Commercial Outsourcing Services Agreement

Exhibit 10.12

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


COMMERCIAL OUTSOURCING SERVICES AGREEMENT


This Commercial Outsourcing Services Agreement (" Agreement" ) is entered into as of November 13, 2002 (" Effective Date" ) by and between Integrated Commercialization Solutions, Inc., a California corporation (" Service Provider" ) and Auxilium Pharmaceuticals, Inc., a Delaware corporation (" Company" ).


RECITALS


A. Company is, among other things, in the business of manufacturing or having manufactured, selling and distributing pharmaceutical products, including those listed on Schedule A (" Products" ).

B. Service Provider is in the business of, among other things, providing commercialization services.

C. Company desires to engage Service Provider as its agent to provide certain commercialization services related to the Products upon the terms and subject to the conditions set forth in this Agreement.

D. Service Provider desires to provide such commercialization services to Company as its agent upon the terms and subject to the conditions set forth in this Agreement. Capitalized words used without definition in this Agreement will each have the meaning in Appendix A.

AGREEMENT

NOW, THEREFORE, in consideration of the mutual covenants contained herein, the above recitals and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties, intending to be legally bound, hereby agree as follows:

1. APPOINTMENT AS EXCLUSIVE AGENT

Company hereby appoints Service Provider as its exclusive outsourcing supplier for warehousing and distributing Products to be sold in the United States, Guam, Puerto Rico and the U.S. Territories during the Term (as defined in Section 4.1) subject to the provisions of this Agreement; provided, however, if Service Provider cannot meet Company' s demand for warehousing and distributing Products, Company may engage a third party to supply those services Service Provider cannot provide pursuant to this Agreement.

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


1 2. SERVICES TO BE PERFORMED

Company hereby engages Service Provider to provide the following services (" Services" ): 2.1 Integrated Access Center as set forth in Exhibit B .

2.2 Order Process Management as set forth in Exhibit C .

2.3 Warehousing and Inventory Program as set forth in Exhibit D .

2.4 Distribution Services as set forth in Exhibit E .

2.5 Contract Management and Chargebacks as set forth in Exhibit H .

2.6 Accounts Receivable Management and Cash Applications as set forth in Exhibit I .

2.7 Finance Management as set forth in Exhibit J .

2.8 Information Technology Service as set forth in Exhibit K .

3. COMPENSATION- FEES FOR SERVICES

Company shall compensate Service Provider for all services provided hereunder in accordance with Schedule B . Payment is due net thirty (30) days from the invoice date. A late fee of 1.5% per month (or part of a month) will be charged on all amounts not paid within sixty (60) days of the date of the invoice date, except for any portion of any bill that is the subject of any dispute raised by Company in good faith. Service Provider will bill Company for any pass through charges monthly or as Service Provider is billed. All other fees for Services will be billed monthly.

4. TERM AND TERMINATION

4.1 Initial Term . This Agreement shall be effective as of the Effective Date and shall continue in full force and effect thereafter for a period of three (3) years from the Effective Date (" Term" ) unless sooner terminated as provided herein, and may be extended upon written mutual agreement of the parties, such extension to be negotiated in good faith six (6) months prior to the expiration of the Term.


4.2 Termination Without Cause . Notwithstanding anything to the contrary contained herein, either party may terminate this Agreement, with or without cause, at any time by providing the other party with at least one hundred eighty (180) days' prior written notice of such termination.


4.3 Termination For Breach. In addition to any other termination rights contained herein, either party may terminate this Agreement upon written notice to the other party following such other party' s failure to cure a material breach of this Agreement within ten (10) ** CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND WILL BE FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A CONFIDENTIAL TREATMENT REQUEST.


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days after receipt of written notice of such breach. Such cure period shall be suspended for so long as the breaching party has diligently commenced to cure such breach and continues diligently to complete such cure; provided, however such cure period may not exceed ninety (90) days.


4.4 Termination For Specific Events . Any party may terminate this Agreement immediately by providing the other parties with concurrent written notice of such termination in the event that any other party: (a) commences a voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect to its debts under any bankruptcy, insolvency, or other similar law now or hereafter in effect; (b) makes a general assignment for the benefit of creditors; (c) becomes insolvent; (d) ceases doing business; and/or (e) takes any corporate action to authorize any of the foregoing. Each party agrees to provide immediate notice to all other parties upon the occurrence of any event specified above.

4.5 Expenses . If Company executes its option under this Agreement to terminate without cause, it shall pay the reasonable and proper documented, non-recoverable expenses related to telecommunication, facsimile, postage and shipping incurred by Service Provider for all services rendered in accordance with the terms of this Agreement.

4.6 Survival . All accrued payment, indemnity and confidentiality obligations of the parties under this Agreement shall survive the termination of this Agreement and, except as provided elsewhere in this Agreement, termination of this Agreement shall not affect any obligations or liabilities arising, or based upon acts or omissions occurring, prior to the date of such termination.


4.7 Return of Data and Information . Upon termination, Service Provider will promptly provide to Company all information and data relating to Products (" Product Data" ) in a mutually agreeable form. Product Data includes all Company Confidential Information and all information related to Products, shipping and tracking information, customer contact information, including customer names and current addresses, marketing and promotional materials and sales and marketing information. Product Data does not include ICS Data (as defined in Section 8.3).

5. RECALLS, OTHER REGULATORY ISSUES

5.1 If Company determines it to be necessary to conduct a recall, market withdrawal or field correction (a " Recall" ) of any Products, Company shall conduct, or designate a third party to conduct, the Recall, and Company shall incur all related expenses and have primary responsibility therefor. Service Provider shall cooperate with, and comply with all reasonable requests of, Company in recalling any affected Products. To the extent a Recall was not due to Service Provider' s acts or omissions, then Company shall pay or reimburse, as the case may be, all of Service Provider' s documented direct out-of-pocket expenses (including but not limited to any reasonable attorney' s fees and expenses) incurred by Service Provider in connection with any such Recall. To the extent a Recall was due to Service Provider' s acts or omissions, then Service Provider shall pay or reimburse, as the case may be, all of Company' s expenses, including reasonable attorney' s fees, incurred in connection the Recall. Each of the parties shall use its best efforts to minimize the expenses of any Recall when it occurs. Company shall use its

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best efforts to inform Service Provider of any proposed Recall within forty-eight (48) hours of the initiation of the Recall.


5.2 Each of the parties shall provide the other with a copy of any correspondence or notices received by such party from the FDA (or counterpart state agency) or other regulatory agency specifically relating to services provided by Service Provider, pursuant to this Agreement, relating to a material violation of any kind that is Company or Product related whether such violation resulted from an act or omission by the Company or by the Service Provider, or that otherwise affects Company' s Products or process no later than the next business day following such receipt. In addition, Service Provider shall provide Company with all notices relating to the Products within two (2) business days of receipt thereof. Each party shall also provide the other with concurrent copies of any responses to any such correspondence or notices (e.g., FDA 483 notice). Where reasonably possible, Service Provider shall give prior notice to Company of any scheduled FDA inspections of Service Provider' s facilities specifically relating to any of the Products and, if reasonably possible, shall afford Company the opportunity to be present at such inspection and to review and contribute to any written response thereto to the extent permitted by law.

5.3 Service Provider and the Company where required, shall obtain and/or maintain all required licenses in all states for the warehousing and shipping of the Products. Service Provider may collect sales tax, where applicable, in all states that Service Provider has registered for sales tax collection. In all other states, Service Provider may collect all other sales taxes pursuant to the Company' s instructions and other legal requirements.

6. LEGAL COMPLIANCE

6.1 During the Term of this Agreement, each party shall conduct its activities in connection with this Agreement in compliance with all applicable laws and regulations. Specifically, Service Provider shall comply with all applicable Requirements of Law related to the storage, handling and distribution of Products, and Company shall comply with all applicable Requirements of Law related to the importation, manufacture, distribution, labeling, storage, sale and handling of the Products.


6.2 Company agrees and does hereby represent and warrant to Service Provider during the Term of this Agreement that (a) all Products, and each shipment of each, or other delivery now and hereafter made by Company to or on the order of Service Provider will not be, at the time of shipment or delivery, adulterated, misbranded or otherwise prohibited within the meaning of the Act or within the meaning of any applicable state or municipal law, (b) the Products are not, at the time of shipment or delivery to Service Provider, merchandise which may not be introduced or delivered for introduction into interstate commerce under the provisions of Sections 404 or 405 of the Act, (c) all such Products will be the subject of a duly approved NDA or ANDA and may be legally transported or sold under applicable Requirements of Law, and (d) all Product has been duly approved by all applicable Governmental Authority for commercial sale and shipment within the United States.

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


4 7. CORPORATE AUTHORITY

7.1 During the Term of this Agreement, Company represents and warrants to Service Provider that: (a) it has full power and authority to enter into this Agreement and perform and observe all obligations and conditions to be performed or observed by it under this Agreement without any restriction by any other agreement or otherwise, (b) the execution, delivery and performance of this Agreement has been duly authorized by all necessary corporate action, (c) this Agreement constitutes the legal, valid and binding obligation of Company, (d) no approvals, consents, orders or authorizations of or designation, registration, declaration or filing with any Governmental Authority (within, as a part of, or constituting the United States of America) are required for the sale and distribution of the Product other than any such approvals obtained, (e) there is no action, proceeding, or investigation pending or threatened which questions the validity of this Agreement, the marketing authorizations related to and for the Product, or any actions taken or to be taken pursuant to this Agreement, and (f) the Product, or any part thereof, has not been materially adversely affected in any way as a result of any legislative or regulatory change, or any revocation of license or right to manufacture, distribute, handle, store, sell or market any of the Product.

7.2 During the Term of this Agreement, Service Provider represents and warrants to Company that: (a) it has full power and authority to enter into this Agreement and perform and observe all obligations and conditions to be performed or observed by it under this Agreement without any restriction by any other agreement or otherwise, (b) the execution, delivery and performance of this Agreement has been duly authorized by all necessary corporate action, (c) this Agreement constitutes the legal, valid and binding obligation of Service Provider, (d) no approvals, consents, orders or authorizations of or designation, registration, declaration or filing with any Governmental Authority (within, as a part of, or constituting the United States of America) are required for the warehousing and distribution of pharmaceutical products other than any such approvals obtained, (e) there is no action, proceeding, or investigation pending or threatened which questions the validity of this Agreement, Service Provider' s licenses to warehouse and distribute pharmaceuticals, or any actions taken or to be taken pursuant to this Agreement, (f) the Product has not been materially adversely affected while in possession of the Service Provider as a result of any revocation of licenses or due to its breach of its obligations hereunder and (g) in the event any of the representations and warranties contained herein become untrue at any time during the Term of this Agreement, Service Provider will immediately notify Company in writing.

7.3 Company and Service Provider shall give prompt written notice to the other if such party becomes aware during the term of this agreement of any action or development which would cause any of said party' s warranties in this section to become untrue.

8. TRADEMARKS, DATA & INTELLECTUAL PROPERTY

8.1 Neither party may use the name of any other party or the other party' s trademarks, service marks, logos, other similar marks or other intellectual property (collectively " Trademarks" ), or any data or information of the other party in any manner without the prior written approval of such other party.


8.2 Service Provider recognizes Company' s right, title and interest in Trademarks for Products or Company and may not at any time do or cause to be done any act that would impair

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Company' s property rights in such Trademarks. Service Provider may not acquire or claim any right, title, or interest in such Trademarks. Use of such Trademarks will inure to Company' s benefit and Service Provider will execute any document Company requests to confirm Company' s rights to such Trademarks.

8.3 Neither party may use any data or information of the other party in any manner without the other party' s prior written approval. Data and information that belongs to Company will be all Product Data and Company Confidential Information, except ICS Data. " ICS Data" includes Service Provider' s Confidential Information and any information that is not specific to Products or is developed by Service Provider relating to the processes, reports and services provided by Service Provider to Company under this Agreement, including those relating to any of Service Provider' s customers and their respective profiles. ICS Data belongs to Service Provider.

8.4 All concepts, inventions, improvements, ideas, patent rights, Trademarks a ...