Exhibit 10.15

 

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.

 

COMMERCIAL SUPPLY AGREEMENT

 

THIS COMMERCIAL SUPPLY AGREEMENT (this “Agreement”) is entered into and
effective as of October 10, 2013 (the “Effective Date”) by and between
VIVUS, Inc., a Delaware corporation with its principal place of business at 351
E. Evelyn Avenue, Mountain View, CA 94041 (“VIVUS”), and Auxilium
Pharmaceuticals, Inc., a Delaware corporation having its principal place of
business at 640 Lee Road, Chesterbrook, PA 19087 (“Purchaser”).  VIVUS and
Purchaser are sometimes referred to herein individually as a “Party” and
collectively as the “Parties”.

 

WHEREAS, VIVUS and Purchaser have entered into a separate License and
Commercialization Agreement, effective as of the date of this Agreement (the
“License Agreement”), pursuant to which VIVUS granted to Purchaser an exclusive
license in the Purchaser Territory for, among other things, the development and
commercialization of the therapeutic drug known as Stendra® (avanafil);

 

WHEREAS, Purchaser desires to purchase the Product from VIVUS, and VIVUS desires
to supply the Product to Purchaser, on the terms and subject to the conditions
of this Agreement.

 

NOW, THEREFORE, in consideration of the mutual covenants and promises set forth
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties agree as follows:

 

1.                                      DEFINITIONS

 

Capitalized terms not expressly defined herein shall have the same meaning as
set forth in the License Agreement.

 

“API” has the meaning set forth in Section 2.10.

 

“Binding Forecast” has the meaning set forth in Section 2.3.

 

“cGMP” means current Good Manufacturing Practices, that is, the current
standards for the manufacture, processing, packing, testing, shipping, and
holding of drug active ingredients in the United States, as set forth in the Act
and applicable regulations promulgated thereunder (including without limitation
21 C.F.R. Parts 210 and 211), as amended from time to time, and the equivalent
laws in Canada or any other jurisdiction that may be applicable to the conduct
of such activities in relation to the Product.

 

“Current Inventory” means VIVUS’s inventory of Product on hand as of the
Effective Date, as specified on Exhibit D to this Agreement.

 

“Finished Product” means Product that is fully packaged and labeled in
accordance with the FDA-approved NDA (or Canadian equivalent).

 

“Forecast” has the meaning set forth in Section 2.2.

 

“GAAP” means then-current generally accepted accounting principles in the United
States, consistently applied during the applicable calculation period by the
applicable Party.

 

“License Agreement” has the meaning set forth in the recitals above.

 

--------------------------------------------------------------------------------

 

“Manufacturing Cost” means VIVUS’s actual out-of-pocket costs in obtaining,
transporting, and storing raw materials for manufacturing Product and in having
the Product manufactured, tested, and supplied to Purchaser hereunder, including
transfer prices paid to MTPC and other Third Party manufacturers.  The
Manufacturing Cost for Product manufactured by MTPC shall be calculated as set
forth in Exhibit B.  Manufacturing Cost may be calculated based on estimated
costs, as determined by VIVUS in good faith and in accordance with its standard
procedures, with appropriate adjustments being made on a periodic basis (at
least annually) to reflect variances between actual and estimated costs.

 

“Minimum Purchase Obligation” means the quantities of Product described in
Exhibit C.

 

“New Third Party Manufacturer” has the meaning set forth in Section 2.1(a).

 

“Person” means an individual, corporation, partnership, limited liability
company, trust, association, joint venture, sole proprietorship, unincorporated
organization, governmental authority, or any other form of entity not
specifically listed herein.

 

“Price” means Manufacturing Cost plus [**] percent ([**]%) to cover VIVUS’s
internal costs to manage and coordinate the supply chain; provided, however,
that such [**] percent ([**]%) markup shall not apply to the Net Sales
Manufacturing Cost (as defined in Exhibit B).

 

“Product” means formulated tablets containing Compound in bulk form which, if
appropriately packaged and labeled would constitute the pharmaceutical product
known as Stendra®, as described in the FDA-approved NDA for such product  (as
such NDA may be modified in the future in accordance with this Agreement and/or
the License Agreement).  Product will initially be ordered and supplied at two
different dosage strengths:  100 mg and 200 mg.

 

“Product Recall” means a recall, product withdrawal, or field correction of any
Product or Finished Product.

 

“Product Shortage” means a circumstance, whether or not the result of a force
majeure, in which VIVUS is unable to supply Product to Purchaser in compliance
with the terms and conditions of this Agreement in the quantities sufficient to
meet Purchaser’s requirements of Product as set forth in outstanding Purchase
Orders and/or the Binding Forecast.

 

“Purchase Orders” has the meaning set forth in Section 2.3.

 

“Purchaser Territory” means the “Auxilium Territory” as defined in the License
Agreement.

 

“Quality Agreement” has the meaning set forth in Section 5.4.

 

“[**]” has the meaning set forth in Section 2.5(b).

 

“Specifications” means the specifications, standards, limits, criteria and other
requirements for or related to the Product provided hereunder, as set forth in
Exhibit A or otherwise agreed to by the Parties in writing.

 

“Supply Disruption” has the meaning set forth in Section 2.8.

 

“Term” has the meaning set forth in Section 9.1.

 

--------------------------------------------------------------------------------

**                                  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.

 

--------------------------------------------------------------------------------

 

2.                                      SUPPLY OF PRODUCTS

 

2.1                               Supply of Product.

 

(a)                                 Supply and Purchase of Product.  During the
Term, and subject to the provisions herein, VIVUS shall manufacture, test, and
supply the Product to Purchaser or its designee, directly or through one or more
Third Party subcontractors.  Purchaser shall purchase the Product from VIVUS,
and VIVUS shall supply Product to Purchaser, pursuant to Purchase Orders
submitted to VIVUS by Purchaser, from time to time in accordance with
Section 2.3.  VIVUS shall ensure that the Product delivered to Purchaser (other
than shipments out of the Current Inventory pursuant to Section 2.5) has a
minimum remaining shelf life of [**].

 

(b)                                 VIVUS’s Third Party Supplier.  Without
limiting or modifying any of VIVUS’s obligations under this Agreement, Purchaser
acknowledges that, as of the Effective Date, VIVUS obtains Product solely from
MTPC and that VIVUS will continue to obtain Product solely from MTPC unless and
until VIVUS is able to qualify with the FDA a Third Party manufacturer with the
ability to manufacture Product in accordance with the Specifications, cGMP, and
Applicable Law (the “New Third Party Manufacturer”) as a manufacturer of
Compound and bulk tablets of Product.  VIVUS represents to Purchaser that 
qualification of a New Third Party Manufacturer is in process as of the
Effective Date and VIVUS agrees to use its best efforts to qualify such New
Third Party Manufacturer as soon as is practicable, but in no event later than
[**].

 

(c)                                  Exclusive Arrangement.  Subject to the
terms and conditions of this Agreement, Purchaser agrees to purchase from VIVUS,
and VIVUS agrees to manufacture and provide to Purchaser, all of Purchaser’s
requirements for Product.  VIVUS shall be free to supply Product to any Third
Party worldwide, subject to the exclusive rights granted to Purchaser and
obligations assumed by VIVUS pursuant to the License Agreement.

 

2.2                               Forecasts.  Purchaser will submit to VIVUS, no
later than the [**] of the [**] preceding the start of every [**] during the
Term, a rolling forecast (“Forecast”) setting forth an estimate of the total
quantity of Product that Purchaser reasonably believes it will purchase during
the [**] commencing with the beginning of the subsequent [**], along with
estimated shipment dates.

 

2.3                               Purchase Orders.  Until such time as a New
Third Party Manufacturer has been appointed by VIVUS, Purchaser shall purchase
Product by written purchase orders (“Purchase Orders”), submitted to VIVUS at
least [**] in advance of the desired shipment date specified therein.  For each
[**], Purchaser shall be required to submit Purchase Orders for at least [**]
percent ([**]%) of the quantities in the Forecast for such calendar quarter
submitted by Purchaser to VIVUS [**] prior to the start of such [**] (the
“Binding Forecast”), and VIVUS will have no obligation to supply Product in
excess of [**] percent ([**]%) of the quantity specified in such Binding
Forecast.  Each Purchase Order shall specify, at a minimum, the applicable
volume of each dosage strength of Product ordered, and the requested delivery
date.  Upon receipt of a Purchase Order, subject to the provisions of
Section 2.1, VIVUS shall supply the Product in such quantities and deliver the
Product to Purchaser (or Purchaser’s designee) on such delivery dates.  VIVUS is
not obligated to accept verbal orders of any kind for the supply of Product
hereunder.  To the extent there is any conflict or inconsistency between this
Agreement and any Purchase Order, this Agreement shall govern.  After a New
Third Party Manufacturer has been appointed by VIVUS, if any, then the lead
times for Purchase Orders set forth above shall be shortened (but not
lengthened) to the extent that VIVUS has shorter lead times in its arrangement
with the New Third Party Manufacturer.

 

--------------------------------------------------------------------------------

**                                  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.

 

--------------------------------------------------------------------------------

 

2.4                               Minimum Purchase Requirements.  For 2015 and
for each subsequent calendar year during the Term, Purchaser shall be required
to either (a) purchase no less than the Minimum Purchase Obligation from VIVUS
in accordance with the terms of this Agreement or (b) [**] as it relates to [**]
to [**].  VIVUS acknowledges and agrees that VIVUS’s sole remedy for Purchaser’s
failure to meet its Minimum Purchase Obligation is set forth in this Section 2.4
and that the Minimum Purchase Obligation is not a guarantee by Purchaser that
any specific sales level will be obtained with respect to the Product. 
Purchaser’s orders of Current Inventory (including the order made pursuant to
Section 2.5(b) below) shall not be counted towards the satisfaction of the
Minimum Purchase Obligation.

 

2.5                               Initial Shipments of Product.

 

(a)                                 The Current Inventory of Product is, as of
the Effective Date, being stored at [**] at [**].  No later than [**] following
the Effective Date, VIVUS shall transfer to Purchaser ownership of [**] of
Product that are in the Current Inventory, at no charge.  Purchaser shall
distribute such Product solely for sampling purposes and shall complete the
distribution of such Product as samples within [**] after receipt.

 

(b)                                 Purchaser hereby submits a binding order for
a portion of the Current Inventory in the quantities set forth on Schedule
2.5(b).  As set forth in Section 3.1, the transfer price for the quantities of
Product ordered pursuant to this Section 2.5(b) shall be the Price.  Upon
payment in full to VIVUS of the portion of the Price based on the Fixed
Manufacturing Cost, such quantities of Product will be sold to Purchaser EXW
(Incoterms 2010) [**] facilities, and title to such quantities of Product shall
automatically pass to Purchaser.

 

(c)                                  For all Product transferred to Purchaser
under this Section 2.5, Purchaser shall be responsible, at Purchaser’s sole
cost, for transport, packaging, and distribution of such Product.  Purchaser may
use any Third Party that it designates for Product packaging, but Purchaser
shall be responsible for the cost of validation if the packager is any Third
Party other than [**], as well as any costs associated with transporting Product
to such other packager.  Other than Product transferred to Purchaser under
Section 2.5(a) for use as samples, VIVUS shall ensure that all Current Inventory
delivered to Purchaser under this Agreement has a minimum remaining shelf life
of not less than [**].

 

2.6                               Delivery and Shipping Terms.  Product supplied
hereunder shall be shipped EXW (Incoterms 2010) MTPC’s manufacturing facility
(or, if applicable, the manufacturing facility of any other manufacturer being
utilized by VIVUS for manufacturing Product) directly to the packaging facility
or other location designated by Purchaser.  Title to the Product and risk of
loss shall pass to Purchaser at the time of delivery of the Product to the Third
Party shipper at the loading dock of the manufacturing facility.  Purchaser
shall arrange for all shipping, insurance freight, custom duties, and other
charges associated with, the shipment, and the cost of the foregoing will be
paid by Purchaser.  VIVUS shall issue (or shall have its manufacturer issue) to
Purchaser in advance of shipment a Certificate of Analysis (each, a “COA”) and
Certificate of Compliance (each, a “COC”) for each shipment of Product
(including Current Inventory) delivered to Purchaser.   Each COA shall be
accompanied by batch documentation for each lot of delivered Product and shall
certify that the Product conforms to the Specifications, this Agreement, and the
Quality Agreement along with the results of such analysis and any supporting
data.  Purchaser will be under no obligation to accept any shipment of Product
for which VIVUS has not provided a COA and/or COC or which Purchaser reasonably
believes does not comply with the COA or COC at the time the Product was
delivered to Purchaser.  VIVUS will be responsible for any out-of-pocket costs
incurred by Purchaser with respect to the storage, shipment, return, or at
VIVUS’s direction, destruction, of such non-conforming shipment.

 

--------------------------------------------------------------------------------

**                                  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.

 

--------------------------------------------------------------------------------

 

2.7                               Packaging and Labeling.  VIVUS will supply
Product to Purchaser in the form of bulk tablets.  Purchaser shall be
responsible, at its sole expense, for packaging and labeling the Product for
commercial sale.  Additionally, Purchaser shall, within [**] after receipt of an
invoice from VIVUS that includes copies of the relevant invoice(s) from [**],
pay VIVUS an amount not to exceed $[**] to reimburse VIVUS for payments made to
[**] prior to the Effective Date in order to initiate packaging validation work
for the Product.  Any labels, product inserts, and other packaging for the
Product shall be consistent with then-current approved NDA for the Product and
with Applicable Law.  VIVUS’s name will not appear on the label or anywhere else
on the commercial packaging of the Product unless:  (a) required by any
Applicable Laws; or (b) VIVUS consents in writing to the use of its name.

 

2.8                               Supply Disruption.  If VIVUS is unable to
supply confirmed orders to Purchaser with respect to the quantity or the
delivery date (a “Supply Disruption”), or if VIVUS believes that a Supply
Disruption is reasonably likely to occur based on Purchaser’s confirmed and/or
forecasted orders, VIVUS shall provide Purchaser with prompt written notice of
such inability or belief.  In the event of a Supply Disruption, VIVUS shall be
obliged to allocate the available Product among Purchaser and any other
licensees and/or authorized distributors of Product worldwide, [**] based on the
volume of Product orders of Purchaser and such other licensees and
distributors.  The “volume of Product orders” will be calculated based on
(a) orders for Product that were delivered during the preceding [**] or that are
then in transit (excluding in each case any orders where payment therefor is
delinquent), and (b) the binding portion of any outstanding purchase orders or
forecasts.  In the event of a Supply Disruption, notwithstanding Section 2.1(c),
Purchaser shall be permitted to obtain from another source the quantities of
Product that VIVUS is unable to supply.  In the absence of gross negligence or
willful misconduct, this Section 2.8 describes Purchaser’s sole and exclusive
remedy, and VIVUS’s sole and exclusive liability, for any Supply Disruption.  In
the event of any Supply Disruption that results in more than [**] percent
([**]%) of ordered Product in any [**] period arriving at the delivery location
more than [**] after the intended delivery date, Purchaser shall be relieved of
any further obligation during the Term to purchase the Minimum Purchase
Obligation.

 

2.9                               Post-Delivery Handling and Release.  After
delivery of the Product to Purchaser in accordance with the terms of this
Agreement and the Quality Agreement, any handling, storage, quality control,
quality assurance, and the release of the Product shall be the sole
responsibility of Purchaser or its designated Third Party.

 

2.10                        Stability Testing.  VIVUS shall be responsible for
conducting all stability testing required under the NDA with respect to the
active pharmaceutical ingredient in the Compound (“API”) and the bulk Product,
and Purchaser shall be responsible for conducting such stability testing with
respect to the Finished Product.

 

2.11                        Technology Transfer.

 

(a)                                 Cooperation.  Upon (i) termination of this
Agreement by Purchaser as a result of VIVUS’s uncured material breach, (ii) in
the event of a Supply Disruption, (iii) upon notice from Purchaser that it
intends to exercise its Supply Chain Transfer rights under Section 6.2 of the
License Agreement, (iv) in the event that VIVUS provides a notice to Auxilium
under Section 2.8, or (v) upon an event of Force Majeure preventing the timely
supply of Product hereunder for a period anticipated to exceed [**], VIVUS shall
provide Purchaser with such assistance and any VIVUS Know-How Controlled by
VIVUS, as reasonably necessary for manufacturing, formulating and/or packaging
of the Product, as the case may be (a “Technology Transfer”).  In connection
with the foregoing, Purchaser shall be permitted to consult with VIVUS’s
technical personnel on the specified manufacturing activities and, to the extent
necessary, VIVUS shall use Commercially Reasonable Efforts to permit Purchaser
to consult with VIVUS’s Third Party manufacturers.

 

--------------------------------------------------------------------------------

**                                  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.

 

--------------------------------------------------------------------------------

 

(b)                                 Manufacturing Rights.  Notwithstanding any
Technology Transfer pursuant to Section 2.11(a), Purchaser’s right to
manufacture or have manufactured Product shall be limited to the rights
described in Section 2.2 of the License Agreement, plus the additional
manufacturing rights described in Section 2.8 in connection with a Supply
Disruption.

 

(c)                                  Technology Transfer Costs.  In connection
with a Technology Transfer pursuant to Section 2.11(a)(iii), Purchaser shall be
responsible for paying VIVUS’s actual costs and expenses incurred in connection
with such Technology Transfer, including FTE costs, out-of-pocket expenses and
any technology transfer fees payable to any other Third Party (collectively,
“Technology Transfer Costs”).  In connection with a Technology Transfer pursuant
to Section 2.11(a)(i), (ii), or (v), VIVUS shall be responsible for the
Technology Transfer Costs.  In connection with a Technology Transfer pursuant to
Section 2.11(a)(iv), Auxilium shall be responsible for the Technology Transfer
Costs unless and until a Supply Disruption shall have occurred, in which event
VIVUS shall be responsible for such Technology Transfer Costs, including
reimbursing Auxilium for those already paid by Auxilium.

 

2.12                        Notice Right; Step-In Right.  VIVUS shall provide
Purchaser with prompt written notice of any breach or alleged breach, including
without limitation any notice of such breach or alleged breach provided by any
Third Party manufacturer of API or bulk Product and shall provide Purchaser with
copies of any documentation and correspondence between any Third Party
manufacturer and VIVUS regarding such breach including written summaries of any
oral discussions.  In the event that VIVUS is in breach of any such
manufacturing or supply agreement with a Third Party manufacturer, it shall
promptly provide to Purchaser a written plan of action to remedy or cure such
breach and shall keep Purchaser promptly informed of its progress or any changes
to such plan of action.  If VIVUS is unable to cure such breach, then, unless
VIVUS is disputing such breach in good faith, at Purchaser’s election VIVUS
shall use commercially reasonable efforts to cause such Third Party manufacturer
to [**].  VIVUS may condition disclosure of attorney-client privileged
information or attorney work product on the Parties’ execution of a joint
defense agreement, common interest agreement, or similar agreement intended to
preserve attorney-client and attorney work product privileges under Applicable
Law, in a form reasonably acceptable to VIVUS.

 

2.13                        Adjustments Related to Third Party Manufacturers. 
VIVUS will not at any time during the Term take any action that could reasonably
be expected to result in a breach of any agreement between VIVUS and any Third
Party manufacturer or supplier.  VIVUS shall provide Auxilium with advance
written notice of any material amendment, waiver of rights, termination or
modification of any agreement between VIVUS and any Third Party manufacturer or
supplier, and VIVUS will not agree to any amendment, waiver of rights,
termination or modification of any agreement between VIVUS and any Third Party
manufacturer or supplier that has, or would reasonably be expected to have, a
material negative effect on Purchaser without the prior written consent of
Purchaser, which shall not be unreasonably withheld, conditioned, or delayed.

 

3.                                      PRICE; PAYMENT

 

3.1                               Prices for Product.  Except for the Products
described in Section 2.5(a), which shall be provided to Purchaser at no charge,
Purchaser shall pay to VIVUS the Price for the units of Product supplied to
Purchaser pursuant to this Agreement.  Purchaser shall be solely responsible for
determining the price at which it will re-sell the Product.

 

3.2                               Payment.  VIVUS shall provide to Purchaser
written invoices setting forth the amount payable by Purchaser with respect to
quantities of Product sold hereunder, including the Price applied by VIVUS to
each dosage strength of Product.  Purchaser shall pay VIVUS for Product in the
amount invoiced by VIVUS within [**] from the date of invoice, which invoice
shall be issued at the delivery

 

--------------------------------------------------------------------------------

**                                  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.

 

--------------------------------------------------------------------------------

 

date.  If Purchaser is legally required to withhold any Taxes from payments due
hereunder,  Purchaser shall (a) deduct such Taxes from the payment made to
VIVUS, and (b) timely pay the taxes to the proper taxing authority.  Each Party
agrees to cooperate with the other Party in claiming exemptions from such
deductions or withholdings under any agreement or treaty from time to time in
effect and shall discuss in good faith how to solve any situation where VIVUS
may not deduct such payment for reasons beyond VIVUS’s reasonable control. 
Solely for purposes of this Section, “Taxes” means any present or future taxes,
levies, imposts, duties, charges, assessments or fees of any nature (including
interest, penalties and additions thereto) that are imposed by the applicable
government or other taxing authority.

 

3.3                               Records; Audit.  VIVUS shall maintain complete
and accurate books and records in accordance with GAAP in sufficient detail to
permit Purchaser to confirm the accuracy of the Manufacturing Costs, and any
other financial measure relating to the Price of the Product payable under this
Agreement, for a period of [**] from the creation of individual records or any
longer period required by Applicable Law.  At Purchaser’s request, such records
shall be available for review at a location in the Purchaser Territory
determined by Purchaser not more than once each calendar year (during normal
business hours on a mutually agreed date with reasonable advance notice) by an
independent Third Party auditor selected by Purchaser and approved by VIVUS
(such approval not to be unreasonably withheld, conditioned, or delayed) and
subject to confidentiality and non-use obligations no less stringent than those
set forth in Article 11 of the License Agreement for the sole purpose of
verifying for Purchaser the accuracy of the Manufacturing Costs and Price paid
by Purchaser pursuant to this Agreement or of any payments made by Purchaser to
VIVUS pursuant to this Agreement.  Any such auditor shall not disclose VIVUS’s
Confidential Information to Purchaser, except to the extent such disclosure is
necessary to verify the accuracy of the financial reports furnished by VIVUS or
the amount of payments due by VIVUS under this Agreement.  Any undisputed
amounts finally determined to be owed but unpaid shall be paid within [**] from
the accountant’s report.  Any amounts finally determined to have been overpaid
may be credited to Purchaser against future payments to VIVUS hereunder. 
Purchaser shall bear the full cost of such audit unless such audit reveals an
underpayment or under-reporting error of [**] percent ([**]%) or more during the
applicable audit period, in which case VIVUS shall bear the full cost of such
audit.

 

4.                                      REPRESENTATIONS AND WARRANTIES

 

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

 

(a)                                 Corporate Existence and Power.  It is a
corporation duly organized, validly existing, and in good standing under the
laws of the jurisdiction in which it is incorporated, and has all requisite
power and authority and the legal right to own and operate its property and
assets and to carry on its business as it is now being conducted and as
contemplated in this Agreement.

 

(b)                                 Authority and Binding Agreement.  It has the
requisite power and authority and the legal right to enter into this Agreement
and perform its obligations hereunder; it has taken all necessary action on its
part required to authorize the execution and delivery of this Agreement and the
performance of its obligations hereunder; and this Agreement has been duly
executed and delivered on its behalf, and constitutes a legal, valid, and
binding obligation of such Party that is enforceable against it in accordance
with its terms, subject as to enforcement of remedies to applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting generally the
enforcement of creditors’ rights and subject to a court’s discretionary
authority with respect to the granting of a decree ordering specific performance
or other equitable remedies.

 

--------------------------------------------------------------------------------

**                                  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.

 

--------------------------------------------------------------------------------

 

(c)                                  Consents.  All necessary consents,
approvals and authorizations of all governmental authorities and other Third
Parties required to be obtained by it in connection with the execution, delivery
and performance of this Agreement have been obtained by it.  For the avoidance
of doubt, Purchaser shall be solely responsible for obtaining any product and/or
distribution license from the applicable Governmental Authority so as to be able
to sell and market the Product in a particular jurisdiction.

 

4.2                               Product Representations and Warranties of
VIVUS.

 

(a)                                 Compliance.  VIVUS warrants that it will
ensure that all Product will be manufactured and tested in conformity with this
Agreement, the License Agreement, cGMP, the Specifications, and the Quality
Agreement.

 

(b)                                 Conformity with Specifications.  VIVUS
warrants that it will and will cause its Third Party suppliers to ensure that
all Product manufactured by or on behalf of VIVUS and sold to Purchaser pursuant
to this Agreement will at the time of delivery to the common carrier for such
Product (i) meet the Specifications and (ii) not be misbranded or adulterated.

 

(c)                                  No Liens.   VIVUS warrants that all Product
delivered to Purchaser pursuant to this Agreement will, at the time of such
delivery, be free and clear of all liens, encumbrances, security interests and
other encumbrances.

 

VIVUS’s obligations as provided in Section 10.1 and Section 6.2 shall be the
sole and exclusive remedies available to Purchaser with respect to Product that
fails to meet the product warranties set forth in Section 4.2.

 

4.3                               Other Representations and Warranties of VIVUS.

 

(a)                                 Performance.  VIVUS will perform its
obligations under this Agreement, and will use commercially reasonable efforts
to cause any Third Party supplier to perform their manufacturing obligations
with respect to the Product, in a professional manner with requisite skill, care
and diligence and in accordance with the industry standards.  VIVUS will
maintain, and will use commercially reasonable efforts to cause its Third Party
suppliers to maintain, appropriately qualified and trained personnel, adequate
premises and space, suitable equipment, correct materials, containers and
labels, suitable storage and the knowledge and experience to carry out
satisfactorily the work ordered by Auxilium.

 

(b)                                 Compliance with Applicable Laws.  During the
Term of this Agreement, VIVUS will comply with, and will use commercially
reasonable efforts to cause its Third Party suppliers to comply with, all
Applicable Laws to the conduct of its business and manufacture of Product in the
performance of this Agreement and will hold, or will cause its Third Party
manufacturers to hold, all permits and authorizations necessary to fulfill its
obligations under this Agreement.

 

(c)                                  Compliance with Certain Agreements.   VIVUS
is in compliance in all material respects with, and will at all times remain in
compliance in all material respects with, and has not received any notice of
breach pursuant to any agreement relating to the manufacture of Product.

 

(d)                                 Debarment.  VIVUS represents and warrants
that it has not been debarred, nor is it under consideration to be debarred, and
that it will not knowingly use in any capacity in connection with the
manufacturing or services hereunder any person (including Third Party
manufacturers) who has

 

--------------------------------------------------------------------------------

 

been debarred, nor is under consideration to be debarred by the FDA and/or TPD,
the subject of a pending debarment pursuant to the Act, or who is the subject of
a conviction described in such section. VIVUS will inform Auxilium in writing
immediately upon becoming aware thereof if it or any person (including Third
Party manufacturers) who is performing manufacturing or any services hereunder
is debarred or is the subject of a conviction described in section 306 of the
Act, or if any action, suit, claim, investigation, or proceeding is pending, or
to the best of VIVUS’s knowledge, is threatened, relating to the debarment or
conviction of VIVUS, or any person performing manufacturing or services pursuant
to this Agreement.

 

4.4                               No Other Representations or Warranties. 
EXCEPT AS EXPRESSLY STATED IN THIS ARTICLE 4 OR THE LICENSE 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 VIVUS.  ALL OTHER REPRESENTATIONS
AND WARRANTIES, WHETHER ARISING BY OPERATION OF LAW OR OTHERWISE, ARE HEREBY
EXPRESSLY EXCLUDED.

 

5.                                      QUALITY

 

5.1                               General.  VIVUS shall be responsible for
establishing and maintaining such procedures for implementing corrective and
preventive actions with respect to the manufacturing of the Product as required
by Applicable Law, cGMP, and the Quality Agreement.  VIVUS shall cooperate with
Purchaser at VIVUS’s expense in determining the cause of any quality problems
involving the Product, identifying corrective actions, and ensuring the
implementation and effectiveness thereof.  VIVUS shall implement such corrective
actions with respect to the Product, and shall provide Purchaser with written
confirmation upon the completion thereof.

 

5.2                               Notice of Failure to Meet Specifications. 
Each Party shall notify the other Party immediately after the discovery that any
lot of Product sold to Purchaser failed to comply with its applicable
Specifications at the time of delivery or was not manufactured in accordance
with Applicable Laws, including without limitation cGMP.  VIVUS will immediately
make, at its sole expense, such further internal investigation of any failure to
meet these requirements as is reasonable under the circumstances and otherwise
consistent with its obligations hereunder and shall use its best efforts to
remediate such failure as promptly as possible.

 

5.3                               Changes to Specifications.

 

(a)                                 Changes Requested by Purchaser.  VIVUS will
not be required to implement any requests by Purchaser to change the
manufacturing process, Specifications, or any testing method with respect to the
Product, but VIVUS shall consider any such requests in good faith.

 

(b)                                 Changes Requested by VIVUS.  VIVUS will
provide Auxilium with advance notice of any material changes to procedures,
Specifications, methods (including testing methods) or standard operating
procedures relating to the manufacture or supply of the Product and VIVUS will
not make or permit any such changes without the prior written consent of
Purchaser if such change is (i) inconsistent with the then-current approved NDA
for the Product, (ii) reasonably likely to have a material adverse effect on
VIVUS’s ability to comply with the terms of this Agreement, including any
Product delivery timelines hereunder, or (iii) otherwise reasonably likely to
have an adverse impact on the Commercialization of the Product in the Purchaser
Territory.

 

--------------------------------------------------------------------------------

 

(c)                                  Changes Required by Applicable Law.  VIVUS
will promptly, at its own expense, implement any changes to any procedures,
Specifications, methods (including testing methods) or standard operating
procedures relating to the manufacture or supply of the Product required by
Applicable Law or the NDA (collectively, “Required Manufacturing Changes”).

 

(d)                                 Cost of Manufacturing Changes.  Prior to a
Supply Chain Transfer, VIVUS will be solely responsible for all internal and
external costs, including, without limitation, obsolete raw materials,
regulatory filings, work-in-process, and Product, (i) associated with Required
Manufacturing Changes, and (ii) all costs associated with any other
manufacturing changes not requested by Purchaser.  Prior to a Supply Chain
Transfer, Purchaser shall be responsible for such costs only in the event such
manufacturing change is requested by Purchaser and is not otherwise required by
Applicable Law or the NDA.

 

5.4                               Quality Agreement.   The parties will use
commercially reasonable efforts to enter into a separate quality agreement
governing the agreed-upon Specifications and other technical aspects of supply
of Products to Purchaser hereunder no later than [**] after the Effective Date
(the “Quality Agreement”).  In the event of any inconsistency between this
Agreement and the Quality Agreement, this Agreement shall control, except with
respect to quality assurance matters.  VIVUS agrees to use its commercially
reasonable efforts to have three-way quality agreements put into place with
Purchaser and VIVUS’s Third Party manufacturers.

 

6.                                      ACCEPTANCE AND REJECTION PROCEDURES

 

6.1                               Inspection.  Purchaser or its designee shall
promptly, upon arrival on its site, carefully inspect each shipment of Product
for transport damages, losses and shortfalls.  Apparent defects, such as, for
instance, damaged containers or missing packages of Product, must be notified to
the carrier promptly upon arrival of the shipment and the freight documents at
Purchaser or its designee and, where possible, countersigned by the carrier’s
representative.  Failure of Purchaser or its designee to notify such visually
detectable defects to the carrier promptly upon arrival of the concerned
shipment and freight documents shall exclude any liability of VIVUS for such
defects.  Purchaser shall have [**] after receipt of a shipment of Product to
determine if there is any defect in the Product or any non-compliance with the
Specifications or Applicable Law, including without limitation cGMP, which is
discoverable by diligent and customary inspection of the shipment and any
accompanying documentation (the “Inspection Period”).  Purchaser shall notify
VIVUS of any such non-compliance prior to the end of the Inspection Period,
describing in reasonable detail the non-compliance.  Notwithstanding the
preceding provisions of this Section 6.1, if with respect to any unexpired
Product, the non-compliance could not reasonably be expected to have been found
by diligent and customary inspection during the Inspection Period and Purchaser
notifies VIVUS of such non-compliance, describing such Latent Defect in detail,
within [**] of Purchaser’s knowledge of the Latent Defect and within the shelf
life of the Product, such non-compliance shall be deemed to be a “Latent Defect”
hereunder.  Purchaser’s notification of VIVUS of a non-compliance during the
Inspection Period or of a Latent Defect as permitted above shall be referred to
herein as a “Claim”.  For the sole purpose of application of Section 6.2,
Purchaser shall be deemed to have accepted any Product if it fails to give a
Claim in the periods permitted above; provided, however, that Purchaser’s
acceptance of Product shall not limit Purchaser’s indemnification rights under
Section 10.1 (which, for clarity, shall be fully subject to the exceptions
recited therein).  At VIVUS’s reasonable request, Purchaser shall provide VIVUS
with any available documentation or analysis that is reasonably necessary for
VIVUS to exercise its rejection rights under its supply agreement with MTPC
and/or any other relevant Third Party manufacturer

 

--------------------------------------------------------------------------------

**                                  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.

 

--------------------------------------------------------------------------------

 

6.2                               Remedies.  Except for Claims disputed pursuant
to Section 6.2(b) hereof, if Purchaser submits a Claim, then as promptly as
practicable after the submission of the Claim to VIVUS (but in no event later
than [**] after the submission of the Claim), VIVUS shall instruct Purchaser
whether to return or destroy the Product in question and provide Purchaser with
replacement Product.  In the event that:

 

(a)                                 VIVUS agrees with the Claim, then VIVUS
shall pay for all out-of-pocket costs of returning or destroying Product that is
the subject of any accepted Claim.  VIVUS shall bear the risk of loss for such
Product, beginning at such time as such Product is taken at Purchaser’s premises
for return delivery.

 

(b)                                 VIVUS does not agree with the Claim, then
the Parties agree to submit the Product in question to a mutually agreed
independent Third Party that has the capability of testing the Product to
determine whether or not it complies with the Quality Agreement, the
Specifications and Applicable Law, including cGMP.  The losing Party shall bear
all costs and expenses related to such testing and pay for all shipping costs of
returning the Product and/or sending the replacement Product, as the case may
be.

 

6.3                               Cost of Product Recalls.  With respect to any
Product supplied hereunder, VIVUS shall bear all Losses (including without
limitation expenses related to communications and meetings with all required
regulatory agencies, expenses of replacement stock, the cost of notifying
customers and costs associated with shipment of recalled Product from customers
and shipment of an equal amount of replacement Product to those customers)
related to any Product Recall in the event that such Product Recall is caused by
or results from (a) the breach by VIVUS (including indirectly by any Third Party
manufacturer) of any representation or warranty or covenant contained in this
Agreement or the License Agreement, or (b) VIVUS’s negligence or willful
misconduct.  Additionally, in the event the Product Recall is caused by or
results from (a) or (b) above, VIVUS shall replace the units of recalled
Products as promptly as practicable and at no cost to Purchaser.  Except as
provided above, Purchaser shall bear all Losses related to any Product Recall.

 

7.                                      REGULATORY MATTERS.

 

7.1                               Regulatory Responsibilities.  The Parties’
respective rights and obligations with respect to Regulatory Approvals in the
Purchaser Territory, communications with Regulatory Authorities in the Purchaser
Territory, and other regulatory matters relating to the Product in the Purchaser
Territory are set forth in the License Agreement.

 

8.                                      RECORD-KEEPING; AUDITS

 

8.1                               Recordkeeping.  VIVUS (and/or MTPC or the New
Third Party Manufacturer) will keep complete and accurate records of the
manufacture and testing of Product, and retain samples of bulk Product and the
active pharmaceutical ingredient in the Compound as are necessary to comply with
Applicable Laws, as well as to assist with resolving Product complaints and
other similar investigations.  Copies of the records and samples will be
retained for a period of [**] following the date of Product expiry, or longer if
required by Applicable Laws.  Purchaser is responsible for retaining samples of
the fully packaged Product necessary to comply with the legal/regulatory
requirements applicable to Purchaser.

 

--------------------------------------------------------------------------------

**                                  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.

 

--------------------------------------------------------------------------------

 

8.2                               Audits.

 

(a)                                 Audit Right; Facility Access.  From and
after the commencement of supply hereunder directly or through an independent
auditor reasonably acceptable to VIVUS, Purchaser shall have the right, upon
reasonable advance notice and during regular business hours, to make an annual
inspection and audit of the facilities being used by VIVUS or a VIVUS Affiliate
for the production, storage, or testing of Product to assure compliance by or on
behalf of VIVUS with cGMPs, the Specifications, and Applicable Law.  At
Purchaser’s reasonable request, VIVUS agrees to use commercially reasonable
efforts to facilitate a similar inspection and audit of the facilities being
used by MTPC and/or any other Third Party manufacturer, such as, solely by way
of example, by exercising VIVUS’s audit right in its agreement with such
manufacturer, at Purchaser’s cost, and permitting Purchaser or its designee to
attend such audit (subject to approval by the Third Party manufacturer to allow
such attendance, which VIVUS shall use commercially reasonable efforts to
obtain) and in any event sharing the results of such audit with Purchaser.

 

(b)                                 Third Party Audits.  Without limiting
VIVUS’s obligations under this Agreement in any respect, Purchaser acknowledges
that VIVUS’s audit right in the MTPC Agreement is limited to periodic audits to
ensure that cGMPs continue to be followed.  In the event that VIVUS or any Third
Party licensee of VIVUS outside the Purchaser Territory proposes to conduct or
conducts an audit of the facilities used by or on behalf of VIVUS or a VIVUS
Affiliate or Third Party for the production, storage, or testing of Product to
be sold to Purchaser under this Agreement, then VIVUS will provide immediate
notice to Purchaser of such audit and VIVUS shall use its commercially
reasonable efforts to permit Purchaser to be able to be present for and
participate in such audit.

 

(c)                                  Procedure.  The inspection and audit
provided for under Section 8.2(a) shall not be carried out by Purchaser more
than [**] per calendar year, but such inspection and audit shall not preclude
Purchaser from conducting any “for cause” inspection or audit permitted under
the Quality Agreement or otherwise for cause.  Each inspection and audit shall
be conducted in a manner so as to minimize disruption of the business operations
of VIVUS, MTPC and/or any other Third Party manufacturer.  VIVUS representatives
will be permitted to participate as observers during any such inspection and
audit.  To the extent that Purchaser’s requests an inspection or audit of the
facilities of MTPC and/or any other Third Party manufacturer, Purchaser
acknowledges that VIVUS must coordinate the dates and schedule of such
inspection and audit with MTPC and/or such other Third Party manufacturer.  The
independent auditor, if any, shall enter into a written confidentiality
agreement with VIVUS containing provisions regarding the disclosure of
information obtained during the inspection and audit that are at least as
restrictive as the provisions of Article 13 of this Agreement; provided that,
the independent auditor will be permitted to disclose to Purchaser whether and
to what extent VIVUS (or, if applicable, MTPC and/or any other Third Party
manufacturer) failed to comply with the requirements of Section 8.1 (and shall
not be permitted to disclose to Purchaser any other information).  A copy of any
such disclosure to Purchaser shall also be provided to VIVUS.

 

(d)                                 Results.  If an inspection or audit reveals
a failure to comply with cGMP or Applicable Law in any material respect, then
Purchaser shall promptly provide to VIVUS written notice of such fact, which
notice shall contain in reasonable detail the deficiencies found in the
applicable facilities and, if practicable, those steps Purchaser believes should
be undertaken in order to remedy such deficiencies.  The Parties shall discuss
in good faith the deficiencies and VIVUS shall, at its own expense, use its best
efforts to remedy such deficiencies, or implement a plan to remedy such
deficiencies, as soon as reasonably practical following receipt of the
notification thereof.  In addition to the audit rights set forth in this Section
8.2, Purchaser will be entitled to perform reasonable follow-up inspections to
monitor correction of such deficiencies or the circumstances giving rise to such
deficiency, failure or notice.

 

--------------------------------------------------------------------------------

**                                  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.

 

--------------------------------------------------------------------------------

 

8.3                               Analytical Method Transfer.  Upon the
reasonable prior written request of Purchaser, VIVUS agrees to provide Purchaser
or use Commercially Reasonable Efforts to cause its Third Party designee
hereunder to provide Purchaser with all required documentation and support for
analytical method transfer for the Product in order to enable Purchaser to
analyze the Product in order to determine its suitability and stability under
this Agreement and according to all applicable requirements of Regulatory
Authorities or to ensure that the Products are in line with the Regulatory
Approvals (a “Method Transfer”).  VIVUS agrees to actively participate, or use
Commercially Reasonable Efforts to cause its Third Party designee hereunder to
participate, in such Method Transfer by, among other things, providing samples
and conducting parallel testing.  Purchaser shall pay for any out-of-pocket
costs incurred by VIVUS in connection with such Method Transfer.

 

8.4                               Regulatory Compliance.  VIVUS will advise
Purchaser promptly if an authorized agent of a Regulatory Authority visits its
facilities (or, to its knowledge, its Third Party designee’s manufacturing
facilities) where the API or the Product is being manufactured, stored, or
tested.  VIVUS will provide Purchaser with all material information in VIVUS’s
possession pertaining to actions taken by Regulatory Authorities (including any
inspections, proposed regulatory actions, investigations or requests for
information or a meeting by any Regulatory Authority) whether inside the
Purchaser Territory or outside the Purchaser Territory in connection with the
API or 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 API or the Product in the Field whether
inside the Purchaser Territory or outside the Purchaser Territory, notice of
violation letter (i.e., an untitled letter), warning letter, service of process
or other inquiry; provided, however, that VIVUS shall be entitled to redact
those portions thereof to the extent not related to the API or the Product in
the Field or to the extent disclosing Third Party confidential information. 
Without limiting the generality of the foregoing, each Party shall promptly, but
in any event within [**], inform the other Party of any material inspections,
proposed regulatory actions, investigations or requests for information or a
meeting by any Regulatory Authority with respect to the API or the Product in
the Field in the Manufacturing Territory.  VIVUS or its Third Party designee
will furnish to Purchaser all material information supplied to, or supplied by,
any Regulatory Authority in the Manufacturing Territory, including the Form 483
observations and responses, to the extent that such information relates to the
API or the Product or the ability of VIVUS to supply such API or the Product and
could reasonably be expected to have a material negative effect on the Purchaser
or the Commercialization of the Product in the Purchaser Territory, within [**]
of their receipt of such information, in each case to the extent that VIVUS is
aware of such information and subject in each case to the redaction right
described above.  VIVUS or its Third Party designee will consult in advance with
Purchaser prior to responding to any request from a Regulatory Authority to the
extent such response relates to the API or the Product, and VIVUS will use
commercially reasonable efforts to permit Purchaser and/or its agents to be
present at any inspection by any Regulatory Authority of any manufacturing
facility where the API or the Product that is supplied to Purchaser hereunder is
being manufactured or quality tested.

 

9.                                      TERM; TERMINATION

 

9.1                               Term.  The term of this Agreement (the “Term”)
will commence on the Effective Date and will continue, unless otherwise agreed
between the Parties, until December 31st, 2018.

 

9.2                               Termination for Default or Bankruptcy.  Either
Party may terminate this Agreement (a) for material breach by the other Party if
such breach continues uncured for a period of [**] after receipt of notice
thereof; or (b) if (i) the other Party shall institute bankruptcy, insolvency,
liquidation or receivership proceedings or proceedings for reorganization under
bankruptcy or comparable laws; or (ii) a petition shall be filed against the
other Party for any proceedings described in clause (i) above, the effectiveness
of which is not stayed or dismissed within [**] after the filing thereof; or
(iii) the other Party

 

--------------------------------------------------------------------------------

**                                  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.

 

--------------------------------------------------------------------------------

 

shall make a general assignment of all or substantially all of its assets for
the benefit of creditors.  Termination of this Agreement pursuant to this
Section 9.2 shall not affect any other rights or remedies which may be available
to the non-defaulting Party, including any rights or remedies under the License
Agreement.

 

9.3                               Termination Upon Termination of License
Agreement.  In addition to the termination rights expressly provided for
elsewhere in this Agreement, either Party may also terminate this Agreement upon
written notice to the other Party if the License Agreement is terminated in
accordance with its terms.

 

9.4                               Termination upon Transfer of Control of Supply
Chain.  This Agreement shall automatically terminate upon the completion of the
Supply Chain Transfer (as defined in the License Agreement).

 

9.5                               Effects of Termination.  Upon expiration or
termination of this Agreement other than termination of this Agreement by
Purchaser under Section 9.2(a), VIVUS shall manufacture and supply, and
Purchaser shall purchase from VIVUS (a) any and all quantities of Product
ordered by Purchaser pursuant to this Agreement prior to the date on which such
notice is given, for the applicable Price, and (b) any and all materials held by
VIVUS or MTPC (or any other Third Party manufacturer of Product) for exclusive
use in the manufacture of Compound or Product based on binding part of the
Forecasts provided by Purchaser, for an amount equal to [**] with respect to
such materials.  Termination or expiration of this Agreement will not affect any
outstanding obligations due hereunder prior to the termination or expiration. 
In the event of Purchaser’s termination of this Agreement under Section 9.2(a),
Purchaser shall not be required to purchase any additional quantities of Product
from VIVUS and all orders of Product shall be immediately voided and of no
effect with no further obligation of Purchaser to VIVUS with respect to
materials held by VIVUS or a Third Party manufacturer for manufacture of the
Compound or Product.

 

9.6                               Survival.  Expiration or termination of this
Agreement shall not relieve the Parties of any obligation accruing prior to the
effective date of such expiration or termination.  The following sections shall
survive termination or expiration of this Agreement for any reason: Sections
2.11, 3.3, 6.1, 6.3 and 8.1 and Articles 9 through 14 and 16.

 

10.                               INDEMNIFICATION

 

10.1                        Indemnification by VIVUS.  VIVUS shall defend and
indemnify and hold Purchaser, its Affiliates and their respective directors,
officers and employees (the “Purchaser Indemnified Parties”) harmless against
any and all Losses resulting from any Claim of a Third Party arising out of,
based on, or caused by (i) alleged or actual bodily injury or property damage
resulting from the manufacturing, packing, labeling, handling, storage,
transportation, use, distribution of Products by or on behalf of VIVUS, its
licensees (other than Auxilium) or Affiliates, including any product liability
claim; (ii) liabilities arising from clinical trials conducted by or on behalf
of VIVUS in connection with any Products; (iii) the breach by VIVUS of any
representation or warranty or covenant contained in this Agreement; (iv) the
Product supplied by VIVUS to Purchaser hereunder failing to meet the warranties
set forth in Section 4.2, or (v) the negligence or willful misconduct of VIVUS
or its Affiliates, sublicensees, or any of its agents, directors, officers or
employees, except in each case to the extent that such Losses arise directly
from the breach by Purchaser of any representation or warranty or covenant
contained in this Agreement or any negligence or willful misconduct by a
Purchaser Indemnified Party.

 

10.2                        Indemnification by Purchaser.  Purchaser agrees to
defend and indemnify and hold VIVUS, its Affiliates and their respective
directors, officers and employees (the “VIVUS Indemnified

 

--------------------------------------------------------------------------------

**                                  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.

 

--------------------------------------------------------------------------------

 

Parties”) harmless against any and all Losses resulting from any Claim of a
Third Party arising out of, based on, or caused by (i) the storage, sale,
shipment, promotion or distribution of the Product by Purchaser after Purchaser
has taken title to the Product, or (ii) the breach by Purchaser of any
representation or warranty or covenant contained in this Agreement, except in
each case to the extent that such Losses arise directly from the breach by VIVUS
of any representation or warranty or covenant contained in this Agreement
(including breach of Section 4.2), or any negligence or willful misconduct by a
VIVUS Indemnified Party.

 

10.3                        Indemnification Procedures.  The Party claiming
indemnity under this Article 10 (the “Indemnified Party”) shall give written
notice to the Party from whom indemnity is being sought (the “Indemnifying
Party”) promptly and in no event later than [**] after learning of a written
claim (“Indemnified Claim”).  Failure by an Indemnified Party to give notice of
an Indemnified Claim within [**] of receiving a writing reflecting such Claim
shall not relieve the Indemnifying Party of its indemnification obligations
hereunder except and solely to the extent that such Indemnifying Party is
actually prejudiced as a result of such failure to give such notice.  The
Indemnifying Party shall have the right to assume the conduct and defense of the
Indemnified Claim with counsel of its choice so long as the Indemnifying Party
is conducting a good faith and diligent defense; provided that, the Indemnifying
Party shall not have the right to assume any Indemnified Claim if (x) the
Indemnifying Party fails to provide reasonable evidence of its ability and
willingness to satisfy such claim, or (y) such claim involves a criminal or
regulatory enforcement action.  The Indemnified Party shall provide the
Indemnifying Party with reasonable assistance in connection with the defense of
the Indemnified Claim.  The Indemnified Party may monitor such defense with
counsel of its own choosing at its sole expense; provided, that if under
applicable standards of professional conduct a conflict of interest exists
between the Indemnifying Party and the Indemnified Party in respect of such
claim, such Indemnified Party shall have the right to employ separate counsel to
represent such Indemnified Party with respect to the matters as to which a
conflict of interest exists and in that event the reasonable fees and expenses
of such separate counsel shall be paid by the Indemnifying Party.  The
Indemnifying Party may not settle the Indemnified Claim without the prior
written consent of the Indemnified Party, such consent shall not be unreasonably
withheld, delayed or conditioned.  In no event shall the Indemnifying Party
settle the Indemnified Claim unless such settlement provides an unconditional
and full release of the Indemnified Party.  If the Indemnifying Party does not
assume and conduct the defense of the Indemnified Claim as provided above: (a)
the Indemnified Party may assume and conduct the defense of the Indemnified
claim at the Indemnifying Party’s expense; (b) the Indemnified Party may consent
to the entry of any judgment or enter into any settlement with respect to the
Indemnified Claim in any manner the Indemnified Party may deem reasonably
appropriate (and the Indemnified Party need not consult with, or obtain any
consent from, the Indemnifying Party in connection therewith); and (c) the
Indemnifying Party will remain responsible to indemnify the Indemnified Party
for Indemnified Amounts as provided in this Article 10.

 

11.                               LIMITATION OF LIABILITY

 

11.1                        Limitation.  NEITHER PARTY SHALL BE LIABLE TO THE
OTHER FOR ANY EXEMPLARY, SPECIAL, CONSEQUENTIAL, INCIDENTAL, PUNITIVE, OR
INDIRECT DAMAGES, COSTS OR EXPENSES (INCLUDING LOST PROFITS, LOST REVENUES
AND/OR LOST SAVINGS) ARISING FROM OR RELATING TO ANY BREACH OF THIS AGREEMENT,
REGARDLESS OF ANY NOTICE OF THE POSSIBILITY OF SUCH DAMAGES.  NOTHING IN THE
PRECEDING SENTENCE IS INTENDED TO OR SHALL LIMIT OR RESTRICT (A) THE
INDEMNIFICATION RIGHTS OR OBLIGATIONS OF ANY PARTY IN CONNECTION WITH THIRD
PARTY CLAIMS UNDER ARTICLE 10, (B) DAMAGES OR INJUNCTIVE RELIEF AVAILABLE FOR A
PARTY’S BREACH OF ARTICLE 13, (C) DAMAGES TO THE EXTENT ARISING FROM OR RELATING
TO  WILLFUL MISCONDUCT OR FRAUDULENT ACTS OR OMISSIONS OF A PARTY OR (D) DIRECT
DAMAGES.  EXCEPT FOR WILLFUL MISCONDUCT

 

--------------------------------------------------------------------------------

**                                  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.

 

--------------------------------------------------------------------------------

 

OR LOSSES ASSOCIATED WITH PRODUCT RECALLS, IN NO EVENT SHALL VIVUS’S AGGREGATE
LIABILITY ARISING OUT OF OR RELATING TO THIS AGREEMENT UNDER ANY THEORY OF
LIABILITY (WHETHER IN CONTRACT, TORT, STATUTORY OR OTHERWISE) EXCEED THE SUM OF
AMOUNTS ACTUALLY RECEIVED BY VIVUS UNDER THIS AGREEMENT AND THE LICENSE
AGREEMENT; PROVIDED, HOWEVER THAT THIS LIMITATION SHALL NOT APPLY TO (I) VIVUS’S
OBLIGATIONS IN CONNECTION WITH THIRD PARTY CLAIMS UNDER ARTICLE 10 OR (II)
DAMAGES TO THE EXTENT ARISING FROM OR RELATING TO VIVUS’S NEGLIGENT, WILLFUL
MISCONDUCT OR FRAUDULENT ACTS OR OMISSIONS.  NOTWITHSTANDING THE FOREGOING,
NOTHING IN THIS AGREEMENT SHALL LIMIT THE LIABILITY OF EITHER PARTY UNDER THE
LICENSE AGREEMENT.

 

11.2                        Duty to Mitigate.  Each Party shall use reasonable
efforts to mitigate any damages incurred by such Party hereunder.

 

12.                               INSURANCE.

 

12.1                        Each Party shall procure and maintain insurance or
self-insure during the Term of this Agreement and for a period of [**] following
the termination or expiration of this Agreement, adequate to cover its
obligations hereunder and which are consistent with normal business practices of
prudent companies similarly situated.  Upon written request, each Party shall
provide proof of adequate coverage to the other Party.  Either Party may
substitute a self-insurance program to satisfy in whole or in part its
obligations under this Article 12 on written notice to the other Party with
information demonstrating the adequacy of such program.

 

12.2                        It is understood that the insurance requirements
above shall not be construed to create a limit of either Party’s liability with
respect to its indemnification obligations under Article 10.  Each Party shall
provide the other Party with written evidence of such insurance upon written
request.  Each Party shall provide the other Party with written notice at least
[**] prior to the cancellation, non-renewal or material change in such insurance
or self-insurance that materially adversely affects the rights of the other
Party hereunder.

 

13.                               CONFIDENTIALITY; PROPRIETARY RIGHTS

 

13.1                        Confidentiality.  Each Party will maintain the
Confidential Information of the other Party in accordance with Article 11 of the
License Agreement.  The Parties agree not to disclose any financial terms or
conditions of this Agreement to any Third Party without the prior consent of the
other Party, except as required by Applicable Law.

 

13.2                        Proprietary Rights. This Agreement shall not affect
the ownership of any intellectual property owned or developed by or licensed to
either Party (“Intellectual Property”) or any rights granted in the License
Agreement with respect to such Intellectual Property.

 

14.                               DISPUTE RESOLUTION

 

14.1                        Disputes.  The Parties recognize that disputes as to
certain matters may from time to time arise during the Term 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 14 if and when a dispute arises under
this Agreement.  In the event of any disputes, controversies or differences
which may arise

 

--------------------------------------------------------------------------------

**                                  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.

 

--------------------------------------------------------------------------------

 

between the Parties out of or in relation to or in connection with this
Agreement, including any alleged failure to perform, or breach, of this
Agreement, or any issue relating to the interpretation or application of this
Agreement, then upon the request of either Party, the Parties agree to meet and
discuss in good faith a possible resolution thereof, which good faith efforts
shall include at least one in-person meeting between the chief executive
officers of each Party; provided that, each Party agrees that any statute of
limitation or survival period with respect to such dispute shall be tolled
during such discussions.  If the matter is not resolved within [**] following
the request for discussions, either Party may then invoke the provisions of
Section 14.2.

 

14.2                        Arbitration.  Any dispute, controversy or claim
arising out of or relating to the validity, construction, interpretation,
enforceability, breach, performance, application or termination of this
Agreement that is not resolved pursuant to Section 14.1, shall be settled by
binding arbitration administered by JAMS pursuant to its Comprehensive
Arbitration Rules and Procedures of JAMS then in effect (the “JAMS Rules”),
except as otherwise provided herein.  The arbitration shall be governed by the
United States Federal Arbitration Act, 9 U.S.C. §§ 1-16 (the “Federal
Arbitration Act”), to the exclusion of any inconsistent state laws.  The United
States Federal Rules of Civil Procedure shall govern discovery and the rules of
evidence for the arbitration.  The arbitration will be conducted in New York,
New York, and the Parties consent to the personal jurisdiction of the United
States federal courts, for any case arising out of or otherwise related to this
arbitration, its conduct and its enforcement.  Any situation not expressly
covered by this Agreement shall be decided in accordance with the JAMS Rules.

 

14.3                        Arbitrator.  The arbitrator shall be one (1)
neutral, independent and impartial arbitrator selected from a pool of retired
federal judges or magistrates to be presented to the Parties by JAMS. Failing
the agreement of the Parties as to the selection of the arbitrator within [**],
the arbitrator shall be appointed by JAMS in accordance with the JAMS Rules.

 

14.4                        Decision.  The power of the arbitrator to fashion
procedures and remedies within the scope of this Agreement is recognized by the
Parties as essential to the success of the arbitration process.  The arbitrator
shall not have the authority to fashion remedies which would not be available to
a federal judge hearing the same dispute.  The arbitrator is encouraged to
operate on this premise in an effort to reach a fair and just decision.  Reasons
for the arbitrator’s decisions should be set forth in accordance with the JAMS
Rules.  Such a written decision shall be rendered by the arbitrator following a
full comprehensive hearing, no later than [**] following the selection of the
arbitrator as provided for in Section 14.3.

 

14.5                        Award.  Any award shall be promptly paid in United
States dollars free of any tax, deduction or offset; and any costs, fees or
taxes incident to enforcing the award shall, to the maximum extent permitted by
Applicable Law, be charged against the Party resisting enforcement.  Each Party
agrees to abide by the award rendered in any arbitration conducted pursuant to
this Article 14, and agrees that, subject to the Federal Arbitration Act,
judgment may be entered upon the final award in any court of competent
jurisdiction and that other courts may award full faith and credit to such
judgment in order to enforce such award.  The award shall include interest from
the date of the award until paid in full, at a rate fixed by the arbitrator and
the arbitrator may, in his or her discretion, award pre-judgment interest.  With
respect to money damages, nothing contained herein shall be construed to permit
the arbitrator or any court or any other forum to award punitive or exemplary
damages.  By entering into this agreement to arbitrate, the Parties expressly
waive any claim for punitive or exemplary damages, subject to the exceptions set
forth in Article 11.

 

14.6                        Costs.  The arbitrator shall assess his or her
costs, fees and expenses against the Party losing the arbitration and shall
require such losing Party to reimburse the other Party for all of its reasonable
attorneys’ fees, costs, and disbursements arising out of the arbitration
(including, for example,

 

--------------------------------------------------------------------------------

**                                  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.

 

--------------------------------------------------------------------------------

 

expert witness fees and expenses, photocopy charges, travel expenses, and so
on).  Notwithstanding the foregoing, if the arbitrator believes that neither
Party is the clear loser, the arbitrator shall divide his or her costs, fees,
and expenses according to his or her sole discretion, and each Party shall bear
its own attorney’s fees, costs, and disbursements arising out of the
arbitration.

 

14.7                        Injunctive Relief.  Provided a Party has made a
sufficient showing under the rules and standards set forth in the Federal Rules
of Civil Procedure and applicable case law, the arbitrator shall have the
freedom to invoke, and the Parties agree to abide by, injunctive measures after
either Party submits in writing for arbitration claims requiring immediate
relief.  Additionally, nothing in this Article 14 will preclude either Party
from seeking equitable relief or interim or provisional relief from a court of
competent jurisdiction, including a temporary restraining order, preliminary
injunction or other interim equitable relief, concerning a dispute either prior
to or during any arbitration if necessary to protect the interests of such Party
or to preserve the status quo pending the arbitration proceeding.

 

14.8                        Confidentiality.  The arbitration proceeding shall
be confidential and the arbitrator shall issue appropriate protective orders to
safeguard each Party’s Confidential Information.  Except as required to comply
with Applicable Laws, including rules and regulations promulgated by the SEC,
The NASDAQ Stock Market or any securities exchanges, no Party shall make (or
instruct the arbitrator to make) any public announcement with respect to the
proceedings or decision of the arbitrator without prior written consent of the
other Party.  The existence of any dispute submitted to arbitration, and the
award, shall be kept in confidence by the Parties and the arbitrator, except as
required in connection with the enforcement of such award or as otherwise
required by Applicable Law.

 

14.9                        Survivability.  Any duty to arbitrate under this
Agreement shall remain in effect and be enforceable after termination of this
Agreement for any reason.

 

15.                               PRESS RELEASES; USE OF NAMES

 

15.1                        Press Releases.  The form and content of any public
announcement to be made by one Party regarding this Agreement, or the subject
matter contained herein, shall be subject to the prior written consent of the
other Party (which consent shall not be unreasonably withheld, conditioned, or
delayed), except as may be required by applicable law in which event the Party
required to make such announcement shall, to the extent possible, provide to the
other Party a written copy of any such required announcement at least [**] prior
to disclosure to give the other Party reasonable advance notice and review of
any such announcement.  Notwithstanding the foregoing, either Party may publicly
disclose without violation of this Agreement, such terms of this Agreement as
are, on the advice of such Party’s counsel, required by the rules and
regulations of the SEC or any other applicable entity having regulatory
authority over such Party’s securities; provided that such Party shall advise
Purchaser of such intended disclosures and requests confidential treatment of
certain commercial terms and technical terms hereof to the extent such
confidential treatment is reasonably available to such Party.  In the event of
any such filing, such Party will provide the other Party, a reasonable time
prior to filing, with a copy of the Agreement marked to show provisions for
which such Party intends to seek confidential treatment and shall reasonably
consider and incorporate the other Party’s comments thereon to the extent
consistent with the legal requirements applicable to such Party and that govern
redaction of information from material agreements that must be publicly filed. 
The other Party shall provide any such comments as promptly as practicable.  The
intention of the Parties is to agree upon a single redacted version of the
Agreement to be filed with the SEC or any other applicable entity.

 

--------------------------------------------------------------------------------

**                                  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.

 

--------------------------------------------------------------------------------

 

15.2                        Use of Names.  Except as otherwise required by law
or by the terms of this Agreement or the License Agreement, or as mutually
agreed upon by the Parties, neither Party shall make any use of the name of the
other Party in any advertising or promotional material, or otherwise, without
the prior written consent of the other Party, which consent shall not be
unreasonably withheld.

 

16.                               MISCELLANEOUS

 

16.1                        Entire Agreement; Amendment.  This Agreement,
including the Exhibits 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 Existing Confidentiality Agreement.  The
foregoing shall not be interpreted as a waiver of any remedies available to
either Party as a result of any breach, prior to the Effective Date, by the
other Party of its obligations pursuant the Existing Confidentiality Agreement. 
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 officer of each Party.

 

16.2                        Relationship of the Parties.  The relationship
between VIVUS and Purchaser is that of independent contractors and nothing
herein shall be deemed to constitute the relationship of partners, joint
venturers, or principal and agent between VIVUS and Purchaser.  Neither Party
shall have any express or implied right or authority to assume or create any
obligations on behalf of or in the name of the other Party or to bind the other
Party to any contract, agreement, or undertaking with any Third Party.

 

16.3                        Force Majeure.  Both Parties shall be excused from
the performance of their 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 takes 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, and failure of plant or
machinery (provided that such failure could not have been prevented by the
exercise of skill, diligence, and prudence that would be reasonably and
ordinarily expected from a skilled and experienced person engaged in the same
type of undertaking under the same or similar circumstances).  Notwithstanding
the foregoing, a Party shall not be excused from making payments owed hereunder
because of a force majeure affecting such Party.

 

16.4                        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 16.4, and shall be deemed to have been
given for all purposes when received, if hand-delivered or by means of facsimile
or other electronic transmission, or one (1) Business Day after being sent by a
reputable overnight delivery service.

 

--------------------------------------------------------------------------------

 

If to VIVUS:

VIVUS, Inc.

 

351 E. Evelyn Avenue

 

Mountain View, CA 94041

 

Attention: General Counsel

 

Fax: (650) 934-5320

 

 

With a copy to:

Hogan Lovells US LLP

 

525 University Avenue

 

3rd Floor

 

Palo Alto, CA 94301

 

Attention: Shane Albright, Partner

 

Fax: (650) 463-4199

 

 

If to Purchaser:

Auxilium Pharmaceuticals, Inc.

 

640 Lee Road

 

Chesterbrook, Pennsylvania 19087

 

Attention:

Adrian Adams, Chief Executive Officer

 

Attention:

Andrew I. Koven, Chief Administrative

 

 

Officer & General Counsel

 

Fax: 1-484-321-5996

 

 

With a copy to:

Holland & Knight LLP

 

701 Brickell Avenue, Suite 3000

 

Miami, FL 33131

 

Attention: Rodney H. Bell

 

Fax: (305) 789-7799

 

16.5                        No Strict Construction; Headings; 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.  The definitions of the terms herein apply
equally to the singular and plural forms of the terms defined.  Whenever the
context may require, any pronoun will include the corresponding masculine,
feminine and neuter forms.  The words “include”, “includes” and “including” will
be deemed to be followed by the phrase “without limitation.”  Unless the context
requires otherwise, (a) any definition of or reference to any agreement,
instrument or other document herein will be construed as referring to such
agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein or therein), (b) any
reference to any laws herein will be construed as referring to such laws and any
rules or regulations promulgated thereunder as from time to time enacted,
repealed or amended, (c) any reference herein to any person will be construed to
include the person’s successors and assigns, (d) the words “herein”, “hereof”
and “hereunder”, and words of similar import, will be construed to refer to this
Agreement in its entirety and not to any particular provision hereof, (e) any
reference herein to the words “mutually agree” or “mutual written agreement”
will not impose any obligation on either Party to agree to any terms relating
thereto or to engage in discussions relating to such terms except as such Party
may determine in such Party’s sole discretion, except as expressly provided in
this Agreement, (f) as applied to a Party, the word “will” shall be construed to
have the same meaning and effect as the word “shall,” and (g) all references
herein without a reference to any

 

--------------------------------------------------------------------------------

 

other agreement to Articles, Sections, or Exhibits will be construed to refer to
Articles, Sections, and Exhibits of or to this Agreement.

 

16.6        Assignment.  Neither Party may assign or transfer this Agreement or
any rights or obligations hereunder without the prior written consent of the
other Party, except that a Party may make such an assignment without the other
Party’s consent to such Party’s Affiliate or to a successor to all or
substantially all of the assets or business of such Party to which this
Agreement pertains.  Any permitted successor or assignee of rights and/or
obligations hereunder shall, in a writing to the other Party, expressly assume
performance of such rights and/or obligations.  Any assignment or attempted
assignment by either Party in violation of the terms of this Section 16.6 shall
be null, void and of no legal effect.

 

16.7        Governing Law.  Resolution of all disputes arising out of or related
to this Agreement or the validity, construction, interpretation, enforcement,
breach, performance, application or termination of this Agreement and any
remedies relating thereto, shall be governed by and construed under the
substantive laws of the State of New York, excluding any conflicts or choice of
law rule or principle that might otherwise refer construction or interpretation
of this Agreement to the substantive law of another jurisdiction.

 

16.8        Successors and Assigns; No Third Party Beneficiaries.  This
Agreement will be binding upon and inure to the benefit of the Parties and their
successors and permitted assigns.  No provision of this Agreement, express or
implied, is intended to or will be deemed to confer upon Third Parties any
right, benefit, remedy, claim, liability, reimbursement, claim of action or
other right of any nature whatsoever under or by reason of this Agreement other
than the Parties and, to the extent provided in Sections 10.1 and 10.2, the
Indemnified Parties.  Without limitation of the foregoing, this Agreement will
not be construed so as to grant employees of either Party in any country any
rights against the other Party pursuant to the laws of such country.

 

16.9        Performance by Affiliates and/or Subcontractors.  Any obligation of
VIVUS under or pursuant to this Agreement may be satisfied, met or fulfilled, in
whole or in part, at VIVUS’s sole and exclusive option, either by VIVUS directly
or by any Affiliate or Third Party that VIVUS causes to satisfy, meet or fulfill
such obligation, in whole or in part.  Any obligation of Purchaser under or
pursuant to this Agreement may be satisfied, met or fulfilled, in whole or in
part, at Purchaser’s sole and exclusive option, either by Purchaser directly or
by any Affiliate of Purchaser or Third Party that Purchaser causes to satisfy,
meet or fulfill such obligation, in whole or in part.  Each of the Parties
guarantees the performance of all actions, agreements and obligations to be
performed by any Affiliates of such Party or a Third Party under the terms and
conditions of this Agreement, and shall cause its Affiliates or such Third Party
to comply with the provisions of this Agreement in connection with such
performance.  Any breach by a Party’s Affiliate of any of such Party’s
obligations under this Agreement shall be deemed a breach by such Party, and the
other Party may proceed directly against such Party without any obligation to
first proceed against such Party’s Affiliate.

 

16.10      Counterparts.  This Agreement may be executed in one (1) or more
counterparts, including by facsimile or other electronic transmission, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.

 

[Signature page follows]

 

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed
as of the date first above written.

 

 

 

AUXILIUM PHARMACEUTICALS, INC.

 

 

 

 

 

 

 

By:

/s/ Adrian Adams

 

 

 

 

Name:

Adrian Adams

 

 

 

 

Title:

CEO & President

 

 

 

 

Date:

10/10/13

 

 

 

 

 

 

 

VIVUS, INC.

 

 

 

 

 

 

 

By:

/s/ John L. Slebir

 

 

 

 

Name:

John L. Slebir

 

 

 

 

Title:

Vice President, General Counsel

 

 

 

 

Date:

10/10/13

 

--------------------------------------------------------------------------------

 

EXHIBIT A

 

Specifications

 

[**]

 

--------------------------------------------------------------------------------

**           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.

 

--------------------------------------------------------------------------------

 

EXHIBIT B

 

Manufacturing Cost for Product Manufactured by MTPC

 

For Product manufactured by MTPC, the Manufacturing Cost shall be equal to the
[**] of (a) or (b) below:

 

(a)         A fixed cost for each dosage form of the Product (the “Fixed
Manufacturing Cost”) as follows:

 

 

Dosage forms

 

Fixed Manufacturing Cost (per tablet)

 

 

 

 

 

 

 

 

 

50mg tablet

 

US$

[**]

 

 

 

 

 

 

 

 

 

 

100mg tablet

 

US$

[**]

 

 

 

 

 

 

 

 

 

 

200mg tablet

 

US$

[**]

 

 

 

(b)         A cost per Product tablet for each dosage form calculated based on a
percentage of [**] total MTPC Agreement Net Sales in the Purchaser Territory
according to the following (the “Net Sales Manufacturing Cost”):

 

Annual Total MTPC Agreement Net 
Sales in the Purchaser Territory

 

Net Sales Manufacturing Cost (per tablet)

Portion up to US$[**]

 

[**]% of the MTPC Agreement Net Sales divided by the quantity of each dosage
forms of the Product for commercial sales during such [**]

Portion above US$[**] but less than or equal to $[**]

 

[**]% of the MTPC Agreement Net Sales divided by the quantity of each dosage
forms of the Product for commercial sales during such [**]

Portion in excess of US$[**]

 

[**]% of the MTPC Agreement Net Sales divided by the quantity of each dosage
forms of the Product for commercial sales during such [**]

 

The Manufacturing Cost for Product manufactured by MTPC shall initially be set
at the Fixed Manufacturing Cost, and the Price for Product hereunder will be
calculated and invoiced to Purchaser based on such Fixed Manufacturing Cost.  In
the event the Net Sales Manufacturing Cost in a [**] per bulk tablet of Product
is [**] than the Fixed Manufacturing Cost per bulk tablet of Product,
Manufacturing Cost for Product sold by Purchaser, its Affiliates, or its
sublicensees to Third Parties during such [**] shall automatically be adjusted
[**] to account for the difference between such costs (the “Manufacturing Cost
Adjustment”).  The formula for calculation of such Manufacturing Cost Adjustment
is as follows:

 

“Manufacturing Cost Adjustment” = [**].

 

No later than [**] after the end of each [**], VIVUS shall notify Purchaser
whether there is a Manufacturing Cost Adjustment with respect to such [**] and
if there is such a Manufacturing

 

--------------------------------------------------------------------------------

**           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.

 

--------------------------------------------------------------------------------

 

Cost Adjustment, shall invoice Purchaser for Product sold during such [**] at a
new Price calculated based on the Manufacturing Cost Adjustment, net of payments
already made by Purchaser for such Product.

 

After transition of manufacturing from MTPC to the New Third Party Manufacturer,
it is anticipated that there will be a final reconciliation between MTPC and
VIVUS pursuant to Section 11.6(a) of the MTPC Agreement to ensure the accuracy
of all amounts paid by VIVUS to MTPC for manufacture of Product.  To the extent
that this final reconciliation results in any payments by or refunds to VIVUS in
respect of Product manufactured by MTPC and ultimately sold to Purchaser
hereunder, the Manufacturing Cost and Price for such Product shall be
appropriately re-calculated hereunder, and appropriate payments to VIVUS shall
be made (or appropriate credits to Purchaser shall be issued, as the case may
be).

 

Purchaser acknowledges that the Manufacturing Cost specified above may need to
be modified in order to maintain consistency between this Agreement and the MTPC
Agreement if the price charged by MTPC to VIVUS for Product changes, it being
understood that (a) such price will not [**] prior to [**]; (b) after such date
such price can only [**] if MTPC’s Manufacturing Cost for the Product [**]
percent ([**]%) of the Fixed Manufacturing Cost above, provided that MTPC
provides reasonable and customary evidence of such [**] and that MTPC and VIVUS
have negotiated the price [**] in good faith; and (c) any such change that would
result in [**] will require [** ].

 

Additionally, for the avoidance of doubt, the Manufacturing Cost specified above
only applies to Product manufactured by MTPC and will need to be modified in
order to maintain consistency between this Agreement and the agreement under
which the New Third Party Manufacturer manufactures and supplies Product;
provided, however, that the Manufacturing Cost for a New Third Party
Manufacturer shall in no event be greater than [**].

 

As used in this Exhibit B, the following initially capitalized term(s), whether
used in the singular or plural form, shall have the meanings set forth below:

 

“MTPC’s Manufacturing Cost” means MANUFACTURING COST (as defined in the MTPC
Agreement).

 

“MTPC Agreement Net Sales” means NET SALES (as defined in the MTPC Agreement).

 

--------------------------------------------------------------------------------

**           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.

 

--------------------------------------------------------------------------------

 

EXHIBIT C

Minimum Purchase Obligations

 

Calendar Year

 

Minimum Purchase Obligation

 

 

 

[**]

 

[**](1)

 

 

 

[**]

 

[**]

 

 

 

[**]

 

[**]

 

 

 

[**]

 

[**]

 

--------------------------------------------------------------------------------

(1)    [**]

 

**           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.

 

--------------------------------------------------------------------------------

 

EXHIBIT D

Current Inventory

 

[**]

 

--------------------------------------------------------------------------------

**           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.

 

--------------------------------------------------------------------------------

 

Schedule 2.5(b)

Order of Current Inventory

 

[**]

 

--------------------------------------------------------------------------------

**           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.

 

--------------------------------------------------------------------------------