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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1995
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
AND EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 0-17254
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NOVEN PHARMACEUTICALS, INC.
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(Exact name of registrant as specified in its charter)
Delaware 59-2767632
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
11960 S.W. 144th Street, Miami, Florida 33186
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(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: (305)253-5099
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Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered Pursuant to Section 12(g) of the Act:
Common Stock $.0001 Par Value
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(Title of class)
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Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days.
YES /X/ NO / /
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K (Section 229.405 of this Chapter) is not contained
herein, and will not be contained, to the best of Registrant's knowledge, in
definitive proxy or information statements incorporated by reference in Part
III of this Form 10-K or any amendment to this Form 10-K.
YES / / NO /X/
The aggregate market value of the voting stock held by non-affiliates
of the registrant on March 8, 1996 was $216,447,581, (See definition of
affiliate in Rule 405, 17 CFR 230.405).
As of March 8, 1995, 19,766,666 shares of common stock, $.0001 par
value, were outstanding.
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DOCUMENTS INCORPORATED BY REFERENCE
<TABLE>
<CAPTION>
Incorporated documents
(to the extent indicated herein) Part of Form 10-K
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<S> <C>
Portions of the Definitive Proxy Part III
Statement for the 1996 Annual
Meeting of Shareholders Items 10-13
</TABLE>
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NOVEN PHARMACEUTICALS, INC.
FORM 10-K
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PART I Page
<S> <C>
Item 1. Business................................ 1
Item 2. Properties.............................. 20
Item 3. Legal Proceedings....................... 21
Item 4. Submission of Matters to a Vote
of Security Holders................... 21
PART II
Item 5. Market for Registrant's Common Equity and
Related Stockholder Matters........... 21
Item 6. Selected Financial Data................. 22
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of
Operations............................ 23
Item 8. Financial Statements and Supplementary
Data.................................. 28
Item 9. Changes in and Disagreements with
Accountants on Accounting and
Financial Disclosure.................. 28
PART III (omitted)
PART IV
Item 14. Exhibits, Financial Statement Schedules,
and Reports on Form 8-K............... 28
</TABLE>
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PART I
Item 1. Business
Noven is a leader in developing and manufacturing transdermal drug
delivery systems. These systems utilize an adhesive patch containing
medication which is administered through the skin and into the bloodstream over
an extended period of time. Noven has developed and patented thin, solid
state, multi-laminate transdermal drug delivery systems that have a small
surface area and the adaptability to deliver numerous drug entities. The
Company is developing products for a broad range of applications, including
hormone replacement therapy, dental pain management, cardiovascular disease,
anti-fungal therapy, asthma, anxiety, neurological and musculoskeletal
disorders.
The Company received approval for its transdermal estrogen delivery
system from the United States Food and Drug Administration ("FDA") as well as
from regulatory authorities in twelve European countries, Canada, Australia,
South Africa, Mexico and New Zealand. Presently, Rhone-Poulenc Rorer, Inc.
("RPR") is selling Noven's transdermal estrogen delivery system under the trade
name Menorest in ten foreign countries, including France, Germany and the
United Kingdom. In March 1996, Ciba-Geigy, Inc. ("Ciba") launched the sale of
this product under the trade name Vivelle(TM) in the United States. The
Company's transdermal nitroglycerin system and transoral mucosal dental
anesthetic is under FDA review. The Company also has other products in various
stages of development, including two products in clinical trials. (See
"Products and Technology Under Development", pages 4, 5 and 6). The Company's
new (40,000 + square foot) manufacturing facility has been inspected by the FDA
and final approval is expected.
TRANSDERMAL DRUG DELIVERY
Conventional methods of drug delivery introduce drugs into the
bloodstream either by absorption in the gastrointestinal ("GI") tract following
oral administration or through parenteral (non-oral) administration.
Conventional dosage forms such as tablets, liquids and injections may have
disadvantages in certain patients, including unpredictable blood levels,
difficult or uncomfortable administration, poor compliance and GI side effects.
Transdermal drug delivery systems may offer significant advantages over these
conventional dosage forms, including non-invasive administration, controlled
delivery over an extended period of time, improved
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patient compliance and avoidance of the problems and adverse side-effects
associated with oral and parenteral drug delivery.
Currently, few drugs are marketed in the form of transdermal drug
delivery systems. These drugs include nitroglycerin for the treatment of
angina, scopolamine for motion sickness, estrogen and estrogen/progestogen for
menopausal symptoms and osteoporosis, isosorbide dinitrate for angina,
clonidine for hypertension, nicotine for smoking cessation, fentanyl for pain
management and testosterone for male hypogonadism. Noven believes there are
numerous other drugs which may be suitable for transdermal drug delivery.
The benefits of transdermal drug delivery include:
Improved Dosage Delivery and Control for Maximum Therapeutic Effect
Transdermal drug delivery helps provide patients with a drug's maximum
therapeutic effect and decreases the risk of adverse side effects or diminished
therapeutic effect due to excessive or insufficient blood concentrations. The
therapeutic effect of a drug is typically achieved only when the drug is within
a specific concentration range in the bloodstream. This blood concentration
range is often called the drug's "therapeutic window." Below this range the
drug may be ineffective, and above it the drug may cause unwanted side effects.
Many conventional forms of drug delivery administer higher concentrations than
are required in order to maintain effective blood levels between doses.
However, blood levels often fall below effective concentrations prior to
administration of the next dose. Transdermal drug delivery systems are
designed to maintain a precise and continuous flow of a drug into the
bloodstream. This results in more stable blood concentrations which
consistently remain within a drug's therapeutic window.
In addition, in contrast to oral administration, transdermal drug
delivery can frequently maximize a drug's therapeutic effect by avoiding the GI
tract and "first pass" liver metabolism. Oral drug delivery can often be
unreliable because the achievement of therapeutic blood levels depends on
several factors, including the drug's chemical composition, the patient's
physical condition, chemical and physical reactions between the drug and
substances in the GI tract and the timing of drug administration. Upon GI
tract
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absorption a drug must pass through the liver before entering the bloodstream.
In many instances, the liver metabolizes a large portion of the drug. As a
result, orally dosed drugs must generally be administered at levels which
exceed optimal therapeutic levels, potentially resulting in adverse side
effects.
Improved Patient Compliance and Safety
Transdermal drug delivery systems are capable of conveniently and
consistently delivering drugs over a number of hours or days, thereby
eliminating many of the compliance problems associated with certain
conventional drug delivery regimens. In order to maintain optimal blood
levels, some conventional forms of drug delivery require frequent doses which
can be difficult to remember or understand, particularly for the elderly
patient. Failure to comply with a recommended drug regimen can endanger a
patient's health.
Transdermal drug delivery may also improve the safety of drug
administration. A transdermal drug delivery system can be removed quickly and
easily. If a patient has an adverse reaction to a drug, removing the
transdermal drug delivery system may assist in minimizing the extent of such an
adverse reaction.
Improved Patient Convenience and Reduced Cost
Transdermal drug delivery systems can eliminate the need for the
frequent doses of conventional forms of certain drugs. In addition,
transdermal drug delivery, particularly when compared to invasive forms of drug
delivery, may result in significant savings of cost and time, and may offer
increased patient comfort and convenience.
Pharmaceutical Industry Benefits
In addition to patient, physician and health care provider benefits,
transdermal drug delivery may provide certain economic benefits to the
pharmaceutical industry. Research and development and obtaining FDA approval
for new drugs can take many years and involve the expenditure of substantial
funds. Transdermal drug delivery systems that utilize drugs which have been
previously approved in conventional dosage forms may be commercialized faster,
and with substantially less cost and risk than new chemical
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entities for pharmaceutical applications. Transdermal drug delivery may also
extend the patent life for those drugs which are approaching patent expiration.
Additionally, transdermal drug delivery may expand the market for drugs which
would benefit from the numerous advantages of this form of drug delivery.
Further, transdermal drug delivery may be the only viable dosage form for
certain new chemical entities.
NOVEN'S TRANSDERMAL DRUG DELIVERY TECHNOLOGY
Noven's patented, proprietary transdermal drug delivery systems
incorporate a thin, solid state, multi-laminate construc-tion with a
drug-bearing interpolymeric adhesive. The transdermal drug delivery system, or
patch, has a finite area with a specific geometric shape. On one side the
patch has a release liner that, when removed, exposes a pressure sensitive
adhesive. This adhesive functions as both the drug platform and as the means
of affixing the system to the patient's skin. The outside of the patch is
comprised of a specialized backing material that is specifically tailored to
the drug being delivered and the length of time the system is intended to be
worn. The size of the patch is dependent upon the amount of drug needed by the
patient, and its shape is designed so that the patch can be worn comfortably.
The transdermal drug delivery system is packaged in a pouch designed to
maintain the system's stability and protect against contamination.
Noven's transdermal drug delivery system is capable of being modified
so that it may be used to deliver various drugs. The techniques utilized to
modify the system include those which improve the solubility and diffusibility
of drugs within the transdermal system and those which improve a drug's
percutaneous absorption by changing the skin's ability to retain moisture; by
softening the skin and improving the skin's permeability; by adding compounds
which may act as penetration assistants or hair follicle openers; or by
changing the skin's boundary layer.
PRODUCTS AND TECHNOLOGY UNDER DEVELOPMENT
The following table sets forth information regarding products and
technology under development by the Company and is qualified by reference to
the more detailed descriptions elsewhere in this Form 10-K.
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<TABLE>
<CAPTION>
DRUG/
TECHNOLOGY THERAPEUTIC USES STATUS LICENSEES
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<S> <C> <C> <C>
Hormone
Replacement
Estrogen Menopausal Symptoms FDA approved; Ciba-Geigy--
approved in 17 U.S. & Canada;
foreign countries; RPR--Worldwide,
commercial sales (excluding U.S.
in the United and Canada)
States (commenced
March 1996) and ten
foreign countries;
regulatory filings
in numerous other
foreign countries
Combination Menopausal Symptoms Phase II/III RPR-Worldwide
Estrogen/Pro- Clinical Trials
gestogen
Second Genera- Menopausal Symptoms Development Ciba-Geigy--
tion Estrogen U.S. & Canada;
RPR--Japan
Other Products
Nitroglycerin Angina ANDA filed --
Transoral Dental Anesthetic NDA filed --
Mucosal
Anesthetic
Antifungal Onychomycosis Phase I/II Clinical --
Trials
Alprazolam Anxiety IND filed --
Albuterol Asthma IND filed --
Selegiline Selected Neurological Pre-Clinical --
Disorders
Nicotine Smoking Cessation Pre-Clinical --
Nonsteroidal Arthritis & Soft Pre-Clinical --
Anti-Inflam- Tissue Injuries
matory Drug
Iontophoretic Transdermal Drug Development --
Technology Delivery
</TABLE>
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TRANSDERMAL ESTROGEN DELIVERY SYSTEM
It has been estimated that during the next 50 years the overall
population of the United States will increase by 40%, while the group of
individuals over 65 years old will increase by 160%. Worldwide, the elderly
population is increasing at a rate approximately 50% faster than overall
population growth. It has also been estimated that there are approximately 35
to 40 million post-menopausal women in the U.S. and this group is one of the
fastest growing demographic segments in the nation. With the aging of the
population over the next several decades, conditions and diseases such as
menopause and osteoporosis, which may benefit from hormone replacement therapy,
will become significantly more prevalent.
At the onset of menopause, women lose their ability to produce
estrogen. A diminished estrogen supply in post-menopausal women can cause hot
flashes, insomnia, vaginal atrophy, irritability, anxiety, moodiness and
excessive sweating. Estrogen replacement therapy ("ERT") can reverse or
prevent these serious physical and psychological symptoms. Another condition
related to the inability to produce estrogen is osteoporosis, a progressive
deterioration of the skeletal system through the loss of bone mass. According
to the National Osteoporosis Foundation, osteoporosis currently affects
approximately 25 million people in the U.S. It is estimated that 80% of all hip
fractures in elderly patients are associated with osteoporosis and that nearly
20% of all patients with hip fractures will die from complications within six
months of the event. Numerous medical studies and the National Institutes of
Health recommend ERT as the most effective method of preventing osteoporosis in
post-menopausal women. In addition, a ten year study of approximately 49,000
post-menopausal women, published in The New England Journal of Medicine in
1991, found that women who take estrogen after menopause can reduce their risk
of heart disease by fifty percent.
On October 28, 1994, Noven received full FDA approval for an advanced
transdermal estrogen replacement system which delivers 17-beta estradiol
continuously for 84 hours (3.5 days) in four separate dosages for the treatment
of moderate to severe menopausal symptoms. To date, regulatory authorities in
seventeen foreign countries also issued approval for the transdermal estrogen
replacement system. This product is being sold by RPR in nine
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countries in Europe (including the United Kingdom, Germany and France) and in
Australia under the name Menorest. In March 1996, Ciba-Geigy launched the
commercial sale of Noven's transdermal estrogen replacement system under the
name Vivelle(TM) in the United States. The Company has licensed this product on
a worldwide basis to Ciba-Geigy in the United States and Canada and to RPR in
Europe, Japan and all other territories. This product has also been submitted
for regulatory approval in numerous other foreign countries.
TRANSDERMAL COMBINATION ESTROGEN/PROGESTOGEN DELIVERY SYSTEM
Progestogen is a hormone that is frequently prescribed in conjunction
with estrogen in order to mitigate the potential side effects of unopposed
estrogen replacement therapy. Clinical studies suggest that unopposed estrogen
replacement therapy may increase the risk of uterine cancer. The
adminis-tration of estrogen and progestogen together more closely imitates the
natural female hormonal cycle. Noven's combination estrogen/progestogen
transdermal drug delivery system combines the advantages of both compounds in a
single delivery system. To date, no approved progestogen or combined
estrogen/progestogen transdermal drug delivery systems are available in the
U.S. Phase II/III clinical trials are being conducted by RPR for the
transdermal combination estrogen/progestogen delivery system. The Company has
licensed these products on a worldwide basis to RPR.
TRANSORAL MUCOSAL DENTAL ANESTHETIC DELIVERY SYSTEM
FOR DENTAL PAIN MANAGEMENT
Intraoral injection is often accompanied by significant discomfort or
pain. Therefore, the use of topical anesthetics prior to intraoral injection
is a widely accepted dental practice. Topical agents including gels, ointments
and sprays are used to anesthetize the oral mucosa, but each of these dosage
forms has distinct disadvantages. Sprays, ointments and gels make it difficult
to control the amount of drug applied and to confine the drug to a desired
site, and can become diluted in the oral cavity.
Noven has developed a unique transoral mucosal dental anesthetic
delivery system that can be applied to the oral mucosa and which will be used
for pre-injection numbing. Additional studies will be required for its
application to certain dental
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procedures requiring minor to moderate pain relief such as periodontal
curettage, periodontal scaling and dental cleaning. The transoral mucosal
dental anesthetic may also be used to relieve the pain from oral sores and
lesions. A transoral drug delivery system for dental anesthesia offers several
potential advantages over conventional intraoral injections, including reduced
patient discomfort, improved safety and reduced risk of cross-infection. In
addition, the transoral mucosal dental anesthetic may offer increased
convenience to the dentist and may result in increased patient visits. Noven
completed Phase III clinical trials for its transoral mucosal dental anesthetic
delivery system and an NDA was filed in May 1995.
TRANSDERMAL NITROGLYCERIN DELIVERY SYSTEM FOR
CARDIOVASCULAR DISEASE
Angina pectoris is a condition caused by the temporary inability of
the coronary arteries to supply a sufficient quantity of oxygenated blood to
the heart muscle. An angina attack is accompanied by steady, severe pain and
intense pressure in the region of the heart. Angina attacks may be relieved by
the administration of nitroglycerin, a known coronary vasodilator, which
increases the flow of oxygenated blood to the heart. The American Heart
Association estimates that angina affects over three million people in the
United States.
Nitroglycerin is available in several conventional dosage forms
including sublingual tablets and other oral and topical formulations. Many of
these dosage forms however, have limitations. Therefore, transdermal drug
delivery systems have become a widely used form of nitroglycerin delivery.
First introduced commercially in 1982, transdermal nitroglycerin delivery
systems are currently marketed by several companies. Worldwide sales in 1993
of this product were estimated to be in excess of $500 million.
The Company has developed a transdermal nitroglycerin delivery system
which has all of the attributes of the most advanced systems currently on the
market, such as a small surface area, appropriate adhesive qualities and a
cosmetically attractive appearance. An Abbreviated New Drug Application
("ANDA") was filed with the FDA for this product in 1992. This product is
currently
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under active FDA review. The Company intends to market this product either
independently or with a marketing partner.
TRANSDERMAL ANTIFUNGAL DELIVERY SYSTEM FOR ONYCHOMYCOSIS
Onychomycosis, a nail fungal infection, is the most frequent cause of
nail disease and occurs in approximately 2-5% of the population. Onychomycosis
can result in splitting, thickening, roughness and discoloration of the nail.
This infection can be painful as well as cosmetically unappealing.
Current treatment for onychomycosis includes orally administered
antifungal agents and topical creams and ointments. Many of the oral dosage
forms which are absorbed systemically have been associated with undesirable
side effects. Current topical treatments are limited in effectiveness by
insufficient penetration of the drug into the nail bed.
Noven has developed a transdermal delivery system to treat
onychomycosis. Noven's transdermal antifungal patch may provide enhanced and
convenient delivery, nonsystemic administration and controlled dosing. The
active ingredient for the Company's system is an antifungal agent that has been
approved by the FDA in other dosage forms. The Company is conducting Phase I/II
clinical trials for this product.
TRANSDERMAL ALPRAZOLAM DELIVERY SYSTEM FOR ANXIETY DISORDERS
Anxiety is the most common mental health problem in the United States.
Although some anxiety or tension associated with the stress of everyday life is
normal, anxiety can become disabling when people suffer from excessive or
unrealistic anxiety or worry. Symptoms of a severe anxiety disorder include
trembling, restlessness, shortness of breath, palpitations, nausea and
insomnia. Anxiety is often treated with antianxiety medication and/or
psychotherapy. Alprazolam, which is only available in tablet form, is a mild
anti-anxiety agent used primarily to relieve mild to moderate anxiety and
nervous tension.
Noven has developed a transdermal alprazolam delivery system for the
treatment of anxiety disorders. The transdermal delivery of alprazolam may
provide a more optimal delivery system with dosing intervals of once a day or
longer. An Investigational New
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Drug Application ("IND") was filed for this product with the FDA in December
1993.
TRANSDERMAL ALBUTEROL DELIVERY SYSTEM FOR ASTHMA
Asthma effects approximately 12 million Americans, including four
million children under the age of eighteen. Asthma, which is a chronic
affliction of the bronchial tubes, is often triggered by viral infections,
allergens or pollutants. Symptoms of an asthma attack include forced
breathing, coughing and loss of consciousness. Treatments for asthma include
bronchodilators and anti-inflammatory drugs. Albuterol, which is available in
aerosol, syrup and tablet dosage form, is a commonly prescribed drug for the
treatment of asthma.
Noven has developed a transdermal albuterol delivery system for the
treatment of asthma. Noven believes that the transdermal delivery of albuterol
could improve the overall bioavailability, dosing requirements and patient
compliance when compared to other albuterol products. An IND was filed for
this product with the FDA in December 1993.
PRODUCT FOR SELECT NEUROLOGICAL DISORDERS
Selegiline is a drug currently being marketed by Somerset
Pharmaceuticals, Inc. ("Somerset") as Eldepryl(R) tablets for the treatment of
late stage Parkinson's disease. U.S. sales of Eldepryl(R) in 1994 were
approximately $125 million.
In June, 1994 Noven entered into an agreement with Somerset to develop
and manufacture a transdermal formulation of Selegiline. Although this
agreement concluded in 1995, Noven is continuing to develop this product and
anticipates clinical investigation commencing in 1996.
PRODUCT FOR MUSCULOSKELETAL DISORDERS
NonSteroidal Anti-Inflammatory Drug ("NSAID") for musculoskeletal
disorders are of the most widely prescribed therapies for conditions ranging
from arthritis to soft tissue injuries; some members of the NSAID class are
also available over-the-counter. Although extremely effective, the major
drawback of NSAID is a potential for irritation and even ulceration of the
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stomach lining which can be life-threatening. Transdermal delivery of an NSAID
directly to the affected joint or tissue should prove therapeutically
beneficial with the added advantage of much lower potential for
gastrointestinal side effects.
Noven has developed transdermal systems containing NSAID. These
products are in preclinical testing and an IND is anticipated in 1996.
OTHER PRODUCTS AND TECHNOLOGY
Several other products are in the preliminary stages of pre-clinical
testing and research and development. Noven has developed a second generation
estrogen transdermal delivery system which is one-third the size of the
Company's current transdermal delivery system, and a transdermal nicotine
system for smoking cessation, which is in pre-clinical testing. Products in
the research and development stage include the transoral mucosal system which
incorporate several pharmaceutical compounds (other than anesthetics) for the
treatment of various oral conditions.
Noven is also actively involved in the development of new technologies
in the transdermal drug delivery area, such as iontophoresis. Iontophoresis is
a technique whereby positively or negatively charged drug molecules are driven
by an electric current from a transdermal device through the skin and into the
bloodstream. Certain higher molecular weight drugs, such as those composed of
peptides, may require modification of the barrier properties of the skin in
order to be delivered transdermally. Noven believes its iontophoretic
transdermal drug delivery system may accommodate these higher molecular weight
drugs and may thereby increase the number of drugs suitable for transdermal
delivery, possibly including certain genetically engineered molecules.
MARKETING
Noven is committed to becoming a fully integrated pharmaceutical
company with capabilities for developing, manufacturing and marketing
pharmaceutical products which incorporate alternate drug delivery technologies.
With respect to certain products, however, Noven has entered into and
anticipates that it will enter into license, development and manufacturing
agreements. For the domestic market, prior to expected product
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approvals from the FDA, the Company will evaluate whether to license products
to a larger company with an established sales force or to develop its own
marketing and sales capabilities. The Company's evaluation will be conducted
on an individual product basis and will include consideration of the estimated
costs associated with sales, marketing and distribution. These combined costs
and the Company's financial position will be factored into the decision of
whether to license or directly market the product.
Noven has licensed its transdermal estrogen replacement system
worldwide to two major pharmaceutical companies, Ciba-Geigy and RPR. In
addition, Noven has licensed its transdermal progestogen delivery system and
its transdermal combination estrogen/progestogen delivery system worldwide to
RPR.
The agreement with Ciba-Geigy provides it with the right to market the
transdermal estrogen delivery system in the U.S. and Canada. Ciba-Geigy
will market Noven's system in the U.S. and Canada as Vivelle(TM).
The agreement with RPR provides it with the right to market (i) the
transdermal estrogen delivery system in all territories exclusive of the United
States and Canada and (ii) the transdermal combination estrogen/progestogen
delivery system and transdermal progestogen delivery system worldwide. RPR
will market Noven's transdermal estrogen delivery system as Menorest in its
territory.
The Company is currently examining the possible development of its own
marketing and sales capabilities with respect to the transoral mucosal dental
anesthetic product in the United States.
MANUFACTURING
Noven's original facility in Dade County, which consists of
approximately 18,300 square feet, is fully equipped and has a manufacturing
capacity of approximately 100 million transdermal units per year. This
facility complied with U.S. and European regulatory requirements and has been
inspected by the FDA and the Medicines Control Agency of the United Kingdom.
This facility is used to commercially manufacture Vivelle(TM) and Menorest for
Ciba-Geigy and RPR, respectively. This facility also received a pre-approval
inspection for the manufacture of Noven's transoral
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mucosal dental anesthetic product and its transdermal nitroglycerin product.
Noven's newer 15 acre site in Dade County includes two adjacent
buildings, each with approximately 40,000 square feet. One of the buildings
has been fully renovated and equipped. This facility was inspected and approved
by the Medicines Control Agency of the United Kingdom. The FDA inspected this
facility in late 1995 and full approval is expected. After FDA approval of
this facility, product manufactured on this site can be marketed to the public.
This facility will have a capacity of approximately 400 million transdermal
units per year. It is anticipated that full development of this site,
including possible new construction on the property, can accommodate Noven's
space requirements for its foreseeable long term growth.
Noven has the capacity of designing, developing, building and
maintaining its production equipment, including fabrication of replacement
parts where appropriate. Additionally, Noven's engineering expertise provides
valuable support to its research and development groups by rapidly fabricating
or modifying equipment essential in the product development program.
COMPETITION
Noven's operations are conducted in highly competitive areas. All
transdermal drug delivery products being developed by the Company will face
competition both from conventional forms of drug delivery (i.e., oral and
parenteral), other transdermal products and, possibly, alternate forms of drug
delivery, such as controlled release oral delivery, liposomes and implants.
Noven, therefore, faces potential competition from numerous pharmaceutical
companies, many of which have greater financial resources, technical staffing
and manufacturing and marketing capabilities.
Competition in drug delivery systems is generally based on a company's
marketing strength, product performance characteristics (i.e., reliability,
safety, patient convenience) and product price. Acceptance by physicians and
other health care providers including managed care groups is also critical to
the success of a product. In a highly competitive marketplace and with
evolving technology, there can be no assurances that additional product
introductions or developments by others will not render the Company's products
or
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technologies noncompetitive or obsolete. Noven has attempted to minimize these
risks, however, by its technological innovativeness and by developing strategic
alliances. For example, Noven has aligned itself with two world wide marketing
organizations, Ciba-Geigy and RPR, for marketing its estrogen delivery system
as Vivelle(TM) in the U.S. and Canada and as Menorest elsewhere.
In January 1995, 3M Pharmaceuticals/Drug Delivery Systems and Berlex
Laboratories, Inc. announced the receipt of FDA approval to market Climara(TM),
an estradiol transdermal system, in the United States in two dosage strengths.
Berlex Laboratories, Inc. has U.S. marketing rights for Climara(TM).
Commercial distribution of this transdermal delivery product commenced in the
second quarter of 1995.
To the Company's knowledge, Ciba-Geigy is the leader in marketing
transdermal estrogen replacement products in the U.S. as well as in European
markets. Noven believes that the quality of Vivelle(TM) and the marketing
ability of Ciba-Geigy in the United States will give this product a competitive
advantage in the marketplace. However, it is impossible to predict, at this
time, the market share Noven's product will receive or the effect Climara(TM)
(or other future competing transdermal systems) will have on sales.
Ciba-Geigy and Schering-Plough Corporation dominate the world market
in transdermal nitroglycerin products. Noven believes that other companies,
including Alza Corporation, Cygnus Therapeutic Systems, Elan Corporation, plc,
TheraTech, Inc., Ethical Holdings, plc, Cilag, a division of Johnson & Johnson,
and 3M Corp. are also developing competing transdermal drug delivery products.
PATENTS AND PROPRIETARY RIGHTS
Noven has obtained eleven U.S. patents and has over 100 pending patent
applications worldwide.
The United States has changed its patent laws in fundamental respects
to fulfill certain obligations under the General Agreement on Tariffs and Trade
(GATT) and specifically under the accompanying Agreement on Trade-Related
Aspects of Intellectual Property Law (TRIPs). These changes became law on
December 8, 1994 when President Clinton signed the Uruguay Round Agreements
Act, and took
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effect in their entirety on January 1, 1996. All patent owners, as well as
pending and future patent applications, will be affected. The immediate
consequences to Noven will be that the term for some existing patents will be
reset beyond their current term of 17 years from issue, thereby extending their
potential commercial value. The long term consequences of these changes are,
at this time, unknown.
The Company is unaware of the existence of any challenges to the
validity of its patents or of any claim made by a third-party of patent
infringement with respect to its products. However, no assurance can be given
that such challenges or claims will not be asserted in the future. Although
there is a statutory presumption as to a patent's validity, the issuance of a
patent is not conclusive as to such validity, or as to the enforceable scope of
the claims of the patent. There is no assurance that Noven's patents or any
future patents will prevent other companies from developing similar or
functionally equivalent products. Furthermore, there is no assurance that any
of the Company's future processes or products will be patentable, that any
pending or additional patents will be issued in any or all appropriate
jurisdictions or that Noven's processes or products will not infringe upon the
patents of third parties.
None of the drug chemical entities Noven uses for the products now in
clinical trials are patented in the U.S. However, some of the drugs which may
be incorporated in the Company's future products may be patented by others.
Therefore, the ability of Noven to market such products prior to the expiration
of such patents may depend, among other things, upon its ability to enter into
arrangements with the holders of such patents.
Noven also attempts to protect its proprietary information under trade
secret laws. Generally, Noven's agreements with each employee, licensing
partner, consultant, university, pharmaceutical company and agent contain
provisions designed to protect the confidentiality of its proprietary
information. There can be no assurance that these agreements will not be
breached, that the Company will have adequate legal remedies as a result
thereof, or that the Company's trade secrets will not otherwise become known or
be independently developed by others.
15
<PAGE> 20
GOVERNMENT REGULATION
United States
The marketing of pharmaceutical products requires the approval of the
FDA in the U.S. The FDA has established regulations, guidelines and safety
standards which apply to the pre-clinical evaluation, clinical testing,
manufacturing and marketing of pharmaceutical products. The process of
obtaining FDA approval for a new product may take several years and is likely
to involve the expenditure of substantial resources. The steps required before
a product can be produced and marketed for human use include: (i) pre-clinical
studies; (ii) submission to the FDA of an IND, which must become effective
before human clinical trials may commence in the U.S.; (iii) adequate and well
controlled human clinical trials; (iv) submission to the FDA of an NDA or, in
some cases, an ANDA; and (v) review and approval of the NDA or an ANDA by the
FDA.
An ANDA may be submitted for products that have the same active
ingredient(s), indication, route of administration, dosage form and dosage
strength as an existing FDA-approved product, if clinical studies have
demonstrated bio-equivalence of the new product to the FDA-approved product.
An NDA generally is required for products with new active ingredients,
new indications, new routes of administration, new dosage forms or new
strengths. An NDA requires that complete clinical studies of a product's
safety and efficacy be submitted to the FDA, the cost of which is substantial.
For products in this category, limited testing may begin on humans after
submission and approval of the IND.
Pre-clinical studies are conducted to obtain preliminary information
on a product's efficacy and safety. The results of these studies are submitted
to the FDA as part of the IND and are reviewed by the FDA before human clinical
trials begin. Human clinical trials may commence 30 days after receipt of the
IND by the FDA, unless the FDA objects to the commencement of clinical trials.
16
<PAGE> 21
Human clinical trials are typically conducted in three sequential
phases, but the phases may overlap. Phase I trials consist of testing the
product primarily for safety in a small number of patients at one or more
doses. In Phase II trials, the safety and efficacy of the product are
evaluated in a patient population somewhat larger than the Phase I trials.
Phase III trials typically involve additional testing for safety and clinical
efficacy in an expanded population at different test sites. A clinical plan,
or protocol, accompanied by the approval of the institution participating in
the trials, must be reviewed by the FDA prior to commencement of each phase of
the clinical trials. The FDA may order the temporary or permanent
discontinuation of a clinical trial at any time.
The results of product development and pre-clinical and clinical
studies are submitted to the FDA as an NDA or an ANDA for approval. If an
application is submitted, there can be no assurance that the FDA will review
and approve the NDA or an ANDA in a timely manner. The FDA may deny an NDA or
an ANDA if applicable regulatory criteria are not satisfied or it may require
additional clinical testing. Even if such data is submitted, the FDA may
ultimately deny approval of the product. Further, if there are any
modifications to the drug, including changes in indication, manufacturing
process, labeling, or a change in a manufacturing facility, an NDA or an ANDA
supplement may be required to be submitted to the FDA. Product approvals may
be withdrawn after the product reaches the market if compliance with regulatory
standards is not maintained or if problems occur regarding the safety or
efficacy of the product. The FDA may require testing and surveillance programs
to monitor the effect of products which have been commercialized, and has the
power to prevent or limit further marketing of these products based on the
results of these post-marketing programs.
The Prescription Drug User Fee Act of 1992 (the "Fee Act") authorized
the FDA to collect three types of fees from prescription drug manufacturers:
(1) one-time application fees imposed upon submission to the FDA for approval,
(2) establishment fees, and (3) product fees which are imposed annually.
Payment of application fees are required for each human drug application
including an NDA, certain ANDAs, certain initial certification/approval of
certain antibiotic drugs, and licensure under the Public Health Service Act of
certain biological products. The Fee Act also mandates a fee on
17
<PAGE> 22
supplements (containing clinical data) to human drug applications. The amount
of the fee is dependent on whether the application is accompanied by clinical
data on safety and efficacy (other than bioavailability or bioequivalence
studies). For 1996, the estimated application fee for human drug applications
is $204,000, while applications without clinical data and supplements with
clinical data are one-half of that fee. Payment of establishment fees are
required for prescription drug establishments at which at least one
prescription drug product is manufactured. For 1996, the estimated
establishment fee is $135,300. Payment of product fees are required for each
strength and dosage form of an approved prescription drug product, and are
estimated for 1996 at $12,500. The Fee Act provides for fee exceptions,
waivers and reductions, including payment deferrals under certain
circumstances, primarily for the benefit of small businesses. While Noven will
endeavor to request such fee exceptions, waivers and reductions where it
believes it can demonstrate eligibility, there is no assurance that the FDA
will grant any such request.
Foreign and domestic manufacturing facilities are subject to periodic
inspections for compliance with the FDA's GMP regulations and each domestic
drug manufacturing facility must be registered with the FDA. In complying with
standards set forth in these regulations, manufacturers must continue to expend
time, money and effort in the area of quality control to insure full technical
compliance. Facilities handling controlled substances, such as Noven, must be
licensed by the U.S. Drug Enforcement Administration ("DEA"). The Company has
produced transdermal drug delivery products in accordance with the FDA's GMP
regulations for clinical trials, manufacturing process validation studies and
commercial manufacture.
Noven's activities may also be subject to various federal, state and
local laws and regulations regarding occupational safety, laboratory practices,
environmental protection and hazardous substance control, and may be subject to
other present and possible future local, state, federal and foreign
regulations. Under certain of these laws, Noven could be liable for
substantial costs and penalties in the event that waste is disposed of
improperly. Noven utilizes two waste management firms to provide for proper
disposal of hazardous waste. The Company believes that its hazardous waste
disposal procedure prevents improper disposal.
18
<PAGE> 23
Foreign
Noven intends to have its products marketed in certain foreign
countries. Therefore, approval by these countries' regulatory authorities must
be obtained. The approval procedures vary from country to country, and the
time required for approval may be longer or shorter than that required for FDA
approval. Even after foreign approvals are obtained, further delays may be
encountered before products may be marketed. For example, many countries
require additional governmental approval for price reimbursement under national
health insurance systems. Such approval can be critical to any extensive
marketing of drug products in such countries. If practical and acceptable to
the FDA, Noven intends to design its FDA protocols for the clinical studies of
its products to permit acceptance of the data by foreign regulatory authorities
and to thereby reduce the risk of duplication of clinical studies. However,
additional studies may be required to obtain foreign regulatory approval.
Further, some foreign regulatory agencies may require additional studies
involving patients located in their countries.
As a result of the enactment of the Drug Export Amendments Act of
1986, a drug not yet approved in the United States, but for which an IND
exemption for human testing has been obtained and for which FDA approval is
being actively pursued, may be exported to certain foreign markets as long as
the product: (i) is approved by the importing nation; (ii) is labeled for
export and (iii) is approved for export by the FDA. However, because numerous
restrictions and reporting requirements are imposed under this law, the cost of
exporting such products can be expected to exceed the costs of exporting
products that have been approved for sale in the United States.
EMPLOYMENT
The Company employs two hundred and twenty-six people; approximately
one hundred and twenty-eight are engaged in process development and
manufacturing, thirty in research and development, fifty four in medical
affairs studies, regulatory affairs, quality assurance and quality control and
fourteen in administration. Most of the Company's scientific and engineering
employees have had
19
<PAGE> 24
prior experience with pharmaceutical or medical product companies. No employee
is represented by a union and Noven has never experienced a work stoppage. The
Company believes its employee relations are excellent.
INSURANCE
The Company has procured general liability insurance, in an amount of
$8,000,000 per incident and $9,000,000 in the aggregate per annum. This policy
provides coverage on an occurrence basis and is subject to annual renewal. The
Company has also procured product liability insurance in an amount of $12
million per incident and $12 million in the aggregate per annum. This policy
provides coverage on a claims made basis and is subject to annual renewal. No
assurance can be given that the coverage limits will be adequate.
Item 2. Properties.
The Company owns a 20,000+ square foot building which is used for
laboratory, engineering, office and administrative purposes on one and one-half
acres. The Company also owns 9.5 acres of vacant land that could accommodate
160,000+ square feet of new buildings for a variety of manufacturing,
warehousing and developmental purposes. RPR owns, on a contiguous site, two
existing buildings of approximately 80,000+ square feet on four acres. One of
the buildings is being used by Noven for manufacturing purposes. The other
building is presently utilized for engineering. The RPR facility is leased to
the Company for a term of 31.5 years on favorable terms. The lease grants
Noven a purchase option. RPR may terminate the lease prior to the expiration
of its term upon termination or expiration of the license agreement entered
into in June 1992. These facilities, it is believed, will provide sufficient
space for the Company's projected growth in the foreseeable future.
The Company leases real property at 13300 Southwest 128th Street,
Miami, Florida, under standard leases expiring on December 31, 1996 with
various option periods. The aggregate annual rental under these leases is
approximately $128,000 per year, subject to certain adjustments. Of the
approximately 18,000 square feet under lease at this location, approximately
16,000 square feet is
20
<PAGE> 25
used for manufacturing, packaging and a laboratory, and approximately 2,000
square feet is used for a warehouse.
The Company believes that its existing properties are well maintained
and in good operating condition and that there is no excessive obsolescence.
Item 3. Legal Proceedings.
The Company is not a party to any legal proceedings and to the
knowledge of the Company, none are threatened.
Item 4. Submission of Matters to a Vote of Security Holders.
The Company did not submit any matters to a vote of stockholders
during the fourth quarter of the fiscal year ended December 31, 1995.
PART II
Item 5. Market for Common Equity and Related Stockholder Matters.
(a) Market Information
The following table sets forth, for the periods indicated, the
high and low sale prices for the Common Stock as reported on the
Nasdaq National Market.
<TABLE>
<CAPTION>
High Price Low Price
---------- ---------
<S> <C> <C>
First Quarter, 1994 19 1/4 13 1/8
Second Quarter, 1994 17 3/4 12 3/4
Third Quarter, 1994 15 1/2 10 1/4
Fourth Quarter, 1994 16 3/4 11 1/8
First Quarter, 1995 12 3/8 6 1/2
Second Quarter, 1995 9 1/8 6 3/4
Third Quarter, 1995 11 7
Fourth Quarter, 1995 11 1/2 8 1/4
</TABLE>
(b) Holders.
As of December 31, 1995, the number of stockholders of record was 693
and the approximate number of beneficial owners was 6,000.
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<PAGE> 26
(c) Dividends.
The Company has never paid a cash dividend on its Common Stock,
intends to retain all earnings for the operation and expansion of its business
and does not anticipate paying cash dividends in the future. Any future
declaration and payment of dividends will be determined by the Board of
Directors in light of conditions then existing, including the Company's
earnings, financial condition, capital requirements, as well as such other
factors as the Company's Board of Directors may consider.
Item 6. Selected Financial Data.
SELECTED FINANCIAL DATA
The selected financial data presented below are derived from the
financial statements of the Company. The financial statements for the years
ended December 31, 1993, 1994 and 1995 and the reports thereon, are included
elsewhere in this Form 10-K. The selected financial data as of December 31,
1991 and 1992 are derived from financial statements previously filed with the
Commission and not included in this Form 10-K. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and Financial
Statements.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------------
1991 1992 1993 1994 1995
---- ---- ---- ---- ----
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
STATEMENT OF
OPERATIONS DATA:
Revenues:
Product Sales $ -- $ -- $ -- $ 295 $ 8,747
License revenue 139 1,927 3,125 4,155 1,703
Interest income 60 803 624 1,214 1,682
Other income -- 192 345 381 52
------- ------- ------- ------- -------
Total 199 2,922 4,094 6,045 12,184
Expenses:
Cost of products
sold -- -- -- 148 4,814
</TABLE>
22
<PAGE> 27
<TABLE>
<S> <C> <C> <C> <C>
Research and
development 2,164 4,127 5,161 8,036 10,509
General and
administrative 1,133 1,836 2,244 2,805 3,442
----- ----- ----- ----- -----
Total 3,297 5,963 7,405 10,989 18,765
Net loss $(3,098) $(3,041) $(3,311) $(4,944) $(6,581)
======= ======== ======== ======= =======
Net loss per share $ (.02) $ (.25) $ (.21) $ (.28) (.34)
======== ======= ======== ======= =======
Weighted average
shares of common
stock and common
stock equivalents 12,246 14,761 15,925 17,440 19,237
</TABLE>
<TABLE>
<CAPTION>
AT DECEMBER 31,
-----------------------------------------------------------------------
1991 1992 1993 1994 1995
---- ---- ---- ---- ----
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital $ 1,946 $ 20,781 $ 14,822 $ 35,047 $ 27,560
Total assets 3,534 23,289 29,860 54,365 48,646
Long-term obligations -- -- -- ----
Accumulated deficit (4,186) (7,228) (10,539) (15,483) (22,063)
Total stockholders'
equity 1,562 20,740 20,693 44,546 38,030
</TABLE>
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
General
Since commencing operations in 1987, the Company has been engaged
primarily in the research and development of transdermal drug delivery systems.
The Company's revenues have been generated principally by license fees,
milestone payments pursuant to various license agreements and interest. A
significant portion of revenues in 1995, however, is attributable to the
purchase by the Company's licensee partners of transdermal estrogen delivery
systems for commercial sale in Europe and in anticipation of that product's
commercial launch in the United States.
23
<PAGE> 28
To date, the Company's product development efforts have been
undertaken independently and pursuant to license agreements with Rhone-Poulenc
Rorer, Inc. and/or its affiliates ("RPR") and Ciba-Geigy Corporation
("Ciba-Geigy"). Under these agreements a license fee was paid upon execution.
All of the agreements provided for the payment of monthly development fees or
cost reimbursements for product development and/or milestone payments upon
achieving certain technical and regulatory goals.
The Company's results of operations vary significantly from quarter to
quarter and depend, among other factors, on the commercial sale of its
products, execution of new product development agreements, the timing of fees
and milestone payments made by its licensees, the progress of clinical trials
conducted by the Company and/or its licensees and costs associated with the
development of the Company's products. The timing of the Company's revenue may
not match the timing of the Company's associated product development expenses
for any particular period.
RESULTS OF OPERATIONS
1995 Compared to 1994
Total revenues increased approximately 100% from approximately
$6,045,000 in 1994 to approximately $12,184,000 in 1995. The increase in
revenues during 1995 was primarily a result of the increase in product sales of
the Company' transdermal estrogen delivery system to its licensee partners from
$295,000 in 1994 to $8,748,000 in 1995. Royalties for product sold to one
licensee will be recognized after the product is launched. License revenues
decreased approximately 60% from approximately $4,155,000 in 1994 to
approximately $1,703,000 in 1995. The Company believes that license revenues
will fluctuate from period to period depending on contributing factors which
include, but are not limited to, future success in finalizing new collaborative
agreements, timely achievement of milestones and strategic decisions on
self-funding certain projects. Interest income increased approximately 39%
from approximately $1,214,000 in 1994 to $1,682,000 in 1995 primarily as a
result of the investment of the proceeds of the 1994 public offering of common
stock.
Cost of product sold increased from approximately $148,000 in 1994 to
approximately $4,814,000 in 1995. The gross margin
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<PAGE> 29
percentage was 50% in 1994 and 45% in 1995. These manufacturing costs and
attendant gross margins were primarily attributable to expenses incurred in the
early stages of manufacturing the transdermal estrogen delivery systems.
Research and development expenses increased approximately 31% from
approximately $8,036,000 in 1994 to approximately $10,509,000 in 1995. The
increase in research and development expenses was attributable to new product
development, manufacturing process engineering and development costs,
preproduction start-up expense and the hiring of additional staff for new and
existing programs. New product development included the transoral dental
anesthetic systems and the transdermal estrogen/progestogen combination
delivery system. Preproduction start-up includes the costs associated with
staffing, obtaining regulatory approvals and preparing for product
commercialization. General and administrative expenses increased approximately
23% from approximately $2,805,000 in 1994 to approximately $3,442,000 in 1995
primarily because of increases in staffing, recruiting expenses and
professional fees.
1994 Compared to 1993
Total revenues increased from $4,094,000 in 1993 to $6,045,000 in
1994. The Company's license revenue increased approximately $1 million or 33%
in 1994 from 1993 due to certain milestone payments. The increase in interest
income of approximately $600,000 or 95% in 1994 was attributable to the
investment of the proceeds of the June 1994 public offering of common stock.
Research and development expenses increased approximately $2,900,000
or 56% due to research activities related to new products such as the
transoral dental anesthetic system, the transdermal estrogen/progestogen
combination delivery system, and the transdermal antifungal delivery system,
among others. The increase in research and development expenses was also
attributable to increases in the number of research, development, clinical and
regulatory personnel, and preproduction expenses relating to the launch of the
estradiol product including materials used in preproduction and training runs
to test and validate manufacturing equipment and processes. The increase in
general and
25
<PAGE> 30
administrative expenses of approximately $560,000 or 25% was primarily due to
increases in staffing.
LIQUIDITY AND CAPITAL RESOURCES
The Company has historically financed its operations through public
offerings of common stock, including the exercise of warrants issued in
connection with the first such offering, private placements of its equity
securities, license and contract revenues, interest income and during the 1995
calendar year, through the sale of product. From its inception through
December 31, 1995, the Company received net proceeds of approximately
$56,000,000 from the sale of equity securities, approximately $14,000,000 from
license agreements, approximately $5,000,000 from interest income and
approximately $9,000,000 from product sales. At the end of December 31, 1995
the Company had approximately $24,000,000 in cash and securities held to
maturity.
The decrease in cash, cash equivalents and securities held to maturity
of $11,503,000 during 1995 primarily reflects the funding of a net loss of
$6,581,000, an increase in inventory of $3,805,000, an increase in accounts
receivable of $1,800,000 to support the worldwide launch of the transdermal
estrogen replacement system and a $1,838,000 investment in property and
equipment. As of December 31, 1995 the Company had no significant commitments
for capital expenditures.
The Company's future capital requirements depend upon numerous
factors, including (i) the progress of its product development programs, (ii)
the time required to obtain government regulatory approvals of products in
development, (iii) the resources that the Company devotes to the development of
self-funded products, proprietary manufacturing methods, advanced technologies
and a marketing and sales administration infrastructure, (iv) the ability of
the Company to obtain additional license agreements and to manufacture products
pursuant to those agreements and (v) the demand for its products, if and when
approved by regulatory authorities.
The Company expects to incur additional costs related to product
development activities, increased general and administrative expenses and the
completion of its manufacturing facilities. Although the Company believes
that existing cash,
26
<PAGE> 31
cash equivalents and securities held to maturity, anticipated contract and
manufacturing revenues, will be adequate for the foreseeable future,
circumstances could arise which may result in a desire to raise additional
capital. There can be no assurance that such capital will be available on
acceptable terms, or at all.
NEW ACCOUNTING STANDARDS
In March 1995, the Financial Accounting Standards Board ("FASB")
issued SFAS No. 121 "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed of". SFAS No. 121 establishes accounting
standards for long-lived assets, certain identifiable intangibles, and goodwill
related to those assets to be held and used and for long-lived assets and
certain identifiable intangibles to be disposed of. SFAS No. 121 requires that
long-lived asets and certain identifiable intangibles to be held and used by
an entity be reviewed for impairment whenever events or changes in
circumstances indicated that the carrying amount of an asset may not be
recoverable. SFAS No. 121 will apply to Noven for the year ended December 31,
1996. Management believes that the adoption of this statement will not have a
material impact on Noven's financial statements.
The FASB has also issued SFAS No. 123, "Accounting for Stock-Based
Compensation". This statement defines a fair value based method of accounting
for an employee stock option. This statement also permits a company to
continue to measure compensation costs for their stock option plan using the
intrinsic value based method of accounting prescribed by Accounting Principles
Board ("APB") Opinion No. 25, "Accounting for Stock Issued to Employees". SFAS
No. 123 requires disclosure of the pro forma net income and earnings per share
that would be recorded if the fair value method was utilized. Noven plans to
continue to utilize the provisions of APB 25 to account for such compensation
costs, and will provide the pro forma disclosures required by SFAS 123 in its
1996 financial statements.
27
<PAGE> 32
Item 8. Financial Statements and Supplementary Data
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
REPORT OF INDEPENDENT AUDITORS'
Deloitte & Touche LLP F-1
FINANCIAL STATEMENTS
Balance Sheets as of December 31, 1995 and 1994 F-2
Statements of Operations for the years ended
December 31, 1995, 1994 and 1993 F-3
Statements of Stockholders' Equity for the years
ended December 31, 1995, 1994 and 1993 F-4
Statements of Cash Flows for the years ended
December 31, 1995, 1994 and 1993 F-5
Notes to Financial Statements F-6
</TABLE>
Item 9. Changes in and Disagreements With Accountants
on Accounting and Financial Disclosure
Not applicable
PART III
Omitted pursuant to General Instruction G(3) to Form 10-K
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form
8-K
(a) 1. Financial Statements included in Part II of this Report.
2. Exhibits
28
<PAGE> 33
Exhibit
Number Description of Document
- ------ -----------------------
3.1 --Certificate of Incorporation of the Registrant dated April
10, 1987 and January 28, 1987, incorporated by reference to
Exhibit 3(a) of Registration Statement on Form S-18
(Commission File No. 33-20331-A).
3.2 --Amendments to Certificate of Incorporation of the Registrant
dated April 10, 1987 and January 28, 1988, incorporated by
reference to Exhibit 3(b) of Registration Statement on Form
S-18 (Commission File No. 33-20331-A).
3.3 --Amendment to Certificate of Incorporation of the Registrant
dated June 21, 1991, incorporated by reference to Exhibit 3.3
of Registration Statement on Form S-2 (Commission File No.
33-45784).
3.4 --Amendment to Certificate of Incorporation of the Registrant
dated August 17, 1992, incorporated by reference to Exhibit
3.4 of Form 10-K filed with the Securities and Exchange
Commission on March 31, 1994.
3.5 --By-laws of the Registrant, as amended and restated as of
April 28, 1992, incorporated by reference to Exhibit 3.5 of
Form 10-K filed with the Securities and Exchange Commission on
March 31, 1994.
3.6 --Amendment to Certificate of Incorporation of the Registrant
dated August 2, 1994 incorporated by reference to Exhibit 3.6
of Form 10-K filed with the Securities and Exchange Commission
on March 31, 1995.
10.2 --Agreement between the Registrant and Rorer Group, Inc. (now
known as Rhone-Poulenc Rorer, Inc.) dated April 27, 1989 (with
certain provisions omitted pursuant to Rule 24b-2), as amended
on June 22, 1990 (with certain provisions omitted pursuant to
Rule 24b-2).
10.3 --Amended and Restated Stock Option Plan of the Registrant,
incorporated by reference to Exhibit 10.10 of Form 10-K for
the year ended December 31, 1990 filed with
29
<PAGE> 34
the Securities and Exchange Commission on March 28, 1991, as
further amended on June 23, 1992 and incorporated by reference
to the 1992 Proxy Statement filed with the Securities and
Exchange Commission on April 30, 1992.
10.5 --Parkside Plaza Office Lease between Maxine Chin and the
Registrant dated April 1, 1991.
10.6 --Parkside Plaza Office Lease between James W. Keen and the
Registrant dated July 2, 1992.
10.7 --Parkside Plaza Office Lease between Mark Rubino and the
Registrant dated November 28, 1990.
10.8 --Parkside Plaza Office Lease between Bud Eiskant and the
Registrant dated June 1, 1990.
10.9 --License Agreement between the Registrant and Ciba-Geigy
Corporation dated November 15, 1991 (with certain provisions
omitted pursuant to Rule 406) incorporated by reference to
Exhibit 10.9 of Amendment No. 1 to Registration Statement on
Form S-2 (Commission File No. 33-45784).
10.12 --Warrant and Warrant Agreement between the Registrant and
Ciba-Geigy Corporation dated November 15, 1991, incorporated
by reference to Exhibit 10.12 of Registration Statement on
Form S-2 (Commission File No. 33-45784).
10.13 --License Agreement and Supply Agreement between the
Registrant and Rhone-Poulenc Rorer Pharmaceuticals Inc. dated
June 26, 1992 (with certain provisions omitted pursuant to
Rule 24b-2), incorporated by reference to Exhibit 10.13 of
Form 10-K for the year ended December 31, 1992, filed with
the Securities and Exchange Commission on March 31, 1993.
10.14 --Warrant and Warrant Agreement between the Registrant and
Rhone-Poulenc Rorer Pharmaceuticals Inc. dated June 26, 1992,
incorporated by reference to Exhibit 10.14 of Form 10-K for
the year ended December 31, 1992, filed
30
<PAGE> 35
with the Securities and Exchange Commission on March 31, 1993.
10.15 --Parkside Plaza Office Lease between Scott E. Stuckey and
Annamarie Stuckey and Registrant dated July 27, 1992,
incorporated by reference to Exhibit 10.15 of Form 10-K for
the year ended December 31, 1992, filed with the Securities
and Exchange Commission on March 31, 1993.
10.16 --Parkside Plaza Office Lease between Lawrence T. Deddy,
Trustee and the Registrant dated July 29, 1992, incorporated
by reference to Exhibit 10.16 of Form 10-K for the year ended
December 31, 1992, filed with the Securities and Exchange
Commission on March 31, 1993.
10.17 --Agreement between the Registrant and Turnpike-McNeil
Development Limited dated January 29, 1993 (re: real
property), incorporated by reference to Exhibit 10.17 of Form
10-K for the year ended December 31, 1992, filed with the
Securities and Exchange Commission on March 31, 1993.
10.18 --Agreement between the Registrant and Turnpike-McNeil
Development Limited dated January 29, 1993 (re: real property
and building), incorporated by reference to Exhibit 10.18 of
Form 10-K for the year ended December 31, 1992, filed with the
Securities and Exchange Commission on March 31, 1993.
10.19 --Warrant issued to Ciba-Geigy Corporation dated April 1,
1993, incorporated by reference to Exhibit 10.19 of Form 10-K
for the year ended December 31, 1993, filed with the
Securities and Exchange Commission on March 31, 1994.
10.20 --Industrial Lease between Rhone-Poulenc Rorer Pharmaceuticals
Inc. and the Registrant dated March 23, 1993 and effective
February 16, 1993 (with certain provisions omitted pursuant to
Rule 24b-2), incorporated by reference to Exhibit 10.20 of
Form 10-K for the year ended December 31, 1993, filed with the
Securities and Exchange Commission on March 31, 1994.
31
<PAGE> 36
10.21 --Second Amendment dated May 13, 1993 to Agreement between the
Registrant and Rhone-Poulenc Rorer, Inc. (successor to Rorer
Group, Inc.) dated April 27, 1989 (with certain provisions
omitted pursuant to Rule 24b-2), incorporated by reference to
Exhibit 10.21 of Form 10-K for the year ended December 31,
1993, filed with the Securities and Exchange Commission on
March 31, 1994.
10.22 --Amendment dated May 17, 1994 to Warrant dated November 15,
1991 issued to Ciba-Geigy Corporation incorporated by
reference to Exhibit 10.22 of Form 10-K filed with the
Securities and Exchange Commission on March 31, 1995.
10.23 --Warrant issued to Ciba-Geigy Corporation dated November 28,
1994 incorporated by reference to Exhibit 10.23 of Form 10-K
filed with the Securities and Exchange Commission on March 31,
1995.
10.24 --Employment Agreement between Steven Sablotsky and the
Registrant dated December 31, 1994 incorporated by reference
to Exhibit 10.24 of Form 10-K filed with the Securities and
Exchange Commission on March 31, 1995.
10.25 --Employment Agreement between Mitchell Goldberg and the
Registrant dated December 31, 1994 incorporated by reference
to Exhibit 10.25 of Form 10-K filed with the Securities and
Exchange Commission on March 31, 1995.
10.26 --Employment Agreement between Colin A. Norris and the
Registrant dated February 1, 1995.
(b) Reports on Form 8-K - None
32
<PAGE> 37
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
Date: March 29, 1996 NOVEN PHARMACEUTICALS, INC.
By:/s/ Steven Sablotsky
---------------------------
STEVEN SABLOTSKY, Chairman
of the Board and President
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
By: /s/ Steven Sablotsky Principal Executive March 29, 1996
---------------------- Officer and Director
Steven Sablotsky
(Chairman of the
Board and President)
By: /s/ William A. Pecora Principal Financial March 29, 1996
---------------------- and Accounting Officer
William A. Pecora
(Chief Financial
Officer)
By: Director March , 1996
----------------------
Mitchell Goldberg
(Executive Vice
President)
</TABLE>
33
<PAGE> 38
<TABLE>
<S> <C> <C>
By:/s/ Sheldon H. Becher Director March 29, 1996
----------------------
Sheldon H. Becher
By: /s/ Sidney Braginsky Director March 29, 1996
----------------------
Sidney Braginsky
By: /s/ Lawrence J. Dubow Director March 29, 1996
----------------------
Lawrence J. Dubow
</TABLE>
34
<PAGE> 39
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders
of Noven Pharmaceuticals, Inc.:
We have audited the accompanying balance sheets of Noven Pharmaceuticals, Inc.
("Noven") as of December 31, 1995 and 1994, and the related statements of
operations, stockholders' equity, and cash flows for each of the three years
ended December 31, 1995. These financial statements are the responsibility of
Noven's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of Noven Pharmaceuticals, Inc. as of December
31, 1995 and 1994, and the results of its operations and its cash flows for
each of the three years ended December 31, 1995, in conformity with generally
accepted accounting principles.
Deloitte & Touche LLP
Miami, Florida
February 16, 1996
F-1
<PAGE> 40
NOVEN PHARMACEUTICALS, INC.
<TABLE>
<CAPTION>
BALANCE SHEETS
DECEMBER 31, 1995 AND 1994
- -----------------------------------------------------------------------------------------------------------
ASSETS 1995 1994
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 16,131,263 $ 12,070,272
Securities held to maturity 7,881,397 23,445,070
Accounts receivable 2,512,561 712,455
Inventories 5,069,946 1,264,553
Prepaid and other current assets 258,220 825,159
------------- -------------
Total current assets 31,853,387 38,317,509
------------- -------------
PROPERTY AND EQUIPMENT:
Property and equipment, at cost 17,506,935 16,098,902
Less: accumulated depreciation and amortization 1,974,138 1,076,379
------------- -------------
Total net property and equipment 15,532,797 15,022,523
------------- -------------
OTHER ASSETS:
Patent development costs, net 1,218,630 979,201
Deposits and other assets 40,738 45,394
------------- -------------
Total other assets 1,259,368 1,024,595
------------- -------------
TOTAL $ 48,645,552 $ 54,364,627
------------- -------------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued liabilities $ 4,293,185 $ 3,270,657
------------- -------------
DEFERRED LICENSE REVENUE 6,322,011 6,548,007
------------- -------------
COMMITMENTS AND CONTINGENCIES (Note 4)
STOCKHOLDERS' EQUITY:
Preferred stock - authorized 100,000 shares of
$.01 par value; no shares issued or outstanding
Common stock - authorized 30,000,000 shares
of $.0001 par value; issued and outstanding
19,674,144 shares in 1995 and 18,839,068 in 1994 1,967 1,884
Additional paid-in capital 60,091,751 60,026,833
Accumulated deficit (22,063,362) (15,482,754)
------------- -------------
Total stockholders' equity 38,030,356 44,545,963
------------- -------------
TOTAL $ 48,645,552 $ 54,364,627
------------- -------------
</TABLE>
See accompanying notes to financial statements.
F-2
<PAGE> 41
NOVEN PHARMACEUTICALS, INC.
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
- -----------------------------------------------------------------------------------------------------------------------
1995 1994 1993
<S> <C> <C> <C>
REVENUES:
Product sales $ 8,747,965 $ 294,814
License revenue 1,702,780 4,155,163 $ 3,124,447
Interest income 1,681,688 1,213,479 623,621
Other income 51,908 381,095 345,480
--------------- ------------- ------------
Total revenues 12,184,341 6,044,551 4,093,548
--------------- ------------- ------------
EXPENSES:
Cost of products sold 4,814,349 147,866
Research and development 10,508,763 8,035,782 5,160,235
General and administrative 3,441,837 2,805,128 2,244,291
--------------- ------------- ------------
Total expenses 18,764,949 10,988,776 7,404,526
--------------- ------------- ------------
NET LOSS $ (6,580,608) $ (4,944,225) $ (3,310,978)
--------------- ------------- ------------
NET LOSS PER SHARE $ (0.34) $ (0.28) $ (0.21)
--------------- ------------- ------------
WEIGHTED AVERAGE SHARES
OF COMMON STOCK AND
COMMON STOCK EQUIVALENTS 19,236,807 17,439,955 15,924,719
--------------- ------------- ------------
</TABLE>
See accompanying notes to financial statements.
F-3
<PAGE> 42
NOVEN PHARMACEUTICALS, INC.
<TABLE>
<CAPTION>
STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
- ---------------------------------------------------------------------------------------------------
ADDITIONAL
COMMON STOCK PAID-IN ACCUMULATED
SHARES AMOUNT CAPITAL DEFICIT TOTAL
<S> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1992 15,591,626 $1,559 $27,965,537 $(7,227,551) $20,739,545
---------- ------ ----------- ------------ -----------
Issuance of 255,716 shares of
stock for acquisition of
property and equipment 255,716 26 3,003,974 3,004,000
Issuance of 300,658 shares of
stock pursuant to stock
option plan, net 300,658 30 76,005 76,035
Grant of stock purchase warrant 184,884 184,884
Net loss (3,310,978) (3,310,978)
---------- ------ ----------- ------------ -----------
BALANCE, DECEMBER 31, 1993 16,148,000 $1,615 $31,230,400 $(10,538,529) $20,693,486
---------- ------ ----------- ------------ -----------
Issuance of 441,068 shares of
stock pursuant to stock
option plan, net 441,068 44 16,585 16,629
Sale of 2,250,000 shares of
common stock in a public
offering, net 2,250,000 225 28,317,348 28,317,573
Grant of stock purchase warrant 462,500 462,500
Net loss (4,944,225) (4,944,225)
---------- ------ ----------- ------------- -----------
BALANCE, DECEMBER 31, 1994 18,839,068 $1,884 $60,026,833 $(15,482,754) $44,545,963
---------- ------ ----------- ------------- -----------
Issuance of 726,347 shares of
stock pursuant to stock
option plan, net 726,347 72 64,929 65,001
Issuance of 108,729 shares for
acquisition of property
and equipment 108,729 11 (11)
Net loss (6,580,608) (6,580,608)
---------- ------ ----------- ------------ -----------
BALANCE, DECEMBER 31, 1995 19,674,144 $1,967 $60,091,751 $(22,063,362) $38,030,356
---------- ------ ----------- ------------ -----------
</TABLE>
See accompanying notes to financial statements.
F-4
<PAGE> 43
NOVEN PHARMACEUTICALS, INC.
<TABLE>
<CAPTION>
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
- -----------------------------------------------------------------------------------------------------------------
1995 1994 1993
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (6,580,608) $ (4,944,225) $ (3,310,978)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 1,327,254 861,312 779,437
Amortization of patent costs 120,480 90,490 55,363
Increase in inventories (3,805,393) (563,914) (157,084)
(Increase) decrease in prepaid and other
current assets 566,939 (237,981) (511,185)
Increase in accounts receivable (1,800,106) (712,455)
Increase (decrease) in accounts payable and
accrued liabilities 1,022,528 2,127,803 (156,932)
Decrease in deferred license revenue (225,996) (1,475,996) (225,997)
----------- ----------- -----------
Cash flows used in operating activities (9,374,902) (4,854,966) (3,527,376)
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
(Purchase) maturity of securities 15,563,673 (11,426,090) 972,679
Purchase of fixed assets, net (1,837,528) (2,772,381) (3,179,294)
Payments for patent development costs (359,909) (311,205) (329,770)
(Payment) refund of deposits 4,656 (19,975) (8,663)
---------- ----------- -----------
Cash flows provided (used) in investing
activities 13,370,892 (14,529,651) (2,545,048)
---------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Sale of common stock 65,001 28,334,202 76,035
Grant of stock purchase warrant 462,500 184,884
------------ ------------ ------------
Cash flows provided by financing activities 65,001 28,796,702 260,919
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 4,060,991 9,412,085 (5,811,505)
CASH AND CASH EQUIVALENTS,
BEGINNING OF YEAR 12,070,272 2,658,187 8,469,692
------------ ------------ ------------
CASH AND CASH EQUIVALENTS,
END OF YEAR $ 16,131,263 $ 12,070,272 $ 2,658,187
------------ ------------ ------------
SUPPLEMENTAL DISCLOSURES OF NON-CASH
INVESTING AND FINANCING ACTIVITIES:
Property and equipment acquired in exchange
of common stock and in connection with
license agreement $10,004,000
-----------
</TABLE>
See accompanying notes to financial statements.
F-5
<PAGE> 44
NOVEN PHARMACEUTICALS, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
- -------------------------------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Noven Pharmaceuticals, Inc. ("Noven") was incorporated in Delaware in
January 1987 to become a fully integrated pharmaceutical company capable of
developing, manufacturing and marketing pharmaceutical products which
incorporate alternate drug delivery technologies. The following is a
summary of significant accounting policies of Noven:
PERVASIVENESS OF ESTIMATES - The preparation of financial statements in
conformity with generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported amounts of assets
and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
CASH AND CASH EQUIVALENTS - Cash and cash equivalents include cash and
securities with a remaining maturity of three months or less.
SECURITIES HELD TO MATURITY - Securities held to maturity consist mainly of
U.S. Government obligations with maturities no longer than one year. The
securities are recorded at cost which approximates fair value.
INVENTORIES - Inventories are stated at the lower of cost (first-in,
first-out method) or net realizable value. The following are the major
classes of inventories as of December 31:
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Finished goods $2,226,603 $ 520,928
Work in process 1,262,657 69,133
Raw Materials 1,580,686 674,492
---------- ----------
TOTAL $5,069,946 $1,264,553
---------- ----------
</TABLE>
Inventories at December 31, 1995 related primarily to the Company's
transdermal estrogen delivery system. To date Noven has not experienced and
does not anticipate in the future, any difficulty acquiring materials
necessary to manufacture its transdermal systems.
PROPERTY AND EQUIPMENT - Property and equipment is recorded at cost.
Depreciation is provided over the estimated useful lives of the assets
ranging up to 31 years. Leasehold improvements are amortized over the life
of the lease or the service life of the improvements, whichever is shorter.
The straight-line method of depreciation is principally followed for
financial purposes. Fully depreciated assets are removed from the cost and
accumulated depreciation accounts.
PATENT DEVELOPMENT COSTS - Costs, principally legal fees, related to the
development of patents are capitalized and amortized over the lesser of
their estimated economic useful lives or their remaining legal lives.
F-6
<PAGE> 45
INCOME TAXES - Noven accounts for income taxes in accordance with the
provisions of Statement of Financial Accounting Standards ("SFAS") No. 109,
"Accounting for Income Taxes". SFAS 109 provides that income taxes are
accounted for using an asset and liability method which requires the
recognition of deferred tax assets and liabilities for expected future tax
consequences of temporary differences between tax bases and financial
reporting bases of assets and liabilities. As there is no assurance that
the Company will generate sufficient earnings to utilize its available tax
assets for carryfowards, a valuation allowance has been established to
offset the existing net deferred tax asset. At December 31, 1995 and 1994,
Noven had net operating loss carryforwards of approximately $24,000,000 and
$18,000,000. Additionally, at December 31, 1995 and 1994, Noven had
research and development credit carryforwards of approximately $2,200,000
and $1,800,000 respectively. Carryforwards expire through 2010.
REVENUE RECOGNITION - Revenue from product sales is recognized at the time
of shipment. License revenue is recognized into income when earned under
the terms of the agreements. Substantially all of Noven's product sales
were to the principal licensees (see Note 3).
COSTS OF PRODUCT SOLD - Direct and indirect costs associated with
manufacturing the transdermal estrogen delivery system are included in costs
of products sold. Pre-production expenses incurred during the start-up
phase are charged to research and development.
RESEARCH AND DEVELOPMENT COSTS - Research and development costs consist of
self-funded research and development costs and the costs associated with
work performed under license agreements. Research and development costs
included direct and allocated expenses and are expensed as incurred.
Research and development costs under license agreements partially funded by
the licensees are recorded as license revenue or other income.
FAIR VALUE OF FINANCIAL INSTRUMENTS - The carrying amounts of cash and cash
equivalents, securities held to maturity, accounts receivable, accounts
payable and accrued expenses approximate fair value due to the relatively
short maturity of the respective instruments.
LOSS PER SHARE - Loss per share is based on the weighted average number of
shares outstanding.
NEW ACCOUNTING STANDARDS - In March 1995, the Financial Accounting Standards
Board ("FASB") issued SFAS No. 121 "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed of". SFAS No.
121 establishes accounting standards for the impairment of the long-lived
assets, certain identifiable intangibles and goodwill related to those
assets to be held and used and for long-lived assets and certain
identifiable intangibles to be disposed of". SFAS No. 121 requires that
long-lived assets and certain identifiable intangibles to be held and used
by an entity be reviewed for impairment whenever events or changes in
circumstances indicated that the carrying amount of an asset may not
recoverable. SFAS No. 121 will apply to Noven for the year ended December
31, 1996. Management believes that the adoption of this statement will not
have a material impact on Noven's financial statements.
The FASB has also issued SFAS No. 123, "Accounting for Stock-Based
Compensation". This statement defines a fair value based method of
accounting for an employee stock option. This statement also permits a
company to continue to measure compensation costs for their stock option
plan using the intrinsic value based method of accounting prescribed by
Accounting Principles Board ("APB") Opinion No. 25, "Accounting for Stock
Issued to Employees". SFAS No. 123 requires disclosure of the pro forma
net income and earnings per share that would be recorded if the fair value
method was utilized. Noven plans to continue to utilize the provisions of
APB 25 to account for such compensation costs, and will provide the pro
forma disclosures required by SFAS 123 its 1996 financial statements.
RECLASSIFICATIONS - Certain amounts in the 1994 financial statements have
been reclassified to conform with the 1995 presentation.
F-7
<PAGE> 46
2. PROPERTY AND EQUIPMENT
Property and equipment consist of the following at December 31, 1995 and
1994:
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Land $ 2,540,035 $ 2,540,035
Building 2,055,714 2,011,006
Leased property and leasehold improvements 7,978,592 7,870,807
Manufacturing and testing equipment 4,481,370 3,260,086
Furniture 451,224 416,968
----------- -----------
17,506,935 16,098,902
Less accumulated depreciation and amortization 1,974,138 1,076,379
----------- -----------
$15,532,797 $15,022,523
----------- -----------
</TABLE>
On February 16, 1993, Noven purchased a 20,000 square foot building and 9.5
acres of vacant land in two separate transactions. The $1.1 million
purchase price for the building was paid with $300,000 in cash and 87,317
shares of restricted Noven common stock. The purchase price for the vacant
land, $2,204,000 was paid with 168,399 shares of Noven restricted stock.
The price protection provisions of the contract resulted in the issuance of
108,729 additional shares of Noven restricted stock on March 15, 1995. The
land and building are adjacent to two 40,000 square foot manufacturing
facilities which are leased by Noven from a licensee as part of a license
agreement.
3. LICENSE AGREEMENTS
In 1989 Noven entered into a license agreement which gave the licensee the
right to market Noven's transdermal estrogen delivery system worldwide
except for Japan. In 1990 Noven reacquired exclusive marketing rights to
the United States and Canada. Licensee fees and milestone payments received
in connection with this agreement were fully recognized into income by 1994.
In 1991 Noven entered into a license agreement which gave the licensee the
right to market Noven's transdermal estrogen delivery system in the United
States and Canada. License fees and milestone payments received in
connection with this agreement were fully recognized into income by 1994.
This agreement also provides for receipt of royalty payments upon the
commercialization of the product. Through December 31, 1995, no royalty
payments have been received nor accrued. In addition, warrants to purchase
1,091,151 shares of common stock were granted under this agreement. The
exercise prices of these warrants range from $2.5875 to $15.34. The term of
the warrants range from five to seven years. In addition, during a 30-day
period subsequent to any public or private sale of common stock by Noven,
the licensee has the right to purchase shares of common stock at the same
price and in an amount sufficient to maintain the same ownership percentage
(inclusive of shares subject to warrants held by the licensee) in
outstanding common stock held prior to any such sales. At December 31,
1995, no warrants have been exercised.
In 1992 Noven entered into an additional license agreement which granted the
licensee the right to market Noven's transdermal progestogen delivery system
and its transdermal combination estrogen/progestogen delivery system
worldwide. The agreement also expanded the licensee's marketing rights for
the transdermal estrogen delivery system to include Japan. The licensee
will fund all development and clinical costs for the licensed products and
will provide Noven certain milestone payments. In addition, Noven granted a
warrant to the licensee for the right to purchase up to 1,000,000 shares of
Noven common stock at a price of $8 per share for a period of 5 years. As
part of this license agreement, the licensee funded the construction of a
manufacturing facility for the production of transdermal drug
F-8
<PAGE> 47
delivery systems. The facility is leased by Noven at a substantially
below market rate. Noven retains the right to purchase the facility at any
time in the future at the licensee's book value. Noven has recorded both the
facility and deferred revenue at amounts equal to the funds advanced by the
licensee which are depreciated/amortized to depreciation expense and license
revenue over the life of the underlying lease (see Note 2).
4. COMMITMENTS AND CONTINGENCIES
Noven has operating lease commitments, principally for research and
development facilities and office space. Future minimum annual rental
payments on existing noncancelable leases, at December 31, 1995, approximate
the following:
<TABLE>
<CAPTION>
<S> <C>
1996 $227,000
1997 89,000
1998 69,000
1999 12,000
--------
Total $397,000
========
</TABLE>
Rent expense for the years ended December 31, 1995, 1994 and 1993
amounted to approximately $172,000, $167,000 and $193,000, respectively.
Noven has long term employment agreements. The agreements provide for base
salaries subject to cost of living increases each year and other increases
and bonuses as determined by the Compensation Committee. These agreements
provide for annual commitments of approximately $800,000 in the aggregate.
5. RELATED PARTY TRANSACTIONS
Professional services have been rendered by an accounting firm of which a
director of Noven is a substantial shareholder. For the years ended December
31, 1995, 1994 and 1993, Noven paid approximately $80,000, $46,000 and
$79,000 for these services.
6. STOCK OPTIONS
Noven has a stock option plan (the "Plan") that provides for the granting of
10,000,000 incentive and non-qualified stock options to selected individuals
or entities. The terms and conditions (including price, exercise date and
number of shares) are determined by the Stock Option Committee, which
administers the Plan. The per share exercise price of (i) non-qualified
stock options granted to directors and all other persons, may not be less
than the fair market value and 50% of the fair market value, respectively,
of the common stock on the date of grant and (ii) incentive stock options
granted to employees and employees owning in excess of 10% of the issued and
outstanding common stock, may not be less than the fair market value and
110% of the fair market value, respectively, of the common stock on the date
of grant. Noven has not granted any options at less than fair market value.
Each option is exercisable after the period(s) specified in the option
agreement, but no option can be exercised after 10 years from the date of
grant (or five years from the date of grant in the case of a grantee holding
more than 10% of the issued and outstanding common stock). Options may be
exercised only if the grantee has been in the continuous employment of, or
affiliation with, or has continuously acted as a consultant for Noven from
the date of grant to the date of exercise, except in the event of death or
permanent disability.
F-9
<PAGE> 48
At December 31, 1995 and 1994, Noven had reserved 3,750,000 shares of common
stock for issuance under the Plan.
A summary of the stock option activity for the years ended December 31, 1995
and 1994 is as follows:
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Outstanding at beginning of year 2,042,149 2,536,771
Granted 628,700 36,750
Exercised/canceled (1,161,486) (531,372)
-------------- ----------------
Outstanding at end of year 1,509,363 2,042,149
-------------- ----------------
Exercisable at end of year 659,952 1,455,660
-------------- ----------------
Available for future grants (from 3,750,000 shares
reserved at December 31, 1995 and 1994.) 297,959 725,803
-------------- ----------------
Range of prices for all options outstanding $ .20 - $17.25 $ .20 - $17.25
-------------- ----------------
Range of prices for options granted in each year $7.50 - $10.50 $11.625 - 17.25
-------------- ----------------
</TABLE>
F-10
<PAGE> 1
EXHIBIT 10.2
Agreement between the Registrant and Rorer Group, Inc. (now know as
Rhone-Poulenc Rorer, Inc.) dated April 27, 1989 (with certain provisions
omitted pursuant to Rule 24b-2), as amended on June 22, 1990 (with certain
provisions omitted pursuant to Rule 24b-2).
<PAGE> 2
A G R E E M E N T
Between
RORER GROUP INC.
And
NOVEN PHARMACEUTICALS, INC.
* CERTAIN PORTIONS HEREOF HAVE BEEN OMITTED PURSUANT TO RULE 24b-2 AND FILED
SEPARATELY WITH THE COMMISSION.
<PAGE> 3
TABLE OF CONTENTS
Article Section Page
RECITALS............................................. 1
I DEFINITIONS.......................................... 2
1.1 Affiliates..................................... 2
1.2 Control........................................ 2
1.3 Costs.......................................... 3
1.4 Clinical and Product Development Program....... 3
1.5 Estrogen Transdermal Drug Delivery System...... 3
1.6 Noven's Technology............................. 4
1.7 Noven's Patent Rights.......................... 4
1.8 Licensed Product............................... 5
1.9 Net Sales...................................... 5
1.10 Standard Packaging............................. 5
1.11 Sublicensee.................................... 6
1.12 The Territory.................................. 6
II OBLIGATIONS OF NOVEN................................. 6
2.1 Level of Effort................................ 6
2.2 Assignment of Invention Rights................. 6
2.3 Progress Reports............................... 7
2.4 Improvements................................... 7
2.5 Program Updates................................ 8
2.6 Term of Clinical and Product Development
Program........................................ 8
2.7 Supply and Use of Information.................. 8
III OBLIGATIONS OF RORER................................. 9
3.1 Clinical Testing............................... 9
3.2 Skin Testing................................... 10
3.3 Governmental Approvals......................... 10
3.4 Supply of Information.......................... 10
3.5 Best Efforts................................... 11
3.6 Time for Reimbursement......................... 11
3.7 Estimate of Costs.............................. 11
-i-
<PAGE> 4
TABLE OF CONTENTS (Cont'd.)
Article Section Page
IV GRANT................................................ 12
4.1 License........................................ 12
4.2 Sublicense..................................... 13
V PAYMENTS............................................. 13
5.1 Initial Payments............................... 13
5.2 Fee............................................ 14
5.3 Minimum Fee.................................... 17
5.4 Payments....................................... 18
5.5 Currency....................................... 18
5.6 Records........................................ 18
5.7 One Royalty.................................... 19
5.8 Compulsory License............................. 19
VI SUPPLY............................................... 19
6.1 Agreement to Supply............................ 19
VII PATENTS.............................................. 20
7.1 Noven Inventions............................... 20
7.2 Joint Inventions............................... 20
VIII CONFIDENTIALITY OBLIGATIONS.......................... 21
8.1 Confidentiality................................ 21
IX TERM AND TERMINATION................................. 22
9.1 Term........................................... 22
9.2 Termination.................................... 22
X NOVEN WARRANTIES..................................... 24
10.1 Ownership...................................... 24
10.2 Right to Enter Agreement....................... 24
10.3 Product Warranty............................... 24
10.4 Foreign Product Warranty....................... 24
10.5 Patent Infringement Warranty................... 25
10.6 Limitation On Damages.......................... 25
-ii-
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TABLE OF CONTENTS (Cont'd)
Article Section Page
XI ARBITRATION.......................................... 25
11.1 Arbitration.................................... 25
11.2 Notification of Breach......................... 25
XII MISCELLANEOUS........................................ 26
12.1 Relationship of Parties........................ 26
12.2 Inspection of Facilities....................... 26
12.3 Entire Agreement............................... 26
12.4 Force Majeure.................................. 27
12.5 Severability................................... 27
12.6 Assignment..................................... 28
12.7 Governing Law.................................. 28
12.8 Notices........................................ 28
12.9 Counterparts................................... 29
EXHIBIT A - CLINICAL AND PRODUCT DEVELOPMENT PROGRAM PROTOCOL
EXHIBIT B - NOVEN'S PATENT RIGHTS
EXHIBIT C - TRANSDERMAL ESTROGEN SKIN PATCH PRODUCT
SPECIFICATIONS
EXHIBIT D - SUPPLY AGREEMENT
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<PAGE> 6
LICENSE AGREEMENT
AGREEMENT ("License Agreement") made as of the 27th day of April, 1989,
by and between RORER GROUP Inc., a Pennsylvania corporation having a place of
business at 500 Virginia Drive, Fort Washington, Pennsylvania 19034 (herinafter
"Rorer"), and NOVEN PHARMACEUTICALS, INC., a Delaware corporation having a
place of business at 13300 S.W. 128th Street, Miami, Florida 33186 (hereinafter
"Noven").
WITNESSETH
WHEREAS, Noven represents and warrants that it has developed certain
information relating to and is the owner of the entire right, title and
interest in and to certain patent applications having claims covering a
Transdermal Estrogen Drug Delivery System (hereinafter defined as "Licensed
Product"); and
WHEREAS, Noven has available as employees and independent contractors a
group of scientists with the expertise and desire to implement the program
described in Exhibit A (hereinafter defined as the "Clinical and Product
Development Program"), said Exhibit A being a part of this License Agreement;
and
WHEREAS, Rorer is willing to fund said Clinical and Product Development
Program with the understanding that the benefits of all such programs shall be
available to Rorer and its Affiliates (as hereinafter defined) for further
evaluation,
<PAGE> 7
and for commercial exploitation solely pursuant to its sale of a Transdermal
Estrogen Drug Delivery System throughout the Territory (as hereinafter
defined).
NOW THEREFORE, it is mutually agreed between the parties hereto as
follows:
ARTICLE I - DEFINITIONS
1.1 Affiliates. The term "Affiliate" or "Affiliates" means 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 Control. The term "Control," "Controls" or "Controlled" means the
ownership, directly or indirectly, of at least fifty percent (50%) of the
voting rights attached to issued voting shares or the power to control
decisions made by any person or entity other than entities having shares. In
addition if any company or its Affiliate, which is one of the fifty largest in
terms of pharmaceutical sales, in the United States acquires sufficient shares
of Noven to exert de facto control, then such shall be considered control
hereunder.
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l.3 Costs. The term "Costs" shall mean the fully allocated costs of
the party referred to including but not limited to the fully allocated cost of
goods and services and the manufacturing overhead related thereto and, only in
the case of the Clinical and Product Development Program, an allocation of all
administrative and general expenses of the entity referred to, in the same
proportion that the man hours devoted to the provision of the goods and
services bears to the total of man hours consumed by the entity referred to.
Cost shall be determined by generally accepted accounting principles, applied
on a consistent basis, as determined by the independent certified public
accountant retained by the entity whose costs are being accounted for.
1.4 Clinical and Product Development Proqram. The term "Clinical and
Product Development Program" shall mean research conducted as a part of Noven's
pre-clinical and clinical activities, the Cost of which is to be wholly paid
for by Rorer, and which is required or reasonably necessary to obtain
governmental health approvals for Licensed Product during the term of this
License Agreement including the program substantially as set forth in Exhibit
A.
l.5 Estrogen Transdermal Drug Delivery System. The term "Estrogen
Transdermal Drug Delivery System" means an estrogen in a
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adapted for transdermal delivery by application to the epidermis.
1.6 Noven's Technology. The term "Noven Technology" shall mean any and all
data, information, technology, know-how, process, technique, method, skill,
proprietary information, trade secret, development, discovery, and inventions,
owned or controlled by Noven and specifically related to an Estrogen
Transdermal Drug Delivery System now existing or developed in the future under
and during the course of the Clinical and Product Development Program. Noven
Technology shall not include information related to the manufacture of Licensed
Product and specifications and procedures related thereo, except to the extent
required for health registration of Licensed Product and except to the extent
of any license to manufacture granted under this License Agreement.
1.7 Noven's Patent Riqhts. The term "Noven Patent Rights" shall mean any
and all patents and patent applications the claims of which cover the Licensed
Product including reissues, extensions and patents of addition, which are owned
by Noven or to which Noven has any right to control or to license third parties
(whether in whole or in part) at any time during the term of this License
Agreement. Patents on inventions made after December 31, 1994 shall be included
only to the extent based on inventions which are conceived or reduced to
practice by either party hereto during and under the
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<PAGE> 10
Clinical and Product Development Program, The presently existing rights are set
forth in Exhibit B, said Exhibit B being a part of this License Agreement.
1.8 Licensed Product. The term "Licensed Product" shall mean any Estrogen
Transdermal Drug Delivery System embodying any part of Noven's Technology or
covered in whole or in part by any of Noven's Patent Rights or which meet the
product specifications set forth in Exhibit C, said Exhibit C being part of
this License Agreement.
1.9 Net Sales. The term "Net Sales" shall mean the gross amount invoiced by
Rorer, its Affiliates and Sublicensees on all sales of Licensed Products less
(a) discounts actually allowed, (b) credits actually allowed for claims,
allowances, retroactive price reductions or returned goods, (c) prepaid
freight, and (d) sales taxes, duties and other governmental charges actually
paid in connection with the sale, to the extent not reimbursed, (but excluding
what is commonly known as income taxes).
1.10 Standard Packaging. The term "Standard Packaging" shall mean an
Estrogen Transdermal Drug Delivery System Licensed Product meeting the
specifications set forth in Exhibit C packaged in individual pouches and in
individual foldings cartons consisting of eight (8) pouch units per carton and
containing any labels and labelling required therefor by the United States Food
and Drug Administration and provided in
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packages of twenty four (24) individual folding cartons per shipping container,
and produced at a Noven facility in the United States, the grade and quality of
the labels, labelling and packaging materials being as specified in the
Abbreviated New Drug Application therefor.
1.11 Sublicensee. The term "Sublicensee" and "Sublicensees" shall mean any
entity to whom Rorer shall grant any right or license to use Noven's Technology
or to make, use or sell under all or any part of Noven's Patent Rights or to
make, use or sell any product which meets the specifications set forth in
Exhibit C.
1.12 The Territory. The term "Territory" shall mean all countries and
territories worldwide except Japan.
ARTICLE II - OBLIGATIONS OF NOVEN
2.1 Level of Effort. The officers and employees of Noven shall devote a
sufficient amount of their time and efforts to the Clinical and Product
Development Program and employ a sufficient number of technically qualified
officers and employees to complete the Clinical and Product Development Program
within the terms set forth in this Article II.
2.2 Assignment of Invention Riqhts. Immediately upon execution of this
Agreement, Noven shall promptly undertake the implementation of the Clinical
and Product Development Program, devoting to the Clinical and Product
Development Program the services of its officers and employees. It is
understood and
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<PAGE> 12
agreed that all employees and, to the extent reasonably practicable, agents and
consultants of Noven employed in or for the Clinical and Product Development
Program shall execute written agreements acceptable to both Noven and Rorer
requiring assignment to Noven of any developments, discoveries, improvements
and/or inventions in Licensed Product made by such employees, agents and
consultants under and during the course of the Clinical and Product Development
Program.
2.3 Progress Reports. Noven shall from time to time, but not less
frequently than once each month, inform Rorer in writing of the progress of the
Clinical and Product Development Program and the commencement of any project
within the Clinical and Product Development Program.
2.4 Improvements. During the term of this License Agreement and any
extension thereof, Noven shall promptly disclose to Rorer in writing, to the
extent legally permitted and in reasonable detail, any developments,
discoveries, improvements or inventions in an Estrogen Transdermal Drug
Delivery System relating to Licensed Product owned or controlled by Noven, its
employees or agents or consultants who have the duty to assign such
applications to the extent such are made prior to December 31, 1994 or at any
time during the Clinical and Product Development Program. Such shall be
automatically deemed Noven's Patent Rights unless Rorer notifies Noven in
writing to the contrary, within sixty (60)
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<PAGE> 13
days of receipt of the initial information concerning the same. No such future
developments, discoveries, improvements or inventions shall be automatically
included within the scope of Noven's Patent Rights unless funded under the
Clinical and Product Development Program.
2.5 Program Updates. On a date which shall be approximately three (3)
months after the commencement of the Clinical and Product Development Program,
and at three-month intervals thereafter, representatives of Noven and of Rorer
shall meet to review the progress and status of the Clinical and Product
Development Program then underway. At such meetings, Rorer shall have the right
to assign or reassign priorities to the various projects comprising the
Clinical and Product Development Program and to suggest procedures for their
implementation, except for projects for use in obtaining regulatory approval to
market Licensed Product in the United States and Canada. However, Rorer's input
shall be reasonably considered.
2.6 Term of Clinical and Product Development Program. Noven will use its
best efforts to complete its work pursuant to the Clinical and Product
Development Program needed to file an Abbreviated New Drug Application for
Licensed Product in the United States, on or about December 31, 1989.
2.7 Supply and Use of Information. Noven shall promptly provide to Rorer,
for Rorer's exclusive use, all
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<PAGE> 14
Noven's Technology relating to Licensed Product, subject only to the concurrent
right of Noven and Noven's Affiliates to use the same in the United States and
Canada. The parties shall, as promptly as possible, provide to each other with
any information that comes to the knowledge of a responsible officer of any
party relating to any adverse reaction occasioned during research on or use of
a Licensed Product. In countries where Rorer needs manufacturing information to
obtain a product license, Noven shall supply the necessary information solely
for use in obtaining such license and subject to the confidentiality
obligations of Article VIII.
ARTICLE III - DEVELOPMENT OBLIGATIONS
3.1 Clinical Testing. All pre-clinical, clinical and post-clinical testing
and stability testing including but not limited to the Clinical Product
Development Program required for government health care approvals in the
Territory of a Licensed Product developed by Noven shall be conducted by Noven
and Rorer, at Rorer's sole expense, it being understood that Noven shall
perform the clinical testing for the United States and Canada at Rorer's sole
expense. However, before clinical testing of a product is commenced, Noven
shall complete all of Rorer's pre-clinical testing requirements set forth in
Exhibit A for the Licensed Product except for the U.S. and Canada.
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<PAGE> 15
3.2 Skin Testing. At the earliest possible date, but no later than
December 31, 1989, Rorer may require adhesion and skin irritation studies.
3.3 Governmental Approvals. Rorer shall file requests with the appropriate
government agencies within the Territory for approval of Licensed Product,
except as to the United States of America and Canada. The decision regarding
the timing of said filings shall be in Rorer's sole discretion, except for the
United States and Canada. Rorer shall have full and complete ownership of all
governmental approvals, except for the United States and Canada, relating to
Licensed Products. The parties shall provide each other with full copies of and
a right of reference to any application for registrations and any registration
in the United States and Canada.
3.4 Supply of Information. Rorer shall promptly and on a continuing basis
provide Noven, for use by Noven, with all information regarding Rorer's
technology related to Licensed Product, on a royalty-free basis.
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<PAGE> 16
3.5 Best Efforts. Rorer shall use its best efforts to file and obtain
approval of appropriate governmental agencies for the sale of Licensed Product
in
Rorer shall use its best efforts to sell Licensed Product in
Rorer shall use efforts to file and obtain approval of appropriate
governmental agencies, and sell Licensed Product as it would for its own
products.
3.6 Time for Reimbursement. Payment shall be made for Noven's Costs
pursuant to this Article III by Rorer in Miami, Florida within thirty (30) days
of receipt of a Noven invoice itemizing the nature of charges incurred
hereunder.
3.7 Estimate of Costs. The parties acknowledge that the Costs of clinical
testing and obtaining any necessary governmental regulatory approvals cannot be
estimated. Without intending to be bound hereby or by the estimates for the
same set forth in Exhibit A, Noven estimates that its Costs of clinical testing
and obtaining an Abbreviated New Drug Application for Licensed Product in the
United States will be approximately One Million (U.S. $ 1,000,000.00) United
States Dollars and the Costs of additional clinical testing for regulatory
filings in
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<PAGE> 17
will be approximately an additional One Million (U.S.
$ 1,000,000.00) United States Dollars. Any costs exceeding the program of
Exhibit A must be agreed to in writing by Rorer.
ARTICLE IV - GRANT
4.1 License.
(a) Noven hereby grants to Rorer, with the right to sublicense Rorer's
Affiliates and Sublicensees subject to the provisions of Article 4.2 hereof,
the exclusive right and license in the territory to use, sell, or otherwise
dispose of Licensed Products under Noven's Patent Rights and Noven's
Technology; provided, however, Noven ond its Affiliates shall retain the
non-exclusive right to use and sell licensed product in the United States and
Canada. Said retained right to use and sell cannot be licensed by Noven to any
third party, other than Noven or its Affillates. Noven's and its Affiliates
retained right to use and sell in the United States and Canada shall cease, at
Rorer's option, if there is a change of Control of Noven.
(b) 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 Licensed Product. No right of Rorer, its Affiliates or sublicensees
to manufacture Licensed Product is granted except to the extent stated herein.
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<PAGE> 18
(c) The term "exclusive" used here means that Noven shall not
voluntarily grant a right to any third parties under Noven's Technology or
Noven's Patent Rights and Rorer shall have the benefit of Article 5.8 hereof
with respect to such grant.
4.2 Sublicense. As part of the rights granted in Article 4.1, Rorer shall
have the right throughout the Territory to grant sublicenses to Sublicensees,
only with the prior written approval of Noven, which approval shall not be
unreasonably withheld. Such written approval by Noven shall not be required for
sublicenses to Rorer Affiliates. Any such Sublicensee shall agree to assume the
duties of Rorer hereunder with respect to the Territory involved, provided,
however, that such sublicense shall not release Rorer 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, from which Rorer shall have the right to delete the financial terms.
ARTICLE V - PAYMENTS
5.1 Initial Payments. As consideration for the rights herein granted,
Rorer shall pay to Noven the sum of
payable as follows:
upon execution of this License Agreement;
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<PAGE> 19
when Noven files an Abbreviated New Drug Application in the
United States for a licensed Product;
when Rorer files for health registration for a Licensed Product
in one of the following countries:
upon first health registration and any required price or
insurance reimbursement approval for Licensed Product in one of the
following countries: and
upon approval for sale by the United States Food and Drug
Administration of Licensed Product.
5.2 Fee.
(a) Rorer shall pay to Noven a fee of of Rorer's, its
Affiliates and Sublicensees Net Sales, which fee shall include the
compensation for supplying Licensed Product in Standard Packaging, subject to
the provisions set forth in Article 5.2. Costs above the Standard Packaging
Cost shall be allocated to Rorer and to Noven.
(b) The fee to be paid hereunder shall be no less than
bulk bandage in Standard Packaging and no more than
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<PAGE> 20
per such unit ex Noven's
factory
(c) After 1989, this minimum and maximum shall be adjusted annually
pursuant to the "Consumer Price Index" published by the U.S. Department of
Labor, Bureau of Labor Statistics, as the U.S. City Average, all items
1982-1984 = 100 (hereinafter referred to as the "Index"). The minimum and the
maximum applicable during years subseguent to 1989 shall be determined by
multiplying the minimums and maximums for 1989, by the fraction, the numerator
of which shall be the Index for January of the year for which the computation
is made, and the denominator of which shall be the Index for January 1989.
Should the publication of said Index be discontinued by said Bureau of Labor
Statistics, then such other indexes may be published by said Bureau most
nearly approaching said discontinued Index shall be used in determining the
adjustment hereunder. Should said Bureau discontinue the publication of any
such index, then such indexes may be published by another United States
governmental agency, as most nearly approximating the Index, shall govern and
be substituted as the Index hereunder.
(d) Notwithstanding the foregoing, if Noven's Cost of Licensed Product
increases at a rate greater than the rate of increase of said Index, or if
Rorer's weighted average gross margin computed excluding samples and sales at
or below
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<PAGE> 21
cost for the product is reduced below with
respect to any country in the Territory, then Rorer and Noven shall negotiate
in good faith for a revised royalty with respect to the countries involved. In
the absence of the parties being able to reach a mutually satisfactory
agreement, Noven shall grant to Rorer a non-exclusive license to manufacture
Licensed Product under Noven's Technology and Noven's Patent Rights in return
for royalty of
of Net Sales, in addition to other terms and
conditions as reasonably agreed between the parties. Such license shall only
be for sales of Licensed Product in the countries which occasioned the
negotiation.
(e) The foregoing minimums and the maximums are based on an Estrogen
Transdermal Drug Delivery System containing a weighted average of of
. To the extent a greater weighted average of
containing bandages is purchased in any calendar
quarter, then the minimums and maximums for such purchases for said calendar
quarter shall be established by multiplying the price as set forth under
Paragraph 5.2(b) and 5.2(c) above times a number, the numerator of which is
the weighted average milligrams of
in the units purchased and the denominator of which is
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5.3 Minimum Fee.
(a) Rorer shall pay Noven a minimum fee per year beginning with the
first calendar year after product registration in the following countries as
follows:
MINIMUM FEE
PER CALENDAR YEAR FROM PRODUCT REGISTRATION
(YEAR 1 - YEAR OF PRODUCT REGISTRATION)
(U.S $ in thousands)
Year 1 Year 2 Year 3 Year 4 Year 5
(b) For year 6 and subsequent years the minimum royalty shall be the
same as for Year 5 multiplied by a number, the numerator of which is the total
transdermal estrogen market in the country in question for which the
calculation is made and the denominator of which is the total transdermal
estrogen market in the country in question in Year 5.
(c) To the extent there is a difference in any country at the end of
each calendar year between any amount set
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forth in Article 5.3(a) in the amounts set forth in Article 5.2(a) above, Rorer
shall pay the difference between the minimums and the amount actually pald
within sixty (60) days of year end or this License Agreement will become
non-exclusive in that country.
5.4 Payments. The fee due hereunder shall be payable as follows: The
miniumum price of Paragraph 5.2(a) and subject to the adjustments set forth in
Paragraph 5.2(b) shall be due and payable within thirty (3O) days of Noven's
invoice for such Licensed Product. The remainder of any payment due under
Article V hereof shall be due and payable within sixty (60) days of the end of
each calendar quarter in which Rorer, Rorer's Affiliates or Rorer's Sublicensees
received payment for such Licensed Product.
5.5 Currency. Fees and royalties based on sales in a currency other than
United States dollars shall be converted to U.S. dollars at the closing spot
rate for the purchase of U.S. dollars on the last business date of the calendar
quarter for which payments are being accounted as published by the Chase
Manhattan Bank, New York.
5.6 Records. Rorer, its Affiliates and Sublicensees shall keep accurate
records in any way related to Licensed Product in accordance with generally
accepted accounting practices uniformly applied. At Noven's request, such
records shall be made available for examination by independent
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<PAGE> 24
certified public accountants or auditors designated by Noven and approved by
Rorer which approval shall not be unreasonably withheld.
5.7 One Royalty. Only one royalty shall be paid on any Sale of Licensed
Product, namely the sale by Rorer, its Affiliate or Sublicensee to an unrelated
third party.
5.8 Compulsory License. As an alternative, but not in addition to this
License Agreement, Rorer shall have the benefit of the royalty provided for in
any compulsory license but to the exclusion of the benefits or rights under
this License Agreement for such country.
ARTICLE VI - SUPPLY
6.1 Agreement to Supply. Noven shall use its best efforts to supply and
Rorer shall purchase all of Rorer's, its Affiliates' and Sublicensees'
requirements of Licensed Product from Noven according to the terms and
conditions set forth in the Supply Agreement set forth in Exhibit D, which
forms a part of this License Agreement; however, should Noven be unable to meet
Rorer's requirements of Licensed Product of Rorer or by reason of force majeure
is unable to import Licensed Product into a country and if the parties, after
having consulted in good faith to resolve the matter, are unable to do so,
Rorer's sole remedy for Noven's failure to supply shall be the right to a
non-exclusive license to make or have made Licensed Product under Noven's
Technology and Noven's Patent Rights under all
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<PAGE> 25
other terms and conditions of this Agreement in return for a royalty for a
royalty of of Net Sales.
ARTICLE VII - PATENTS
7.1 Noven Inventions. On all inventions conceived or made under and during
the scope of the Clinical and Product Development Program for which Noven
(through its employees and consultants) is the sole inventor, Noven shall
obtain at its own expense and own any patents in the countries requested by
Rorer and these inventions shall become a part of Noven's Patent Rights. Rorer
shall decide unilaterally in which countries Rorer wishes patent protection and
Noven shall, at Noven's expense, file patent applications in such countries in
the name of Noven, and Noven shall have all right, title and interest
subject to the other provisions of this Agreement. Except for the United States
and Canada, Rorer shall have the duty to pay all costs and fees for such
filings in any and all said countries for so long as Rorer is not selling
Licensed Product in such country or is not paying the minimum royalties with
respect to such countries.
7.2 Joint Inventions. On all inventions conceived or made under and during
the scope of the Clinical and Product Development Program which are joint
inventions of an employee(s) or consultants of Noven and an employee(s) or
consultants of Rorer, or an Affiliate of Rorer, the parties to this Agreement
shall have joint ownership of any patent
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<PAGE> 26
applications and patents obtained thereon, and Rorer shall pay all costs and
expenses of obtaining and maintaining such patent rights, provided, however,
that one-half (1/2) of all such expenses in a country payable by Rorer shall be
a credit against one-half (l/2) of any royalties otherwise due Noven in such
country. Rorer shall have the sole right to decide in which countries Rorer
wishes patent protection on an invention developed hereunder. Rorer shall keep
Noven fully and promptly informed with respect to the countries in which Rorer
elects to obtain patent protection, and Noven may, at its own espense, apply
for and obtain patent protection in any country in which Rorer does not elect
to obtain such patent protection.
ARTICLE VIII - CONFIDENTIALITY OBLIGATIONS
8.1 Confidentiality. Except to the extent that any of the data,
information or know-how developed by either party, including but not limited to
Noven's Technology, is in the public domain at the time of disclosure or
subsequently enters the public domain without fault on the part of a party
hereto, each party shall hold all such data, information, or know-how received
from the other prior to or during the term of this License Agreement in
confidence and shall not disclose it to any other entities during the term of
this License Agreement or thereafter without the other party's permission in
writing. Such permission shall not be withheld (a) to the extent disclosure
is required by legal process to which process the
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<PAGE> 27
generating party is permitted to object or (b) to information required to be
submitted to governmental authorities in order to obtain any necessary health
registration or price reimbursement. Such permission shall not be unreasonably
withheld as to other information reasonably required for obtaining health
registration or insurance reimbursement approval or in marketing Licensed
Product. Notwithstanding the foregoing, Rorer shall have the riqht to use and
disclose after the year 2010 Noven's Technology existing on the date of signing
of this License Agreement or twenty (20) years after its disclosure as to data
generated after the execution of this Agreement, if this Agreement expires by
its normal terms, as set forth under paragraph 9.1 below.
ARTICLE IX - TERM AND TERMINATION
9.1 Term. The term of this License Agreement shall be for the last to
expire of Noven's Patent Rights on a country-by-country basis. In countries
where Noven has no Patent Rights, the term of this License Agreement shall be
for ten (10) years and shall automatically be renewed for a five (5) year term.
9.2 Termination
(a) If either Rorer or Noven should fail to discharge fully and
promptly any of its obligations under this License Agreement, including but not
limited to the Supply Agreement, attached as Exhibit D, including the
obligation to
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<PAGE> 28
make payments, and should such party failing to discharge any of its
obligations fail to rectify such failure within ten (10) to make payments or
within sixty (60) days for other failures after notice in writing thereof by
the other party, this Agreement can thereupon be terminated at the other
party's option upon receipt of notice to that effect.
(b) Any one party hereto shall have the right to terminate this License
Agreement with immediate effect in the event of any proceeding under a
Bankruptcy Act or any insolvency, receivership or dissolution proceeding
directed against the other party.
(c) Noven shall have the right to terminate this Agreement at any time
upon thirty (30) days' notice in the event that Rorer or any Rorer Affiliate or
Sublicensee or any entity to whom Rorer sells its ethical pharmaceutical
business markets, sells or distributes any Estrogen Transdermal Drug Delivery
System other than Licensed Product.
(d) Upon termination, all information and data, relating to 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. Rorer, its Affiliates and Sublicensees shall make no further use of
the same. The foregoing shall not apply to information solely generated by
Rorer, if termination is by
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<PAGE> 29
Rorer for cause of Noven or by expiration of the term specified in Article 9.1
ARTICLE X - NOVEN WARRANTIES
10.1 Ownership. Noven represents and warrants that it has developed
Noven's Technology and it owns the entire right, title and interest in the
patent and patent applications now set forth in Exhibit B.
10.2 Riqht to Enter Aqreement. Noven 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, inconsistent with this License Agreement.
10.3 Product Warranty. Noven represents and warrants that Licensed Product
in the form delivered to Rorer shall conform to specifications for any such
product and approved in any United States Abbreviated New Drug Application
pertaining thereto including composition, purity, appearance and stability and
shall be capable of maintaining such until any expiration date for such
Licensed Product; and shall not be misbranded in violation of Sections 501, 502
and 505 of the Federal Food, Drug and Cosmetic Act, as amended from time to
time.
10.4 Foreiqn Product Warranty. Noven will use its best efforts to comply
with manufacturing specifications of foreign countries of which Rorer has given
Noven notice, provided that Rorer pays all Cost of such compliance.
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10.5 Patent Infringement Warranty. Noven represents and warrants that it
has no present knowledge of any patent, the claims of which cover Licensed
Product.
10.6 Limitation On Damages. In the event of any breach of any
representation and warranty of Noven under this Article X damages shall be
limited to actual damages and shall not exceed the royalty payable to Noven
hereunder in any calendar year or, in the case of the warranty against patent
infringement, shall not exceed fifty (50%) percent of the royalties paid to
Noven in any such calendar year for the country in question.
ARTICLE XI - ARBITRATION
11.1 Arbitration. Any claim or controversy arising between the parties
hereto in connection with this License Agreement or the breach thereof which
cannot be settled satisfactorily by correspondence or by mutual conference
shall be determined by arbitration in New York, New York, by three arbitrators
in accordance with the then prevailing rules of the American Arbitration
Association upon the request by either party. Judgment upon the award rendered
may be entered in any court having jurisdiction thereof.
11.2 Notification of Breach. In the event one party notifies the other
party of a breach of this License Agreement, and such breach is not cured
within the applicable notice
-25-
<PAGE> 31
period, such other party shall have the right within said sixty (60) day period
to bring such dispute to arbitration.
ARTICLE XII - MISCELLANEOUS
12.1 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.
12.2 Inspection of Facilities. At any time during the term of this
License Agreement and any extension thereof, Rorer may from time to time during
normal working hours have employees of its choosing visit and inspect the
facilities of Noven, and may discuss with Noven employees the progress of
projects under development by Noven.
12.3 Entire Agreement. This License Agreement represents the entire
understanding between the parties 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,
-26-
<PAGE> 32
supplement or modification which is signed by both parties hereto.
12.4 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 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 its best efforts 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 Agreement
is prevented for a continuous period of one hundred eighty (180) days, either
party shall have the right to terminate this agreement as to the country or
countries involved by providing the other party with written notice of
termination.
12.5 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 effect or render invalid or
unenforceable any other severable provision of this License Agreement, and this
License Agreement shall be carried out as
-27-
<PAGE> 33
if any such invalid or unenforceable provision were not contained herein.
12.6 Assignment. This License Agreement shall inure to the benefit of
the parties and to the successors and assigns of that part of the business of
Rorer to which the subject matter of this License Agreement is related. This
License Agreement, or any rights thereunder, shall not otherwise be sold,
assigned, transferred or encumbered by either party without first obtaining the
consent of the other party in writing.
12.7 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 New York
law cannot be validly applied to this Agreement and that an agreement to use
"best efforts" is unenforceable under New York law.
12.8 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.
13300 S.W. 128th Street
Miami, Florida 33186
Attention: President
With a copy to: Sybil Meloy, Esq.
Ruden, Barnett, McClosky, Smith,
Schuster & Russell, P.A.
701 Brickell Avenue
Miami, Florida 33131
-28-
<PAGE> 34
(2) Rorer Group Inc.
500 Virginia Drive
Fort Washington, Pennsylvania 19034
Attention: President
With a copy to: Ernest Lipscomb, III, Esq.
Patent Counsel
Rorer Group Inc.
500 Virginia Drive
Fort Washington, Pennsylvania 19034
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 date of mailing.
12.9 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.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed in duplicate and their seals to be hereunto affixed as of the day and
year first written above.
RORER GROUP INC.
By:
--------------------------------
Title:
-----------------------------
Date:
-----------------------------
NOVEN PHARMACEUTICALS, INC.
By: /s/ Steven Sablotsky
-------------------------------
Title: President
-----------------------------
Date: 4-27-89
-----------------------------
-29-
<PAGE> 35
(2) Rorer Group Inc
500 Virginia Drive
Fort Washington, Pennsylvania 19034
Attention: President
With a copy to: Ernest Lipscomb III, Esq.
Patent Counsel
Rorer Group Inc
500 Virginia Drive
Fort Washington, Pennsylvania 19034
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 date of mailing.
12.9 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.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed in duplicate and their seals to be hereunto affixed as of the day and
year first written above.
RORER GROUP INC.
By: /s/
------------------------------
Title: Senior V.P.-Finance and CFO
----------------------------
Date: April 27, 1989
-----------------------------
NOVEN PHARMACEUTICALS, INC.
By:
-------------------------------
Title:
----------------------------
Date:
-----------------------------
-29-
<PAGE> 36
EXHIBIT A
CLINICAL AND PRODUCT DEVELOPMENT PROGRAM
================================================================================
ESTRADIOL TRANSDERMAL COST EST.
$
ACTIVITY 1 MILLION
<PAGE> 37
EXHIBIT B
NOVEN'S PATENT RIGHTS
<PAGE> 38
EXHIBIT C
TRANSDERMAL ESTROGEN SKIN PATCH PRODUCT SPECIFICATIONS
An estrogen in a
in a
form suitable for application to and delivery through the
skin meeting the specifications now employed by Noven and
any such amended or revised specifications, as set forth in the
approved new drug application for such product by Federal Food and
Drug application.
<PAGE> 39
EXHIBIT D
SUPPLY AGREEMENT
This Agreement, made this 27th day of April, 1989, by and between RORER
GROUP INC , a Pennsylvania corporation, having a place of business at 500
Virginia Drive, Fort Washington, Pennsylvania 19034 (hereinafter "Rorer"), and
NOVEN PHARMACEUTICALS, INC , a Delaware corporation, having a place of business
at 13300 S.W. 128th Street, Miami, Florida 33186 (hereinafter "Noven").
W I T N E S S E T H
WHEREAS, Noven has licensed Rorer the right to market an estrogen drug
delivery system, specifications of which are attached to said License Agreement
as Exhibit C (herein "Licensed Product");
WHEREAS, RORER desires to purchase all of its requirements of the
Licensed Product from Noven; and
WHEREAS, Noven desires to supply Rorer with all of its requirements of
the Licensed Product.
NOW, THEREFORE, it is mutualIy agreed between the parties hereto as
follows:
<PAGE> 40
ARTICLE I - DEFINITIONS
1.01 In General. All terms used in this Supply Agreement shall have the
same definition as in the License Agreement entered into by the parties hereto
concurrently with the execution of this Supply Agreement.
ARTICLE II - SUPPLY
2.01 Agreement to Supply.
(a) Noven shall use its best efforts to supply and Rorer shall
purchase, in Standard Packaging, all of Rorer's, its Affiliates' and its
Sublicensees' requirements for the Licensed Product subject to the terms and
limitations herein contained.
(b) Licensed Product shall meet the following specifications:
A laminate with a colorless plastic backing juxtaposed to a
where the
in a form suitable for delivery
through the skin. The adhesive has a
contained in a heat sealed. The units will be available in
the following dosages:
-2-
<PAGE> 41
2.02 Price. The price to be paid by Rorer to Noven for the Licensed
Product which Rorer purchases from Noven pursuant to this Supply Agreement, is
set forth in Article 5.2 of the License Agreement.
2.03 Payment. Payment for each delivery of Licensed Product shall be
made in accordance with the provisions of Article 5.2 of the License Agreement.
2.04 Price Increases. The minimum and maximum initial payment for
Licensed Product shall be increased as set forth in Article 5.2 of the License
Agreement.
2.05 Records of Costs. Noven shall keep accurate accounting records for
the calculation of Noven's Cost of Licensed Product supplied Rorer Licensed
Product.
2.06 Manufacturing Standards.
(a) The Licensed Product supplied by Noven hereunder shall be
manufactured, assayed, and packaged in accordance with Good Manufacturing
Practices ("GMP") as such
-3-
<PAGE> 42
term is defined under the United States Federal Food, Drug and Cosmetic Act of
1938, as amended from time to time, and regulations and guidelines promulgated
pursuant thereto and in an establishment licensed for such purpose by the United
States Food & Drug Administration or any successor agency of the United States
government, and shall fully conform with the specifications attached to the
License Agreement as Exhibit C and with all United States governmental
requirements in effect at the time of shipment. Furthermore, the Licensed
Product supplied by Noven for sale in countries other than the United States
shall conform with the standards of that country and shall be manufactured in a
facility approved for that purpose by the proper authorities of each country to
the extent Rorer specifically notifies Noven of the same and pays the cost of
any changes in specifications or manufacturing practices required.
(b) Rorer shall provide a rolling forecast of needs on a calendar
quarter year in advance of such forecasted need, which forecast shall be updated
on a calendar quarter basis. Rorer shall be required to purchase ninety (90%)
percent of such forecast made six (6) months in advance of the specified
delivery date and Noven shall have no duty to deliver units in excess of one
hundred ten (110%) percent of such forecast, in addition to and independent of
the limits based on Rorer's Moving Average.
-4-
<PAGE> 43
(c) Noven shall deliver to Rorer with each shipment of the Licensed
Product a certificate of analysis for each lot of Licensed Product.
2.07 Forecasts and Orders. Rorer orders for the Licensed Product shall
indicate the quantity to be delivered and specific delivery dates on a monthly
basis and shall be sent to Noven at least 120 days prior to the earliest
specified delivery date. Rorer shall attempt to minimize fluctuations in the
amounts of such orders to the extent feasible Rorer's orders shall not call for
delivery of more than ten thousand (10,000) units in any calendar month during
the first year of marketing in any country under this agreement. Thereafter, any
order for delivery in any month of more than one hundred twenty (120%) percent
of Rorer's Moving Average (as hereinafter defined) shall be sent to Noven at
least six (6) months prior to the earliest specified delivery date, but no such
order shall call for delivery of more than one hundred fifty (150%) percent of
said Rorer's Moving Average. If Rorer's requirements exceed the limitations set
forth above, the parties shall consult in good faith regarding the best way in
which to fulfill them.
2.08 Movinq Average. "Rorer's Moving Average" as used herein shall
mean the average monthly number of patches ordered by Rorer during the six (6)
month period immediately preceding the date of the order being considered.
-5-
<PAGE> 44
ARTICLE III - REPRESENTATIONS, WARRANTIES AND INDEMNITY
3.01 Ownership. Noven represents and warrants that it has developed
Noven's Technology and it owns the entire right, title and interest in the
patent applications now set forth in Exhibit B.
3.02 Right to Enter Agreement. Noven warrants that it has the right to
enter into this Supply Agreement, and that there are no outstanding assignments,
grants, licenses, encumbrances, obligations or agreements, either written, oral
or implied, inconsistent with this Supply Agreement.
3.03 Product Indemnity. Noven represents and warrants that Licensed
Product in the form delivered to Rorer shall conform to specifications for any
such product and proved in any United States abbreviated New Drug Application
pertaining thereto including composition, purity, appearance and stability and
shall be capable of maintaining such until any expiration date for such Licensed
Product; and Noven represents and warrants that it will use its best efforts
comply with all rules and regulations, including all current Good Manufacturing
Practices, as that term is defined by the United States Food and Drug
Administration, applicable to the manufacture, filling, labeling, packaging,
storage and shipment of Licensed Product which are in force or hereafter adopted
by the United States Food and Drug Administration or any successor agency
thereto or any agency Oe the state within the Territory and
-6-
<PAGE> 45
shall not be misbranded in violation of Sections 501, 502 and 505 of the Federal
Food, Drug and Cosmetic Act, as amended from time to time.
3.04 Foreign Product Warranty. Noven will use its best efforts to
comply with manufacturing specifications of foreign countries of which Rorer has
given Noven specific notice, provided that Rorer pays all Cost of such
compliance.
3.05 No Other Warranties. Except as stated above, Noven makes no other
warranties or indemnities, express or implied, with respect to Noven's
Technology, Noven's Patent Rights or Licensed Product.
3.06 Limitation On Damages. In the event of any breach of any
representation and warranty of Noven under this Article III damages shall be
limited to actual damages and shall not exceed the royalty payable to Noven
under the License Agreement in any calendar year except in the case of the
warranty against patent infringement, which shall not exceed fifty (50%) percent
of the royalties paid to Noven in any such calendar year for such country.
ARTICLE IV - CONFIDENTIALITY
4.01 Confidentiality. Except to the extent that any of the data,
information or know-how developed by either party, including but not limited to
Noven's Technology, is in the public domain at the time of disclosure or
subsequently enters the public domain without fault on the part of a party
hereto,
-7-
<PAGE> 46
each party shall hold all such data, information, or know-how received from the
other prior to or during the term of this License Agreement in confidence and
shall not disclose it to any other entities during the term of this License
Agreement or thereafter without the other party's permission in writing. Such
permission shall not be withheld (a) to the extent disclosure is required by
legal process to which process the generating party is permitted to object or
(b) to information required to be submitted to governmental authorities in order
to obtain any necessary health registration or price reimbursement. Such
permission shall not be unreasonably withheld as to other information reasonably
required for obtaining health registration or insurance reimbursement approval
or in marketing Licensed Product. Notwithstanding the foregoing, Rorer shall
have the right to use and disclose after the year 2010 Noven's Technology
existing on the date of signing of this License Agreement or twenty (20) years
after its disclosure as to data generated after the execution of this Agreement,
if this Agreement expires by its normal forms, as set forth under paragraph 9.1
below.
ARTICLE V - PRODUCT RECALL
5.01 Recall. If an authorized government agency of the United or any
country or territory based on requirements specifically notified to Noven by
Rorer thereof shall seize any Licensed Product or if Rorer deems it necessary
- 8 -
<PAGE> 47
to initiate a voiuntary recall of any Licensed Product for any reason, Rorer
shall immediately notify Noven of such seizure or recall and shall consult with
Noven regarding the timely compliance with all pertinent state or federal
regulations pertaining thereto. Furthermore, Rorer shall make a permanent record
of all costs incurred thereby, a copy of which shall be delivered to Noven as
soon after the completion of such recall or seizure as practically may be done.
When the reason of said recall or seizure resides in the negligent failure of
Noven to manufacture Licensed Product in accordance with its specifications,
compendium requirements, or government rules and regulations, or in the failure
of Licensed Product to maintain stability for the period described in the
product labeling, Noven shall reimburse Rorer for all reasonable costs incurred
by Rorer in effecting such recall or seizure, including all reasonable credits
extended to Rorer's customers as a result thereof. When the cause or reason of
said recall or seizure directly resides in the failure of Rorer to properly
store, transport or care for Licensed Product while Licensed Product was in
Rorer's possession, Rorer shall bear all costs of such recall or seizure and
indemnity Noven therefrom.
ARTICLE VI - TERM AND TERMINATION
6.01 Term. The term of this Supply Agreement shall be the same as the
term set forth in Paragraph 9.1 of the License Agreement, unless earlier
terminated in accordance with Paragraph 6.02 of this Supply Agreement.
- 9 -
<PAGE> 48
6.02 Termination. Each party shall have the right to terminate this
Supply Agreement at any time on ninety (90) days' written notice that the other
party is in default and the reasons therefore, and if such other party fails to
cure such default within such period, this Supply Agreement shall terminate upon
the date set in such notice; provided, however, that if this Supply Agreement is
terminated (i) Rorer shall have the right to sell all Licensed Product then in
its inventory, and (ii) in the event such termination is through no fault of
Rorer, if Rorer so elects; it shall have the right to receive from Noven, and to
se11, all of Rorer's orders for Licensed Product accepted by Noven prior to such
notice of default. The provisions of this Supply Agreement shall apply to all
such orders notwithstanding its termination.
6.03 Force Majeure. If the performance of this Supply Agreement or any
obligation hereunder is prevented or hindered, by reason of any cause beyond
control of the affected party, including, but not limited to, fire, flood, riot,
strikes or any governmental action, the party so affected, upon immediate notice
to the other party, shall be excused from such performance, provided that the
party so affected shall use its best efforts to avoid or remove such cause or
causes of non-performance and shall continue to perform hereunder with the
utmost dispatch whenever such cause or causes are removed. If as a result of
any governmental action, the performance of
-10-
<PAGE> 49
this Supply Agreement or any obligation hereunder is prevented for a continuous
period of one hundred eighty (180) days, either party shall have the right to
terminate this Agreement by providing the other party with written notice of
termination.
ARTICLE VII - NOTICE
7.01 Notices. Any notice or report required or permitted hereunder shall
be given in writing, by registered or certified mail, to the following
addresses:
(1) Noven Pharmaceuticals, Inc.
13000 S.W. 128th Street
Miami, Florida 33186
Attention: President
With a copy to: Sybil Meloy, Esq.
Ruden, Barnett, McClosky, Smith,
Schuster & Russell, P.A.
701 Brickell Avenue
Miami , Florida 33131
(2) Rorer Group Inc.
500 Virginia Drive
Fort Washington, Pennsylvania 19034
Attention: President
With a copy to: Ernest Lipscomb, Esq.
Patent Counsel
Rorer Group Inc.
500 Virginia Drive
Fort Washington, Pennsylvania 19034
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 date of mailing.
-11-
<PAGE> 50
ARTICLE VIII - MISCELLANEOUS
8.01 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.
8.02 Entire Agreement. This Supply Agreement and the License Agreement
and Exhibits attached thereto which this Supply Agreement forms a part thereof,
represent the entire understanding between the parties and supersedes any and
all previous understandings, both oral and written, with respect to the subject
matter hereof. This Supply 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.
8.03 Severability. If any provision of this Supply Agreement shall be
held invalid or unenforceable, such invalidity or unenforceability shall attach
only to such provision and shall not in any manner effect or render invalid or
unenforceable any other severable provision of this Supply Agreement, and this
Supply Agreement shall be carried out as if any such invalid or unenforceable
provision were not contained herein.
8.04 Arbitration. Any dispute arising from or relating to this Supply
Agreement shall be finally and
-12-
<PAGE> 51
bindingly settled by arbitration in accordance with the then obtaining rules of
the American Arbitration Association by one or more arbitrators designated in
conformity with those rules at a site mutually agreed upon by the parties, or,
if there is no such agreement, then in New York, New York, and judgment upon any
award thereunder may be entered in any court having jurisdiction thereof.
8.05 Assiqnment. This Supply Agreement shall inure to the benefit of the
parties and to the successors and assigns of that part of the business of Rorer
to which the subject matter of this Supply Agreement is related. This Supply
Agreement, or any rights thereunder, shall not otherwise be sold, assigned,
transferred or encumbered by either party without first obtaining the consent
of other other party in writing.
8.06 Governinq Law. This Supply Agreement shall be construed, and the
respective rights of the parties hereto determined, according to the substantive
laws of the State of New York, without reference to the conflict of law rules.
lN WITNESS WHEREOF, the parties hereto have caused this Supply Agreement
to be executed by their duly authorized officers upon the date above written.
ATTEST: NOVEN PHARMACEUTICALS, INC.
/s/ Graciela Lopez
- --------------------------------- By: /s/ Steven Sablotsky
-------------------------------
Title: President
-----------------------------
Date: 4-27-89
-----------------------------
(SIGNATURES CONTINUED ON NEXT PAGE)
-13-
<PAGE> 52
(SIGNATURES CONTINUED)
ATTEST: RORER GROUP INC.
/s/ Ernest B. Lipscomb
- -----------------------------
Ernest B. Lipscomb By: /s/
-----------------------------
Title: Senior V.P.-Finance and CFO
---------------------------
Date: April 27, 1989
---------------------------
-14-
<PAGE> 53
AMENDMENT TO LICENSE AGREEMENT
This amends the License Agreement of April 27, 1989 between Noven
Pharmaceuticals, Inc. (Noven) and Rorer Group Inc. (Rorer).
WHEREAS, Noven and Rorer entered into a license agreement covering the
development, marketing, supply and sale of Licensed Product, as that term is
defined in the License Agreement of April 27, 1989 (the License Agreeement);
WHEREAS, the License Agreement covered all countries and territories
worldwide, except Japan;
WHEREAS, Rorer is willing to surrender its U.S. and Canadian rights to
the Licensed Products under the circumstances described below; and
WHEREAS, Rorer and Noven intend to continue their collaboration on the
Licensed Products outside the United States and Canada;
NOW, THEREFORE, intending to be legally bound, Noven and Rorer hereby
amend the License Agreement as follows:
I. Surrender of U.S. and Canadian License Rights
Rorer hereby surrenders and grants back to Noven all license rights
covered by Article IV of the License Agreement with respect to the United
States and Canada. The foregoing grant back and surrender of license rights
applies only to the U.S. and Canada, and not to any other area of the
Territory, as that term is defined in the License Agreement.
II. Rorer Relieved of Obligation to Fund the U.S. Clinical and Product
Development Program
Rorer shall be excused and released from funding any work conducted
after March 31, 1990 on the U.S. and Canadian Clinical and Product Development
Program, as that term is defined in the License Agreement.
III. Contingent Reimbursement of Rorer of its Prior U.S. and Canadian
Clinical and Product Development Program Costs
Noven shall reimburse Rorer the approximately in costs paid to
third-parties in connection with clinical trials 1001, 1002 and 1005 for the
U.S. and Canadian Clinical and Product Development Program, if that program's
studies are used by Noven for any purpose and are not used by Rorer to secure
regulatory approval outside the U.S. or Canada and provided that Noven either
commercializes the Licensed Product in the U.S. or Canada or receives payments
from a third party in return for the U.S. or Canadian rights to the Licensed
<PAGE> 54
Product. In the latter event, if Noven receives a lump sum payment from a
third party in return for such rights, Noven shall immediately reimburse Rorer
the entire amount required under this section, up to the amount of the lump sum
payment(s). Any remaining balance -- or in the event no lump sum payment is
received from a third party, the entire amount to be reimbursed -- shall be
paid by Noven commencing on commercialization of the Licensed Product. In such
event, percent of the operating profit Noven makes on the Licensed Product in
each calendar quarter -- whether such profit is derived from sales, royalties,
manufacturing or any other source -- shall be paid over to Rorer within thirty
days of the end of that calendar quarter, until Rorer has been fully reimbursed
as required by this section.
IV. Contingent Reimbursement Of Rorer Of One Half Of The Payment Made To
Noven On Execution Of License Agreement
If Noven commercializes the Licensed Product in the United States or
Canada, or enters into an agreement with a third party covering the U.S. or
Canadian rights to the Licensed Product, Noven shall reimburse Rorer
dollars, an amount that represents the payment
Rorer made to Noven on execution of the License Agreement. Such reimbursement
will be made immediately, to the extent of any lump sum payments Noven receives
from a third-party for the U.S. or Canadian rights to the Licensed Product.
If such lump sum payments from third-parties in the aggregate are less than
, then Noven shall pay Rorer within thirty days of the close of
each calendar quarter following U.S. or Canadian commercialization,
percent of the operating profit Noven makes in that quarter from the Licensed
Product -- whether such profit is derived from sales, royalties, manufacturing
or any other source -- until Rorer has been reimbursed the full
payment.
V. Previous U.S. ANDA Milestone Payment To Be Applied Against Future
International Milestone Payments
The previously paid by Rorer to Noven as an advance
payment in anticipation that Noven would shortly file a completed U.S. ANDA
will be applied and credited against the remaining International milestone
payments specified in Article 5.1 of the License Agreement.
VI. Notices, Records and Audit Rights
Noven shall immediately notify Rorer, if Noven either commercializes
the Licensed Product in the U.S. or Canada or enters into an agreement with a
third-party covering the rights thereto in those countries. All reimbursement
payments
-2-
<PAGE> 55
required by Sections III and IV hereof shall be accompanied by a statement in
reasonable detail, permitting Rorer to ascertain whether the amount of the
payment is correct. On reasonable notice and at reasonable times, Rorer, not
more than twice a year, shall have the right to audit relevant books and
records of Noven to ensure that Noven is not in breach of its obligations to
make the aforesaid reimbursement payments.
VII. Release Of Rorer From Further U.S. and Canadian Obligations Relating
To The Licensed Product
Noven hereby releases Rorer from any and all further obligations,
whether contractual or otherwise, relating to the development, sale,
distribution, manufacture or any other aspect of the Licensed Products in the
U.S. or Canada.
VIII. Reciprocal Rights To Exploit Data
Rorer shall have the unrestricted right to use any data derived from
any existing or future study on the Licensed Product, whether conducted by
Rorer, Noven or a third party, in any country or area of the Territory other
than the United States and Canada. Noven shall similarly have the unrestricted
right to use any such data, but only in the United States, Canada and Japan.
IX. Ceiling On International Clinical And Product Development Program
Notwithstanding any provision or term of the License Agreement, Noven
shall charge Rorer no more than the following monthly sums for all work
performed, and all Licensed Product furnished, by Noven in 1990 in connection
with the International Product Development Program for the Licensed Products
(the "Ceiling Sums").
<TABLE>
<CAPTION>
Month Ceiling Sum in $000s
<S> <C>
April
May
June
July
August
September
October
November
December
Total
</TABLE>
The foregoing Ceiling Sums, which shall cover all direct and indirect costs
including overhead and legal fees, may not be exceeded without the express
written consent of Rorer. Noven shall provide all services specified in a
letter from R. Haslan
-3-
<PAGE> 56
to R. Lucking dated 3/21/90, a copy of which is attached as Exhibit A. Noven
will forward to Keith Salenger and Robin Norris invoices covering actual
monthly expenses up to the Ceiling Sums.
X. Effect Of Amendment On License Agreement
Except as provided in this amendment, all other terms and provisions
of the License Agreement shall remain in full force and effect.
NOVEN PHARMACEUTICALS INC. RORER GROUP INC.
BY: /s/ Steven Sablotsky BY: /s/
--------------------------- -----------------------------
DATE: 5-10-90 DATE: 6/22/90
------------------------- ----------------------------
-4-
<PAGE> 1
EXHIBIT 10.5
Parkside Plaza Office Lease between Maxine Chin and the Registrant dated
April 1, 1991.
<PAGE> 2
LEASE
This Lease is made this 1st day of April, 1991, by and between Maxine Chin
("Landlord"), an individual whose mailing address is 12300 S.W. 121st Avenue,
Miami, Florida 33186 and Noven Pharmaceuticals, Inc. ("Tenant") whose mailing
address is 13300 S.W. 128th Street, Miami, Florida 33186, as follows:
Premises: Landlord, in consideration of the rents and covenants hereinafter
contained does hereby lease to Tenant, on a month to month basis, the building
space ("Leased Premises") having a street address at 13388 S.W. 128th Street,
Miami, Florida 33186.
Term: Commencing on the "Commencement Date" April 1, 1991 and ending 21
months thereafter; except that in the event the Commencement Date is a date
other than the first day of calendar month, said term shall extend for said
number of months in addition to the remainder of the calendar month following
the Commencement Date. The term of this Lease shall be 21 months from April 1,
1991 to December 31, 1992 with an additional three (3) two-year options to run
consecutively with an annual increase in rent proportionate to such increase in
the CPI Miami with April 1, 1991 as the basis with maximum increase of
_____________________________.
Rent: Tenant shall pay rent to the Landlord starting with the commencement
date of Lease or the date of occupancy, whichever first
<PAGE> 3
occurs for the use and occupancy of the Leased Premises at a rate of Six Hundred
and Twenty-Four Dollars ($624.00) per month plus applicable sales tax, each
installment being due on or before the first date of each month during the
leased period, without notice or demand.
Use and Care of Premises: Tenant shall use the Leased Premises as a warehouse
and for no other purpose without the prior written consent of Landlord. Tenant
will not use or occupy the Leased Premises for any unlawful purpose and will
comply with all present and future laws, ordinances, regulations and orders of
all state and governmental units or agencies having jurisdiction over the
Leased Premises. Tenant hereby agrees to abide by all of the rules and
regulations as set forth by the Landlord attached hereto as Exhibit "A" and as
may be from time to time modified in the sole discretion of the Landlord.
Tenant hereby accepts the Premises in "as is" condition and shall return the
Premises upon termination of this Lease in a like manner, normal wear and tear
excepted and broom clean. Any and all equipment or fixtures remaining at
termination shall be considered the property of the Landlord.
Security Deposit: Tenant, upon executing this Lease has deposited with
Landlord Six Hundred Dollars ($600.00) as security for Tenant's performance of
this Lease. Such sum shall be held by Landlord without
2
<PAGE> 4
interest. Should Tenant comply with all of the terms, covenants and conditions
of this lease and promptly pay all of the rental and all other sums payable by
Tenant herein as they fall due, the Security Deposit (less any sums incurred or
expended by Landlord in cleaning and restoring the Demised Premises) shall be
returned to Tenant at the end of the term.
Utilities and Services: Tenant shall pay for all electricity, gas, telephone,
sewer, water and other utility services separately metered or chargeable to the
Leased Premises. All utility services which are not separately metered or
chargeable to the Leased Premises shall be paid by Landlord.
Insurance: Landlord shall maintain fire and extended coverage insurance on
the building and the Premises in such amounts as Landlord deems appropriate.
Such insurance shall be maintained at the expense of Landlord. Tenant shall
maintain, at its expense, in an amount equal to full replacement cost, fire and
extended coverage insurance on all of its personal property, including
removable trade fixtures, located in the Premises and in such additional
amounts as are required to meet Tenant's obligations.
Tenant shall, at its own expense, maintain a policy or policies of
comprehensive general liability insurance with respect to the Premises, with
the premium thereon fully paid on or before due date, issued by and
3
<PAGE> 5
binding upon an insurance company approved by Landlord. Such insurance shall
afford minimum protection of not less than $300,000.00 combined single limit
coverage for bodily injury, property damage or any combination thereof. Landlord
shall not be required to maintain insurance against theft within the Premises or
the building.
Tenant shall, at Landlord's request provide Landlord with current certificates
of insurance, which shall name as additional insureds Maxine Chin, an
individual. All insurance purchased by Tenant shall contain a Waiver of
Subrogation against Maxine Chin, an individual.
Default: Tenant's non-compliance with any of the provisions set forth in this
Lease shall be considered a default. Landlord may pursue any and all legal
remedies available to it to cure any default. Tenant agrees that should
Landlord employ an attorney to present, enforce or defend Landlord's rights or
remedies hereunder, the undersigned shall pay any and all attorney's fees and
expenses incurred by Landlord in connection therewith.
Notices: All notices or demands to be given by either party hereunder shall
be in writing and addressed to the addressees first set forth above.
Governing Law: This Lease shall be governed by the Laws of Florida.
4
<PAGE> 6
IN WITNESS WHEREOF, Landlord and Tenant have duly executed this Lease as of the
day and year first above written.
Signed, Sealed and Delivered "LANDLORD"
in the presence of:
/s/ By: /s/
- ---------------------------- ---------------------------
Operations Manager As Its Landlord
- ----------------------------
Witness
"TENANT"
/s/ By: /s/ Steven Sablotsky
- ---------------------------- ---------------------------
Accountant As Its President 4-3-91
5
<PAGE> 1
EXHIBIT 10.6
Parkside Plaza Office Lease Between James W. Keen and the Registrant
dated July 2, 1992.
<PAGE> 2
STANDARD OFFICE LEASE
THIS LEASE AGREEMENT made and entered into this 2nd day of July, 1992
by and between James W. Keen (hereinafter referred to as "Lessor") and Noven
Pharmaceuticals, Inc. (hereinafter referred to as "Tenant" or "Lessee").
WITNESSETH:
1. DESCRIPTION. Lessor hereby leases unto Tenant and Tenant
hereby leases form Lessor, Suite No. 104,203 & 204 ("Demised Premises")
containing approximately 3,328 square feet in that certain building
("Building") located at 13316, 13332, 13334 SW. 128th Street, Miami, Florida,
also known as "Parkside Plaza."
2. TERM. [Fill in and Initial A or B]
A. The term ("Term") of this Lease shall be from the 1st
day of January, 1993 ("Commencement Date") through the 31st day of December,
1994 ("Expiration Date") with three (3) additional two-year options.
B. The term ("Term") of this lease shall commence on
<PAGE> 3
the earlier of the following dates ("Commencement Date"): (i) the date on which
Tenant opens for business in the Demises Premises, or (ii) ______________ days
after Lessor has tendered possession (as hereafter provided) of the Demised
Premises to Tenant, or (iii) the date _________ days after Lessor notifies
Tenant that the Demises Premises are or should be ready for occupancy. Tenant
shall pay all rent and additional rent relating to the Demised Premises which
accrue after Lessor's tender of possession.
Tender of possession shall be deemed to have occurred when Lessor has
completed Lessor's work, if any.
If Lessor is unable to give possession of the Demised Premises to
Tenant on the date for the commencement of the term hereof by reason of the
fact that Lessor has not substantially completed any space preparation work in
the Demised Premises pursuant to Lessor's Work Letter signed on behalf of
Lessor and Tenant (which Work Letter, if any, is made a part hereof by
reference) and if the delay in completion of such work has not been caused by
Tenant's failure to submit its plans and specifications to Lessor on or before
the time called for in the Work Letter, or caused by other act or failure to
act by Tenant, then the term of this Lease shall commence on the day following
the day of notification by Lessor
<PAGE> 4
that such work has been substantially completed. If such date shall be other
than the first day of a calendar month, the rent or such months shall be
prorated on a per diem basis. No failure to deliver possession on the
scheduled date for the commencement of the term shall extend, or be deemed to
extend, the term of this Lease.
3. RENTAL PAYMENT. Subject to increase as provided in this
Lease. Tenant agrees to pay to Lessor as and for rent for the Demised Premises
for the Term hereof the sum of Fifty-one thousand nine hundred sixteen dollars
and eighty cents ($51,916.80) plus all applicable sales and use taxes which
sum for the convenience of the Tenant shall be paid as follows:
$2,163.20 + 6.5% sales tax = $2,303.81 ("Base Monthly Rental") plus
all applicable sales and use taxes upon the first day of each calendar month
for the Term hereof commencing with the first calendar month following the
calendar month of the Commencement Date.
The rental payments shall be made to Lessor of the address hereinafter
set forth to which notices to Lessor shall be sent or at such other place as
Lessor may, from time to time, hereafter designate by notice to Tenant.
Tenant's obligation to pay rent
<PAGE> 5
and keep and perform any and all covenants and agreements herein contained
shall not be abated, released or discharged because of any reason whatsoever
except as is otherwise specifically provided for in this Lease. Rent and each
installment thereof shall be paid in lawful money of the United States, legal
tender at the time of payment. All rents shall be payable in advance and paid
without deduction, setoff, discount or abatement.
Under no circumstances shall any holding over by Tenant be authorized
and no occupancy beyond the term limited hereby shall ever constitute anything
except an unlawful holding over by Tenant after the expiration of the Term. By
Tenant's execution hereof, Tenant acknowledges that Tenant has inspected the
Demised Premises and the Building and that as of the date hereof the Demised
Premises and the Building are in all respects in satisfactory condition and
acceptable to Tenant and Tenant is accepting same as is.
A. This Lease shall replace all previous existing leases
regarding the aforementioned units between Noven Pharmaceuticals and James W.
Keen. This new lease shall take effect January 1, 1993. All previously
existing leases shall be in force until this lease is in effect.
<PAGE> 6
4. INCREASE OF BASE RENT: The annual rental for each year of
this lease ("lease year"), after the base year shall be increased or decreased,
but never less than the base rent, by an amount equal to the proportion
hereafter set forth, times the amount of the increase or decrease based on the
cost of living escalation published by the Bureau of Labor Statistics U.S.
Department of Labor.
(a) COST OF LIVING ESCALATION: If two months prior to
commencement of any lease year, the Consumer Price Index (C.P.I.) for "all
items" (United States City Average Index) as compiled and published by the
Bureau of Labor Statistics, United States Department of Labor not to exceed
5.5% maximum should be higher than the Base Consumer Price Index of January 1,
1993, the Minimum Monthly Rent installments shall be increased by an amount
proportionate to the amount of such increase in the said price index, not to
exceed 5.5% maximum. If such price index should in the future be compiled upon
a different basis, a proper adjustment will be made therein, for the purposes
of this Paragraph, to reflect any increase the cost of living that has occurred
over the Base Consumer Price Index. If at the time of any such computation the
United States Department of Labor should no longer compile and publish such
prices indexes, the index for "All Items" compiled and published by any other
branch or department of the Federal
<PAGE> 7
government shall be used for the purpose of this paragraph and if no such index
is compiled and published by any branch or department of the Federal
government, the statistics reflecting cost of living increases as compiled by
any institution or organization or individual generally recognized as an
authority by financial and insurance institutions shall be used as a basis for
such adjustment. This provision is independent of the other provisions which
provide for a pass through of certain increases. (See attached addendum for
cost of option renewal).
For example: If the base C.P.I. is 230.5 and two months prior to the
first lease year the C.P.I. is 235.8 and the minimum monthly rent is $1,400.00.
The new minimum monthly rent for the next lease year would be $1,432.19 or
$1,432.00 per month. [235.8 divided by 230.5 = 1.023 X $1,400.00 = $1,432.19
per month].
Lessor shall have the right to treat any sums due pursuant to this
Paragraph as additional rent due hereunder and if the same be not promptly paid
when due. Lessor shall have all the rights and remedies to which Lessor is
entitled for the nonpayment of rent.
5. USE AND POSSESSION. It is understood and agreed that the
demised space and premises shall be continually used and
<PAGE> 8
occupied by the Lessee during the term of this Lease only for the research,
development, clinical manufacturing and packaging of pharmaceutical products
and for no other purposes or uses whatsoever. Tenant will not make or permit
any use of the space or premises which, directly or indirectly, is forbidden by
public law, ordinance or government regulation or which may be dangerous to
life, limb or property. In the event the Tenant uses the space or premises for
any purposes not expressly permitted herein then the Lessor may terminate the
lease or without notice to tenant, restrain such improper use by injunction or
other legal action.
As a material consideration hereto the Tenant covenants that Tenant
will not without the written consent of the Lessor permit the premises to be
occupied by any person, firm or corporation other than the Tenant whose name
appears on this lease.
6. SERVICES: Lessor agrees to furnish the following services to
Tenant: (1) Automatically operated fire suppressant sprinkler system throughout
and central smoke detector in office areas only. (2) Water. (3) Furnishing,
supplying and maintaining the building's common areas and restroom facilities,
all at Lessor's expense, unless otherwise agreed to in this Lease.
Tenant agrees to and shall pay when due all charges for
<PAGE> 9
utility services, which are billed to Tenant with respect to the Demised
Premises or which are charged with respect to the Demised Premises as opposed
to the Building as a whole. If the Tenant fails to pay same promptly when due.
Lessor shall have the right, but not the obligation, to pay said charges and
Tenant agrees to reimburse Lessor promptly therefor. Any sum to which Lessor
shall be entitled pursuant to this Paragraph shall be deemed to be additional
rent hereunder and, if the same be not promptly paid to Lessor, Lessor shall
have all the rights and remedies to which it is entitled for the nonpayment of
rent. Tenant shall pay for all utility charges, for electricity, in connection
with the Demised Premises.
If the Tenant requires additional current or other than 110 volt
service, request for same must be obtained from the Lessor and all work
required will be paid for by the Tenant. The Lessor shall not be liable for
any delay or failure to supply any of such services due to unusual conditions
beyond its control and Lessor shall not be liable for damage nor shall the
Tenant ever be entitled to any abatement of rent for failure to supply same.
7. NO ASSIGNMENTS, SUBLEASES OR ENCUMBRANCES: Tenant shall
neither sublet the Demised Premises or any part thereof nor assign this lease
or any of the rights herein granted to Tenant without
<PAGE> 10
the prior written consent of Lessor in each instance. Tenant shall have no
right or power to, and shall not, hypothecate, transfer, pledge or other
encumber this Lease or Tenant's rights hereunder nor shall Tenant permit any
such encumbrance. Tenant has no right or power to cause, permit or do anything
which would cause the Demised Premises, the Building, the Land or Tenant's
interest in this Lease to become the subject of any lien, including, but not
limited to, any mechanic's liens under the laws of the State of Florida and
nothing done by, through, under or against Tenant shall ever create any such
liens. If any such lien is filed, Tenant shall cause the land and the Tenant's
interest in this Lease to be released from the lien thereof by posting a bond
or otherwise within ten (10) days of the date such lien is filed.
8. ALTERATIONS AND IMPROVEMENTS, ETC.: (a) Tenant shall make no
alterations, decorations, installations, additions or improvements in or to the
demised premises without Lessor's prior written consent. Tenant shall not cut,
drill into, disfigure, deface or injure any part of the premises; nor obstruct
or permit any obstruction, alteration, addition, improvement, decoration or
installation in the premises. All alterations, additions, improvements,
decorations or installations (except movable furniture and fixtures put in at
the expense of the Tenant and removable without defacing or injuring the
Building or the
<PAGE> 11
premises) shall become the property of Lessor at the termination of the term;
Lessor, however, reserves the option to require Tenant upon demand in writing
to remove all fixtures and additions, improvements, decorations or
installations (including those not removable without defacing or injuring the
leased premises) and to restore the premises to the same condition as when
originally leased to Tenant, reasonable wear and tear excepted. Tenant agrees
to restore the premises immediately upon the receipt of the said demand in
writing at his own cost and expense and agrees in case of his failure to do so,
that Lessor may do so and collect the cost thereof from Tenant. Any such
alterations or restorations shall be made at such times and in such manner as
Lessor may designate and so as not to interfere with the occupation, use and
enjoyment of the remainder of the Building by the other tenants thereof.
(b) In making any alterations, decorations, additions,
installations or improvements to or in the premises. Tenant shall employ and
use only such labor, contractors or mechanics as approved by Lessor and all
such work done by Tenant shall be performed and installed in such a manner that
the same shall comply with all provisions of law, ordinances and all rules and
regulations of any and all agencies and authorities having jurisdiction over
the premises and at such time and in such manner
<PAGE> 12
as not to interfere with the progress of any work being performed by or on
account of Lessor. Notwithstanding the foregoing, it is understood that Tenant
is not obliged by Lessor to make any improvement or improvements and in no
event shall Tenant have the right to create or permit there to be established
any lien or encumbrance of any nature against the premises or the Building for
said improvement or improvements by Tenant shall fully pay the cost of any
improvement or improvements made or contracted by Tenant. Any mechanics's lien
filed against the premises of the Building for work claimed to have been, done
or materials claims to have been furnished to Tenant shall be duly discharged
by Tenant within ten (10) days after the filing of the lien.
9. INSPECTION, EXAMINATION AND ENTRY: Lessor and
Lessor's agents shall have the right to enter the premises at all reasonable
hours to examine the same and workmen may enter at any time when authorized by
Lessor or Lessor's agents to make such repairs, alternations or improvements in
the Building as Lessor may deem necessary or desirable. If during the last
month of the term, Tenant shall have removed all of Tenant's property. Lessor
may immediately enter the premises and prepare them for any future Tenant.
Furthermore, the Lessor may allow such future Tenant to occupy the premises.
These acts shall have no effect upon Tenant's
<PAGE> 13
obligations under this Lease and Tenant shall be entitled to no abatement on
diminution of rent as a result thereof, except that in the event such future
Tenant makes any payment for the period up until the expirations of this Lease,
Tenant shall be entitled to a credit to the extent of such payment. If Tenant
shall not be personally present to open and permit entry into the premises,
when entry therein to shall be permissible or necessary hereunder, Lessor may
forcibly enter same without rendering Lessor liable to any claim for damages
and without affecting the obligations and covenants of this Lease. Employees
of Lessor and Lessor's agents shall be permitted to enter the demised premises
by pass-key at all reasonable times. The Lessor shall also have the right to
enter the leased premises at all reasonable hours for the purpose of displaying
said premises to prospective tenants within ninety days prior to the
termination of this Lease.
10. RIGHT OF LESSOR TO USE ENTRANCES, ETC. AND TO CHANGE SAME:
For the purpose of making repairs or alterations in any portion of the Building
of which the premises form a part, Lessor may use one or more of the street
entrances, halls, passageways and elevators of the said building, provided,
however, that there be no unnecessary obstruction of the right of entry to the
premises while the same are occupied. Lessor may at any time change the name
or
<PAGE> 14
number of the Building, remodel or alter the same, or the locations of any
entrance thereto, or any other portion thereof not occupied by Tenant and the
same shall not constitute a constructive or actual, total or partial eviction.
11. TENANT TO TAKE GOOD CARE OF PREMISES: Tenant shall keep the
premises in a clean, safe and sanitary condition and shall permit no waste or
injury to occur to the premises and fixtures therein, or to any additions,
alterations and improvements thereto. All damage caused by Tenant's
negligence, or that of his agents, servants, employees or visitors, shall be
repaired promptly by Tenant at his sole cost and expense. In the event that
the Tenant fails to comply with the foregoing provisions, the Lessor shall have
the option to enter the premises and make all necessary repairs at Tenant's
cost and expense, the same to be added to and be payable with the next monthly
installment of rent.
12. COMPLIANCE WITH ORDINANCES AND DIRECTIVES OF AUTHORITIES:
Lessee shall, at its own cost and expense, comply with all present or future
rules, regulations, directives, laws, ordinances and orders of all public
authorities and Fire Underwriters which are or may become applicable to the
leased premises and space, except as said rules pertain to any structural work
or outside repairs.
<PAGE> 15
Lessee waives any claim against Lessor for any expenses or damages resulting
from compliance with any of the said rules, regulations, directives, laws,
ordinances or orders.
13. RULES AND REGULATIONS: That in addition to the several
covenants in this Lease, it is mutually covenanted and agreed that the rules
and regulations appertaining to the said building and which are annexed hereto,
as part hereof in Exhibit C, are agreed to in all of their terms and said
Tenant agrees to be bound by the same, and also covenants to be bound by such
further rules and regulations as may be made by said Lessor from time to time,
during this Lease, deemed by it to be necessary, for the safety, care,
cleanliness and the economical management of the premises, and for the
preservations of good order therein. Any failure on the part of the Tenant to
comply with the terms of this Lease, or with any of said rules and regulations
now in existence, as aforesaid, shall, at Lessor's option, work a forfeiture of
this Lease and of all rights of Lessee hereunder, and hereupon the Lessor, its
agents or attorneys, shall have the right to re-enter said premises and remove
Lessee therefrom and to take all necessary steps to collect any rents due
hereunder up to the time of said forfeiture or cancellation.
<PAGE> 16
14. PARKING: Lessor shall provide and maintain for the use of
Tenant and Tenant's invitees and guests, in common with other tenants of the
Building and their invitees and guests, an off-street parking area. Lessor
reserves the right, however, to enlarge or rearrange such parking facility and
Tenant agrees that Tenant and Tenant's employees, if requested by Lessor will
park their automobiles only in such areas as Lessor designates from time to
time.
15. EQUIPMENT: In the event Tenant desires to place any
equipment in the Demised Premises other than normal and customary business
equipment, Tenant shall be allowed to install all equipment necessary to carry
out said use per paragraph "5". In connection with the installation,
maintenance and use by Tenant in equipment using or producing electricity,
x-rays, ultra violet rays, infrared rays, sound waves or other rays, waves or
forces emitted by scientific or technological equipment. Tenant covenants that
Tenant will maintain adequate and proper safeguards, procedures and equipment
necessary or desirable for the use of such equipment and that Tenant will
indemnify Lessor and hold Lessor harmless from any liability to which Lessor
might or could become subjected by reason of inconvenience, injury or damage to
person or property resulting from the use of any Tenant's equipment. In
<PAGE> 17
addition, should the installation or use of or any equipment, whether properly
or improperly installed or protected, result in any increase in the fire
insurance rate payable by Lessor or by any other tenant (nothing herein
contained being construed to permit Tenant to do anything or to install or use
any equipment which would result in any increase in any fire insurance rate),
then Tenant shall be liable for such increased rate and shall pay to Lessor
forthwith upon demand all increased costs resulting therefrom.
Any equipment, including medical and dental equipment, installed by
Tenant shall be and remain at all times the property of Tenant and shall be
removed by Tenant at the termination of the tenancy, at Tenant's own cost and
expense; and upon such removal Tenant shall restore the Demised Premises to
their original condition, usual wear and tear excepted.
16. SIGNS: The Tenant will not place any signs or other
advertising matter or material on the exterior or on the interior, where
possible to be seen from the exterior, of the leased premises or of the
building in which the leased premises are located, without the prior written
consent of the Lessor. Any lettering or signs placed on the interior of said
building shall be for
<PAGE> 18
directional purposes only and such signs and lettering shall be of a type,
kind, character and description to be approved by the Lessor.
17. DAMAGE TO PROPERTY: It is covenanted and agreed by and
between the parties hereto that the Lessor shall not in any event, whether
caused by the Lessor's negligence or otherwise, be liable for any loss, damage
or injury to the Tenant, Tenant's agents, servants, employees or visitors, or
to the Tenant's property, for any damage or injury caused by or from the
bursting or leaking of boilers of water, sewer or steam pipes, or air
conditioning equipment, or from heating or plumbing fixtures, or from electric
wires, equipment or fixtures, or from gas odors or from the elements, or from
any cause whatsoever, except in the case of the willful neglect of the Lessor.
18. SUBORDINATION AND ATTORNMENT: This Lease is subject and
subordinate to the lien of any mortgage or ground lease or deeds of trust or
other encumbrances, now or hereafter placed upon the land or Building, in any
amounts whatsoever. Tenant covenants and agrees to execute and deliver such
instruments evidencing such subordination of this Lease to such liens of any
such mortgages, deeds of trust or other encumbrances, as may be requested by
Lessor
<PAGE> 19
from time to time.
As aforedescribed, this Lease is subordinate to the lien of any
existing and/or future mortgage and any further advances, renewals, extensions
or modifications thereof, so long as Tenant is not in default under the Lease
at that time, this Lease shall continue in full force and effect as a direct
and valid Lease between the Tenant and then owner of the fee provided that the
then new owner shall not be liable for any previous act or omission of Lessor
or any other party, or be subject to any offsets against Lessor, or bound by
prepayment of more than one (1) month's rent.
19. DAMAGE BY FIRE OR OTHER CASUALTY: In the event that the
Demised Premises are rendered untenantable by reason of fire, explosion or any
other casualty, Lessor, at its option, may either repair the said premises to
make the same tenable within one hundred eighty (180) days thereafter, or may,
at its option, terminate this Lease. In either event, Lessor shall give Tenant
a thirty (30) day notice in writing. Furthermore, in the event that the
Demised Premises are untenantable and further if Tenant is not liable for the
damage in question, Tenant's rent for that period of time shall be abated or
apportioned under this Lease or otherwise.
<PAGE> 20
20. CONDEMNATION: If during the term of this Lease, the whole of
the leased premises or Building, or such portion(s) thereof as will render the
leased premised unusable for the purpose leased, be condemned or otherwise
leased or taken under the right of eminent domain by any competent authority
for public or quasi-public use or purpose or is taken by private purchase in
lieu of condemnation, then in such event this Lease shall, at the option of the
Lessor, cease and come to an end as of the date of the vesting of title in such
public authority or by private purchase, or when possession is given to such
public authority, whichever event last occurs. Upon such occurrence the rent
shall be proportioned as of such date and any prepaid rent shall be returned to
the Tenant. The Lessor shall be entitled to the entire award or purchase price
and the Tenant shall have no right or claim to any part thereof.
21. ABANDONMENT: In case Tenant shall fail to take possession at
the commencement of the term, or in case the premises or any part thereof shall
be vacated during the term prior to the expiration of the term of this Lease.
Lessor shall have the right to enter the premises without instituting any
proceeding either by force or otherwise without being liable for damages
therefor, and to relet the same, or any part thereof, for the unexpired portion
of the term or longer and to collect the rent therefor and to apply
<PAGE> 21
the rents so collected to the payment of rent and all other sums payable to
Lessor. Tenant shall in such case remain responsible to Lessor for any and all
deficiency, loss and damage suffered by Lessor.
22. RE-ENTRY, DEFAULT: The Tenant covenants that if the rent
reserved by this Lease or any part thereof shall be unpaid when due, or, if the
premises shall become vacant or actually unoccupied during the term, or if the
Tenant shall fail to perform any of the conditions, covenants, provisions and
agreements contained herein, or if a petition in bankruptcy shall be filed by
the Tenant, or if the Tenant shall be adjudged bankrupt or insolvent by any
court, or if a receiver or trustee in bankruptcy or receiver of the property of
the Tenant shall be appointed in any suit, action or proceeding, or if the
Tenant shall make an assignment for the benefit of creditors, of if an
execution shall be issued against the Tenant, or if the Tenant's leasehold
interest herein shall be levied upon, or if the Tenant's leasehold interest
herein shall by operation of law pass to any person other than the Tenant, then
in each and every case, the Lessor may, at its option, without notice to the
Tenant or to any assignee, transferee, trustee, receiver or other person or
persons with force or otherwise, retake and recover possession of said premises
and
<PAGE> 22
terminate this Lease and the term herein and hereby granted and demised; or, in
each and such case, the Lessor may, at its option, without notice to the Tenant
or to any assignee, transferee, trustee, receiver or other person or persons,
with force or otherwise enter said premises and relet the same as it may see
fit, without avoiding or terminating this Lease, and for the purpose of such
reletting the Lessor may make such repairs, alterations and addition in or to
said premises as the Lessor may deem necessary for the purpose and charges of
such reletting, alterations and additions in and to said premises to equal the
rent hereinabove covenanted to be paid by the Tenant, then the Tenant shall pay
any deficiency arising upon demand therefor and such deficiency shall be
considered, construed and taken to be a debt provable in bankruptcy or
receivership.
23. ATTORNEY'S FEES: If the Tenant defaults in the performance
of any of the covenants of this Lease and by reason thereof the Lessor employs
the services of an attorney to enforce performance of the covenants by the
Tenant, to evict the Tenant, to collect monies due by the Tenant, or to perform
any service based upon said default, then in any of said events, the Tenant
does not agree to pay a reasonable attorney's fee, including all appellate fees
and all expenses and costs incurred by the Lessor pertaining
<PAGE> 23
thereto and in enforcement of any remedy available to the Lessor.
24. HOLDING OVER: In the event the Tenant shall withhold from
the Lessor the possession of the premises demised herein after the termination
of this Lease and the term hereby demised, whether by expiration of said term
or by election or act of either party hereto, the damages for which the Tenant
shall be liable to the Lessor for a period equal to the period of such
detention. In the event the Tenant shall remain in possession of said premises
after the expiration and termination of this Lease for any cause whatsoever,
the Tenant shall then be considered a tenant at will and by sufferance and no
such holding over or retention of possession or occupancy shall operate as an
extension or renewal of this Lease in any manner whatsoever.
25. CERTIFICATE BY TENANT: Tenant shall deliver to Lessor or to
its mortgagee, auditors or prospective purchaser, or the owner of the fee, when
requested by Lessor, a certificate to the effect that this Lease is in full
force and effect and that Lessor is not in default therein, or stating
specifically any exceptions thereto. Failure to give such a certificate within
two (2) weeks after written request shall be conclusive evidence that the lease
is in full force and effect and Lessor is not in default and Tenant
<PAGE> 24
shall be estopped from asserting any defaults known to him at that time.
26. INDEMNIFICATION: The Lessor shall not be liable for any
damage or injury to any person or property whether it be the person or property
of the Tenant, the Tenant's employees, agents, guests, invitees or otherwise by
reason of Tenant's occupancy and use of the leased premises or because of the
fire, flood, windstorm, Acts of God or for any other reason.
Tenant shall indemnify and save Lessor harmless and does agree to
indemnify and save Lessor harmless, of and from all fines, claims demands and
causes of action of every nature whatsoever arising or growing out of or in any
manner connected with the occupation or use of the premises and Building and
every part thereof, by Tenant and the employees, agents, servants, guests and
invitees of Tenant including without limiting the generality of the foregoing,
any claims, demands and causes of action for personal injury and/or property
damage and said indemnification shall extend to any fines, claims, demands and
causes of action of every nature whatsoever which may be made upon, sustained
or incurred by Lessor or reason of any breach, violation or non-performance of
any term, covenant or condition hereof on the part of Tenant or by reason of
<PAGE> 25
any act or omission on the part of Tenant and the employees, agents, servants,
guests and invitees of Tenant. In any such event, contributory negligence on
the part of the Lessor shall not any wise affect Tenant's obligations under
this indemnification. Tenant agrees that this indemnification shall further
extend to all costs incurred by Lessor, including reasonable attorney's fees.
27. NOTICES: All notices required hereunder shall be in writing
and any notice by Lessor to Tenant shall be deemed to be duly given if either
delivered personally to Tenant or sent by registered or certified mail,
addressed to Tenant at the premises leased hereunder. Any notice by Tenant to
Lessor shall be deemed duly given if sent by registered or certified mail to
Lessor at Aaron-Thomas, Inc., 11010 N. Kendall Drive, Suite 200, Miami, Florida
33176 (or at such other address as may be hereafter designated by Lessor) and
also to the agent of Lessor charged with the renting and management of the
Building, if any.
28. SURRENDER AT EXPIRATION OF TERM: Tenant agrees at the
expiration of the term by lapse of time or otherwise to quit and surrender the
premises hereby demised and everything belonging to or connected therewith in
as good a state and condition as reasonable wear and use thereof will permit
and to remove all
<PAGE> 26
signs, advertisements and rubbish from the said premises; and Tenant hereby
expressly authorizes Lessor, as the agent of Tenant, to remove such rubbish and
make such changes and repairs as may be necessary to restore the premises to
such condition at the expense of Tenant.
29. QUIET POSSESSION AND OTHER COVENANTS: Lessors covenants that
if and so long as Tenant pays the rent and additional rent reserved by this
Lease and performs and observes all of the covenants, conditions and rules and
regulations hereof, Tenant shall quietly enjoy the demised premises subject,
however, to all of their terms of this Lease. Tenant expressly agrees for
himself, his executors, administrators, personal representatives, successors
and assigns that the covenant of quiet enjoyment (express or implied) and all
other covenants in this Lease on the part of Lessor to be performed shall be
binding upon Lessor only so long as Lessor remains the owner of the Building
which the demised premises form a part.
30. REMEDIES CUMULATIVE: The various rights, remedies, powers
and elections of Lessor reserved, expressed or contained in this Lease, are
cumulative and none of them shall be deemed to be exclusive of the others or of
such other rights, remedies, powers,
<PAGE> 27
options or elections as are now or may hereafter be conferred upon Lessor by
law. The failure on the part of the Lessor to exercise promptly any rights
given hereunder shall not operate to forfeit or waive any of the said rights.
31. NO WAIVER OF PERFORMANCE: No waiver by Lessor of any
provision hereof shall be deemed to have been made unless such waiver be in
writing signed by Lessor. The failure of Lessor to insist upon the strict
performance of any of the covenants or conditions of this Lease, or to exercise
any option herein conferred, shall not be construed as waiving or relinquishing
for the future of any such covenants, conditions or options but the same shall
continue and remain in full force and effect. No act of Lessor or its agent
during the term hereof shall be deemed an acceptance of a surrender of the said
premises unless made in writing and personally subscribed by Lessor, neither
shall the delivery of the keys to the premises by Tenant to Lessor or its agent
be deemed a surrender and acceptance thereof. No payment by Tenant of a lesser
amount than the monthly rent herein stipulated shall be deemed to be other than
on account of the stipulated rent.
32. SECURITY: The Tenant concurrently with the execution of this
Lease has deposited with Lessor the sum of $4,240.00
<PAGE> 28
($2,120.00, security and $2,120.00 last month's rent)(1) as security for the
faithful performance and observance by Tenant of the terms, provisions and
conditions of this Lease; it is agreed that, in the event Tenant defaults in
respect of any of the terms, provisions and conditions of this Lease,
including, but not limited to, the payment of rent and additional rent Lessor
may use, apply or retain the whole or any part of the security so deposited to
the extent required for the payment of any rent and additional rent or any
other sum as to which tenant is in default or for any sum which Lessor may
expend or may be required to expend by reason of Tenant's default in respect to
any of the terms, covenants and conditions of this Lease, including, but not
limited to, any damages or deficiency in the re-letting of the premises whether
such damage or deficiency accrued before or after summary proceedings on other
re-entry by Lessor. In the event that Tenant shall fully and faithfully comply
with all of the terms, provisions, covenants and conditions of this Lease, the
security shall be returned to Tenant after the date fixed as the end of the
Lease and after delivery of entire possession of the premises to the Lessor.
In the event of a sale of the land and Building of
- ---------------------------
(1)Lessor acknowledges that Lessee has paid these amounts in full upon
execution of previous leases regarding these units with Lessor.
<PAGE> 29
which the premises form a part, Lessor shall have the right to transfer the
security to the vendee and Lessor shall thereupon be released by Tenant from
all liability for the return of such security and Tenant agrees to look to the
new Lessor solely for the return of such security. It is agreed that the
provisions hereof shall apply to every transfer or assignment made of the
security to a new Lessor. Tenant further covenants that he will not assign or
encumber the monies deposited herein as security and that neither Lessor nor
its assigns shall be bound by and any such assignment or encumbrances. Lessor
shall not be required to keep the security in a segregated account and the
security may be commingled with other funds of Lessor and in ono event shall
Tenant be entitled to any interest on the security.
33. LIEN: The said Tenant hereby pledges and assigns to the
Lessor all the furniture, fixtures, goods and chattels of said Tenant, which
shall or may be brought or put on said premises as security for the payment of
the rent herein reserved and the Tenant agrees that the said lien may be
enforced by distress, foreclosure or otherwise at the election of the said
Lessor and does hereby agree to pay attorney's fees together with all costs and
charges therefor incurred or paid by the Lessor.
<PAGE> 30
34. SUCCESSORS: This Lease shall inure to and be binding upon
the heirs, administrators, executors, successors and assigns of the Lessor and
the heirs, administrators, executors, successors and assigns of the Tenant.
35. AMENDMENT: It is mutually agreed that this Lease cannot be
changed, altered, modified or extended, except in writing signed by the
Lessor's duly authorized agent.
36. RELOCATION: Lessor reserves the right to relocate the Tenant
in another similar area of the Building during the term of this Lease, provided
Tenant is given 90 days written notice as to relocation and all attendant costs
of moving, telephones, stationery, etc. are paid by Lessor.
37. INSURANCE, INDEMNIFICATION: Tenant agrees that Tenant will,
at its own cost and expense, maintain public liability insurance naming Lessor
and Tenant as insureds, protecting each of them against any and all claims for
injury or damage to persons or property or for the loss of life or property
occurring in, or about the Demised premises and arising out of the act,
negligence, omission, nonfeasance or malfeasance of Tenant, its employees,
agents, contractors, customers licensees, invitees or guests. Such
<PAGE> 31
insurance shall be carried in an amount not less than Three Hundred Thousand
Dollars ($300,000.00) for bodily injury or death to any one person and Three
Hundred Thousand Dollars ($300,000.00) for bodily injury or death of a number
of persons in the same accident or occurrence and One Hundred Thousand Dollars
($100,000.00) for property damage. All such insurance shall be effective under
valid and enforceable policies and shall be issued by insurers of recognized
responsibility authorized to do business in the State of Florida and
acceptable to Lessor (though Lessor's acceptance of any such insurer shall not
constitute a representation or warranty by Lessor as to the financial stability
of such insurer or otherwise and no such acceptance of any insurer by Lessor
shall be deemed a release or waiver of any responsibility, obligation or
liability of Tenant under this Lease). All such insurance policies shall
contain a provision whereby the insurer agrees not to cancel such insurance
without ten (10) days prior written notice to Lessor. Tenant shall furnish
Lessor with a certificate evidencing the aforesaid insurance coverage on or
before the Commencement Date and upon each renewal thereof but in all events at
least ten (10) days prior to the expiration of any such policy. Tenant shall
indemnify and save harmless Lessor and its agents against and from (i) any and
all claims arising from : (a) the management by Tenant of the Demised Premises
or any business therein, any work whatsoever done
<PAGE> 32
therein or thereon, or any condition created therein or thereon, during the
Term of this Lease or during any other period of time that Tenant has access to
the Demised Premises (though nothing herein contained shall be construed to
grant Tenant access to the Demised Premises except as provided in this Lease);
or (b) any negligent or otherwise wrongful act or omission of Tenant or any
subtenant (though nothing contained in this Lease shall be construed to permit
a sublease), licensee, employee, agent or contractor of Tenant or any other
party acting by, through or under Tenant; and (ii) all costs, expenses and
liabilities incurred in or in connection with or as a result of each such
claim, action or proceeding brought hereunder, whether or not suit be
instituted, including but not limited to reasonable attorney's fees incurred by
Lessor in defending any such action through and including all appeals. In case
any action or proceeding be brought against Lessor by reason of any such claim,
Tenant, upon notice from Lessor, shall resist and defend such action or
proceeding at the cost of Tenant.
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands
and seals the day and year first above written.
WITNESSES: TENANT:
<PAGE> 33
/s/ Graciela Lopez /s/ Steven Sablotsky, President
[SEAL]
______________________________ ______________________________
8-10-92
______________________________ ______________________________
Date signed by Tenant
WITNESSES: LESSOR:
/s/ /s/ James Keen
__________________________ ______________________________
8-10-92
__________________________ _______________________________
Date signed by Lessor
Commission
At the time of signing, a commission of 6% of the total rent due under
the Lease is due and payable to Aaron-Thoms, Inc. The same rate is due upon
the exercise of each option as it occurs.
Commission is Lessor's responsibility. Lessee is not responsible in
any manner for payment of commission.
<PAGE> 34
ADDENDUM
OPTION TO RENEW: Lessor hereby grants to Lessee the exclusive right and option
to renew this lease for an additional three consecutive two year periods. The
increase in rental price during the option renewal will follow the schedule as
stated in section 4a of this Lease Agreement.
In addition, as agreed with all increases, the monthly rent installments during
option renewals will not exceed 5.5% maximum.
/s/ Steven Sablotsky
8-10-92
<PAGE> 1
EXHIBIT 10.7
Parkside Plaza Office Lease between Mark Rubino and the Registrant dated
November 28, 1990.
<PAGE> 2
STANDARD OFFICE LEASE
THIS LEASE AGREEMENT made and entered into this 28th day of November,
1990, by and between Mark Rubino, an individual (hereinafter referred to as
"Lessor") and Noven Pharmaceuticals, Inc. (hereinafter referred to as "Tenant"
or "Lessee").
WITNESSETH:
1. DESCRIPTION. Lessor hereby leases unto Tenant and Tenant hereby leases
form Lessor, Suite No. 208 ("Demised Premises") containing approximately 1,091
square feet in that certain building ("Building") located at 13342 S.W. 128th
Street, Miami, FL, also known as "Parkside Plaza."
2. TERM. [Fill in and Initial A or B]
A. The term ("Term") of this Lease shall be two years from the 1st day
of January, 1991 ("Commencement Date") through the 31st day of December, 1992
("Expiration Date") with an additional three (3) two-year options to run
consecutively.
B. The term ("Term") of this lease shall commence on
<PAGE> 3
the earlier of the following dates ("Commencement Date"): (i) the date on which
Tenant opens for business in the Demises Premises, or (ii) ______________ days
after Lessor has tendered possession (as hereafter provided) of the Demised
Premises to Tenant, or (iii) the date _________ days after Lessor notifies
Tenant that the Demises Premises are or should be ready for occupancy. Tenant
shall pay all rent and additional rent relating to the Demised Premises which
accrue after Lessor's tender of possession.
Tender of possession shall be deemed to have occurred when Lessor has
completed Lessor's work, if any.
If Lessor is unable to give possession of the Demised Premises to Tenant
on the date for the commencement of the term hereof by reason of the fact that
Lessor has not substantially completed any space preparation work in the
Demised Premises pursuant to Lessor's Work Letter signed on behalf of Lessor
and Tenant (which Work Letter, if any, is made a part hereof by reference) and
if the delay in completion of such work has not been caused by Tenant's failure
to submit its plans and specifications to Lessor on or before the time called
for in the Work Letter, or caused by other act or failure to act by Tenant,
then the term of this Lease shall commence on the day following the day of
notification by Lessor
<PAGE> 4
that such work has been substantially completed. If such date shall be other
than the first day of a calendar month, the rent or such months shall be
prorated on a per diem basis. No failure to deliver possession on the
scheduled date for the commencement of the term shall extend, or be deemed to
extend, the term of this Lease.
3. RENTAL PAYMENT. Subject to increase as provided in this Lease. Tenant
agrees to pay to Lessor as and for rent for the Demised Premises for the Term
hereof the sum of Fifteen thousand six hundred dollars ($15,600.00) plus all
applicable sales and use taxes which sum for the convenience of the Tenant
shall be paid as follows:
$650.00 ("Base Monthly Rental") plus all applicable sales and use taxes
upon the first day of each calendar month for the Term hereof commencing with
the first calendar month following the calendar month of the Commencement Date.
The rental payments shall be made to Lessor of the address hereinafter set
forth to which notices to Lessor shall be sent or at such other place as Lessor
may, from time to time, hereafter designate by notice to Tenant. Tenant's
obligation to pay rent and keep and perform any and all covenants and
agreements herein
<PAGE> 5
contained shall not be abated, released or discharged because of any reason
whatsoever except as is otherwise specifically provided for in this Lease.
Rent and each installment thereof shall be paid in lawful money of the United
States, legal tender at the time of payment. All rents shall be payable in
advance and paid without deduction, setoff, discount or abatement.
Under no circumstances shall any holding over by Tenant be authorized and
no occupancy beyond the term limited hereby shall ever constitute anything
except an unlawful holding over by Tenant after the expiration of the Term. By
Tenant's execution hereof, Tenant acknowledges that Tenant has inspected the
Demised Premises and the Building and that as of the date hereof the Demised
Premises and the Building are in all respects in satisfactory condition and
acceptable to Tenant and Tenant is accepting same as is.
4. INCREASE OF BASE RENT: The annual rental for each year of this lease
("lease year"), after the base year shall be increased or decreased, but never
less than the base rent, by an amount equal to the proportion hereafter set
forth, times the amount of the increase or decrease based on the cost of living
escalation published by the Bureau of Labor Statistics U.S.
<PAGE> 6
Department of Labor.
(a) Base year shall be the first full calendar year after the building
has been completed or the first full calendar year of the terms of this lease,
whichever is later.
(b) Direct operating costs shall include: taxes, insurance, and water &
sewer. All expenditures scheduled less often than annually shall be prorated
over the period to which such expenditures are applicable.
(c) For purposes of determining increases or decreases in taxes:
(i) "Base year tax" shall mean the real estate tax bill of the land
and building, of which the demised premises are a part, made in the first tax
year that the building is assessed as completed, rather than under
construction, or the base tax year of 1991 and the real estate tax for that
year is to be ascertained.
(ii) "Taxes" shall mean real estate taxes, special and extraordinary
assessments, and governmental levies imposed upon or with respect to the land
and building of which is the demised premises are a part and any similar tax
imposed in addition to, in substitution for, or in lieu of such leases. (d)
Lessee's pro rata share of any increase in direct operating costs shall be
determined by the ratio that the gross
<PAGE> 7
rental area of the demised premises bears to the total gross rental of the
building which Lessor and Tenant hereby agree is 3.855 percent.
(e) COST OF LIVING ESCALATION: If two months prior to commencement of any
lease year, the Consumer Price Index (C.P.I.) for "all items" (Miami, FL C.P.I.
Index) as compiled and published by the Bureau of Labor Statistics, United
States Department of Labor not to exceed 5% maximum should be higher than the
Base Consumer Price Index of January 1, 1991, the Minimum Monthly Rent
installments shall be increased by an amount proportionate to the amount of
such increase in the said price index, not to exceed 5% maximum. If such price
index should in the future be compiled upon a different basis, a proper
adjustment will be made therein, for the purposes of this Paragraph, to reflect
any increase the cost of living that has occurred over the Base Consumer Price
Index. If at the time of any such computation the United States Department of
Labor should no longer compile and publish such prices indexes, the index for
"All Items" compiled and published by any other branch or department of the
Federal government shall be used for the purpose of this paragraph and if no
such index is compiled and published by any branch or department of the Federal
government, the statistics reflecting cost of living increases as compiled by
any institution or organization or individual generally recognized as an
authority
<PAGE> 8
by financial and insurance institutions shall be used as a basis for such
adjustment. This provision is independent of the other provisions which
provide for a pass through of certain increases. (See attached addendum for
cost of option renewal).
For example: If the base C.P.I. is 230.5 and two months prior to the first
lease year the C.P.I. is 235.8 and the minimum monthly rent is $1,400.00. The
new minimum monthly rent for the next lease year would be $1,432.19 or
$1,432.00 per month. [235.8 divided by 230.5 = 1.023 X $1,400.00 = $1,432.19
per month].
Lessor shall have the right to treat any sums due pursuant to this
Paragraph as additional rent due hereunder and if the same be not promptly paid
when due. Lessor shall have all the rights and remedies to which Lessor is
entitled for the nonpayment of rent.
5. USE AND POSSESSION. It is understood and agreed that the demised
space and premises shall be continually used and occupied by the Lessee during
the term of this Lease only for the research, development, clinical
manufacturing and packaging of pharmaceutical products and for no other
purposes or uses whatsoever. Tenant will not make or permit any use of the
space or premises which, directly or indirectly, is forbidden by public law,
<PAGE> 9
ordinance or government regulation or which may be dangerous to life, limb or
property. In the event the Tenant uses the space or premises for any purposes
not expressly permitted herein then the Lessor may terminate the lease or
without notice to tenant, restrain such improper use by injunction or other
legal action.
As a material consideration hereto the Tenant covenants that Tenant will
not without the written consent of the Lessor permit the premises to be
occupied by any person, firm or corporation other than the Tenant whose name
appears on this lease.
6. SERVICES: Lessor agrees to furnish the following services to Tenant:
(1) Automatically operated fire suppressant sprinkler system throughout and
central smoke detector in office areas only. (2) Water. (3) Furnishing,
supplying and maintaining the building's common areas and restroom facilities,
all at Lessor's expense, unless otherwise agreed to in this Lease.
Tenant agrees to and shall pay when due all charges for utility services,
which are billed to Tenant with respect to the Demised Premises or which are
charged with respect to the Demised Premises as opposed to the Building as a
whole. If the Tenant fails to pay same promptly when due. Lessor shall have
the right, but not the obligation, to pay said charges and Tenant agrees to
<PAGE> 10
reimburse Lessor promptly therefor. Any sum to which Lessor shall be entitled
pursuant to this Paragraph shall be deemed to be additional rent hereunder and,
if the same be not promptly paid to Lessor, Lessor shall have all the rights
and remedies to which it is entitled for the nonpayment of rent. Tenant shall
pay for all utility charges, for electricity, in connection with the Demised
Premises.
If the Tenant requires additional current or other than 110 volt service,
request for same must be obtained from the Lessor and all work required will be
paid for by the Tenant. The Lessor shall not be liable for any delay or
failure to supply any of such services due to unusual conditions beyond its
control and Lessor shall not be liable for damage nor shall the Tenant ever be
entitled to any abatement of rent for failure to supply same.
7. NO ASSIGNMENTS, SUBLEASES OR ENCUMBRANCES: Tenant shall neither sublet
the Demised Premises or any part thereof nor assign this lease or any of the
rights herein granted to Tenant without the prior written consent of Lessor in
each instance. Tenant shall have no right or power to, and shall not,
hypothecate, transfer, pledge or other encumber this Lease or Tenant's rights
hereunder nor shall Tenant permit any such encumbrance. Tenant has no right or
power to cause, permit or do anything which would cause the
<PAGE> 11
Demised Premises, the Building, the Land or Tenant's interest in this Lease to
become the subject of any lien, including, but not limited to, any mechanic's
liens under the laws of the State of Florida and nothing done by, through,
under or against Tenant shall ever create any such liens. If any such lien is
filed, Tenant shall cause the land and the Tenant's interest in this Lease to
be released from the lien thereof by posting a bond or otherwise within ten
(10) days of the date such lien is filed.
8. ALTERATIONS AND IMPROVEMENTS, ETC.: (a) Tenant shall make no
alterations, decorations, installations, additions or improvements in or to the
demised premises without Lessor's prior written consent. Tenant shall not cut,
drill into, disfigure, deface or injure any part of the premises; nor obstruct
or permit any obstruction, alteration, addition, improvement, decoration or
installation in the premises. All alterations, additions, improvements,
decorations or installations (except movable furniture and fixtures put in at
the expense of the Tenant and removable without defacing or injuring the
Building or the premises) shall become the property of Lessor at the
termination of the term; Lessor, however, reserves the option to require Tenant
upon demand in writing to remove all fixtures and additions, improvements,
decorations or installations (including those not removable without defacing or
injuring the leased premises) and to
<PAGE> 12
restore the premises to the same condition as when originally leased to Tenant,
reasonable wear and tear excepted. Tenant agrees to restore the premises
immediately upon the receipt of the said demand in writing at his own cost and
expense and agrees in case of his failure to do so, that Lessor may do so and
collect the cost thereof from Tenant. Any such alterations or restorations
shall be made at such times and in such manner as Lessor may designate and so
as not to interfere with the occupation, use and enjoyment of the remainder of
the Building by the other tenants thereof.
(b) In making any alterations, decorations, additions, installations or
improvements to or in the premises. Tenant shall employ and use only such
labor, contractors or mechanics as approved by Lessor and all such work done by
Tenant shall be performed and installed in such a manner that the same shall
comply with all provisions of law, ordinances and all rules and regulations of
any and all agencies and authorities having jurisdiction over the premises and
at such time and in such manner as not to interfere with the progress of any
work being performed by or on account of Lessor. Notwithstanding the
foregoing, it is understood that Tenant is not obliged by Lessor to make any
improvement or improvements and in no event shall Tenant have the right to
create or permit there to be established any lien or
<PAGE> 13
encumbrance of any nature against the premises or the Building for said
improvement or improvements by Tenant shall fully pay the cost of any
improvement or improvements made or contracted by Tenant. Any mechanics's lien
filed against the premises of the Building for work claimed to have been, done
or materials claims to have been furnished to Tenant shall be duly discharged
by Tenant within ten (10) days after the filing of the lien.
(c) Lessor agrees to additional roof penetrations required by Leases for
ventilation of labs and clinical manufacturing areas.
(d) Any improvements made by Tenant will become part of the real estate
and are to remain.
9. INSPECTION, EXAMINATION AND ENTRY: Lessor and Lessor's agents shall
have the right to enter the premises at all reasonable hours to examine the
same and workmen may enter at any time when authorized by Lessor or Lessor's
agents to make such repairs, alternations or improvements in the Building as
Lessor may deem necessary or desirable. If during the last month of the term,
Tenant shall have removed all of Tenant's property. Lessor may immediately
enter the premises and prepare them for any future Tenant. Furthermore, the
Lessor may allow such future Tenant to
<PAGE> 14
occupy the premises. These acts shall have no effect upon Tenant's obligations
under this Lease and Tenant shall be entitled to no abatement on diminution of
rent as a result thereof, except that in the event such future Tenant makes any
payment for the period up until the expirations of this Lease, Tenant shall be
entitled to a credit to the extent of such payment. If Tenant shall not be
personally present to open and permit entry into the premises, when entry
therein to shall be permissible or necessary hereunder, Lessor may forcibly
enter same without rendering Lessor liable to any claim for damages and without
affecting the obligations and covenants of this Lease. Employees of Lessor and
Lessor's agents shall be permitted to enter the demised premises by pass-key at
all reasonable times. The Lessor shall also have the right to enter the leased
premises at all reasonable hours for the purpose of displaying said premises to
prospective tenants within ninety days prior to the termination of this Lease.
10. RIGHT OF LESSOR TO USE ENTRANCES, ETC. AND TO CHANGE SAME: For the
purpose of making repairs or alterations in any portion of the Building of
which the premises form a part, Lessor may use one or more of the street
entrances, halls, passage ways and elevators of the said building, provided,
however, that there be no unnecessary obstruction of the right of entry to the
premises while
<PAGE> 15
the same are occupied. Lessor may at any time change the name or number of the
Building, remodel or alter the same, or the locations of any entrance thereto,
or any other portion thereof not occupied by Tenant and the same shall not
constitute a constructive or actual, total or partial eviction.
11. TENANT TO TAKE GOOD CARE OF PREMISES: Tenant shall keep the
premises in a clean, safe and sanitary condition and shall permit no waste or
injury to occur to the premises and fixtures therein, or to any additions,
alterations and improvements thereto. All damage caused by Tenant's
negligence, or that of his agents, servants, employees or visitors, shall be
repaired promptly by Tenant at his sole cost and expense. In the event that
the Tenant fails to comply with the foregoing provisions, the Lessor shall have
the option to enter the premises and make all necessary repairs at Tenant's
cost and expense, the same to be added to and be payable with the next monthly
installment of rent.
12. COMPLIANCE WITH ORDINANCES AND DIRECTIVES OF AUTHORITIES: Lessee
shall, at its own cost and expense, comply with all present or future rules,
regulations, directives, laws, ordinances and orders of all public authorities
and Fire Underwriters which are or may become applicable to the leased premises
and space, except as
<PAGE> 16
said rules pertain to any structural work or outside repairs. Lessee waives
any claim against Lessor for any expenses or damages resulting from compliance
with any of the said rules, regulations, directives, laws, ordinances or
orders.
13. RULES AND REGULATIONS: That in addition to the several covenants in
this Lease, it is mutually covenanted and agreed that the rules and regulations
appertaining to the said building and which are annexed hereto, as part hereof
in Exhibit C, are agreed to in all of their terms and said Tenant agrees to be
bound by the same, and also covenants to be bound by such further rules and
regulations as may be made by said Lessor from time to time, during this Lease,
deemed by it to be necessary, for the safety, care, cleanliness and the
economical management of the premises, and for the preservations of good order
therein. Any failure on the part of the Tenant to comply with the terms of
this Lease, or with any of said rules and regulations now in existence, as
aforesaid, shall, at Lessor's option, work a forfeiture of this Lease and of
all rights of Lessee hereunder, and hereupon the Lessor, its agents or
attorneys, shall have the right to re-enter said premises and remove Lessee
therefrom and to take all necessary steps to collect any rents due hereunder up
to the time of said forfeiture or cancellation.
<PAGE> 17
14. PARKING: Lessor shall provide and maintain for the use of Tenant and
Tenant's invitees and guests, in common with other tenants of the Building and
their invitees and guests, an off-street parking area. Lessor reserves the
right, however, to enlarge or rearrange such parking facility and Tenant agrees
that Tenant and Tenant's employees, if requested by Lessor will park their
automobiles only in such areas as Lessor designates from time to time.
15. EQUIPMENT: In the event Tenant desires to place any equipment in the
Demised Premises other than normal and customary business equipment, Tenant
shall be allowed to install all equipment necessary to carry out said use per
paragraph "5". In connection with the installation, maintenance and use by
Tenant in equipment using or producing electricity, x-rays, ultra violet rays,
infrared rays, sound waves or other rays, waves or forces emitted by scientific
or technological equipment. Tenant covenants that Tenant will maintain
adequate and proper safeguards, procedures and equipment necessary or desirable
for the use of such equipment and that Tenant will indemnify Lessor and hold
Lessor harmless from any liability to which Lessor might or could become
subjected by reason of inconvenience, injury or damage to person or property
resulting from the use of any Tenant's equipment. In
<PAGE> 18
addition, should the installation or use of or any equipment, whether properly
or improperly installed or protected, result in any increase in the fire
insurance rate payable by Lessor or by any other tenant (nothing herein
contained being construed to permit Tenant to do anything or to install or use
any equipment which would result in any increase in any fire insurance rate),
then Tenant shall be liable for such increased rate and shall pay to Lessor
forthwith upon demand all increased costs resulting therefrom.
Any equipment, including medical and dental equipment, installed by Tenant
shall be and remain at all times the property of Tenant and shall be removed by
Tenant at the termination of the tenancy, at Tenant's own cost and expense; and
upon such removal Tenant shall restore the Demised Premises to their original
condition, usual wear and tear excepted.
16. SIGNS: The Tenant will not place any signs or other advertising
matter or material on the exterior or on the interior, where possible to be
seen from the exterior, of the leased premises or of the building in which the
leased premises are located, without the prior written consent of the Lessor.
Any lettering or signs placed on the interior of said building shall be for
<PAGE> 19
directional purposes only and such signs and lettering shall be of a type,
kind, character and description to be approved by the Lessor.
17. DAMAGE TO PROPERTY: It is covenanted and agreed by and between the
parties hereto that the Lessor shall not in any event, whether caused by the
Lessor's negligence or otherwise, be liable for any loss, damage or injury to
the Tenant, Tenant's agents, servants, employees or visitors, or to the
Tenant's property, for any damage or injury caused by or from the bursting or
leaking of boilers of water, sewer or steam pipes, or air conditioning
equipment, or from heating or plumbing fixtures, or from electric wires,
equipment or fixtures, or from gas odors or from the elements, or from any
cause whatsoever, except in the case of the willful neglect of the Lessor.
18. SUBORDINATION AND ATTORNMENT: This Lease is subject and subordinate
to the lien of any mortgage or ground lease or deeds of trust or other
encumbrances, now or hereafter placed upon the land or Building, in any amounts
whatsoever. Tenant covenants and agrees to execute and deliver such
instruments evidencing such subordination of this Lease to such liens of any
such mortgages, deeds of trust or other encumbrances, as may be requested by
Lessor
<PAGE> 20
from time to time.
As aforedescribed, this Lease is subordinate to the lien of any existing
and/or future mortgage and any further advances, renewals, extensions or
modifications thereof, so long as Tenant is not in default under the Lease at
that time, this Lease shall continue in full force and effect as a direct and
valid Lease between the Tenant and then owner of the fee provided that the then
new owner shall not be liable for any previous act or omission of Lessor or any
other party, or be subject to any offsets against Lessor, or bound by
prepayment of more than one (1) month's rent.
19. DAMAGE BY FIRE OR OTHER CASUALTY: In the event that the Demised
Premises are rendered untenantable by reason of fire, explosion or any other
casualty, Lessor, at its option, may either repair the said premises to make
the same tenable within one hundred eighty (180) days thereafter, or may, at
its option, terminate this Lease. In either event, Lessor shall give Tenant a
thirty (30) day notice in writing. Furthermore, in the event that the Demised
Premises are untenantable and further if Tenant is not liable for the damage in
question, Tenant's rent for that period of time shall be abated or apportioned
under this Lease or otherwise.
<PAGE> 21
20. CONDEMNATION: If during the term of this Lease, the whole of the
leased premises or Building, or such portion(s) thereof as will render the
leased premised unusable for the purpose leased, be condemned or otherwise
leased or taken under the right of eminent domain by any competent authority
for public or quasi-public use or purpose or is taken by private purchase in
lieu of condemnation, then in such event this Lease shall, at the option of the
Lessor, cease and come to an end as of the date of the vesting of title in such
public authority or by private purchase, or when possession is given to such
public authority, whichever event last occurs. Upon such occurrence the rent
shall be proportioned as of such date and any prepaid rent shall be returned to
the Tenant. The Lessor shall be entitled to the entire award or purchase price
and the Tenant shall have no right or claim to any part thereof.
21. ABANDONMENT: In case Tenant shall fail to take possession at the
commencement of the term, or in case the premises or any part thereof shall be
vacated during the term prior to the expiration of the term of this Lease.
Lessor shall have the right to enter the premises without instituting any
proceeding either by force or otherwise without being liable for damages
therefor, and to relet the same, or any part thereof, for the unexpired portion
of the term or longer and to collect the rent therefor and to apply
<PAGE> 22
the rents so collected to the payment of rent and all other sums payable to
Lessor. Tenant shall in such case remain responsible to Lessor for any and all
deficiency, loss and damage suffered by Lessor.
22. RE-ENTRY, DEFAULT: The Tenant covenants that if the rent reserved by
this Lease or any part thereof shall be unpaid when due, or, if the premises
shall become vacant or actually unoccupied during the term, or if the Tenant
shall fail to perform any of the conditions, covenants, provisions and
agreements contained herein, or if a petition in bankruptcy shall be filed by
the Tenant, or if the Tenant shall be adjudged bankrupt or insolvent by any
court, or if a receiver or trustee in bankruptcy or receiver of the property of
the Tenant shall be appointed in any suit, action or proceeding, or if the
Tenant shall make an assignment for the benefit of creditors, of if an
execution shall be issued against the Tenant, or if the Tenant's leasehold
interest herein shall be levied upon, or if the Tenant's leasehold interest
herein shall by operation of law pass to any person other than the Tenant, then
in each and every case, the Lessor may, at its option, without notice to the
Tenant or to any assignee, transferee, trustee, receiver or other person or
persons with force or otherwise, retake and recover possession of said premises
and
<PAGE> 23
terminate this Lease and the term herein and hereby granted and demised; or, in
each and such case, the Lessor may, at its option, without notice to the Tenant
or to any assignee, transferee, trustee, receiver or other person or persons,
with force or otherwise enter said premises and relet the same as it may see
fit, without avoiding or terminating this Lease, and for the purpose of such
reletting the Lessor may make such repairs, alterations and addition in or to
said premises as the Lessor may deem necessary for the purpose and charges of
such reletting, alterations and additions in and to said premises to equal the
rent hereinabove covenanted to be paid by the Tenant, then the Tenant shall pay
any deficiency arising upon demand therefor and such deficiency shall be
considered, construed and taken to be a debt provable in bankruptcy or
receivership.
23. ATTORNEY'S FEES: If the Tenant defaults in the performance of any of
the covenants of this Lease and by reason thereof the Lessor employs the
services of an attorney to enforce performance of the covenants by the Tenant,
to evict the Tenant, to collect monies due by the Tenant, or to perform any
service based upon said default, then in any of said events, the Tenant does
not agree to pay a reasonable attorney's fee, including all appellate fees and
all expenses and costs incurred by the Lessor pertaining
<PAGE> 24
thereto and in enforcement of any remedy available to the Lessor.
24. HOLDING OVER: In the event the Tenant shall withhold from the Lessor
the possession of the premises demised herein after the termination of this
Lease and the term hereby demised, whether by expiration of said term or by
election or act of either party hereto, the damages for which the Tenant shall
be liable to the Lessor for a period equal to the period of such detention. In
the event the Tenant shall remain in possession of said premises after the
expiration and termination of this Lease for any cause whatsoever, the Tenant
shall then be considered a tenant at will and by sufferance and no such holding
over or retention of possession or occupancy shall operate as an extension or
renewal of this Lease in any manner whatsoever.
25. CERTIFICATE BY TENANT: Tenant shall deliver to Lessor or to its
mortgagee, auditors or prospective purchaser, or the owner of the fee, when
requested by Lessor, a certificate to the effect that this Lease is in full
force and effect and that Lessor is not in default therein, or stating
specifically any exceptions thereto. Failure to give such a certificate within
two (2) weeks after written request shall be conclusive evidence that the lease
is in full force and effect and Lessor is not in default and Tenant
<PAGE> 25
shall be estopped from asserting any defaults known to him at that time.
26. INDEMNIFICATION: The Lessor shall not be liable for any damage or
injury to any person or property whether it be the person or property of the
Tenant, the Tenant's employees, agents, guests, invitees or otherwise by reason
of Tenant's occupancy and use of the leased premises or because of the fire,
flood, windstorm, Acts of God or for any other reason.
Tenant shall indemnify and save Lessor harmless and does agree to
indemnify and save Lessor harmless, of and from all fines, claims demands and
causes of action of every nature whatsoever arising or growing out of or in any
manner connected with the occupation or use of the premises and Building and
every part thereof, by Tenant and the employees, agents, servants, guests and
invitees of Tenant including without limiting the generality of the foregoing,
any claims, demands and causes of action for personal injury and/or property
damage and said indemnification shall extend to any fines, claims, demands and
causes of action of every nature whatsoever which may be made upon, sustained
or incurred by Lessor or reason of any breach, violation or non-performance of
any term, covenant or condition hereof on the part of Tenant or by reason of
<PAGE> 26
any act or omission on the part of Tenant and the employees, agents, servants,
guests and invitees of Tenant. In any such event, contributory negligence,
except willful neglect, on the part of the Lessor shall not any wise affect
Tenant's obligations under this indemnification. Tenant agrees that this
indemnification shall further extend to all costs incurred by Lessor, including
reasonable attorney's fees.
27. NOTICES: All notices required hereunder shall be in writing and any
notice by Lessor to Tenant shall be deemed to be duly given if either delivered
personally to Tenant or sent by registered or certified mail, addressed to
Tenant at the premises leased hereunder. Any notice by Tenant to Lessor shall
be deemed duly given if sent by registered or certified mail to Lessor at Mark
Rubino, 27221 S.W. 145th Avenue, Naranja, Florida 33032 (or at such other
address as may be hereafter designated by Lessor) and also to the agent of
Lessor charged with the renting and management of the Building, if any.
28. SURRENDER AT EXPIRATION OF TERM: Tenant agrees at the expiration of
the term by lapse of time or otherwise to quit and surrender the premises
hereby demised and everything belonging to or connected therewith in as good a
state and condition as
<PAGE> 27
reasonable wear and use thereof will permit and to remove all signs,
advertisements and rubbish from the said premises; and Tenant hereby expressly
authorizes Lessor, as the agent of Tenant, to remove such rubbish and make such
changes and repairs as may be necessary to restore the premises to such
condition at the expense of Tenant.
29. QUIET POSSESSION AND OTHER COVENANTS: Lessors covenants that if and
so long as Tenant pays the rent and additional rent reserved by this Lease and
performs and observes all of the covenants, conditions and rules and
regulations hereof, Tenant shall quietly enjoy the demised premises subject,
however, to all of their terms of this Lease. Tenant expressly agrees for
himself, his executors, administrators, personal representatives, successors
and assigns that the covenant of quiet enjoyment (express or implied) and all
other covenants in this Lease on the part of Lessor to be performed shall be
binding upon Lessor only so long as Lessor remains the owner of the Building
which the demised premises form a part.
30. REMEDIES CUMULATIVE: The various rights, remedies, powers and
elections of Lessor reserved, expressed or contained in this Lease, are
cumulative and noone of them shall be deemed to be
<PAGE> 28
exclusive of the others or of such other rights, remedies, powers, options or
elections as are now or may hereafter be conferred upon Lessor by law. The
failure on the part of the Lessor to exercise promptly any rights given
hereunder shall not operate to forfeit or waive any of the said rights.
31. NO WAIVER OF PERFORMANCE: No waiver by Lessor of any provision
hereof shall be deemed to have been made unless such waiver be in writing
signed by Lessor. The failure of Lesor to insist upon the strict performance
of any of the covenants or conditions of this Lease, or to exercise any option
herein conferred, shall not be construed as waiving or relinquishing for the
future of any such covenants, conditions or options but the same shall continue
and remain in full force and effect. No act of Lessor or its agent during the
term hereof shall be deemed an acceptance of a surrender of the said premises
unless made in writing and personally subscribed by Lessor, neither shall the
delivery of the keys to the premises by Tenant to Lessor or its agent be deemed
a surrender and acceptance thereof. No payment by Tenant of a lesser amount
than the monthly rent herein stipulated shall be deemed to be other than on
account of the stipulated rent.
32. SECURITY: The Tenant concurrently with the execution of this Lease
has deposited with Lessor the sum of Twelve hundered
<PAGE> 29
dollars ($600.00, security and $600.00 last month's rent)(1) as security for the
faithful performance and observance by Tenant of the terms, provisions and
conditions of this Lease; it is agreed that, in the event Tenant defaults in
respect of any of the terms, provisions and conditions of this Lease,
including, but not limited to, the payment of rent and additional rent Lessor
may use, apply or retain the whole or any part of the security so deposited to
the extent required for the payment of any rent and additional rent or any
other sum as to which tenant is in default or for any sum which Lessor may
expend or may be required to expend by reason of Tenant's default in respect to
any of the terms, covenants and conditions of this Lease, including, but not
limited to, any damages or deficiency in the re-letting of the premises whether
such damage or deficiency accrued before or after summary proceedings on other
re-entry by Lessor. In the event that Tenant shall fully and faithfully comply
with all of the terms, provisions, covenants and conditions of this Lease, the
security shall be returned to Tenant after the date fixed as the end of the
Lease and after delivery of entire possession of the premises to the Lessor.
In the event of a sale of the land and Building of
- ------------------------
(1)Lessor acknowledges that Lessee has paid these amounts in full upon
execution of previous leases regarding these units with Lessor.
<PAGE> 30
which the premises form a part, Lessor shall have the right to transfer the
security to the vendee and Lessor shall thereupon be released by Tenant from
all liability for the return of such security and Tenant agrees to look to the
new Lessor solely for the return of such security. It is agreed that the
provisions hereof shall apply to every transfer or assignment made of the
security to a new Lessor. Tenant further covenants that he will not assign or
encumber the monies deposited herein as security and that neither Lessor nor
its assigns shall be bound by and any such assignment or encumbrances. Lessor
shall not be required to keep the security in a segregated account and the
security may be commingled with other funds of Lessor and in ono event shall
Tenant be entitled to any interest on the security.
33. LIEN: The said Tenant hereby pledges and assigns to the Lessor all
the furniture, fixtures, goods and chattels of said Tenant, which shall or may
be brought or put on said premises as security for the payment of the rent
herein reserved and the Tenant agrees that the said lien may be enforced by
distress, foreclosure or otherwise at the election of the said Lessor and does
hereby agree to pay attorney's fees together with all costs and charges
therefor incurred or paid by the Lessor.
<PAGE> 31
34. SUCCESSORS: This Lease shall inure to and be binding upon the heirs,
administrators, executors, successors and assigns of the Lessor and the heirs,
administrators, executors, successors and assigns of the Tenant.
35. AMENDMENT: It is mutually agreed that this Lease cannot be changed,
altered, modified or extended, except in writing signed by the Lessor's duly
authorized agent.
36. RELOCATION: Lessor reserves the right to relocate the Tenant in
another similar area of the Building during the term of this Lease, provided
Tenant is given 90 days written notice as to relocation and all attendant costs
of moving, telephones, stationery, etc. are paid by Lessor.
37. INSURANCE, INDEMNIFICATION: Tenant agrees that Tenant will, at its
own cost and expense, maintain public liability insurance naming Lessor and
Tenant as insureds, protecting each of them against any and all claims for
injury or damage to persons or property or for the loss of life or property
occurring in, or about the Demised premises and arising out of the act,
negligence, omission, nonfeasance or malfeasance of Tenant, its employees,
agents, contractors, customers licensees, invitees or guests. Such
<PAGE> 32
insurance shall be carried in an amount not less than Three Hundred Thousand
Dollars ($300,000.00) for bodily injury or death to any one person and Three
Hundred Thousand Dollars ($300,000.00) for bodily injury or death of a number
of persons in the same accident or occurrence and One Hundred Thousand Dollars
($100,000.00) for property damage. All such insurance shall be effective under
valid and enforceable policies and shall be issued by insurers of recognized
responsibility authorized to do business in the State of Florida and
acceptable to Lessor (though Lessor's acceptance of any such insurer shall not
constitute a representation or warranty by Lessor as to the financial stability
of such insurer or otherwise and no such acceptance of any insurer by Lessor
shall be deemed a release or waiver of any responsibility, obligation or
liability of Tenant under this Lease). All such insurance policies shall
contain a provision whereby the insurer agrees not to cancel such insurance
without ten (10) days prior written notice to Lessor. Tenant shall furnish
Lessor with a certificate evidencing the aforesaid insurance coverage on or
before the Commencement Date and upon each renewal thereof but in all events at
least ten (10) days prior to the expiration of any such policy. Tenant shall
indemnify and save harmless Lessor and its agents against and from (i) any and
all claims arising from: (a) the management by Tenant of the Demised Premises
or any business therein, any work whatsoever done
<PAGE> 33
therein or thereon, or any condition created therein or thereon, during the
Term of this Lease or during any other period of time that Tenant has access to
the Demised Premises (though nothing herein contained shall be construed to
grant Tenant access to the Demised Premises except as provided in this Lease);
or (b) any negligent or otherwise wrongful act or omission of Tenant or any
subtenant (though nothing contained in this Lease shall be construed to permit
a sublease), licensee, employee, agent or contractor of Tenant or any other
party acting by, through or under Tenant; and (ii) all costs, expenses and
liabilities incurred in or in connection with or as a result of each such
claim, action or proceeding brought hereunder, whether or not suit be
instituted, including but not limited to reasonable attorney's fees incurred by
Lessor in defending any such action through and including all appeals. In case
any action or proceeding be brought against Lessor by reason of any such claim,
Tenant, upon notice from Lessor, shall resist and defend such action or
proceeding at the cost of Tenant.
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands and
seals the day and year first above written.
WITNESSES: TENANT:
<PAGE> 34
/s/ Graciela Lopez /s/ Steven Sablotsky 12-6-90
-------------------------- ------------------------------
President
-------------------------- ------------------------------
WITNESSES: LESSOR:
/s/ Mark Rubino
-------------------------- ------------------------------
-------------------------- ------------------------------
<PAGE> 1
EXHIBIT 10.8
Parkside Plaza Office Lease between Bud Eiskant and the Registrant dated
June 1, 1990.
<PAGE> 2
STANDARD OFFICE LEASE
THIS LEASE AGREEMENT made and entered into this 1st day of June, 1990, by
and between Bud Eiskant, an individual (hereinafter referred to as "Lessor")
and Noven Pharmaceuticals, Inc. (hereinafter referred to as "Tenant" or
"Lessee").
WITNESSETH:
1. DESCRIPTION. Lessor hereby leases unto Tenant and Tenant hereby leases
form Lessor, Suite No. 209 ("Demised Premises") containing approximately 1,091
square feet in that certain building ("Building") located at 13344 S.W. 128th
Street, Miami, FL, also known as "Parkside Plaza."
2. TERM. [Fill in and Initial A or B]
A. The term ("Term") of this Lease shall be 2 years and 7 months from
the 1st day of June, 1990 ("Commencement Date") through the 31st day of
December, 1992 ("Expiration Date") with an additional three (3) two-year
options to run consecutively with an option to purchase any time during this
period at fair market
<PAGE> 3
value.(1)
B. The term ("Term") of this lease shall commence on the earlier of the
following dates ("Commencement Date"): (i) the date on which Tenant opens for
business in the Demised Premises, or (ii) 7 days after Lessor has tendered
possession (as hereafter provided) of the Demised Premises to Tenant, or (iii)
the date 7 days after Lessor notifies Tenant that the Demises Premises are or
should be ready for occupancy. Tenant shall pay all rent and additional rent
relating to the Demised Premises which accrue after Lessor's tender of
possession.
Tender of possession shall be deemed to have occurred when Lessor has
completed Lessor's work, if any.
If Lessor is unable to give possession of the Demised Premises to Tenant
on the date for the commencement of the term hereof by reason of the fact that
Lessor has not substantially completed any space preparation work in the
Demised Premises pursuant to Lessor's Work Letter signed on behalf of Lessor
and Tenant (which Work
- ------------------------
(1)The purchase price shall be established by the average of three (3)
MAI appraisers; one to be chosen by the Tenant, one by the Landlord, and the
third will be chosen through mutual agreement of the other two appraisers.
<PAGE> 4
Letter, if any, is made a part hereof by reference) and if the delay in
completion of such work has not been caused by Tenant's failure to submit its
plans and specifications to Lessor on or before the time called for in the Work
Letter, or caused by other act or failure to act by Tenant, then the term of
this Lease shall commence on the day following the day of notification by
Lessor that such work has been substantially completed. If such date shall be
other than the first day of a calendar month, the rent or such months shall be
prorated on a per diem basis. No failure to deliver possession on the
scheduled date for the commencement of the term shall extend, or be deemed to
extend, the term of this Lease.
3. RENTAL PAYMENT. Subject to increase as provided in this Lease. Tenant
agrees to pay to Lessor as and for rent for the Demised Premises for the Term
hereof the sum of Twenty-one thousand seven hundred dollars ($21,700.00) plus
all applicable sales and use taxes which sum for the convenience of the Tenant
shall be paid as follows:
$700.00 ("Base Monthly Rental") plus all applicable sales and use taxes
upon the first day of each calendar month for the Term hereof commencing with
the first calendar month following the calendar month of the Commencement Date.
<PAGE> 5
The rental payments shall be made to Lessor of the address hereinafter set
forth to which notices to Lessor shall be sent or at such other place as Lessor
may, from time to time, hereafter designate by notice to Tenant. Tenant's
obligation to pay rent and keep and perform any and all covenants and
agreements herein contained shall not be abated, released or discharged because
of any reason whatsoever except as is otherwise specifically provided for in
this Lease. Rent and each installment thereof shall be paid in lawful money of
the United States, legal tender at the time of payment. All rents shall be
payable in advance and paid without deduction, setoff, discount or abatement.
Under no circumstances shall any holding over by Tenant be authorized and
no occupancy beyond the term limited hereby shall ever constitute anything
except an unlawful holding over by Tenant after the expiration of the Term. By
Tenant's execution hereof, Tenant acknowledges that Tenant has inspected the
Demised Premises and the Building and that as of the date hereof the Demised
Premises and the Building are in all respects in satisfactory condition and
acceptable to Tenant and Tenant is accepting same as is.
<PAGE> 6
4. INCREASE OF BASE RENT: The annual rental for each year of this lease
("lease year"), after the base year shall be increased or decreased, but never
less than the base rent, by an amount equal to the proportion hereafter set
forth, times the amount of the increase or decrease based on the cost of living
escalation published by the Bureau of Labor Statistics U.S. Department of
Labor.
(a) Base year shall be the first full calendar year after the building
has been completed or the first full calendar year of the terms of this lease,
whichever is later.
(b) Direct operating costs shall include: taxes, insurance, and water &
sewer. All expenditures scheduled less often than annually shall be prorated
over the period to which such expenditures are applicable.
(c) For purposes of determining increases or decreases in taxes:
(i) "Base year tax" shall mean the real estate tax bill of the land
and building, of which the demised premises are a part, made in the first tax
year that the building is assessed as completed, rather than under construction,
or the base tax year of 1990 and the real estate tax for that year is to be
ascertained.
(ii) "Taxes" shall mean real estate taxes, special
<PAGE> 7
and extraordinary assessments, and governmental levies imposed upon or with
respect to the land and building of which is the demised premises are a part
and any similar tax imposed in addition to, in substitution for, or in lieu of
such leases.
(d) Lessee's pro rata share of any increase in direct operating costs
shall be determined by the ratio that the gross rental area of the demised
premises bears to the total gross rental of the building which Lessor and
Tenant hereby agree is 3.0 percent.
(e) COST OF LIVING ESCALATION: If two months prior to commencement of
any lease year, the Consumer Price Index (C.P.I.) for "all items" (Miami, FL
C.P.I. Index) as compiled and published by the Bureau of Labor Statistics,
United States Department of Labor not to exceed 5% maximum should be higher
than the Base Consumer Price Index of June 1, 1990, the Minimum Monthly Rent
installments shall be increased by an amount proportionate to the amount of
such increase in the said price index, not to exceed 5% maximum. If such price
index should in the future be compiled upon a different basis, a proper
adjustment will be made therein, for the purposes of this Paragraph, to reflect
any increase the cost of living that has occurred over the Base Consumer Price
Index. If at the time of any such computation the United States Department of
Labor should no longer compile and publish such prices indexes, the
<PAGE> 8
index for "All Items" compiled and published by any other branch or department
of the Federal government shall be used for the purpose of this paragraph and
if no such index is compiled and published by any branch or department of the
Federal government, the statistics reflecting cost of living increases as
compiled by any institution or organization or individual generally recognized
as an authority by financial and insurance institutions shall be used as a
basis for such adjustment. This provision is independent of the other
provisions which provide for a pass through of certain increases. (See
attached addendum for cost of option renewal).
For example: If the base C.P.I. is 230.5 and two months prior to the first
lease year the C.P.I. is 235.8 and the minimum monthly rent is $1,400.00. The
new minimum monthly rent for the next lease year would be $1,432.19 or
$1,432.00 per month. [235.8 divided by 230.5 = 1.023 X $1,400.00 = $1,432.19
per month].
Lessor shall have the right to treat any sums due pursuant to this
Paragraph as additional rent due hereunder and if the same be not promptly paid
when due. Lessor shall have all the rights and remedies to which Lessor is
entitled for the nonpayment of rent.
5. USE AND POSSESSION. It is understood and agreed that
<PAGE> 9
the demised space and premises shall be continually used and occupied by the
Lessee during the term of this Lease only for the research, development,
clinical manufacturing and packaging of pharmaceutical products and for no
other purposes or uses whatsoever. Tenant will not make or permit any use of
the space or premises which, directly or indirectly, is forbidden by public
law, ordinance or government regulation or which may be dangerous to life, limb
or property. In the event the Tenant uses the space or premises for any
purposes not expressly permitted herein then the Lessor may terminate the lease
or without notice to tenant, restrain such improper use by injunction or other
legal action.
As a material consideration hereto the Tenant covenants that Tenant will
not without the written consent of the Lessor permit the premises to be
occupied by any person, firm or corporation other than the Tenant whose name
appears on this lease.
6. SERVICES: Lessor agrees to furnish the following services to Tenant:
(1) Automatically operated fire suppressant sprinkler system throughout and
central smoke detector in office areas only. (2) Water. (3) Furnishing,
supplying and maintaining the building's common areas and restroom facilities,
all at Lessor's expense, unless otherwise agreed to in this Lease.
<PAGE> 10
Tenant agrees to and shall pay when due all charges for utility services,
which are billed to Tenant with respect to the Demised Premises or which are
charged with respect to the Demised Premises as opposed to the Building as a
whole. If the Tenant fails to pay same promptly when due. Lessor shall have
the right, but not the obligation, to pay said charges and Tenant agrees to
reimburse Lessor promptly therefor. Any sum to which Lessor shall be entitled
pursuant to this Paragraph shall be deemed to be additional rent hereunder and,
if the same be not promptly paid to Lessor, Lessor shall have all the rights
and remedies to which it is entitled for the nonpayment of rent. Tenant shall
pay for all utility charges, for electricity, in connection with the Demised
Premises. Lessor will provide 220V Service.
If the Tenant requires additional current or other than 110 volt service,
request for same must be obtained from the Lessor and all work required will be
paid for by the Tenant. The Lessor shall not be liable for any delay or
failure to supply any of such services due to unusual conditions beyond its
control and Lessor shall not be liable for damage nor shall the Tenant ever be
entitled to any abatement of rent for failure to supply same.
7. NO ASSIGNMENTS, SUBLEASES OR ENCUMBRANCES: Tenant shall neither sublet
the Demised Premises or any part thereof nor assign
<PAGE> 11
this lease or any of the rights herein granted to Tenant without the prior
written consent of Lessor in each instance. Tenant shall have no right or
power to, and shall not, hypothecate, transfer, pledge or other encumber this
Lease or Tenant's rights hereunder nor shall Tenant permit any such
encumbrance. Tenant has no right ow power to cause, permit or do anything
which would cause the Demised Premises, the Building, the Land or Tenant's
interest in this Lease to become the subject of any lien, including, but not
limited to, any mechanic's liens under the laws of the State of Florida and
nothing done by, through, under or against Tenant shall ever create any such
liens. If any such lien is filed, Tenant shall cause the land and the Tenant's
interest in this Lease to be released from the lien thereof by posting a bond
or otherwise within ten (10) days of the date such lien is filed.
8. ALTERATIONS AND IMPROVEMENTS, ETC.:
(a) Tenant shall make no alterations, decorations, installations,
additions or improvements in or to the demised premises without Lessor's prior
written consent. Tenant shall not cut, drill into, disfigure, deface or injure
any part of the premises; nor obstruct or permit any obstruction, alteration,
addition, improvement, decoration or installation in the premises. All
alterations, additions, improvements, decorations or installations (except
movable furniture and fixtures put in at the
<PAGE> 12
expense of the Tenant and removable without defacing or injuring the Building
or the premises) shall become the property of Lessor at the termination of the
term; Lessor, however, reserves the option to require Tenant upon demand in
writing to remove all fixtures and additions, improvements, decorations or
installations (including those not removable without defacing or injuring the
leased premises) and to restore the premises to the same condition as when
originally leased to Tenant, reasonable wear and tear excepted. Tenant agrees
to restore the premises immediately upon the receipt of the said demand in
writing at his own cost and expense and agrees in case of his failure to do so,
that Lessor may do so and collect the cost thereof from Tenant. Any such
alterations or restorations shall be made at such times and in such manner as
Lessor may designate and so as not to interfere with the occupation, use and
enjoyment of the remainder of the Building by the other tenants thereof.
(b) In making any alterations, decorations, additions, installations or
improvements to or in the premises. Tenant shall employ and use only such
labor, contractors or mechanics as approved by Lessor and all such work done by
Tenant shall be performed and installed in such a manner that the same shall
comply with all provisions of law, ordinances and all rules and regulations of
any and all agencies and authorities having
<PAGE> 13
jurisdiction over the premises and at such time and in such manner as not to
interfere with the progress of any work being performed by or on account of
Lessor. Notwithstanding the foregoing, it is understood that Tenant is not
obliged by Lessor to make any improvement or improvements and in no event shall
Tenant have the right to create or permit there to be established any lien or
encumbrance of any nature against the premises or the Building for said
improvement or improvements by Tenant shall fully pay the cost of any
improvement or improvements made or contracted by Tenant. Any mechanics's lien
filed against the premises of the Building for work claimed to have been, done
or materials claims to have been furnished to Tenant shall be duly discharged
by Tenant within ten (10) days after the filing of the lien.
(c) Lessor agrees to additional roof penetrations required by Leases
for ventilation of labs and clinical manufacturing areas.
(d) Any improvements made by Tenant will become part of the real estate
and are to remain.
9. INSPECTION, EXAMINATION AND ENTRY: Lessor and Lessor's agents shall
have the right to enter the premises at all reasonable hours to examine the
same and workmen may enter at any time when authorized by Lessor or Lessor's
agents to make such repairs, alternations or improvements in the Building as
Lessor may deem
<PAGE> 14
necessary or desirable. If during the last month of the term, Tenant shall
have removed all of Tenant's property. Lessor may immediately enter the
premises and prepare them for any future Tenant. Furthermore, the Lessor may
allow such future Tenant to occupy the premises. These acts shall have no
effect upon Tenant's obligations under this Lease and Tenant shall be entitled
to no abatement on diminution of rent as a result thereof, except that in the
event such future Tenant makes any payment for the period up until the
expirations of this Lease, Tenant shall be entitled to a credit to the extent
of such payment. If Tenant shall not be personally present to open and permit
entry into the premises, when entry therein to shall be permissible or
necessary hereunder, Lessor may forcibly enter same without rendering Lessor
liable to any claim for damages and without affecting the obligations and
covenants of this Lease. Employees of Lessor and Lessor's agents shall be
permitted to enter the demised premises by pass-key at all reasonable times.
The Lessor shall also have the right to enter the leased premises at all
reasonable hours for the purpose of displaying said premises to prospective
tenants within ninety days prior to the termination of this Lease.
10. RIGHT OF LESSOR TO USE ENTRANCES, ETC. AND TO CHANGE SAME: For the
purpose of making repairs or alterations in any
<PAGE> 15
portion of the Building of which the premises form a part, Lessor may use one
or more of the street entrances, halls, passageways and elevators of the said
building, provided, however, that there be no unnecessary obstruction of the
right of entry to the premises while the same are occupied. Lessor may at any
time change the name or number of the Building, remodel or alter the same, or
the locations of any entrance thereto, or any other portion thereof not
occupied by Tenant and the same shall not constitute a constructive or actual,
total or partial eviction.
11. TENANT TO TAKE GOOD CARE OF PREMISES: Tenant shall keep the
premises in a clean, safe and sanitary condition and shall permit no waste or
injury to occur to the premises and fixtures therein, or to any additions,
alterations and improvements thereto. All damage caused by Tenant's
negligence, or that of his agents, servants, employees or visitors, shall be
repaired promptly by Tenant at his sole cost and expense. In the event that
the Tenant fails to comply with the foregoing provisions, the Lessor shall have
the option to enter the premises and make all necessary repairs at Tenant's
cost and expense, the same to be added to and be payable with the next monthly
installment of rent.
12. COMPLIANCE WITH ORDINANCES AND DIRECTIVES OF AUTHORITIES:
<PAGE> 16
Lessee shall, at its own cost and expense, comply with all present or future
rules, regulations, directives, laws, ordinances and orders of all public
authorities and Fire Underwriters which are or may become applicable to the
leased premises and space, except as said rules pertain to any structural work
or outside repairs. Lessee waives any claim against Lessor for any expenses or
damages resulting from compliance with any of the said rules, regulations,
directives, laws, ordinances or orders.
13. RULES AND REGULATIONS: That in addition to the several covenants in
this Lease, it is mutually covenanted and agreed that the rules and regulations
appertaining to the said building and which are annexed hereto, as part hereof
in Exhibit C, are agreed to in all of their terms and said Tenant agrees to be
bound by the same, and also covenants to be bound by such further rules and
regulations as may be made by said Lessor from time to time, during this Lease,
deemed by it to be necessary, for the safety, care, cleanliness and the
economical management of the premises, and for the preservations of good order
therein. Any failure on the part of the Tenant to comply with the terms of
this Lease, or with any of said rules and regulations now in existence, as
aforesaid, shall, at Lessor's option, work a forfeiture of this Lease and of
all rights of Lessee hereunder, and hereupon the Lessor, its agents
<PAGE> 17
or attorneys, shall have the right to re-enter said premises and remove Lessee
therefrom and to take all necessary steps to collect any rents due hereunder up
to the time of said forfeiture or cancellation.
14. PARKING: Lessor shall provide and maintain for the use of Tenant and
Tenant's invitees and guests, in common with other tenants of the Building and
their invitees and guests, an off-street parking area. Lessor reserves the
right, however, to enlarge or rearrange such parking facility and Tenant agrees
that Tenant and Tenant's employees, if requested by Lessor will park their
automobiles only in such areas as Lessor designates from time to time.
15. EQUIPMENT: In the event Tenant desires to place any equipment in the
Demised Premises other than normal and customary business equipment, Tenant
shall be allowed to install all equipment necessary to carry out said use per
paragraph "5". In connection with the installation, maintenance and use by
Tenant in equipment using or producing electricity, x-rays, ultra violet rays,
infrared rays, sound waves or other rays, waves or forces emitted by scientific
or technological equipment. Tenant covenants that Tenant will maintain
adequate and proper safeguards,
<PAGE> 18
procedures and equipment necessary or desirable for the use of such equipment
and that Tenant will indemnify Lessor and hold Lessor harmless from any
liability to which Lessor might or could become subjected by reason of
inconvenience, injury or damage to person or property resulting from the use of
any Tenant's equipment. In addition, should the installation or use of or any
equipment, whether properly or improperly installed or protected, result in any
increase in the fire insurance rate payable by Lessor or by any other tenant
(nothing herein contained being construed to permit Tenant to do anything or to
install or use any equipment which would result in any increase in any fire
insurance rate), then Tenant shall be liable for such increased rate and shall
pay to Lessor forthwith upon demand all increased costs resulting therefrom.
Any equipment, including medical and dental equipment, installed by Tenant
shall be and remain at all times the property of Tenant and shall be removed by
Tenant at the termination of the tenancy, at Tenant's own cost and expense; and
upon such removal Tenant shall restore the Demised Premises to their original
condition, usual wear and tear excepted.
16. SIGNS: The Tenant will not place any signs or other
<PAGE> 19
advertising matter or material on the exterior or on the interior, where
possible to be seen from the exterior, of the leased premises or of the
building in which the leased premises are located, without the prior written
consent of the Lessor. Any lettering or signs placed on the interior of said
building shall be for directional purposes only and such signs and lettering
shall be of a type, kind, character and description to be approved by the
Lessor.
17. DAMAGE TO PROPERTY: It is covenanted and agreed by and between the
parties hereto that the Lessor shall not in any event, whether caused by the
Lessor's negligence or otherwise, be liable for any loss, damage or injury to
the Tenant, Tenant's agents, servants, employees or visitors, or to the
Tenant's property, for any damage or injury caused by or from the bursting or
leaking of boilers of water, sewer or steam pipes, or air conditioning
equipment, or from heating or plumbing fixtures, or from electric wires,
equipment or fixtures, or from gas odors or from the elements, or from any
cause whatsoever, except in the case of the willful neglect of the Lessor.
18. SUBORDINATION AND ATTORNMENT: This Lease is subject and subordinate
to the lien of any mortgage or ground lease or deeds of
<PAGE> 20
trust or other encumbrances, now or hereafter placed upon the land or Building,
in any amounts whatsoever. Tenant covenants and agrees to execute and deliver
such instruments evidencing such subordination of this Lease to such liens of
any such mortgages, deeds of trust or other encumbrances, as may be requested
by Lessor from time to time.
As aforedescribed, this Lease is subordinate to the lien of any existing
and/or future mortgage and any further advances, renewals, extensions or
modifications thereof, so long as Tenant is not in default under the Lease at
that time, this Lease shall continue in full force and effect as a direct and
valid Lease between the Tenant and then owner of the fee provided that the then
new owner shall not be liable for any previous act or omission of Lessor or any
other party, or be subject to any offsets against Lessor, or bound by
prepayment of more than one (1) month's rent.
19. DAMAGE BY FIRE OR OTHER CASUALTY: In the event that the Demised
Premises are rendered untenantable by reason of fire, explosion or any other
casualty, Lessor, at its option, may either repair the said premises to make
the same tenable within one hundred eighty (180) days thereafter, or may, at
its option, terminate this Lease. In either event, Lessor shall give Tenant a
<PAGE> 21
thirty (30) day notice in writing. Furthermore, in the event that the Demised
Premises are untenantable and further if Tenant is not liable for the damage in
question, Tenant's rent for that period of time shall be abated or apportioned
under this Lease or otherwise.
20. CONDEMNATION: If during the term of this Lease, the whole of the
leased premises or Building, or such portion(s) thereof as will render the
leased premised unusable for the purpose leased, be condemned or otherwise
leased or taken under the right of eminent domain by any competent authority
for public or quasi-public use or purpose or is taken by private purchase in
lieu of condemnation, then in such event this Lease shall, at the option of the
Lessor, cease and come to an end as of the date of the vesting of title in such
public authority or by private purchase, or when possession is given to such
public authority, whichever event last occurs. Upon such occurrence the rent
shall be proportioned as of such date and any prepaid rent shall be returned to
the Tenant. The Lessor shall be entitled to the entire award or purchase price
and the Tenant shall have no right or claim to any part thereof.
21. ABANDONMENT: In case Tenant shall fail to take possession at the
commencement of the term, or in case the premises or any part thereof shall be
vacated during the term prior to the
<PAGE> 22
expiration of the term of this Lease. Lessor shall have the right to enter the
premises without instituting any proceeding either by force or otherwise
without being liable for damages therefor, and to relet the same, or any part
thereof, for the unexpired portion of the term or longer and to collect the
rent therefor and to apply the rents so collected to the payment of rent and
all other sums payable to Lessor. Tenant shall in such case remain responsible
to Lessor for any and all deficiency, loss and damage suffered by Lessor.
22. RE-ENTRY, DEFAULT: The Tenant covenants that if the rent reserved by
this Lease or any part thereof shall be unpaid when due, or, if the premises
shall become vacant or actually unoccupied during the term, or if the Tenant
shall fail to perform any of the conditions, covenants, provisions and
agreements contained herein, or if a petition in bankruptcy shall be filed by
the Tenant, or if the Tenant shall be adjudged bankrupt or insolvent by any
court, or if a receiver or trustee in bankruptcy or receiver of the property of
the Tenant shall be appointed in any suit, action or proceeding, or if the
Tenant shall make an assignment for the benefit of creditors, of if an
execution shall be issued against the Tenant, or if the Tenant's leasehold
interest herein shall be levied upon, or if the Tenant's leasehold interest
<PAGE> 23
herein shall by operation of law pass to any person other than the Tenant, then
in each and every case, the Lessor may, at its option, without notice to the
Tenant or to any assignee, transferee, trustee, receiver or other person or
persons with force or otherwise, retake and recover possession of said premises
and terminate this Lease and the term herein and hereby granted and demised;
or, in each and such case, the Lessor may, at its option, without notice to the
Tenant or to any assignee, transferee, trustee, receiver or other person or
persons, with force or otherwise enter said premises and relet the same as it
may see fit, without avoiding or terminating this Lease, and for the purpose of
such reletting the Lessor may make such repairs, alterations and addition in or
to said premises as the Lessor may deem necessary for the purpose and charges
of such reletting, alterations and additions in and to said premises to equal
the rent hereinabove covenanted to be paid by the Tenant, then the Tenant shall
pay any deficiency arising upon demand therefor and such deficiency shall be
considered, construed and taken to be a debt provable in bankruptcy or
receivership.
23. ATTORNEY'S FEES: If the Tenant defaults in the performance of any of
the covenants of this Lease and by reason thereof the Lessor employs the
services of an attorney to enforce
<PAGE> 24
performance of the covenants by the Tenant, to evict the Tenant, to collect
monies due by the Tenant, or to perform any service based upon said default,
then in any of said events, the Tenant does not agree to pay a reasonable
attorney's fee, including all appellate fees and all expenses and costs
incurred by the Lessor pertaining thereto and in enforcement of any remedy
available to the Lessor.
24. HOLDING OVER: In the event the Tenant shall withhold from the Lessor
the possession of the premises demised herein after the termination of this
Lease and the term hereby demised, whether by expiration of said term or by
election or act of either party hereto, the damages for which the Tenant shall
be liable to the Lessor for a period equal to the period of such detention. In
the event the Tenant shall remain in possession of said premises after the
expiration and termination of this Lease for any cause whatsoever, the Tenant
shall then be considered a tenant at will and by sufferance and no such holding
over or retention of possession or occupancy shall operate as an extension or
renewal of this Lease in any manner whatsoever.
25. CERTIFICATE BY TENANT: Tenant shall deliver to Lessor or to its
mortgagee, auditors or prospective purchaser, or the owner of the fee, when
requested by Lessor, a certificate to the
<PAGE> 25
effect that this Lease is in full force and effect and that Lessor is not in
default therein, or stating specifically any exceptions thereto. Failure to
give such a certificate within two (2) weeks after written request shall be
conclusive evidence that the lease is in full force and effect and Lessor is
not in default and Tenant shall be estopped from asserting any defaults known
to him at that time.
26. INDEMNIFICATION: The Lessor shall not be liable for any damage or
injury to any person or property whether it be the person or property of the
Tenant, the Tenant's employees, agents, guests, invitees or otherwise by reason
of Tenant's occupancy and use of the leased premises or because of the fire,
flood, windstorm, Acts of God or for any other reason.
Tenant shall indemnify and save Lessor harmless and does agree to
indemnify and save Lessor harmless, of and from all fines, claims demands and
causes of action of every nature whatsoever arising or growing out of or in any
manner connected with the occupation or use of the premises and Building and
every part thereof, by Tenant and the employees, agents, servants, guests and
invitees of Tenant including without limiting the generality of the foregoing,
any claims, demands and causes of action for personal
<PAGE> 26
injury and/or property damage and said indemnification shall extend to any
fines, claims, demands and causes of action of every nature whatsoever which
may be made upon, sustained or incurred by Lessor or reason of any breach,
violation or non-performance of any term, covenant or condition hereof on the
part of Tenant or by reason of any act or omission on the part of Tenant and
the employees, agents, servants, guests and invitees of Tenant. In any such
event, contributory negligence, except willful neglect, on the part of the
Lessor shall not any wise affect Tenant's obligations under this
indemnification. Tenant agrees that this indemnification shall further extend
to all costs incurred by Lessor, including reasonable attorney's fees.
27. NOTICES: All notices required hereunder shall be in writing and any
notice by Lessor to Tenant shall be deemed to be duly given if either delivered
personally to Tenant or sent by registered or certified mail, addressed to
Tenant at the premises leased hereunder. Any notice by Tenant to Lessor shall
be deemed duly given if sent by registered or certified mail to Lessor at 8864
S.W. 176th Terrace, Miami, Florida 33157 (or at such other address as may be
hereafter designated by Lessor) and also to the agent of Lessor charged with
the renting and management of the Building, if any.
<PAGE> 27
28. SURRENDER AT EXPIRATION OF TERM: Tenant agrees at the expiration of
the term by lapse of time or otherwise to quit and surrender the premises
hereby demised and everything belonging to or connected therewith in as good a
state and condition as reasonable wear and use thereof will permit and to
remove all signs, advertisements and rubbish from the said premises; and Tenant
hereby expressly authorizes Lessor, as the agent of Tenant, to remove such
rubbish and make such changes and repairs as may be necessary to restore the
premises to such condition at the expense of Tenant.
29. QUIET POSSESSION AND OTHER COVENANTS: Lessors covenants that if and
so long as Tenant pays the rent and additional rent reserved by this Lease and
performs and observes all of the covenants, conditions and rules and
regulations hereof, Tenant shall quietly enjoy the demised premises subject,
however, to all of their terms of this Lease. Tenant expressly agrees for
himself, his executors, administrators, personal representatives, successors
and assigns that the covenant of quiet enjoyment (express or implied) and all
other covenants in this Lease on the part of Lessor to be performed shall be
binding upon Lessor only so long as Lessor remains the owner of the Building
which the demised premises form a part.
<PAGE> 28
30. REMEDIES CUMULATIVE: The various rights, remedies, powers and
elections of Lessor reserved, expressed or contained in this Lease, are
cumulative and noone of them shall be deemed to be exclusive of the others or
of such other rights, remedies, powers, options or elections as are now or may
hereafter be conferred upon Lessor by law. The failure on the part of the
Lessor to exercise promptly any rights given hereunder shall not operate to
forfeit or waive any of the said rights.
31. NO WAIVER OF PERFORMANCE: No waiver by Lessor of any provision
hereof shall be deemed to have been made unless such waiver be in writing
signed by Lessor. The failure of Lesor to insist upon the strict performance
of any of the covenants or conditions of this Lease, or to exercise any option
herein conferred, shall not be construed as waiving or relinquishing for the
future of any such covenants, conditions or options but the same shall continue
and remain in full force and effect. No act of Lessor or its agent during the
term hereof shall be deemed an acceptance of a surrender of the said premises
unless made in writing and personally subscribed by Lessor, neither shall the
delivery of the keys to the premises by Tenant to Lessor or its agent be deemed
a surrender and acceptance thereof. No payment by
<PAGE> 29
Tenant of a lesser amount than the monthly rent herein stipulated shall be
deemed to be other than on account of the stipulated rent.
32. SECURITY: The Tenant concurrently with the execution of this Lease
has deposited with Lessor the sum of $450.00 first month's rent, $450.00 last
month's rent and $450 security(2) as security for the faithful performance and
observance by Tenant of the terms, provisions and conditions of this Lease; it
is agreed that, in the event Tenant defaults in respect of any of the terms,
provisions and conditions of this Lease, including, but not limited to, the
payment of rent and additional rent Lessor may use, apply or retain the whole
or any part of the security so deposited to the extent required for the payment
of any rent and additional rent or any other sum as to which tenant is in
default or for any sum which Lessor may expend or may be required to expend by
reason of Tenant's default in respect to any of the terms, covenants and
conditions of this Lease, including, but not limited to, any damages or
deficiency in the re-letting of the premises whether such damage or deficiency
accrued before or after summary proceedings on other re-entry by Lessor. In
the event that Tenant shall fully and faithfully comply with all of the terms,
- ----------------------
(2)Lessor acknowledges that Lessee has paid these amounts in full upon
execution of previous leases regarding these units with Lessor.
<PAGE> 30
provisions, covenants and conditions of this Lease, the security shall be
returned to Tenant after the date fixed as the end of the Lease and after
delivery of entire possession of the premises to the Lessor. In the event of
a sale of the land and Building of which the premises form a part, Lessor shall
have the right to transfer the security to the vendee and Lessor shall
thereupon be released by Tenant from all liability for the return of such
security and Tenant agrees to look to the new Lessor solely for the return of
such security. It is agreed that the provisions hereof shall apply to every
transfer or assignment made of the security to a new Lessor. Tenant further
covenants that he will not assign or encumber the monies deposited herein as
security and that neither Lessor nor its assigns shall be bound by and any such
assignment or encumbrances. Lessor shall not be required to keep the security
in a segregated account and the security may be commingled with other funds of
Lessor and in ono event shall Tenant be entitled to any interest on the
security.
33. LIEN: The said Tenant hereby pledges and assigns to the Lessor all
the furniture, fixtures, goods and chattels of said Tenant, which shall or may
be brought or put on said premises as security for the payment of the rent
herein reserved and the Tenant agrees that the said lien may be enforced by
distress, foreclosure
<PAGE> 31
or otherwise at the election of the said Lessor and does hereby agree to pay
attorney's fees together with all costs and charges therefor incurred or paid
by the Lessor.
34. SUCCESSORS: This Lease shall inure to and be binding upon the heirs,
administrators, executors, successors and assigns of the Lessor and the heirs,
administrators, executors, successors and assigns of the Tenant.
35. AMENDMENT: It is mutually agreed that this Lease cannot be changed,
altered, modified or extended, except in writing signed by the Lessor's duly
authorized agent.
36. RELOCATION: Lessor reserves the right to relocate the Tenant in
another similar area of the Building during the term of this Lease, provided
Tenant is given 90 days written notice as to relocation and all attendant costs
of moving, telephones, stationery, etc. are paid by Lessor.
37. INSURANCE, INDEMNIFICATION: Tenant agrees that Tenant will, at its
own cost and expense, maintain public liability insurance naming Lessor and
Tenant as insureds, protecting each of them against any and all claims for
injury or damage to persons or
<PAGE> 32
property or for the loss of life or property occurring in, or about the Demised
premises and arising out of the act, negligence, omission, nonfeasance or
malfeasance of Tenant, its employees, agents, contractors, customers licensees,
invitees or guests. Such insurance shall be carried in an amount not less than
Three Hundred Thousand Dollars ($300,000.00) for bodily injury or death to any
one person and Three Hundred Thousand Dollars ($300,000.00) for bodily injury
or death of a number of persons in the same accident or occurrence and One
Hundred Thousand Dollars ($100,000.00) for property damage. All such insurance
shall be effective under valid and enforceable policies and shall be issued by
insurers of recognized responsibility authorized to do business in the State of
Florida and acceptable to Lessor (though Lessor's acceptance of any such
insurer shall not constitute a representation or warranty by Lessor as to the
financial stability of such insurer or otherwise and no such acceptance of any
insurer by Lessor shall be deemed a release or waiver of any responsibility,
obligation or liability of Tenant under this Lease). All such insurance
policies shall contain a provision whereby the insurer agrees not to cancel
such insurance without ten (10) days prior written notice to Lessor. Tenant
shall furnish Lessor with a certificate evidencing the aforesaid insurance
coverage on or before the Commencement Date and upon each renewal thereof but
in all events at least ten (10) days
<PAGE> 33
prior to the expiration of any such policy. Tenant shall indemnify and save
harmless Lessor and its agents against and from (i) any and all claims arising
from : (a) the management by Tenant of the Demised Premises or any business
therein, any work whatsoever done therein or thereon, or any condition created
therein or thereon, during the Term of this Lease or during any other period of
time that Tenant has access to the Demised Premises (though nothing herein
contained shall be construed to grant Tenant access to the Demised Premises
except as provided in this Lease); or (b) any negligent or otherwise wrongful
act or omission of Tenant or any subtenant (though nothing contained in this
Lease shall be construed to permit a sublease), licensee, employee, agent or
contractor of Tenant or any other party acting by, through or under Tenant; and
(ii) all costs, expenses and liabilities incurred in or in connection with or
as a result of each such claim, action or proceeding brought hereunder, whether
or not suit be instituted, including but not limited to reasonable attorney's
fees incurred by Lessor in defending any such action through and including all
appeals. In case any action or proceeding be brought against Lessor by reason
of any such claim, Tenant, upon notice from Lessor, shall resist and defend
such action or proceeding at the cost of Tenant.
<PAGE> 34
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands and
seals the day and year first above written.
WITNESSES: TENANT:
/s/ /s/ Steven Sablotsky (SEAL)
__________________________ ______________________________
5-30-90
__________________________ ______________________________
WITNESSES: LESSOR:
/s/ /s/ Anthony C. Eiskant
__________________________ ______________________________
5-30-90 5-30-90
__________________________ ______________________________
<PAGE> 1
EXHIBIT 10.26
Employment Agreement between Colin A. Morris and the Registrant dated
February 1, 1995.
<PAGE> 2
EMPLOYMENT AGREEMENT
THIS AGREEMENT, made and entered into this 1st day of February, 1995
by and between COLIN A. MORRIS (hereinafter referred to "EMPLOYEE") and Noven
Pharmaceuticals, Inc., a Delaware Corporation having its principal office at
11960 S.W. 144th Street, Miami, Florida 33186 (hereinafter referred to as the
"COMPANY").
WITNESSETH:
WHEREAS, EMPLOYEE is currently employed as Vice President of
Operations of the COMPANY and has been so employed since April, 1993;
WHEREAS, a principal inducement of the COMPANY for entering into this
Agreement is the continued employment of EMPLOYEE to provide his unique
qualifications, knowledge, skill and ability in conducting and developing the
business of the COMPANY and its subsidiaries, in accordance with the terms of
this Agreement;
WHEREAS, EMPLOYEE desires to perform such duties and functions for the
COMPANY and its subsidiaries as described herein, subject to the terms and
conditions of this Agreement; and
WHEREAS, the Compensation Committee of the Board of Directors of the
COMPANY has approved the terms and conditions of the employment of EMPLOYEE as
set forth herein and has authorized the execution and delivery of this
Agreement.
<PAGE> 3
NOW, THEREFORE, for and in consideration of the mutual covenants
herein and such other good and valuable consideration, the receipt and
sufficiency of which are hereby mutually acknowledged, the parties agree as
follows:
Page 2 of 14
<PAGE> 4
1. EMPLOYMENT
The COMPANY hereby employs EMPLOYEE as a full-time EMPLOYEE of
the COMPANY to perform the duties and functions set forth in Section 3, and
EMPLOYEE hereby accepts such employment and agrees to perform such duties and
functions upon the terms and conditions contained herein.
2. TERM
(a) The term of this Agreement shall be for a period of two
(2) years commencing January 1, 1995, unless sooner terminated in accordance
with the terms, provisions and conditions set forth herein.
(b) Upon the mutual agreement of the COMPANY and EMPLOYEE, the
term of this Agreement may be extended for additional periods, on the terms,
provisions and conditions set forth herein. Any such extension shall be made no
later than sixty (60) days prior to the termination of the original two (2)
year term.
3. DUTIES
EMPLOYEE shall, and does hereby agree to, perform the
following duties and functions, and any additional duties and functions as may
be from time to time assigned to EMPLOYEE by the President of the COMPANY, in
connection with his employment:
Page 3 of 14
<PAGE> 5
(a) To perform such duties customarily incident to the office
of Vice President of Operations of the COMPANY, and such other duties and
functions assigned by the President of the COMPANY from time to time.
(b) To promote the interests of the COMPANY and assist in its
business and scientific dealings with other companies, academic institutions
and medical/business groups.
(c) To devote such effort, time and skill to the affairs of
the COMPANY as is reasonable necessary to competently perform his duties and
functions, and not participate in any outside business or academic activities
which would prevent such performance of duties and functions. EMPLOYEE agrees
to accept no outside employment of any kind, whether as a consultant, guest
lecturer or otherwise, without the prior written approval of the President of
the COMPANY.
4. COMPENSATION
(a) Salary and Bonus:
(i) THE COMPANY shall pay EMPLOYEE an annual base
salary of One Hundred Sixty Thousand Dollars (U.S. $160,000). For each
subsequent year, the Compensation Committee of the Board of Directors shall
have the authority to increase the annual base salary at any time during the
remainder of the term of this
Page 4 of 14
<PAGE> 6
Agreement or any extension thereof.
(ii) EMPLOYEE shall be entitled to receive a bonus
beginning December 1995 and each December thereafter; provided however, that
the determination of (i) whether EMPLOYEE shall receive any bonus and (ii) the
amount and form of payment of any such bonus, shall be solely in the discretion
of the Compensation Committee of the Board of Directors.
(iii) Compensation pursuant to 3(a) and (b) shall be
paid to EMPLOYEE with the same frequency as other executives of the COMPANY are
compensated.
(iv) EMPLOYEE'S annual base salary shall be
automatically increased minimally each year during the term of this Agreement,
or any extension thereof, beginning with the year 1996 without action by the
COMPANY or EMPLOYEE, by an amount which shall be necessary to adjust such
annual base salary to keep pace with the increases in the cost of living. The
COMPANY shall compute the increase, if any, as promptly as practicable at the
end of each year during the term of this Agreement, or any extension thereof,
using the "Revised Consumers Price Index - Cities" (hereinafter the "Index")
published by the United States Bureau of Labor Statistics, as the basis of such
compensation, with October 1994 as the base year and the corresponding Index
number for the month of October
Page 5 of 14
<PAGE> 7
each anniversary thereafter as the current Index number. Appropriate
adjustments shall be promptly made in case there is a published amendment of
the Index figures upon which the computation is based. If publication of the
Index is discontinued, the parties hereto shall accept comparable statistics on
the cost of living in Miami, Florida as computed and published by an agency of
the United States or by a responsible financial periodical of recognized
authority then to be mutually agreed upon by the parties.
(b) Stock:
(i) EMPLOYEE shall be entitled to receive options for stock of
the COMPANY in accordance with the prevailing policies and practices of the
COMPANY then in effect, based upon performance by EMPLOYEE of his duties and
functions; provided, however, that the determination to grant any such stock
options shall be solely in the opinion and discretion of the COMPANY's
executive management with the approval of the Chairman of the Executive
Compensation/Stock Option Committee of the Board of Directors.
(ii) As additional consideration for entering into this
Agreement, EMPLOYEE hereby agrees to the cancellation of options for 100,000
shares of common stock granted on April 12, 1993 at $10.50 per share. COMPANY
shall issue new seven (7) year options in the amount of 100,000 shares at $7.75
per share, the closing price
Page 6 of 14
<PAGE> 8
on February 1, 1995. Such options shall be dated February 1, 1995.
(c) Employee Benefits:
(i) Nothing contained in this Agreement shall be construed to
limit EMPLOYEE'S participation in or entitlement to any medical, health and
insurance plan or coverage, or any other EMPLOYEE benefit to which EMPLOYEE
would otherwise be entitled, in accordance with the prevailing policies and
practices of the COMPANY then in effect, in the absence of this Agreement.
5. NON-COMPETITION
(a) During the term of this Agreement, and for a period of two
(2) years following termination of the services of EMPLOYEE with the COMPANY
unless waived in writing by a majority vote of the Board of Directors of the
COMPANY, EMPLOYEE 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
pharmaceutical product designed to compete directly with the
transdermal/transoral or topical products
Page 7 of 14
<PAGE> 9
of the COMPANY and its subsidiaries which are under active development or are
manufactured, marketed or sold during the term of this Agreement.
(b) EMPLOYEE acknowledges that the provisions of Section 5(a)
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 5(a) be enforceable to the fullest extent
permissible under applicable law. EMPLOYEE agrees, however, that in the event
any restriction or limitation of Section 5(a), 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.
(c) EMPLOYEE acknowledges and agrees that a breach or
threatened breach of Section 5 of this Agreement will cause irreparable injury
to COMPANY'S legitimate business interests and goodwill. The COMPANY shall
accordingly be entitled to injunctive relief from a court of competent
jurisdiction without the posting of bond or security, in addition to any other
rights, remedies or damages available to the COMPANY.
Page 8 of 14
<PAGE> 10
6. TERMINATION
(a) This agreement may be terminated upon mutual agreement in
writing of the COMPANY and EMPLOYEE.
(b) This Agreement may be terminated by the COMPANY for
cause, for breach of Section 5(a), or for any intentional breach of any
material term, provision or condition of this Agreement. For purposes of
this Agreement, the term "cause" when used with reference to the termination
of the services of EMPLOYEE, shall mean the termination by vote of a majority
of the Board of Directors of the COMPANY, after giving EMPLOYEE (i) not less
than ten (10) days prior written notice stating the specific action proposed
to be taken and the grounds therefor and (ii) a reasonable opportunity to
respond to such notice at a meeting of the Board of Directors of the COMPANY,
that one of the following events has occurred and such event and/or condition
is the reason for termination:
(i) Willful, substantial or continuing neglect or
inattention by EMPLOYEE of or to the duties in Section 3;
(ii) Willful misconduct or gross negligence of
EMPLOYEE in connection with the performance of such duties; or
(iii) The refusal of EMPLOYEE to perform any of the
duties described in Section 3 or elsewhere in the Agreement, or the
Page 9 of 14
<PAGE> 11
reasonable instructions of the President of the Company.
(c) This Agreement shall terminate upon the death or permanent
disability of EMPLOYEE. For purposes of this Agreement, the term "permanent
disability" when used with reference to the termination of the services of
EMPLOYEE shall mean a mental or physical illness or condition which renders
EMPLOYEE incapable of performing EMPLOYEE'S duties and functions with the
COMPANY for a period of one hundred eighty (180) consecutive days during the
term of this Agreement or any extension thereof, as determined by the Board of
Directors of the COMPANY, who shall also determine the date of onset of
permanent disability. In such event, the COMPANY shall pay EMPLOYEE, or his
designated beneficiaries, estate or legal representatives the death and
disability payments as set forth in Section 7.
(d) In the event that the COMPANY shall cease operations
without the transfer of its business, in whole or in part, to a successor, this
Agreement shall terminate as of the last day of the month on which the COMPANY
ceases operation with the same force and effect as if such last day of the
month were originally set as the termination date thereof.
7. DISABILITY. DEATH AND SEVERANCE PAYMENTS
In the event of termination of this Agreement under any
Page 10 of 14
<PAGE> 12
of the following conditions, the COMPANY shall provide the payments and/or
benefits to EMPLOYEE as follows:
(a) Disability: In the event that EMPLOYEE shall become
disabled and terminated for such disability pursuant to Section 6(c), then
EMPLOYEE shall continue to receive his annual salary at the date of onset of
such disability for the remaining term of this Agreement or any extension
thereof; provided, however that payment of such salary shall be reduced by
the amount of any disability payments received by EMPLOYEE from any insurance
policy or policies paid for by the COMPANY.
(b) Death: EMPLOYEE'S designated beneficiaries, legal
representatives or estate shall receive for a period of one year or the
remaining term of this Agreement or any extension thereof, whichever is less,
the compensation EMPLOYEE would have otherwise received as an active EMPLOYEE
pursuant to Sections 4(a).
(c) Severance: If EMPLOYEE is terminated pursuant to
Section 6(b) or resigns or leaves the COMPANY, through no act of the COMPANY,
then EMPLOYEE shall receive no payments and/or benefits after the date of
termination. If EMPLOYEE is terminated pursuant to Section 6(a), then EMPLOYEE
shall receive all compensation to which EMPLOYEE would be entitled under this
Agreement.
Page 11 of 14
<PAGE> 13
(d) Stock Options: Any unvested options shall terminate in
accordance with the Stock Option Plan in the event that EMPLOYEE does not, for
any reason, remain in the employ of the COMPANY or in the event that EMPLOYEE
is terminated pursuant to Section 6(b) herein.
8. NOTICES
Any notice required or permitted to be given under this
Agreement shall be in writing and made by certified mail, return-receipt
requested, postage prepaid or by hand delivery, telex or facsimile, and shall
be deemed to have been given upon receipt or actual notice.
9. WAIVER
Any failure on the part of the COMPANY to insist upon the
performance of this Agreement, or any part thereof, at any time or from time to
time, shall not constitute a waiver of any right, or future performance of any
term, provision or covenant, under this Agreement.
10. ASSIGNMENT
This Agreement shall inure to the benefit of and be binding on
(a) the COMPANY's successors and assigns, including without limitation, any
person or entity which may acquire substantially all of the COMPANY'S assets or
business, or with or
Page 12 of 14
<PAGE> 14
into which the COMPANY may be merged, consolidated, liquidated or otherwise
combined and (b) so far as legally possible, on EMPLOYEE'S heirs,
administrators, executors and legal representatives.
11. SEVERABILITY
The invalidity or unenforceability of any term, provision or
condition of this Agreement shall not impair or affect the validity or
enforceability of any other term, provision or condition. In the event of such
invalidity or enforceability, the term, provision or condition shall, in so far
as possible, be substituted or modified to implement the purpose thereof in a
valid or enforceable way.
12. GOVERNING LAW
This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida, both substantive and
procedural, without regard to choice-of-law principles. Venue for any legal
proceeding relating to or arising from this Agreement shall be exclusively in
Dade County, Florida.
13. ENTIRE AGREEMENT
This Agreement, together with the Confidential Disclosure and
Invention Agreement attached hereto and executed contemporaneously herewith and
all prior stock agreements and/or
Page 13 of 14
<PAGE> 15
grants, contains the entire understanding and agreement of parties with respect
to the subject matter hereof, and supersedes all prior understandings and
agreements directed thereto. No modification, amendment, alteration or waiver
shall be valid or binding except as may be specifically authorized herein or by
a written document duly executed by the parties or their representatives.
IN WITNESS WHEREOF, the parties have executed this Agreement to be
effective as of the date first written above.
NOVEN PHARMACEUTICALS, INC. COLIN A. MORRIS
By:
/s/ Sheldon H. Becher /s/ Colin A. Morris
- ---------------------------- ----------------------
SHELDON H. BECHER, DIRECTOR,
CHAIRMAN OF EXECUTIVE
COMPENSATION/STOCK OPTION
COMMITTEE
Page 14 of 14
