<PAGE>
                                                                   EXHIBIT 10.47


                                SUPPLY AGREEMENT


                          DATED AS OF FEBRUARY 25, 2004


                                 BY AND BETWEEN


                           NOVEN PHARMACEUTICALS, INC.


                                       AND


                            ENDO PHARMACEUTICALS INC.

         THE CONFIDENTIAL PORTIONS OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY
         WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A CONFIDENTIAL
         TREATMENT REQUEST IN ACCORDANCE WITH RULE 24B-2 OF THE SECURITIES AND
         EXCHANGE ACT OF 1934, AS AMENDED. REDACTED PORTIONS OF THIS EXHIBIT ARE
         MARKED BY AN ***.



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         Securities and Exchange Commission. Asterisks denote omissions.

                                SUPPLY AGREEMENT

THIS SUPPLY AGREEMENT (the "Agreement"), is hereby entered into as of February
25, 2004 (the "Effective Date"), by and between Noven Pharmaceuticals, Inc., a
Delaware corporation ("Noven"), and Endo Pharmaceuticals Inc., a Delaware
corporation ("Endo").

                                   WITNESSETH

WHEREAS, Noven and Endo are contemporaneously herewith entering into a License
Agreement (the "License Agreement") related to a fentanyl transdermal patch
product (the "Product" as further defined herein) developed by Noven;

WHEREAS, Noven desires to manufacture and supply Endo with its requirements of
Product; and,

WHEREAS, Endo desires to purchase its requirements of the Product from Noven
pursuant to the terms and conditions set forth in this Agreement.

NOW, THEREFORE, in consideration of the mutual covenants and agreements of the
parties contained herein and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereby
agree as follows:

                              ARTICLE I DEFINITIONS

      Section 1.01. Definitions. As used herein, the following capitalized terms
have the following meanings:

      "ANDA" means an abbreviated new drug application filed with the FDA
pursuant to 21 U.S.C. 355(j)

      "Affiliate" means with respect to a Person, any legally distinct
corporation, firm, individual or other form or business organization which is,
directly or indirectly, controlled by, controlling, or under common control
with, the subject Person hereto. An entity shall be regarded as being in control
of another entity if such first entity has the direct or indirect power to order
or cause the direction of the management and policies of the other entity,
whether through ownership of at least fifty percent (50%) of the outstanding
voting securities or participating profit interest of such entity, through other
dominant equity ownership or by contract, statute, regulation or otherwise.

      "API" means the active pharmaceutical ingredient fentanyl base.

      "Applicable Law" means, with respect to any Person, any domestic or
foreign, federal, state or local statute, treaty, law, ordinance, rule,
regulation, administrative interpretation, order, writ, injunction, judicial
decision, decree or other requirement of any Governmental Authority applicable
to such Person or any of such Person's respective properties, assets, officers,
directors,


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employees, consultants or agents (in connection with such officers', directors',
employees', consultants' or agents' activities on behalf of such Person).

      "Business Day" means a day other than a Saturday, Sunday or other day on
which commercial banks in New York, New York, USA are authorized or required by
law to close.

      "Code of Federal Regulations" or "C.F.R." means the codification of
the general and permanent rules published in the Federal Register.  Title
21 of the C.F.R. contains the regulations promulgated by the FDA pursuant
to the FDC Act.

      "Confidential Information" means all secret, confidential or proprietary
data, know-how and related information, including all regulatory applications
and other regulatory filings, regulatory and clinical materials, Materials, the
content of any unpublished patent applications, operating methods and
procedures, marketing, manufacturing, distribution and sales methods and
systems, sales figures, pricing policies and price lists and other business
information and shall include all information disclosed or accessed by a party
from the other in connection with this Agreement.

      "Damages" means all liabilities, demands, obligations, assessments,
judgments, levies, losses, fines, penalties, damages (including compensatory
damages), costs and expenses, including reasonable attorneys', accountants',
investigators', and experts' fees and expenses, reasonably sustained or incurred
in connection with the defense or investigation of any Proceedings (including
any Proceedings to establish insurance coverage).

      "FDA" means the United States Food and Drug Administration and any
successor agency thereto.

      "FDC Act" means the United States Federal Food, Drug and Cosmetic Act, 21
U.S.C. Section 301 et seq., as amended, and the regulations promulgated there
under, as amended from time to time.

      "GAAP" means generally accepted accounting principles in effect in the
United States from time to time.

      "GMP" means the current Good Manufacturing Practices as that term is
presently or hereafter defined by the FDA or other applicable Regulatory
Authority.

      "Governmental Authority" means any foreign, domestic, federal,
territorial, state or local governmental authority, quasi-governmental
authority, instrumentality, court, government or self-regulatory organization
(including any securities exchange such as The NASDAQ Stock Market), commission,
tribunal or organization or any regulatory, administrative or other agency, or
any political or other subdivision, department or branch of any of the
foregoing.

      "Label" shall mean any package (primary or secondary container) labeling
designed for use with the Product, including the package insert; and any
variation of such term, such as "Labeled" or "Labeling", shall mean the act of
doing the foregoing.


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      "Materials" means all ingredients, items or substances (including those
that may not appear in the Product) used or required for use by Noven to
manufacture the Product, including the API, all other active drug ingredients,
excipients, packaging components, printed materials and manufacturing materials
associated with the Product.

      "Manufacturing Facility" means Noven's facility located at 11960 S.W.
144th Street, Miami, Florida 33186 or such other FDA-approved facility as Noven
may notify to Endo from time to time.

      "Person" means an individual, a corporation, a general partnership, a
limited partnership, a limited liability company, a limited liability
partnership, an association, a trust or any other entity or organization,
including a Governmental Authority.

      "Proceedings" means governmental, judicial, administrative or adversarial
proceedings (public or private), litigation, suits, arbitration, disputes,
claims, causes of action or investigations.

      "Product" or "Products" means the products listed in Exhibit C which are
the fully packaged, labeled and released fentanyl transdermal patch product that
is the subject of the Product ANDA.

      "Quality Agreement" means the Quality Agreement attached hereto as Exhibit
B.

      "Regulatory Authority" means a Governmental Authority that has the
authority over the manufacture, use, storage, import, export, clinical testing,
transport, marketing, sale or distribution of the Product in all or any portion
of the Territory, including the FDA.

      "Securities Laws" means the United States Securities Act of 1933, as
amended, the United States Securities Exchange Act of 1934, as amended, and any
other similar law or regulation of a Governmental Authority, or any successor to
any such laws or regulations, together with any rules, regulations or listing
standards or agreements of any national or international securities exchange or
The NASDAQ Stock Market.

      "Specifications" means, collectively, the manufacturing, packaging and
testing procedures and standards for Product, including all applicable control
procedures and analytical test methods, each as described in the Product ANDA as
amended, supplemented or otherwise modified from time to time in accordance with
Applicable Law.

      "Territory" shall have the meaning set forth in the License Agreement as
may be amended from time to time.

      "Validation Batches" means the batches which Noven elects to utilize to
satisfy the FDA requirements regarding validation of its commercial
manufacturing process. ***.


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      Section 1.02.  Other Definitions.  Each of the following terms is
defined in the section of this Agreement referenced opposite such term.

<TABLE>
      Term..........................................................     Section
      ----                                                               -------
<S>                                                                     <C>
      Agreement ....................................................    Preamble
      Collar........................................................        4.03
      Endo..........................................................    Preamble
      Effective Date ...............................................    Preamble
      Force Majeure Event ..........................................       11.13
      Launch Quantities ............................................        3.09
      License Agreement ............................................    Recitals
      Noven.........................................................    Preamble
      Rejection Notice .............................................      3.07(a)
      Tech Transfer Services........................................     10.02(e)
      Term .........................................................       10.01
</TABLE>

                  ARTICLE II COMMITMENT TO SUPPLY AND PURCHASE

      Section 2.01. Supply. Subject to the terms and conditions of this
Agreement and the license rights granted to Endo in the License Agreement, from
and after the Effective Date: (1) Noven shall use commercially reasonable
efforts to supply Endo with its requirements of Product as ordered by Endo
pursuant to the terms of this Agreement; (2) Noven shall not supply Product to
any third Party for use or sale within the Territory without the prior written
consent of Endo; (3) Endo shall purchase Product exclusively from Noven; and,
(4) Endo shall only use and sell Product within the Territory.

      Section 2.02. API. In the event that either party is able to secure a
lower price for the API from a source that meets Noven's quality requirements,
subject to Noven's contractual commitments with its suppliers, Noven will work
with Endo in good faith to utilize such API in place of its own source of API.
Once agreed to by both parties to qualify a lower price API, Endo and Noven
shall equally share all out of pocket expenses in qualifying and otherwise
securing such new API source. To the extent that Noven is able to use such lower
priced API, the lower cost will be reflected in Noven's manufacturing costs for
the Product. *** In the period prior to commercial launch of the Product, to the
extent that Endo supplies Noven with the API, Endo will invoice Noven for the
portion of the cost of such API for which Noven is assuming risk pursuant to
Section 3.09 below. All such invoices shall be due and payable within thirty
days of receipt and shall bear interest at the rate of 1% per month or the
maximum allowable by law on any overdue amounts. Noven shall include such API
costs in its manufacturing costs and Endo shall deduct the API costs not
invoiced to Noven from the next *** payment otherwise owed Noven under the
License Agreement. After the commercial launch of the Product, Endo shall deduct
the cost of the API it supplies Noven from the next *** payment otherwise owed
Noven under the License Agreement.

      Section 2.03. Compliance with Applicable Law. Endo hereby covenants and
agrees that Endo and its Affiliates shall store, handle, transport, market,
promote, sell, distribute, use and otherwise dispose of any Product supplied by
Noven, and any materials used in connection with such


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Product, including any labeling, packaging and advertising, in accordance with
all Applicable Laws.

           ARTICLE III FORECASTS, ORDERS, DELIVERY AND ACCEPTANCE

      Section 3.01. Forecasts. Within 30 days of the Effective Date, Endo shall
provide to Noven a good faith, but non-binding, forecast of its requirements for
Product for the following twenty-four (24) months. Beginning approximately 9
months before the anticipated commercial launch date of the Product by Endo and
within ten Business Days after the first day of each calendar month thereafter
during the Term, Endo will provide Noven with a non-binding (except as otherwise
provided in Section 3.03), rolling 12-month forecast of its requirements of
Product to be delivered by Noven. Endo shall use reasonable commercial efforts
to ensure that its forecasts are as accurate as possible.

      Section 3.02. Validation Batches and Initial Order. Noven and Endo hereby
acknowledge and agree that, in order to address the initial requirements for the
commercial launch of the Product, the lead times associated with manufacturing
Product and the general preparation for such commercial launch, Noven and Endo
will consult with each other in good faith regarding the anticipated commercial
launch date. In connection with such discussions Endo will provide a binding
initial purchase order to Noven approximately *** ; the delivery date for such
purchase orders shall be between one and thirty days prior to the anticipated
commercial launch date of the Product. The initial purchase orders shall be for
quantities of the Product sufficient for launch and for the first month of sales
of the Product; such amount of product shall be no less than *** and no greater
than *** of Endo's most recent forecasted requirements for the first month of
sales of the Product; provided, however, that upon request by Endo, Noven shall
attempt in good faith to supply a quantity of the Product in excess of *** of
the amount.

      Section 3.03. Future Orders. For anticipated sales of Product by Endo in
the second month following commercial launch of the Product and thereafter
during the Term Endo shall submit purchase orders to Noven for such Product on a
monthly basis. Each purchase order shall be submitted at least ninety (90) days
prior to the expected respective sales month. Each purchase order shall specify
an amount of Product that is at least *** and no greater than *** of Endo's most
recent previous forecast for the applicable month; provided, however, that upon
request by Endo, Noven shall attempt in good faith to supply a quantity of the
Product in excess of *** of the amount previously forecasted by Endo for any
such month. Each purchase order shall be binding, and shall specify a delivery
date that is no sooner than ninety days after submission of the purchase order
to Noven. In the event that the terms and conditions of any purchase order are
inconsistent with or conflict with the terms and conditions of this Agreement,
the terms and conditions of this Agreement shall govern.

      Section 3.04. Order Size. All purchase orders for Product placed by Endo
shall be for amounts of product equal to a full manufacturing batch or multiples
thereof with the amount ordered based on the estimated actual yields. An
estimate of the number of units per batch is attached hereto as Exhibit A. The
actual number of units delivered pursuant to any purchase order for Product
shall be equal to the number of units produced in each batch thereof, subject to


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reduction of the number of units produced in any batch by the number of units
not suitable for release or otherwise retained pursuant to the provisions of the
Quality Agreement. In the event that Noven shall deliver less than *** of the
units ordered by Endo pursuant to any purchase order (which number shall be
determined with reference to the number of units estimated to be yielded by each
batch ordered by Endo as reflected on Exhibit A), Noven shall notify Endo in
writing of the amount of such shortfall upon discovery of the shortfall of the
Product. Endo shall, within 30 days of receipt of such delivery, either (a)
accept such delivery in full satisfaction of the purchase order (as to quantity
only and not in waiver of Endo's opportunity to reject under pursuant to Section
3.07), or (b) issue a replacement purchase order for an additional batch of the
Product, and Noven shall use reasonable commercial efforts to deliver such
Product within 60 days of the date of such replacement purchase order; provided,
that in either case Endo shall accept and pay to Noven the price for the units
of Product delivered. Endo's failure to issue a replacement purchase order
within such 30-day period shall be deemed as an acceptance of such delivery
pursuant to subsection (a) above. Any replacement Purchase order submitted by
Endo to Noven pursuant to this Section 3.04 shall be subject to the same terms
and conditions of this Agreement as purchase orders submitted pursuant to
section 3.03.

      Section 3.05. Delivery. Product shall be delivered to Endo by Noven Ex
Works (Incoterms 2000) Noven's Manufacturing Facility. All Products shall be
properly prepared for safe and lawful shipment by Noven, shall be shipped to
Endo's distribution center in Memphis, Tennessee or other location designated by
Endo, via the common carrier selected by Endo, and shall be accompanied by
appropriate transportation and other agreed upon documentation including,
without limitation, DEA form 222. Noven shall ensure that the common carrier
vehicles onto which the Product is loaded are environmentally controlled
vehicles. Noven shall make all arrangements for shipping via the common carrier
at Endo's expense. No product of any other party shall be shipped with the
Products. Shipping cost actually prepaid by Noven will be billed to Endo monthly
by Noven on separate invoices.

      Section 3.06. Active Ingredient Quota. On April 1 of each calendar year,
Endo shall deliver to Noven a forecast of its requirements of the Product for
the following calendar year, for the purpose of assisting Noven in projecting
its demand for the Active Ingredient for such calendar year for submission to
and approval by the DEA.

      Section 3.07.  Acceptance and Rejection of the Product.

      (a) Endo shall, (i) in the case of defects which are discovered during
incoming inspection by Endo, within 30 days after Endo receives delivery of
shipment of the Product, or (ii) in the case of latent defect, within 30 days
from the date that Endo discovered such defect, notify Noven, in writing, of any
rejection of any such Product ("Rejection Notice"), on the basis of (A) any
non-compliance with the Specifications or (B) failure of any such shipment to
conform with any product warranty set forth in this Agreement. Failure to
provide Rejection Notice to Noven within the applicable 30-day period shall
constitute acceptance by Endo of the shipment. Any such possible Rejection
Notice shall state in reasonable detail (sufficient to enable Noven to identify
the nature of the problem for tests or studies to be conducted by or on its
behalf or to dispute the same) the reason why Endo believes the Product may not
be acceptable to Endo. Endo shall, within five business days of its receipt of a
request by Noven for


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samples of rejected Product, provide samples of the Product being rejected, if
appropriate, and copies of written reports relating to tests, studies or
investigations performed to date by or on behalf of Endo on the Product being
rejected.

      (b) Endo's test results or basis for rejection shall be conclusive unless
Noven notifies Endo, within 30 days of receipt by Noven of the Rejection Notice,
that it disagrees with such test results or basis for rejection. If Endo and
Noven fail to agree within 10 days after Noven's notice to Endo as to whether
any Product identified in the Rejection Notice (i) deviates from the
Specifications to any extent, or (ii) breaches a representation or warranty in
this Agreement to an extent that the Product is not saleable, representative
samples of the batch of the Product in question shall be submitted to a mutually
acceptable independent laboratory or consultant (if not a laboratory analysis
issue) for analysis or review. If such laboratory needs to be qualified, then
Endo and Noven will equally share the cost and expense of the qualification. The
results of such evaluation shall be binding upon the parties. If Noven and Endo
determine by agreement or if such evaluation certifies that the Product was
properly rejected by Endo, Endo may reject the Product in the manner
contemplated by Section 3.07(c). The party that is determined to have been
incorrect in its determination of whether the Product should be rejected shall
pay the costs of any such evaluation. Should the fees associated with the work
conducted by the independent laboratory or consultant be due up front, Endo and
Noven shall each pay 50% of such upfront fees; provided, that if it is
determined by the independent laboratory or consultant that either party shall
have been incorrect in its determination, such party shall reimburse the other
party for such 50% of fees.

      (c) In the event an order or partial order is rejected by Endo pursuant to
the provisions of this Section 3.07, Endo shall return to Noven (or, at the
election of Noven, destroy and provide evidence of such destruction to Noven)
any units of such rejected Product. Noven shall, at Endo's election, either (i)
credit the original invoice in respect of the rejected Product and re-invoice
Endo for the units that were not rejected and credit Endo any reasonable
expenses incurred by it related to the shipping of the rejected Product to Endo
and the return or destruction of the rejected Product against other amounts then
due Noven hereunder or (ii) at Noven's cost and expense, replace such rejected
Product with conforming Product as soon as practicable. Noven shall have no
obligation to Endo with regard to any defective Product if it is determined that
any such defect is attributable to the failure by any Person to properly store,
transport or care for such Product after such Product leaves Noven's possession.

      (d) Notwithstanding any other provision of this Agreement to the contrary
(except Section 3.09 below), in the event that Endo receives Product in
violation of the Product dating warranty set forth at Section 5.01(d), Endo will
attempt to mitigate the damages caused by such breach by using commercially
reasonable efforts to sell such Product with twelve (12) or more months of
dating, provided, however, that Noven shall remain responsible for its breach of
Section 5.01(d) in the event that Endo is unsuccessful in its efforts to sell
such Products or its results result in the Product being sold at a reduced
price.

      Section 3.08. Notices Regarding Supply. If at anytime during the Term of
this Agreement Noven determines that its ability to supply Endo's requirements
of Product may be hindered, Noven shall promptly notify Endo.


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      Section 3.09 Endo Responsibility for ***. In the event that any portion of
the Validation Batches or orders for the first three months of commercial supply
(the "Launch Quantities") become unsaleable due to delay in receiving final FDA
Regulatory Approval for the Product, FDA required changes in the Product
labeling (including the printed patch backing) or a Force Majeure event
(including in each case where the unsaleability is due to a resulting diminished
remaining shelf-life), the parties shall share the risk as follows: ***.

                          ARTICLE IV PRICE AND PAYMENT

      Section 4.01. Invoice. Following shipment of each order of the Product to
Endo, Noven shall promptly invoice Endo for such shipment. Each invoice shall
specify the amount of product shipped, the per unit invoice Price of the Product
as further described in Section 4.02 below, and the total invoice amount.
Subject to Section 3.07(c), Endo shall pay Noven for each shipment of Product
the total invoiced amount within thirty (30) days after the date of receipt of a
correct invoice, the Product and all supporting documentation (such as the
certificate of analysis) required to perform an incoming quality assurance
inspection; provided that with respect to any shipments for which Endo has
identified a quality assurance issue during such thirty (30) day period, payment
therefore shall be ten (10) business days from the date of resolution of such
quality assurance issue. Both parties agree to provide their full cooperation
with any quality assurance investigation and to use commercially reasonable
efforts to achieve the prompt resolution of any such investigation. All payments
required to be made hereunder shall be paid in United States dollars and made by
corporate check drawn on a United States bank or a United States branch of a
foreign bank, or by wire transfer of immediately available funds to the
financial institution, account number and account party's name designated in
writing by Noven to Endo from time to time. Should Endo dispute any portion of
an invoice, it shall not be required to pay any portion of such invoice until
such time as the dispute is resolved and Endo receives a fully corrected
invoice; provided that, in such an event, Noven shall have the option of issuing
a new, correct invoice for the portion of the original invoice not in dispute,
and Endo shall pay such new invoice within 10 business days of the receipt of
the corrected invoice (provided that Endo shall have no obligation to pay
earlier than when the payment following the original invoice would have been
due). Interest shall accrue on any overdue and undisputed amount due and payable
to Noven at the lesser rate of 1% per month or the maximum rate permitted by law

      Section 4.02. Invoice Price. Noven shall charge Endo for shipped Product
manufactured for commercial sale in the United States on a per unit basis at
Noven's actual fully loaded manufacturing cost. Noven shall charge Endo for
shipped Product manufactured for commercial sale in Canada on a per unit basis
at Noven's actual fully loaded manufacturing cost plus ***. Noven's fully loaded
manufacturing cost shall be calculated in accordance with Section 4.03 below. A
non-binding estimate of the price for the first year of commercial supply of the
U.S. Product, together with a detailed allocation of the calculation of each
component of Noven's fully loaded manufacturing costs, is set forth on Schedule
4.02. Noven shall provide Endo with a similar estimate within 30 days of the
beginning of each subsequent contract year. The transfer price for the Product
charged to Endo in each Invoice will be based on good faith estimates by Noven
of the actual fully loaded manufacturing cost of Product. Semi-annually Noven
shall


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reconcile the amount invoiced to Endo and paid by Endo with Noven's actual fully
loaded manufacturing cost. Noven shall provide a copy of each reconciliation to
Endo. To the extent that Noven has overcharged Endo, Noven shall credit to Endo
all amounts overcharged. To the extent that Noven has undercharged Endo, Noven
shall invoice Endo for the undercharged amount in accordance with the terms of
this Agreement. In the event of a dispute between Endo and Noven as to the
proper calculation of the Product Price, such dispute shall be referred to an
independent accounting firm mutually agreeable to the parties per Section 6.01
below, whose opinion shall be final and binding.

      Section 4.03. Limit on Overhead Allocation. For purposes of determining
Noven's fully loaded manufacturing cost of Product supplied to Endo hereunder,
Noven shall include Noven's actual cost of materials and labor and an allocation
of Noven's total manufacturing overhead. This allocation shall be determined
using the same methodology Noven uses in determining its cost of goods for the
other products it manufactures, all in accordance with GAAP consistently
applied, but subject to the further limitations described in this Section 4.03.
***.

          ARTICLE V MANUFACTURING STANDARDS AND QUALITY ASSURANCE

      Section 5.01.  Product Warranties.  Noven hereby covenants and
agrees that:

      (a)   Noven will manufacture and deliver to Endo the Product in accordance
            with, and the Product will conform with, the Specifications and the
            Quality Agreement; all Product supplied by Noven to Endo shall be
            manufactured, packaged, tested, stored and handled in accordance
            with the then current version of the ANDA and shall not be
            adulterated or misbranded.

      (b)   Noven will comply with all Applicable Laws and current good
            manufacturing practices relating to the Product.

      (c)   All Product supplied by Noven hereunder shall be transferred to Endo
            free and clear of all liens, title claims, encumbrances and security
            interests.

      (d)   Except for Product manufactured before final approval of the Product
            in fulfillment of Endo orders for Launch Quantities, all Product
            supplied by Noven shall have a minimum of *** of the shelf life set
            forth in the applicable Product registration still available at the
            time of delivery to Endo.

      Section 5.02. The Specifications. Endo or Noven shall not change the
Specifications at any time without the prior written consent of the other party;
provided, however, that either party may change the Specifications upon
reasonable advance notice to the other party if such change is required by an
applicable Regulatory Authority.

      Section 5.03. Quality Agreement. Contemporaneously with the execution of
this Agreement, the parties are entering into a Quality Agreement which is
attached hereto as Exhibit B.


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      Section 5.03.  Disclaimer.  NOVEN HEREBY DISCLAIMS ALL WARRANTIES
NOT EXPRESSLY PROVIDED IN THIS AGREEMENT, INCLUDING ANY IMPLIED
WARRANTIES, INCLUDING WARRANTIES OF FITNESS FOR A PARTICULAR PURPOSE AND
WARRANTIES OF MERCHANTABILITY.


                  ARTICLE VI AUDITS AND INSPECTION RIGHT'S

      Section 6.01. Records and Audits. Noven shall keep complete and accurate
records concerning its manufacturing costs and any other costs and expenses
relevant to the amounts payable to Noven hereunder. Such records shall be kept
in accordance with GAAP applied on a consistent basis. Noven shall, at Endo's
request and expense, make those records available during normal business hours
upon ten (10) business days prior written notice for examination by independent
certified public accountants or auditors designated by Endo and reasonably
acceptable to Noven; provided, that Endo shall only have access to such records
once in each calendar year. In the event an underpayment or overpayment is
discovered, the applicable party shall make payment to the other of the
respective amount within 15 days of notification of the determination. In the
event that an overpayment by Endo of greater than 5% is discovered, the cost of
such audit shall be borne by Noven. Notwithstanding any provision in this
Agreement to the contrary, the terms of the Quality Agreement will govern all
quality assurance inspections.


       ARTICLE VII ADDITIONAL COVENANTS AND AGREEMENTS OF THE PARTIES

      Section 7.01. Confidentiality. The parties hereby agree that the terms and
conditions of this Agreement and each party's activities hereunder shall be
subject to the confidentiality obligations (and all applicable exceptions
thereto) set forth in the License Agreement.

      Section 7.02. Packaging and Labeling. All Products supplied hereunder
shall be in finished dosage form, packaged and Labeled for commercial sale in
accordance with the terms and conditions of this Agreement, the Specifications
and applicable Laws. Subject to the provisions of this Section 2.03, Endo shall
control the content and type of all Labeling for the Products. Endo shall supply
to Noven, in a timely fashion, all artwork required to Label the Products with
such trademarks, logos or designs as Endo shall select and in accordance with
Applicable Laws. Noven shall have the responsibility for: (i) securing any
approvals required by the FDA or other applicable Regulatory Authorities for the
initial Label; (ii) securing any approvals required by the FDA or other
applicable Regulatory Authorities for any changes or supplements to the Labeling
requested by Endo following regulatory approval of the Product ANDA, provided
that Noven is the holder of the Product ANDA at such time; and (iii) any Noven
information on the Label which shall be approved in advance by Noven. In the
event that Endo wishes to modify or change the Label, Endo shall provide
reasonable advance notice of such desired change to Noven and forward such
modifications or changes to Noven for Noven's review and approval (which shall
not be unreasonably withheld).

      Section 7.03. Product Recall. Product recalls shall be conducted in
accordance with the terms of the Quality Agreement. Each of Noven and Endo shall
make a permanent, complete


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and accurate record of all costs incurred by its connection with any Product
recall, a copy of which shall be delivered to the other party upon its request
as soon after the completion of such recall or seizure as practically may be
done. If the cause of, or reason for, said recall is attributable to any reason
beyond the reasonable control of the parties, the total cost of the recall to
the parties shall be shared equally among the parties. If the cause of, or
reason for, said recall or seizure arises is both not attributable to reasons
beyond the reasonable control of the parties and is attributable to the
negligence or breach of this Agreement by a party hereto, such party shall
reimburse the other for all reasonable costs incurred by it in effecting such
recall or seizure. If Noven and Endo cannot agree which party is at fault or
whether the recall was reasonably beyond the control of the parties, then an
independent technical expert, acceptable to both, will be designated to make the
determination. The so designated technical expert shall not be an employee,
consultant, officer, director or shareholder of or otherwise associated with any
party or an Affiliate of any party. The technical expert's determination shall
be, in the absence of fraud or manifest error, binding and conclusive upon the
parties.

      Section 7.04 Product Shelf Life. Noven shall use commercially reasonable
efforts to obtain *** expiration dating, and will to continue to use such
efforts even if the Product is initially approved by the FDA with less than ***
expiration dating.


                ARTICLE VIII REPRESENTATIONS AND WARRANTIES

      Section 8.01. Representations and Warranties.  Each party hereby
represents and warrants to the other that as of the Effective Date:

      (a) Organization. It is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction of its incorporation. As of
the Closing Date, it will be duly qualified to do business in each jurisdiction
where the character of its business (after giving effect to the Contemplated
Transactions) make such qualifications necessary to carry on its business.

      (b) Power, Authority and Enforceability. It has full corporate power and
authority to enter into and perform this Agreement and to consummate the
transactions contemplated herein. This Agreement has been or shall be duly
executed and delivered by duly authorized signatories. This Agreement
constitutes a valid and binding obligation, enforceable against it in accordance
with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to or affecting creditors' rights generally.

      (c) No Violation. Neither the execution and delivery of this Agreement nor
the consummation by it of the transactions contemplated hereby, will (i)
conflict with or result in a breach of any of the terms, conditions or
provisions of its certificate of incorporation or other governing or charter
document, or of any statute or administrative regulation, or, to the best of its
knowledge, of any order, writ, injunction, judgment or decree of any court or
Governmental Authority or of any arbitration award or any agreement binding upon
it or its assets, or (ii) to the


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best of its knowledge, contravene or conflict with, or constitute a violation
of, any provisions of any Applicable Law binding upon it.

      (d) No Default. It is not a party to any unexpired, undischarged or
unsatisfied written of oral contract, agreement, indenture, mortgage, debenture,
note or other instrument under the terms of which performance by it according to
the terms of this Agreement will be a default, or whereby timely performance by
it according to the terms of this Agreement may be prohibited or delayed.


           ARTICLE IX INDEMNIFICATION AND LIMITATION OF LIABILITY

      Section 9.01 Indemnification. Indemnification for activities related to
this Agreement shall be provided pursuant to the License Agreement between the
parties entered into on the same date.

      Section 9.02. Limitation of Liability. NO PARTY SHALL BE ENTITLED TO
RECOVER ANY PUNITIVE, INCIDENTAL OR CONSEQUENTIAL DAMAGES (INCLUDING LOST
PROFITS FROM LOST SALES TO THIRD PARTIES) WHATSOEVER UNDER THIS AGREEMENT EXCEPT
TO THE EXTENT ANY SUCH PUNITIVE, INCIDENTAL OR CONSEQUENTIAL DAMAGES SHALL BE
PAYABLE TO A THIRD PARTY.

      Section 9.03  ***.


                         ARTICLE X TERM AND TERMINATION

      Section 10.01. Term. This Agreement shall continue in full force and
effect until the earlier of (a) the termination of the License Agreement, or (b)
termination of this Agreement in accordance with Section 10.02 (the Effective
Date until such termination, the "Term").

      Section 10.02. Certain Termination Events.

      (a) Except as otherwise contemplated by Sections 3.05 and 10.02(c), either
Noven or Endo shall have the right to terminate this Agreement if the other
commits any continuing or material breach of any of the provisions of this
Agreement and (in the case of a breach which is capable of remedy) fails to
remedy the same within 60 days after receipt of written notice giving full
particulars of the breach and requiring it to be so remedied;

      (b) In the event that at any time during the Term Noven shall, (i) during
any period of six consecutive months, fail to supply at least *** of the
aggregate number of units of Product (which number of units shall be determined
with reference to the number of units estimated to be yielded by each Batch
ordered by Endo as reflected in Exhibit A) ordered pursuant to Purchase Orders
properly submitted by Endo during such period (other than by reason of the fault
of Endo), or (ii) fail to provide *** of the aggregate number of units of
Product ordered during any


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two separate periods of three consecutive months, Endo shall (A) have the right
to terminate its obligation to exclusively purchase Product from Noven and have
a third party manufacture on its behalf the Product to supply and (B) have the
right to withdraw any purchase orders submitted to Noven for amounts in excess
of Noven's ability to supply.

      (c) Either party may terminate this Agreement with immediate effect if the
Product is withdrawn from the market in the Territory for serious adverse health
or safety reasons.

      (d) Either Noven or Endo may terminate this Agreement with immediate
effect in the event a Force Majeure Event as to the other shall exist and be
continuing for a period of 120 consecutive days.

      (e) Noven may terminate its obligation to supply Endo with its
requirements of Product under this Agreement upon twenty-four months notice in
the event that Noven's gross margins on the manufacture of Product (taking into
account all Endo payments hereunder and under the License Agreement in
calculating such margins -- except for the milestone payments) drops to less
than*** of its fully allocated manufacturing cost for the Product in two
consecutive calendar quarters. ***. Noven agrees to provide the technical
transfer services set forth in Schedule 10.02 (the "Tech Transfer Services"),
including the delivery to Endo of the Technical Transfer Documentation Package
within *** of the termination notice and completion of the transfer of all
analytical methods within *** of the termination notice. The termination by
Noven shall become effective *** following receipt of the notice by Endo,
provided, however, that the effective date of the termination shall be extended
by each day of delay in excess of the corresponding time periods set forth above
which it takes Noven to complete the transfer of the Technical Transfer
Documentation Package and the analytical methods. The manufacturing period,
however, shall not be extended to the extent such delay occurs through no fault
of Noven. To the extent that such alternative manufacturer would need to use
technology owned by, or protected by intellectual property owned by, Noven,
access to such technology would be provided on limited basis and restricted
solely to use for the manufacture of Product.

      (f) In the event of a termination by Endo pursuant to Section 10.02 (a),
(b) or (d), Noven agrees to work in good faith with Endo to qualify a suitable
alternative manufacturer for the Product that has been identified by Endo and
that agrees to undertake such manufacturing. Endo agrees to work in good faith
with Noven regarding such transfer and ensure that the third party works in good
faith with Noven as well. Noven shall, as promptly as is reasonably practicable,
perform the Tech Transfer Services. In the event the delivery to Endo of the
Technical Transfer Documentation Package is completed within *** of the
termination notice and the transfer of all analytical methods is completed
within *** of the termination notice, or such time periods are exceeded due to
no fault of Noven, Endo shall ***. In the event that such services are not
completed within such time periods due to the fault of Noven, Endo will *** . To
the extent that such alternative manufacturer would need to use technology owned
by, or protected by intellectual property owned by, Noven, access to such
technology would be provided on limited basis and restricted solely to use for
the manufacture of Product.

      Section 10.04. Obligations on Termination. Within 30 days of any
expiration or termination of this Agreement other than a termination by Endo
pursuant to Section 10.02 (a), (b) or (d), or a termination by Noven pursuant to
Section 10.02 (e), (i) Endo shall cease to use


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and shall deliver to Noven, upon written request, all Confidential Information
of Noven, except for any documents or records that Endo is required to retain by
Applicable Law, and (ii) Noven shall cease to use and shall deliver to Endo,
upon written request, all Confidential Information of Endo except for any
documents or records that Noven is required to retain by Applicable Law. In the
event of a termination by Endo pursuant to Section 10.02 (a), (b) or (d), a
termination by Noven pursuant to Section 10.02 (e), Endo shall be permitted to
retain and use the Confidential Information in the manufacture of the Product,
and to disclose such Confidential Information to its third party manufacturer,
provided that such third party manufacturer is under obligations of
confidentiality no less stringent than this Agreement.

      Section 10.05. Effect of Termination. Upon termination, this Agreement
shall forthwith become void and of no further force or effect, except for the
following provisions, which shall remain in full force and effect: (a) Section
7.01 (Confidentiality), (b) this Article 10, (c) Section 11.9 (Governing Law),
(d) Section 11.11 (Entire Agreement), and (e) Section 11.12 (Expenses) and any
other provisions which expressly survive termination. The rights and remedies
provided in this Article X shall be cumulative and not exclusive of any rights
or remedies provided by Applicable Law. Any termination of this Agreement shall
not affect any right or claim hereunder that arises prior to such termination,
which claims and rights shall survive any such termination.


                            ARTICLE XI MISCELLANEOUS

      Section 11.01. Notices. All notices, claims, certificates, requests,
demands and other communications hereunder shall be in writing and shall be
delivered personally or sent by confirmed facsimile transmission, air courier or
registered or certified mail, return receipt requested, addressed as follows:

      if to Noven:
            Noven Pharmaceuticals, Inc.
            11960 S. W. 144th Street Miami, Florida 33186
            Attention: CEO & General Counsel
            Telecopy: 305-964-3340

      with copies (which shall not constitute notice) to:

            Frommer Lawrence & Haug LLP
            745 Fifth Avenue
            New York, New York  10151
            Attention: Edgar H. Haug, Esq.
            Telecopy: 212-588-0500

      if to Endo:

            Endo Pharmaceuticals Inc.
            100 Painters Dr.


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            Chadds Ford, PA  19317
            Attention: General Counsel
            Telecopy:  610-558-9684


or to such other address as the party to whom notice is to be given may have
furnished to the other party in writing in accordance herewith. Any such
communication shall be deemed to have been delivered (a) when delivered, if
delivered personally, by air courier or by mail, (b) when sent (with written
confirmation received), if sent by facsimile transmission on a Business Day, (c)
on the first Business Day after dispatch (with written confirmation received),
if sent by facsimile transmission on a day other than a Business Day.

      Section 11.02. Independent Contractors. In making and performing this
Agreement, the parties are acting and shall act as independent contractors.
Nothing in this Agreement shall be deemed to create an agency, joint venture or
partnership relationship between the parties hereto. No party shall have the
authority to obligate another party in any respect, and no party shall hold
itself out as having any such authority. All personnel of Noven shall be solely
employees of Noven and shall not represent themselves as employees of Endo. All
personnel of Endo shall be solely employees of Endo and shall not represent
themselves as employees of Noven.

      Section 11.03. Assignment. Noven shall not have the right to assign this
Agreement or delegate any of its rights, interests duties or obligations
hereunder without the prior written consent of Endo, which consent shall not be
unreasonably withheld. Notwithstanding the foregoing, at any time during the
term of this Agreement either party may assign this Agreement to any of its
Affiliates without the prior written consent of the other parties; provided,
that no such assignment of this Agreement shall relieve the assignor of any of
its obligations or liabilities under this Agreement. Notwithstanding the
foregoing, any party may assign this Agreement without the other parties' prior
written consent in connection with the transfer or sale of all or substantially
all of its assets or business or its merger or consolidation with another Person
upon written notice to the other parties. Any attempted assignment in violation
of this Section 11.04 shall be void.

      Section 11.04. Binding Effect; Benefit. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their successors and
permitted assigns. Nothing in this Agreement, express or implied, is intended to
confer on any Person other than the parties hereto and their respective
successors and permitted assigns any rights, remedies, obligations or
liabilities under or by reason of this Agreement.

      Section 11.05.  Amendments. This Agreement shall not be modified,
amended or supplemented except pursuant to an instrument in writing
executed and delivered on behalf of each of the parties hereto.

      Section 11.06. No Waiver. The failure in any one or more instances of a
party to insist upon performance of any of the terms, covenants or conditions of
this Agreement, to exercise any right or privilege conferred in this Agreement,
or the waiver by said party of any breach of any of the terms, covenants or
conditions of this Agreement, shall not be construed as a


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subsequent waiver of any such terms, covenants, conditions, rights or
privileges, but the same shall continue and remain in full force and effect as
if no such forbearance or waiver had occurred. No waiver shall be effective
unless it is in writing and signed by an authorized representative of the
waiving party.

      Section 11.07. Counterparts. This Agreement shall become binding when any
one or more counterparts hereof, individually or taken together, shall bear the
signatures of each of the parties hereto. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original as against the
party whose signature appears thereon, but all of which taken together shall
constitute but one and the same instrument. Each party may execute this
Agreement on a facsimile of the Agreement. In addition, facsimile signatures of
authorized signatories of any party shall be valid and binding and delivery of a
facsimile signature by any party shall constitute due execution and delivery of
this Agreement.

      Section 11.08. Interpretation. The article and section headings contained
in this Agreement are for convenience of reference only and shall not affect the
meaning or interpretation of this Agreement. As used fit this Agreement, any
reference to the masculine, feminine or neuter gender shall include all genders,
the plural shall include the singular, and singular shall include the plural.
Unless the context otherwise requires, the term "party" when used herein means a
party hereto. References herein to a party or other Person include their
respective successors and assigns. The words "include," "includes" and
"including" when used herein shall be deemed to the followed by the phrase
"without limitation" unless such phrase otherwise appears. Unless the context
otherwise requires, references herein to Articles, Sections, Exhibits and
Schedules shall be deemed references to Articles and Sections of, and Exhibits
and Schedules to, this Agreement. Unless the context otherwise requires, the
words "hereof," "hereby" and "herein" and words of similar meaning when used in
this Agreement refer to this Agreement in its entirety and not to any particular
Article, Section or provision hereof. With regard to each and every term and
condition of this Agreement, the parties understand and agree that the same have
or has been mutually negotiated, prepared and drafted, and that if at any time
the parties desire or are required to interpret or construe any such term or
condition or any agreement or instrument subject thereto, no consideration shall
be given to the issue of which party actually prepared, drafted or requested any
term or condition of this Agreement.

      Section 11.9. Governing Law. This Agreement and any claims, disputes or
causes of action relating to or arising out of this Agreement shall be construed
in accordance with and governed by the substantive laws of the State of New
York, without giving effect to the conflict of laws principles thereof.

      Section 11.10. Unenforceability. If any provisions of this Agreement are
determined to be invalid or unenforceable in any jurisdiction, such provisions
shall be ineffective to the extent of such invalidity or unenforceability in
such jurisdiction, without rendering invalid or unenforceable the remaining
provisions hereof or affecting the validity or enforceability of any of such
provisions of this Agreement in any other jurisdiction. The parties will use
their best efforts to substitute the invalid or unenforceable provision with a
valid and enforceable one which conforms, as nearly as possible, with the
original intent of the parties.


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      Section 11.11. Entire Agreement. This Agreement, together with any and all
schedules, exhibits and appendices hereto, embodies the entire agreement and
understanding between the parties hereto with respect to the subject matter
hereof and supersedes all prior agreements, commitments, arrangements,
negotiations or understandings, whether oral or written, between the parties
hereto and their respective Affiliates with respect thereto. There are no
agreements, covenants or undertakings with respect to the subject matter of this
Agreement other than those expressly set forth or referred to herein and no
representations or warranties of any kind of nature whatsoever, express or
implied, are made or shall be deemed to be made herein by the parties hereto,
except those expressly made in this Agreement and the other Transaction
Documents.

      Section 11.12. Expenses. Except as expressly set forth herein, each party
hereto shall bear all fees and expenses incurred by such party in connection
with, relating to or arising out of the execution, delivery and performance of
this Agreement and the consummation of the Contemplated Transactions, including
attorneys', accountants' and other professional fees and expenses.

      Section 11.13. Force Majeure. If the performance of this Agreement or any
obligation hereunder (except the payment of money) by any party is prevented or
hindered, by reason of any cause beyond the reasonable control of the affected
party, including fire, flood, riot, war, explosions, acts of God (including
hurricanes and tropical storms), acts of a public enemy, delay of carrier,
shortage or failure in the supply of materials, labor disturbance or acts,
regulations or laws of any government adopted after the date of this Agreement
or subject to a new interpretation after the date of this Agreement that render
impossible or illegal the performance by a Party of its obligations under this
Agreement (a "Force Majeure Event"), the party so affected, upon notice to the
other parties, shall be excused from such performance, provided that the party
so affected shall use diligent effort to avoid or remove such cause or causes of
non-performance and shall continue to perform hereunder with the utmost dispatch
whenever such cause or causes are removed.

      Section 11.14. Insurance. Throughout the Term, each of Noven and Endo
shall maintain commercial liability insurance, including blanket commercial
liability insurance covering the obligation of that party under this Agreement
through the term of this Agreement and for five years thereafter, which
insurance shall afford limits of not less than US*** per occurrence, (and in the
aggregate only with respect to personal injury liability) for bodily injury
liability, products liability, property damage liability, contractual liability
and completed operations liability with an insurance carrier qualified to do
business in the United States. Each of Noven and Endo shall promptly furnish to
the other evidence of the maintenance of the insurance required hereunder and
shall name the other as an "additional insured" under a broad form vendor's
endorsement to such insurance policy. In case any such policies are written on a
"claims made" basis, such policies shall remain in effect for a period of five
years following the expiration or earlier termination of this Agreement.
Notwithstanding the foregoing, the obligation of each of Noven and Endo to
obtain insurance in accordance with this Section 7.04 is subject to the
availability of such insurance from nationally recognized carriers at reasonable
rates and on reasonable terms and conditions, which reasonableness shall be
determined in the judgment of each party, respectively, in accordance with such
party's past practices to the ordinary course of business. In the event either
party shall be unable to obtain insurance as contemplated by this Section 7.04,


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such party shall notify the other party as soon as practicable and shall have
the right to self-insure such coverage; provided that any party opting to so
self-insure shall provide to the other party reasonable information regarding
its self-insurance program.

      Section 11.15. No Debarred Persons. Each of Noven and Endo covenants and
agrees that it has not and will not use in any capacity the services of any
Person debarred under subsections (a) or (b) of Section 306 of the FDC Act in
connection with its performance of this Agreement.


      IN WITNESS WHEREOF, the parties hereto have entered into this Agreement
effective as of the Effective Date.


NOVEN PHARMACEUTICALS, INC.              ENDO PHARMACEUTICALS INC.

By:      /s/ Robert C. Strauss           By:     /s/ Peter A. Lankau
Name:    Robert C. Strauss               Name:   Peter A. Lankau
Title:   President, CEO and Chairman     Title:  President and COO
Date:    February 25, 2004               Date:   February 25, 2004


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