**Exhibit 10.16**

 

******CONFIDENTIALPORTIONS OF THIS AGREEMENT HAVE BEEN OMITTED AND FILED SEPARATELY WITH THECOMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT******

 

LICENCEAGREEMENT

 

between

 

LONZABIOLOGICS PLC

 

and

 

LPATH,INC

 

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INDEX

 
| **ARTICLE** | ** ** | **TITLE**                                        | ** ** | **PAGE** |
|-------------|------------|--------------------------------------------------|------------|----------|
|        |       |                                             |       |     |
| 1.          |       | Definitions                                      |       |     |
| 2.          |       | Supply of  System and Know-How                   |       |     |
| 3.          |       | Ownership of  Property and Intellectual Property |       |     |
| 4.          |       | Licences                                         |       |     |
| 5.          |       | Payments                                         |       |     |
| 6.          |       | Royalty  Procedures                              |       |     |
| 7.          |       | Liability  and Warranties                        |       |     |
| 8.          |       | Indemnification                                  |       |     |
| 9.          |       | Confidentiality                                  |       |     |
| 10.         |       | Intellectual  Property Enforcement               |       |     |
| 11.         |       | Term and  Termination                            |       |     |
| 12.         |       | Assignment                                       |       |     |
| 13.         |       | Governing  Law and Jurisdiction                  |       |     |
| 14.         |       | Force  Majeure                                   |       |     |
| 15.         |       | Illegality                                       |       |     |
| 16.         |       | Miscellaneous                                    |       |     |
| 17.         |       | Notice                                           |       |     |
| 18.         |       | Interpretation                                   |       |     |
|        |       |                                             |       |     |
| SCHEDULE    |       |                                             |
|        |       |                                             |       |     |
| 1           |       | Patent  Rights                                   |       |     |
| 2           |       | Cell Line  Testing                               |       |     |

 

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THIS AGREEMENTis made the 8th day of August 2006

 

BETWEEN

 

LONZABIOLOGICS PLC of 228 Bath Road, Slough, Berkshire SL1 4DX, England (hereinafterreferred to as “Biologics”), and

 

Lpath, Inc, of6335 Ferris Square, Suite A, San Diego, CA 92121, USA, (hereinafter referred to as “Licensee”)

 

WHEREAS

 

A.                                   Biologics is the proprietor of the System and has the right to grantcertain Intellectual Property rights in relation thereto (all as hereinafterdefined), and

 

B.                                    The Licensee wishes to take a licence under Intellectual Property(as hereinafter defined) of which Biologics is the proprietor to commerciallyexploit the Product (as hereinafter defined) in the form hereunder.

 

NOW THEREFOREthe parties hereby agree as follows:

 

1.             Definitions

 

1.1           “Affiliate” means any company, corporation, limited liabilitycompany, partnership, or other entity that directly or indirectly controls, iscontrolled by or is under common control, directly or indirectly, with therelevant party to this Agreement. “Control” means the ownership of more thanfifty percent (50%) of the issued share capital of the party in question or thelegal power to direct or cause the direction of the general management andpolicies of the party in question.

 

1.2           “Cell Lines” means those cell lines referred to in Clause 2.1.1(b).

 

1.3           “Competing Contract Manufacturer” shall mean any party whoundertakes or performs more than fifty percent (50%) of their business as athird party manufacturer of monoclonal antibodies and/or therapeutic proteinsor any product of a similar nature to which this Agreement relates.

 

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***CONFIDENTIALPORTIONS OF THIS AGREEMENT HAVE BEEN OMITTED AND FILED SEPARATELY WITH THECOMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT.

 

1.4           “Effective Date” means the date first above written.

 

1.5           “First Commercial Sale” means the date of the first sale or otherdisposal of Product for consideration by Licensee or its Affiliates orsublicensees following the final issuance of all required licenses andapprovals by the United States Food and Drug Administration (“FDA”) (orequivalent licenses and approvals in a country other than the United States)allowing for the manufacture and sale of a Product for human use.

 

1.6           “Intellectual Property” means System Know-How and Patent Rights.

 

1.7           “Know-How” means technical and other information, whether patentedor unpatented, including, but without prejudice to the generality of theforegoing, ideas, concepts, trade secrets, know-how, inventions, discoveries,data, formulae, specifications, processes, procedures for experiments and testsand other protocols, results of experimentation and testing, fermentation andpurification techniques, and assay protocols.

 

1.8           “Net Selling Price” means ***:

 

1.8.1        ***;

1.8.2        ***;

1.8.3        ***; and

1.8.4        ***;

1.8.5        ***;

1.8.6        ***; and

1.8.7        ***.

 

Upon any saleor other disposal of Product by or on behalf of Licensee or its Affiliates orsublicensees hereunder other than a bona fide arms length transactionexclusively for money or upon any use of the Product for purposes which do notresult in a disposal of such Product in consideration of sales revenuecustomary in the country of use, such sale, other disposal, or use shall bedeemed to constitute a sale ***.

 

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***CONFIDENTIALPORTIONS OF THIS AGREEMENT HAVE BEEN OMITTED AND FILED SEPARATELY WITH THECOMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT.

 

For theavoidance of doubt, *** shall not be considered in determining Net Sales.

 

***.

 

1.9           “Patent Rights” means the patents and applications, shortparticulars of which are set out in Schedule 1 hereto, and all patents andapplications thereof of any kind throughout the world, whether national orregional, including, but without prejudice to the generality of the foregoing,author certificates, inventor certificates, improvement patents, utilitycertificates and models and certificates of addition, and including anydivisions, renewals, continuations, continuations in part, reissues, patent disclosures,improvements and extensions of reissue thereof.

 

1.10         “Product” means a humanized monoclonal antibody known as SphingomabTM,which targets sphingosine-1-phosphate (S1P), or an S1P-binding fragmentthereof, of which Licensee is the proprietor and which is obtained by theexpression of any one gene or of any combination of genes by use of the System.

 

1.11         “Strategic Partner” means a party with whom Licensee has enteredinto a contractual relationship, to identify a therapeutic target and/orcollaborate in the performance of research and development of a Product or aproduct of which the Strategic Partner is the Proprietor. In no event may anyentity that is primarily a Competing Contract Manufacturer be deemed aStrategic Partner for the purposes of this Agreement.

 

1.12         “System” means Biologics’ glutamine synthetase gene expressionsystem consisting of the Cell Lines, the Vectors, and the System Know-How,whether used individually or in combination with each other. For the avoidanceof doubt, any gene proprietary to Licensee inserted into the System for thepurposes of producing Product does not form part of the System.

 

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***CONFIDENTIALPORTIONS OF THIS AGREEMENT HAVE BEEN OMITTED AND FILED SEPARATELY WITH THECOMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT.

 

1.13         “System Know-How” means Know-How relating directly or indirectly tothe System known to Biologics from time to time, of which Biologics is theproprietor.

 

1.14         “Territory” means world-wide.

 

1.15         “Valid Claim” means a claim of any unexpired issued patent withinthe Patent Rights which has not been held unenforceable or invalid by thedecision of a court or other governmental agency of competent jurisdictionunappealable or unappealed within the time allowed for appeal, and which hasnot been admitted to be invalid or unenforceable through re-issue or disclaimeror otherwise.

 

1.16         “Vectors” means those vectors referred to in Clause 2.1.1(a).

 

2.             Supply of the System and System Know-How

 

2.1           Unless previously supplied by Biologics under a separate agreement,Biologics shall, *** Licensee the following:

 

2.1.1        (a)            Vectors

Approximately*** of vector ***.

Approximately*** of vector ***.

Approximately*** of vector ***.

Approximately*** of vector ***.

 

Notwithstandingthe foregoing, upon request by Licensee, Biologics shall supply such additionalquantities of vectors listed above as may be reasonably requested by Licenseefrom time to time during the term of this Agreement. Such supply will be ***.

 

(b)            Cell Lines

Two *** vialsof the Chinese Hamster Ovary cell line ***.

 

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***CONFIDENTIALPORTIONS OF THIS AGREEMENT HAVE BEEN OMITTED AND FILED SEPARATELY WITH THECOMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT.

 

Notwithstandingthe foregoing, upon request by Licensee, Biologics shall supply such additionalquantities of cell lines listed above as may be reasonably requested byLicensee from time to time during the term of this Agreement. Such supply willbe ***.

 

2.1.2        System Know-How

 

SystemKnow-How contained as at the date hereinabove in (a) manuals of operatingprocedures for the System, (b) regulatory information on CD-ROM, and (c) Vectornucleotide sequences. During the term of this Agreement, Biologics shallprovide to Licensee *** such additional, updated, or revised System Know-Howthat Biologics decides to make available to licensees of the System generally. Biologicsmay develop additional, updated, or revised System Know-How for which itintends to charge licensees, and Licensee shall be informed of the availabilityof such additional, updated, or revised System Know-How.

 

2.2           Licensee shall use the System only in the expression of Product byinsertion of gene(s) coding for Product(s) into the System, and shall not use,cause the use of, or permit to be used the System for any purpose not directlyauthorised by this Agreement.

 

3.             Ownership of Property and Intellectual Property

 

3.1           It is hereby acknowledged and agreed that, as between the parties,any and all property and Intellectual Property in the System is vested inBiologics, and any and all property and Intellectual Property in the Product isvested in Licensee.

 

3.2           The provisions of this Clause 3 shall survive termination of thisAgreement.

 

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4.             Licences

 

4.1           Biologics hereby grants to Licensee, and Licensee hereby accepts onbehalf of Licensee, a world-wide non-exclusive licence (with the right to grantand authorize sublicenses, subject to Clause 4.3, below) under the IntellectualProperty to exploit the System make, have made, use, develop, manufacture,market, sell, have sold, offer for sale, distribute, import, and export Productin the Territory.

 

4.2           Save as expressly provided by Clause 2.2, above, Licensee herebyundertakes not to make any modifications or adaptations to the System duringthe subsistence of this Agreement.

 

4.3           Subject to the provisions of this Clause 4.3, Licensee shall beentitled to authorize and grant sublicences to the rights granted by Clause4.1, above, to any one or more third parties but only for the purpose of anysuch third party using the System to produce Product, provided always:

 

4.3.1        Licensee shall ensure any such sublicensee’s use of the System, theIntellectual Property, and the Product is undertaken solely for the purpose ofestablishing a manufacturing process for Product, or producing Product, forLicensee or its Affiliates or Strategic Partners; and

 

4.3.2        Any sublicensee shall not, by virtue of this Agreement, be grantedany right or licence, either express or implied, under any patent orproprietary right vested in Biologics or otherwise, to use the System, theIntellectual Property, or the Product other than for the purposes of establishinga manufacturing process for Product or producing Product, Licensee shall in noevent transfer to a sublicensee (i) a Vector or (ii) a Cell Line that has notbeen transfected with a Vector encoding at least a portion of the Product, andLicensee agrees to ensure that any such sublicensee shall not assign, transfer,further sublicense or otherwise make over the benefit or the burden of therights granted to it pursuant to this Agreement other than pursuant to anAgreement subject to the terms of this Agreement; and

 

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***CONFIDENTIALPORTIONS OF THIS AGREEMENT HAVE BEEN OMITTED AND FILED SEPARATELY WITH THECOMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT.

 

4.3.3        Any sublicense granted shall be expressly subject and subordinate tothe terms of this Agreement, and it shall be Licensee’s responsibility toensure the strict adherence by any sublicensee hereunder to the terms andconditions of this Agreement;

 

4.3.4        ***; and

 

4.3.5        *** Licensee shall provide Biologics a copy of any such sublicense(the financial terms of which Licensee shall have the right to redact) withinthirty (30) days after the execution of such sublicense.

 

4.4           If, on a country-by-country basis, any granted patents that formpart of the Patent Rights (including any re-issued patents and unexpiredpatents), subsequently expire or no longer contain a Valid Claim, such PatentRights shall automatically fall outside the scope of this Agreement and theprovisions of Clauses 4.1 to 4.3, above, shall only apply, with respect togranted patents, to those granted patents which contain a Valid Claim and formpart of the Patents Rights for as long as those granted patents remain inforce.

 

4.5           Notwithstanding Clause 4.4, above, on a country-by-country basis,where no Valid Claims within the Patent Rights remain in force, the provisionsof Clauses 4.1 to 4.3, above, shall only apply for as long as the SystemKnow-How remains secret and substantial.

 

5.             Payments

 

5.1           In consideration of the licence granted to Licensee pursuant to Clause4.1 above, and in consideration for the right to sublicense the rights grantedby Clause 4.1 pursuant to Clause 4.3, above, Licensee shall pay Biologics asfollows:

 

5.1.1        ***;

 

5.1.2        ***:

 

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***CONFIDENTIALPORTIONS OF THIS AGREEMENT HAVE BEEN OMITTED AND FILED SEPARATELY WITH THECOMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT.

 

5.1.2.1     ***; and

 

5.1.2.2     ***.

 

5.1.3        ***:

 

5.1.3.1     ***; and

 

5.1.3.2     ***.

 

5.2           [Intentionally left blank]

 

5.3           If, on a country-by-country basis, the manufacture, use, tender,importation, and/or sale of the Product are not protected by a Valid Claimwithin the Patent Rights, then in respect of sales in such countries:

(a)           ***;

(b)           ***;

(c)           ***;

(d)           ***.

 

5.4           ***.

 

5.5           The following *** shall apply with respect to ***:

 

(a)           ***. The obligation to pay any *** under this Agreement shall beimposed only once with respect to the same unit of Product, regardless of thenumber of Valid Claims concerning the same;

 

(b)           Notwithstanding anything to the contrary herein, Licensee’sobligations to pay royalties hereunder shall in any event expire at the laterto occur of (i) expiration of the last to expire patent right within theIntellectual Property or (ii) the ten (10) year anniversary of the FirstCommercial Sale.

 

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***CONFIDENTIALPORTIONS OF THIS AGREEMENT HAVE BEEN OMITTED AND FILED SEPARATELY WITH THECOMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT.

 

6.             Royalty Procedures

 

6.1           Licensee shall keep trueand accurate records and books of account containing all data necessary for thecalculation of royalties payable to Biologics. Such records shall be retainedby Licensee for *** following the end of the calendar year to which theypertain. Such records and books of account shall, upon reasonable notice havingbeen given by Biologics (which in no event shall be less than *** priornotice), be open at all reasonable times during regular business hours forinspection by an independent certified public accountant selected by Biologicsand reasonably acceptable to Licensee. Such independent accountant shall agreeto maintain the confidentiality of the information and materials disclosedduring any inspection. Any such inspection shall be conducted in a manner thatdoes not interfere unreasonably with the operations of Licensee’s business.Biologics may perform an inspection ***. Each inspection shall begin upon thedate specified by Biologics and shall be completed ***. The independentaccountant shall agree to be bound by reasonable confidentiality provisions infavor of Licensee. Biologics shall pay the costs of the independent accountantconducting such audit, unless the results of the inspection reveal anunderpayment of *** or more by Licensee for the entire period under audit, inwhich case, Licensee shall pay the reasonable costs of the independentaccountant. If an inspection concludes that an overpayment or underpayment hasoccurred during the audited period, such payment shall be remitted by the partyresponsible for such payment to the other party within *** after the date ofthe accountant’s written report identifying the overpayment or underpayment isdelivered to the party responsible for such payment.

 

6.2           Licensee shall prepare astatement in respect of each *** that shall show for the immediately preceding*** details of the sales of Product and the *** due and payable to Biologicsthereon.

 

Such statementshall be submitted to Biologics within *** after the end of the *** to which itrelates, together with a remittance for the royalties due to Biologics, provided,however, that with respect to the ***, such statement shall not be due until***.

 

6.3           All sums due under thisAgreement:

 

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***CONFIDENTIALPORTIONS OF THIS AGREEMENT HAVE BEEN OMITTED AND FILED SEPARATELY WITH THECOMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT.

 

6.3.1        shall be made in pounds sterling to Biologics. Payments due toBiologics in currencies other than pounds sterling shall first be ***. The rateof exchange shall be ***.

 

6.3.2        are exclusive of any applicable taxes, levies, imposts, duties, andfees of whatever nature imposed by or under the authority of any government orpublic authority, and shall be paid by Licensee (other than value added taxesor taxes on Biologics’ income). The parties agree to co-operate in all respectsreasonably necessary to take advantage of such double taxation treaties as maybe available.

 

6.4           Where Biologics does not receive payment of any sum by the due date,***.

 

7.             Liability and Warranties

 

7.1           ***, subject to the warranty given in clause 7.2(a) below.

 

7.2           Biologics warrants that (a) the patents included in the PatentRights are the only patents that must be licensed from Biologics or itsAffiliates in order to operate or otherwise use the System to express Productfrom the System, (b) it has not received any suit or claim alleging that thepractice of the Intellectual Property infringes the intellectual propertyrights of a third party, (c) that as of the Effective Date, to the best of itsknowledge, operation or use of the System does not infringe the intellectualproperty rights vested in any third party, and (d) the Cell Lines have beenproperly tested in accordance with the tests set forth in Schedule 2, below,which testing may be updated or modified in writing by Biologics from time totime during the term of this Agreement.

 

7.3           Licensee hereby acknowledges that in order to exploit the rightscontained herein, other than with respect to the System for the purpose ofexpressing Product from the System, Licensee may require licences underBiologics patent rights other than those herein licensed or under third partypatent rights (including those vested in Affiliates of Biologics) that may beinfringed by the use by the Licensee of the rights licensed herein, and it ishereby agreed that it shall be the Licensee’s responsibility to satisfy itselfas to the need for such

 

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licences andif necessary to obtain such licences. No licence is granted save as expresslyprovided herein, and no licence in addition thereto shall be deemed to havearisen or be implied by way of estoppel or otherwise.

 

7.4           Each Party (“Indemnifying Party”) shall indemnify, defend, and holdharmless the other Party (“Indemnified Party”) and its directors, officers,servants, and agents at all times in respect of any and all losses, damages,costs, and expenses suffered or incurred as a result of any contractual,tortuous, or other claims or proceedings by third parties against IndemnifiedParty arising out of the Indemnifying Party’s breach of this Agreement, includingbreach of representations and warranties, violation of applicable law,negligence, or wilful misconduct.

 

7.5           With respect to product liability claims or proceedings, thefollowing shall apply: (a) except to the extent provided in (b) below, Licenseeshall indemnify, defend, and hold harmless Biologics and its directors,officers, servants, and agents at all times in respect of any and all losses,damages, costs, and expenses suffered or incurred as a result of any tortiousclaims or proceedings of death or bodily injury relating to the Product, and(b) Biologics shall indemnify and hold harmless Licensee and its directors,officers, servants, and agents at all times in respect of any and all losses,damages, costs and expenses suffered or incurred as a result of any tortiousclaims or proceedings of death or bodily injury relating to the Product to theextent such claims or proceedings result from defects in the System, or fromBiologics breach of this Agreement.

 

7.6           A party (the “Indemnitee”) that intends to claim indemnificationunder Clause 7.3 or 7.4, above, shall notify the Indemnifying Party in writingwithin thirty (30) days of receipt of notice of any loss, claim, damage,liability, or action in respect of which the Indemnitee intends to claim suchindemnification, and the Indemnifying Party shall have the right to participatein, and, to the extent the Indemnifying Party so desires, to assume the defensethereof, unless the assumption of such defense would be inappropriate due toactual or potential differing interests between the parties which in such casethe Indemnitee may retain its own counsel at the expense of the IndemnifyingParty. The indemnity agreement in this Clause 7 shall not apply to amounts paidin settlement of any loss, claim, damage, liability, or action if suchsettlement is effected without the Indemnifying Party’s prior written consent. Thefailure to

 

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deliverwritten notice to the Indemnifying Party within a reasonable time afterlearning of such liability or the commencement of any such action, ifprejudicial to the Indemnifying Party’s ability to defend such action, shallrelieve the Indemnifying Party of any liability to the Indemnitee under Clause7.3 or 7.4, above, with respect to the particular claim(s). At the IndemnifyingParty’s request, the Indemnitee shall cooperate fully with the IndemnifyingParty and its legal representatives in the investigation of any action, claim,or liability covered hereunder, and provide full information with respectthereto.

 

7.7           Any condition or warranty other than those relating to title thatmight otherwise be implied or incorporated within this Agreement by reason ofstatute or common law or otherwise is hereby expressly excluded.

 

7.8           The terms of this Clause 7 shall survive termination of theAgreement for whatever reason.

 

7.9           As of the Effective Date, each of Licensee and Biologics herebyrepresents and warrants to the other as follows:

 

(a)            it is a corporation or entity duly organized and validly existingunder the laws of the state, country, or other jurisdiction of itsincorporation or formation;

 

(b)           it has the power and authority to execute and deliver this Agreementand to perform its obligations hereunder;

 

(c)            the execution, delivery, and performance by such party of this Agreementand its compliance with the terms and provisions hereof does not and will notconflict with or result in a breach of any terms and provisions of orconstitute a default under (a) any agreement or instrument binding or affectingit or its property, (b) any contract entered , the provisions of its charter oroperative documents or bylaws, or (c) any order, writ, injunction, or decree ofany court or governmental authority entered against it or by which any of itsproperty is bound;

 

(d)            it has the full right and authority to enter into this Agreement,and that it is not aware of any impediment that would inhibit its ability toperform its obligations hereunder and comply with the terms and conditionsimposed on it by this Agreement; and

 

(e)            it has the full right, power, and authority to grant all of therights, including all right title and interest in the licenses, granted to theother party under this Agreement.

 

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8.             Confidentiality

 

8.1           Licensee expresslyacknowledges that the System Know-How and any other Know-How with which it issupplied by Biologics pursuant to this Agreement is supplied in circumstancesimparting an obligation of confidence, and Licensee agrees to keep suchKnow-How or System Know-How secret and confidential and to respect Biologics’proprietary rights therein and to use the same for the sole purpose of thisAgreement and not during the period of this Agreement or at any time for anyreason whatsoever to disclose or permit to be disclosed such Know How or SystemKnow-How to any third party other than sublicensees hereunder for use inaccordance with the terms of this Agreement. Licensee shall procure, and causeits Affiliates and sublicensees to procure, that only its employees shall haveaccess to the Know How or System Know-How on a need to know basis and that allsuch employees shall be informed of their secret and confidential nature andshall be subject to the same obligations as Licensee and its sublicenseehereunder pursuant to this Clause 8.1.

 

8.2           Licensee hereby undertakesand agrees to keep the System secure and safe from loss, damage, theft, misuse,and unauthorised access, and shall procure that the System shall be madeavailable only to employees of Licensee and its sublicensees on a need to knowbasis and subject to the same obligations of confidence as provided in Clause8.1 hereof, and to use the same for the sole purpose of this Agreement.

 

8.3           Biologics expresslyacknowledges that any information provided by Licensee to Biologics is suppliedin circumstances imparting an obligation of confidence, and Biologics agrees tokeep such information secret and confidential and to respect Licensee’sproprietary rights therein and to use the same for the sole purpose of thisAgreement and not during the period of this Agreement or at any time for anyreason whatsoever to disclose or permit to be disclosed such information to anythird party.

 

8.3           Both parties undertake andagree not to at any time for any reason whatsoever disclose or permit to bedisclosed to any third party or otherwise make use of or permit to be made useof any trade secrets or confidential information or materials relating to thebusiness affairs or finances of the other

 

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or of anysuppliers, agents, distributors, licensees or other customers of the otherwhich comes into their possession pursuant to this Agreement.

 

8.4           The obligations of confidence referred to in this Clause 8 shall notextend to any information, which the receiving party demonstrates:

 

8.4.1        is or shall become generally available to the public otherwise thanby reason of a breach by the recipient party of such information of theprovisions of this Clause 8;

 

8.4.2        is known to the recipient party of such information and is at itsfree disposal prior to its receipt from the other;

 

8.4.3        is subsequently disclosed to the recipient party without obligationsof confidence by a third party owing no such obligation of confidentiality tothe disclosing party; and

 

8.4.4        Biologics or Licensee may be required to disclose to a governmentagency for the purpose of any statutory, regulatory, or similar legislativerequirement applicable to the production of Product or to meet the requirementsof any Stock Exchange to which the parties may be subject, but only to theextent (i) the recipient party notifies the disclosing party in advance of suchrequired disclosure, (ii) such disclosure is indeed required, (iii) that therecipient party cooperates with the disclosing party in attempting to obtainsecrecy orders or other confidential treatment, (iv) any such requireddisclosure contains such information as is required to be disclosed, and (v)subject to obligations of secrecy wherever possible; and

 

8.4.5        can be demonstrated by competent written evidence as having beenindependently developed by the recipient of the information in question withoutaccess to or use or knowledge of the information of the disclosing party.

 

8.5           The obligations of both parties under this Clause 8 shall survivethe expiry or termination of this Agreement for whatever reason.

 

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9.             Intellectual Property Enforcement

 

9.1           Biologics hereby undertakes and agrees that at its own cost andexpense it will:

 

9.1.1        prosecute or procure prosecution of such of the Patent Rights whichare patent applications diligently so as to secure the best commercialadvantage obtainable, as determined by Biologics in its commercially reasonablediscretion, and will pursue, as determined by Biologics in its commerciallyreasonable discretion, all necessary actions against any third party thatBiologics reasonably believes is infringing, misappropriating or violating anyIntellectual Property; and

 

9.1.2        pay or procure payment of all renewal fees in respect of the PatentRights valid and subsisting for the full term thereof and in particular willprocure such renewal of the registrations thereof as may be necessary from timeto time so far as it is reasonable to do so with particular reference tocommercial considerations.

 

9.2                           Licensee shall promptly notify Biologics in writing of anyinfringement or improper or unlawful use of or of any challenge to the validityof the Patent Rights and/or Know-How of which Licensee becomes aware. Biologicsundertakes and agrees to take all such steps and proceedings and to do allother acts and things as may in Biologics’ sole discretion be necessary torestrain any such infringement or improper or unlawful use or to defend suchchallenge to validity and Licensee shall permit Biologics to have the soleconduct of any such steps and proceedings including the right to settle themwhether or not Licensee is a party to them. Licensee shall have the right atits own cost and for its own benefit to initiate, prosecute, and control theenforcement of the Patent Rights against infringement by a Third Party in theTerritory if all of the following conditions are fulfilled (a) the productmanufactured through the infringing activity is a competing product to theProduct, (b) Biologics has not granted rights to third parties which preventBiologics from granting such a right to enforce to Licensee, and (c) Biologicsdoes not initiate proceedings within sixty (60) days of being requested to doso by Licensee. In such event, and to the extent necessary, Biologics agrees tocooperate with Licensee, at Licensee’s expense, in enforcing the Patent Rights,including being

 

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joined asparty to any action to abate such infringement. Licensee shall be entitled toretain any recovery obtained from any enforcement activity it prosecutes.

 

10.           Term and Termination

 

10.1         Unless terminated earlier in accordance with the provisions of thisClause 10 or Clause 14, this Agreement shall continue in force in each countryof the world, until expiry of the last Valid Claim, or for so long as theSystem Know-How is identified and remains secret and substantial, whichever islater.

 

10.2         Licensee may terminate this Agreement by giving sixty (60) daysnotice in writing to Biologics.

 

10.3         Either Biologics or Licensee may terminate this Agreement forthwithby notice in writing to the other upon the occurrence of any of the followingevents:

 

10.3.1                 if the other commits a breach of this Agreement that in the case ofa breach capable of remedy shall not have been remedied within *** of thereceipt by the other of a notice identifying the breach and requiring itsremedy; and

 

10.3.2                 if the other is unable to pay its debts or enters into compulsory orvoluntary liquidation (other than for the purpose of effecting a reconstructionor amalgamation in such manner that the company resulting from suchreconstruction or amalgamation if a different legal entity shall agree to bebound by and assume the obligations of the relevant party under this Agreement)or compounds with or convenes a meeting of its creditors or has a receiverappointed over all or any part of its assets or takes or suffers any similaraction in consequence of a debt, or ceases for any reason to carry on business.

 

10.4         If at any time during this Agreement Licensee knowingly, directly orindirectly, opposes or assists any third party to oppose the grant of letterspatent or any patent application within any of the Patent Rights, Biologicsshall be entitled at

 

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any timethereafter to terminate all or any of the licences granted hereunder forthwithby notice to Licensee.

 

10.5         If this Agreement is terminated for any reason, any and all licencesgranted hereunder shall terminate with effect from the date of termination andLicensee shall destroy all Vectors, Cell Lines, and Product forthwith, andshall certify such destruction immediately thereafter in writing to Biologics;provided, however, that in the event Biologics terminates this Agreement, anysublicense granted hereunder by Licensee to a Strategic Partner in respect ofProduct and in effect at the time of termination shall survive, subject howeverto (i) the Strategic Partner not being in material breach of their sublicence,and (ii) such sublicence being replaced by an agreement between Biologics andsuch Strategic Partner on terms equivalent to those contained in this Agreement.Notwithstanding the foregoing, Licensee (or its Affiliates or sublicensees)may, however, after the effective date of such termination, sell all Products,and complete Products in the process of manufacture at the time of saidtermination and sell the same, provided that Licensee shall pay to Biologics infull all payments due under Clause 5, above, and shall submit the reports requiredby Clause 6.2, above.

 

10.6         Termination for whatever reason or expiration of this Agreementshall not affect the accrued rights of the parties arising in any way out ofthis Agreement as at the date of termination. The right to recover damages againstthe other and all provisions which are expressed to survive this Agreementshall remain if full force and effect.

 

11.           Assignment

 

11.1         Save as expressly provided by Clause 4, neither party shall beentitled to assign, transfer, charge, or in any way make over the benefitand/or the burden of this Agreement without the prior written consent of theother, which consent shall not be unreasonably withheld or delayed, save that(i) either party shall be entitled without the prior written consent of the otherparty to assign, transfer, charge, sub-contract, deal with, or in any othermanner make over the benefit and/or burden of this Agreement to an Affiliate orto any 50/50 joint venture company of which Biologics or Licensee, as the casemay be, is the beneficial owner of fifty percent (50%) of the issued sharecapital thereof or to any company with which that party may merge or to anycompany to

 

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***CONFIDENTIALPORTIONS OF THIS AGREEMENT HAVE BEEN OMITTED AND FILED SEPARATELY WITH THECOMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT.

 

which thatparty may transfer its assets and undertaking, and (ii) Licensee shall beentitled without the prior written consent of Biologics to assign thisAgreement in the event Licensee sells or otherwise transfers all orsubstantially all of its assets related to this Agreement to a third party,including an Affiliate of Licensee or a sublicensee, whether by acquisition,sale, merger, or operation of law.

 

11.2         This Agreement shall be binding upon the successors and assigns ofthe parties, and the name of a party appearing herein shall be deemed toinclude the names of its successors and assigns, provided always that nothingherein shall permit any assignment by either party except as expressly providedherein.

 

12.           Governing Law and Jurisdiction

 

12.1         The validity, construction, interpretation, and performance of thisAgreement shall be governed by the laws of the State of ***, without referenceto conflicts of law principles, except that questions affecting theconstruction and effect of any patent shall be determined by the law of thecountry in which the patent was granted. .

 

12.2         The parties hereby submit to the non-exclusive jurisdiction of thestate and federal courts located in *** with regard to the resolution of adispute between the parties relating to the validity, interpretation,implementation, or application of this Agreement, or any other matter inconnection with it. Either party shall have the right to take proceedings inany other jurisdiction for the purposes of enforcing a judgement or orderobtained from a state or federal court in the United States.

 

13.           Force Majeure

 

Neither partyshall be in breach of this Agreement if there is any total or partial failureof performance by it of its duties and obligations under this Agreementoccasioned by any act of God, including without limitation, fire, act ofgovernment or state, war, civil commotion, insurrection, embargo, epidemic,terrorism or earthquake, prevention from or hindrance in obtaining any rawmaterials, energy or other supplies, labour

 

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***CONFIDENTIALPORTIONS OF THIS AGREEMENT HAVE BEEN OMITTED AND FILED SEPARATELY WITH THECOMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT.

 

disputes ofwhatever nature and any other reason beyond the control of either party. Ifeither party is unable to perform its duties and obligations under thisAgreement as a direct result of the effect of one of the reasons set out inthis Clause 13 such party shall give written notice to the other of suchinability stating the reason in question. The operation of this Agreement shallbe suspended during the period (and only during the period) in which the reasoncontinues. Forthwith upon the reason ceasing to exist the party relying upon itshall give written notice to the other of this fact. If the reason continuesfor a period of more than *** and substantially affects the commercial basis ofthis Agreement the party not claiming under this Clause 13 shall have the rightto terminate this Agreement by giving written notice of such termination to theother party.

 

14.           Invalidity

 

14.1         If any provision or term of this Agreement or any part thereof shallbecome or be declared illegal, invalid, or unenforceable for any reasonwhatsoever, including, but without limitation, by reason of the provisions ofany legislation or other provisions having the force of law or by reason of anydecision of any Court or other body or authority having jurisdiction over theparties hereto or this Agreement, including the EC Commission or the EuropeanCourt of Justice:

 

(i)            such provision shall, sofar as it is illegal, invalid or unenforceable, be given no effect by theParties and shall be deemed not to be included in this Agreement;

 

(ii)           the other provisions ofthis Agreement shall be binding on the Parties as if such provision was notincluded therein; and

 

(iii)          the Parties agree tonegotiate in good faith to amend such provision to the extent possible forincorporation herein in such reasonable manner as most closely achieves theintention of the Parties without rending such provision invalid orunenforceable.

 

15.           Miscellaneous

 

15.1         This Agreement, including Schedules 1 and 2 appended hereto,embodies and sets forth the entire agreement and understanding of the partieswith

 

----

 

respect to thesubject matter hereof, and supersedes all prior oral and written agreements,understandings, or arrangements relating to the subject matter of thisAgreement. Neither party shall be entitled to rely on any agreement,understanding, or arrangement which is not expressly set forth in thisAgreement.

 

15.2         This Agreement shall not be amended, modified, varied, orsupplemented except in writing signed by duly authorised representatives of theparties.

 

15.3         No failure or delay on the part of either party hereto to exerciseany right or remedy under this Agreement shall be construed or operated as awaiver thereof nor shall any single or partial exercise of any right or remedyunder this Agreement preclude the exercise of any other right or remedy orpreclude the further exercise of such right or remedy as the case may be. Therights and remedies provided in this Agreement are cumulative and are notexclusive of any rights or remedies provided by law or equity.

 

15.4         Except as required by law, the text of any press release or othercommunication to be published by or in the media whether of a scientific natureor otherwise and concerning this Agreement shall require the prior writtenapproval of Biologics and Licensee; provided, however, that once approved, thesubstance of any such disclosure may be used subsequently by the disclosingparty without having to again obtain the other party’s prior written approval.

 

15.5         Each of the parties hereto shall be responsible for its respectivelegal and other costs incurred in relation to the preparation, enforcement,interpretation, or performance of this Agreement or any provision or obligationhereunder.

 

15.6         The parties to this Agreement do notintend that any term hereof should be enforceable by virtue of the Contracts(Rights of Third Parties) Act 1999, or by any other statute or common-lawprinciple, by any person who is not a party to this Agreement.

 

16.           Notice

 

16.1         Any notice or other document to be given under this Agreement shallbe in writing and shall be deemed to have been duly given if left at or sent by

 

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***CONFIDENTIALPORTIONS OF THIS AGREEMENT HAVE BEEN OMITTED AND FILED SEPARATELY WITH THECOMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT.

 

registeredpost or by a reputable overnight courier to a party or delivered in person to aparty at the address set out below for such party or such other address as theparty may from time to time designate by written notice to the other(s):

 

Address ofBiologics

LonzaBiologics plc, 228 Bath Road, Slough, Berkshire SL1 4DX

Facsimile: ***

For theattention of the Head of Legal Services

 

Address ofLicensee

Lpath, Inc., 6335 Ferris Square, Suite A, San Diego, CA 92121, USA

Facsimile: 858.678.0900

For theattention of: President and CEO insert]

 

16.2         All such notices and documents shall be in the English language. Anysuch notice or other document shall be deemed to have been received by theaddressee seven (7) working days following the date of dispatch of the noticeor other document by post or, where the notice or other document is sent byhand, at the time of such delivery. To prove the giving of a notice or otherdocument it shall be sufficient to show that it was dispatched.

 

17.           Interpretation

 

17.1         The headings in this Agreement are inserted only for convenience andshall not affect the construction hereof.

 

17.2         Where appropriate words denoting a singular number only shallinclude the plural and vice versa.

 

[remainderof this page intentionally left blank]

 

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17.3         Reference to any statute or statutory provision includes a referenceto the statute or statutory provision as from time to time amended, extended orre-enacted.

 

AS WITNESS the hands of the duly authorised representatives of theparties hereto

 

 
| Signed for  and on behalf of |   /s/                                     |   |
|------------------------------|-----------------------------------------------------|--------|
| LONZA  BIOLOGICS PLC         |                                                |
|                         |                                                |
|                         |    Director                          | TITLE  |
|                         |                                                |
| Signed for  and on behalf of |   /s/   Scott  R. Pancoast |   |
| LPATH, INC.                  | President  & CEO                                | TITLE  |
|                              |                                                     |        |  |

 

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SCHEDULE1

 

PATENTRIGHTS

 
| **Biologics  Ref. No.**            |   | L.B.P.07 (PA  98)                                                                                                             |
|------------------------------------|--------|-------------------------------------------------------------------------------------------------------------------------------|
|                               |   |                                                                                                                          |
| **Subject  Matter:**               |   | Expression  of polypeptides, such as antibodies, in myeloma cell lines                                                        |
|                               |   |                                                                                                                          |
| **Title:**                         |   | Transformed  Myeloma Cell-Line and a Process for the Expression of a Gene Coding for a  Eukaryotic Polypeptide Employing Same |
|                               |   |                                                                                                                          |
| **Origin:**                        |   | Celltech  invention                                                                                                           |
| **Registered  Owner:**             |   | Lonza Group  AG                                                                                                               |
|                               |   |                                                                                                                          |
| **Priority  Application Dates:**   |   | 1st April  1985 (GB 8508442); 3rd September 1985 (GB 8521815)                                                                 |
|                               |   |                                                                                                                          |
| **Earliest  Publication Date/No:** |   | 9th October  1986 (WO86/05807)                                                                                                |

 
| **Territory**   | ** ** | **Appl. Date** | ** ** | **Patent No.** | ** ** | **Expiry Date** | ** ** |
|-----------------|------------|---------------------|------------|---------------------|------------|----------------------|------------|
| Australia       |       | 01.04.86            |       | 584417              |       | 01.04.06             |       |
| Canada          |       | 01.04.86            |       | 1319120             |       | 15.06.10             |       |
| *Europe         |       | 01.04.86            |       | 0216846             |       | 01.04.06             |       |
| Russia          |       | 01.04.86            |       | 2079553             |       | 01.04.06             |       |
| United  Kingdom |       | 01.04.86            |       | 2183662             |       | 01.04.06             |       |
| USA  (cont.III) |       | 07.06.95            |       | 5981216             |       | 09.11.16             |       |

 

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*includes:Austria, Belgium, France, Germany, Italy, Luxembourg, Netherlands, Sweden andSwitzerland

 

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| **Biologics  Ref. No.**            |   | PA 108                                                                         |
|------------------------------------|--------|--------------------------------------------------------------------------------|
|                               |   |                                                                           |
| **Subject  Matter:**               |   | GS Coding  sequence                                                            |
|                               |   |                                                                           |
| **Title**:                         |   | Recombinant  DNA which encodes glutamine synthetase                            |
|                               |   |                                                                           |
| **Origin:**                        |   | University  Glasgow /R.H. Wilson joint invention with former Celltech Limited. |
| **Registered  Owner:**             |   | Celltech  Therapeutics Ltd.; The University Court of the University of Glasgow |
|                               |   |                                                                           |
| **Inventors:**                     |   | Bebbington,  Christopher Robert                                                |
|                               |   | Wilson,  Richard Harris                                                        |
|                               |   |                                                                           |
| **Priority  Application Dates:**   |   | 23rd  January 1986 (GB 1986-1597)                                              |
| **Earliest  Publication Date/No**: |   | 30th  July 1987 (WO87/04462)                                                   |

 
| **Territory** | ** ** | **Appli. Date** | ** ** | **Patent No.** | ** ** | **Expiry Date** | ** ** |
|---------------|------------|----------------------|------------|---------------------|------------|----------------------|------------|
| *Europe       |       | 23.01.87             |       | 256055              |       | 23.01.07             |       |
| Japan         |       | 23.01.87             |       | 07032712            |       | 23.01.07             |       |
| Canada        |       | 23.01.87             |       | 1338901             |       | 11.02.14             |       |
| Australia     |       | 23.01.87             |       | 599081              |       | 23.01.07             |       |
| USA           |       | 23.10.87             |       | 5122464             |       | 16.06.09             |       |
| USA Cont.III  |       | 08.07.94             |       | 5770359             |       | 16.06.09             |       |
| USA Cont.IV   |       | 07.06.95             |       | 5827739             |       | 16.06.09             |       |

 

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*includes:Austria, France, Germany, Luxembourg, Netherlands, Sweden, Switzerland/LI,Belgium, Great Britain, Italy,

 

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| **Biologics  Ref. No.**            |   | L.B.P. 09  (PA 140)                            |
|------------------------------------|--------|------------------------------------------------|
|                               |   |                                           |
| **Subject  Matter:**               |   | Expression  systems containing a hCMV promoter |
|                               |   |                                           |
| **Title:**                         |   | Recombinant  DNA Expression Vectors            |
|                               |   |                                           |
| **Origin:**                        |   | Celltech  invention                            |
| **Registered  Owner:**             |   | Lonza Group  AG                                |
|                               |   |                                           |
| **Priority  Application Date:**    |   | 23rd July  1987 (GB 8717430)                   |
| **Earliest  Publication Date/No:** |   | 9th February  1989 (WO89/01036)                |

 
| **Territory**    | ** ** | **Appl. Date** | ** ** | **Patent No.** | ** ** | **Expiry Date** | ** ** |
|------------------|------------|---------------------|------------|---------------------|------------|----------------------|------------|
| *Europe          |       | 22.07.88            |       | 0323997             |       | 22.07.08             |       |
| Japan            |       | 22.07.88            |       | 2505268             |       | 22.07.08             |       |
| USA (cont.II)    |       | 09.02.94            |       | 5591639             |       | 07.01.14             |       |
| USA (divisional) |       | 16.04.96            |       | 5658759             |       | 22.07.08             |       |

 

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*includes:Austria, Belgium, France, Germany, Italy, Luxembourg, Netherlands, Sweden,Switzerland, United Kingdom

 

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| **Biologics  Ref. No.**            |   | L.B.P. 10  (PA 177)                                                     |
|------------------------------------|--------|-------------------------------------------------------------------------|
|                               |   |                                                                    |
| **Subject  Matter:**               |   | Operation of  glutamine synthetase expression systems in lymphoid cells |
|                               |   |                                                                    |
| **Title:**                         |   | Recombinant  DNA Methods, Vectors and Host Cells                        |
|                               |   |                                                                    |
| **Origin:**                        |   | Celltech  invention                                                     |
| **Registered  Owner:**             |   | Lonza Group  AG                                                         |
|                               |   |                                                                    |
| **Priority  Application Date:**    |   | 18th April  1988 (GB 8809129)                                           |
| **Earliest  Publication Date/No:** |   | 25th October  1989 (EP 0338841)                                         |
|                               |   | 02nd  November 1989 (WO89/10404)                                        |

 
| **Territory**    | ** ** | **Appl. Date** | ** ** | **Patent No.** | ** ** | **Expiry Date** | ** ** |
|------------------|------------|---------------------|------------|---------------------|------------|----------------------|------------|
| (1)Australia     |       | 18.04.89            |       | 624616              |       | 18.04.09             |       |
| Canada           |       | 18.04.89            |       | 1338891             |       | 04.02.14             |       |
| *Europe          |       | 18.04.89            |       | 0338841             |       | 18.04.09             |       |
| (1)Japan         |       | 18.04.89            |       | 2007380             |       | 18.04.09             |       |
| (1)USA (cont I)  |       | 12.06.92            |       | 5879936             |       | 09.03.16             |       |
| (1)USA (cont II) |       | 23.01.95            |       | 5891693             |       | 06.04.16             |       |

 

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*includes:Austria, Belgium, France, Germany, Greece, Italy, Luxembourg, Netherlands,Spain, Sweden, Switzerland, United Kingdom

 

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***CONFIDENTIALPORTIONS OF THIS AGREEMENT HAVE BEEN OMITTED AND FILED SEPARATELY WITH THECOMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT.

 

SCHEDULE2

 

**Cell Testing (***)**

 

| **Test** | ** ** | **Method** | ** ** | **Result** | ** ** |
|----------|------------|------------|------------|------------|------------|
| ***      |       | ***        |       | ***        |       |
| ***      |       | ***        |       | ***        |       |
| ***      |       | ***        |       | ***        |       |
| ***      |       | ***        |       | ***        |       |
| ***      |       | ***        |       | ***        |       |
| ***      |       | ***        |       | ***        |       |
| ***      |       | ***        |       | ***        |       |
| ***      |       | ***        |       | ***        |       |
| ***      |       | ***        |       | ***        |       |
| ***      |       | ***        |       | ***        |       |
| ***      |       | ***        |       | ***        |       |
| ***      |       | ***        |       | ***        |       |
| ***      |       | ***        |       | ***        |       |
| ***      |       | ***        |       | ***        |       |

 

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