Exhibit 10.1

 

EXECUTION VERSION

 

COLLABORATION AGREEMENT

DATED AS OF FEBRUARY 22, 2012

 

BY AND AMONG

 

AUXILIUM PHARMACEUTICALS, INC. AND

 

AUXILIUM INTERNATIONAL HOLDINGS, INC.

 

AND

 

ACTELION PHARMACEUTICALS LTD

 

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

 

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TABLE OF CONTENTS:

 

 

 

 

 

 

ARTICLE 1

 

DEFINITIONS

 

1

 

 

 

 

 

ARTICLE 2

 

LICENSES

 

14

 

 

 

 

 

2.1

Grant to Actelion

 

14

2.2

Grant to Auxilium

 

15

2.3

Additional Licensing Provisions

 

15

2.4

Performance by Affiliates, Subcontractors and Sublicensees

 

15

2.5

Exclusivity

 

16

2.6

Right of Negotiation

 

17

2.7

Restrictive Covenants

 

17

 

 

 

 

 

ARTICLE 3

 

GOVERNANCE

 

19

 

 

 

 

 

3.1

Joint Steering Committee

 

19

3.2

Joint Steering Committee Membership

 

20

3.3

Joint Steering Committee Meetings

 

20

3.4

Decision-Making

 

21

3.5

Alliance Managers

 

21

3.6

Committees

 

21

3.7

Limits on JSC and Committee Authority

 

21

3.8

Disbanding the JSC

 

22

3.9

Actions

 

22

3.10

Exchange of Information

 

22

3.11

Minutes of Committee Meetings

 

22

 

 

 

 

 

ARTICLE 4

 

DEVELOPMENT

 

23

 

 

 

 

 

4.1

Overview

 

23

4.2

Objectives Under the Development Plan

 

24

4.3

Development Plan and Development Budget

 

24

4.4

Development Costs

 

25

4.5

Records, Reports and Information

 

26

4.6

Ownership and Transfer of Development Data

 

26

4.7

Right to Audit

 

27

 

 

 

 

 

ARTICLE 5

 

REGULATORY

 

27

 

 

 

 

 

5.1

Regulatory Data and Regulatory Materials

 

27

5.2

Regulatory Filings and Regulatory Approvals

 

28

5.3

Communications

 

30

5.4

No Other Regulatory Filings

 

30

5.5

Adverse Event Reporting; Safety Data Exchange and Medical Inquiries

 

30

5.6

Regulatory Authority Communications Received by a Party

 

31

5.7

Recall, Withdrawal, or Market Notification of Product

 

33

5.8

Regulatory Diligence

 

34

 

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ARTICLE 6

 

COMMERCIALIZATION

 

34

 

 

 

 

 

6.1

Commercialization in the Field in the Territory

 

34

6.2

Commercialization Plan

 

35

6.3

Actelion’s Performance

 

36

6.4

Reports

 

37

6.5

Compliance

 

37

6.6

Sales Representatives and Medical Science Liaisons

 

37

6.7

Promotional Materials

 

37

6.8

Product Trademarks and Product Trade Dress

 

38

6.9

Commercialization Data

 

40

6.10

Global Branding Strategy

 

41

 

 

 

 

 

ARTICLE 7

 

SUPPLY

 

41

 

 

 

 

 

7.1

General

 

41

7.2

Development Supply

 

41

7.3

Commercial Supply

 

41

7.4

Exclusive Source

 

42

7.5

Packaging and Labeling; Certain Other Manufacturing Activities

 

42

7.6

Forecasting and Ordering

 

43

7.7

Invoicing, and Manufacturing Standard Cost Audit

 

45

7.8

Shipping and Delivery

 

45

7.9

Quality and Compliance

 

46

7.10

Disputes and Remedies

 

47

7.11

Shortages

 

48

7.12

Manufacturing Supply Assurance

 

49

7.13

Safety Stock Obligations

 

49

7.14

Product Specification and Manufacturing Changes

 

49

7.15

Termination of Supply Obligations

 

49

7.16

Auxilium Notice

 

50

 

 

 

 

 

ARTICLE 8

 

PAYMENTS

 

50

 

 

 

 

 

8.1

Upfront Payment

 

50

8.2

Milestone Payments

 

50

8.3

Royalties

 

52

8.4

Royalty Reports and Payments

 

52

8.5

Third Party Royalties and Other Payments

 

53

8.6

Taxes and Withholding

 

54

8.7

Currency Conversion

 

55

8.8

General Payment Procedures

 

55

8.9

Late Payments

 

55

8.10

Legal Restrictions

 

55

8.11

Records; Audits

 

55

 

 

 

 

 

ARTICLE 9

 

INTELLECTUAL PROPERTY MATTERS

 

56

 

 

 

 

 

9.1

Ownership of Intellectual Property

 

56

9.2

Disclosures; Disputes Regarding Inventions

 

57

 

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9.3

Patent Filings, Prosecution and Maintenance

 

57

9.4

Defense and Enforcement of Patents

 

60

9.5

Patent Term Extensions

 

62

9.6

Patent Marking

 

63

 

 

 

 

 

ARTICLE 10

 

REPRESENTATIONS, WARRANTIES AND COVENANTS

 

63

 

 

 

 

 

10.1

Mutual Representations and Warranties

 

63

10.2

Additional Representations, Warranties and Covenants of Auxilium

 

64

10.3

Additional Representations, Warranties and Covenants of Actelion as of the
Effective Date

 

66

10.4

Additional Covenants of Actelion

 

66

10.5

Disclaimer

 

67

10.6

No Other Representations or Warranties

 

67

 

 

 

 

 

ARTICLE 11

 

LIABILITY AND INDEMNIFICATION

 

67

 

 

 

 

 

11.1

Liability

 

67

11.2

Indemnification by Auxilium

 

68

11.3

Indemnification by Actelion

 

68

11.4

Indemnification Procedures

 

68

11.5

Limitation of Liability

 

70

11.6

Insurance

 

70

 

 

 

 

 

ARTICLE 12

 

CONFIDENTIALITY

 

71

 

 

 

 

 

12.1

Confidential Information

 

71

12.2

Confidentiality Obligations

 

72

12.3

Permitted Disclosure and Use

 

72

12.4

Notification

 

73

12.5

Publicity; Filing of this Agreement

 

73

12.6

Publication

 

74

12.7

Use of Names

 

74

12.8

Survival

 

74

 

 

 

 

 

ARTICLE 13

 

TERM AND TERMINATION

 

74

 

 

 

 

 

13.1

Term

 

74

13.2

Termination for Material Breach

 

74

13.3

Termination as a Result of Bankruptcy

 

74

13.4

Termination by Auxilium

 

75

13.5

Termination by Actelion

 

75

 

 

 

 

 

ARTICLE 14

 

EFFECTS OF TERMINATION

 

75

 

 

 

 

 

14.1

Effects of Termination

 

75

14.2

Actelion Rights In Lieu of Termination

 

77

14.3

Expiration of this Agreement

 

77

14.4

Accrued Rights

 

78

14.5

Survival

 

78

14.6

Rights in Bankruptcy

 

78

 

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ARTICLE 15

 

DISPUTE RESOLUTION

 

78

 

 

 

 

 

15.1

Disputes

 

78

15.2

Arising Between the Parties

 

79

15.3

Dispute Resolutions

 

79

15.4

Patent and Trademark Dispute Resolution

 

79

15.5

Injunctive Relief

 

79

 

 

 

 

 

ARTICLE 16

 

MISCELLANEOUS

 

79

 

 

 

 

 

16.1

Entire Agreement; Amendment

 

79

16.2

Force Majeure

 

80

16.3

Notices

 

80

16.4

No Strict Construction; Interpretation

 

81

16.5

Assignment

 

81

16.6

Further Actions

 

81

16.7

Severability

 

81

16.8

No Waiver

 

81

16.9

Independent Contractors

 

81

16.10

English Language; Governing Law

 

81

16.11

Counterparts

 

82

 

 

 

 

 

Schedules:

 

 

 

 

 

 

 

 

 

Schedule 1.11 — Auxilium Patents

 

 

Schedule 6.3.1 — Minimum Annual Finished Product Sales Commitments

 

 

Schedule 7.6 — Forecast Methodology

 

 

Schedule 7.11 — Shortages

 

 

Schedule 10.2 — Disclosure Schedule

 

 

Schedule 10.2.7 — Auxilium Trademarks

 

 

Schedule 12.5.1 — Press Release

 

 

 

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COLLABORATION AGREEMENT

 

This Collaboration Agreement (this “Agreement”), dated as of February 22, 2012
(the “Effective Date”), is made by and among Auxilium Pharmaceuticals, Inc., a
Delaware corporation, and Auxilium International Holdings, Inc., a Delaware
corporation, (together referred to as “Auxilium”), and Actelion Pharmaceuticals
Ltd, a Swiss corporation (“Actelion”).  Auxilium and Actelion are sometimes
referred to herein individually as a “Party” and collectively as the “Parties.”

 

RECITALS

 

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

 

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

 

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

 

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

 

ARTICLE 1
DEFINITIONS

 

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

 

1.1          “Actelion Applied Know-How” means all Know-How that is
(i) (a) Controlled by Actelion (or its Affiliates) as of the Effective Date or
comes under the Control of Actelion (or its Affiliates) during the Term (other
than as a result of the licenses granted by Auxilium to Actelion under this
Agreement) and (b) incorporated by Actelion into any Finished Product prior to
any termination or expiration of this Agreement (provided, however, that such
Know-How is necessary or reasonably useful for the Development or Manufacture of
Bulk Product or Commercialization of Finished Product) or (ii) an Actelion
Invention.

 

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

 

1.3          “Actelion Applied Technology” means the Actelion Applied Know-How
and the Actelion Applied Patents.

 

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

 

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

 

1.6                               “Analytical Release Testing and
Characterization” means all activities associated with carrying out the
analytical testing and release of the Bulk Product in the Territory.  Such
activities shall include:  transferring test methods, developing and validating
new analytical tests required in the Territory, amending the release
specifications to be in compliance with local Laws, conducting the release
testing of the Bulk Product in the Territory and final release of the Bulk
Product (including raw materials, intermediates, drug substance, drug product
and sterile diluents).  For clarity, preparation of reference standards to be
used for Analytical Release Testing and Characterization includes analytical
tests other than release testing (e.g., mass spectrophotometry,
isoelectrofocusing, N- and C-terminal sequencing, amino acid analysis, etc.),
which activities shall also be deemed Analytical Release Testing and
Characterization hereunder.

 

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

 

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

 

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

 

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

 

1.11                        “Auxilium Patent” means any Patent in the Territory
that is (i) Controlled by Auxilium (or its Affiliates) as of the Effective Date,
including the Patents listed in Schedule 1.11, or (ii) that comes under the
Control of Auxilium during the Term (including an Auxilium Collaboration
Patent), in each case of (i) or (ii) which is necessary or reasonably useful for
the Development of Bulk Product or Commercialization of the Product in the Field
in the Territory.

 

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

 

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

 

1.14                        “BTC License Agreement” means that certain Second
Amended and Restated Development and License Agreement, dated as of August 31,
2011, by and between Auxilium and BioSpecifics Technologies Corp. (“BTC”).

 

1.15                        “Bulk Product” means the finished form of the
Product including a sterile diluent containing NaCl and CaCl2, packaged in
unlabeled vials.

 

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

 

1.17                        “Commercially Reasonable Efforts” means, with
respect to a Party’s obligations under this Agreement, including to
Commercialize the Finished Product, those efforts and resources consistent with
the usual practices of such Party in pursuing the development or
commercialization of its own pharmaceutical products that are of similar market
potential as such Finished Product, taking into account all relevant factors
including product labeling, market potential,  financial return, medical and
clinical considerations, regulatory environment and competitive market
conditions, all as measured by the facts and circumstances at the time such
efforts are due.  Without limiting the foregoing, Commercially Reasonable
Efforts requires, with respect to such obligations, that the Party: (i) promptly
assign

 

3

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responsibility for such obligation to specific employee(s) who are held
accountable for progress and monitor such progress on an on-going basis,
(ii) set annual objectives for carrying out such obligations, and (iii) allocate
resources designed to advance progress with respect to such objectives.

 

1.18                        “Competitive Product” means (i) any pharmaceutical
product containing [**] or [**] or (ii) any pharmaceutical product indicated for
use [**].

 

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

 

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

 

1.21                        “Develop”, “Developing” or “Development” means all
activities relating to research, non-clinical, preclinical and clinical trials,
toxicology testing, statistical analysis and reporting, necessary or reasonably
useful or otherwise requested or required by a Regulatory Authority as a
condition or in support of obtaining or maintaining all Regulatory Approvals in
the Field in the Territory and all other development-related activities that are
deemed by the JSC to be commercially useful, but shall not include any
activities related to Commercialization or Manufacture.

 

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

 

1.23                        “Development Costs” means the costs and expenses
incurred by a Party or its Affiliates attributable to, or reasonably allocable
to, the Development of the Bulk Product, including costs of conducting Phase IV
Clinical Trials (as well as other post-Regulatory Approval filing date studies
(including physician - initiated studies)).  “Development Costs” shall include
(i) Out-of-Pocket Costs and (ii) internal costs (e.g., staff or administrative)
that are attributable or reasonably allocable to the Development of the Bulk
Product.  For clarity, Development Costs shall exclude Regulatory Costs.

 

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

 

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

 

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

 

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1.26                        “Facility” means, as applicable, a Party’s
Manufacturing facility and such other facilities used by such Party (or those of
its Affiliates or Third Party contractors) in the manufacture, packaging,
labeling or storage of (i) Bulk Product or (ii) materials utilized in the
manufacture, packaging or labeling, in each case, with respect to the Bulk
Product for Development or Finished Product for Commercialization in the Field
in the Territory hereunder.

 

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

 

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

 

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

 

1.30                        “Finished Product” means a Unit of Product in its
full packaging and final presentation form ready for release to end-users.

 

1.31                        “First Commercial Sale” means, with respect to a
Finished Product, the first sale of such Finished Product in a given country or
other regulatory jurisdiction in the Territory by or on behalf of Actelion, its
Affiliates or its permitted distributors to a Third Party, after receipt of
Regulatory Approval for such Finished Product in such country or regulatory
jurisdiction.

 

1.32                        “General Development Activities” means all
Development Activities other than Territory Development Activities.

 

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

 

1.34                        “Good Laboratory Practices” or “GLP” means all
applicable Good Laboratory Practice standards, including, as applicable, (i) as
set forth in the then-current good laboratory practice standards promulgated or
endorsed by the FDA as defined in 21 C.F.R. Part

 

5

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58, and (ii) the equivalent Laws in any relevant country, each as may be amended
and applicable from time to time.

 

1.35                        “Good Manufacturing Practices” or “GMP” means all
applicable Good Manufacturing Practices including, (i) the principles detailed
in the U.S. Current Good Manufacturing Practices, 21 C.F.R. Sections 210, 211,
601 and 610, (ii) the principles detailed in the ICH Q7 guidelines, and
(iii) the equivalent Laws in any relevant country, each as may be amended and
applicable from time to time.

 

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

 

1.37                        “IND” means the equivalent application of an
Investigational New Drug Application to the equivalent agency of the FDA in the
Territory, such as a clinical trial application (“CTA”) or a clinical trial
exemption (“CTX”), the filing of which is necessary to commence or conduct
clinical testing of a pharmaceutical product in humans in such jurisdiction.

 

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

 

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

 

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

 

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

 

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

 

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

 

6

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1.44                        “Manufacture” or “Manufacturing” means all
activities related to the manufacturing of the Bulk Product, or any ingredient
thereof, including manufacturing for clinical use or commercial sale, in-process
and Bulk Product testing, handling and storage of Bulk Product and ongoing
stability tests and regulatory activities related to any of the foregoing;
provided, however, that for purposes of clarity “Manufacture” shall include fill
and lyophilization of Drug Substance but shall exclude Packaging and Labeling
(whether in commercial or clinical packaging presentation).  For clarity,
Manufacturing shall exclude Analytical Release Testing and Characterization.

 

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

 

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

 

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

 

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

 

1.49                        “Net Sales” means the gross amount invoiced by or on
behalf of Actelion, its Affiliates, its sublicensees or any permitted
distributors on account of sales of the Finished Product, less the following
deductions specifically and solely related to the Finished Product and actually
allowed consistent with GAAP:

 

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

 

1.49.2              excise, import and sales taxes, customs duties, and other
fees of a similar nature to the extent included in the price and separately
itemized on the invoice price (but

 

7

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specifically excluding, for clarity, any income taxes assessed against the
income arising from such sale);

 

1.49.3              outbound freight, shipment and insurance costs to the extent
included in the price;

 

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

 

1.49.5              compulsory payments and rebates directly related to the sale
of the Finished Product paid to a Governmental Authority pursuant to
governmental regulations, including retroactive reductions imposed by a
Governmental Authority.

 

For clarity, (i) Net Sales shall not be reduced by the amount of any commissions
paid to individuals, whether they are associated with independent sales agencies
or regularly employed by Actelion, its Affiliate or its sublicensee (or any
agent, distributee, or designee thereof), or for a cost of collection or any
other amount not specifically set forth in Subsections 1.49.1 — 1.49.5,
inclusive, above and (ii) the amount of any discounts, rebates or allowances
granted or taken with respect to the total sales to a customer for multiple
products of Actelion, its Affiliate or its sublicense (or any agent,
distributee, or designee thereof) shall not be deducted in calculating Net
Sales.  Any of the items set forth above that would otherwise be deducted from
the invoice price in the calculation of Net Sales but which are separately
charged to, and paid by, Third Parties shall not be deducted from the invoice
price in the calculation of Net Sales.  In the case of any sale of the Finished
Product for value other than in an arm’s length transaction exclusively for
cash, such as barter or counter-trade, Net Sales shall be determined by
referencing Net Sales at which substantially similar quantities of the Finished
Product are sold in an arm’s length transaction for cash.

 

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

 

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

 

1.51                        “Patents” means patents and patent applications and
all substitutions, divisions, continuations, continuations-in-part, any patent
issued with respect to any such patent applications, any reissue, reexamination,
utility models or designs, renewal or extension

 

8

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(including any supplementary protection certificate) of any such patent, and any
confirmation patent or registration patent or patent of addition based on any
such patent, and all counterparts thereof in any country.

 

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

 

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

 

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

 

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

 

1.56                        “Pricing Approval” means the approval, agreement,
determination or decision from a Governmental Authority establishing the price
and/or reimbursement for the Finished Product for sale in a given country or
regulatory jurisdiction, as required by Laws in such country or other regulatory
jurisdiction prior to the sale of the Finished Product in such country or
regulatory jurisdiction.

 

1.57                        “Product” means, in all cases excluding any dermal
formulations labeled for topical administration, any dosage strength of the
pharmaceutical product consisting of the lyophilized form of injectable
collagenases derived from Clostridium histolyticum [**].

 

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

 

1.59                        “Product Complaint” means any written, verbal or
electronic expression of dissatisfaction regarding any Finished Product sold by
or on behalf of Actelion (or any of its Affiliates, its sublicensees or
permitted distributors) in the Territory, including reports of actual or
suspected product tampering, contamination, mislabeling or inclusion of improper
ingredients.

 

1.60                        “Product Specifications” means those
(i) Manufacturing, performance and quality-control specifications for the Bulk
Product or (ii) performance, quality-control and

 

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

 

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Packaging and Labeling specifications for the Finished Product (which are
initially as set forth in the applicable Product Approval), as the case may be,
in the Territory, as such specifications may be amended from time to time
pursuant to the terms of this Agreement.

 

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

 

1.62                        “Quality Agreement” means the quality agreement
relating to the Unit of Product between Actelion and Auxilium.

 

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

 

1.64                        “Regulatory Authority” means, in a particular
country or regulatory jurisdiction, any applicable Governmental Authority
involved in granting Regulatory Approval in such country or regulatory
jurisdiction.

 

1.65                        “Regulatory Costs” means the costs and expenses
incurred by a Party or its Affiliates attributable to, or reasonably allocable
to, the preparation, obtaining or maintaining of Regulatory Materials and
Regulatory Approvals for the Bulk Product or Finished Product, including MAAs
(other than Pricing Approval and Manufacturing-related Regulatory Approvals),
including any filing fees.  “Regulatory Costs” shall include (i) Out-of-Pocket
Costs and (ii) internal costs (e.g., staff or administrative) that are
attributable or reasonably allocable to the preparation of Regulatory Materials,
and maintenance of Regulatory Approvals, for the Bulk Product or Finished
Product in the Field in the Territory.  For clarity, Regulatory Costs shall
exclude Development Costs.

 

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

 

1.67                        “Regulatory Exclusivity” means any exclusive
marketing rights or data exclusivity rights conferred by any Governmental
Authority with respect to the Product other than a Patent right.

 

10

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

 

1.69                        “Royalty Term” means, on a country-by-country and
Finished Product-by-Finished Product basis in the Territory, the period of time
beginning on the First Commercial Sale of such Finished Product in such country
and ending upon the latest of: (i) the date on which such Finished Product
(including, the use, sale, offer for sale, importation, development or
manufacturing thereof) is no longer Covered by a Valid Claim in such country,
(ii) the fifteenth (15th) anniversary of the First Commercial Sale of such
Finished Product in such country, (iii) Generic Entry with respect to such
Finished Product in such country, or (iv) loss of Regulatory Exclusivity in such
country.  For the purpose of this definition only, Valid Claim shall not include
Actelion Collaboration Patents, i.e. the Royalty Term will not be extended
pursuant to clause (i) if the only Patent Covering the Commercialization of the
Finished Product is an Actelion Collaboration Patent.

 

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

 

1.71                        “Territory” means Canada, Australia, Brazil and
Mexico.

 

1.72                        “Territory Development Activities” means those
Development Activities that are (i) necessary solely for obtaining or
maintaining Regulatory Approval for the Finished Product in the Field in any
given country in the Territory and (ii) post-Regulatory Approval filing date
Development Activities in any given country in the Field in the Territory. 
Notwithstanding the foregoing, in the event that Actelion requests that Auxilium
perform certain Development Activities, within the Territory, which are not
necessary solely for obtaining or maintaining Regulatory Approval in the
Territory, and Auxilium agrees at its sole discretion to perform such activities
within the Territory, then such activities as are conducted in any given country
in the Territory shall be deemed Territory Development Activities.  For clarity,
those Development Activities which Auxilium proposes (absent Actelion’s request)
to conduct in the Territory shall not be included in the definition of Territory
Development Activities, and shall therefore be deemed General Development
Activities.

 

1.73                        “Third Party” means any Person other than Auxilium
or Actelion or their respective Affiliates.

 

1.74                        “Unit of Product” means one 0.9 mg vial of the
current Product and one 3 mL vial of sterile diluent containing NaCl and CaCl2.

 

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

 

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1.76                        “Valid Claim” means (a) a claim of an issued and
unexpired Auxilium Patent, Joint Collaboration Patent or an Actelion
Collaboration Patent that (i) has not been rejected, revoked or held to be
invalid or unenforceable by a court or other authority of competent
jurisdiction, from which decision no appeal can be further taken or (ii) has not
been finally abandoned, disclaimed or admitted to be invalid or unenforceable
through reissue or disclaimer; or (b) a claim included in a pending patent
application of an Auxilium Patent, Joint Collaboration Patent or an Actelion
Collaboration Patent (whether filed before or after the Effective Date) that
(i) has not been pending for more than seven (7) years from the effective date
of filing for such patent application (provided, however that for purposes of
clarity, in the event such pending claim subsequently issues in an issued
patent, then such claim shall again be a Valid Claim as of the date of issuance
of such patent) or (ii) has not been finally determined to be unallowable by the
applicable governmental authority (from which no appeal is or can be taken).

 

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

 

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

 

Term

 

Section

“Abandoned Collaboration Patents”

 

9.3.2

“Abandoned Joint Inventions”

 

9.3.2

“Actelion”

 

Preamble

“Actelion Collaboration Patents”

 

9.1.1

“Actelion Funded Patent Rights”

 

9.3.1

“Agreement”

 

Preamble

“Additional Diluent”

 

7.3

“Additional Diluent Supply Price”

 

7.3

“Alliance Manager”

 

3.5

“Auxilium”

 

Preamble

“Auxilium Collaboration Patents”

 

9.1.1

“Audit”

 

8.11

 

12

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Term

 

Section

“Bankrupt Party”

 

14.6

“Breaching Party”

 

13.2

“BTC”

 

1.14

“CDS”

 

5.1.1

“CMC”

 

1.66

“Claim”

 

11.2

“Commercialization Budget”

 

6.2.3(e)

“Commercialization Data”

 

6.9

“Commercialization Plan”

 

6.2.1

“Commercial Supply Price”

 

7.3

“Committee”

 

3.6

“Confidential Information”

 

12.1

“Controlling Party”

 

9.4.1(a)

“CTA”

 

1.37

“CTX”

 

1.37

“Development Budget”

 

4.3.1(c)

“Development Data”

 

4.6

“Development Plan”

 

4.3.1

“Development Supply Price”

 

7.2

“Disbanding Notice”

 

3.8

“Disclosing Party”

 

12.1

“DMFs”

 

1.66

“Effective Date”

 

Preamble

“Executive Officer”

 

15.2

“Forecast”

 

7.6.1

“Forecast Date”

 

7.6.1

“GAAP”

 

1.46

“Generic Entry”

 

8.3.2

“Global Branding Strategy”

 

6.10

“ICH”

 

1.33

“Indemnification Claim Notice”

 

11.4.1

“Indemnified Party” and “Indemnifying Party”

 

11.4.1

“Indemnitee” and “Indemnitees”

 

11.4.1

“Infringement Claim”

 

9.4.1

“Initial Commercialization Plan”

 

6.2.1

“Initial Forecast Date”

 

7.6.1

“Joint Collaboration Patents”

 

9.1.1

“Latent Defects”

 

7.9.2(b)

“Long Range Forecast”

 

7.6.2

“Losses”

 

11.2

“Manufacturing Certificate of Analysis”

 

7.9.2(a)

“Milestone Notification Notice”

 

8.2

“Minimum Delivery Amount”

 

7.11

“Minimum Delivery Cure Period”

 

7.11

 

13

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Term

 

Section

“New Indication”

 

2.6

“Notice of Non-Conformance”

 

7.9.2(a)

“OOS”

 

7.9.3

“Packaging and Labeling”

 

7.5

“Party” or “Parties”

 

Preamble

“Patent Challenge”

 

13.4

“Pfizer”

 

5.5.2

“Product Trade Dress”

 

6.8.1

“Product Trademark”

 

6.8.1

“Promotional Commercialization Data”

 

6.9

“Purchase Order”

 

7.6.3

“Purchase Order Acceptance Date”

 

7.6.4

“Receiving Party”

 

12.1

“Recovery”

 

9.4.2(c)(iv)

“Redacted Agreement”

 

12.5.2

“Royalty Payments”

 

8.3.1

“Royalty Rates”

 

8.3.1

“Term”

 

13.1

“Upfront Payment”

 

8.1

“VAT”

 

8.6(a)

 

ARTICLE 2
LICENSES

 

2.1                               Grant to Actelion.

 

2.1.1                     General Grant to Actelion.  Subject to the terms and
conditions of this Agreement, Auxilium hereby grants to Actelion during the Term
(i) a co-exclusive (with Auxilium and its Affiliates) license or sublicense, as
applicable, with the right to sublicense solely in accordance with
Section 2.4.2, under the Auxilium Technology and the Joint Collaboration
Patents, to perform Territory Development Activities with respect to Bulk
Product, and (ii) an exclusive (even as to Auxilium and its Affiliates),
payment-bearing license or sublicense, as applicable, with the right to
sublicense solely in accordance with Section 2.4.2, under the Auxilium
Technology and the Joint Collaboration Patents, to Commercialize the Finished
Product in the Field in the Territory.

 

2.1.2                     Additional Grant to Actelion.  Subject to the terms
and conditions of this Agreement, including in particular Section 6.8, Auxilium
hereby grants to Actelion during the Term an exclusive license or sublicense, as
applicable, with the right to sublicense solely in accordance with
Section 2.4.2, to use the Product Trademark and Product Trade Dress solely to
the extent necessary to (i) Develop the Bulk Product in the Field in the
Territory, (ii) Commercialize the Finished Product in the Field in the Territory
and (iii) Package and Label for Commercialization in the Field in the
Territory.  Auxilium hereby grants to Actelion during the Term and from and
after the expiration or termination for breach of Auxilium of this Agreement, a
non-exclusive, royalty-free, irrevocable, perpetual, worldwide license under any
Joint Collaboration Patents for any and all

 

14

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uses; provided, that in the event of a termination of this Agreement for breach
of Auxilium such license shall not include any rights with respect to the
Product, Bulk Product or Finished Product.

 

2.2                               Grant to Auxilium.

 

2.2.1                     General Grant to Auxilium.  Subject to the terms and
conditions of this Agreement, Actelion, together with its Affiliates, hereby
grants to Auxilium during the Term a non-exclusive royalty-free license or
sublicense, as applicable, with the right to sublicense, under the Actelion
Applied Technology, to Develop, Manufacture or Commercialize the Product, Bulk
Product or Finished Product.

 

2.2.2                     Additional Grant to Auxilium.  Subject to the terms
and conditions of this Agreement, Actelion, together with its Affiliates, hereby
grants to Auxilium (i) a non-exclusive, paid-up, irrevocable, perpetual,
worldwide license or sublicense, as applicable, with the right to sublicense,
under the Actelion Applied Technology, to develop (including obtaining and
maintaining regulatory approval), make, use, import, export, offer for sale and
sell pharmaceutical products containing injectable collagenases derived from
Clostridium histolyticum for sale anywhere in the world (other than the sale of
the Bulk Product or Finished Product in the Field in the Territory), (ii) from
and after the expiration or termination of this Agreement (on a
country-by-country basis), a non-exclusive, paid-up, irrevocable, perpetual,
worldwide license or sublicense, as applicable, with the right to sublicense,
under the Actelion Applied Technology, to develop (including obtaining and
maintaining regulatory approval), make, use, import, export, offer for sale and
sell the Product, Bulk Product or Finished Product in the Field in such country
in the Territory.

 

2.3                               Additional Licensing Provisions.

 

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

 

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

 

2.4                               Performance by Affiliates, Subcontractors and
Sublicensees.

 

2.4.1                     Performance by Affiliates.  The Parties recognize that
each may perform some or all of its obligations under this Agreement through
Affiliates; provided, however, that each Party shall remain responsible for and
be guarantor of the performance by its Affiliates and shall cause its Affiliates
to comply with the provisions of this Agreement in connection with such
performance.  Each Party hereby expressly waives any requirement that the other
Party exhaust any right, power or remedy, or proceed against an Affiliate, for
any obligation or performance hereunder prior to proceeding directly against
such Party.  Wherever in this Agreement the Parties delegate responsibility to
Affiliates, the Parties agree that such entities may not make decisions
inconsistent with this Agreement, amend the terms of this Agreement or act
contrary to its terms in any way.

 

15

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2.4.2                     Subcontractors and Sublicensees.  Actelion shall have
the right to grant sublicenses to any sublicensee under all of its rights under
the license granted pursuant to Section 2.1, or to subcontract the performance
of its obligations hereunder, at any given time during the Term in any part of
the Territory; provided however that with respect to each such sublicense or
subcontract, as the case may be: (i) with respect to each sublicensee, Auxilium
shall be notified in writing at least twenty (20) business days in advance of
the grant (including a description of the rights to be granted, the identity of
the sublicensee and the countries involved); (ii) Actelion shall ensure that
each of its sublicensees and subcontractors accepts and complies with all
applicable terms and conditions of this Agreement, and Actelion shall remain
responsible for, and shall guarantee, the performance of its sublicensees and
subcontractors hereunder; and (iii) any such sublicense or subcontract shall
(a) be subject and subordinate to the terms and conditions of this Agreement,
(b) be subject to an appropriate written agreement that imposes on any such
sublicensee or subcontractor all applicable terms, conditions and obligations
under this Agreement, including the reporting, audit, inspection and
confidentiality provisions hereunder, (c) contain a provision prohibiting such
sublicensee or subcontractor from further sublicensing and subcontracting and
(d) not in any way diminish, reduce or eliminate any of Actelion’s obligations
under this Agreement.  For the avoidance of doubt, Actelion will remain directly
responsible for all amounts owed to Auxilium under this Agreement.  Actelion
hereby expressly waives any requirement that Auxilium exhaust any right, power
or remedy, or proceed against a sublicensee or subcontractor for any obligation
or performance hereunder prior to proceeding directly against Actelion.

 

2.5                               Exclusivity.

 

2.5.1                     Actelion.  Actelion hereby covenants not to research,
develop (including submitting any applications for regulatory approval),
manufacture or commercialize, during the Term, any Competitive Product [**],
either on its own, with or through any Affiliate, or in collaboration with a
Third Party, in each case other than with respect to the Development of Bulk
Product and Commercialization of the Finished Product in the Field in the
Territory pursuant to this Agreement.  Notwithstanding the foregoing, the
limitations set forth in this Section 2.5.1 shall not apply to any New
Indication, subject to Section 2.6.

 

2.5.2                     Auxilium.  Auxilium hereby covenants that it shall not
(and shall cause its Affiliates not to), during the Term, develop (including
submitting any applications for regulatory approval), manufacture or
commercialize any Competitive Product in the Field in the Territory, either on
its own, with or through any Affiliate, or in collaboration with a Third Party,
and in each case other than with respect to the Development of Bulk Product and
Commercialization of the Finished Product in the Field in the Territory pursuant
to this Agreement.  Notwithstanding the foregoing, the limitations set forth in
this Section 2.5.2 shall not apply to any New Indication, subject to
Section 2.6.  Should Auxilium or its Affiliates, during the Term, develop
(including submitting any applications for regulatory approval), manufacture or
commercialize any Competitive Product in the Field, either Party may initiate
discussions regarding the commercial viability of such Competitive Product in
the Field in the Territory and should Auxilium, following such discussions,
desire to develop or commercialize such Competitive Product in the Field in the
Territory, Auxilium shall offer the exclusive rights to such Competitive Product
in the Field in the Territory to Actelion, the details of which shall be
negotiated in good faith between the Parties.

 

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

 

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2.6                               Right of Negotiation.  If Auxilium wishes to
Develop the Bulk Product and Commercialize the Finished Product (solely for
purposes of this Section 2.6, references to “Finished Product” shall not include
the specific concentrations of Product and diluent referenced in Unit of
Product) for sale in the Territory in an indication outside the Field (a “New
Indication”), then Actelion and Auxilium shall negotiate with respect to such
New Indication in the Territory pursuant to this Section 2.6.  Auxilium shall
notify Actelion in writing in the event it wishes to Develop the Bulk Product
and Commercialize the Finished Product in such New Indication in the Territory,
and Actelion shall notify Auxilium in writing within twenty-eight (28) days
after receipt of such notice whether or not it desires to enter negotiations as
set forth in this Section 2.6.  If Actelion exercises such right of negotiation
in accordance with this Section 2.6, the Parties shall negotiate in good faith
(but subject to each Party’s final management approval which can be given in
their absolute discretion) the terms of a definitive agreement regarding the
Development of the Bulk Product and Commercialization of such New Indication for
the Finished Product in the Territory, including the financial terms thereof
(such as applicable upfront and milestone payments), as well as the
apportionment between the Parties of development costs with respect thereto.  If
Auxilium and Actelion are unable to enter into a definitive agreement with
respect to such transaction within sixty (60) days after receipt of the said
notice (or such longer period as may be mutually agreed upon by the Parties),
then Auxilium (either itself, or with its Affiliates or Third Parties) shall be
permitted to Develop and/or Commercialize such New Indication in the Territory
in each case utilizing a differentiated product presentation that is not
reasonably susceptible to use in the Field.  The Parties further agree and
acknowledge that nothing contained in this Section 2.6 shall prohibit Auxilium
from (and this Section 2.6 shall not apply with respect to) (i) Developing the
Bulk Product or Commercializing the Finished Product in a New Indication for
sale outside the Territory, or (ii) Developing the Bulk Product or
Commercializing the Finished Product for non-human uses anywhere in the world
for any indication.

 

2.7                               Restrictive Covenants.

 

2.7.1                     Ex-Territory Activities.  Actelion hereby covenants
and agrees that it shall not (and shall cause its Affiliates, sublicensees and
subcontractors not to), either itself or through a Third Party, Commercialize
the Finished Product outside of the Territory in or outside of the Field. 
Without limiting the generality of the foregoing, with respect to countries
outside of the Territory, Actelion shall not (i) engage in any advertising
activities relating to the Finished Product directed to customers outside the
Territory, or (ii) solicit orders from any prospective purchaser located outside
the Territory.  If Actelion receives any order from a prospective purchaser
located in a country outside of the Territory, Actelion shall immediately refer
that order to Auxilium and shall not accept any such order or deliver or tender
(or cause to be delivered or tendered) any Finished Product under such order. 
If Actelion should reasonably know that a customer or distributor is engaged
itself or through a Third Party in the sale or distribution of the Finished
Product outside of the Territory, then Actelion shall (a) within two
(2) Business Days of gaining knowledge of such activities notify Auxilium
regarding such activities and provide all information that Auxilium may request
concerning such activities and (b) take all reasonable steps (including
cessation of sales to such customers) necessary to limit such sale or
distribution outside the Territory, unless otherwise agreed in writing by the
Parties.

 

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2.7.2                     Ex-Field Activities.  Actelion hereby covenants and
agrees that it shall not (and shall cause its Affiliates, its sublicensees and
subcontractors not to), either itself or through a Third Party, Commercialize
the Finished Product in the Territory for use outside the Field.  Without
limiting the generality of the foregoing, Actelion shall not (i) engage in any
advertising activities relating to the Finished Product directed to use outside
the Field, or (ii) solicit orders from any prospective purchaser for use of the
Finished Product outside the Field in the Territory.  If Actelion receives any
order from a prospective purchaser for use of the Finished Product outside the
Field, Actelion shall immediately refer that order to Auxilium and shall not
accept any such order or deliver or tender (or cause to be delivered or
tendered) any Finished Product under such order, unless otherwise agreed in
writing by the Parties.  If Actelion should reasonably know that a customer or
distributor, or a customer’s distributor or customer, is engaged in the sale or
distribution of the Finished Product for use outside the Field, then Actelion
shall (a) within two (2) Business Days of gaining knowledge of such activities
notify Auxilium regarding such activities and provide all information that
Auxilium may request concerning such activities and (b) take all reasonable
steps (including cessation of sales to such customer) necessary to limit such
sale or distribution for use outside the Field, unless otherwise agreed in
writing by the Parties.

 

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

 

2.7.4                     Within-Territory Activities.  Auxilium hereby
covenants and agrees that it shall not (and shall cause its Affiliates,
sublicensees and subcontractors not to), either itself or through a Third Party,
market, distribute or sell the Finished Product into countries within the
Territory for use in the Field.  Without limiting the generality of the
foregoing, with respect to such countries within the Territory, Auxilium shall
not (i) engage in any advertising activities relating to the Bulk Product or
Finished Product for use in the Field directed solely to customers located in
such countries, or (ii) solicit orders from any prospective purchaser located in
such countries (other than outside the Field in accordance with Section 2.6).

 

2.7.5                     Auxilium Contracts.  In the event that Auxilium (or
any of its Affiliates) enters into any agreements with a subcontractor
(including, any distributors or wholesalers) or a sublicensee for the
Commercialization of Finished Product, it shall include in any and all said
agreements provisions substantially similar to those set forth in Section 2.7.4,
such that such subcontractor or sublicensee, as applicable, shall only be
authorized to market, distribute and sell the Finished Product: (i) within
countries outside the Territory or (ii) within the Territory, for use outside
the Field as otherwise provided in this Agreement (including in accordance with
Section 2.6).

 

2.7.6                     Jurisdictional Compliance.  It is the desire and
intent of the Parties that the restrictive covenants contained in this
Section 2.7 be enforced to the fullest extent permissible under the Laws and
public policies applied in each jurisdiction in which enforcement is sought. 
Auxilium

 

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and Actelion believe that the restrictive covenants in this Section 2.7 are
valid and enforceable.  However, if any restrictive covenant should for any
reason become or be declared by a competent court or competition authority to be
invalid or unenforceable in any jurisdiction, such restrictive covenant shall be
deemed to have been amended to the extent necessary in order that such provision
be valid and enforceable, such amendment shall apply only with respect to the
operation of such provision of this Section 2.7 in the particular jurisdiction
in which such declaration is made.

 

ARTICLE 3
GOVERNANCE

 

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

 

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

 

3.1.2                     Approve, manage and oversee the preparation and
implementation of the Development Plan, if any, and any material amendments
thereto, including reviewing the design of the clinical trial protocols and
endpoints and overseeing the conduct of all clinical trials required as set
forth in the Development Plan

 

3.1.3                     Discuss any General Development Activities and
Territory Development Activities to be conducted with respect to the Bulk
Product in the Field in the Territory;

 

3.1.4                     Review any matters related to Regulatory Approvals for
the Bulk Product or Finished Product in the Field in the Territory, including
the development and contents of all submissions to Regulatory Authorities in the
Territory for Regulatory Approvals and all necessary filing and registration
activities related thereto;

 

3.1.5                     Review and discuss the overall strategy for obtaining,
maintaining and enforcing Patent protection and market and data exclusivity for
the Product, Bulk Product or Finished Product in the Field in the Territory;

 

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

 

3.1.7                     Review and discuss the Commercialization Plan, and any
amendments or revisions thereto, which review shall be on an annual basis, on or
before October 31st of each year during the Term, with a six (6) month review of
any amendments or revisions thereto until three (3) years after the First
Commercial Sale when such reviews shall become annual reviews only;

 

3.1.8                     Provide a forum for the Parties to discuss the
Commercialization of the Finished Product in the Field in the Territory in the
broader context of Auxilium’s Global Branding Strategy;

 

3.1.9                     Discuss a range of suggested prices at which the
Finished Product will be sold to Third Parties in the Field in the Territory and
any discount strategies for the Finished

 

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Product in the Field in the Territory; provided that nothing contained herein
shall limit or in any way restrict Actelion from having the final decision on
setting the price or negotiating with pricing and reimbursement authorities in
the countries within the Territory to determine at which price the Finished
Product will be sold in the Field in the Territory;

 

3.1.10              Discuss safety stock of Drug Substance as provided in
Section 7.13;

 

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

 

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

 

3.1.13              Resolve disputes and other matters that are subject to JSC
oversight;

 

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

 

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

 

3.2                               Joint Steering Committee Membership.  Auxilium
and Actelion shall each designate three (3) representatives of appropriate
seniority and experience to serve on the JSC by written notice to the other
Party.  Either Party may designate substitutes for its representatives if one
(1) or more of such Party’s designated representatives are unable to be present
at a meeting.  From time to time each Party may replace its representatives by
written notice to the other Party specifying the prior representative(s) and
their replacement(s).  The JSC shall be co-chaired by a representative of each
of Actelion and Auxilium.  One member of the JSC shall serve as secretary of the
JSC at each JSC meeting, and the secretary shall alternate from meeting to
meeting between an Actelion JSC member and an Auxilium JSC member.  The
chairpersons shall be responsible for (i) calling meetings, (ii) preparing and
issuing minutes of each such meeting within a reasonable time thereafter (but in
any event not to exceed thirty (30) days following such meeting), and
(iii) preparing and circulating an agenda for the upcoming meeting; provided
that the chairpersons shall consider including any agenda items proposed by
either Party no less than five (5) days prior to the next scheduled JSC meeting.

 

3.3                               Joint Steering Committee Meetings.  The JSC
shall hold at least one (1) meeting per calendar quarter at such times during
such calendar quarter as it elects to do so until First Commercial Sale, and
thereafter, if the Parties mutually so decide, twice per year provided that the
JSC shall meet more or less frequently as Actelion and Auxilium mutually agree
upon as appropriate.  Meetings of the JSC shall be effective only if at least
one (1) representative of each Party is present or participating.  The JSC may
meet either (i) in person at either Party’s facilities or at such locations as
the Parties may otherwise agree or (ii) by audio or video teleconference.  Other
representatives of each Party involved with the Product may attend meetings as
non-voting participants, subject to the confidentiality provisions set forth in
ARTICLE 12.  Additional meetings of the JSC may also be held with the consent of
each Party, as required to resolve disputes, disagreements or deadlocks in the
other Committees or as

 

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otherwise required under this Agreement, and neither Party shall unreasonably
withhold its consent to hold such additional meetings.  Each Party shall be
responsible for all of its own expenses incurred in connection with
participating in the JSC meetings or any of the other Committee meetings.

 

3.4                               Decision-Making.  The JSC may make decisions
with respect to any subject matter that is subject to the JSC’s decision-making
authority and functions as set forth in Section 3.1.  All decisions of the JSC
shall be made by unanimous vote or written consent, with Actelion and Auxilium
each having, collectively, among its respective members, one (1) vote in all
decisions.  The JSC shall use commercially reasonable efforts to resolve the
matters within its roles and functions or otherwise referred to it.  If the JSC
cannot reach consensus on a given matter, then Auxilium shall have the final
decision-making authority with respect to matters relating to Sections 3.1.1 to
3.1.5, inclusive, and 3.1.12.

 

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

 

3.6                               Committees.  From time to time, the JSC may
establish and delegate duties to other sub-committees or directed teams (each, a
“Committee”) to oversee particular projects or activities.  Each such Committee
shall be constituted and shall operate as the JSC determines; provided that each
Committee shall have equal representation from each Party.  Committees may be
established on an ad hoc basis for purposes of a specific project, or on such
other basis as the JSC may determine.  Each Committee and its activities shall
be subject to the oversight, review and approval of, and shall report to, the
JSC.  In no event shall the authority of a Committee exceed that of the JSC.

 

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

 

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outside the Field or outside of the Territory, (iii) the Commercialization of
the Finished Product outside the Field or outside of the Territory and (iv) the
Manufacture of the Bulk Product.  It is understood, however, that such matters
can be discussed at the JSC especially as they may pertain to the Development of
the Bulk Product or Commercialization of the Finished Product in the Territory.

 

3.8                               Disbanding the JSC.  At any time during the
Term, and for any reason, Auxilium shall have the right to disband the JSC (and
any Committees existing as of such time) upon written notice to Actelion, which
notice shall be effective immediately upon receipt (“Disbanding Notice”). 
Following the issuance of a Disbanding Notice and subject to this Section 3.8,
(i) the JSC (and any Committees existing as of such time) shall immediately
cease meeting and (ii) all decisions, obligations, rights and responsibilities
within the purview of the JSC (and any Committees existing as of such time)
shall henceforth be handled directly between the Parties with each Party
maintaining its decision making authority, consistent with Section 3.4, in the
event of any dispute.  If, at any time following the issuance of a Disbanding
Notice, Auxilium wishes to reestablish the JSC, Auxilium shall notify Actelion
in writing and, thereafter, the JSC shall be reestablished and function in
accordance with the provisions of this ARTICLE 3.  For clarity, the disbanding
of the JSC by Auxilium under this Section 3.8 shall have no impact on the
consideration provided for or due to Auxilium under this Agreement.

 

3.9                               Actions.  In developing strategies, making
decisions and exercising its rights under this Agreement (including acting
through its representatives on any of the Committees and its Alliance Managers),
each Party shall act in good faith and use its Commercially Reasonable Efforts
to achieve the goals of the then-current Development Plan or Commercialization
Plan.

 

3.10                        Exchange of Information.  Each Party shall keep the
other Party fully and promptly informed as to its progress and activities
relating to the Manufacture or Development of the Bulk Product in the Territory,
and Commercialization of the Finished Product in the Territory, including with
respect to regulatory matters and meetings with Regulatory Authorities, by way
of updates to appropriate Committees at their meetings or to the other Party in
the event that the Committees are disbanded and as otherwise specified in this
Agreement, or as reasonably requested from time to time by the other Party.  In
connection therewith, Auxilium and Actelion shall provide each other with such
information regarding such progress and activities under the Development Plan or
the Commercialization Plan, or otherwise relating to the Finished Product, as
the other Party may reasonably request from time to time.

 

3.11                        Minutes of Committee Meetings.  The Parties shall
endeavor to finalize minutes of all Committee meetings within a reasonable time
after the meeting (but in any event within thirty (30) days of such meeting) in
accordance with the guidelines provided below:

 

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

 

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

 

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

 

ARTICLE 4
DEVELOPMENT

 

4.1                               Overview.

 

4.1.1                     Overview of Development.  Subject to the terms and
conditions of this Agreement, the Parties shall collaborate with respect to the
Development of the Bulk Product for use in the Field in the Territory as set
forth herein.  Auxilium shall conduct the General Development Activities and, in
accordance with the Development Plan, such portion of the Territory Development
Activities as the Parties agree.  Actelion shall conduct, in accordance with the
Development Plan, the Territory Development Activities, including bridging
studies, clinical studies, Phase IV Clinical Studies (and other post-Regulatory
Approval studies).  Auxilium shall use Commercially Reasonable Efforts to
perform the General Development Activities and the Territory Development
Activities as above for the Bulk Product for each indication in the Field (i.e.,
(i) Dupuytren’s Contracture, (ii) Peyronie’s Disease and (iii) such other New
Indications as the Parties agree to include hereunder in accordance with
Section 2.6, if any).  Actelion shall use Commercially Reasonable Efforts to
perform the Territory Development Activities for the Bulk Product for each
indication in the Field (i.e., (a) Dupuytren’s Contracture, (b) Peyronie’s
Disease and (c) such other New Indications as the Parties agree to include
hereunder in accordance with Section 2.6, if any) to enable obtaining Regulatory
Approval in the Territory for the Finished Product (solely for purposes of this
clause (c) of this Section 4.1.1, the reference to “Finished Product” shall not
include the specific concentrations of Product and diluent referenced in Unit of
Product) for each such indication.

 

4.1.2                     General Development Activities and Development Outside
the Territory or Outside the Field; Regulatory Approvals Outside the Territory
or Outside the Field.  The Parties hereby agree and acknowledge that nothing
contained herein shall limit or otherwise restrict the ability of Auxilium or
its sublicensees to (i) perform the General Development Activities as it sees
fit and at its sole discretion, (ii) develop the Bulk Product for use or sale
outside the Territory (whether or not in the Field) and (iii) obtain or maintain
Regulatory Approvals for the Bulk Product or Finished Product outside the
Territory (whether or not in the Field), except that Auxilium shall not commence
clinical trials of the Bulk Product in a given country in the Territory in an
indication in the Field that has received Regulatory Approval in such country in
the Territory for Development of Bulk Product for Commercialization inside or
outside the Territory without Actelion’s prior written approval, such approval
not to be unreasonably withheld.  Without limiting the generality of the
foregoing, the Development Plan shall not address (a) any General Development
Activities or (b) any activities related to obtaining or maintaining Regulatory
Approval for the Bulk Product or

 

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Finished Product in any country outside the Territory.  Any Development of the
Bulk Product for obtaining or maintaining Regulatory Approval for the Finished
Product within the Territory but outside the Field shall only take place in
accordance with the provisions of Section 2.6 and shall not otherwise be limited
or restricted by this Agreement.

 

4.1.3                     Manufacturing Related Activities.

 

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

 

(b)                                 The Parties shall agree as to the allocation
of responsibility with respect to the performance of the developmental aspects
of Analytical Release Testing and Characterization; provided that, Actelion, as
Marketing Authorization holder, shall have final decision-making authority in
accordance with Section 3.4, with respect to such decisions.

 

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

 

4.2                               Objectives Under the Development Plan.

 

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

 

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

 

4.3                               Development Plan and Development Budget.

 

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

 

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

 

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

 

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

 

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

 

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

 

4.3.2                     Initial Development Plan.  The initial Development
Plan for the Bulk Product shall be prepared by the Parties taking into
consideration any consultation with or guidance from any applicable Regulatory
Authorities.  To the extent that future “national meetings” with the Regulatory
Authorities in a specific country or territory within the Territory provide
guidance with respect to the risk management plan or Development Activities in
such country or territory, the Parties shall consider such guidance in updating
and amending the Development Plan pursuant to Section 4.3.3.

 

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

 

(a)                                 On or before October 31st of each year
during the Term, the JSC shall review, update and approve the Development Plan
(including the Development Budget contained therein) which shall cover the
Development Activities, if any, to be conducted during the upcoming calendar
year, and the JSC shall, on at least a quarterly basis, review and update, as
appropriate, the then-current Development Plan (including the Development
Budget) to reflect any changes, reprioritizations of, or additions to the
Development Plan.

 

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

 

4.4                               Development Costs.

 

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

 

4.4.2                     Territory Development Activities.  Actelion shall be
solely responsible for one hundred percent (100%) of all Development Costs
incurred by Actelion or Auxilium with respect to any Territory Development
Activities (including, for clarity, any given General Development Activities
which are deemed Territory Development Activities in accordance with
Section 1.72).  Auxilium shall invoice Actelion for Development Costs it incurs
in connection with performing any Territory Development Activities, which
invoices Actelion shall pay within thirty (30) days of receipt thereof.

 

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

 

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

 

4.5                               Records, Reports and Information.

 

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

 

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

 

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

 

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such reports and summaries become available to such Party.  Actelion hereby
grants Auxilium (and its Affiliates and designees), a right of reference to all
Development Data owned by Actelion (or its Affiliates) for all uses in
connection with the Product outside the Territory or outside the Field
(including the development (including obtaining and maintaining Regulatory
Approvals), manufacturing and commercialization thereof), which right of
reference shall survive the expiration or termination of this Agreement.

 

4.7                               Right to Audit.  Each Party shall ensure that
the other Party’s authorized representatives and any Regulatory Authorities, to
the extent permitted by Laws, may, during regular business hours and upon
reasonable advance written notice, not more than [**] (except for cause),
(i) examine and inspect its facilities or, subject to any Third Party
confidentiality restrictions and other obligations, the facilities of any
subcontractor or any investigator site used by it in the performance of
Development of the Bulk Product in the Field in the Territory hereunder, and
(ii) subject to Laws and any Third Party confidentiality restrictions and other
obligations, inspect all data, documentation and work product relating to the
activities performed by it, the subcontractor or investigator site, including
the medical records of any patient participating in any clinical study, in each
case generated pursuant to the said Development.  This right to inspect all
data, documentation, and work product relating to the Bulk Product in the Field
in the Territory may be exercised at any time during the Term upon reasonable
notice (subject to each Party’s record retention policies then in effect), or
such longer period as shall be required by Laws.  To the extent a Third Party’s
facilities are the subject of an audit pursuant to this Section 4.7, the
requesting Party shall (a) perform such audit in connection with the Party
having contractual privity with such Third Party and (b) bear any costs charged
by such Third Party associated with such audit.  For clarity, the Party having
contractual privity with such Third Party shall have the right to accompany the
requesting Party on any such audit of a Third Party facility.

 

ARTICLE 5
REGULATORY

 

5.1                               Regulatory Data and Regulatory Materials.

 

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

 

5.1.2                     Regulatory Data Generated by Auxilium and Actelion. 
Within thirty (30) days after the Effective Date, Auxilium and Actelion shall
meet and agree upon the portion of Regulatory Materials and Regulatory Data that
is necessary for Actelion to perform its obligations hereunder.  Auxilium will
use reasonable efforts to supply Actelion with such Regulatory Materials and
Regulatory Data as Actelion may reasonably request from time to time.  During
the Term, Auxilium and Actelion shall each promptly provide to the other copies
of any further Regulatory Materials and Regulatory Data that either may generate
or otherwise acquire.

 

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

 

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5.1.3                     Use of Data by Actelion.  Actelion may only use the
Regulatory Materials and Regulatory Data provided by Auxilium hereunder or
generated by Actelion hereunder, and any other Development Data, for the
purposes of (i) Developing the Bulk Product in the Field in the Territory
pursuant to this Agreement, (ii) Commercializing the Finished Product in the
Field in the Territory pursuant to this Agreement and (iii) obtaining and
maintaining Regulatory Approval, for the Finished Product in the Field in the
Territory pursuant to this Agreement.

 

5.2                               Regulatory Filings and Regulatory Approvals.

 

5.2.1                     General Responsibilities; Ownership of Regulatory
Approvals.  Subject to Section 5.2.5, Actelion shall be responsible for the
preparation of all Regulatory Materials necessary or desirable for obtaining and
maintaining such Regulatory Approvals in the Territory (including in connection
with Patient Information Leaflets, labeling and packaging for the Finished
Product in the Field in the Territory) and Actelion shall submit such Regulatory
Materials, Regulatory Approval and MAA’s, as applicable, to the applicable
Governmental Authorities in the Territory.  Auxilium shall provide reasonably
necessary and timely assistance to Actelion in connection with all activities
undertaken by Actelion relating to the obtaining and maintaining of the
Regulatory Approvals.  To the extent not prohibited by Laws, Actelion and
Auxilium shall each be entitled to attend key meetings with the relevant
Regulatory Authorities with respect to obtaining or maintaining the Product
Approvals for the Finished Product in the Field in the Territory.  All
Regulatory Approvals for the Finished Product in the Territory (other than those
related solely to the Manufacture of the Product in the Territory, if any) shall
be in the name of Actelion, and Actelion shall own all right, title and interest
in and to all such Regulatory Approvals and all related Regulatory Materials. 
In furtherance of the foregoing, Auxilium shall assign (and shall cause its
Affiliates to assign), and hereby does assign, to Actelion any and all of its
right, title and interest in and to the Regulatory Materials for the Finished
Product in Canada.  The provisions of this Section 5.2.1 shall be subject to the
provisions of Section 5.2.2.

 

5.2.2                     Certain Regulatory Approvals.

 

(a)                                 Pricing Approvals.  Notwithstanding the
provisions of Section 5.2.1, to the extent that a given country or regulatory
jurisdiction in the Territory requires Pricing Approval for sale of the Finished
Product in the Field in such country or regulatory jurisdiction, Actelion shall
(to the extent permitted by Laws) be solely responsible for (and shall use
Commercially Reasonable Efforts toward) obtaining and maintaining Pricing
Approvals in all such countries and regulatory jurisdictions in the Territory,
in its own name.  Without limiting the foregoing, Actelion shall use
Commercially Reasonable Efforts to apply for Pricing Approvals in each country
or regulatory jurisdiction in the Territory where Pricing Approvals are required
for the sale of the Product in the Field no later than ninety (90) days
following the receipt of the Product Approval in such country or regulatory
jurisdiction.  Actelion shall keep Auxilium informed on an ongoing basis of
Actelion’s strategy for seeking, and the results it obtains in seeking, such
Pricing Approvals in the Territory, including the results of any material
discussion or other communication with relevant Governmental Authorities
regarding such Pricing Approvals.

 

(b)                                 Manufacturing Approvals and Manufacturing
Related Sections.  Notwithstanding the provisions of Section 5.2.1, Auxilium
shall be primarily responsible for

 

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preparing those portions of any Regulatory Materials related to the Manufacture
of the Product for sale in the Field in the Territory, including any DMFs and
CMC (or equivalent) sections of any Regulatory Materials, and will provide such
Regulatory Materials to Actelion for use (with or without edit/modification) in
compiling, supporting and maintaining regulatory filings in the Territory. 
Auxilium shall provide Actelion with copies of all reasonably requested
analytical methods, and transfer the related Auxilium Know-How, including
providing Actelion with such reasonable technical assistance as is necessary to
enable Actelion to fulfill its obligations to release Finished Product under
Section 7.5 for distribution in the Field in the Territory under
Section 6.3.1(a).

 

5.2.3                     Cost of Regulatory Activities.  All Regulatory Costs
incurred by Actelion, and all out-of-pocket Regulatory Costs incurred by
Auxilium, in connection with the preparation of Regulatory Materials for the
Bulk Product or Finished Product, and obtaining of Product Approvals for the
Finished Product, in the Field in the Territory shall be borne solely by
Actelion.  Auxilium shall be responsible for all internal Regulatory Costs
incurred by Auxilium in connection with the preparation of Regulatory Materials
for, and obtaining of Product Approvals in the Territory.  Actelion shall be
responsible for all Regulatory Costs involved in the maintenance of all
Regulatory Approvals (other than Bulk Product Manufacturing-related Regulatory
Approvals) for the Bulk Product or Finished Product in the Field in the
Territory.  Auxilium shall invoice Actelion for: (i) all out-of-pocket
Regulatory Costs it incurs in connection with the preparation of Regulatory
Materials for, and obtaining of Product Approvals in the Field in the Territory
for the Finished Product and (ii) all Regulatory Costs it incurs in connection
with the maintenance of Regulatory Approvals in the Field in the Territory for
the Bulk Product or Finished Product, which invoices Actelion shall pay within
thirty (30) days of receipt thereof.

 

5.2.4                     Reporting and Review.  Each Party shall keep the other
Party reasonably and regularly informed in connection with the preparation of
all Regulatory Materials, Regulatory Authority review of Regulatory Materials,
and Regulatory Approvals, in each case with respect to the Product for sale in
the Field whether within the Territory or outside the Territory.  Each Party
shall provide the other Party, in a timely manner, with copies and, where
available, English translations of all notices, questions, and requests for
information in tangible form which it receives from a Regulatory Authority with
respect to the Finished Product for sale in the Field; provided, however that
such Party shall have the right to redact any information to the extent not
related to the Finished Product for sale in the Field.

 

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

 

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Regulatory Materials could adversely affect Development Activities outside of
the Territory or Product Approval of the Product, Bulk Product or Finished
Product outside the Territory.

 

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

 

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

 

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

 

5.5.1                     Pharmacovigilance.  Actelion, as the holder of the
Product Approvals, shall be responsible for the collection, review, assessment,
tracking and filing of information related to adverse events associated with the
Bulk Product or Finished Product (solely for purposes of this Section 5.5,
references to “Finished Product” shall not include the specific concentrations
of Product and diluent referenced in Unit of Product) in the Field in the
Territory (whether or not Product Approval has been achieved), in each case in
accordance with Laws and this Agreement (and Actelion shall ensure that, in the
Development of the Bulk Product and Commercialization of the Finished Product,
it will record, investigate, summarize, notify, report and review all adverse
events in accordance with Laws).  Auxilium (or its designee) shall be
responsible for the collection, review, assessment, tracking and filing of
information related to adverse events associated with the Bulk Product or
Finished Product in the countries outside the Territory.  The safety units from
each of the Parties shall meet and agree upon a written pharmacovigilance
agreement for exchanging adverse event and other safety information relating to
the Bulk Product and Finished Product prior to Actelion’s first clinical
activity or prior to the first Regulatory Approval in the Territory (whichever
is first).  Such written pharmacovigilance agreement shall ensure that adverse
event and other safety information is exchanged according to a schedule that
will permit each Party (and its designees or sublicensees) to comply with
applicable Laws and regulatory requirements in their respective markets.

 

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5.5.2                     Global Safety Database.  In accordance with that
certain Development, Commercialization and Supply Agreement between Auxilium and
Pfizer Inc. (“Pfizer”), dated as of December 17, 2008, and the related
pharmacovigilance agreement between Auxilium and Pfizer, Pfizer is responsible
for maintaining the global safety database for the Bulk Product and Finished
Product.  In the event Pfizer requires a separate pharmacovigilance agreement
among Pfizer, Auxilium and Actelion, the Parties shall meet with Pfizer and
agree upon a written pharmacovigilance agreement for exchanging adverse event
and other safety information relating to the Bulk Product and Finished Product
prior to Actelion’s first clinical activity or prior to the first Regulatory
Approval in the Territory (whichever is first).  Such written pharmacovigilance
agreement shall ensure that adverse event and other safety information is
exchanged according to a schedule that will permit Pfizer, Actelion and Auxilium
(and each of their designees and sublicensees, as applicable) to comply with
Laws and regulatory requirements in their respective markets.

 

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

 

5.6                               Regulatory Authority Communications Received
by a Party.

 

5.6.1                     General.  Each Party shall immediately inform the
other Party of notification of any action by, or notification or other
information which it receives (directly or indirectly) from, any Regulatory
Authority whether inside the Territory or outside the Territory which (i) raises
any material concerns regarding the safety or efficacy of the Bulk Product or
Finished Product; (ii) indicates or suggests a potential material liability of
either Party to Third Parties in connection with the Bulk Product or Finished
Product; (iii) is reasonably likely to lead to a recall, market withdrawal or
market notification with respect to the Finished Product whether inside the
Territory or outside the Territory; or (iv) relates to expedited and periodic
reports of adverse events with respect to the Bulk Product or Finished Product
whether inside the Territory or outside the Territory, or Product Complaints,
and which may have an adverse impact on Regulatory Approval or the continued
Commercialization of the Finished Product whether inside the Territory or
outside the Territory.  Actelion shall be solely responsible for responding to
any such communications relating to the Finished Product in the Field in the
Territory and the Parties shall reasonably cooperate with and assist each other
in complying with regulatory obligations, including by Auxilium providing to
Actelion such information and documentation which is in Auxilium’s possession as
may be

 

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necessary or reasonably helpful for Actelion to prepare a response to an inquiry
from a Regulatory Authority in the Territory with respect to the Finished
Product in the Field.  Each Party shall also promptly provide the other Party
with a copy of all correspondence received from a Regulatory Authority whether
inside the Territory or outside the Territory specifically regarding the matters
referred to above.  Auxilium (or its designee) shall be solely responsible for
any communications relating to the Bulk Product and Finished Product outside of
the Territory.

 

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

 

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

 

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

 

(c)                                  Certain Activities Outside the Territory. 
Auxilium will provide reports of safety information related to the Bulk Product
arising from all non-clinical toxicology studies and all clinical studies
initiated outside of the Territory by Auxilium (or its Affiliates or by any
Third Party on its or their behalf) related to the Bulk Product within (i) forty
eight (48) hours in the case of safety related information and (ii) sixty (60)
days of completion in all other cases, in each case, solely to the extent such
information is Controlled by Auxilium.  Auxilium will also provide Actelion with
copies of all material regulatory filings made by Auxilium related to the Bulk
Product or Finished Product in the Field outside of the Territory that may have
a material impact on the Development of the Bulk Product and/or
Commercialization of the Finished Product in the Field in the Territory. 
Notwithstanding anything to the contrary contained in this Section 5.6.2(c),
Actelion shall only be entitled to utilize any such data or other information
provided pursuant to this Section 5.6.2(c) to satisfy its pharmacovigilance and
safety reporting obligations hereunder in compliance with Laws (and for purposes
of clarity, such information

 

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shall not be utilized for any other purposes, including to broaden the scope of
any Regulatory Approval), and all such data and other information shall be
considered “Confidential Information” of Auxilium.

 

(d)                                 BTC.  Actelion hereby agrees and
acknowledges that Auxilium shall have the right to grant BTC a right of
reference with respect to Regulatory Data.

 

5.7                               Recall, Withdrawal, or Market Notification of
Product.

 

5.7.1                     Notification and Determination.  In the event that any
Governmental Authority threatens or initiates any action to remove the Finished
Product from the market whether inside the Territory or outside the Territory
(in whole or in part), the Party receiving notice thereof shall notify the other
Party of such communication immediately, but in no event later than one (1)
business day, after receipt thereof.  Notwithstanding the foregoing, in all
cases Actelion (acting as the holder of the Product Approval in the Territory)
shall determine whether to initiate any recall, withdrawal or market
notification of the Finished Product in the Field in the Territory, and
Auxilium, as, between the Parties, holder of the Product Approval outside the
Territory shall determine whether to initiate any such recall, withdrawal or
market notification of the Finished Product outside the Territory, including the
scope of such recall or withdrawal (e.g., a full or partial recall, or a
temporary or permanent recall) or market notification; provided, however that
before Actelion or Auxilium (as the case may be) initiates a recall, withdrawal
or market notification, the Parties shall promptly meet and discuss in good
faith the reasons therefor, provided that such discussions shall not delay any
action that Actelion or Auxilium (as the case may be) reasonably believes has to
be taken in relation to any recall, withdrawal or market notification.  In the
event of any such recall, withdrawal or market notification, Actelion or
Auxilium (as the case may be), as the distributor of the Finished Product, shall
determine the necessary actions to be taken, and, shall implement such action,
with the other Party providing reasonable input (which the first Party shall in
good faith consider and incorporate into any recall, withdrawal or market
notification strategy) and reasonable assistance, to conduct such recall,
withdrawal or market notification.  Without limiting the foregoing, Auxilium
shall have the right to propose that a Finished Product recall, withdrawal or
market notification should be initiated by Actelion, but Actelion, acting as the
holder of the Product Approval in the Territory, shall make the final decision
as to whether or not the recall, withdrawal or market notification will be
initiated.  Actelion shall at all times utilize a batch tracing system which
will enable the Parties to identify, on a prompt basis, customers within the
Territory who have been supplied with Finished Product of any particular batch,
and to recall such Finished Product from such customers as set forth in this
Section 5.7.1.

 

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

 

(a)                                 in the event, and to the extent, that the
recall, withdrawal or market notification arises as a result of a material
breach of this Agreement by Auxilium, including any Bulk Product Manufacturing
breach, then Auxilium shall bear the costs and expenses, including all internal
and Out-of-Pocket Costs of Actelion for implementing the recall, withdrawal or
market notification (including an appropriate credit to Actelion against the
payments of the

 

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applicable supply price pursuant to Section 7.7.1 for any Bulk Product that was
incorporated into such recalled Finished Product which Actelion has paid for);
and

 

(b)                                 in the event, and to the extent, that the
recall, withdrawal or market notification arises out of the material breach of
this Agreement by Actelion, then Actelion shall bear the costs and expenses for
implementing the recall, withdrawal or market notification (and no credit will
be given to Actelion against the payments of the applicable supply price
pursuant to Section 7.7.1 for any Bulk Product that was incorporated into such
recalled Finished Product which Actelion has paid for); and

 

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

 

5.8                               Regulatory Diligence.

 

5.8.1                     Regulatory Approval in the Territory.  Actelion shall
(i) file for Regulatory Approval for the Finished Product in each of the
countries in the Territory no later than the [**] anniversary of the Effective
Date and (ii) use Commercially Reasonable Efforts to obtain Regulatory Approval
for the Finished Product in each of the countries in the Territory no later than
the [**] anniversary of the Effective Date.  Actelion’s failure to comply with
either of the foregoing clauses (i) or (ii) for any country in the Territory
shall constitute a material breach of this Agreement by Actelion with respect to
such country, unless the Parties agree otherwise in writing (and at each Party’s
sole discretion) or Actelion’s failure is due to Auxilium’s breach of its
obligations hereunder to provide Actelion with necessary assistance in
connection with Regulatory Approvals.

 

5.8.2                     Actelion’s Determination Not to Proceed.  Without
limitation of Section 5.8.1, in the event that Actelion determines at any time
during the Term that it is not economically feasible to incur the costs
necessary to obtain and/or maintain Regulatory Approval for the Finished Product
in a given country in the Territory, Actelion shall promptly notify Auxilium in
writing of such determination and Auxilium shall have the right to terminate
this Agreement with respect to such country.

 

ARTICLE 6
COMMERCIALIZATION

 

6.1                               Commercialization in the Field in the
Territory.  During the Term, Actelion shall be solely responsible for
Commercializing the Finished Product in the Territory for use in the Field,
which Commercialization shall be in accordance with the Commercialization Plan
and this Agreement.  Actelion shall be responsible for one hundred percent
(100%) of the expenses (including Pre-Marketing and other Commercialization
expenses) incurred in connection with the Commercialization of the Finished
Product in the Territory for use in the Field.  Without limiting the foregoing,
Actelion shall use Commercially Reasonable Efforts to Commercialize the Finished
Product for use in the Field in each country in the Territory.

 

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

 

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6.2                               Commercialization Plan.

 

6.2.1                     Initial Commercialization Plan.  On an annual basis,
Actelion shall prepare a commercialization plan with respect to the
Commercialization of the Finished Product in the Field in the Territory pursuant
to this Agreement (the “Commercialization Plan”).  The initial Commercialization
Plan for the Finished Product for the first full calendar year of this Agreement
(including any additional period from the Effective Date through the end of the
initial calendar year) (i) for Canada shall be prepared by Actelion and provided
to Auxilium within thirty (30) days after the Effective Date and (ii) for each
other country in the Territory shall be prepared by Actelion and provided to
Auxilium within one-hundred and eighty (180) days after the Effective Date (the
“Initial Commercialization Plan”).

 

6.2.2                     Updates to Commercialization Plan.  On an annual basis
no later than October 31st of each year (except as set forth in Section 6.2.1),
Actelion shall prepare and submit to the JSC for its review and discussion the
Commercialization Plan for the following calendar year.  The Commercialization
Plan shall contain a five (5) year rolling annual plan for the Commercialization
of the Finished Product in the Territory for use in the Field.  The first year
of such plan (except the initial Commercialization Plan as set forth in
Section 6.2.1), shall constitute the plan and budget for the first year and the
remaining four (4) years shall be for planning purposes only (provided that
Actelion shall prepare such four (4) year portion in accordance with its good
faith anticipated activities).  Upon review and discussion by the JSC, Actelion
shall finalize the Commercialization Plan for the following calendar year.  From
time to time during a given calendar year, Actelion may propose written updates
to the Commercialization Plan for review and discussion by the JSC.  Actelion
shall conduct all Commercialization of the Product in accordance with the
Commercialization Plan and this Agreement.

 

6.2.3                     Contents of Commercialization Plan.  Each annual
Commercialization Plan shall include and set forth on a country-by-country basis
as determined by Actelion, among other things, the following items in connection
with the Commercialization of the Product in the Territory for use in the Field:

 

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

 

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

 

(c)                                  a forecast of annual sales (in Dollars) for
the Finished Product in each country of the Territory;

 

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

 

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

 

6.3                               Actelion’s Performance.

 

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

 

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

 

(b)                                 Actelion shall use Commercially Reasonable
Efforts to launch the Finished Product in each country (or other regulatory
jurisdiction) in the Territory after all applicable Regulatory Approvals for the
Finished Product in such country (or other regulatory jurisdiction) have been
obtained.  Actelion shall (i) commercially launch the Finished Product in each
country in the Territory within sixty (60) days after the receipt of Pricing
Approval and final label agreement of the Finished Product in such country (to
the extent Pricing Approval and final label agreement are required in such
country, and otherwise within sixty (60) days after receipt of Product Approval
in, or otherwise covering, such country) and (ii) ensure that once launched the
Finished Product remains commercially available in each country in which it has
been launched for the duration of the Royalty Term in such country; provided
that Auxilium complies with its obligations to supply Bulk Product in accordance
with ARTICLE 7 of this Agreement.

 

(c)                                  Schedule 6.3.1 sets forth the annual
minimum Finished Product sales commitments of Actelion in the Field in the
Territory, it being understood that such minimums are based on assumptions
regarding the date of obtaining Regulatory Approval in a given country in the
Territory (including Pricing Approval for Canada and Australia).

 

6.3.2                     Commercialization Plan.  Without limiting obligations
of Actelion under Sections 6.3.1, Actelion shall carry out the Commercialization
activities in the Commercialization Plan in accordance with the time frames set
forth in the Commercialization Plan.

 

6.3.3                     Diligence Failures.  If Actelion fails to satisfy the
requirements set forth in Section 6.3.1 with respect to the Commercialization of
the Finished Product in the Field in the Territory or Auxilium believes that
Actelion is not using Commercially Reasonable Efforts with regards to the
Commercialization of the Finished Product in a given country or countries in the
Territory, then Auxilium shall raise such issue by notice to Actelion.  If
within sixty (60) days following Actelion’s receipt of any such notice from
Auxilium, Actelion has not remedied the issues identified by Auxilium in such
notice, then (i) Actelion shall provide Auxilium with a written response
specifying, in reasonable detail, how it is using or has begun to use such
Commercially

 

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Reasonable Efforts and/or explaining the reason for its failure to satisfy the
requirements set forth in Section 6.3.1, (ii) the Parties shall discuss such
response at the JSC and (iii) any issues raised by such response and discussion,
shall, to the extent appropriate, be submitted to the Dispute Resolution
procedures set forth in Section 15 of this Agreement.

 

6.4                               Reports.  Actelion shall update the JSC on a
country-by-country basis no less than twice per calendar year regarding its
significant Commercialization activities involving the Finished Product.

 

6.5                               Compliance.  Actelion shall, in
Commercializing the Finished Product, comply with all Laws, including the U.S.
Foreign Corrupt Practices Act and the United Kingdom Bribery Act 2010, as well
as all applicable Regulatory Approvals for the Finished Product.  In addition,
Actelion shall not use in any capacity, in connection with its Commercialization
of the Finished Product (or Development of the Bulk Product) hereunder, any
Person who has been debarred pursuant to Section 306 of the FD&C Act (or similar
Laws outside of the U.S.), or who is the subject of a conviction described in
such section, and Actelion shall inform Auxilium in writing immediately if it or
any Person who is performing services for Actelion hereunder is debarred or is
the subject of a conviction described in Section 306 (or similar Laws outside of
the U.S.), or if any action, suit, claim, investigation or legal administrative
proceeding is pending or, to Actelion’s knowledge, is threatened, relating to
the debarment of Actelion or any Person used in any capacity by Actelion in
connection with its Commercialization of the Finished Product (or Development of
the Bulk Product) hereunder.

 

6.6                               Sales Representatives and Medical Science
Liaisons.  Actelion shall be solely responsible for (i) any compensation that is
payable to its Sales Representatives or Medical Science Liaisons (including with
respect to any employee benefit plan) and (ii) the payment or withholding of any
contributions, payroll taxes, or any other payroll-related item by or on behalf
of Actelion (or its Affiliates or sublicensees) or any of its Sales
Representatives or Medical Science Liaisons.  Actelion acknowledges and agrees
that Auxilium does not and will not maintain or procure any worker’s
compensation, healthcare, or other insurance for or on behalf of Actelion’s
Sales Representatives or Medical Science Liaisons, all of which shall be
Actelion’s sole responsibility.  For the avoidance of doubt, Actelion shall be
solely responsible for any act or omission of its Sales Representatives and
Medical Science Liaisons and for all probationary and termination actions taken
by it with respect to its Sales Representatives and Medical Science Liaisons

 

6.7                               Promotional Materials.

 

6.7.1                     Creation of Promotional Materials.  Auxilium shall
provide Actelion with existing and new Promotional Materials that are created
and Controlled by Auxilium. Actelion will create and develop Promotional
Materials for the Territory, which may be based on such Auxilium provided
Promotional Materials, in accordance with the Regulatory Approvals and Laws, and
shall provide samples thereof to Auxilium for its review and comment (and
Actelion shall consider any such comments in good faith) prior to distributing
such Promotional Materials.  To the extent Actelion includes any Auxilium
trademarks in the Promotional Materials, Actelion shall comply with Auxilium’s
then current guidelines for trademark usage, provided such guidelines are made
available to Actelion on a timely basis.  Notwithstanding anything to the
contrary contained herein,

 

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Actelion shall have final decision-making authority with respect to the content
of all Promotional Materials for the Territory.

 

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

 

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

 

6.7.4                     Use of Promotional Materials Exclusively for the
Product.  The Promotional Materials, and any aspects of those uniquely tied to
the Finished Product, shall be used by Actelion exclusively in connection with
the Commercialization of the Finished Product in the Field in the Territory in
accordance with the terms of this Agreement, and Actelion shall not use, or
allow any other Person to use, any such Promotional Materials except in
accordance with this Agreement.

 

6.8                               Product Trademarks and Product Trade Dress.

 

6.8.1                     Product Trademark.  Actelion shall use Commercially
Reasonable Efforts to Commercialize the Finished Product in the Field in the
Territory under the trademark XIAFLEX® or XIAPEX™ (and logo) and under the trade
dress or such other trademark or trade dress as the Parties mutually agree upon
(in each such Party’s sole discretion), including, if applicable, any
alternative trademark and any alternative trade dress pursuant to this
Section 6.8.1 (the “Product Trademark” and the “Product Trade Dress”,
respectively).  Notwithstanding the foregoing, in the event that Actelion
believes that the use or registration of the Product Trademark or the use of the
Product Trade Dress in a particular country in the Territory would be
inappropriate due to such country’s linguistic or cultural particularities or
against the Laws of such country, or in conflict with any Third Party’s
intellectual property rights in that country, based on a review of market
research,

 

38

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regulatory research, legal searches, investigation results, and any other
relevant information that may have been collected by either Party that is
relevant to the clearance for use and registration of a trademark or for use and
registration of a trade dress (it being understood that there is no obligation
for either Party to perform any such review or research), Actelion shall present
such concern to Auxilium, and Auxilium shall propose an alternative trademark
and trade dress to Actelion for use and registration in the country in question
without prejudice to Actelion’s right to reasonably refuse to adopt any such
alternative trademark or trademark on the aforementioned grounds.  If Actelion
accepts such alternative trademark and trade dress, then Auxilium shall perform
all necessary activities and bear all costs relating to the creation, legal
clearance, filing, registration, and maintenance of the initial alternative
trademark and trade dress; provided, that Actelion and Auxilium shall share such
costs with respect to each alternative trademark and trade dress after the
initial proposal. Actelion may request, and Auxilium shall use Commercially
Reasonable Efforts to provide, a reasonable number of alternative trademarks and
trade dresses from among which the Parties may agree that the use or
registration of such an alternative trademark, or the use of such an alternative
trade dress, in a particular country in the Territory would not be inappropriate
due to such country’s linguistic or cultural particularities, or against the
Laws of such country, or in conflict with any Third Party’s intellectual
property rights in that country, based on a review of market research,
regulatory research, legal searches, investigation results, and any other
relevant information that may have been collected by either Party that is
relevant to the clearance for use and registration of a trademark or for use and
registration of a trade dress.

 

6.8.2                     Use and Ownership of Product Trademarks and Product
Trade Dress.  All uses of the Product Trademark and Product Trade Dress by
Actelion (and its Affiliates and sublicensees) to identify and/or in connection
with the Commercialization of the Finished Product in the Field in the Territory
shall be in accordance with Regulatory Approvals and all Laws and shall be
subject to the approval of Auxilium in its reasonable discretion.  Actelion (and
its Affiliates and sublicensees) shall only use the Product Trademark and
Product Trade Dress pursuant to the terms of this Agreement to identify and in
connection with the Commercialization of the Finished Product in the Territory
for use in the Field, and Actelion shall not (and shall cause its Affiliates and
sublicensees not to) use such Product Trademark or Product Trade Dress to
identify or in connection with the marketing of any other product(s).  Auxilium
shall own and retain all rights to the Product Trademark and Product Trade Dress
(in each case, together with all goodwill associated therewith throughout the
Territory), and Actelion shall assign (and shall cause its Affiliates and
sublicensees to assign), and hereby does assign to Auxilium, all of its right,
title and interest in and to such Product Trademark and Product Trade Dress, if
any. Auxilium shall also own rights to any Internet domain names incorporating
the Product Trademark or any variation or part of such trademark as its URL
address or any part of such address; and Actelion shall not establish any
Internet domain name or URL incorporating such trademark without the prior
written consent of Auxilium; provided that Actelion shall be responsible for all
costs incurred by Auxilium with respect to such Internet domain names or URLs to
the extent used for the Commercialization of the Finished Product in the
Territory.  The Parties hereby agree and acknowledge that nothing contained
herein shall limit Auxilium’s right to use the Product Trademark or Product
Trade Dress outside the Territory.

 

6.8.3                     Maintenance of Product Trademark and Internet Domain
Names.  During the Term, Auxilium will use Commercially Reasonable Efforts to
establish, maintain,

 

39

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monitor and enforce the Product Trademark in the Territory and internet domain
names if any, and will bear all costs and expenses relating thereto.

 

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

 

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

 

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

 

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

 

ARTICLE 7
SUPPLY

 

7.1                               General.  Auxilium will use Commercially
Reasonable Efforts to Manufacture (or have Manufactured) and supply requested
quantities (taking into consideration Auxilium’s capacity) of the Bulk Product
for clinical and commercial use in the Field in the Territory, in each case in
accordance with the terms of this ARTICLE 7 and the Quality Agreement.

 

7.2                               Development Supply.  Auxilium will use
Commercially Reasonable Efforts to Manufacture, or arrange for a Third Party to
Manufacture, and supply all of Actelion’s requirements of Units of Product for
Development Activities, if any, to be performed by it in accordance with the
Development Plan, which supply shall be in accordance with the terms of this
ARTICLE 7.  Units of Product shall be ordered and supplied for Development
Activities in accordance with the procedures set forth in this ARTICLE 7;
provided that, the Parties shall agree as to an appropriate forecasting
mechanism for Development supply of Bulk Product (either through including such
forecasts in the Development Plan or some other mechanism) reasonably in advance
of any orders therefor from Actelion.  Units of Product (as well as any placebo
requested by Actelion) supplied for Development Activities shall be invoiced at
Auxilium’s prevailing Manufacturing Standard Cost (and placebo, if applicable)
at the time Actelion issued the relevant Purchase Order (the “Development Supply
Price”).

 

7.3                               Commercial Supply.  Auxilium will use
Commercially Reasonable Efforts to Manufacture, or arrange for a Third Party to
Manufacture, and supply all of Actelion’s requirements of Units of Product for
commercial sale in the Field in the Territory pursuant to this Agreement, which
supply shall be in accordance with the terms of this ARTICLE 7 and the Quality
Agreement.  Units of Product supplied for commercial sale shall be invoiced at
Auxilium’s prevailing Manufacturing Standard Cost at the time Actelion issued
the relevant

 

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Purchase Order plus the following mark-up, if any, on Auxilium’s prevailing
Manufacturing Standard Cost (the “Commercial Supply Price”):

 

If Auxilium’s Manufacturing
Standard Cost is:

 

Mark-Up to Actelion Shall Be:

 

 

 

Equal to or less than $[**]

 

[**]%

 

 

 

Greater than $[**] but less than $[**]

 

A dollar amount equal to $[**] less [**]

 

 

 

Equal to or greater than $[**]

 

[**]%

 

Auxilium will use Commercially Reasonable Efforts to lower the Manufacturing
Standard Cost during the Term; provided, however, that Auxilium makes no
guarantees with respect to its ability to, or the degree to which it is able to,
lower the Manufacturing Standard Cost.

 

Auxilium will use Commercially Reasonable Efforts to Manufacture, or arrange for
a Third Party to Manufacture, and supply diluent ordered by Actelion in excess
of the diluent included in a Unit of Product (“Additional Diluent”).  Such
additional diluent shall be invoiced at Auxilium’s prevailing Manufacturing Cost
of such diluent at the time Actelion issued the relevant Purchase Order plus a
mark-up of [**] percent ([**]%) on Auxilium’s prevailing Manufacturing Cost of
such diluent (the “Additional Diluent Supply Price”).

 

7.4                       Exclusive Source.  Subject to the provisions of this
Agreement, Actelion shall purchase all of its requirements of Bulk Product
(i.e., Units of Product) exclusively from Auxilium pursuant to the terms of this
ARTICLE 7.

 

7.5                       Packaging and Labeling; Certain Other Manufacturing
Activities.  Notwithstanding anything to the contrary contained herein, in
accordance with the procedures set forth in the Quality Agreement, Actelion or
its designated Third Party shall be responsible (at its sole cost and expense)
for all final product labeling and packaging (whether in commercial or clinical
packaging presentation), including insertion of materials such as applicators,
transfer needles, syringes, patient inserts, patient medication guides,
professional inserts and any other written, printed or graphic materials
accompanying the Bulk Product, considered to be part of the Finished Product,
and handling, storage, quality control, quality assurance, and the testing and
release aspects of Analytical Release Testing and Characterization and related
activities (collectively, “Packaging and Labeling”).  Actelion or its designated
Third Party shall ensure that all such Packaging and Labeling shall comply with
Laws, GMPs and the Regulatory Approvals for the Finished Product in the
Territory, including the Product Specifications; provided that, Auxilium shall
have the right, but not the obligation, to review any single or collective
element of Packaging and Labeling at any time and Actelion shall give good faith
consideration to any comments received from Auxilium.  Actelion or its
designated Third Party shall also be responsible for performing the testing and
release aspects of Analytical Release Testing and Characterization and Auxilium
shall provide assistance to Actelion in connection therewith (including, to the
extent possible, granting Actelion reasonable access to Auxilium (and its
Affiliates’, sublicensees’ and subcontractors’) facilities as is necessary or
useful for Actelion to access applicable records and documents for performing
the testing and release aspects of Analytical Release Testing and
Characterization

 

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

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

 

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obligations), all as more particularly set forth in the Quality Agreement.  To
the extent that a Third Party is involved in Packaging and Labeling or other
activities described in this Section 7.5, Actelion shall be wholly responsible
for, and bear one hundred percent (100%) of the costs related to, qualifying
such Third Party to perform such activities.

 

7.6                       Forecasting and Ordering.

 

7.6.1                     Forecast.  Actelion shall furnish the first forecast
under this Section 7.6 no later than ninety (90) days after the Effective Date
(the “Initial Forecast Date”).  On the Initial Forecast Date and on the first
day of each calendar quarter thereafter (each a “Forecast Date”), Actelion shall
furnish Auxilium a forecast of quantities of Units of Product that Actelion
expects to be delivered on a monthly basis in each of the six (6) calendar
quarters beginning, respectively, six (6) months, nine (9) months, twelve (12)
months, fifteen (15) months, eighteen (18) months and twenty-one (21) months
from the Forecast Date (each a “Forecast”).  The Forecast for deliveries
occurring in the calendar quarter beginning six (6) months after the Forecast
Date shall provide for quantities no less than seventy-five percent (75%), and
no more than one hundred twenty five percent (125%), of the quantities contained
in the Forecast for such quarter given one quarter earlier.  The Forecast for
deliveries occurring in the calendar quarters beginning nine (9) months, twelve
(12) months, fifteen (15) months, eighteen (18) months and twenty-one (21)
months after the Forecast Date shall be non-binding (see Schedule 7.6 for
Forecast methodology).  All Forecasts shall (i) be specified for Units of
Product on a monthly basis and (ii) be for full production lots of Units of
Product (i.e. between [**] and [**] Units of Product for full production lots of
the [**]L Manufacturing environment or between [**] and [**] Units of Product
for full production lots of the [**]L Manufacturing environment, as applicable);
provided, however, that, in the event the Manufacturing specifications and
release testing requirements for Bulk Product to be supplied to Actelion are
identical to such specifications and testing requirements for Bulk Product
adhered to by Auxilium for the Finished Product to be sold in Canada, then
Actelion may place Forecasts for partial production lots of Bulk Product
manufactured by Auxilium for Finished Product to be sold in the U.S.
 Notwithstanding the immediately preceding sentence, the Parties acknowledge and
agree that the Units of Product per full production lot may vary in the future
based on changes in yield; provided that, in the event of any such changes,
Auxilium shall notify Actelion of such changes from time to time and such
notification shall be deemed an amendment of the immediately preceding sentence
in satisfaction of Section 16.1 hereof.  The Parties recognize that the
foregoing Forecasts may change over time based on commercial and regulatory
developments and other factors, and Actelion shall be liable to reimburse
Auxilium for Out-of-Pocket Costs incurred by Auxilium as a result of any such
changes with respect to the second and third quarters of the then current
Forecast (i.e., the two (2) quarters commencing ninety (90) days after and one
hundred eighty (180) days, respectively, after the Forecast Date); provided,
that, to the extent practicable, Auxilium will use Commercially Reasonable
Efforts to reduce such reimbursement exposure to Actelion under the terms hereof
incident to changes in such Forecast; provided, however, that, notwithstanding
the foregoing, in all cases, Auxilium shall not be in breach of this Agreement
for any failure to reduce such reimbursement exposure and Actelion shall be
responsible for purchasing any and all Units of Product in accordance with the
provisions of this Agreement.

 

7.6.2                     Long Range Capacity Planning; Supply Chain
Improvements.  Concurrent with the Initial Forecast, for the purposes of
discussion and planning of manufacturing capacity Actelion shall provide a
non-binding forecast of its Units of Product needs for the twenty-

 

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

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

 

43

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four (24) months following that specified in the then current Forecast as
described in Section 7.6.1 (“Long Range Forecast”).  In the event Auxilium
projects a shortfall in capacity based on the Long Range Forecast, the Parties
will jointly discuss alternatives to increase such capacity, and the Parties
shall promptly meet to discuss a reasonable manner of proceeding.  Unless
otherwise agreed to by the Parties during the Term, the Long Range Forecast
shall be updated by Actelion and reviewed with Auxilium on an annual basis.

 

7.6.3                     Orders.  On each Forecast Date, in addition to the
initial Forecast specified in Section 7.6.1, Actelion shall for the Term deliver
to Auxilium a firm purchase order or orders specifying the quantities of the
Units of Product for delivery on a monthly basis in the calendar quarter
beginning three (3) months after the Forecast Date (each a “Purchase Order”). 
Each such Purchase Order shall provide for aggregate quantities for delivery in
such quarter that are, unless otherwise agreed between the Parties in writing,
no less than seventy-five percent (75%), and no more than one hundred twenty
five percent (125%), of the quantities contained in the Forecast for such
quarter given one (1) quarter earlier than the Forecast Date on which such
Purchase Order is placed (see Schedule 7.6 for Forecast methodology).  Unless
agreed separately between the Parties, each Purchase Order shall specify no more
than one (1) delivery date for the Units of Product in each calendar month.

 

7.6.4                     Receipt and Acceptance.  Actelion shall purchase all
Units of Product ordered and specified in a Purchase Order.  Purchase Orders may
be delivered electronically or by other means to such location as Auxilium shall
designate and shall be in a form reasonably acceptable to Auxilium.  Auxilium
shall provide written confirmation of such Purchase Order to Actelion within ten
(10) business days of receipt of such Purchase Order (the date of such written
confirmation, the “Purchase Order Acceptance Date”).  Auxilium will accept any
Purchase Order for Units of Product that does not exceed the applicable maximum
provided for in the most recent Forecast.  If a Purchase Order, whether or not
accepted, exceeds such applicable maximum, the Parties shall seek to agree on a
reasonable manner of proceeding.  Auxilium shall use reasonable efforts to
supply any amount of Units of Product that Actelion orders pursuant to
Section 7.6.3 in excess of the maximum amount deliverable under the ordering and
forecasting procedures specified herein, but in any event, such efforts shall
not be construed as an obligation hereunder and in no event shall Auxilium be
deemed in breach of this Agreement by means of a failure to provide Units of
Product in excess of the then current Forecasted amount.  Nothing in any such
Purchase Order or written acceptance shall supersede the terms and conditions of
this Agreement or the Quality Agreement, and in the event of a conflict between
the terms of such Purchase Order (or written acceptance, as applicable) and the
terms of this Agreement (or the Quality Agreement, as applicable), the terms of
this Agreement (or the Quality Agreement, as applicable) shall control.  All
Purchase Orders, written acceptances of Purchase Orders and other notices
contemplated under this Section 7.6 shall be sent to the attention of such
persons as each Party may identify to the other in writing from time to time in
accordance with Section 16.3.  Notwithstanding any term in Section 7.6.3 or this
Section 7.6.4 or elsewhere herein, and notwithstanding any Forecasts given by
Actelion, Actelion shall not be obligated to place any Purchase Orders for Units
of Product prior to receipt of Regulatory Approval thereof, and Actelion shall
have the right to reasonably amend its Forecasts and Purchase Orders in the
event of unexpected delays in receipt of any such approval; provided, that
Actelion shall be liable to reimburse Auxilium for Out-of-Pocket Costs incurred
by Auxilium as a result of any such changes with respect to the second and third
quarters of the then

 

44

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current Forecast (i.e., the two (2) quarters commencing ninety (90) days after
and one hundred eighty (180) days, respectively, after the Forecast Date);
provided, that, to the extent practicable, Auxilium will use Commercially
Reasonable Efforts to reduce such reimbursement exposure to Actelion under the
terms hereof incident to changes in such Forecasts and Purchase Orders;
provided, however, that notwithstanding the foregoing, in all cases, Auxilium
shall not be in breach of this Agreement for any failure to reduce such
reimbursement exposure and Actelion shall be responsible for purchasing any and
all Units of Product in accordance with the provisions of this Agreement.

 

7.7                       Invoicing, and Manufacturing Standard Cost Audit.

 

7.7.1                     Invoice.  Each delivery of Units of Product hereunder
shall be accompanied by an invoice setting forth the Development Supply Price or
the Commercial Supply Price, as applicable, for such delivery.  Auxilium shall
invoice such Units of Product at the Development Supply Price or the Commercial
Supply Price, as applicable, and Actelion will issue payment against invoices
within thirty (30) days.  Each delivery of Additional Diluent hereunder shall be
accompanied by an invoice setting forth the Additional Diluent Supply Price for
such delivery.  Auxilium shall invoice such Additional Diluent at the Additional
Diluent Supply Price, and Actelion will issue payment against invoices within
thirty (30) days.

 

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

 

7.8                       Shipping and Delivery.

 

7.8.1                     Delivery.  Auxilium shall deliver (or have delivered)
to Actelion in accordance with this Section 7.8 the quantity of the Units of
Product specified in each accepted Purchase Order within ninety (90) days from
the Purchase Order Acceptance Date or otherwise as agreed to by the Parties. 
Notwithstanding anything to the contrary contained herein, (i) Auxilium will
notify Actelion of the anticipated FCA (Incoterm 2010) (Auxilium’s or its
designee’s site)  date of delivery at least five (5) days prior to such FCA
(Auxilium’s or its designee’s site) date, which FCA (Auxilium’s or its
designee’s site) date may occur as many as seven (7) days prior to or seven
(7) days after the date that is ninety (90) days from the Purchase Order
Acceptance Date, and such delivery shall be deemed to have been delivered on a
timely basis hereunder, and (ii) in order to allow for Bulk Product
Manufacturing variances, Auxilium shall be entitled to deliver quantities of
Units of Product as much as ten percent (10%) above or as little as ten percent
(10%) below the amount of the Units of Product specified by Actelion in the
applicable Purchase Order, provided however that the aggregate difference in any
twelve (12) month period does not exceed ten percent (10%) in the aggregate for
all such Units of Product ordered for such period and such delivery shall be
deemed to have been delivered in satisfaction of Auxilium’s obligations
hereunder.  Actelion shall purchase all such Units of Product so delivered
provided delivered Units of Product have a minimum shelf life of not less than
eighty percent (80%) of its total approved shelf-life remaining at the time of
delivery or as otherwise detailed in the Quality Agreement.

 

45

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7.8.2                     Delivery Terms.  Units of Product shall be supplied to
Actelion FCA (Auxilium’s or its designee’s site).  Delivery shall occur, and
title and risk of loss will pass to Actelion, when each order of Units of
Product is placed at the disposal of Actelion at such Facility.  The Units of
Product shall be shipped at Actelion’s expense (including, without limitation,
all shipping costs, shipping insurance, customs charges, tariffs, import taxes,
fees or other charges (including costs of quarantine) in connection with
importing the Units of Product into the Territory or to Actelion’s facilities)
via a carrier identified by Actelion in the applicable Purchase Order; provided,
that in the event that Actelion fails to identify a carrier, Auxilium may choose
a carrier at its own reasonable discretion.

 

7.8.3                     Retention.  Unless the Parties agree otherwise,
Auxilium will maintain analytical samples of Bulk Product from which Units of
Product delivered to Actelion hereunder are derived in storage for a time period
based upon Auxilium’s sample retention policy, which currently provides for
retention for a period of one (1) year in accordance with U.S. regulatory
requirements.

 

7.9                       Quality and Compliance.

 

7.9.1                     Quality Agreement.  The Quality Agreement will set
forth the Parties’ quality and compliance obligations with respect to
Manufacture and acceptance of the Bulk Product and Packaging and Labeling and
release of the Finished Product.  Actelion and Auxilium agree to comply with the
requirements and provisions set forth in the Quality Agreement.  The Quality
Agreement will set forth in greater detail many of the responsibilities and
obligations set forth herein.  In the event of a conflict between the terms of
the Quality Agreement and the terms of this Agreement, the terms of this
Agreement shall prevail.  The Parties shall execute the Quality Agreement within
one-hundred eighty (180) days of the Effective Date.

 

7.9.2                     Notice of Non-Conformance.

 

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

 

(b)                                 Latent Defects shall be communicated to
Auxilium, together with appropriate detail, via a Notice of Non-Conformance,
without undue delay after such Latent Defect is first discovered by Actelion (or
Actelion otherwise is notified of such Latent Defect), but in all cases within
two (2) business days of the date on which such Latent Defect was first
discovered by Actelion or was notified to Actelion by the relevant Person
discovering the defect, and thereafter such Latent Defect shall be handled as
set forth in the remainder of this Section 7.9 and/or the Quality Agreement, as
applicable.  For purposes of this Section 7.9.2(b), “Latent Defects” shall mean
those defects that could not be discovered by inspection by Actelion or its
designee as described in Section 7.9.2(a).

 

46

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7.9.3                     Notification of significant quality issues.  As set
forth in the Quality Agreement (including on timing set forth therein), the
Parties shall notify each other of the occurrence of a confirmed out-of
specification (“OOS”) result or major process deviation relating to the Bulk
Product whether inside the Territory or outside the Territory.  The Parties
agree to consult on all quality decisions regarding any OOS result or major
process deviations involving the Bulk Product.

 

7.9.4                     Audits.  Actelion shall have access to Auxilium
Facilities associated with the Drug Substance or Bulk Product at a mutually
agreeable time for the sole purpose of auditing the Facilities for operational
compliance with cGMPs and the content of the respective Quality Agreement.  The
right to audit also includes any testing Facility related to the Drug Substance
or Bulk Product.  To the extent a Third Party’s facilities are the subject of an
audit pursuant to this Section 7.9.4, Actelion shall (a) perform such audit in
connection with Auxilium and in accordance with this Agreement and any related
Quality Agreement and (b) bear any costs charged by such Third Party associated
with such audit.  For clarity, Auxilium shall have the right to accompany
Actelion on any such audit of a Third Party Facility.

 

7.10                Disputes and Remedies.

 

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

 

7.10.2              Remedies.  In the event any shipment of Units of Product is
rejected pursuant to Section 7.10.1 (or as a result of an uncontested Notice of
Non-Conformance) and/or the Quality Agreement, as applicable, solely as a result
of any act or omission of Auxilium, then (i) Actelion shall, at the direction of
Auxilium, either (a) destroy such rejected Units of Product at Auxilium’s
reasonable expense (in accordance with Laws) or (b) return such Units of Product
to Auxilium, at a location designated by Auxilium and at Auxilium’s reasonable
expense, and (ii) Auxilium, at no expense to Actelion, shall, either (a) use its
Commercially Reasonable Efforts to promptly replace such non-conforming Units of
Product (or short shipment) or (b) give Actelion a credit in an amount equal to
the amount paid or payable by Actelion with respect to such rejected Units
Product (or

 

47

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short shipment) as reasonably agreed between the Parties.  In the event that any
shipment of Units of Product is rejected for any other reason, Auxilium shall
have no liability to Actelion in connection therewith, and Actelion shall, at
its sole cost, destroy such rejected Units of Product in compliance with Laws. 
AUXILIUM’S LIABILITY IN RESPECT OF ANY REJECTION (INCLUDING ANY SHORT SHIPMENT)
SHALL BE LIMITED TO THE REMEDIES PROVIDED IN THIS SECTION 7.10.2.

 

7.11                Shortages.  In the event that the materials and/or
Manufacturing capacity required to Manufacture and deliver Units of Product to
Actelion in a timely manner are in short supply, Auxilium shall notify Actelion
of such shortage and, the Parties shall promptly meet to discuss the shortage. 
Auxilium shall provide a written plan of action stating in reasonable detail the
root cause of the shortage and proposed measures to remedy the shortage and the
date such shortage is expected to end.  Notwithstanding anything to the contrary
contained herein, the situation where the commercial success of the Finished
Product in the Territory is the reason for such shortage (which situation is
addressed in Section 7.6.2) shall not constitute a “shortage” or mean that
Auxilium is “unable to supply” for purposes of this Section 7.11 (provided, that
Auxilium is using Commercially Reasonable Efforts to supply all of Actelion’s
Purchase Orders in accordance with this Agreement, including the allocation set
forth in this Section 7.11).  Auxilium shall use its Commercially Reasonable
Efforts to minimize the duration of any shortage.  During any such shortage,
Auxilium shall allocate the materials and resources used in the supply of Units
of Product between Auxilium (and any other Third Parties), on the one hand, and
Actelion, on the other hand (subject to pre-existing obligations to Third
Parties), (i) for the first two (2) years from the First Commercial Sale, based
on, in the case of Actelion, the lesser of twenty-five percent (25%) of
available Units of Product (subject to pre-existing obligations to Third
Parties) or the undelivered quantities specified in all then current Purchase
Orders, (ii) following the second anniversary of the First Commercial Sale, the
forecasted demand reported one quarter earlier (pursuant to Section 7.6) against
the forecasted needs of Auxilium (and any Third Parties) and (iii) following the
third anniversary of the First Commercial Sale, in accordance with their
respective share of sales in the applicable market of Units of Product during
the immediately preceding twelve (12) months.  The allocation described in the
immediately foregoing sentence is diagrammed in Schedule 7.11.  If, during the
Term, Auxilium is unable to supply according to the terms of this Agreement at
least fifty percent (50%) of the aggregate quantity of Units of Product to be
delivered as required by Actelion’s Purchase Orders (which have been properly
submitted in accordance with this Agreement) (such quantity of Units of Product,
the “Minimum Delivery Amount”), other than to the extent caused by a Force
Majeure Event or an act or omission of Actelion or any of its Affiliates, then
Auxilium will inform Actelion in writing thereof.  Following receipt of such
notice, a joint team shall be formed without undue delay to address the nature
of the shortage.  Auxilium shall have ninety (90) days to supply Actelion with
sufficient quantities of Units of Product such that Auxilium shall have
delivered the Minimum Delivery Amount for the applicable period (the “Minimum
Delivery Cure Period”), and in the event that Auxilium is unable to supply such
quantities of Units of Product to meet the Minimum Delivery Amount within such
Minimum Delivery Cure Period, then until such time as quantities of Bulk Product
to meet the Minimum Delivery Amount are supplied to Actelion, the Royalty Rate
will be reduced by twenty-five percent (25%) (i.e., reduced by one quarter, for
example from eighteen percent (18%) to thirteen and one-half percent (13.5%))
for all Net

 

48

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Sales commencing with sales recorded in the month immediately following the
month in which the end of the Minimum Deliver Cure Period occurred, and ending
up to three (3) months following the month in which Auxilium has delivered
quantities of Units of Product sufficient to meet the Minimum Delivery Amount;
provided that, for clarity, such three (3) month period is solely intended to
allow Actelion an opportunity to reestablish its inventory, and to the extent
that Actelion is able to do so in less than such three (3) month period the
Royalty Rate shall promptly revert to the amounts currently set forth in
Section 8.3.1; provided, further, during such three (3) month period, Actelion
shall have the right to submit Purchase Orders in excess of the twenty-five
percent (25%) cap on increases from the previously forecasted amount for such
period (provided, that, Auxilium shall not be obligated hereunder to fill such
excess orders but shall use reasonable efforts to satisfy such excess orders);
provided, further, that Auxilium’s inability to fill such excess orders shall
not constitute an additional shortage hereunder; provided, further, that, at the
option of Actelion, during the pendency of any such shortage, Auxilium will
agree to form a joint Actelion/Auxilium team responsible for overseeing the
restoration of supply.  Should such a shortage period last for more than four
(4) consecutive quarters, Actelion will have the right, but not the obligation,
to terminate this Agreement on a country-by-country and Finished
Product-by-Finished Product basis.

 

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

 

7.13                Safety Stock Obligations.  Commencing after the first twelve
(12) months after First Commercial Sale, the Joint Steering Committee shall
consider what level of safety stock of Drug Substance and Bulk Product would be
mutually acceptable to the Parties.

 

7.14                Product Specification and Manufacturing Changes.  Product
Specification and Manufacturing changes, including those resulting from a
request received by a Party from a Governmental Authority, or any changes that
Auxilium may make, shall be dealt with pursuant to the Quality Agreement;
provided that all applicable Regulatory Materials shall be prepared and filed by
the Parties in accordance with the provisions of ARTICLE 5.

 

7.15                Termination of Supply Obligations.  Notwithstanding anything
to the contrary contained herein, the obligations of Auxilium under this
ARTICLE 7, including the obligations to Manufacture and supply Units of Product
to Actelion hereunder, and Actelion’s obligations to purchase solely from
Auxilium, may continue after the end of the Royalty Term, or terminate (on a
country-by-country and Finished Product-by-Finished Product basis) from and
after the end of the Royalty Term with respect to such Finished Product in such
country.  The Parties will negotiate in good faith the terms and conditions upon
which Auxilium might continue to Manufacture and supply, and Actelion might
continue to purchase, requirements of Units of Product from Auxilium pursuant to
a distinct manufacturing and supply agreement which shall be amendable to
include additional countries of the Territory as the Royalty Term expires in
such countries.  For avoidance of doubt, should the Parties not agree on the
terms and conditions of a distinct manufacturing and supply agreement for Units
of Product as described above, Actelion shall be free to purchase Units of
Product from a Third Party.

 

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7.16                Auxilium Notice.  Auxilium shall provide Actelion with
verbal notice as soon as practicable after it becomes aware, confirmed in
writing within three (3) business days thereafter, of any significant condition
or incident, which shall include any event, occurrence, or circumstance,
including any governmental or private action, which could reasonably be expected
to materially impact Auxilium’s ability to perform its obligations under this
Agreement.

 

ARTICLE 8
PAYMENTS

 

8.1                       Upfront Payment.  Within five (5) business days of the
Effective Date, Actelion shall pay to Auxilium an upfront amount equal to Ten
Million Dollars ($10,000,000) (the “Upfront Payment”) by wire transfer of
immediately available funds into an account designated in writing by Auxilium. 
Such Upfront Payment shall be nonrefundable and noncreditable against any other
payments due hereunder.

 

8.2                       Milestone Payments.  Actelion shall pay to Auxilium
the milestone payments described in this Section 8.2 following achievement
(first occurrence) of the corresponding milestone event.  A Party shall promptly
notify the other Party in writing, but in no event later than five (5) days
after, of the achievement of each such milestone event (each, a “Milestone
Notification Notice”) achieved by it.  Actelion shall pay the applicable
milestone payment by wire transfer of immediately available funds into an
account designated by Auxilium as per Section 8.8 of this Agreement; provided,
however, that in no event shall a failure to deliver a Milestone Notification
Notice relieve Actelion of its obligation to pay Auxilium the milestone payments
described in this Section 8.2.  Each such milestone payment is nonrefundable and
noncreditable against any other payments due hereunder.

 

Milestone Event

 

Milestone Payment

 

 

 

Dupuytren’s Contracture

 

 

 

1.  Receipt by Actelion of first Product Approval for Dupuytren’s Contracture in
Canada.

 

[**] Dollars ($[**])

 

 

 

2.  Receipt by Actelion of first Pricing Approval for Dupuytren’s Contracture in
Canada.

 

[**] Dollars ($[**])

 

 

 

3.  Receipt by Actelion of first Product Approval for Dupuytren’s Contracture in
Australia.

 

[**] Dollars ($[**])

 

 

 

4.  Receipt by Actelion of first Pricing Approval for Dupuytren’s Contracture in
Australia.

 

[**] Dollars ($[**])

 

 

 

5.  Receipt by Actelion of first Regulatory Approval for Dupuytren’s Contracture
in Brazil.

 

[**] Dollars ($[**])

 

 

 

6.  Receipt by Actelion of first Regulatory Approval for Dupuytren’s Contracture
in Mexico.

 

[**] Dollars ($[**])

 

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

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

 

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Milestone Event

 

Milestone Payment

 

 

 

Peyronie’s Disease

 

 

 

1.  Receipt by Actelion of first Product Approval for Peyronie’s Disease in
Canada.

 

[**] Dollars ($[**])

 

 

 

2.  Receipt by Actelion of first Pricing Approval for Peyronie’s Disease in
Canada.

 

[**] ($[**])

 

 

 

3.  Receipt by Actelion of first Product Approval for Peyronie’s Disease in
Australia.

 

[**] Dollars ($[**])

 

 

 

4.  Receipt by Actelion of first Pricing Approval for Peyronie’s Disease in
Australia.

 

[**] ($[**])

 

 

 

5. Receipt by Actelion of first Regulatory Approval for Peyronie’s Disease in
Brazil.

 

[**] Dollars ($[**])

 

 

 

6. Receipt by Actelion of first Regulatory Approval for Peyronie’s Disease in
Mexico.

 

[**] Dollars ($[**])

 

 

 

Sales Based Milestones

 

 

 

1. Aggregate Net Sales of Finished Product in the Territory equal or exceed [**]
Dollars ($[**]) for any calendar year.

 

[**] Dollars ($[**])

 

 

 

2. Aggregate Net Sales of Finished Product in the Territory equal or exceed [**]
Dollars ($[**]) for any calendar year.

 

[**] Dollars ($[**])

 

 

 

3.  Aggregate Net Sales of Finished Product in the Territory equal or exceed
[**] ($[**]) for any calendar year.

 

[**] Dollars ($[**])

 

 

 

4.  Aggregate Net Sales of Finished Product in the Territory equal or exceed
[**] Dollars ($[**]) for any calendar year.

 

[**] Dollars ($[**])

 

8.2.1                     The date of (i) “Receipt by Actelion of first
Regulatory Approval”, (ii) “Receipt by Actelion of first Product Approval” or
(iii) “Receipt by Actelion of first Pricing Approval” shall mean, as the case
may be, the date on which Actelion has received official notice from the
relevant Governmental Authority related thereto.

 

8.2.2                     Each of the Sales Based Milestones shall be payable
only once during the Term.

 

8.3                       Royalties.

 

8.3.1                     Royalty Rate During Term.  As further consideration
for the rights granted to Actelion under this Agreement, Actelion shall pay to
Auxilium tiered payments (“Royalty Payments”) at the following rates (the
“Royalty Rates”) based on aggregate annual Net Sales of

 

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

 

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Finished Product in the Territory for all or any portion of a calendar year
falling within the Royalty Term:

 

Calendar Year Net Sales

 

Royalty Rate

 

 

 

For that portion of aggregate annual Net Sales less than [**] Dollars ($[**])

 

[**]%

 

 

 

For that portion of aggregate annual Net Sales equal to or greater than [**]
Dollars ($[**]) but less than [**] Dollars ($[**])

 

[**]%

 

 

 

For that portion of aggregate annual Net Sales equal to or greater than [**]
Dollars ($[**])

 

[**]%

 

Also, for the purposes of clarity, aggregate Net Sales levels from the Territory
shall be computed using the exchange rate in effect at the time for the
calculation of the quarterly royalties and then summed to determine whether an
aggregate sales milestone has been reached.

 

8.3.2                     Reduction of Compensation due to Biosimilar.  If the
Biosimilar Version market share of all Biosimilar Versions of the Product sold
by Third Parties in a given country in the Territory is greater than [**]
percent ([**]%) in either case in any calendar quarter (in which case “Generic
Entry” shall be deemed to have occurred with respect to the Finished Product in
such country), then the compensation rate set forth in Section 8.3.1 with
respect to such tier payable on Net Sales of Finished Product in such country
during each calendar quarter in any such year from and after the calendar
quarter during which Generic Entry occurred and for so long as such Generic
Entry continues in such country shall be reduced by [**] percent ([**]%).

 

8.4                       Royalty Reports and Payments.  Within fifteen (15)
days of the end of each calendar quarter Actelion shall provide Auxilium with a
royalty report that includes: (i) a statement of the amount of gross sales of
the Finished Product, if possible on an indication-by-indication basis, (a) in
the Territory as a whole and (b) on a country-by-country basis during the
applicable calendar quarter (including such amounts expressed in local currency
and as converted to Dollars), (ii) an itemized calculation of Net Sales (a) in
the Territory as a whole and (b) on a country-by-country basis, showing for both
(a) and (b) deductions provided for in the definition of “Net Sales” during such
calendar quarter and (iii) the total Royalty Payment payable to Auxilium
pursuant to Section 8.3 with respect to Net Sales during such calendar quarter,
which amount shall be converted to Dollars at such time in accordance with
Section 8.7.  Without limiting the generality of the foregoing, Actelion shall
require its Affiliates and sublicensees (and any distributors) to account for
its Net Sales and to provide such reports with respect thereto as if such sales
were made by Actelion.  Following Auxilium’s receipt of such royalty report,
Auxilium shall issue an invoice for the total Royalty Payment due, which invoice
Actelion shall remit payment against to Auxilium as per Section 8.8.

 

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

 

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8.5                       Third Party Royalties and Other Payments.

 

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

 

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

 

8.5.3                     Licenses to Other Patents.  Except as provided in
Sections 8.5.1 and 8.5.2, if Actelion desires to obtain a license under any
Third Party’s Patents that are otherwise useful for the Development of the Bulk
Product or Commercialization of the Finished Product in the Field in the
Territory, then Actelion shall notify the JSC.  To the extent that both Parties
determine (in each such Party’s sole discretion) to pursue such a license, then
Actelion shall be primarily responsible for the negotiation and execution of the
corresponding license agreement and the Parties shall share equally (unless
otherwise mutually agreed or as provided in the next sentence) all payments
associated with any license fees, royalties and other amounts owed to the
applicable Third Party for such license.  Notwithstanding the foregoing, at the
time a license opportunity is presented to the JSC, Auxilium may elect not to
participate in the costs of such joint licensing opportunity with respect to the
Development of the Bulk Product or Commercialization of the Finished Product in
the Field in the Territory.  In such event Actelion may pursue such licensing
opportunity and shall be responsible for one hundred percent (100%) of all
payments associated with any license fees,

 

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royalties and other amounts owed to the applicable Third Party for such license,
with no right to invoice Auxilium or offset such amounts against any amounts
owed to Auxilium under this Agreement; provided that, in the event that Actelion
decides to pursue such license within the Territory, then Auxilium will not be
entitled to opt out of the obligation to contribute equally to all costs of such
licensing opportunity within the Territory if Auxilium pursues the licensing of
such opportunity outside of the Territory.

 

8.6                       Taxes and Withholding.

 

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

 

(b)                                 Withholding Tax Matters.  If Actelion is
required to make a payment to Auxilium subject to a deduction of tax or
withholding tax, the sum payable by Actelion (in respect of which such deduction
or withholding is required to be made) shall be made to Auxilium after deduction
of the amount required to be so deducted or withheld, which deducted or withheld
amount shall be remitted in accordance with Laws.  Any such withholding taxes
required under Laws to be paid or withheld shall be an expense of, and borne
solely by Auxilium, subject to Section 8.6(a) and the obligation of Actelion to
assume the responsibility of such expense in the event that such expense arises
as a result of any action by Actelion.

 

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

 

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Laws, of withholding taxes, VAT, or similar obligations resulting from payments
made under this Agreement, such recovery to be for the benefit of the Party
bearing such withholding tax or VAT.

 

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

 

8.8                       General Payment Procedures.  With the exception of the
Upfront Payment payable pursuant to Section 8.1, the receiving Party shall
invoice the paying Party for all amounts due to such receiving Party under this
Agreement, and such payments shall be made within twenty (20) days following the
receipt by the paying Party of an invoice from the receiving Party specifying
the amount due.

 

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

 

8.10                Legal Restrictions.  If at any time legal restrictions
prevent the remittance by Actelion of all or any part of amounts due under this
Agreement in any country, Actelion will have the right and option to make such
payment by depositing the amount thereof in local currency to an account in the
name of Auxilium in a bank or other depository in such country as directed by
Auxilium.  Actelion will consult with Auxilium regarding, and promptly notify
Auxilium of, any and all such arrangements.  Under such circumstances Actelion
shall not be liable for any late fees to the extent the subject payment is
deposited in a bank or other depository in such country as directed by Auxilium
prior to the date such payment is otherwise due hereunder.

 

8.11                Records; Audits.  Actelion and its Affiliates, its
sublicensees and subcontractors shall keep full, true and accurate records and
books of account containing all particulars that may be necessary for the
purpose of confirming the accuracy of, and calculating, as applicable, all
Royalty Payments and other amounts payable to Auxilium hereunder (including
records of Net Sales), and any other records reasonably required to be
maintained with respect to Actelion’s obligations under this Agreement, for a
minimum period of two (2) years or such longer period as required by Laws. 
Auxilium shall have a right to request an audit of Actelion in order to confirm
the accuracy of the foregoing (an “Audit”); provided, however, that Auxilium
shall only have the right to request such Audit one time during any given
calendar year.  Upon the written request by Auxilium to Audit Actelion, Auxilium
shall have the right to engage an independent, internationally recognized
accounting firm to perform a review as is reasonably necessary to enable such
accounting firm to calculate or otherwise confirm the accuracy of any of the
foregoing for the calendar year(s) requested by Auxilium; provided that

 

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(i) such accountants shall be given access to, and shall be permitted to examine
and copy such books and records of Actelion upon five (5) days’ prior written
notice to Actelion, and at all reasonable times on such business days, (ii)
prior to any such examination taking place, such accountants shall enter into a
confidentiality agreement with Actelion reasonably acceptable to Actelion in
order to keep all information and data contained in such books and records
strictly confidential and shall not disclose such information or copies of such
books and records to any third person including Auxilium, but shall only use the
same for the purpose of the reviews and/or calculations which they need to
perform in order to determine any amounts being reviewed, and (iii) such
accountants shall use reasonable efforts to minimize any disruption to
Actelion’s business.  Actelion shall make personnel reasonably available during
regular business hours to answer queries on all such books and records required
for the purpose of the Audit.  The accountants shall deliver a copy of their
findings to each of the Parties within ten (10) business days of the completion
of the review, and, in the absence of fraud or manifest error, the findings of
such accountant shall be final and binding on each of the Parties.  Any
underpayments by Actelion shall be paid to Auxilium within ten (10) business
days of notification of the results of such inspection.  Any overpayments made
by Actelion shall be refunded by Auxilium within ten (10) business days of
notification of the results of such inspection.  The cost of the accountants
shall be the responsibility of Auxilium unless the accountants’ calculation
shows that the actual royalties payable, Net Sales, and/or any other applicable
amount Audited hereunder to be different, by more than ten percent (10%), than
the amounts as previously calculated by Actelion.

 

ARTICLE 9
INTELLECTUAL PROPERTY MATTERS

 

9.1                       Ownership of Intellectual Property.

 

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

 

9.1.2                     Employees.  Each Party will require all of its and its
Affiliates’ employees to assign all Inventions that are developed, made or
conceived by such employees according to the ownership principles described in
Section 9.1.1 free and clear of all liens, encumbrances, charges,

 

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

 

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

 

9.3                       Patent Filings, Prosecution and Maintenance.

 

9.3.1                     Auxilium Patents.  Subject to, and without limiting
Actelion’s rights under, Section 9.4 of this Agreement, Auxilium shall have the
first right to prepare, file, prosecute and maintain (i) Auxilium Collaboration
Patents and (ii) all other Auxilium Patents, at its own cost and expense. 
Auxilium shall keep Actelion informed of the status of Auxilium Patents and will
provide Actelion with copies of all substantive documentation submitted to, or
received from, the patent offices in connection therewith.  With respect to any
substantive submissions that Auxilium is required to or otherwise intends to
submit to a patent office with respect to an Auxilium Patent, Auxilium shall
provide a draft of such submission to Actelion at least sixty (60) days) (or
such time as is possible) prior to the deadline for, or the intended filing date
of, such submission, whichever is earlier (or as soon as reasonably possible if
Auxilium has less than sixty (60) days notice of a deadline for submission). 
Actelion shall have the right to review and comment upon any such submission by
Auxilium to a patent office, and will provide such comments within twenty (20)
days after receiving such submission (provided, that if no comments are received
within such twenty (20) day period, then Auxilium may proceed with such
submission).  Auxilium shall consider in good faith any suggestions or
recommendations of Actelion concerning the preparation, filing, prosecution and
maintenance thereof.  The Parties shall cooperate reasonably in the prosecution
of all Auxilium Patents and shall share all material information relating
thereto promptly after receipt of such information.  If, during the Term,
Auxilium (a) intends to allow any Auxilium Patent to which Actelion has a
license under this Agreement to expire or intends to otherwise abandon any such
Auxilium Patent, or (b) decides not to prepare or file patent applications
covering Auxilium Inventions in the Territory to which Actelion would otherwise
have a license under this Agreement, Auxilium shall notify Actelion of such
intention or decision at least thirty (30) days (or as soon as

 

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possible if less than thirty (30) days) prior to any filing or payment due date,
or any other date that requires action, in connection with such Auxilium Patent,
and Actelion shall thereupon have the right, but not the obligation, to assume
responsibility for the preparation, filing, prosecution or maintenance thereof
in the Territory at its sole cost and expense (provided that Actelion may
thereafter at any time decide not to pursue any such Auxilium Patent and
Auxilium hereby agrees to reasonably cooperate with Actelion in order to enable
Actelion to cease such preparation, filing, prosecution or maintenance), in the
name of Auxilium (such patents and patent applications shall thereafter be
referred to as “Actelion Funded Patent Rights,” and, at Actelion’s election,
such Actelion Funded Patent Rights shall not be considered part of the Auxilium
Patents for purposes of determining whether a claim constitutes a Valid Claim
(i.e. the Royalty Term will not be extended as a result of a Valid Claim
included within the Actelion Funded Patent Right); provided that, with respect
to any international Patent applications included in the Auxilium Patents
described in the foregoing sentence, Auxilium shall not allow such an
international Patent application to expire or otherwise be abandoned until such
international Patent application is about to enter the national stage, at which
time Auxilium shall notify Actelion of such intention or decision at least
thirty (30) days (or as soon as possible if less than thirty (30) days) prior to
any filing or payment due date, or any other date that requires action, in
connection with such international Patent application in a country or region in
the Territory that is designated in such international Patent, and Actelion
shall have the right to, but not the obligation, to assume responsibility for
the preparation, filing, prosecution or maintenance of the national phase of
such an international Patent in the Territory at its sole cost and expense, in
the name of Auxilium (rendering such international Patent, an “Actelion Funded
Patent Rights”).  Auxilium agrees to use Commercially Reasonable Efforts with
respect to any decision to allow an Auxilium Patent to expire or to otherwise go
abandoned, or with respect to any decision not to prepare or file patent
applications covering Auxilium Inventions.

 

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

 

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decision at least thirty (30) days (or as soon as possible if less than thirty
(30) days) prior to any filing or payment due date, or any other date that
requires action, in connection with such Abandoned Collaboration Patent or
Abandoned Joint Invention, and Actelion shall thereupon have the right, but not
the obligation, to assume responsibility for the preparation, filing,
prosecution or maintenance thereof at its sole cost and expense, in the name of
Actelion and such Abandoned Collaboration Patents shall not be considered part
of the Joint Collaboration Patents for purposes of determining whether a claim
constitutes a Valid Claim (i.e. the Royalty Term will not be extended as a
result of a Valid Claim included within the Abandoned Collaboration Patents).

 

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

 

9.3.4                     Cooperation.  The Parties agree to cooperate in the
preparation, filing, prosecution and maintenance of all Patents under this
Section 9.3, including obtaining and executing necessary powers of attorney and
assignments by the named inventors, providing relevant technical

 

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reports to the filing Party concerning the Invention disclosed in such Patent,
obtaining execution of such other documents which are needed in the filing and
prosecution of such Patent, and, as requested by a Party, updating each other
regarding the status of such Patent, and shall cooperate with the other Party so
far as reasonably necessary with respect to furnishing all information and data
in its possession reasonably necessary to obtain or maintain such Patents.

 

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

 

9.4                       Defense and Enforcement of Patents.

 

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

 

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

 

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

 

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

 

9.4.2                     Prosecution of Infringers.

 

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

 

(b)                                 Enforcement of Patents.

 

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

 

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

 

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(c)                                  Cooperation; Damages.

 

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

 

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

 

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

 

(iv)                              Any settlements, damages or other monetary
awards (a “Recovery”) recovered pursuant to a suit, action or proceeding brought
pursuant to Section 9.4.2(b) will be allocated first to the costs and expenses
of the Party taking such action, and second, to the costs and expenses (if any)
of the other Party, with any remaining amounts (if any) to be allocated as
follows: (i) to the extent that such Recovery is a payment for lost sales of the
Product in the Field in the Territory, any such Recovery will be shared equally
by Auxilium and Actelion and (ii) all remaining Recoveries shall be payable to
the Party taking such action to the extent such remaining Recoveries relate
solely to the Product in the Field in the Territory (and, for purposes of
clarity, all remaining Recoveries related to the Product outside the Field or
outside the Territory shall be payable to Auxilium).

 

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

 

9.5                       Patent Term Extensions.  As between Auxilium and
Actelion, Auxilium shall have the exclusive right, but not the obligation, to
seek, in Actelion’s name if so required, Patent Term Extensions (including any
supplemental protection certificates and the like available under applicable
Law) in any country in the Territory in relation to the Auxilium Patents
(including Joint Collaboration Patents).  Actelion and Auxilium shall cooperate
in

 

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connection with all such activities.  Auxilium, its agents and attorneys will
give due consideration to all suggestions and comments of Actelion regarding any
such activities, but in the event of a disagreement between the Parties,
Auxilium will have the final decision making authority.

 

9.6                       Patent Marking.  Actelion shall mark the Finished
Product marketed and sold by Actelion (or its Affiliate or distributor)
hereunder with appropriate patent numbers or indicia, to the extent not
prohibited by Law in a given country in the Territory.

 

ARTICLE 10
REPRESENTATIONS, WARRANTIES AND COVENANTS

 

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

 

10.1.1              Corporate Existence and Power.  It is a company or
corporation duly organized, validly existing, and in good standing under the
laws of the jurisdiction in which it is incorporated, and has full corporate
power and authority and the legal right to own and operate its property and
assets and to carry on its business as it is now being conducted and as
contemplated in this Agreement, including the right to grant the licenses
granted by it hereunder.

 

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

 

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

 

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

 

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10.2                Additional Representations, Warranties and Covenants of
Auxilium.  Auxilium hereby represents, warrants and covenants to Actelion that,
as of the Effective Date, except as set forth on Schedule 10.2:

 

10.2.1              Except for Canada (NDS number 147788), Auxilium has not
filed any Marketing Authorization Applications with a Governmental Authority in
the Territory for the sale of the Finished Product in the Territory.

 

10.2.2              To its knowledge, Auxilium is the owner or licensee of the
Auxilium Patents, Auxilium Know-How, Product Trademark and all other rights
necessary to make and use the Bulk Product and use and sell the Finished
Product.

 

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

 

10.2.4              Neither Auxilium nor, to the knowledge of Auxilium, its
subcontractors, has received written notice of any proceedings pending before or
threatened by any Regulatory Authority with respect to the Product or any
Facility where the Drug Substance or Bulk Product is Manufactured.

 

10.2.5              To the knowledge of Auxilium, (a) the issued patents
encompassed within the Auxilium Patents are valid and enforceable patents, and
(b) there are no facts which would render the patent applications encompassed
within the Auxilium Patents, if and when issued, invalid or unenforceable. To
the knowledge of Auxilium, no Third Party (i) is infringing any such Auxilium
Patents or has misappropriated any Auxilium Technology or (ii) has challenged
the ownership, scope, duration, validity, enforceability, priority, or
Auxilium’s right to use or license any Auxilium Technology.

 

10.2.6              Schedule 1.11 contains a complete and correct list of the
Auxilium Patents that are Controlled by Auxilium (or its Affiliates) as of the
Effective Date.

 

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

 

10.2.8              There are no claims, judgments or settlements against or
owed by Auxilium, nor any pending reissue, reexamination, interference,
opposition or similar proceedings with respect to Auxilium’s Trademark
XIAFLEX® and XIAPEX™ or Auxilium Technology, and Auxilium has not received
notice as of the Effective Date of any threatened claims or litigation or any
reissue, reexamination, interference, opposition or similar proceedings seeking
to invalidate or otherwise challenge the Auxilium Patent rights, Auxilium’s
Trademark XIAFLEX® and XIAPEX™ or Auxilium Know-How.

 

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10.2.9              To the knowledge of Auxilium, the use, sale, offer for sale,
or importation by Auxilium or Actelion (or their respective Affiliates), as
applicable, of the Finished Product (as the Bulk Product exists on the Effective
Date, and excluding, for the avoidance of doubt, any additional technology that
may be combined or incorporated therewith, or any future improvements or
enhancements to the Bulk Product), (i) does not infringe any issued patent of
any Third Party and (ii) does not misappropriate any Know-How of any Third Party
and (iii) will not infringe any claim, if and when issued, within any patent
application of any Third Party published as of the Effective Date. The
Manufacture by Auxilium (or its Affiliates), as applicable, of the Bulk Product
(as the Bulk Product exists on the Effective Date, and excluding, for the
avoidance of doubt, any additional technology that may be combined or
incorporated therewith, or any future improvements or enhancements to the Bulk
Product), (a) does not infringe any issued patent of any Third Party, (b) does
not misappropriate any Know-How of any Third Party, and (c) will not infringe
any claim, if and when issued, within any patent application of any Third Party
published as of the Effective Date.

 

10.2.10       All Bulk Product Manufactured and supplied hereunder by, or under
authority of, Auxilium shall be Manufactured and supplied such that:

 

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

 

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

 

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

 

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

 

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

 

10.2.11       To its knowledge, Auxilium has complied with all Laws in all
material respects, including any disclosure requirements, in connection with the
filing, prosecution and maintenance of the Auxilium Patents owned by Auxilium in
the Territory.

 

10.2.12       None of the rights of Auxilium or its Affiliates under the
Auxilium Patents owned by Auxilium were developed with federal funding from the
United States government or any other Governmental Authority.

 

10.2.13       Auxilium has obtained assignments from the inventors of all
inventorship rights relating to the Auxilium Patents which are owned by
Auxilium, and all such assignments of inventorship rights relating to such
Auxilium Patents are valid and enforceable. With respect to the

 

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Auxilium Patents that are the subject of the BTC License Agreement, to the
knowledge of Auxilium, BTC has obtained assignments from the inventors of all
inventorship rights relating to such Patents, and to the knowledge of Auxilium,
all such assignments are valid and enforceable.

 

10.3                Additional Representations, Warranties and Covenants of
Actelion as of the Effective Date.  Actelion hereby represents, warrants and
covenants to Auxilium that, as of the Effective Date:

 

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

 

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

 

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

 

10.3.4              All Finished Product Commercialized by, or under authority
of, Actelion:

 

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

 

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

 

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

 

10.3.5              Actelion shall conduct its Development, Commercialization,
Packaging and Labeling and all other activities related to this Agreement and
the Bulk Product or Finished Product, as applicable, in compliance with Laws and
Regulatory Approvals including but not limited to anti-corruption Laws,
including the U.S. Foreign Corrupt Practices Act and the UK Bribery Act 2010.

 

10.4                Additional Covenants of Actelion.  Actelion hereby covenants
to Auxilium that to the extent that any Actelion Applied Patents are
incorporated in the Bulk Product during the Term, Actelion shall ensure that:

 

(a)                                 To the knowledge of Actelion, no claim or
demand of any Person has been asserted in writing to Actelion that challenges
the rights of Actelion to use or license any of the Actelion Applied Technology.

 

(b)                                 To the knowledge of Actelion, Actelion has
complied with all Laws, in all material respects, including any disclosure
requirements, in connection with the filing, prosecution and maintenance of the
Actelion Applied Patents owned by Actelion in the Territory.

 

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(c)                                  To the knowledge of Actelion, none of the
rights of Actelion or its Affiliates under the Actelion Applied Patents owned by
Actelion were developed with federal funding from the United States government
or any other Governmental Authority.

 

(d)                                 Actelion has obtained assignments from the
inventors of all inventorship rights relating to the Actelion Applied Patents
which are owned by Actelion, and, to the knowledge of Actelion, all such
assignments of inventorship rights relating to such Actelion Applied Patents are
valid and enforceable.

 

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

 

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

 

ARTICLE 11
LIABILITY AND INDEMNIFICATION

 

11.1                Liability.

 

11.1.1              Subject to the terms and condition of this Agreement, and to
the extent finally determined pursuant to ARTICLE 16, Auxilium shall be liable
towards Actelion for (i) any breach by Auxilium of any of its representations,
warranties, covenants or obligations pursuant to this Agreement, (ii) the
negligence or willful misconduct by Auxilium or its Affiliates or their
respective officers, directors, employees, agents or consultants in performing
any obligations under this Agreement or (iii) any matter related to the
Development or Manufacturing of the Product hereunder (including, for clarity,
product liability Losses including defects in design and failure to warn, in
each case resulting therefrom) by Auxilium or its Affiliates or their respective
officers, directors, employees, agents, consultants or sublicensees.

 

11.1.2              Subject to the terms and condition of this Agreement, and to
the extent finally determined pursuant to ARTICLE 16, Actelion shall be liable
towards Auxilium for (i) any breach by Actelion of any of its representations,
warranties, covenants or obligations pursuant to this Agreement, (ii) the
negligence or willful misconduct by Actelion or its Affiliates or their
respective officers, directors, employees, agents or consultants in performing
any obligations under this Agreement or (iii) any matter related to the
Development of the Bulk Product or the Packaging and Labeling or
Commercialization of the Finished Product hereunder (including, for clarity,
product

 

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liability Losses including defects in design and failure to warn, in each case
resulting therefrom) by Actelion or its Affiliates or their respective officers,
directors, employees, agents, consultants or sublicensees.

 

11.2                Indemnification by Auxilium.  Auxilium hereby agrees to
save, indemnify, defend and hold Actelion, its Affiliates, and their respective
directors, officers, agents and employees harmless from and against any and all
losses, damages, liabilities, costs and expenses (including reasonable
attorneys’ fees and expenses) (collectively, “Losses”) arising in connection
with any and all charges, complaints, actions, suits, proceedings, hearings,
investigations, claims, demands, judgments, orders, decrees, stipulations or
injunctions by a Third Party (each a “Claim”) resulting or otherwise arising
from (i) any breach by Auxilium of any of its representations, warranties,
covenants or obligations pursuant to this Agreement, (ii) the negligence or
willful misconduct by Auxilium or its Affiliates or their respective officers,
directors, employees, agents or consultants in performing any obligations under
this Agreement or (iii) any matter related to the Development or Manufacturing
of the Bulk Product hereunder (including, for clarity, product liability Losses
including defects in design and failure to warn, in each case resulting
therefrom) by Auxilium or its Affiliates or their respective officers,
directors, employees, agents, consultants or sublicensees; in each case except
to the extent that such Losses are subject to indemnification by Actelion
pursuant to Section 11.3.

 

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

 

11.4                Indemnification Procedures.

 

11.4.1              Notice of Claim.  All indemnification claims in respect of
any indemnitee seeking indemnity under Section 11.2 or 11.3, as applicable
(collectively, the “Indemnitees” and each an “Indemnitee”) will be made solely
by the corresponding Party (the “Indemnified Party”).  The Indemnified Party
will give the indemnifying Party (the “Indemnifying Party”) prompt written
notice (an “Indemnification Claim Notice”) of any Losses and any legal
proceeding initiated by a Third Party against the Indemnified Party as to which
the Indemnified Party intends to make a request for indemnification under
Section 11.2 or 11.3, as applicable, but in no event will the Indemnifying Party
be liable for any Losses that result from any delay in providing such notice
which materially prejudices the defense of such proceeding.  Each
Indemnification Claim Notice shall contain a description of the claim and the
nature and amount of such Loss (to the extent that the nature and amount of such
Loss are known at such time).  Together with the Indemnification

 

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Claim Notice, the Indemnified Party will furnish promptly to the Indemnifying
Party copies of all notices and documents (including court papers) received by
any Indemnitee in connection with the Claim.

 

11.4.2              Control of Defense.  At its option, the Indemnifying Party
may assume the defense of any Claim subject to indemnification as provided for
in Section 11.2 or 11.3, as applicable, by giving written notice to the
Indemnified Party within thirty (30) days after the Indemnifying Party’s receipt
of an Indemnification Claim Notice.  Upon assuming the defense of a Claim, the
Indemnifying Party may appoint as lead counsel in the defense of the Claim any
legal counsel it selects, and such Indemnifying Party shall thereafter continue
to defend such Claim in good faith.  Should the Indemnifying Party assume the
defense of a Claim (and continue to defend such Claim in good faith), the
Indemnifying Party will not be liable to the Indemnified Party or any other
Indemnitee for any legal expenses subsequently incurred by such Indemnified
Party or other Indemnitee in connection with the analysis, defense or settlement
of the Claim, unless the Indemnifying Party has failed to assume the defense and
employ counsel in accordance with this Section 11.4.

 

11.4.3              Right to Participate in Defense.  Without limiting
Section 11.4.2, any Indemnitee will be entitled to participate in the defense of
a Claim for which it has sought indemnification hereunder and to employ counsel
of its choice for such purpose; provided, however, that such employment will be
at the Indemnitee’s own expense unless (i) the employment thereof has been
specifically authorized by the Indemnifying Party in writing, or (ii) the
Indemnifying Party has failed to assume the defense (or continue to defend such
Claim in good faith) and employ counsel in accordance with this Section 11.4, in
which case the Indemnified Party will be allowed to control the defense.

 

11.4.4              Settlement.  With respect to any Losses relating solely to
the payment of money damages in connection with a Claim and that will not result
in the Indemnitee becoming subject to injunctive or other relief or otherwise
adversely affect the business of the Indemnitee in any manner, and as to which
the Indemnifying Party will have acknowledged in writing the obligation to
indemnify the Indemnitee hereunder, the Indemnifying Party will have the sole
right to consent to the entry of any judgment, enter into any settlement or
otherwise dispose of such Loss, on such terms as the Indemnifying Party, in its
reasonable discretion, will deem appropriate (provided, however, that such terms
shall include a complete and unconditional release of the Indemnified Party from
all liability with respect thereto), and will transfer to the Indemnified Party
all amounts which said Indemnified Party will be liable to pay prior to the time
of the entry of judgment.  With respect to all other Losses in connection with
Claims, where the Indemnifying Party has assumed the defense of the Claim in
accordance with Section 11.4.2, the Indemnifying Party will have authority to
consent to the entry of any judgment, enter into any settlement or otherwise
dispose of such Loss, provided it obtains the prior written consent of the
Indemnified Party (which consent will be at the Indemnified Party’s reasonable
discretion).  The Indemnifying Party that has assumed the defense of (and
continues to defend) the Claim in accordance with Section 11.4.2 will not be
liable for any settlement or other disposition of a Loss by an Indemnitee that
is reached without the written consent of such Indemnifying Party.  Regardless
of whether the Indemnifying Party chooses to defend or prosecute any Claim, no
Indemnitee will admit any liability with respect to, or settle, compromise or
discharge, any Claim without first offering to the

 

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Indemnifying Party the opportunity to assume the defense of the Claim in
accordance with Section 11.4.2.

 

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

 

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

 

11.5                Limitation of Liability.  NEITHER PARTY SHALL BE LIABLE TO
THE OTHER FOR ANY CONSEQUENTIAL, INCIDENTAL, OR INDIRECT DAMAGES ARISING FROM OR
RELATING TO ANY BREACH OF THIS AGREEMENT, REGARDLESS OF ANY NOTICE OF THE
POSSIBILITY OF SUCH DAMAGES.  NOTWITHSTANDING THE FOREGOING, NOTHING IN THIS
SECTION 11.5 IS INTENDED TO OR SHALL LIMIT OR RESTRICT THE INDEMNIFICATION
RIGHTS OR OBLIGATIONS OF ANY PARTY UNDER SECTION 11.2 or 11.3, OR DAMAGES
AVAILABLE FOR A PARTY’S BREACH OF CONFIDENTIALITY OBLIGATIONS UNDER ARTICLE 12. 
EXCEPT AS EXPRESSLY SET FORTH IN ANY REPRESENTATION OR WARRANTY IN ARTICLE 10,
ACTELION ACKNOWLEDGES AND AGREES THAT AUXILIUM HAS MADE NO REPRESENTATIONS OR
WARRANTIES WITH RESPECT TO, AND ACTELION SHALL HAVE NO CLAIM OR RIGHT (INCLUDING
WITH RESPECT TO INDEMNIFICATION PURSUANT TO THIS ARTICLE 11 (OR OTHERWISE)) WITH
RESPECT TO, ANY INFORMATION, DOCUMENTS OR MATERIALS FURNISHED TO OR FOR ACTELION
BY AUXILIUM, ANY OF ITS AFFILIATES, OR ANY OF ITS OR THEIR OFFICERS, DIRECTORS,
EMPLOYEES, AGENTS OR ADVISORS, INCLUDING THE CONFIDENTIAL INFORMATION PACKAGE
REGARDING THE PRODUCT, BULK PRODUCT OR FINISHED PRODUCT PROVIDED TO ACTELION AND
ANY INFORMATION, DOCUMENTS OR MATERIAL MADE AVAILABLE TO ACTELION IN ANY “DATA
ROOM”, MANAGEMENT PRESENTATION OR ANY OTHER FORM IN EXPECTATION OF THE
TRANSACTION AND COLLABORATION CONTEMPLATED HEREBY.

 

11.6                Insurance.  Each Party shall (provided that either Party
shall be allowed to self-insure) procure and maintain insurance, including
clinical trials insurance and product liability

 

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

 

ARTICLE 12
CONFIDENTIALITY

 

12.1                Confidential Information.  As used in this Agreement, the
term “Confidential Information” means all information, whether it be written or
oral, including all production schedules, lines of products, volumes of
business, processes, new product developments, product designs, formulae,
technical information, laboratory data, clinical data, patent information,
know-how, trade secrets, financial and strategic information, marketing and
promotional information and data, and other material relating to any products,
projects or processes of one Party (the “Disclosing Party”) that is provided to,
or otherwise obtained by, the other Party (the “Receiving Party”) in connection
with this Agreement (including information exchanged prior to the date hereof in
connection with the transactions set forth in this Agreement, including any
information disclosed by either Party pursuant to the Confidentiality Agreement
between the Parties dated April 14, 2011).  Notwithstanding the foregoing
sentence, Confidential Information shall not include any information or
materials that:

 

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

 

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

 

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

 

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

 

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

 

12.2                Confidentiality Obligations.  Each of Actelion and Auxilium
shall keep all Confidential Information received from or on behalf of the other
Party with the same degree of care with which it maintains the confidentiality
of its own Confidential Information, but in all cases no less than a reasonable
degree of care.  Neither Party shall use such Confidential Information for any
purpose other than in performance of this Agreement or disclose the same to any
other Person other than to such of its and its Affiliates’ directors, managers,
employees, independent contractors, agents, consultants or, solely with respect
to Auxilium, its sublicensees who have a need to know such Confidential
Information to implement the terms of this Agreement or enforce its rights under
this Agreement; provided, however, that a Receiving Party shall advise any of
its and its Affiliates’ directors, managers, employees, independent contractors,
agents, consultants or sublicensees who receives such Confidential Information
of the confidential nature thereof and of the obligations contained in this
Agreement relating thereto, and the Receiving Party shall ensure (including, in
the case of a Third Party, by means of a written agreement with such Third Party
having terms at least as protective as those contained in this ARTICLE 12) that
all such directors, managers, employees, independent contractors, agents,
consultants or sublicensees comply with such obligations.  Upon termination of
this Agreement, the Receiving Party shall return or destroy all documents, tapes
or other media containing Confidential Information of the Disclosing Party that
remain in the possession of the Receiving Party or its directors, managers,
employees, independent contractors, agents, consultants or sublicensees, except
that the Receiving Party may keep one copy of the Confidential Information,
solely for archival purposes and subject at all times to the obligations of
confidentiality and non-use described herein.  Such archival copy shall be
deemed to be the property of the Disclosing Party, and shall continue to be
subject to the provisions of this Article 12.

 

12.3                Permitted Disclosure and Use.  Notwithstanding Section 12.2,
(i) either Party may disclose Confidential Information belonging to the other
Party only to the extent such disclosure is reasonably necessary to: (a) comply
with or enforce any of the provisions of this Agreement; or (b) comply with
Laws; and (ii) Auxilium may disclose Confidential Information belonging to
Actelion related to a Product only to the extent such disclosure is reasonably
necessary to obtain or maintain regulatory approval of a Product, as applicable,
to the extent such disclosure is made to a Governmental Authority.  If a Party
deems it necessary to disclose Confidential Information of the other Party
pursuant to this Section 12.3, such Party shall give reasonable advance written
notice of such disclosure to the other Party to permit such other Party
sufficient opportunity to object to such disclosure or to take measures to
ensure confidential treatment of such information, including seeking a
protective order or other appropriate remedy.  Notwithstanding Section 12.2,
Auxilium may also disclose Confidential Information belonging to Actelion
related to the Bulk Product or Finished Product (X) to BTC pursuant to the BTC
License Agreement and (Y) to Third Parties in connection with the

 

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development or commercialization of the Bulk Product or Finished Product outside
of the Field or outside of the Territory (provided that such Third Parties are
bound by written agreements having terms at least as protective as those
contained in this ARTICLE 12 with respect to keeping such Confidential
Information confidential).

 

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

 

12.5                Publicity; Filing of this Agreement.

 

12.5.1              Publicity.  The press release to be issued in connection
with the transactions is set forth on Schedule 12.5.1.  Except as otherwise
provided in this Section 12.5, each Party shall maintain the confidentiality of
all provisions of this Agreement, and without the prior written consent of the
other Party, which consent shall not be unreasonably withheld, neither Party nor
its respective Affiliates shall make any press release or other public
announcement of or otherwise disclose the provisions of this Agreement, except
for: (i) disclosure to those of its directors, officers, employees, accountants,
attorneys, auditors, underwriters, lenders and other financing sources,
potential strategic partners, advisors, agents and sublicensees whose duties
reasonably require them to have access to this Agreement, provided that such
directors, officers, employees, accountants, attorneys, underwriters, lenders
and other financing sources, advisors, agents or sublicensees are required to
maintain the confidentiality of this Agreement, (ii) disclosures required by
Nasdaq regulation or any listing agreement with a national securities exchange,
in which case the disclosing Party shall provide the nondisclosing Party with at
least forty eight (48) hours’ notice unless otherwise not practicable, but in
any event no later than the time the disclosure required by such Nasdaq
regulation or listing agreement is made, (iii) disclosures as may be required by
Laws, in which case the disclosing Party shall provide the nondisclosing Party
with prompt advance notice of such disclosure and cooperate with the
nondisclosing Party to seek a protective order or other appropriate remedy,
including a request for confidential treatment in the case of a filing with the
Securities and Exchange Commission, (iv) the report on Form 8-K, which may be
filed by Auxilium or an Affiliate of Auxilium setting forth the press release
referred to above, and/or the Redacted Agreement (as defined in Section 12.5.2),
and the report on Form 10-K or Form 10-Q, which may be filed by Auxilium or an
Affiliate of Auxilium setting forth the Redacted Agreement, (v) disclosures that
are consistent with or complementary to those described in clause (vi) but which
do not contain any Confidential Information of the other Party; and (vii) other
disclosures for which consent has previously been given.  A Party may publicly
disclose without regard to the preceding requirements of this Section 12.5 any
information that was previously publicly disclosed pursuant to this
Section 12.5.

 

12.5.2              Redacted Agreement.  Auxilium shall prepare a redacted copy
of this Agreement (“Redacted Agreement”) which it shall provide to Actelion for
comments, which comments Auxilium shall consider in good faith; provided, that
Auxilium shall have final discretion with regards to the content of the Redacted
Agreement.  In the event Actelion is obligated to file this Agreement it shall
file the Redacted Agreement as filed by Auxilium.

 

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

 

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

 

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

 

ARTICLE 13
TERM AND TERMINATION

 

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

 

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

 

13.3                Termination as a Result of Bankruptcy.  Each Party shall
have the right to terminate this Agreement upon written notice as a result of
the filing or institution of

 

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bankruptcy, reorganization, liquidation or receivership proceedings, or upon an
assignment of a substantial portion of the assets for the benefit of creditors
by the other Party; provided that such termination shall be effective only if
such proceeding is not dismissed within ninety (90) days after the filing
thereof.

 

13.4                Termination by Auxilium.  Without limitation of its other
rights under this ARTICLE 13, Auxilium will be permitted to terminate this
Agreement: (A) in its entirety upon written notice to Actelion, effective upon
receipt, if Actelion or any of its Affiliates or subcontractors, directly or
indirectly, (i) initiate or request an interference or opposition proceeding
with respect to, (ii) make, file or maintain any claim, demand, lawsuit or cause
of action to challenge the validity or enforceability of, or (iii) oppose any
extension of, or the grant of a supplementary protection certificate with
respect to, any Auxilium Patent or Auxilium Manufacturing Patent (each of clause
(i) or (ii), a “Patent Challenge”); (B) in its entirety or on a
country-by-country basis, as applicable, pursuant to the provisions of
Section 5.8.2; and (C) in its entirety if, for two (2) consecutive years,
Actelion has not reached at least seventy five percent (75%) of the minimum
Finished Product sales reflected in Schedule 6.3.1.

 

13.5                Termination by Actelion.  Actelion may terminate this
Agreement in whole, or on a country by country basis, for any reason with prior
written notice of one-hundred and eighty (180) days; provided that such notice
may not be given prior to the second anniversary of the First Commercial Sale
without any termination payments or other compensation payable to Auxilium
except as specifically set forth in Article 14 with respect to pending Purchase
Orders.

 

ARTICLE 14
EFFECTS OF TERMINATION

 

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

 

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

 

14.1.2              Assignments.  Actelion will promptly, in each case within
sixty (60) days after receipt of Auxilium’s request, and at no cost to Auxilium:

 

(a)                                 assign to Auxilium all of Actelion’s right,
title and interest in and to any agreements (or portions thereof) between
Actelion and Third Parties that relate to the Development of the Bulk Product or
Commercialization of the Finished Product;

 

(b)                                 assign to Auxilium all of Actelion’s right,
title and interest in and to any (i)Promotional Materials and (ii) copyrights
and trademarks (including the Product Trademarks), including any goodwill
associated therewith, and any registrations and design patents for the
foregoing, and (iii) any Internet domain name registrations for such trademarks
and slogans, all to the extent solely related to the Finished Product; provided,
however, in the event Auxilium

 

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exercises such right to have assigned such Promotional Materials, Actelion shall
grant, and hereby does grant, a royalty-free right and license to any
housemarks, trademarks, names and logos of Actelion contained therein for a
period of twelve (12) months in order to use such Promotional Materials in
connection with the Commercialization of the Finished Product;

 

(c)                                  assign to Auxilium, the management and
continued performance of any clinical trials for the Bulk Product ongoing
hereunder as of the effective date of such termination in respect of which
Auxilium shall assume full financial responsibility from and after the effective
date of such termination;

 

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

 

(e)                                  transfer to Auxilium all of Actelion’s
right, title and interest in and to any and all Development Data and Promotional
Commercialization Data Controlled by Actelion for the Bulk Product or Finished
Product, as the case may be; and

 

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

 

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

 

14.1.3              Disclosure and Delivery.  Actelion will promptly transfer to
Auxilium copies of any physical embodiment of any Actelion Applied Know-How, to
the extent then used in connection with the Development of the Bulk Product or
Commercialization of the Finished Product; such transfer shall be effected by
the delivery of material documents, to the extent such Actelion Applied Know-How
is embodied in such documents, and to the extent that Actelion Applied Know-How
is not fully embodied in such documents, Actelion shall make its employees and
agents who have knowledge of such Actelion Applied Know-How in addition to that
embodied in documents available to Auxilium for interviews, demonstrations and
training to effect such transfer in a manner sufficient to enable Auxilium to
practice such Actelion Applied Know-How but only in a manner as set out as
follows in this Section.  The appropriate technical teams at Auxilium and
Actelion will meet to plan transfer for the Actelion Applied Know-How as
follows: (a) Actelion’s designated representative(s) for the Bulk Product will
meet with representatives from

 

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Auxilium to answer questions with respect to the Actelion Applied Know-How and
establish a plan for the transfer for such Actelion Applied Know-How;
(b) Actelion will allocate adequate appropriately qualified representatives to
work with Auxilium to review the Actelion Applied Know-How to enable the
completion of the transfer within thirty (30) days of the completion of the
initial transfer planning meetings to the extent reasonable, but in any event no
longer than sixty (60) days thereafter.

 

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

 

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

 

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

 

14.3                Expiration of this Agreement.

 

14.3.1              Upon expiration of this Agreement pursuant to Section 13.1
with respect to a given country and Finished Product in the Territory, all
rights and licenses granted to Actelion shall terminate with respect to such
country and the provisions of Sections 14.1.2(c) and 14.1.3 shall apply to such
country; provided, however, that from and after the date of such expiration,
Auxilium shall grant, and hereby does grant, to Actelion (i) a fully paid,
non-exclusive, perpetual license under the Auxilium Technology solely to
Commercialize the Finished Product in such country for sale in the Field in such
country, and (ii) subject to Section 14.3.2, a non-exclusive, royalty-bearing
license with regard to the Product Trademark and Product Trade Dress solely to
(a) Commercialize the Finished Product in such country for sale in the Field in
such country and (b) Package and Label the Finished Product for
Commercialization by Actelion in the Field in such country.

 

14.3.2              For so long as Actelion is Commercializing the Finished
Product under the Product Trademark and Product Trade Dress pursuant to the
license granted to Actelion in Section 14.3.1(ii):  (a) Actelion shall pay
Auxilium a [**] percent ([**]%) royalty on annual Net Sales of Finished Product
in all such expired countries and (b) without limitation of Section 14.5, the
following provisions shall remain in full force and effect:  Articles: 11, 12
and 16 and Sections:

 

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

 

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2.5.1, 2.7.1, 2.7.2, 5.1.3, 5.5.1, 5.6, 6.5 — 6.8 (inclusive), 6.10, 7.15, 8.4,
8.6 — 8.11 (inclusive), 14.3 and 15.4.

 

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

 

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

 

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

 

ARTICLE 15
DISPUTE RESOLUTION

 

15.1                Disputes.  The Parties recognize that, from time to time
during the Term, disputes may arise as to certain matters which relate to either
Party’s rights and/or obligations hereunder.  It is the objective of the Parties
to establish procedures to facilitate the resolution of disputes arising under
this Agreement in an expedient manner by mutual cooperation and

 

78

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without resort to litigation.  To accomplish this objective, the Parties agree
to follow the procedures set forth in this ARTICLE 15 to resolve any controversy
or claim arising out of, relating to or in connection with any provision of this
Agreement (other than a dispute addressed in Section 3.4).

 

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

 

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

 

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

 

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

 

ARTICLE 16
MISCELLANEOUS

 

16.1                Entire Agreement; Amendment.  This Agreement, including the
Exhibits and Schedules hereto, sets forth the complete, final and exclusive
agreement and all the covenants, promises, agreements, warranties,
representations, conditions and understandings between the Parties hereto with
respect to the subject matter hereof and supersedes, as of the Effective Date,
all prior agreements and understandings between the Parties with respect to the
subject matter hereof, including the Confidential Disclosure Agreement between
the Parties dated April 14, 2011 (which shall remain effective prior to the
Effective Date).  There are no covenants, promises, agreements, warranties,
representations, conditions or understandings, either oral or written, between
the Parties other than as are set forth herein and therein.  No subsequent
alteration, amendment, change or addition to this Agreement shall be binding
upon the Parties unless reduced to writing and signed by an authorized
representative of each Party.

 

79

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

 

16.3        Notices.  Any notice required or permitted to be given under this
Agreement shall be in writing, shall specifically refer to this Agreement, and
shall be addressed to the appropriate Party at the address specified below or
such other address as may be specified by such Party in writing in accordance
with this Section 16.3, and shall be deemed to have been given for all purposes
(i) when delivered, if hand-delivered or sent by facsimile on a business day,
(ii) on the next business day if sent by a reputable international overnight
courier service, or (iii) five (5) business days after mailing, if mailed by
first-class certified or registered airmail, postage prepaid, return receipt
requested.  Unless otherwise specified in writing, the mailing addresses of the
Parties shall be as described below:

 

If to Auxilium:                                                            
Auxilium Pharmaceuticals, Inc.

40 Valley Stream Parkway

Malvern, Pennsylvania 19355

U.S.A.

Attention: General Counsel

Fax: 1-484-321-5996

 

With a copy to:                                                     Morgan,
Lewis & Bockius LLP

502 Carnegie Center

Princeton, New Jersey 08540

U.S.A.

Attn: Randall B. Sunberg

Fax: 1-609-919-6701

 

If to Actelion:                                                             
Actelion Pharmaceuticals Ltd

Gewerbestrasse 16

CH-4123 Allschwil

Switzerland

Attention: Chief Executive Officer

Fax: +41 61 565 8900

 

With a copy to:                                                     Actelion
Pharmaceuticals Ltd

Gewerbestrasse 16

CH-4123 Allschwil

 

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Switzerland

Attn: General Counsel

Fax: +41 61 565 6691

 

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

 

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

 

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

 

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

 

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

 

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

 

16.10      English Language; Governing Law.  This Agreement was prepared in the
English language, which language shall govern the interpretation of, and any
dispute regarding, the terms of this Agreement.  This Agreement and all disputes
arising out of or related to this Agreement or any breach hereof shall be
governed by and construed under the laws of the State

 

81

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of New York, without giving effect to any choice of law principles that would
require the application of the laws of a different state.

 

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

 

[No Further Text on This Page]

 

82

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IN WITNESS WHEREOF, the Parties have executed this Agreement by their duly
authorized representatives as of the Effective Date.

 

 

 

 

 

 

ACTELION PHARMACEUTICALS LTD

 

AUXILIUM PHARMACEUTICALS, INC.

 

 

 

 

 

 

 

 

 

By:

/s/ Nicholas Franco

 

By:

/s/ Adrian Adams

Name:

Nicholas Franco

 

Name:

Adrian Adams

Title:

EVP, Chief Business Development Officer

 

Title:

CEO & President

 

 

ACTELION PHARMACEUTICALS LTD

 

AUXILIUM INTERNATIONAL HOLDINGS, INC.

 

 

 

 

 

 

By:

/s/ Jörg Felix

 

By:

/s/ James Englund

Name:

Jörg Felix

 

Name:

James Englund

Title:

Group Head of Treasury & Tax

 

Title:

President Auxl. Int’l Holdings

 

Signature Page to Collaboration Agreement

 

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Schedule 1.11 — Auxilium Patents

 

[**]

 

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

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

 

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

 

Schedule 6.3.1 — Minimum Annual Finished Product Sales Commitments
(expressed as Units of Product)

 

[**]

 

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

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

 

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

 

Schedule 7.6 — Forecast Methodology

 

Q1 (months 1 -3)

 

Q2 (months 4 -6)

 

Q3 (months 7 -9)

 

Q4 – Q8 (months 10 – 24)

Currently being filled

 

Purchase Order submitted for this Quarter simultaneously with Forecast
submission

 

May not vary by more than +/- 25% when Q3 becomes Q2 via next Forecast and
Purchase Order

 

Non-binding, good faith estimates

 

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Schedule 7.11 — Shortages

 

[g92901kk19i001.jpg]

 

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Schedule 10.2 — Disclosure Schedule

 

[**]

 

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

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

 

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Schedule 10.2.7 — Auxilium Trademarks

 

The mark “XIAFLEX”

 

AU 859702 (registered)

BR 099519690 (registered)

CA 1340817 (allowed)

MX 1116963 (registered)

 

The mark “XIAPEX”

 

CA Appl’n No. 1523126

 

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Schedule 12.5.1 — Press Release

 

GRAPHIC [g92901kk21i001.jpg]

 

GRAPHIC [g92901kk21i002.jpg]

 

 

AUXILIUM PHARMACEUTICALS, INC. AND ACTELION PHARMACEUTICALS LTD. ENTER A
COLLABORATION AGREEMENT FOR XIAFLEX® IN CANADA, AUSTRALIA, BRAZIL AND MEXICO

 

Actelion Obtains Exclusive Rights for Two Potential Indications

Auxilium to Receive up to $68.5 million in Aggregate Upfront, Regulatory,
Pricing, Reimbursement and Sales Milestones

 

Malvern, PA, and Allschwil/Basel, Switzerland, (February 23, 2012) — Auxilium
Pharmaceuticals, Inc. (NASDAQ: AUXL) and Actelion Pharmaceuticals Ltd. (SWX:
ATLN.S) announced today that they have entered into a long-term partnership for
the development, supply and commercialization of XIAFLEX® (collagenase
clostridium histolyticum), a novel, first-in-class biologic for the potential
treatment of Dupuytren’s contracture and Peyronie’s disease.  Under the terms of
the agreement, Actelion will receive exclusive rights to commercialize XIAFLEX
for the treatment of Dupuytren’s contracture and Peyronie’s disease in Canada,
Australia, Brazil and Mexico upon receipt of the respective regulatory
approvals. Actelion will be primarily responsible for the applicable regulatory
and commercialization activities for XIAFLEX in these countries.

 

XIAFLEX has been approved by the U.S. Food and Drug Administration and the
European Medicines Agency as a treatment for Dupuytren’s contracture, and is
also in development in Japan. In addition, XIAFLEX has been accepted for review
by Health Canada for the treatment of Dupuytren’s contracture in Canada and
regulatory action is expected in the second half of 2012.  Actelion expects to
file for approval of XIAFLEX for the treatment of Dupuytren’s contracture in
Australia, Brazil and Mexico over the next 12 months.  XIAFLEX is also being
evaluated in a global phase III development program for Peyronie’s disease with
top-line data expected in late second quarter 2012.

 

“Today, Actelion and Auxilium have forged a partnership, which we believe has
the opportunity to offer, subject to regulatory approval, the first, effective
nonsurgical treatment for two diseases in multiple new geographies,” said Adrian
Adams, Chief Executive Officer and President of Auxilium.  “With the strength of
Actelion’s commercialization and development organization in these diverse and
far-ranging markets, this relationship should further enhance our ability to
bring this potentially groundbreaking product to a global audience.”

 

Philippe de Lavenne, VP, Head of Europe, Canada, Latin America, Middle East &
Africa commented: “This tailored partnership has been designed to leverage
Actelion’s regulatory and

 

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marketing expertise, as well as our established local operating companies in
these markets. Auxilium has done an outstanding job in the development of this
innovative product, and we look forward to contributing to making XIAFLEX a
global success.”

 

Under the terms of the agreement, Actelion will pay Auxilium $10 million upfront
and will also make up to $16 million in potential regulatory, pricing, and
reimbursement milestone payments and $42.5 million in potential sales milestone
payments.  Auxilium will also receive increasing tiered double-digit royalties
based on sales of XIAFLEX in Actelion’ territories and will supply product to
Actelion at a predetermined cost.

 

Auxilium will remain primarily responsible for the global development of XIAFLEX
in Peyronie’s disease and will be responsible for all clinical and commercial
drug manufacturing and supply.  Actelion will be responsible for clinical
development activities and associated costs corresponding to any additional
trials required for specific territories.

 

About Auxilium

 

Auxilium Pharmaceuticals, Inc. is a specialty biopharmaceutical company with a
focus on developing and marketing products to predominantly specialist
audiences. Auxilium markets XIAFLEX® (collagenase clostridium histolyticum) for
the treatment of adult Dupuytren’s contracture patients with a palpable cord and
Testim® 1%, a testosterone gel, for the topical treatment of hypogonadism in the
U.S. Pfizer has marketing rights for XIAPEX® (the EU tradename for collagenase
clostridium histolyticum) in Europe; Asahi Kasei Pharma Corporation has
development and commercial rights for XIAFLEX in Japan; and Actelion
Pharmaceuticals Ltd has development and commercial rights for XIAFLEX in Canada,
Australia, Brazil and Mexico. Ferring International Center S.A. markets Testim
in the EU and Paladin Labs Inc. markets Testim in Canada. Auxilium has three
projects in clinical development. XIAFLEX is in phase III of development for the
treatment of Peyronie’s disease, in phase IIa of development for the treatment
of Frozen Shoulder syndrome (Adhesive Capsulitis) and is in phase Ib of
development for the treatment of cellulite (edematous fibrosclerotic
panniculopathy). Auxilium also has rights to pursue additional indications for
XIAFLEX. For additional information, visit http://www.auxilium.com.

 

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

 

This news release contains forward-looking statements as defined by the Private
Securities Litigation Reform Act of 1995, which discuss matters that are not
facts, and may include words to indicate their uncertain nature such as
“believe,” “expect,” anticipate,” “intend,” “plan,” “should,” “could,”
“estimate,” “project,” “will,” and “target.”  Our forward-looking statements
convey management’s expectations, beliefs, plans and objectives regarding future
performance of the Company and are based upon preliminary information and
management assumptions.  No specific assurances can be given with respect to
whether we will develop XIAFLEX for the treatment of multiple potential
indications or achieve the results or indicated timing of clinical trials for
XIAFLEX for the additional indications; regulatory approval will be obtained for
XIAFLEX in any of Actelion’s licensed territories within the anticipated
timeframes, if at all; Actelion will be successful in developing and
commercializing XIAFLEX in its licensed

 

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territories; or we will receive the indicated milestone or royalty payments from
Actelion. While the Company may elect to update the forward-looking statements
made in this news release in the future, the Company specifically disclaims any
obligation to do so.  Such forward-looking statements are subject to a wide
range of risks and uncertainties that could cause results to differ in material
respects, including those relating to product development, revenue, expense and
earnings expectations, intellectual property rights, results and timing of
clinical trials, success of marketing efforts, the need for additional research
and testing, and the timing and content of decisions made by regulatory
authorities, including the U.S. Food and Drug Administration, and those risks
discussed in our reports on file with the Securities and Exchange Commission
(the “SEC”).  Our SEC filings may be accessed electronically by means of the
SEC’s home page on the Internet at http://www.sec.gov or by means of the
Company’s home page on the Internet at http://www.auxilium.com under the heading
“For Investors - SEC Filings.”  There may be additional risks that the Company
does not presently know or that the Company currently believes are immaterial
which could also cause actual results to differ from those contained in the
forward-looking statements.

 

About Actelion

 

Actelion Ltd is a biopharmaceutical company with its corporate headquarters in
Allschwil/Basel, Switzerland.  Actelion’s first drug Tracleer®, an orally
available dual endothelin receptor antagonist, has been approved as a therapy
for pulmonary arterial hypertension.  Actelion markets Tracleer® through its own
subsidiaries in key markets worldwide, including the United States (based in
South San Francisco), the European Union, Japan, Canada, Australia and
Switzerland. Actelion, founded in late 1997, is a leading player in innovative
science related to the endothelium - the single layer of cells separating every
blood vessel from the blood stream.  Actelion’s over 2,500 employees focus on
the discovery, development and marketing of innovative drugs for significant
unmet medical needs. Actelion shares are traded on the SIX Swiss Exchange
(ticker symbol: ATLN) as part of the Swiss blue-chip index SMI (Swiss Market
Index SMI®).

 

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

 

The above information contains certain “forward-looking statements”, relating to
the company’s business, which can be identified by the use of forward-looking
terminology such as “estimates”, “believes”, “expects”, “may”, “are expected
to”, “will”, “will continue”, “should”, “would be”, “seeks”, “pending” or
“anticipates” or similar expressions, or by discussions of strategy, plans or
intentions. Such statements include descriptions of the company’s investment and
research and development programs and anticipated expenditures in connection
therewith, descriptions of new products expected to be introduced by the company
and anticipated customer demand for such products and products in the company’s
existing portfolio. Such statements reflect the current views of the company
with respect to future events and are subject to certain risks, uncertainties
and assumptions. Many factors could cause the actual results, performance or
achievements of the company to be materially different from any future results,
performances or achievements that may be expressed or implied by such
forward-looking statements. Should one or more of these risks or uncertainties
materialize, or should underlying assumptions prove incorrect, actual

 

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results may vary materially from those described herein as anticipated,
believed, estimated or expected.

 

Auxilium contact:

James E. Fickenscher

Chief Financial Officer +1-484-321-5900

jfickenscher@auxilium.com

 

or

 

William Q. Sargent Jr.

Vice-President, Investor Relations and Corporate Communications

+1-484-321-5900

wsargent@auxilium.com

 

Actelion Contact:

 

Roland Haefeli

Senior Vice President, Head of Investor Relations & Public Affairs

Actelion Pharmaceuticals Ltd, Gewerbestrasse 16, CH-4123 Allschwil

+41 61 565 62 62

+1 650 624 69 36

www.actelion.com

 

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