EX-10.39.2:



 






CONFIDENTIAL




Exhibit 10.39.2




SECOND AMENDMENT TO THE MASTER DEVELOPMENT

AND TOLL MANUFACTURING AGREEMENT BETWEEN

ENDO PHARMACEUTICALS INC. AND

NOVARTIS CONSUMER HEALTH, 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 ***.




 









 





CONFIDENTIAL



This Second Amendment to the Master Development and Toll Manufacturing Agreement, dated May 3, 2001
(as amended, the “Agreement”), by and between Endo Pharmaceuticals Inc. (“Endo”) and Novartis
Consumer Health, Inc. (“Novartis”) is entered in this 2nd day of August 2005 and is
effective as of December 1, 2004 (this “Amendment”).



WHEREAS, Endo and Novartis entered into the Agreement pursuant to which Novartis agreed to perform
certain Services on behalf of Endo as set forth therein;



WHEREAS, Endo and Novartis mutually amended the Agreement by way of a First Amendment dated
February 1, 2003; and



WHEREAS, Endo and Novartis now desire to further amend the Agreement as more fully set forth below;



NOW THEREFORE, for good and valuable consideration, the receipt of which is hereby acknowledged,
the parties hereto agree as follows:





	 	1.	 	Unless otherwise set forth herein, the capitalized terms contained in this Amendment
shall have the meanings set forth in the Agreement.
	 
	 	2.	 	The following Annexes to the Agreement are hereby deleted in their entirety and
replaced the following Annexes attached hereto:






Annex H




	 	3.	 	The definition of “Annex I” is hereby added to Section 2:






“Annex I” means the *** attached to this Agreement as Annex I, as may be amended or
supplemented from time to time.




	 	4.	 	The definition of “Development Work” is hereby deleted in its entirety and replaced
with the following:






“Development Work” means the activities to be performed by Novartis which are related to
product development for NDA or ANDA products or required for the scale-up and/or
transfer of a product to Novartis from another site.”




	 	5.	 	The definition of “Initial Term” is hereby deleted in its entirety and replaced with
the following:






““Initial Term” means the period of time commencing on the Effective Date and ending
December 31, 2006.”



2









 





CONFIDENTIAL





	 	6.	 	The definition of “Production Baseline” is hereby deleted in its entirety and replaced
with the following:






“Production Baseline” means *** of Products (excluding ***), in any combination,
during each Production Year ***, or any equivalent thereof to be determined by
mutual agreement of the parties.”




	 	7.	 	The definition of “Production Year” is hereby deleted in its entirety and replaced with
the following:






“Production Year” means each period of twelve (12) consecutive months commencing on
the FDA Approval Date for the first Initial Product to be approved by the FDA, or
any anniversary thereof, during the Term, and following January 1, 2005, means each
period of twelve (12) consecutive months thereafter.




	 	8.	 	Section 2 of the Agreement is hereby deleted in its entirety and replaced with the
following:






“2. DESCRIPTION OF DEVELOPMENT WORK




	 	2.1	 	Novartis shall perform all Development Work at the Facility or
other site specified by Endo and agreed to by Novartis.
	 
	 	2.2	 	Novartis shall determine the costs for all Development Work to
be done and invoiced to Endo; provided that Endo must agree in writing to those
costs before such Development Work begins.
	 
	 	2.3	 	Endo and Novartis may choose to set an annual fixed fee based
on the amount of Development Work to be done which fee will cover Novartis’
fixed costs including personnel costs, facility overhead charges, project
related costs, and testing costs. Notwithstanding the foregoing, nothing shall
obligate Novartis to disclose any of its internal costs or related information
to Endo. If Endo and Novartis choose to set such an annual fixed fee, Endo and
Novartis will agree as to the amount of such annual fixed fee and review it
regularly and adjust it as necessary upon mutual agreement.
	 
	 	2.4	 	Endo will pay Novartis for all materials used in the course of
the Development Work. Materials for the Development Work will be billed to
Endo at Novartis’ actual cost. In connection with the Development Work only,
Novartis will charge Endo for manufacturing and packaging time as agreed to
each year. 2005 charges for such time will be as follows:





***




3









 





CONFIDENTIAL





	 	2.5	 	Novartis shall perform the Development Work in compliance with
(i) the Act, (ii) cGMP, (iii) the Quality Control Requirements and (iv) the
Specifications.






	 	9.	 	Section 19.1 of the Agreement (not including Sections 19.1.1 and 19.1.2) is hereby
deleted in its entirety and replaced with the following:






“This Agreement shall be in effect during the Initial Term and thereafter until
December 31, 2011, and shall be extended automatically thereafter for successive
additional periods of five (5) years each, on the same terms and conditions.”




	 	10.	 	Section 9.2.2.3 of the Agreement is hereby deleted in its entirety and replaced with
the following:






“Endo shall purchase, at its cost, all *** to be used in performing the services
hereunder. Novartis shall purchase, at its cost, all *** to be used in performing
the services hereunder and shall pass along, on a dollar-for-dollar basis, changes
in the *** Costs actually incurred by Novartis in performing the services hereunder.




	 	11.	 	In Sections 9.2.2.4 and 9.2.2.4.1 of the Agreement, the word “***” shall be inserted
in front of the term “API Cost.”






	 	12.	 	The third sentence in Section 9.2.2.3.2 of the Agreement is hereby deleted in its
entirety and replaced with the following:






“Should Novartis identify such a source and obtain Endo’s written consent to
utilize the source so identified, then the prices charged by Novartis for Products
shall be reduced by an amount reasonably determined by Novartis based on the amount
of any resulting reductions in API costs, except as otherwise agreed to in writing
by both parties.”




	 	13.	 	Section 9.2.3 is hereby deleted in its entirety and replaced with the following:






“The prices on Annex B are based on the manufacture of, at minimum, the Production
Baseline or equivalent thereof as agreed to by the parties and is subject to the ***
as defined by Annex I.”




	 	14.	 	The following sentence is hereby added to the end of Section 19.1.2.1:






“Should Endo terminate this Agreement effective after the end of the Initial Term
and prior to December 31, 2011, Endo shall pay Novartis, as liquidated damages and
not as a penalty, the net book value remaining on the Assets as of the effective
date of termination; provided that the Assets shall be fully
depreciated over a five (5)-year period with a zero dollar ($0) net book value at
the end of year five (5). Novartis shall keep Endo timely informed of all
newly-acquired



4









 





CONFIDENTIAL





Assets and obtain Endo’s written consent prior to acquiring any new Assets that
exceed $500,000, including, without limitation, by means of an annual meeting
between the parties; provided further that shall Novartis
utilize any of the Assets to manufacture a Competing Product at any time following
such termination notice and prior to the effective termination date, then the amount
payable by Endo for such utilized Assets pursuant to this sentence shall be zero.”




	 	15.	 	Section 21.1.2.1 is hereby deleted in its entirety and replaced with the following:






“Endo may, from time to time, request changes in the product labeling or packaging
material. No such changes shall be implemented without Novartis’ prior written
agreement, which shall not be unreasonably withheld. Endo will review and approve
any Novartis-proposed changes as defined in Sections 21.1.1.1 and 21.1.1.2 above.”




	 	16.	 	Section 23.3 is hereby amended to reflect Endo’s and Novartis’ addresses as follows:






Endo Pharmaceuticals Inc.

100 Endo Blvd.

Chadds Ford, PA 19317

Attention: Chief Legal Officer

Fax: 610-558-9684




Novartis Consumer Health, Inc.

200 Kimball Drive

Parsippany, NJ 07054

Attention: General Counsel

Fax: 973-503-8450




	 	17.	 	The first sentence of Section 23.4 is hereby deleted in its entirety and replaced
with the following:






“This Agreement, including all annexes hereto and Amendments Nos. 1 and 2, constitutes
the entire understanding between the parties with respect to the subject matter hereof
and is intended as a final expression of their agreement and as a complete statement of
terms and conditions thereof.”



5









 





CONFIDENTIAL





	 	18.	 	Except as otherwise set forth in this Amendment, all other terms contained in the
Agreement, as amended, shall remain in full force and effect.





	 	 	 
	ENDO PHARMACEUTICALS INC.

	 	NOVARTIS CONSUMER HEALTH, INC.
	 
	 	 
	By:  /s/ Peter Lankau

	 	By: /s/ John McKenna
	     Peter Lankau

	 	           Name: John McKenna
	     President and CEO

	 	           Title: CFO
	 
	 	 
	Date: July 29, 2005

	 	Date: August 2, 2005
	 
	 	 
	 

	 	By: /s/ Timothy Howe
	 

	 	            Name: Timothy Howe
	 

	 	            Title: CFO — North America
	 
	 	 
	 

	 	Date: August 2, 2005






6









 





CONFIDENTIAL




ANNEX H

TO

MASTER DEVELOPMENT AND TOLL MANUFACTURING

AGREEMENT




APIs




***




7









 





CONFIDENTIAL




ANNEX I

TO

MASTER DEVELOPMENT AND TOLL MANUFACTURING

AGREEMENT




***





8