Document:

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                                                                    EXHIBIT 10.1

                     SEVERANCE AND NON-COMPETITION AGREEMENT

         This Severance and Non-Competition Agreement, dated as of September 21,
2000, is entered into between Noven Pharmaceuticals, Inc., a Delaware
corporation (the "COMPANY"), and Steven Sablotsky (the "EXECUTIVE").

                                    RECITALS

         A. The Executive is currently employed as the Chairman of the Board of
the Company.

         B. The Executive and the Board of Directors have mutually agreed that
it would be in the best interests of the Executive and the Company for the
Executive to cease his day-to-day management activities.

         C. The Compensation and Stock Option Committee of the Board of
Directors has agreed to provide the Executive with certain severance and other
benefits, subject to the terms and conditions of this Agreement.

                                    AGREEMENT

         NOW THEREFORE, in consideration of the foregoing and the mutual
promises contained below, the parties agree as set forth below.

         1. TERMINATION OF EMPLOYMENT. The Executive's employment with the
Company will be terminated effective as of June 1, 2001 (the "Employment
Termination Date"). The Company agrees to pay the Executive his current salary
through the Employment Termination Date, together with any bonus and other
benefits to which he would otherwise be entitled as an officer of the Company,
including at least the benefits the Executive is receiving as of the date of
this Agreement; provided that the Executive shall not receive any salary
increase or stock options, except as otherwise provided herein, between the date
of this Agreement and the Employment Termination Date and shall not receive any
bonus for the Company's 2001 fiscal year. Without limiting the generality of the
foregoing, the Executive shall be entitled to receive a bonus for his
performance in the Company's 2000 fiscal year in accordance with the Company's
2000 Management Incentive Plan. Such bonus shall be paid at the earlier of the
time other officers receive their 2000 bonuses or March 31, 2001.

         2. ACCRUED VACATION. The Company agrees to pay the Executive all of the
Executive's accrued but unused vacation time which the Executive earns through
the Employment Termination Date. The Executive will not continue to earn
vacation or other paid time off after the Employment Termination Date.

         3. FULL PAYMENT. The Executive agrees that all payments provided to the
Executive under paragraphs 1 and 2 of this Agreement are in complete

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satisfaction of any and all compensation due to the Executive from the Company
through the Employment Termination Date. The Executive agrees to reimburse the
Company for all personal expenses due and owing to the Company as of the
Employment Termination Date.

         4. EMPLOYEE BENEFIT PROGRAMS. The Executive's participation in all
employee benefit programs (health, dental, life and disability) of the Company
shall continue through the Employment Termination Date, at which date the
Executive's participation in such programs shall cease in accordance with the
terms of those programs. The Executive will have the option to elect to continue
the Executive's health care coverage under COBRA for a period beginning with the
Employment Termination Date and ending 18 months after such date, provided the
Executive pays the full monthly premium cost of the Executive's coverage under
the applicable health care plans. Detailed information will be provided to the
Executive under separate cover.

         5. STOCK OPTIONS. The Company and the Executive hereby ratify and
confirm the option grants previously made to the Executive, as set forth on
Exhibit A attached hereto and made a part hereof, and the agreements evidencing
such option grants (the "Option Agreements"). Notwithstanding anything contained
in this Agreement (except as otherwise provided in paragraph 15 below), the
Option Agreements or the Company's stock option plans applicable to the Option
Agreements, subsequent to the Employment Termination Date, and provided the
Executive remains as a member of the Board of Directors of the Company, the
Option Agreements shall remain in full force and effect, with the options
vesting in accordance with the vesting schedule of each Option Agreement, and
exercisable through the expiration dates set forth therein; provided, however,
if the Executive is terminated by the Company for Cause pursuant to paragraph 16
below, such termination shall be deemed to be a termination of employment with
the Company, with the Option Agreements thereby terminating in accordance with
their terms. For as long as the Executive serves as a director of the Company,
he shall receive stock options commensurate with the stock options granted to
other outside directors under the terms of the Company's applicable stock option
plan.

         6. TAXES. All payments by the Company under this Agreement will be
reduced by all taxes and other amounts that the Company is required to withhold
under applicable law and all other deductions authorized by the Executive.

         7. ADDITIONAL COMPENSATION. In consideration for the Executive's
noncompetition agreement pursuant to paragraph 10 hereof and for his other
obligations hereunder, the Company agrees to pay the Executive the amount of
$1,200,000, payable in a lump sum on the Employment Termination Date.

         8. COMPANY PROPERTY. On the Employment Termination Date, the Executive
shall return to the Company any and all documents, materials and information
related to the Company, or its subsidiaries, affiliates or businesses, and all
other property of the Company, including, without limitation, credit cards,
phone and other charge cards, car phones, fax machines and other equipment,
files and personal computers in the Executive's possession or control, provided,
however, the Executive may purchase the Company's car phones, fax machines and
computers in his possession for a purchase price equal to their fair market

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value. Further, the Executive agrees that on and after the Employment
Termination Date he will not for any purpose attempt to access or use any
Company computer or computer network or system, including without limitation its
electronic mail system.

         9. RELEASE. In exchange for the consideration described in paragraphs
1, 2, 5 and 7 hereof, the Executive hereby releases and discharges the Company
and its current, former or future officers, directors, employees, agents,
representatives and legal predecessors and successors from all claims,
liabilities and causes of action, whether known or unknown, up to and including
the date of this Agreement, which the Executive has, may have, or claim to have
against any of them, including without limitation those based upon or arising
out of the Executive's employment with the Company, the termination of the
Executive's employment and other relationships with the Company and any of the
Company's policies, procedures or requirements. The Executive hereby agrees not
to file any lawsuit to assert such claims, which include, but are not limited
to, any claims for breach of contract, wrongful termination or age, sex, race,
disability or other discrimination under the Age Discrimination in Employment
Act, Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1866,
the Employee Retirement Income Security Act of 1974, the Americans with
Disabilities Act of 1990, Florida's Civil Rights Act or other federal, state or
local laws prohibiting such discrimination or under any other federal, state or
local employment laws. Notwithstanding the foregoing, the Executive does not
waive any right to indemnification from the Company under law, the Company's
Certificate of Incorporation, By-laws or the Indemnity Agreement, dated as of
December 1, 1999, between the Executive and the Company (the "Indemnification
Agreement").

THE EXECUTIVE UNDERSTANDS AND ACKNOWLEDGES THAT HE HAS BEEN ADVISED TO SEEK THE
ADVICE OF AN ATTORNEY, IF HE SO CHOOSES, PRIOR TO SIGNING THIS RELEASE AND THAT
TO THE EXTENT DESCRIBED HEREIN HE IS GIVING UP CERTAIN LEGAL CLAIMS HE HAS
AGAINST THE COMPANY AND ITS CURRENT, FORMER OR FUTURE OFFICERS, DIRECTORS,
EMPLOYEES, AGENTS, REPRESENTATIVES, LEGAL PREDECESSORS AND SUCCESSORS BY SIGNING
THIS RELEASE. THE EXECUTIVE FURTHER UNDERSTANDS THAT HE MAY HAVE 21 DAYS TO
CONSIDER THIS AGREEMENT, THAT HE MAY REVOKE IT AT ANY TIME DURING THE SEVEN DAYS
AFTER HE SIGNS IT, AND THAT IT WILL NOT BECOME EFFECTIVE UNTIL THE 7-DAY
REVOCATION PERIOD HAS PASSED. THE EXECUTIVE FULLY UNDERSTANDS HIS RIGHTS TO TAKE
21 DAYS TO CONSIDER SIGNING THIS RELEASE AND, AFTER HAVING SUFFICIENT TIME TO
CONSIDER HIS OPTIONS, HE HEREBY WAIVES HIS RIGHT TO TAKE THE FULL 21-DAY PERIOD.
THE EXECUTIVE ACKNOWLEDGES THAT HE IS SIGNING THIS RELEASE KNOWINGLY, WILLINGLY
AND VOLUNTARILY IN EXCHANGE FOR THE CONSIDERATION DESCRIBED IN PARAGRAPHS 1, 2,
5 AND 7 HEREIN.

         10. NON-COMPETE. While employed by the Company and for a period of
thirty-six (36) months after the Employment Termination Date (the "Non-Compete
Period"), the Executive shall not, directly or indirectly, whether as principal,
agent, shareholder (except as set forth below) or in any other capacity, whether
or not compensation is received, engage or participate in any activity for, be
employed by, assist or have an equity interest in (other than as a passive
investor of no more than ten percent (10%) with no involvement in the management
or conduct of the affairs of business of such entity) any business or other
entity which is or plans to develop, manufacture, market or sell any transdermal

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or transmucosal pharmaceutical product or any other pharmaceutical product that
is designed to compete with any product that is manufactured, marketed or sold
by the Company, its subsidiaries or Affiliates (as defined herein) or that is in
Active Development (as defined herein) by, the Company, its subsidiaries or
Affiliates, all as of the Employment Termination Date. A product shall be deemed
to be in "Active Development" by the Company if it is a Tier I, Tier II or Tier
III product, as such terms are currently defined by the Company, as of the
Employment Termination Date, unless the Company no longer designates such
product as a Tier I, Tier II or Tier III product after the Employment
Termination Date. The Executive agrees to notify the Company in writing prior to
becoming involved in any manner that may be deemed to be a breach of the
covenant contained herein and to provide a description to the Company of the
business conducted or proposed to be conducted by such business or entity. The
Company's failure to respond to the Executive within 15 days after receiving any
such notice shall be deemed to constitute the Company's consent to the
Executive's involvement in such business or entity. The Executive acknowledges
that the provisions of this Section 10 are reasonably necessary for the purposes
of protecting the Company's legitimate business interests and goodwill. It is
accordingly the intention of the parties that this Section 10 be enforceable to
the fullest extent permissible under applicable law. The Executive agrees,
however, that in the event any restriction or limitation of this Section 10, or
any portion thereof, shall be declared or held to be invalid or unenforceable by
a court of competent jurisdiction, then such restriction or limitation shall be
deemed amended to substitute or modify it, as either or both may be necessary,
to render it valid and enforceable. For purposes of this Agreement, "Affiliate"
means any person which controls, is controlled by or is under common control
with the Company. The term "control" means the ownership, directly or
indirectly, or the power to direct the voting or disposition, of 50 percent or
more of the voting stock or equity interests of the subject entity or person.
Vivelle Ventures LLC shall be deemed to be an Affiliate of the Company.

         11. NON-SOLICITATION. During the Non-Compete Period, the Executive
shall not, without the written consent of the Company, directly or indirectly,
for himself or for any other person, firm, corporation, partnership, association
or other entity, employ or enter into any contractual arrangement with any
employee or former employee of the Company, unless such employee or former
employee has not been employed by the Company for a period in excess of six
months, or attempt to induce any customer or supplier of the Company or any of
its subsidiaries or affiliates to terminate its relationship with such entity.

         12. RESIGNATION. The Executive hereby resigns effective as of June 1,
2001 the Executive's position as an officer of the Company.

         13. NON-DISPARAGEMENT. Each of the Executive and the Company agree that
he or it, as the case may be, will not criticize, disparage or defame the other
party or any of the people or organizations connected with him or it, which
would thereby cause material harm to the interests or reputation of the other
party and any of the organizations or people connected with them. Nothing in
this provision will prevent a party from (i) complying with compulsory legal
process or otherwise making disclosures in connection with litigation or

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administrative proceedings, (ii) making such disclosures as are necessary to
obtain legal advice, (iii) making disclosures as are required by federal, state
or local regulatory authorities, (iv) making disclosures which by law are
required or cannot be prohibited, and (v) making disclosures in a capacity as a
member of the Board of Directors of the Company. For purposes of this provision,
the obligations of the Company shall only extend to the directors and officers
of the Company.

         14. COOPERATION. The Executive agrees to reasonably cooperate with the
Company, at times and places that are mutually convenient, with respect to all
matters arising during or related to the Executive's employment, including but
not limited to cooperation in connection with any governmental investigation,
litigation or regulatory or other proceeding which may have arisen or which may
arise following the signing of this Agreement. The Company shall pay for all of
the Executive's reasonable, documented expenses incurred as a result of
complying with this provision.

         15. NOMINATION AS DIRECTOR. The Company shall cause the nomination of
the Executive as a director of the Company at each of the Company's 2001 and
2002 annual meetings of shareholders. In the event that the Company does not
cause the nomination of the Executive as a director at either of such annual
meetings, then as of the termination date of the Executive's service on the
Board of Directors, all of the Executive's unvested stock options shall vest,
and, notwithstanding the terms of the Option Agreements or the Stock Option
Plans, all of the Executive's outstanding stock options shall continue to be
exercisable through the expiration dates as set forth on Exhibit A.

         16. TERMINATION FOR CAUSE. Notwithstanding anything contained to the
contrary in this Agreement, the Executive may be terminated by the Company for
Cause prior to the Employment Termination Date. As used in this Agreement,
"Cause" shall only mean (i) any material act or acts of personal dishonesty
taken by the Executive which is at the expense of the Company and reasonably
likely to bring significant disrepute to the Company, (ii) subject to the
following sentences, any violation by the Executive of the Executive's material
obligations under this Agreement which is demonstrably willful and deliberate on
the Executive's part and which is not remedied within ten business days after
receipt of written notice from the Company, (iii) the conviction of the
Executive for any criminal act which is a felony or a misdemeanor involving
moral turpitude, or (iv) a material breach of the Confidentiality and Invention
Agreement, dated as of January 27, 1987, between the Company and the Executive
(the "Confidentiality Agreement"). Upon any determination by the Company's Board
of Directors that Cause exists under clause (i), (ii) or (iii), the Company
shall cause a special meeting of the Board to be called and held at a time
mutually convenient to the Board and Executive, but in no event later than ten
(10) business days after Executive's receipt of the notice as set forth below.
Executive shall have the right to appear before such special meeting of the
Board with legal counsel of his choosing to refute any determination of Cause
specified in such notice, and any termination of Executive's employment by
reason of such Cause determination shall not be effective until Executive is
afforded such opportunity to appear and, if capable of being cured, cured within
a reasonable time. Any termination for Cause shall be made in writing to
Executive, which notice shall set forth in detail all acts or omissions upon
which the Company is relying for such termination. Upon any termination pursuant
to this Section 16, the Executive shall be entitled to be paid his base salary
to the date of termination and the Company shall have no further liability
hereunder (other than for reimbursement for reasonable business expenses
incurred prior to the date of termination).

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         17. ENTIRE AGREEMENT. Except as otherwise set forth below, this
Agreement contains the entire agreement between the Executive and the Company
and replaces all prior and contemporaneous agreements, communications and
understandings, whether written or oral, with respect to the Executive's
resignation, employment and termination and all related matters; provided that
in the event of a Change of Control of the Company (as defined in the Employment
Agreement (Change in Control), dated as of December 1, 1999, between the Company
and the Executive (the "Change in Control Agreement")) prior to the Employment
Termination Date, the provisions of the Change in Control Agreement shall
supersede the provisions of this Agreement and this Agreement shall be of no
further force or effect; and provided further that the Indemnification
Agreement, the Confidentiality and Invention Agreement, dated as of December 21,
1994 (the "Confidentiality Agreement"), and the Option Agreements shall continue
in full force and effect. In the event of any conflict between this Agreement
and the Confidentiality Agreement, the provisions of this Agreement shall
prevail.

         18. GOVERNING LAW. This Agreement will be governed by and interpreted
in accordance with the laws of the State of Florida without regard to choice of
law provisions.

         19. SEVERABILITY. If one or more provisions of this Agreement are held
to be unenforceable under applicable law, such provision shall be excluded from
this Agreement and replaced with a provision which is enforceable and comes
closest to the intent of the parties underlying the unenforceable provision.

         20. RELIEF. In the event of a breach of the provisions of this
Agreement by any party, in addition to any other rights that the other parties
may have under law or in equity, each party shall have the right to specific
performance and injunctive relief, it being acknowledged and agreed that money
damages will not provide an adequate remedy. Without limiting the generality of
the foregoing, in the event of a breach by the Executive of the provisions of
Section 10 or 11 hereof, the Executive shall reimburse the Company for the
payment made to the Executive under Section 7. Upon any determination by the
Company's Board of Directors that the Executive has breached the provisions of
Section 10 or 11, the Company shall provide written notice to the Executive,
which notice shall set forth in detail all acts or omissions upon which the
Company is claiming breach. The Executive shall then have fifteen (15) days in
which to cure such breach, failing which the payment made to the Executive under
Section 7 shall be immediately due and payable by the Executive to the Company.

         21. SUCCESSORS AND ASSIGNS. No party hereto may assign any of its
rights under this Agreement without the prior written consent of the other
party. This Agreement is binding on each of the parties' permitted assigns,
successors in interest, heirs, administrators and executors.

         22. NOTICES. All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:

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                  If to the Executive:         Steven Sablotsky
                                               c/o Noven Pharmaceuticals, Inc.
                                               11960 S.W. 144th Street
                                               Miami, Florida 33186

                  with a copy to:              Charles Modlin, Esq.
                                               Modlin Haftel & Nathan LLP
                                               777 Third Avenue
                                               13th Floor
                                               New York, NY 10017

                  If to the Company:           Noven Pharmaceuticals, Inc.
                                               11960 S.W. 144th Street
                                               Miami, Florida 33186
                                               Attention: General Counsel

or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.

         23. VOLUNTARY AGREEMENT. In signing this Agreement, the Executive gives
the Company assurance that the Executive has signed it voluntarily and with a
full understanding of its terms and that the Executive has had sufficient
opportunity to consider this Agreement and to consult with anyone of the
Executive's choosing before signing it. If the terms of this Agreement are
acceptable to the Executive, please sign and return it to the undersigned. At
the time the Executive signs and return this Agreement, it will take effect as a
legally-binding agreement between the Executive and the Company on the basis set
forth above.

Date Received by the Executive:  September 21, 2000

                                           NOVEN PHARMACEUTICALS, INC.

                                       By: /s/ ROBERT C. STRAUSS
                                           ------------------------------------
                                           ROBERT C. STRAUSS
                                           President and Chief Executive Officer

Accepted and Agreed:

By: /s/ STEVEN SABLOTSKY
   --------------------------
   STEVEN SABLOTSKY

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                                    EXHIBIT A

The following table lists the stock options currently held by the Executive:
<TABLE>
<CAPTION>

------------------------- ---------------------- ----------------------- ---------------------- ----------------------
      DATE GRANTED              NUMBER OF               EXERCISE           VESTING SCHEDULE          EXPIRATION
                                 SHARES                  PRICE                                          DATE
------------------------- ---------------------- ----------------------- ---------------------- ----------------------
<S>                              <C>                    <C>                       <C>                <C>
       12-13-1995                11,342                 $ 11.55                   (1)                12-13-2000
------------------------- ---------------------- ----------------------- ---------------------- ----------------------
       12-09-1996                60,000                 $ 15.82                   (1)                12-09-2001
------------------------- ---------------------- ----------------------- ---------------------- ----------------------
       1-12-1999                 50,000                 $ 6.188                   (1)                01-12-2004
------------------------- ---------------------- ----------------------- ---------------------- ----------------------
       12-1-1999                 62,500                 $ 14.23                   (1)                 12-1-2004
------------------------- ---------------------- ----------------------- ---------------------- ----------------------
</TABLE>

(1)      One third exercisable after year one.
         One third exercisable after year two.
         One third exercisable after year three.

                                       8<PAGE>   1
                                                                    EXHIBIT 10.2

          Confidential Materials omitted and filed separately with the
        Securities and Exchange Commission. Asterisks denote omissions.

                                LICENSE AGREEMENT

         This LICENSE AGREEMENT (the "License Agreement") is hereby made by and
between NOVARTIS PHARMA AG (hereinafter "Novartis"), a corporation organized
under the laws of Switzerland having its principal place of business at
Lichtstrasse 35, CH-4056, Basel, Switzerland, and NOVEN PHARMACEUTICALS, INC., a
Delaware corporation having its principal place of business at 11960 Southwest
144th Street, Miami, Florida 33186 (hereinafter "Noven") as of this 3rd day of
November, 2000 (hereinafter the "Effective Date").

                                   WITNESSETH:

         WHEREAS, the parties to this License Agreement wish to collaborate on
the development and marketing of Estrogen Transdermal Drug Delivery Systems, as
hereinafter defined (hereinafter "Licensed Products");

         WHEREAS, Noven has developed certain information relating to and is the
owner of record or under an unrecorded assignment of certain patents and patent
applications having claims covering the Licensed Products;

         WHEREAS, Noven wishes to provide for the development and regulatory
approval of the Licensed Products and for their marketing;

         WHEREAS, Novartis is willing and able to pursue regulatory approval for
and to market the Licensed Products, in accordance with the terms of this
License Agreement.

         NOW, THEREFORE, for good and valuable consideration and intending to be
legally bound, the parties hereto agree as follows:

                             ARTICLE I - DEFINITIONS

         1.1 AFFILIATES. The term "Affiliate" or "Affiliates" shall mean any
entity that is Controlled directly or indirectly by the party referred to, or
any entity that directly or indirectly Controls the party referred to, or any
entity that is directly or indirectly Controlled by an entity which also
directly or indirectly Controls the party referred to, so that the term shall
include any parent of the entity referred to or a directly or indirectly held
subsidiary of the parent or of the entity referred to, and entities in common
control with the entity referred to.

         1.2 ***.

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          Confidential Materials omitted and filed separately with the
        Securities and Exchange Commission. Asterisks denote omissions.

         1.3 CONTROL. The term "Control," "Controls" or "Controlled" shall mean
the ownership, directly or indirectly, of fifty percent (50%) or more of the
voting rights attached to issued and outstanding voting shares or the power to
direct or cause the direction of the management

         1.4 COST(S). The term "Costs" and "Cost" shall mean Noven's fully
allocated cost of manufacturing the Licensed Product, including (i) the direct
cost of any raw materials and packaging materials utilized in manufacturing such
Licensed Product, (ii) repair, maintenance and operating costs of the production
facilities utilized in manufacturing Licensed Products, (iii) costs of quality
and in-process controls, and (iv) the direct labor utilized in manufacturing
such Licensed Product plus an appropriate share of all factory overhead, both
fixed and variable, allocated to the Licensed Product in accordance with
generally accepted accounting principles and the normal accounting practices for
all other products manufactured in the applicable facility.

         1.5 ESTROGEN TRANSDERMAL DRUG DELIVERY SYSTEM. The term "Estrogen
Transdermal Drug Delivery System" shall mean an estrogen in a polymer adapted
for transdermal delivery by application to the epidermis developed by Noven,
including but not limited to the product marketed in the U.S. as Vivelle-Dot(TM)
(hereinafter "Vivelle-Dot((TM)) Product") and the Included Improvements (as
defined herein), but excluding any product previously licensed by Noven in the
Restated License Agreement, dated November 15, 1991, between Noven and Novartis
Pharmaceuticals Corporation, or in the Amended and Restated License Agreement,
dated September 30, 1999, between Noven and Rhone-Poulenc Rorer, Inc.

         1.6 EUROPEAN ECONOMIC AREA. The term "European Economic Area" shall
mean the European Union and Iceland, Liechtenstein and Norway.

         1.7 INCLUDED IMPROVEMENTS. The term "Included Improvements" shall mean
the three included improvements as defined in the attached Exhibit A.

         1.8 LICENSED PRODUCT(S). The term "Licensed Product" or "Licensed
Products" shall mean individually and collectively any Estrogen Transdermal Drug
Delivery System.

         1.9 LICENSED TRADEMARK. The term "Licensed Trademark" shall mean
Estradot((TM)) together with such variations and similar marks that Noven may
approve for Novartis to use in connection with products supplied by Noven to
Novartis.

         1.10 NET REVENUES. The term "Net Revenues" shall mean the gross amount
invoiced by Novartis, its Affiliates and Sublicensees on all sales of any
Licensed Product, (but not including sales between or among Novartis, its
Affiliates and Sublicensees) in all countries of the Territory less (a)
discounts actually allowed, (b) credits actually allowed for claims, allowances,
retroactive price reductions or returned goods, (c) prepaid freight and
insurance separately stated on sales invoices, and (d) sales taxes, value added
taxes, duties and other governmental charges or rebates actually paid in
connection with the sale, to the extent not reimbursed (but excluding taxes
based on the income of Novartis, its Affiliates or Sublicensees). Novartis may
calculate

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          Confidential Materials omitted and filed separately with the
        Securities and Exchange Commission. Asterisks denote omissions.

Net Revenues in accordance with its standard accounting principles as long as
such are consistent with the definitions of Net Revenues and with the other
terms of this Agreement.

         1.11 NOVEN'S PATENT RIGHTS. The term "Noven's Patent Rights" shall mean
any and all patents, including but not limited to reissues, extensions and
patents of addition, and patent applications, continuations, divisionals and
continuations-in-part that are owned or controlled by Noven and the claims of
which cover the Licensed Products now existing or obtained or acquired by Noven
as set forth in Article 7.1. Noven's Patent Rights include the patents and
patent applications listed in Exhibit B and all equivalents thereof in the
Territory.

         1.12 NOVEN'S TECHNOLOGY. The term "Noven's Technology" shall mean any
and all data, information, technology, know-how, processes, techniques, methods,
skills, proprietary information, trade secrets, developments, discoveries, and
inventions, owned or controlled by Noven or its Affiliates and specifically
related to one or more of its Estrogen Transdermal Drug Delivery Systems now
existing or developed in the future by Noven. Notwithstanding the foregoing,
Noven's Technology shall not include information related to the manufacture of
Licensed Products or specifications or procedures related thereto, except to the
extent required for obtaining health or governmental registration or both of
Licensed Products and except to the extent of any license to manufacture granted
to Novartis under this License Agreement.

         1.13 NOVEN'S TRADEMARK RIGHTS. The term "Noven's Trademark Rights"
shall mean the rights of Noven relating to the trademark Estradot(TM). Noven's
Trademark Rights include the registered trademarks and trademark applications
listed in Exhibit B.

         1.14 REGULATORY APPLICATION. The term "Regulatory Application" means a
formal application submitted to the appropriate Regulatory Authority under
applicable law seeking approval to market a Licensed Product within a country or
group of countries in the Territory.

         1.15 REGULATORY APPROVAL. The term "Regulatory Approval" means a
communication in writing from the appropriate Regulatory Authority permitting
the marketing of a Licensed Product within a country or group of countries in
the Territory.

         1.16 REGULATORY AUTHORITY. The term "Regulatory Authority" means a
governmental regulatory authority of a country or group of countries within the
Territory which has authority over the clinical testing, manufacturing,
marketing, or sale of pharmaceutical products.

         1.17 STANDARD SPECIFICATION(S). The term "Standard Specifications" and
"Standard Specification" shall mean the specifications set forth in the Supply
Agreement, which Supply Agreement is attached hereto as Exhibit C and
incorporated herein by reference.

         1.18 SUBLICENSEE. The term "Sublicensee" and "Sublicensees" shall mean
any entity to whom Novartis shall grant any right or license to use Noven's
Technology or Noven's Patent Rights or to make, use or sell any Licensed Product
under all or any part of Noven's Technology and Noven's Patent Rights in the
Territory.

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<PAGE>   4

          Confidential Materials omitted and filed separately with the
        Securities and Exchange Commission. Asterisks denote omissions.

         1.19 TERRITORY. The term "Territory" shall mean all the countries and
territories worldwide except the United States, Canada, Japan and the
territories and possessions of the United States, Canada, and Japan.

         1.20 TRADE UNIT. The term "Trade Unit" shall mean a single pouched
Estrogen Transdermal Drug Delivery System constituting a Licensed Product sold
or to be sold by Novartis.

                         ARTICLE II - REGULATORY MATTERS

         2.1      GENERAL REGULATORY MATTERS.
                  --------------------------

                  2.1(a) REGULATORY APPROVALS. Except as otherwise provided
         herein, Novartis shall, at its own expense, consistent with sound
         scientific and commercial practices, use commercially reasonable
         efforts to: (1) prepare and file Regulatory Applications in its name
         with such Regulatory Authorities as shall be necessary to procure
         Regulatory Approvals for each of the Licensed Products in the
         Territory; (2) diligently prosecute and obtain such Regulatory
         Applications; and (3) maintain such Regulatory Approvals in full force
         and effect. Without limiting the requirements of this Article, in
         connection with the clinical testing of the Licensed Products, the
         preparation, filing and prosecution of the Regulatory Applications, and
         the maintenance of the Regulatory Approvals, Novartis shall use at
         least the same degree of care and diligence as it uses in connection
         with its own products. Notwithstanding the foregoing, the decisions
         regarding the timing of said filings shall be in Novartis' sole
         discretion. In the event that Novartis has not initiated the process of
         obtaining Regulatory Approval for a Licensed Product in a country of
         the Territory ***, or in the event that Novartis has stopped exercising
         commercially reasonable efforts to obtain Regulatory Approval in a
         country of the Territory for ***, and such failure shall continue for a
         period of 30 days after written notice from Noven to Novartis, then
         Noven shall have the option, exercisable by delivery of written notice
         to Novartis, to terminate this License Agreement with respect to such
         Licensed Product in such country. If Noven determines to terminate this
         License Agreement with respect to a Licensed Product in any such
         country, Novartis shall promptly take such actions with respect to such
         country as Noven may reasonably request, including the execution and
         delivery of any documents which Noven may reasonably request, in order
         to transfer to Noven or its designee, free of charge, all of Novartis'
         right, title and interest in and to all information, data, and
         applicable Regulatory Applications (if any) relating solely to such
         Licensed Product in such country. In addition, Novartis shall
         reasonably cooperate with Noven in connection with the transfer of
         data, registrations, and applications related to such Licensed Product
         in such country. Notwithstanding the foregoing, Noven shall not market
         any re-acquired Licensed Products in such country under the Licensed
         Trademark, unless Noven reacquires the Licensed Trademark pursuant to
         Article 3.2.

                  2.1(b) CLINICAL STUDIES. Except as otherwise provided herein,
         Novartis shall not undertake or perform any human clinical studies
         relating to any Licensed Products without the prior written consent of
         Noven. To the extent clinical studies are required to

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         be conducted in order to secure Regulatory Approvals to sell the
         Licensed Products in a country of the Territory, such clinical studies
         shall be conducted by Novartis, at its expense, pursuant to a
         development plan, including protocols, that will be mutually agreed
         upon in good faith between Novartis and Noven.

                  2.1(c) COOPERATION; SUPPLY OF INFORMATION BY NOVEN. Noven
         agrees to fully cooperate with Novartis in connection with Novartis'
         obligations under this Article II, and to provide to Novartis copies of
         all documents in its possession related to the Licensed Products which
         it is legally permitted to disclose and which are necessary for the
         preparation of the Regulatory Applications; provided, however, that
         nothing herein contained shall require Noven to generate any
         information which it does not already possess or to disclose or
         reference to Novartis data related to the manufacture of the Licensed
         Products unless required by Regulatory Authorities in the Territory in
         order to obtain Regulatory Approval.

                  2.1(d) STATUS OF REGULATORY APPROVALS. Novartis shall maintain
         Noven fully informed of the status of the performance of its
         obligations under this Article II, and shall, upon request of Noven,
         provide such information concerning the status of the clinical trials,
         the preparation and prosecution of the Regulatory Applications, and the
         maintenance of the Regulatory Approvals as Noven may request from time
         to time. Without limiting the generality of the foregoing, Novartis
         shall (1) if requested by Noven, deliver to Noven copies of the results
         of all clinical trials, a copy of each Regulatory Application
         (including exhibits and attachments thereto) and all supplements and
         amendments thereto, and copies of other documents and correspondence
         relating to the Regulatory Application and Regulatory Approval, (2)
         provide a written report to Noven within forty-five (45) days after the
         end of each calendar year describing the actions taken by Novartis
         during the preceding year to comply with its obligations under Article
         II, and (3) if requested by Noven, cause its personnel responsible for
         the performance of its obligations under Article II to meet with Noven
         personnel at mutually convenient locations not more frequently than
         every six (6) months to discuss the status of the Regulatory Approval
         of the Licensed Products.

                  2.1(e) RIGHT OF REFERENCE. Novartis shall permit Noven and its
         Affiliates and licensees to reference the Regulatory Approvals with
         respect to the Licensed Products for purposes of government
         registrations and filings in jurisdictions within or outside of the
         Territory.

                  2.1(f) SAFETY ADDENDUM. The parties will establish and
         implement a procedure for the mutual exchange of adverse event reports
         and safety information associated with the Licensed Products. Details
         of the operating procedure shall be the subject of a Safety Addendum to
         this License Agreement, agreed between the designated pharmacovigilance
         primary liaisons of the respective companies. The Safety Addendum will
         be agreed and implemented at a time sufficient to permit compliance
         with applicable Regulatory Authority guidelines and regulations. The
         Safety Addendum will be updated by the parties from time to time and
         expanded to take into account the status of the Licensed Products.

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         2.2      REGULATORY MATTERS AS TO THE VIVELLE-DOT(TM) PRODUCT

                  2.2(a) REGULATORY APPROVAL OF THE VIVELLE-DOT(TM) PRODUCT IN
         THE NETHERLANDS. Notwithstanding Article 2.1(a), Noven will, at its own
         expense, consistent with sound scientific and commercial practices, use
         commercially reasonable efforts to: (1) promptly prepare and file
         Regulatory Applications in its name with such Regulatory Authorities as
         shall be necessary to procure Regulatory Approvals for the
         Vivelle-Dot(TM) Product in the Netherlands and (2) diligently prosecute
         and obtain such Regulatory Applications.

                  2.2(b) TRANSFER OF REGULATORY APPROVALS. Promptly after
         receipt of Regulatory Approval for the Vivelle-Dot(TM) Product in the
         Netherlands, the parties will work together to transfer such Regulatory
         Approvals to Novartis at Novartis' expense.

                  2.2(c) REGULATORY APPROVAL OF THE VIVELLE-DOT(TM) PRODUCT IN
         COUNTRIES OTHER THAN THE NETHERLANDS. Notwithstanding Article 2.1(a),
         Novartis shall, at Novartis' expense, consistent with sound scientific
         and commercial practices, use commercially reasonable efforts to pursue
         Regulatory Approval in its name following the European Mutual
         Recognition Procedure (hereinafter "MRP") to gain Regulatory Approval
         of the Vivelle-Dot(TM) Product in all countries in the Territory
         subject to the MRP other than the Netherlands. Novartis shall maintain
         Noven fully informed of the status of the performance of its
         obligations under this Article 2.2(c), and shall, upon request of
         Noven, provide Noven with information concerning the status of the
         preparation and prosecution of the Regulatory Applications. In the
         event that Novartis has to withdraw a country from the MRP, then
         Novartis shall undertake such efforts as are commercially reasonable to
         resubmit the Regulatory Application in such country. Without limiting
         the requirements of Novartis under Articles 2.1(a) and 2.1(d), Novartis
         shall use commercially reasonable efforts to obtain Regulatory Approval
         for the Vivelle-Dot(TM) Product in ***.

                  2.2(d) CLINICAL SUPPLIES. Noven will provide to Novartis
         clinical supplies (including placebos) of the Vivelle-Dot(TM) Product
         required for obtaining Regulatory Approval in the Territory at a price
         of ***.

         2.3      REGULATORY MATTERS AS TO THE INCLUDED IMPROVEMENTS.

                  2.3(a) ICH STABILITY BATCHES. Notwithstanding Articles 2.1(a)
         and 2.1(b), Noven will bear the expense of formulation development and
         manufacture as well as the testing of required ICH stability batches
         for the Included Improvements.

                  2.3(b) SUPPLY OF INCLUDED IMPROVEMENTS FOR CLINICAL STUDIES.
         Noven will provide to Novartis clinical supplies (including placebos)
         of the Included Improvements required for obtaining Regulatory Approval
         in the Territory, at a price of ***.

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                  2.3(c) ADDITIONAL IMPROVEMENTS. The cost of formulation
         development, manufacture of ICH stability batches and clinical supplies
         of any additional improvements other than the Included Improvements
         requested by Novartis will be separately negotiated in good faith
         between Noven and Novartis.

              ARTICLE III - COMMERCIALIZATION OF LICENSED PRODUCTS

         3.1      COMMERCIALIZATION.

                  3.1(a) GENERAL. Novartis shall use commercially reasonable
         efforts, at its own expense, to actively and diligently promote, market
         and sell the Licensed Products in the Territory, similar to such
         efforts Novartis would undertake for its own products with similar
         market potential. Novartis shall commence commercial marketing of each
         Licensed Product in each country within the Territory within ***. If
         Novartis fails to commence to market any Licensed Product in accordance
         with the foregoing sentence, and such failure shall continue for a
         period of 30 days after written notice from Noven to Novartis, then
         Noven shall have the option, exercisable by delivery of written notice
         to Novartis, to terminate this License Agreement with respect to such
         Licensed Product in such country. If Noven determines to terminate this
         License Agreement with respect to a Licensed Product in a country,
         Novartis shall promptly take such actions as Noven may reasonably
         request, including the execution and delivery of any documents which
         Noven may reasonably request, in order to transfer to Noven or its
         designee, free of charge, all of Novartis' right, title and interest in
         and to any Regulatory Approvals relating to such Licensed Products in
         such country, and all information relating to any Regulatory Approvals
         not previously supplied to Noven. Notwithstanding the foregoing, Noven
         shall not market the Licensed Products in such reacquired country under
         the Licensed Trademark, unless Noven reacquires the Licensed Trademark
         pursuant to Article 3.2.

                  3.1(b) INCLUDED IMPROVEMENTS. If Novartis does not
         commercialize any Included Improvement in ***, the right to develop and
         market such Included Improvement in the whole Territory will revert to
         Noven on terms and conditions to be negotiated in good faith, provided
         that Noven shall have no right to use the Licensed Trademark in such
         event. ***.

                  3.1(c) MARKETING PLAN. Ninety days before the commencement of
         each calendar year, Novartis shall provide Noven with a written
         marketing plan setting forth a detailed description of Novartis'
         strategies and business plan with respect to the marketing,
         distribution and sale of each of the Licensed Products in the
         Territory, and such other information as Noven shall reasonably request
         (the "Marketing Plan"). At Noven's request, designated employees of
         each of the parties shall meet not more than once every six months at a
         location to be mutually agreed upon to discuss the Marketing Plan and
         Novartis' performance thereof under this License Agreement; provided,
         however, that the Marketing Plan is only subject to Noven's review and
         comments but not approval.

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                  3.1(d) REPORTS. To the extent legally permissible, Novartis
         shall prepare and make available to Noven upon Noven's request (1)
         reports on the general market conditions regarding the Licensed
         Products, (2) reports of all customer complaints regarding the Licensed
         Products, and (3) such other information concerning the Licensed
         Products as Noven may reasonably request.

                  3.1(e) MARKETING TO CUSTOMERS. To the extent not otherwise
         prohibited by applicable law, Novartis shall not seek customers outside
         of the Territory; provided, however, that if any party exports the
         Licensed Products acquired from Novartis to customers outside the
         Territory without Novartis' explicit authorization, Novartis shall not
         be liable to Noven for any damages or claims arising from such third
         party actions. Novartis shall not establish any branch or maintain any
         distribution depot for the Licensed Products outside the Territory.
         Novartis shall during the Term refer to Noven or its designee all
         inquiries or orders received by it for the Licensed Products to be
         delivered outside the Territory.

         3.2 TRADEMARKS. The Licensed Products shall be sold in the Territory
under the Licensed Trademark or such other trademark as Novartis may register,
together with a clear statement that the Product is being sold by Novartis as
licensee of Noven, and all labeling, packaging and advertising used in the
promotion and sale of the Licensed Products in the Territory shall bear the
Licensed Trademark or such other trademark as Novartis may register and such
statement. Noven shall register the Licensed Trademark, in its own name. If
Novartis does not use the trademark Estradot(TM) to market the first Licensed
Product within 18 months after the first commercial sale by Novartis of such
Licensed Product in any country of the Territory, then all rights under the
Licensed Trademark shall revert to Noven and Novartis shall have no further
right to use the Licensed Trademark in connection with the Licensed Products
sold in the Territory. If Novartis uses the trademark Estradot(TM) to market the
first Licensed Product within 18 months after the first commercial sale by
Novartis of such Licensed Product in any country of the Territory, then upon
request by Novartis, Noven shall assign title in the trademark Estradot(TM) for
the Territory to Novartis. Novartis shall bear the expense of prosecuting and
maintaining the Licensed Trademark in the Territory beginning on the Effective
Date. Novartis acknowledges the validity of the Licensed Trademark, and any use
thereof by Novartis will inure to the benefit of Noven except if Novartis uses
the trademark Estradot(TM) and Noven transfers title for the trademark
Estradot(TM) in the Territory to Novartis as provided above. The Licensed
Trademark shall be the sole and exclusive property of Noven except if Novartis
elects to use the trademark Estradot(TM) and requests Noven to transfer title in
the trademark Estradot(TM) for the Territory to Novartis. In the event that
Novartis does not elect to use the trademark Estradot(TM) or does not request
Noven to transfer title in the trademark Estradot(TM) for the Territory to
Novartis, Novartis shall not in any manner represent that it has any ownership
in the Licensed Trademark, or registration thereof, and Novartis acknowledges
that use of the Licensed Trademark shall not create in Novartis' favor any
right, title or interest in and to such trademarks except as granted pursuant to
this License Agreement. In the event that Novartis does not elect to use the
trademark Estradot(TM) or does not request Noven to transfer title in the
trademark Estradot(TM) for the Territory to Novartis, Novartis will not at any
time do or cause to be done any act or thing contesting or in any way impairing
or tending to impair any part of Noven's

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right, title and interest in and to the Licensed Trademark or the goodwill and
reputation of the Licensed Trademark.

                               ARTICLE IV - GRANT

         4.1      LICENSE.

                  4.1(a) Subject to the terms and conditions of this License
         Agreement, Noven hereby grants to Novartis an exclusive right and
         license solely within the Territory, under Noven's Patent Rights and
         Noven's Technology, to use, sell or otherwise dispose of the Licensed
         Products. For purposes of this License Agreement, the phrase "use, sell
         or otherwise dispose of Licensed Product", or words of similar effect,
         includes the right to market, advertise, promote, distribute and
         develop Licensed Product throughout the Territory, and the obligations
         arising therefrom.

                  4.1(b) Subject to the terms and conditions of this License
         Agreement, Noven further grants to Novartis an exclusive, royalty-free
         license solely within the Territory, to use the Licensed Trademark in
         connection with the marketing and promotion of the Licensed Products
         and further agrees to transfer title in the trademark Estradot(TM) for
         the Territory to Novartis if Novartis elects to use the trademark
         Estradot(TM) and requests Noven to transfer title as specified in
         Article 3.2.

                  4.1(c) No right or license to make, use or sell under Noven's
         Technology or Noven's Patent Rights is granted herein except as
         provided herein and with reference to the Licensed Products.
         Notwithstanding the foregoing, no right of Novartis, its Affiliates or
         Sublicensees to manufacture Licensed Products is granted except to the
         extent specifically hereinafter provided.

                  4.1(d) The term "exclusive" as used in this Article means that
         the rights conferred on Novartis are to the exclusion of all other
         persons and entities, including but not limited to Noven, and that
         Noven shall not voluntarily grant any rights in the Territory to any
         third party to use, sell or otherwise dispose of Licensed Products.

                  4.1(e) As part of the rights granted in this Article 4.1,
         Novartis shall have the right to grant sublicenses to Sublicensees,
         only with the prior written approval of Noven, which approval shall not
         be unreasonably withheld. Affiliates, agents, distributors,
         wholesalers, and other independent resellers shall not be considered
         sublicensees hereunder. Any such Sublicensee shall agree in writing to
         assume the duties of Novartis hereunder with respect to the country and
         Licensed Product involved, provided, however, that no such sublicense
         shall release Novartis from any liability for performance under this
         License Agreement. Noven shall have no duty to approve any such
         sublicense until it receives a copy of the proposed sublicense
         agreement. After receiving a request to sublicense and a copy of the
         proposed sublicense agreement, Noven shall respond to the request for
         consent to sublicense within 30 days, ***.

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                               ARTICLE V - SUPPLY

         5.1 AGREEMENT TO SUPPLY. Noven shall use commercially reasonable
efforts to supply to Novartis, and Novartis shall purchase from Noven, all of
Novartis', its Affiliates' and Sublicensees' requirements of all Licensed
Products. The Licensed Products shall be supplied and purchased according to the
terms and conditions set forth in the Supply Agreement set forth in Exhibit C,
which Exhibit C is attached hereto and incorporated herein by reference.
Licensed Product shall be supplied in finished, packaged and labeled form.
However, should Noven be unable to meet Novartis' requirements of any Licensed
Product or by reason of force majeure be unable to supply Licensed Product for a
country and if the parties, after having consulted in good faith to resolve the
matter, are unable to do so, Novartis' sole remedy for Noven's failure to supply
shall be ***.

         5.2 SUPPLY PRICE FOR SAMPLES AND PLACEBOS. Noven shall supply pouched
samples and placebos (clearly labeled as samples or placebos) of the
Vivelle-Dot(TM) Product as requested by Novartis at a price of ***.

                          ARTICLE VI -FEES AND PAYMENTS

         6.1 UP-FRONT PAYMENT. Novartis shall pay Noven Twenty Million U.S.
Dollars (U.S. $20,000,000.00) in immediately available funds at the time of
execution of this License Agreement.

         6.2 MILESTONE PAYMENT. Novartis shall pay Noven *** in immediately
available funds after receiving notification of Regulatory Approval of the
Vivelle-Dot(TM) Product in ***. Novartis shall promptly notify Noven of the
achievement of a milestone, whereupon Noven will submit an invoice in the form
of Exhibit E to Novartis for the milestone payment. Upon receipt of Noven's
invoice for a milestone payment, Novartis shall pay the milestone payment within
five (5) business days.

         6.3 SUPPLY FEES.

                  6.3(a) Independent from and in addition to the up-front and
         milestone payment of Articles 6.1 and 6.2, Novartis shall pay to Noven
         a fee per Trade Unit of Licensed Product equal to *** of such Licensed
         Products purchased from Noven within a calendar year, and a fee per
         Trade Unit of Licensed Product equal to *** from all additional sales
         of such Licensed Product purchased from Noven over and above *** in
         that calendar year, said percentage being calculated by: ***.
         Notwithstanding the foregoing, in no event shall the per Trade Unit fee
         paid by Novartis be less than the amount set forth in the attached
         Exhibit D. The minimum per Trade Unit fee for any Licensed Product not
         specified in Exhibit D will be separately negotiated in good faith
         between Noven and Novartis, and the parties will amend Exhibit D to
         reflect such agreement.

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                  6.3(b) The supply fees shall include compensation for the
         rights licensed to Novartis under this License Agreement and
         compensation for supplying the Licensed Products meeting the Standard
         Specifications.

                  6.3(c) Notwithstanding Article 6.3(a), during the term of this
         License Agreement, the parties shall work together to maximize the
         efficiency of the manufacturing processes and to minimize the Cost of
         the Licensed Products. To the extent economic benefits result from such
         efforts ***.

         6.4 MINIMUM FEE. For the first three twelve-month periods following the
first commercial sale of the first Licensed Product to be sold in any Major
Country in the Territory, Novartis shall be required to pay Noven total supply
fees of at least *** per year.

         6.5 PAYMENTS. With respect to each Licensed Product, the fees provided
for in Article 6.3 shall be payable in immediately available funds as follows:

                  6.5(a) The parties agree that the transfer price (hereinafter
         "Transfer Price") for each Licensed Product shall be equal to **.

                  6.5(b) With respect to any Licensed Product, the Transfer
         Price determined in accordance with Article 6.5(a) shall be due and
         payable within thirty (30) days of Novartis' receipt of Noven's invoice
         for such Licensed Product.

                  6.5(c) The remainder of any payment due under Article 6.3(a)
         hereof shall be due and payable within sixty (60) days of the end of
         each semi-annual calendar period (i.e., January 1 to June 30 and July 1
         to December 31) in which Novartis, its Affiliates or Sublicensees
         invoice for such Licensed Product. If the amount paid by Novartis for
         Licensed Products shipped in such semi-annual period is greater than
         the amount due under Article 6.5(a) hereof, Novartis shall invoice
         Noven for such difference within sixty (60) days of the end of the
         semi-annual calendar period and Noven shall pay the amount of such
         invoice within thirty (30) days of its receipt of Novartis' invoice. If
         the amount paid by Novartis for Licensed Products shipped in such
         semi-annual period is less than the amount due under Article 6.5(a)
         hereof, Novartis shall pay such difference to Noven within sixty (60)
         days after the end of the semi-annual calendar period.

                  6.5(d) The price for samples and placebos provided for in
         Article 5.2 shall be payable in immediately available funds within
         thirty (30) days of Novartis' receipt of Noven's invoice for such
         samples and placebos.

                  6.5(e) In the event that the total supply fees paid by
         Novartis in any year are less than the minimum required under Article
         6.4, Novartis shall pay Noven the difference between the minimum and
         the amount actually paid within sixty (60) days after the end of the
         applicable twelve-month period, unless Novartis has terminated this
         Agreement under Section 9.2(a).

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         6.6 STATEMENT OF ACCOUNT. At each time a payment under Article 6.5(c)
is due, Novartis shall deliver to Noven a written statement of account setting
forth in detail the quantity of Licensed Products sold by Novartis and its
Affiliates and Sublicensees, if any, during the period covered by the statement
of account, and a calculation of the payment due pursuant to Article 6.5(c).
Such statement shall be certified as true and correct by a duly authorized
officer of Novartis. Noven shall then verify Novartis' statement and, if a
payment is due from Novartis under Article 6.5(c), Noven shall submit an invoice
to Novartis for the amount due.

         6.7 RECORDS; INSPECTION OF RECORDS. Novartis shall maintain complete
and accurate books and records of account relating to the sale of Licensed
Products in the Territory, in sufficient detail to permit the accurate
calculation of the payments due hereunder. Noven shall have the right during the
term of this License Agreement and for a period of three years thereafter, to
have a public accountant reasonably acceptable to Novartis examine the relevant
books and records of Novartis during normal business hours not more than once
each calendar year to verify that appropriate accounting and payments have been
made by Novartis under this License Agreement. In the event a determination is
made that Noven has not been paid the payments due to it under this License
Agreement, without prejudice to any other rights which Noven may have, Novartis
shall promptly pay to Noven the excess of the proper amount due over the amount
actually paid. The fees and expenses of the accountant performing any
verification pursuant to this Article shall be paid by Noven; provided that if a
determination is made that the amount paid to Noven with respect to any calendar
year was less than *** of the amount properly due to Noven, Novartis shall
promptly reimburse Noven for the costs of such verification. Any accountant
which examines the books and records of Novartis pursuant to this Article shall
sign a confidentiality agreement in form and substance reasonably satisfactory
to Novartis, and shall not disclose to Noven any information relating to the
business of Novartis except as necessary to provide to Noven a basis for
verifying the statement of account hereunder.

         6.8 CURRENCY. The payments due under Article 6.5 shall accrue and be
payable in United States Dollars in immediately available funds. With respect to
any sales made in currencies other than United States Dollars, such sales shall
first be calculated in the foreign currency, then converted to Swiss Francs and
then converted to United States Dollars on the basis of the Average Quarterly
Exchange Rate (as hereinafter defined) for such quarter in which payment is
made. Novartis' Average Quarterly Exchange Rate is currently computed as
follows: a daily rate is calculated as the average of the Reuters exchange rate
as quoted at 09:30 AM CET and the Frankfurter fixing as quoted at 02:00 PM CET.
A monthly rate will be calculated as the average of these daily rates for that
month. The Average Quarterly Exchange Rate will be calculated as the average of
the three monthly rates for that quarter. Novartis represents that the foregoing
calculation method is the currently used standard method at Novartis for
converting to United States Dollars.

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                              ARTICLE VII - PATENTS

         7.1 NOVEN INVENTIONS. If Noven (through its employees, agents or
consultants) makes or conceives any inventions or discoveries in the course of
the work to be performed by it pursuant to this License Agreement, Noven shall
own such inventions and discoveries and they shall become part of Noven's
Technology and be subject to the terms of this License Agreement. Noven shall
file and pursue all patent applications requested by Novartis on a
country-by-country basis in Noven's name and at Novartis' expense. Any patents
so obtained shall be owned by Noven and become part of Noven's Patent Rights and
be subject to the terms of this License Agreement. Any patent applications or
patents issuing therefrom for which Novartis does not pay expenses in accordance
with this Article 7.1 in a country shall not be included in Noven's Patent
Rights and shall not be licensed in such country. Noven agrees to cooperate with
Novartis in connection with Novartis' obligations under this Article, by, but
not limited to, providing the necessary information to enable Novartis to come
to an informed decision whether to pay said expenses and providing an annual
budget of costs which shall be discussed promptly should it be significantly
exceeded.

         7.2 COSTS OF LICENSED PATENTS. Subject to the limitation of the
immediately following sentence, on a country-by-country basis, Novartis shall
bear the costs of prosecuting and maintaining the Licensed Patents in the
Territory beginning on the Effective Date and ending with the earliest of (i)
commercialization of the first Licensed Product in that country, (ii) expiration
of this License Agreement, and (iii) termination of this License Agreement for
any reason except if Novartis elects option (i) under Article 9.3(d).
Notwithstanding the foregoing sentence, Novartis may choose to discontinue
bearing the costs of prosecuting and maintaining any patent or patent
application among the Licensed Patents in a country before the earliest of (i)
commercialization of the first Licensed Product in that country, (ii) expiration
of this License Agreement, and (iii) termination of this License Agreement for
any reason except if Novartis elects option (i) under Article 9.3(d), whereby in
case of Novartis' decision to discontinue bearing such costs in such country,
such patent application or such patent shall be excluded from Noven's Patent
Rights and shall no longer be licensed in such country. Noven agrees to
cooperate with Novartis in connection with Novartis' obligations under this
Article, by, but not limited to, providing the necessary information to enable
Novartis to come to an informed decision whether to continue paying such costs
and providing an annual budget of costs which shall be discussed promptly should
it be significantly exceeded.

         7.3 JOINT INVENTIONS. If Noven and Novartis jointly (through their
respective employees, agents or consultants) make or conceive any inventions or
discoveries in the course of the work to be performed pursuant to this License
Agreement, Novartis and Noven shall have joint ownership of such inventions or
discoveries and any patent applications and patents obtained thereon, and
Novartis shall pay all costs and expenses of obtaining and maintaining such
patent rights. Novartis shall have the sole right to decide what patent rights,
if any, to apply for with respect to the joint inventions or discoveries
described in this Article 7.3. Novartis shall keep Noven fully and promptly
informed with respect to patent rights, if any, that Novartis elects to apply
for, and Noven may, at its own expense, apply for and obtain patent protection
in any country in which Novartis does not elect to obtain such patent
protection. Each party shall have

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full right to use, pursuant to the terms of this License Agreement, any
discoveries, inventions or patent rights described in this Article 7.3.

         7.4 NOVARTIS INVENTIONS. If Novartis (through its employees, agents or
consultants) makes or conceives any inventions or discoveries in the course of
the work to be performed by it under this License Agreement, Novartis shall own
such inventions or discoveries. Noven and its Affiliates shall have a
non-exclusive, royalty-free right to use throughout the world all such
inventions and discoveries, and any patent rights that result from them, in
connection with the Licensed Products and pursuant to and during the term of
this License Agreement.

         7.5      INFRINGEMENT OR UNAUTHORIZED USE BY THIRD PARTIES.

                  7.5(a) Each party shall promptly notify the other following
         the discovery of any infringement or unauthorized use of the other
         party's intellectual property rights used in the development,
         manufacture or marketing of Licensed Products which may come to its
         attention.

                  7.5(b) Noven shall have one hundred and twenty (120) days
         following such notice during which it may exercise the right, but shall
         have no obligation, to take any action, legal or otherwise, which it
         deems advisable in order to protect the Licensed Patents in the event
         that the alleged infringement relates to the Licensed Patents. In
         taking any such action, Novartis shall (1) at the request of Noven,
         agree to be joined as a party plaintiff to any legal proceeding
         instituted by Noven if it is legally required for Novartis to join, (2)
         cooperate with Noven in good faith in all respects, (3) on reasonable
         notice have any of its employees, officers, directors, agents and other
         representatives testify when necessary, and (4) on reasonable notice
         make available to Noven as necessary all relevant records, specimens,
         samples and other information.

                  7.5(c) If Noven elects to bring an action under Article
         7.5(b), then Noven shall offer Novartis an opportunity to share the
         expenses of the action and to share in any recovery obtained from the
         action after legal fees are paid. If Noven and Novartis agree to share
         the expenses, ***. If Novartis elects not to share in the expenses, any
         money recoveries received in connection with any such proceeding shall
         be paid exclusively to Noven. If Novartis does not agree with Noven to
         share the expenses of an action brought by Noven under Article 7.5(b),
         Novartis shall, at its own expense, have the right to be represented in
         any legal proceeding instituted by Noven pursuant to Article 7.5(b) by
         counsel reasonably acceptable to Noven.

                  7.5(d) In the event that Noven does not take any action with
         respect to any such infringement within one hundred and twenty (120)
         days after receiving notice of such infringement, Novartis may take any
         action, legal or otherwise, which it deems advisable in order to
         protect the Licensed Patents; provided that Novartis shall maintain
         Noven fully informed of the status of any such actions and provide to
         Noven such documents concerning the action as Noven may reasonably
         request. All expenses incurred by Novartis in connection with an action
         under this Article 7.5(d) (including reasonable

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         attorneys' and accountants' fees), shall be paid by Novartis. Noven
         shall, at its own expense, have the right to be represented in any
         legal proceeding instituted by Novartis pursuant to this Article 7.5(d)
         by counsel reasonably acceptable to Novartis. After payment of any
         legal costs and out of pocket expenses incurred by Novartis, any
         remaining money recoveries received in connection with any such
         proceeding shall be ***.

         7.6 INFRINGEMENT OF THIRD PARTIES' RIGHTS. In the event that any legal
proceeding shall be instituted or threatened against Novartis or any notice
given to Novartis involving any claim of patent infringement or request to take
a license under any patent relating to the Licensed Products within the
Territory, Novartis shall promptly notify Noven in writing, which notice shall
include copies of all documents relating to such notice, proceeding or
threatened proceeding. Noven shall assume the defense of any such claim or
action responsive to such notice, provided Novartis has not altered the Licensed
Products supplied by Noven which meet the Standard Specifications and provided
Novartis has not altered the packaging or labeling provided by Noven for the
Licensed Products unless Noven has previously consented in writing to such
alteration, and the reasonable costs and expenses (including reasonable
attorneys' fees) incurred by Noven in connection with the defense of such claim
shall be shared equally by the parties. Noven shall provide to Novartis an
itemization of the costs and expenses so incurred. Any counsel selected by Noven
for the purposes of defending any such claim shall be reasonably acceptable to
Novartis. Novartis shall (1) fully cooperate with Noven in connection with any
such claim, (2) on reasonable notice have any of its employees, officers,
directors, agents and other representatives testify when necessary, and (3) on
reasonable notice make available to Noven as necessary all relevant records,
specimens, samples and other information in its possession. Novartis shall, at
its own expense, have the right to join any such legal proceeding and to be
represented in any legal proceeding by counsel reasonably acceptable to Noven.
If, as a result of any such claim, Novartis is required by reason of an order of
a court, arbitration board or other similar body or by reason of a settlement
between the parties, to pay a royalty or make other similar payments to a third
party, ***. Without limiting the foregoing, Novartis may not agree to pay any
royalties to a third party relating to Licensed Products without Noven's prior
consent, which shall not be unreasonably withheld.

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                   ARTICLE VIII - CONFIDENTIALITY OBLIGATIONS

         8.1      CONFIDENTIALITY.

                  8.1(a) Except as specifically authorized by this License
         Agreement, each party shall, for the term of this License Agreement and
         for ten (10) years after its expiration or termination, keep
         confidential, not disclose to others and use only for the purposes
         authorized herein, any and all data, information, and know-how
         including Noven's Technology, (collectively "Confidential Information")
         received from the other party prior to or under this License Agreement;
         provided, however, that the foregoing obligations shall not apply to
         the extent that such information is (i) already known to the recipient
         at the time of disclosure as evidenced by competent proof; (ii)
         publicly known prior to or after disclosure other than through
         unauthorized acts or omissions of the recipient; or (iii) disclosed in
         good faith to the recipient by a third party entitled to make such
         disclosure. With respect to any information already known to Novartis
         only as a result of the Restated License Agreement, dated November 15,
         1991, between Noven and Novartis Pharmaceuticals Corporation, or the
         Amended and Restated License Agreement, dated September 30, 1999,
         between Noven and Rhone-Poulenc Rorer Pharmaceuticals, Inc., the time
         period specified in this Article 8.1(a) shall control and supersede any
         prior term set by the previous agreements.

                  8.1(b) In the event a party who receives Confidential
         Information under this License Agreement is required: (i) by law, rule
         or regulation to disclose Confidential Information to regulatory
         authorities to obtain and maintain Regulatory Approval for a Licensed
         Product; (ii) to disclose Confidential Information to respond to a
         regulatory or governmental inquiry concerning Licensed Product; or
         (iii) to disclose Confidential Information in a judicial,
         administrative or arbitration proceeding to enforce such party's rights
         under this License Agreement or the Supply Agreement, it may do so only
         if it limits disclosure to that purpose.

                  8.1(c) Notwithstanding the provisions of Articles 8.1(a) and
         8.1(b), Novartis shall be permitted to disclose to its distributors,
         wholesalers, and other direct customers such Confidential Information
         relating to Licensed Products as Novartis shall reasonably determine to
         be necessary or useful in order to effectively market and distribute
         Licensed Products.

                        ARTICLE IX - TERM AND TERMINATION

         9.1      TERM.

                  9.1(a) This License Agreement shall take effect as of the
         Effective Date and continue in full force and effect in each country
         throughout the Territory until the date of expiration of the last to
         expire of Noven's Patent Rights in such country or until 10 years from
         the first commercial sale of any Licensed Product in such country,
         whichever is later, on a country-by-country and product-by-product
         basis.

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                  9.1(b) Upon expiration of this License Agreement pursuant to
         this Article 9.1 in any country for a particular Licensed Product,
         Novartis shall have the right to elect to extend this License Agreement
         on terms to be negotiated in good faith taking into account the
         expiration of the applicable patents by giving Noven written notice of
         its intention to do so prior to the end of any such term.

         9.2      TERMINATION.

                  9.2(a) If either Novartis or Noven should fail to discharge
         fully and promptly any of its material obligations under this License
         Agreement, including but not limited to the Supply Agreement attached
         as Exhibit C, and including its obligation to make payments, and should
         such party failing to discharge any of its material obligations fail to
         cure such failure within thirty (30) days in the case of failure to
         make payments or within sixty (60) days for other failures after notice
         in writing thereof by the other party, which period to cure may be
         extended for up to sixty (60) days, upon written request, if such
         additional time is reasonably necessary to effect such cure and
         provided that such party is using diligent effort to pursue such cure,
         this License Agreement can thereupon be terminated at the other party's
         option upon receipt of notice to that effect. Notwithstanding the
         foregoing, if the dispute resolution process in accordance with Article
         12.1 has been initiated, such notice of termination shall not be given
         until the time period for the CEO's of the parties to resolve the
         dispute has expired without the dispute having been resolved.

                  9.2(b) Either party hereto may terminate this License
         Agreement with immediate effect in the event that any proceeding under
         a Bankruptcy Act or any insolvency, receivership or dissolution
         proceeding is filed against the other party and such proceeding is not
         dismissed within sixty (60) days after the filing thereof.

                  9.2(c) Either party may terminate this License Agreement with
         immediate effect with respect to any Licensed Product that is
         permanently and completely withdrawn from all markets in the Territory
         for serious adverse health or safety reasons, as defined in the Safety
         Addendum.

                  9.2(d) For a period of *** from the first commercial sale of
         the Licensed Product in any country of the Territory, Noven may
         terminate if Novartis, its Sublicensees or Affiliates markets, sells,
         or distributes any transdermal product in the Territory that is
         identical or substantially similar to any Licensed Product (hereinafter
         the "Competing Product"), except that, within the European Economic
         Area (hereinafter "EEA"), instead of a right to terminate, Noven has a
         right to convert the license to a non-exclusive license in the EEA and
         to grant licenses relating to the Licensed Products to third parties.
         After a period of *** from the date of first commercial sale of a
         Licensed Product in any country of the Territory not within the EEA,
         Novartis may market, sell or distribute a Competing Product in the
         Territory if ***. After a period of *** from the date of first
         commercial sale of a Licensed Product in any country of the Territory
         within the EEA, Novartis may market, sell or distribute a Competing
         Product in the Territory provided that Noven has a

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         right to convert the license to a non-exclusive license in the EEA and
         to grant licenses relating to the Licensed Products to third parties.
         The foregoing rights of Noven shall not apply ***.

                  9.2(e) Either party shall have the right to terminate this
         License Agreement upon the occurrence of the right to terminate under a
         force majeure event described in Article 13.4.

         9.3      RIGHTS UPON TERMINATION.

                  9.3(a) Upon termination, except if Novartis elects option (i)
         under Article 9.3(d), all information and data relating to any Licensed
         Product including but not limited to Noven's Technology, and
         information obtained from, incorporating or based on Noven's Technology
         shall be returned to Noven. Novartis, its Affiliates and Sublicensees
         shall make no further use of the same. The foregoing shall not apply to
         information solely generated by Novartis, if termination is by Novartis
         for cause of Noven.

                  9.3(b) Upon termination for any reason by either party, with
         the exception of Noven terminating pursuant to Article 9.2(a), if
         Novartis is not using the Licensed Trademark in any country of the
         Territory, then Noven shall re-acquire all rights to the Licensed
         Trademark without compensation to Novartis in the Territory, and
         Novartis shall have no further right to the Licensed Trademark in the
         Territory. Upon termination of this License Agreement by Noven pursuant
         to Article 9.2(a), Noven shall re-acquire all rights to the Licensed
         Trademark irrespective of Novartis using the Licensed Trademark in the
         Territory. If necessary in such event, Novartis shall assign the
         Licensed Trademark to Noven throughout the Territory.

                  9.3(c) Upon expiration of this License Agreement with respect
         to any Licensed Product in any country or termination of this License
         Agreement with respect to any Licensed Product in any country by Noven
         pursuant to Article 9.2, all information and data relating solely to
         such Licensed Product for such country, including but not limited to
         Noven's Technology, and information obtained from, incorporating or
         based on Noven's Technology, shall be returned to Noven, and Novartis,
         its Affiliates and Sublicensees shall make no further use of the same
         with respect to such Licensed Product and such country, and shall (i)
         assign to Noven or its designee all Regulatory Applications and
         Regulatory Approvals relating to such Licensed Product in such country;
         (ii) have no further right or license to Noven's Technology or Noven's
         Patent Rights with respect to such Licensed Product in such country;
         and (iii) reasonably cooperate with Noven in connection with the
         transfer of data, registrations and applications related to such
         Licensed Product in such country.

                  9.3(d) Upon termination of this License Agreement by Novartis
         pursuant to Article 9.2(a) or 9.2(b), Novartis has the option to (i)
         continue using the Licensed Trademark and acquire the right to a
         non-exclusive license to make or have made the Licensed Product under
         Noven's Technology and Noven's Patent Rights under all other

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         terms and conditions of this License Agreement in return for paying ***
         or (ii) return all rights under this License Agreement to Noven in the
         manner described in Article 9.3(c) in exchange for payment by Noven
         ***.

                  9.3(e) Upon expiration or termination of this License
         Agreement, except if Novartis elects option (i) under Article 9.3(d),
         Novartis shall have the right to distribute Licensed Products in its
         inventories or otherwise in its control as of the expiration or
         termination of this License Agreement for a period not to exceed six
         (6) months from such expiration or termination (the "Wind-Down
         Period"), in all cases subject to the payments under Article VI above.

                  9.3(f) Within fifteen (15) days after expiration of the
         Wind-Down Period, Novartis shall destroy all tangible items bearing,
         containing, or contained in, trademarks, marks, trade names, patents,
         copyrights, designs, drawings, formulas or other data, photographs,
         samples, literature and sales and promotional aids of every kind
         relating to the Licensed Products and received from or owned by Noven,
         in its possession or control and provide written certification of such
         destruction, or prepare such tangible items for shipment to Noven, as
         Noven may direct, at Noven's expense. Novartis shall not make or retain
         any copies of any Confidential Information of Noven which may have been
         entrusted to it, except for one copy for archiving purposes. Effective
         upon expiration of the Wind-Down Period, Novartis shall cease to use
         all trademarks and trade names of Noven or reassign the Licensed
         Trademark if this has been assigned to Novartis under Article 3.2
         except as permitted under Article 9.3(g). During the term of this
         Agreement and after any termination or expiration of this Agreement,
         Noven shall have the right to continue to use and disclose for any
         purpose customer lists, customer data and other customer information
         and any and all data relating to the Licensed Products, which is or was
         provided or required to be provided by Novartis to Noven pursuant to
         this License Agreement.

                  9.3(g) Upon expiration of this License Agreement (but not
         termination), (i) if Novartis has not requested Noven to assign the
         Licensed Trademark to Novartis under Article 3.2, then Novartis shall
         have a fully paid-up license to use the Licensed Trademark in the
         Territory solely in connection with the sale of generic versions of
         Licensed Products in the Territory or, (ii) if Novartis has requested
         Noven to assign the Licensed Trademark to Novartis under Article 3.2,
         then Novartis shall be entitled to retain all rights and title to the
         Licensed Trademark following expiration.

                  9.3(h) Articles 2.1(e), 2.1(f), 6.1-6.8, 7.3, 8.1, 9.3,
         10.1-10.7, and 11.1-11.3 and Articles XII and XIII shall survive
         expiration and termination for any reason of this License Agreement,
         and they shall continue in full force and effect. Without limiting the
         preceding sentence, expiration or termination for any reason shall not
         release Novartis from any payment due to Noven pursuant to Article 6.5.

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                             ARTICLE X - WARRANTIES

         10.1 OWNERSHIP. Noven represents and warrants that it has developed and
has the right to license Noven's Technology and that it owns all right, title
and interest in Noven's Patent Rights and in the Licensed Trademarks, as set
forth in Exhibit B.

         10.2 RIGHT TO ENTER AGREEMENT. Noven represents and warrants that it
has the right to enter into this License Agreement, and that there are no
outstanding assignments, grants, licenses, encumbrances, obligations or
agreements, either written, oral or implied, materially inconsistent with this
License Agreement. Noven represents that it does not have actual knowledge of
any valid patents of third parties which would be infringed by the manufacture,
use or sale of any or all of the Licensed Products according to the terms of
this License Agreement.

         10.3 PRODUCT WARRANTY. Noven represents and warrants that Licensed
Products supplied by Noven for sale in any country in the Territory shall
conform with the Standard Specifications and shall be manufactured in a facility
approved for that purpose by the proper authorities of such country to the
extent Novartis specifically notifies Noven of the applicable standards,
specifications, laws and regulations.

         10.4 DISCLAIMER OF TRADEMARK WARRANTIES. NOVEN DISCLAIMS ALL WARRANTIES
OR REPRESENTATIONS OF ANY KIND CONCERNING THE PRESENT RIGHTS, BY REGISTRATION OR
OTHERWISE, TO OR IN THE LICENSED TRADEMARK AND ANY OTHER NAMES, DESIGNS, AND
DISTINGUISHING CHARACTERISTICS OWNED OR CONTROLLED BY IT, AND AS TO THEIR
POSSIBLE CONFLICT WITH NAMES, TRADEMARKS, DESIGNS AND DISTINGUISHING
CHARACTERISTICS OWNED OR REGISTERED BY OTHERS IN THE TERRITORY.

         10.5 NOVARTIS WARRANTIES. Novartis warrants and represents to Noven
that (i) it has the full right and authority to enter into this License
Agreement and grant the rights and licenses granted herein; (ii) it has not
previously granted and will not grant any rights in conflict with the rights and
licenses granted herein; (iii) no action, suit or claim has been initiated or
threatened against Novartis with respect to its right to enter into and perform
obligations under this License Agreement; and (iv) it has not previously
granted, and will not grant during the term of this License Agreement, any
right, license or interest that is in conflict with the rights or licenses
granted under this License Agreement.

         10.6 COMPLIANCE WITH LAWS. Novartis shall comply with all laws
applicable to the storage, handling, marketing, distribution and sale of the
Licensed Products.

         10.7 GENERAL DISCLAIMER OF OTHER WARRANTIES. EXCEPT AS SET FORTH
HEREIN, NO OTHER WARRANTIES, EXPRESS OR IMPLIED, ARE CREATED BY THIS LICENSE
AGREEMENT.

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                          ARTICLE XI - INDEMNIFICATION

         11.1 INDEMNITY. Each party shall indemnify, defend, release and hold
the other party and its affiliates, subsidiaries, successors, officers and
directors harmless against any and all third party claims, suits, actions or
threats of action, liabilities, settlement amounts, expenses or costs, including
without limitation reasonable attorneys' fees and costs, which result from or
arise out of any breach of the representations and warranties of such party set
forth under Article X of this License Agreement except to the extent a loss was
caused by negligence or willful misconduct of the indemnitee.

         11.2 INDEMNITY PROCEDURE. Upon receiving notice of any claim or suit
under Article 11.1 hereof, the indemnified party shall immediately notify the
indemnifying party and shall allow the indemnifying party, its insurer or both
the opportunity to assume direction and control of the defense of such claim,
including without limitation, the settlement thereof at the sole option of the
indemnifying party or its insurer. The indemnified party agrees to cooperate
with the indemnifying party in the conduct of any negotiations, dispute
resolution or litigation of any such claim or suit; and the indemnifying party
shall inform the indemnified party of the progress of the claim or suit at such
times and in such manner as is reasonable under the circumstances.

         11.3 INSURANCE. During the term of this License Agreement and for a
period of three years thereafter, each party shall maintain insurance coverage
of the types and in amounts usually insured by companies of the size and
operating the business conducted by such party, including, without limitation,
such insurance coverage as such party is required to maintain under applicable
law and comprehensive general liability insurance (including product liability)
safeguarding against liability for injuries to persons, including injuries
resulting in death, and damage to property. The insurance policy required
pursuant this Article shall provide that in the event of its cancellation or
nonrenewal, the insurer shall give written notice to the other party at least 30
days prior to the effective date of the cancellation or nonrenewal.

                             ARTICLE XII - DISPUTES

         12.1 DISPUTES. In the event of any controversy or claim arising out of,
relating to or in connection with any provision of this License Agreement, or
the rights or obligations of the parties hereunder, the parties shall try to
settle their differences amicably between themselves. Either party may initiate
such informal dispute resolution by sending written notice of the dispute to the
other party, and within ten (10) days after such notice appropriate
representatives of the parties shall meet for attempted resolution by good faith
negotiations. If such representatives are unable to resolve promptly such
disputed matter, it shall be referred to the Chief Executive Officer of Noven
Pharmaceuticals, Inc. and the Chief Executive Officer of Novartis Pharma AG, or
their respective designees, for discussion and resolution. If such personnel are
unable to resolve such dispute within thirty (30) days of initiating such
negotiations, the parties agree first to try in good faith to settle the dispute
by mediation under the Commercial Mediation Rules of the American Arbitration
Association, before resorting to litigation.

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                          ARTICLE XIII - MISCELLANEOUS

         13.1 RELATIONSHIP OF PARTIES. The parties hereto have the relationship
of independent contractors, and neither party shall enter into any agreements,
understandings or commitments on behalf of the other party without the other
party's express permission in writing.

         13.2 INSPECTION OF FACILITIES. At any time during the term of this
License Agreement and any extension thereof, upon reasonable prior notice and no
more than twice per year, each party may during normal working hours have
employees of its choosing visit and inspect the facilities of the other party
that are used in performing such party's obligations hereunder.

         13.3 ENTIRE AGREEMENT. This License Agreement represents the entire
understanding between the parties with respect to the matters set forth herein
and supersedes any and all previous understandings, both oral and written, with
respect to the subject matter hereof. The terms, conditions and provisions of
this License Agreement shall prevail over any inconsistent statements, terms,
conditions or provisions contained in any document passing between the parties
hereto including, but not limited to, any acknowledgment, confirmation or
notice. This License Agreement may not be amended, supplemented, or otherwise
modified except by an instrument in writing designated as an amendment,
supplement or modification which is signed by both parties hereto.

         13.4 FORCE MAJEURE. If the performance of this License Agreement or any
obligation reasonably related thereto is prevented or hindered, by reason of any
cause beyond the reasonable control of the affected party, including, but not
limited to, fire, flood, riot, strikes or any governmental action, then the
party so affected, upon notice to the other party, shall be excused from such
performance, provided that the party so affected shall use diligent effort to
avoid or remove such cause or causes of non-performance and shall continue to
perform thereunder with the utmost dispatch whenever such cause or causes are
removed. If, as a result of any such action, the performance of this License
Agreement is prevented for a continuous period of one hundred eighty (180) days,
either party shall have the right to terminate this License Agreement as to the
country or countries involved by providing the other party with written notice
of termination.

         13.5 SEVERABILITY. If any provision of this License Agreement shall be
held invalid or unenforceable, such invalidity or unenforceability shall attach
only to such provision and shall not in any manner affect or render invalid or
unenforceable any other severable provision of this License Agreement, and this
License Agreement shall be carried out as if any such invalid or unenforceable
provision were not contained herein.

         13.6 ASSIGNMENT. All of the terms and provisions of this License
Agreement shall be binding upon and inure to the benefit of and be enforceable
by the respective permitted successors and assigns of the parties. This License
Agreement, or any rights thereunder, shall not be sold, assigned, transferred or
encumbered by either party without first obtaining the consent of the other
party in writing, provided that either party may assign or transfer any of its

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rights and obligations to any of its Affiliates and to any successors or assigns
of that part of its business to which the subject matter of this License
Agreement is related.

         13.7 GOVERNING LAW. This License Agreement shall be interpreted in
accordance with and governed by the laws of the State of New York, without
references to the conflict of law rules. Both parties forever waive any defense
or claim that New York law cannot be validly applied to this License Agreement.
The parties hereby agree that, where applicable, the United Nations Convention
on Contracts for the International Sales of Goods shall not apply to this
License Agreement.

         13.8 NOTICES. Any notice or report required or permitted hereunder
shall be given in writing, hand delivered or by registered or certified mail, to
the following addresses:

                  (1)               Noven Pharmaceuticals, Inc.
                                    11960 Southwest 144th Street
                                    Miami, Florida 33186
                                    Attention: President

With a copy to:                     Noven Pharmaceuticals, Inc.
                                    11960 Southwest 144th Street
                                    Miami, Florida 33186
                                    Attention: General Counsel

                  (2)               Novartis Pharma AG
                                    Lichtstrasse 35
                                    CH-4002 Basel, Switzerland
                                    Attention: General Counsel

With a copy to:                     Novartis Pharma AG
                                    Lichtstrasse 35
                                    CH-4002 Basel, Switzerland
                                    Attention: Head BD & L

or to such other address or in care of such other person as hereafter shall be
designated in writing by either party to the other, and shall be deemed to have
been given as of the fifth business day after mailing.

         13.9 COUNTERPARTS. This License Agreement and any amendments may be
executed in one or more counterparts, each of which shall be deemed an original
but all of which together will constitute one and the same instrument.

         13.10 PUBLICITY. Noven and Novartis shall not issue any press release
or other public statement regarding, or disclosing the existence of, this
License Agreement without the prior written consent of the other party;
provided, however, that Noven and Novartis shall not be prevented from complying
with any duty of disclosure it may have pursuant to law or applicable stock
exchange rules.

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         13.11 ENGLISH VERSION. In the event that this License Agreement is
translated into a language other than English, the English version of this
License Agreement shall control all questions of interpretation with respect
thereto.

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         IN WITNESS WHEREOF, the parties hereto have caused this License
Agreement to be executed in duplicate and their seals to be hereunto affixed as
of the day and year first written above.

                                       NOVARTIS PHARMA AG

                                       By: /s/ G. Hazelzet
                                          ------------------------------
                                          G. Hazelzet
                                          Head Licensing Europe
                                          Business Development & Licensing

                                       By: /s/ G. Schelling
                                          ------------------------------
                                          G. Schelling
                                          Legal Counsel

                                       NOVEN PHARMACEUTICALS, INC.

                                       By: /s/ Robert C. Strauss
                                          ------------------------------
                                          Robert C. Strauss
                                          President and Chief Executive Officer

                                       25

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