Exhibit 10.3

Portions of this agreement, marked by asterisks (***), have been omitted
pursuant to a request for confidential treatment.  The omitted information has
been filed separately with the Securities and Exchange Commission

 

COLLABORATIVE RESEARCH & LICENSE AGREEMENT

between

LIPID SCIENCES, INC.

and

ELANCO ANIMAL HEALTH

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Portions of this agreement, marked by asterisks (***), have been omitted
pursuant to a request for confidential treatment.  The omitted information has
been filed separately with the Securities and Exchange Commission

 

This COLLABORATIVE RESEARCH & LICENSE AGREEMENT (the “Agreement”) is effective
from the Effective Date by and between:

 

LIPID SCIENCES, INC. (“Lipid Sciences”), a publicly-traded Delaware corporation,
having a place of business at 7068 Koll Center Parkway - Suite 401, Pleasanton,
CA 94566;

and

ELI LILLY AND COMPANY, an Indiana corporation, operating through its Elanco
Animal Health division and having a principal place of business at 2001 W. Main
Street, Greenfield, Indiana 46140 (“Elanco”).

INTRODUCTION

A.            WHEREAS, Lipid Sciences and/or its Affiliate(s) have developed
proprietary technology for, and are the owners and/or exclusive licensees of
patents claiming, delipidation-based methods and systems for the production of
treatments for viral or bacterial infections, among other ailments
(“Immunological Products”).

B.            WHEREAS, Lipid Sciences and/or its Affiliate(s) have facilities
and personnel that enable it to design and develop various kinds of
Immunological Products.

C.            WHEREAS, Lipid Sciences and/or its Affiliate(s) possess know-how,
expertise and intellectual property rights pertaining to the design and
development of these Immunological Products.

D.            WHEREAS, Elanco is engaged in the research, development,
marketing, manufacturing and distribution of animal health products for use in,
on or near live animals.

E.             WHEREAS, Elanco desires to design, develop and manufacture
certain Immunological Products for use in, on or near live animals.

F.             WHEREAS, Lipid Sciences and/or its Affiliate(s) desire to
collaborate with Elanco in the development of one or more Immunological Products
for animal health applications, subject to the terms and conditions set forth
herein.

NOW THEREFORE, in consideration of the foregoing premises and the following
mutual covenants and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Parties agree as follows:

ARTICLE I

1.1           Interpretation.  In this Agreement, unless the context otherwise
requires, a reference to:

(a)                                  a paragraph, section, exhibit or schedule
is a reference to a paragraph, section, exhibit or schedule to this Agreement;

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pursuant to a request for confidential treatment.  The omitted information has
been filed separately with the Securities and Exchange Commission

 

(b)                                 any document includes a reference to that
document (and, where applicable, any of its provisions) as amended, novated,
supplemented or replaced from time to time;

(c)                                  a statute or other law includes regulations
and other instruments under it and consolidations, amendments, re-enactments or
replacements of any of them;

(d)                                 the singular includes the plural and vice
versa, except as it regards the definitions in Sections 1.27 and 1.28 of this
Agreement;

(e)                                  a Party, person or entity includes:

(i)                                     an individual, firm, company,
corporation, association, trust, estate, state or agency of a state, government
or government department or agency, municipal or local authority and any other
entity, whether or not incorporated and whether or not having a separate legal
personality; and

(ii)                                  an employee, agent, successor, permitted
assign, executor, administrator and other representative of such party, person
or entity;

(f)                                    one gender includes the other;

(g)                                 “written” and “in writing” include any means
of reproducing words, figures or symbols in a tangible and visible form;

(h)                                 a month or year is a reference to a calendar
month or calendar year, as the case may be; and

(i)                                     individuals or persons include companies
and other corporations and vice versa.

1.2           “Affiliate” means any corporation or other entity that controls,
is controlled by, or is under common control with a Party to the Agreement.  A
corporation or other entity will be regarded as in control of another
corporation or entity if the latter corporation or entity owns or directly or
indirectly controls more than fifty percent (50%) of the voting stock or other
ownership interest of the former corporation or other entity, or if the latter
corporation or entity possesses, directly or indirectly, the power to direct or
cause the direction of the management and policies of the former corporation or
other entity or the power to elect or appoint fifty percent (50%) or more of the
members of the governing body of the former corporation or other entity. An
Affiliate will be bound under this Agreement in the same manner as if it were a
party hereto.

1.3           “Agreement” means this formal legal document if ultimately signed
by both Parties, effective as of the Effective Date.

1.4           “Confidential Information” means all know-how, trade secrets,
technical information, specifications, data, formulae, intellectual property or
software of a Party relating to or arising out of this Agreement including,
without limitation:

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Portions of this agreement, marked by asterisks (***), have been omitted
pursuant to a request for confidential treatment.  The omitted information has
been filed separately with the Securities and Exchange Commission

 

(a)                                  all communications between the Parties or
information of whatever kind whether recorded or not and, if recorded, in
whatever medium, relating to or arising out of the Product Development Plan, the
Design & Development Program, the Improvements, the Lipid Sciences Patent
Rights, the Elanco Patent Rights, the Elanco Inventions, Lipid Sciences
Inventions, Lipid Sciences Technology, Elanco Technology or the Agreement,
whether disclosed prior to or after entering into the Agreement;

(b)                                 any information that the Party indicates in
writing is information of a confidential nature or which is marked
“confidential”; and

(c)                                  all copies of the communications,
information, notes, reports and documents in whatever form referred to in
paragraph (a) or (b) of this definition.

1.5           “Design & Development Program” means the work performed by Lipid
Sciences and Elanco and/or their respective Affiliate(s) in accordance with the
Product Development Plan as revised from time to time as provided in the
Agreement.

1.6           “ECI” or “Employment Cost Index” means the “Private Industry,
Compensation, 12-Month Percent Change, Not Seasonally Adjusted - ECU10002A” with
respect to Total Compensation in Private Industry for All Workers (annual rate
or average of the relevant year’s four calendar quarters if not annual), Series
Id ECU10002A; using 2007 as the base year for purposes of indexing within the
context of this Agreement, as published by the U.S. Bureau of Labor Statistics
and available at the following URL:  http://data.bls.gov/cgi-bin/surveymost?ec,
or its successor site.

1.7           “Effective Date” means the last date of signature on the
Agreement.

1.8           “Elanco Compound” means one or more active ingredients directly
resulting from Lipid Sciences Technology that is selected by Elanco for
development and commercialization of Product(s) and/or New Product(s).

1.9           “Elanco Invention” means any Invention by Elanco and/or its
Affiliates (other than a joint invention) that is discovered, made, or conceived
and reduced to practice during or as a result of the Design & Development
Program.  For clarity, any invention by Elanco and/or its Affiliates outside the
Design & Development Program will be solely owned by Elanco and/or its
Affiliates.

1.10         “Elanco Patent Rights” means any and all Patent Rights owned and/or
controlled by Elanco during the term of the Agreement.

1.11         “Elanco Technology” means Technology, including know-how and trade
secrets, owned and/or controlled by Elanco as of the Effective Date of the
Agreement and/or developed during the term of the Agreement.

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Portions of this agreement, marked by asterisks (***), have been omitted
pursuant to a request for confidential treatment.  The omitted information has
been filed separately with the Securities and Exchange Commission

1.12         “Field” means all applications and uses of the Lipid Sciences
Technology and Lipid Sciences Patent Rights for Products.  For clarity, “Field”
does not include any human applications or uses.

1.13         “First Commercial Sale” of any Product(s) and/or New Product(s)
means the first sale for use by an end-user customer of such Product(s) and/or
New Product(s) in a country.

1.14         “First Payment” means the first payment, e.g., a technology access
fee or a payment made due to a first Regulatory Agency submission, made by
Elanco to Lipid Sciences pursuant to the payment terms of Article V for any
Product(s) and/or New Product(s).

1.15         “GxP” means compliance with all relevant Regulatory Agency
requirements for Good Clinical Practices, Good Laboratory Practices, and Good
Manufacturing Practices.

1.16         “Immunological Products” means: proprietary delipidation-based
methods and systems for the production of treatments for viral or bacterial
infections, among other ailments, of which Lipid Sciences and/or its
Affiliate(s) are the owners and/or exclusive licensees having the right to
enforce and sublicense.

1.17         “Improvements” means:  (a) any modification of Lipid Sciences
Technology, Elanco Technology or an Elanco Compound, provided such modification,
if unlicensed, would infringe one or more Valid Claims of Lipid Sciences Patent
Rights or Elanco Patent Rights; and (b) any beneficial modification of a
component or material useful in a Product(s) and/or New Product(s); in each of
(a) and/or (b) for use in the Field or New Field, which is reduced to practice
within the term of the Agreement.

1.18         “Invention” means patentable ideas and/or discoveries conceived by
one or more employee(s) or agent(s) of Lipid Sciences or Elanco, which arise
under and during the term of this Agreement.  “Sole Invention” means an
Invention discovered, made, or conceived and reduced to practice solely by Lipid
Sciences employee(s) or agent(s) or solely by Elanco employee(s) or agent(s). 
“Joint Invention” means an Invention discovered, made, or conceived and reduced
to practice jointly by Lipid Sciences employee(s) or agent(s) and Elanco
employee(s) or agent(s).

1.19         “Joint Patent Rights” means Patent Rights to a Joint Invention.

1.20         “Lipid Sciences Invention” means any Invention by Lipid Sciences
and/or its Affiliates (other than a joint invention) that is discovered, made,
or conceived and reduced to practice during or as a result of the Design &
Development Program.  For clarity, any invention by Lipid Sciences and/or its
Affiliates outside the Design & Development Program will be solely owned by
Lipid Sciences and/or its Affiliates.

1.21         “Lipid Sciences Patent Rights” means any and all Patent Rights
owned and/or controlled by Lipid Sciences and/or its Affiliates in the Field or
New Field during the term of the Agreement.

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Portions of this agreement, marked by asterisks (***), have been omitted
pursuant to a request for confidential treatment.  The omitted information has
been filed separately with the Securities and Exchange Commission

1.22         “Lipid Sciences Technology” means Technology, including know how
and trade secrets, owned and/or controlled by Lipid Sciences as of the Effective
Date of the Agreement and/or developed during the term of the Agreement, and
includes, without limitation, Immunological Products and delipidation-based
immunological technology for use in, on or for animals.

1.23         “Net Sales” means, with respect to a Product(s) and/or New
Product(s), the gross amount invoiced by Elanco (including an Elanco Affiliate)
or any sublicensee thereof to unrelated Third Parties, excluding any
sublicensee, for Product(s) and/or New Product(s) in the Territory, less the
following:

(a)                                  Customary trade, quantity and cash
discounts allowed;

(b)                                 Third Party Agent commissions, discounts,
refunds, rebates, chargebacks, retroactive price adjustments and similar
allowances, limited to reasonable adjustments and allowances which effectively
reduce the net selling price;

(c)                                  Actual Product(s) and/or New Product(s)
returns or allowances;

(d)                                 Any tax imposed on the sale, delivery or use
of the Product(s) and/or New Product(s), including, without limitation, sales,
use, excise or value added taxes, but excluding any tax on income; and

(e)                                  Any other similar and customary deductions.

Such amounts will be determined from the books and records of Elanco, Elanco
Affiliates and/or sublicensee(s) (as applicable), maintained in accordance with
U.S. Generally Accepted Accounting Principles (also known as “GAAP”) or, in the
case of sublicenses, such similar accounting principles, consistently applied. 
Elanco further agrees in determining such amounts, it will use Elanco’s
then-current standard procedures and methodology, including Elanco’s then
current standard exchange rate methodology for the translation of foreign
currency sales into U.S. Dollars or, in the case of sublicensees, such similar
methodology, consistently applied.

1.24         “New Field” means all applications and uses of the Lipid Sciences
Technology and Lipid Sciences Patent Rights for New Products. For clarity, “New
Field” does not include any human applications or uses.

1.25         “New Product(s)” means any *** that incorporates, uses or
implements Lipid Sciences Technology and/or Lipid Sciences Patent Rights and
that is ultimately sold by or for Elanco inside the New Field in the Territory,
whether such embodiment was in existence prior to the effective date of a
collaborative research and commercialization agreement, or is developed or
improved under that agreement.  ***

1.26         “Notice” means the definition provided in Section 11.7.

1.27         “Parties” means Lipid Sciences and Elanco.

1.28         “Party” means Lipid Sciences or Elanco.

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Portions of this agreement, marked by asterisks (***), have been omitted
pursuant to a request for confidential treatment.  The omitted information has
been filed separately with the Securities and Exchange Commission

1.29         “Patent Rights” means rights under all patents, provisional and
non-provisional, owned or controlled by the Parties (including all reissues,
extensions, substitutions, confirmations, re-registrations, re-examinations,
re-validations, patents of addition, supplementary protection certificates or
the equivalents thereof) and under all provisional and non-provisional patent
applications (including, without limitation, all continuations,
continuations-in-part and divisionals thereof), in each case, claiming an
Invention which is necessary or useful for the design, development, testing,
use, manufacture or sale of a Product(s) and/or New Product(s) that results from
the Agreement.

1.30         “POC Study” means the initial proof-of-concept study that Elanco
will conduct at its expense as consideration for the rights granted under this
Agreement.  The criteria for establishing this POC Study are described in
Exhibit A of this Agreement.  As additional consideration to Lipid Sciences for
entering into this Agreement, Elanco will also provide technical advice
regarding the detailed design and scope of this POC Study, at no charge to Lipid
Sciences.

1.31         “Primary Contact Person” will be the respective individuals
designated by Lipid Sciences and Elanco, as noted in Exhibit C, who will be
responsible for the day-to-day interactions between the Parties related to the
Design & Development Program and the management of the day-to-day operations of
the Design & Development Program.  Each Party may change its Primary Contact
Person upon Notice to the other Party.

1.32         “Product” means any *** that incorporates, uses or implements Lipid
Sciences Technology and/or Lipid Sciences Patent Rights, whether such embodiment
was in existence prior to the Effective Date, or is developed or improved under
the Agreement.  ***

1.33         “Product Development Plan” means the written development plan for
Product(s) and/or New Product(s) (including a corresponding budget), as amended
from time to time by the Parties.

1.34         “Program Year” means each twelve (12) calendar month period during
the term of the Design & Development Program, except in the first Program Year
in which case the Program Year will not be twelve (12) calendar months in
length, but will be the period from the Effective Date to 31-December-2007.

1.35         “Reasonable Commercial Efforts” means effort, expertise and
resources normally used by the Party in the development and/or commercialization
of a compound or product owned or controlled by such Party which is of similar
market potential at a similar stage in its development or product life, taking
into account issues of safety and efficacy, product profile, the competitiveness
of the marketplace, the proprietary position of the compound or product, the
regulatory structure involved, the profitability of the applicable products, and
other relevant factors.

1.36         “Regulatory Agency” means any one of the U.S. Department of
Agriculture (USDA); Environmental Protection Agency (EPA); Food and Drug
Administration (FDA); Food Safety and Inspection Service (FSIS); or any
counterparts thereof in jurisdictions outside of the USA.

1.37         “Steering Committee” means the joint committee composed of
representatives of Lipid Sciences and Elanco, as described in the Agreement.

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Portions of this agreement, marked by asterisks (***), have been omitted
pursuant to a request for confidential treatment.  The omitted information has
been filed separately with the Securities and Exchange Commission

1.38         “Technology” means written specifications, sketches, drawings,
schematics, prototypes, methods, protocols, know-how, trade secrets, all
proprietary data, information, inventions, regulatory submissions or other
intellectual property of any kind, excluding Patent Rights, to the extent
necessary or useful for the research, development and commercialization of
Product(s) and/or New Product(s) in the Field or New Field, and any other
information or tangible material and any data related thereto that is useful in
the Field or New Field.

1.39         “Territory” means worldwide.

1.40         “Third Party” means any entity, including any natural person, other
than Lipid Sciences or Elanco and their respective Affiliates.

1.41         “Valid Claim” means either (a) a claim of an issued and unexpired
patent which has not been held permanently revoked, unenforceable or invalid by
a decision of a court or other governmental agency of competent jurisdiction,
unappealable or unappealed within the time allowed for appeal, and which has not
been admitted to be invalid or unenforceable through re-examination, reissue or
disclaimer or otherwise; or (b) a claim of a pending patent application, which
claim was filed in good faith and has not been abandoned or finally disallowed
without the possibility of appeal or refiling of said application.

ARTICLE II

2.1           License Grant.  Subject to the terms of the Agreement, Lipid
Sciences and its Affiliates hereby grant to Elanco and its Affiliates the sole
and exclusive license under Lipid Sciences Technology, Lipid Sciences Patent
Rights, Lipid Sciences Inventions and Lipid Sciences Improvements in the Field
and Territory to research, develop, make, have made, use, sell, offer for sale,
import and sub-license, Product(s).

2.2           Rights Retained by Lipid Sciences.  Lipid Sciences retains the
sole and exclusive right outside the Field in the Territory to use for any
purpose any Lipid Sciences Technology, Lipid Sciences Patent Rights, Lipid
Sciences Inventions and Lipid Sciences Improvements (including, without
limitation, to research, develop, make, have made, use, sell, offer for sale,
import and license products).  For clarity, Elanco and its Affiliates cannot
research, develop, make, have made, use, sell, offer for sale, import or
sublicense any Lipid Sciences Technology, Lipid Sciences Inventions, Lipid
Sciences Improvements or Lipid Sciences Patent Rights outside the Field, unless
Elanco and/or its Affiliates enter into a separate agreement with Lipid Sciences
and/or its Affiliates.  Furthermore:

(a)                                  no license or other rights are granted to
Lipid Sciences to Elanco Technology, Elanco Patent Rights or Elanco Inventions,
except solely for the benefit of Elanco and its Affiliates;

(b)                                 no license or other rights are granted to
Elanco to Lipid Sciences Technology, Lipid Sciences Patent Rights or Lipid
Sciences Inventions, except as provided in this Agreement;

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pursuant to a request for confidential treatment.  The omitted information has
been filed separately with the Securities and Exchange Commission

(c)                                  Elanco and its Affiliates acknowledge that,
as of the Effective Date, no license or other rights are necessary to be
granted, or are granted, to Lipid Sciences by Elanco and its Affiliates for the
purposes of the Agreement, except to the extent disclosed in writing by Elanco
to Lipid Sciences prior to work commencing under the Product Development Plan or
under the Design & Development Program for the development of the Product in the
Field; and

(d)                                 Lipid Sciences and its Affiliates
acknowledge that, as of the Effective Date, no license or other rights are
necessary to be granted, or are granted, to Lipid Sciences by Third Parties for
the purposes of the Agreement, except to the extent disclosed in writing by
Lipid Sciences to Elanco prior to work commencing under the Product Development
Plan or under the Design & Development Program for the development of the
Product in the Field.

2.3           Rights Reverting to Lipid Sciences.  If any Product(s) and/or New
Product(s) or indication reverts to Lipid Sciences pursuant to Section 5.1, then
Lipid Sciences will have the exclusive right inside the Field or New Field and
within the Territory to use any Lipid Sciences Technology, Lipid Sciences Patent
Rights, Lipid Sciences Improvements and Lipid Sciences Inventions to develop,
make, have made, use, sell, import or sub-license Product(s) and/or, as
applicable, New Product(s).

2.4           Sublicenses.  Subject to the other provisions of the Agreement,
Elanco shall have the sole right to sublicense any and all rights licensed to
Elanco under Section 2.1.  Any such sublicense by Elanco shall be consistent
with the terms of the Agreement, and shall include an obligation for each such
sublicensee to comply with the applicable obligations of Elanco set forth in the
Agreement.

2.5           Trademarks.  Elanco will be free to use and to register in any
trademark office any trademark for use with a Product(s) and/or New Product(s)
in its sole discretion, except for trademarks proprietary to Lipid Sciences and
its Affiliates.  Elanco will own all right, title and interest in and to any
such trademark in its own name during and after the term of the Agreement,
except for trademarks proprietary to Lipid Sciences and its Affiliates.

ARTICLE III

3.1           Formation and Composition.  A joint committee comprised of four
(4) members, two (2) named representatives of each of Elanco and Lipid Sciences
(the “Steering Committee”) is being appointed pursuant to this Agreement.  Each
Party has provided the other Party in writing with the name, title, e-mail
address, telephone number and facsimile number of their respective Steering
Committee members and such information is set forth in Exhibit C.  The Steering
Committee will meet as needed, but not less than once each quarter during the
term of the Design & Development Program.  Such meetings will be at such times
agreed to by Lipid Sciences and Elanco, and will alternate between the offices
of the Parties unless the Parties otherwise agree, or will be in such other form
(e.g., telephone or video conference) as the members of the Steering Committee
will agree.

3.2           Steering Committee Functions and Powers.  The Steering Committee
will be responsible for the direction and overall supervision and management of
the Design &

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pursuant to a request for confidential treatment.  The omitted information has
been filed separately with the Securities and Exchange Commission

Development Program consistent with each Party’s internal policies and
procedures.  The principal functions of the Steering Committee will be to:

(a)                                  create Design & Development Program(s) and
Product Development Plan(s);

(b)                                 monitor the progress and results achieved
under the Design & Development Program and to revise, as necessary, the Product
Development Plan;

(c)                                  foster the collaborative relationship
between the Parties;

(d)                                 facilitate the transfer, development and
commercialization of technology in accordance with the Agreement;

(e)                                  determine potential New Products, identify
and approve the development of New Products; and

(f)                                    such other functions as agreed by the
Parties.

A Party may change one or more of its representatives to the Steering Committee
at any time.  Members of the Steering Committee may be represented at any
meeting by another member of the Steering Committee, or by a deputy.  Either
Party may permit additional employees and consultants to attend and participate
(on a non-voting basis) in the Steering Committee meetings, subject to the
confidentiality provisions of the Agreement.

3.3           Decisions of the Steering Committee.  A quorum of the Steering
Committee will be present at any meeting of the Steering Committee if at least
two (2) representatives of each Party are present at such meeting in person or
by telephone or videoconference.  If a quorum exists at any meeting, a unanimous
vote of the members of the Steering Committee present at such meeting is
required to take any action on behalf of the Steering Committee, with the
exception of any actions taken pursuant to Section 3.4.

3.4           Elanco’s Right to Control Commercialization.  Notwithstanding the
responsibilities and duties of the Steering Committee, Elanco will have the
right to choose Product(s) and/or New Product(s) for development and
commercialization, including formulation, means of administration and other
factors that appear most promising for further development.  Promptly upon
making a selection, Elanco will notify the Steering Committee in writing.

3.5           New Products.  Elanco has the first option right to commercialize
all applications and uses of the Lipid Sciences Technology and Lipid Sciences
Patent Rights for New Products (“Option Right”).  Therefore, if Elanco
determines that, pursuant to the results obtained by the Design & Development
Program, Product(s) and/or New Product(s) are commercially viable, upon the
payment of relevant payments described in Article V of this Agreement, Elanco
and its Affiliates will have the sole and exclusive license under Lipid Sciences
Technology, Lipid Sciences Patent Rights, Lipid Sciences Inventions and Lipid
Sciences Improvements in the New Field and Territory to research, develop, make,
have made, use, sell, offer for sale, import and sub-license the New Product(s)
in accordance with the following terms:

3.5.1. Exercise of Option Right by Elanco.  To exercise the Option Right, Elanco
shall propose to the Steering Committee, in writing, the commercialization of
any New Product(s); within three (3) months, the Steering Committee shall
complete a Product Development Plan for said New Product(s).  Provided Elanco
pays the additional payments described in Article V of this

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pursuant to a request for confidential treatment.  The omitted information has
been filed separately with the Securities and Exchange Commission

Agreement, the Option Right shall be deemed to have been exercised by Elanco,
the Option Right shall be deemed to have been granted to Elanco by Lipid
Sciences, and the New Product(s shall be deemed to have been approved for
development by the Steering Committee.

3.5.2. Termination of Option Right by Elanco.  The Option Right for any New
Product terminates sixty (60) days after Elanco receives Notice from Lipid
Sciences that any payment due under Article V has not been received, provided
that, during that sixty (60) day period, Elanco has not made such payment to
Lipid Sciences.  After the Option Right terminates for any New Product, Lipid
Sciences has full right and authority to pursue, or have others pursue, the
research and/or commercialization of the relevant New Product.

3.5.3. Limitations on Option Right.  In order to effectively manage the
development pipeline, if, after exercising its Option Right(s), Elanco has not
made a First Payment for three (3) New Product(s), Elanco must first obtain the
written approval of the Steering Committee before exercising its Option Right to
commercialize any additional New Product(s).

Notwithstanding Sections 2.1 and 3.5, this Agreement does not serve to grant to
Elanco or its Affiliates a license under Lipid Sciences Technology, Lipid
Sciences Patent Rights, Lipid Sciences Inventions and Lipid Sciences
Improvements to generally use Lipid Sciences Technology in a field outside the
Field or New Field or to research, develop, make, have made, sell, offer for
sale, import and sub-license products other than Product(s) or New Product(s).

3.6           Chair.  The Steering Committee will be chaired by one Elanco
representative appointed by Elanco for the first Program Year, then one Lipid
Sciences representative (or Elanco representative at Lipid Sciences’s request)
appointed by Lipid Sciences for the second Program Year and alternating
accordingly thereafter.  The chair does not have a second or casting vote.

3.7           Minutes and Reports.  The Steering Committee will be responsible
for keeping accurate minutes of its deliberations that record all proposed
decisions and all actions recommended or taken.  Within ten (10) business days
of each meeting, the chair will provide the Parties with draft minutes of such
meeting and a draft of a written accompanying report describing in reasonable
detail the status of the Design & Development Program, a summary of the work and
progress to date, any issues requiring resolution and any proposed decisions and
actions recommended or taken to all members of the Steering Committee.  Within
thirty (30) days of each meeting, the Steering Committee will approve final
versions of the meeting minutes and the accompanying report and such minutes and
accompanying report will thereafter be recognized as duly accepted by the
Parties.  All records of the Steering Committee will be available to both
Parties.

3.8           Information and Results.  Except as otherwise provided, the
Parties will make available and disclose to one another all results of the work
conducted pursuant to the Design & Development Program prior to and in
preparation for the Steering Committee meetings, by the deadline and in the form
and format to be designated by the Steering Committee.

3.9           Subcontracts.  Subject to the provisions of the Agreement, the
Parties may subcontract to Affiliates and Third Parties portions of the Design &
Development Program to be performed, provided the subcontracting Party has
obtained the prior consent of the Steering Committee; and provided, however,
that such Affiliates and Third Party subcontractors will be required to enter
into appropriate confidentiality agreements (said agreements of which signed
copies will be submitted to the Steering Committee) unless such subcontracting
would not require the transfer

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pursuant to a request for confidential treatment.  The omitted information has
been filed separately with the Securities and Exchange Commission

of Confidential Information to the Affiliate or Third Party subcontractor, and
further provided that the Parties’ rights under the Agreement are not adversely
affected.

ARTICLE IV

4.1           Performance of Design & Development Program.  The Steering
Committee will establish a program under which the Parties will use Reasonable
Commercial Efforts to collaboratively develop Product(s) and/or New Product(s),
with the initial goal of ***.  The Parties will use Reasonable Commercial
Efforts to perform the design and development tasks as described in the initial
Product Development Plan subsequently attached as Exhibit A.  The Design &
Development Program will be conducted by the Parties in good scientific manner,
and where necessary, in compliance with all applicable GxP and ISO9001 design
requirements.

4.2           Product Development Plan.  The Design & Development Program will
be conducted in accordance with the Product Development Plan that describes the
work to be pursued by the Parties during each Program Year.  Except for the
first Program Year, the Product Development Plan will be updated and approved by
the Steering Committee no later than sixty (60) days prior to the start of each
Program Year.  The Product Development Plan in effect at any time may not be
amended except as agreed in writing by the Steering Committee.  If at any time
during the Program Year, either Party determines that a change to the Product
Development Plan would benefit the Design & Development Program, such Party will
prepare and submit to the Steering Committee a written proposal detailing its
proposed changes to the Product Development Plan.  Any budget for Lipid
Sciences’ costs under a modified Product Development Plan that are to be
reimbursed by Elanco will be approved by the Steering Committee before Lipid
Sciences commences any work on such modified Product Development Plan.

4.3           SHARING OF TESTING, MARKETING, MANUFACTURING AND REGULATORY DATA. 
PARTIES WILL PROVIDE TO EACH OTHER, AT NO CHARGE, ACCESS TO TESTING, PILOT
MANUFACTURING AND REGULATORY DATA RELEVANT TO PRODUCT(S) AND/OR NEW PRODUCT(S)
IN THE FIELD OR NEW FIELD, OR IF REQUIRED FOR REGULATORY PURPOSES.

4.4           Results and Records.  The Parties will make available and disclose
to one another all results of the work conducted pursuant to the Design &
Development Program, and will keep such records as described herein; provided
that each Party will maintain such results and records of the other Party in
confidence in accordance with the confidentiality provisions in the Agreement,
and will not use such results or records except to the extent otherwise
permitted by the Agreement.  The Parties will maintain records of the results in
sufficient detail and in good scientific manner appropriate for patent purposes,
and in a manner that properly reflects all work done and results achieved in the
performance of the Design & Development Program (including all data in the form
required to be maintained under any applicable governmental regulations).  Such
records will include reports, research notes, charts, graphs, computations,
analyses, recordings, photographs, and other graphic or written data
specifically relevant to the Design & Development Program.

4.5           Availability of Employees.  Each Party agrees to make its
employees and non-employee consultants reasonably available at their respective
places of employment to consult with the other Party on issues arising during
the Design & Development Program and in connection with any request related to a
Product(s) and/or New Product(s) or the Design & Development Program from any
Regulatory Agency, including regulatory, scientific, technical and clinical
testing issues.

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pursuant to a request for confidential treatment.  The omitted information has
been filed separately with the Securities and Exchange Commission

4.6           Visit of Facilities.  Representatives of the Parties may, upon
reasonable advance notice and at times reasonably acceptable to the other Party,
visit the other Party’s facilities where the Design & Development Program is
being conducted, and consult informally, during such visits and by telephone,
facsimile and e-mail, with the other Party’s personnel performing work on the
Design & Development Program.

4.7           Product(s) and/or New Product(s) Development by Elanco.  Elanco
will conduct all related Product(s) and/or New Product(s) development activities
in the Field or New Field and Territory at its expense from the Effective Date,
including the preparation and submission of the appropriate regulatory documents
required for commercialization within the Field or New Field and Territory.

4.8           Product(s) and/or New Product(s) Development Conducted by Lipid
Sciences.

(a)                                  Elanco will pay Lipid Sciences as described
in “(b)” and “(c)” of this Section, for any development activities associated
with the Product Development Plan or the Design & Development Program that are
approved in writing in advance by the Steering Committee.  If Steering Committee
approval is not granted, Lipid Sciences will not commence any work or incur such
costs or expenses on behalf of Elanco or the Steering Committee.  With respect
to the activities to be undertaken by Lipid Sciences under the Agreement, Elanco
will reimburse Lipid Sciences for these activities.  Elanco will reimburse Lipid
Sciences for reasonable costs incurred due to Lipid Sciences’ personnel, or
approved third party personnel, working directly on Product(s) and/or New
Product(s) development.  The total annual rate per full-time equivalent employee
(“FTE”) of Lipid Sciences to be paid by Elanco will be *** for any FTE in the
first Program Year, said rate to include overhead costs of Lipid Sciences for
said FTE.  Beginning in 2008, this rate will be adjusted annually to reflect
changes, if any, in the ECI.  Elanco will also reimburse Lipid Sciences for
expenses incurred due to Lipid Sciences’ personnel, or approved third party
personnel, working directly on Product(s) and/or New Product(s) development,
such as transportation, travel, or lodging costs subject to pre-approval by the
Steering Committee.

(b)                                 Notwithstanding section (a), Elanco
recognizes that the Design & Development Program may require the services of
Third Parties, including consultants, laboratories, or scientific advisors. 
Elanco further recognizes that the services of Third Parties may exceed ***, and
therefore agrees that the *** sum in section (a) does not apply to services from
Third Parties.  Lipid Sciences agrees to submit all such Third Party expenses to
the Steering Committee, for approval, prior to commencing any work with any
Third Party(ies).

(c)                                  For budgeted expenses in “(a)” of this
Section that are to be incurred by or on behalf of Lipid Sciences under the
Product Development Plan and/or the Design & Development Program, Elanco will
pay Lipid Sciences within sixty (60) days of Elanco’s receipt of invoice from
Lipid Sciences for any such expenses.

(d)                                 In addition to expenses covered in “(b)” of
this Section, should additional expenses be approved in writing in advance by
the Steering Committee that were not initially budgeted and paid for under “(b)”
of this Section, Elanco will reimburse Lipid

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pursuant to a request for confidential treatment.  The omitted information has
been filed separately with the Securities and Exchange Commission

 

Sciences within sixty (60) days of Elanco’s receipt of invoice from Lipid
Sciences for any such expenses.

4.9           Regulatory / Quality Assurance / Quality Control / Legal.  Parties
will allow Regulatory, Quality Assurance, Quality Control, Accounting and Legal
personnel from either Party or its attorneys, advisors, accountants and
contractors, on a “need to know” basis, timely and reasonable access to audit
financial records, trial protocols, pilot scale manufacturing documents,
procedures manuals, patent documents and other Product(s) and/or New
Product(s)-related items relating to the license granted pursuant to the
Agreement or relating to the Product Development Plan or the Design &
Development Program.

4.10         Performance.  Elanco will use Reasonable Commercial Efforts to
identify, research, and develop and commercialize Product(s) and/or New
Product(s) in the Field or New Field in the Territory, but will be under no
obligation to commercialize and market a Product or New Product if it
determines, in its sole and reasonable business judgment, that such an effort is
not commercially viable for Elanco.

4.11         Quality.  Elanco will determine, in its sole judgment, quality
standards for Product(s) and/or New Product(s) including, but not limited to: 
stability; process validation and pre-approval inspection preparation; common
specifications; assay methodology and storage conditions.  Elanco will also
determine, in its sole business judgment, manufacturing standards and
requirements for Product(s) and/or New Product(s).

4.12         Out-Of-Pocket Expense Reimbursements.  Elanco agrees to pay Lipid
Sciences, within sixty (60) days of Elanco’s receipt of invoice from Lipid
Sciences, for all out-of-pocket expenses approved in advance by Elanco, that are
paid by Lipid Sciences to Third Parties, or pay the Third Parties directly at
Elanco’s sole election.

4.13         Regulatory Approvals.  Elanco will assume all responsibility and
related expense for Regulatory Agency approvals of Product(s) and/or New
Product(s) in the Field or New Field and Territory.

4.14         Manufacturing.  Elanco will have the exclusive right and obligation
to manufacture, or have manufactured, Product(s) and/or New Product(s) for all
development, Regulatory Agency approval, and commercialization purposes.  Elanco
will assume all responsibility and related expense for manufacturing and supply
of Product(s) and/or New Product(s) to Elanco customers.

4.15         Marketing and Sales.  Elanco will assume all responsibility and
related expense for marketing and sales of Product(s) and/or New Product(s) to
Elanco customers.

4.16         Regulatory Issues and Obligations, Ownership and Survival Rights. 
Elanco will own the regulatory registrations for Product(s) and/or New
Product(s) developed and commercialized by Elanco, at its sole expense, but will
assign to Lipid Sciences, in perpetuity and free of royalties to Elanco,
manufacturing, use, and sale rights back to Lipid Sciences if Elanco elects to
terminate the License during the Term, or if Lipid Sciences terminates the
License for Elanco’s material breach.

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pursuant to a request for confidential treatment.  The omitted information has
been filed separately with the Securities and Exchange Commission

 

ARTICLE V

5.1           Consideration.  In each instance for the milestone payments
described below, if Elanco fails to pay or elects not to pay the relevant owed
milestone payment within sixty (60) days of Elanco’s receipt of Notice from
Lipid Sciences that the relevant milestone event has occurred, the rights for
that(those) relevant Product(s) and/or New Product(s) or indication (as
described below) will revert to Lipid Sciences:

5.2           License Fee(s). Elanco agrees to pay Lipid Sciences development
and commercialization license fees in accordance with the schedule provided in
Exhibit E.

5.3           ***.

5.4           Payments under Sub-License.  If Elanco sub-licenses the Lipid
Sciences Technology, the Lipid Sciences Patent Rights, the Lipid Sciences
Inventions or the Lipid Sciences Improvements in the Field or New Field, Elanco
will pay Lipid Sciences *** percent (***) of all payments (including signing
fees, milestones and supply margins if Elanco produces Product(s) and/or New
Product(s) under said sub-license) received from the Third Party to whom it has
granted the sub-license.

5.5           Audits.  Upon the written request of Lipid Sciences, Elanco will
permit an independent certified public accountant selected by Lipid Sciences and
acceptable to Elanco, which acceptance will not be unreasonably withheld or
delayed, to have access during normal business hours to such of the records of
Elanco as may be reasonably necessary to verify the accuracy of the payment
reports hereunder in respect of any calendar year ending not more than
thirty-six (36) months prior to the date of such request.  Except as described
in the next paragraph, all such verifications will be conducted at the expense
of Lipid Sciences and not more than once in each calendar year.

In the event such accountant concludes that additional payments of any kind as
required by this Agreement were owed during such period, the additional amounts
will be paid within 90 (ninety) days of the date Lipid Sciences delivers to
Elanco such accountant’s written report so concluding.  The fees charged by such
accountant will be paid by Lipid Sciences, unless the audit discloses that the
amounts payable by Elanco for the audited period are more than one hundred and
ten percent (110%) of the amounts actually paid for such period, in which case
Elanco will pay the reasonable fees and expenses charged by the accountant.

Elanco will include in each sublicense granted by it pursuant to the Agreement a
provision requiring the sublicensee to make reports to Elanco, to keep and
maintain records of sales pursuant to such sublicense and to grant access to
such records by Lipid Sciences’s independent accountant to the same extent
required of Elanco under the Agreement.

Upon the written request of Elanco, Lipid Sciences will permit an independent
certified public accountant selected by Elanco and acceptable to Lipid Sciences,
which acceptance will not be unreasonably withheld or delayed, to have access
during normal business hours to such of the records of Lipid Sciences as may be
reasonably necessary to verify the accuracy of the financial records hereunder
in respect of any calendar year ending not more than thirty-six (36) months
prior to the date of such request.  Except as described in the next paragraph,
all such verifications will be conducted at the expense of Elanco and not more
than once in each calendar year.

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pursuant to a request for confidential treatment.  The omitted information has
been filed separately with the Securities and Exchange Commission

In the event such accountant concludes that amounts reimbursed to Lipid Sciences
by Elanco during such period exceeded the amounts approved in writing in advance
by Elanco pursuant to Section 4.8 and out-of-pocket expenses approved by Elanco
pursuant to Section 4.12, the amount of the excess expenses will be paid to
Elanco within ninety (90) days of the date Elanco delivers to Lipid Sciences
such accountant’s written report so concluding.  The fees charged by such
accountant will be paid by Elanco, unless the audit discloses that the amounts
paid by Elanco to Lipid Sciences for the audited period are more than one
hundred and ten percent (110%) of the amount of the expenses approved by Elanco
for such period, in which case Lipid Sciences will pay the reasonable fees and
expenses charged by such accountant.

The Parties agree that all information subject to review under this Section or
under any sublicense agreement is confidential and that it will cause its
accountant to retain all such information in confidence.

5.6           Royalty Payment Terms.  Royalties shown to have accrued by each
royalty report provided for under the Agreement will be due and payable on the
date such royalty report is due.  Payment of royalties in whole or in part may
be made in advance of such due date.  Royalties determined to be owing, and any
overpayments to be credited with respect to any prior period, will be added
together with interest thereon accruing under the Agreement from the date of the
report for the period for which such amounts are owing, or credited, as the case
may be, to the next annual payment hereunder.

5.7           Royalty Reports.  Royalty reports are due for each calendar
quarter 90 (ninety) days after the end of the quarter.  The royalty report must
set out the Net Sales for Product(s) and/or New Product(s) for the period to
which the report relates.

5.8           Withholding of Taxes.  Any withholding of taxes levied by tax
authorities outside the United States on the payments hereunder will be deducted
by Elanco from the sums otherwise payable by it hereunder for payment to the
proper tax authorities on behalf of Lipid Sciences and will be borne by Lipid
Sciences.  Elanco agrees to cooperate with Lipid Sciences in the event Lipid
Sciences claims exemption from such withholding or seeks deductions under any
double taxation or other similar treaty or agreement from time to time in force,
such cooperation to consist of providing receipts of payment of such withheld
tax or other documents reasonably available to Elanco.

5.9           Exchange Controls.  Except as otherwise provided in the Agreement,
all payments to be made pursuant to the Agreement will be paid in U.S. Dollars. 
If at any time legal restrictions prevent the prompt remittance of part or all
royalties with respect to any country where Product(s) and/or New Product(s)
is(are) sold, payment will be made through such lawful means or methods as
Elanco may determine.  When in any country the law or regulations prohibit both
the transmittal and deposit of royalties on sales or any other payments due
under this Agreement in such a country, royalty payments due by Elanco to Lipid
Sciences in respect of sales in such country will be suspended for as long as
such prohibition is in effect, and as soon as such prohibition ceases to be in
effect, all payments that Elanco would have been obligated to transmit or
deposit, but for the prohibition, will forthwith be deposited or transmitted
promptly to the extent allowable, as the case may be.  If the royalty rate
specified in the Agreement should exceed the permissible rate established in any
country, the royalty rate for sales in such country will be adjusted to the
highest legally permissible or government-approved rate.

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pursuant to a request for confidential treatment.  The omitted information has
been filed separately with the Securities and Exchange Commission

5.10         Interest on Late Payments.  If either Party fails to pay any
payment due under this Agreement on or before the date such payment is due, as
provided in this Agreement, such late payment shall bear interest, to the extent
permitted by applicable law, at the prime rate as of the date of U.S. Mail
postmark of the relevant payment if sent by U.S. Mail, or otherwise on the date
of receipt of payment, as published in The Wall Street Journal and found on the
wsj.com website at the following link or its successor site:

http://online.wsj.com/page/mdc/2_0500-rates-10.html?mod=2_0031

plus five percentage points (5.0 p.p.), as calculated on the number of days the
relevant payment is delinquent from and including the date payment is due
through and including the date upon which the owed Party has collected
immediately available funds in its own account.

ARTICLE VI

6.1           Disclosure of Inventions.  During the term of the Design &
Development Program, each Party will promptly disclose to the other Party the
Inventions arising under the Design & Development Program made by its employees
or agents, provided that such Inventions are related to Product(s) and/or New
Product(s).

6.2           Lipid Sciences Inventions and Patent Rights.  All right, title and
interest in all Lipid Sciences Inventions, Lipid Sciences Improvements, Lipid
Sciences Technology and Lipid Sciences Patent Rights will be owned by Lipid
Sciences.

6.3           Elanco Inventions and Patent Rights.  All right, title and
interest in all Elanco Inventions, Elanco Improvements, Elanco Technology and
Elanco Patent Rights will be owned by Elanco.

6.4           Joint Inventions and Joint Patent Rights.   Subject to Section
6.8, all right, title and interest in all Joint Inventions and Joint Patent
Rights will be owned jointly by Elanco and Lipid Sciences; provided however,
responsibility for patent filing with respect to Joint Inventions will be as set
forth in Section 6.8; and provided further that, except in connection with a
permitted assignment of the Agreement pursuant to Section 11.6, neither Party
may transfer its interest in any Joint Invention or Joint Patent Right unless
Notice of such transfer has been first given to the other Party and the
transferee agrees in writing to be bound by the terms of the Agreement with
respect to the interest so transferred, and the right of first refusal having
been extended to the other Party.  In the event either Party decides to
commercially exploit or license to any Third Party any rights or interests in
Joint Inventions or Joint Patent Rights inside the Field or New Field in any
jurisdiction in which the consent of joint owners is required for such
exploitation or grant of such license, the other Party agrees that it will not
unreasonably withhold its consent, nor require payment in connection with
granting such consent.

The Parties acknowledge Lipid Sciences may develop, make, have made, use, sell,
license or commercially exploit (either by itself or to or with any Third Party)
any rights in Joint Inventions or Joint Patent Rights outside the Field or New
Field in any jurisdiction.  Elanco will not develop, make, have made, use, sell,
license or commercially exploit (either by itself or with or to any Third Party)
any rights in Joint Inventions or Joint Patent Rights outside the Field or New
Field in any jurisdiction, nor prevent Lipid Sciences from so doing.  To the
extent that any law requires the consent of Elanco for Lipid Sciences to
develop, make, have made, use, sell, offer for sale, import, license, practice
or commercially exploit (either by itself or to or with any Third Party) any
rights in

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been filed separately with the Securities and Exchange Commission

Joint Inventions or Joint Patent Rights outside the Field or New Field in any
jurisdiction, the execution of the Agreement is deemed to be the giving of such
consent by Elanco.

The Parties acknowledge Elanco may (and only Elanco may) develop, make, have
made, use, sell, license or commercially exploit (either by itself or to or with
any Third Party) any rights in Joint Inventions or Joint Patent Rights inside
the Field or New Field in any jurisdiction.  Lipid Sciences will not develop,
make, have made, use, sell, offer for sale, import, license, practice or
commercially exploit (either by itself or with or to any Third Party) any
Product(s) and/or New Product(s) under Joint Inventions or Joint Patent Rights
inside the Field or New Field in any jurisdiction, nor prevent Elanco from so
doing.  To the extent that any law requires the consent of Lipid Sciences for
Elanco to develop, make, have made, use, sell, license or commercially exploit
(either by itself or to or with any Third Party) any rights in Joint Inventions
or Joint Patent Rights inside the Field or New Field in any jurisdiction, the
execution of this Agreement is deemed to be the giving of such consent by Lipid
Sciences.

6.5           Cooperation of Employees.  Each Party represents and agrees that
all its employee(s) or agent(s) will be obligated under a binding written
agreement to assign to such Party, or as such Party will direct, all Inventions
made or conceived by such employee(s) or other agent(s) in connection with this
Agreement.

6.6           Lipid Sciences Patent Rights.  Lipid Sciences will have sole
responsibility for and control over the filing, prosecution, maintenance and
enforcement of the Lipid Sciences Patent Rights, at Lipid Sciences’ expense. 
Lipid Sciences will keep Elanco informed regarding the status and prosecution of
all patent applications and patents included in such Lipid Sciences Patent
Rights licensed to Elanco pursuant to Section 2.1.  No later than March 1st of
each year during the term of the Agreement, Lipid Sciences will provide Elanco
with a report describing the status of the Lipid Sciences Patent Rights licensed
to Elanco pursuant to Section 2.1.  Such report will include, at a minimum, the
patent application and patent number, country(ies), filing date, issue date,
expiration date and any other relevant information.

If Lipid Sciences determines it will not seek patent rights with respect to any
potentially patentable Lipid Sciences Invention or Lipid Sciences files Lipid
Sciences Patent Rights in one or more countries but subsequently determines, on
a country-by-country basis, that it will not file, prosecute or maintain any
patent or patent application within the Lipid Sciences Patent Rights licensed to
Elanco pursuant to Section 2.1 (except for abandonment of a patent application
in favor of a patent application subsequently filed for purposes of continuing
the prosecution of Lipid Sciences Patent Rights claiming the inventions included
in the abandoned patent application), then Lipid Sciences will give Elanco the
timely opportunity to direct Lipid Sciences to continue to prosecute or maintain
the patent application or patent in Lipid Sciences’ name and at Elanco’s
expense.

6.7           Elanco Patent Rights.  Elanco will have sole responsibility for
and control over the filing, prosecution, maintenance and enforcement of the
Elanco Patent Rights, at Elanco’s expense.

6.8           Joint Patent Rights.  Elanco will have the first right to assume
responsibility for the preparation, filing, prosecution and maintenance of any
Joint Patent Rights in each country or region of the Territory where the Parties
mutually determine that it is commercially reasonable to do so, using outside
patent counsel reasonably acceptable to Lipid Sciences.  Elanco will share
equally with Lipid Sciences the reasonable out-of-pocket expenses incurred in
connection with

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pursuant to a request for confidential treatment.  The omitted information has
been filed separately with the Securities and Exchange Commission

such preparation, filing, prosecution and maintenance of Joint Patent Rights. 
Lipid Sciences will reimburse Elanco for Lipid Sciences’ share of such expenses
within ninety (90) days after receipt of invoice from Elanco (including
supporting documentation, upon written request of Lipid Sciences); if Lipid
Sciences fails or declines to pay its one-half share of expenses within the
ninety (90) day period, Elanco may deduct from amounts due and owing to Lipid
Sciences such share of unpaid expense.  Elanco will keep Lipid Sciences
reasonably informed of, and consult with Lipid Sciences with respect to, all
significant actions relating thereto.  If Elanco elects not to assume such
responsibility, Lipid Sciences will have the right but not the obligation to do
so, and will keep Elanco reasonably informed of, and consult with Elanco with
respect to, all significant actions relating thereto; and in such event, Elanco
will bear one-half the reasonable out-of-pocket expenses of preparation, filing,
prosecution and maintenance thereof.  If Lipid Sciences assumes such
responsibility but Elanco fails or declines to pay its one-half share of
expenses within the ninety (90) day period, Lipid Sciences may add to amounts
due and owing to Lipid Sciences such share of unpaid expense.

6.9           Patent Term Extension.  Lipid Sciences will cooperate with Elanco
in obtaining patent term extension or supplemental protection certificates and
the like with respect to the Lipid Sciences Patent Rights and Joint Patent
Rights in the Field or New Field as to which Elanco is licensed under the
Agreement, in each country and region where it is possible to do so.  Elanco
will make the election and Lipid Sciences agrees to abide by such election. 
Lipid Sciences may elect to be reimbursed by Elanco for its fully burdened FTE
and legal costs for accomplishing such patent term extension or supplemental
protection certificates requested by Elanco.

6.10         Data and Intellectual Property.  Technology and patents owned by
either Party at the beginning of the Agreement for Product(s) and/or New
Product(s) and Technology, and that developed and owned during the Term will
remain the sole property of the owning Party to exploit in any manner it chooses
at its sole discretion, except to the extent otherwise provided in this
Agreement.  New Invention(s) made by Lipid Sciences and/or Elanco in connection
with Product(s) and/or New Product(s) and/or Technology during the term of the
Agreement, and any patents, copyrights or other intellectual property based on
such Invention(s), will be owned by the Party(ies) of which the inventor(s) is
an employee or agent.

ARTICLE VII

7.1           Infringement Claims.  If the manufacture, sale or use of
Product(s) and/or New Product(s) pursuant to the Agreement results in, or may
result in, any claim, suit or proceeding by a Third Party alleging patent
infringement by Lipid Sciences or Elanco (or its licensees or sublicensees), or
by an Affiliate of Lipid Sciences or Elanco, such Party will promptly notify the
other Party hereto in writing.  The Party subject to such Third-Party claim will
have the exclusive right to defend and control the defense of any such claim,
suit or proceeding, at its own expense, using counsel of its own choice;
provided, however, that Elanco will not enter into any settlement which admits
or concedes that any aspect of the Lipid Sciences Patent Rights is invalid or
unenforceable without the prior written consent of Lipid Sciences, and Lipid
Sciences will not enter into any settlement which admits or concedes that any
aspect of the Elanco Patent Rights is invalid or unenforceable without the prior
written consent of Elanco.  The Party subject to the Third-Party claim will keep
the other Party hereto reasonably informed of all material developments in
connection with any such claim, suit or proceeding.  Should Elanco decide not to
actively defend or fail to defend any such claim, suit, or proceedings by a
Third Party relating to

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been filed separately with the Securities and Exchange Commission

Lipid Sciences Patent Rights, then Lipid Sciences will be entitled to take over,
at its option, the right to defend such infringement proceedings and the control
of any such defence, at its cost.

7.2           Enforcement of Joint Patent Rights.  Lipid Sciences and Elanco
will each promptly notify the other in writing of any alleged or threatened
infringement of the Joint Patent Rights of which they become aware.  Lipid
Sciences and Elanco will then confer and may agree jointly to prosecute any such
infringement.  If the Parties do not agree on whether or how to proceed with
enforcement activity (a) within ninety (90) days following the notice of alleged
infringement or (b) ten (10) business days before the time limit, if any, set
forth in the appropriate laws and regulations for the filing of such actions,
whichever comes first, then Elanco may commence litigation with respect to the
alleged or threatened infringement at its own expense.  In the event that Elanco
does not commence litigation within five (5) business days of the
above-specified date, Lipid Sciences may do so, at Lipid Sciences’ expense.  In
the event a Party brings an infringement action against a Third Party, the other
Party will cooperate fully, provided that there is a mutual agreement as to the
purpose and goal of the enforcement action.

Except as otherwise agreed to by the Parties as part of a cost-sharing
arrangement, any recovery realized as a result of such litigation (whether by
way of settlement or otherwise) will be first allocated to reimbursement of
unreimbursed legal fees and expenses incurred by the Party initiating the
proceeding, then toward reimbursement of any unreimbursed legal fees and
expenses of the other Party, and then the remainder will be divided between the
Parties as follows:  (y) if the award is based on lost profits, Elanco will
receive an amount equal to the damages the court determines Elanco has suffered
as a result of the infringement less the amount of any royalties that would have
been due to Lipid Sciences on sales of Product(s) and/or New Product(s) lost by
Elanco or any Affiliate or sublicensee of Elanco as a result of the infringement
had Elanco or any Affiliate or sublicensee of Elanco made such sales, and Lipid
Sciences will receive an amount equal to the royalties and other payments it
would have received under Article VI if such sales had been made by Elanco or
any Affiliate or sublicensee of Elanco; and (z) as to awards other than those
based on lost profits, sixty percent (60%) to the Party initiating such
proceedings and forty percent (40%) to the other Party.

7.3           Enforcement Action in the Field or New Field.  Lipid Sciences
shall have the sole right, but not the obligation, to commence and control any
legal action or proceeding, or the filing of any counterclaim, related to any
alleged infringement of the Lipid Sciences Patent Rights (“Action”) in the Field
or New Field in the Territory.  In the event that Lipid Sciences elects, in its
sole discretion, to undertake such an Action, Elanco agrees to reasonably
cooperate with Lipid Sciences, including providing access to all necessary
documents, executing all papers and performing such other acts as may be
reasonably required for such Action, including, but not limited to, consenting
to be joined as a Party plaintiff in such Action.  Lipid Sciences shall control
such Action, and Lipid Sciences may enter into settlements, stipulated judgments
or other arrangements respecting such infringement; provided, however, Lipid
Sciences shall not settle or make any agreement that would have an adverse
effect on Elanco’s rights under this Agreement, without the prior written
consent of Elanco.  Lipid Sciences shall keep Elanco reasonably apprised of the
progress of any such Action.  Elanco may, at its option and sole expense, be
represented by counsel of its choice, but all other costs associated with any
such Action shall be at the sole expense of Lipid Sciences.  In any Action, any
damages or other recovery, including compensatory and other non-compensatory
damages or recovery actually received from a Third Party, shall first be used to
reimburse Lipid Sciences for its respective costs and expenses incurred in
connection with such Action and Elanco for its respective costs and expenses
incurred in connection with such

20

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Portions of this agreement, marked by asterisks (***), have been omitted
pursuant to a request for confidential treatment.  The omitted information has
been filed separately with the Securities and Exchange Commission

Action, provided that Lipid Sciences requested Elanco support Lipid Sciences or
otherwise participate in such Action and Elanco provided such requested support
and participation. To the extent that such damages were calculated based upon
the loss suffered by Elanco as a result of such Third Party infringement, said
remaining damages or other recovery shall be treated as Net Sales and Elanco
shall pay Lipid Sciences the applicable Royalty on such Net Sales and retain the
balance.

ARTICLE VIII

8.1           Confidentiality Agreement. The Parties are bound by a Mutual
Confidentiality Agreement effective as of January 20, 2006, with the ability to
exchange information under the Confidentiality Agreement through January 20,
2007, and with obligations to maintain such information for *** years after the
expiration or termination of the Agreement. The Parties’ rights and obligations
under the Mutual Confidentiality Agreement are incorporated herein by reference
and now extended for the term of this Agreement; should there be any conflict,
the provisions of this Agreement shall prevail.

8.2           Nondisclosure; Exceptions. Neither Lipid Sciences nor Elanco shall
publish or disclose to any Third Party, including its independent contractors,
any or all Confidential Information of the other Party without the advance
execution of a binding confidentiality agreement between the Third Party and the
disclosing Party and advance approval of the Steering Committee. Neither Lipid
Sciences nor Elanco shall disclose to any Third Party or use for any purpose
besides this Agreement Confidential Information of the other Party, unless such
Party can demonstrate that such information:

(a)                                  Was known to the receiving Party or to the
public prior to disclosure by the disclosing Party under this Agreement, as
shown by written records;

(b)                                 Becomes known to the public from a source
other than the receiving Party;

(c)                                  Is disclosed to the receiving Party on a
non-confidential basis by a Third Party having a legal right to make such
disclosure;

(d)                                 Is required to be disclosed by law or
judicial order; provided, however, the receiving Party shall promptly notify the
disclosing Party and shall not disclose any information without the disclosing
Party’s prior written consent or until the disclosing Party has exhausted any
legal actions it may take to prevent or limit the requested disclosure; or

(e)                                  Is independently developed by an employee
of the receiving Party not having access to the disclosing Party’s information.

The provisions of this Section do not prevent Lipid Sciences from disclosing or
using Confidential Information about Lipid Sciences Technology, Lipid Sciences
Patent Rights, Improvements, and Lipid Sciences Inventions outside the Field or
New Field and Territory. The provisions of this Section do not prevent Lipid
Sciences from disclosing or using Confidential Information about Joint
inventions or Joint Patent Rights outside the Field or New Field and Territory,
subject to the recipient having first entered into a binding confidentiality
agreement with Lipid Sciences.

21

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Portions of this agreement, marked by asterisks (***), have been omitted
pursuant to a request for confidential treatment.  The omitted information has
been filed separately with the Securities and Exchange Commission

8.3           Such obligations of confidentiality and non-use shall survive
expiration or termination of this Agreement for a period of *** years from the
effective date of such termination or expiration.

8.4           The Parties expressly agree that Elanco may submit Confidential
Information of Lipid Sciences to any Regulatory Agency for the purpose of
obtaining marketing approvals in the Field or New Field.

ARTICLE IX

9.1           Liabilities; Indemnification by Elanco. Except for liability
caused by the gross negligence or willful misconduct of Lipid Sciences, Elanco
will bear all liabilities arising from the development, regulatory approval,
manufacture, marketing and sales of Product(s) and/or New Product(s) to Elanco
customers in the Field or New Field. Elanco will at all times during and after
the term of the Agreement be responsible for, and will defend, indemnify and
hold Lipid Sciences and its directors, officers, employees and contractors
harmless from and against any and all losses, claims, suits, proceedings,
expenses, recoveries and damages, including reasonable legal expenses and costs
including attorneys’ fees, arising out of any claim by any Third Party relating
to Product(s) and/or New Product(s) or Elanco Technology or Elanco Patent Rights
or any aspect of Elanco’s performance in connection with the Agreement, to the
extent such liability results or arises from (a) Elanco’s uncured breach of its
obligations under the Agreement; (b) the gross negligence or willful misconduct
of Elanco or its Affiliates, directors, officers, employees or contractors in
their performance hereunder; (c) attributes of the Product(s) and/or New
Product(s); or (d) any breach by Elanco of any of its covenants, representations
or warranties set forth in the Agreement. Lipid Sciences will give Elanco prompt
Notice of any such claim or lawsuit and, without limiting the foregoing
indemnity, Elanco will have the right to compromise, settle or defend such claim
or lawsuit; provided that no offer of settlement, settlement or compromise by
Elanco shall be binding on Lipid Sciences without its prior written consent
(which consent shall not be unreasonably withheld or delayed), unless such
settlement fully releases Lipid Sciences without any liability, loss, cost or
obligation incurred by Lipid Sciences.

9.2           Indemnification by Lipid Sciences. Except to the extent caused by
the gross negligence or willful misconduct of Elanco, Lipid Sciences agrees to
indemnify, defend and hold Elanco and its directors, officers, employees and
contractors harmless from and against any and all losses, claims, suits,
proceedings, expenses, recoveries and damages, including attorneys’ fees,
arising out of any claim by any Third Party in connection with the Agreement
relating to Lipid Sciences Technology or Lipid Sciences Patent Rights, to the
extent arising out of (a) Lipid Sciences’s uncured breach of its obligations
under the Agreement; (b) the gross negligence or willful misconduct of Lipid
Sciences or its Affiliates, directors, officers, employees or contractors in
their performance hereunder; or (c) any breach by Lipid Sciences of any of its
covenants, representations or warranties set forth in the Agreement. Elanco will
give Lipid Sciences prompt Notice of any such claim or lawsuit and, without
limiting the foregoing indemnity, Lipid Sciences will have the right to
compromise, settle or defend such claim or lawsuit; provided that no offer of
settlement, settlement or compromise by Lipid Sciences shall be binding on
Elanco without its prior written consent (which consent shall not be
unreasonably withheld or delayed), unless such settlement fully releases Elanco
without any liability, loss, cost or obligation incurred by Elanco.

9.3           Lipid Sciences Representations & Warranties to Elanco. As of the
Effective Date,

22

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Portions of this agreement, marked by asterisks (***), have been omitted
pursuant to a request for confidential treatment.  The omitted information has
been filed separately with the Securities and Exchange Commission

Lipid Sciences represents and warrants that it owns all right and title to, or
owns the exclusive rights to, the Lipid Sciences Patent Rights listed in Exhibit
D and the Lipid Sciences Technology licensed by Elanco hereunder; that it has
the right to enter into the Agreement; and that to the best of its knowledge,
its patents are valid and its Technology has merit.

9.4           Representations & Warranties of the Parties to Each Other. Lipid
Sciences and Elanco each represent and warrant that execution, delivery and
performance of the Agreement have been duly authorized by all necessary action
on the part of such Party, its officers and directors and does not conflict
with, violate, or breach any agreement to which either Elanco or Lipid Sciences
is a party, or either Party’s articles of incorporation or bylaws.

ARTICLE X

10.1         Term. Except as otherwise provided in the Agreement, the term of
the Agreement will commence on the Effective Date and end on the later of: (a)
the *** year anniversary of the expiration, lapse, or invalidation of the last
remaining Valid Claim of Lipid Sciences Patent Rights used in Product(s) and/or
New Product(s), or (b), in the absence of any Valid Claims of Lipid Sciences
Patent Rights used in Product(s) and/or New Product(s), the *** year anniversary
of first Product launch, unless extended by mutual agreement of the Parties.

10.2         Expiration of License. The license for the Territory and Field or
New Field granted by Lipid Sciences to Elanco pursuant to Section 2.1 and all
other rights granted to Elanco (other than those expressly stated to continue
after expiration or termination of the Agreement), will cease upon the earlier
of:

(a)          expiry of the term of this Agreement pursuant to Section 10.1; or

(b)         termination of the Agreement pursuant to Section 10.7; or

(c)          termination of the Agreement by Lipid Sciences pursuant to Section
10.9.

Subject to the foregoing, expiration of any particular Lipid Sciences Patent
Rights will not preclude Elanco from continuing to market and sell Product(s)
and/or New Product(s) or to use Product(s) and/or New Product(s) after the term
of the Agreement.

10.3         Lipid Sciences Termination For Cause and Consideration. If Lipid
Sciences terminates the Agreement pursuant to Section 10.7 or 10.10, Lipid
Sciences will retain all sums earned and paid by Elanco and Elanco will promptly
pay all sums accrued which are then due and payable to Lipid Sciences.

10.4         Elanco Termination For Cause and Consideration. If Elanco
terminates the Agreement pursuant to Section 10.9, Lipid Sciences will return
all sums earned and paid by Elanco under Section 3.10 that have not been
expensed or committed against the budget in the Product Development Plan.

10.5         Surviving Obligations. Upon expiration or termination of the
Agreement, the obligations which by their nature are intended to survive
expiration or termination of the Agreement, will survive.

23

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Portions of this agreement, marked by asterisks (***), have been omitted
pursuant to a request for confidential treatment.  The omitted information has
been filed separately with the Securities and Exchange Commission

10.6         Existing Obligations. Expiration pursuant to Sections 10.1 or 10.2
above, or termination pursuant to Section 10.3, 10.4 or 10.7 of the Agreement
for any reason, will not relieve the Parties of any obligation that accrued
prior to such expiration or termination.

10.7         Mutual Termination Privilege. Subject to the provisions of the
Agreement, either Party may terminate the Agreement upon thirty (30) days’
Notice to the other Party.

10.8         Accrued Obligations. The expiration or termination of the Agreement
or the Design & Development Program will not relieve the Parties of any
obligation that accrued prior to such expiration or termination.

10.9         Events of Default.  An event of default (“Event of Default”) will
have occurred and the Agreement may be terminated by the Party first named in
each paragraph below in the following circumstances:

(a)           Material Breach.  By the non-breaching Party, if the breaching
Party fails to remedy a material breach of the Agreement within sixty (60) days
after Notice thereof detailing the breach has been given to the breaching Party
by the non-breaching Party.

(b)           Failure of Elanco to Pay.  By Lipid Sciences, if Elanco fails to
make any payment as required under the Agreement within the period(s) identified
in this Agreement after such payment becomes payable, and such failure is not
remedied within thirty (30) business days after subsequent Notice thereof from
Lipid Sciences.

(c)           Bankruptcy.  By either Party, upon bankruptcy, insolvency,
dissolution or winding up of the other.

10.10       Default Remedies.

(a)           Default Remedies Available to Elanco.  In the event that an Event
of Default occurs that is caused by Lipid Sciences, and Lipid Sciences fails to
cure such default within the applicable cure period under this Section 10.9,
Elanco may elect to either (i) terminate the Agreement and/or (ii) without
limiting any other legal or equitable remedies that Elanco may have, continue
the Agreement in full force and effect, in accordance with its terms.

(b)           Default Remedies Available to Lipid Sciences.  In the event that
an Event of Default occurs that is caused by Elanco, and Elanco fails to cure
such default within the applicable cure period under this Section 10.9, Lipid
Sciences may elect to either (i) terminate the Agreement and/or (ii) without
limiting any other legal or equitable remedies that Lipid Sciences may have,
continue the Agreement in full force and effect, in accordance with its terms.

ARTICLE XI

11.1         Non-Compete.  Except on written consent of Elanco, during the term
of the Agreement and for a period of *** thereafter, if Lipid Sciences
terminates this Agreement pursuant to Section 10.7, Lipid Sciences and its
Affiliates will not develop or sell Product(s) and/or New Product(s) in

24

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Portions of this agreement, marked by asterisks (***), have been omitted
pursuant to a request for confidential treatment.  The omitted information has
been filed separately with the Securities and Exchange Commission

the Field or New Field and Territory that were licensed to Elanco by means of
the Agreement. For clarity, the provisions of this Section do not apply if the
Agreement is terminated by Lipid Sciences pursuant to Section 10.9 nor to
Product(s) and/or New Product(s) that has(have) reverted to Lipid Sciences
pursuant to Section 2.3, nor if Elanco terminates the Agreement under Section
10.7.

11.2         Separate Entities / Disclaimer of Agency.  Lipid Sciences and
Elanco are and will remain separate independent entities. This Agreement will
not constitute, create or otherwise imply a joint venture, partnership or formal
business organization of any kind. Each Party to the Agreement will act as an
independent contractor and not as an agent or legal representative of the other.
Neither Party will have the right or authority to assume, create or incur any
Third Party liability or obligation of any kind, express or implied, against or
in the name of or on behalf of the other Party except as expressly set forth in
the Agreement.

11.3         Press Releases & Disclosures. Neither Party will submit for written
or oral publication any document, data, or other information generated and
provided by the other Party during the Term without first obtaining the prior
written consent of the other Party, which consent will not be unreasonably
withheld, especially as it relates to releases required for local fiscal
reporting laws, filing regulations or stock rules relating to the Party or any
Affiliate of the Party. The contributions of each Party will be noted in all
publications, presentations, and press releases. Notwithstanding the above,
Elanco recognizes that, for Lipid Sciences, the Agreement may constitute a
material agreement, as defined by Securities Exchange Commission regulations,
and, if so, will be subject to public disclosure. Lipid Sciences agrees to work
with Elanco to place any public disclosure of the Agreement in a mutually
agreeable form by redacting, if legally permissible, certain content of the
Agreement.

11.4         Publicity.  Neither Party will disclose to the public, any
information about the Agreement, including its existence, without the prior
written consent of the other Party, which decision regarding consent will be
communicated no later than twenty (20) days from the date of receipt of the
request, except where required for local fiscal reporting laws, filing
regulations or stock exchange rules relating to the Party or any Affiliate of
the Party. Furthermore, neither Party shall use in advertising, publicity or
otherwise the name or any trademark of the other Party without prior written
consent.

11.5         Force Majeure.  If either Party is affected by any extraordinary,
unexpected and unavoidable event such as acts of God, floods, fires, riots,
terrorism, war, accidents, labor disturbances, breakdown of plant or equipment,
lack or failure of transportation facilities, unavailability of equipment,
sources of supply or labor, raw materials, power or supplies, infectious
diseases of animals, or by the reason of any law, order, proclamation,
regulation, ordinance, demand or requirement of the relevant government or any
sub-division, authority or representative thereof (provided that in all such
cases the Party claiming relief on account of such event can demonstrate that
such event was extraordinary, unexpected and unavoidable by the exercise of
reasonable care) (“Force Majeure”), it will as soon as reasonably practicable
notify the other Party of the nature and extent thereof and take all reasonable
steps to overcome the Force Majeure and to minimize the loss occasioned to that
other Party. Neither Party will be deemed to be in breach of this Agreement or
otherwise be liable to the other Party by reason of any delay in performance or
nonperformance of any of its obligations hereunder to the extent that such delay
and nonperformance is due to any Force Majeure of which it has notified the
other Party and the time for performance of that obligation will be extended
accordingly. Notwithstanding the foregoing sentence, should the Force Majeure
continue for more than three

25

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Portions of this agreement, marked by asterisks (***), have been omitted
pursuant to a request for confidential treatment.  The omitted information has
been filed separately with the Securities and Exchange Commission

(3) months, then the other Party shall have the right to terminate this
Agreement immediately upon Notice of termination delivered to the affected
Party.

11.6         Assignment.  The Agreement may not be assigned or otherwise
transferred by either Party without the prior written consent of the other
Party, which consent will not be unreasonably withheld or delayed; provided,
however, that each of the Parties may, without such consent, assign the
Agreement and its rights and obligations hereunder to its Affiliates or in
connection with the transfer or sale of all or substantially all of the portion
of its business to which the Agreement relates, or in the event of its merger or
consolidation or change in control or similar transaction or, in the case of
Lipid Sciences, the creation of a special purpose corporation or design and
development limited partnership. Any permitted assignee will assume all
obligations of its assignor under the Agreement in writing prior to the
assignment. Any purported assignment in violation of the preceding sentences
will be void.

11.7         Notices.  Any consent, notice or report required or permitted to be
given or made under the Agreement by one of the Parties hereto to the other (a
“Notice”) will be delivered in writing by one of the following means: delivered
personally; sent via e-mail with confirmation from the addressee of its receipt;
by facsimile (and promptly confirmed by personal delivery or courier); by
courier; or by U.S. mail postage prepaid (where applicable), and addressed to
such other Party at its address indicated below, or to such other address as the
addressee will have last furnished in writing to the addressor and will be
effective upon receipt by the addressee. Such notices will be effective within
three (3) business days of the postmark or transmittal date or when delivered to
the addressee, whichever is earlier.

If to Lipid Sciences:

 

 

 

Lipid Sciences, Inc.

 

 

 

7068 Koll Center Parkway - Suite 401

 

 

 

Pleasanton, CA 94566

 

 

 

 

 

 

Attention:

S. Lewis Meyer, Ph.D.

 

 

 

President and CEO

 

 

Fax:

925-249-4040

 

 

E-mail:

***

 

 

 

 

 

If to Elanco:

 

 

Elanco Animal Health

 

 

 

Greenfield Laboratories

 

 

 

2001 West Main Street / P.O. Box 708

 

 

 

Greenfield, IN 46140

 

 

 

 

 

Attention:

Legal Department

 

 

Fax:

***

 

 

E-mail:

***

 

11.8         Execution of Agreement.  This Agreement may be executed by original
or facsimile signature in several counterparts, all of which shall be deemed to
be originals, and all of which shall constitute one and the same Agreement.
Notwithstanding the foregoing, the Parties shall deliver original execution
copies of this Agreement to one another as soon as practicable following
execution thereof.

26

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Portions of this agreement, marked by asterisks (***), have been omitted
pursuant to a request for confidential treatment.  The omitted information has
been filed separately with the Securities and Exchange Commission

EXECUTED

Signed on behalf of

)

 

Eli Lilly and Company, operating through
its Elanco Animal Health division

)
)

 

by an authorized officer in the presence of:

)

 

 

 

 

 

 

 

***

 

***

Signature of Witness

 

Signature of Authorized Officer

 

 

 

 

 

 

***

 

***

Name of Witness (please print)

 

Name of Authorized Officer (please print)

 

 

 

 

 

 

11/07/2006

 

 

Date Signed

 

 

 

 

 

 

 

 

Signed on behalf of

)

 

Lipid Sciences, Inc.

)

 

by an authorized officer in the presence of:

)

 

 

 

 

 

 

 

***

 

/s/ S. Lewis Meyer

Signature of Witness

 

Signature of Authorized Officer

 

 

 

 

 

 

***

 

S. Lewis Meyer

Name of Witness (please print)

 

Name of Authorized Officer (please print)

 

 

 

 

 

 

10/26/2006

 

 

Date Signed

 

 

 

27

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Portions of this agreement, marked by asterisks (***), have been omitted
pursuant to a request for confidential treatment.  The omitted information has
been filed separately with the Securities and Exchange Commission

EXHIBIT A
PRODUCT DEVELOPMENT PLAN

(First draft to be provided by the Project Team to the Steering Committee within
60 days of the completion of Elanco due diligence, with final approval by
Steering Committee within 90 days after receipt of the first draft)

[Elanco to provide first draft after completion of due diligence]

28

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Portions of this agreement, marked by asterisks (***), have been omitted
pursuant to a request for confidential treatment.  The omitted information has
been filed separately with the Securities and Exchange Commission

EXHIBIT B
CRITERIA TO ESTABLISH A POC STUDY

29

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Portions of this agreement, marked by asterisks (***), have been omitted
pursuant to a request for confidential treatment.  The omitted information has
been filed separately with the Securities and Exchange Commission

EXHIBIT C
STEERING COMMITTEE MEMBERS AND PRIMARY CONTACT PERSONS

For Elanco:

 

 

Name:

***

 

Title:

Manager - Innovation & Development

 

E-mail:

***

 

Phone:

***

 

Fax:

***

 

 

 

 

Name:

***

 

Title:

Associate Consultant

 

E-mail:

***

 

Phone:

***

 

Fax:

***

 

 

 

For Lipid Sciences:

 

Name:

***

 

Title:

***

 

E-mail:

***

 

Phone:

925-249-4000

 

Fax:

925-249-4040

 

 

 

 

Name:

Dale Richardson

 

Title:

Vice President - Business Development

 

E-mail:

***

 

Phone:

***

 

Fax:

925-249-4040

 

30

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Portions of this agreement, marked by asterisks (***), have been omitted
pursuant to a request for confidential treatment.  The omitted information has
been filed separately with the Securities and Exchange Commission

EXHIBIT D
LIPID SCIENCES PATENT RIGHTS

[Include filing/issuance dates, patent/application numbers, etc.]

NOTE:  Other Lipid Sciences patents may be added to this exhibit in the future
if it is determined that a non-exclusive license needs to be granted to Elanco
to fully practice and exploit the rights granted to it hereunder.

31

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EXHIBIT E:
Payment Schedule

1. Elanco agrees to pay the following fees in order to pursue the
commercialization of each Product(s) or New Product(s) in the Field or New Field
throughout the Territory where the Product(s) or New Product(s) ***, subjected
to Lipid Sciences Technology, Lipid Sciences Patent Rights, Lipid Sciences
Inventions or Lipid Sciences Improvements:

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***  This Exhibit has been omitted pursuant to a request for confidential
treatment.  The omitted information has been filed separately with the
Securities and Exchange Commission.

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