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EXHIBIT 10.7
AMENDMENT TO OPERATING AGREEMENT
FIRST AMENDMENT, dated as of March 29, 2001, (this
"Amendment"), to LIMITED LIABILITY COMPANY OPERATING AGREEMENT dated May 1,
1998, of Vivelle Ventures LLC (the "Company"), by and among Novartis
Pharmaceuticals Corporation, a Delaware corporation ("Novartis"), as the
successor-in-interest to the Pharmaceuticals Division of Ciba-Geigy Corporation,
a New York corporation and Noven Pharmaceuticals, Inc., a Delaware corporation
("Noven"), as members of the Company (the "Members"). All capitalized terms used
herein but not otherwise defined herein shall have the respective meanings given
to such terms in the Operating Agreement.
W I T N E S S E T H:
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WHEREAS, Novartis and Noven are parties to a Limited Liability
Company Operating Agreement (the "Operating Agreement"), dated as of May 1,
1998, of the Company; and
WHEREAS, Novartis and Noven wish to amend certain provisions
of the Operating Agreement as herein provided.
NOW, THEREFORE, it is agreed:
1. Section 1.1 of the Operating Agreement is hereby amended by
(i) deleting the definition, "Annual Plan" in said Section in its entirety and
(ii) deleting the definition, "Vivelle Business," in said Section and inserting
in lieu thereof the following definition:
"HRT Business" shall mean: (a) the manufacture, marketing and
sale of the 17B-estradiol single active ingredient products in a matrix marketed
in the Territory under the trademarks "Vivelle" and "Vivelle Dot" pursuant to
the License Agreement; and (b) the development, use, sale and other disposal of
the transdermal estrogen/progestin product which is marketed in the Territory
under the trademark "CombiPatch" pursuant to the License Agreement between the
Company and Noven dated March 29, 2001, (but, in each case, shall not include
engaging in clinical development activities).
And each reference in the Operating Agreement to the term
"Vivelle Business" is hereby deleted and the term "HRT Business" is hereby
inserted in lieu thereof.
2. Paragraphs (b) and (c) of Section 2.7 of the Operating
Agreement are hereby deleted in their entirety and replaced by the following new
paragraphs, respectively:
"(b) The Members agree that in the event that Noven reasonably believes
that Novartis has breached its obligations under the Distribution and
Services Agreement, the Limited Assignment Agreement, the Trademark
License or the Sublicense Agreement, Noven may, on behalf of the
Company, assert a breach thereof and pursue all remedies at law or
equity with respect thereto. The Members further agree that Noven may,
on behalf of the
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Company, exercise the rights of the Company contained in Sections 5.4,
5.5, 5.6, 8.1 and 10.1 of the Distribution and Services Agreement and
shall act on behalf of the Company in agreeing the Services Plan
pursuant to Section 4.1 of the Distribution and Services Agreement.
(c) The Members agree that in the event that Novartis reasonably
believes that Noven has breached its obligations under the Marketing
and Promotional Services Agreement, the Limited Assignment Agreement or
the Sublicense Agreement, Novartis may, on behalf of the Company,
assert a breach thereof and pursue all remedies at law or equity with
respect thereto. The Members further agree that Novartis may, on behalf
of the Company, exercise the rights of the Company contained in
Sections 4.4, 4.5, 4.6, 7.1 and 9.1 of the Marketing and Promotional
Services Agreement and shall act on behalf of the Company in agreeing
the Sales and Marketing Plan pursuant to Section 3.1 of the Marketing
and Promotional Services Agreement."
3. Section 2.7(d) of the Operating Agreement is hereby amended
to delete references to "(c)" and "(d)" in said Section and replace them with
"(b)" and "(c)", respectively.
4. Section 5.2 of the Operating Agreement is hereby amended by
deleting said Section in its entirety and inserting in lieu thereof the
following text:
"Section 5.2 PRESIDENT. (a) The first individual to act as "President"
of the Company shall be Xxxxxx X. Xxxxxxx. Upon the death, resignation
or removal of Xx. Xxxxxxx pursuant to the terms hereof, each Member
shall have the right to propose to the Management Committee a successor
President. The successor President shall be appointed by a majority
vote of the Management Committee provided that at least four (4)
Members cast votes in connection with such appointment. The President
shall have such authority as is set forth in this Agreement. The
successor President shall hold office until his or her death,
resignation or removal by a majority vote of the Management Committee,
whereupon further successor Presidents shall be proposed and appointed
as set forth above.
(b) Xx. Xxxxxxx and each successor President, if any (collectively
referred to as the "President" for purposes of this Section 5.2(b)),
shall manage the day-to-day business operations and affairs of the
Company subject to direction and oversight by the Management Committee.
The President shall be responsible for the implementation of the
decisions of the Management Committee and shall have the power to
represent and bind the Company regarding the incurrence of monetary
obligations or making of payments provided for under the Services Plan
or the Sales and Marketing Plan, as defined in the Distribution and
Services Agreement and the Marketing and Promotional Services
Agreement, respectively. Decisions on matters hereunder requiring the
express approval of the Members or which are set forth in Section 5.4,
however, shall be made solely by the Management Committee. The
President shall have such other powers and perform such other duties as
usually pertain to the office of the President and as from time to time
may be assigned to him or her by the Management Committee. The annual
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compensation of the President shall be determined by a majority vote of
the Management Committee."
5. Section 5.4 of the Operating Agreement is hereby amended by
deleting clauses (i) through (xiii) in their entirety and inserting in lieu
thereof the following new clauses:
"(i) the approval of any material amendment to the annual operating and
capital budgets of the Company outside of the ordinary course of the
HRT Business for each product line sold by the Company;
(ii) the approval of any amendment to the Certificate of Formation of
the Company;
(iii) the approval of any material amendment to any of the Ancillary
Agreements, the Sublicense Agreement, the Assignment Agreement, the
Trademark License or the entry into any product supply contract, other
than the Supply Agreement, with an alternative or second supplier;
(iv) the creation by the Company of any indebtedness in excess of one
million dollars ($1,000,000) or obligation to guaranty such
indebtedness;
(v) the entry into any technology transfer, licensing or sublicensing
arrangement, other than the Sublicense Agreement and the Trademark
License;
(vi) the entry into any agreement regarding the contribution and
subsequent marketing of new products not falling under the terms of the
License Agreement, or the undertaking of any clinical development
activities, which would create activities outside of the ordinary
course of the HRT Business;"
(vii) the purchase price of any new products not falling under the
terms of the License Agreement;
(viii) the admission of new Members;
(ix) the acquisition of any asset by the Company outside the ordinary
course of the HRT Business in one transaction or a series of related
transactions for consideration in excess of five hundred thousand
dollars ($500,000) or the acquisition by the Company in the ordinary
course of the HRT Business of any asset in one transaction or a series
of related transactions for consideration greater than twenty percent
(20%) of the fair market value of the Company's assets immediately
prior to such acquisition;
(x) the disposition of any asset of the Company outside the ordinary
course of the HRT Business in one transaction or a series of related
transactions with an aggregate fair market value in excess of five
hundred thousand dollars ($500,000) or the disposition by the Company
in the ordinary course of the HRT Business of assets in one transaction
or a series of related transactions for consideration greater than
twenty percent (20%) of the fair market value of the Company's assets
immediately prior to such disposition; and
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(xi) the settlement of any commercial litigation which would require a
payment by the Company in excess of one million dollars ($1,000,000) or
which involves injunctive relief or consent orders which would enjoin
the Company from selling any of its products."
6. Section 8.2 of the Operating Agreement is hereby amended by
deleting the last sentence in said Section and inserting in lieu thereof the
following sentence:
"The Tax Matters Member shall not file any annual income tax return of
the Company, which income tax return would, in Noven's sole discretion,
adversely affect the tax liability of the Company or any distribution
made to Noven hereunder, prior to the review by, and the consent to the
filing thereof by, Noven, which consent shall not be unreasonably
withheld or delayed."
7. This Amendment is limited as specified and shall not
constitute a modification, acceptance or waiver of any other provision of the
Operating Agreement.
8. This Amendment may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which counterparts when executed and delivered shall be an original, but all
of which shall together constitute one and the same instrument.
9. This Amendment and the rights of the Members hereunder
shall be governed by, and interpreted in accordance with, the laws of the State
of Delaware.
10. The headings of the several sections of this Amendment are
inserted for convenience only and shall not in any way affect the meaning or
construction of any provision hereof.
11. This Amendment shall become effective on the date (the
"Amendment Effective Date") when each of the Members shall have signed a
counterpart hereof (whether the same or different counterparts).
12. From and after the Amendment Effective Date, all
references in the Operating Agreement shall be deemed to be references to the
Operating Agreement as amended hereby.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Amendment as of the date and year first above written.
NOVARTIS PHARMACEUTICALS CORPORATION
/s/ Xxxxxxxx X. Xxxxxx, M.D.
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Xxxxxxxx X. Xxxxxx, M.D.
Senior Vice President and General
Manager, Commercial Operations
NOVEN PHARMACEUTICALS, INC.
/s/ Xxxxxx X. Xxxxxxx
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Xxxxxx X. Xxxxxxx
President, Chief Executive Officer and
Co-Chairman
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