“Products”**means, collectively, (i) the ***, (ii) theT-Patch, (iii) any Additional Products that become “Products” for purposes of theLicense Agreement, and (iv) samples and placebos of the foregoing. For purposes ofclarity, it is agreed that “Products” shall not include any clinical productsdelivered by NOVEN to P&GP pursuant to the Development Agreement or theLicense Agreement.
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 1.57 **“Purchase Order”**has the meaning set forth in Section 4.03.  1.58 **“Purchase Price”**has the meaning set forth in Section 5.01.  1.59 **“Quality Assurance Agreement”**has the meaning set forth in Section 3.01.  1.60 **“Quality Assurance Key Elements”**or **“QAKE”**has the meaning set forth inSection 3.11.  1.61 **“Raw Materials”**means, with respect to any Product, all activeingredients, starting materials, excipients and other ingredients used in themanufacture of such Product, as well as all packaging, labeling and other printedmatter included in such Product.  1.62 **“Receiving Party”**has the meaning set forth in Section 10.01(a).  1.63 **“Required Change”**has the meaning set forth in Section 5.07(b).  1.64 **“Regulatory and Clinical Materials”**means all documents, supportingmaterials and other materials relating to the Regulatory Applications, anyRegulatory Approval or other matter required to be submitted to any RegulatoryAuthority in relation to the Products, including the INDs and NDAs for the Productsand documents, supporting materials and other materials relating to any drug masterfile, investigators’ brochures, clinical studies, pre-clinical studies, safetydata, adverse event reports, questionnaires, consultants reports, correspondence(including correspondence with any Regulatory Authority), batch reports, protocols,specifications, quality assurance, quality control, customer queries and anyresponses thereto, and any compilation or evaluations thereof, and question andanswer scripts.
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 1.65 **“Regulatory Applications”**means the applications submitted by P&GP orits Related Parties to Regulatory Authorities seeking authorization or approval forthe development, manufacture, testing, storage, transport, marketing,advertisement, promotion, sale, use, distribution or other disposal of theProducts in all or any portion of the Territory, including the INDs and theNDAs for the Products.  1.66 **“Regulatory Approval”**means, as to each Product, (i) with respect tothe United States, the issuance of an approval letter (as defined in 21 C.F.R. §314.3(b)) by the FDA pursuant to 21 U.S.C. §355(c) and 21 C.F.R. § 314.105approving the NDA for such Product and approving the Product for manufacturing,marketing, sale, distribution and use in the United States, irrespective of anypost-marketing study commitments related to such Product, and (ii) with respect toany territory outside of the United States, the comparable issuance of approval bya Regulatory Authority for the manufacturing, marketing, sale, distribution and useof such Product in such territory.  1.67 **“Regulatory Authority”**means a Governmental Authority that has theauthority over the manufacture, use, storage, import, export, testing, transport,marketing, sale or distribution of any of the Products in all or any portion of theTerritory, including the FDA and any counterparts to the FDA in territories outsideof the United States.  1.68 **“Related Parties”**means P&GP’s Affiliates and permitted sublicensees.For purposes of clarification, it is acknowledged and agreed that the term “RelatedParties” does not include distributors.  1.69 **“Rolling Forecast”**has the meaning set forth in Section 4.01(a).  1.70 **“Royalties”**has the meaning set forth in the License Agreement.  1.71 **“Services”**means, with respect to any Product, formulation, stabilitytesting, manufacture, packaging, printing and application of labeling, testingprior to shipment (including but not limited to Raw Materials, intermediate/work inprocess and finished goods testing) and storage prior to loading of suchProduct onto the carrier approved by P&GP for shipment.
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 1.72 **“Site Level Execution Agreement”**or **“SLEA”**has the meaning set forth inSection 4.11.  1.73 **“SKU”**has the meaning set forth in Section 4.03.  1.74 **“Specifications”**means, with respect to any Product, the writtenmethods, procedures, specifications, tests and standards pertaining to themanufacture, storage, labeling, packaging and/or testing of such Product, as suchSpecifications may be subsequently amended pursuant to Article 6. **Schedule 1**provides the Specifications for T-Patch as of the Effective Date. Specificationsfor each other Product, including without limitation for ***, will be agreed uponby the parties and attached as a Schedule hereto prior to launch of such Product.  1.75 **“Split Lot Charges”**has the meaning set forth in Section 4.04(b).  1.76 **“Steering Committee”**has the meaning set forth in Article 12.  1.77 **“Target Inventory Levels”**has the meaning set forth in Section 2.09(b).  1.78 **“T-Patch”**means the transdermal patch drug delivery system developed byNOVEN ***, and shall include any minor improvements or modifications to suchproduct that do not require additional development work (provided thatclinical trials of the T-Patch and clinical work related to the T-Patch performedby P&GP shall not be considered additional development work for purposes of theforegoing phrase). For purposes of clarification, the term “T-Patch” shall notinclude any product that may constitute an Additional Product under the LicenseAgreement.  1.79 *******means the transdermal patch drug delivery system to be developed byNOVEN ***. For purpose of clarification, the term *** shall not include anyproduct that may constitute an Additional Product under the License Agreement.
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 1.80 **“Technology”**has the meaning set forth in the License Agreement.  1.81 **“Term”**has the meaning set forth in Section 9.01.  1.82 **“Territory”**has the meaning set forth in the License Agreement.  1.83 **“Third Party”**means any Person other than the parties hereto and theirrespective Affiliates and, in the case of P&GP, any Related Party.  1.84 **“Three-Year Forecast”**has the meaning set forth in Section 4.01(e).  1.85 **“Transaction Documents”**means this Agreement, the License Agreement,any agreements or documents prepared or executed pursuant to the transactionscontemplated by such agreements, any exhibits or attachments to any of theforegoing and any other written agreement signed by NOVEN and P&GP that isexpressly identified as a Transaction Document, as any of the foregoing may beamended, supplemented or otherwise modified from time to time.  1.86 **“Transfer Taxes”**means, collectively, all taxes payable with respect tothe manufacture, sale and transportation of the Products hereunder that are imposedby a Governmental Authority, including, without limitation, any sales, use, excise,value-added, services, consumption and other taxes and duties incurred by reason ofthe manufacture, sale and/or transportation of the Products under this Agreement.  1.87 **“United States”**means the United States of America and its territoriesand possessions.**Article 2.** **Supply of Product** 2.01 **Obligation**. Subject to the terms and conditions hereof, NOVEN shallsell and supply the Products to P&GP, and P&GP shall purchase and receiveexclusively from NOVEN all of its requirements of each Product. Subject to theterms and conditions hereof, NOVEN is responsible for providing the Services withrespect to each Product sold and purchased hereunder.
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 2.02 **Exclusivity of Supply**.  (a) Subject to the terms and conditions of this Agreement, NOVEN will notmanufacture, sell or otherwise provide any Product in any country with respect towhich P&GP holds an exclusive license under the License Agreement for any partyother than P&GP, or any successor, assignee, delegatee or partner of P&GP approvedby NOVEN in accordance with this Agreement or the License Agreement, during theTerm.  (b) Subject to the terms and conditions hereof, NOVEN will be the exclusivesupplier of the Products.  2.03 **Shelf Life**.  (a) All Product sold hereunder is intended to bear at least *** months ofits approved shelf life at the time of loading of such Product onto the carrierapproved by P&GP for shipment at NOVEN’s manufacturing facility. NOVEN and P&GPwill seek to collaborate during supply chain planning discussions on the timing ofmanufacturing schedules and placement of Purchase Orders to meet the shelf liferequirements. Both P&GP and NOVEN recognize that, from time to time, the ***months shelf life requirement may not be achievable due to manufacturing or qualityvariances.  (b) P&GP shall have the right to refuse any shipment of Product thatdoes not bear at least *** months of its approved shelf life at the time ofloading of such Product onto the carrier approved by P&GP for shipment, providedthat the diminished shelf life is not due to any delay by P&GP. This Section2.03(b) sets forth NOVEN’s sole and exclusive liability, and P&GP’s sole andexclusive remedy, with respect to any failure to meet the shelf liferequirements set forth in this Section 2.03 (provided that any Product refusedby P&GP pursuant to this Section 2.03(b) will be considered Product notdelivered to P&GP for purposes of Sections 4.07 and Section 9.02(c), and will betaken into account indetermining whether any shortage or failure of supply has occurred, inaccordance with the terms of those provisions).
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 (c) The shelf life requirements set forth in this Section 2.03 are basedupon an approved shelf life of the Product of *** months. If the approved shelflife for any Product is extended beyond *** months, the parties will discuss ingood faith a revision of the shelf life requirements under this Section 2.03 withrespect to such Product. If, at initial launch for any Product, the approved shelflife of such Product is less than *** months, the parties will discuss in goodfaith a revision of the shelf life requirements set forth in this Section 2.03, andNOVEN will use commercially reasonable efforts to assist P&GP in obtaining approvalfor a minimum *** month shelf life.  2.04 **Regulatory Compliance**. NOVEN shall ensure that all services,facilities and equipment used in the manufacture, packaging, labeling, storage andtesting of Product prior to loading the Product onto the carrier approved by P&GPfor shipment at NOVEN’s manufacturing facility comply with all Applicable Laws andregulations including but not limited to cGMPs.  2.05 **Child Labor and Forced Labor**. NOVEN represents, warrants andcovenants that:  (a) NOVEN does not and will not employ children, prison labor, indenturedlabor or bonded labor or use corporal punishment or other forms of mental andphysical coercion as a form of discipline; and  (b) to NOVEN’S knowledge, no suppliers or subcontractors engaged by NOVENin connection with the performance of Services hereunder employ children, prisonlabor, indentured labor or bonded labor or use corporal punishment or other formsof mental and physical coercion as a form of discipline, and in the event NOVENlearns that any such supplier or subcontractor has engaged in any of theforegoing, it shall use commercially reasonable efforts to require suchsupplier or subcontractor to cease such activities.
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  In the absence of any national or local law setting the minimum age, P&GP and NOVENagree to define “child” as less than 15 years of age. If national or local law sets theminimum age below 15 years of age, but is in accordance with exceptions underInternational Labor Organization Convention 138, the lower age will apply. 2.06 **Shipment**.  (a) Except as set forth in Section 2.06(c) below, all Product sold to P&GPhereunder shall be loaded by NOVEN onto P&GP’s designated carrier for shipment atNOVEN’s manufacturing facility. NOVEN shall arrange for P&GP’s designated carrierto receive each shipment of Product at NOVEN’s manufacturing facility for deliveryto P&GP’s designees and/or distribution centers.  (b) P&GP will provide to NOVEN all information necessary for export andcustoms clearance of Product to be shipped to foreign countries. NOVEN shall beresponsible for completing any DEA forms and for physical preparation of Productfor shipment to P&GP’s designees and designated distribution centers. With respectto any shipment of Product outside of the United States, NOVEN shall be theexporter of record and will prepare export paperwork for shipment to a customsbroker within the United States designated by P&GP in writing to NOVEN.  (c) Shipment of Product shall be F.C.A. (Incoterms 2000) NOVEN’smanufacturing facility for all export shipments and Ex-Works (Incoterms 2000)NOVEN’s manufacturing facility for all U.S. shipments. Notwithstanding anyprovision of this Agreement, risk of loss and damage to any and all Productmanufactured hereunder shall pass to P&GP upon loading of such Product onto thecarrier approved by P&GP for shipment at NOVEN’s manufacturing facility. NOVEN
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   shall have no liability under this Agreement for any failure of any carrier todeliver Product on or before the applicable Fixed Order Date so long as NOVENhas loaded the Product onto such carrier no later than five (5) Business Daysprior to such Fixed Order Date, unless NOVEN is at fault for any delays indelivery by such carrier (for example due to improper packing), in which casethe period of the delay caused by NOVEN shall be counted for purposes ofdetermining whether NOVEN has satisfied the requirements set forth in Section4.06(a)(i). P&GP shall ensure that the storage conditions of each Productduring transportation are maintained in accordance with its Specifications.All transportation costs associated with shipping Product from NOVEN’smanufacturing facility shall be borne entirely by P&GP. NOVEN shall arrangefor P&GP’s designated carrier to receive each shipment of Product at NOVEN’smanufacturing facility for delivery to P&GP’s distribution centers or othershipping locations and P&GP shall arrange, directly with the carrier, thetiming and method of delivery to its distribution centers and other shippinglocations. P&GP will provide to NOVEN a list of preferred carriers and NOVENshall use said carriers unless P&GP’s designated carrier is not available, inwhich case NOVEN will select an alternate carrier. In such case, NOVEN mustreceive P&GP’s approval (not to be unreasonably withheld or delayed) prior tothe use of any carrier other than those designated by P&GP as preferredcarriers in accordance with this Section 2.06(c), and such approval by P&GPshall pertain only to the approved shipment unless otherwise indicated byP&GP. Additional shipping costs resulting from NOVEN’s expedited deliveriesor use of alternate carriers in order to comply with NOVEN’s obligations toexpedite delivery, that are due to the fault of NOVEN, will be at NOVEN’sexpense. Any costs associated with any other expedited deliveries, or anyother use of an alternate carrier requested or approved by P&GP, will be atP&GP’s expense.
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 2.07 **Environmental Standards**. NOVEN agrees to comply with all environmentallaws, ordinances, codes, rules, regulations and permits applicable to theperformance of Services hereunder.  2.08 **Documentation**. NOVEN shall maintain and provide to P&GP copies ofdocumentation relevant to the manufacture, packaging, labeling, storage and testingof Product subject to and in accordance with the terms and conditions of theQuality Assurance Agreement.  2.09 **Supply Of Materials**.  (a) NOVEN will exercise commercially reasonable efforts to obtain all RawMaterials necessary to fulfill its obligations to supply Product to P&GP hereunder.  (b) NOVEN shall exercise commercially reasonable efforts to develop,qualify (in accordance with the Quality Assurance Agreement) and audit adequatesources to maintain a target inventory safety stock of Raw Materials necessary tomanufacture Product, the minimum and maximum levels of which shall be set forth inthe SLEA (the “Target Inventory Levels”). P&GP shall be liable for any RawMaterials maintained pursuant to this Agreement within the Target Inventory Levelsset forth in the SLEA, and, upon request of NOVEN, will reimburse NOVEN for NOVEN’sreasonable out-of-pocket costs of any such Raw Materials not incorporated intoProduct purchased by P&GP, subject to Section 5.07, Article 6 and Section 9.03(c),to the extent applicable.  (c) NOVEN shall exercise commercially reasonable efforts to identifyalternative vendors for Raw Materials; provided, that P&GP herebyacknowledges and agrees that certain suppliers of Raw Materials to NOVEN are or maybe single-source vendors and that Raw Materials supplied to NOVEN may not bereasonably available for purchase by NOVEN from any other vendor on terms andconditions that meet NOVEN’s alternative raw materials acceptance
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   process. The parties shall cooperate through the Steering Committee toprepare a summary plan outlining alternative sources of Raw Materials,including contingency suppliers, and shall cooperate to update such summaryplan annually or more frequently as necessary to reflect any material changesthereto. The parties shall work together through the Steering Committee todetermine whether qualification of additional vendors of Raw Materials isappropriate, to estimate the amount of time required to qualify additionalvendors of Raw Materials and to effect any such qualifications to the extentdeemed appropriate by the Steering Committee; provided that allsuppliers of Raw Materials shall meet NOVEN’s and P&GP’s alternative rawmaterials acceptance process. All costs of qualification of additionalvendors of Raw Materials requested by either P&GP or NOVEN shall be paid bythe party making the request; provided that to the extent suchqualification is required as the result of a Force Majeure event, the costs ofqualification shall be shared by both parties.  (d) NOVEN is responsible to inspect, analyze or otherwise ensure that allRaw Materials meet NOVEN’s specifications and standards for such Raw Materials andmeet Applicable Laws and regulations including but not limited to cGMPs, inaccordance with the Quality Assurance Agreement; provided, however,that P&GP shall be solely responsible for the design and content (including withoutlimitation artwork and text) of all Printed Matter used in the manufacture of theProduct, as further described in the Quality Assurance Agreement.  (e) In order to assist NOVEN in fulfilling its obligations under thisAgreement, and at NOVEN’s request, P&GP may arrange for supply of one or more RawMaterials to NOVEN on terms reasonably acceptable to NOVEN. In such event, P&GPand NOVEN shall cooperate to agree on pricing and responsibilities for logisticsprocedures, losses and risks associated with such Raw Materials.
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 2.10 **Supply Assurance / Business Continuity Planning.**NOVEN shall prepare,within ninety (90) calendar days after submission of the first RegulatoryApplication of a Product for marketing authorization in any country within theTerritory, a business continuity plan (“Business Continuity Plan”), the purpose ofwhich shall be to assess and reduce supply interruption risks associated withsupply of Product sold hereunder. Such a plan will include an analysis of risksincluding but not limited to: failure or delay of land, water or airtransportation; governmental action; strikes or other labor disputes; accident,fire, explosion, flood, storm or other acts of God; shortage of Raw Materials,labor, fuel, power, inventory or machinery; technical failures, delay or failure toperform by any supplier; or any other relevant factor as determined by NOVEN in itssole discretion. The Business Continuity Plan will include commercially reasonableaction steps to reduce the likelihood or severity of risks considered unacceptable.P&GP shall have the right to provide input into the Business Continuity Plan. TheSteering Committee will mutually agree on the approved Business Continuity Plan toprotect supply of Product. NOVEN will be responsible for any costs and expensesassociated with implementation of the Business Continuity Plan as proposed byNOVEN, and P&GP shall reimburse NOVEN for its costs and expenses associated withimplementing any revisions to the Business Continuity Plan proposed by P&GP.  2.11 **Funding for Purchase of Equipment**. In order that NOVEN may performits obligations herein, NOVEN may request that P&GP consider providing, and P&GPmay agree to provide to NOVEN, funding for the purchase and installation of uniqueequipment/production parts and for specialized facility modifications necessary tocarry out the Services for the Products. In the event that NOVEN requests and P&GPagrees to provide such funding, the following provisions shall apply:
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 (a) P&GP shall provide such funding to NOVEN as costs are incurred,approved by P&GP and invoiced by NOVEN with supporting documentation. Such fundingprovided by P&GP shall be in an amount sufficient to cover any sales or transactiontax applicable to the purchase of the applicable equipment. P&GP shall also pay, orreimburse to NOVEN, the cost of installation of any equipment funded by P&GPhereunder.  (b) Any equipment purchased using funds provided to NOVEN by P&GP underthis Section 2.11 will be for use by NOVEN exclusively in the performance ofServices for P&GP; provided that if another opportunity arises to utilizesuch equipment for another customer, NOVEN may request P&GP’s approval to so usesuch equipment, which shall be at P&GP’s sole discretion.  (c) All equipment purchased with such funds will be the property of NOVEN.NOVEN will acquire and retain title to such equipment and will be responsible forits maintenance and/or replacement in the event of loss or destruction. NOVEN willuse commercially reasonable efforts to maintain adequate insurance to cover thereplacement of equipment in the event of loss or destruction. In addition, P&GPwill have the option, commencing upon the later of the expiration or termination ofthis Agreement or any extension(s) thereof, if any, and continuing for three (3)months thereafter, to purchase at fair market value any or all equipment purchasedwith funds provided to NOVEN by P&GP under this Section 2.11. Such fair marketvalue will be determined at the time such option is exercised based on the cost ofsuch equipment as invoiced from NOVEN to P&GP less the amount of funding providedby P&GP under this Section 2.11 with respect to such equipment. If P&GP exercisesthis option, the costs of removal, restoration, if any, and transportation of theequipment will be borne by P&GP. It is understood that NOVEN will not be requiredto refund installation costs should the asset be removed by P&GP or released byP&GP under this Section 2.11(c).
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 (d) NOVEN will keep any and all equipment purchased with such funds freeand clear of all liens, claims, security interests, pledges, charges, mortgages,deeds of trust, options, or other encumbrances of any kind including but notlimited to such liens arising out of or relating to provincial construction lienlegislation in Canada, U.S. state mechanic’s liens statutes, or similar statutes.  2.12 **Notification of Supply Issues**. NOVEN will notify P&GP promptly of anycapacity or schedule changes, conflicts or risks reasonably likely to affect itsability to supply Product forecasted and ordered by P&GP hereunder pursuant to aforecast and Purchase Order submitted in accordance with the provisions of Section4.01 and Section 4.03. NOVEN shall use commercially reasonable efforts to resolvesuch issues promptly and to allocate limited materials and resources, includingequipment and labor capacity, on a pro-rated basis among its various products andcustomers.  2.13 **Reporting Requirements**. NOVEN shall provide to P&GP such informationand reports as may be reasonably requested by P&GP and agreed to by NOVEN, in aformat and on a frequency to be agreed upon by the parties.  2.14 **Labeling and Packaging of Supplied Products**. P&GP shall, at its owncost and expense, supply NOVEN with the electronic and/or mechanical design of alltext, artwork, specification number, and other information to be used for allPrinted Matter. P&GP shall supply such materials, data and information to NOVEN ona timely basis so as not to cause any delay in NOVEN’s manufacturing process.  **Article 3. Quality Control and Testing** 3.01 **Quality Assurance Agreement**. Simultaneously with, or as soon aspracticable after, the execution of this Agreement, the parties shall enter into aQuality Assurance Agreement (the “Quality Assurance Agreement”) covering thedetails of items such as, but not limited to, quality control procedures, testing,quality
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   assurance, product and material release, change control, notifications,deviations and similar activities. Such Quality Assurance Agreement may beamended from time to time as provided therein or as otherwise agreed to inwriting by the parties without formal amendment to this Agreement.  3.02 **Testing and Certificate of Analysis**. Before releasing any Batch ofProduct hereunder, NOVEN shall test Product and check the compliance of such Batchwith the Specifications. Such compliance check shall be performed by NOVEN’sQuality Assurance Control department and shall be certified by the head of suchdepartment (or his/her designee). Copies of the certificate of analysis and cGMPconformity certification, along with any other pertinent manufacturing or testingdocumentation, shall be sent to P&GP in accordance with the terms and conditions ofthe Quality Assurance Agreement.  3.03 **Preservation Samples / Retained Samples**. NOVEN shall retain samples ofRaw Materials and Product supplied hereunder in accordance with the terms andconditions of the Quality Assurance Agreement.  3.04 **Quality Disputes; Acceptance and Return**.  (a) Any claim by P&GP that any Product at the time it was loaded onto thecarrier approved by P&GP for shipment did not meet the warranties andrepresentations set forth in Section 8.01(a) must be made in writing to NOVENwithin thirty (30) days of delivery (for Product released in the United States) orwithin sixty (60) days of delivery (for Product released outside the UnitedStates). Notwithstanding the foregoing, with respect to any latent defect (i.e.,any failure of a Product to meet the applicable requirements set forth in theSpecifications which is not determinable by testing upon physical arrival of theProduct at P&GP’s distribution center in accordance with standard quality controlprocedures, and which is not otherwise apparent), P&GP must notify NOVEN of a claimthat the Product does not meet the applicable requirements set forth in theSpecifications within thirty (30) days from the date that the problem
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   becomes discoverable. The notice provided by P&GP with respect to a claimunder either of the first two (2) sentences of this Section 3.04(a) shall bereferred to herein as a “Complaint Notice”. Failure to provide a ComplaintNotice to NOVEN within the applicable period set forth in this Section 3.04(a)shall constitute acceptance of such Product by P&GP, and NOVEN shall have noliability for defects or deviations for which it has not received noticewithin such period. Any such Complaint Notice shall be issued in good faithand state in reasonable detail (sufficient to enable NOVEN to identify thenature of the problem for tests or studies to be conducted by or on its behalfor to dispute the same) the reason why P&GP believes the Product may not beacceptable to P&GP. P&GP shall, as soon as reasonably practicable, and in anycase within fifteen (15) days of the delivery by P&GP of any such possibleComplaint Notice, provide samples of the Product being rejected, if available,and copies of written reports relating to tests, studies or investigationsperformed to that date by or on behalf of P&GP on the Batch of the Productbeing rejected. NOVEN shall use commercially reasonable efforts to notifyP&GP of NOVEN’s agreement or disagreement with P&GP’s Complaint Notice aspromptly as practicable, but in any event within ten (10) days after the laterof (i) receipt by NOVEN of the Complaint Notice or (ii) receipt by NOVEN ofsamples of the rejected Product from P&GP. NOVEN shall test a sample from thesame Batch as the contested Product, and shall provide to P&GP a copy of theresults of such test. If P&GP does not agree with the outcome of suchtesting, representative samples of the Batch of the Product in question shallbe submitted to an independent third party laboratory mutually agreed upon bythe parties. The results of such third party testing shall be accepted byNOVEN and P&GP as final and binding. The cost of such third party testingshall be borne by the party whose position is not substantiated by thetesting. P&GP will have final decision authority on determining whether anyProduct can be used for sale and distribution.
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 (b) Any Product that is properly rejected in accordance with subsection (a)above for failure to meet the warranties and representations set forth in Section8.01(a) shall be returned to NOVEN (or, at NOVEN’s election, destroyed by P&GP withevidence of such destruction provided by P&GP to NOVEN) at NOVEN’s expense,including costs of return shipment, shipment to destruction location, and/ordestruction, as applicable. NOVEN shall credit P&GP the Purchase Price, plus anyAdditional Charges paid by P&GP for such Product or, if P&GP has not yet paid forsuch Product, P&GP will be relieved of any payment obligations with respectthereto. NOVEN shall also credit P&GP for the amount of reasonable shipping andreasonable out-of-pocket charges actually incurred by P&GP in association with thedelivery and incoming quality inspection of such defective Product to P&GP.Consistent with NOVEN’s responsibility to remedy noncompliance as described in thissubsection (b), in the event any Product is properly rejected pursuant to Section3.04(a) above, P&GP may exercise one of the following remedies: (i) submit a new Purchase Order for Product with amutually agreed to Fixed Order Date, and NOVEN shall use commerciallyreasonable efforts to expedite manufacture and delivery of the replacementProduct ordered by P&GP;  (ii) the parties will mutually work together to determineif the rejected Product can be remediated by modifying an existingPurchase Order, considering the availability of Product in the appropriatestage of the manufacturing process; or  (iii) replace the rejected Product through a futuredelivery not in the Fixed Zone.    P&GP will not incur any Additional Charges with respect to the replacementProduct unless such Additional Charges were previously paid and refunded withrespect to the rejected Product, or were invoiced but not yet paid at the timesuch Product was rejected and the Purchase Price therefor refunded. P&GPwill, in good faith, work with NOVEN to minimize the additional costs NOVENwillincur to supply replacement Product while not jeopardizing P&GP’s tradecommitments.
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 (c) Notwithstanding the foregoing provisions of this Section 3.04, NOVENshall have no liability or obligation to P&GP under this Section 3.04 if it isdetermined that any defect in any Product is attributable to the failure by anyPerson (including P&GP) to properly store, transport or care for any unit of suchProduct after such Product left NOVEN’s possession or is otherwise due to the faultof P&GP.  (d) If NOVEN supplies Product which fails to comply with therepresentations and warranties as set forth in Section 8.01(a), NOVEN shallperform, at its own cost and expense, an investigation into the reasons for suchfailure in accordance with the terms and conditions of the Quality AssuranceAgreement.  (e) P&GP’s rights and remedies set forth in this Section 3.04, togetherwith NOVEN’s indemnification obligations under Section 8.02, shall constituteP&GP’s exclusive remedy with respect to any failure of Product supplied hereunderto comply with the representations and warranties set forth in Section 8.01(a)(unless such failure results in a supply failure under Section 9.02(c), in whichcase Section 9.02(c) shall apply).  3.05 **Stability Testing**. NOVEN shall conduct, at its own cost and expense,stability programs in accordance with the terms and conditions of the QualityAssurance Agreement. NOVEN and P&GP agree to cooperate in good faith to seek anextension of expiration dating for the Products as stability data are generated oncommercial batches.  3.06 **Customer Complaints**. NOVEN and P&GP shall be responsible for reportingand investigating customer complaints related to the Products in accordance withthe terms and conditions of the Quality Assurance Agreement.
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 3.07 **Inquiries and Requests for Inspection**. NOVEN and P&GP shall beresponsible for responding to inquiries and any requests for inspections byRegulatory Authorities and other Third Parties in accordance with the terms andconditions of the Quality Assurance Agreement.  3.08 **Inspections**. NOVEN shall develop and execute periodic self-inspectionas set forth in the Quality Assurance Agreement.  3.09 **Validations**. NOVEN shall implement validation procedures in accordancewith the terms and conditions of the Quality Assurance Agreement.  3.10 **Cross Contamination Risk**. NOVEN hereby declares that in its facilitieswhere the Products are manufactured, tested or stored, NOVEN is not and has notmanufactured, packaged, tested or stored biological preparations containing livingorganisms, cephalosporins, cytotoxics or highly active materials, penicillin orother products that could reasonably be expected to constitute hazardouscontaminants. In the event that NOVEN intends, during the course of thisAgreement, to begin such activity, NOVEN shall promptly notify P&GP in writing ofits intention to do so in order to allow P&GP to consider any potential questionsof cross-contamination or regulatory requirements. In the event P&GP, afterreasonable consultation with NOVEN, identifies a potential problem ofcross-contamination or regulatory requirements that would prohibit the activity,NOVEN agrees not to manufacture, formulate or package products in the facility thatpresent cross-contamination problems for the Product(s).  3.11 **Quality Assurance Key Elements**. NOVEN represents and warrants thatNOVEN’s quality control systems are designed to meet the quality standardsdescribed in **Exhibit A**hereto (referred to as “Quality Assurance Key ElementsAssessment” or “QAKE”), to the extent such standards are applicable to the Servicesperformed by NOVEN hereunder. In connection with its Annual MA conducted under theQuality Assurance Agreement, with respect to compliance with QAKE, P&GP may auditNOVEN’s manufacturing facility, in a manner
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   not to unreasonably interfere with NOVEN’s operation at the manufacturingfacility. P&GP will provide to NOVEN such results from the QAKE audit in theform of a score. If the score is less than ***, NOVEN shall develop andimplement a detailed action plan to improve NOVEN’s quality standards. In theevent NOVEN fails to implement such action plan or subsequent audit resultshave a score of less than ***, P&GP shall be entitled to a review of all batchdocumentation and/or on site monitoring of process conditions prior to theshipment of Product to P&GP, subject to the parties reaching mutual agreementwith respect to the payment of costs and expenses associated with suchmonitoring. It is acknowledged that nothing in this Section 3.11 shall limitNOVEN’s representations and warranties set forth in Section 8.01(a), includingNOVEN’s representations and warranties regarding compliance with cGMP.  **Article 4. Forecasts and Ordering** 4.01 **Forecasting**.  (a) Rolling Forecasts. P&GP shall provide to NOVEN, within three(3) months after submission of the first Regulatory Application of a Product formarketing authorization in any country within the Territory, and shall provide toNOVEN on a monthly basis thereafter, on or before the tenth (10th) day of eachcalendar month, a written, rolling twelve (12)-month forecast (broken down bycalendar month of delivery, with the requested date of delivery to P&GP’sdistribution center (“Fixed Order Date”) for each such month, pouch languagecombinations and SKU) of P&GP’s estimated requirements of each Product (each, a“Rolling Forecast”). The aggregate quantity of Product forecasted with respect toany calendar month pursuant to this Section 4.01 shall not exceed one-twelfth(1/12) of NOVEN’s Annual Installed Capacity, with the exception of quantitiesforecasted with respect to the launch order under Section 4.02. NOVEN shall beentitled to reject any Rolling Forecast that is not submitted on or before thetenth (10th) day of any calendar month. NOVEN, upon receipt of P&GP’smonthlyRolling Forecast, shall, within fourteen (14) calendar days, notify P&GP ifNOVEN expects to be unable to deliver P&GP’s forecasted Product requirements.P&GP shall use commercially reasonable efforts to ensure that its RollingForecasts are as accurate as possible.
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 (b) Fixed Orders. P&GP shall give NOVEN a Purchase Order for eachSKU of Product at least *** days prior to the Fixed Order Date for such Productidentified within the Rolling Forecast.  (c) Fixed Zone. *** prior to each Fixed Order Date is the “FixedZone”. P&GP shall purchase one hundred percent (100%) of the Product forecastedwith respect to each Fixed Zone period (adjusted for changes mutually agreed). ***of each Fixed Zone (counting backwards from the Fixed Order Date) are unchangeable.During *** of each Fixed Zone (counting backwards from the Fixed Order Date),changes to language groups, packaging configurations within language group, andchanges to scheduled Batches are allowed, with mutual agreement by NOVEN and P&GP.***.  (d) Planning Horizon. *** prior to each Fixed Order Date shall bereferred to herein as the “Planning Horizon”. Within the Planning Horizon, nolimitations shall apply to additions, deletions or changes to the Rolling Forecast,except that the quantity of Product forecasted for *** prior to a Fixed Order Datecannot increase by more than twenty percent (20%) when rolled into the next FixedZone.  (e) Three-Year Forecast. Within three (3) months after submissionof the first Regulatory Application of a Product for marketing authorization in anycountry within the Territory, and on an annual basis thereafter, P&GP shall provideto NOVEN a written, three (3)-year long range forecast (broken down by month ofdelivery, pouch language combination and SKUs in Year 1 and annual number ofpatches for Years 2 and 3) of P&GP’s estimated requirements of each Product (each,a “Three-Year Forecast”). NOVEN and P&GP will utilize each Three-Year Forecast to discuss the potential for any Product shortfalls and mutuallyagree to any supply risk mitigation plans via the Steering Committee.
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 4.02 **Launch Order**. The parties will consult with each other to seek toprovide P&GP with sufficient quantities of each Product for the initial commerciallaunch of such Product.  4.03 **Purchase Orders**. Each purchase order for requirements of Product(“Purchase Order”) placed by P&GP shall be submitted in writing by P&GP and shallspecify, at a minimum:  ** ** - the P&GP legal entity placing the Purchase Order,  ** ** - the unique material code for each carton of Product (“SKU”),  ** ** - the quantity of SKU of Product ordered,  ** ** - the Fixed Order Date, and  ** ** - the applicable country to which the Product will ultimately be delivered.    NOVEN shall have the right to invoice P&GP for Product forecasted for deliverywithin the Fixed Zone if NOVEN does not receive a Purchase Order for suchProduct by the Fixed Order Date.  4.04 **Batch Size**. P&GP shall have the right to order Product as follows:  (a) P&GP shall have the right to order the full targeted yield of one ormore whole Batches of a single Product, each unit of which shall be packaged insingle specified pouch/language combinations and SKU. The targeted yield of aBatch of T-Patch is set forth on **Schedule 2**. The parties will discuss anddetermine implications of any adjustment of targeted yield (e.g. validation, changecontrol) that may be necessary to reflect increases or decreases in anticipatedyield.  (b) P&GP shall have the right to order a single Batch of a Product splitinto multiple Purchase Orders having distinct pouches and/or cartons. In the eventP&GP shall desire to so split a Batch, P&GP shall pay to NOVEN the applicablecharges set forth under the heading “Split Lot Costs” on **Schedule 2**attachedhereto (the “Split Lot Charges”).
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 (c) P&GP shall have the right to submit a single or multiple PurchaseOrder(s) requesting less than the full yield of a Batch of a Product. In the eventP&GP shall desire to order less than the full yield of a Batch of Product, P&GPshall pay to NOVEN the applicable charges set forth under the heading “Full BatchOrder with Partial Batch Processing” on **Schedule 2**attached hereto (the “PartialBatch Charges” and, together with the Split Lot Charges, the “Additional Charges”).It is acknowledged and agreed that a single Purchase Order may be subject to SplitLot Charges as well as Partial Lot Charges.  (d) P&GP shall have the right to request NOVEN to validate a *** batch ofProduct (a “***”). In the event that P&GP desires that NOVEN establish thecapability to produce a ***, P&GP shall submit to NOVEN a written request forvalidation of the mixing process for ***. Within thirty (30) days after receipt ofsuch written notice from P&GP, NOVEN will provide P&GP with a written estimate ofthe cost to perform validation of the mixing process for ***. If P&GP providesNOVEN with written approval of the estimated validation cost, then NOVEN shallcarry out such validation at P&GP’s sole cost and expense. After successfulcompletion of such validation, NOVEN shall provide P&GP with written noticethereof, and P&GP shall thereafter have the right to submit Purchase Orders for***. In the event P&GP exercises its right to request ***, P&GP shall pay NOVEN aper-patch purchase price to be agreed by the parties and to be set forth in**Schedule 2**attached hereto. **Schedule 2**sets forth a non-binding estimate of suchper-patch purchase price.  (e) All Additional Charges shall be invoiced to P&GP in arrears on aquarterly basis.
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 4.05 **Annual Installed Capacity**. The parties acknowledge and agree thatNOVEN’s ability to supply P&GP’s requirements of Product shall be limited byNOVEN’smaximum installed capacity for production of each Product per twelve (12)month period, as such capacity shall exist from time to time (the “AnnualInstalled Capacity”). NOVEN shall commit the Annual Installed Capacity tofulfillment of Purchase Orders placed by P&GP under this Agreement;provided that NOVEN’s obligations with respect to committed AnnualInstalled Capacity shall not commence until ninety (90) days after submissionof the first Regulatory Application of a Product for marketing authorizationin any country within the Territory. The initial Annual Installed Capacityfor all Products in the aggregate shall be *** units of Product. Commencingninety (90) days after submission of the first Regulatory Application of aProduct for marketing authorization in any country within the Territory, inthe event NOVEN shall at any time have an opportunity to utilize any portionof the Annual Installed Capacity for any purpose other than the manufacture ofProduct for supply to P&GP hereunder, NOVEN may request P&GP to release aportion of the Annual Installed Capacity and P&GP shall not unreasonablywithhold or delay its approval of such request.  4.06 **Customer Service**  (a) NOVEN shall exercise commercially reasonable efforts to develop andmaintain systems, staffing, and procedures to meet the following standards ofcustomer service: (i) *** of shipments of the Product in each calendarmonth will be loaded onto the carrier approved by P&GP for shipment atNOVEN’s manufacturing facility on or before the date that is five (5)Business Days prior to the applicable Fixed Order Date, plus or minus five(5) days; and  (ii) The Purchase Order quantity of Product loaded ontothe carrier approved by P&GP for shipment at NOVEN’s manufacturingfacility during each calendar month shall equal between *** and *** of thenumber of units ordered in the applicable Purchase Order fulfilled duringsuch month.
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 (b) The parties shall cooperate to track NOVEN’s actual monthly performanceversus the above targets (the “Monthly Targets”) and shall review these resultsduring periodic meetings of the Steering Committee. Commencing *** days afterProduct launch, if NOVEN shall fail to meet either of the Monthly Targets for ***,and the cause of NOVEN’s below-target performance is within the control of NOVEN,then the parties will cooperate to develop a plan (an “Action Plan”) to enableNOVEN to meet or exceed the relevant performance target. The parties will considerwhether NOVEN could benefit from technical assistance from P&GP. This Section4.06(b) sets forth NOVEN’s sole and exclusive liability, and P&GP’s sole andexclusive remedy, with respect to (A) any late supply or delivery of Product(unless (x) the shelf life of such Product does not meet the requirements set forthin Section 2.03, in which case Section 2.03 shall apply or (y) quality Product isnot received as set forth in Section 3.04, in which case Section 3.04 shall apply,or (z) such failure results in a supply failure under Section 9.02(c), in whichcase Section 9.02 (c) shall apply), and/or (B) any delivery of an excessive orinsufficient quantity of Product (unless (x) the quantity delivered is less than*** of the quantity ordered, in which case Section 4.07 shall apply, or (y) qualityProduct is not received as set forth in Section 3.04, in which case Section 3.04shall apply, or (z) such failure results in a supply failure under Section 9.02(c),in which case Section 9.02(c) shall apply).
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 4.07 **Shortfalls**. In the event NOVEN shall supply less than *** of the unitsordered by P&GP pursuant to any Purchase Order, NOVEN shall notify P&GP in writingof the amount of such shortfall as soon as reasonably practicable on discovery ofsuch shortfall, and P&GP shall, within thirty (30) days after the earlier of (i)receipt of such notification or (ii) receipt of the applicable delivery of suchProduct, exercise one of the following remedies:  (a) accept such delivery in full satisfaction of the Purchase Order (as toquantity only and not in waiver of P&GP’s opportunity to reject such Productpursuant to Section 3.04);  (b) issue a new Purchase Order for Product with a mutually agreed to FixedOrder Date, and NOVEN shall use commercially reasonable efforts to expeditemanufacture and delivery of the units of Product ordered pursuant to suchorder; provided, that in either case P&GP shall pay NOVEN the PurchasePrice for the units of Product actually supplied and such Additional Chargesthat would have applied to the original Purchase Order had such Productactually shipped;  (c) the parties will mutually work together to determine if the shortfall canbe remediated by modifying an existing Purchase Order, considering theavailability of Product in the appropriate stage of the manufacturing process;or  (d) replace the shortfall with a projected future delivery not in the FixedZone.    P&GP will not incur any Additional Charges with respect to any quantities ofProduct provided in remediation of a shortfall unless such Additional Chargeswere previously paid and refunded with respect to the rejected Product. P&GPwill, in good faith, work with NOVEN to minimize the additional costs NOVENwill incur in addressing a shortfall while not jeopardizing P&GP’s tradecommitments. P&GP’s failure to exercise one of the remedies under thisSection 4.07 within such thirty (30)-day period shall be deemed an acceptanceof such units in satisfaction of the applicable Purchase Order pursuant tosubsection (a) above. This Section 4.07 sets forth NOVEN’s sole and exclusiveliability, and P&GP’s sole and exclusive remedy, with respect to any deliveryof an insufficient quantity of Product (unless (x) such failure constitutes afailure to meet the Monthly Targets pursuant to Section 4.06(a)(ii), in whichcase Section 4.06(b) shall apply, or (y) quality Product is not received asset forth in Section 3.04, in which case Section 3.04 shall apply, or (z) suchfailure results in a supply failure under Section 9.02(c), in which caseSection 9.02(c) shall apply).
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 4.08 **Failure to Deliver**. Subject to the limited remedies set forth inSection 4.06 and Section 4.07, in the event NOVEN fails to deliver Product orderedby P&GP due to actions or inaction on the part of NOVEN, NOVEN shall take allcommercially reasonable steps, including but not limited to, working extra hours,shifts or days, to fulfill NOVEN’s obligation hereunder. All costs for suchadditional efforts will be NOVEN’s.  4.09 **Notice of Delay**. Whenever NOVEN becomes aware of any event orcircumstance that impacts, or threatens to impact, the timely performance ofNOVEN’s obligations under this Agreement or any Purchase Order(s), NOVEN shallpromptly notify P&GP in writing of all relevant information with respect to suchevent or circumstance, and shall use commercially reasonable efforts to deliversuch notice within five (5) days. No such notification from NOVEN to P&GP shallrelease NOVEN from any liability under this Agreement otherwise resulting from thedelay.  4.10 **Technical Assistance**. If NOVEN delivers less than *** of quantityshipped versus quantity ordered due to technical manufacturing issues, the partiesmay agree to have P&GP provide technical expertise and assistance until theissue(s) are resolved.  4.11 **Site Level Execution Agreement**. As soon as practicable after executionof this Agreement and before the first country Regulatory Approval, the partiesshall enter into a written Site Level Execution Agreement (“SLEA”) providingadditional detail regarding items such as, but not limited to, production planning,supply chain measures, forecasting, ordering, customer service, inventory recordaccuracy, quality assurance, compliance measures, cGMP, Raw Material TargetInventory Levels and Product loss targets, shipping guidelines, problem solvingprocedures, and similar activities. SLEAs may be amended from time to time asagreed to in writing by the parties without formal amendment to this Agreement.
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  **Article 5. Prices and Payment Terms** 5.01 **Price**. In consideration for the supply of Products by NOVEN hereunder,P&GP shall pay NOVEN the per-unit purchase price (the “Purchase Price”), for eachunit of Product supplied hereunder. P&GP shall also pay NOVEN the applicableAdditional Charges and any other charges set forth in **Schedule 2**. The PurchasePrice for commercial supply of the T-Patch is set forth in **Schedule 2**hereto. ThePurchase Price shall be in addition to, and independent of, Royalties, MilestonePayments and other amounts payable by P&GP to NOVEN under this Agreement and/or theLicense Agreement.  5.02 **Invoicing**. On each Purchase Price invoice submitted hereunder, NOVENwill include the number of the applicable Purchase Order, the quantity shipped, thePurchase Price, payment remit to, and the legal entity indicated as the orderingentity on such Purchase Order. P&GP may withhold payment of NOVEN’s invoice untilthe provisions of this paragraph have been fulfilled. With respect to each invoicefor Additional Charges or other amounts payable to NOVEN hereunder, NOVEN shallinclude sufficient information to enable P&GP to identify such Additional Chargesand other amounts.  5.03 **Payment Terms**. P&GP shall pay each complete and correct invoicereceived from NOVEN within forty-five (45) days from the date of receipt by P&GP ofsuch invoice. Payments shall be in U.S. Dollars and shall be paid to NOVEN’saccount specified in writing to P&GP from time to time hereunder. Overdue invoicesshall bear interest at the rate of 1.5% per month until the entire invoice amountis paid.  5.04 **Adjustment Pursuant to Producer Price Index**. On June 1 of each calendaryear during the Term, the Purchase Price of each Product shall bedecreased/increased by an amount equal to the decrease/increase in the PPI over theimmediately-preceding twelve (12) month period. The decrease/increase shall bedetermined by multiplying the respective Purchase Price for each Product by afraction, the numerator of which shall be the average value of the
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   PPI for the twelve (12) month period ending in May of the then-currentcalendar year, and the denominator of which shall be the average value of thePPI for the twelve (12) month period ending in May of theimmediately-preceding calendar year. As the PPI figures for February, March,April and May of the then-current calendar year are preliminary as of June 1of each calendar year, the Purchase Price may be further adjusted pursuant tothis Section 5.04 by either party when actual PPI figures are posted. Forpurposes of this Section 5.04, “PPI” shall mean the producer price indexindustry data figure (Pharmaceutical Preparations Manufacturing,PCU325412325412), as published by the United States Department of Labor,Bureau of Labor Statistics of the U.S. Department of Labor (web address:www.bls.gov). **Schedule 2**attached hereto provides additional detail regardingcalculation of the PPI adjustment.  5.05 **Adjustment for Low Volume**. In the event that, at any time afterexpiration of the Grace Period, (a) P&GP’s Net Outside Sales with respect to theProducts fall below *** over a twelve (12)-month period and (b) the then-currentPurchase Price with respect to the Products for *** units of Product does notresult in a *** Gross Margin to NOVEN, then NOVEN shall have the right to identifyand invoice to P&GP, and P&GP shall pay, a surcharge in such an amount as isnecessary to bring NOVEN’s Gross Margin for the Products for such twelve (12)-monthperiod to ***. As used herein, “Grace Period” shall mean the period beginning onthe T-Patch launch and ending on the earlier of (i) two (2) years after the initiallaunch of the T-Patch in the first country in which the T-Patch is launched, or(ii) one (1) year from the initial launch of the T-Patch in the second country inwhich the T-Patch is launched. Within thirty (30) days after any surcharge isinvoiced to P&GP pursuant to this Section 5.05, P&GP shall have the right to notifyNOVEN of its intent to audit NOVEN to verify NOVEN’s cost and Gross Margincalculations, and the parties shall schedule such audit on a mutually agreeabledate. Such audit shall be in addition to the periodic auditsconducted pursuant to Section 5.10, but shall otherwise be subject to, andconducted in accordance with, the provisions of Section 5.10.
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 5.06 **Unprofitable Supply Terms**. If, at any time after expiration of theGrace Period, NOVEN’s aggregate Gross Margin with respect to all Products over atwelve (12)-month period falls below ***, NOVEN will notify P&GP in writing. NOVENand P&GP will then engage in a business discussion to understand the reasons forNOVEN’s Gross Margin for the aggregate of all Products falling below ***, includinga review of NOVEN’s cost of goods for the aggregate of all Products, P&GP’s netprices of all Products and the profitability of all Products, in order to negotiatea mutually acceptable solution. In the event that the parties, after discussionsand acting in good faith, cannot agree to an acceptable solution to bring NOVEN’sGross Margin for the aggregate of all Products to ***, NOVEN will have the right toterminate this Agreement upon (i) twelve (12) months written notice to P&GP (ifP&GP has qualified an Alternate Supplier) or (ii) thirty-six (36) months writtennotice to P&GP (if P&GP has not qualified an Alternate Supplier). During the noticeperiod prior to the effectiveness of such termination, NOVEN shall have the rightto assess against P&GP, and P&GP shall pay and deliver to NOVEN, a surcharge insuch amount as is necessary to bring NOVEN’s Gross Margin for the aggregate of allProducts to ***. Notwithstanding the foregoing, to the extent that NOVEN’s failureto achieve a *** Gross Margin is attributable to (x) NOVEN’s failure to manufacturethe Products in accordance with the shelf life and quality requirements of Section2.03 and Section 3.04, respectively, which failure in each case is due to the faultof NOVEN, including Noven’s suppliers, or (y) NOVEN’s manufacture of failedBatches, the surcharge to be assessed against P&GP during the notice period priorto the effectiveness of such termination to bring NOVEN’s Gross Margin to *** shallbe reduced accordingly. Within thirty (30) days after any surcharge is invoiced toP&GP pursuant to this Section 5.06, P&GP shall have the right to notify NOVEN ofitsintent to audit NOVEN to verify NOVEN’s cost and Gross Margin calculations,and the parties shall schedule such audit on a mutually agreeable date. Suchaudit shall be in addition to the periodic audits conducted pursuant toSection 5.10, but shall otherwise be subject to, and conducted in accordancewith, the provisions of Section 5.10.
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 5.07 **Adjustment for Modification of Specifications**.  (a) In the event any change in the Specifications or the manufacturingprocess of any Product that is not necessary to comply with the requirements of anyApplicable Law or Regulatory Authority (a “Discretionary Change”) is implemented byeither party in accordance with the Quality Assurance Agreement and Article 6hereof, the parties shall, to the extent commercially reasonable under thecircumstances, cooperate in making such changes. The party initiating suchchange(s) shall bear all reasonable costs of both parties associated with andresulting from any such change(s) in accordance with Article 6. In addition: (i) in the event any such Discretionary Change initiatedby P&GP shall result in increased costs to NOVEN to perform the Serviceswith respect to such Product, the Purchase Price for such Product shall beincreased by an amount equal to ***;  (ii) in the event any such Discretionary Change shallresult in decreased costs to NOVEN to perform the Services with respect tosuch Product, and if (and only if) such Discretionary Change was initiatedby P&GP, the Purchase Price for such Product shall be decreased by anamount equal to ***.  (iii) in the event of a Discretionary Change initiated byP&GP, P&GP shall pay NOVEN for NOVEN inventory with respect to suchProduct, including (x) NOVEN’s reasonable out-of-pocket costs of RawMaterials (to the extent within Target Inventory Levels), (y) the PurchasePrice of any finished goodsrendered obsolete or rejected as a result of the change, and (z) NOVEN’scosts of any works in progress, at prices to be determined consistent withthe principles reflected on **Schedule 2**; and
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 (iv) in the event of a Discretionary Change initiated byNOVEN, NOVEN shall, unless otherwise agreed, bear the costs of makingand/or implementing such Discretionary Change and the costs of works inprogress, Raw Materials, and finished goods rendered obsolete or rejectedas a result of such Discretionary Change, including reasonable costs ofP&GP incurred as a result of such Discretionary Change initiated by NOVEN. (b) In the event any change in the Specifications or the manufacturingprocess of any Product that is necessary to comply with the requirements of anyApplicable Law or Regulatory Authority (“Required Change”) is implemented inaccordance with the Quality Assurance Agreement and Article 6 hereof, then, subjectto Section 5.07(d) (regarding Label Changes): (i) in the event such Required Change shall result indecreased or increased costs to NOVEN to perform the Services with respectto such Product, then the Purchase Price for such Product shall bedecreased or increased, as the case may be, by an amount equal to ***;***;and  (ii) ***  (iii) P&GP shall pay NOVEN for *** of any inventory ofNOVEN with respect to such Product, including (x) NOVEN’s reasonableout-of-pocket costs of Raw Materials (to the extent within TargetInventory Levels), (y) the Purchase Price of any finished goods renderedobsolete or rejected as a result of the change, and (z) NOVEN’s costs ofany works in progress, at prices to be determined consistent with theprinciples reflected on **Schedule 2**.
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 (c) For changes which (i) are not the result of a Discretionary Change, aRequired Change, or a Label Change and (ii) are required to bring NOVEN’sfacilitiesand/or processes into compliance with the requirements of any Applicable Lawor Regulatory Authority (“Other Required Change”), the parties shall cooperatein making such changes promptly and NOVEN shall, unless otherwise agreed, bearthe costs of making and/or implementing such changes and the costs of works inprogress, Raw Materials, and finished goods rendered obsolete or rejected as aresult of such Other Required Change.  (d) With respect to any changes to any Printed Matter of any Product(“Label Changes”) initiated by either party, NOVEN and P&GP shall cooperate inmaking such Label Changes promptly and, unless otherwise agreed in writing by theparties: (i) in the event any such Label Change is either (x)initiated by P&GP in its discretion, or (y) required by Applicable Law orRegulatory Authority, then: (A) if such Label Change shall result in increasedcosts to NOVEN to perform the Services with respect to such Product,then the Purchase Price for such Product shall be increased by anamount equal to ***;  (B) P&GP shall be responsible for and shallreimburse NOVEN for the costs of implementing such Label Change,including costs in connection with labeling, packaging and preprintingof backing or pouch materials due to such Label Change; and  (C) P&GP shall pay NOVEN for NOVEN inventory withrespect to such Product, including (x) NOVEN’s reasonable out-of-pocketcosts of Raw Materials (to the extent within Target Inventory Levels),(y) the Purchase Price of any finished goods rendered obsolete orrejected as a result of the change, and (z) NOVEN’s costs of any worksin progress, at prices to be determined consistent with the principlesreflected on **Schedule 2**; and
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 (ii) in the event such Label Change is a discretionarychange initiated by NOVEN, NOVEN shall, unless otherwise agreed, bear thecosts of making and/orimplementing such Label Change and the costs of works in progress, RawMaterials, and finished goods rendered obsolete or rejected as a result ofsuch Label Change. (e) For purposes of clarification, NOVEN’s right to receive payments with a*** under the applicable provisions of this Section 5.07 is intended to protectNOVEN’s Gross Margin with respect to the additional costs incurred by NOVEN underthe applicable provisions of this Section 5.07, but shall not be construed toentitle NOVEN to a surcharge to provide NOVEN with an overall *** with respect tothe Products if such *** is not otherwise achieved.  5.08 **Transfer Taxes**. NOVEN shall be responsible for and pay all TransferTaxes, in each case the taxable incident of which occurs prior to NOVEN’s loadingof the Products onto the applicable carrier for shipment at NOVEN’s manufacturingfacility (collectively, “NOVEN Transfer Taxes”). For the avoidance of doubt,NOVEN Transfer Taxes shall not include any import/export duties, levies or chargesor customs-related expenses. NOVEN shall be responsible for and pay any personalproperty taxes on property it owns or leases, franchise and privilege taxes on itsbusiness, and taxes based on its net income or gross receipts. P&GP shall beresponsible for and pay all Transfer Taxes, in each case the taxable incident ofwhich occurs upon or after NOVEN’s loading of the Products onto the applicablecarrier for shipment at NOVEN’s manufacturing facility, and P&GP shall beresponsible for and pay all Transfer Taxes, including without limitation sales andvalue-added taxes and duties, that arise out of or are payable as a result of thesale of Products to P&GP under this Agreement (collectively, “P&GP TransferTaxes”). NOVEN’s invoices shall separately state the amount of any P&GP TransferTaxes that NOVEN is charging P&GP (in addition to the Purchase Price and anyAdditional Charges), to the extent applicable. NOVEN shall provide and makeavailable to P&GP any resale certificates or other exemption certificates requestedby P&GP in
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   connection with P&GP Transfer Taxes, to the extent such certificates areavailable to NOVEN. P&GP shall provide and make available to NOVEN anyapplicable resale or tax exemption certificates requested by NOVEN tosubstantiate non-taxability for sales tax purposes.  5.09 **Continuous Improvement**. NOVEN and P&GP agree to identify and implementa continuous improvement/cost reduction plan for package materials (pouch, cartons,etc.) within thirty (30) days of the end of each calendar year; providedthat (a) the decision to pursue any cost reduction projects and any determinationof cost reduction goals in relation to NOVEN’s business activities shall be withinthe sole discretion of NOVEN; and (b) NOVEN shall be under no obligation to provideaccess to P&GP to any of NOVEN’s records, data or systems in connection with thisSection 5.09.  5.10 **Right to Audit.**  (a) NOVEN shall keep complete and accurate records in sufficient detail topermit P&GP to confirm the accuracy of calculations of any adjustments to thePurchase Price hereunder. P&GP shall keep, and shall cause its Related Parties,successors, assigns, delegates and/or partners to keep, complete and accuraterecords in sufficient detail to permit NOVEN to confirm the costs and expensesincurred by P&GP in connection with a Product recall hereunder. Such records shallbe maintained in accordance with Applicable Law and in any event for at least athree (3) year period following the end of the calendar quarter to which theypertain. Not more than once in any fiscal year and upon reasonable advance noticeto the other party (the “Audited Party”), at its own expense (subject to Section5.10(c)), each party (the “Auditing Party”) shall be entitled to nominate aninternationally recognized independent certified public accounting firm reasonablyacceptable to the Audited Party to have access at reasonable times during normalbusiness hours (subject to signing a confidentiality agreement, if applicable) toexamine the Audited Party’s (or its Related Party’s,
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   Affiliate’s, successor’s, assign’s, delegate’s or partner’s, as the case maybe) records as they relate to relevant Products for the purpose of verifyingthe correctness of any adjustments to the Purchase Price hereunder (where P&GPis the Auditing Party) or verifying the amount of the costs and expensesassociated with a Product recall (where NOVEN is the Auditing Party);provided, however, that if such audit reveals that the AuditedParty’s miscalculation or misstatement resulted in an overpayment by theAuditing Party of *** or more, then such audit shall not count against the oneaudit to which the Auditing Party is entitled per fiscal year. Moreover, ifan accounting firm is used in such audit, the accounting firm shall notdisclose to the Auditing Party or to any Third Party any financial or otherinformation relating to the business of the Audited Party except that which isnecessary to inform the Auditing Party of the accuracy or inaccuracy of theAudited Party’s calculation. The Auditing Party shall not audit the samerecords twice. The Auditing Party shall only be entitled to audit books andrecords of the Audited Party from the three (3) calendar years prior to thecalendar year in which the audit request is made.  (b) In the event the Auditing Party shall dispute the correctness of theAudited Party’s calculation or statement, the Auditing Party shall, withinforty-five (45) calendar days of receipt of any such calculation or payment,provide written notice to the Audited Party of such objection, setting forth inwriting and in reasonable detail the reasons therefor; provided that thefailure to give notice of an objection within such forty-five (45) calendar dayperiod shall not result in the waiver or loss of the Auditing Party’s right todispute the correctness of the Audited Party’s calculation or statement unless, andonly to the extent that, the Audited Party is actually prejudiced by such failure.NOVEN and P&GP shall endeavor in good faith to resolve any disputed matters withinforty-five (45) calendar days after the Audited Party’s receipt of the AuditingParty’s notice of objections. If NOVEN and P&GP are unable to resolve the disputedmatters within such forty-five (45) calendar day period, NOVEN and P&GP shallselect
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   a nationally known independent accounting firm (which firm shall not be thethen regular auditors of either party) to resolve the matters in dispute, andthe determination of such firm in respect of the correctness of each matterremaining in dispute shall be conclusive and binding on NOVEN and P&GP. Theindependent accounting firm selected to resolve such disputes shall haveaccess to the relevant records of the Parties with respect to the matter indispute. In connection with the resolution of any dispute under this Section5.10(b), the Auditing Party shall bear the costs and expenses of theindependent accounting firm selected to resolve such disputes, subject toSection 5.10(c). (c) If it is determined that the Audited Party’s miscalculation ormisstatement resulted in an overpayment by the Auditing Party of *** or more, thenthe Audited Party shall reimburse the Auditing Party for any and all reasonable,actual out-of-pocket expenses incurred by the Auditing Party in connection with thedispute, including any costs and expenses payable to the independent accountingfirm or firms engaged pursuant to Section 5.10(a) and/or Section 5.10(b), and anyother costs and expenses incurred by the Auditing Party in connection with theaudit of the Audited Party’s books and records and any such dispute resolutionprocess.**Article 6. Change Management**. Changes to, the Specifications or the manufacturing process of theProducts may be made only in accordance with the terms and conditions of the Quality AssuranceAgreement. Subject to, and without limiting the provisions of Section 5.07, the party requestingany such change shall bear the costs thereof, including the costs of making or implementing suchchanges and the costs of the scrapping of materials (including but not limited to Raw Materials (tothe extent within Target Inventory Levels), work in process, and finished product) necessitated byany such change, unless otherwise agreed by the parties in writing. The parties shall cooperate toimplement in a prompt manner any such agreed upon changes to the Specifications or themanufacturing process of the Products.
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**Article 7. Authorizations**. During the Term, P&GP shall, at its sole expense, conduct clinicalstudies, file requisite paperwork for Regulatory Approvals and maintain Regulatory and ClinicalMaterials with respect to the Products both within and outside of the United States. Subject tothe foregoing, during the Term, NOVEN shall obtain and maintain in force all licenses andauthorizations necessary for NOVEN to manufacture and supply Product hereunder. NOVEN shall bearthe full cost and expense of obtaining and maintaining such licenses and authorizations. P&GPshall provide NOVEN with assistance reasonably necessary for NOVEN to obtain and maintain suchlicenses and authorizations.**Article 8.** **Liabilities**. 8.01 **Warranties; Disclaimer**.  (a) NOVEN hereby represents and warrants to P&GP that Product supplied toP&GP hereunder shall, on the date of loading of such Product onto the carrierapproved by P&GP for shipment at NOVEN’s manufacturing facility: (i) meet theapplicable requirements set forth in the Specifications; (ii) not be adulterated ormisbranded within the meaning of any applicable food or drug law or regulation orany applicable equivalent law, rule or regulation; and (iii) comply with approvedRegulatory Approvals and all Applicable Laws (including, but not limited to, cGMPapplicable to the Product and prevailing as of such date governing the manufacture,packaging (including without limitation labeling), storage (prior to shipment) andtesting (prior to shipment) of Product); provided that NOVEN shall not bein breach or violation of its representations and warranties under this Section8.01(a) to the extent that any failure to comply with the foregoing is due to anyact or omission of P&GP (including without limitation any failure of any labelingprovided by P&GP to comply with all Applicable Laws and cGMP). **NO OTHER EXPRESS ORIMPLIED WARRANTY EXISTS, INCLUDING ANY WARRANTY OF FITNESS FOR A PARTICULARPURPOSE, AND NOVEN EXPRESSLY DISCLAIMS ANY SUCH WARRANTIES.**
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 (b) P&GP represents and warrants to NOVEN that: (i) P&GP Inc. is awholly-owned, direct subsidiary of The Procter & Gamble Company; (ii) P&GP SARL isa wholly owned, indirect subsidiary of The Procter & Gamble Company; and (iii) ***.  8.02 **NOVEN Indemnity**. NOVEN shall indemnify and hold P&GP and itsAffiliates, and their respective directors, officers, employees and agents,successors and assigns (the “P&GP Indemnitees”) harmless from and against any andall Damages that P&GP Indemnitees may incur or suffer arising out of, resultingfrom or caused by (a) any failure of the Product manufactured hereunder to meet therequirements of Section 8.01(a) hereof, (b) any material breach by NOVEN of itsobligations hereunder, or (c) any intentional or negligent act or omission of NOVENor any of its directors, officers, employees, agents, successors, assigns,sublicensees, delegatees or partners; provided that NOVEN shall have noobligation under this Section 8.02 to the extent such Damages arise out of, resultfrom or are caused by: (i) any material breach by P&GP of its obligations underthis Agreement, (ii) an intentional or negligent act or omission of any P&GPIndemnitee, or (iii) any matter for which P&GP has an obligation to indemnify theNOVEN Indemnitees under this Agreement or the License Agreement*.*    NOVEN agrees to maintain at least ten million dollars ($10,000,000.00) ofcommercial general liability insurance, as one or more insurance policies, insupport of this indemnity with companies reasonably acceptable to P&GP, whichinsurance will carry an endorsement including P&GP and its Affiliates asadditional insureds.  8.03 **P&GP Indemnity**. P&GP shall indemnify and hold NOVEN and itsAffiliates, and their respective directors, officers, employees and agents,successors and assigns (the “NOVEN Indemnitees”) harmless from and against any andall Damages arising out of, resulting from or caused by, or claimed to arise outof,
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   result from or be caused by: (a) the Products, and/or any bodily injury,illness or death of any person caused or alleged to be caused by the use,distribution or sale of the Products, including without limitation (i)liabilities for product liability and returned goods, (ii) liabilities inrespect of product warranty obligations or services and any returned Productsold, and (iii) liabilities relating to errors and omissions or claims ofdesign and other defects with respect to any Product sold, including anyclinical and non-clinical trials; (b) any material breach by P&GP of itsobligations under this Agreement; or (c) any intentional or negligent act oromission of P&GP or any of its directors, officers, employees, agents,successors, assigns, sublicensees, delegatees or partners; provided,that P&GP shall have no obligation under this Section 8.03 to the extent suchDamages arise out of, result from or are caused by: (i) any material breachby NOVEN of its obligations under this Agreement, (ii) an intentional ornegligent act or omission of any NOVEN Indemnitee, or (iii) any matter forwhich NOVEN has an obligation to indemnify the P&GP Indemnitees under thisAgreement or the License Agreement.  8.04 **Certain Limitations**. Except for conditions permitting termination ofthis Agreement provided in Section 9.02 or as otherwise provided in Section 10.01,the sole and exclusive remedy with respect to any breach of any representation,warranty, covenant or agreement contained herein and for the other mattersdescribed in Sections 8.02 and 8.03 (other than (i) with respect to a breach of theterms of a covenant or agreement as to which P&GP or NOVEN, as the case may be,also shall be entitled to seek specific performance or other equitable relief and(ii) with respect to claims for fraud) shall be a claim for Damages (whether bycontract, in tort or otherwise, and whether in law, in equity or both) madepursuant to this Article 8.
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 8.05 **Disclaimer of Incidental Damages**. NOTWITHSTANDING ANYTHING HEREIN TOTHE CONTRARY, NEITHER PARTY SHALL BE LIABLE TOTHE OTHER FOR ANY PUNITIVE, INCIDENTAL, INDIRECT, CONSEQUENTIAL OR SPECIALDAMAGES OR LOST PROFITS, EXCEPT TO THE EXTENT ANY SUCH PUNITIVE, INCIDENTAL,INDIRECT, CONSEQUENTIAL OR SPECIAL DAMAGES OR LOST PROFITS ARE PAYABLE TO ATHIRD PARTY.  8.06 **Product Recalls**. Product recalls shall be conducted by the parties inaccordance with the terms and conditions of the Quality Assurance Agreement. Allreasonable costs and expenses of any recall of any Product and corrective actionsshall be the responsibility of P&GP; provided that NOVEN shall reimburseP&GP for its reasonable out-of-pocket costs and expenses of effecting such recallhereunder to the extent such recall was caused by a matter for which NOVEN isobligated to indemnify P&GP under Section 8.02. In the event that P&GP’sreasonable out-of-pocket costs and expenses are reimbursed by NOVEN, NOVEN shall beentitled to audit such costs and expenses in accordance with Section 5.10.  8.07 **Notice and Opportunity to Defend.**If any Proceeding arises as to whicha right of indemnification provided in Section 8.02 or Section 8.03 applies, theparty seeking indemnification hereunder (the “Indemnified Party”) shall, withintwenty (20) calendar days, notify the other party (the “Indemnifying Party”)thereof in writing and allow the Indemnifying Party and its insurers theopportunity to assume liability for any Damages arising out of such Proceeding andthe direction and control of the defense against such Proceeding, at its soleexpense, including the settlement thereof at the sole option of the IndemnifyingParty or its insurers; provided, that the failure to give notice of a claimfor indemnification within such twenty (20)-calendar day period shall not result inthe waiver or loss of any right to bring a claim for indemnification hereunderunless, and only to the extent that, the Indemnifying Party is actually prejudicedby such failure. Notwithstanding the foregoing, the Indemnifying Party may not
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   enter into any compromise or settlement without the prior written consent ofthe Indemnified Party unless such compromise or settlement includes as anunconditional term thereof the giving by each plaintiff or claimant to theIndemnified Party of a release from all liability in respect of such claim andonly if such compromise or settlement does not include any admission of legalwrongdoing on the part of the Indemnified Party. The Indemnified Party shallfully cooperate with the Indemnifying Party and its insurers in thedisposition of any such matter and the Indemnified Party will have the rightand option to participate in (but not control) the defense of any Proceedingas to which the right of indemnity applies, with separate counsel at itselection and cost. If the Indemnifying Party fails or declines to assume thedefense of any such Proceeding within thirty (30) calendar days after noticethereof, the Indemnified Party may assume the defense thereof for the accountand at the risk of the Indemnifying Party. The Indemnifying Party shall paypromptly to the Indemnified Party any Damages to which the right of indemnityapplies, as incurred.  **Article 9. Term and Termination**. 9.01 **Term**. This Agreement shall terminate upon the earlier of (i) with respect to eachProduct and with respect to each country in the Territory, the termination of theLicense Agreement with respect to such Product and/or such country, or (ii) thetermination of this Agreement in its entirety in accordance with Section 9.02 (theEffective Date until such termination or expiration, the “Term”).  9.02 **Certain Termination Events**.  (a) **Bankruptcy**. Either NOVEN or P&GP shall have the right to terminatethis Agreement in its entirety upon sixty (60) calendar days written notice to theother party at any time after the other party (or, with respect to P&GP, a RelatedParty) (a) is dissolved (other than pursuant to a consolidation, amalgamation ormerger); (b) becomes insolvent or is generally unable to pay its debts as they
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   become due or admits in writing its inability generally to pay its debts asthey become due; (c) makes a general assignment, arrangement or compositionwith or for the benefit of its creditors; (d) institutes or has institutedagainst it by a Third Party a proceeding seeking a judgment of insolvency orbankruptcy or any other relief under any bankruptcy or insolvency law or othersimilar law affecting creditor’s rights, or a petition is presented for itswinding-up or liquidation, and, in the case of any such proceeding or petitioninstituted or presented against it, such proceeding or petition (i) results ina judgment of insolvency or bankruptcy or the entry of an order for relief orthe making of an order for its winding-up or liquidation or (ii) is notdismissed, discharged, stayed or restrained in each case within thirty (30)calendar days of the institution or presentation thereon; (e) has a resolutionpassed for its winding-up, official management or liquidation (other thanpursuant to a consolidation, amalgamation or merger); (f) seeks or becomessubject to the appointment of an administrator, provisional liquidator,conservator, receiver, trustee, custodian or other similar official for it orfor all or substantially all its assets; (g) has a secured party takepossession of all or substantially all of its assets or has a distress,execution, attachment, sequestration or other legal process levied, enforcedor sued on or against all or substantially all its assets and such securedparty maintains possession, or any such process is not dismissed, discharged,stayed or restrained, in each case within thirty (30) calendar daysthereafter; or (h) causes or is subject to any event with respect to it which,under the applicable law of any jurisdiction, has an analogous effect to anyof the events specified in clauses (a) to (g) (inclusive).  (b) **Material Breach**. In the event that either party commits a materialbreach of any of the provisions of this Agreement and such breach either is notcurable or is not cured within sixty (60) days after notice of the breach by thenon-breaching party (or, if the breach is not capable of cure within sixty (60)days, the breaching party has not commenced a cure within sixty (60) days aftersuch
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   notice and has not cured such breach as soon thereafter as possible, but in nocase longer than ninety (90) days after such notice), then the non-breachingparty may terminate this Agreement in its entirety with immediate effect uponwritten notice to the breaching party; provided that notwithstandingthe foregoing, P&GP shall not have any right to terminate this Agreementpursuant to this Section 9.02(b) for any breach by NOVEN that is related tothe quality of Products manufactured or supplied by NOVEN hereunder, thequantity of Product supplied, the timeliness of such Products being loadedonto the applicable carrier or delivered to P&GP, or similar matters. Withoutlimiting the generality of the foregoing sentence, P&GP shall not be entitledto terminate this Agreement under this Section 9.02(b) for any breach by NOVENof any of Sections 2.03, 3.04, 4.06, 4.07, 4.08, or 9.02(c).  (c) **Failure to Supply**. In the event that at any time during the Term NOVENshall, during any period of *** consecutive months with respect to which P&GP hassubmitted Purchase Orders, fail to supply at least *** of the aggregate number ofunits of Product ordered pursuant to Purchase Orders properly submitted by P&GPduring such period pursuant to Section 4.03, or, during any period of ***consecutive months with respect to which P&GP has submitted Purchase Orders, supply*** of Product ordered pursuant to Purchase Orders properly submitted by P&GPduring such period (in each case other than (x) by reason of a circumstancecontemplated by Section 13.01, (y) by reason of the fault of P&GP, or (z) inconnection with units of Product accepted by P&GP pursuant to Section 4.07), thenP&GP shall have the right to: (i) subject to Sections 11.02 and 11.03, have anAlternate Supplier manufacture on its behalf that portion of its requirements ofthe Product that NOVEN is not able to supply; (ii) terminate this Agreement in itsentirety (in which case P&GP may at its option elect remedies under Section 11.02);or (iii) withdraw any Purchase Orders submitted pursuant to Section 4.03.
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 (d) **Unprofitable Supply Terms.**NOVEN may terminate this Agreement pursuantto the provisions of Section 5.06.  (e) **Adverse Health or Safety**. Either NOVEN or P&GP may terminate thisAgreement with immediate effect with respect to any Product in a country if suchProduct is permanently and completely withdrawn from the market in such country forserious adverse health or safety reasons.  (f) **Force Majeure**. Either party may terminate this Agreement in itsentirety with immediate effect if an event of force majeure contemplated in Section13.01 as to the other party shall exist and shall continue to prevent performanceby the other party for a period of ninety (90) consecutive days.  9.03 **Consequences of Termination**.  (a) **Effect of Termination.**Upon termination of this Agreement with respectto any country and/or with respect to any Product, this Agreement and all rightsand obligations hereunder shall each forthwith become void and of no further forceor effect with respect to such country and/or such Product, as the case may be (andin the event of any termination of this Agreement in its entirety, this Agreementand all rights and obligations of the parties hereunder shall each forthwith becomevoid and of no further force or effect in their entirety), except in each case asotherwise provided in this Section 9.03.  (b) **Obligation to Pay.**The termination or expiration of this Agreementshall not relieve either party of any liability for any monies due to the other ator following the time of such termination or expiration, nor shall it relieveeither party of the post-termination obligations imposed by this Agreement.  (c) **P&GP’s Property**. In the event that P&GP terminates this Agreementpursuant to any of Sections 9.02(a), 9.02(b), or 9.02(c), NOVEN will make availablefor P&GP’s removal any such Raw Materials (at NOVEN’s actual cost), Product (at thethen prevailing Purchase Price for each such Product), equipment funded by
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   P&GP and repurchased by P&GP pursuant to Section 2.11, and any of P&GP’sproperty then under NOVEN’s control in connection with the Services under theAgreement. NOVEN further agrees that it shall use commercially reasonableefforts, after receipt of notice of any termination by P&GP under any ofSections 9.02(a), 9.02(b), or 9.02(c), not to encumber such materials, Productor other property, such as through security liens or pledges, in any way.  9.04 **Survival**. Notwithstanding anything herein to the contrary, theprovisions of Article 8, Section 9.03, Article 10, Section 13.03 and Section 13.10hereof shall survive any expiration or termination of this Agreement.  **Article 10. Confidentiality, Public Announcements, Intellectual Property**. 10.01 **Confidentiality**.  (a) Pursuant to the terms of this Agreement, each party (in such capacity,the “Disclosing Party”), has disclosed and will be disclosing to the other partyand/or its Affiliates, Related Parties, successors, assigns, delegates, partners,or representatives (in such capacity, the “Receiving Party”), certain ConfidentialInformation of the Disclosing Party. The Receiving Party shall make no use of suchConfidential Information except in the exercise of its rights and the performanceof its obligations set forth in this Agreement. The Receiving Party shall use atleast the same efforts to keep secret, and prevent the disclosure to Third Partiesof, Confidential Information of the Disclosing Party as it would use with respectto its own Confidential Information. Confidential Information disclosed by theDisclosing Party shall remain the sole and absolute property of the DisclosingParty, subject to the rights granted herein. The above restrictions on the use anddisclosure of Confidential Information shall not apply to any information which (i)is already known to the Receiving Party at the time of disclosure by the DisclosingParty, as demonstrated by competent proof, (ii) is or becomes generally availableto the public other than through any act or omission of the Receiving Party inbreach of this Agreement, (iii) is acquired by
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   the Receiving Party from a Third Party who is not, directly or indirectly,under an obligation of confidentiality to the Disclosing Party with respect tosame, or (iv) is developed independently by the Receiving Party without use,direct or indirect, of information that is required to be held confidentialhereunder. (b) In the event the Receiving Party is required (i) by Applicable Law todisclose Confidential Information of the Disclosing Party to any RegulatoryAuthorities to obtain Regulatory Approval for the Products or to comply with therequirement of any Regulatory Authority, (ii) to disclose Confidential Informationof the Disclosing Party to respond to an inquiry of a Regulatory Authority orGovernmental Authority concerning the Products, or (iii) to disclose ConfidentialInformation of the Disclosing Party in a judicial, administrative or arbitrationproceeding to enforce such party’s rights under this Agreement, it may do so onlyif it (A) provides the Disclosing Party with as much advance written notice aspossible of the required disclosure, (B) cooperates with the Disclosing Party inany attempt to prevent or limit the disclosure, and (C) limits disclosure, if any,to the specific purpose at issue.  (c) Notwithstanding the provisions of this Section 10.01: (i) P&GP shall be permitted to disclose to itsdistributors, wholesalers, customers and other Third Parties having areasonable need to know such information such Confidential Informationrelating to the Products as P&GP shall reasonably determine to benecessary or useful in order to effectively develop, market and distributethe Products;  (ii) NOVEN shall be permitted to disclose suchConfidential Information relating to the Products as NOVEN shallreasonably determine to be necessary or useful in order to effectivelyperform its obligations under this Agreement;  (iii) each of NOVEN and P&GP shall be permitted todisclose to a Regulatory Authority such Confidential Information relatingto the Products as it shall
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   reasonably determine (but only after consulting with the other party to theextent practicable) to be necessary to comply with the provisions ofApplicable Law; and  (iv) nothing in this Section 10.01 shall be interpreted tolimit the ability of either NOVEN or P&GP to disclose its own ConfidentialInformation to the other party or any other Person on such terms andsubject to such conditions as it deems advisable or appropriate;   provided, however, that in each such case any Third Partyrecipients of any Confidential Information (other than a Regulatory Authorityor other Governmental Authority) undertake substantially the sameconfidentiality obligation as the parties hereunder with respect to suchConfidential Information. (d) Each of NOVEN and P&GP acknowledge and agree that the terms andconditions of this Agreement shall be considered Confidential Information of eachparty and shall be treated accordingly. Notwithstanding the foregoing, (i) P&GPacknowledges and agrees that NOVEN may be required to disclose some or all of theinformation included in this Agreement in order to comply with its obligationsunder the applicable securities laws, and hereby consents to such disclosure to theextent deemed advisable or appropriate by counsel to NOVEN; provided thatP&GP is informed of the information to be disclosed and given an adequate time tocomment; and (ii) NOVEN acknowledges and agrees that P&GP may disclose the termsand conditions of this Agreement to (A) third party sublicensees and co-promotionpartners to permit P&GP to exercise its rights to fulfill its obligations underSections 3.04 and 3.05 of the License Agreement and (B) Alternate Suppliers topermit P&GP to exercise its rights under Article 11; provided,however, that (x) such disclosure shall be pursuant to, and subject to theterms and conditions of, non-disclosure or similar protective agreements in formand substance reasonably acceptable to NOVEN, which agreements shall containcovenants, agreements, restrictions and
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   limitations at least as restrictive as those set forth in this Agreement, (y)such disclosure may be made only to sublicensees and co-partners permittedunder Sections 3.04 and 3.05 of the License Agreement and Alternate Suppliersas permitted under Article 11, as the case may be, and (z) P&GP shall providewritten notice of any such disclosure to NOVEN.  (e) Each party specifically recognizes that any breach by it or itsAffiliates, Related Parties, successors, assigns, delegates, partners orrepresentatives of this Section 10.01 may cause irreparable injury to the otherparty and that actual damages may be difficult to ascertain, and in any event, maybe inadequate. Accordingly (and without limiting the availability of legal orequitable, including injunctive, remedies under any other provisions of thisAgreement), each party agrees that in the event of any such breach, the other partyshall be entitled to seek, by way of private litigation in the first instance,injunctive relief and such other legal and equitable remedies as may be available.  (f) The obligations of confidentiality and nonuse set forth in this Section10.01 shall survive the termination of this Agreement for a period of five (5)years.  10.02 **Public Announcements**. In addition, except as may be required byApplicable Law, no party shall originate any publicity, press or news release orother public announcement, written or oral, whether to the public press orotherwise, relating to this Agreement, the other Transaction Documents or to theexistence of an arrangement between the parties, without the prior written consentof the other party, which consent shall not be unreasonably withheld or delayed.  10.03 **License to Products**. P&GP hereby grants to NOVEN a non-exclusive,non-sublicenseable, royalty free license, effective during the Term, under allpatents, unpatented technology, and other intellectual property rights owned,controlled or licensed by P&GP relating to the Products to the extent (but only tothe extent) necessary for NOVEN to realize its rights and fulfill its obligationsunder this Agreement.
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**Article 11. **Alternate Suppliers**. 11.01 **Qualification of Alternate Suppliers**. P&GP may, during the Term, takesteps to qualify one or more Third Party suppliers of Product (each, an “AlternateSupplier”), which Alternate Suppliers shall be subject to prior written approval ofNOVEN (such approval not to be unreasonably withheld or delayed); providedthat NOVEN and P&GP shall agree to a mutually acceptable plan for qualification ofsuch Alternate Supplier, which shall include, but not be limited to, any reasonablecosts to be incurred by NOVEN in connection with such qualification. Allreasonable costs and expenses, including reasonable out-of-pocket expenses incurredby NOVEN, associated with qualifying an Alternate Supplier in accordance with theplan therefor agreed upon by the parties and approved by P&GP in writing shall bepaid by P&GP or reimbursed to NOVEN, it being understood that NOVEN shall have noobligation to take any action with respect to the qualification of an AlternateSupplier unless and until NOVEN receives written approval from P&GP of any suchout-of-pocket expenses. Upon the written request of P&GP, and at P&GP’s expense,NOVEN agrees to provide reasonable assistance *** to Alternate Suppliers sought tobe qualified by P&GP pursuant to this Section 11.01 and access to such of NOVEN’sConfidential Information and Technology as may be reasonably necessary for theAlternate Supplier to manufacture Product for sale to P&GP; provided, thatsuch Alternate Supplier shall be bound by obligations of confidentiality in favorof NOVEN consistent with those set forth in this Agreement and the LicenseAgreement. Notwithstanding the foregoing, nothing in this Section 11.01 shallrelieve P&GP of its obligation to purchase all of its requirements of Product fromNOVEN and P&GP shall only have the right to acquire Product from an AlternateSupplier as provided in Section 11.02.
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 11.02 **Reasonable Assistance; Limited License**. In the event of a terminationof this Agreement by P&GP pursuant to any of Sections 9.02(a), 9.02(b), 9.02(c) or9.02(f), or by NOVEN pursuant to Section 9.02(d):  (a) if P&GP has not already qualified an Alternate Supplier under Section11.01, then, upon request of P&GP and at P&GP’s expense, NOVEN shall providereasonable assistance to an Alternate Supplier identified by P&GP and approved byNOVEN (such approval not to be unreasonably withheld or delayed) and access to suchof NOVEN’s Confidential Information and Technology as may be reasonably necessaryfor such Alternate Supplier to manufacture Product for sale to P&GP;provided, that such Alternate Supplier shall be bound by obligations ofconfidentiality in favor of NOVEN consistent with those set forth in this Agreementand the License Agreement; and providedfurther, that allreasonable costs and expenses, including reasonable out-of-pocket expenses incurredby NOVEN, associated with qualifying such Alternate Supplier in accordance with theplan therefor agreed upon by the parties and approved in writing by P&GP shall bepaid by P&GP or reimbursed to NOVEN to the extent applicable, it being understoodthat NOVEN shall have no obligation to take any action with respect to thequalification of an Alternate Supplier unless and until NOVEN receives writtenapproval from P&GP of any such out-of-pocket expenses;  (b) subject to Section 11.03, the license granted to P&GP in the LicenseAgreement shall be deemed to include the right of P&GP to have Product made on itsbehalf by the Alternate Supplier approved by NOVEN under Section 11.01 or11.02(a), as applicable, for the term of the License Agreement;  (c) subject to Section 11.03, to the extent, but only to the extent,that such Alternate Supplier requires a license to any manufacturing know-how ofNOVEN in order for such Alternate Supplier to manufacture the applicableProduct(s) for P&GP, NOVEN agrees to grant such a license on a limited basis tothe extent (but only
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   to the extent) reasonably necessary for such manufacture, which license shallbe restricted solely to use in the manufacture of Product for P&GP ascontemplated in this Agreement; and  (d) NOVEN will use commercially reasonable efforts to continue to supplyProduct to P&GP pursuant to the terms and conditions of this Agreement, subject toany force majeure event or inability of NOVEN to supply Product to P&GP, until anAlternate Supplier is qualified but in no event more than *** after termination;provided that P&GP shall pay to NOVEN a surcharge in such amount, if any,as is necessary to bring NOVEN’s Gross Margin for the Product to at least ***during such period. Notwithstanding the foregoing, in the circumstance of atermination of this Agreement by NOVEN pursuant to Section 9.02(d) only, theprovisions of Section 5.06 shall govern the terms of NOVEN’s continued supply ofProduct and P&GP’s payment of such surcharge.  (e) Except as expressly provided in this Section 11.02, neither P&GP norany Alternate Supplier shall have any license under the NOVEN Patents, NOVEN’srights in any Joint Developments (as defined in the License Agreement) or theTechnology to make or have the Product made by any manufacturer or supplier otherthan NOVEN.  (f) The Alternate Supplier qualified by P&GP pursuant to Section 11.01shall have the right to manufacture up to three (3) batches of Product asnecessary to validate its manufacturing process, and up to three (3) batches ofProduct each year thereafter, as necessary to maintain validation of suchAlternate Supplier’s manufacturing process. These batches will be consideredsaleable Product. To the extent any such batches produced by an AlternateSupplier are indicated on any Rolling Forecast or Three-Year Forecast submitted byP&GP hereunder, P&GP will designate such batches as batches to be produced by theAlternate Supplier on such Rolling Forecast or Three-Year Forecast, and suchamountswill not be deemed as Product forecasted to be ordered from NOVEN hereunder.
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 11.03 **Royalties**. Notwithstanding the provisions of Section 11.02, theeffectiveness of the license granted to P&GP under the License Agreement and of anylicense granted by NOVEN to any Alternate Supplier in accordance with Section11.02, shall be at all times conditioned upon P&GP’s payment of Royalties,Milestone Payments and other amounts payable to NOVEN with respect to the sales ofany Product supplied to P&GP by any Alternate Supplier and sold by P&GP (or anyAffiliate, successor, assignee, sublicensee, delegatee or partner of P&GP) inaccordance with the terms and conditions of the License Agreement, as well asP&GP’s payment obligations under this Agreement, and all such licenses shallterminate in the event P&GP shall breach its obligations thereunder or hereunder(subject to any applicable cure periods).**Article 12. Steering Committee**. To facilitate the manufacture of Product hereunder, NOVEN and P&GPshall each, within thirty (30) days of the Effective Date, nominate representatives from theirrespective employees, full time consultants or Affiliates to a Steering Committee (the “SteeringCommittee”) to serve in an advisory capacity with respect to their respective obligations underthis Agreement to (a) review manufacturing operations for the purpose of considering, proposing anddeveloping improvements to the ordering and manufacturing process and to the way the partiescommunicate and interact, (b) consider strategic planning and facilitate manufacturing operations,(c) provide ongoing advisory services with respect to manufacturing services hereunder, and (d)attempt to resolve amicably any disputes arising between NOVEN and P&GP with respect to day-to-dayoperations. The Steering Committee is intended to provide a mechanism to foster a better workingrelationship between the parties. Except as otherwise expressly provided herein, the SteeringCommittee shall not have any authority or responsibility hereunder or require any matter to bebrought (and no party shall be required to bring any matter) before the Steering Committee prior topursuing any available remedy. Furthermore, no action of the Steering Committee shall conflict orbe inconsistent with the terms of this Agreement absent an amendment to this Agreement agreed to bythe
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parties in writing. NOVEN and P&GP shall appoint as members of the Steering Committee a reasonablenumber of suitably qualified and experienced representatives of each of NOVEN and P&GP and shalleach designate one member appointed by it to be the principal contact in relation to the day to daymanagement of and administration of this Agreement. Each of NOVEN and P&GP shall appoint no morethan four persons to the Steering Committee. The Steering Committee shall meet at regularintervals on such dates and at such locations as may be agreed upon by NOVEN and P&GP, in person orby video or telephone conference. In particular, the Steering Committee shall strive to meet atleast once per quarter, but in any event shall meet no less than twice per year during the Termunless otherwise agreed by NOVEN and P&GP. The Steering Committee may also meet upon fifteen (15)days’ written request by either NOVEN or P&GP, should circumstances necessitate such a meeting, andif requested by either party, an expanded Steering Committee will meet to discuss forecastingassumptions and other information regarding market conditions and expected demand for the Product.**Article 13. **General Provisions**. 13.01 **Force Majeure**. Neither NOVEN nor P&GP shall be deemed to be in breachhereof on account of any delay or failure in supply or other performance (exceptthe payment of money) caused in whole or in part by, or otherwise materiallyrelated to, the occurrence of any contingency beyond the performing party’scontrol, including but not limited to: war or hostility; failure or delay of land,water or air transportation; governmental action; strikes or other labor disputes;accident, fire, explosion, flood, storm or other acts of God; unavailability orshortage of Raw Materials; or, in general, any other cause where NOVEN or P&GP hasexercised reasonable care in the prevention thereof; provided that theparty so affected shall give immediate notice thereof to the other party and shallrender the delayed performance in the manner as practicable as possible after suchevent of force majeure has ceased or otherwise abated sufficiently in order topermit it to do so without incurring any material additional expense which it wouldnot have had in the absence of such event of force majeure.
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 13.02 **Notices**. All notices, requests, reports, demands and othercommunications made or given under the terms of this Agreement or in connectionherewith shall be in writing and shall be delivered personally or sent by facsimiletransmission, air courier or registered or certified mail, return receiptrequested, and shall be addressed to the appropriate party at the addresses setforth in **Schedule 3**hereto or to such other address or place as such party may fromtime to time designate in writing. Any notice, request, demand or othercommunication given or made pursuant to this Section 13.02 shall be deemed to havebeen delivered (a) when delivered, if delivered personally, (b) when sent (withwritten confirmation received), if sent by facsimile transmission on a BusinessDay, (c) on the first Business Day after dispatch (with written confirmationreceived), if sent by facsimile transmission on a calendar day other than aBusiness Day, (d) on the second Business Day after dispatch, if sent by aircourier, and (e) on the fifth Business Day after mailing, if sent by mail.  13.03 **Governing Law**. This Agreement and any claims, disputes or causes ofaction relating to or arising out of this Agreement shall be governed by andinterpreted for any and all purposes in accordance with the laws of New York,without giving effect to the conflicts of law principles thereof.  13.04 **Non-Waiver of Rights**. The failure by either party at any time toenforce any of the provisions of this Agreement shall not be construed as a waiverof such provisions or any other provisions hereof. The exercise by either party ofany of its rights herein or at law or in equity shall not preclude or prejudicesuch party from exercising any other rights provided herein or at law or in equity.No waiver shall be effective unless it is in writing and signed by an authorizedrepresentative of the waiving party.
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 13.05 **Entire Agreement — Modifications**. This Agreement, together with theLicense Agreement, supersedes all prior agreements, oral or written, between theparties hereto and contains the entire and only agreement between the partiesand their respective Affiliates regarding the subject matter hereof (except asotherwise expressly provided herein), and any representation, terms orconditions relating thereto or in connection therewith, oral or in writing,not incorporated herein will not be binding upon either party. Nomodification of this Agreement or any of the provisions hereof will be bindingunless made in writing with express reference to this Agreement, signed byboth parties. All of the Schedules, and any amendments thereto made pursuantto this Section 13.05, are a part of this Agreement and are herebyincorporated herein.  13.06 **Agreement Precedence**. In the event of any conflict between thisAgreement and any Schedule, Purchase Order, SLEA or Quality Assurance Agreement,this Agreement will take precedence, unless such other document specifically refersto this Agreement and indicates that such other document will take precedence overthis Agreement.  13.07 **Assignment**. Except with respect to any sublicensee approved by NOVENunder the License Agreement (and in such instance, only to the extent of suchsublicensee’s approved sublicense), P&GP shall not have the right to assign thisAgreement or delegate any of its rights, interests, duties or obligations hereunderwithout the prior written consent of NOVEN, which consent may be granted orwithheld in NOVEN’s sole discretion. In the event NOVEN shall consent to any suchassignment or delegation, (a) the assignee or delegatee shall confirm in writing toand for the benefit of NOVEN that it will comply with the covenants and agreementsof P&GP hereunder, and (b) no such assignment or delegation pursuant to thisSection 13.07 shall relieve P&GP of any of its obligations or liabilities underthis Agreement. NOVEN shall not have the right to assign or delegate to any thirdparty its obligations under this Agreement without the express prior writtenconsent of P&GP. Notwithstanding the foregoing, (i) either party may assign thisAgreement to any of its Affiliates without the prior written consent of the otherparty; provided, that no such assignment of this
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   Agreement shall relieve the assignor of any of its obligations or liabilitiesunder this Agreement, (ii) either party may assign this Agreement without theother party’s prior written consent in connection with the transfer or sale ofall or substantially all of its assets or business or its merger orconsolidation with another Person upon written notice to the other party, and(iii) P&GP may assign this Agreement without Noven’s prior written consent inconnection with a transaction in which P&GP is spun off as an independentpublicly traded company, provided that such assignment shall be to suchcompany. Any attempted assignment in violation of this Section 13.07 shall bevoid.  13.08 **Partial Invalidity**. Should any one or more provisions of thisAgreement be invalid or unenforceable in any jurisdiction, such provision(s) shallbe ineffective to the extent of such invalidity or unenforceability in suchjurisdiction, and the parties shall substitute for the invalid provision(s) a validprovision(s) which achieves as much as possible the purport, sense and economicpurpose of the invalid provision(s), without rendering invalid or unenforceable anysuch provision(s) in any other jurisdiction, and without affecting the validity orenforceability of the remaining provisions of this Agreement.  13.09 **Contractor Status**. NOVEN is an independent contractor and nothingherein contained and no course of dealing between the parties will create or bedeemed to create an agency, partnership, joint venture or any other relationship,fiduciary or otherwise between the parties hereto. Neither party is granted anyright or authority to assume or to create an obligation or responsibility, expressor implied, on behalf of or in the name of the other party or bind the other partyin any manner whatsoever, and neither party shall hold itself out as having suchauthority. All personnel of NOVEN shall be solely employees of NOVEN and shall notrepresent themselves as employees of P&GP. All personnel of P&GPshall be solely employees of P&GP and shall not represent themselves asemployees of NOVEN.
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 13.10 **Disputes**. In the event of any controversy or claim arising out of,relating to or in connection with any provision of this Agreement, or the rights orobligations of the parties hereunder, the parties shall try to settle theirdifferences amicably among themselves. Either party may initiate such informaldispute resolution by sending written notice of the dispute to the other party, andwithin ten (10) calendar days after such notice, appropriate representatives of theparties shall meet for attempted resolution by good faith negotiations. If suchrepresentatives are unable to resolve promptly such disputed matter, it shall bereferred to the presidents of NOVEN and P&GP, or their respective designees, fordiscussion and resolution. If such personnel are unable to resolve such disputewithin thirty (30) calendar days of initiating such negotiations, the parties agreefirst to try in good faith to settle the dispute by mediation in Washington, D.C.under the Commercial Mediation Rules of the American Arbitration Association. Iffollowing any such mediation the parties still have not been able to resolve anysuch dispute, the parties agree to submit the dispute to final and bindingarbitration before a single arbitrator in Washington, D.C. under the CommercialArbitration Rules of the American Arbitration Association. The parties agree thata judgment may be entered on the arbitrator’s award in any court of competentjurisdiction. The arbitrator in reviewing any claim under this Agreement shallhave the exclusive authority to determine any issues as to the arbitrability of anysuch claim or related disputes under this Agreement. In reaching a decision, thearbitrator shall interpret, apply and be bound by this Agreement and by ApplicableLaw. The arbitrator shall have no authority to add to, detract from or modify thisAgreement or any Applicable Law in any respect. The arbitrator may not grant anyremedy or relief that a court of competent jurisdiction could not grant, nor anyrelief or remedy greater than that sought by the parties, nor any punitive,incidental or consequential damages,
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   except to the extent any such punitive, incidental or consequential damagesare payable to a third party. Any up-front costs of the arbitrator shall beborne equally by the parties; provided, however, that thenon-prevailing party in any such arbitration shall pay, and to the extentapplicable reimburse the prevailing party for, the costs and expenses of thearbitrator, including costs and expenses payable to the American ArbitrationAssociation and to the arbitrator; and providedfurther, thatin the event each party prevails as to certain claims in connection with anysuch arbitration, the fees of the arbitrator shall be paid and/or reimbursedin accordance with the decision of the arbitrator. Each party shall bear itsown costs incurred in connection with attorneys’ fees and related expenses.Notwithstanding the foregoing provisions of this Section 13.10, nothing inthis Agreement shall limit or in any way restrict the ability of any party toseek injunctive or other equitable relief in a court or other judicial body.  13.11 **Audits**.  (b) It is agreed that P&GP may arrange, through NOVEN’s management, routineobservational visits by technical or corporate quality assurance personnel toNOVEN’s manufacturing facility. In connection with such visits, P&GP’s and/or itsAffiliate’s representatives will be escorted at all times by NOVEN personnel.  (c) Manufacturing Audits will be conducted in accordance with the QualityAssurance Agreement.  13.12 **Time Periods**. Any notice or other time period hereunder that ends ona day other than a Business Day, counting forward or backward, as the case may be,shall automatically be extended to the next Business Day. Unless indicated asBusiness Days, references in this Agreement to days shall mean calendar days.  13.13 **Expenses**. Except as expressly set forth herein, each party heretoshall bear all fees and expenses incurred by such party in connection with,relating to or arising out of the execution, delivery and performance of thisAgreement and theperformance of its obligations hereunder, including attorneys’, accountants’and other professional fees and expenses.
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 13.14 **Binding Effect; No Third Party Beneficiaries**. This Agreement shallinure to the benefit of and be binding upon the parties hereto and their successorsand permitted assigns. Nothing in this Agreement, express or implied, is intendedto confer on any Person other than the parties hereto, and their respectiveindemnitees, successors and permitted assigns, any rights, remedies, obligations orliabilities under or by reason of this Agreement.  13.15 **Interpretation**. The article and section headings contained in thisAgreement are for convenience of reference only and shall not affect the meaning orinterpretation of this Agreement. As used in this Agreement, any reference to themasculine, feminine or neuter gender shall include all genders, the plural shallinclude the singular, and singular shall include the plural. Unless the contextotherwise requires, the term “party” when used herein means a party hereto.References herein to a party or other Person include their respective successorsand assigns. Unless the context otherwise requires, references herein to Articles,Sections, Exhibits and Schedules shall be deemed references to Articles andSections of, and Exhibits and Schedules to, this Agreement. Unless the contextotherwise requires, the words “hereof,” “hereby” and “herein” and words of similarmeaning when used in this Agreement refer to this Agreement in its entirety and notto any particular Article, Section or provision hereof. With regard to each andevery term and condition of this Agreement, the parties understand and agree thatthe same have or has been mutually negotiated, prepared and drafted, and that if atany time the parties desire or are required to interpret or construe any such termor condition or any agreement or instrument subject thereto, no consideration shallbe given to the issue of which party actually prepared, drafted or requested anyterm or condition of this Agreement.  13.16 **Counterparts**. This Agreement shall become binding when any one ormore counterparts hereof, individually or taken together, shall bear the signaturesofeach of the parties hereto. This Agreement may be executed in any number ofcounterparts, each of which shall be deemed an original as against the partywhose signature appears thereon, but all of which taken together shallconstitute but one and the same instrument. Each party may execute thisAgreement on a facsimile of the Agreement. In addition, facsimile signaturesof authorized signatories of either party shall be valid and binding anddelivery of a facsimile signature by either party shall constitute dueexecution and delivery of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first set forthabove.       **NOVEN PHARMACEUTICALS, INC.**           **(NOVEN)**           By: /s/ Richard P. Gilbert                  Title: Vice President — Operations                  Date: August 14, 2008                  **P&G PHARMACEUTICALS, INC.**           **(P&GP INC.)**           By: /s/ Woody Keown Form                Title: Director, Purchasing Finance                Date: August 14, 2008 Execution                **P&G PHARMACEUTICALS, S.A.R.L**           **(P&GP SARL)**           By: /s/ P. Slater Form                Title: Purchasing Director Finance                Date: August 13, 2008 Execution         
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