Document:

exv10w2

 

EXHIBIT
10.2

CONFIDENTIAL TREATMENT REQUESTED

QUALITY AGREEMENT

THIS AGREEMENT made as of the 4th day of January, 2006

BETWEEN:

AVANIR PHARMACEUTICALS,

a corporation existing under the laws of California,

(hereinafter referred to as the “Avanir”)

- and -

PATHEON INC.,

a corporation existing under the laws of Canada,

Specific sites covered by this Agreement:

          ***

          ***

          ***

(hereinafter referred to as “Patheon”)

          WHEREAS Patheon and Avanir are currently negotiating a manufacturing services agreement (the
"MSA”), to which this Quality Agreement will form part of, wherein Patheon will agree to provide
pharmaceutical manufacturing services in respect of certain Products (as described in Schedule A
hereto);

          AND WHEREAS pursuant to the MSA, Avanir is required to provide the Specifications to Patheon
in order for Patheon to provide the Manufacturing Services;

 

			
	***	 	Certain confidential portions of
this Exhibit were omitted by means of blackout of the text (the
“Mark”). This Exhibit has been filed separately with the Secretary
of the Commission without the Mark pursuant to the Company’s
Application Requesting Confidential Treatment under Rule 24b-2
under the 1934 Act.

 

 

- 2 -

          AND WHEREAS pursuant to the MSA, Patheon is required to perform the Manufacturing Services in
accordance with the Specifications as provided;

          AND WHEREAS the parties desire to allocate the responsibility for procedures and
specifications impacting on the identity, strength, quality and purity of the Products;

          NOW THEREFORE in consideration of the rights conferred and the obligations assumed under the
MSA and herein, and for other good and valuable consideration (the receipt and sufficiency of which
are acknowledged by each party), and intending to be legally bound the parties agree as follows:

ARTICLE 1

RESPONSIBILITIES

     1.1 Subject to the terms and conditions hereinafter set out the parties agree that Patheon shall
be responsible for all the operations that are marked with “X” in the column titled “Patheon” and
that Avanir shall be responsible for all the operations that are marked with “X” in the column
titled “Avanir”. If marked with “(X)”, cooperation is required from the designated party.

(a) General

	 	 	 	 	 	 	 
	 	 	 	 	Avanir	 	Patheon
	1.

	 	Provide Specifications.
	 	X	 	 
	2.

	 	Manufacture and package Product in strict adherence
to the Specifications.
	 	 	 	X
	3.

	 	Permit audits of all relevant premises, procedures
and documentation by Avanir, and permit inspection by
regulatory authorities.
	 	 	 	X
	4.

	 	Patheon may arrange for subcontractors to perform specific
testing services for Products and Components; provided
that (1) all such subcontractors will be duly qualified by
Patheon under GMP and Applicable Laws to perform such
testing; (2) Patheon will at all times remain fully
responsible to Avanir for the performance of all
obligations pursuant to the MSA related to such
subcontracted testing services; and (3) no subcontractors
will be utilized to perform release testing of the
Product.
	 	 	 	X
	5.

	 	Provide copies of all information and correspondence
regarding Annual Product Reviews when requested by Avanir.
	 	 	 	X
	6.

	 	Notify and obtain approval from Avanir prior to
implementation of any proposed changes to the process,
materials, testing, equipment or premises that may affect
the Product, such Avanir approval not to be unreasonably
withheld.
	 	 	 	X

 

 

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	 	 	 	 	Avanir	 	Patheon
	7.

	 	Notify Avanir within *** of
receipt of any Form 483’s, warning letters or the like
from applicable regulatory agencies relating to: (i) the
Product; or (ii) if the supply of Products will be
affected, the facilities used to produce, test or package
the Product. Responses related to the Product shall be
reviewed and approved by Avanir prior to submission to the
applicable regulatory agency, provided that Patheon
reserves the right to respond to such regulatory agencies
without approval, if, in the reasonable opinion of
Patheon’s counsel, it is required to do so.
	 	 	 	X
	8.

	 	Notify Avanir within *** of any
regulatory authority requests for Product samples, Batch
documentation, or other information related to the
Product.
	 	 	 	X
	9.

	 	Conduct operations in compliance with applicable
environmental, occupational health and safety laws and
cGMP regulations.
	 	 	 	X
	10.

	 	Investigate and resolve all medical and nonmedical
Product complaints.
	 	X
	 	(X)
	11.

	 	Investigate all manufacturing type Product complaints.
	 	 	 	X
	12.

	 	Initiate and control a Product recall.
	 	X
	 	(X)
	13.

	 	Liaise with Regulatory Authorities for approval,
maintenance and updating of marketing approval in a timely
manner.
	 	X
	 	(X)

          (b) Validation and Process Testing Activities

	 	 	 	 	 	 	 
	 	 	 	 	Avanir	 	Patheon
	1.

	 	Establish applicable master validation plans and
maintain a validation program for the Product.
	 	X
	 	X
	2.

	 	Qualify (IQ/OQ) facilities, utilities and process
equipment.
	 	 	 	X
	3.

	 	Calibrate instrumentation and qualify computer
systems used in the manufacture and testing of the
Product.
	 	 	 	X

 

			
	***	 	Certain confidential portions of
this Exhibit were omitted by means of blackout of the text (the
“Mark”). This Exhibit has been filed separately with the Secretary
of the Commission without the Mark pursuant to the Company’s
Application Requesting Confidential Treatment under Rule 24b-2
under the 1934 Act.

 

 

- 4 -

	 	 	 	 	 	 	 
	4.

	 	Prepare and approve all performance qualification and
process validation protocols and reports, for
manufacturing, packaging, and analytical testing
operations.
	 	(X)
	 	X
	5.

	 	Review and approve master validation plan,
performance qualification and process validation
protocols and reports for the Product.
	 	X
	 	X
	6.

	 	Maintain an appropriate cleaning and cleaning
validation program.
	 	 	 	X
	7.

	 	Provide toxicological information to be used in the
development of a cleaning program.
	 	X	 	 
	8.

	 	Validate analytical test methods for finished Product.
	 	(X)
	 	X

          (c) Raw Materials

	 	 	 	 	 	 	 
	 	 	 	 	Avanir	 	Patheon
	1.

	 	Provide the master formula.
	 	X	 	 
	2.

	 	Provide approved supplier list. Avanir to audit and approve
Component and Active Material suppliers and ensure cGMP compliance
where Avanir stipulates the supplier. Avanir stipulated supplier shall
be included on Avanir’s approved supplier list (attached hereto as
Schedule D). Patheon to audit and approve Component and Active
Material suppliers and ensure cGMP compliance as per Patheon SOP where
Patheon stipulates the supplier. Patheon stipulated supplier shall be
included on Patheon’s approved supplier list (Schedule C). Avanir to
audit and approve, in its sole discretion, all Patheon stipulated
suppliers.
	 	X
	 	X
	3.

	 	Qualify and approve Active Materials supplier(s).
	 	X
	 	(X)
	4.

	 	Provide Active Materials specifications (including Certificates of
Analysis).
	 	X	 	 
	5.

	 	Procure Active Materials (including Certificates of Analysis).
	 	X	 	 
	6.

	 	Provide test methods for Active Materials (if non-Compendial).
	 	X	 	 
	7.

	 	Validate non-Compendial testing methods for Active Materials.
	 	(X)
	 	X
	8.

	 	Analyze and release Active Materials (including documentation and
Certificates of Analysis).
	 	(X)
	 	X

 

 

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	 	 	 	 	Avanir	 	Patheon
	9.

	 	Retain reference sample of Active Materials for ***
past the expiration date of the last Batch of Product manufactured
with that material in the Product or such longer period required by
law.
	 	 	 	X
	10.

	 	Procure inactive ingredients (including Certificates of Analysis).
	 	 	 	X
	11.

	 	Provide test methods and method validation for inactive
ingredients (if non-Compendial).
	 	X	 	 
	12.

	 	Analyze and release inactive ingredients (including documentation
and Certificates of Analysis).
	 	 	 	X
	13.

	 	Retain reference samples of inactive ingredients for
***  past the expiration date of the last Batch
manufactured with that material in the Product or such longer period as
required by law.
	 	 	 	X
	14.

	 	Provide to Avanir, at Avanir’s request, by means of a BSE/TSE
certificate of compliance from the raw material vendor, confirmation of
any bovine, caprine, or ovine derived raw materials purchased by
Patheon for the manufacture of Products.
	 	 	 	X

          (d) Bulk Manufacture

	 	 	 	 	 	 	 
	 	 	 	 	Avanir	 	Patheon
	1.

	 	Create, control, issue and execute master batch record.
	 	 	 	X
	2.

	 	Approve master batch record.
	 	X
	 	X
	3.

	 	Document, investigate and resolve deviations from
approved manufacturing instructions or Specifications.
Report and obtain approval from Avanir QA regarding Quality
Deviation Report (“QDR”) type deviations (incidents where
there is a potential to affect Product quality). Provide
copies of all QDR’s to Avanir as part of master batch
record.
	 	 	 	X

          (e) Bulk Packaging

	 	 	 	 	 	 	 
	 	 	 	 	Avanir	 	Patheon
	1.

	 	Create, control, issue and execute master batch record.
	 	 	 	X

 

			
	***	 	Certain confidential portions of
this Exhibit were omitted by means of blackout of the text (the
“Mark”). This Exhibit has been filed separately with the Secretary
of the Commission without the Mark pursuant to the Company’s
Application Requesting Confidential Treatment under Rule 24b-2
under the 1934 Act.

 

 

- 6 -

	 	 	 	 	 	 	 
	 	 	 	 	Avanir	 	Patheon
	2.

	 	Approve master packaging batch record.
	 	X
	 	X
	3.

	 	Provide specifications for packaging components.
	 	 	 	X
	4.

	 	Qualify and approve packaging component suppliers.
Patheon to audit and approve packaging component suppliers and
ensure cGMP compliance as per Patheon SOP where Patheon stipulates
the supplier. Patheon stipulated supplier shall be included on its
approved supplier list (Schedule C). Avanir to audit and approve, in
its sole discretion, all Patheon stipulated suppliers.
	 	(X)
	 	X
	5.

	 	Provide test methods and method validation for packaging
components. Where applicable, Patheon will provide such test
methods and validation for packaging components purchased from
suppliers on the Patheon approved supplier list only (Schedule C).
	 	(X)
	 	X
	6.

	 	Procure packaging components.
	 	 	 	X
	7.

	 	Analyze and release packaging components.
	 	 	 	X
	8.

	 	Retain reference samples of bulk Product for ***
past Product expiry or such longer period as required by law.
Avanir to retain legal sample of finished Product.
	 	(X)
	 	X
	9.

	 	Document, investigate and resolve any deviation from approved
packaging instructions or specifications. Report and obtain
approval from Avanir QA regarding QDR type deviations. Provide
copies of all QDR’s to Avanir as part of master batch packaging
record.
	 	(X)
	 	X

          (f) Testing & Release of Finished Product

	 	 	 	 	 	 	 
	 	 	 	 	Avanir	 	Patheon
	1.

	 	Provide finished Product specifications.
	 	X	 	 
	2.

	 	Supply / develop analytical test
methods for finished Product.
	 	X
	 	X
	3.

	 	Test finished Product.
	 	 	 	X
	4.

	 	Maintain all Batch records for a
minimum of *** past
Product expiry date and supply all such
records to Avanir upon request.
	 	 	 	X
	5.

	 	Maintain records and evidence on the
testing of raw materials and
packaging/labelling materials for
*** after the materials
were last used in the manufacture or
	 	 	 	X

 

			
	***	 	Certain confidential portions of
this Exhibit were omitted by means of blackout of the text (the
“Mark”). This Exhibit has been filed separately with the Secretary
of the Commission without the Mark pursuant to the Company’s
Application Requesting Confidential Treatment under Rule 24b-2
under the 1934 Act.

 

 

- 7 -

	 	 	 	 	 	 	 
	 	 	 	 	Avanir	 	Patheon
	 

	 	packaging/labelling of the Product.	 	 	 	 
	6.

	 	Notify Avanir QA of confirmed
out-of-Specification results (“OOS”) within
*** ; Patheon to
generate QDR and obtain approval of the QDR
from Avanir QA.
	 	(X)
	 	X

          (g) Stability Testing (if required)

	 	 	 	 	 	 	 
	 	 	 	 	Avanir	 	Patheon
	1.

	 	Store stability samples.
	 	 	 	X
	2.

	 	Develop and validate stability indicating assay.
	 	(X)
	 	X
	3.

	 	Provide stability testing protocol for finished Product.
	 	X	 	 
	4.

	 	Perform stability testing.
	 	 	 	X
	5.

	 	Notify the Avanir of any stability failure for Product
supplied to the Avanir.
	 	 	 	X

ARTICLE 2

COMPLIANCE BETWEEN PRODUCT REGISTRATION AND THE MANUFACTURING PROCESS

     2.1 Technical Changes

	 	(a)	 	All proposed process changes shall be communicated to the Avanir for initial
review and approval, such Avanir approval not to be unreasonably withheld. The Avanir
shall be responsible for determining whether or not to initiate registration variation
procedures and for maintaining adequate control over the quality commitments of the
marketing authorization made to the regulatory authorities by the Avanir for Products.
	 
	 	(b)	 	Following validation of a process change, Patheon shall deliver a copy of the
related validation report to the Avanir and the associated stability data, if
applicable, as it becomes available.

 

			
	***	 	Certain confidential portions of
this Exhibit were omitted by means of blackout of the text (the
“Mark”). This Exhibit has been filed separately with the Secretary
of the Commission without the Mark pursuant to the Company’s
Application Requesting Confidential Treatment under Rule 24b-2
under the 1934 Act.

 

 

- 8 -

	 	2.2	 	Labelling / Packaging Material Changes
	 
	 	 	 	The Avanir may initiate changes and shall review and approve any Patheon-proposed changes to
labelling or packaging, including a change in the supplier of any labelling or packaging
materials before any such change may be implemented.
	 
	 	2.3	 	Other Changes
	 
	 	 	 	Patheon will not make any changes in storage, shipping, facilities or equipment that affect
the Product, or process or procedure used to manufacture the Product, without first
obtaining written approval from Avanir (such approval not to be unreasonably withheld.
	 
	 	2.4	 	Permits
	 
	 	 	 	The Avanir shall be solely responsible for obtaining or maintaining, on a timely basis, any
permits or other regulatory approvals in respect of the Products or the Specifications,
including, without limitation, all marketing and post-marketing approvals.

ARTICLE 3

BATCH RELEASE

3.1 Batch review and release shall be the responsibility of a Patheon qualified person who shall
act in accordance with Patheon’s standard operating procedures.

3.2 For each Batch released by Patheon for shipment to the Avanir, Patheon shall deliver to the
Avanir a certificate of compliance, which certificate shall include a statement that the Batch
has been manufactured in accordance with cGMPs and the Specifications. The Avanir shall have
sole responsibility for release of the Product to the market.

3.3 Patheon shall notify the Avanir within ***  in the event of (i) any
deviation during manufacture which affects the quality or efficacy of the Product or (ii) a
confirmed out of specification (OOS) result.

 

			
	***	 	Certain confidential portions of
this Exhibit were omitted by means of blackout of the text (the
“Mark”). This Exhibit has been filed separately with the Secretary
of the Commission without the Mark pursuant to the Company’s
Application Requesting Confidential Treatment under Rule 24b-2
under the 1934 Act.

 

 

- 9 -

ARTICLE 4

BATCH DOCUMENTATION

4.1 Originals of all Batch documentation will be retained by Patheon for a period of
***  past the expiry date of the Product at which time the Avanir will be
contacted concerning the future storage or destruction of such documentation.

4.2 Patheon will provide a copy of any of the executed Batch documents relating to Products to
the Avanir electronically, by facsimile or courier within *** .

ARTICLE 5

STABILITY

5.1 Patheon shall perform such stability testing as described in a stability protocol agreed to
by both Patheon and the Avanir.

5.2 If a confirmed result indicates that a Product has failed to remain within stability
specifications, Patheon will notify the Avanir within *** .

5.3 Patheon shall provide Avanir with a certificate of analysis following testing at each
mutually agreed stability pull point.

5.4 In the event that the MSA is terminated, Patheon will continue to provide the Avanir with
stability data supporting the acceptability of the Product until all such Product distributed by
the Avanir has reached the end of its shelf-life.

ARTICLE 6

VALIDATION

6.1 Patheon will perform the qualification, validation and stability services described in this
Quality Agreement on each of three validation Batches of Product manufactured by Patheon which is
necessary to support the validation portion of Avanir’s NDA submission to the FDA.

6.2 Avanir must ensure that their analytical methods and manufacturing procedures (including
packaging procedures) are validated. If such methods and procedures are not

 

			
	***	 	Certain confidential portions of
this Exhibit were omitted by means of blackout of the text (the
“Mark”). This Exhibit has been filed separately with the Secretary
of the Commission without the Mark pursuant to the Company’s
Application Requesting Confidential Treatment under Rule 24b-2
under the 1934 Act.

 

 

- 10 -

validated by the
Avanir, then Patheon may assist in validation development with the costs being borne by the
Avanir.

ARTICLE 7

GENERAL

7.1 Any communications with respect to the subject matter of this Agreement shall be directed, in
the first instance, to the person(s) identified in Schedule B hereto.

7.2 Capitalized terms not otherwise defined herein shall have the meaning specified in the MSA.

7.3 To the extent of any inconsistency between the terms of this Quality Agreement and the terms
of the MSA the terms of the MSA shall govern.

ARTICLE 8

ADDITIONAL PROVISIONS

8.1 Reporting. Patheon shall provide any and all supporting documentation and
data relating to the manufacture of Product to Avanir upon request and Patheon will retain
sufficient quantities of all shipped Product, Active Materials and Components to perform at
least full duplicate quality control testing. Retained repository samples and test data of all
shipped Product, Active Materials and Components will be maintained in a suitable storage
facility until *** after expiry or such longer period as may be required
by Applicable Laws at which time Patheon will contact Avanir concerning the future disposition
of such materials and documentation. All such samples and test data will be available for
inspection and testing by Avanir at reasonable intervals upon reasonable notice. If any Batch of
Products fails testing, Patheon and Avanir will jointly determine the proceedings and methods to
be undertaken to investigate the causes of such failure, including which party will bear the
cost of such investigation.

8.2 Adverse Experience Reporting. Each party will notify the other party
promptly and not later than ***  after it becomes aware of:

(a) any information concerning any potentially serious or unexpected side effect, injury,
toxicity or sensitivity reaction or any unexpected incidence or other adverse experience (an
“Adverse Experience”) and the severity thereof associated with the use of the
Product, whether or not determined to be attributable to the Product; or

 

			
	***	 	Certain confidential portions of
this Exhibit were omitted by means of blackout of the text (the
“Mark”). This Exhibit has been filed separately with the Secretary
of the Commission without the Mark pursuant to the Company’s
Application Requesting Confidential Treatment under Rule 24b-2
under the 1934 Act.

 

 

 - 11 -

(b) any information regarding any pending or threatened action which may affect the safety
or efficacy claims of the Product or the continued marketing of the Product in any nation or
jurisdiction.

          8.3 Government Inspection.

Patheon will make its internal practices, books and records relating to its manufacture of
the Product available and allow access to all facilities used for manufacturing the Product
to the FDA and any other Authority having jurisdiction over the manufacture of the Product
for the purposes of determining Patheon’s compliance with GMP and Applicable Laws.

Patheon will advise Avanir by telephone immediately of any proposed or announced visit or
inspection (and will permit Avanir to be onsite at any such visit or inspection), and as
soon as possible, *** of any unannounced visit or inspection, by the
FDA or any other Authority relating to the Product or any other inspection or action that
could have an adverse effect on the Product or its manufacturing or delivery schedule.

Patheon will keep Avanir informed of (i) any remediation plan and changes Patheon adopts to
alleviate any concerns raised by the FDA or any other Authority contemplated by Section 1.1a
(7), (ii) its progress in implementing the remediation plan and changes, and (iii) the
formal responses of the FDA or applicable Authority to such remediation plan and changes and
their implementation.

No Active Materials or Product may be reprocessed without the prior written consent of
Avanir.

Patheon will maintain on-site all of its necessary manufacturing licenses, permits or approvals
required to perform the Manufacturing Services.

Batch Documents. Following the manufacture and packaging of each Batch, and in
accordance with this Quality Agreement, Patheon will provide Avanir with properly completed
copies of all Batch Documents. For purposes of the foregoing, “Batch Documents” means
(a) manufacturing and packaging Batch records completed in accordance with the Specifications;
(b) a Certificate of Compliance for the Batch ; (c) any out of Specification result
investigations associated with Product; (d) the Certificate of Analysis for the Batch comparing
test results to Specifications; (e) the appropriate disposition notification for the Batch.

 

			
	***	 	Certain confidential
portions of this Exhibit were omitted by means of blackout of the
text (the “Mark”). This Exhibit has been filed separately with the
Secretary of the Commission without the Mark pursuant to the
Company’s Application Requesting Confidential Treatment under Rule
24b-2 under the 1934 Act.

 

 

- 12 -

	 	 	 	 	 	 	 
	AVANIR PHARMACEUTICALS	 	PATHEON INC.
	 
	 	 	 	 	 	 
	Name:

	 	 	 	Name:	 	 
	 

	 	 
	 	 	 	 
	Signature:

	 	 	 	Signature:	 	 
	 

	 	 
	 	 	 	 
	Date:

	 	 	 	Date:	 	 
	 

	 	 
	 	 	 	 

SCHEDULE A

PRODUCT(S)

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Product(s)
	 	 	 	 	 	 	Galenic Form	 	 	 	 	Dosage (strength)	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	[***]
Bulk
	 	 	 	 	 	 	*	**	 	 	 	 	 	Dextromethorphan HBr/Quinidine
Sulfate ***	 	 	 
	[***]
Capsules

 

			
	***	 	 Certain confidential
portions of this Exhibit were omitted by means of blackout of the
text (the “Mark”). This Exhibit has been filed separately with the
Secretary of the Commission without the Mark pursuant to the
Company’s Application Requesting Confidential Treatment under Rule
24b-2 under the 1934 Act.

 

 

SCHEDULE B

QUALITY CONTACTS

*** 

*** 

 

			
	***	 	 Certain confidential
portions of this Exhibit were omitted by means of blackout of the
text (the “Mark”). This Exhibit has been filed separately with the
Secretary of the Commission without the Mark pursuant to the
Company’s Application Requesting Confidential Treatment under Rule
24b-2 under the 1934 Act.

 

 

- 14 -

SCHEDULE C

PATHEON APPROVED SUPPLIER LIST

	 	 	 	 	 	 	 	 	 
	***
	 	 	*	**	 	 	*	**
	***
	 	 	*	**	 	 	*	**
	***
	 	 	*	**	 	 	*	**
	***
	 	 	*	**	 	 	*	**

 

			
	***	 	Certain confidential
portions of this Exhibit were omitted by means of blackout of the
text (the “Mark”). This Exhibit has been filed separately with the
Secretary of the Commission without the Mark pursuant to the
Company’s Application Requesting Confidential Treatment under Rule
24b-2 under the 1934 Act.

 

 

- 15 -

SCHEDULE D

AVANIR APPROVED SUPPLIER LIST

	 	 	 	 	 	 	 	 	 
	***
	 	 	*	**	 	 	*	**
	***
	 	 	*	**	 	 	*	**
	***
	 	 	*	**	 	 	*	**
	***
	 	 	*	**	 	 	*	**
	***
	 	 	*	**	 	 	*	**
	***
	 	 	*	**	 	 	*	**
	***
	 	 	*	**	 	 	*	**
	***
	 	 	*	**	 	 	*	**
	***
	 	 	*	**	 	 	*	**

 

			
	***	 	Certain confidential
portions of this Exhibit were omitted by means of blackout of the
text (the “Mark”). This Exhibit has been filed separately with the
Secretary of the Commission without the Mark pursuant to the
Company’s Application Requesting Confidential Treatment under Rule
24b-2 under the 1934 Act.exv10w3

 

EXHIBIT
10.3

CONFIDENTIAL TREATMENT REQUESTED

DOCOSANOL LICENSE AGREEMENT

     THIS DOCOSANOL LICENSE AGREEMENT is made and entered into as of January 5, 2006, between
Avanir Pharmaceuticals, a California corporation (“Avanir”) and Kobayashi Pharmaceutical
Co., Ltd, a Japanese corporation (“Licensee”).

BACKGROUND

     A. Avanir is the owner of certain patent rights, know-how, trade secrets, confidential
information, inventions, technology, and other proprietary rights which Licensee does not
presently possess and that (i) pertain to a pharmaceutical grade chemical known as “docosanol,”
(ii) relate to use of docosanol in the treatment of viral infections and inflammations of skin
and mucous membranes in humans, and other medicinal uses and (iii) include certain medicinal
formulations and manufacturing methods of docosanol.

     B. The United States Food and Drug Administration (“FDA”) has approved Avanir’s New
Drug Application in the United States of America (“USA”) relating to products
incorporating docosanol for topical, human use for the treatment of herpes labialis.

     C. Licensee is interested in obtaining from Avanir a license to Avanir’s proprietary rights
relating to the use of docosanol and access to Avanir’s proprietary know-how in order to
establish OTC business in Japan, and Avanir is willing to grant such license and access on the
terms and conditions of this Agreement.

     NOW, THEREFORE, in consideration of the monetary consideration set forth in this Agreement
and of the terms, conditions and agreements contained in this Agreement, and for other good and
valuable consideration, the receipt and adequacy of which are hereby acknowledged, Avanir and
Licensee hereby agree as follows:

     1. DEFINITIONS.

     Words and phrases used in this Agreement which are not otherwise defined will be interpreted
in accordance with the common usage for such term in English. Technical terms unless otherwise
defined will be interpreted consistent with their common usage in the relevant scientific field.
Some terms are defined in this Agreement parenthetically, and such terms will have the meanings
apparent from the context in which such terms are parenthetically defined. When used in this
Agreement, each of the following defined terms will have the meanings set forth in this Section.

CONFIDENTIAL

1

 

     1.1 “Active Ingredient” means (a) docosanol ***, (b) any other
*** or (c) such specification for docosanol as an active ingredient that is
curative of episodic outbreaks of herpes simplex or herpes labialis. Provided however, it always
means that the foregoing description of Active Ingredients must be approved by the Ministry of
Health, Labor, and Welfare (“MHLW”) in Japan as an active ingredient that is curative of episodic
outbreaks of herpes simplex or herpes labialis (***).

     1.2 “Additional Studies” means any additional pre-clinical, clinical or non-clinical
studies required to be conducted solely to obtain or to maintain in effect Territory
Registrations of the Products in the Territory.

     1.3 “Affiliate(s)” means, with respect to each party, any organization, corporation,
company, firm, or other entity that controls, is controlled by, or is under common control with
such party. A company will be deemed to have control of another if it owns directly or indirectly
at least fifty-percent (50%) of the voting shares of or is entitled directly or indirectly to
appoint at least one half of the directors of the other company; provided however, Kobashou Co.,
Ltd. does not fall within the scope of Affiliates in this Agreement.

     1.4 “ Best Efforts ” means the taking of all prompt, substantial and
persistent efforts to effect a result as expeditiously as possible, but does not require taking any
extraordinary or unusual actions that would not be financially reasonable in the particular
circumstances.

     1.5 “Bulk Docosanol” means a pharmaceutical grade bulk form of the Active
Ingredient.

     1.6 “Competing Products” means other medicinal or therapeutic products that are
curative of episodic outbreaks of herpes simplex or herpes labialis (***) containing
the Active Ingredient.

     1.7 “Confidential Information” means all information which is of a confidential and
proprietary nature, including without limitation, trade secrets and unpatented Know-How and
Improvements relating to the Active Ingredient or the Products and any and all formulations
thereof or manufacturing methods thereof, and any and all material information either of the
parties to this Agreement may acquire concerning the financial, business and marketing goals and
plans of the other, including the terms of this Agreement. Notwithstanding anything in this
Agreement to the contrary, the defined term “Confidential Information” and the
obligations of nondisclosure, non-use and confidentiality relating thereto will, without granting
any right or license, not include any information or data which: (a) is or becomes known to the
general public through no action or fault of the receiving party; (b) was already known to the
receiving party prior to the date of disclosure pursuant to this Agreement, as evidenced by the
written records of that party, without any obligation of confidentiality; (c) is or becomes known
to the receiving party without any obligation of confidentiality from a Third Party having the
right to disclose the same, and not having a confidential relationship with the disclosing party
with respect thereto; or (d) is necessary for the receiving party or its Affiliates to disclose
to a

 

			
	***	 	Certain confidential portions of this
Exhibit were omitted by means of blackout of the text (the “Mark”). This
Exhibit has been filed separately with the Secretary of the Commission without
the Mark pursuant to the Company’s Application Requesting Confidential
Treatment under Rule 24b-2 under the 1934 Act.

CONFIDENTIAL

2

 

governmental authority or any agency thereof on a non-confidential basis, in order to pursue
Territory Registration or other purposes.

     1.8 “Cost” means all purchase, labor, material and overhead costs and expenses
incurred in connection with the procurement, manufacture and testing of Products as determined in
accordance with generally accepted accounting principles.

     1.9 “Field” means all non-ophthalmic, topical, medicinal, therapeutic applications
of the Products to skin, mucous membranes, and surrounding tissue in humans sold for the
treatment of herpes simplex or herpes labialis via prescription (Rx), behind the counter or over
the counter (“OTC”).

     1.10 “First Commercial Sale” means the first commercial sale in the Territory
following Territory Registration, where sale means delivery, billing out or invoicing, whichever
comes first, of a Product by Licensee, its Affiliates or sublicensees to any person or entity other
than Licensee, its Affiliates or sublicensees.

     1.11 “Gross Sales” means the gross sales of the Products invoiced by Licensee, its
Affiliates or sublicensees to distributors, resellers or other Third Parties as expressed in
Japanese Yen. For the sake of clarity, the Gross Sales does not include *** .
(The currency conversion rate employed for calculation of Gross Sales will be that published in
the Nihon Keizai Shinbun’s “Foreign Currency Exchange Rates” on the last business day of the
calendar quarter.).

     1.12 “Improvements” means any and all inventions, developments and improvements and
any other new Know-How relating to the Active Ingredient or the Products, including, without
limitation, any new indications, compositions, concentrations, derivatives, formulations,
preparations, processes, specifications, administrations, combinations or dosage strengths and
sizes or applications thereof, which are developed by or for Avanir or Licensee during the term
of this Agreement.

     1.13 “Know-How” means any data, results, know-how, manufacturing methods and processes
of the Bulk Docosanol to the extent available and information which Avanir owns, controls or has a
license (with a right to sublicense) and relating to the Active Ingredient or that is necessary or
useful to the manufacture, use or sale of Products, including, without limitation, data or
information incorporated either in Avanir’s approved New Drug Application in the USA or in
regulatory filing submitted to other regulatory authorities, if any.

     1.14 “Licensed Patents” means all (a) the Territory patents and patent applications
listed in Schedule 1.14 or covering any Avanir Owned Improvements, as long as Licensee
agrees; (b) any divisionals and patent applications; and (c) all patent term extensions of the
foregoing patents.

     1.15 “Post Marketing Surveillance Period” means a certain period of post-marketing
surveillance in the Territory, in other words, a certain period for surveillance, imposed by the
Ministry of Health, Labor and Welfare in Japan upon marketing approval of the Product in the
Territory, with regard to quality, efficacy and safety for clinical usage of the Product. In the

 

			
	***	 	Certain confidential portions of this
Exhibit were omitted by means of blackout of the text (the “Mark”). This
Exhibit has been filed separately with the Secretary of the Commission without
the Mark pursuant to the Company’s Application Requesting Confidential
Treatment under Rule 24b-2 under the 1934 Act.

CONFIDENTIAL

3

 

event the Japanese government introduces a new proprietary, exclusivity period, the PMS Period will
be deemed to include the exclusivity period for the purpose of this Agreement.

     1.16 “Products” means any finished or semi-finished medicinal product that is
curative of episodic outbreaks of herpes simplex or herpes labialis ( *** )
that contains a therapeutic concentration of the Active Ingredient either as the sole ingredient
or in combination with any other ingredient, substance or compound, in any and all
concentrations, formulations, preparations, administrations, combinations or dosage strengths.

     1.17 “Reasonable Efforts” means efforts and resources commonly used in the
research-based pharmaceutical industry for the research, development and commercialization of a
product at a similar stage in its product life, a similar market potential and a similar
profitability ratio.

     1.18 “Territory” means the territories and possessions of Japan.

     1.19 “Territory Registration” means satisfaction of any related applicable
registration (including any duplicate marketing authorizations) and notification requirements and
approvals, licenses, registrations or authorizations of any federal, state or local regulatory
agency, department, bureau or other government entity, necessary for the manufacture, use,
storage, import, transport or sale of Products or the equivalent from the appropriate
governmental agency in the Territory.

     1.20 “Third Party” or “Third Parties” means any person, organization,
corporation, company, firm, or other entity that is not a party hereto or an Affiliate of either
party.

     1.21 “Trademark” means a trademark or trademarks for use in connection with the sale
of the Products in the Territory, together with any registrations or pending registration
applications filings therefore by Licensee at the Japan Patent Office. It is expressly
understood that the Trademark does not include the trademarks “Avanir” or “Abreva” or any
variations thereof even if such trademarks are used in association or combination with the
Trademark.

     1.22 “Supply Agreement” means the separate agreement for the supply of Bulk
Docosanol to be entered into between Licensee and Avanir.

     2. LICENSES. 

     2.1 Grant. Subject to all the terms and limitations of this Agreement, Avanir hereby
grants to Licensee an exclusive license, possibly including a Senyo Jisshiken under Japanese Patent
Law, under its Licensed Patents and to the Know-How to make, have made, use, and offer to sell and
to sell and import Products in the Territory and only in or for the Field. Licensee will register
the aforesaid exclusive license as the exclusive license, with the cooperation of Avanir but at
Licensee’s expense, possibly including Senyo Jisshiken of the Japanese Patent Law. Such license
does not include the right to manufacture Bulk Docosanol. For the avoidance of doubt,

 

			
	***	 	Certain confidential portions of this
Exhibit were omitted by means of blackout of the text (the “Mark”). This
Exhibit has been filed separately with the Secretary of the Commission without
the Mark pursuant to the Company’s Application Requesting Confidential
Treatment under Rule 24b-2 under the 1934 Act.

CONFIDENTIAL

4

 

the license
to manufacture described in the foregoing sentence of this Section 2.1 is limited to rights
to manufacture for Licensee’s Products. Subject to price, terms and conditions yet to be mutually
agreed in the Supply Agreement, Avanir will be fully obligated to supply Bulk Docosanol to Licensee
so long as this Agreement is effective or until such time as Licensee has notified Avanir that
Licensee has entered into a separate supply agreement for Bulk Docosanol
with a Third Party. Licensee will use all commercially reasonable efforts to obtain, as soon
as practicable, either a direct source of supply of Bulk Docosanol from Avanir’s supplier or a
second source of supply of Bulk Docosanol. Upon Licensee’s request, Avanir will cooperate with
Licensee to establish the manufacturing process of the Bulk Docosanol of Licensee and/or its
designee and to obtain the required permits from the MHLW regarding any change in such
manufacturing process; provided, however, that Licensee and/or its designee will not proceed to
produce the Bulk Docosanol unless, within ***  months from Avanir’s receipt of
the firm order for Bulk Docosanol from Licensee, Avanir nevertheless fails to fill such order as
provided by the Supply Agreement regarding the Bulk Docosanol. In case of the above mentioned Bulk
Docosanol production by Licensee and/or its designee(s), Licensee or its designee(s) will retain
the right to manufacture Bulk Docosanol without any limitation. In that case, Avanir will disclose
to Licensee and/or its designee(s) any Know-How that Avanir owns or controls, conditioned upon
payment of a commercially reasonable fee by Licensee.

     2.2 Restrictions on Licensee. To the extent not otherwise prohibited by law, Licensee
will not directly or indirectly for the term of this Agreement, (a) promote, market, distribute or
sell the Products outside the Field; (b) actively or passively sell the Products outside the
Territory, (c) sell or distribute the Products to any Third Party whom Licensee has reasonable
grounds to believe is likely to sell outside the Field or export the Products outside the
Territory. If any person sells, markets or exports the Products sold to it by Licensee contrary
to the above restrictions, Licensee will make Best Efforts to take actions within its legal rights
and powers to cause such persons to cease such sale, marketing or exportation. For purposes of the
foregoing restrictions, (1) “actively sell” in a territory means engaging in advertising, marketing
or promotion specifically aimed to such territory or establishing any branch or distribution
operations for the purpose of distributing Products in such territory and (2) “passively sell”
means responding to unsolicited customer orders while not engaging in any advertising, marketing or
promotion.

     2.3 Restrictions on Avanir. To the extent not otherwise prohibited by law, Avanir
will not sell the Products or Bulk Docosanol inside the Territory and inside the Field or to any
party who Avanir has reasonable grounds to believe is likely to export the Products or Bulk
Docosanol into the Territory for sale in the Field. If any person sells or exports the Products
or Bulk Docosanol acquired from Avanir to customers inside the Territory for use in the Field
without Avanir’s authorization, Avanir will make Best Efforts to start to take action within six
months from Avanir’s awareness of the above-mentioned situation, within its legal rights and
powers to cause such persons to cease such sale or exportation.

     2.4 Sublicenses. Licensee may not sublicense its rights under this Agreement without
Avanir’s prior written consent, which Avanir may grant or withhold in its sole discretion. For the
sake of clarity, sublicenses do not include manufacturing of finished Product by a third party or
subcontracts for commercializing the Product by Licensee. Upon the prior written consent of

 

	
	*** Certain confidential portions of this
Exhibit were omitted by means of blackout of the text (the “Mark”). This
Exhibit has been filed separately with the Secretary of the Commission without
the Mark pursuant to the Company’s Application Requesting Confidential
Treatment under Rule 24b-2 under the 1934 Act.

CONFIDENTIAL

5

 

Avanir,
Licensee will only have the right to grant sublicenses within the Territory and Field under
Section 2.1 under the terms and conditions of this Agreement and only for the expressly
limited purpose of co-promotion and co-marketing Products where and when (i) Licensee is and
remains the single registration holder for the Product; (ii) Licensee is and remains the single
person responsible for the manufacture of Product and (iii) only the Trademark is used in
connection with the Product. In all cases (a) such sublicensees will be at least the equivalent
of Licensee with respect to fitness to perform in accordance with the terms of this Agreement, (b)
the prospective sublicensees may not distribute in the Territory a Competing Product; (c) such
sublicensees will have entered into a Sublicense Agreement; and (d) Licensee agrees in writing with
Avanir to remain obligated in all respects to comply with the provisions of this Agreement and to
indemnify Avanir for any costs, expenses or damages that may result from sublicensee’s breach of
any provision of the Sublicense Agreement. Upon request of Avanir, Licensee will make reasonable
inquiries of any proposed sublicensee to determine whether such proposed sublicensee is developing,
making, marketing or selling Competing Products. Except as specifically provided above, Licensee
will have no rights to sublicense all or any part of the license granted to Licensee pursuant to
this Agreement. Any transfer or extension of rights under the license granted under this Agreement,
in whole or in part, by Licensee to any Third Party will be deemed and considered to be a
sublicense subject to the requirements of this Section, even if not so designated or described in
the relevant legal agreements, instruments or documents.

     2.5 Improvements.

     (a) Avanir Owned Improvements. Avanir will solely own any Improvements that
Avanir invents, develops, discovers or creates (“Avanir Owned Improvements”).
Avanir retains the ownership of and sole right and discretion to file, prosecute and
maintain any Territory, U.S. or foreign patent applications covering any Avanir Owned
Improvements. Any Avanir Owned Improvements and related patents or patent applications
will be included in the scope of the licenses granted under Section 2.1,
as long as Licensee agrees.

     (b) Licensee Owned Improvements. Licensee will solely own any Improvements
that Licensee invents, develops, discovers or creates that are not Avanir Owned
Improvements (“Licensee Owned Improvements”). Licensee retains ownership of and
sole right and discretion to file, prosecute and maintain any Territory, U.S. or foreign
patent applications covering any Licensee Owned Improvements.

     2.6 Patent Prosecution and Maintenance.

     (a) Consultations. Each party will promptly inform, consult with and assist the
other, as to all matters that come to its attention that may affect the preparation, filing,
prosecution, or maintenance of the patents relating to the Products that each such party
owns, including, without limitation, the discovery or invention of any Improvements that
such party owns and permit each other to provide comments and suggestions with respect to
such activities, which comments and suggestions will be reasonably considered by the other
party. If Avanir files a patent application(s) relating to Improvements, including without
limitation the anti-herpes compositions and therapy with the Japan Patent Office or obtains
a patent(s) relating to the same in the Territory, Avanir will promptly notify the Licensee
by priority, and provide exclusive license of the patent to the Licensee, as long as
Licensee agrees.

CONFIDENTIAL

6

 

     (b) Assistance. Upon receipt of any Territory Registration, Licensee will
provide assistance to Avanir in obtaining patent extensions, supplementary protection
certificates, and the like for the Licensed Patents to the extent the laws of the Territory
provide it. If Licensee needs necessary cost for its reasonable personnel’s time and
expenses, Licensee will consult with and obtain an approval in advance from Avanir before
Licensee charge that to Avanir.

     (c) Abandonment of Licensed Patents. Avanir will make Best Efforts to maintain
Licensed Patents in the Territory. However, if Avanir has irresistible reason to surrender
or abandon Licensed Patents, Avanir will provide Licensee with at least 60-days prior
written notice before surrendering or abandoning any Licensed Patents. To the extent that
Licensee desires to continue maintenance and/or prosecution of such Licensed Patents in such
countries which Avanir has elected to surrender rights, Avanir will assign such Licensed
Patents to Licensee, cooperate fully with Licensee, its attorneys, and agents in assuming
such responsibilities and provide Licensee with complete copies of any and all documents or
other materials that Avanir deems necessary to undertake such responsibilities. Licensee
will assume responsibility for all costs associated with the Licensed Patents for which it
elects to assume responsibility, including costs associated with transferring patent
prosecution responsibilities to an attorney or agent of Licensee’s choice.

     3. REGULATORY MATTERS.

     3.1 Delivery of Know-How by Avanir.

     (a) Data and Applications. In consideration for the fee to be paid by
Licensee pursuant to Section 5.1, Avanir will provide, no later than 30 days after
the date of this Agreement, all available data used in the USA, in Sweden and in other
countries’ regulatory submissions for 10% docosanol cream in the treatment of herpes
simplex or herpes labialis and pre-clinical data and post marketing surveys (to the extent
available and possible under existing confidentiality agreements), including, without
limitation, copies of all clinical data, documents, papers, protocols, results and
analyses as well as currently available information including that concerning adverse
effects and products complaints (to the extent the information is available to Avanir), in
each case that relates to or would be useful in connection with the import, marketing,
manufacturing, and/or registration of the Products in the Field in the Territory.

     (b) Access to Drug Master File. As soon as practicable after the date of
this Agreement, (and supplemented as reasonably needed by Licensee as soon as reasonably
practicable thereafter during the term of this Agreement) Avanir will use its Best Efforts
to make available to Licensee the drug master file for Bulk Docosanol on file at MHLW for
the purpose of Licensee’s Territory registration for the curative of episodic outbreaks of
herpes simplex or herpes labialis (subject to the confidentiality obligations of
Article 8), if required by Licensee. In any such event, Licensee will reimburse
Avanir’s reasonable out–of-pocket expenses incurred as a result of rendering such access.

     3.2 Additional Studies.

     (a) Licensee’s Responsibility. With respect to Additional Studies, Licensee
will be responsible for conducting any Additional Studies which Licensee

CONFIDENTIAL

7

 

concludes
Licensee’s needs to conduct and for all costs and expenses associated therewith.

     (b) Conduct of Additional Studies. Such Additional Studies will be conducted
by Licensee in accordance with applicable law and current Good Clinical Practices
(“GCPs”). Licensee will provide Avanir with summaries of all protocols in respect of
Additional Studies concerning the Products to be conducted by Licensee and information
indicating whether Licensee desires to publish the results of such Additional Studies.
Licensee will provide such summaries to Avanir for Avanir’s review and comment within a
month before such Additional Studies are undertaken. Licensee will give such comments due
and careful consideration in the light of its obligations under this Agreement. However,
it is not necessary for Licensee to produce any English translation of the Japanese
original documents. During any time when Additional Studies are being conducted, Licensee
will also deliver to Avanir a status report every calendar quarter with respect to such
Additional Studies.

     (c) Third Party Collaborators. Avanir and Licensee each acknowledge and agree
that, with respect to any Additional Studies, (i) Licensee’s arrangements made with the
Third Party providers of services will in all cases require that such Third Party providers
grant sole ownership of (and publication rights with respect to) the information, data,
clinical trial results and other know-how resulting from such Additional Studies to Licensee
and (ii) as between Licensee and Avanir, such information, data, clinical trial results and
other know-how resulting from such Additional Studies will belong solely to Licensee as
Licensee Owned Improvements.

     3.3 Territory Registrations.

     (a) Licensee’s Responsibilities. Licensee will directly bear all costs and
expenses and use its Best Efforts to complete all necessary studies to obtain Territory
Registrations and will be solely responsible for and will prepare (using the data and files
provided by Avanir pursuant to Section 3.1(a)) and submit an application for the
Territory Registration with the Territory health care authorities in the Territory as soon
as possible but no later than ***  months after the date of
satisfactory conclusion of clinical trials and other tests. Provided however, this time
limit of ***  months will not apply if the MHLW changes the procedure of
clinical trials and other tests, or a very special demand for information is made by the
Ministry. In connection with the foregoing, Licensee may utilize other agents or
consultants to assist in obtaining Territory Registrations, but may not share Know-How with
such agents or consultants without entering into an appropriate confidentiality agreement.
Licensee will also be responsible for any other registration, regulatory and pricing matters
concerning the Products in the Territory.

     (b) Assistance. Avanir will assist Licensee in regulatory matters as
appropriate and reasonably requested by Licensee. If Licensee requests assistance from
Avanir, Avanir will consult with and obtain approval in advance from Licensee if Avanir
desires to be reimbursed for its reasonable costs of personnel time and expenses plus
*** %.

 

			
	***	 	Certain confidential portions of this
Exhibit were omitted by means of blackout of the text (the “Mark”). This
Exhibit has been filed separately with the Secretary of the Commission without
the Mark pursuant to the Company’s Application Requesting Confidential
Treatment under Rule 24b-2 under the 1934 Act.

CONFIDENTIAL

8

 

     (c) Ownership of Territory Registrations. Licensee will register and keep any
such Territory Registrations in Licensee’s own name. Licensee may assign
ownership of the Territory Registrations to Avanir in exchange for reimbursement of its
appropriate amount, including but not limited to the costs of obtaining and maintaining the
Registrations, and clinical study costs, in the event of termination of this Agreement by
Avanir prior to its expiration according to Section 7.6(c).

     (d) Post Marketing Surveillance. Licensee will utilize its Best Efforts to
obtain any and all advantage derived from the Post Marketing Surveillance in the Territory.

     (e) Improvements of Bulk Docosanol. In the case where modification or
improvement of Bulk Docosanol is required for obtaining the Territory Registration and/or
promoting the sales of the Products in the Territory, the Licensee may request Avanir to
modify or improve the Bulk Docosanol. Avanir will use its Best Efforts to comply with any
requests for improvements to Bulk Docosanol. In any such event, Licensee will reimburse
Avanir’s reasonable out–of-pocket expenses incurred as a result of rendering such compliance
or assistance.

     3.4 Additional Indications. In the event that Avanir makes regulatory filings for
the marketing approval of other indications in the Field but outside the Territory during the
term of this Agreement, Avanir and Licensee will discuss the appropriate regulatory filing
strategy for such indications in the Territory, but any such filings will be solely Licensee’s
responsibility and expense.

     3.5 Regulatory Developments and Communications. Each party will notify the other
immediately by telephone (with prompt, written follow-up), facsimile or any other electrical
method in writing of any inquiry, contact or communication received from any governmental
regulatory agency or other official body which adversely relates to or impacts upon the Products
or any component or ingredient thereof (including, without limitation, any issuance of any
Territory Registration administrative decree relating to a recall of the Products or the
imposition of any post marketing surveillance period), and will promptly furnish the other party
with copies of all written communications relating thereto sent to or received from such
regulatory agency. Licensee will report to Avanir of the status of the Territory Registration
efforts on a current basis every three months, and will furnish Avanir, upon Avanir’s reasonable
request, copies of all of the documents, data and other information supplied to or received from
the government in the Territory or other any approval authority in connection with the Territory
Registration without unreasonable delay. Avanir will have the right to be informed of, and upon
Licensee’s request, participate in and attend discussions regarding the Territory Registration or
any administrative decree. Upon receipt of the Territory Registrations, Licensee will promptly
furnish Avanir copies or other satisfactory evidence thereof.

     3.6 Other Governmental Filings or Notices. Licensee will be solely and exclusively
responsible for and bear all expenses associated with any permits, licenses or approvals
necessary or advisable for the entry into force and performance in the Territory of this
Agreement and of the matters contemplated in this Agreement.

     4. MANUFACTURE AND COMMERCIALIZATION OF PRODUCTS.

CONFIDENTIAL

9

 

     4.1 Manufacturing of Products. As between Avanir and Licensee, throughout the term
of this Agreement, Licensee will be solely responsible for: (a) manufacturing or having
manufactured the Products for distribution and sale in the Territory and any related packaging and
branding with Trademark, (b) acquiring or causing to be acquired all manufacturing equipment and
licenses, including, without limitation, plant, equipment and facilities licenses and approvals,
necessary to enable the manufacture and testing of the Products, (c) obtaining any required
importation licenses or approvals for importation of Bulk Docosanol into the Territory, including
payment of any related import charges or levies, (d) reporting of matters regarding the manufacture
of Products to relevant regulatory authorities and handling and responding to any appropriate
governmental agency inspections with respect to manufacturing of Products, all in accordance with
applicable laws and regulations. Licensee will provide to Avanir any information requested by any
governmental agency in connection with any governmental inspection related to Bulk Docosanol and
will notify Avanir of any such matter if significant or serious and promptly furnish complete
copies of such reports to Avanir. Licensee also will advise Avanir of any occurrence or
information which arises out of Licensee’s or its subcontractors’ manufacturing activities which
has materially adverse regulatory compliance and/or reporting consequences concerning the Products.
Licensee will use Reasonable Efforts to promptly advise Avanir of any requests by any governmental
agency for such inspections with respect to manufacturing of the Products.

     4.2. Product Manufacturing Processes & Quality Control. Licensee will not, and will
ensure its manufacturing subcontractors do not, without the consent of Avanir (such consent not to
be unreasonably withheld) deviate from or modify the instructions and methods which have been given
by Avanir in writing and agreed to by Licensee for the manufacture of the Products as well as the
methods supplied by Avanir and agreed to by Licensee for quality control of the Products, subject
to any applicable laws, regulations or requirements of any governmental agency in the Territory.
For the avoidance of doubt, the deviations and modifications with respect to which Licensee must
obtain the consent of Avanir are ones that have a material impact on quality of the Product or
affect the obtaining or maintenance of any Territory Registration.

     4.3 Adverse Event Data Exchange.

     (a) In the event that either party, its Affiliates or sublicensees obtains, directly or
indirectly, information, data, inquiries, complaints, or reports on any Adverse Events during the
development, marketing and distribution of any of the Products, such party will disclose, as soon
as reasonably practicable, such information and data to the other party and will collaborate with
such other party to respond to or inform any applicable governmental authority. Such information
will include an identifiable patient, a suspect medicinal product, an identifiable reporting source
and an event or outcome. Follow-up information should be actively sought by the party and
submitted within the same time-lines as an initial report. Each party will also send (by fax or
electronically) the other party written notice in English of fatal and life-threatening events,
which are unexpected and considered possibly related to the Products, within 72 hours of receipt
and of all other serious adverse events within ten business days. All other Adverse Events
associated with Products will be reported by either party to the other party in summary format at
least quarterly. For purposes of the foregoing, an “Adverse Event” means any untoward
medical occurrence in a patient or clinical investigation subject administered the Product and
which does not necessarily have to have a causal relationship with the Products, including, without
limitation: (a) with respect to clinical trials, all noxious and unintended responses to the
Product and (b) after the First Commercial Sale, any response to the Product which is noxious and
unintended and which occurs at doses normally used in man for

CONFIDENTIAL

10

 

prophylaxis, diagnosis or therapy of
disease or for modification of physiological function. The
provisions of this section will survive termination of this Agreement so long as either party is
marketing Products.

     (b) Licensee will bear the expenses of any recall of a Product in the Territory; provided
however, that Avanir will bear the expense of a recall to the extent that such recall directly and
exclusively caused by Avanir’s breach of its obligations hereunder or Avanir’s negligence or
willful misconduct or intentional omission. Such expenses of recall will include expenses for
notification, destruction and return of the recalled Product and any refund to customers of amounts
paid for the recalled Product.

     4.4 Commercialization.

     (a) Efforts. Licensee will (a) use its Best Efforts applying its marketing
and sales expertise to maximize the sale and the profit from the Products considering
market situation in the Territory as soon as reasonably practical but no later than
***  after the issuance of a Territory Registration; (b) have no right
to use the Avanir trade name and trademark, apart from the Products labeling requirements
of Section 4.6; and (c) subject to and to the extent permitted by applicable laws,
not produce, sell or distribute any Competing Products within the Territory, directly or
indirectly, throughout the term of this Agreement and for a period of ***
after termination of the Agreement by Avanir. Maximizing sale of the Products
includes, without limitation, a nation-wide scope test marketing in Japan. If the date of
the First Commercial Sale of the Products in the Territory does not occur by the
*** anniversary of the issuance of the first Territory Registrations
in the Territory, the exclusive license for the Territory may immediately convert to a
non-exclusive license, but Licensee will have a *** -month option to
maintain its exclusive license by paying, in advance, due on the first day of the month, a
fee of $ *** per month until the Product is launched or the
***  months have expired. For the sake of clarity, First Commercial
Sale includes those by the Licensee in maximizing of the sale of the Products.

     (b)  Exclusivity. If Avanir considers that the Licensee produces, sells or
distributes any Competing Products in violation of the Agreement at any time during the term
of this Agreement, Avanir may commence a proceeding under Section 13.5. If Avanir
and the Licensee do not reach a settlement, the license granted by Avanir under Section
2.1 will cease to be exclusive and, notwithstanding any other provision in this
Agreement, Avanir will have no obligation to continue to license Improvements to Licensee.
Notwithstanding the foregoing, no such termination of exclusivity by Avanir will be
effective until completion of the dispute resolution procedures set forth in Section
13.5.

     4.5 Trademarks.

     (a) Ownership and Registration. Licensee will develop a unique Trademark and
will own the Trademark and be solely responsible for its use and registration and all

 

			
	***	 	Certain confidential portions of this
Exhibit were omitted by means of blackout of the text (the “Mark”). This
Exhibit has been filed separately with the Secretary of the Commission without
the Mark pursuant to the Company’s Application Requesting Confidential
Treatment under Rule 24b-2 under the 1934 Act.

CONFIDENTIAL

11

 

related costs and expenses. Licensee will take all Reasonable Efforts to register and
maintain the Trademark in the Territory for use in association with the Products.
Licensee will take due care not to do or cause to be done any action or omission which
adversely affects the validity of the Trademark or jeopardizes the maintenance thereof,
either during the term of this Agreement.

     (b) Trademarks owned by Avanir. Licensee will make Best Efforts to use
the Trademark for the Products. Licensee will not market, sell or distribute any Products
under any brand or trademark that is the same as or confusingly similar to the trademark
and trade names owned by Avanir. Licensee acknowledges that Avanir has no rights in the
“Abreva” trademark.

     4.6 Marketing. Licensee will make Best Efforts to achieve the marketing at maximum.
Licensee agrees that the word “patented” or its appropriate substitute under Japanese Patent Law
will appear on the Product’s packaging, on an insert and in other measures of description on or
related to the Products in a place determined by Licensee in its sole discretion and that
labeling for Products will contain the statement:

          “Distribution under license from Avanir Pharmaceuticals.”

     4.7 Publicity. The parties to this Agreement understand that both Avanir and
Licensee are public companies and agree that they may disclose certain matters pertaining to this
Agreement as to enable it to fully comply with USA or Territory securities laws or regulations,
which disclosure may be in the form of public statements, whether oral or written, including, but
not limited to, shareholder reports, communications with stock market analysts, press releases or
other communications with the media. Notwithstanding the foregoing, any press release or other
announcement pertaining to this Agreement by either party will be provided to the other party in
advance for review and approval with such approval not to be unreasonably withheld.

                    4.8 Publications. Neither Licensee nor its agents, collaborators and
subcontractors will publish the results of clinical or preclinical studies of the Products or any
Active Ingredient without the prior approval of Avanir, which approval of Avanir will not be
unreasonably withheld.

     5. ROYALTIES, FEES AND MILESTONE PAYMENTS.

     5.1 Data Transfer Fee. In consideration for the transfer of data under Section
3.1(a), Licensee will pay to Avanir the non-refundable sum of 100,000,000.00 Japanese Yen as a
Know-How and data transfer fee no later than 30 days after the date of this Agreement.

     5.2 Royalties. In consideration for the licenses granted pursuant to Section
2.1, for manufacture and sales of Products by Licensee or its Affiliates or sublicensees in
the Territory, for the Territory, Licensee will pay Avanir royalties as follows:

     (a) Patent / PMS period Royalties. Licensee will pay Avanir
***  % of aggregate Gross Sales in the Territory, (i) during the term of
any issued and valid Licensed

 

			
	***	 	Certain confidential portions of this
Exhibit were omitted by means of blackout of the text (the “Mark”). This
Exhibit has been filed separately with the Secretary of the Commission without
the Mark pursuant to the Company’s Application Requesting Confidential
Treatment under Rule 24b-2 under the 1934 Act.

CONFIDENTIAL

12

 

Patents or (ii) during the Post Marketing Surveillance Period which the MHLW has not
approved a generic product equivalent to any type of docosanol cream in the Territory.

     (b) Know-How Royalties. Licensee will pay Avanir ***  % of
aggregate Gross Sales in the Territory, as a Know-How royalty (notwithstanding whether
Avanir has or will have any Licensed Patents or any other intellectual property in the
Territory) until the date that is 10 years from the First Commercial Sale in the Territory.

     5.3 Milestone Payments. Licensee will pay the milestone payments set forth on the
table below within 30 days after the date of the described event:

	 	 	 
	MILESTONE	 	PAYMENT
	***

	 	***JP Yen
	***

	 	***JP Yen
	***

	 	***JP Yen
	***

	 	***JP Yen
	***

	 	*** JP Yen

6. ACCOUNTING MATTERS.

     6.1 Payment of Royalties. Royalties will accrue upon the earlier of shipping or
billing of Products by Licensee or its Affiliates or sublicensees to a distributor, reseller or
other Third Party and will be payable quarterly, 60 days after the end of each calendar quarter.
Any royalties due but not received by Avanir will begin accruing interest on such overdue amounts
at a rate of *** % as set be required by applicable law. Quarterly royalty
payments to Avanir will be accompanied by a detailed written report covering each calendar quarter
showing (a) the Gross Sales of Products in aggregate in the Territory by Licensee or its Affiliates
or sublicensees, and (b) the royalty payments, which will have accrued in respect of such sales and
the basis for calculating those royalties, including gross invoiced sales of each Product and the
deductions, if any, taken to calculate Gross Sales. Each quarterly report will be due 30 days
following the close of each calendar quarter. Unless otherwise expressly provided herein, all
royalty payments under this Agreement will be paid without notice or demand and without abatement
or deduction of any amount unless other provisions of this Agreement admit exception.

     6.2 Access to Records. Licensee will keep and will cause its Affiliates or
sublicensees to keep records relating to the transactions covered by this Agreement throughout the
term of this Agreement and for a period of three years thereafter. Upon Avanir’s request (but no
more than once per year) and on reasonable notice, Licensee will and will cause its Affiliates and
sublicensees to permit, at the expense of Avanir, an independent certified public accountant
reasonably acceptable to both parties, to have access during reasonable business hours to such
records as may be necessary to determine, in respect of any quarterly period the correctness of any
royalty statements and payments made under this Agreement; provided, however, that Licensee will
bear any such audit expense if the review or audit shows an underpayment equal to

 

			
	***	 	Certain confidential portions of this
Exhibit were omitted by means of blackout of the text (the “Mark”). This
Exhibit has been filed separately with the Secretary of the Commission without
the Mark pursuant to the Company’s Application Requesting Confidential
Treatment under Rule 24b-2 under the 1934 Act.

CONFIDENTIAL

13

 

or greater than ***  % for the applicable period. The independent certified
public accountant must sign confidential non-disclosure agreements prohibiting him from revealing
to any Third Party any information and allowing him to disclose to Avanir only information relevant
to royalty statements and payments.

     6.3 Currency of Payment. Except as set forth below, any and all payments to be made to
Avanir by Licensee under this Agreement will be made in Japanese Yen. The conversion rate employed
for calculation of royalties as provided in Section 6.1 will be that published in the Nihon
Keizai Shimbun’s “Foreign Currency Exchange Rates” on the last business day of the calendar quarter
for which the royalty statement is made.

     6.4 Required Taxes and Withholdings.

     (a) Avanir’s Taxes. If Licensee makes any payment to any governmental agency in
the Territory or is subject to any withholding requirements in the Territory on account of
taxes payable by Avanir, Licensee may deduct the amount of such tax payment actually paid to
such governmental agency from Licensee’s royalties payable to Avanir under this Agreement.
In order to obtain proper tax exemptions in international situation, the parties will take
reasonable action to apply Article 12 of CONVENTION BETWEEN THE GOVERNMENT OF JAPAN AND THE
GOVERNMENT OF THE UNITED STATES OF AMERICA FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE
PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME to Licensee’s royalties payable
to Avanir under this Agreement.

     (b) Licensee’s Taxes. If Licensee makes any payment to any governmental agency
in the Territory or is subject to any withholding requirements in the Territory on account
of taxes payable by Licensee, Licensee may not deduct the amount of such tax payment from
royalties payable to Avanir under this Agreement, and Licensee’s payment to Avanir will be
in full and free of all liability, deduction or set off for such tax or other deduction.

     (c) Sublicensee’s Withholdings. If any of Licensee’s sublicensees makes any
payment to any governmental agency in the Territory or is subject to any withholding
requirements in the Territory on account of taxes payable by Licensee, even though such
sublicensee deducts such payment or withholding from amounts payable by such sublicensee to
Licensee, Licensee may not deduct the amount of such tax payment from royalties payable to
Avanir under this Agreement and the Licensee’s payment to Avanir will be in full and free of
all liability, deduction or set off for such tax or other deduction.

     6.5 Taxes. Licensee will pay and bear the expense of local and any government license,
sales and use, property and ad valorem taxes including the consumption tax in Japan, and any custom
duties, fees or charges which may be imposed or assessed on it with respect to manufacture or sales
of Products in the Territory under this Agreement. If a party receives a refund or rebate for
taxes it paid on behalf of the other party, the party receiving such refund or rebate will promptly
remit it to the other party.

 

			
	***	 	Certain confidential portions of this
Exhibit were omitted by means of blackout of the text (the “Mark”). This
Exhibit has been filed separately with the Secretary of the Commission without
the Mark pursuant to the Company’s Application Requesting Confidential
Treatment under Rule 24b-2 under the 1934 Act.

CONFIDENTIAL

14

 

     7. TERM AND TERMINATION.

     7.1 Term. Unless otherwise terminated as set forth below, the term of this Agreement
will commence on the date of this Agreement and will continue until and automatically expire upon
the later to occur of (a) the 10th anniversary of the First Commercial Sale in the Territory or (b)
the date the last claim of any patent of the Licensed Patents licensed under this Agreement that
covers sales of Products in the Territory expires or is invalidated or (c) the last date of the
expiration of the Post Marketing Surveillance Period in the Territory. Upon expiration of the term
of this Agreement in the Territory, Licensee will thereafter retain a fully paid-up perpetual,
irrevocable, royalty-free non-exclusive license under the license rights granted under Section
2.1.

     7.2 Material Breach by Licensee. If Licensee materially breaches, materially
defaults or otherwise materially fails to perform under the terms of this Agreement or any other
agreement between the parties to this Agreement, Avanir may terminate this Agreement by giving
***  months advance written notice, unless Licensee will cure such breach,
default or failure of performance within such ***  months period or unless
such breach, default or failure is subject to the force majeure provisions of Section
13.4. For the avoidance of doubt (and as examples only), “materially breaches, materially
defaults or otherwise materially fails” as used in this Section 7.2 means (a) failure to
prepare and submit an application for the Territory Registrations with the Territory health care
authorities within ***  months from the conclusion of the clinical trials and
other tests sufficient for registration, provided however, this time limit of
***  months will not apply if the MHLW changes the procedure of clinical
trials and other tests, or a very special demand for information is made by the MHLW; or (b) no
First Commercial Sale in the Territory has occurred by the date required by Section
4.4(a), entitling Avanir to terminate the Agreement under this Section, except for the event
that (i) Territory Registration is not obtained for reasons that are not attributable to
Licensee’s responsibility, or (ii) the cost of obtaining the Territory Registration, in relation
to the aforesaid clinical trials and other tests, exceeds ***  Japanese Yen.
Such other tests include without limitation, non-clinical trials such as animal tests.
Notwithstanding the foregoing, no such termination by Avanir will be effective until completion
of the dispute resolution procedures set forth in Section 13.5.

     7.3 Material Breach by Avanir. If Avanir materially breaches, materially defaults,
or otherwise materially fails to perform under the terms of this Agreement or the Supply Agreement,
Licensee may, in its sole discretion either (a) retain the licenses granted under this Agreement
and bring an action for damages against Avanir or (b) terminate this Agreement (and the licenses
granted hereunder) by giving ***  months advance written notice, unless
Avanir cures such breach, default or failure of performance within such *** 
months period or unless such breach, default or failure is subject to the force majeure provisions
of Section 13.4. For the sake of clarity, a “materially breaches, materially defaults, or
otherwise materially fails”, as used in this Section means (a) intentional breach of obligations to
deliver Know How, (b) any fraud or misrepresentation, or (c) a breach by Avanir of its obligation
under the Supply Agreement to provide Bulk Docosanol (each such event being a “Material Breach”
hereafter). Notwithstanding the foregoing, no such termination by Licensee will be effective until
completion of the dispute resolution procedures set forth in Section 13.5. For the
avoidance of doubt, Avanir has

 

			
	***	 	Certain confidential portions of this
Exhibit were omitted by means of blackout of the text (the “Mark”). This
Exhibit has been filed separately with the Secretary of the Commission without
the Mark pursuant to the Company’s Application Requesting Confidential
Treatment under Rule 24b-2 under the 1934 Act.

CONFIDENTIAL

15

 

obligations under this Agreement other than specified obligation on
the definition of Material Breach.

     7.4 Continuing Obligations. Termination of this Agreement by either party for any
reason under the terms and conditions of this Agreement will not affect obligations of either party
incurred prior to termination or the right of either party to recover damages from any breach
thereof or affect Licensee’s obligations to pay Avanir any fees, milestones, royalties or other
payments that have accrued as of the date of such termination.

     7.5 Remedies. Termination is not the sole remedy under this Agreement and, whether
or not termination is effected, all other remedies will remain available.

     7.6 Consequences of Termination. Upon termination of this Agreement by either party
prior to the expiration of this Agreement set forth in Section 7.1, for any reason:

     (a) Licenses. If termination of this Agreement is caused by material breach
by Licensee, the licenses granted under Section 2.1 will terminate, and Licensee
will permanently discontinue all advertising with respect to Products, although Licensee
may, to the extent permitted by applicable law, continue to sell Products which it has in
inventory at the time of termination; provided, however, that any such sale will (i) be
made at prices and under terms generally consistent with previous sales of the Products by
Licensee and (ii) be conducted in a manner so as not to be harmful to Avanir or the market
for the Products. Notwithstanding the above, Licensee may not sell the Products more than
180 days after the effective date of termination. At Avanir’s option, remaining stocks of
Products may be bought by Avanir at Licensee’s *** . Licensee will
deliver such stocks at Avanir’s direction and expense.

     (b) Trademark. Licensee will keep and own its registration of the Trademark
in the Territory even after any termination of this Agreement, as well as the expiration
of the Agreement set forth in Section 7.1. Provided, however, that only if this
Agreement was terminated by material breach by Licensee, Licensee will assign ownership of
the Trademark to Avanir in exchange for payment of an appropriate amount.

     (c) Governmental Registrations. Within a reasonable period (as far as the
laws and regulations in the Territory permit deliverance and transfer) after the effective
date of any pre-expiration termination due to any material breach of Licensee, Licensee
will, at Licensee’s expense, (i) deliver and transfer to Avanir the Territory Registration
and attachments and instruments directly relating thereto, any registration of any
exclusive patent license (Senyo Jisshiken) and any other import licenses and related
licenses and rights obtained by or on behalf of Licensee that are legally required for the
importation, use, distribution or sale of the Products by Avanir or such designated entity
in the Territory in exchange for appropriate amount of payment; (ii) notify in writing any
applicable government agencies of such transfer; and (iii) follow any necessary procedures
of any applicable government agencies. If such deliverance or transfer is not legally
permissible, or if such an attempted deliverance or transfer would be ineffective

 

			
	***	 	Certain confidential portions of this
Exhibit were omitted by means of blackout of the text (the “Mark”). This
Exhibit has been filed separately with the Secretary of the Commission without
the Mark pursuant to the Company’s Application Requesting Confidential
Treatment under Rule 24b-2 under the 1934 Act.

CONFIDENTIAL

16

 

or would
adversely affect materially the rights of Avanir so that Avanir would not in fact receive
substantially all such rights, Licensee will cooperate with Avanir, free of charge, in any
reasonable arrangement designed to provide Avanir the benefits under
any such registrations, licenses and rights as far as the laws and regulations permit
deliverance and transfer thereto this Agreement or other actions by Licensee so as to
enable Avanir to obtain the benefits under such licenses and rights. Licensee will
continue to provide Avanir with assistance ensuring the orderly transition of the Products
and its corresponding regulatory approvals to Avanir.

     (d) Confidential Information. If termination of this Agreement is caused by
material breach by Licensee, Licensee will return all copies of all Avanir’s Confidential
Information and any other Know-How relating to the Products, together with copies of any
registrations and applications for registration of the Products. Licensee will disclose
all manufacturing information solely related to the Products (in so far as such
information is within Licensee’s control and in so far as Licensee is legally able to
disclose the information) to Avanir and Licensee will continue to manufacture Avanir’s or
its licensees’ requirements of the Products until such time as a substitute manufacturing
source has been approved by the Territory Regulatory Agency, if applicable, and on such
terms as will be agreed by the parties negotiating in good faith.

     8. CONFIDENTIALITY.

     8.1 Confidential and Proprietary Information. Each party to this Agreement
acknowledges that in order for Avanir and Licensee to carry out their respective obligations
under this Agreement, it may be necessary for Avanir and Licensee to disclose to each other
certain Confidential Information. Each party to this Agreement agrees: (a) not to reveal or make
available any Confidential Information of the other to any Third Party, (except (i) to agents or
consultants engaged to obtain Territory Registrations in the Territory who have entered into
confidentiality agreements in a form acceptable to Avanir or (ii) as such disclosure may be
specifically approved in writing by the party against whom such disclosure is sought and except
as such disclosure may be required by the receiving party’s compliance with legal requirements
and in any such case such party will promptly notify the other party of any such legally required
disclosure) and to ensure that it will treat such Confidential Information of the other party in
the same manner as it treats its own Confidential Information, such treatment to be at least the
degree that a reasonable person would perform under similar circumstances; (b) to ensure that
Affiliates, sublicensees, employees, agents, associates or other persons to whom such disclosure
may be made or who may otherwise have access to such Confidential Information of the other have,
directly or indirectly, agreed in writing to safeguard and maintain such Confidential Information
of the other and not to disclose or use such Confidential Information of the other; (c) to ensure
that Confidential Information of the other is not used for the receiving party’s benefit except
as such benefits are expressly contemplated in this Agreement; (d) to prohibit the Confidential
Information of the other from being duplicated in any manner; except as is reasonably necessary
to perform the tasks and obligations contemplated under this Agreement; (e) to prohibit the
Confidential Information of the other from being published in any form without the express
written consent from the disclosing party, and (f) to ensure that each party of this Agreement
will not disclose any terms and condition of this Agreement in detail to a Third Party without
prior written consent of the other party, except as provided in Section 47. and
4.8.

CONFIDENTIAL

17

 

     8.2 Survival of Confidentiality. The obligations of this Article 8 with
respect to Confidential Information will continue during the term of this Agreement and for
***  years thereafter.

     8.3 Remedies. The receiving party acknowledges and agrees that due to the unique
nature of the disclosing party’s Confidential Information, there can be no adequate remedy at law
for any breach of its obligations pursuant to this Agreement, that any such breach may allow the
receiving party or Third Parties to unfairly compete with the disclosing party resulting in
irreparable harm to the disclosing party, and therefore, that upon any such breach or any threat
thereof, the disclosing party will be entitled to immediate injunctive relief in addition to
damages and expenses, including attorneys’ fees, in connection with any breach or enforcement of
the receiving party’s obligations pursuant to this Agreement or the unauthorized use or release
of any such Confidential Information. The receiving party will notify the disclosing party in
writing immediately upon the occurrence of any such unauthorized release or other breach. If any
breach of this Article 8 is seriously detrimental to relationship of trust between
Licensee and Avanir, that breach will constitute a material breach of this Agreement.

     9. REPRESENTATIONS AND WARRANTIES OF AVANIR.

     9.1 Due Organization and Authority. Avanir represents and warrants: (a) that it is
a corporation duly incorporated, validly existing and in good standing under the laws of the
State of California and has the corporate power and authority to execute, deliver and carry out
the terms and provisions of this Agreement; (b) that the execution, delivery and performance of
this Agreement by Avanir will not require the consent of any Third Party and will not cause a
breach or violation under any fiduciary, contractual, statutory or judicial obligation or
restraint to which Avanir is subject or bound; and (c) that the person executing this Agreement
on behalf of Avanir is duly authorized to do so to bind the corporation.

     9.2 Safety and Stability. Avanir represents and warrants that it has not received
any notification of, and has no current knowledge that there is now pending or that there have
been any judicial or administrative orders to ban the development or use of the Active
Ingredient, and Avanir has no current knowledge of any adverse reactions or test results
encountered or discovered regarding the use of the Active Ingredient which would render the
Active Ingredient unsuitable or unsafe for the purpose contemplated by this Agreement, which have
not been disclosed to Licensee.

     9.3 No Conflicts. Avanir represents and warrants that it has the right, without any
conflicts or restrictions, to enter into and perform in this Agreement.

     9.4 NO OTHER WARRANTIES. EXCEPT AS MAY BE EXPRESSLY PROVIDED IN THIS AGREEMENT OR THE
SUPPLY AGREEMENT, AVANIR DISCLAIMS ANY WARRANTY WITH RESPECT TO (A) THE QUALITY, COMPLETENESS,
EFFICACY OR EFFICIENCY OF THE BULK DOCOSANOL, PRODUCTS, KNOW-HOW OR ANY OTHER DATA OR OTHER
INFORMATION TO BE DELIVERED UNDER THIS AGREEMENT; (B) MERCHANTABILITY, TITLE, OF ANY PRODUCTS OR
KNOW-HOW, FITNESS FOR A PARTICULAR PURPOSE WITH RESPECT

 

			
	***	 	Certain confidential portions of this
Exhibit were omitted by means of blackout of the text (the “Mark”). This
Exhibit has been filed separately with the Secretary of the Commission without
the Mark pursuant to the Company’s Application Requesting Confidential
Treatment under Rule 24b-2 under the 1934 Act.

CONFIDENTIAL

18

 

TO ANY AND ALL OF THE FOREGOING; AND (C) THE VALIDITY OF ANY PATENTS OR THE PATENTABILITY OF ANY
PATENT APPLICATIONS.

However, notwithstanding the foregoing, Avanir represents, warrants and covenants to Licensee that:

	 	a)	 	As of the date hereof, Avanir is the sole and exclusive owner of the entire right,
title and interest in the Licensed Patents listed in Schedule 1.14, and is entitled
to grant the licenses specified herein. True, complete and correct copies of the complete
file wrapper and other documents and materials relating to the prosecution, defense,
maintenance, validity and enforceability of the Licensed Patents have been provided to
Licensee prior to the date hereof or will be provided as soon as reasonably practicable
following patent grant, as the case may be. The Licensed Patents listed in Schedule 1.14
constitute all of the relevant patents applicable to Active Ingredient, Bulk Docosanol and
Product as of the date hereof. During the term of this Agreement, Avanir will not take any
action to encumber or diminish the rights granted to Licensee hereunder with respect to the
Licensed Patents.
	 
	 	b)	 	As of the date hereof, to the best of Avanir’s knowledge, the Licensed Patents are
being diligently procured from the Japanese Patent Office in accordance with all applicable
laws and regulations. As of the date hereof, such Licensed Patents have been filed and
maintained properly and correctly and all applicable fees have been paid on or before the
due date for payment.
	 
	 	c)	 	As of the date hereof, to the best of Avanir’s and its Affiliates’ knowledge, there is
no actual infringement or threatened infringement of the Licensed Patents and Know-How by
any Third Party.
	 
	 	d)	 	As of the date hereof, to the best of Avanir’s and its Affiliates’ knowledge,
Licensee’s exploitation of the Patents or the Know-How hereunder will not infringe any
patent or other intellectual property or proprietary right of any Third Party.
	 
	 	e)	 	To the best of Avanir’s and its Affiliates’ knowledge, the Licensed Patents and the
Know-How existing as of the date hereof are subsisting and are not invalid or
unenforceable, in whole or in part. As of the date hereof, no claim or litigation has been
brought or threatened by any Third Party alleging, and Avanir is not aware of any possible
claim, whether or not asserted, that the Licensed Patents or Know-How are invalid or
unenforceable.
	 
	 	f)	 	Avanir has not previously entered into any agreement with respect to the Territory,
whether written or oral, with respect to, or otherwise assigned, transferred, licensed,
conveyed or otherwise encumbered its right, title or interest in or to, the Licensed
Patents or Know-How, the Bulk Docosanol or the Products (including by granting any covenant
not to sue with respect thereto) and it will not enter into any such agreements or grant
any such right, title or interest to any Third Party that is inconsistent with the rights
and licenses granted to Licensee under this Agreement.
	 
	 	g)	 	To the best of Avanir’s and its Affiliates’ knowledge, the Know-How has been kept
confidential or has been disclosed to Third Parties only under terms of confidentiality.

CONFIDENTIAL

19

 

     10. REPRESENTATIONS AND WARRANTIES OF LICENSEE.

     10.1 Due Organization and Authority. Licensee represents and warrants that: (a) it
and each of its Affiliates is a corporation duly incorporated, validly existing and in good
standing under the laws of Japan and has the full power and authority to execute, deliver and
carry out the terms and provisions of this Agreement; (b) the execution, delivery and performance
of this Agreement by Licensee will not require the consent of any Third Party and will not cause
a breach or violation under any fiduciary, contractual, statutory or judicial obligation or
restraint to which Licensee is subject or bound; and (c) the person executing this Agreement on
behalf of Licensee is duly authorized to do so to bind Licensee.

     10.2 No Pending Action against Licensee. Licensee represents and warrants that it
has not received any notification of and has no current knowledge of any action or proceeding
pending or threatened against Licensee which might result in a material adverse change in the
business or financial condition of Licensee which could adversely affect the rights of Avanir
under this Agreement or the development of the Products.

     10.3 Governmental Agencies. Licensee represents and warrants that it has disclosed
and made available to Avanir all pertinent correspondence received from any governmental agency
which relates to or impacts on its ability to develop the Products pursuant to this Agreement in
the Territory and will disclose all such further information to Avanir in the future.

     10.4 No Conflicts. Licensee represents and warrants that it has the right, without
any conflicts or restrictions, to enter into and perform in this Agreement.

     11. CLAIMS BY OR AGAINST THIRD PARTIES.

     11.1 Representations. Each party represents and warrants that it has not been
notified of any claims by any Third Parties related to the Active Ingredient or the Products that
have not been communicated to the other in writing before execution of this Agreement.

     11.2 Notice of Reimbursed Claims. If during the term of this Agreement, either
party receives notice of or becomes aware of any Third Party claim against such party or its
Affiliates or sublicensees, which claim is subject to Reimbursement by the other party under this
Article 11 (an “Reimbursed Claim”), such party seeking Reimbursement or its substitutes
including appropriate damage compensation for any liability under applicable law will promptly
inform the other party of such claim and all relevant and applicable facts relating thereto in
writing.

     11.3 Defense of Reimbursed Claims. Upon receiving a notification of a Reimbursed
Claim, the Reimbursing party will have sole discretion with respect to and will solely control,
at the Reimbursing party’s expense, the defense of any such Reimbursed Claim. The Reimbursing
party will keep the Reimbursed party fully informed regarding the status of any negotiations or
suits relating to such Reimbursed Claim. The Reimbursed party will cooperate fully with the
Reimbursing party and will offer such assistance to the Reimbursing party as the Reimbursing
party requests in connection with the defense of any such Reimbursed Claim at no charge to the
Reimbursing party, except for reimbursement of reasonable out-of-pocket expenses incurred in
rendering such assistance. The Reimbursing party will have the right to join the Reimbursed
party as a party to any lawsuit relating to such Reimbursed Claim at the Reimbursing party’s
expense, if the action has already been commenced against Reimbursed party by the Third Party,
and the Reimbursed party will have the right to be represented therein by legal counsel of its
own choice at the Reimbursed party’s expense, where

CONFIDENTIAL

20

 

it is allowed under applicable law. The Reimbursing party will not settle any such suit if such
settlement would have an affect on the rights of the Reimbursed party without obtaining the prior
written consent of the Reimbursed party, which consent will not be unreasonably withheld. The
Reimbursing party’s obligation to indemnify under this Article 11 will not apply to the
extent that the party seeking Reimbursement (i) failed to comply with the obligations under this
Section 11.3 or (ii) contributed to such loss, damage, injury, liability or claim by any
act, or by an omission to perform some duty imposed by applicable law, this Agreement or other
contract between the parties, on the Reimbursed party. The Reimbursement rights of either party
under this Article 11 will be the sole remedy for any claims for which either such party
seeks Reimbursement under this Article 11.

     11.4 Reimbursement of Avanir by Licensee. Licensee will defend, indemnify and hold
harmless Avanir, its successors, assigns, officers, directors, employees and agents from any and
all claims, causes of action, losses, liabilities and expenses (including, but not limited to,
reasonable attorneys’ fees) to Third Parties (including Avanir’ employees and any sublicensees)
arising out of (a) any breach of this Agreement by Licensee or (b) any personal injury, death,
environmental damage or property damage resulting from (i) any defects in design, materials or
workmanship of any kind or (ii) failure to comply with any applicable laws or misappropriation of
any Third Party rights, related to the manufacture, labeling, marketing, advertising,
distribution, transportation, sale and use of the Products by Licensee or its Affiliates or
sublicensees or by any Third Party acting under any contract with Licensee or with Licensee’s
knowledge, consent or approval or (c) claims that the Trademark infringes any trademark rights
owned by a Third Party.

     11.5 Reimbursement of Licensee by Avanir. Avanir will defend, indemnify and hold
harmless Licensee, its successors, assigns, officers, directors, employees and agents from any
and all claims, causes of action, losses, liabilities and expenses (including, but not limited
to, reasonable attorneys’ fees) by Third Parties (including Licensees’ employees and any
sublicensee) arising out of (a) any breach of this Agreement by Avanir; (b) any personal injury,
death, environmental damage or property damage resulting from (i) any defects in design,
materials or workmanship of any kind related to Bulk Docosanol that is supplied by Avanir
pursuant to the Supply Agreement or (ii) failure to comply with any applicable laws related to
Bulk Docosanol that is supplied by Avanir pursuant to the Supply Agreement, or by any Third Party
acting under any contract with Avanir or with Avanir’s knowledge, consent or approval and related
to Bulk Docosanol that is supplied by Avanir pursuant to the Supply Agreement; or (c) claims and
damages related to such claims, that Licensee’s approved use or sale of Products within the Field
infringes any patent owned by a Third Party in the Territory; provided, however, the amount of
Reimbursement is subject to and to the extent permitted by any applicable law. The above
provision may not be construed or interpreted as to exceed the maximum limitation of liability
permitted by the law. If an action is commenced by a Third Party against Licensee seeking a
preliminary or permanent injunction with respect to the manufacture and sales of the Products by
Licensee and Avanir is unable to obtain a written opinion of patent counsel that it is not
infringing the third-party’s patent, or that such patent is invalid, then Licensee will cease any
such alleged infringement or misappropriation. In the event of any such occurrence, Licensee and
Avanir will promptly work together on a change of design which should not create any infringement
or misappropriation under the Third Party’s patent.

CONFIDENTIAL

21

 

     11.6 Enforcement of Proprietary Rights against Third Parties. If Licensee becomes
aware of any product or activity of any Third Party that is suspected of involving infringement
or violation of any of Avanir’s proprietary rights, then Licensee will promptly notify Avanir in
writing of such infringement or violation. If Avanir becomes aware of any product or activity of
any Third Party that is suspected of involving infringement or violation of Avanir’s proprietary
rights and that affect Licensee’s license rights pursuant to this Agreement, then Avanir will
promptly notify Licensee in writing of such infringement or violation. Avanir may in its sole
discretion take or not take whatever action it believes is appropriate in connection with any
such infringement or violation, and will have the right to initiate an infringement or other
appropriate suit, including any defensive action in an invalidation trial at the Japan Patent
Office for any one of the Licensed Patents listed in the Schedule of 1.14, against any
Third Party who is suspected of infringing or misappropriating any Licensed Patents, invention or
technology included in any Products or the Know-How in the Territory. If Avanir elects to take
action, Licensee will fully cooperate therewith at Avanir’s expense. If Avanir initiates and
prosecutes any such action under this Section 11.6, all legal expenses (including court
costs and attorneys’ fees) will be for Avanir’s account but Licensee and Avanir will be entitled
to the balance shared proportional to their damages or payments regarding losses (other than for
reimbursement of costs or expenses, including attorney’s fees) awarded by way of judgment,
settlement or compromise and received by Avanir from the Third Party(s). If necessary, Licensee
may be joined as a party to the suit and will cooperate fully with respect to such suit and will
offer such assistance to Avanir in connection therewith at no charge except for reimbursement of
reasonable out-of-pocket expenses (including attorneys’ fees) incurred in rendering such
assistance. In such situation, Licensee will have sole discretion in selecting its own counsel.
If Avanir declines in any way whatsoever to enforce or initiate an infringement or other
appropriate suit against an infringing Third Party, Licensee will have the right to sue,
selecting its counsel in its sole discretion, and, subject to the proviso below, will be
entitled to receive all amounts awarded by way of judgment, settlement or compromise, if Licensee
registers Senyo Jisshiken under the Japanese Patent Law and any other applicable precedents under
Japanese Law in the subject case, provided, however, that Avanir will be entitled to a
proportionate share of any damages or payments (other than for reimbursement of costs or
expenses, including attorneys’ fees) received by Licensee from such Third Party(s). Avanir will
fully cooperate therewith at Avanir’s expense.

     11.7 Reimbursement Payment Adjustments. Any Reimbursed amounts provided under this
Article 11 will be reduced or refunded to take account of any net tax benefit or insurance
proceeds received and any other amount recovered, if any, by the Reimbursed party with respect to
any Reimbursed amounts.

     11.8 Insurance. To provide each Reimbursed party under this Agreement with adequate
assurance of Reimbursement, for the term of this Agreement and for a period of five years after the
expiration of this Agreement or earlier termination, each party will obtain and/or maintain,
respectively, at its sole cost and expense, product liability insurance in amounts, which are
reasonable and customary in the local pharmaceutical industry considering the respective size and
activities of the two parties. Such product liability insurance will insure against all liability,
including liability for personal injury, physical injury and property damage. Each party will
provide written proof of the existence of such insurance to the other party upon request.

     12. ASSIGNMENTS.

CONFIDENTIAL

22

 

     12.1 No Right to Assign. Subject to Sections 12.2, and 12.3,
neither party will have the right to assign or delegate this Agreement, or any of its rights or
obligations under this Agreement (except for Avanir’s rights to payments of royalties pursuant to
this Agreement) without the other’s express written consent, and such assignment or delegation
without such consent will be null and void for all purposes. In case for Avanir’s rights to
payments of royalties pursuant to this Agreement, Avanir will provide Licensee with at least
60-days prior written notice before the assignment of the right.

     12.2 Sale of Business. Notwithstanding anything to the contrary in this Agreement,
either Avanir or Licensee may assign its entire interest in this Agreement provided that such
assignment is part of the sale or transfer of substantially all of Avanir’s or Licensee’s
business, merger (“Gappei in Japanese Commercial Law), corporate division, corporate separation
or demerger (“Kaisya Bunkatsu” in Japanese Commercial Law), as the case may be.

     12.3 Assignment to Affiliates. Notwithstanding the provisions of Section
12.1, this Agreement and the obligations pursuant to this Agreement will be assignable, in
whole or in part, by Avanir, without consent of Licensee, to one or more Affiliates who will
affirm to Licensee a complete assumption of the obligations assigned; provided that Avanir will
guarantee the performance by such Affiliate(s) of such obligations. On the other hand,
notwithstanding the provisions of Section 12.1, this Agreement and the obligations
pursuant to this Agreement will be assignable, in whole or in part, by Licensee, without consent
of Avanir, to one or more of Licensee’s Affiliates that are as able or more able to perform the
obligations of Licensee under this Agreement and that will affirm to Avanir a complete assumption
of the obligations assigned; provided that Licensee will guarantee the performance by such
Affiliate(s) of such obligations. Licensee hereby guarantees the performance of its Affiliates,
and further promises that such assignment will revert to the Licensee in the event that such
Affiliate subsequently ceases to be an Affiliate.

     13. MISCELLANEOUS.

     13.1 Notices/Reports. Any reports, notices or other communications required or
permitted to be given by either party to this Agreement will be given in writing by personal
delivery, overnight courier service or facsimile, or by registered or certified air mail, postage
prepaid, return receipt requested, or electronic means including e-mail addressed to each
respective party at the address shown below.

If to Avanir:

Avanir Pharmaceuticals, Inc.

11388 Sorrento Valley Road, Suite 200

San Diego, California 92121

Attention: Vice President, Business Development

Facsimile No: ***

If to Licensee:

Kobayashi Pharmaceutical Co., Ltd.

 

			
	***	 	Certain confidential portions of this
Exhibit were omitted by means of blackout of the text (the “Mark”). This
Exhibit has been filed separately with the Secretary of the Commission without
the Mark pursuant to the Company’s Application Requesting Confidential
Treatment under Rule 24b-2 under the 1934 Act.

CONFIDENTIAL

23

 

30-3, 1-chome, Toyokawa

Ibaraki-shi

Osaka 567-0057, JAPAN

Attention: Chief of R&D Company

Facsimile No.: ***

or to such other address as either party may indicate by proper notice to the other in the
same manner as provided in this Agreement. All notices are deemed effective on the date of
receipt or, if delivery is not accepted, five days after placement with the addressee, an
overnight courier service or a post office, as applicable.

     13.2 Severability. If any provision of this Agreement is determined to be invalid,
void, or unenforceable, then any such provision will be ineffective and the remaining provisions
of this Agreement will continue in full force and effect without being impaired or invalidated in
any way.

     13.3 Counterparts. This Agreement may be executed in several counterparts, each of
which will be an original, but all of which, when taken together, will constitute one and the
same instrument.

     13.4 Force Majeure. Except for the payment of money, no failure or omission by the
parties to this Agreement in the performance of any obligation of this Agreement will be deemed a
breach of this Agreement nor create any liability, if the same arises as a result of force
majeure, i.e., any cause or causes beyond the control of the parties, including, but not limited
to, the following, which, for the purposes of this Agreement, will be regarded as beyond the
control or the party in question: acts of God; acts, omissions, rules, regulations, decisions,
denials or orders of any governmental authority or any officer, department, agency or
instrumentality thereof, fire, storm, flood, earthquake, accident, acts of the public enemy; war;
rebellion, insurrection, riot, invasion, strikes, or lockouts. In the event of such cause
intervening, such excuse of performance will be only to the extent that such nonperformance is
beyond the reasonable control of the party bound by such covenant or obligation; and the party so
affected will use its Best Efforts to eliminate or cure or overcome any of such causes and to
resume performance of its covenants and obligations with all possible speed.

     13.5 Dispute Resolution Process.

     (a) Scope. As a required precondition to terminating the Agreement or any
license granted pursuant to this Agreement or to initiating any legal action, any dispute,
controversy, or claim arising out of this Agreement or its interpretation, performance,
breach, enforcement or termination, or any other claim arising out of the respective
rights and duties of the parties (hereinafter, a “Dispute”), will be settled by the
procedures described in this Section 13.5. For the avoidance of doubt, this
Section does not apply to disputes relating to patent validity which will be determined by
a court and/or a patent office of competent jurisdiction.

 

			
	***	 	Certain confidential portions of this
Exhibit were omitted by means of blackout of the text (the “Mark”). This
Exhibit has been filed separately with the Secretary of the Commission without
the Mark pursuant to the Company’s Application Requesting Confidential
Treatment under Rule 24b-2 under the 1934 Act.

CONFIDENTIAL

24

 

     (b) Informal Efforts to Resolve Disputes. Before resorting to the procedures
set forth in subsections (c) through (g) below, the parties will first use all
Reasonable Efforts to resolve any Disputes through good faith negotiations and friendly
and informal discussions at a management level appropriate to the circumstances. Should
such informal efforts to resolve a Dispute fail, before the Agreement may be terminated by
either party or before either party may initiate any legal action, the Dispute must be
resolved pursuant to the remaining provisions of this Section 13.5.

     (c) Notice of Breach or Dispute. If the informal efforts described in
subsection (b) above fail to resolve a Dispute, or if either party believes that there has
occurred any material breach of the Agreement or there exists any Dispute relating to any
material breach or any other Dispute has arisen, such party will immediately deliver
written notice (the “Dispute Notice”) to the other party of the alleged material breach or
Dispute. The Dispute Notice will contain a detailed and explanatory description of the
alleged event of default, breach or Dispute, including the factual and legal or
contractual basis for the alleged event of default, breach or Dispute and the relief or
remedy sought by the party giving notice.

     (d) Conference. Within 30 days of the date of the Dispute Notice,
representatives of the parties having authority to settle the Dispute will confer either by
telephone or, if mutually agreed, in person in a good faith effort to resolve the Dispute.

     (e) In Person Meeting. If a mutually acceptable resolution of the Dispute is
not achieved by the 30th day after the conference described in subsection (d)
above, the Dispute will be automatically referred to senior executives nominated by each
party and of comparable rank or position who will meet in person to discuss and use all
Reasonable Efforts in good faith to resolve the Dispute to the mutual satisfaction of the
parties within 30 days thereafter. In the event that Licensee has delivered the Dispute
Notice to Avanir, then such meeting will take place in San Diego, California, and in the
event that Avanir has delivered the Dispute Notice to Licensee, then such meeting will take
place in Osaka, Japan. Each party will bear its own expenses relating to such meeting.

     (f) Binding Arbitration. If the personal meeting referred to in subsection (e)
cannot resolve the matter or dispute within the 30-day period scheduled for its completion,
the Dispute will be resolved, to the exclusion of a court of law, by binding arbitration as
follows:

(i) Arbitration Rules. Any formal arbitration commenced by either party
will be conducted in accordance with the Arbitration Rules of the Japan
Commercial Arbitration Association or the American Arbitration Association
as follows the location of arbitration as set forth in (v) of this
Section 13.5(f), in effect as of the date hereof.

(ii) Arbitrators. Unless the parties agree in writing on the appointment
of a single arbitrator, the matter will be referred to three arbitrators;
one to be appointed by each party, and the third, who will act as
Chairman, being nominated by the two so selected by the parties.

CONFIDENTIAL

25

 

(iii) Arbitration Decisions. The arbitration decision or award will be final
and binding on the parties, and the parties agree to be bound thereby and to
act accordingly. The arbitration award is to be given by a majority
decision; however, if there be no majority in favor of a single decision or
award, the award will be made by the Chairman alone. The arbitrators will
be empowered to award relief which is legal and/or equitable in nature, as
appropriate.

(iv) Arbitration Expenses. The expenses of the proceeding will initially
be borne equally by the parties to the dispute, but the prevailing party
in such proceeding will be entitled to recover, in addition to reasonable
attorneys’ fees and all other expenses, its contribution for the
reasonable fees and expenses of the arbitrator as an item of damage and/or
recoverable expenses.

(v) Arbitration Location. The place of arbitration will be in the city of
the principal address of the respondent in any such proceeding.

(vi) Arbitration Language. The language of such arbitration will be
English

(vii) Enforcement of Arbitration Decision. Judgment on the award rendered
by the arbitrators may be entered in any court of competent jurisdiction,
or application may be made to such court for judicial acceptance of the
award and/or an order of enforcement as the case may be.

(viii) Confidential Arbitration. The arbitration will be conducted
confidentially and any award may be made public only with the prior written
consent of the parties.

     (g) Effects of Pending Dispute. In the course of any negotiations,
consultations, meetings, discussions, whether formal or informal, and during any mediation
or arbitration proceedings to resolve any Dispute, both parties will make an effort to
continue to perform the Agreement in all respects and no termination of the Agreement will
be effective by either party until the final resolution of the Dispute by the parties or
by the arbitrators. Notwithstanding anything to the contrary contained in this Agreement,
in the event of a dispute relating to or arising out of an alleged material breach by
either party, although the effective date of any termination of the Agreement will not be
until the completion of all the steps required by this Section 13.5, the
commencement of any Dispute resolution proceeding under this Section 13.5 will not
(i) extend any payment due dates or cure periods set forth in this Agreement with respect
to any determination as to whether a material breach has occurred or (ii) relieve either
party of any payment or other obligations that are incurred during the pendency of the
dispute resolution proceeding under this Section 13.5. Provided, however,
Licensee has an option to deposit any payment to any governmental depository service
offices or other escrow service agents during the Dispute resolution proceeding.

     13.6 Governing Law. This Agreement will be construed in accordance with the
substantive laws of Japan, without giving any effect to the principles of conflict of laws.

CONFIDENTIAL

26

 

     13.7 Entire Agreement. This Agreement (together with its Exhibits and Schedules)
contains the entire agreement of the parties regarding the subject matter of this Agreement and
supersedes all prior agreements, understandings and negotiations regarding the same. This
Agreement may not be changed, modified, amended or supplemented except by a written instrument
signed by both parties.

     13.8 Captions. The captions used in this Agreement are for purposes of
clarification only and are not meant to be construed as part of this Agreement.

     13.9 Limitation of Liability. TO THE EXTENT PERMITTED BY APPLICABLE LAW, NEITHER
LICENSEE NOR AVANIR WILL BE LIABLE WITH RESPECT TO ANY SUBJECT MATTER OF THIS AGREEMENT UNDER ANY
CONTRACT, NEGLIGENCE, STRICT LIABILITY OR OTHER THEORY FOR COST OF PROCUREMENT OF SUBSTITUTE
GOODS, SERVICES, TECHNOLOGY OR RIGHTS OR FOR ANY INCIDENTAL OR CONSEQUENTIAL DAMAGES. SUBJECT TO
AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, EXCEPT WITH RESPECT TO ITS REIMBURSEMENT
OBLIGATIONS UNDER THIS AGREEMENT, AVANIR WILL NOT BE LIABLE FOR ANY AMOUNTS AGGREGATING IN EXCESS
OF ONE HUNDRED PERCENT OF THE AMOUNTS PAID TO IT HEREUNDER.

     13.10 Compliance with Export and Other Laws. Each party to this Agreement hereby
covenants to comply with, and the performance of the terms of this Agreement will be subject to,
all applicable treaties, laws, statutes, rules and regulations of any federal, state or local
governmental entity or instrumentality, including without limitation, the provisions of the U.S.
Export Administration Act of 1969, as amended.

     13.10 English Language. All reports, data, information, notices, schedules, plans,
records and other information required to be provided pursuant to this Agreement by either party
to this Agreement will be in the English language unless the original data and the source of
description thereof are written only in Japanese. If a translation is made of this Agreement, it
will be made for the convenience of Licensee and the English version of this Agreement, rather
than the translated version, will be deemed to be controlling. The parties have negotiated this
Agreement in the English language.

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

     13.12 Waiver. The waiver by either party of a breach of any provisions contained in
this Agreement will be in writing and will in no way be construed as a waiver of any succeeding
breach of such provision of the waiver of the provision itself.

     13.13 Relationship of the Parties. The relationship between Avanir and Licensee
under this Agreement is that of parties to an arms-length negotiated contract. Nothing in this
Agreement is intended or is to be construed so as to create between Avanir and Licensee,
respectively, the relationship of partners, or joint ventures, or to establish either party to
this Agreement as the employee or agent of the other party to this Agreement. Neither party to
this Agreement has an express or implied right or authority under this Agreement to make any
statement or commitments of any kind or to assume or to create any obligations on behalf of or

CONFIDENTIAL

27

 

in
the name of the other party to this Agreement, or to bind the other party to any contract,
agreement or undertaking with any Third Party.

     13.14 Certain Construction Rules. The Article and Section headings used in this
Agreement are for convenience of reference only and in no way define, limit, extend or describe
the scope or intent of any provisions hereof. In addition, as used in this Agreement, unless
otherwise expressly stated to the contrary, (a) all references to days, months or years are
references to calendar days, months or years and (b) any reference to a “Section,” “Article,”
“Exhibit,” or “Schedule” is a reference to a Section or Article of this Agreement or an Exhibit
or Schedule attached to this Agreement. Any reference to a “person” means any individual,
corporation, partnership, joint venture, association, trust or any other entity or organization
of any kind or character, including a governmental agency.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

CONFIDENTIAL

28

 

     IN WITNESS WHEREOF, the parties to this Agreement have executed this Agreement as of the day
and year first written above.

	 	 	 	 	 	 	 	 	 	 	 
	Kobayashi Pharmaceutical Co., Ltd.	 	AVANIR PHARMACEUTICALS	 	 
	(LICENSEE)
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ Yutaka Kobayashi
	 	 	 	By:
	 	/s/ Gregory P. Hanson	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	Name: Yutaka Kobayashi	 	Name: Gregory P. Hanson	 	 
	Title: President and Chief Operating Officer	 	Title: Vice President and CFO	 	 
	Date: January 5, 2006	 	Date: January 10, 2006	 	 

[SIGNATURE PAGE TO DOCOSANOL LICENSE AGREEMENT]

CONFIDENTIAL

29

 

SCHEDULE 1.14

Licensed Patents (Japan)

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Patent / Application	 	 
	Patent title	 	Territory	 	Status	 	Filing date	 	Number	 	Issue date
	***

	 	***
	 	***
	 	***
	 	***
	 	***
	***

	 	***
	 	***
	 	***
	 	***
	 	***
	***

	 	***
	 	***
	 	***
	 	***	 	 

 

			
	***	 	Certain confidential portions of this
Exhibit were omitted by means of blackout of the text (the “Mark”). This
Exhibit has been filed separately with the Secretary of the Commission without
the Mark pursuant to the Company’s Application Requesting Confidential
Treatment under Rule 24b-2 under the 1934 Act.

CONFIDENTIAL

30

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