Exhibit 10.4

CONFIDENTIAL

EXECUTION VERSION

DEVELOPMENT, COMMERCIALIZATION AND SUPPLY AGREEMENT

DATED AS OF MARCH 22, 2011

BY AND AMONG

AUXILIUM PHARMACEUTICALS, INC. AND

AUXILIUM INTERNATIONAL HOLDINGS, INC.

AND

ASAHI KASEI PHARMA CORPORATION

Confidential treatment requested under 17 C.F.R. §§ 200.80(b)(4) and 240.24b-2.
The confidential portions of this exhibit have been omitted and are marked
accordingly. The confidential portions have been filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment request.

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ARTICLE 1    DEFINITIONS      1    ARTICLE 2    LICENSES      16   

2.1

   Grant to Asahi      16   

2.2

   Grant to Auxilium      17   

2.3

   Additional Licensing Provisions      18   

2.4

   Performance by Affiliates and Subcontractors      18   

2.5

   Exclusivity      19   

2.6

   Right of First Negotiation      19   

2.7

   Restrictive Covenants      20    ARTICLE 3    GOVERNANCE      21   

3.1

   Joint Steering Committee      21   

3.2

   Joint Steering Committee Membership      22   

3.3

   Joint Steering Committee Meetings      23   

3.4

   Decision-Making      23   

3.5

   Alliance Managers      23   

3.6

   Limits on JSC and Committee Authority      24   

3.7

   Disbanding the JSC      24   

3.8

   Committees      24   

3.9

   Manufacturing and Supply Committee      25   

3.10

   Development and Regulatory Committee      26   

3.11

   Actions      27   

3.12

   Exchange of Information      28   

3.13

   Minutes of Committee Meetings      28   

3.14

   Expenses      28    ARTICLE 4    DEVELOPMENT      29   

4.1

   Overview      29   

4.2

   Objectives Under the Development Plan      30   

4.3

   Development Plan and Development Budget      30   

4.4

   Development Costs      31   

4.5

   Records, Reports and Information      32   

4.6

   Ownership and Transfer of Development Data      33   

4.7

   Right to Audit      33    ARTICLE 5    REGULATORY      34   

5.1

   Regulatory Data and Regulatory Materials      34   

5.2

   Regulatory Filings and Regulatory Approvals      35   

5.3

   Communications      37   

5.4

   No Other Regulatory Filings      37   

5.5

   Rights of Reference      37   

5.6

   Adverse Event Reporting; Safety Data Exchange and Medical Inquiries      38
  

5.7

   Regulatory Authority Communications Received by a Party      39   

5.8

   Recall, Withdrawal, or Market Notification of Product      41   

 

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5.9

   Regulatory Diligence      42   

ARTICLE 6

   COMMERCIALIZATION      43   

6.1

   Commercialization in the Field in the Territory      43   

6.2

   Commercialization Plan      43   

6.3

   Asahi’s Performance      45   

6.4

   Reports      45   

6.5

   Compliance      46   

6.6

   Provisions applicable to Sales Representatives (and Wholesalers and
Distributors) and/or Medical Science Liaisons      46   

6.7

   Promotional Materials      46   

6.8

   Product Trademarks and Product Trade Dress      48   

6.9

   Commercialization Data      50   

6.10

   Global Branding Strategy      50   

ARTICLE 7

   SUPPLY      51   

7.1

   General      51   

7.2

   Development Supply      51   

7.3

   Commercial Supply      51   

7.4

   Exclusivity      51   

7.5

   Packaging and Labeling; Certain Other Manufacturing Activities      51   

7.6

   Forecasting and Ordering      52   

7.7

   Pricing, Invoicing, and Manufacturing Standard Cost Audit      54   

7.8

   Shipping and Delivery      55   

7.9

   Quality and Compliance      55   

7.10

   Disputes and Remedies      57   

7.11

   Shortages      58   

7.12

   Manufacturing Supply Assurance      59   

7.13

   Safety Stock Obligations      59   

7.14

   Product Specification and Manufacturing Changes      59   

7.15

   Termination of Supply Obligations      59   

7.16

   Auxilium Notice      60   

ARTICLE 8

   PAYMENTS      60   

8.1

   Upfront Payment      60   

8.2

   Milestone Payments      60   

8.3

   Royalty Payments      61   

8.4

   Royalty Payments and Reports; Floor Price      62   

8.5

   Third Party Royalties and Other Payments      63   

8.6

   Taxes and Withholding      64   

8.7

   Currency Conversion      65   

8.8

   General Payment Procedures      65   

8.9

   Late Payments      65   

8.10

   Legal Restrictions      65   

8.11

   Records; Audits      65   

 

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ARTICLE 9

   INTELLECTUAL PROPERTY MATTERS      66   

9.1

   Ownership of Intellectual Property      66   

9.2

   Disclosures; Disputes Regarding Inventions      67   

9.3

   Patent Filings, Prosecution and Maintenance      67   

9.4

   Defense and Enforcement of Patents      70   

9.5

   Patent Term Extensions      73   

9.6

   Patent Marking      73   

9.7

   Patent Challenge      73   

ARTICLE 10

   REPRESENTATIONS, WARRANTIES AND COVENANTS      73   

10.1

   Mutual Representations and Warranties      73   

10.2

   Additional Representations, Warranties and Covenants of Auxilium      74   

10.3

   Additional Representations, Warranties and Covenants of Asahi      76   

10.4

   Disclaimer      77   

10.5

   No Other Representations or Warranties      77   

ARTICLE 11

   INDEMNIFICATION      78   

11.1

   Indemnification by Auxilium      78   

11.2

   Indemnification by Asahi      78   

11.3

   Indemnification Procedures      78   

11.4

   Limitation of Liability      80   

11.5

   Insurance      81   

ARTICLE 12

   CONFIDENTIALITY      81   

12.1

   Confidential Information      81   

12.2

   Confidentiality Obligations      82   

12.3

   Permitted Disclosure and Use      83   

12.4

   Notification      83   

12.5

   Publicity; Filing of this Agreement      83   

12.6

   Publication      84   

12.7

   Use of Names      84   

12.8

   Survival      84   

ARTICLE 13

   TERM AND TERMINATION      85   

13.1

   Term      85   

13.2

   Termination for Breach      85   

13.3

   Termination as a Result of Bankruptcy      85   

13.4

   Termination by Auxilium      85   

13.5

   Termination by Asahi      85   

ARTICLE 14

   EFFECTS OF TERMINATION      85   

14.1

   Effects of Termination      85   

14.2

   Effects of Termination      88   

14.3

   Expiration of this Agreement      88   

14.4

   Accrued Rights      89   

 

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14.5

   Survival      89   

14.6

   Rights in Bankruptcy      90   

ARTICLE 15

   DISPUTE RESOLUTION      90   

15.1

   Disputes      90   

15.2

   Arising Between the Parties      90   

15.3

   Dispute Resolutions      91   

15.4

   Patent and Trademark Dispute Resolution      91   

15.5

   Injunctive Relief      91   

ARTICLE 16

   MISCELLANEOUS      91   

16.1

   Entire Agreement; Amendment      91   

16.2

   Force Majeure      91   

16.3

   Notices      92   

16.4

   No Strict Construction; Interpretation      92   

16.5

   Assignment      92   

16.6

   Further Actions      93   

16.7

   Severability      93   

16.8

   No Waiver      93   

16.9

   Independent Contractors      93   

16.10

   English Language; Governing Law      93   

16.11

   Counterparts      93   

Schedules:

Schedule 1.12: Auxilium Patents

Schedule 1.15: BTC License Agreement

Schedule 6.8.1: XIAFLEX Trademark and Logo

Schedule 7.6: Forecast Methodology

Schedule 10.2: Disclosure Schedule

Schedule 12.5.1: Press Release

 

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DEVELOPMENT, COMMERCIALIZATION AND SUPPLY AGREEMENT

This Development, Commercialization and Supply Agreement (this “Agreement”),
dated as of March 22, 2011 (the “Effective Date”), is made by and among Auxilium
Pharmaceuticals, Inc., a Delaware corporation, and Auxilium International
Holdings, Inc., a Delaware corporation, (together referred to as “Auxilium”),
and Asahi Kasei Pharma Corporation, a Japanese corporation (“Asahi”). Auxilium
and Asahi are sometimes referred to herein individually as a “Party” and
collectively as the “Parties.”

RECITALS

WHEREAS, Auxilium has developed and is currently further developing a
pharmaceutical product hereinafter defined as the Product for the treatment of
Dupuytren’s Contracture and Peyronie’s Disease;

WHEREAS, Asahi has significant experience in the development and
commercialization of pharmaceutical products in the Territory; and

WHEREAS, Asahi and Auxilium desire to establish a collaboration for the further
development and commercialization of the Product in the Field in the Territory.

NOW THEREFORE, in consideration of the foregoing premises and the mutual
promises, covenants and conditions contained in this Agreement, the Parties
agree as follows:

ARTICLE 1

DEFINITIONS

As used in this Agreement, the following initially capitalized terms shall have
the meanings set forth in this ARTICLE 1 or as otherwise defined elsewhere in
this Agreement:

1.1 “Advertising and Promoting Costs” means the Out-of-Pocket Costs and internal
costs (including labor cost of Asahi’s sales force) paid by Asahi for, and
attributable to, or reasonably allocable to, the marketing, promoting, selling
or offering for sale of the Product for an indication in the Field in the
Territory, including planning, market research, Pre-Marketing, advertising,
educating, marketing and promoting, by Asahi of the Product in the Field in the
Territory, including, (i) advertising agency fees, (ii) costs for conducting
medical education or seminars in the Territory, (iii) costs for exhibiting at
medical conventions and participating in professional medical association
meetings in the Territory, (iv) costs for direct mail, internet programs and
journal advertising in the Territory, (v) costs for conducting post-marketing
surveillance that is not required for obtaining or maintaining Regulatory
Approval for the Product in the Territory, (vi) costs and expenses associated
with detailing and (vii) costs for creation of Promotional Materials and
campaigns. For purposes of clarity, the costs and expenses associated with
Asahi’s sales force which are not attributable to, or reasonably allocable to,
the marketing, promoting, selling or offering for sale of the Product in the
Field in the Territory shall not be considered Advertising and Promoting Costs
hereunder.

 

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1.2 “Affiliate” means any Person directly or indirectly controlled by,
controlling or under common control with, a Party, but only for so long as such
control shall continue. For purposes of this definition, “control” (including,
with correlative meanings, “controlled by” and “under common control with”),
shall be presumed to exist with respect to a Person in the event of the
possession, direct or indirect, of (i) the power to direct or cause the
direction of the management and policies of such Person (whether through
ownership of securities, by contract or otherwise), or (ii) at least fifty
percent (50%) of the voting securities or other comparable equity interests. The
Parties acknowledge that in the case of certain entities organized under the
laws of certain countries outside of the United States, the maximum percentage
ownership permitted by law for a foreign investor may be less than fifty percent
(50%), and that in such case, such lower percentage shall be substituted in the
preceding sentence, provided that such foreign investor has the power to direct
or cause the direction of the management and policies of such Person. For the
avoidance of doubt, neither of the Parties shall be deemed to be an “Affiliate”
of the other.

1.3 “Asahi Applied Know-How” means all Know-How that is (i) (a) Controlled by
Asahi (or its Affiliates) as of the Effective Date or comes under the Control of
Asahi (or its Affiliates) during the Term (other than as a result of the
licenses granted by Auxilium to Asahi under this Agreement) and (b) incorporated
by Asahi in any Product prior to any termination or expiration of this Agreement
(provided, however, that such Know-How is necessary or reasonably useful for the
Development, Packaging and Labeling, Manufacture or Commercialization of any
Product) or (ii) an Asahi Invention. For clarity, “Asahi Applied Know-How” shall
not include Asahi Applied Patents.

1.4 “Asahi Applied Patent” means any Patent that is (i) (a) Controlled by Asahi
(or its Affiliates) as of the Effective Date or comes under the Control of Asahi
(or its Affiliates) during the Term (other than as a result of the licenses
granted by Auxilium to Asahi under this Agreement) and (b) claims any Asahi
Applied Know-How or (ii) an Asahi Collaboration Patent.

1.5 “Asahi Applied Technology” means the Asahi Applied Know-How and the Asahi
Applied Patents.

1.6 “Asahi Invention” means an Invention that is Invented, solely or jointly
with a Third Party, by an employee of Asahi or its Affiliates or a Person under
an obligation of assignment to Asahi or its Affiliates.

1.7 “Auxilium Invention” means an Invention that is Invented solely or jointly
with a Third Party, by an employee of Auxilium or its Affiliates or a Person
under an obligation of assignment to Auxilium or its Affiliates.

1.8 “Auxilium Know-How” means all Know-How that is (i) Controlled by Auxilium
(or its Affiliates) as of the Effective Date or at any time during the Term or
(ii) an Auxilium Invention or a Joint Invention, in each case of (i) or (ii),
which is necessary or reasonably useful for the Development, Packaging and
Labeling or Commercialization of the Product in the Field in the Territory;
provided, however, that “Auxilium Know-How” shall not

 

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include any Auxilium Manufacturing Know-How. For clarity, “Auxilium Know-How”
shall not include (a) the Auxilium Patents or (b) the Auxilium Manufacturing
Patents.

1.9 “Auxilium Manufacturing Know-How” means all Know-How that is (i) Controlled
by Auxilium (or its Affiliates) as of the Effective Date or (ii) an Auxilium
Invention or a Joint Invention, in each case of (i) or (ii), which is necessary
or reasonably useful for the Manufacture of the Product for Commercialization in
the Field in the Territory, including any CMC information.

1.10 “Auxilium Manufacturing Patent” means any Patent that is (i) Controlled by
Auxilium (or its Affiliates) as of the Effective Date or at any time during the
Term or (ii) an Auxilium Collaboration Patent, in each case of (i) or (ii),
which is necessary or reasonably useful for the Manufacture of the Product for
Commercialization in the Field in the Territory; provided, however, that an
“Auxilium Manufacturing Patent” shall not include any Auxilium Patent.

1.11 “Auxilium Manufacturing Technology” means the Auxilium Manufacturing
Know-How and Auxilium Manufacturing Patents; provided, however, that “Auxilium
Manufacturing Technology” shall not include any Auxilium Technology.

1.12 “Auxilium Patent” means any Patent in the Territory that (i) is Controlled
by Auxilium (or its Affiliates) as of the Effective Date, including the Patents
listed in Schedule 1.12 (including those licensed under the BTC License
Agreement), or (ii) comes under the Control of Auxilium during the Term
(including an Auxilium Collaboration Patent), in each case of (i) or (ii) which
is necessary or reasonably useful for the Development or Commercialization of
the Product in the Field in the Territory.

1.13 “Auxilium Technology” means the Auxilium Patents and Auxilium Know-How.

1.14 “Biosimilar Version” means, with respect to a Product in the Territory, a
Third Party pharmaceutical product (other than such Product hereunder) that:
(i) contains injectable collagenases derived from Clostridium histolyticum as
the sole active ingredient (and labeled for the same indications of treatment as
such Product) and (ii) has been granted a marketing authorization by an abridged
procedure that relies in whole or in part on safety and efficacy data generated
for the marketing authorization for such Product as determined by the applicable
Governmental Authority in the Territory.

1.15 “BTC License Agreement” means that certain Amended and Restated Development
and License Agreement, dated as of December 11, 2008, by and between Auxilium
and BioSpecifics Technologies Corp. (“BTC”), a copy of which is attached hereto
as Schedule 1.15.

1.16 “Bulk Product” means the finished form of the Product, packaged in
unlabeled vials.

 

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1.17 “Commercialize”, “Commercializing” or “Commercialization” means all
activities directed to the marketing, promoting, selling or offering for sale of
a Product for an indication, including planning, market research, Pre-Marketing,
advertising, educating, marketing, promoting, importing, exporting,
distributing, pharmacovigilance and post-marketing safety surveillance and
reporting. For clarity, “Commercialization” shall not include any activities
related to clinical research, Manufacturing or Development of the Product.

1.18 “Commercially Reasonable Efforts” means, with respect to a Party’s
obligations under this Agreement, including to Manufacture, Develop or
Commercialize the Product, those efforts and resources consistent with the usual
practices of such Party in pursuing the manufacture, development or
commercialization of its own pharmaceutical products that are of similar market
potential as such Product, taking into account all relevant factors including
product labeling or anticipated labeling, present and future market potential,
past performance of such Product and such Party’s other pharmaceutical products
that are of similar market potential, financial return, medical and clinical
considerations, present and future regulatory environment and competitive market
conditions, all as measured by the facts and circumstances at the time such
efforts are due. Without limiting the foregoing, Commercially Reasonable Efforts
requires, with respect to such obligations, that the Party: (i) promptly assign
responsibility for such obligation to specific employee(s) who are held
accountable for progress and monitor such progress on an on-going basis,
(ii) set annual objectives for carrying out such obligations, and (iii) allocate
resources designed to advance progress with respect to such objectives.

1.19 “Competitive Product” means any pharmaceutical product, in the Field, that
has the same therapeutic indications as the Product.

1.20 “Control” means, when used in reference to intellectual property, other
intangible property, or materials, that a Party owns or has a license or
sublicense to such intellectual property, other intangible property or
materials, and has the ability to grant a license or sublicense or other right
to use such intellectual property, other intangible property or materials, as
applicable, as provided for herein, without (i) requiring the consent of a Third
Party or (ii) violating the terms of any agreement or other arrangement with any
Third Party.

1.21 “Cover(ed)” means, with respect to any Patent and the subject matter at
issue, that, but for a license granted under a Valid Claim of such Patent, the
manufacture, development, use, sale, offer for sale or importation of the
subject matter at issue would infringe such Valid Claim, or in the case of a
Patent that is a patent application, would infringe a Valid Claim in such patent
application if it were to issue as a patent.

1.22 “Develop”, “Developing” or “Development” means all activities relating to
research, non-clinical, preclinical and clinical trials, toxicology testing,
statistical analysis and reporting, which are necessary or reasonably useful or
otherwise requested or required by a Regulatory Authority as a condition or in
support of obtaining or maintaining all Regulatory Approvals, including
(i) Phase IV Clinical Trials and other post-Regulatory Approval studies that are
required or reasonably useful to obtain or maintain Regulatory Approval,
(ii) the development aspects of the Territory-Specific Analytical Release
Testing and Characterization, (iii) physician/investigator-initiated studies and
(iv) all other development-related activities that

 

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are deemed by the JSC to be commercially useful; provided, however, that
“Develop”, “Developing” and “Development” shall not include any activities
related to Commercialization or Manufacture.

1.23 “Development Activities” means those Development activities undertaken by
or on behalf of a Party or its Affiliates with respect to the Product in the
Field.

1.24 “Development Costs” means the costs and expenses incurred by a Party or its
Affiliates attributable to, or reasonably allocable to, the Development of the
Product in the Field, including costs of conducting Phase I clinical trials,
Phase II clinical trials, Phase III Clinical Trials and Phase IV Clinical Trials
(as well as other post-Regulatory Approval studies (including
physician/investigator—initiated studies)). “Development Costs” shall include
(i) Out-of-Pocket Costs and (ii) internal costs (e.g., staff or administrative)
that are attributable to, or reasonably allocable to, the Development of the
Product in the Field. For clarity, Development Costs shall exclude Regulatory
Costs.

1.25 “Dollar” means a U.S. dollar, and “$” shall be interpreted accordingly.

1.26 “Drug Substance” means the collagenases derived from Clostridium
histolyticum.

1.27 “Drug Substance Specifications” means those Manufacturing, performance and
quality-control specifications for the Drug Substance in the Territory, which
are initially as set forth in the U.S. Regulatory Approval for the Product, as
such specifications may be amended from time to time pursuant to the terms of
this Agreement and/or the Quality Agreements.

1.28 “EMA” means the European Medicines Agency or its successor.

1.29 “Facility” means, as applicable, a Party’s Manufacturing facility and such
other facilities used by such Party (or those of its Affiliates or Third Party
contractors) in the manufacture, packaging, labeling or storage of (i) Product,
(ii) Drug Substance or (iii) materials utilized in the manufacture, packaging or
labeling of Product or Drug Substance, including raw materials, auxiliary
materials, intermediates, containers and packing materials, in each case, with
respect to the Product for Development or Commercialization in the Field in the
Territory hereunder.

1.30 “FDA” means the U.S. Food and Drug Administration or its successor.

1.31 “FD&C Act” means the U.S. Federal Food, Drug and Cosmetic Act, as amended,
and the regulations promulgated thereunder.

1.32 “Field” means the treatment in humans of (i) Dupuytren’s Contracture,
(ii) Peyronie’s Disease and (iii) such other New Indications as the Parties
agree to include hereunder in accordance with Section 2.6, if any. For purposes
of clarity, the “Field” shall not include any new indications for the Product
other than as set forth in the foregoing clauses (i) and (ii) and any New
Indications.

 

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1.33 “Finished Product” means the Product in its full packaging and final
presentation form ready for release to end-users.

1.34 “First Commercial Sale” means, with respect to a Product, the first sale of
such Product in the Territory by or on behalf of Asahi or its Affiliates to a
Third Party (including wholesalers or distributors), after receipt of Regulatory
Approval (including Pricing Approval, to the extent required for sale of a
Product in the Territory, and any necessary labeling negotiations that may be
required after Regulatory Approval and such Pricing Approval) for such Product
in the Territory.

1.35 “Fiscal Year” means a period of twelve (12) consecutive months beginning on
April 1st of a year and ending on March 31st of the subsequent year.

1.36 “GAAP” means generally accepted accounting principles in the United States,
as consistently applied.

1.37 “General Development Activities” means all Development Activities other
than (i) Territory Development Activities and (ii) Territory-Specific Analytical
Release Testing and Characterization.

1.38 “Good Clinical Practices” or “GCP” means all applicable Good Clinical
Practice standards for the design, conduct, performance, monitoring, auditing,
recording, analyses and reporting of clinical trials, including, as applicable,
(i) those standards required by the MHLW, (ii) as set forth in the International
Conference on Harmonisation of Technical Requirements for Registration of
Pharmaceuticals for Human Use (“ICH”) Harmonised Tripartite Guideline for Good
Clinical Practice (CPMP/ICH/135/95) and any other guidelines for good clinical
practice for trials on medicinal products in the Territory, (iii) the
Declaration of Helsinki (2004) as last amended at the 52nd World Medical
Association in October 2000 and any further amendments or clarifications
thereto, (iv) U.S. Code of Federal Regulations Title 21, Parts 50 (Protection of
Human Subjects), 56 (Institutional Review Boards) and 312 (Investigational New
Drug Application), as may be amended from time to time, and (v) the equivalent
Laws in any relevant country, each as may be amended and applicable from time to
time and in each case, that provide for, among other things, assurance that the
clinical data and reported results are credible and accurate and protect the
rights, integrity, and confidentiality of trial subjects.

1.39 “Good Laboratory Practices” or “GLP” means all applicable Good Laboratory
Practice standards, including, as applicable, (i) those standards required by
the MHLW, (ii) as set forth in the then-current good laboratory practice
standards promulgated or endorsed by the FDA as defined in 21 C.F.R. Part 58,
and (iii) the equivalent Laws in any relevant country, each as may be amended
and applicable from time to time.

1.40 “Good Manufacturing Practices” or “GMP” means all applicable Good
Manufacturing Practices including, as applicable, (i) those standards required
by the MHLW, (ii) the principles detailed in the U.S. Current Good Manufacturing
Practices, 21 C.F.R. Sections 210, 211, 601 and 610, (iii) the principles
detailed in the ICH Q7 guidelines, and (iv) the

 

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equivalent Laws in any relevant country, each as may be amended and applicable
from time to time.

1.41 “Governmental Authority” means any multinational, federal, state, local,
municipal or other governmental authority of any nature (including any
governmental division, prefecture, subdivision, department, agency, bureau,
branch, office, commission, council, court or other tribunal), in each case,
having jurisdiction over the applicable subject matter.

1.42 “IND” means an application to the applicable Regulatory Authority, such as
a clinical trial application or a clinical trial exemption, the filing of which
is necessary to commence or conduct clinical testing of a pharmaceutical product
in humans in such jurisdiction, including the Clinical Trial Notification to the
MHLW and the Investigational New Drug Application to the FDA.

1.43 “Invented” means the acts of (an) inventor(s), as determined in accordance
with Laws relating to inventorship set forth in the patent Laws of the United
States (Title 35, United States Code), in discovering, conceiving and completing
an Invention.

1.44 “Invention” means any writing, invention, discovery, improvement,
technology or other Know-How (in each case, whether patented or not) in the
Field that is not existing as of the Effective Date and is Invented under this
Agreement during the Term.

1.45 “Joint Invention” means an Invention that is Invented jointly by an
employee of, or Person under an obligation of assignment to, each of Auxilium
and Asahi or their respective Affiliates.

1.46 “Joint Steering Committee” or “JSC” means the joint steering committee
formed by the Parties as described in Section 3.1.

1.47 “Know-How” means any proprietary data, results, material(s), technology,
and nonpublic information of any type whatsoever, in any tangible or intangible
form, including know-how, trade secrets, practices, techniques, methods,
processes, inventions, developments, specifications, formulations, formulae,
materials or compositions of matter of any type or kind (patentable or
otherwise), software, algorithms, marketing reports and plans, market research,
expertise, technology, test data (including pharmacological, biological,
chemical, biochemical, toxicological, preclinical and clinical test data),
analytical and quality control data, stability data, other study data and
procedures.

1.48 “Laws” means all applicable laws, statutes, rules, regulations, directives,
decisions, ordinances, guidelines and other pronouncements of any Governmental
Authority.

1.49 “Manufacture” or “Manufacturing” means all activities related to the
manufacturing of the Bulk Product, Drug Substance, or any ingredient thereof,
including manufacturing for clinical use or commercial sale, in-process and Bulk
Product or Drug Substance testing, quality assurance and quality control
required for release of the Product in the Field (which are initially as
required for release of the Product in the Field in the U.S., as such

 

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quality assurance and quality control requirements may be changed from time to
time pursuant to the terms of this Agreement and/or the Quality Agreements),
handling and storage of Bulk Product or Drug Substance and ongoing stability
tests and regulatory activities related to any of the foregoing; provided,
however, that for purposes of clarity “Manufacture” shall include fill and
lyophilization of Drug Substance but shall exclude Packaging and Labeling
(whether in commercial or clinical packaging presentation). For clarity,
Manufacturing shall exclude Manufacturing Development Activities and
Territory-Specific Analytical Release Testing and Characterization.

1.50 “Manufacturing Development Activities” means development of test methods,
stability testing, formulation development, process development, quality
assurance activities, quality control activities, qualification and validation
activities, analytic process development, manufacturing process validation,
scale-up and all other activities, including CMC-related activities, necessary
for or related to the Manufacture of the Product for use in the Field. For
clarity, Manufacturing Development Activities shall exclude Territory-Specific
Analytical Release Testing and Characterization.

1.51 “Manufacturing Standard Cost” means the standard cost per Unit of Bulk
Product, calculated annually in accordance with GAAP. This includes the cost of
raw materials, labor, and other direct and identifiable variable costs and
appropriate costs for equipment pools, plant operations and plant support
services. The costs for plant operations and support services would include
utilities, maintenance, engineering, safety, human resources, finance, plant
management and other similar activities, as well as shipping costs to a finished
goods warehouse. The plant operations and support services costs would be
allocated to the Product consistent with GAAP, based on budgeted volumes. Costs
which cannot be identified to a specific activity supporting Manufacturing, such
as charges for corporate overhead which are not related to Manufacturing, would
not be included in Manufacturing Standard Cost hereunder.

1.52 “Marketing Authorization Application” or “MAA” means an application to the
appropriate Regulatory Authority for approval to sell the Product (but excluding
Pricing Approval) in any particular country or regulatory jurisdiction.

1.53 “Medical Science Liaison” means an individual who is employed by or on
behalf of Asahi or its Affiliates and who provides field based medical
information, educational services and other educational efforts directed towards
the medical and/or scientific community.

1.54 “MHLW” means the Japanese Ministry of Health, Labor and Welfare, or a
successor agency thereto.

1.55 “Net Sales” means the gross amount invoiced by or on behalf of Asahi or any
of its Affiliates on account of sales of the Product, less the following
deductions specifically and solely related to the Product and actually allowed:

1.55.1 customary trade, cash or quantity discounts actually paid, granted or
accrued, to the extent not already reflected in the amount invoiced;

 

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1.55.2 excise and sales taxes and customs duties to the extent included in the
price and separately itemized on the invoice price (but specifically excluding,
for clarity, any income taxes assessed against the income arising from such
sale);

1.55.3 packing, freight, shipment and insurance costs to the extent included in
the price and separately itemized;

1.55.4 amounts actually paid, granted or accrued on (i) returns or rejection in
accordance with Asahi’s returned goods policy provided to Auxilium or
(ii) recalls;

1.55.5 allowances, rebates and bona fide price reductions actually given to
trade customers, wholesalers, distributors and pharmaceutical benefit managers,
group purchasing organizations and other managed care organizations
(collectively, “Customers”) based upon purchase of the Product and calculated as
follows: such allowances, rebates and bona fide price reductions = A x B / C,
where A = aggregate allowances, rebates and bona fide price reductions actually
given to all Customers, B = aggregate sales of the Product to all Customers, and
C = aggregate sales of all of Asahi’s pharmaceutical products including the
Product to all Customers; and

1.55.6 compulsory payments and rebates directly related to the sale of the
Product paid to a Governmental Authority pursuant to governmental regulations by
reason of any national or local health insurance program or similar program.

For clarity, Net Sales shall not be reduced by the amount of any commissions
paid to individuals, whether they are associated with independent sales agencies
or regularly employed by Asahi (or any agent, distributee, or designee thereof),
or for a cost of collection or any other amount not specifically set forth in
Subsections 1.55.1 – 1.55.6, inclusive, above. Any of the items set forth above
that would otherwise be deducted from the invoice price in the calculation of
Net Sales but which are separately charged to, and paid by, Third Parties shall
not be deducted from the invoice price in the calculation of Net Sales. In the
case of any sale of the Product for value other than in an arm’s length
transaction exclusively for cash, such as barter or counter-trade, Net Sales
shall be determined by referencing Net Sales at which substantially similar
quantities of the Product are sold in an arm’s length transaction for cash.

Notwithstanding the foregoing, amounts billed by Asahi or its Affiliates for the
sale of Product among Asahi or its Affiliates for resale shall not be included
in the computation of Net Sales hereunder. Net Sales shall be accounted for in
accordance with GAAP. Asahi and its Affiliates will sell the Product as a
stand-alone product and will not sell the Product as part of a bundle with other
products or offer package deals to customers that include the Product, except to
the extent required to obtain sales contracts with government entities, and in
such case, the price of the Product relevant for the calculation of Net Sales
will be the average price in the preceding calendar quarter of the Product sold
separately less the average discount of all products sold as part of the
package.

1.56 “NHI” means the Japanese national health insurance system, or its successor
system.

 

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1.57 “NHI Price” means the reimbursement price of the Product for purposes of
the NHI.

1.58 “NHI Price Approval” means approval of the NHI Price by the MHLW.

1.59 “Out-of-Pocket Costs” means costs and expenses paid to Third Parties (or
payable to Third Parties and accrued in accordance with GAAP), other than
Affiliates or employees, by either Party.

1.60 “Patents” means patents and patent applications and all substitutions,
divisions, continuations, continuations-in-part, any patent issued with respect
to any such patent applications, any reissue, reexamination, utility models or
designs, renewal or extension (including any supplementary protection
certificate) of any such patent, and any confirmation patent or registration
patent or patent of addition based on any such patent, and all counterparts
thereof in any country.

1.61 “Patent Term Extension” means any term extensions, supplementary protection
certificates and equivalents thereof offering Patent protection beyond the
initial term with respect to any issued Patents.

1.62 “Person” means any corporation, limited or general partnership, limited
liability company, joint venture, trust, unincorporated association,
governmental body, authority, bureau or agency, any other entity or body, or an
individual.

1.63 “Phase III Clinical Trials” means a clinical trial identified as a Phase
III clinical trial in the Development Plan and conducted as a pivotal trial for
purposes of filing a MAA for a Product that provides for the clinical study of
such Product on a sufficient number of patients to confirm with statistical
significance the efficacy, and confirm the safety of such Product, sufficient to
support such MAA for such Product.

1.64 “Phase IV Clinical Trials” means certain post-marketing studies to
delineate additional information about a pharmaceutical product’s risks,
benefits, and optimal use, commenced after receipt of regulatory approval for a
product in the indication for which such trial is being conducted.

1.65 “PMDA” means the Pharmaceuticals and Medical Devices Agency of Japan, which
is an extra-ministerial bureau of the MHLW and is responsible for, among other
things, the evaluation of new drugs, and offers face-to-face consultation
services, or a successor agency thereto.

1.66 “Pre-Marketing” means marketing activities undertaken prior to and in
preparation for the launch of the Product in the Territory. Pre-Marketing shall
include market research, key opinion leader development, advisory boards,
medical education, disease-related public relations, health care economic
studies, sales force training and other pre-launch activities prior to the First
Commercial Sale of the Product in the Territory.

 

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1.67 “Pricing Approval” means the approval, agreement, determination or decision
from a Governmental Authority, including the NHI Price Approval, establishing
the price and/or reimbursement for the Product for sale in the Territory, prior
to the sale of the Product in the Territory.

1.68 “Product” means, in all cases excluding any dermal formulations labeled for
topical administration, any dosage strength of the pharmaceutical product
consisting of the lyophilized form of injectable collagenases derived from
Clostridium histolyticum [**] and a sterile diluent containing NaCl and CaCl2.

1.69 “Product Approval” means the approval of a Governmental Authority necessary
for the marketing and sale of the Product in a given country or regulatory
jurisdiction, which may include the approval of an MAA (but shall not include
any Pricing Approvals).

1.70 “Product Complaint” means any written, verbal or electronic expression of
dissatisfaction regarding any Product sold by or on behalf of Asahi or any of
its Affiliates in the Territory, including reports of actual or suspected
product tampering, contamination, mislabeling or inclusion of improper
ingredients.

1.71 “Product Specifications” means (i) with respect to the Bulk Product, those
Manufacturing, performance, quality-control, and Packaging and Labeling
specifications for the Bulk Product in the Territory, which are initially as set
forth in the applicable U.S. FDA Regulatory Approval for the Bulk Product, as
such specifications may be amended from time to time pursuant to the terms of
this Agreement and/or the Quality Agreements, and (ii) with respect to the
Product, those Manufacturing, performance, quality-control, and Packaging and
Labeling specifications for the Product in the Territory, which are initially as
set forth in the applicable Japanese MHLW Regulatory Approval for the Product,
as such specifications may be amended from time to time pursuant to the terms of
this Agreement and/or the Quality Agreements.

1.72 “Promotional Materials” means all written, printed, video or graphic
advertising, promotional, educational and communication materials (other than
the Product labels and package inserts) for marketing, advertising and promoting
of the Product in the Field in the Territory, for use (i) by a Sales
Representative, a Medical Science Liaison, a wholesaler or a distributor, or
(ii) in advertisements, web sites or direct mail pieces.

1.73 “Quality Agreements” means each quality agreement relating to the Product
or the Drug Substance, as applicable, between Asahi and Auxilium (and its
designated manufacturer, as the case may be).

1.74 “Re-Examination Period” means a period (which, for clarity, as of the
Effective Date, is ten (10) years in the case of a product approved with an
“orphan” indication and eight (8) years for all other new chemical entities)
following receipt of Regulatory Approval (i) during which the approved product
is afforded data exclusivity in the Territory and (ii) at the end of which the
efficacy and the safety of such product will be re-examined by the Regulatory
Authority.

 

 

** CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND WILL BE FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A
CONFIDENTIAL TREATMENT REQUEST.

 

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1.75 “Regulatory Approvals” means all necessary approvals (including INDs, MAAs,
Product Approvals, Pricing Approvals, import permits, and, in each case any
supplements and amendments thereto), licenses, registrations or authorizations
of any Governmental Authority, necessary for the manufacture, distribution, use,
promotion and sale of the Product in a given country or regulatory jurisdiction.

1.76 “Regulatory Authority” means, in a particular country or regulatory
jurisdiction, any applicable Governmental Authority involved in granting
Regulatory Approval in such country or regulatory jurisdiction, including, in
the Territory, the MHLW and the PMDA.

1.77 “Regulatory Costs” means the costs and expenses incurred by Asahi or its
Affiliates attributable to, or reasonably allocable to, the preparation,
obtaining or maintaining of Regulatory Materials and Regulatory Approvals for
the Product (other than Pricing Approval and Manufacturing-related Regulatory
Approvals), including any filing fees and such costs and expenses incurred by
Auxilium or its Affiliates to the extent requested by Asahi or required by this
Agreement. “Regulatory Costs” shall include (i) Out-of-Pocket Costs and
(ii) internal costs (e.g., staff or administrative) that are specifically
attributable to the preparation of Regulatory Materials, and obtaining or
maintenance of Regulatory Approvals, for the Product in the Field in the
Territory. For clarity, Regulatory Costs shall exclude Development Costs and any
costs and expenses incurred by Auxilium or its Affiliate to supply Regulatory
Data that are already in the possession of Auxilium or its Affiliates other than
as a result of Auxilium’s obligations hereunder.

1.78 “Regulatory Data” means any and all research data, pharmacology data,
chemistry, manufacturing and control data, preclinical data, clinical data and
all other documentation submitted, or required to be submitted, to Regulatory
Authorities in association with regulatory filings for the Product (including
any applicable Drug Master Files (“DMFs”), Chemistry, Manufacturing and Control
(“CMC”) data, or similar documentation).

1.79 “Regulatory Materials” means regulatory applications, submissions,
notifications, communications, correspondence, registrations, Regulatory
Approvals and/or other filings made to, received from or otherwise conducted
with a Regulatory Authority that are necessary in order to Develop, Manufacture,
obtain marketing authorization, market, sell or otherwise Commercialize the
Product in a particular country or regulatory jurisdiction. Regulatory Materials
include INDs, MAAs, presentations, responses, and applications for other Product
Approvals.

1.80 “Royalty Term” means, on a Product-by-Product basis in the Territory, the
period of time beginning on the First Commercial Sale of such Product and ending
upon the latest of: (i) the date on which such Product (including, the use,
sale, offer for sale, importation, development or manufacturing thereof) is no
longer Covered by a Valid Claim, (ii) the fifteenth (15th) anniversary of the
First Commercial Sale of such Product, or (iii) Biosimilar Entry with respect to
such Product.

 

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1.81 “Sales Representative” means an individual who is employed by or on behalf
of Asahi (or its Affiliates or subcontractors) and who performs details and
other promotional efforts with respect to the Product.

1.82 “Territory” means Japan.

1.83 “Territory Development Activities” means those Development Activities
consistent with the applicable Development Plan that are (i) necessary solely
for obtaining or maintaining Regulatory Approval for the Product in the Field in
the Territory and (ii) post-Regulatory Approval-filing date Development
Activities for the Product in the Field in the Territory. Notwithstanding the
foregoing, in the event that Asahi requests that Auxilium perform certain
Development Activities, within the Territory, which are not necessary solely for
obtaining Regulatory Approval in the Territory, and Auxilium agrees at its sole
discretion to perform such activities within the Territory, then such activities
as are conducted in the Territory shall be deemed Territory Development
Activities. For clarity, (i) those Development Activities which Auxilium
proposes (absent Asahi’s request) to conduct in the Territory shall not be
included in the definition of Territory Development Activities, and shall
therefore be deemed General Development Activities, and (ii) Territory
Development Activities shall not include activities associated with
Territory-Specific Analytical Release Testing and Characterization.

1.84 “Territory-Specific Analytical Release Testing and Characterization” means
all activities associated with carrying out the analytical testing and release
of the Product which are necessary for delivery of the Product for Development
or sale in the Field in the Territory, but which are not necessary for delivery
of the Product for Development or sale in the Field in the U.S. Such activities
shall include: transferring test methods, developing and validating new
analytical tests required in the Territory, amending the release specifications
to be in compliance with local Laws in the Territory, conducting the release
testing of the Product and final release of the Product (including raw
materials, intermediates, drug substance, drug product and sterile diluents).
For clarity, preparation of reference standards to be used for
Territory-Specific Analytical Release Testing and Characterization includes
analytical tests other than release testing (e.g., mass spectrophotometry,
isoelectrofocusing, N- and C-terminal sequencing, amino acid analysis, etc.),
which activities shall also be deemed Territory-Specific Analytical Release
Testing and Characterization hereunder.

1.85 “Third Party” means any Person other than Auxilium or Asahi or their
respective Affiliates.

1.86 “Unit of Bulk Product” means one 0.9 mg vial of the lyophilized form (as of
the Effective Date) of injectable Drug Substance and one 3 mL vial of sterile
diluent containing NaCl and CaCl2, packaged in unlabeled vials.

1.87 “Unit of Product” means one 0.9 mg vial of the lyophilized form (as of the
Effective Date) of injectable Drug Substance and one 3 mL vial of sterile
diluent containing NaCl and CaCl2, packaged and labeled for commercial sale.

1.88 “U.S.” means the United States of America and its possessions and
territories.

 

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1.89 “Valid Claim” means a claim of an Auxilium Patent, an Asahi Applied Patent
or a Joint Collaboration Patent that (i) has not been rejected, revoked or held
to be invalid or unenforceable by a court or other authority of competent
jurisdiction, from which decision no appeal can be further taken or (ii) has not
been finally abandoned, disclaimed or admitted to be invalid or unenforceable
through reissue or disclaimer.

1.90 “Yen” means Japanese yen, and “¥” shall be interpreted accordingly.

1.91 Interpretation. Except where expressly stated otherwise in this Agreement,
the following rules of interpretation apply to this Agreement: (i) “include”,
“includes” and “including” are not limiting; (ii) “hereof”, “hereto”, “herein”
and “hereunder” and words of similar import when used in this Agreement refer to
this Agreement as a whole and not to any particular provision of this Agreement;
(iii) words of one gender include the other gender; (iv) words using the
singular or plural number also include the plural or singular number,
respectively; (v) references to a contract or other agreement mean such contract
or other agreement as from time to time amended, modified or supplemented;
(vi) references to a Person are also to its permitted successors and assigns;
(vii) references to an “Article”, “Section”, “Exhibit” or “Schedule” refer to an
Article or Section of, or an Exhibit or Schedule to, this Agreement, unless
expressly stated otherwise; (viii) references to a Law include any amendment or
modification to such Law and any rules and regulations issued thereunder,
whether such amendment or modification is made, or issuance of such rules and
regulations occurs, before or after the Effective Date; and (ix) Dupuytren’s
Contracture is analogous to Dupuytren’s Disease as such term is used in the BTC
License Agreement.

1.92 Additional Definitions. The following terms have the meanings set forth in
the corresponding Sections of this Agreement:

 

Term

   Section

“Abandoned Collaboration Patents”

   9.3.2

“Abandoned Joint Inventions”

   9.3.2

“Agreement”

   Preamble

“Alliance Manager”

   3.5

“Asahi”

   Preamble

“Asahi Collaboration Patents”

   9.1.1

“Asahi Funded Patent Rights”

   9.3.1

“Auxilium”

   Preamble

“Auxilium Collaboration Patents”

   9.1.1

“Audit”

   8.11

“Auxilium Press Release”

   12.5.1

“Bankrupt Party”

   14.6

“Biosimilar Entry”

   8.3.2

“Breaching Party”

   13.2

“BTC”

   1.15

“CDS”

   5.1.1

“CMC”

   1.78

 

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Term

   Section

“Commercialization Budget”

   6.2.3(d)

“Commercialization Data”

   6.9

“Commercialization Plan”

   6.2.1

“Committee”

   3.7

“Confidential Disclosure Agreement”

   12.1

“Confidential Information”

   12.1

“Controlling Party”

   9.4.1(a)

“Customers”

   1.55.5

“Development and Regulatory Committee” or “DRC”

   3.10

“Development Budget”

   4.3.1(d)

“Development Data”

   4.6

“Development Plan”

   4.3.1

“Development Supply Price”

   7.2

“Disbanding Notice”

   3.7

“Disclosing Party”

   12.1

“DMFs”

   1.78

“Effective Date”

   Preamble

“Executive Officer”

   15.2

“Forecast”

   7.6.1

“Forecast Date”

   7.6.1

“Global Branding Strategy”

   6.10

“ICH”

   1.38

“Indemnification Claim Notice”

   11.3.1

“Indemnified Party” and “Indemnifying Party”

   11.3.1

“Indemnitee” and “Indemnitees”

   11.3.1

“Infringement Claim”

   9.4.1

“Initial Commercialization Plan”

   6.2.1

“Initial Forecast”

   7.6.1

“Initial Forecast Date”

   7.6.1

“Joint Collaboration Patents”

   9.1.1

“Latent Defects”

   7.9.2(b)

“Long Range Forecast”

   7.6.2

“Losses”

   11.1

“Manufacturing and Supply Committee” or “MSC”

   3.9

“Manufacturing Certificate of Analysis”

   7.9.2(a)

“Milestone Notification Notice”

   8.2

“Minimum Delivery Amount”

   7.11.1

“Minimum Delivery Cure Period”

   7.11.1

“New Indication”

   2.6

“Notice of Non-Conformance”

   7.9.2(a)

“OOS”

   7.9.3

“Packaging and Labeling”

   7.5

 

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Term

   Section

“Party” or “Parties”

   Preamble

“Patent Challenge”

   9.7

“Pfizer”

   5.6.2

“Product Trade Dress”

   6.8.1

“Product Trademark”

   6.8.1

“Promotional Commercialization Data”

   6.9

“Purchase Order”

   7.6.3

“Purchase Order Acceptance Date”

   7.6.4

“Receiving Party”

   12.1

“Recovery”

   9.4.2(c)(iv)

“Redacted Agreement”

   12.5.2

“Restricted Indications”

   2.5.3

“Royalty Payments”

   8.3.1

“Royalty Rates”

   8.3.1

“Supply Delivery Price”

   7.7.1

“Term”

   13.1

“Third Party Claim”

   11.1

“Trademark Royalty Product”

   14.3.1

“Upfront Payment”

   8.1

“VAT”

   8.6

ARTICLE 2

LICENSES

2.1 Grant to Asahi.

2.1.1 General Grant to Asahi. Subject to the terms and conditions of this
Agreement, Auxilium hereby grants to Asahi during the Term (i) a co-exclusive
(with Auxilium and its Affiliates) license or sublicense, as applicable, without
the right to sublicense, under the Auxilium Technology and the Joint
Collaboration Patents, to Develop the Product in the Field in the Territory,
(ii) an exclusive (even as to Auxilium and its Affiliates), payment-bearing
license or sublicense, as applicable, without the right to sublicense, under the
Auxilium Technology and the Joint Collaboration Patents, to Commercialize the
Product in the Field in the Territory, and (iii) a co-exclusive (with Auxilium
and its Affiliates and sublicensees) license or sublicense, as applicable,
without the right to sublicense, under the Auxilium Technology and the Joint
Collaboration Patents, to Package and Label the Product in the Territory for
Development or Commercialization of the Product in the Field in the Territory
(provided that, for clarity, Auxilium’s right to further co-exclusively license
such right to Package and Label the Product in the Territory shall only be for
the purpose of Packaging and Labeling the Product for Commercialization of the
Product either outside of the Field or outside of the Territory).

2.1.2 Additional Grant to Asahi. Subject to the terms and conditions of this
Agreement, including in particular Section 6.8, Auxilium hereby grants to Asahi
during the Term an exclusive (even as to Auxilium and its Affiliates) license or
sublicense, as applicable, without

 

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the right to sublicense, to use the Product Trademark and Product Trade Dress
solely to the extent necessary to (i) Commercialize the Product in the Field in
the Territory and (ii) Package and Label the Product in the Territory for
Development or Commercialization in the Field in the Territory. In addition,
Auxilium hereby grants to Asahi during the Term and from and after the
expiration or termination of this Agreement, a non-exclusive, royalty-free,
irrevocable, perpetual, worldwide license, with the right to sublicense, under
any Joint Collaboration Patents for any and all uses; provided that, in the
event of termination of this Agreement by Auxilium pursuant to Section 13.2,
13.3, or 13.4 or by Asahi pursuant to Section 13.5 such license grant is subject
to the exclusive license granted by Asahi to Auxilium pursuant to
Section 2.2.3(ii); provided, further, that the foregoing right to sublicense
shall (a) be limited to the right to sublicense in connection with the
development, manufacture or commercialization of a product in collaboration with
Asahi (i.e., no “bare license”) and (b) require prior written notice to Auxilium
identifying the prospective sublicensee as well the nature and purpose of such
sublicense.

2.2 Grant to Auxilium.

2.2.1 General Grant to Auxilium. Subject to the terms and conditions of this
Agreement, Asahi hereby grants to Auxilium during the Term a non-exclusive
royalty-free license or sublicense, as applicable, with the right to sublicense,
under the Asahi Applied Technology, (i) to Develop or Manufacture the Product
anywhere in the world, or (ii) to Commercialize the Product outside the Field
(whether inside or outside the Territory) or in the Field outside the Territory.

2.2.2 Additional Grant to Auxilium. Subject to the terms and conditions of this
Agreement, Asahi hereby grants to Auxilium during the Term a non-exclusive
royalty-free worldwide license or sublicense, as applicable, with the right to
sublicense, under the Asahi Applied Technology, to develop (including obtaining
and maintaining regulatory approval), make, use, import, export, offer for sale
and sell pharmaceutical products (other than the Product) containing injectable
collagenases derived from Clostridium histolyticum for sale anywhere in the
world.

2.2.3 Grants after Termination. Subject to the terms and conditions of this
Agreement, Asahi hereby grants to Auxilium (i) from and after the termination
(as opposed to expiration) of this Agreement (on a Product-by-Product basis) by
Auxilium pursuant to Section 13.2, 13.3, or 13.4 or by Asahi pursuant to
Section 13.5, a non-exclusive, paid-up, irrevocable, perpetual, license or
sublicense, as applicable, with the right to sublicense, under the Asahi Applied
Technology, (a) to Develop, Manufacture or Commercialize such terminated Product
anywhere in the world and (b) to develop (including obtaining and maintaining
regulatory approval), make, use, import, export, offer for sale and sell
pharmaceutical products (other than the Product) containing injectable
collagenases derived from Clostridium histolyticum for sale anywhere in the
world, and (ii) in the event of termination (as opposed to expiration) of this
Agreement by Auxilium pursuant to Section 13.2, 13.3, or 13.4 or by Asahi
pursuant to Section 13.5, from and after such termination, an exclusive (even as
to Asahi and its Affiliates), royalty-free, irrevocable, perpetual, worldwide
license, with the right to sublicense, under any Joint Collaboration Patents
with respect to the terminated Product.

 

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2.2.4 Grants after Expiration. Subject to the terms and conditions of this
Agreement, Asahi hereby grants to Auxilium from and after the expiration of this
Agreement (on a Product-by-Product basis), a non-exclusive, paid-up,
irrevocable, perpetual, license or sublicense, as applicable, with the right to
sublicense, under the Asahi Applied Technology, (i) to Develop, Manufacture or
Commercialize such Product outside the Field (whether inside or outside the
Territory) or in the Field outside the Territory, (ii) to develop (including
obtaining and maintaining regulatory approval), make, use, import, export, offer
for sale and sell pharmaceutical products (other than the Product) containing
injectable collagenases derived from Clostridium histolyticum for sale anywhere
in the world, and (iii) from and after the expiration, in accordance with
Section 14.3.5, of the license granted to Asahi by Auxilium pursuant to
Section 14.3.4, to Develop, Manufacture or Commercialize such Product in the
Field in the Territory.

2.3 Additional Licensing Provisions.

2.3.1 Negative Covenant. Each Party covenants that it will not use or practice
any of the other Party’s Patent rights or other intellectual property rights
licensed (or sublicensed, as applicable) to it under this ARTICLE 2 except for
the purposes expressly permitted in the applicable license grant.

2.3.2 No Implied Licenses; Retained Rights. Except as explicitly set forth in
this Agreement, neither Party grants any license, express or implied, under its
intellectual property rights to the other Party, whether by implication,
estoppel or otherwise.

2.4 Performance by Affiliates and Subcontractors.

2.4.1 Performance by Affiliates. The Parties recognize that each may perform
some or all of its obligations under this Agreement through Affiliates;
provided, however, that each Party shall remain responsible for and be guarantor
of the performance by its Affiliates and shall cause its Affiliates to comply
with the provisions of this Agreement in connection with such performance. Each
Party hereby expressly waives any requirement that the other Party exhaust any
right, power or remedy, or proceed against an Affiliate, for any obligation or
performance hereunder prior to proceeding directly against such Party. Wherever
in this Agreement the Parties delegate responsibility to Affiliates, the Parties
agree that such entities may not make decisions inconsistent with this
Agreement, amend the terms of this Agreement or act contrary to its terms in any
way. For clarity, to the extent that an Affiliate performs the obligations or
exercises the rights of a Party hereunder, such Party shall have appropriate
written agreements in place with such Affiliate to ensure that any Know-How (or
Patents Covering such Know-How) developed by such an Affiliate can be licensed
(or assigned, as the case may be) to the other Party hereunder in accordance
with the provisions of this Agreement.

2.4.2 Subcontractors. Asahi shall have the right to subcontract the performance
of its obligations hereunder at any given time during the Term in any part of
the Territory; provided, however, that with respect to each such subcontract,
(i) Auxilium shall be notified through the JSC regarding the identity of each
subcontractor, other than wholesalers, that Asahi desires to collaborate with
for performance of its obligations hereunder prior to the execution of

 

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a contract with each such subcontractor, (ii) Asahi shall ensure that each of
its subcontractors accepts and complies with all applicable terms and conditions
of this Agreement, and Asahi shall remain responsible for, and shall guarantee,
the performance of its subcontractors hereunder, and (iii) any such subcontract
shall (a) impose on the subcontractor all applicable obligations under the terms
of this Agreement, including the reporting, audit, inspection and
confidentiality provisions hereunder, and (b) contain a provision prohibiting
such subcontractor from further subcontracting. For the avoidance of doubt,
Asahi will remain directly responsible for all amounts owed to Auxilium under
this Agreement. Asahi hereby expressly waives any requirement that Auxilium
exhaust any right, power or remedy, or proceed against a subcontractor, for any
obligation or performance hereunder prior to proceeding directly against Asahi.

2.5 Exclusivity.

2.5.1 Asahi. Asahi hereby covenants that it shall not (and shall cause its
Affiliates not to), during the Term, (i) (a) develop (including submitting any
application(s) for regulatory approval), manufacture or commercialize [**] or
(b) commercialize [**] or (ii) develop (including submitting any application(s)
for regulatory approval), manufacture or commercialize [**], in each case of
(i) or (ii), either on its own, with or through any Affiliate, or in
collaboration with a Third Party, and in each case other than with respect to
the Development and Commercialization of the Product in the Field in the
Territory pursuant to this Agreement. In the event that Asahi desires to
commercialize [**] during the Term (and following the Term in the event that
Asahi [**]), Asahi shall provide advance written notice to Auxilium; provided
that, for clarity, such notice shall not remedy any breach of this Agreement
resulting from the commercialization of [**]. Notwithstanding the foregoing, the
limitations set forth in this Section 2.5.1 shall not apply to any New
Indication, subject to Section 2.6.

2.5.2 Auxilium. Auxilium hereby covenants that it shall not (and shall cause its
Affiliates not to), during the Term, (i) develop (including submitting any
applications for regulatory approval), manufacture or commercialize any
collagenase-based pharmaceutical for use in the Field in the Territory or
(ii) develop (including submitting any applications for regulatory approval),
manufacture or commercialize any Competitive Product in the Territory, in each
case of (i) and (ii), either on its own, with or through any Affiliate, or in
collaboration with a Third Party, and in each case other than with respect to
the Development and Commercialization of the Product in the Field in the
Territory pursuant to this Agreement. Notwithstanding the foregoing, the
limitations set forth in this Section 2.5.2 shall not apply to any New
Indication, subject to Section 2.6.

2.5.3 Restricted Indications. “Restricted Indications” means (i) the treatment
of [**], (ii) the treatment of [**], (iii) the treatment and prevention of [**],
(iv) the treatment of [**], (v) the treatment and prevention of [**], and
(vi) the treatment of [**].

2.6 Right of First Negotiation. If Auxilium wishes to Develop and Commercialize
the Product for sale in the Territory in an indication outside the Field (a “New
Indication”), then Asahi and Auxilium shall negotiate with respect to such New
Indication in the Territory pursuant to this Section 2.6. Auxilium shall notify
Asahi in writing in the event it wishes to Develop and

 

 

** CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND WILL BE FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A
CONFIDENTIAL TREATMENT REQUEST.

 

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Commercialize the Product in such New Indication in the Territory, and Asahi
shall notify Auxilium in writing within twenty-eight (28) days after receipt of
such notice whether or not it desires to enter negotiations as set forth in this
Section 2.6. If Asahi exercises such right of negotiation in accordance with
this Section 2.6, the Parties shall negotiate in good faith (but subject to each
Party’s final management approval which can be given in their absolute
discretion) the terms of a definitive agreement regarding the Development and
Commercialization of such Product in the Territory, including the financial
terms thereof (such as applicable upfront and milestone payments). If Auxilium
and Asahi are unable to enter into a definitive agreement with respect to such
transaction within sixty (60) days after receipt of the said notice by Asahi (or
such longer period as may be mutually agreed upon by the Parties), then Auxilium
(either itself, or with its Affiliates or Third Parties) shall be permitted to
Develop and/or Commercialize such New Indication in the Territory in each case.
The Parties further agree and acknowledge that nothing contained in this Section
2.6 shall prohibit Auxilium from (and this Section 2.6 shall not apply with
respect to) (i) Developing or Commercializing the Product in a New Indication
outside the Territory, or (ii) Developing or Commercializing the Product for
non-human uses anywhere in the world for any indication.

2.7 Restrictive Covenants.

2.7.1 Ex-Territory Activities. Asahi hereby covenants and agrees that it shall
not (and shall cause its Affiliates and subcontractors not to), either directly
or indirectly, market, distribute or sell the Product into countries outside of
the Territory. Without limiting the generality of the foregoing, with respect to
such countries outside of the Territory, Asahi shall not (i) engage in any
advertising activities relating to the Product directed solely to customers
located in such countries, or (ii) solicit orders from any prospective purchaser
located in such countries.

2.7.2 Ex-Field Activities. Asahi hereby covenants and agrees that it shall not
(and shall cause its Affiliates and subcontractors not to), either directly or
indirectly, market, distribute or sell the Product for use outside the Field.
Without limiting the generality of the foregoing, Asahi shall not (i) engage in
any advertising activities relating to the Product directed to use outside the
Field, or (ii) solicit orders from any prospective purchaser for use of the
Product outside the Field in the Territory.

2.7.3 Asahi Contracts. In the event that Asahi (or any of its Affiliates) enters
into any agreements with a subcontractor (including any distributors or
wholesalers) for the Product, it shall include in any and all said agreements
provisions substantially similar to those set forth in Sections 2.7.1 and 2.7.2,
such that such subcontractor shall only be authorized to market, distribute and
sell the Product within the Field in the Territory, and shall be prohibited from
marketing, distributing or selling the Product outside the Field or outside the
Territory.

2.7.4 Within-Territory Activities. Auxilium hereby covenants and agrees that it
shall not (and shall cause its Affiliates, sublicensees (except BTC and solely
in accordance with Section 2.7.5) and subcontractors not to), either directly or
indirectly, market, distribute or sell the Product within the Territory for use
in the Field. Without limiting the generality of the foregoing, Auxilium shall
not (i) engage in any advertising activities relating to the Product for

 

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use in the Field directed solely to customers located in the Territory, or
(ii) solicit orders from any prospective purchaser located in the Territory
(other than outside the Field in accordance with Section 2.6).

2.7.5 Auxilium Contracts. In the event that Auxilium (or any of its Affiliates)
enters into any agreements with a subcontractor (including any distributors or
wholesalers) or a sublicensee (except BTC and solely in accordance with this
Section 2.7.5) for the Product, it shall include in any and all said agreements
provisions substantially similar to those set forth in Section 2.7.4, such that
such subcontractor or sublicensee, as applicable, shall only be authorized to
market, distribute and sell the Product: (i) within countries outside the
Territory or (ii) within the Territory, for use outside the Field in accordance
with Section 2.6 and as otherwise provided in this Agreement. Without limitation
of the foregoing, each Party shall take any action reasonably requested by the
other Party to prevent any potential breach of the BTC License Agreement. Asahi
acknowledges and agrees that in furtherance of the foregoing, and
notwithstanding the exclusive licenses granted to Asahi herein, BTC has the
right to co-promote the Product in the Territory in accordance with Section 5.4
of the BTC License Agreement.

2.7.6 Jurisdictional Compliance. It is the desire and intent of the Parties that
the restrictive covenants contained in this Section 2.7 be enforced to the
fullest extent permissible under the Laws and public policies applied in each
jurisdiction in which enforcement is sought. Auxilium and Asahi believe that the
restrictive covenants in this Section 2.7 are valid and enforceable. However, if
any restrictive covenant should for any reason become or be declared by a
competent court or competition authority to be invalid or unenforceable in any
jurisdiction, (i) the Party first gaining knowledge of such decision shall
promptly notify the other Party thereof and (ii) such restrictive covenant shall
be deemed to have been amended to the extent necessary in order that such
provision be valid and enforceable. For clarity, such amendment shall apply only
with respect to the operation of such provision of this Section 2.7 in the
particular jurisdiction in which such declaration is made.

ARTICLE 3

GOVERNANCE

3.1 Joint Steering Committee. The Parties shall establish the JSC within thirty
(30) days after the Effective Date. The JSC shall perform the following
functions:

3.1.1 Approve the initial Development Plan and each annual update and any
material amendments thereto;

3.1.2 Review any matters related to Regulatory Approvals for the Product in the
Field in the Territory;

3.1.3 Review and discuss the overall strategy for obtaining, maintaining and
enforcing Patent protection and commercial exclusivity during the Re-Examination
Period for the Product in the Field in the Territory;

 

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3.1.4 Review and discuss the overall strategy for Commercializing the Product in
the Field in the Territory;

3.1.5 Review and discuss the Commercialization Plan, and any material amendments
or revisions thereto, which review shall be on an annual basis, on or before
November 30 of each year during the Term, with a six (6) month review of any
material amendments or revisions thereto until three (3) years after the First
Commercial Sale when such reviews shall become annual reviews only;

3.1.6 Provide a forum for the Parties to discuss the Commercialization of the
Product in the Field in the Territory in the broader context of Auxilium’s
Global Branding Strategy (including providing a forum for Auxilium to notify
Asahi, subject to any applicable obligations of confidentiality owed to a Third
Party or arising under Laws (e.g., securities laws restricting disclosure of
material information), of Auxilium’s termination of a material sublicense
agreement covering the Product (including the sublicense agreement with Pfizer)
prior to such termination);

3.1.7 Discuss a range of suggested prices at which the Product will be sold to
Third Parties in the Field in the Territory and any discount strategies for the
Product in the Field in the Territory; provided that, nothing contained herein
shall limit or in any way restrict Asahi from having the final decision on
setting the price at which the Product will be sold in the Field in the
Territory;

3.1.8 Review the progress of any other Committees;

3.1.9 Resolve disputes and other matters referred to the JSC by any other
Committee; and

3.1.10 Have such other responsibilities as may be assigned to the JSC pursuant
to this Agreement or as may be mutually agreed upon by the Parties in writing
from time to time.

3.2 Joint Steering Committee Membership. Auxilium and Asahi shall each designate
three (3) representatives of appropriate seniority and experience to serve on
the JSC by written notice to the other Party. Either Party may designate
substitutes for its representatives if one (1) or more of such Party’s
designated representatives are unable to be present at a meeting. From time to
time each Party may replace its representatives by written notice to the other
Party specifying the prior representative(s) and their replacement(s). The JSC
shall be co-chaired by a representative of each of Asahi and Auxilium. One
member of the JSC shall serve as secretary of the JSC at each JSC meeting, and
the secretary shall alternate from meeting to meeting between an Asahi JSC
member and an Auxilium JSC member. The chairpersons shall be responsible for
(i) calling meetings, (ii) preparing and issuing minutes of each such meeting
within thirty (30) days thereafter, and (iii) preparing and circulating an
agenda for the upcoming meeting; provided that, the chairpersons shall consider
including any agenda items proposed by either Party no less than five (5) days
prior to the next scheduled JSC meeting.

 

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3.3 Joint Steering Committee Meetings. The JSC shall hold at least one
(1) meeting per calendar quarter at such times during such calendar quarter as
it elects to do so until pre-launch Territory Development Activities for the
Product in the Field in the Territory are completed, and thereafter, if the
Parties mutually so decide, twice per year; provided that, the JSC shall meet
more or less frequently as Asahi and Auxilium mutually agree upon as
appropriate. Meetings of the JSC shall be effective only if at least one
(1) representative of each Party is present or participating. The JSC may meet
either (i) in person at either Party’s facilities (alternating between the
facilities of Asahi and Auxilium) or at such locations as the Parties may
otherwise agree or (ii) by audio or video teleconference; provided that, no less
than one (1) meeting of the JSC during each calendar year shall be conducted in
person. Other representatives of each Party involved with the Product may attend
meetings as non-voting participants, subject to the confidentiality provisions
set forth in ARTICLE 12. Additional meetings of the JSC may also be held with
the consent of each Party, as required to resolve disputes, disagreements or
deadlocks in the other Committees or as otherwise required under this Agreement,
and neither Party shall unreasonably withhold its consent to holding such
additional meetings.

3.4 Decision-Making. The JSC may make decisions with respect to any subject
matter that is subject to the JSC’s decision-making authority and functions as
set forth in Section 3.1, but subject to the limitations on such decision-making
authority set forth in Section 3.6, and any dispute referred to the JSC by the
other Committee. All decisions of the JSC shall be made by unanimous vote or
written consent, with Asahi and Auxilium each having, collectively, among its
respective members, one (1) vote in all decisions. The JSC shall use
commercially reasonable efforts to resolve the matters within its roles and
functions or otherwise referred to it. If the JSC cannot reach consensus on a
given matter, then decision-making authority shall be allocated (i) to Asahi to
the extent the disagreement relates to Territory Development Activities or
Territory-Specific Analytical Release Testing and Characterization (provided,
however, that to the extent Auxilium determines in its sole discretion that a
given decision of Asahi with respect to the Territory Development Activities or
Territory-Specific Analytical Release Testing and Characterization could
materially and adversely affect Development and Commercialization of the Product
in the Field outside the Territory, then Auxilium shall have the final
decision-making authority with respect to such matter); and (ii) to Auxilium
with respect to any matter other than a Territory Development Activity-related
matter or Territory-Specific Analytical Release Testing and
Characterization-related matter.

3.5 Alliance Managers. Promptly following the Effective Date, each Party shall
designate an individual to serve as the main point of contact for each Party to
exchange information, facilitate communication and coordinate the Parties’
activities under this Agreement relating to the Product and to provide
day-to-day support to the Committees (each, an “Alliance Manager”). Each
Alliance Manager shall be experienced in project management and shall have
appropriate experience in the pharmaceutical industry. The Alliance Managers
shall attend all meetings between the Parties, including Committee meetings, and
shall also work together to resolve any deadlock between the Parties; provided,
however, that the Alliance Managers shall not be members of any Committee
established pursuant to this Agreement. Each Party may change its designated
Alliance Manager from time to time upon written notice to the other Party;

 

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provided that, the Parties recognize and agree as to the importance of
continuity in their relationship and the activities hereunder.

3.6 Limits on JSC and Committee Authority. The JSC and any other Committee shall
have only the powers assigned expressly to it in this ARTICLE 3 and elsewhere in
this Agreement, and shall not have any power to amend, modify or waive
compliance with this Agreement. In furtherance thereof, each Party shall retain
the rights, powers and discretion granted to it under this Agreement and no such
rights, powers or discretion shall be delegated or vested in the JSC or any
other Committee unless such delegation or vesting of rights is expressly
provided for in this Agreement or the Parties expressly so agree in writing.
Without limiting the generality of the foregoing, the JSC and any other
Committee shall have no decision-making authority with respect to any matters
related to (i) approving (or otherwise making decisions with respect to) matters
related to obtaining, maintaining or enforcing Patent protection or with respect
to the Re-Examination Period for the Product in the Field in the Territory
(which matters shall be governed by ARTICLE 9), (ii) the Development of the
Product outside the Field or outside of the Territory, (iii) the
Commercialization of the Product and (iv) the Manufacture of the Product.

3.7 Disbanding the JSC. At any time during the Term, and for any reason,
Auxilium shall have the right to disband the JSC (and any Committees existing as
of such time) upon written notice to Asahi, which notice shall be effective
immediately upon receipt (“Disbanding Notice”). Following the issuance of a
Disbanding Notice and subject to this Section 3.7, (i) the JSC (and any
Committees existing as of such time) shall immediately cease meeting and
(ii) all decisions, obligations, rights and responsibilities within the purview
of the JSC (and any Committees existing as of such time) shall henceforth be
handled directly between the Parties. In the event the Parties cannot reach an
agreement on a given matter, then decision-making authority shall be allocated
(a) to Asahi to the extent the disagreement relates to Territory Development
Activities of the Product in the Field in the Territory or Territory-Specific
Analytical Release Testing and Characterization (provided, however, that to the
extent Auxilium determines in its sole discretion that a given decision of Asahi
with respect to the Territory Development Activities of the Product in the Field
in the Territory or Territory-Specific Analytical Release Testing and
Characterization could materially and adversely affect Development and
Commercialization of the Product in the Field outside the Territory, then
Auxilium shall have the final decision-making authority with respect to such
matter); and (b) to Auxilium with respect to any matter other than a Territory
Development Activity-related matter or Territory-Specific Analytical Release
Testing and Characterization-related matter. If, at any time following the
issuance of a Disbanding Notice, Auxilium wishes to reestablish the JSC,
Auxilium shall notify Asahi in writing and, thereafter, the JSC shall be
reestablished and function in accordance with the provisions of this ARTICLE 3.
For clarity, the disbanding of the JSC by Auxilium under this Section 3.7 shall
have no impact on the consideration provided for or due to Auxilium under this
Agreement.

3.8 Committees. From time to time, the JSC may establish and delegate duties to
other sub-committees or directed teams (each, a “Committee”) to oversee
particular projects or activities. Each such Committee shall be constituted and
shall operate as the JSC determines;

 

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provided that, each Committee shall have equal representation from each Party.
Committees may be established on an ad hoc basis for purposes of a specific
project, or on such other basis as the JSC may determine. Unless otherwise
provided in this ARTICLE 3, any disputes that may arise in a Committee shall be
referred to the JSC for resolution pursuant to Section 3.4. Each Committee and
its activities shall be subject to the oversight, review and approval of, and
shall report to, the JSC. In no event shall the authority of a Committee exceed
that of the JSC. Without limiting the foregoing, the Parties agree to initially
establish the Committees described in Sections 3.9 and 3.10, respectively.

3.9 Manufacturing and Supply Committee. Within thirty (30) days after the
Effective Date, Auxilium and Asahi agree to establish the Manufacturing and
Supply Committee (the “MSC”) as a Committee. The MSC shall consist of up to ten
(10) members (or such other number as may be agreed by the Parties in writing),
up to five (5) of whom shall be representatives designated by Asahi, and up to
five (5) of whom shall be representatives designated by Auxilium. Such
representatives shall include individuals who have experience in the
manufacturing of pharmaceutical products. The MSC shall be co-chaired by a
representative of each of Asahi and Auxilium. One member of the MSC shall serve
as secretary of the MSC at each MSC meeting, and the secretary shall alternate
from meeting to meeting between an Asahi MSC member and an Auxilium MSC member.
The MSC shall advise the JSC with respect to all discussions related to the
Manufacture and supply chain for the Product. Meetings of the MSC shall commence
at a time to be mutually agreed upon by the Parties and the MSC shall meet at
least once every three (3) months, and in any case more or less frequently as
Asahi and Auxilium deem appropriate or as reasonably requested by either such
Party, on such dates and at such places and times as the Parties shall agree.
The MSC may meet either (i) in person alternating between the offices of Asahi
and Auxilium, or such other place as the Parties may agree or (ii) by audio or
video teleconference. The members of the MSC also may convene or be consulted
from time to time by means of telecommunications, video conferences, electronic
mail or correspondence, as deemed necessary or appropriate. The MSC shall be a
joint forum for the Parties to meet and discuss, with Asahi providing Auxilium
reasonable input (which Auxilium shall in good faith consider incorporating into
its Manufacturing and supply related decisions), but the MSC shall not be a
decision-making body but shall provide regular updates to the JSC on those
matters under this Section 3.9 no less frequently than once each calendar
quarter after the Effective Date. Additionally, the MSC shall:

3.9.1 Receive quarterly summaries of Drug Substance safety stock levels held at
Auxilium’s Facilities;

3.9.2 Be informed of Auxilium’s Manufacturing licensure activities and sourcing
strategies in support of the Development and Commercialization of the Product in
the Territory, including the strategic aspects of Manufacturing capacity;

3.9.3 Be informed of results of regulatory inspections related to the Product
(including Drug Substance) and review steps to be taken by Auxilium to address
any deficiencies noted;

 

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3.9.4 Be informed of any material quality-related issues concerning the Product
(including Drug Substance);

3.9.5 Be informed on progress and issues concerning Manufacturing Development
Activities and Territory-Specific Analytical Release Testing and
Characterization;

3.9.6 Be informed of and discuss changes in Facilities, testing sites, and
responsibilities in the supply chain for the Product for Commercialization in
the Field in the Territory;

3.9.7 Be informed of any Packaging and Labeling strategies with respect to the
Product in the Field in the Territory; and

3.9.8 Ensure guidance, consultancy and access by both Parties to CMC information
and data in support of filings, Facility inspections and Product launch in the
Territory.

For purposes of clarity, Auxilium shall have final decision-making authority
with respect to any dispute involving the Manufacture of the Product (including
any Manufacturing Development Activities).

3.10 Development and Regulatory Committee. Within thirty (30) days after the
Effective Date, the Parties shall establish a development and regulatory
committee (the “Development and Regulatory Committee” or “DRC”), which shall
consist of up to six (6) members (or such other number as may be agreed by the
Parties in writing), up to three (3) of whom shall be representatives designated
by Asahi, and up to three (3) of whom shall be representatives designated by
Auxilium. Each of Asahi and Auxilium may replace any or all of its
representatives on the DRC at any time upon written notice to the other Party.
Such representatives shall include individuals who have clinical trial and
regulatory experience and expertise in pharmaceutical drug development. A Party
may designate a substitute to temporarily attend and perform the functions of
such Party’s designee at any meeting of the DRC. The DRC shall be co-chaired by
a representative of each of Asahi and Auxilium. One member of the DRC shall
serve as secretary of the DRC at each DRC meeting, and the secretary shall
alternate from meeting to meeting between an Asahi DRC member and an Auxilium
DRC member. Meetings of the DRC shall commence at a time to be mutually agreed
upon by the Parties and the DRC shall meet at least once every three (3) months,
and in any case more or less frequently as Asahi and Auxilium deem appropriate
or as reasonably requested by either such Party, on such dates and at such
places and times as the Parties shall agree. The DRC may meet either (i) in
person alternating between the offices of Asahi and Auxilium, or such other
place as the Parties may agree or (ii) by audio or video teleconference. The
members of the DRC also may convene or be polled or consulted from time to time
by means of telecommunications, video conferences, electronic mail or
correspondence, as deemed necessary or appropriate. Asahi and Auxilium each may,
on advance notice to the other Party, invite non-member employees of such Party
to attend meetings of the DRC. The DRC may make decisions with respect to any
subject matter that is subject to their decision-making authority and functions
as set forth in this Section 3.10. All decisions of the DRC shall be made by
unanimous vote or written consent, with Asahi

 

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and Auxilium each having collectively, among its respective members, one
(1) vote in all decisions. If the DRC cannot reach consensus on a given matter,
then decision-making authority shall be allocated (a) to Asahi to the extent the
disagreement relates to Territory Development Activities or Territory-Specific
Analytical Release Testing and Characterization (provided, however, that to the
extent Auxilium determines in its sole discretion that a given decision of Asahi
with respect to the Territory Development Activities or Territory-Specific
Analytical Release Testing and Characterization could materially and adversely
affect Development and Commercialization of Product in the Field outside the
Territory, then Auxilium shall have the final decision making authority with
respect to such matter); and (b) to Auxilium with respect to any matter other
than a Territory Development Activity-related matter or Territory-Specific
Analytical Release Testing and Characterization-related matter. The DRC shall
perform the following functions:

3.10.1 Review, coordinate and discuss the overall strategy for Developing the
Product in the Field in the Territory, including reviewing, coordinating and
discussing the overall strategy for seeking Regulatory Approvals for the Product
in the Field in the Territory;

3.10.2 Manage and oversee the preparation and implementation of the Development
Plan;

3.10.3 Review updates and material amendments to the Development Plan;

3.10.4 Facilitate the exchange of information between the Parties under this
Agreement regarding the strategy for implementing the Development Activities,
including sharing Development Data created pursuant to this Agreement and
establishing procedures for the efficient sharing of information and materials
necessary or useful for the Development of the Product in the Field in the
Territory;

3.10.5 Review the design of the clinical trial protocols and endpoints and
oversee the conduct of all clinical trials required as set forth in the
Development Plan as well as discuss any General Development Activities and
Territory Development Activities to be conducted with respect to the Product in
the Field;

3.10.6 Be informed of the development and contents of all submissions to
Regulatory Authorities in the Territory for Regulatory Approvals and all
necessary filing and registration activities related thereto;

3.10.7 Review and oversee issues regarding pharmacovigilance and safety both
inside and outside the Territory; and

3.10.8 Have such other responsibilities as may be assigned to the DRC pursuant
to this Agreement or as may be mutually agreed upon by the Parties from time to
time.

3.11 Actions. In developing strategies, making decisions and exercising its
rights under this Agreement (including acting through its representatives on any
of the Committees and

 

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its Alliance Managers), each Party shall act in good faith and use its
Commercially Reasonable Efforts to achieve the goals of the then-current
Development Plan or Commercialization Plan.

3.12 Exchange of Information. Each Party shall keep the other Party fully and
promptly informed as to its progress and activities relating to the Manufacture
of the Product for use or sale in the Territory, and Development and
Commercialization of the Product in the Territory, including with respect to
regulatory matters and meetings with Regulatory Authorities, by way of updates
to appropriate Committees at their meetings or to the other Party in the event
that the Committees are disbanded and as otherwise specified in this Agreement,
or as reasonably requested from time to time by the other Party. In connection
therewith, Auxilium and Asahi shall provide each other with such information
regarding such progress and activities under the Development Plan or the
Commercialization Plan, or otherwise relating to the Product, as the other Party
may reasonably request from time to time. Auxilium shall further provide Asahi
with material information regarding Development and Commercialization of the
Product in the Field outside the Territory, including with respect to material
regulatory matters and material meetings with Regulatory Authorities, which is
reasonably necessary for Asahi to perform its obligations hereunder and to the
extent accessible to and Controlled by Auxilium.

3.13 Minutes of Committee Meetings. Definitive minutes of all Committee meetings
shall be finalized no later than thirty (30) days after the meeting to which the
minutes pertain as follows:

3.13.1 Within ten (10) days after a Committee meeting, the secretary of such
Committee shall prepare and distribute to all members of such committee draft
minutes of the meeting. Such minutes shall provide a list of any issues yet to
be resolved, either within such Committee or through the relevant resolution
process.

3.13.2 The members of each Committee shall then have ten (10) days after
receiving such draft minutes to collect comments thereon and provide them to the
secretary of such Committee.

3.13.3 Upon the expiration of such second ten (10) day period, the Parties shall
have an additional ten (10) days to discuss each other’s comments and finalize
the minutes. The secretary and chairperson(s) of such Committee shall each sign
and date the final minutes. The signature of such chairperson(s) and secretary
upon the final minutes shall indicate each Party’s assent to the minutes.

3.14 Expenses. Each Party shall be responsible for all of its own expenses
incurred in connection with participating in the JSC meetings or any of the
other Committee meetings.

 

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ARTICLE 4

DEVELOPMENT

4.1 Overview.

4.1.1 Overview of Development. Subject to the terms and conditions of this
Agreement, the Parties shall collaborate with respect to the Development of the
Product for use in the Field in the Territory as set forth herein. Auxilium
shall conduct the General Development Activities and the Manufacturing
Development Activities, and shall conduct the Territory Development Activities
and the Territory-Specific Analytical Release Testing Characterization which the
Parties mutually agree that Auxilium shall conduct. Asahi shall conduct, in
accordance with the Development Plan, the Territory Development Activities,
including bridging studies, clinical studies, physician/investigator – initiated
studies, Phase IV Clinical Studies (and other post-Regulatory Approval studies)
and the Territory-Specific Analytical Release Testing and Characterization
necessary for obtaining or maintaining Regulatory Approvals or is otherwise
required to conduct to comply with Laws. Auxilium shall use Commercially
Reasonable Efforts to perform the General Development Activities for the Product
for each indication in the Field (i.e., (i) Dupuytren’s Contracture,
(ii) Peyronie’s Disease and (iii) such other New Indications as the Parties
agree to include hereunder in accordance with Section 2.6, if any) to enable
obtaining Regulatory Approval for each such indication. Auxilium shall, to the
extent mutually agreed by the Parties, further use Commercially Reasonable
Efforts to perform the Manufacturing Development Activities, the Territory
Development Activities and the Territory-Specific Analytical Release Testing and
Characterization. Asahi shall use Commercially Reasonable Efforts to perform the
Territory Development Activities for the Product for each indication in the
Field (i.e., (a) Dupuytren’s Contracture, (b) Peyronie’s Disease and (c) such
other New Indications as the Parties agree to include hereunder in accordance
with Section 2.6 (if any) to enable obtaining Regulatory Approval in the
Territory for the Product for each such indication. Asahi shall further use
Commercially Reasonable Efforts to perform the Territory-Specific Analytical
Release Testing Characterization.

4.1.2 General Development Activities and Development Outside the Territory or
Outside the Field; Regulatory Approvals Outside the Territory or Outside the
Field. The Parties hereby agree and acknowledge that nothing contained herein
shall limit or otherwise restrict the ability of Auxilium or its (sub)licensees
to (i) perform the General Development Activities as it sees fit and at its sole
discretion, (ii) Develop the Product for use or sale outside the Territory
(whether or not in the Field) and (iii) obtain or maintain Regulatory Approvals
for the Product outside the Territory (whether or not in the Field). Without
limiting the generality of the foregoing, the Development Plan shall not address
(a) any General Development Activities, (b) any activities which are necessary
solely for obtaining or maintaining Regulatory Approval for the Product in any
country outside the Territory or (c) obtaining or maintaining Regulatory
Approvals for the Product outside the Territory. Any Development of the Product
or obtaining or maintaining Regulatory Approval for the Product within the
Territory but outside the Field shall only take place in accordance with the
provisions of Section 2.6 and shall not otherwise be limited or restricted by
this Agreement.

 

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4.1.3 Manufacturing Related Activities.

(a) The Parties hereby agree and acknowledge that Auxilium shall be solely
responsible for planning and performing all Manufacturing Development
Activities. Manufacturing Development Activities shall not be set forth in the
Development Plan.

(b) The Parties shall agree as to the allocation of responsibility with respect
to the performance of the developmental aspects of Territory-Specific Analytical
Release Testing and Characterization; provided that, for clarity, Asahi shall be
solely responsible for any costs incurred by Asahi or Auxilium in performing
Territory-Specific Analytical Release Testing and Characterization.

4.1.4 Certain Additional Restrictions. Asahi agrees and acknowledges that it and
its Affiliates shall not conduct any Development of the Product except in
accordance with a Development Plan established pursuant to this Agreement.

4.2 Objectives Under the Development Plan.

4.2.1 Development Activities. Each Party shall use Commercially Reasonable
Efforts to carry out the Territory Development Activities assigned to it under
the Development Plan and in accordance with the time frames set forth in the
Development Plan.

4.2.2 Compliance. Each Party shall conduct its Territory Development Activities
in accordance with sound and ethical business and scientific practices, and in
compliance with all Laws, GCPs and GLPs.

4.3 Development Plan and Development Budget.

4.3.1 General. In connection with the Development of the Product for use in the
Field in the Territory, the Parties shall conduct Territory Development
Activities, if any, pursuant to a comprehensive development plan (the
“Development Plan”). The Development Plan shall set forth, among other things,
the following:

(a) any preclinical studies, toxicology studies, pharmaco-economic studies, and
other clinical studies (including physician/investigator – initiated studies and
Phase IV Clinical Trials), in each case, together with all protocols, endpoints
and primary investigators conducting such studies, with respect to the Product
in the Field in the Territory;

(b) summary plans and timeline for Territory-Specific Analytical Release Testing
and Characterization;

(c) all regulatory plans and other elements of obtaining and maintaining
Regulatory Approvals in the Field in the Territory;

(d) a detailed annual budget for all Development Costs and Regulatory Costs for
the activities in the applicable Development Plan (the “Development Budget”);

 

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(e) subject to the provisions of Section 4.1.1, the allocation of the Territory
Development Activities to be conducted by each Party and the timeline for
completing such Territory Development Activities; and

(f) the plans and timeline for preparing the necessary Regulatory Materials and
for obtaining Regulatory Approval in the Field in the Territory.

4.3.2 Initial Development Plan. The initial Development Plan for the Product for
Dupuytren’s Contracture and Peyronie’s Disease shall be prepared by Asahi taking
into consideration any consultation with or guidance from any applicable
Regulatory Authorities in the Territory. To the extent that future meetings with
the Regulatory Authorities in the Territory provide guidance with respect to the
risk management plan or Territory Development Activities, the Parties shall
consider such guidance in updating and amending the Development Plan pursuant to
Section 4.3.3.

4.3.3 Updating and Amending Development Plan and Development Budget; Additional
Development Activities.

(a) On or before November 30th of each year during the Term, the JSC shall
review, update and approve amendments to the Development Plan (including the
Development Budget contained therein) which shall cover the Territory
Development Activities to be conducted during the upcoming calendar year, and
the JSC shall, on at least a quarterly basis, review and update, as appropriate,
the then-current Development Plan (including the Development Budget) to reflect
any material changes, reprioritizations of, or additions to the Development
Plan.

(b) From time to time during the Term, either Party may submit to the JSC any
proposed expansion or other material amendment of the Development Plan to cover
additional Territory Development Activities (or otherwise amend the Territory
Development Activities) with respect to the Product for use in the Field in the
Territory for the JSC’s review and approval. Once approved by the JSC, each
amended Development Plan (including the Development Budget contained therein)
shall become effective and supersede the previous Development Plan and
Development Budget as of the date of such approval or at such other time as
decided by the JSC.

4.4 Development Costs.

4.4.1 General Development Activities. Auxilium shall be responsible for one
hundred percent (100%) of all Development Costs incurred by Auxilium with
respect to any General Development Activities.

4.4.2 Territory Development Activities. Asahi shall be solely responsible for
one hundred percent (100%) of all Development Costs incurred by Asahi or
Auxilium (to the extent as described in the next sentence) with respect to any
Territory Development Activities (including, for clarity, any given Development
Activities which are deemed Territory Development Activities in accordance with
Section 1.83). For clarity, Asahi shall be responsible

 

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for Auxilium’s Development Costs incurred in performing Territory Development
Activities to the extent that implementation of such Territory Development
Activities by Auxilium is requested by Asahi or required by the terms and
conditions of this Agreement (provided that, for clarity, Asahi shall not be
responsible for any costs associated with materials or data which are already in
the possession of Auxilium), and Auxilium shall invoice Asahi for Development
Costs it incurs in connection with performing such Territory Development
Activities, which invoices Asahi shall pay within thirty (30) days of receipt
thereof.

4.4.3 Manufacturing Development Activities. For purposes of clarity, Auxilium
shall be solely responsible for one hundred percent (100%) of the costs incurred
by Auxilium or its Affiliates associated with any Manufacturing Development
Activities. Manufacturing Development Activities shall not be set forth in the
Development Plan.

4.4.4 Territory-Specific Analytical Release Testing and Characterization. Asahi
shall be solely responsible for one hundred percent (100%) of all Development
Costs incurred by Asahi or Auxilium (to the extent as described in the next
sentence) with respect to any Territory-Specific Analytical Release Testing and
Characterization. Auxilium shall invoice Asahi for Development Costs it incurs
in connection with performing Territory-Specific Analytical Release Testing and
Characterization, which invoices Asahi shall pay within thirty (30) days of
receipt thereof.

4.5 Records, Reports and Information.

4.5.1 General. Each Party shall maintain current and accurate records of all
work conducted by it under the Development Plan and all data and other
information resulting from such work (which records shall include, as
applicable, books, records, reports, research notes, charts, graphs, comments,
computations, analyses, recordings, photographs, computer programs and
documentation thereof (e.g., samples of materials and other graphic or written
data generated in connection with the Development Activities)). Such records
shall properly reflect all work done and results achieved in the performance of
the Development Activities in sufficient detail and in good scientific manner
appropriate for regulatory and Patent purposes. Each Party shall document all
preclinical studies and clinical trials to be conducted pursuant to the
Development Plan in formal written study reports according to applicable
national and international (e.g., ICH, GCP and GLP) guidelines. Each Party shall
be given an adequate opportunity, in any event not less than ten (10) business
days, to comment on the drafts of reports resulting from Territory Development
Activities conducted under the Development Plan.

4.5.2 Status Updates. Each Party shall provide the JSC and the DRC, as
appropriate, with reports detailing its respective Territory Development
Activities and the results thereof at least five (5) business days prior to any
JSC or DRC, as applicable, meeting, but in any event, on at least a calendar
quarter basis. Without limiting the foregoing, each Party shall promptly, but in
any event within five (5) business days after receipt thereof, provide to the
other Party copies of any material documents or correspondence received from any
Regulatory Authority related to Territory Development Activities.

 

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4.5.3 Access to Records. Each Party shall have the right, not more than one
(1) time per calendar year, to review all records under the Development Plan
maintained by the other Party at reasonable times, upon written request;
provided, however, that such other Party shall have the right to redact any
portions thereof not related to the Development of the Product for use in the
Field in the Territory.

4.5.4 Development-Related Safety Data. Without limitation of Sections 4.6 and
5.5, Asahi shall ensure that Auxilium has real-time access to all safety-related
data which arises in the course of Asahi’s performance of Development Activities
hereunder. Asahi shall reasonably cooperate with Auxilium to enable Auxilium to
satisfy all of its safety reporting obligations with respect to the Product,
including providing copies of requested data as well as general or specific
reports regarding any safety-related occurrences.

4.6 Ownership and Transfer of Development Data. All data (including
pre-clinical, clinical, technical, chemical, safety, and scientific data and
information), know-how and other results generated by or resulting from or in
connection with the conduct of Development Activities, including relevant
laboratory notebook information, screening data, Regulatory Data and synthesis
schemes, including descriptions in any form, data and other information
(collectively, the “Development Data”), shall be owned solely and exclusively by
the Party generating such data which shall be Confidential Information of such
Party (and each Party shall require that all of its Affiliates and
subcontractors assign any of such Affiliates’ and subcontractors’ right, title
and interest in and to such Development Data to such Party). With respect to
Development Data generated by a Party, such Party shall promptly provide the
other Party with copies of reports and, if available, summaries thereof, in each
case as such reports and summaries become available to such Party.

4.7 Right to Audit. Each Party shall ensure that the other Party’s authorized
representatives and any Regulatory Authorities, to the extent permitted by Laws,
may, during regular business hours and upon reasonable advance written notice,
not more than [**] (except for cause), (i) examine and inspect its facilities
or, subject to any Third Party confidentiality restrictions and other
obligations, the facilities of any subcontractor or any investigator site used
by it in the performance of Development of the Product in the Field in the
Territory hereunder, and (ii) subject to Laws and any Third Party
confidentiality restrictions and other obligations, inspect all data,
documentation and work product relating to the activities performed by it, the
subcontractor or investigator site, including the medical records of any patient
participating in any clinical study, in each case generated pursuant to the said
Development. This right to inspect all data, documentation, and work product
relating to the Product in the Field in the Territory may be exercised at any
time during the Term upon reasonable notice (subject to each Party’s record
retention policies then in effect), or such longer period as shall be required
by Laws. To the extent a Third Party’s facilities are the subject of an audit
pursuant to this Section 4.7, the requesting Party shall (a) perform such audit
in connection with the Party having contractual privity with such Third Party
and (b) bear any costs charged by such Third Party associated with such audit.
For clarity, the Party having contractual privity with such Third Party shall
have the right to accompany the requesting Party on any such audit of a Third
Party facility. The audit rights described in this Section 4.7 are without
limitation of the financial audit rights described in

 

 

** CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND WILL BE FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A
CONFIDENTIAL TREATMENT REQUEST.

 

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Section 8.11. Notwithstanding the foregoing, a Party shall have the right to
redact any portions of any documentation described above in this Section 4.7
that is not related to the Development of the Product for use in the Field in
the Territory

ARTICLE 5

REGULATORY

5.1 Regulatory Data and Regulatory Materials.

5.1.1 Regulatory Materials. Each Party shall, as soon as reasonably practicable
after the same become available (to the extent that such Party, and in the case
of Auxilium, and to the extent accessible to and Controlled by Auxilium, its
sublicensee, is undertaking any preparation of the same), provide the other
Party with copies of the Core Data Sheet (“CDS”), approved local prescriber, and
patient-directed, labeling that are proposed or approved for the
Commercialization and Development of the Product in the Field in the Territory,
with respect to Asahi, or outside the Field or outside the Territory, with
respect to Auxilium.

5.1.2 Regulatory Data Generated by Auxilium and Asahi. Within thirty (30) days
after the Effective Date, Auxilium and Asahi shall meet and agree upon the
portion of Regulatory Materials and Regulatory Data which is known to and
Controlled by Auxilium and that is necessary for Asahi to perform its
obligations hereunder and Auxilium shall thereafter use reasonable efforts to
supply Asahi with such Regulatory Materials and Regulatory Data. During the
Term, Auxilium and Asahi shall each promptly provide to the other copies of any
further Regulatory Materials and Regulatory Data that either may generate or
otherwise acquire. For clarity, Regulatory Materials and Regulatory Data
generated or acquired by Auxilium’s sublicensees shall be included in such
Regulatory Materials and Regulatory Data to be provided by Auxilium to Asahi to
the extent that such materials are accessible to and Controlled by Auxilium.

5.1.3 Use of Data by Asahi and Auxilium. Asahi may only use the Regulatory
Materials and Regulatory Data and any other Development Data provided by
Auxilium hereunder, for the purposes of (i) Developing the Product in the Field
in the Territory pursuant to this Agreement, (ii) Commercializing the Product in
the Field in the Territory pursuant to this Agreement and (iii) obtaining and
maintaining Regulatory Approval, for the Product in the Field in the Territory
pursuant to this Agreement. Auxilium may use the Regulatory Materials and
Regulatory Data and any other Development Data provided by Asahi hereunder for
the purposes of Development and Commercialization of, and obtaining and
maintaining Regulatory Approval of, the Product (a) outside the Territory
(whether in the Field or outside Field) and (b) in the Territory, subject to the
license grants and the terms and conditions of this Agreement with respect to
indications in the Field and, subject to Section 2.6, with respect to
indications outside of the Field.

5.1.4 Cooperation by Auxilium. Auxilium shall, and shall cause its Affiliates
to, reasonably cooperate with and assist Asahi in preparing and submitting
Regulatory Materials and obtaining and maintaining Regulatory Approvals of the
Product in the Field in the Territory as described herein. Such cooperation
shall include, (i) performing re-investigation or statistical

 

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re-analysis of Regulatory Data or Development Data, (ii) providing Asahi with
assistance in connection with the preparation of initial and/or additional
Regulatory Materials, for submission of Regulatory Materials, and
(iii) supporting Asahi in responding to any inquiries or investigation from and
communications with, Regulatory Authorities.

5.2 Regulatory Filings and Regulatory Approvals.

5.2.1 General Responsibilities; Ownership of Regulatory Approvals. Subject to
Section 5.2.5, Asahi shall be responsible for the preparation of all Regulatory
Materials necessary or desirable for obtaining and maintaining such Regulatory
Approvals in the Territory (including in connection with Patient Information
Leaflets, labeling and packaging for the Product in the Field in the Territory)
and Asahi shall submit such Regulatory Materials, as applicable, to the
applicable Governmental Authorities in the Territory. Auxilium shall provide
reasonable assistance to Asahi in connection with all activities undertaken by
Asahi relating to the obtaining and maintaining of the Regulatory Approvals. To
the extent not prohibited by Laws, Auxilium shall be entitled to attend, at its
cost and expense, key meetings as an observer with the relevant Regulatory
Authorities with respect to obtaining or maintaining the Product Approvals for
the Product in the Field in the Territory; provided that, for clarity, to the
extent that a Regulatory Authority, or Laws, so requires, or the subject matter
of such meeting makes it appropriate given the allocation of responsibilities
herein (e.g., Auxilium’s responsibility for Manufacturing the Product), then
Auxilium’s role shall not be limited to that of an observer and Auxilium shall
be allowed to actively participate in such meeting. All Regulatory Approvals for
the Product in the Territory (other than those related solely to the Manufacture
of the Product, if any) shall be in the name of Asahi, and Asahi shall own all
right, title and interest in and to all such Regulatory Approvals and all
related Regulatory Materials. The provisions of this Section 5.2.1 shall be
subject to the provisions of Section 5.2.2. The Parties acknowledge and agree
that as of the Effective Date Asahi intends to pursue an “orphan drug”
designation for the Product for the indications of Dupuytren’s Contracture and
Peyronie’s Disease in the Territory.

5.2.2 Certain Regulatory Approvals.

(a) Pricing Approvals. Notwithstanding the provisions of Section 5.2.1, to the
extent that Asahi is required to or deems it necessary to obtain Pricing
Approval for sale of the Product in the Field in the Territory, Asahi shall (to
the extent permitted by Laws) be solely responsible for (and shall use
Commercially Reasonable Efforts toward) obtaining and maintaining such Pricing
Approvals in the Territory, in its own name. Without limiting the foregoing,
Asahi shall use Commercially Reasonable Efforts to apply for Pricing Approvals
in the Territory, to the extent Asahi deems necessary, no later than the date
designated by the Regulatory Authority following the receipt of the Product
Approval in the Territory. Asahi shall keep Auxilium informed on an ongoing
basis of Asahi’s strategy for seeking, and the results it obtains in seeking,
such Pricing Approvals in the Territory, including the results of any material
discussion or other communication with relevant Governmental Authorities
regarding such Pricing Approvals. To the extent not prohibited by Laws, Auxilium
shall be entitled to attend, at its cost and expense, key meetings with the
relevant Regulatory Authorities with respect to obtaining or maintaining Pricing
Approvals for the Product in the Field in the Territory.

 

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(b) Manufacturing Approvals and Manufacturing Related Sections. Notwithstanding
the provisions of Section 5.2.1, Auxilium shall be primarily responsible for
preparing those portions of any Regulatory Materials related to the Manufacture
of the Product for sale in the Field in the Territory, including any DMFs and
CMC (or equivalent) sections of any Regulatory Materials, and will provide such
Regulatory Materials to Asahi for use (with or without edit/modification) in
compiling, supporting and maintaining regulatory filings and Regulatory
Approvals in the Territory. Auxilium shall provide Asahi with copies of all
reasonably requested analytical methods, and transfer the related Auxilium
Know-How, including providing Asahi with such reasonable technical assistance as
is necessary to enable Asahi to fulfill its obligations to release Finished
Product under Section 7.5 for distribution in the Field in the Territory under
Section 6.3.1(a). For clarity, and notwithstanding anything to the contrary
herein, Auxilium shall have the right to review and approve all Regulatory
Materials related to the Manufacture of the Product for sale in the Field in the
Territory, including any DMFs and CMC (or equivalent) sections of any Regulatory
Materials, prior to their submission to applicable Regulatory Authorities.

5.2.3 Cost of Regulatory Activities. All Regulatory Costs incurred by Asahi or
Auxilium in connection with the preparation of Regulatory Materials for, and
obtaining of Product Approvals (other than Bulk Product Manufacturing-related
Regulatory Approvals) in, the Field in the Territory for the Product shall be
borne solely by Asahi. Asahi shall be responsible for all Regulatory Costs
involved in the maintenance of all Regulatory Approvals (other than Bulk Product
Manufacturing-related Regulatory Approvals) for the Product in the Field in the
Territory. Auxilium shall invoice Asahi for Regulatory Costs it incurs in
connection with the preparation of Regulatory Materials (including the
performance of any Territory-Specific Analytical Release Testing and
Characterization associated therewith) for, and obtaining of Product Approvals
in, the Field in the Territory for the Product, which invoices Asahi shall pay
within thirty (30) days of receipt thereof.

5.2.4 Reporting and Review. Each Party shall keep the other Party reasonably and
regularly informed in connection with the preparation of all Regulatory
Materials, Regulatory Authority review of Regulatory Materials, and Regulatory
Approvals, in each case with respect to the Product for sale in the Field
whether within the Territory or outside the Territory. Each Party shall provide
the other Party, in a timely manner, with copies of notices, questions, and
requests for information in tangible form which it (or, in the case of Auxilium,
to the extent that such materials are accessible to and Controlled by Auxilium,
its sublicensee) receives from a Regulatory Authority with respect to the
Product for sale in the Field; provided, however, that such Party shall have the
right to redact any information to the extent not related to the Product for
sale in the Field. Asahi shall, to the extent that it is not an unreasonable
burden on Asahi’s resources to satisfy Asahi’s obligations under Section 5.9.1,
provide all material reports, material summaries, material Regulatory Materials,
material Regulatory Approvals and any other material written material(s) that it
is obligated to deliver to Auxilium pursuant to this ARTICLE 5 in English;
provided, however, that in all situations Asahi shall provide all
Manufacturing-related materials (including DMF and CMC (or equivalent) sections
of any Regulatory Materials) in English.

 

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5.2.5 Consultation and Approval Prior to Regulatory Filings. The Parties shall
consult with each other on the strategy for pre-authorization activities (i.e.,
Regulatory Authority meetings and MAA filing) and post-authorization activities,
with respect to Regulatory Approvals for the Product in the Field in the
Territory prior to the filing. Without limitation of the foregoing, Asahi shall
provide Auxilium with a copy of all proposed Regulatory Materials for review and
comment prior to filing, and Asahi shall incorporate any reasonable comments
received from Auxilium to the extent Auxilium provides comments in a timely
manner; provided, however, that Auxilium shall have (i) final decision-making
authority on the content of all Regulatory Materials related to the Manufacture
of the Product for sale in the Field in the Territory and (ii) final
decision-making authority on the content of all Regulatory Materials associated
with the Product in the Field in the Territory in the event that Auxilium
reasonably determines that such Regulatory Materials could adversely affect
Development Activities outside of the Territory or Product Approval of the
Product outside the Territory.

5.3 Communications. The Parties shall cooperate in communicating with any
Regulatory Authority having jurisdiction regarding the Product in the Field
whether within the Territory or outside the Territory and each Party shall
immediately notify the other in the event that such Party (or, in the case of
Auxilium, to the extent that such materials are accessible to and Controlled by
Auxilium, its sublicensee) communicates, or intends to communicate, either on
its own initiative in accordance with this Agreement or as a result of such a
Regulatory Authority initiating contact with such Party (or, in the case of
Auxilium, to the extent that such materials are accessible to and Controlled by
Auxilium, its sublicensee) in connection therewith. Notwithstanding the
foregoing, except as may be required by Laws, Asahi shall not, with respect to
the Product, communicate with (i) any Regulatory Authority having jurisdiction
outside the Territory regarding the Product or (ii) any Regulatory Authority
with respect to the Product for use outside the Field, in each case, unless
explicitly provided for in the Development Plan or requested or permitted in
writing to do so by Auxilium, or unless so ordered by such Regulatory Authority,
in which case Asahi shall immediately notify Auxilium of such order and shall,
to the extent permitted by Laws, not take any further actions or communicate
with such Regulatory Authority further until Auxilium has provided instruction
as to how to proceed, which instruction shall be given reasonably in advance of
the deadline, if any. All communications with Regulatory Authorities regarding
the Product in the Field in the Territory shall be undertaken as provided in
this Agreement.

5.4 No Other Regulatory Filings. Except as otherwise expressly set forth in
ARTICLE 5, Asahi (and its Affiliates) shall not file any Regulatory Materials or
Regulatory Approvals for the Product or that are otherwise based on any Auxilium
Technology or any Joint Collaboration Patents.

5.5 Rights of Reference.

5.5.1 Auxilium shall use Commercially Reasonable Efforts to permit Asahi to
access, and shall provide Asahi with sufficient rights to reference and use, in
association with exercising Asahi’s rights and performing its obligations under
this Agreement, Auxilium’s Development Data, Regulatory Materials and Regulatory
Approvals outside the Territory that are

 

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associated with the Product in the Field. Auxilium shall transmit to the extent
accessible to and Controlled by Auxilium (or use Commercially Reasonable Efforts
to cause the transmission of) all necessary and appropriate letters to
applicable Regulatory Authorities advising such applicable Regulatory
Authorities of such rights of reference and use.

5.5.2 Asahi shall permit Auxilium (and its designees) to access, and shall
provide Auxilium (and its designees) with sufficient rights to reference and use
in association with exercising its rights and performing its obligations under
this Agreement and for all uses in connection with the Product outside the
Territory or outside the Field, Asahi’s Development Data, Regulatory Materials
and Regulatory Approvals in the Territory that are associated with the Product.
Asahi shall transmit all necessary and appropriate letters to applicable
Regulatory Authorities advising such applicable Regulatory Authorities of such
rights of reference and use.

5.6 Adverse Event Reporting; Safety Data Exchange and Medical Inquiries.

5.6.1 Pharmacovigilance.

(a) Asahi, as the holder of the Product Approvals, shall be responsible for the
collection, review, assessment, tracking and filing of information related to
adverse events associated with the Product in the Territory (whether or not
Product Approval has been achieved), in each case in accordance with Laws and
this Agreement (and Asahi shall ensure that, in the Development and
Commercialization of the Product, it will record, investigate, summarize,
notify, report and review all adverse events in accordance with Laws). Auxilium
(or its designee) shall be responsible for the collection, review, assessment,
tracking and filing of information related to adverse events associated with the
Product in the countries outside the Territory. The safety units from each of
the Parties shall meet and agree upon a written pharmacovigilance agreement for
exchanging adverse event and other safety information relating to the Product
prior to Asahi’s first clinical activity or prior to the first Regulatory
Approval in the Territory (whichever is first). Such written pharmacovigilance
agreement shall ensure that adverse event associated with the Product and other
safety information is exchanged according to a schedule that will permit each
Party (and its designees or, solely with respect to Auxilium, its sublicensees)
to comply with Laws and regulatory requirements in their respective markets.

(b) Notwithstanding the foregoing, or anything else to the contrary contained
herein, in the event that, at any time during the Term, Asahi receives a
notification from a Governmental Authority (including, for clarity, a Regulatory
Authority) indicating that Asahi’s pharmacovigilance infrastructure or
implementation is in violation of applicable Laws or is otherwise subject to
investigation by such Governmental Authority, then Auxilium shall have the
option, but not the obligation, to assume, to the extent that such assumption is
not prohibited by Laws, responsibility for pharmacovigilance with respect to the
Product in the Field in the Territory including the collection, review,
assessment, tracking and filing of information related to adverse events
associated with the Product in the Field in the Territory (whether or not
Product Approval has been achieved). If Asahi receives such a notification and
Auxilium desires to exercise such option, then the Parties shall promptly meet
to discuss the transfer of pharmacovigilance oversight in the Territory with
respect to the Product in the Field to Auxilium, and shall ensure that such
transfer is in compliance with all Laws; furthermore, Asahi

 

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shall provide all assistance requested by Auxilium in conducting such
pharmacovigilance activities in the Territory.

5.6.2 Pfizer Agreement. In accordance with that certain Development,
Commercialization and Supply Agreement between Auxilium and Pfizer Inc.
(“Pfizer”), dated as of December 17, 2008, and the related pharmacovigilance
agreement between Auxilium and Pfizer, Pfizer is responsible for maintaining the
global safety database for the Product. The pharmacovigilance agreement to be
entered into between the Parties pursuant to Section 5.6.1(a) shall provide for
Auxilium communicating to Pfizer such information on behalf of Asahi as Pfizer
requires for purposes of maintaining such global safety database in accordance
with Laws and regulatory requirements; provided that, in the event a
Governmental Authority or Laws or regulatory requirements require a separate
pharmacovigilance agreement among Pfizer, Auxilium and Asahi, the Parties shall
meet with Pfizer and agree upon a written pharmacovigilance agreement for
exchanging adverse event and other safety information relating to the Product.
Any such three-way pharmacovigilance agreement shall ensure that adverse event
and other safety information is exchanged according to a schedule that will
permit Pfizer, Asahi and Auxilium (and each of their designees and sublicensees,
as applicable) to comply with Laws and regulatory requirements in their
respective markets.

5.6.3 Medical Inquiries for the Product. Following the Effective Date, Asahi, as
the holder of the Product Approval, shall be responsible for handling all
medical questions or inquiries in the Territory, including all Product
Complaints, with regard to any Product sold by or on behalf of Asahi (or any of
its Affiliates) (including setting up a call center in connection therewith), in
each case in accordance with Laws and this Agreement. Asahi shall submit a copy
of any standardized responses to medical inquiries prior to use thereof for
Auxilium’s review and comment. Auxilium shall immediately forward any and all
medical questions or inquiries which it receives with respect to any Product
sold by or on behalf of Asahi (or any of its Affiliates) in the Territory to
Asahi in accordance with all Laws and Asahi shall immediately forward to
Auxilium any and all medical questions or inquiries that it receives with
respect to Product (i) not sold by or on behalf of Asahi (or any of its
Affiliates) in the Territory or (ii) outside of the Territory, in each case in
accordance with all Laws. Notwithstanding the foregoing, Auxilium shall be
responsible for handling any Product Complaints related to the Manufacture of
the Product, and Asahi shall refer all such Product Complaints to Auxilium.

5.7 Regulatory Authority Communications Received by a Party.

5.7.1 General. Each Party shall immediately inform the other Party of
notification of any action by, or notification or other information which it
receives (directly or indirectly) from, any Regulatory Authority whether inside
the Territory or outside the Territory which (i) raises any material concerns
regarding the safety or efficacy of the Product; (ii) indicates or suggests a
potential material liability of either Party to Third Parties in connection with
the Product; (iii) is reasonably likely to lead to a recall, market withdrawal
or market notification with respect to the Product whether inside the Territory
or outside the Territory; or (iv) relates to expedited and periodic reports of
adverse events with respect to the Product whether inside the Territory or
outside the Territory, or Product Complaints, and which

 

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may have an adverse impact on Regulatory Approval or the continued
Commercialization of the Product whether inside the Territory or outside the
Territory. Asahi shall be solely responsible for responding to any such
communications relating to the Product in the Field in the Territory and the
Parties shall reasonably cooperate with and assist each other in complying with
regulatory obligations, including by Auxilium providing to Asahi such
information and documentation which is in Auxilium’s possession as may be
necessary or reasonably helpful for Asahi to prepare a response to an inquiry
from a Regulatory Authority in the Territory with respect to the Product in the
Field. Each Party shall also promptly provide the other Party with a copy of all
correspondence received from a Regulatory Authority whether inside the Territory
or outside the Territory specifically regarding the matters referred to above.
Auxilium (or its designee) shall be solely responsible for any communications
relating to the Product outside of the Territory or outside the Field.

5.7.2 Disclosures. In addition to its obligations under this Agreement, each
Party shall disclose to the other Party (and in the case of Auxilium, Auxilium
shall have the right to subsequently disclose to its designees) the following
regulatory information:

(a) Regulatory Actions. All material information pertaining to actions taken by
Regulatory Authorities whether inside the Territory or outside the Territory
Controlled by such Party (including, in the case of Auxilium, and to the extent
accessible to Auxilium, its sublicensees), in connection with the Product in the
Field, including any notice, audit notice, notice of initiation by Regulatory
Authorities of investigations, inspections, detentions, seizures or injunctions
concerning the Product in the Field whether inside the Territory or outside the
Territory, notice of violation letter (i.e., an untitled letter), warning
letter, service of process or other inquiry; provided, however, that a Party
shall be entitled to redact those portions thereof to the extent not related to
the Product in the Field. Without limiting the generality of the foregoing, each
Party shall promptly, but in any event within two (2) business days, inform the
other Party of any inspections, proposed regulatory actions, investigations or
requests for information or a meeting by any Regulatory Authority with respect
to the Product in the Field whether inside the Territory or outside the
Territory.

(b) Regulatory Non-compliance. All information pertaining to notices from
Regulatory Authorities whether inside the Territory or outside the Territory
Controlled by such Party (including, in the case of Auxilium, and to the extent
accessible to Auxilium, its sublicensees) of non-compliance with Laws in
connection with the Product, including receipt of a warning letter or other
notice of alleged non-compliance from any Regulatory Authority relating to the
Product whether inside the Territory or outside the Territory; provided,
however, that a Party shall be entitled to redact those portions thereof to the
extent not related to the Product.

(c) Certain Activities Outside the Territory. Auxilium will provide reports of
safety information related to the Product arising from all non-clinical
toxicology studies (other than studies outside of the Field) and all clinical
studies initiated outside of the Territory by Auxilium (or its Affiliates or by
any Third Party on its or their behalf) related to the Product within forty
eight (48) hours in the case of safety related information, for clarity, solely

 

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to the extent such information is Controlled by Auxilium (and solely to the
extent Auxilium is permitted to disclose such information to Asahi pursuant to
Laws or otherwise). For clarity, the foregoing obligation shall not require
Auxilium to provide Asahi individual case report forms with respect to any given
adverse event unless required by Laws or Regulatory Authorities. Auxilium will
also provide Asahi with copies of all material regulatory filings made by
Auxilium related to the Product in the Field outside of the Territory that may
have a material adverse impact on the Development and/or Commercialization of
the Product in the Field in the Territory. Notwithstanding anything to the
contrary contained in this Section 5.7.2(c), Asahi shall only be entitled to
utilize any such data or other information provided pursuant to this
Section 5.7.2(c) to satisfy its pharmacovigilance and safety reporting
obligations hereunder in compliance with Laws (and for purposes of clarity, such
information shall not be utilized for any other purposes, including to broaden
the scope of any Regulatory Approval), and all such data and other information
shall be considered “Confidential Information” of Auxilium.

(d) BTC. Asahi hereby agrees and acknowledges that Auxilium shall have the right
(i) in connection with Section 5.1(c) of the BTC License Agreement, to provide
BTC with copies of all market research plans and research results, clinical
development results and similar items for the Product for the purposes of the
“JCC” (as such term is defined in the BTC License Agreement) and (ii) in
connection with Section 3.3(a) of the BTC License Agreement, to grant BTC a
right of reference with respect to “Remaining Indications” to the “Regulatory
Data” contained in “Regulatory Approvals” (as such terms are defined in the BTC
License Agreement) for the Product in the Field in the Territory.

5.8 Recall, Withdrawal, or Market Notification of Product.

5.8.1 Notification and Determination. In the event that any Governmental
Authority threatens or initiates any action to remove the Product from the
market in the Field whether inside the Territory or outside the Territory (in
whole or in part), the Party receiving notice thereof shall notify the other
Party of such communication immediately, but in no event later than one
(1)) business day, after receipt thereof. Notwithstanding the foregoing, in all
cases Asahi (acting as the holder of the Product Approval in the Territory)
shall determine whether to initiate any recall, withdrawal or market
notification of the Product in the Field in the Territory, and Auxilium, as,
between the Parties, holder of the Product Approval outside the Territory shall
determine whether to initiate any such recall, withdrawal or market notification
of the Product outside the Territory, including the scope of such recall or
withdrawal (e.g., a full or partial recall, or a temporary or permanent recall)
or market notification; provided, however, that before Asahi or Auxilium (as the
case may be) initiates a recall, withdrawal or market notification, the Parties
shall promptly meet and discuss in good faith the reasons therefor, provided
that such discussions shall not delay any action that Asahi or Auxilium (as the
case may be) reasonably believes has to be taken in relation to any recall,
withdrawal or market notification. In the event of any such recall, withdrawal
or market notification, Asahi or Auxilium (as the case may be), as the
distributor of the Product, shall determine the necessary actions to be taken,
and, shall implement such action, with the other Party providing reasonable
input (which the first Party shall in good faith consider and incorporate into
any recall, withdrawal or market notification strategy) and reasonable
assistance, to conduct such recall, withdrawal or market notification.

 

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Without limiting the foregoing, Auxilium shall have the right to propose that a
Product recall, withdrawal or market notification should be initiated by Asahi,
but Asahi, acting as the holder of the Product Approval in the Territory, shall
make the final decision as to whether or not the recall, withdrawal or market
notification will be initiated. Asahi shall at all times utilize a batch tracing
system which will enable the Parties to identify, on a prompt basis, customers
within the Territory who have been supplied with Product of any particular
batch, and to recall such Product from such customers as set forth in this
Section 5.8.1.

5.8.2 Cost Allocation. All direct costs and expenses associated with
implementing a recall, withdrawal or market notification with respect to the
Product in the Field in the Territory shall be allocated between Auxilium and
Asahi as follows:

(a) in the event, and to the extent, that the recall, withdrawal or market
notification arises as a result of a material breach of this Agreement by
Auxilium, including any Bulk Product Manufacturing breach, then Auxilium shall
bear the costs and expenses, including all internal and Out-of-Pocket Costs of
Asahi for implementing the recall, withdrawal or market notification (including
an appropriate credit to Asahi against the payments of the Supply Delivery Price
pursuant to Section 7.7.1 for any such recalled Product which Asahi has paid
for); and

(b) in the event, and to the extent, that the recall, withdrawal or market
notification arises out of the material breach of this Agreement by Asahi, then
Asahi shall bear the costs and expenses for implementing the recall, withdrawal
or market notification (and no credit will be given to Asahi against the
payments of the Supply Delivery Price pursuant to Section 7.7.1 for any such
recalled Product which Asahi has paid for); and

(c) in all other cases, all costs and expenses incurred by either Party for
implementing the recall, withdrawal or market notification shall be borne
equally by the Parties.

5.9 Regulatory Diligence.

5.9.1 Regulatory Approval in the Territory. Asahi shall (i) file an IND for the
Product for the indication of Dupuytren’s Contracture in the Territory no later
than the [**] anniversary of the Effective Date, (ii) use Commercially
Reasonable Efforts, to file a MAA for the Product for the indication of
Dupuytren’s Contracture in the Territory no later than the [**] anniversary of
the Effective Date and (iii) use Commercially Reasonable Efforts to obtain
Regulatory Approval for the Product for the indication of Dupuytren’s
Contracture in the Territory by the [**] anniversary of the Effective Date.
Without limitation of Auxilium’s remedies hereunder or at Law, should Asahi
determine it may not to be able to satisfy the foregoing obligations within the
period indicated after consultations with the Regulatory Authority in the
Territory or fail to satisfy the foregoing obligations within the period
indicated, Asahi shall promptly consult with the JSC regarding the reason for
such failure.

5.9.2 Asahi’s Determination Not to Proceed. Without limitation of Section 5.9.1,
in the event that Asahi determines at anytime during the Term that it is not
economically

 

 

** CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND WILL BE FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A
CONFIDENTIAL TREATMENT REQUEST.

 

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feasible to incur the costs necessary to obtain and maintain Regulatory Approval
for the Product for a given indication in the Field, Asahi shall promptly notify
Auxilium in writing of such determination and Auxilium shall have the right to
terminate this Agreement with respect to such indication(s); provided that, for
clarity, such notice shall not remedy any breach of this Agreement resulting
from Asahi’s failure to use Commercially Reasonable Efforts to satisfy its
regulatory-related diligence obligations with respect to the Product in the
Territory.

ARTICLE 6

COMMERCIALIZATION

6.1 Commercialization in the Field in the Territory. During the Term, Asahi
shall be, subject to Section 2.7.5, solely responsible for Commercializing the
Product in the Territory for use in the Field, which Commercialization shall be
in accordance with the Commercialization Plan and this Agreement. Asahi shall be
responsible for one hundred percent (100%) of the expenses (including
Pre-Marketing and other Commercialization expenses) incurred in connection with
the Commercialization of the Product in the Territory for use in the Field.
Without limiting the foregoing, Asahi shall use Commercially Reasonable Efforts
to Commercialize the Product for use in the Field in the Territory; provided
that Auxilium is using Commercially Reasonably Efforts to comply with its
obligations to supply Product in accordance with ARTICLE 7 of this Agreement.

6.2 Commercialization Plan.

6.2.1 Initial Commercialization Plan. On an annual basis, Asahi shall prepare a
commercialization plan with respect to the Commercialization of the Product in
the Field in the Territory pursuant to this Agreement (the “Commercialization
Plan”). The initial Commercialization Plan for the Product will be prepared by
Asahi (the “Initial Commercialization Plan”) at least eighteen (18) months prior
to the expected launch date of the Product in the Field in the Territory.

6.2.2 Updates to Commercialization Plan. On an annual basis no later than
November 30 of each year (except as set forth in Section 6.2.1), Asahi shall
create and submit to the JSC for its review and discussion the Commercialization
Plan for the following calendar year. The Commercialization Plan shall contain a
five (5) year rolling annual plan for the Commercialization of the Product in
the Territory for use in the Field. The first year of such plan (except the
initial Commercialization Plan as set forth in Section 6.2.1), shall constitute
the plan and budget for the first year and the remaining four (4) years shall be
for planning purposes only (provided that Asahi shall prepare such four (4) year
portion in accordance with its good faith anticipated activities). Upon review
and discussion by the JSC, Asahi shall finalize the Commercialization Plan for
the following calendar year. From time to time during a given calendar year,
Asahi may propose written updates to the Commercialization Plan for review and
discussion by the JSC. Asahi shall conduct all Commercialization of the Product
in accordance with the Commercialization Plan and this Agreement.

 

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6.2.3 Contents of Commercialization Plan. Each annual Commercialization Plan
shall include, among other things, the following items in connection with the
Commercialization of the Product in the Territory for use in the Field:

(a) a description of the short-and long-term vision for the Product and Product
positioning; a situation analysis; a Strengths, Weaknesses, Opportunities and
Threats (SWOT) analysis; and a description of critical issues, strategic
imperatives and tactics by strategic imperative with timelines, all of the
foregoing from each of the following perspectives: marketing, sales,
reimbursement and distribution;

(b) a summary of the minimum level of sales efforts to be dedicated to the
promotion of the Product, including the anticipated number of details and
targets of such details;

(c) a description of any Promotional Materials and campaigns, including
publication plans, to be used, subject to Section 6.7.1, in connection with the
promotion of the Product in the Field; and

(d) a comprehensive budget for the Commercialization activities (including
advertisement, promotion, medical education, public relations, life cycle
management and publication costs) for the applicable period (the
“Commercialization Budget”).

6.3 Asahi’s Performance.

6.3.1 Specific Commercialization Obligations. Without limiting the generality of
the provisions of Section 6.1, in connection with the Commercialization of the
Product in the Territory for use in the Field by Asahi hereunder:

(a) Asahi shall be solely responsible for (i) receiving, accepting and filling
orders for the Product in the Field in the Territory, (ii) handling all returns
of the Product in the Field in the Territory, (iii) controlling invoicing, order
processing and collection of accounts receivable for the sales of the Product in
the Field in the Territory, and (iv) distributing and managing inventory of the
Product in the Field in the Territory.

(b) Asahi shall use Commercially Reasonable Efforts to launch the Product in the
Territory after all applicable Regulatory Approvals for the Product have been
obtained. Asahi shall (i) launch the Product in the Territory within sixty
(60) days after the receipt of Product Approval (or, to the extent Pricing
Approval is required, then within sixty (60) days after receipt of Pricing
Approval) and (ii) ensure that once launched the Product remains commercially
available throughout the Territory for the duration of the Royalty Term;
provided that Auxilium complies with its obligations to supply Product in
accordance with ARTICLE 7 of this Agreement.

(c) Asahi shall [**] from the Effective Date through [**].

(d) On an [**], Asahi shall [**]:

 

 

** CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND WILL BE FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A
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(i) with respect to [**] of such Product [**]:

(1) [**] during [**]; and

(2) [**] during [**]; and

(ii) with respect to [**] of such Product [**]:

(1) [**] during [**]; and

(2) [**] during [**].

(e) Notwithstanding the foregoing [**] expenditure requirements, such
requirements are subject to the following: (i) such expenditures may be subject
to limitations, restrictions or regulations by a Governmental Authority, in
which case Asahi’s obligations under Sections 6.3.1(c) and (d) shall be tolled
for so long as such limitations, restrictions or regulations prohibit the
expenditure of such Advertising and Promoting Costs, and (ii) Asahi shall be
obligated to incur at least one-third (1/3) of the amounts indicated in Sections
6.3.1(c) and (d) through Out-of-Pocket Costs.

6.3.2 Commercialization Plan. Without limiting obligations of Asahi under
Sections 6.3.1, Asahi shall use Commercially Reasonable Efforts to carry out the
Commercialization activities in the Commercialization Plan in accordance with
the time frames set forth in the Commercialization Plan.

6.3.3 Diligence Failures. If Asahi fails to satisfy the requirements set forth
in Section 6.3.1 with respect to the Commercialization of the Product in the
Field in the Territory or Auxilium believes that Asahi is not using Commercially
Reasonable Efforts with regards to the Commercialization of the Product in the
Territory in accordance with Section 6.1, then Auxilium shall raise such issue
at the JSC and the Parties shall discuss causes underlying such issue and any
possible resolution; provided that, for clarity, such discussion shall not
remedy any breach of Section 6.1 or 6.3.1.

6.4 Reports. Asahi shall update the JSC no less than twice per calendar year
regarding its significant Commercialization activities involving the Product.

6.5 Compliance. Asahi shall, in Commercializing the Product, comply with all
Laws, including MHLW requirements, the U.S. Foreign Corrupt Practices Act, as
well as all applicable Regulatory Approvals for the Product. In addition, Asahi
shall not use in any capacity, in connection with its Commercialization (or
Development) of the Product hereunder, any Person who has been debarred pursuant
to Section 306 of the FD&C Act (or similar Laws outside of the U.S.), or who is
the subject of a conviction described in such section, and Asahi shall inform
Auxilium in writing immediately if it or any Person who is performing services
for Asahi hereunder is debarred or is the subject of a conviction described in
Section 306 (or similar Laws outside of the U.S.), or if any action, suit,
claim, investigation or legal administrative proceeding is pending or, to
Asahi’s knowledge, is threatened, relating to the debarment of Asahi

 

 

** CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND WILL BE FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A
CONFIDENTIAL TREATMENT REQUEST.

 

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or any Person used in any capacity by Asahi in connection with its
Commercialization (or Development) of the Product hereunder.

6.6 Provisions applicable to Sales Representatives (and Wholesalers and
Distributors) and/or Medical Science Liaisons.

6.6.1 General. Asahi shall, and shall cause its Sales Representatives (and
wholesalers and distributors) to, conduct all details with respect to the
Product and perform its other Commercialization activities under this Agreement
in the Territory in adherence with Laws and Regulatory Approvals, the Product
package inserts, labeling and packaging, and any professional requirements,
including those relating to promotion of pharmaceutical products, consumer
protection, fraud and abuse and false claims.

6.6.2 Compensation. Asahi shall be solely responsible for (i) any compensation
that is payable to its Sales Representatives (including, without limitation,
with respect to any employee benefit plan), (ii) the payment or withholding of
any contributions, payroll taxes, or any other payroll-related item by or on
behalf of Asahi (or its Affiliates) or any of its Sales Representatives or
Medical Science Liaisons, and (iii) any failure of Asahi (or its Affiliates) to
withhold or pay required taxes or failure to file required forms with regard to
compensation and benefits paid or extended by Asahi (or its Affiliates) to any
of its Sales Representatives or Medical Science Liaisons. Asahi acknowledges and
agrees that Auxilium does not and will not maintain or procure any worker’s
compensation, healthcare, or other insurance for or on behalf of the Asahi’s
Sales Representatives, all of which shall be Asahi’s sole responsibility.

6.6.3 Training. Asahi shall be solely responsible for training, and all costs
associated with such training, its Sales Representatives and Medical Science
Liaisons using Commercially Reasonable Efforts and in all cases in accordance
with Laws, including timely reporting of any adverse events with respect to the
Product.

6.6.4 Acts of Sales Representatives (and Wholesalers and Distributors) and
Medical Science Liaisons. For the avoidance of doubt, Asahi shall be solely
responsible for any act or omission of its Sales Representatives (and
wholesalers and distributors) and Medical Science Liaisons while performing any
Commercialization activities (including, without limitation, any proceedings or
claims for benefits that any Sales Representative or Medical Science Liaison may
make under or with respect to any Auxilium benefit plan). Asahi shall be solely
responsible and liable for all probationary and termination actions taken by it
with respect to its Sales Representatives and Medical Science Liaisons, as well
as for the formulation, content and dissemination (including content) of all
employment policies and rules (including written probationary and termination
policies) applicable to its employees and contractors.

6.7 Promotional Materials.

6.7.1 Creation of Promotional Materials. Asahi will create and develop
Promotional Materials for the Territory in accordance with the Regulatory
Approvals and Laws. Prior to the First Commercial Sale of the Product, Asahi
shall provide samples thereof to Auxilium for its review and comment (and Asahi
shall consider any such comments in good

 

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faith) prior to distributing such Promotional Materials (for clarity, such
samples need only be submitted for each different type of Promotional Material,
as opposed to each item of Promotional Material needing to be submitted). Any
new samples of Promotional Material for the Territory made thereafter will be
provided to Auxilium for its review and comment (and Asahi shall consider any
such comments in good faith). To the extent Asahi includes any Auxilium
trademarks in the Promotional Materials for the Territory, Asahi shall comply
with Auxilium’s then current guidelines for trademark usage. Notwithstanding
anything to the contrary contained herein, Asahi shall have final
decision-making authority with respect to the content of all Promotional
Materials for the Territory.

6.7.2 Inclusion of Logos on Packaging and Promotional Materials. To the extent
permitted or required by Laws and subject to obtaining necessary Regulatory
Authority approvals, with respect to Product to be sold by or on behalf of Asahi
(or any of its Affiliates) in the Territory, the Auxilium housemark and the
Asahi housemark shall be given equal prominence on all package inserts utilized
by Asahi. Auxilium hereby grants to Asahi a non-exclusive, royalty-free right
and license during the Term to utilize the Auxilium housemark (including all
trademarks, names and logos) in order to perform the Commercialization
activities required to be performed by Asahi hereunder in accordance with the
terms of this Agreement. Asahi hereby grants to Auxilium a non-exclusive,
royalty-free right and license to utilize the Asahi housemark (including all
trademarks, names and logos) in order to perform the Manufacturing and other
activities to be performed by or on behalf of Auxilium under the terms of this
Agreement. Each Party shall only use the housemark of the other Party with the
necessary trademark designations, and each Party shall use the other Party’s
housemarks in a manner that does not derogate from such Party’s rights in its
trademarks, names and logos. Each Party shall submit representative samples of
its use of the other Party’s housemark for review by the JSC. Each Party will
take no action that will interfere with or diminish the other’s rights in its
respective trademarks, names and logos, and if a Party reasonably believes that
the use of its trademarks, names and logos by the other Party hereunder is
interfering with or diminishing its rights, such Party shall notify the other
Party thereof in writing and such other Party shall promptly cease use of such
trademarks, names or logos in such manner. Each Party agrees that all use of the
other Party’s trademarks, names and logos will inure to the benefit of such
other Party, including all goodwill in connection therewith.

6.7.3 Asahi Ownership of Promotional Materials. Subject to ARTICLE 14, Asahi
shall own all right, title and interest in and to any Promotional Materials
created by Asahi hereunder relating to the Product in the Field in the Territory
including copyrights, but excluding trademarks (including the Product
Trademark), names, logos and other marks owned by or on behalf of Auxilium or
its Affiliates.

6.7.4 Use of Promotional Materials Exclusively for the Product. The Promotional
Materials, and any aspects of those uniquely tied to the Product, shall be used
by Asahi, its Affiliates, wholesalers and distributors in connection with the
Commercialization of the Product in the Field in the Territory in accordance
with the terms of this Agreement, and Asahi shall not use, or allow any other
Person to use, any such Promotional Materials except in accordance with this
Agreement. For the avoidance of doubt, promotional materials which

 

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contain both the Product and any other product that Asahi promotes in the
Territory may also be used in connection with commercialization of such other
product in the Territory, subject to compliance with this Agreement with respect
to such use in connection with the Product.

6.8 Product Trademarks and Product Trade Dress.

6.8.1 Product Trademark. Asahi shall use Commercially Reasonable Efforts to
Commercialize the Product in the Field in the Territory under the trademark
XIAFLEX® (and logo) (as displayed on Schedule 6.8.1) and under the trade dress
or such other trademark or trade dress as the Parties mutually agree upon (in
each such Party’s sole discretion), including, if applicable, any alternative
trademark and any alternative trade dress pursuant to this Section 6.8.1 (the
“Product Trademark” and the “Product Trade Dress”, respectively).
Notwithstanding the foregoing, in the event that Asahi believes that the use or
registration of the Product Trademark or the use of the Product Trade Dress in
the Territory would be inappropriate due to linguistic or cultural
particularities or against the Laws of the Territory, or in conflict with any
Third Party’s intellectual property rights in the Territory, based on a review
of market research, regulatory research, legal searches, investigation results,
and any other relevant information that may have been collected by either Party
that is relevant to the clearance for use and registration of a trademark or for
use and registration of a trade dress, Asahi shall present such concern to
Auxilium, and Asahi may propose an alternative trademark and trade dress to
Auxilium for use and registration in the Territory; provided that, Auxilium
shall have the right to approve the Product Trademark and the Product Trade
Dress to be used in the Territory, such approval not to be unreasonably
withheld. Auxilium shall bear all costs relating to the creation, legal
clearance, filing, registration, and maintenance of any alternative trademark
and trade dress. Asahi shall not employ any such alternative trademarks or trade
dress without obtaining Auxilium’s prior approval.

6.8.2 Use and Ownership of Product Trademarks and Product Trade Dress. All uses
of the Product Trademark and Product Trade Dress by Asahi (and its Affiliates)
to identify and/or in connection with the Commercialization of the Product in
the Field in the Territory shall be in accordance with Regulatory Approvals and
all Laws and shall be subject to the approval of Auxilium in its reasonable
discretion. Asahi (and its Affiliates) shall only use the Product Trademark and
Product Trade Dress pursuant to the terms of this Agreement to identify and in
connection with the Commercialization of the Product in the Territory for use in
the Field, and Asahi shall not (and shall cause its Affiliates not to) use such
Product Trademark or Product Trade Dress to identify, or subject to
Section 6.7.4 in connection with the marketing of any other products. Auxilium
shall own and retain all rights to the Product Trademark and Product Trade Dress
(in each case, together with all goodwill associated therewith throughout the
Territory), and Asahi shall assign (and shall cause its Affiliates to assign),
and hereby does assign to Auxilium, all of its right, title and interest in and
to such Product Trademark and Product Trade Dress, if Asahi filed and registered
any such Product Trademark or Product Trade Dress at the request of Auxilium,
then Auxilium shall reimburse all reasonable costs relating to the filing,
registration, and maintenance of such Product Trademark or Product Trade Dress
within forty-five (45) days of receipt of an invoice. Auxilium shall also own
rights to any Internet domain names incorporating the Product Trademark or any
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its URL address or any part of such address; and Asahi shall not establish any
Internet domain name or URL incorporating the Product Trademark without the
prior written consent of Auxilium; provided that Asahi shall be responsible for
all costs incurred by Auxilium with respect to such Internet domain names or
URLs to the extent used for the Commercialization of the Product in the
Territory. The Parties hereby agree and acknowledge that nothing contained
herein shall limit Auxilium’s right to use the Product Trademark or Product
Trade Dress outside the Territory.

6.8.3 Maintenance of Product Trademark and Product Trade Dress. Auxilium shall
use Commercially Reasonable Efforts to establish, maintain and enforce the
Product Trademark and Product Trade Dress in the Territory and shall bear all
costs and expenses relating thereto.

6.8.4 Infringement of the Product Trademark or Product Trade Dress. In the event
that either Party becomes aware of any infringement of the Product Trademark or
Product Trade Dress by a Third Party in the Territory, such Party shall promptly
notify the other Party and the Parties shall consult with each other in good
faith with respect thereto. Auxilium shall, at its sole discretion, have the
first right to determine how to proceed with respect to such infringement,
including by the institution of legal proceedings against such Third Party, in
which case all costs and awards relating to such legal proceedings will be borne
exclusively by Auxilium. If requested to do so, Asahi shall reasonably cooperate
with any and all action initiated by Auxilium, including by joining legal
proceedings as a party at Auxilium’s reasonable expense. If Auxilium elects not
to take action or initiate legal proceedings against an instance of infringement
to the Product Trademark or Product Trade Dress in the Territory, Asahi shall
have the right at its own and sole discretion to take action or initiate legal
proceedings against such instance of infringement to the Product Trademark or
Product Trade Dress in the Territory, in which case all costs and awards
relating to such legal proceeding will be borne exclusively by Asahi. If
requested to do so, Auxilium shall reasonably cooperate with any and all action
initiated by Asahi in connection therewith, including, by joining legal
proceedings as a party at Asahi’s reasonable expense.

6.8.5 Trademark Acknowledgments. Each Party acknowledges the sole ownership by
the other Party and validity of all copyright, trademarks, trade dress, logos
and slogans owned by the other Party and used or intended to be used in
connection with the Commercialization of the Product for the Field in the
Territory. Each Party agrees that it will not at any time during or after the
Term assert or claim any interest in, or do anything which may adversely affect
the validity or enforceability of, any copyright, trademark, trade dress, logo
or slogan owned by the other Party and used or intended to be used on or in
connection with the marketing or sale of the Product. Neither Party will
register, seek to register or cause to be registered any copyrights, trademarks,
trade dress, logos or slogans owned by the other Party and used or intended to
be used on or in connection with the marketing or sale of the Product or any
variation thereof, under any Laws providing for registration of copyrights,
trademarks, service marks, trade names or fictitious names (including as an
Internet domain name) or similar Laws, without the other Party’s prior written
consent (in its sole discretion).

 

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6.9 Commercialization Data.

6.9.1 Asahi shall own all marketing and sales data and information resulting
from its Commercialization of the Product in the Field in the Territory (the
“Commercialization Data”). Upon request from Auxilium, Asahi shall provide to
Auxilium a copy of such of the Commercialization Data as constitutes promotional
materials, marketing strategies and market research data (“Promotional
Commercialization Data”). Auxilium shall have the right and license to use all
such Promotional Commercialization Data (and the right to grant its Affiliates
and Third Parties the right to use such Promotional Commercialization Data) in
connection with its commercialization of the Product in the Field outside the
Territory, which right and license shall survive the expiration or termination
of this Agreement by Auxilium pursuant to Sections 13.2, 13.3 or 13.4.
Notwithstanding the foregoing, Asahi’s obligation to provide Promotional
Commercialization Data and Auxilium’s right to use such data shall be performed,
or exercised, respectively, in all instances in accordance with all applicable
Laws, including, without limiting the foregoing, any data privacy Laws.

6.9.2 Upon request from Asahi, Auxilium shall provide to Asahi a copy of
marketing and sales data and information resulting from its and its Affiliates’
and its sublicensees’ (with respect to any sublicensees’ marketing and sales
data and information, to the extent that such materials are accessible to and
Controlled by Auxilium) Commercialization of the Product in the Field outside
the Territory as constitutes promotional materials, marketing strategies and
market research data. Asahi shall have the right and license to use all such
promotional commercialization data (and the right to grant its Affiliates the
right to use such promotional commercialization data) in connection with its
Commercialization of the Product in the Field in the Territory, which right and
license shall survive the expiration of this Agreement. Notwithstanding the
foregoing, Auxilium’s obligation to provide promotional commercialization data
and Asahi’s right to use such data shall be performed, or exercised,
respectively, in all instances in accordance with all applicable Laws,
including, without limiting the foregoing, any data privacy Laws.

6.10 Global Branding Strategy. Auxilium shall have the right, from time to time
during the Term, to implement (and thereafter modify and update) a global
branding strategy, including global messaging, for the Product for use in the
Field throughout the world (the “Global Branding Strategy”). To the extent
Auxilium determines to utilize such Global Branding Strategy, Asahi shall use
Commercially Reasonable Efforts to adhere to the Global Branding Strategy in its
Commercialization of the Product, including with respect to any Promotional
Materials; provided that, in the event that Asahi believes that the application
of the Global Branding Strategy in the Territory would be inappropriate whether
because of linguistic or cultural particularities, because it is against the
Laws of the Territory or because Asahi reasonably determines it would be
inconsistent with Asahi’s obligation to use Commercially Reasonable Efforts to
Commercialize the Product in the Territory, Asahi shall present such concern to
Auxilium, and the Parties shall discuss whether appropriate revisions to the
Global Branding Strategy may make it appropriate for use in the Territory.
Nothing in this Section shall be construed to derogate from Asahi’s ultimate
right and responsibility to use Commercially

 

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Reasonable Efforts to Commercialize the Product in the Territory in accordance
with the terms and conditions of this Agreement.

ARTICLE 7

SUPPLY

7.1 General. Auxilium shall use Commercially Reasonable Efforts to Manufacture
(or have Manufactured) and supply all reasonable quantities of the Bulk Product
for clinical and commercial use in the Field in the Territory, in each case in
accordance with the terms of this ARTICLE 7 and the applicable Quality
Agreements for the Product and Drug Substance.

7.2 Development Supply. Auxilium shall use Commercially Reasonable Efforts to
Manufacture, or arrange for a Third Party to Manufacture, and supply all of
Asahi’s requirements of the Bulk Product for Territory Development Activities to
be performed by it in accordance with the Development Plan, which supply shall
be in accordance with the terms of this ARTICLE 7 and the applicable Quality
Agreements for the Product and Drug Substance. The Bulk Product shall be ordered
and supplied for Territory Development Activities in accordance with the
procedures set forth in this ARTICLE 7 (provided, however, that orders of
Product for Development purposes may be in Units of Bulk Product as opposed to
full lots); provided that, the Parties shall agree as to an appropriate
forecasting mechanism for Development supply of Product (either through
including such forecasts in the Development Plan or some other mechanism)
reasonably in advance of any orders therefor from Asahi. The Bulk Product (as
well as any placebo requested by Asahi) supplied for Territory Development
Activities shall be invoiced at [**] (and placebo, if applicable) [**] (the
“Development Supply Price”).

7.3 Commercial Supply. Auxilium shall use Commercially Reasonable Efforts to
Manufacture, or arrange for a Third Party to Manufacture, and supply all of
Asahi’s requirements of the Bulk Product for commercial sale in the Field in the
Territory pursuant to this Agreement, which supply shall be in accordance with
the terms of this ARTICLE 7 and the applicable Quality Agreements for the
Product and Drug Substance.

7.4 Exclusivity. Subject to the provisions of this Agreement, Asahi shall
purchase all of its requirements of the Product exclusively from Auxilium and
Auxilium shall supply the Product for sale in the Field in the Territory
exclusively to Asahi pursuant to the terms of this ARTICLE 7.

7.5 Packaging and Labeling; Certain Other Manufacturing Activities.
Notwithstanding anything to the contrary contained herein, in accordance with
the procedures set forth in the Quality Agreements, Asahi or its designated
Third Party shall be responsible (at its sole cost and expense) for all final
product labeling and packaging (whether in commercial or clinical packaging
presentation), including insertion of materials such as applicators, transfer
needles, syringes, patient inserts, patient medication guides, professional
inserts and any other written, printed or graphic materials accompanying the
Product, considered to be part of the Finished Product, and handling, storage,
quality control, quality assurance, and the testing and release aspects of
Territory-Specific Analytical Release Testing and Characterization and related
activities, of the Finished Product in connection with the foregoing
(collectively, “Packaging

 

 

** CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND WILL BE FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A
CONFIDENTIAL TREATMENT REQUEST.

 

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and Labeling”). Asahi or its designated Third Party shall ensure that all such
Packaging and Labeling shall comply with Laws, GMPs and the Regulatory Approvals
for the Product in the Territory, as well as the Product Specifications for the
Product; provided that, Auxilium shall have the right, but not the obligation,
to review any single or collective element of Packaging and Labeling at any time
and Asahi shall give good faith consideration to any comments received from
Auxilium. Asahi or its designated Third Party shall also be responsible for
performing the testing and release aspects of Territory-Specific Analytical
Release Testing and Characterization of the Finished Product and Auxilium shall
provide assistance to Asahi in connection therewith (including, to the extent
possible, granting Asahi reasonable access to Auxilium (and its Affiliates’,
sublicensees’ and subcontractors’) facilities as is necessary or useful for
Asahi to access applicable records and documents for performing the testing and
release aspects of Territory-Specific Analytical Release Testing and
Characterization obligations), all as more particularly set forth in the Quality
Agreements. To the extent that a Third Party is involved in Packaging and
Labeling or other activities described in this Section 7.5, Asahi shall be
wholly responsible for, and bear one hundred percent (100%) of the costs related
to, qualifying such Third Party to perform such activities.

7.6 Forecasting and Ordering.

7.6.1 Forecast. Asahi shall furnish the first forecast under this Section 7.6
(the “Initial Forecast”) no less than twelve (12) months before the anticipated
First Commercial Sale of the Product under this Agreement (the “Initial Forecast
Date”). On the Initial Forecast Date and on the first day of each calendar
quarter thereafter (each a “Forecast Date”), Asahi shall furnish Auxilium a
forecast of quantities of Bulk Product that Asahi expects to be delivered on a
monthly basis in each of the six (6) calendar quarters beginning, respectively,
six (6) months, nine (9) months, twelve (12) months, fifteen (15) months,
eighteen (18) months and twenty-one (21) months from the Forecast Date (each a
“Forecast”). The Forecast for deliveries occurring in the calendar quarter
beginning six (6) months after the Forecast Date shall provide for quantities no
less than seventy-five percent (75%), and no more than one hundred twenty five
percent (125%), of the quantities contained in the Forecast for such quarter
given one quarter earlier. The Forecast for deliveries occurring in the calendar
quarters beginning nine (9) months, twelve (12) months, fifteen (15) months,
eighteen (18) months and twenty-one (21) months after the Forecast Date shall be
non-binding (see Schedule 7.6 for Forecast methodology). All Forecasts shall
(i) be specified for Bulk Product on a monthly basis and (ii) be for full
production lots (i.e., as of the Effective Date, between [**] and [**] Units of
Bulk Product for full batches of the [**]L Manufacturing environment or, as of
the Effective Date, between [**] and [**] Units of Bulk Product for full batches
of the [**]L Manufacturing environment, as applicable). Notwithstanding the
immediately preceding sentence and subject to Section 7.14, the Parties
acknowledge and agree that the Units of Bulk Product per full production lot may
vary in the future based on changes in yield; provided that, in the event of any
such changes, Auxilium shall notify Asahi of such changes from time to time and
such notification shall be deemed an amendment to the immediately preceding
sentence in satisfaction of Section 16.1 hereof. The Parties recognize that the
foregoing Forecasts may change over time based on commercial and regulatory
developments and other factors, and Asahi shall be liable to reimburse Auxilium
for Out-of-Pocket Costs incurred by Auxilium as a result of any such changes
with respect to the

 

 

** CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND WILL BE FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A
CONFIDENTIAL TREATMENT REQUEST.

 

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first three (3) quarters of the then current Forecast; provided, that, to the
extent practicable, Auxilium shall use Commercially Reasonable Efforts to reduce
such reimbursement exposure to Asahi under the terms hereof incident to changes
in such Forecast; provided, however, that, notwithstanding the foregoing, in all
cases, Auxilium shall not be in breach of this Agreement for any failure to
reduce such reimbursement exposure and Asahi shall be responsible for purchasing
any and all Bulk Product in accordance with the provisions of this Agreement.

7.6.2 Long Range Capacity Planning; Supply Chain Improvements. Concurrent with
the Initial Forecast, for the purposes of discussion and planning of
manufacturing capacity Asahi shall provide a non-binding forecast of Bulk
Product needs for the twenty-four (24) months following that specified in the
then current Forecast as described in Section 7.6.1 (“Long Range Forecast”). In
the event Auxilium projects a shortfall in capacity based on the Long Range
Forecast, the Parties will jointly discuss alternatives to increase such
capacity, and the Parties shall promptly meet to discuss a reasonable manner of
proceeding. Unless otherwise agreed to by the Parties during the Term, the Long
Range Forecast shall be updated by Asahi and reviewed with Auxilium on an annual
basis.

7.6.3 Orders. On each Forecast Date, in addition to the Forecast specified in
Section 7.6.1, Asahi shall for the Term deliver to Auxilium a firm purchase
order or orders specifying the quantities of the Bulk Product for delivery on a
monthly basis in the calendar quarter beginning three (3) months after the
Forecast Date, as well as the location of delivery and desired delivery date for
each delivery (each a “Purchase Order”). Each such Purchase Order shall provide
for aggregate quantities for delivery in such quarter that are no less than
seventy-five percent (75%), and no more than one hundred twenty five percent
(125%), of the quantities contained in the Forecast for such quarter given one
(1) quarter earlier than the Forecast Date on which such Purchase Order is
placed (see Schedule 7.6 for Forecast methodology). Unless agreed separately
between the Parties, each Purchase Order shall specify no more than one
(1) delivery date for the Bulk Product in each calendar month and not less than
ninety (90) days from the Purchase Order Acceptance Date.

7.6.4 Receipt and Acceptance. Asahi shall purchase all Bulk Product ordered and
specified in a Purchase Order. Purchase Orders may be delivered electronically
or by other means to such location as Auxilium shall designate and shall be in a
form reasonably acceptable to Auxilium. Auxilium shall provide written
confirmation of such Purchase Order to Asahi within ten (10) business days of
receipt of such Purchase Order (the date of such written confirmation, the
“Purchase Order Acceptance Date”). Auxilium shall accept any Purchase Order for
Bulk Product that does not exceed the applicable maximum provided for in the
most recent Forecast. If a Purchase Order, whether or not accepted, exceeds such
applicable maximum, the Parties shall seek to agree on a reasonable manner of
proceeding. Auxilium shall use reasonable efforts to supply any amount of Bulk
Product that Asahi orders pursuant to Section 7.6.3 in excess of the maximum
amount deliverable under the ordering and forecasting procedures specified
herein, but in any event, such efforts shall not be construed as an obligation
hereunder and in no event shall Auxilium be deemed in breach of this Agreement
by means of a failure to provide Bulk Product in excess of the Forecasted
amount. Nothing in any such Purchase Order or written acceptance shall supersede
the terms and conditions of this Agreement

 

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or the Quality Agreements, and in the event of a conflict between the terms such
Purchase Order (or written acceptance, as applicable) and the terms of this
Agreement (or the Quality Agreements, as applicable), the terms of this
Agreement (or the Quality Agreements, as applicable) shall control. All Purchase
Orders, written acceptances of Purchase Orders and other notices contemplated
under this Section 7.6 shall be sent to the attention of such persons as each
Party may identify to the other in writing from time to time in accordance with
Section 16.3. Notwithstanding any term in Section 7.6.3 or this Section 7.6.4 or
elsewhere herein, and notwithstanding any Forecasts given by Asahi, Asahi shall
have the right to reasonably amend its Forecasts and Purchase Orders in the
event of unexpected delays in receipt of Regulatory Approvals.

7.7 Pricing, Invoicing, and Manufacturing Standard Cost Audit.

7.7.1 Supply Delivery Price. The consideration payable by Asahi to Auxilium for
the supply of Bulk Product for commercial sale and for the other rights granted
to Asahi under this Agreement is contained in Section 8.3 as part of the Royalty
Payments. As an advance against the Royalty Payments, Asahi shall make initial
payments (“Supply Delivery Price”) which shall be calculated by [**]. The Supply
Delivery Price will be credited against future Royalty Payments as provided in
Section 8.4.

7.7.2 Invoice. Each delivery of Bulk Product hereunder shall be accompanied by
an invoice setting forth the Development Supply Price or the Supply Delivery
Price, as applicable, for such delivery. Auxilium shall invoice such Bulk
Product at the Development Supply Price or the Supply Delivery Price, as
applicable, and Asahi will make payment against each invoice within fifty
(50) days after delivery of invoice to Asahi, which invoice will accompany the
Bulk Product covered by such invoice and delivered in accordance with
Section 7.8.

7.7.3 Manufacturing Standard Cost Audit. Asahi shall have the right to audit the
calculation of Auxilium’s prevailing Manufacturing Standard Cost of the Bulk
Product. Such audit shall be carried out in the same manner as the audit
provisions of Section 8.11 which shall apply mutatis mutandis to both Parties to
facilitate such right of audit.

7.7.4 Royalty Rate and Supply Price Reduction. In the event that Asahi
reasonably determines at anytime during the Term that any significant factor
underlying Commercialization of the Product in the Field in the Territory has
fundamentally changed in a manner that could not have been foreseen as of the
Effective Date, so as to make it economically infeasible to incur the costs
necessary to obtain and maintain Regulatory Approval for the Product for a given
indication in the Field, then Asahi shall have the right to raise such concern
at the next scheduled meeting of the JSC and the Parties shall discuss such
fundamental changes and whether a reduction in the Supply Delivery Price or the
Royalty Rate is appropriate; provided that, for clarity, nothing herein shall in
any way obligate Auxilium to reduce the Supply Delivery Price or the Royalty
Rate.

 

 

** CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND WILL BE FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A
CONFIDENTIAL TREATMENT REQUEST.

 

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7.8 Shipping and Delivery.

7.8.1 Delivery. Auxilium shall deliver (or have delivered) to Asahi in
accordance with this Section 7.8 the quantity of the Bulk Product specified in
each accepted Purchase Order by the respective delivery date set forth in such
Purchase Order or otherwise as agreed to by the Parties. Notwithstanding
anything to the contrary contained herein, (i) Auxilium will notify Asahi of the
anticipated FCA (Auxilium’s or its designee’s site) date of delivery at least
five (5) days prior to such FCA (Auxilium’s or its designee’s site) date, which
FCA (Auxilium’s or its designee’s site) date may occur as many as seven (7) days
prior to or seven (7) days after the delivery date set forth in the Purchase
Order, and such delivery shall be deemed to have been delivered on a timely
basis hereunder, and (ii) in order to allow for Bulk Product Manufacturing
variances, Auxilium shall be entitled to deliver quantities of Bulk Product as
much as ten percent (10%) above or as little as ten percent (10%) below the
amount of the Bulk Product specified by Asahi in the applicable Purchase Order,
provided however that the aggregate difference in any twelve (12) month period
does not exceed ten percent (10%) in the aggregate for all such Bulk Product
ordered for such period and such delivery shall be deemed to have been delivered
in satisfaction of Auxilium’s obligations hereunder. Asahi shall purchase all
such Bulk Product so delivered.

7.8.2 Delivery Terms. Bulk Product shall be supplied to Asahi FCA (Auxilium’s or
its designee’s site). Delivery shall occur, and title and risk of loss will pass
to Asahi, when each order of the Product is placed at the disposal of Asahi at
such Facility. The Bulk Product shall be shipped at Asahi’s expense via a
carrier identified by Asahi in the applicable Purchase Order; provided, that in
the event that Asahi fails to identify a carrier, Auxilium may choose a carrier
at its own reasonable discretion.

7.8.3 Remainder of Shelf Life. Bulk Product shall be delivered by Auxilium to
Asahi within ninety-five (95) days of the date of manufacture (i.e., filling and
lyophilization of Drug Substance) of such Bulk Product. In the event Auxilium
wishes to deliver Bulk Product to Asahi later than ninety-five (95) days after
the date of manufacture (i.e., filling and lyophilization of Drug Substance) of
such Bulk Product, Auxilium may only do so with the prior written consent of
Asahi.

7.8.4 Retention. Unless the Parties agree otherwise, Auxilium will maintain
analytical samples of each Bulk Product in storage for a time period based upon
Auxilium’s sample retention policy.

7.9 Quality and Compliance.

7.9.1 Quality Agreement. The Quality Agreements will set forth the Parties’
quality and compliance obligations with respect to Manufacture of the Product,
and Auxilium’s quality and compliance obligations with respect to Manufacture of
the Drug Substance used in the Product. Asahi and Auxilium agree to comply with
the requirements and provisions set forth in the Quality Agreements. The Quality
Agreements will set forth in greater detail many of the responsibilities and
obligations set forth herein. In the event of a conflict between the terms of
the Quality Agreements and the terms of this Agreement, the terms of this
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prevail. The Parties shall execute the Quality Agreements within one-hundred
eighty (180) days of the Effective Date, or such other time-frame as otherwise
agreed between the Parties. To the extent required by Laws, in the event that
Auxilium has a Third Party Manufacture Drug Substance or Product, Auxilium shall
cause such Third Party to execute a quality agreement among Auxilium and Asahi
detailing quality and compliance obligations of such Third Party with respect to
Manufacture of the Drug Substance or the Product within one-hundred eighty
(180) days of the Effective Date, or such other time-frame as otherwise agreed
between the Parties, which in the event of a conflict between such Quality
Agreement and the terms of this Agreement, the terms of this Agreement shall
prevail.

7.9.2 Notice of Non-Conformance.

(a) Auxilium shall supply to Asahi the applicable batch number for the Bulk
Product delivered as well as such other information as the Parties may set forth
in the Quality Agreements with respect to the Manufacture of the Product (a
“Manufacturing Certificate of Analysis”) for all Product shipped to Asahi
hereunder. Asahi shall promptly on receipt of each shipment of Bulk Product
hereunder inspect, or cause to have inspected, each shipment of the Product for
any damage, defect or shortage and within a reasonable period of time give
Auxilium written notice of any such damaged, defective or short shipment (a
“Notice of Non-Conformance”).

(b) Latent Defects shall be communicated to Auxilium, together with appropriate
detail, via a Notice of Non-Conformance, without undue delay after such Latent
Defect is first discovered by Asahi (or Asahi otherwise is notified of such
Latent Defect), but in all cases within five (5) business days of the date on
which such Latent Defect was first discovered by Asahi or was notified to Asahi
by the relevant Person discovering the defect, and thereafter such Latent Defect
shall be handled as set forth in the remainder of this Section 7.9 and/or the
Quality Agreements, as applicable. For purposes of this Section 7.9.2(b),
“Latent Defects” shall mean those defects that could not be discovered by
inspection by Asahi or its designee as described in Section 7.9.2(a).

7.9.3 Notification of significant quality issues. As set forth in the Quality
Agreements, the Parties shall notify each other of the occurrence of a confirmed
out-of specification (“OOS”) result or major process deviation relating to the
Product and/or Drug Substance for use or sale in the Territory. Auxilium agrees
to inform Asahi on all quality decisions regarding any OOS result or major
process deviations involving the Bulk Product and/or Drug Substance.

7.9.4 Audits. Asahi shall have access to Auxilium’s or its Third Party
manufacturer’s Facilities associated with the Product or Drug Substance at a
mutually agreeable time for the sole purpose of auditing the Facilities for
operational compliance with GMPs and the content of the respective Quality
Agreements for Product and Drug Substance. The right to audit also includes any
testing Facility related to the Product or Drug Substance, and any Facilities
associated with raw materials, auxiliary materials, intermediates, container
materials, and packing materials related to the Product or Drug Substance;
provided that, to the extent a Third Party’s Facilities are the subject of an
audit pursuant to this Section 7.9.4, Asahi shall (a)

 

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perform such audit in conjunction with Auxilium (and any other licensees of
Auxilium desiring to so audit), (b) bear any costs charged by such Third Party
associated with such audit, and (c) abide by any applicable terms and conditions
regarding such audit as Auxilium’s agreement with such Third Party may provide
(including any limitations on the number of such audits as may be conducted in a
given time-frame). For clarity, Auxilium shall have the right to accompany Asahi
on any such audit of a Third Party Facility.

7.10 Disputes and Remedies.

7.10.1 Disputes. If Asahi delivers a Notice of Non-Conformance in respect of all
or any part of a shipment of the Bulk Product, and Auxilium does not agree with
Asahi’s determination that the Bulk Product fails to meet the Product
Specifications for the Bulk Product (or there is a short shipment), the Parties
shall in good faith attempt to resolve such dispute. Auxilium and Asahi shall
have thirty (30) days, unless otherwise agreed in writing by the Parties, from
the date of Auxilium’s receipt of a Notice of Non-Conformance to resolve such
dispute regarding whether all or any part of such shipment of Bulk Product was
Manufactured in conformance with the Product Specifications for the Bulk Product
(or there is otherwise a short shipment). If the dispute regarding whether all
or any part of a shipment of Bulk Product rejected by Asahi was Manufactured in
conformance with the Product Specifications for the Bulk Product (or there is a
short shipment) is not resolved in such thirty (30) day period, then Auxilium
shall prepare an investigative report concerning such alleged non-conformance
and such investigative report and Asahi’s original Notice of Non-Conformance
shall be submitted to an independent consultant. The consultant shall be
mutually agreed upon in writing by the Parties. The results of the consultant’s
determination shall be based on Auxilium’s investigative report and Asahi’s
original Notice of Non-Conformance and shall be final and binding on the
Parties, and if such Bulk Product is determined to meet the Product
Specifications for the Bulk Product (or is otherwise determined not to be a
short shipment, as applicable), then Asahi shall pay for the costs of such
consultant; otherwise Auxilium shall pay for such costs.

7.10.2 Remedies. In the event any shipment of Bulk Product is rejected pursuant
to this Section 7.10 and/or the Quality Agreements, as applicable, solely as a
result of any act or omission of Auxilium or its Third Party manufacturer, then
(i) Asahi shall, at the direction of Auxilium, either (a) destroy such rejected
Bulk Product at Auxilium’s reasonable expense (in accordance with Laws) or
(b) return such Bulk Product to Auxilium, at a location designated by Auxilium
and at Auxilium’s reasonable expense, and (ii) Auxilium, at no expense to Asahi,
shall (in Asahi’s sole discretion) either (a) use its Commercially Reasonable
Efforts to replace such non-conforming Bulk Product (or short shipment) or
(b) give Asahi a credit in an amount equal to the amount paid or payable by
Asahi with respect to such rejected Bulk Product (or short shipment). In the
event that any shipment of Bulk Product is rejected for any other reason,
Auxilium shall have no liability to Asahi in connection therewith, and Asahi
shall, at its sole cost, destroy such rejected Bulk Product in compliance with
Laws. SUBJECT TO SECTION 11.1, AUXILIUM’S LIABILITY IN RESPECT OF ANY REJECTION
(INCLUDING ANY SHORT SHIPMENT) SHALL BE LIMITED TO THE REMEDIES PROVIDED IN THIS
SECTION 7.10.2.

 

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7.11 Shortages.

7.11.1 General. In the event that Auxilium anticipates the materials and/or
Manufacturing capacity of Auxilium or its Third Party manufacturer required to
Manufacture and deliver the Bulk Product to Asahi is to be in short supply,
Auxilium shall promptly notify Asahi of such shortage and, the Parties shall
promptly meet to discuss the shortage. Auxilium shall provide a written plan of
action stating in reasonable detail the root cause of the shortage and proposed
measures to remedy the shortage and the date such shortage is expected to end.
Notwithstanding anything to the contrary contained herein, the situation where
the commercial success of the Product in the Territory is the reason for such
shortage (which situation is addressed in Section 7.6.2) shall not constitute a
“shortage” or mean that Auxilium is “unable to supply” for purposes of this
Section 7.11 (provided, that Auxilium is using Commercially Reasonable Efforts
to supply all of Asahi’s Purchase Orders in accordance with this Agreement,
including the allocation set forth in this Section 7.11.1). Auxilium shall use
its Commercially Reasonable Efforts to minimize the duration of any shortage.
During any such shortage, Auxilium shall allocate the materials and resources
used in the supply of the Bulk Product between Auxilium (and any other Third
Parties), on the one hand, and Asahi, on the other hand (subject to pre-existing
obligations to Third Parties), (i) for the first two (2) years from the First
Commercial Sale, based on, in the case of Asahi, the lesser of twenty-five
percent (25%) of available Bulk Product (subject to pre-existing obligations to
Third Parties) or the undelivered quantities specified in all then current
Purchase Orders, (ii) following the second anniversary of the First Commercial
Sale, the forecasted demand reported one quarter earlier (pursuant to
Section 7.6) against the forecasted needs of Auxilium (and any Third Parties)
and (iii) following the third anniversary of the First Commercial Sale, in
accordance with their respective share of sales in the applicable market of the
Product during the immediately preceding twelve (12) months. If, during the
Term, Auxilium is unable to supply according to the terms of this Agreement at
least sixty-five percent (65%) of the aggregate quantity of Bulk Product to be
delivered as required by Asahi’s Purchase Orders (which have been properly
submitted in accordance with this Agreement) (such quantity of Product, the
“Minimum Delivery Amount”), other than to the extent caused by a Force Majeure
Event or an act or omission of Asahi or any of its Affiliates, then Asahi will
inform Auxilium in writing thereof. Following receipt of such notice, a joint
team shall be promptly formed to address the nature of the shortage. Auxilium
shall have ninety (90) days following receipt of such notice to supply Asahi
with sufficient quantities of Bulk Product such that Auxilium shall have
delivered the Minimum Delivery Amount for the applicable period (the “Minimum
Delivery Cure Period”), and in the event that Auxilium is unable to supply such
quantities of Bulk Product to meet the Minimum Delivery Amount within such
Minimum Delivery Cure Period, then until such time as quantities of Bulk Product
to meet the Minimum Delivery Amount are supplied to Asahi, the Royalty Rate will
be reduced by twenty five percent (25%) (i.e., reduced by one-fourth) for all
Net Sales commencing with sales recorded in the month immediately following the
month in which the end of the Minimum Deliver Cure Period occurred, and ending
up to three (3) months following the month in which Auxilium has delivered
quantities of Bulk Product sufficient to meet the Minimum Delivery Amount;
provided, that, for clarity, such three (3) month period is solely intended to
allow Asahi an opportunity to reestablish its inventory, and to the extent that
Asahi is able to do so in less than such three (3) month period the Royalty Rate
shall promptly revert to

 

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the amounts currently set forth in Section 8.3; provided, further, that during
such three (3) month period, Asahi shall have the right to submit Purchase
Orders in excess of the twenty-five percent (25%) cap on increases from the
previously forecasted amount for such period (provided, that, Auxilium shall not
be obligated hereunder to fill such excess orders but shall use reasonable
efforts to satisfy such excess orders); provided, further, that Auxilium’s
inability to fill such excess orders shall not constitute a shortage hereunder;
provided, further, that during the pendency of any such shortage, Auxilium shall
agree to form a joint Asahi/Auxilium team responsible for overseeing the
restoration of supply.

7.12 Manufacturing Supply Assurance. Auxilium shall use Commercially Reasonable
Efforts, as the exclusive supplier of Bulk Product, to ensure for the duration
of the Term of the Agreement that a reasonable measure of supply assurance be
maintained.

7.12.1 Auxilium shall, as part of this obligation, use Commercially Reasonable
Efforts to establish within twenty four (24) months of the First Commercial Sale
a fully qualified, approved, and validated back-up Facility for the filling and
finishing of Bulk Product.

7.12.2 Auxilium shall, as part of this obligation, use Commercially Reasonable
Efforts to establish within forty-two months (42) months of the First Commercial
Sale a fully qualified, approved, and validated back-up Facility for the
Manufacturing of the Drug Substance.

7.13 Safety Stock Obligations. From and after the First Commercial Sale,
Auxilium shall maintain a minimum of [**] of Drug Substance based on Asahi’s
Purchase Orders for the preceding [**], plus or minus twenty-five percent (25%).
Auxilium shall, at Asahi’s option, upon reasonable advanced written notice,
allow Asahi to audit such safety stock during normal business hours no more than
once annually. From and after the First Commercial Sale, Asahi shall maintain a
stock of at least [**] of Finished Product or Bulk Product based on Asahi’s
sales of Units of Product for the preceding [**], plus or minus twenty-five
percent (25%). In the event that either Party becomes unable to maintain a
safety stock of Drug Substance or Finished Product or Bulk Product, as
applicable, equivalent to at least seventy-five percent (75%) of that required
by this Section 7.13, the Parties shall meet to discuss ways to mitigate further
erosion of supply assurance.

7.14 Product Specification and Manufacturing Changes. Product Specification (for
the Bulk Product and for the Product), Drug Substance Specification, Facilities
changes (including changes to any Third Party manufacturers) and Manufacturing
changes (including changes to lot sizes), including those resulting from a
request received by a Party from a Governmental Authority, or any changes that
Auxilium may propose to make, shall be dealt with pursuant to the Quality
Agreements; provided that all applicable Regulatory Materials shall be prepared
and filed by the Parties in accordance with the provisions of ARTICLE 5.

7.15 Termination of Supply Obligations. Notwithstanding anything to the contrary
contained herein, the obligations of Auxilium under this ARTICLE 7, including
the obligations to Manufacture and supply Product to Asahi hereunder, and
Asahi’s obligations to purchase solely from Auxilium, shall, so long as Auxilium
desires to continue supplying the Product, continue after the end of the Royalty
Term, under the terms and conditions set forth in Section

 

 

** CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND WILL BE FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A
CONFIDENTIAL TREATMENT REQUEST.

 

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14.3.2 and upon reasonable terms and conditions (subject to those terms and
conditions set forth in Section 14.3.2) to be agreed between the Parties. In the
event that Asahi desires to continue Commercializing the Product and Auxilium
desires to continue supplying the Product following the expiration of this
Agreement, the Parties shall, at least twenty-four (24) months before the
expiration of this Agreement, negotiate in good faith and execute a distinct
manufacturing and supply agreement with the terms and conditions (including the
terms and conditions set forth in Section 14.3.2) upon which Auxilium continues
to Manufacture and supply, and Asahi continues to purchase, requirements of the
Product from Auxilium. In the event that Auxilium does not desire to continue
Manufacturing and supplying the Product, but Asahi desires to continue
Commercializing the Product in the Field in the Territory, Auxilium shall grant
to Asahi a non-exclusive license under the Auxilium Manufacturing Technology to
enable Asahi to Manufacture or have Manufactured the Product under the terms and
conditions set forth in Section 14.3.2.

7.16 Auxilium Notice. Auxilium shall provide Asahi with notice by E-mail or
Facsimile within three (3) business days after becoming aware of any significant
condition or incident, which shall include any event, occurrence, or
circumstance, including any governmental or private action, which could
reasonably be expected to materially impact Auxilium’s ability to perform its
obligations under this Agreement.

ARTICLE 8

PAYMENTS

8.1 Upfront Payment. In recognition of the approval of the Product for the
treatment of Dupuytren’s Contracture in the U.S. and pending approval in the
European Union, within fifteen (15) days of the Effective Date, Asahi shall pay
to Auxilium an upfront amount equal to fifteen million Dollars ($15,000,000)
(subject to withholding) (the “Upfront Payment”) by wire transfer of immediately
available funds into an account designated in writing by Auxilium; provided that
Asahi shall pay the amount withheld to the proper Governmental Authority in a
timely manner and promptly transmit to Auxilium an official tax certificate or
other evidence of such withholding and assist Auxilium to claim refund of the
withholding tax in accordance with Section 8.6.3. Such Upfront Payment shall be
nonrefundable and noncreditable against any other payments due hereunder.

8.2 Milestone Payments. Asahi shall pay to Auxilium the milestone payments
described in this Section 8.2 following achievement (first occurrence) of the
corresponding milestone event. A Party shall promptly notify the other Party in
writing, but in no event later than five (5) days after, of the achievement
(first occurrence) of each such milestone event (each, a “Milestone Notification
Notice”) achieved by it. Asahi shall pay the applicable milestone payment by
wire transfer of immediately available funds into an account designated by
Auxilium within fifteen (15) days after the date on which the relevant invoice
issued by Auxilium was received by Asahi; provided, however, that in no event
shall a failure to deliver a Milestone Notification Notice relieve Asahi of its
obligation to pay Auxilium the milestone payments described in this Section 8.2.
Each such milestone payment shall be payable only once

 

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regardless of how many times the milestone event is achieved. Each such
milestone payment is nonrefundable and noncreditable against any other payments
due hereunder.

 

Milestone Event

  

Milestone Payment

Dupuytren’s Contracture

  

1. First Filing and Receipt by the Regulatory Authority of Marketing
Authorization Application for Product Approval for Dupuytren’s Contracture in
the Territory.

   [**] Dollars ($[**])

2. First Commercial Sale of Product for Dupuytren’s Contracture in the
Territory.

   [**] Dollars ($[**])

Peyronie’s Disease

  

1. First Filing and Receipt by the Regulatory Authority of Marketing
Authorization Application for Product Approval for Peyronie’s Disease in the
Territory.

   [**] Dollars ($[**])

2. First Commercial Sale of Product for Peyronie’s Disease in the Territory.

   [**] Dollars ($[**])

Sales Based Milestones

  

1. Aggregate Net Sales of Product in the Territory equal or exceed [**] Yen
(¥[**]) for any Fiscal Year.

   [**] Dollars ($[**])

2. Aggregate Net Sales of Product in the Territory equal or exceed [**] Yen
(¥[**]) for any Fiscal Year.

   [**] Dollars ($[**])

3. Aggregate Net Sales of Product in the Territory equal or exceed [**] Yen
(¥[**]) for any Fiscal Year.

   [**] Dollars ($[**])

4. Aggregate Net Sales of Product in the Territory equal or exceed [**] Yen
(¥[**]) for any Fiscal Year.

   [**] Dollars ($[**])

5. Aggregate Net Sales of Product in the Territory equal or exceed [**] Yen
(¥[**]) for any Fiscal Year.

   [**] Dollars ($[**])

6. Aggregate Net Sales of Product in the Territory equal or exceed [**] Yen
(¥[**]) for any Fiscal Year.

   [**] Dollars ($[**])

8.3 Royalty Payments.

8.3.1 Royalty Payments. As further consideration for the rights granted to Asahi
under this Agreement and the supply commitments under ARTICLE 7, Asahi shall pay
to Auxilium tiered payments (“Royalty Payments”) at the following rates (the
“Royalty Rates”)

 

 

** CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND WILL BE FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A
CONFIDENTIAL TREATMENT REQUEST.

 

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based on aggregate annual Net Sales of Product in the Territory for all or any
portion of the calendar year falling within the Royalty Term:

 

Fiscal Year Net Sales

   Royalty Rate  

For that portion of aggregate Fiscal Year Net Sales
less than
[**]Yen (¥[**])

     [ **]% 

For that portion of aggregate Fiscal Year Net Sales
equal to or greater than
[**]Yen (¥[**])

     [ **]% 

8.3.2 Reduction of Compensation due to Biosimilar Entry. If in any calendar
quarter Biosimilar Versions of the Product sold by a Third Party(ies) in the
Territory constitute a unit based market share (determined on the basis of sales
of the Product and such Biosimilar Versions) greater than [**] percent ([**]%)
(in which case “Biosimilar Entry” shall be deemed to have occurred with respect
to the Product), then the Royalty Rate set forth in Section 8.3.1 with respect
to such tier payable on Net Sales of Product during each calendar quarter in any
such year from and after the calendar quarter during which Biosimilar Entry
occurred and for so long as such Biosimilar Entry continues shall be reduced by
[**] percent ([**]%), such that the revised Royalty Rates will be [**] percent
([**]%) and [**] percent ([**]%), respectively.

8.4 Royalty Payments and Reports; Floor Price.

8.4.1 General. Asahi shall calculate all Royalty Payments payable to Auxilium
pursuant to Section 8.3 with respect to Net Sales at the end of each calendar
quarter, which amounts shall be converted to Dollars at such time in accordance
with Section 8.7. Asahi shall provide a written estimate of Net Sales during the
just ended calendar quarter within fifteen (15) days of the end of such calendar
quarter. Thereafter, Asahi shall pay to Auxilium the Royalty Payment due for Net
Sales during a given calendar quarter within forty-five (45) days following the
end of such calendar quarter. Each Royalty Payment due to Auxilium shall be
accompanied by (i) a statement of the amount of gross sales of the Product in
the Territory during the applicable calendar quarter (such amounts expressed in
local currency), (ii) an itemized calculation of Net Sales in the Territory,
showing deductions provided for in the definition of “Net Sales” during such
calendar quarter, (iii) a calculation of the amount of the Royalty Payment due
on such Net Sales for such calendar quarter less any amounts already remitted in
such calendar quarter (and permitted to be credited against Royalty Payments) in
accordance with Section 7.7 hereof as the Supply Delivery Price and (iv) twice
per Fiscal Year, any reconciliations necessary as a result of the issuance of
any rebates and allowances in accordance with Section 1.55.5. Without limiting
the generality of the foregoing, Asahi shall require its Affiliates to account
for its Net Sales and to provide such reports with respect thereto as if such
sales were made by Asahi.

8.4.2 Floor Price. Notwithstanding anything to the contrary herein, the Royalty
Payments owed to Auxilium hereunder for each Unit of Product sold shall in no
event be less than [**] plus such amounts as Auxilium may owe to BTC or any
other Third Party for

 

 

** CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND WILL BE FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A
CONFIDENTIAL TREATMENT REQUEST.

 

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intellectual property rights as a result of the Manufacture and sale of such
Unit of Product, as applicable.

8.5 Third Party Royalties and Other Payments.

8.5.1 Certain Existing Obligations. Auxilium shall be solely responsible for the
payment of any royalties, sublicense revenues, milestones or other payments due
to Third Parties under the BTC License Agreement as applicable, on account of
the sale of the Product by Asahi hereunder.

8.5.2 Licenses to New Necessary Patents. If Asahi determines that it is
necessary to obtain a license under any Patent of a Third Party that would be
infringed by the Development or Commercialization by Asahi of the Product, as
the Product exists on the Effective Date (excluding, for the avoidance of doubt,
any additional technology that may be combined or incorporated therewith, or any
future improvements or enhancements to the Product) in the Territory for use in
the Field (as defined on the Effective Date), other than those described in
Section 8.5.1 necessary to make, use, sell, offer for sale or import the Product
for sale in the Field in the Territory, then the Parties shall meet to discuss
and determine which Party will be primarily responsible for the negotiation and
execution of the corresponding license agreement; provided, however, that,
notwithstanding the foregoing, Auxilium shall have the sole right to obtain a
license, and negotiate and execute a license agreement, in connection with the
Manufacture of the Product or with respect to any intellectual property
applicable to the Product on a worldwide basis (and, provided, that at the
request of Auxilium, any such license from a Third Party shall include a license
to Auxilium and its sublicensees with respect to the Product outside the
Territory (and/or outside the Field)) during the Term. Any amounts due under
such Third Party license agreement with respect to sale of the Product in the
Field in the Territory will be borne by Asahi; provided, however, that Asahi
shall be entitled to deduct up to fifty percent (50%) of the royalties payable
to such Third Party in any given calendar quarter (on account of the sale of the
Product in the Field in the Territory) from the Royalty Payments thereafter made
by Asahi to Auxilium hereunder; provided, however, that the Royalty Payments
payable under Section 8.3 shall not be reduced in any such event in any given
calendar quarter below fifty percent (50%) of the amounts set forth in
Section 8.3.1 and 8.3.2, as applicable. To the extent that Auxilium obtains a
license under such a Third Party license agreement to sell the Product outside
the Territory or outside the Field in the Territory, any amounts due under such
a Third Party license agreement with respect to the sale of the Product outside
the Territory or outside the Field in the Territory will be borne solely by
Auxilium. In no event shall a license be deemed to be “necessary” on a Third
Party Patent that is not issued, literally infringed or has genuine issues of
fact that raise a reasonable defense that such Patent is invalid or
unenforceable.

8.5.3 Licenses to Other Patents. Except as provided in Sections 8.5.1 and 8.5.2,
if Asahi desires to obtain a license under any Third Party’s Patents that are
otherwise useful for the Development or Commercialization of Product in the
Field in the Territory but not necessary for Development or Commercialization by
Asahi of the Product as such Product exists on the Effective Date in the
Territory for use in the Field (as defined on the Effective Date), then Asahi
shall notify the JSC. To the extent that both Parties determine (in each such
Party’s sole

 

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discretion) to pursue such a license with respect to Product in the Field in the
Territory, then Asahi shall be primarily responsible for the negotiation and
execution of the corresponding license agreement and the Parties shall share
equally (unless otherwise mutually agreed or as provided in the next sentence)
all payments associated with any license fees, royalties and other amounts owed
to the applicable Third Party for such license. Notwithstanding the foregoing,
at the time a license opportunity is presented to the JSC, Auxilium may elect
not to participate in the costs of such joint licensing opportunity with respect
to the Product in the Field in the Territory. In such event Asahi may pursue
such licensing opportunity and shall be responsible for one hundred percent
(100%) of all payments associated with any license fees, royalties and other
amounts owed to the applicable Third Party for such license, with no right to
invoice Auxilium or offset such amounts against any amounts owed to Auxilium
under this Agreement; provided that, in the event that Asahi decides to pursue
such license in the Field within the Territory, then Auxilium will not be
entitled to opt out of the obligation to contribute equally to all costs of such
licensing opportunity in the Field within the Territory if Auxilium pursues the
licensing of such opportunity outside of the Territory or outside the Field.

8.6 Taxes and Withholding.

8.6.1 VAT. The Parties agree to cooperate with one another and use reasonable
efforts to ensure that value added tax or similar payment (“VAT”) in respect of
any payments made by Asahi to Auxilium under this Agreement does not represent
an unnecessary cost in respect of payments made under this Agreement. For
purposes of clarity, all sums payable under this Agreement shall be exclusive of
VAT. In the event that any VAT is owing in any jurisdiction in respect of any
such payment, Asahi shall pay such VAT, and (i) if such VAT is owing as a result
of any action by Asahi, including any assignment or sublicense (including,
assignment to, or payment hereunder by, another Asahi-related entity or
Affiliate), or any failure on the part of Asahi or its Affiliates to comply with
applicable tax Laws or filing or record retention requirements, that has the
effect of modifying the tax treatment of the Parties hereto, then the payment in
respect of which such VAT is owing shall be made without deduction for or on
account of such VAT to ensure that Auxilium receives a sum equal to the sum
which it would have received had such VAT not been due or (ii) otherwise, such
payment shall be made after deduction of such VAT. For the sake of clarity, any
increase in payments to Auxilium under this Section 8.6 shall reflect only the
incremental increase in VAT directly resulting from clause (i) above. In the
event that any VAT is owing in any jurisdiction in respect of any such payment,
Auxilium will provide to Asahi tax invoices showing the correct amount of VAT in
respect of such payments hereunder.

8.6.2 Withholding Tax Matters. If Asahi is required to make a payment to
Auxilium subject to a deduction of tax or withholding tax, the sum payable by
Asahi (in respect of which such deduction or withholding is required to be made)
shall be made to Auxilium after deduction of the amount required to be so
deducted or withheld, which deducted or withheld amount shall be remitted in
accordance with Laws. Any such withholding taxes required under Laws to be paid
or withheld shall be an expense of, and borne solely by Auxilium, subject to
Section 8.6.1 and the obligation of Asahi to assume the responsibility of such
expense in the event that such expense arises as a result of any action by
Asahi.

 

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8.6.3 Tax Cooperation. To the extent Asahi is required to deduct and withhold
taxes on any payments to Auxilium, Asahi shall pay the amounts of such taxes to
the proper Governmental Authority in a timely manner and promptly transmit to
Auxilium an official tax certificate or other evidence of such withholding
sufficient to enable Auxilium to claim such payments of taxes. Auxilium shall
provide to Asahi any tax forms that may be reasonably necessary in order for
Asahi not to withhold tax or to withhold tax at a reduced rate under an
applicable bilateral income tax treaty. Auxilium shall use reasonable efforts to
provide any such tax forms to Asahi at least thirty (30) days prior to the due
date for any payments for which Auxilium desires that Asahi apply a reduced
withholding rate. Each Party shall provide the other with reasonable assistance
to enable the recovery, as permitted by Laws, of withholding taxes, VAT, or
similar obligations resulting from payments made under this Agreement, such
recovery to be for the benefit of the Party bearing such withholding tax or VAT.

8.7 Currency Conversion. All payments hereunder shall be made in U.S. Dollars.
For the purpose of calculating any sums due under, or otherwise reimbursable
pursuant to, this Agreement (including the calculation of Net Sales expressed in
currencies other than U.S. Dollars), any amount expressed in a foreign currency
shall be converted into U.S. Dollars in a manner consistent with such Party’s
normal practices used to prepare its audited financial statements for external
reporting purposes, provided that such practices use a widely accepted source of
published exchange rates.

8.8 General Payment Procedures. Unless otherwise expressly payable in certain
time frames as provided in this Agreement (including Section 7.7.2), the
receiving Party shall invoice the paying Party for all amounts due to such
receiving Party under this Agreement, and such payments shall be made within
forty-five (45) days following the receipt by the paying Party of an invoice
from the receiving Party specifying the amount due.

8.9 Late Payments. Any amount required to be paid by a Party hereunder which is
not paid on the date due shall bear interest at a rate equal to the thirty
(30) day U.S. dollar LIBOR rate effective for the date that payment was first
due as reported by The Wall Street Journal plus two percent (2%). Such interest
shall be computed on the basis of a year of three hundred sixty (360) days for
the actual number of days payment is delinquent.

8.10 Legal Restrictions. If at any time legal restrictions prevent the
remittance by Asahi of all or any part of amounts due under this Agreement in
the Territory, Asahi will have the right and option to make such payment by
depositing the amount thereof in local currency to an account in the name of
Auxilium in a bank or other depository in the Territory as directed by
Auxilium. Asahi will consult with Auxilium regarding, and promptly notify
Auxilium of, any and all such arrangements.

8.11 Records; Audits. Asahi and its Affiliates and subcontractors shall keep
full, true and accurate records and books of account containing all particulars
that may be necessary for the purpose of confirming the accuracy of, and
calculating, as applicable, all Royalty Payments and other amounts payable to
Auxilium hereunder (including records of Net Sales), and any other records
reasonably required to be maintained with respect to Asahi’s obligations under
this Agreement, for a minimum period of two (2) years or such longer period as
required

 

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by Laws. Auxilium shall have a right to request an audit of Asahi by an
independent, internationally recognized accounting firm in order to confirm the
accuracy of the foregoing (an “Audit”); provided, however, that Auxilium shall
only have the right to request such Audit one time during any given calendar
year. Upon the written request by Auxilium to Audit Asahi, Auxilium shall have
the right to engage an independent, internationally recognized accounting firm
to perform a review as is reasonably necessary to enable such accounting firm to
calculate or otherwise confirm the accuracy of any of the foregoing for the
calendar year(s) requested by Auxilium; provided that (i) such accountants shall
be given access to, and shall be permitted to examine and copy such books and
records of Asahi upon five (5) business days’ prior written notice to Asahi, and
at all reasonable times on such business days, (ii) prior to any such
examination taking place, such accountants shall enter into a confidentiality
agreement with Asahi reasonably acceptable to Asahi in order to keep all
information and data contained in such books and records strictly confidential
and shall not disclose such information or copies of such books and records to
any third person including Auxilium, but shall only use the same for the purpose
of the reviews and/or calculations which they need to perform in order to
determine any amounts being reviewed, and (iii) such accountants shall use
reasonable efforts to minimize any disruption to Asahi’s business. Asahi shall
make personnel reasonably available during regular business hours to answer
queries on all such books and records required for the purpose of the Audit. The
accountants shall deliver a copy of their findings to each of the Parties within
ten (10) business days of the completion of the review, and, in the absence of
fraud or manifest error, the findings of such accountant shall be final and
binding on each of the Parties. Any underpayments by Asahi shall be paid to
Auxilium within ten (10) business days of notification of the results of such
inspection. Any overpayments made by Asahi shall be refunded by Auxilium within
ten (10) business days of notification of the results of such inspection. The
cost of the accountants shall be the responsibility of Auxilium unless the
accountants’ calculation shows that the actual royalties payable, Net Sales,
and/or any other applicable amount Audited hereunder to be different, by more
than ten percent (10%), than the amounts as previously calculated by Asahi.
Without limitation of the foregoing, Asahi shall have the right to audit the
calculation of Development Costs and Regulatory Costs incurred by Auxilium, and
with respect to which Auxilium is seeking reimbursement from Asahi hereunder, on
the same terms and conditions as Auxilium may audit Asahi’s records under this
Section 8.11 (substituting references to “Auxilium” for “Asahi”, and vice versa,
and substituting references to “Development Costs” or “Regulatory Costs”, as the
case may be, for “Net Sales”).

ARTICLE 9

INTELLECTUAL PROPERTY MATTERS

9.1 Ownership of Intellectual Property.

9.1.1 General. Subject to the provisions of this Section 9.1.1 and except as
expressly set forth otherwise in this Agreement, (i) Auxilium shall solely own,
and it alone shall have the right to apply for, Patents within and outside of
the Territory Covering any Auxilium Invention (“Auxilium Collaboration
Patents”), and (ii) Asahi shall solely own, and it alone shall have the right to
apply for, Patents within and outside of the Territory Covering any Asahi
Invention (“Asahi Collaboration Patents”). With respect to any Joint Invention
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Patents claiming such Joint Invention (“Joint Collaboration Patents”), Asahi
shall assign (and shall cause its Affiliates and subcontractors to assign), and
hereby does assign, any and all of Asahi’s (and its Affiliates’ its and
subcontractors’) right, title and interest in and to such Joint Inventions and
Joint Collaboration Patents to Auxilium, such that Auxilium shall solely own
such Joint Inventions and Joint Collaboration Patents and thereafter, any
Confidential Information contained therein shall be deemed “Confidential
Information” of Auxilium. Each Party shall promptly disclose to the other Party
all Auxilium Inventions, Asahi Inventions and Joint Inventions, as applicable,
made by it during the Term. The determination of inventorship for such
Inventions shall be made in accordance with applicable Laws relating to
inventorship set forth in the patent Laws of the United States (Title 35, United
States Code).

9.1.2 Employees. Each Party will require all of its and its Affiliates’
employees to assign all Inventions that are developed, made or conceived by such
employees according to the ownership principles described in Section 9.1.1 free
and clear of all liens, encumbrances, charges, security interests, mortgages or
other similar restrictions. Each Party will also use its Commercially Reasonable
Efforts to require any agents or independent contractors performing an activity
pursuant to this Agreement to assign all Inventions that are developed, made or
conceived by such agents or independent contractors to Auxilium and/or Asahi
according to the ownership principles described in Section 9.1.1 free and clear
of all liens, encumbrances, charges, security interests, mortgages or other
similar restrictions.

9.2 Disclosures; Disputes Regarding Inventions. Each Party shall, before filing
a new Patent application (including provisionals and continuations-in-part)
claiming an Invention, promptly disclose such Invention to the other Party and
shall provide the other Party with a copy of the proposed patent application at
least ten (10) business days before filing such application or such shorter time
as may be required to preserve Patent rights, including the avoidance of a
statutory bar or prior publication. If the non-filing Party believes that the
filing Party’s proposed Patent application discloses Confidential Information of
the non-filing Party, the non-filing Party shall so notify the filing Party
within such ten (10) business days after receipt thereof, and the filing Party
shall amend its proposed application to comply with the confidentiality
provisions of this Agreement. If the Parties are in agreement as to the
designation of the Invention as an Auxilium Invention, Joint Invention or Asahi
Invention, as applicable, they can continue as set forth in Section 9.3. If the
Parties disagree as to whether an Invention is an Auxilium Invention, Joint
Invention or Asahi Invention, and are unable to reach agreement within thirty
(30) days after commencing discussions, then the provisions of ARTICLE 15 shall
apply to such dispute.

9.3 Patent Filings, Prosecution and Maintenance.

9.3.1 Auxilium Patents. Subject to, and without limiting Asahi’s rights under,
Section 9.4 of this Agreement, Auxilium shall have the first right to prepare,
file, prosecute and maintain (i) Auxilium Collaboration Patents and (ii) all
other Auxilium Patents, at its own cost and expense. Auxilium shall keep Asahi
informed of the status of Auxilium Patents and will provide Asahi with copies of
all substantive documentation submitted to, or received from, the patent offices
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Auxilium is required to or otherwise intends to submit to a patent office with
respect to an Auxilium Patent, Auxilium shall provide a draft of such submission
to Asahi at least sixty (60) days (or such time as is possible) prior to the
deadline for, or the intended filing date of, such submission, whichever is
earlier (or as soon as reasonably possible if Auxilium has less than sixty
(60) days notice of a deadline for submission). Asahi shall have the right to
review and comment upon any such submission by Auxilium to a patent office, and
will provide such comments within thirty (30) days after receiving such
submission (provided, that if no comments are received within such thirty
(30) day period, then Auxilium may proceed with such submission). Auxilium shall
consider in good faith any suggestions or recommendations of Asahi concerning
the preparation, filing, prosecution and maintenance thereof. The Parties shall
cooperate reasonably in the prosecution of all Auxilium Patents and shall share
all material information relating thereto promptly after receipt of such
information. If, during the Term, Auxilium (a) intends to allow any Auxilium
Patent to which Asahi has a license under this Agreement to expire or intends to
otherwise abandon any such Auxilium Patent, or (b) decides not to prepare or
file patent applications covering Auxilium Inventions in the Territory to which
Asahi would otherwise have a license under this Agreement, Auxilium shall notify
Asahi of such intention or decision at least thirty (30) days (or as soon as
possible if less than thirty (30) days) prior to any filing or payment due date,
or any other date that requires action, in connection with such Auxilium Patent
or Auxilium Inventions, and Asahi shall thereupon have the right, but not the
obligation, to assume responsibility for the preparation, filing, prosecution or
maintenance thereof in the Territory at its sole cost and expense, in the name
of Auxilium (such patents and patent applications shall thereafter be referred
to as “Asahi Funded Patent Rights,” and, at Asahi’s election, such Asahi Funded
Patent Rights shall not be considered part of the Auxilium Patents for purposes
of determining whether a claim constitutes a Valid Claim); provided that, with
respect to any international Patent applications included in the Auxilium
Patents described in the foregoing sentence, Auxilium shall not allow such an
international Patent application to expire or otherwise be abandoned until such
international Patent application is about to enter the national stage, at which
time Auxilium shall notify Asahi of such intention or decision at least sixty
(60) days (or as soon as possible if less than sixty (60) days) prior to any
filing or payment due date, or any other date that requires action, in
connection with such international Patent application in the Territory that is
designated in such international Patent, and Asahi shall have the right to, but
not the obligation, to assume responsibility for the preparation, filing,
prosecution or maintenance of the national phase of such an international Patent
in the Territory at its sole cost and expense, in the name of Auxilium
(rendering such international Patent, “Asahi Funded Patent Rights”). Auxilium
agrees to use Commercially Reasonable Efforts with respect to any decision to
allow an Auxilium Patent to expire or to otherwise go abandoned, or with respect
to any decision not to prepare or file patent applications covering Auxilium
Inventions.

9.3.2 Joint Collaboration Patents. Subject to, and without limiting Asahi’s
rights under, Section 9.4 of this Agreement, Auxilium shall have the first right
to prepare, file, prosecute and maintain Joint Collaboration Patents. Auxilium
shall keep Asahi informed of the status of Joint Collaboration Patents and will
provide Asahi with copies of all substantive documentation submitted to, or
received from, the patent offices in connection therewith. With respect to any
substantive submissions that Auxilium is required to or otherwise intends to
submit to a patent office with respect to a Joint Collaboration Patent, Auxilium
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draft of such submission to Asahi at least sixty (60) days (or such time as is
possible) prior to the deadline for, or the intended filing date of, such
submission, whichever is earlier (or as soon as reasonably possible if Auxilium
has less than sixty (60) days notice of a deadline for submission). Asahi shall
have the right to review and comment upon any such submission by Auxilium to a
patent office, and will provide such comments within twenty (20) days after
receiving such submission (provided, that if no comments are received within
such twenty (20) day period, then Auxilium may proceed with such submission).
Auxilium shall consider in good faith any suggestions or recommendations of
Asahi concerning the preparation, filing, prosecution and maintenance thereof.
The Parties shall cooperate reasonably in the prosecution of all Joint
Collaboration Patents and shall share all material information relating thereto
promptly after receipt of such information. If, during the Term, Auxilium
(i) intends to allow any Joint Collaboration Patent to expire or intends to
otherwise abandon any such Joint Collaboration Patent (“Abandoned Collaboration
Patents”), or (ii) decides not to prepare or file patent applications covering
Joint Inventions (“Abandoned Joint Inventions”) Auxilium shall notify Asahi of
such intention or decision at least thirty (30) days (or as soon as possible if
less than thirty (30) days) prior to any filing or payment due date, or any
other date that requires action, in connection with such Abandoned Collaboration
Patent or Abandoned Joint Invention, and Asahi shall thereupon have the right,
but not the obligation, to assume responsibility for the preparation, filing,
prosecution or maintenance thereof at its sole cost and expense, in the name of
Auxilium, and, at Asahi’s election, such Abandoned Collaboration Patents shall
not be considered part of the Joint Collaboration Patents for purposes of
determining whether a claim constitutes a Valid Claim.

9.3.3 Asahi Collaboration Patents and Asahi Applied Patents. Asahi shall have
the first right to prepare, file, prosecute and maintain (i) Asahi Collaboration
Patents and (ii) all other Asahi Applied Patents, at its own cost and expense.
Asahi shall keep Auxilium informed of the status of Asahi Applied Patents and
will provide Auxilium with copies of all substantive documentation submitted to,
or received from, the patent offices in connection therewith. With respect to
any substantive submissions that Asahi is required to or otherwise intends to
submit to a patent office with respect to an Asahi Applied Patent, Asahi shall
provide a draft of such submission to Auxilium at least sixty (60) days (or such
time as is possible) prior to the deadline for, or the intended filing date of,
such submission, whichever is earlier (or as soon as reasonably possible if
Asahi has less than sixty (60) days notice of a deadline for submission).
Auxilium shall have the right to review and comment upon any such submission by
Asahi to a patent office, and will provide such comments within twenty (20) days
after receiving such submission (provided, that if no comments are received
within such twenty (20) day period, then Asahi may proceed with such
submission). Asahi shall consider in good faith any suggestions or
recommendations of Auxilium concerning the preparation, filing, prosecution and
maintenance thereof. The Parties shall cooperate reasonably in the prosecution
of all Asahi Applied Patents and shall share all material information relating
thereto promptly after receipt of such information. If, during the Term, Asahi
(a) intends to allow any Asahi Applied Patent to which Auxilium has a license
under this Agreement to expire or intends to otherwise abandon any such Asahi
Applied Patent, or (b) decides not to prepare or file patent applications
covering Asahi Applied Know-How or Asahi Inventions to which Auxilium would
otherwise have a license under this Agreement, Asahi shall notify Auxilium of
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(30) days (or as soon as possible if less than thirty (30) days) prior to any
filing or payment due date, or any other date that requires action, in
connection with such Asahi Applied Patent or Asahi Inventions, and Auxilium
shall thereupon have the right, but not the obligation, to assume responsibility
for the preparation, filing, prosecution or maintenance thereof at its sole cost
and expense, in the name of Auxilium and Asahi shall, and hereby does, assign to
Auxilium Asahi’s entire right, title and interest in and to any such Asahi
Applied Patents (rendering, for clarity, such Asahi Applied Patent an Auxilium
Patent hereunder). Asahi agrees to use Commercially Reasonable Efforts with
respect to any decision to allow an Asahi Applied Patent to expire or to
otherwise go abandoned, or with respect to any decision not to prepare or file
patent applications covering Asahi Inventions.

9.3.4 Cooperation. The Parties agree to cooperate in the preparation, filing,
prosecution and maintenance of all Patents under this Section 9.3, including
obtaining and executing necessary powers of attorney and assignments by the
named inventors, providing relevant technical reports to the filing Party
concerning the Invention disclosed in such Patent, obtaining execution of such
other documents which are needed in the filing and prosecution of such Patent,
and, as requested by a Party, updating each other regarding the status of such
Patent, and shall cooperate with the other Party so far as reasonably necessary
with respect to furnishing all information and data in its possession reasonably
necessary to obtain or maintain such Patents.

9.3.5 Patent Expenses. Any expenses incurred by a Party in connection with the
preparation, filing, prosecution and maintenance of any Auxilium Patents, Joint
Collaboration Patents or Asahi Applied Patents, as applicable, shall be borne by
the Party incurring such expenses.

9.4 Defense and Enforcement of Patents.

9.4.1 Infringement of Third Party Patents. Each of the Parties shall promptly,
but in any event no later than ten (10) days after receipt of notice thereof,
notify the other Party in writing in the event of any claims by a Third Party of
alleged patent infringement by Asahi or Auxilium or any of their respective
Affiliates or, solely with respect to Auxilium, its sublicensees with respect to
the research, development, manufacture, use, sale, offer for sale or importation
of a Product (each, an “Infringement Claim”). With respect to any Infringement
Claim in the Field in the Territory, the Parties shall attempt to negotiate in
good faith a resolution with respect thereto. If the Parties cannot settle such
Infringement Claim with the appropriate Third Parties within thirty (30) days
after the receipt of the notice pursuant to this Section 9.4.1, then the
following shall apply:

(a) In the case of any such Infringement Claim against Asahi alone or against
both Asahi and Auxilium, in each case, with respect to the Product in the Field
in the Territory, then Asahi shall be deemed to be the “Controlling Party” for
purposes of such Infringement Claim. In the case of any Infringement Claim
against (i) Auxilium alone, or (ii) with respect to the Product outside the
Territory or outside the Field, then Auxilium shall be deemed to be the
“Controlling Party” for purposes of such Infringement Claim. In the event of
worldwide litigation (such that related cases and/or claims are being pursued
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outside of the Territory), each Party shall reasonably assist the other in its
role as the Controlling Party in its respective territory.

(b) The Controlling Party shall assume control of the defense of such
Infringement Claim. The non-Controlling Party, upon request of the Controlling
Party, agrees to join in any such litigation at the Controlling Party’s expense,
and in any event to reasonably cooperate with the Controlling Party at the
Controlling Party’s expense. The non-Controlling Party will have the right to
consult with the Controlling Party concerning such Infringement Claim and to
participate in and be represented by independent counsel in any litigation in
which such non-Controlling Party is a party at its own expense. The Controlling
Party shall have the exclusive right to settle any Infringement Claim without
the consent of the other Party, unless such settlement shall have a material
adverse impact on the other Party (in which case the consent of such other Party
shall be required). For purposes of this Section 9.4.1(b), any settlement that
would involve the waiver of rights (including the rights to receive payments) of
such other Party shall be deemed a material adverse impact and shall require the
consent of such other Party, such consent not to be unreasonably withheld.

(c) If a Party shall become engaged in or participate in any suit described in
this Section 9.4.1, the other Party shall cooperate, and shall cause its and its
Affiliates’ employees to cooperate, with such Party in all reasonable respects
in connection therewith, including giving testimony and producing documents
lawfully requested, and using its reasonable efforts to make available to the
other, at no cost to the other (other than reimbursement of actually incurred,
reasonable out-of-pocket travel and lodging expenses), such employees who may be
helpful with respect to such suit, investigation, claim or other proceeding.

9.4.2 Prosecution of Infringers.

(a) Notice. If either Party (i) receives notice of any patent nullity actions,
any declaratory judgment actions or any alleged or threatened infringement of
patents or patent applications or misappropriation of intellectual property in
the Territory comprising the (w) Joint Inventions or Joint Collaboration
Patents, (x) Auxilium Patents, Auxilium Inventions or Auxilium Know-How or
(y) Asahi Applied Patents, Asahi Inventions or Asahi Applied Know-How, or
(ii) learns that a Third Party is infringing or allegedly infringing any Patent
within the Auxilium Patents, Joint Collaboration Patents or Asahi Applied
Patents in each case, in the Territory, or if any Third Party claims that any
such Patent is invalid or unenforceable, in each case, with respect to the Field
in the Territory, it shall promptly notify the other Party thereof, including
providing evidence of infringement or the claim of invalidity or
unenforceability reasonably available to such Party.

(b) Enforcement of Patents.

(i) As between Auxilium and Asahi, Asahi shall have the first right (but not the
obligation) to take the appropriate steps to enforce or defend any Patent within
the Auxilium Patents, Asahi Applied Patents and Joint Collaboration Patents
against infringement by a Third Party that is conducting the manufacture, sale,
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pharmaceutical product in the Field in the Territory. Asahi may take steps
including the initiation, prosecution and control of any suit, proceeding or
other legal action by counsel of its own choice. Asahi shall bear the costs of
such enforcement or defense, as applicable. Notwithstanding the foregoing,
Auxilium will have the right, at its own expense, to be represented in any such
action by counsel of its own choice.

(ii) If, pursuant to Section 9.4.2(b)(i), Asahi fails to institute such
litigation or otherwise take steps to remedy the infringement of an Auxilium
Patent, an Asahi Applied Patent or a Joint Collaboration Patent within one
hundred eighty (180) days of the date one Party has provided notice to the other
Party pursuant to Section 9.4.2(a) of such infringement or claim, then Auxilium
shall have the right (but not the obligation), at its own expense, to bring any
such suit, action or proceeding by counsel of its own choice and Asahi will have
the right, at its own expense, to be represented in any such action by counsel
of its own choice. Notwithstanding anything to the contrary contained herein, in
no event shall Asahi have any right to bring any suit, action or proceeding with
respect to any matter involving infringement of an Auxilium Manufacturing
Patent, or a Patent outside the Territory or outside the Field.

(c) Cooperation; Damages.

(i) If one Party brings any suit, action or proceeding under Section 9.4.2(b),
the other Party agrees to be joined as party plaintiff if necessary to prosecute
the suit, action or proceeding and to give the first Party reasonable authority
to file and prosecute the suit, action or proceeding; provided, however, that
neither Party will be required to transfer any right, title or interest in or to
any property to the other Party or any other party to confer standing on a Party
hereunder.

(ii) The Party not pursuing the suit, action or proceeding hereunder will
provide reasonable assistance to the other Party, including by providing access
to relevant documents and other evidence and making its employees available,
subject to the other Party’s reimbursement of any Out-of-Pocket Costs incurred
by the non-enforcing or defending Party in providing such assistance.

(iii) Asahi shall not, without the prior written consent of Auxilium (in its
sole discretion), enter into any compromise or settlement relating to any claim,
suit or action that it brought under Section 9.4.2 involving an Auxilium Patent,
an Asahi Applied Patent or a Joint Collaboration Patent, that admits the
invalidity or unenforceability of any Auxilium Patent, Asahi Applied Patent or
Joint Collaboration Patent, or requires Auxilium to pay any sum of money, or
otherwise adversely affects the rights of Auxilium with respect to such Patents,
the Product or Auxilium’s rights hereunder (including the rights to receive
payments).

(iv) Any settlements, damages or other monetary awards (a “Recovery”) recovered
pursuant to a suit, action or proceeding brought pursuant to Section 9.4.2(b)
will be allocated first to the costs and expenses of the Party taking such
action, and second, to the costs and expenses (if any) of the other Party, with
any remaining amounts (if any) to be allocated as follows: (i) to the extent
that such Recovery is a payment for lost sales of the Product in the Field in
the Territory, (a) if Asahi is the Party taking such action, then Asahi shall

 

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pay a Royalty Payment to Auxilium pursuant to Section 8.3 with respect to the
imputed loss in Net Sales out of any such Recovery or (b) if Auxilium is the
Party taking such action, then any such Recovery shall be shared equally by
Auxilium and Asahi and (ii) all remaining Recoveries shall be payable to the
Party taking such action to the extent such remaining Recoveries relate solely
to the Product in the Field in the Territory (and, for purposes of clarity, all
remaining Recoveries related to the Product outside the Field or outside the
Territory shall be payable to Auxilium).

(d) Infringement and Defense of Auxilium Patents Outside of the Territory or
Outside the Field. For clarity, with respect to any and all infringement or
defense of any Auxilium Patent (including a Joint Collaboration Patent) anywhere
outside of the Territory or outside the Field, Auxilium (or its designee) shall
have the sole and exclusive right to bring an appropriate suit or other action
against any Person engaged in such infringement or defense of any such Auxilium
Patents (including any Joint Collaboration Patents), in its sole discretion and
Asahi shall have no rights with respect thereto.

9.5 Patent Term Extensions. As between Auxilium and Asahi, Auxilium shall have
the exclusive right, but not the obligation, to seek, in Asahi’s name if so
required, Patent Term Extensions (including any supplemental protection
certificates and the like available under applicable Law) in the Territory in
relation to the Auxilium Patents (including Joint Collaboration Patents). Asahi
and Auxilium shall cooperate in connection with all such activities. Auxilium,
its agents and attorneys will give due consideration to all suggestions and
comments of Asahi regarding any such activities, but in the event of a
disagreement between the Parties, Auxilium shall have the final decision making
authority.

9.6 Patent Marking. Asahi shall mark the Product marketed and sold by Asahi or
its Affiliates hereunder with appropriate patent numbers or indicia, as long as
it is required by Law.

9.7 Patent Challenge. Auxilium will be permitted to terminate this Agreement
upon written notice to Asahi, effective upon receipt, if Asahi or any of its
Affiliates or subcontractors, directly or indirectly, (i) initiate or request an
interference or opposition proceeding with respect to, or (ii) make, file or
maintain any claim, demand, lawsuit or cause of action to challenge the validity
or enforceability of, or, to the extent applicable, oppose any extension of, or
the grant of a supplementary protection certificate with respect to, any
Auxilium Patent or Auxilium Manufacturing Patent (each of clause (i) or (ii), a
“Patent Challenge”).

ARTICLE 10

REPRESENTATIONS, WARRANTIES AND COVENANTS

10.1 Mutual Representations and Warranties. Each Party hereby represents and
warrants (as applicable) to the other Party as follows, as of the Effective
Date:

10.1.1 Corporate Existence and Power. It is a company or corporation duly
organized, validly existing, and in good standing under the laws of the
jurisdiction in which it is incorporated, and has full corporate power and
authority and the legal right to own and operate

 

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its property and assets and to carry on its business as it is now being
conducted and as contemplated in this Agreement, including the right to grant
the licenses granted by it hereunder.

10.1.2 Authority and Binding Agreement. (i) It has the corporate power and
authority and the legal right to enter into this Agreement and perform its
obligations hereunder, (ii) it has taken all necessary corporate action on its
part required to authorize the execution and delivery of this Agreement and the
performance of its obligations hereunder, and (iii) this Agreement has been duly
executed and delivered on behalf of such Party, and constitutes a legal, valid,
and binding obligation of such Party that is enforceable against it in
accordance with its terms, except as enforcement may be affected by bankruptcy,
insolvency or other similar laws and by general principles of equity.

10.1.3 No Conflicts. The execution, delivery and performance of this Agreement
by it does not (i) conflict with any agreement, instrument or understanding,
oral or written, to which it is a party and by which it may be bound, subject in
all cases to the rights of BTC under the BTC License Agreement or (ii) violate
any Laws of any Governmental Authority having jurisdiction over it.

10.1.4 All Consents and Approvals Obtained. Except with respect to Regulatory
Approvals for the Development, Manufacturing or Commercialization of the Product
or as otherwise described in this Agreement, (i) all necessary consents,
approvals and authorizations of, and (ii) all notices to, and filings by such
Party with, all Governmental Authorities and other Persons required to be
obtained or provided by such Party as of the Effective Date in connection with
the execution, delivery and performance of this Agreement have been obtained and
provided, except for those approvals, if any, not required at the time of
execution of this Agreement.

10.2 Additional Representations, Warranties and Covenants of Auxilium. Auxilium
hereby represents, warrants and covenants to Asahi that:

10.2.1 As of the Effective Date, Auxilium has not filed any Marketing
Authorization Applications with a Governmental Authority in the Territory for
the sale of the Product in the Territory.

10.2.2 As of the Effective Date, to its knowledge, Auxilium is the owner or
licensee of, and has the right to license, the Auxilium Patents (including the
Patents licensed under BTC License Agreement), Auxilium Know-How, and all other
rights necessary to make, use and sell the Product.

10.2.3 As of the Effective Date, neither Auxilium nor its Affiliates, nor, to
Auxilium’s knowledge, its subcontractors nor sublicensees, has received any
notice in writing or otherwise has knowledge of any facts which have led
Auxilium to believe that any of the Regulatory Approvals relating to the Product
are not currently in good standing with the FDA or its foreign equivalents.

 

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10.2.4 As of the Effective Date, neither Auxilium nor its Affiliates, nor, to
the knowledge of Auxilium, its subcontractors nor sublicensees, has received
written notice of any proceedings pending before or threatened by any Regulatory
Authority with respect to the Product or any Facility where the Product is
Manufactured.

10.2.5 As of the Effective Date and except as set forth on Schedule 10.2, to the
knowledge of Auxilium, no Third Party (i) is infringing any such Auxilium
Patents or Auxilium Manufacturing Patents or has misappropriated any Auxilium
Technology or Auxilium Manufacturing Know-How or (ii) has challenged the scope,
duration, validity, enforceability, priority, or Auxilium’s right to use or
license any Auxilium Technology, Auxilium Manufacturing Patent or Auxilium
Manufacturing Know-How.

10.2.6 As of the Effective Date, Schedule 1.12 contains a complete and correct
list of the Auxilium Patents that are Controlled by Auxilium (or its Affiliates)
as of the Effective Date.

10.2.7 As of the Effective Date, Auxilium (or its Affiliate) is the exclusive
owner of the trademark registrations for XIAFLEX® as displayed on Schedule
6.8.1. It has no knowledge of any trademarks or other rights which would prevent
the use or registration of the XIAFLEX® mark in the Territory.

10.2.8 As of the Effective Date, to its knowledge, Auxilium nor its Affiliates
have received any written warning that any Patent, trademark or other
intellectual property right owned by a Third Party would be infringed by
research, development manufacture, use, sale, offer for sale, or import of the
Product in the Field in the Territory.

10.2.9 During the Term, all Bulk Product Manufactured and supplied hereunder by,
or under authority of, Auxilium shall be Manufactured and supplied such that:

(a) The Bulk Product furnished by Auxilium to Asahi under this Agreement:

(i) shall be manufactured, handled, stored and shipped by Auxilium, in
accordance with, and shall conform to, the Product Specifications for the Bulk
Product;

(ii) shall be manufactured, handled, stored and shipped by Auxilium in
compliance with all applicable Laws including, GMPs;

(iii) shall be manufactured using Drug Substance which is manufactured, handled,
stored and shipped by Auxilium in accordance with, and conforms to, the
applicable Drug Substance Specifications and in compliance with all applicable
Laws including, GMPs; and

(iv) shall, at the time delivered by Auxilium or its designated Third Party, not
contain any material that would cause the Bulk Product to be adulterated or
misbranded within the meaning of applicable Laws.

 

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(b) In the course of the Development of the Product, to its knowledge, Auxilium
has not used any employee that is debarred by the FDA under the Generic Drug
Enforcement Act of 1992 (or by any analogous agency or under any analogous Laws
in the Territory).

10.2.10 As of the Effective Date and except as set forth on Schedule 10.2, to
the best of its knowledge, Auxilium has complied with all Laws in all material
respects, including any disclosure requirements, in connection with the filing,
prosecution and maintenance of the Auxilium Patents owned by Auxilium in the
Territory.

10.2.11 As of the Effective Date, none of the rights of Auxilium or its
Affiliates under the Auxilium Patents owned by Auxilium were developed with
federal funding from the United States government or any other Governmental
Authority.

10.2.12 As of the Effective Date and except as set forth on Schedule 10.2,
Auxilium has obtained assignments from the inventors of all inventorship rights
relating to its ownership interest in the Auxilium Patents, and all such
assignments of inventorship rights relating to such Auxilium Patents are valid
and enforceable. With respect to the Auxilium Patents that are the subject of
the BTC License Agreement, to the best knowledge of Auxilium, BTC has obtained
assignments from the inventors of all inventorship rights relating to its
ownership interest in such Patents, and to the best knowledge of Auxilium, all
such assignments are valid and enforceable.

10.2.13 During the Term, Auxilium shall not (i) terminate the BTC License
Agreement, or (ii) agree to any amendments to the BTC License Agreement that
would affect Asahi’s rights hereunder without the prior written consent of
Asahi, which consent shall not be unreasonably withheld.

10.3 Additional Representations, Warranties and Covenants of Asahi. Asahi hereby
represents, warrants and covenants to Auxilium that,

10.3.1 As of the Effective Date, Asahi is solvent and has the ability to pay and
perform all of its obligations as and when such obligations become due,
including payment obligations and other obligations under this Agreement.

10.3.2 As of the Effective Date, Asahi’s compensation programs for its Sales
Representatives do not, and will not, provide financial incentives for the
promotion, sales, and marketing of the Product in violation of any Laws or any
professional requirements.

10.3.3 As of the Effective Date, Asahi’s medical, regulatory or legal teams will
review all training materials and programs prior to use by Asahi to ensure that
all training materials and programs are in accordance with the Commercialization
Plan, the Regulatory Approvals and applicable Laws.

10.3.4 During the Term, all Product Commercialized by, or under authority of,
Asahi:

 

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(a) shall be packaged, labeled, handled, stored and shipped by Asahi, in
accordance with, and shall conform to, the Product Specifications for the
Product;

(b) shall be packaged, labeled, handled, stored and shipped by Asahi in
compliance with all applicable Laws including, GMPs; and

(c) shall, from and after the time delivered by Auxilium hereunder, not contain
any material that would cause the Product to be adulterated or misbranded within
the meaning of Laws.

10.3.5 As of the Effective Date, to the knowledge of Asahi, no claim or demand
of any Person has been asserted in writing to Asahi that challenges the rights
of Asahi to use or license any of the Asahi Applied Technology.

10.3.6 As of the Effective Date, to its knowledge, Asahi has complied with all
applicable Laws, in all material respects, including any disclosure
requirements, in connection with the filing, prosecution and maintenance of the
Asahi Applied Patents owned by Asahi in the Territory.

10.3.7 As of the Effective Date, to the knowledge of Asahi, none of the rights
of Asahi or its Affiliates under the Asahi Applied Patents owned by Asahi were
developed with federal funding from the United States government or any other
Governmental Authority.

10.3.8 As of the Effective Date, Asahi has obtained assignments from the
inventors of all inventorship rights relating to the Asahi Applied Patents which
are owned by Asahi, and, to the knowledge of Asahi, all such assignments of
inventorship rights relating to such Asahi Applied Patents are valid and
enforceable.

10.4 Disclaimer. Asahi understands that the Product is the subject of ongoing
clinical research and development and that Auxilium cannot ensure the safety or
usefulness of the Product or that the Product will receive Regulatory Approvals.
In addition, Auxilium makes no warranties except as set forth in this ARTICLE 10
concerning the Auxilium Technology.

10.5 No Other Representations or Warranties. EXCEPT AS EXPRESSLY STATED IN THIS
AGREEMENT, NO REPRESENTATIONS OR WARRANTIES WHATSOEVER, WHETHER EXPRESS OR
IMPLIED, INCLUDING WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE, NON-INFRINGEMENT, OR NON-MISAPPROPRIATION OF THIRD PARTY INTELLECTUAL
PROPERTY RIGHTS, ARE MADE OR GIVEN BY OR ON BEHALF OF A PARTY. EXCEPT AS
EXPRESSLY STATED IN THIS AGREEMENT, ALL REPRESENTATIONS AND WARRANTIES, WHETHER
ARISING BY OPERATION OF LAW OR OTHERWISE, ARE HEREBY EXPRESSLY EXCLUDED.

 

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ARTICLE 11

INDEMNIFICATION

11.1 Indemnification by Auxilium. Auxilium hereby agrees to save, indemnify,
defend and hold Asahi, its Affiliates, and their respective directors, officers,
agents and employees harmless from and against any and all losses, damages,
liabilities, costs and expenses (including reasonable attorneys’ fees and
expenses) (collectively, “Losses”) arising in connection with any and all
charges, complaints, actions, suits, proceedings, hearings, investigations,
claims, demands, judgments, orders, decrees, stipulations or injunctions by a
Third Party (each a “Third Party Claim”) resulting or otherwise arising from
(i) any breach by Auxilium (or any of its Affiliates) of any of its
representations, warranties, covenants or obligations pursuant to this
Agreement, (ii) the negligence or willful misconduct by Auxilium or its
Affiliates or their respective officers, directors, employees, agents,
consultants or sublicensees (other than Asahi) in performing any obligations
under this Agreement or (iii) any matter related to the Development or
Manufacturing of the Product hereunder (including, for clarity, product
liability Losses resulting therefrom) by Auxilium or its Affiliates or their
respective officers, directors, employees, agents, consultants or sublicensees
(other than Asahi); in each case except to the extent that such Losses are
subject to indemnification by Asahi pursuant to Section 11.2.

11.2 Indemnification by Asahi. Asahi hereby agrees to save, indemnify, defend
and hold Auxilium, its Affiliates, and their respective directors, agents and
employees harmless from and against any and all Losses arising in connection
with any and all Third Party Claims resulting or otherwise arising from (i) any
breach by Asahi (or by any of its Affiliates, wholesalers or distributors) of
any of its representations, warranties, covenants or obligations pursuant to
this Agreement, (ii) the negligence or willful misconduct by Asahi or its
Affiliates, wholesalers or distributors or their respective officers, directors,
employees, agents or consultants in performing any obligations under this
Agreement, or (iii) any matter related to the Development, Packaging and
Labeling or Commercialization of the Product hereunder (including, for clarity,
any product liability Losses resulting therefrom) by Asahi or its Affiliates
wholesalers or distributors or their respective officers, directors, employees,
agents or consultants; in each case except to the extent that such Losses are
subject to indemnification by Auxilium pursuant to Section 11.1.

11.3 Indemnification Procedures.

11.3.1 Notice of Claim. All indemnification claims in respect of any indemnitee
seeking indemnity under Section 11.1 or 11.2, as applicable (collectively, the
“Indemnitees” and each an “Indemnitee”) will be made solely by the corresponding
Party (the “Indemnified Party”). The Indemnified Party will give the
indemnifying Party (the “Indemnifying Party”) prompt written notice (an
“Indemnification Claim Notice”) of any Losses and any legal proceeding initiated
by a Third Party against the Indemnified Party as to which the Indemnified Party
intends to make a request for indemnification under Section 11.1 or 11.2, as
applicable, but in no event will the Indemnifying Party be liable for any Losses
that result from any delay in providing such notice which materially prejudices
the defense of such proceeding. Each Indemnification Claim Notice shall contain
a description of the claim and the nature and amount

 

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of such Loss (to the extent that the nature and amount of such Loss are known at
such time). Together with the Indemnification Claim Notice, the Indemnified
Party will furnish promptly to the Indemnifying Party copies of all notices and
documents (including court papers) received by any Indemnitee in connection with
the Third Party Claim.

11.3.2 Control of Defense. At its option, the Indemnifying Party may assume the
defense of any Third Party Claim subject to indemnification as provided for in
Section 11.1 or 11.2, as applicable, by giving written notice to the Indemnified
Party within thirty (30) days after the Indemnifying Party’s receipt of an
Indemnification Claim Notice. Upon assuming the defense of a Third Party Claim,
the Indemnifying Party may appoint as lead counsel in the defense of the Third
Party Claim any legal counsel it selects, and such Indemnifying Party shall
thereafter continue to defend such Third Party Claim in good faith. Should the
Indemnifying Party assume the defense of a Third Party Claim (and continue to
defend such Third Party Claim in good faith), the Indemnifying Party will not be
liable to the Indemnified Party or any other Indemnitee for any legal expenses
subsequently incurred by such Indemnified Party or other Indemnitee in
connection with the analysis, defense or settlement of the Third Party Claim,
unless the Indemnifying Party has failed to assume the defense and employ
counsel in accordance with this Section 11.3.

11.3.3 Right to Participate in Defense. Without limiting Section 11.3.2, any
Indemnitee will be entitled to participate in the defense of a Third Party Claim
for which it has sought indemnification hereunder and to employ counsel of its
choice for such purpose; provided, however, that such employment will be at the
Indemnitee’s own expense unless (i) the employment thereof has been specifically
authorized by the Indemnifying Party in writing, or (ii) the Indemnifying Party
has failed to assume the defense (or continue to defend such Third Party Claim
in good faith) and employ counsel in accordance with this Section 11.3, in which
case the Indemnified Party will be allowed to control the defense.

11.3.4 Settlement. With respect to any Losses relating solely to the payment of
money damages in connection with a Third Party Claim and that will not result in
the Indemnitee becoming subject to injunctive or other relief or otherwise
adversely affect the business of the Indemnitee in any manner, and as to which
the Indemnifying Party will have acknowledged in writing the obligation to
indemnify the Indemnitee hereunder, the Indemnifying Party will have the sole
right to consent to the entry of any judgment, enter into any settlement or
otherwise dispose of such Loss, on such terms as the Indemnifying Party, in its
reasonable discretion, will deem appropriate (provided, however, that such terms
shall include a complete and unconditional release of the Indemnified Party from
all liability with respect thereto), and will transfer to the Indemnified Party
all amounts which said Indemnified Party will be liable to pay prior to the time
of the entry of judgment. With respect to all other Losses in connection with
Third Party Claims, where the Indemnifying Party has assumed the defense of the
Third Party Claim in accordance with Section 11.3.2, the Indemnifying Party will
have authority to consent to the entry of any judgment, enter into any
settlement or otherwise dispose of such Loss, provided it obtains the prior
written consent of the Indemnified Party (which consent will be at the
Indemnified Party’s reasonable discretion). The Indemnifying Party that has
assumed the defense of (and continues to defend) the Third Party Claim in
accordance with Section 11.3.2

 

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will not be liable for any settlement or other disposition of a Loss by an
Indemnitee that is reached without the written consent of such Indemnifying
Party. Regardless of whether the Indemnifying Party chooses to defend or
prosecute any Third Party Claim, no Indemnitee will admit any liability with
respect to, or settle, compromise or discharge, any Third Party Claim without
first offering to the Indemnifying Party the opportunity to assume the defense
of the Third Party Claim in accordance with Section 11.3.2.

11.3.5 Cooperation. If the Indemnifying Party chooses to defend or prosecute any
Third Party Claim, the Indemnified Party will, and will cause each other
Indemnitee to, cooperate in the defense or prosecution thereof and will furnish
such records, information and testimony, provide such witnesses and attend such
conferences, discovery proceedings, hearings, trials and appeals as may be
reasonably requested in connection with such Third Party Claim. Such cooperation
will include access during normal business hours afforded to the Indemnifying
Party to, and reasonable retention by the Indemnified Party of, records and
information that are reasonably relevant to such Third Party Claim, and making
Indemnitees and other employees and agents available on a mutually convenient
basis to provide additional information and explanation of any material provided
hereunder, and the Indemnifying Party will reimburse the Indemnified Party for
all its reasonable out-of-pocket expenses incurred in connection with such
cooperation.

11.3.6 Expenses of the Indemnified Party. Except as provided above, the
reasonable and verifiable costs and expenses, including fees and disbursements
of counsel, incurred by the Indemnified Party in connection with any Third Party
Claim will be reimbursed on a calendar quarter basis by the Indemnifying Party,
without prejudice to the Indemnifying Party’s right to contest the Indemnified
Party’s right to indemnification and subject to refund in the event the
Indemnifying Party is ultimately held not to be obligated to indemnify the
Indemnified Party.

11.4 Limitation of Liability. NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR ANY
CONSEQUENTIAL, INCIDENTAL, OR INDIRECT DAMAGES ARISING FROM OR RELATING TO ANY
BREACH OF THIS AGREEMENT, REGARDLESS OF ANY NOTICE OF THE POSSIBILITY OF SUCH
DAMAGES. NOTWITHSTANDING THE FOREGOING, NOTHING IN THIS SECTION 11.4 IS INTENDED
TO OR SHALL LIMIT OR RESTRICT THE INDEMNIFICATION RIGHTS OR OBLIGATIONS OF ANY
PARTY UNDER SECTION 11.1 OR 11.2, OR DAMAGES AVAILABLE FOR A PARTY’S BREACH OF
CONFIDENTIALITY OBLIGATIONS UNDER ARTICLE 12. EXCEPT AS EXPRESSLY SET FORTH IN
ANY REPRESENTATION OR WARRANTY IN ARTICLE 10, ASAHI ACKNOWLEDGES AND AGREES THAT
AUXILIUM HAS MADE NO REPRESENTATIONS OR WARRANTIES WITH RESPECT TO, AND ASAHI
SHALL HAVE NO CLAIM OR RIGHT (INCLUDING WITH RESPECT TO INDEMNIFICATION PURSUANT
TO THIS ARTICLE 11 (OR OTHERWISE)) WITH RESPECT TO, ANY INFORMATION, DOCUMENTS
OR MATERIALS FURNISHED TO OR FOR ASAHI BY AUXILIUM, ANY OF ITS AFFILIATES, OR
ANY OF ITS OR THEIR OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR ADVISORS,
INCLUDING THE CONFIDENTIAL INFORMATION PACKAGE

 

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REGARDING THE PRODUCT PROVIDED TO ASAHI AND ANY INFORMATION, DOCUMENTS OR
MATERIAL MADE AVAILABLE TO ASAHI IN ANY “DATA ROOM”, MANAGEMENT PRESENTATION OR
ANY OTHER FORM IN EXPECTATION OF THE TRANSACTION AND COLLABORATION CONTEMPLATED
HEREBY.

11.5 Insurance. Each Party shall (provided that either Party shall be allowed to
self insure) procure and maintain insurance, including clinical trials insurance
and product liability insurance, adequate to cover its obligations hereunder and
which is consistent with normal business practices of prudent companies
similarly situated at all times during which the Product is being clinically
tested in human subjects or commercially distributed or sold by such Party
pursuant to this Agreement, and the clinical trials insurance coverage shall,
prior to the First Commercial Sale of a Product in the Territory, in no event be
less than Ten Million Dollars ($10,000,000) per loss occurrence and Ten Million
Dollars ($10,000,000) in the aggregate, and product liability insurance coverage
shall, after such First Commercial Sale in the Territory, in no event be less
than Twenty-five Million Dollars ($25,000,000) per loss occurrence and
Twenty-five Million Dollars ($25,000,000) in the aggregate. It is understood
that such insurance shall not be construed to create a limit of either Party’s
liability with respect to its indemnification obligations under this ARTICLE 11.
Each Party shall provide the other Party with written evidence of such insurance
prior to commencement of this Agreement (if requested by the other Party) and
upon expiration of any one coverage. Each Party shall provide the other Party
with written notice at least thirty (30) days prior to the cancellation,
nonrenewal or material change in such insurance or self - insurance which
materially adversely affects the rights of the other Party hereunder.

ARTICLE 12

CONFIDENTIALITY

12.1 Confidential Information. As used in this Agreement, the term “Confidential
Information” means all information, whether it be written or oral, including all
production schedules, lines of products, volumes of business, processes, new
product developments, product designs, formulae, technical information,
laboratory data, clinical data, patent information, know-how, trade secrets,
financial and strategic information, marketing and promotional information and
data, and other material relating to any products, projects or processes of one
Party (the “Disclosing Party”) that is provided to, or otherwise obtained by,
the other Party (the “Receiving Party”) in connection with this Agreement
(including information exchanged prior to the date hereof in connection with the
transactions set forth in this Agreement, including any information disclosed by
either Party pursuant to the Confidentiality and Nondisclosure Agreement between
the Parties dated September 16, 2009 (the “Confidential Disclosure Agreement”)).
Notwithstanding the foregoing sentence, Confidential Information shall not
include any information or materials that:

12.1.1 were already known to the Receiving Party (other than under an obligation
of confidentiality), at the time of disclosure by the Disclosing Party, to the
extent such Receiving Party has documentary evidence to that effect;

 

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12.1.2 were generally available to the public or otherwise part of the public
domain at the time of disclosure thereof to the Receiving Party;

12.1.3 became generally available to the public or otherwise part of the public
domain after disclosure or development thereof, as the case may be, and other
than through any act or omission of a Party in breach of such Party’s
confidentiality obligations under this Agreement;

12.1.4 were disclosed to a Party, other than under an obligation of
confidentiality, by a Third Party who had no obligation to the Disclosing Party
not to disclose such information to others; or

12.1.5 were independently discovered or developed by or on behalf of the
Receiving Party without the use of the Confidential Information belonging to the
other Party, to the extent such Receiving Party has documentary evidence to that
effect.

12.2 Confidentiality Obligations. Each of Asahi and Auxilium shall keep all
Confidential Information received from or on behalf of the other Party with the
same degree of care with which it maintains the confidentiality of its own
Confidential Information, but in all cases no less than a reasonable degree of
care. Neither Party shall use such Confidential Information for any purpose
other than in performance of this Agreement or disclose the same to any other
Person other than to such of its and its Affiliates’ directors, managers,
employees, independent contractors, agents, consultants or, solely with respect
to Auxilium, its sublicensees who have a need to know such Confidential
Information to implement the terms of this Agreement or enforce its rights under
this Agreement; provided, however, that a Receiving Party shall advise any of
its and its Affiliates’ directors, managers, employees, independent contractors,
agents, consultants or, solely with respect to Auxilium, its sublicensees who
receives such Confidential Information of the confidential nature thereof and of
the obligations contained in this Agreement relating thereto, and the Receiving
Party shall ensure (including, in the case of a Third Party, by means of a
written agreement with such Third Party having terms at least as protective as
those contained in this ARTICLE 12) that all such directors, managers,
employees, independent contractors, agents, consultants or, solely with respect
to Auxilium, its sublicensees comply with such obligations. Upon termination of
this Agreement (as opposed to expiration), the Receiving Party shall return or
destroy all documents, tapes or other media containing Confidential Information
of the Disclosing Party that remain in the possession of the Receiving Party or
its directors, managers, employees, independent contractors, agents, consultants
or, solely with respect to Auxilium, its sublicensees, except that the Receiving
Party may keep one copy of the Confidential Information in the legal department
files (or with other appropriately secure and confidential files) of the
Receiving Party, solely for archival purposes. Such archival copy shall be
deemed to be the property of the Disclosing Party, and shall continue to be
subject to the provisions of this ARTICLE 12. It is understood that receipt of
Confidential Information under this Agreement will not limit the Receiving Party
from assigning its employees to any particular job or task in any way it may
choose, subject to the terms and conditions of this Agreement.

 

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12.3 Permitted Disclosure and Use. Notwithstanding Section 12.2, (i) either
Party may disclose Confidential Information belonging to the other Party only to
the extent such disclosure is reasonably necessary to: (a) comply with or
enforce any of the provisions of this Agreement; or (b) comply with Laws; and
(ii) Auxilium may disclose Confidential Information belonging to Asahi related
to a Product only to the extent such disclosure is reasonably necessary to
obtain or maintain Regulatory Approval of a Product, as applicable, to the
extent such disclosure is made to a Governmental Authority. If a Party deems it
necessary to disclose Confidential Information of the other Party pursuant to
this Section 12.3, such Party shall give reasonable advance written notice of
such disclosure to the other Party to permit such other Party sufficient
opportunity to object to such disclosure or to take measures to ensure
confidential treatment of such information, including seeking a protective order
or other appropriate remedy. Notwithstanding Section 12.2, Auxilium may also
disclose Confidential Information belonging to Asahi related to the Product
(X) to BTC pursuant to the BTC License Agreement and (Y) to Third Parties in
connection with the development or commercialization of the Product outside of
the Field or outside of the Territory (provided that BTC and such Third Parties
are bound by written agreements having terms at least as protective as those
contained in this ARTICLE 12 with respect to keeping such Confidential
Information confidential).

12.4 Notification. The Receiving Party shall notify the Disclosing Party
promptly upon discovery of any unauthorized use or disclosure of the Disclosing
Party’s Confidential Information, and will cooperate with the Disclosing Party
in any reasonably requested fashion to assist the Disclosing Party to regain
possession of such Confidential Information and to prevent its further
unauthorized use or disclosure.

12.5 Publicity; Filing of this Agreement.

12.5.1 Publicity. The press release to be issued by Auxilium (the “Auxilium
Press Release”) and the press release to be issued by Asahi in connection with
the transactions are set forth on Schedule 12.5.1. Except as otherwise provided
in this Section 12.5, each Party shall maintain the confidentiality of all
provisions of this Agreement, and without the prior written consent of the other
Party, which consent shall not be unreasonably withheld, neither Party nor its
respective Affiliates shall make any press release or other public announcement
of or otherwise disclose the provisions of this Agreement to any Third Party,
except for: (i) disclosure to those of its directors, officers, employees,
accountants, attorneys, underwriters, lenders and other financing sources,
potential strategic partners, advisors, agents and, solely with respect to
Auxilium, its sublicensees whose duties reasonably require them to have access
to this Agreement, provided that such directors, officers, employees,
accountants, attorneys, underwriters, lenders and other financing sources,
advisors, agents or, solely with respect to Auxilium, sublicensees are required
to maintain the confidentiality of this Agreement; (ii) disclosures required by
Nasdaq regulation or any listing agreement with a national securities exchange,
in which case the disclosing Party shall provide the nondisclosing Party with at
least sixty (60) hours notice, but in any event no later than the time the
disclosure required by such Nasdaq regulation or listing agreement is made;
(iii) disclosures as may be required by Laws, in which case the disclosing Party
shall provide the nondisclosing Party with prompt advance notice of such
disclosure and cooperate with the nondisclosing Party to seek a protective order
or

 

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other appropriate remedy, including a request for confidential treatment in the
case of a filing with the Securities and Exchange Commission; (iv) the report on
Form 8-K, which may be filed by Auxilium or an Affiliate of Auxilium setting
forth the Auxilium Press Release referred to above, and the report on Form 10Q,
which may be filed by Auxilium or an Affiliate of Auxilium setting forth this
Agreement in redacted form (i.e., Redacted Agreement) as provided in
Section 12.5.2; (v) disclosures that are consistent with or complementary to
those described in clause (iv) but which do not contain any Confidential
Information of the other Party; and (vi) other disclosures for which consent has
previously been given. A Party may publicly disclose without regard to the
preceding requirements of this Section 12.5 any information that was previously
publicly disclosed pursuant to this Section 12.5.

12.5.2 Redacted Agreement. Auxilium shall prepare a redacted copy of this
Agreement (“Redacted Agreement”) which it shall provide to Asahi for its
comments. In the event both Auxilium and Asahi are obligated to file this
Agreement, each shall file the Redacted Agreement as jointly agreed by the
Parties. In the event that only Auxilium is obligated to file this Agreement,
Auxilium may file the Redacted Agreement at its discretion but taking into
account any reasonable comments provided by Asahi with respect thereto.

12.6 Publication. Asahi shall submit copies of each proposed academic,
scientific, medical and other publication or presentation that is prepared under
Asahi’s direct or indirect authorization (e.g., including such materials as may
be prepared following a physician/investigator - initiated study) and that
contains or refers to the Auxilium Patents, Auxilium Know-How or otherwise
relates to the Product or any research or Development Activities under this
Agreement to Auxilium at least thirty (30) days in advance of submitting such
proposed publication or presentation to a publisher or other Third Party.
Auxilium shall have the right to review, comment on and consent to each such
proposed publication or presentation at its sole discretion. Auxilium shall have
the right to remove any of its Confidential Information prior to submission for
publication or presentation. Asahi shall redact or otherwise modify the proposed
publication or presentation to remove any such Confidential Information of
Auxilium. In addition, in the event that the document includes data, information
or material generated by Auxilium’s scientists, and professional standards for
authorship would be consistent with including Auxilium’s scientists as
co-authors of the document, the names of such scientists will be included as
co-authors.

12.7 Use of Names. Except as otherwise set forth in this Agreement, neither
Party shall use the name of the other Party in relation to this transaction in
any public announcement, press release or other public document without the
written consent of such other Party, which consent shall not be unreasonably
withheld; provided, however, that subject to Section 12.5, either Party may use
the name of the other Party in any document filed with any Regulatory Authority
or Governmental Authority, including the Securities and Exchange Commission.

12.8 Survival. The obligations and prohibitions contained in this ARTICLE 12 as
they apply to Confidential Information shall survive the expiration or
termination of this Agreement for a period of ten (10) years.

 

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ARTICLE 13

TERM AND TERMINATION

13.1 Term. This Agreement shall become effective on the Effective Date and,
unless earlier terminated pursuant to this ARTICLE 13, shall remain in effect,
on a Product-by-Product basis, until the expiration of the Royalty Term for such
Product in the Territory (the “Term”).

13.2 Termination for Breach. Either Party may, without prejudice to any other
remedies available to it at law or in equity, terminate this Agreement upon
written notice to the other Party in the event that the other Party (the
“Breaching Party”) shall have materially breached or defaulted in the
performance of any of its obligations. The Breaching Party shall have sixty
(60) days (thirty (30) days in the event of payment) after written notice
thereof was provided to the Breaching Party by the non-breaching Party to remedy
such default. Unless the Breaching Party has cured any such breach or default
prior to the expiration of such sixty (60) day period (thirty (30) day period
for payment), such Termination shall become effective upon the end of the sixty
(60) day period (thirty (30) day period for non-payment).

13.3 Termination as a Result of Bankruptcy. Each Party shall have the right to
terminate this Agreement upon written notice as a result of the filing or
institution of bankruptcy, reorganization, liquidation or receivership
proceedings, or upon an assignment of a substantial portion of the assets for
the benefit of creditors by the other Party; provided that such termination
shall be effective only if such proceeding is not dismissed within ninety
(90) days after the filing thereof.

13.4 Termination by Auxilium. Without limitation of its rights under this
Article 13, Auxilium may also terminate this Agreement in its entirety or on an
indication-by-indication basis, as applicable, pursuant to the provisions of
Sections 2.5.1, 5.9.2, and 9.7.

13.5 Termination by Asahi. Without limitation of its rights under this ARTICLE
13, Asahi may also, by written notice to Auxilium, terminate this Agreement
solely with respect to Peyronie’s Disease, at any time during the Term following
the third (3rd) anniversary of the Effective Date, in the event unexpected
additional investment would be imposed on Asahi due to the necessity of
(a) conducting additional clinical studies in the Territory or (b) increasing
the number of subjects, number of patient arms or study duration, in each case
compared to that contemplated under the initial Development Plan and based on
consultations with the Regulatory Authority in the Territory, such that the
Development Costs and the Regulatory Costs necessary for obtaining and
maintaining Regulatory Approval for the Product for Peyronie’s Disease are
projected to increase by [**] percent ([**]%) or greater over the Development
Costs and the Regulatory Costs estimated before consultation with the Regulatory
Authority in the Territory.

ARTICLE 14

EFFECTS OF TERMINATION

14.1 Effects of Termination. Without limiting any other legal or equitable
remedies that a Party may have, if this Agreement is terminated by Auxilium
pursuant to Section 13.2, 13.3 or 13.4 or by Asahi pursuant to Section 13.5
prior to its natural expiration, then the

 

 

** CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND WILL BE FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A
CONFIDENTIAL TREATMENT REQUEST.

 

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following provisions shall apply; provided, however, that if this Agreement is
terminated under such Section for one or more indications in the Field or one or
more Products, this Section shall be applied for only the relevant indication or
Product, but shall not be applied for all the non-terminated indications and
Product (for which this Agreement shall remain in full force):

14.1.1 Termination of Licenses. All rights and licenses granted to Asahi
hereunder shall immediately terminate and be of no further force and effect and
Asahi shall cease Developing, Commercializing and Packaging and Labeling the
Product (except as otherwise set forth in Section 14.1.4).

14.1.2 Assignments. Asahi will promptly, in each case within sixty (60) days
after receipt of Auxilium’s request, and:

(a) To the extent permitted by Laws and applicable agreements, assign to
Auxilium all of Asahi’s right, title and interest in and to any agreements (or
portions thereof) between Asahi and Third Parties that relate to the Development
or Commercialization of the Product;

(b) To the extent permitted by Laws and applicable agreements, assign to
Auxilium all of Asahi’s right, title and interest in and to any (i)Promotional
Materials and (ii) copyrights and trademarks, including any goodwill associated
therewith, and any registrations and design patents for the foregoing, and
(iii) any Internet domain name registrations for such trademarks and slogans,
all to the extent solely related to the Product; provided, however, in the event
Auxilium exercises such right to have assigned such Promotional Materials, to
the extent not prohibited by Laws or applicable agreements, Asahi shall grant,
and hereby does grant, a royalty-free right and license to any housemarks,
trademarks, names and logos of Asahi contained therein for a period of twelve
(12) months in order to use such Promotional Materials in connection with the
Commercialization of the Product;

(c) assign to Auxilium, the management and continued performance of any clinical
trials for the Product ongoing hereunder as of the effective date of such
termination in respect of which Auxilium shall assume full financial
responsibility from and after the effective date of such termination; provided,
however, that Auxilium shall have the right to decline to undertake the
continuance of such trial(s), in which case Asahi shall be obligated to
wind-down such clinical trial(s) as promptly as possible and in accordance with
all Laws (for clarity, Auxilium hereby grants Asahi, to the extent applicable, a
limited license under the Auxilium Technology for the sole purpose of concluding
such trial(s), subject to Section 4.6 remaining effective with respect to any
Development Data arising from the exercise of such limited license);

(d) transfer to Auxilium all of, if any, Asahi’s right, title and interest in
and to any and all regulatory filings, Regulatory Approvals and other Regulatory
Materials for the Product in respect of which Auxilium shall assume full
financial responsibility;

 

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(e) transfer to Auxilium all of Asahi’s right, title and interest in and to any
and all Development Data and Promotional Commercialization Data Controlled by
Asahi for the Product; and

(f) provide a copy of (i) the material tangible embodiments of the foregoing and
(ii) any other material books, records, files and documents Controlled by Asahi
solely to the extent related to the Product and which may be redacted to exclude
Confidential Information of Asahi;

(g) provided, however, that to the extent that any agreement or other asset
described in this Section 14.1.2 is not assignable by Asahi, then such agreement
or other asset will not be assigned, and upon the request of Auxilium, Asahi
will take such steps as may be reasonably necessary to allow Auxilium to obtain
and to enjoy the benefits of such agreement or other asset. For purposes of
clarity, (1) Auxilium shall have the right to request that Asahi take any or all
of the foregoing actions in whole or in part, or with respect to all or any
portion of the assets set forth in the foregoing provisions and (2) to the
extent Auxilium requests Asahi to transfer its right, title and interest in the
items set forth in this Section 14.1.2 to Auxilium, Asahi shall also cause its
Affiliates to transfer and assign to Auxilium all of such Affiliates’ right,
title and interest in and to the foregoing items set forth in this
Section 14.1.2.

14.1.3 Disclosure and Delivery. Asahi will promptly transfer to Auxilium copies
of any physical embodiment of any Asahi Applied Know-How, to the extent then
used in connection with the Development or Commercialization of the Product;
such transfer shall be effected by the delivery of material documents, to the
extent such Asahi Applied Know-How is embodied in such documents, and to the
extent that Asahi Applied Know-How is not fully embodied in such documents,
Asahi shall make its employees and agents who have knowledge of such Asahi
Applied Know-How in addition to that embodied in documents available to Auxilium
for interviews, demonstrations and training to effect such transfer in a manner
sufficient to enable Auxilium to practice such Asahi Applied Know-How but only
in a manner as set out as follows in this Section. The appropriate technical
teams at Auxilium and Asahi will meet to plan transfer for the Asahi Applied
Know-How as follows: (a) Asahi’s designated representative(s) for the Product
will meet with representatives from Auxilium to answer questions with respect to
the Asahi Applied Know-How and establish a plan for the transfer for such Asahi
Applied Know-How; (b) Asahi will allocate adequate appropriately qualified
representatives to work with Auxilium to review the Asahi Applied Know-How to
enable the completion of the transfer within thirty (30) days of the completion
of the initial transfer planning meetings to the extent reasonable, but in any
event no longer than sixty (60) days thereafter.

14.1.4 Disposition of Inventory. Asahi and its Affiliates will be entitled,
during the period ending on the last day of the sixth (6th) full month following
the effective date of such termination, to sell any inventory of Product
affected by such termination that remains on hand as of the effective date of
the termination, so long as Asahi pays to Auxilium the Royalty Payments and
other amounts payable hereunder (including milestones) applicable to said
subsequent sales, with respect to sales in the Territory, as applicable, in
accordance with the

 

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terms and conditions set forth in this Agreement and otherwise complies with the
terms set forth in this Agreement.

14.1.5 Disposition of Commercialization Related Materials. Asahi will promptly
deliver to Auxilium in electronic, sortable form (a) a list identifying all
wholesalers and other distributors involved in the Commercialization of the
Product in the Territory as well as any customer lists (e.g., purchasers)
related to the Commercialization of the Product in the Territory, and (b) all
Promotional Materials as well as any items bearing the Product Trademark and/or
any trademarks or housemarks of Auxilium otherwise associated with the Product.

14.2 Effects of Termination. Without limiting any other legal or equitable
remedies that a Party may have, if this Agreement is terminated by Asahi
pursuant to Section 13.2 or 13.3 prior to its natural expiration, then the
following provisions shall apply:

14.2.1 Termination of Licenses. All rights and licenses granted to Auxilium
hereunder shall immediately terminate and be of no further force and effect, and
Auxilium shall cease use of Asahi Applied Technology unless the Parties agreed
on reasonable royalty or any other consideration to be paid from Auxilium to
Asahi.

14.2.2 Asahi Rights In Lieu of Termination. Without limiting any other legal or
equitable remedies that Asahi may have, if Asahi has the right to terminate this
Agreement in accordance with Section 13.2 because Auxilium is the breaching
Party or Section 13.3, then Asahi shall have the option, in its sole discretion,
to allow this Agreement to remain in full force and effect in lieu of exercising
such termination right.

14.3 Expiration of this Agreement.

14.3.1 Upon expiration of this Agreement pursuant to Section 13.1 with respect
to a given Product (each such Product, a “Trademark Royalty Product”), all
rights and licenses under Auxilium Technology and Joint Collaboration Patent
granted to Asahi shall terminate with respect to each Trademark Royalty Product;
provided, however, that from and after the date of such expiration, Auxilium
shall grant, and hereby does grant, to Asahi (i) a fully paid, non-exclusive,
perpetual license under the Auxilium Know-How solely to Package and Label and
Commercialize such Trademark Royalty Product for sale in the Field in the
Territory, and (ii) subject to Section 14.3.5, an exclusive, royalty-bearing
license with regard to the Product Trademark and Product Trade Dress solely to
(a) Commercialize such Trademark Royalty Product in the Field in the Territory
and (b) Package and Label and have Packaged and Labeled such Trademark Royalty
Product for Commercialization in the Field in the Territory.

14.3.2 For so long as Asahi is Commercializing a Trademark Royalty Product under
the Product Trademark and Product Trade Dress pursuant to the license granted to
Asahi in Section 14.3.1(ii) and not purchasing the Product from Auxilium
pursuant to Section 7.15, in consideration of the license granted to Asahi in
Section 14.3.1(ii) and the license granted to Asahi under the Auxilium
Manufacturing Technology pursuant to Section 7.15, Asahi shall pay Auxilium an
amount equal to royalties on annual Net Sales of all Trademark Royalty Products
at the following rate:

 

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Fiscal Year Net Sales

   Rate  

For that portion of aggregate Fiscal Year Net Sales

less than

[**] Yen (¥[**])

     [ **]% 

For that portion of aggregate Fiscal Year Net Sales

equal to or greater than [**] Yen (¥[**])

     [ **]% 

For so long as Asahi is Commercializing a Trademark Royalty Product under the
Product Trademark and Product Trade Dress pursuant to the license granted to
Asahi in Section 14.3.1(ii) and is purchasing the Product from Auxilium pursuant
to a supply agreement to be concluded in accordance with Section 7.15, in
consideration of the license granted to Asahi in Section 14.3.1(ii) and the
supply of Trademark Royalty Product for commercial sale under such supply
agreement, Asahi shall pay the amounts equal to royalties on annual Net Sales of
all Trademark Royalty Products at the above rate set forth in this Section plus
[**].

14.3.3 Asahi may use the Regulatory Materials and Regulatory Data provided by
Auxilium hereunder or generated by Asahi hereunder, and any other Development
Data and Commercialization Data, for the purposes of maintaining Regulatory
Approval for the Product in the Field in the Territory.

14.3.4 For so long as Asahi is Commercializing a Trademark Royalty Product under
the Product Trademark and Product Trade Dress pursuant to the license granted to
Asahi in Section 14.3.1(ii), and without limitation of Section 14.5, the
following provisions shall remain in full force and effect: Articles 11, 12 and
16 and Sections 2.5, 2.7, 5.1.3, 5.5, 5.6.1, 5.7, 6.5 – 6.8 (inclusive), 6.10,
7.15, 8.4.1, 8.6, 8.7, 8.9, 8.10, 8.11, 14.3 and 15.4.

14.3.5 In the event that there is any period of twelve (12) months following the
expiration of this Agreement during which Asahi is not continuously
Commercializing a given Trademark Royalty Product, then the Parties shall
discuss the reasons therefor and if the Parties agree that the license granted
under Section 14.3.1(ii) is no longer necessary or Auxilium determines at its
sole discretion that the reasons presented by Asahi are not adequate to justify
such lack of continuous Commercialization, then such license shall be deemed to
have expired.

14.4 Accrued Rights. Termination or expiration of this Agreement for any reason
will be without prejudice to any rights that will have accrued to the benefit of
a Party prior to the effective date of such termination. Such termination will
not relieve a Party from obligations that are expressly indicated to survive the
termination or expiration of this Agreement.

14.5 Survival. Notwithstanding anything to the contrary contained herein, the
following provisions shall survive any expiration or termination of this
Agreement: Articles: 11, 12, 15 and 16 and Sections: 14.1, 14.2, 14.4, 14.5,
14.6. Except as set forth in this ARTICLE 14 or otherwise expressly set forth
herein, upon termination or expiration of this Agreement all other rights and
obligations of the Parties shall cease.

 

 

** CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND WILL BE FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A
CONFIDENTIAL TREATMENT REQUEST.

 

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14.6 Rights in Bankruptcy. All rights and licenses granted under or pursuant to
this Agreement by Auxilium and Asahi are, and shall otherwise be deemed to be,
for purposes of Section 365(n) of the U.S. Bankruptcy Code (and of any similar
provisions of Laws under any other jurisdiction), licenses of right to
“intellectual property” as defined under Section 101 of the U.S. Bankruptcy
Code. The Parties agree that each Party, as licensee of certain rights under
this Agreement, shall retain and may fully exercise all of its rights and
elections under the U.S. Bankruptcy Code and under any similar provisions of Law
under any other jurisdiction. The Parties further agree that, in the event of
the commencement of a bankruptcy proceeding by or against a Party (such Party,
the “Bankrupt Party”) under the U.S. Bankruptcy Code or under any similar
provisions of Law under any other jurisdiction, (a) the other Party shall be
entitled to a complete duplicate of (or complete access to, as appropriate) any
intellectual property licensed to such other Party and all embodiments of such
intellectual property, which, if not already in such other Party’s possession,
shall be promptly delivered to it (x) upon any such commencement of a bankruptcy
proceeding upon such other Party’s written request therefor, unless the Bankrupt
Party elects to continue to perform all of its obligations under this Agreement
or (y) if not delivered under clause (x), following the rejection of this
Agreement by the Bankrupt Party upon written request therefor by the other Party
and (b) the Bankrupt Party shall not unreasonably interfere with the other
Party’s rights to intellectual property and all embodiments of intellectual
property, and shall assist and not unreasonably interfere with the other Party
in obtaining intellectual property and all embodiments of intellectual property
from another entity. The “embodiments” of intellectual property includes all
tangible, intangible, electronic or other embodiments of rights and licenses
hereunder, including all compounds and products embodying intellectual property,
Products, filings with Regulatory Authorities and related rights and Auxilium
Know-How in the case that Auxilium is the Bankrupt Party and Asahi Applied
Know-How in the case Asahi is the Bankrupt Party.

ARTICLE 15

DISPUTE RESOLUTION

15.1 Disputes. The Parties recognize that, from time to time during the Term,
disputes may arise as to certain matters which relate to either Party’s rights
and/or obligations hereunder. It is the objective of the Parties to establish
procedures to facilitate the resolution of disputes arising under this Agreement
in an expedient manner by mutual cooperation and without resort to litigation.
To accomplish this objective, the Parties agree to follow the procedures set
forth in this ARTICLE 15 to resolve any controversy or claim arising out of,
relating to or in connection with any provision of this Agreement (other than a
dispute addressed in Section 3.4).

15.2 Arising Between the Parties. With respect to all disputes arising between
the Parties and not from the JSC, including any alleged failure to perform, or
breach, of this Agreement, or any issue relating to the interpretation or
application of this Agreement, if the Parties are unable to resolve such dispute
within thirty (30) days after such dispute is first identified by either Party
in writing to the other, the Parties shall refer such dispute to the Chief
Executive Officers of each of the Parties, or a designee from senior management
with decision-making authority (the Chief Executive Officer or such designee,
the “Executive Officer”) for

 

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attempted resolution by good-faith negotiations within thirty (30) days after
such notice is received by the Executive Officers of each of the Parties.

15.3 Dispute Resolutions. If the Executive Officers are not able to resolve such
dispute referred to them under Section 15.2 within such thirty (30) day period,
then either Party shall have right to pursue any legal or equitable remedy
available to it under Laws; provided that any litigation arising under this
Agreement shall be brought in the United States District Court for the Southern
District of New York. Each Party hereby agrees to the exclusive jurisdiction of
such court and waives any objections as to the personal jurisdiction or venue of
such court.

15.4 Patent and Trademark Dispute Resolution. Any dispute, controversy or claim
relating to the scope, validity, enforceability or infringement of any patent
rights covering the manufacture, use or sale of any Product or of any trademark
rights relating to any Product shall be submitted to a court of competent
jurisdiction in the Territory in which such patent or trademark rights were
granted or arose.

15.5 Injunctive Relief. Nothing herein may prevent either Party from seeking a
preliminary injunction or temporary restraining order, in any court of competent
jurisdiction, so as to prevent any Confidential Information from being disclosed
in violation of this Agreement.

ARTICLE 16

MISCELLANEOUS

16.1 Entire Agreement; Amendment. This Agreement, including the Exhibits and
Schedules hereto, sets forth the complete, final and exclusive agreement and all
the covenants, promises, agreements, warranties, representations, conditions and
understandings between the Parties hereto with respect to the subject matter
hereof and supersedes, as of the Effective Date, all prior agreements and
understandings between the Parties with respect to the subject matter hereof,
including the Confidential Disclosure Agreement (which shall remain effective
prior to the Effective Date). There are no covenants, promises, agreements,
warranties, representations, conditions or understandings, either oral or
written, between the Parties other than as are set forth herein and therein. No
subsequent alteration, amendment, change or addition to this Agreement shall be
binding upon the Parties unless reduced to writing and signed by an authorized
representative of each Party.

16.2 Force Majeure. A Party shall be excused from the performance of its
obligations under this Agreement to the extent that such performance is
prevented by force majeure and the nonperforming Party promptly provides notice
of the prevention to the other Party. Such excuse shall be continued so long as
the condition constituting force majeure continues and the nonperforming Party
makes reasonable efforts to remove the condition. For purposes of this
Agreement, force majeure shall include conditions beyond the control of the
Parties, including an act of God, war, civil commotion, terrorist act, labor
strike or lock-out, epidemic, failure or default of public utilities or common
carriers, destruction of production facilities or materials by fire, earthquake,
storm or like catastrophe. Notwithstanding the foregoing, a Party shall not be
excused from making payments owed hereunder because of force majeure affecting
such Party.

 

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16.3 Notices. Any notice required or permitted to be given under this Agreement
shall be in writing, shall specifically refer to this Agreement, and shall be
addressed to the appropriate Party at the address specified below or such other
address as may be specified by such Party in writing in accordance with this
Section 16.3, and shall be deemed to have been given for all purposes (i) when
delivered, if hand-delivered or sent by facsimile on the next business day,
(ii) on three (3) business days if sent by a reputable international overnight
courier service, or (iii) seven (7) business days after mailing, if mailed by
first-class certified or registered airmail, postage prepaid, return receipt
requested. Unless otherwise specified in writing, the mailing addresses of the
Parties shall be as described below:

 

If to Auxilium:    Auxilium Pharmaceuticals, Inc.    40 Valley Stream Parkway   
Malvern, Pennsylvania 19355    U.S.A.    Attention: General Counsel    Fax:
1-484-321-5996 With a copy to:    Morgan, Lewis & Bockius LLP    502 Carnegie
Center    Princeton, New Jersey 08540    U.S.A.    Attn: Randall B. Sunberg   
Fax: 1-609-919-6701 If to Asahi:    Asahi Kasei Pharma Corporation    1-105
Kanda Jinbocho, Chiyoda-ku    Tokyo 101-8101, Japan    Attention: General
Manager, Business Development & Licensing    Fax: 81-3-3296-3681

16.4 No Strict Construction; Interpretation. This Agreement has been prepared
jointly and shall not be strictly construed against either Party. Ambiguities,
if any, in this Agreement shall not be construed against any Party, irrespective
of which Party may be deemed to have authored the ambiguous provision. The
headings of each Article and Section in this Agreement have been inserted for
convenience of reference only and are not intended to limit or expand on the
meaning of the language contained in the particular Article or Section.

16.5 Assignment. Neither Party may assign or transfer this Agreement or any
rights or obligations hereunder without the prior written consent of the other,
which consent shall not be unreasonably withheld, except that Auxilium may make
such an assignment without Asahi’s consent to (a) Affiliates or (b) a successor
to substantially all of the business of Auxilium to which this Agreement
relates, whether in a merger, sale of stock, sale of assets or other
transaction. Any permitted assignment shall be binding on the successors of the
assigning Party. Any assignment or attempted assignment by either Party in
violation of the terms of this Section 16.5 shall be null, void and of no legal
effect.

 

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16.6 Further Actions. Each Party agrees to execute, acknowledge and deliver such
further instruments, and to perform all such other acts, as may be necessary or
appropriate in order to carry out the purposes and intent of this Agreement.

16.7 Severability. If any one or more of the provisions of this Agreement are
held to be invalid or unenforceable by any court of competent jurisdiction from
which no appeal can be or is taken, such provision or provisions shall be
considered severed from this Agreement and shall not serve to invalidate any
remaining provisions hereof. The Parties shall make a good-faith effort to
replace any invalid or unenforceable provision with a valid and enforceable one
such that the objectives contemplated by the Parties when entering this
Agreement may be realized.

16.8 No Waiver. Any delay in enforcing a Party’s rights under this Agreement or
any waiver as to a particular default or other matter shall not constitute a
waiver of such Party’s rights to the future enforcement of its rights under this
Agreement, except with respect to an express written and signed waiver relating
to a particular matter for a particular period of time.

16.9 Independent Contractors. Each Party shall act solely as an independent
contractor, and nothing in this Agreement shall be construed to give either
Party the power or authority to act for, bind, or commit the other Party in any
way. Nothing herein shall be construed to create the relationship of partners,
principal and agent, or joint-venture partners between the Parties.

16.10 English Language; Governing Law. This Agreement was prepared in the
English language, which language shall govern the interpretation of, and any
dispute regarding, the terms of this Agreement. This Agreement and all disputes
arising out of or related to this Agreement or any breach hereof shall be
governed by and construed under the laws of the State of New York, without
giving effect to any choice of law principles that would require the application
of the laws of a different state.

16.11 Counterparts. This Agreement may be executed in two (2) or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

[No Further Text on This Page]

 

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IN WITNESS WHEREOF, the Parties have executed this Agreement by their duly
authorized representatives as of the date first written above.

 

ASAHI KASEI PHARMA CORPORATION     AUXILIUM PHARMACEUTICALS, INC. By:  

/s/ Toshio Asano

    By:  

/s/ Armando Anido

Name:  

Toshio Asano

    Name:  

Armando Anido

Title:  

President

    Title:  

CEO and President

      AUXILIUM INTERNATIONAL HOLDINGS, INC.       By:  

/s/ James Englund

      Name:  

James Englund

      Title:  

President

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Schedule 1.12: Auxilium Patents

[**]

 

** CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND WILL BE FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A
CONFIDENTIAL TREATMENT REQUEST.

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Schedule 1.15: BTC License Agreement

**See the Amended and Restated Development and License Agreement, dated as of
December 11, 2008, by and between BioSpecifics Technologies Corp. and Auxilium
Pharmaceuticals, Inc. (“Auxilium”) (filed as Exhibit 10.2 to Auxilium’s Current
Report on Form 8-K filed with the Securities and Exchange Commission on
December 18, 2008 and incorporated by reference herein).**

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Schedule 6.8.1: XIAFLEX Trademark and Logo

 

Country

  

Application No.

  

Registration No.

Japan    2007-27153    5083756

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Schedule 7.6: Forecast Methodology

 

Q1 (months 1 -3)

  

Q2 (months 4 -6)

  

Q3 (months 7 -9)

  

Q4 – Q8 (months 10 – 24)

Currently being filled    Purchase Order submitted for this Quarter
simultaneously with Forecast submission    May not vary by more than +/- 25%
when Q3 becomes Q2 via next Forecast and Purchase Order    Non-binding, good
faith estimates

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Schedule 10.2: Disclosure Schedule

Auxilium and BTC are currently engaged in resolving BTC’s assertion that two of
its employees are co-inventors of the patents and patent applications [**].

 

** CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND WILL BE FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A
CONFIDENTIAL TREATMENT REQUEST.

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Schedule 12.5.1: Press Release

LOGO [g176708ex10_4pg100.jpg]

Auxilium Pharmaceuticals, Inc. and Asahi Kasei Pharma Corporation Enter
Agreement

to Develop, Commercialize and Supply XIAFLEX® In Japan

Asahi Kasei Obtains Exclusive Rights for Two Indications

Malvern, PA (March XX, 2011) — Auxilium Pharmaceuticals, Inc. (NASDAQ: AUXL) and
Asahi Kasei Pharma Corporation announced today that they have entered into a
long-term strategic alliance for the development, commercialization and supply
of XIAFLEX® (collagenase clostridium histolyticum), a novel, first-in-class
biologic for the treatment of Dupuytren’s contracture and Peyronie’s disease.
Under the terms of the agreement, Asahi Kasei Pharma will receive exclusive
rights to commercialize XIAFLEX for the treatment of Dupuytren’s contracture and
Peyronie’s disease in Japan. Asahi Kasei Pharma will be primarily responsible
for the clinical development, regulatory and commercialization activities for
XIAFLEX in Japan.

XIAFLEX has been approved by the U.S. Food and Drug Administration and the
European Commission for the treatment of Dupuytren’s contracture. Asahi Kasei
Pharma expects to begin clinical trials for XIAFLEX for the treatment of
Dupuytren’s contracture in 2012. XIAFLEX is also being evaluated in a global
phase III development program for Peyronie’s disease with top line data expected
in the first half of 2012.

“Today, Asahi Kasei Pharma and Auxilium have forged a partnership, which we
believe has the opportunity to offer the first, effective nonsurgical treatment
for two diseases in Japan,” said Armando Anido, Chief Executive Officer and
President of Auxilium. “With the strength of Asahi Kasei Pharma’s development
and commercialization organizations in Japan, we believe this relationship
greatly enhances our ability to effectively introduce this potentially
groundbreaking product.”

Asahi Kasei Pharma will pay Auxilium $15 million upfront. Under the terms of the
agreement, Asahi Kasei Pharma will also make up to $247 million in potential
milestone payments, with $37 million tied to development and regulatory
milestones and $210 million based on sales milestones. Auxilium will receive
increasing tiered double-digit royalties based on sales of XIAFLEX in Japan and
will supply product to Asahi Kasei Pharma at a predetermined cost.

“Our partnership with Auxilium reinforces Asahi Kasei Pharma’s commitment to
seek out innovative products that complement our existing portfolio in
orthopedics and urology and address significant unmet medical needs in Japan,”
said Toshio Asano, President and Representative Director of Asahi Kasei Pharma.
“We look forward to combining our organizational strengths to develop the
potential for XIAFLEX as a novel nonsurgical treatment for patients suffering
from Dupuytren’s contracture and Peyronie’s disease in Japan.”

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Auxilium will remain primarily responsible for the global development of XIAFLEX
in Peyronie’s disease and will be responsible for all clinical and commercial
drug manufacturing and supply. Asahi Kasei Pharma will be responsible for
clinical development and regulatory activities and associated costs in Japan.
Furthermore, Asahi Kasei Pharma will have a right of first negotiation to obtain
exclusive rights to commercialize XIAFLEX pipeline indications in Japan.

About XIAFLEX

XIAFLEX (collagenase clostridium histolyticum) is a biologic approved in the
U.S. and the EU for the treatment of adult Dupuytren’s contracture patients with
a palpable cord. XIAFLEX is a novel nonsurgical treatment for this condition and
consists of a highly purified combination of several subtypes of collagenase,
derived from clostridium histolyticum, in specific proportion. It is also in
phase III of a global development program for the treatment of Peyronie’s
disease and is in phase II of development for the treatment of Frozen Shoulder
syndrome (Adhesive Capsulitis). Together, they work synergistically to break the
bonds of the triple helix collagen structure more effectively than human
collagenase.

Claims for Auxilium’s U.S. Patent No. 7,811,560 include, among other things,
purified collagenase, which is the active component in XIAFLEX (collagenase
clostridium histolyticum). This patent entitled “COMPOSITIONS AND METHODS FOR
TREATING COLLAGEN-MEDIATED DISEASES” is expected to expire in July 2028. The
Company has filed continuation applications with the USPTO, which, if granted,
may expand the scope of patent claims covering XIAFLEX. An international patent
covering the same claims as the U.S. patent is currently under review outside of
the U.S.

About Dupuytren’s Contracture

Dupuytren’s contracture is a condition that affects the connective tissue that
lies beneath the skin in the palm. The disease is progressive in nature.
Typically, nodules develop in the palm as collagen deposits accumulate. As the
disease progresses, the collagen deposits form a cord that stretches from the
palm of the hand to the base of the finger. Once this cord develops, the
patient’s fingers contract and the function of the hand is impaired. The
incidence of Dupuytren’s contracture is highest in Caucasians, historically
those of Northern European descent, with a global prevalence of three to six
percent of the Caucasian population. (1) The incidence of Dupuytren’s
contracture in a Japanese population is estimated to be less than seen in
Caucasian populations. Most cases of Dupuytren’s contracture occur in patients
older than 50 years. (2)

The most frequently affected parts of the hand associated with Dupuytren’s
contracture are the joints called the Metacarpal Phalangeal Joint, or MP joint,
which is the joint closest to the palm of the hand and the Proximal
Intra-Phalangeal Joint, or the PIP joint, which is the middle joint in the
finger. The little finger and ring finger are most frequently involved. XIAFLEX
is the only drug approved by the U.S. Food and Drug Administration for treatment
of Dupuytren’s contracture, which has historically been treated primarily by an
open surgical procedure.

 

(1) American Academy of Orthopaedic Surgeons.
http://orthoinfo.aaos.org/topic.cfm?topic=A00008

(2) Badalamente, M. A., Hurst, L. C. et al., Collagen as a Clinical Target:
Nonoperative Treatment of Dupuytren’s Disease, The Journal of Hand Surgery,
(2002;27A:788-798)

About Peyronie’s Disease

Peyronie’s disease is the development of collagen plaque, or scar tissue, on the
shaft of the penis that hardens and reduces flexibility, thus causing pain and
forcing the penis to bend or arc during erection. This may prevent intercourse.
In addition to difficulty with sexual intercourse, Peyronie’s disease may also
be associated with emotional distress, bother, loss of self-esteem and
depression.

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Prevalence of Peyronie’s disease is estimated to be approximately 5% in adult
men, but actual prevalence may be higher, based on autopsies. (1,2,3,4)

 

(1) Bella A. Peyronie’s Disease J Sex Med 2007;4:1527–1538

(2) Lue TF, et al. Summary of the recommendations on sexual dysfunctions in men.
J Sex Med 2004;1:6–23.

(3) Mulhall JP, et al. Subjective and objective analysis of the prevalence of
Peyronie’s disease in a population of men presenting for prostate cancer
screening. J Urol 2004;171:2350–3.

(4) Smith BH. Am J Clin Pathol. 1966;45:670-678.

About Auxilium

Auxilium Pharmaceuticals, Inc. is a specialty biopharmaceutical company with a
focus on developing and marketing products to predominantly specialist
audiences, such as urologists, endocrinologists, certain targeted primary care
physicians, hand surgeons, subsets of orthopedic, general, and plastic surgeons
who focus on the hand, and rheumatologists. Auxilium markets XIAFLEX®
(collagenase clostridium histolyticum) for the treatment of adult Dupuytren’s
contracture patients with a palpable cord and Testim® 1%, a testosterone gel,
for the topical treatment of hypogonadism. Auxilium has two projects in clinical
development. XIAFLEX is in phase III of development for the treatment of
Peyronie’s disease and is in phase II of development for treatment of Frozen
Shoulder syndrome (Adhesive Capsulitis). Auxilium also has rights to pursue
additional indications for XIAFLEX. For additional information, visit
http://www.auxilium.com.

About Asahi Kasei Pharma

Asahi Kasei Pharma Corporation, headquartered in Tokyo, Japan, is a
research-based healthcare innovator that discovers, develops, manufactures, and
markets products for the pharmaceutical, diagnostics, and medical nutrition
markets. Asahi Kasei Pharma is a wholly owned business unit of Asahi Kasei
Corporation, a US$15 billion technology company that provides innovative,
science-based solutions to a diverse range of markets including chemicals and
plastics, apparel, housing and construction, healthcare, and electronics.

AUXILIUM SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM
ACT OF 1995

This release contains “forward-looking-statements” within the meaning of The
Private Securities Litigation Reform Act of 1995, including statements regarding
the timing of release of results from the phase III trial for XIAFLEX for the
treatment of Peyronie’s disease; Asahi Kasei Pharma’s ability to develop,
register for approval and commercialize XIAFLEX for Dupuytren’s contracture and
Peyronie’s disease in the licensed territory; Auxilium’s receipt of milestone
payments and royalties from Asahi Kasei Pharma; the benefits of the strategic
alliance between Auxilium and Asahi Kasei Pharma; the patent protection for
XIAFLEX; the number of people suffering from Dupuytren’s contracture and
Peyronie’s disease and products in development for Peyronie’s disease and Frozen
Shoulder syndrome. All statements other than statements of historical facts
contained in this release, including but not limited to, statements regarding
future expectations, plans and prospects for the Company, statements regarding
forward-looking financial information and other statements containing the words
“believe,” “appears,” “may,” “could,” “will,” “estimate,” “continue,”
“anticipate,” “intend,” “should,” “plan,” “expect,” and similar expressions, as
they relate to the Company, constitute forward-looking statements. Actual
results may differ materially from those reflected in these forward-looking
statements due to various factors, including further evaluation of clinical
data, results of clinical trials, the performance of third-party service
providers, decisions by regulatory authorities regarding whether or when to
proceed to the next phase of clinical trials, general financial, economic,
regulatory and political conditions affecting the biotechnology and
pharmaceutical industries and those discussed in the Company’s Annual Report on
Form 10-K for the year ended December 31, 2010 under the heading “Risk Factors,”
which is on file with the Securities and Exchange Commission (the “SEC”) and may
be accessed electronically by means of the SEC’s home page on the Internet at
http://www.sec.gov or by means of the Company’s home page on

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the Internet at http://www.auxilium.com under the heading “For Investors — SEC
Filings.” There may be additional risks that the Company does not presently know
or that the Company currently believes are immaterial which could also cause
actual results to differ from those contained in forward-looking statements.
Given these risks and uncertainties, any or all of the forward-looking
statements contained in this release may prove to be incorrect. Therefore, you
should not rely on any such factors or forward-looking statements.

In addition, forward-looking statements provide the Company’s expectations,
plans or forecasts of future events and views as of the date of this release.
The Company anticipates that subsequent events and developments will cause the
Company’s assessments to change. However, while the Company may elect to update
these forward-looking statements at some point in the future, the Company
specifically disclaims any obligation to do so. These forward-looking statements
should not be relied upon as representing the Company’s assessments as of any
date subsequent to the date of this release.

CONTACT:

James E. Fickenscher

Chief Financial Officer, Auxilium Pharmaceuticals, Inc.

+1-484-321-5900

jfickenscher@auxilium.com

or

William Q. Sargent Jr.

Vice-President, Investor Relations and Corporate Communications

+1-484-321-5900

wsargent@auxilium.com

or

Minoru Takada

General Manager, Business Development & Licensing

Asahi Kasei Pharma Corporation

+81-3-3296-3631

licensing@om.asahi-kasei.co.jp

or

Asahi Kasei Corporation

Corporate Communications

+81-3-3296-3008

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LOGO [g176708ex10_4pg104.jpg]    Asahi Kasei Pharma Corp. Press Release   
March 23, 2011

License agreement for Xiaflex collagenase clostridium histolyticum

Asahi Kasei Pharma has concluded a license agreement with Auxilium
Pharmaceuticals, Inc. of the US on March 22, 2011, under which Asahi Kasei
Pharma received exclusive rights to develop and market Auxilium’s Xiaflex*
collagenase clostridium histolyticum in Japan.

Xiaflex is a novel, first-in-class biologic, developed to address unmet medical
needs through the provision of a nonsurgical treatment for Dupuytren’s
contracture and Peyronie’s disease. By proceeding with the development of
Xiaflex under this agreement in order to obtain regulatory approval in Japan,
Asahi Kasei Pharma is further reinforcing its R&D pipeline in its key strategic
fields of orthopedics and urology.

Corporate profile of Auxilium Pharmaceuticals, Inc.

 

CEO:    Armando Anido Headquarter:    Malvern, Pennsylvania, USA Paid-in
capital:    US$94 million (≈ \8.0 billion) Business line:    Development and
marketing of products to predominantly specialist audiences, such as urologists,
endocrinologists, hand surgeons, plastic surgeons who focus on the hand, and
rheumatologists, as a specialty biopharmaceutical company Sales (2010):   
US$211 million* (≈ \17.9 billion)

About Xiaflex

Xiaflex (collagenase clostridium histolyticum), a biologic developed by Auxilium
Pharmaceuticals, Inc., consists of a highly purified combination of several
subtypes of collagenase derived from clostridium histolyticum in specific
proportion. As a locally injectable treatment, it is the first effective
non-surgical therapy for Dupuytren’s contracture, and has been approved in the
US and the EU for this indication. Xiaflex is now also in Phase III of a global
development program for the treatment of Peyronie’s disease, and in Phase II of
development for the treatment of frozen shoulder syndrome (adhesive capsulitis).

About Dupuytren’s contracture

Dupuytren’s contracture is a condition that affects aponeurotic tissue (a kind
of connective tissue) beneath the skin of the palm, causing a fixed flexion
contracture of the fingers as the disease progresses. The incidence of
Dupuytren’s contracture is highest in Caucasians of Northern European descent,
but there remain many unknowns regarding its pathogenic mechanism. Xiaflex is
the only drug which shows effectiveness for the treatment of Dupuytren’s
contracture, which has conventionally been treated by surgery.

 

Page 1 of 2

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Press Release   Asahi Kasei Pharma Corp. Page 2 of 2   March 23, 2011

 

About Peyronie’s disease

Peyronie’s disease is the development of collagen plaque, or scar tissue, on the
shaft of the penis that hardens and reduces flexibility, thus causing pain and
forcing the penis to bend or arc during erection, possibly preventing
intercourse. The disease occurs mostly in middle-aged men, and is possibly
associated with other afflictions such as diabetes, erectile dysfunction (ED),
and Dupuytren’s contracture. The precise number of patients is unknown.

About clostridium histolyticum

Clostridium histolyticum is a bacterium that secretes various kinds of
collagenase-like proteinase which decompose tissue for it to feed on and
multiply. As it exhibits a strong enzymatic activity, the collagenase derived
from Clostridium histolyticum is often used in the separation of cells from
animal tissue during the course of various biochemical and physiological
research.

About collagenase

Collagenase is an enzyme which breaks apart collagen, a fibrous protein that
plays a vital role in maintaining connective tissue and bones in animals.

 

* Xiaflex is a registered trademark of Auxilium Pharmaceuticals, Inc.

For more information, please contact:

 

Asahi Kasei Pharma Corporation    Asahi Kasei Corporation General Affairs
Department    Corporate Communications Phone: +81-(0)3-3296-3600    Phone:
+81-(0)3-3296-3008 Fax: +81-(0)3-3296-3680    Fax: +81-(0)3-3296-3162