Patent and Know-How License, Development and Commercialization Agreement

Patent License Agreement

$Patent and Know-How License, Development and Commercialization Agreement | Document Parties: AVIGEN INC \DE | SDI DIAGNOSTICS INTERNATIONAL LTD$

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AVIGEN INC \DE | SDI DIAGNOSTICS INTERNATIONAL LTD

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Title: Patent and Know-How License, Development and Commercialization Agreement
Date: 3/16/2006
Industry: Biotechnology and Drugs

$Patent and Know-How License, Development and Commercialization Agreement, Parties: avigen inc \de , sdi diagnostics international ltd$

EXHIBIT 10.59

Patent and Know-How License, Development and Commercialization Agreement

THIS AGREEMENT dated 12 January 2006 is between:

(1)	SDI DIAGNOSTICS INTERNATIONAL LTD a limited liability company organized under the laws of Switzerland (“SDI”) whose registered office is at Baarerstrasse 96/PF 2252 CH-6302 Zug, Switzerland; and

(2)	AVIGEN, INC. a corporation organized under the laws of Delaware (“Avigen”) whose registered office is at 1301 Harbor Bay Parkway, Alameda, California 94502, USA.

RECITALS:

Tolperisone has been sold as a pharmaceutical product to treat acute and chronic pain, and muscle spasm and rigidity, for many years in some European countries and Japan, but has never been approved as a pharmaceutical product in North America and is anticipated to qualify for new chemical entity status in the US;

B.	SDI and its Affiliates have developed and manufacture two formulations of Tolperisone, one in an immediate release dosage form and one in a controlled release dosage form (the Current IR Product and Current CR Product, each as more particularly defined below);

C.	SDI has conducted some clinical development of each the Current IR Product and the Current CR Product, and plans further clinical development of each of them in order to seek approval to sell them in Europe;

D.	SDI possesses some and will develop more clinical data and other know-how relating to the Current IR Product and Current CR Product, and *[]** ;

E.	Avigen is located in North America and has a team experienced in developing and commercializing pharmaceutical products for the North American market, including in particular pharmaceutical products for neurological conditions;

Avigen wishes to acquire rights under SDI’s clinical data, other know-how, and patent rights relating to tolperisone products, as well as supply from SDI of these products, all for the development and commercialization of tolperisone products in North America (the Territory, more particularly defined below), in accordance with the provisions of this Agreement.

IT IS AGREED as follows:

1	Definitions

Section 12.7 provides certain rules of interpretation that apply to this Agreement. Also in this Agreement, the following words shall have the following meanings (with derivative forms being interpreted accordingly):

* = confidential treatment requested; certain confidential information, in the places marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

Advance Payment	Shall have the meaning given such phrase in Section 4.5.1.
Affiliate	Shall mean, in relation to a Party, any entity or person that Corporately Controls, is Corporately Controlled by, or is under common Corporate Control with that Party. SDI’s Affiliates include Sanochemia Pharmazeutika AG, an Austrian corporation.
Agreement	This Patent and Know-How License, Development and Commercialization Agreement (meaning this entire document, including all Schedules and Attachments, including the Supply Terms).
ANDA	Shall mean an abbreviated new drug application (abbreviated NDA) in the US.
API	Shall have the meaning given in the Supply Terms.
Article	An article of this Agreement. This Agreement contains 12 Articles.
Avigen Indemnitees	Shall have the meaning given such phrase in Section 9.6.
Clinical Trial Information	All technical information and data *[] to the []* is *[] by or on behalf of []* or *[]** . This includes the following kinds of data: data regarding the chemical and physical properties of the Licensed Product; pharmacological, toxicological, pharmacokinetic and clinical data; and quality control, testing and assay data.
Closely Related Compounds	Shall mean analogs and derivatives of Tolperisone described by the following chemical structure: *[]**
Combination Product	Shall have the meaning given such phrase in Section 4.3.5.
Commencement Date	Shall mean the date first set forth above, in the first paragraph of this Agreement (the first paragraph appearing after the initial title).
Committee	Shall have the meaning given such phrase in Section 5.1.
Competent Authority	Any national or local agency, authority, department, inspectorate, minister, ministry official, parliament or public or statutory person or other entity (whether autonomous or not) of any government of any country having jurisdiction or authority over either any of the activities and functions contemplated or described by this Agreement or the Parties including the European Commission, the Court of First Instance and the European Court of Justice. Competent Authorities include Regulatory Bodies.
Competing Product	Shall mean any *[] that (a) is a []* or contains a *[] as []* , (b) is *[] , and (c) []* be *[] to []* a *[] on the []* of the *[] in the []* .

Confidential Information	Shall have the meaning given such phrase in Section 3.3.1.
Control	Shall mean, with respect to a Party and a Patent or item of Know-How, the ability of such Party to grant a license as provided for hereunder under such Patent or item of Know-How, *[]**
Corporate Control	Shall mean, with respect to any entity, either (i) direct or indirect beneficial ownership of fifty percent (50%) or more of the capital stock, voting shares or other participating interest carrying the right to vote or to distribution of profits of that entity, or such lesser share as may be the maximum share permitted to be held in accordance with law; or (ii) the actual power to elect the management of or to control the policies of that entity.
CR-Qualified Product	Any pharmaceutical composition *[] providing for []* . A pharmaceutical composition providing for *[] in this context means that such pharmaceutical composition (a) []* in a manner that *[] a []* in the *[] that is []* of the *[] and (b) is []* to be *[] of []* or, where *[] satisfies the following paragraph (i.e. the remainder of the text of this definition excluding the final paragraph). In evaluating (b), []* to the *[] a particular such pharmaceutical composition []* in the *[] if: (i) []* a *[] of such pharmaceutical composition []* that would permit the *[] of []* to be *[] has []* and/or *[] in the []* or in *[] within the []* demonstrating that *[] in the []* a *[] for []* of *[] and []* the FDA *[] that []* composition would be *[] to be []* for a *[] that if []* to be *[] and (y) []* as *[] as []* in such *[] (ii) the Parties otherwise agree (in their sole discretions) that such pharmaceutical composition []* and *[] then such pharmaceutical composition shall be a CR-Qualified Product until and unless (x) whether it qualified under (i) or (ii), a []* such pharmaceutical composition either *[] not []* such *[] and/or []* or such pharmaceutical composition *[] but []* to be *[] for []* of *[] in the case of a pharmaceutical composition that []* Avigen *[] thereof or []* not to *[] for []* (it being understood that such a pharmaceutical composition *[]** In accordance with this determination of prong (b), the same pharmaceutical composition may be a CR-Qualified Product at one time, but not at another later time. If the Parties do not agree as to the application of clause (i) (above in this definition) to any particular formulation proposed as a possible CR-Qualified Product, then the determination of whether such formulation qualifies under clause (i) (above in this definition) shall be determined as set forth in Section 12.9.2. CR-Qualified Products may include the Current CR Product and other formulations of Tolperisone (to the extent described by the foregoing in this definition), and shall include them to the extent described by the foregoing definition or as provided in Section 5.6.
Current CR Product	That certain formulation of Tolperisone that SDI tested in that certain clinical trial identified by protocol number SFK-0300-01/I-003 filed with Independent

	Ethics Committee, Assen, The Netherlands.
Current IR Product	That certain formulation of Tolperisone that SDI most recently tested in those certain clinical trials identified by protocol numbers SFK-0300-01/I-001 and SFK-0300-01/I-002 filed with Independent Ethics Committee of the Landesärztekammer Brandenburg, Cottbus, Germany
Diligence Plan	Shall have the meaning given such phrase in Section 7.4.
Diligent and Reasonable Efforts	The level of efforts which, consistent with the exercise of prudent scientific and business judgment, would be applied by a company in the biotechnology industry for a product owned by it or to which it has rights, that (relative to Licensed Product) is of similar market potential and is at a similar stage in its development or product life, taking into account issues of safety and efficacy, product profile, the competitiveness of the marketplace, the proprietary position of the product, the regulatory structure involved, the profitability of the applicable products, and all other relevant factors. Diligent and Reasonable Efforts is evaluated in the context of Territory-wide efforts, recognizing that some development and commercialization activities may or may not be required by this standard for countries other than the US, and that a reasonable development and commercialization program may stage or stagger activities for different countries over time. A Party’s obligation to devote Diligent and Reasonable Efforts may be satisfied by the actions of a Party’s or its Affiliate’s own efforts, or those of a subcontractor or service provider; and in Avigen’s case the actions of a Sublicensee or Distributor.
Disclosing Party	Shall have the meaning given such phrase in Section 3.3.1.
Distributor	Shall have the meaning given such phrase in Section 2.4.
EMEA	European Medicines Evaluation Agency.
Event of Force Majeure	Shall have the meaning given such phrase in Section 12.1.
Excess	Shall have the meaning given such phrase in Section 4.5.3.
FDA	The United States Food and Drug Administration.
Field	The treatment of muscle spasticity and acute muscle spasm.
Finished Product	IR Product or CR-Qualified Product in finished product form, that is filled, labeled and packaged into finished product.
Fully Burdened Manufacturing Cost	Shall mean, with respect to any Licensed Product (in bulk or finished product form, as the case may be), one hundred percent (100%) of SDI’s fully burdened manufacturing cost to manufacture such Licensed Product in such form, consisting solely of: *[] Fully Burdened Manufacturing Costs excludes []*

	Fully Burdened Manufacturing Cost shall be calculated in accordance with *[]** generally accepted accounting principles, consistently applied throughout the manufacturing organization with respect to all product candidates and products that it manufactures.
Further Payment	Shall have the meaning given such phrase in Section 4.5.2.
Improvement	Shall have the meaning given such phrase in Section 8.3.1.
Improvement Patent	Shall have the meaning given in Section 8.3.1.
IND	An Investigational New Drug application in the US, or an equivalent filing in another country of the Territory required to be approved (or not rejected) in order for human clinical testing of a Licensed Product in such country to be legally conducted.
Indemnify	Shall have the meaning given such phrase in Section 9.5.
Industry Valuation Expert	Shall mean a human person who is unaffiliated with both Parties (including through their Affiliates) and has at least ten (10) years experience valuing pharmaceutical and/or biopharmaceutical assets in a senior business development, chief financial officer or investment banking role.
Information	Shall have the meaning given such phrase in Section 3.1.
IR Product	Any pharmaceutical composition containing Tolperisone as an active ingredient, that is not a CR-Qualified Product, *[]** IR Products include the Current IR Product.
Joint Improvement Patents	Shall have the meaning given such phrase in Section 8.3.1.
Know-How	Shall mean data, know-how, instructions, processes (including manufacturing and QA/QC processes), methods (including analytical methods), formulae, materials, expert opinions, technical or scientific information and biological materials (including without limitation cell lines, vectors and their progeny and derivatives), including biological, chemical, pharmacological, toxicological, pharmaceutical, physical and analytical, clinical, safety, manufacturing and quality control data and information.
Launch	Shall mean, for each IR Product and CR-Qualified Product in each country of the Territory, the first commercial sale of an IR Product or CR-Qualified Product (respectively) by or on behalf of Avigen, its Affiliates, Sublicensees or Distributors in such country following the Regulatory Approval of such IR Product or CR-Qualified Product (respectively) in such country.
Licensed Know-How	Shall mean the Clinical Trial Information (other than Avigen’s Clinical Trial Information), and all other Know-How Controlled by SDI or its Affiliates at any time prior to expiration of the term of this Agreement that is necessary or useful for the development (including seeking Regulatory Approval for), manufacture, use, sale, or commercialization of Tolperisone Products. As regards any of the foregoing Know-How that is useful but not necessary for

	such activities (“Useful Know-How”), the Licensed Know-How shall exclude Useful Know-How that only qualifies as such with respect to Licensed Products that include another active ingredient in addition to Tolperisone (due to the presence of such other active ingredient) in the Licensed Product, and *[] to active pharmaceutical ingredients other than []* The Licensed Know-How includes the Information.
Licensed Patents	The Listed Patent Rights, and all other Patents Controlled by SDI or any Affiliate of SDI during the term of this Agreement that claim any invention that is necessary or useful for the manufacture, use or sale of Tolperisone Products. The Licensed Patents exclude Patents that meet all of the following descriptions: (a) they are not referred to in the next paragraph, (b) they would not cover any Tolperisone Product but for the inclusion of another active ingredient other than Tolperisone or a Closely Related Compound in such Tolperisone Product, (c) they are directed *[]** to active pharmaceutical ingredients other than Tolperisone or Closely Related Compounds, and (d) they are not directed in whole or in part to combining (or the combination of) Tolperisone with any other active pharmaceutical ingredient; provided, however , that until all Royalty Terms under this Agreement have expired, SDI shall not for the Territory grant any Third Party a license under any of such excluded Patents with respect to any Tolperisone Product. The Licensed Patents include all Patents claiming inventions conceived or reduced to practice in the course of the SDI CR Clinical Program (and SDI shall ensure that it or an SDI Affiliate Controls such Patents for the full scope of activities specified in Section 2.1). Except to the extent excluded under (b), (c) and (d) above, the Licensed Patents also include all Patents claiming inventions conceived or reduced to practice in the course of all other testing of Licensed Product by or on behalf of SDI or its Affiliates, which inventions relate to Licensed Product (including via the composition, manufacture, formulation or use of any Licensed Product), and SDI shall ensure that it or an SDI Affiliate Controls such Patents for the full scope of activities specified in Section 2.1. The Licensed Patents also include SDI’s interest in all Improvements Patents, including those solely owned by SDI and the Joint Improvement Patents.
Licensed Products	IR Products, CR-Qualified Products, and all other Tolperisone Products.
Listed Patent Rights	The patents and patent applications listed in Schedule 1; all divisionals, converted provisionals, continuations, continuations-in-part, and substitutions of, and all other applications claiming priority to (or claiming priority to a common priority document as), any of the foregoing applications; all patents issuing on any of the foregoing applications; all re-examinations, reissues, renewals and extensions (including supplementary protection certificates or their equivalent) of the foregoing patents; all registrations and confirmations of any of the foregoing; and all counterparts in other countries of the Territory to any of the foregoing patents and patent applications.
Losses	Shall have the meaning given such phrase in Section 9.5.

NDA	A New Drug Application in the United States of America under Section 21 of the United States Code of Federal Regulations, Part 314.
Necessary	Shall have the meaning given such phrase in Section 8.9.1.

Net Sales	The gross invoice price of Licensed Products sold by or on behalf of Avigen or its Affiliates or Sublicensees to Third Parties, after deduction of all of the following (reasonably documented): (a) cash, trade and quantity discounts, actually paid or incurred; (b) discounts, refunds, rebates, chargebacks, retroactive price adjustments, and any other allowances actually made which effectively reduce the net selling price, including any institutional rebate or discount for government subsidy or reimbursement programs such as Medicare or Medicaid provided in the United States or any similar organization elsewhere in the world; amounts due under inventory management agreements or any comparable agreements with wholesalers or distributors; and distribution fees and sales commissions paid to Third Parties; (c) credits and allowances for product returns actually made and actually taken (for the selling entities’ financial reporting purposes) for recalls, retroactive price reductions, and billing corrections; (d) freight, packing, shipping, handling and insurance fees, but solely to the extent separately stated on the invoice and included in the gross invoice price; and (e) taxes, including value added taxes and sales taxes, but excluding taxes on seller’s net income. Amounts invoiced between Avigen, its Affiliates and Sublicensees for quantities of Licensed Product for use in clinical trials or for resale shall not be included in the calculation of Net Sales. Provided that Avigen’s (or its Affiliate’s or Sublicensee’s) invoiced sales of Licensed Product to Distributors are included in the calculation of Net Sales, amounts invoiced by Distributors to their customers are excluded from Net Sales, except as provided in the next sentence. If any Distributor pays Avigen or an Avigen Affiliate *[] then for purposes of calculating Net Sales hereunder such Distributor []*
Offsettable Consideration	Shall have the meaning given such phrase in Section 4.3.4.2.
Orange Book	The FDA’s list of Approved Drug Products with Therapeutic Equivalence Evaluations (commonly known as the “Orange Book”).
Other Licensee	Shall have the meaning given such phrase in Section 5.11.2.
Other Party	Shall have the meaning given such phrase in Section 10.2.3.
Parties	SDI and Avigen, and “Party” shall mean either of them.
Patent	Shall mean any patent application or patent, including all of the following kinds: provisional, converted provisional or regular, divisional, continuation, continuation-in-part, and substitution applications; and regular utility, re-issue,

	re-examination, renewal and extended patents.
Patent Expert	Shall have the meaning given such phrase in Section 8.9.1.2.
Phase II Design Standard	Shall mean with respect to a phase II clinical trial (a) that the design of such trial is consistent with the clinical program set forth in Schedule 2, and (b) that if a trial conducted in accordance with such design *[] in the []* or *[] the []* (but otherwise *[] such []* a determination that the subject pharmaceutical composition is *[]**
Pivotal Clinical Trial	Shall mean a clinical trial that is a part of a Pivotal Trial Program.
Pivotal Trial Program	That clinical trial or those clinical trials in humans that is or are required to *[]** on the basis of the results of such trial or trials alone (if such results are favorable), without the need for any further clinical testing to support such US Regulatory Approval Application (NDA).
Quarter	A period of three months commencing on 1st January, 1st April, 1st July and 1st October in each year during the term of this Agreement, and “Quarterly” shall be construed accordingly.
Receiving Party	Shall have the meaning given such phrase in Section 3.3.
Regulatory Approval	Any approval (in whatever form, whether a license, registration, authorization or approval) of any supra-national, national, regional, state or local regulatory agency, department, bureau, commission, council or other governmental entity, necessary for the legal sale of a given pharmaceutical product as such. In the US, Regulatory Approval is achieved by NDA approval.
Regulatory Approval Application	Shall mean an application for Regulatory Approval. Regulatory Approval Applications in the US include NDAs.
Regulatory Body	The FDA in the US, and any authorities responsible for the grant of Regulatory Approvals in the other countries of the Territory.
Related Entity End User	Shall have the meaning given such phrase in Section 4.3.8.
Relevant Patent	Shall have the meaning given such phrase in Section 8.5.1.
Required Phase II Clinical Trial	Shall have the meaning given such phrase in Section 5.5. The Required Phase II Clinical Trial is part of the SDI CR Clinical Program.
Royalty Term	Shall mean, with respect to each Licensed Product in each country of the Territory, the period (x) beginning on the date of Launch of (if such Licensed Product is an IR Product) the first IR Product anywhere in the Territory, or (if such Licensed Product is a CR-Qualified Product) the first CR-Qualified Product anywhere in the Territory, and (y) ending on the latest of: (a) the date on which there is first no longer any Valid Claim of the Licensed Patents that would be infringed by the manufacture, use or sale by Avigen of such Licensed Product in such country but for the license granted Avigen

	hereunder; (b) the date on which *[] -- if any -- []* to Avigen, an Avigen Affiliate or a Sublicensee with respect to such Licensed Product expires or lapses; and (c) the *[]** of (if such Licensed Product is an IR Product) the Launch of the first IR Product in the United States, or (if such Licensed Product is a CR-Qualified Product) the Launch of the first CR-Qualified Product in the United States, in each case by Avigen, an Avigen Affiliate or a Sublicensee or Distributor. If (c) occurs later than (a) or (b) with respect to any Licensed Product in any country of the Territory, then the period from the later of (a) and (b) (with respect to such Licensed Product in such country) to (c) (with respect to such Licensed Product in such country) is the “Second Part-Royalty Term” with respect to such Licensed Product in such country. The period of the Royalty Term includes -- to avoid any doubt -- that period that is the Second Part-Royalty Term.
Sales Estimate	Shall have the meaning given such phrase in Section 6.4.
SDI Communicator	Shall have the meaning given such phrase in Section 5.10.
SDI CR Clinical Program	Shall have the meaning given such phrase in Section 5.2.
SDI Indemnitees	Shall have the meaning given such phrase in Section 9.5.
SEC	Shall have the meaning given such phrase in Section 3.7.1.
Second Part-Royalty Term	Shall have the meaning given such phrase in the definition of Royalty Term.
Section	Shall mean a section of this Agreement. These Sections are the smaller (than Articles) numbered units that make up the Articles.

Significant Supply Failure	Shall mean SDI’s failure to supply at least *[] of Licensed Product properly ordered in accordance with the procedures contained in the Supply Terms by Avigen for delivery []* which failure SDI has not cured *[]** either by supplying itself or through another appropriately validated source.
Sublicensee	Any Third Party to which Avigen or an Avigen Affiliate grants a license under the Licensed Patents and/or Licensed Know-How to offer to sell, have sold or import Licensed Product in the Territory. Sublicensees exclude Distributors.
Supply Terms	Those terms and conditions for the supply of IR Product and CR-Qualified Product attached as Schedule 2.
Supply Terms Article	Shall mean an article of the Supply Terms.
Supply Terms Section	Shall mean a section of the Supply Terms.
Territory	North America. North America includes the United States of America, its territories and possessions; Canada, its territories and possessions; and Mexico, its territories and possessions.
Territory Infringement	Shall have the meaning given such phrase in Section 8.4.1.
Third Party	Any person, firm, trust, partnership, company or corporate or other entity that is not either a Party or an Affiliate of either Party. Once appointed, a Sub-licensee or Distributor shall cease to be a “Third Party” for the purposes of this Agreement.
Third-Party Claim	Shall have the meaning given such phrase in Section 9.5.
Trade Mark	Shall have the meaning given such phrase in Section 8.8.1.
Transfer Price Percentage	*[]**
Tolperisone	The compound currently identified by SDI as “Tolperisone,” the chemical formula for which is C16H23NO.HCl (including all isomers and steric forms described by such chemical formula).
Tolperisone Product	shall mean any pharmaceutical composition containing as an active ingredient Tolperisone or any *[]** of Tolperisone.
US	The United States of America, its territories and possessions.

Valid Claim

An issued claim of a patent, which claim has not expired, lapsed, been abandoned, been cancelled, been revoked, been held invalid or unenforceable by a court of competent jurisdiction in a final and non-appealable or unappealed judgment, and has not been admitted to be invalid or unenforceable through reissue, re-examination, disclaimer or otherwise.

2	Grant of license rights .

2.1

Licenses . Subject to the terms and conditions of this Agreement, SDI hereby grants to Avigen an exclusive, sublicenseable (subject to compliance with and as set forth in Section 2.3) license under the Licensed Patents and the Licensed Know-How to develop, have developed, use, have used, market, have marketed, offer for sale, sell, have sold, import and have imported the Licensed Products in the Territory. For the avoidance of doubt, such license shall not include any right to manufacture or have manufactured the Licensed Product. (However, for clarity, Avigen shall have those manufacturing rights that are set forth in Sections 4.5.5 and 10.4.2 and in Supply Terms Sections 6.5 and 8.3, under the circumstances referred to in such Section and Supply Terms Sections.)

2.2

Formal Licenses for Recordation Purposes Only . The Parties shall -- if requested in writing by Avigen -- execute such formal license recordation documents as may be necessary or appropriate for registration with Patent Offices and other relevant authorities in particular countries of the Territory. If any such license recordation document conflicts with this Agreement, this Agreement shall prevail, govern and control, in all cases. Prior to the execution of the formal license recordation document(s) (if any) referred to in this Section 2.2, the Parties shall so far as possible have the same rights and obligations towards one another as if such formal license recordation document(s) had been executed and recorded. The Parties shall use reasonable endeavors to ensure that, to the extent permitted by relevant authorities, this Agreement shall not form part of any public record, subject to Section 3.7.

2.3	Sublicensing . Avigen shall be entitled to grant sublicenses of its rights under this Agreement through one or more tiers of sublicensees without consent, including to its Affiliates and to Third Parties, provided that all of the following are satisfied:

2.3.1

Avigen notifies SDI in writing the identity of each Sublicensee within thirty (30) days after granting the sublicense.

2.3.2

The sublicense shall include obligations on the Sublicensee which are sufficient to allow Avigen to fulfil its obligations under this Agreement (e.g., the Sublicensee shall report its Net Sales to Avigen on a timeline that enables Avigen to make any royalty payments on the Sublicensee’s Net Sales required by this Agreement in a timely manner).

2.3.3

The sublicenses shall terminate automatically on termination of this Agreement under Section 10.2.3 for Avigen’s uncured material breach or insolvency or under Section 10.2.2 by Avigen at will. Avigen shall notify its Sublicensees promptly (within 30 days) after any such termination of this Agreement. If within 30 days of such notification a Sublicensee notifies SDI in writing that the Sublicensee wishes its sublicensed rights to continue as a direct license from SDI for the then remainder of the term of its sublicense, SDI may grant to the Sublicensee a direct license on the same terms as the sublicense provided such terms are in SDI’s reasonable view no more onerous and no less favorable to SDI than the terms of this Agreement.

2.3.4

Within 30 days of the grant of any sublicense Avigen shall provide to SDI a true copy of such portions of the sublicense as are necessary to verify that the sublicense is in accordance with this Agreement; and

2.3.5

Avigen shall remain responsible to SDI for any act or omission of a Sublicensee to the extent it constitutes a breach of the Agreement.

2.4

Distributors . In addition to its right to grant sublicenses, without granting a sublicense, Avigen may appoint any one or more Affiliate(s) or Third Party(ies) to distribute and sell Licensed Products (any such Third Party that is so appointed (but not any Affiliate that is so appointed), a “Distributor”) in one or more country(ies) of the Territory provided that all of the following are satisfied:

2.4.1

Avigen notifies SDI in writing the identity of each Distributor within thirty (30) days after granting the Distributorship;

2.4.2

The Distributor’s appointment shall terminate automatically on termination of this Agreement under Section 10.2.3 for Avigen’s uncured material breach or insolvency or under Section 10.2.2 by Avigen at will. Avigen shall notify its Distributors promptly (within 30 days) after any such termination.

2.4.3

Within 30 days after the appointment of a Distributor, Avigen shall provide to SDI a true copy of such portions of the distribution agreement as are necessary to verify compliance with this Section 2.4.

2.4.4

Avigen shall remain responsible to SDI for any act or omission of a Distributor to the extent it constitutes a breach of the Agreement.

2.5

Reservation of rights . No right, title or interest is granted, whether expressly or by implication, to any Patents or Know-How owned by SDI, except for the rights and licenses expressly granted under this Agreement under the Licensed Patents and Licensed Know-How. SDI reserves to itself all rights not expressly granted under this Agreement. This Agreement shall not be deemed to restrict SDI from exploiting any of its rights not expressly granted to Avigen under this Agreement. Without prejudice to the generality of the foregoing SDI reserves all rights under any and all Patents outside the Territory that are x-Territory counterparts to the Licensed Patents, and under the Licensed Know-How outside the Territory; provided , however , that SDI shall not grant any license or other right to practice outside the Territory under Licensed Patent counterparts outside the Territory, or under Licensed Know-How, with respect to Tolperisone Products, which license covers activities to supply any Tolperisone or Tolperisone Product into the Territory or would permit the licensee to supply any Tolperisone Product into the Territory.

2.6	Exclusivity Commitments . The Parties are making the exclusivity commitments set forth in Article 11.

2.7	Avigen License and Disclaimer . Avigen is granting SDI the license set forth in Section 8.3.2. Avigen makes the disclaimer with regard to all other licenses that is set forth in the second paragraph of Section 8.3.2.

3	Know-how and Confidential Information

3.1

Provision of Information . Upon Avigen’s reasonable request, SDI shall supply Avigen with all Know-How in SDI’s possession at the date of the request that (a) SDI Controls, (b) has not previously been supplied to Avigen; and (c) is necessary or useful to enable Avigen to undertake (x) the further development of the Licensed Products (including without limitation any such Know-How that is necessary or useful to include in an IND or NDA for any Licensed Product) and (y) prosecution for the Territory of the Licensed Patents (“Information”). The Information shall be subject to the confidentiality provisions of Clause 3.3. The Information shall include at a minimum each of the following:

3.1.1		[*
3.1.2
3.1.3
3.1.4
3.1.5		]

This Section 3.1 shall not be read to limit in any way SDI’s obligations to (a) disclose Clinical Trial Information to Avigen under Section 5.11, or (b) make disclosures as set forth in the Supply Terms.

3.2

Use of Information . Avigen undertakes that for so long as any part of the Information remains subject to the obligations of confidence of Section 3.3 it shall -- to the full extent provided for in such Section and subject to the exceptions and permitted disclosures of Sections 3.4-3.7 -- protect the Information as Confidential Information and shall not use the Information for any purpose except in accordance with (including pursuant to any license granted Avigen under this Agreement) the provisions of this Agreement. This Section 3.2 is not intended to impose any different standard or obligation on Avigen for confidentiality and use of Information than the confidentiality and non-use provisions of Section 3.3 regarding all Confidential Information.

3.3	Confidentiality obligations . Each Party (“Receiving Party”) undertakes:

3.3.1

to maintain as secret and confidential all Know-How and other business information disclosed by the other Party (“Disclosing Party”) (whether directly through the Disclosing Party or indirectly through its Affiliate, Sublicensee or Other Licensee) under this Agreement or that certain Confidential Disclosure Agreement between Avigen and Sanochemia Pharmazeutika AG dated August 11 ^th , 2005 (all of the foregoing information disclosed by a Party, including disclosures under Section 5.11 and including in the case of SDI, the Information, collectively, that Party’s “Confidential Information”);

3.3.2 not to use Confidential Information that is not Know-How (i.e. that is other business information), and to use Confidential Information that is Know-How exclusively within the scope of a license granted such Party under this Agreement or otherwise in a manner consistent with Article 11 ( provided that under no circumstances shall Avigen cite clinical trial data received from SDI in a filing for Regulatory Approval outside the Territory nor shall SDI cite clinical trial data received from Avigen in a filing for Regulatory Approval inside the Territory); and

3.3.3

to disclose Confidential Information only to those of its employees, contractors, Sublicensees and potential Sublicensees pursuant to this Agreement (if any) to whom and to the extent that such disclosure is reasonably necessary or useful for the purposes of this Agreement and as provided in Section 3.6.

3.4	Exceptions to obligations . The provisions of Section 3.3 shall not apply to Confidential Information that the Receiving Party can demonstrate by competent proof:

3.4.1

was, prior to its receipt by the Receiving Party from the Disclosing Party, in the possession of the Receiving Party and not subject to legally binding obligations of confidentiality or non-use; or

3.4.2

is subsequently disclosed to the Receiving Party without any obligations of confidence or non-use by a third party who has not derived it directly or indirectly from the Disclosing Party; or

3.4.3

is or becomes generally available to the public or publicly known through no act or default of the Receiving Party or its agents, employees, Affiliates or Sublicensees; or

3.4.4

[*]

3.5

Legally Required Disclosures . If the Receiving Party is legally required to disclose Confidential Information of the Disclosing Party to the courts of any competent jurisdiction, or to any government regulatory agency or financial authority, the Receiving Party shall be entitled to do so; provided that the Receiving Party shall (i) inform the Disclosing Party as soon as is reasonably practicable, and (ii) at the Disclosing Party’s request seek or provide the Disclosing Party with reasonable assistance to seek to persuade the court, agency or authority to have the information treated in a confidential manner, where this is possible under the court’s, agency’s or authority’s procedures.

3.6

Disclosure to employees etc . The Receiving Party is entitled to disclose the Disclosing Party’s Confidential Information: to the Receiving Party’s employees, contractors, Affiliates, legal and financial advisors, and to investors and underwriters doing diligence on the Receiving Party and their legal and financial advisors; in Avigen’s case, to actual and potential Sublicensees and Distributors; and in SDI’s case, subject to Section 5.11.2, to SDI’s actual and potential Other Licensees. The Receiving Party shall procure, however, that all of the foregoing entities (if any) who have access to any of the Disclosing Party’s Confidential Information shall be made aware of and legally bound to obligations of confidentiality and non-use at least as restrictive as provided in this Article 3 and which apply to the Disclosing Party’s Confidential Information. Disclosures to employees and contractors shall be limited as per Section 3.3.3.

3.7

Publicity . Neither Party may use the name of the other party in any publicity, advertising or in any other public way nor issue press releases or otherwise publicize or disclose any information related to the existence of this Agreement, the terms or conditions of this Agreement or any information relating to the subject matter hereof without the prior written consent of the other Party. A Party is not required to get permission to repeat information that has already been publicly disclosed in accordance with this Agreement. Nothing in the foregoing shall prohibit a Party from making disclosures to the extent required to any Competent Authority or by any Competent Authority or any securities exchange on which such Party’s stock is listed.

3.7.1

In particular (but without limitation), SDI hereby acknowledges that Avigen is a publicly traded company in the US. Because of this: (a) Avigen will be required to publicly file this Agreement with the US Securities and Exchange Commission (“SEC”), (b) to the extent considered material to Avigen (as Avigen may determine in its reasonable judgment or as it may be advised by outside counsel), Avigen is required to publicly disclose events and information that relate to the Licensed Products and this Agreement, and (c) Avigen will be required to refer to this Agreement, Licensed Products and information and events relating thereto in Avigen’s SEC filings (both its regular filings and those that it makes in relation to financing events). Avigen shall be entitled to make all of the foregoing legally required disclosures. On initial filing of this Agreement, Avigen will request confidential treatment of the sensitive terms of this Agreement (to the extent reasonably available based on current law and SEC practice). On achievement of material events or receipt of material information regarding the Licensed Products, if requested by Avigen SDI shall -- while it may make comments for Avigen to reasonably consider as to wording -- approve a press release (or other appropriate public disclosure requested by Avigen) to announce the event or information.

3.7.2

Also in particular but without limitation, Avigen hereby acknowledges that SDI is an Affiliate of a publicly traded company in Germany. Because of this, Section 3.7.1 shall apply mutatis mutandis for SDI as it does for Avigen.

4	Accounting and Payment

4.1

Signature fee . Within 30 days of signature of this Agreement, Avigen shall pay to SDI three million US dollars (US$3,000,000) by wire transfer of immediately available funds in one lump sum. The foregoing sum is non-refundable, and shall not be set-off against and is not an advance on any other payments or sums which may be due or payable by Avigen to SDI whether by way of milestones, transfer payments, royalties or otherwise.

4.2

Milestones . Avigen shall pay to SDI the following sums within thirty (30) days after the first occurrence of the stated milestones. Such sums shall be non-refundable, and shall not be set-off against and not an advance on any other payments or sums which may be due or payable by Avigen to SDI whether by way of other milestone payments, transfer payments, royalties or otherwise:

Amount	Milestone
[*






	*]

Each milestone shall be payable once only, regardless of whether achieved more than once with respect to one or more Licensed Products. With respect to those milestones referable to Net Sales, [*] the [*] of [*] to [*] Avigen shall notify SDI in writing within 30 days following the first occurrence of each milestone event.

4.3	Royalties .

4.3.1

Base Rate . Avigen shall pay SDI a royalty of [*] of Net Sales [*] For Net Sales that [*] Avigen shall pay SDI a royalty of

[*] of such Net Sales. Such obligation to pay royalties only applies with respect to Net Sales occurring during the applicable Royalty Term for each Licensed Product in each country. Avigen shall not have any obligation to pay royalty on Net Sales occurring after the applicable Royalty Term for each Licensed Product in each country.

4.3.2

Second Part-Royalty Term Rate . For Net Sales during the Second Part-Royalty Term, Avigen shall pay royalties on such Net Sales at a rate equal to [*] the rate otherwise set forth in Section 4.3.1, instead of a royalty at the rate set forth in Section 4.3.1.

4.3.3

Competition Adjustment . If (a) any Third Party [*] or (b) in any [*] Tolperisone Products not sold by Avigen, its Affiliate, Distributor or Sublicensee (i.e., Tolperisone Products sold by other Third Parties, taken all together) [*] achieve a [*] market share [*] then, with respect to such country, Avigen shall be entitled to the royalty reductions of Section 4.3.3.1 and/or 4.3.3.2 respectively as applicable. For purposes of (b), market share shall be measured by number of prescriptions filled (or units sold), by reference to IMS data, or an at-least similarly reputable, validated audit source. This Section 4.3.3 (including the reductions and measurements provided below) shall apply with respect to all IR Products taken together, and separately to all CR-Qualified Products taken together. IR Products and CR-Qualified Products shall not be aggregated for purposes of measuring the [*] market share described above.

4.3.3.1

In the case of (a), the royalty reduction shall apply on a country by country basis in the Territory, and shall be in an amount that compensates Avigen for [*] in the US for Tolperisone Products licensed under this Agreement. The extent of this [*] shall be determined [*] by reference to the [*]

The precise amount of such royalty reduction in the case of (a) shall be agreed by the Parties in writing. If the Parties are unable to agree in writing within [*] after Avigen notifies SDI of (a) occurring, then the royalty reduction shall be decided by an Industry Valuation Expert through baseball arbitration as follows: At the end of such [*] period, either Party may refer the matter for resolution by written notice to the other Party. The Parties shall agree on the Industry Valuation Expert within [*] days after the date of such notice. (If they have not agreed within such [*] days, then each shall propose one (1), and these two (2) persons shall choose a third Industry Valuation Expert. This third

Industry Valuation Expert shall be the Industry Valuation Expert to decide the royalty reduction. If such two (2) persons cannot agree on the third, then the arbitral body specified in Section 12.9.1 shall designate a single Industry Valuation Expert who shall be the person to decide the royalty reduction.) The Parties shall share equally the expenses incurred for the services of such Industry Valuation Expert and arbitral body. Within [*] days after the Industry Valuation Expert is selected, each Party shall submit no more than [*] pages of written documentation to him or her stating such Party’s proposed royalty reduction and justification of it. Each Party shall be entitled to see the other Party’s submission. Within [*] days after the written documentation is due, the Industry Valuation Expert shall conduct a proceeding in which each Party is entitled to make a presentation of no more than [*] and to respond to the Industry Valuation Expert’s questions for no more than [*] Neither Party shall engage in ex parte communications with the Industry Valuation Expert. Within [*] days after the proceeding, the Industry Valuation Expert shall render his or her decision as to the royalty reduction. Such royalty reduction must be equal to one of the Parties’ proposals. The Industry Valuation Expert’s decision shall be binding on the Parties absent fraud.

This royalty reduction applies beginning as of Launch in the relevant country of the Territory and applies for so long as [*] Thereafter, the royalty rates set forth in Section 4.3.1 shall apply as the base royalty rate (subject to any other reductions under this Section 4.3).

4.3.3.2

In the case of (b), the royalty rates set forth in Section 4.3.1 shall be reduced to rates equal to [*] the rates set forth in such Section with respect to Net Sales in all Quarters in the relevant country of the Territory. This reduction shall only apply from the beginning of the [*] and thereafter [*] the [*]

4.3.4

Third-Party IP .

4.3.4.1

General . Rights and responsibilities as between the Parties regSarding Third-Party intellectual property are set out in Section 8.9.

Offset . If -- having first followed the procedures regarding Third-Party intellectual property licenses set forth in Section 8.9 -- Avigen pays any Third Party consideration for an intellectual property license covering the Licensed Product or to settle an intellectual property dispute with respect to Licensed Product(s), which license [*] then Avigen shall be entitled to offset against royalties due SDI hereunder [*] of such consideration to the Third Party (“Offsettable Consideration”). To avoid any doubt, Avigen may carry forward any unused (i.e. not offset) Offsettable Consideration into future payment periods, and Avigen is not in any way restricted to taking or applying its offsets in the payment period in which they were incurred. If Avigen chooses to invoke this provision with respect to any given such Necessary license that Avigen has successfully obtained, this Section 4.3.4.2 shall be [*]

4.3.5

Calculation of Net Sales of Combination Products . Net Sales of any Licensed Product sold by or on behalf of Avigen, its Affiliates and/or its Sublicensees as part of a product that in addition to Tolperisone (or any of the forms of it referred to in the definition of Tolperisone Product) contains one or more other active ingredients (the product is a “Combination Product”), shall be calculated as follows:

4.3.5.1

The Net Sales for the purpose of determining royalties on sales of the Combination Product shall be calculated by multiplying Net Sales of such Combination Product by the fraction A/(A+B) where A is either: (a) the price to Third Party end users of the Tolperisone Product component of the Combination Product when sold separately, should Tolperisone Products be sold separately in the applicable country; or (b) the fair market value of the portion of the Combination Product containing the Tolperisone Product included in such Combination Product, as such fair market value is determined in good faith by the Parties, if Tolperisone Products are not sold separately in the applicable country, and B is either (c) the price to Third Party end users of product containing the other active ingredients of the Combination Product when sold separately should such active ingredients be sold separately in the applicable country; or (d) the fair market value of the portion of the Combination Product containing the other active ingredients, as such fair market value is determined in good faith by the Parties, should such active ingredients not be sold separately in the applicable country.

4.3.5.2

Regarding list prices when sold separately referred to in Section 4.3.5.1, if these are available for different dosages of Tolperisone and the other active ingredients than their dosages that are included in the Combination Product, then Avigen shall be entitled to make an equitable (typically, proportional) adjustment to the list prices in calculating the royalty-bearing Net Sales of the Combination Product.

4.3.5.3

Regarding fair market values called for in Section 4.3.5.1, if the Parties do not agree as to fair market values by good faith negotiations of no less than [*] days after either Party first proposes in writing such values to the other Party, then the mechanism of the second paragraph of Section 4.3.3.1 shall apply mutatis mutandis to have an Industry Valuation Expert decide which of the Parties’ proposals as to such fair market values shall be used for the calculation of Section 4.3.5.1.

4.3.6 Anti-Bundling . If Avigen (or its Affiliate or Sublicensee) prices a “bundle” of products, and the “bundle” includes Licensed Product, then (for purposes of calculating royalties due under this Section 4.3) Net Sales of the Licensed Product when sold as part of the “bundle” shall be discounted relative to the list price of that Licensed Product when sold separately, if at all, by no more than the average percentage discount of all products included in the “bundle,” calculated as follows:

Average percentage discount on a particular “bundle” of products = 1 - (A/B) x 100,

where A equals the total discounted price of the “bundle” of products, and B equals the sum of the undiscounted bona fide list prices or fair market values as established by other evidence of each unit of every product in such “bundle.”

For purposes of this Section 4.3.6, a “bundle” is a group of products for which Avigen (or its Affiliate or Sublicensee) establishes prices with individual customers as a group or package, such that the prices for all products in the group are negotiated together. (This practice is sometimes referred to as “portfolio pricing.”)

4.3.7

Payment Schedule . Avigen shall pay SDI the royalty required under this Section 4.3 within [*] days of the end of each Quarter in respect of sales of Licensed Product made and Net Sales generated during such Quarter.

4.3.8

Sales to Related Parties as End Users . Sales to Third Parties are presumed to occur at arm’s length. Net Sales regarding these sales in general require no special adjustments to ensure arm’s-length pricing. In cases, however, where Avigen or its Affiliate or Sublicensee sells Licensed Product to an entity in which any of them has a [*] and such entity (a) is not marketing or clinically testing Licensed Product, and (b) is the end user of such Licensed Product (“Related Entity End User”), then the value of Net Sales for the units sold to the Related Entity End User shall be equal to the average per-unit Net Sales price for Licensed Product in the country of the Related Entity End User. (To avoid any doubt, the sales to the Related Entity End User itself shall be excluded from the calculation of the average per-unit Net Sales value, which shall be based on the other sales of the applicable Licensed Product in that country.)

4.4

Clinical Supply Price . Supply of Finished Product to Avigen and made available by Avigen on a free of charge basis for the purposes of conducting clinical trials necessary for obtaining Regulatory Approvals and/or label expansions for Licensed Products that have already been approved, or for use in marketing studies, shall be at the price set forth in Schedule 5 for the Current IR Product and corresponding placebos, and the Current CR Product, and [*] If for such clinical purposes Avigen requires supply of any differently formulated IR Product or CR-Qualified Product (for example, if the FDA requires a modification to either of them), then SDI shall supply Avigen at a price that reflects any increase in SDI’s Fully Burdened Manufacturing Cost to manufacture the differently formulated version, relative to SDI’s Fully Burdened Manufacturing Cost as of the Commencement Date, to manufacture the Current IR Product and the Current CR Product. To avoid any doubt, nothing in this Section 4.4 is intended to make Avigen responsible in any way (on a pass-through basis through the supply price or otherwise) for any capital improvements that may be required for SDI to manufacture Licensed Products to supply Avigen hereunder.

4.5 Commercial Supply Price . In addition to the sums set out in clauses 4.1, 4.2, 4.3 and 4.4, and in consideration of all supply of Finished Product to Avigen other than for the purposes of conducting clinical trials necessary for obtaining or expanding Regulatory Approvals, Avigen shall pay SDI the following transfer prices, calculated and payable as follows:

4.5.1

An advance payment of [*] of Finished Product for the IR Product, and a price per pack of the CR-Qualified Product determined in accordance with Section 4.5.4, in each case delivered to Avigen or its designee (“Advance Payment”); and

4.5.2

A payment calculated as Net Sales in any Quarter multiplied by the Transfer Price Percentage (“Further Payment”); and

4.5.3

The payment required in Section 4.5.2 shall be reduced by the amount of the Advance Payment attributable to that same Quarter (i.e., by [*] of Licensed Product sold that Quarter to generate that Quarter’s Net Sales), and the payment of Section 4.5.2 is only required to actually be made to the extent the Further Payment in any Quarter exceeds the Advance Payment attributable to that same Quarter. To the extent the Advance Payment attributable to a Quarter (i.e., [*] of such Licensed Product sold that Quarter to generate that Quarter’s Net Sales) exceeds the Further Payment for that Quarter, Avigen is entitled to credit the amount by which such Advance Payment exceeds such Further Payment (the “Excess”) against subsequent payments due SDI hereunder, or, if no further payments are due SDI hereunder SDI shall refund to Avigen the Excess within [*] after requested in writing by Avigen.

4.5.4

When a phase III clinical trial to support US Regulatory Approval of a CR-Qualified Product is commenced, the Parties shall [*] Such Advance Payment on a per-unit basis shall be less than [*] If the [*] in [*] then the [*] shall be such Advance Payment.

4.5.5

If Net Sales per [*] then the Parties shall meet to discuss in good faith such measures as are appropriate and reasonable under the circumstances. Neither Party is required to agree to any change, reformation or amendment to this Agreement to address such circumstances. If the Parties are not able to agree in writing on such measures within six (6) months, then SDI shall either continue to supply Avigen in accordance with this Agreement (including the Supply Terms), or (b) notify Avigen in writing that the following rights of Avigen with respect to Licensed Product manufacture apply:

4.5.5.1

Avigen is released of its obligations to purchase its requirements of Licensed Product from SDI;

4.5.5.2

SDI hereby grants Avigen, effective upon grant of such rights hereunder, the exclusive right to manufacture Avigen’s (and its Affiliates’ and Sublicensees’) requirements of Licensed Product for the Territory (in any and all forms, including Tolperisone API and Finished Product forms), under all Patents and Know-How the subject matter of which was practiced under the Supply Terms; such license shall be sublicenseable through one (1) or more tiers of sublicensees without consent;

4.5.5.3

SDI shall -- and SDI shall cause all of its Affiliates and contractors who have been manufacturing Licensed Product (in any and all forms) supplied (or to be supplied) to Avigen under the Supply Terms to -- promptly after written request by Avigen perform all technology transfer requested by Avigen to establish all then-current manufacturing processes (including analytical methods) for Licensed Products (in any and all forms) at Avigen’s

manufacturing facility or the manufacturing facility of Avigen’s chosen supplier.

4.5.5.4

SDI shall continue to fill Avigen’s purchase orders for Licensed Product placed in accordance with the Supply Terms, until such time as Avigen is able to establish (pursuing such establishment with Diligent and Reasonable Efforts) an alternative source of supply that has been validated with and accepted by all Regulatory Bodies of the Territory in which Licensed Products have received Regulatory Approval, such that Avigen may legally sell Licensed Products under such Regulatory Approvals in such country;

4.5.5.5

Avigen shall remain responsible for royalties under Section 4.3, but except with respect to quantities actually supplied to Avigen by SDI in accordance with Section 4.5.5.4, Avigen shall not be responsible for any additional payments under Section 4.5.

4.6	Timing of Commercial Supply Payments .

4.6.1

The Advance Payment shall be paid within [*] of delivery in accordance with the Supply Terms.

4.6.2

The Further Payment (if any actual payment is required under Section 4.5.3) shall be made within [*] of the end of the Quarter to which such payment is attributable. The Further Payment shall be accompanied by an accurate and reasonably detailed statement setting out Avigen’s calculation of the Further Payment for such Licensed Products in accordance with clause 4.5 above based on actual invoiced gross sales (and deductions in accordance with the definition of Net Sales), as well as reconciling Advance Payments made with Further Payments due in that Quarter.

4.7

Late Payments . Any payment which is not paid within the time frames specified in this Article 4 shall bear interest, to the extent permitted by applicable law, at the prime rate of the Bank of America (or if it no longer exists under such name, the entity succeeding to all or substantially all of its banking assets) as reported in the Wall Street Journal (or its successor) from time to time, calculated on the number of days such payment is overdue.

4.8

Withholding . If provision is made in law or regulation of any country for withholding of taxes of any type, levies or other charges with respect to the signature fee, milestone payments, royalties or other amounts payable under this Agreement (including, to avoid any doubt, the Supply Terms) to SDI, then Avigen shall be entitled to deduct such taxes, levies and other charges from such amounts payable under this Agreement. Avigen shall promptly pay such tax, levy or charge for and on behalf of SDI to the proper government authority. Avigen shall thereafter promptly (within sixty (60) days) furnish SDI with receipt of payment. Avigen shall be entitled to be promptly reimbursed by SDI if no further payments are due from Avigen to SDI. Each Party agrees to assist the other Party in claiming exemption from such deductions or

withholdings under double taxation or similar agreement or treaty from time to time in force and in minimizing the amount required to be so withheld or deducted.

4.9	No Set Off . Except to the extent expressly stated otherwise in this Agreement (for example, in Section 4.8 with respect to withholding and *[]** ), all payments to SDI hereunder shall all be made without deduction or set-off of any nature whatsoever.

4.10	Records and Audits .

4.10.1

Avigen shall keep and ensure that its Affiliates and Sublicensees keep complete and accurate records of its inventory of Licensed Products, and sales and other dispositions (including use in clinical trials, or provision on a compassionate use basis or as marketing samples) of the Licensed Products including all such records that may be necessary for the purposes of calculating all payments due under this Agreement. SDI shall have the right to have a certified public accounting firm that is nationally recognized in the US examine such records. Avigen shall make such records available for inspection by SDI’s chosen such accounting firm at Avigen’s premises in the US on reasonable notice during regular business hours.

4.10.2	Accordingly, at the expense of SDI no more than once per year, SDI has the right to have such certified public accountant from a nationally recognized accounting firm perform on behalf of SDI an audit -- conducted in accordance with US generally accepted accounting principles -- of such books and records of Avigen, its Affiliates and its Sublicensees, as are deemed necessary by the independent public accountant to report on Net Sales for the period or periods requested by SDI and the correctness of any report or payments made under this Agreement (all subject to Section 4.10.3).
4.10.3	Upon timely request and at least *[] business days’ prior written notice from SDI, Avigen shall permit such audit to be conducted during regular business hours in such a manner as to not unnecessarily interfere with Avigen’s normal business activities. Such audit shall be limited to results in the []* prior to audit notification.
4.10.4	All information, data, documents and abstracts herein referred to shall be used only for the purpose of verifying compliance with this Agreement, shall be treated as Avigen Confidential Information subject to the obligations of this Agreement (in particular Article 3) and need neither be retained more than *[] after completion of an audit hereof, if an audit has been requested; nor more than []* from the end of the calendar year to which each shall pertain; nor more than one (1) year after the date of termination of this Agreement.
4.10.5	Audit results shall be shared by Avigen and SDI. However, no information that is not necessary to demonstrate any under- or over-payment will be disclosed by the auditor to SDI (nor is this information otherwise required under this Section to be shared with SDI). The auditor shall be under written obligations to Avigen of confidentiality and non-use (other than uses required by this Section 4.10).
4.10.6	If the audit reveals an overpayment, SDI shall promptly reimburse Avigen for the amount of overpayment.

4.10.7 If the audit reveals an underpayment, Avigen shall promptly make up such underpayment. If the audit reveals that the monies owed by Avigen to SDI has been understated by more than [*] Avigen shall, in addition, pay the reasonable costs of such audit.

4.11

Currency . All payments hereunder shall be made in US dollars by wire transfer to a bank account designated by SDI. Where the Net Sales underlying any royalty due hereunder are in a currency other than US dollars, the amount of each payment concerned shall be converted from such other currency using the exchange rate for the currency concerned available from the Bank of America (or if it no longer exists under such name, the entity succeeding to all or substantially all of its banking assets) on the date payment is first due.

5	Development and Regulatory .

5.1

Joint Committee . Promptly after the execution of this Agreement the Parties will form a joint information sharing committee (the “Committee”). The Committee shall be made up of an equal number of representatives of each of SDI and Avigen. It shall include at least one person at the level of Vice President or above from each Party. The role of the Committee is to provide a regular forum for communication between the Parties. The Committee is anticipated to be the first place and opportunity for the Parties to discuss any desired elements of collaboration and to consider together any potential amendments to this Agreement with regard to development activities. Neither Party is required to agree to any such amendments. Any actual amendments require an authorized officer of each Party to sign in writing the amendment. The Committee has no decision-making authority. The Committee has no power to amend, modify or waive compliance with this Agreement. The Committee shall meet Quarterly until Launch of the CR-Qualified Product in the US (or, if development of any CR-Qualified Product is abandoned by SDI, Launch of the IR Product in the US) and annually thereafter.

Avigen shall prepare and deliver progress reports regarding Licensed Product development not less than [*] prior to each meeting of the Committee. SDI shall do the same in time periods when SDI is conducting (including sponsoring) clinical trials of Licensed Products.

Each Party shall have the right to change their representation on the Committee upon not less than [*] written notice to the other Party. The Committee is not specific to development information sharing. It also applies to commercialization information sharing. It is anticipated that as Avigen’s primary Licensed Product activities shift from development to commercialization, the Parties may wish to update their Committee membership to include people more familiar with commercialization than development (but to be clear, this is voluntary, not required).

5.2

Overview and Background . SDI is seeking to gain Regulatory Approval to market the Current IR Product and Current CR Product in Europe. To work to achieve this, SDI has conducted certain clinical trials of each of the Current IR Product and the Current CR Product prior to the Commencement Date. For the Current IR Product, the Parties expect that data from the clinical trials for which SDI already (as of the Commencement Date) has the final reports and final data should enable Avigen to proceed directly to conduct [*] . For the Current CR Product, in contrast, SDI has conducted a PK trial, but not yet any phase II clinical trials on the Current CR Product. The phase II trial envisaged for the Current CR Product is the Required Phase II CR Clinical Trial, as further described in Section 5.5. As specified in Section 5.5, Avigen will not be conducting such trial or any similar trial unless it elects in its sole discretion to do so. It is not possible for Avigen to proceed directly to a Pivotal Trial Program of the

Current CR Product for the US market on the basis of SDI’s current clinical data. Therefore, Avigen’s clinical development of the Current CR Product -- which is intended by the Parties to begin with a Pivotal Trial Program, and not, except to the extent Avigen agrees in its sole discretion otherwise, any earlier stage trials ( [*] ) -- depends on the clinical trial of the Current CR Product for which SDI is responsible under Section 5.5, with Avigen’s consultation and input under such Section. Avigen shall also be obliged to contribute to a portion of the cost of such trial, solely if and to the extent specified in Section 5.5 with respect to a change to such trial [*] of which Avigen notifies SDI in writing under such Section that [*] Accordingly: (a) SDI is required to carry out certain further Current CR Product clinical programs as stated in Section 5.5, and an outline of which is attached at Schedule 2 (“SDI CR Clinical Program”), and (b) other than the obligations for Avigen to confer in a collaborative manner and provide input to SDI to the extent set forth in Section 5.5, Avigen’s diligence and other obligations for CR-Qualified Products do not begin prior to, and are subject to SDI’s successful completion of, the SDI CR Clinical Program, or [*] of a [*] that [*] the [*] that [*] through [*] on the timing and as provided in Section 7.2.3.

The remainder of this Article 5 and Article 6 (except with respect to Avigen’s obligation to use Diligent and Reasonable Efforts, and SDI’s obligations to use such efforts under Section 5.8.3), represent merely a general statement of the allocation of responsibilities among the Parties. Avigen’s diligence obligations with respect to these responsibilities are set forth in Article 7. Nothing in this Article 5 or Article 6 shall be read to modify Article 7 or impose a different or heightened standard on Avigen in lieu of or in addition to those of Article 7.

5.3

Avigen Overall Responsibility . Avigen shall as between the Parties be responsible to: (a) develop and obtain Regulatory Approval for Licensed Product for the Field in the Territory; (b) carry out a Launch in respect of Licensed Product in all countries in the Territory in which it receives Regulatory Approval (and any applicable governmental pricing approval that may in effect be required for a commercially reasonable product launch); and (c) promote, market, sell or otherwise commercially exploit Licensed Products for the Field in the Territory. All expenses incurred by Avigen for research, development and commercialization, including all required expenses for toxicology and all expenses for preclinical development, clinical trials, preparing, filing and maintaining INDs and NDAs and other regulatory activities, shall be borne and paid by Avigen.

5.4

Certain Service Providers for the Territory . Attached at Schedule 7is a list of agreements initiated and entered by SDI or its Affiliates prior to the Commencement Date and related to the development of the Licensed Products. By way of background, each item on the list [*] that Avigen would require written agreement with the service provider on in order to take over the relationships with these service providers for [*] Avigen shall [*] to reach [*] as to [*] with the service provider for each item listed at Schedule 7. If Avigen reaches such agreement on any item listed at Schedule 7, then Avigen shall assume all of SDI’s obligations under and responsibility for, and shall pay all fees and expenses payable by SDI under, such agreement to the extent they accrue and /or fall due on or after the Commencement Date. If Avigen fails to reach such agreement on any item listed at Attachment 4, then SDI shall retain responsibility for and the relationship

under such item and shall retain its obligations to the relevant service provider. If data generated under any such item is submitted by Avigen to a Regulatory Body (whether submitted in a Regulatory Approval Application or in response to a Regulatory Body request or requirement), then Avigen shall reimburse to SDI all fees and expenses paid by SDI under such agreement to the extent they accrued and /or fell due on or after the Commencement Date. In the case of the document written in the German language referred to in Schedule 7, SDI has provided a written translation of such document into English. Avigen is entitled to rely on such translation provided by SDI. As between the Parties, SDI shall be solely responsible for any discrepancies between the German version and the English translation provided by SDI.

5.5

SDI CR Clinical Program . Schedule 2 contains a description of the basic elements of the SDI CR Clinical Program. The SDI CR Clinical Program shall encompass [*] and that must meet the Phase II Design Standard (the “Required Phase II CR Clinical Trial”). Within one hundred twenty (120) days after the Commencement Date, the Parties shall discuss through the Committee a more detailed specification for such program, including protocols to be submitted for Regulatory Body and institutional permissions to conduct the trial, and in particular the design of and the formulation (recognizing that the Parties currently intend it to be the Current CR Product) of the potential CR-Qualified Product which is to be used in such Required Phase II CR Clinical Trial. These discussions are intended to explore advice, suggestions and questions Avigen may have regarding the Required Phase II CR Clinical Trial as proposed by SDI and to provide an opportunity for Avigen to give SDI feedback. However, [*] for [*] the [*] as to the [*] implementation of the Phase II CR Clinical Trial [*] the [*] or [*] of the [*] as [*] as well as the decisions regarding whether or how to conduct any further phase II clinical testing of potential CR-Qualified Products that SDI may choose to undertake to demonstrate whether a particular pharmaceutical composition actually meets the definition of CR-Qualified Product. SDI shall use its Diligent and Reasonable Efforts to conduct and complete the Required Phase II CR Clinical Trial. The costs of the Required Phase II Clinical Trial shall be borne by the Parties as follows:

(a) SDI shall be solely responsible for all such costs other than those set forth in clause (b) (immediately following) to be Avigen’s responsibility, and

(b) If the Parties discuss a potential addition or cost-increasing change to the Required Phase II CR Clinical Trial, which addition or cost-increasing change [*] be [*] to [*] a determination whether [*] then if Avigen -- once notified by [*] -- agrees (in its sole discretion) in writing to pay the costs of the addition or change, then Avigen may [*] that SDI implement such change on the basis that Avigen would pay such costs if SDI were to implement the change. SDI, [*] shall [*] whether or not to implement such change. In making this decision, [*] primary factors whether the addition or change would materially delay the trial or materially interfere with the trial, in which case depending the circumstances and importance of data from the addition or

change [*] the written agreement for the costs shall state in detail the particular addition or change that is to be implemented, as well as the costs of such change. Avigen may wish to fund an addition or change to obtain data that is not [*] or because Avigen believes [*] determination at that stage. However, in no event shall this provision be read to mean that if [*] or agree to [*] that the trial as conducted without such data is necessarily [*] merely because [*] designing the Required Phase II Clinical Trial that meets the Phase II Design Standard and yields data allowing this determination to be made remains [*] Beyond the Required Phase II CR Clinical Trial, each Party is responsible for the costs of the clinical trials of Licensed Products that such Party conducts, except only to the extent the Parties otherwise agree in writing (with each Party being entitled to withhold its consent in its sole discretion).

SDI is not required to undertake clinical testing of potential CR-Qualified Products beyond the SDI CR Clinical Program. However, SDI may choose to do so (at its sole expense). Avigen will have the obligations as regards an additional formulation (but only if further formulations are required) other than the Current CR Product that is proven in phase II to qualify (at that stage, subject to demonstration to the contrary at a later stage) as a CR-Qualified Product, that are set forth in Section 7.2.3.

5.6

Avigen Clinical Trials . Except for the SDI CR Clinical Program, Avigen shall be solely responsible for the cost of all studies necessary to file for Regulatory Approval of the Licensed Products in the Territory, whether or not such studies are contracted out to a Third Party. Avigen’s current plans for its clinical trials of the Current IR Product for the Field are as set forth in Schedule 6. Such plans are subject to change. Avigen does not covenant, represent or warrant that its actual clinical program for the Current IR Product will be as set forth in such Schedule. However, as Avigen develops these plans Avigen will discuss them with SDI through the Committee meetings. Avigen is not required to obtain SDI’s consent to Avigen’s clinical plans for any Licensed Product.

Regarding the Current CR Product, following completion of the Required Phase II CR Clinical Trial and any further trials of the Current CR Product that are conducted in accordance with Section 5.5 and final reports and analysis of data from such trial(s), Avigen shall decide whether to commence the Pivotal Trial Program with respect to the Current CR Product. If Avigen in its sole discretion decides not to request the FDA to hold a pre-IND meeting with Avigen [*] following completion of the determination that the Current CR Product is a CR-Qualified Product and availability to Avigen of the final reports from all clinical trials used to demonstrate such status (including the final report from the Required Phase II CR Clinical Trial) in order to seek permission to commence such Pivotal Trial Program, then for so long as (and only for so long as) the Current CR Product continues to be proven to qualify as a CR-Qualified Product, [*] If Avigen chooses to commence the Pivotal Trial Program with respect to the Current CR Product, then for so long as Avigen continues to pursue with Diligent and Reasonable Efforts a Pivotal Trial Program, [*] However, if Avigen thereafter ceases to pursue with Diligent and Reasonable Efforts such a Pivotal Trial

Program with respect to the Current CR Product, the Current CR Product shall only be deemed a CR Product if and for so long as it is demonstrated to meet the standards to be a CR Product in accordance with the definition of such term.

If the Required Phase II CR Clinical Trial is performed on a formulation other than the Current CR Product, then the foregoing paragraph applies mutatis mutandis to that formulation. In addition, if SDI presents an alternative formulation timely under Section 7.2.3 with phase II clinical trial data from a trial commensurate with the Required Phase II CR Clinical Trial demonstrating that such formulation at that stage is a CR-Qualified Product (“Alternative Formulation”), then the foregoing paragraph applies mutatis mutandis to the Alternative Formulation. To be clear, the foregoing sentence only applies if the Current CR Product fails in development or is not proven to be a CR-Qualified Product.

If Avigen is deemed under the foregoing in this Section 5.6 to have [*] develop as a CR-Qualified Product both the Current CR Product (or such alternative formulation tested in the Required Phase II CR Clinical Trial), and an Alternative Formulation (which -- by definition -- [*] then [*] solely and exclusively with respect to the [*] if and for so long as each continues to qualify as such, but Avigen shall [*]

5.7

Avigen Regulatory Filings . Avigen shall file and process all applications for Regulatory Approval in the Territory in its own name and shall be solely responsible for the cost of the filing and processing of all such applications in the Territory, taking such steps and actions as may be necessary and advisable to obtain Regulatory Approval for the Licensed Products in the Territory, including, without limitation, making all applications, requests for authorizations, submissions of information and data, connected with or related to the approval of clinical trials work and Regulatory Approvals for the Licensed Products under this Agreement with the Regulatory Body or other competent authorities of the Territory. Avigen shall provide to SDI copies of a draft summary of all manufacturing data and draft related submissions sufficiently in advance of submission to such Regulatory Body or authorities to allow SDI reasonable opportunity to comment thereon, and Avigen shall take reasonable account of SDI’s comments. In addition, upon request of SDI, Avigen shall provide to SDI copies of a draft summary of all other data and draft related submissions sufficiently in advance of submission to such Regulatory Body or authorities to allow SDI reasonable opportunity to comment thereon, [*] Avigen is entitled, if it chooses, to provide these copies in electronic form. SDI shall have the right to receive a copy with regard to any written submission to such Regulatory Body or authority.

5.8	Certain SDI Supply, Information Disclosure and Regulatory Responsibilities . In order to enable Avigen to file and process INDs and Regulatory Approval Applications SDI shall:

5.8.1

At the price referred to in Section 4.4 provide to Avigen Avigen’s requirement of clinical supplies of Licensed Products to support the work to be carried out by Avigen to obtain Regulatory Approval or any phase IV clinical trials.

5.8.2

Free of charge, provide to Avigen all information and documentation in its possession at the relevant time regarding the relevant Licensed Products and the manufacturing process therefore to the extent necessary to support such applications. This shall include but not be limited to any information typically required in drug master files (DMFs).

5.8.3 Use Diligent and Reasonable Efforts to support Avigen in obtaining Regulatory Approval for the Licensed Products in the Territory. Such support shall be provided free of charge (including internal and external costs) in so far as it relates to the provision of information which SDI has in its possession or can be derived (without generating any further data or information) from information within its possession and Control. Such support shall include [*]

5.9	Notices Regarding Certain Regulatory Submissions and Grants. Avigen shall promptly inform SDI of the submission and grant of any Regulatory Approval.

5.10	No SDI Communications with Territory Regulatory Bodies . Except to the extent Avigen requests in writing, SDI and its Affiliates and Other Licensees (“SDI Communicators”), shall not communicate with any Regulatory Body of the Territory (including the FDA) regarding any Licensed Products.

With respect to Licensed Product manufacture, SDI Communicators shall be entitled to communicate with Territory Regulatory Bodies to the extent provided in the Supply Terms. However, Avigen shall have the right to comment in advance (and SDI shall incorporate Avigen’s comments) on all such written communications and to participate in all meeting with Territory Regulatory Bodies regarding Licensed Product manufacture. In addition, to avoid any doubt, Avigen has those rights to notices and with respect to audits, inspections, communications and meetings by and with Regulatory Bodies that are set forth in the Supply Terms.

5.11	Clinical Trial Information from Each Party .

5.11.1

Disclosure . Each Party shall promptly disclose to the other, free of charge, and for the other Party’s use in accordance with this Agreement, any and all Clinical Trial Information that the disclosing Party develops or obtains or that otherwise becomes available to it before and during the term of this Agreement with respect to Licensed Product safety and Licensed Product efficacy for the Field.

5.11.2

Sharing with Other Licensees . Avigen acknowledges that SDI shall, subject to appropriate terms as to confidentiality, provide relevant Clinical Trial Information to its other Licensed Product licensees outside the Territory (together with any Licensed Product distributors outside the Territory, the “Other Licensees”), subject to the last sentence of this Section 5.11.2. SDI shall be entitled to use Avigen’s Clinical Trial Information itself for SDI’s own activities with regard to the Licensed Products outside the Territory. SDI shall only provide Avigen’s Clinical Trial Information to those Other Licensees who agree in writing in advance to provide all Know-How of the Other Licensee that if such Know-How were Controlled by SDI would be Clinical Trial Information, to Avigen, and that Avigen shall be entitled to use, practice and disclose such Know-How within the scope of, and for activities in exercise of, Avigen’s license under Section 2.1.

5.11.3

Control of Information from SDI CR Clinical Program . SDI covenants that it shall have the right to license to Avigen for the activities specified in Section 2.1 all Know-How generated in connection with the SDI CR Clinical Program and all other testing of Licensed Product by or on behalf of SDI or its Affiliates.

5.12 Adverse Events Reporting . The Parties shall perform their obligations under the adverse events reporting protocol agreed to in writing prior to the time that both Parties have regulatory reporting obligations with respect to Licensed Products, which protocol shall be consistent with the protocol provided at Schedule 8 as well as in any event providing for sufficiently fast reporting between the Parties of adverse events to permit Avigen to comply with Territory Regulatory Body requirements. SDI shall require its Other Licensees to provide information that -- if known to SDI -- would be required to be reported under such protocol, on a timeline that is at least fast enough to enable SDI to meet its obligations under such protocol.

6	Commercialization and Commercial Supply .

6.1

Committee at Commercialization Stage . The Committee shall (as per Section 5.1) continue to meet annually after US Launch of the CR-Qualified Product (or if CR-Qualified Product development is abandoned by SDI or Avigen, of the IR Product in the US). Avigen will provide the Committee with written updates regarding Avigen’s progress to commercialize Licensed Products, every [*] prior to the anticipated date of first Launch in the Territory and continuing so long as the Committee meets.

6.2

Marketing Plans . Avigen shall be responsible for the creation and implementation of marketing plans for the Licensed Products in the Territory. Avigen shall not be required to obtain SDI’s approval of Avigen’s marketing plans, promotional advertising and selling material. At a reasonable time and in no event later than [*] before anticipated Launch of a Licensed Product in the Territory, Avigen shall provide SDI with its marketing plan for the Territory. Thereafter Avigen shall provide SDI’s Marketing Representative (meaning one of SDI’s Committee members, whom SDI will designate as the primary contact for marketing information sharing) with Avigen’s annual marketing plan for the Territory [*] until (as to each Licensed Product) [*] after Launch of such Licensed Product in the US. SDI’s Marketing Representative’s function is to provide comment to Avigen to which Avigen shall give due consideration, but all decision-making authority (including the final decision) with regard to all promotional and other commercialization activity for the Licensed Products in the Territory shall remain with Avigen. Such marketing plans shall include (at a gross level of detail) the activities of Avigen’s Affiliates and Sublicensees, if any. Such marketing plan for Licensed Products shall include the following information:

6.2.1

6.2.2

6.2.3

6.2.4

6.2.5

]

each of the foregoing to the extent reasonably available to Avigen.

6.3

Net Sales Reports . Avigen shall inform SDI in writing within [*] following the end of each Quarter about the Net Sales value and calculation for the Quarter, and Avigen’s and its Affiliates’ and/or its Sublicensees’ inventories of the Licensed Products. Avigen may choose to combine this report with the report of Section 4.6.2.

6.4

Sales Estimates . In addition to the forecast and ordering procedures set out in the Supply Terms, Avigen shall provide to SDI a sales target report showing Avigen’s estimates of sales of Licensed Products by or on behalf of Avigen over a [*] period (“Sales Estimate”). The first Sales Estimate shall be provided no later than [*] prior to the anticipated date of Launch of the first Licensed Product, and shall estimate sales for the [*] period from Launch. The Sales Estimate shall be updated [*] . The Sales Estimate shall not be binding, but Avigen shall use its Diligent and Reasonable Efforts to ensure that it is a true and accurate reflection of Avigen’s then-expected sales performance, fairly and reasonably estimated based upon the information then available to Avigen.

6.5	Launch Notice . Avigen shall promptly (within *[]** days after occurrence) inform SDI in writing of the date of actual Launch of each Licensed Product in the Territory.

6.6	Pricing . Pricing policy for Licensed Products shall be the exclusive responsibility of Avigen.

6.7

Quality . Avigen shall procure that all of the Licensed Products marketed by or on behalf of it, its Affiliates and its Sublicensees are of satisfactory quality and comply with all applicable laws and regulations in each part of the Territory, including without limitation the Regulatory Approval therefor, and all subject to SDI meeting its obligations under the Supply Terms.

6.8

Promotional Material . No more frequently than once per year the Committee will review Avigen’s printed promotional materials for the Licensed Product. SDI shall be entitled to share its thoughts and comments with Avigen. Avigen, however, as between the Parties retains sole decision-making authority as to promotional materials.

6.9

Supply Terms . During the term of this Agreement, SDI agrees to supply Avigen and Avigen agrees to purchase from SDI, Avigen’s and its Affiliates’ and Sublicensees’ total clinical and commercial requirements of the Licensed Product for the Territory (to be clear, except as provided in Section 4.5.5, Section 10.4, and Supply Terms Articles 6 and 8). The supply and purchase shall be pursuant to the Supply Terms.

6.10	Relationship to Supply Terms . The Supply Terms shall be deemed part of this Agreement, and any breach thereof shall be deemed a breach of this Agreement.

7	Diligence and Diligence Determinations .

7.1	Diligence Obligation . Avigen shall devote Diligent and Reasonable Efforts, subject to SDI supplying Licensed Products in accordance with the Supply Terms, to:

7.1.1

conduct any Pivotal Clinical Trials of the Current IR Product that may be required to support US Regulatory Approval of the Current IR Product for [*] ;

7.1.2

if the results of the SDI CR Clinical Program are sufficient to support the commencement of a Pivotal Clinical Trial, which Pivotal Clinical Trial would be of a formulation that (at that stage) meets the definition of CR-Qualified Product, conduct those Pivotal Clinical Trials that are required to support US Regulatory Approval of that CR-Qualified Product for [*] provided, however , that for formulations that [*] to avoid any doubt, this Section 7.1.2 in no way alters the application of [*] and shall not be read or deemed to prevent Avigen from choosing to discontinue clinical trials of a formulation that [*] (so that unless the formulation separately [*] and this

Section 7.1.2 no longer applies to such formulation), nor require Avigen to continue any clinical trial (including a Pivotal Clinical Trial) of a formulation that no longer qualifies as a CR-Qualified Product ( [*] ); and provided, further , that to avoid any doubt, results of the SDI CR Clinical Program that support the commencement of a Pivotal Clinical Trial, but do not support that the subject formulation is a CR-Qualified Product (for example, that would support starting a Pivotal Clinical Trial, but not a Pivotal Clinical Trial that [*] ) do not give rise to an Avigen obligation under this Section 7.1.2 except only for so long as [*] );

7.1.3

within [*] after US Regulatory Approval of a first IR Product, Launch such IR Product in the US;

7.1.4

within [*] after US Regulatory Approval of a first CR-Qualified Product, Launch such CR-Qualified Product in the US;

7.1.5

after US Launch of each Licensed Product, promote and market such Licensed Product, including [*] ; and

7.1.6

after US Regulatory Approval, determine a strategy for whether to seek Regulatory Approval of such Licensed Product in the other countries of the Territory (it being understood and agreed that depending on pricing, parallel importation and all other relevant issues and concerns a reasonable commercial strategy for the Licensed Product may not involve seeking Licensed Product Regulatory Approval in or selling Licensed Product in such other countries of the Territory). It is anticipated by the Parties that not seeking Regulatory Approval for and selling Licensed Product in such other countries of the Territory may be consistent with the exercise of Diligent and Reasonable Efforts.

7.2	Development and Launch Diligence Goals and Timelines . Avigen shall be deemed to be meeting its obligations under Section 7.1 so long as it does not fail to meet any of the following diligence goals on the timeline set forth in this Section 7.2:

7.2.1	IR Product .
	7.2.1.1	File an IND with *[] for an IR Product within []*
	7.2.1.2	commence a clinical trial of the Current IR Product *[] for such trial ( []* to *[]** ); and
	7.2.1.3	if warranted by the res

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