Document:

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                                                                    Exhibit 4.6
                                    FORM OF
                          REGISTRATION RIGHTS AGREEMENT

     This Registration Rights Agreement, dated as of December 30, 2005, (this
"Agreement"), is entered into by and among pSivida Limited, an Australian
corporation ("Issuer"), and the securityholders of Control Delivery Systems,
Inc., a Delaware corporation (the "Company"), named on the signature pages
hereto (each a "Holder" and collectively, the "Holders").

                                    RECITALS

     A. WHEREAS, Issuer is a party to that certain Agreement and Plan of Merger,
dated as of October 3, 2005 (the "Merger Agreement") that provides, among other
things, that (i) pSivida Inc., a Delaware corporation and a wholly-owned
subsidiary of Issuer ("Merger Subsidiary"), will be merged with and into the
Company (the "Merger") with the Company continuing as the surviving corporation
(the "Surviving Corporation"), and (ii) immediately after the Merger, Issuer
will own all of the issued and outstanding equity interests of the Surviving
Corporation.

     B. WHEREAS, subject to the terms and conditions of the Merger Agreement, at
the effective time of the Merger (the "Closing"), the Holders shall receive or
become entitled to receive American Depositary Shares of Issuer ("ADSs").

     C. WHEREAS, as a condition precedent to the consummation of the
transactions contemplated by the Merger Agreement, Issuer has agreed to grant
the Holders certain registration rights, as set forth herein, with respect to
the Registrable Securities (as defined herein).

                                    AGREEMENT

     NOW, THEREFORE, in consideration of the premises, and the mutual
representations, warranties, covenants, and agreements hereinafter set forth,
the parties hereto agree as follows:

          1. Definitions.

          (a) Each capitalized term used but not defined herein shall have the
meaning ascribed to such term in the Merger Agreement.

          (b) "Commission" shall mean the Securities and Exchange Commission or
any other federal agency at the time administering the Securities Act.

          (c) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any similar successor federal statute and the rules and regulations
thereunder, all as the same shall be in effect from time to time.

          (d) "Registrable Securities" means all of the ADSs issued to a Holder
pursuant to the Merger Agreement, such number and type of securities to be
equitably adjusted in the event of a stock split, stock dividend, combination,
reclassification, merger or reincorporation.

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          (e) "Registration Expenses" means all expenses incident to Issuer's
performance of, or compliance with, this Agreement, including, without
limitation, all registration, filing, listing and NASD fees, all fees and
expenses of complying with securities or blue sky laws, all word processing,
duplicating and printing expenses, messenger and delivery expenses, the fees and
expenses of counsel for Issuer and of its independent public accountants,
including the expenses of any special audits or "cold comfort" letters required
by or incident to such performance and compliance, but excluding underwriting
discounts and commissions, and transfer taxes, if any.

          (f) "Rule 144" shall mean Rule 144 as promulgated by the Commission
under the Securities Act, as such Rule may be amended from time to time, or any
similar successor rule that may be promulgated by the Commission.

          (g) "Rule 415" shall mean Rule 415 as promulgated by the Commission
under the Securities Act, as such Rule may be amended from time to time, or any
similar successor rule that may be promulgated by the Commission.

          (h) "Transfer" shall mean any sale, assignment, conveyance, exchange,
pledge, hypothecation, gift, disposal of or other parting with any indicia or
aspect of title, ownership or possession, including without limitation, the
withdrawal from the depositary of the underlying ordinary shares of pSivida
Limited represented by one or more ADSs.

          2. Shelf Registration Statement for Holders. Issuer shall use its
commercially reasonable efforts to prepare and file with the Commission a
"shelf" registration statement under the Securities Act for an offering to be
made on a continuous basis pursuant to Rule 415 covering, along with any other
securities that Issuer shall choose to include, all of the Registrable
Securities held by a Holder or permitted transferee or assignee pursuant to
Section 8 (the "Shelf Registration Statement"). Issuer shall use its
commercially reasonable efforts to cause the Shelf Registration Statement (a) to
become effective on or prior to one hundred eighty (180) days following the
closing of the Merger (the "Required Registration Date") and (b) to remain
effective for a period ending on the earliest to occur of (i) two (2) years from
the date of effectiveness (subject to extension for any "black-out" period
permitted by Section 6(a) or suspensions permitted by Section 3(f) hereof), or
(ii) the first date (x) on which each Holder of Registrable Securities would be
eligible to sell publicly, pursuant to Rule 144 within the volume limitations
contained in subsection (e)(1)(i) of Rule 144, 110% of the Registrable
Securities then held by such Holder, or (y) on which all Registrable Shares have
been sold (the "Registration Rights Period"). The Shelf Registration Statement
when declared effective (including the documents incorporated therein by
reference) will comply as to form with all applicable requirements of the
Securities Act and the Exchange Act. Notwithstanding the foregoing, Issuer shall
have no obligation to include any of the Registrable Securities of any Holder in
any Shelf Registration Statement pursuant to this Agreement when such Holder
would be eligible to sell publicly, pursuant to Rule 144 within the volume
limitations contained in subsection (e)(1)(i) of Rule 144, 110% of the
Registrable Securities then held by such Holder.

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          3. Registration Procedures - Issuer. In connection with its
obligations contained in Section 2 hereof, Issuer will, subject to the terms and
conditions of this Agreement:

          (a) subject to any "black-out" period permitted by Section 6(a),
prepare and file with the Commission such amendments and supplements to the
Shelf Registration Statement and any prospectus used in connection therewith as
may be necessary to keep such registration statement effective and to comply
with the provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement until the end of the
Registration Rights Period;

          (b) furnish to each Holder of Registrable Securities covered by the
Shelf Registration Statement such number of conformed copies of such
registration statement and of each such amendment and supplement thereto (in
each case including all exhibits), such number of copies of the prospectus
contained in such registration statement (including each preliminary prospectus
and any summary prospectus) and any other prospectus filed under Rule 424 under
the Securities Act, in conformity with the requirements of the Securities Act,
and such other documents, in each case, as such Holder may reasonably request;

          (c) use its commercially reasonable efforts to register or qualify,
prior to the effective date of such registration, all Registrable Securities
covered by the Shelf Registration Statement under such securities or blue sky
laws of such jurisdictions as each Holder thereof shall reasonably request, to
keep such registration or qualification in effect for so long as such
registration statement remains in effect, and take any other action which may be
reasonably necessary or advisable to enable such Holder to consummate the
disposition in such jurisdictions of the securities owned by such Holder, except
that Issuer shall not for any such purpose be required to: (i) qualify generally
to do business as a foreign corporation in any jurisdiction wherein it would not
but for the requirements of this Section 3(c) be obligated to be so qualified,
(ii) subject itself to taxation in any such jurisdiction, or (iii) consent to
general service of process in any such jurisdiction;

          (d) use its commercially reasonable efforts to obtain all legal
opinions and auditors' consents as may be required by applicable law.

          (e) use its commercially reasonable efforts to cause, prior to the
effective date of the Shelf Registration Statement, all Registrable Securities
covered by such registration statement to be registered with or approved by such
other governmental agencies or authorities as may be necessary to enable the
Holder or Holders thereof to consummate the disposition of such Registrable
Securities;

          (f) (i) immediately notify each Holder of Registrable Securities
covered by the Shelf Registration Statement, at any time when a prospectus
relating thereto is required to be delivered under the Securities Act, of the
happening of any event or the existence of any condition as a result of which
the prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading in the light of the circumstances under which they were made, or,
if in the opinion of counsel for Issuer, it is necessary to supplement or amend
such prospectus to comply with law and, after such notice,

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(ii) except for periods described in Section 6 hereof or the time period for
filing with the Commission information referred to in Section 3(a) hereof has
not expired, promptly prepare and furnish to each Holder a supplement or
amendment to such prospectus or otherwise update such prospectus so that such
prospectus will not contain an untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading. The Issuer will extend the Registration
Rights Period by the number of days during the period from and including the
date of giving such notice to and including the date when the Holders shall have
received copies of the revised prospectus;

          (g) use its best efforts to list or admit all Registrable Securities
covered by such registration statement on any securities exchange on which any
of the Registrable Securities are then listed or any other trading market on
which any of the Registrable Securities are then admitted for trading; and
provide and cause to be maintained a depositary for all Registrable Securities;
and

          (h) pay all Registration Expenses relating to any such registration.

          4. Failure to Register. In addition to any other remedies available to
Holders under this Agreement or at law or equity, if no Shelf Registration
Statement has been declared effective by the Required Registration Date or such
Shelf Registration Statement is not available with respect to all Registrable
Securities at any time on or after the Required Registration Date and during the
Registration Rights Period (except during any "black-out" period permitted by
Section 6(a) or any suspension permitted by Section 3(f) hereof) the Issuer
shall cause to be wire transferred to an account specified by each Holder on the
last business day of each month an amount, in immediately available United
States funds, equal to:

               1/30% x ND x MV

               Where:

               ND = the number of days in such month that the Shelf Registration
                    Statement has not been declared effective by the Required
                    Registration Date or the Shelf Registration Statement is not
                    available with respect to Registrable Securities that Issuer
                    is then required to register pursuant to Section 2 or that
                    may not otherwise be sold by such Holder immediately
                    pursuant to Rule 144 without compliance with the
                    registration requirements of the Securities Act ("Non-Rule
                    144 Stock"); and

               MV = the average of the closing price of Parent ADSs on The
                    Nasdaq National Market for each of the ten (10) trading days
                    ending on the trading day that is four (4) full trading days
                    prior to the Closing Date of the Merger multiplied by the
                    average number of shares of Non-Rule 144 Stock held by
                    Holders on each of the days included in "ND" above.

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          5. Registration Procedures - Holders. Each Holder of Registrable
Securities agrees as follows:

          (a) that upon receipt of any notice from Issuer of the happening of
any event of the kind described in Section 3(f), such Holder will forthwith
discontinue such Holder's disposition of Registrable Securities pursuant to the
registration statement relating to such Registrable Securities until such
Holder's receipt of the copies of the supplemented or amended prospectus
contemplated by Section 3(f) and, if so directed by Issuer, will deliver to
Issuer all copies, other than permanent file copies, then in such Holder's
possession of the prospectus relating to such Registrable Securities current at
the time of receipt of such notice, and

          (b) that it will immediately notify Issuer, at any time when a
prospectus relating to the registration of such Registrable Securities is
required to be delivered under the Securities Act, of the happening of any event
as a result of which information previously furnished by such Holder to Issuer
in writing for inclusion in such prospectus contains an untrue statement of a
material fact or omits to state any material fact required to be stated therein
or necessary to make the statements therein not misleading in the light of the
circumstances under which they were made.

          6. Black-Out Periods for Holders; Standstill.

          (a) No Holder shall offer to sell or sell any Registrable Securities
pursuant to the Shelf Registration Statement, and Issuer shall not be required
to supplement or amend any Registration Statement or otherwise facilitate the
sale of Registrable Securities pursuant thereto, during the 30-day period (or
such lesser number of days until Issuer makes a relevant public disclosure or
otherwise gives Holders notice of the termination of such period) immediately
following the receipt by each Holder of a certificate of an authorized officer
of Issuer to the effect that Issuer has determined in good faith that such
offer, sale, supplement or amendment is likely to (i) interfere with or have a
detrimental effect on the negotiation or completion of any material transaction
that is being contemplated by Issuer (whether or not a final decision has been
made to undertake such transaction) at the time the right to delay is exercised,
or (ii) involve initial or continuing disclosure obligations that are likely to
have a detrimental effect on the Issuer or its stockholders. Any period
described in this Section 6(a) during which Holders are not able to sell shares
of Registrable Securities pursuant to the Shelf Registration Statement is herein
referred to as a "black-out" period. Issuer shall notify each Holder of the
expiration or earlier termination of any "black-out" period (the nature and
pendency of which need not be disclosed during such "black-out" period). The
Issuer may exercise the rights provided by this Section 6(a) with respect to no
more than an aggregate of sixty (60) days within any 365-day period; provided,
(x) that no "black-out" period shall exceed thirty (30) consecutive days and (y)
that the Issuer may not exercise the rights provided by this Section 6(a) for
more than an aggregate of thirty (30) days within the first six months following
the effectiveness of the Shelf Registration Statement.

          (b) No Holder shall offer to sell or Transfer any Registrable
Securities, pursuant to the Shelf Registration Statement or otherwise, during
the six (6) month period immediately following the Closing. Notwithstanding the
foregoing, a Holder may transfer Registrable Securities during such period (i)
as a bona fide gift or gifts, provided that the donee or donees

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thereof agree to be bound in writing by the restrictions set forth herein, (ii)
to any trust for the direct or indirect benefit of the Holder or the immediate
family of Holder, provided that the trustee of the trust agrees to be bound in
writing by the restrictions set forth herein, and provided further that any such
transfer shall not involve a disposition for value, or (iii) to an Affiliate,
partner, member or stockholder of the Holder or, with respect to any Holder that
is an institutional investor, to another institutional investor under common
management with such Holder, provided that the transferee agrees to be bound in
writing by the restrictions set forth herein, or (iv) with the prior written
consent of Issuer.

          (c) No Holder shall offer to sell or Transfer any of any of the
ordinary shares underlying the Registrable Securities (other than to an
Affiliate, partner, member or stockholder of the Holder or to an institutional
investor under common management with such Holder in compliance with the terms
of Section 8 herein), including through trading on the Australian Stock
Exchange, at any time prior to the earlier of: (a) the Issuer's subsequent
lodgement with the Australian Securities and Investments Commission of a
prospectus under the Corporations Act for fully paid ordinary shares of the
Issuer (such prospectus incorporating the Shelf Registration Statement or
extracts of the Shelf Registration Statement as deemed appropriate by the
Issuer); or (b) the date which is 12 months after the closing of the Merger. The
Issuer shall, on or prior to the Required Registration Date lodge such
prospectus.

          (d) Each Holder hereby agrees that, at the request of and for the
benefit of the underwriter or underwriters of any underwritten public offering
of ADSs or other securities of the Issuer for the account of the Issuer, for a
period beginning seven days immediately preceding and ending not more than
ninety (90) days following the effective date of the registration statement used
in such offering, such Holder will not offer, sell, contract to sell, pledge, or
otherwise dispose of, directly or indirectly, any ADSs or securities convertible
into or exchangeable or exercisable for any ADSs (other than any transfers of a
Holder to any Affiliate, partner, member or stockholder of such Holder (each of
whom shall have furnished to the Issuer and the underwriters its written consent
to be bound by the terms of this Agreement pursuant to Section 8)), enter into a
transaction which would have the same effect, or enter into any swap, hedge or
other arrangement that transfers, in whole or in part, any of the economic
consequences of ownership of the ADSs, whether any such aforementioned
transaction is to be settled by delivery of the ADSs or such other securities,
in cash or otherwise, or publicly disclose the intention to make any such offer,
sale, pledge or disposition, or to enter into any such transaction, swap, hedge
or other arrangement, without, in each case, the prior written consent of such
underwriter or underwriters; provided, however, that such Holder is at the time
of such public offering an officer or director of the Issuer or is the holder of
more than 5% of the outstanding capital stock of Issuer and that all officers
and directors and all holders of more than 5% of the outstanding capital stock
of the Issuer enter into lock-up agreements with such underwriter or
underwriters for the same period and on the same terms.

          7. Indemnification.

          (a) Indemnification by Issuer. Issuer will, and hereby does, to the
full extent permitted by law indemnify and hold harmless each participating
Holder of any Registrable Securities covered by any registration statement filed
pursuant to Section 2 hereof, from and against any losses, claims, damages or
liabilities, joint or several (or actions or proceedings,

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whether commenced or threatened, in respect thereof, whether or not such Holder
is a party thereto, and including reasonable costs of investigation and legal
expenses) (collectively, "Claims"), to which such Holder may become subject
under the Securities Act or otherwise, insofar as such Claims arise out of or
are based upon any untrue statement or alleged untrue statement of any material
fact contained in any registration statement under which such securities were
registered under the Securities Act, any preliminary prospectus, final
prospectus or summary prospectus contained therein, or any amendment or
supplement thereto (if used during the period Issuer is required to keep the
registration statement current) or any documents incorporated therein
(collectively, "Registration Documents"), or any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading (in the case of a prospectus or
preliminary prospectus, in light of the circumstances in which they were made),
and Issuer will reimburse such Holder for any legal or any other expenses
reasonably incurred by them in connection with investigating or defending any
such Claim; provided, however, that Issuer shall not be liable in any such case
to the extent that any such Claim or expense arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in any such Registration Document in reliance upon and in conformity with
written information furnished to Issuer by such Holder for use in the
preparation thereof. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of such Holder and shall
survive the Transfer of such securities by such Holder.

          (b) Indemnification by the Holders. Each Holder will, if Registrable
Securities held by such Holder are included in any registration statement filed
pursuant to Section 2 hereof, indemnify the Issuer, each of its directors,
officers, legal counsel, and accountants, each Holder and each of their
officers, directors and partners, and each person controlling such Holder (to
the extent such Holder's Registrable Securities were included in such
registration), against all claims, losses, damages and liabilities (or actions
in respect thereof) arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any such registration
statement, prospectus, offering circular or other document, or any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, and will reimburse
the Issuer, its directors, officers, partners, legal counsel, and accountants,
the Holders, or control persons, for any legal or any other expenses reasonably
incurred in connection with investigating or defending any such claim, loss,
damage, liability, or action, in each case to the extent, but only to the
extent, that such untrue statement (or alleged untrue statement) or omission (or
alleged omission) is made in such registration statement, prospectus, offering
circular or other document in reliance upon and in conformity with written
information furnished to the Issuer by such Holder and stated to be specifically
for use therein; provided, however, that the obligations of such Holder
hereunder will be limited to an amount equal to the net proceeds to such Holder
(after deducting any underwriter's discounts and commissions and all other
expenses paid by such Holder in connection with the registration in question)
and shall not apply to amounts paid in settlement of any such claims, losses,
damages or liabilities (or actions in respect thereof) if such settlement is
effected without the consent of such Holder (which consent shall not be
unreasonably withheld).

          (c) Notices of Claims, etc. Promptly after receipt by an indemnified
party of notice of the commencement of any action or proceeding involving a
Claim referred to in the preceding subdivisions of this Section 7, such
indemnified party will, if a claim in respect thereof

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is to be made against an indemnifying party, give written notice to the latter
of the commencement of such action; provided, however, that the failure of any
indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations under the preceding subdivisions of this
Section 7, except to the extent that the indemnifying party is actually
prejudiced by such failure to give notice. In case any such action is brought
against an indemnified party, the indemnifying party shall be entitled to
participate in and to assume the defense thereof, jointly with any other
indemnifying party similarly notified to the extent that it may wish, and after
notice from the indemnifying party to such indemnified party of its election so
to assume the defense thereof, the indemnifying party shall not be liable to
such indemnified party for any legal or other expenses subsequently incurred by
the latter in connection with the defense thereof other than reasonable costs of
investigation. No indemnifying party shall consent to entry of any judgment or
enter into any settlement of any pending or threatened proceeding in respect of
which an indemnified party is or could have been a party and indemnity could
have been sought under Section 7(a) without the consent of the indemnified party
which does not include as an unconditional term thereof the giving by the
claimant or plaintiff to such indemnified party of a release from all liability
in respect to such claim or litigation.

          8. Transfer or Assignment of Registration Rights. The rights and
obligations provided by this Agreement may be transferred or assigned by any
Holder in connection with the transfer of such Holder's Registrable Securities
to an Affiliate, partner, member or stockholder of such Holder or, with respect
to any Holder that is an institutional investor, to another institutional
investor under common management with such Holder, and any such transferee shall
be deemed a Holder hereunder; provided that no Holder may assign its rights
hereunder unless (i) its proposed assignee assumes all of the obligations of
such Holder hereunder and (ii) Issuer is given written notice prior to any said
transfer or assignment, containing the name and address of any such transferee.

          9. Sales Pursuant to Rule 144. Each of the parties hereto acknowledges
that the registration benefits provided in this Agreement will not affect the
ability of the Holders to sell Registrable Securities pursuant to Rule 144
rather than pursuant to the Shelf Registration Statement.

          10. Reports under the Exchange Act. With a view to making available to
the Holders the benefits of Rule 144 promulgated under the Securities Act and
any other rule or regulation of the Commission that may at any time permit such
Holder to sell securities of the Issuer to the public without registration and
with a view to making it possible for Holders to register the Registrable
Securities pursuant to a registration statement on Form S-3 or Form F-3, as
applicable, the Issuer agrees to use its commercially reasonable efforts to:

          (a) make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act;

          (b) file with the Commission in a timely manner all reports and other
documents required of the Issuer under the Securities Act and the Exchange Act;
and

          (c) furnish to any Holder promptly upon request, to the extent
necessary in order to enable such Holder to avail itself of any rule or
regulation of the Commission that permits the

<PAGE>

selling of any such securities without registration, a written statement by the
Issuer as to its compliance with the reporting requirements of Rule 144 (at any
time after the termination of the trading restrictions contained in Section
6(b)), the Securities Act and the Exchange Act (at any time after it has become
subject to such reporting requirements), or as to its qualification as a
registrant whose securities may be resold pursuant to Form S-3 (at any time
after it so qualifies).

          11. Termination of Registration Obligation. Any and all other
provisions of this Agreement notwithstanding, in the event that the Issuer
becomes a domestic U.S. issuer and as part of such transaction issues to all
Holders securities in consideration of the Registrable Securities (the
"Equivalent Securities") in a transaction that is registered under the
Securities Act such that the Equivalent Securities are freely tradable under the
Securities Act, then this Agreement will terminate upon the issuance of such
registered Equivalent Securities and the rights and obligations of all parties
hereunder shall cease, provided that any payment obligations then owing under
Sections 3(h), 4 or 7 of this Agreement shall not be affected by such
termination and such provisions shall remain in full force and effect with
respect to such accrued obligations.

          12. Notices. All notices, requests, demands, claims and other
communications hereunder shall be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given (a) if
personally delivered, when so delivered, (b) if mailed, three (3) business days
after having been sent by registered or certified mail, return receipt
requested, postage prepaid and addressed to the intended recipient as set forth
below, (c) if given by telex or telecopier, once such notice or other
communication is transmitted to the telex or telecopier number specified below
and the appropriate answer back or telephonic confirmation is received, provided
that such notice or other communication is promptly thereafter mailed in
accordance with the provisions of clause (b) above, or (d) if sent through an
overnight delivery service in circumstances in which such service guarantees
next day delivery, the day following being so sent:

               (i) If to Issuer:

               pSivida Limited
               Level 12, BGC Centre
               28 The Esplanade, Perth
               WA 6000 Australia
               GPO Box 2535
               Perth, WA 6831
               Attention: Gavin Rezos
               Facsimile No.: +61 8 9226 5499

               with a copy (which shall not constitute notice) to Parent's
               Counsel:
               Curtis, Mallet-Prevost, Colt & Mosle LLP
               101 Park Avenue
               New York, NY 10178
               Attention: Lawrence Goodman, Esq.
               Facsimile No.: (212) 697-1559

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               (ii) If to Holders:

               To the address set forth on the signature pages hereto.

     In the event that any of the Holders identified in this Agreement transfers
Registrable Securities to a new Holder in accordance with Section 8 above,
Issuer may provide notice to such Holder through notifying the original Holder
identified herein. Any party may give any notice, request, demand, claim or
other communication hereunder using any other means (including ordinary mail or
electronic mail), but no such notice, request, demand, claim or other
communication shall be deemed to have been duly given unless and until it
actually is received by the individual for whom it is intended. Any party may
change the address to which notices, requests, demands, claims and other
communications hereunder are to be delivered by giving the other parties notice
in the manner herein set forth.

          13. Amendments. No change or modification of this Agreement or waiver
of any provision hereof shall be valid, binding or enforceable as against (a)
Issuer, unless the same shall be in writing and signed by Issuer, and (b) any
Holder, unless the same shall be in writing and signed by Holders who own, in
the aggregate, at least fifty per cent (50%) of the total number of Registrable
Securities that Issuer is then required to register pursuant to Section 2 hereof
at the time of such amendment; provided, however, that any such amendment or
waiver that affects one Holder in a way that is materially adverse to such
Holder relative to all other Holders cannot be effected without the written
consent of such Holder and no additional or expanded obligations may be imposed
on any Holder without the consent of such Holder.

          14. No Waivers. No waiver by a party of any default, misrepresentation
or breach of warranty or covenant hereunder, whether intentional or not, shall
be deemed to extend to any prior or subsequent default, misrepresentation or
breach of warranty or covenant hereunder or affect in any way any rights arising
by virtue of any prior or subsequent occurrence. No failure or delay by a party
in exercising any right, power or privilege hereunder shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
The rights and remedies herein provided shall be cumulative and not exclusive of
any rights or remedies provided by law.

          15. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns, provided that no registration rights will be transferred
other than in accordance with Section 8 hereof.

          16. Governing Law. This Agreement shall be construed in accordance
with and governed by the internal laws of the State of New York.

          17. Counterparts. This Agreement may be signed in any number of
counterparts and the signatures delivered by telecopy, each of which shall be an
original, with the same effect as if the signatures thereto and hereto were upon
the same instrument.

          18. Entire Agreement. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof and supersedes all
prior agreements, understandings and negotiations, both written and oral,
between the parties with respect to the

<PAGE>

subject matter of this Agreement. Neither this Agreement nor any provision
hereof is intended to confer upon any person other than the parties hereto any
rights or remedies hereunder.

          19. Captions. The captions herein are included for convenience of
reference only and shall be ignored in the construction or interpretation
hereof. All references to an Article or Section include all subparts thereof.

          20. Severability. If any provision of this Agreement, or the
application thereof to any person, place or circumstance, shall be held by a
court of competent jurisdiction to be invalid, unenforceable or void, the
remainder of this Agreement and such provisions as applied to other persons,
places and circumstances shall remain in full force and effect only if, after
excluding the portion deemed to be unenforceable, the remaining terms shall
provide for the consummation of the transactions contemplated hereby in
substantially the same manner as originally set forth at the later of the date
this Agreement was executed or last amended.

          21. Third Party Beneficiaries. No provision of this Agreement shall
create any third party beneficiary rights in any person.

                            [Signature pages follow.]

<PAGE>

          IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.

                                        ISSUER

                                        PSIVIDA LIMITED

                                        By: /s/ Gavin Rezos
                                            ------------------------------------
                                        Name: Gavin Rezos
                                        Title: Chief Executive Officer and
                                               Managing Director

                                        By: /s/ Aaron Finlay
                                            ------------------------------------
                                        Name: Aaron Finlay
                                        Title: Chief Financial Officer and
                                               Company Secretary

<PAGE>

                             HOLDERS' SIGNATURE PAGE

                                     TO THE

                          REGISTRATION RIGHTS AGREEMENT

     EXECUTED this _______ day of ____________, 2006

SIGN HERE: X
             ------------------------   ----------------------------------------
                                        Exact Number of Registrable Securities

-------------------------------------   ----------------------------------------
Print name exactly as it should         Enter number of ADSs of pSivida Limited
appear in the Shelf Registration        (other than Registrable Securities) that
Statement                               you own.

IF AN ENTITY, ADD:

                                        Have you or your organization had any
By:                                     position, office or other material
    ---------------------------------   relationship within the past three (3)
Title:                                  years with pSivida Limited or its
       ------------------------------   affiliates? Check one:

                                        [ ] Yes

ALL HOLDERS:                            [ ] No

Address: ____________________________   If "Yes" please describe: ______________

_____________________________________   ________________________________________

_____________________________________   ________________________________________

Fax: ________________________________<PAGE>

                                                                    EXHIBIT 4.12

                                                                  EXECUTION COPY

[*] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
COMMISSION PURSUANT TO RULE 24B-2 PROMULGATED UNDER THE SECURITIES AND EXCHANGE
ACT OF 1934, AS AMENDED.

                              AMENDED AND RESTATED

                                LICENSE AGREEMENT

                                     BETWEEN

                         CONTROL DELIVERY SYSTEMS, INC.

                                       AND

                           BAUSCH & LOMB INCORPORATED

  THIS AGREEMENT IS CONFIDENTIAL AND SHALL NOT BE DISCLOSED TO ANY THIRD PARTY
    EXCEPT IN ACCORDANCE WITH THE PROCEDURES SPECIFIED IN ARTICLE 32 HEREOF.

                         Dated as of December 9th, 2003

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                             Page
                                                                                                             ----
<S>                                                                                                          <C>
Article 1. Definitions:..................................................................................       1

        1.1     Active Commercialization or Actively Commercializing.....................................       1
        1.2     Affiliate................................................................................       1
        1.3     Amendment Date...........................................................................       2
        1.4     ANDA.....................................................................................       2
        1.5     ARMD.....................................................................................       2
        1.6     Base Royalty.............................................................................       2
        1.7     Clinical IP..............................................................................       2
        1.8     Commercialize, Commercializing or Commercialization......................................       2
        1.8A    Co-Owned Patents.........................................................................       2
        1.9     Confidential Information.................................................................       2
        1.10    Develop, Developing or Development.......................................................       2
        1.11    DME......................................................................................       2
        1.12    DR.......................................................................................       2
        1.13    Eligible Licensed Product................................................................       3
        1.14    First Generation Exclusive Licensed Product..............................................       3
        1.15    FDA......................................................................................       3
        1.16    Generic Product..........................................................................       3
        1.17    Improvement..............................................................................       3
        1.18    IND......................................................................................       3
        1.19    Invention................................................................................       3
        1.20    Issued Patent Claim......................................................................       3
        1.21    Know-how.................................................................................       3
        1.22    Licensed Field...........................................................................       3
        1.23    Licensed Patents.........................................................................       3
        1.24    Licensed Product.........................................................................       4
        1.25    Licensed Territory.......................................................................       4
        1.26    Licensee Improvement.....................................................................       4
        1.27    Licensee Improvement Application.........................................................       4
        1.28    Licensee Improvement Patent..............................................................       4
        1.29    Licensor Improvement Product.............................................................       4
        1.29A   Licensor Improvement.....................................................................       4
        1.29B   Licensor Improvement Patents.............................................................       5
        1.30    Milestone Payment........................................................................       5
        1.31    NDA......................................................................................       5
        1.32    Net Sales................................................................................       5
        1.33    Non-Exclusive Licensed Product...........................................................       5
        1.34    Original Effective Date..................................................................       6
        1.35    Other Technology.........................................................................       6
        1.36    Patent Rights............................................................................       6
        1.37    Person...................................................................................       6
        1.38    Regulatory Approval......................................................................       6
        1.39    Right of Access to Clinical IP...........................................................       6
</TABLE>

<PAGE>

<TABLE>
<S>                                                                                                           <C>
        1.40    Sublicense...............................................................................       6
        1.41    Sublicensee..............................................................................       6
        1.42    Target Market............................................................................       6
        1.43    Term of this Agreement...................................................................       6
        1.44    Third Party Licensed Product.............................................................       7
        1.45    Total Relevant Sales.....................................................................       7
        1.46    UKRF.....................................................................................       7
        1.47    UKRF Licenses............................................................................       7
        1.48    Uveitis Base Royalty Product.............................................................       7
        1.49    Uveitis Product..........................................................................       7
        1.50    Valid Claim..............................................................................       7
        1.51    Vitrasert Licensed Product...............................................................       7

Article 2. Granting Clause:..............................................................................       8

        2.1     License Grant............................................................................       8
        2.2     Sublicensing.............................................................................       8
        2.3     Non-suit.................................................................................       9
        2.4     Non-assert of Know-how...................................................................      10
        2.5     Non-Compete..............................................................................      10
         (a)    Non-Compete for Uveitis Product..........................................................      10
         (b)    Non-Compete for First Generation Exclusive License Product...............................     101
        2.6     Licensor Disclosure of Inventions........................................................      12
        2.7     Licensee Disclosure of Inventions........................................................      12
        2.8     Co-Owned Patents.........................................................................      13
        2.9     Licensee Non-suit........................................................................      13
        2.10    Licensee Covenant Not to File............................................................      13
        2.11    Frustration Regarding Vitrasert Product..................................................      13

Article 3. Royalties and Repayment Obligations...........................................................      13

        3.1     Running Royalties........................................................................      13
        3.2     Royalty Step-Down for Generic Competition................................................      15
        3.3     Royalties Payable Only Once..............................................................      16
        3.4     Timing of Royalty Payments...............................................................      16
        3.5     Withholding Taxes........................................................................      16
        3.6     Intentionally Omitted....................................................................      16
        3.7     Repayment of Advanced Amount.............................................................      16
        3.8     Royalty Calculation......................................................................      18

Article 4. License and Maintenance Fees..................................................................      18

        4.1     License and Maintenance Fees.............................................................      18

Article 5. Development of Licensed Products..............................................................      18

        5.1     Joint Diligence Obligation...............................................................      18
        5.2     Licensee's General Diligence Obligations.................................................      18
        5.3     (a) Licensee's Specific Diligence Obligations - Uveitis..................................      18
        5.3     (b) Licensee's Specific Diligence Obligations - Other First Generation
                Exclusive Licensed Product...............................................................      18
</TABLE>

<PAGE>

<TABLE>
<S>                                                                                                            <C>
        5.4     Licensee's Specific Diligence Obligations - Non-Exclusive Licensed Products..............      19
        5.5     Failure to Comply with Diligence Obligations.............................................      19

Article 6. Marketing Obligations.........................................................................      19

Article 7. Reporting and Accounting Provisions:..........................................................      20

        7.1     Royalty Report...........................................................................      20
        7.2     Record Keeping by Licensee...............................................................      20
        7.3     Termination Report.......................................................................      20

Article 8. Ownership:....................................................................................      21

        8.1     Ownership................................................................................      21
        8.2     Inventorship.............................................................................      21
        8.3     Licensee Improvements....................................................................      21

Article 9. Filing and Maintenance of Patents:............................................................      23

Article 10. Enforcement of Intellectual Property Rights:.................................................      24

        10.1    Notice to Licensor.......................................................................      24
        10.2    Right to Bring Suit - Licensor; Settlement...............................................      24
        10.3    Right to Bring Suit - Licensee...........................................................      24
        10.4    UKRF.....................................................................................      25
        10.5    Expense..................................................................................      25

Article 11. Term; Termination:...........................................................................      27

        11.1    Expiration of Royalty Obligations........................................................      27
        11.2    Term.....................................................................................      27
        11.3    Termination by Licensor..................................................................      27
        11.4    Termination by Licensee..................................................................      28
        11.5    Bankruptcy...............................................................................      29
        11.6    Effect of Termination....................................................................      29
        11.7    Grant Back...............................................................................      29

Article 12. Ownership of Clinical IP:....................................................................      30

        12.1    Clinical IP Outside Licensees License Rights.............................................      30
        12.2    Clinical IP-Cooperation..................................................................      30

Article 13. University of Kentucky Research Foundation Licenses:.........................................      30

Article 14. Indemnification:.............................................................................      31

        14.1    Indemnification of Licensee..............................................................      31
        14.2    Indemnification of Licensor..............................................................      31
        14.3    Limitation of Liability..................................................................      32
        14.4    Procedure for Indemnification............................................................      32
        14.5    Insurance................................................................................      32

Article 15. Trademarks:..................................................................................      32

Article 16. Representations and Warranties:..............................................................      33

        16.1    Representations and Warranties of Both Parties...........................................      33
</TABLE>

<PAGE>

<TABLE>
<S>                                                                                                            <C>
        16.2    Representations and Warranties of Licensor...............................................      33

Article 17. Warranty Disclaimer:.........................................................................      34

Article 18. Operations in Compliance with Law:...........................................................      35

Article 19. Infringement of Third Party's Patents:.......................................................      35

Article 20. Force Majeure:...............................................................................      37

Article 21. Choice of Law/Forum:.........................................................................      37

Article 22. Dispute Resolution:..........................................................................      37

Article 23. Notices:.....................................................................................      38

Article 24. Merger Clause:...............................................................................      39

Article 25. Integration Clause:..........................................................................      39

Article 26. Severability Clause:.........................................................................      39

Article 27. No Waiver:...................................................................................      40

Article 28. Transferability of Rights and Obligations:...................................................      40

Article 29. Patent Marking:..............................................................................      40

Article 30. Publicity:...................................................................................      40

Article 31. Independent Contractors:.....................................................................      40

Article 32. Confidentiality:.............................................................................      40

        32.1    Confidentiality..........................................................................      40
        32.2    External Disclosure......................................................................      41

Article 33. Relinquishment:..............................................................................      42

        33.1    UKRF Letter Agreement....................................................................      42
        33.2    Covenant Not to Compete..................................................................      42

Article 34. No Limit to Remedies:........................................................................      42

Article 35. Counterparts:................................................................................      42

Article 36. Transition Obligations:......................................................................      42

        36.1    Clinical/Trial Agreements................................................................      42
        36.2    Clinical Activities Data.................................................................      43
        36.3    Transition Space.........................................................................      43
        36.4    Insurance................................................................................      43
</TABLE>

<PAGE>

EXHIBITS
--------
Exhibit 1.14         -    First Generation Exclusive Licensed Product
                          Specifications/Drawings
Exhibit 1.23(a)      -    Licensed Patents, Patent Applications and IDFs
Exhibit 1.23(b)      -    Excluded Patents, Patent Applications and IDFs
Exhibit 1.33         -    Non-Exclusive Licensed Product
Exhibit 1.47         -    UKRF Licenses
Exhibit 2.3          -    Non-Suit Excluded Patents, Patent Applications and
                          IDFs
Exhibit 2.8          -    Licensee Patents
Exhibit 2.9          -    Licensee Non-suit
Exhibit 2.10         -    Licensee IDFs; Covenant Not to File
Exhibit 3.7.3        -    Form of Option
Exhibit 3.7.4        -    Form of Promissory Note
Exhibit 4.1          -    Milestone Payments
Exhibit 5.3          -    Due Diligence Obligations for First Generation
                          Exclusive Licensed Products (Non-Uveitis Indications)
Exhibit 5.4          -    Due Diligence Obligations for Non-Exclusive Licensed
                          Products
Exhibit 16.1(vi)     -    Litigation, Proceedings, Governmental Investigations
Exhibit 16.2(iii)    -    Exceptions to Ownership of Licensed Patents
Exhibit 16.2(v)      -    Licensor Disclosees
Exhibit 36.1A        -    Clinical Agreements
Exhibit 36.1B        -    Trial Agreements
<PAGE>

                     AMENDED AND RESTATED LICENSE AGREEMENT

THIS AMENDED AND RESTATED LICENSE AGREEMENT ("Agreement"), effective as of the
9th day of December, 2003 (the "Amendment Date"), is made between Control
Delivery Systems, Inc., a corporation organized and existing under the laws of
the State of Delaware and having its principal place of business at 400 Pleasant
Street, Watertown, Massachusetts 02472-2234 ("Licensor") and Bausch & Lomb
Incorporated, a corporation organized and existing under the laws of the State
of New York and having its principal place of business at One Bausch & Lomb
Place, Rochester, New York 14604 ("Licensee"). Collectively, Licensor and
Licensee are "Parties" and, individually, a "Party."

                                    RECITALS

WHEREAS, the Parties have entered into, and performed in part under, the License
Agreement between Licensor and Licensee, dated June 9, 1999, as amended January
1, 2001, December 31, 2001, and April 14, 2003 (the "1999 Agreement"), and the
License and Development Agreement dated December 31, 1992, between Licensor and
Licensee, as the assignee of ChironVision Corporation (formerly Chiron
IntraOptics, Inc.) ("Chiron"), as amended August 16, 1993, March 30, 1995, June
23, 1995, and December 31, 1997 (the "Vitrasert Agreement"); and

WHEREAS, the Parties have determined to change, in part, the nature of their
relationship with respect to the development, manufacturing and licensing of
products under the 1999 Agreement and with respect to intellectual property
rights and other matters reflected in this Agreement; and

WHEREAS, the Parties wish to amend and restate their intentions into a single
agreement, all to effect the foregoing changes.

NOW THEREFORE, in consideration of the mutual promises set forth below, the
Parties agree as follows:

ARTICLE 1. DEFINITIONS:

In addition to the terms defined elsewhere in this Agreement, the following
terms shall have their associated meanings.

   1.1 Active Commercialization or Actively Commercializing. "Active
   Commercialization" and "Actively Commercializing" means: (a) Licensee
   diligently conducting clinical trials for Uveitis Base Royalty Product; or
   (b) with respect to a Uveitis Base Royalty Product for which clinical trials
   are complete, Licensee diligently obtaining Regulatory Approval; or (c) with
   respect to a Uveitis Base Royalty Product that has received Regulatory
   Approval in one or more markets, Licensee diligently Commercializing such
   product in such markets; all in active furtherance of Licensee's diligence
   obligations pursuant to Articles 5 and 6 of this Agreement.

   1.2 Affiliate. "Affiliate" of any Party means any Person that is controlled
   by, controls, or is under common control with such Party, for so long as such
   control relationship continues to exist. "Control" as used in this definition
   means the possession, directly or indirectly, of the

<PAGE>

   power to direct or cause the direction of the management of a Person, whether
   through ownership of voting securities, by contract, or otherwise.

   1.3 Amendment Date. "Amendment Date" shall mean December 9th, 2003.

   1.4 ANDA. "ANDA" means an Abbreviated New Drug Application and all associated
   documents and components thereof, required to be filed with the FDA in order
   to obtain approval to market a particular product in the United States.

   1.5 ARMD. "ARMD" means age-related macular degeneration.

   1.6 Base Royalty. "Base Royalty" means a running royalty rate of [*] of Net
   Sales, provided that, as set forth in Section 3.8, the  amount of royalties
   due and owing pursuant to Section 3 shall be subject to Licensee's right of
   recoupment as follows: if the Advanced Amount has not been fully repaid by
   Licensor to Licensee as required hereunder, the amount of any royalties that
   might otherwise be due and owing from Licensee to Licensor under this
   Agreement shall in all instances be the amount determined in accordance with
   Article 3, less the Unpaid Advanced Amount at the time of such determination.

   1.7 Clinical IP. "Clinical IP" means (i) all pre-clinical and clinical
   protocols, studies, data and results and study-related forms, materials and
   reports (e.g., investigator brochures, informed consent forms, data safety
   monitoring board related documents, patient recruitment related materials,
   biocompatibility studies, animal studies, safety studies, and chemistry,
   manufacturing and control data) used in or resulting from any pre-clinical or
   clinical study or trial and any audits of any pre-clinical or clinical study
   or trial of any First Generation Exclusive Licensed Product or the Vitrasert
   Licensed Product in the Licensed Field, and (ii) all INDs, NDAs, any unfiled
   applications, components or materials normally associated with an IND or NDA,
   regulatory filings or applications comparable to INDs or NDAs in any foreign
   jurisdictions, and other regulatory applications and approvals regarding any
   First Generation Exclusive Licensed Product or the Vitrasert Licensed Product
   in the Licensed Field.

   1.8 Commercialize, Commercializing or Commercialization. "Commercialize",
   "Commercializing" or "Commercialization" means the sale, offering for sale,
   distribution, or marketing, of a product.

   1.8A Co-Owned Patents. "Co-Owned Patents" is defined in Section 2.8 of this
   Agreement.

   1.9 Confidential Information. "Confidential Information" is defined in
   Article 32 of this Agreement.

   1.10 Develop, Developing or Development. "Develop", "Developing" or
   "Development" means performance of human clinical trials for a product.

   1.11 DME. "DME" means diabetic macular edema.

   1.12 DR. "DR" means diabetic retinopathy.

   [*] - INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
   TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH
   THE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES AND
   EXCHANGE ACT OF 1934, AS AMENDED.

                                      -2-

<PAGE>

   1.13 Eligible Licensed Product. "Eligible Licensed Product" is defined in
   Section 3.2 of this Agreement.

   1.14 First Generation Exclusive Licensed Product. "First Generation Exclusive
   Licensed Product" shall mean a product, other than the Vitrasert Licensed
   Product, that is an implant that is required to be surgically inserted
   through an incision of at least 2 mm (and which cannot be inserted through an
   incision of less than 2 mm) in the scelera into the vitreous, is secured in
   the posterior of the eye, cannot be injected, and uses a reservoir design
   that generally conforms to the drawings and specifications (and any prior
   iterations thereof in whole or in part) shown in Exhibit 1.14. An example of
   such a design is that which is currently used in clinical trial #005 and #002
   for DME and clinical trial #001 for Uveitis.

   1.15 FDA. "FDA" means the United States Food and Drug Administration.

   1.16 Generic Product. "Generic Product" is defined in Section 3.2 of this
   Agreement.

   1.17 Improvement. "Improvement" means any Invention which is a development,
   enhancement, improvement, invention, modification, derivative or new use of a
   Licensed Product, [*].

   1.18 IND. "IND" means an Investigational New Drug Application and associated
   documents, components thereof, or corresponding applications and associated
   documents for devices or combination products, required to be filed with the
   FDA in order to obtain approval to commence human clinical trials of product
   in the United States.

   1.19 Invention. "Invention" shall mean any invention or discovery.

   1.20 Issued Patent Claim. "Issued Patent Claim" is defined in Section 1.50 of
   this Agreement.

   1.21 Know-how. "Know-how" means unpatented information, whether or not
   patentable, including, without limitation, technical information, processes,
   formulae, trade secrets, materials, designs, drawings and data.

   1.22 Licensed Field. "Licensed Field" means with respect to: (a) the First
   Generation Exclusive Licensed Products, any and all use for the treatment,
   prevention and/or diagnosis of any disease, disorder and/or condition of the
   human eye; (b) Non-Exclusive Licensed Products, any and all use for the
   treatment, prevention and/or diagnosis in humans of [*] (c) Vitrasert
   Licensed Product, any and all use for the prevention and treatment of
   cytomegalovirus retinitis in humans; and (d) all Licensed Products, any and
   all research in non-human eyes.

   1.23 Licensed Patents. "Licensed Patents" shall mean all: (1) patents issued
   to or licensed by Licensor on or before June 18, 2003, as set forth in
   Exhibit 1.23(a), other than those specific patents listed on Exhibit 1.23(b);
   (2) patent applications filed by Licensor on or before June 18,

   [*] - INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
   TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH
   THE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES AND
   EXCHANGE ACT OF 1934, AS AMENDED.

                                      -3-

<PAGE>

   2003, as set forth in Exhibit 1.23(a), other than those specific patent
   applications listed on Exhibit 1.23(b); (3) patent applications filed by
   Licensor after June 18, 2003, to the extent directed to the specific
   inventions made before June 18, 2003, and disclosed in the invention
   disclosure forms set forth in Exhibit 1.23(a), other than those specific
   invention disclosure forms listed on Exhibit 1.23(b); and (4) all patents and
   patent applications claiming priority to the patents or patent applications
   set forth in (1) - (3) above, including (i) any continuation,
   continuation-in-part (to the extent the claims are specifically directed to
   the subject matter in the patent or patent application to which it claims
   priority), divisional, reissue, reexamination, or renewal with respect to any
   of the foregoing, and (ii) any corresponding patent, utility model, inventor
   certificate, registration or the like in any country of the world with
   respect to the foregoing; provided, however, that notwithstanding anything to
   the contrary in this Section 1.23 or elsewhere in this Agreement, Licensed
   Patents shall not include any patent or patent application, or any claim
   thereof, that is directed to inventions made by Licensor after June 18, 2003.
   Exhibit 1.23(a) shall be updated from time to time by Licensor to incorporate
   the patent application serial numbers for the patent applications referenced
   in subsection (3) above. For the purposes of this Section 1.23, patents,
   patent applications, Patent Rights and Inventions shall only mean patents,
   patent applications, Patent Rights and Inventions of Control Delivery
   Systems, Inc., and shall not include patents, patent applications, Patent
   Rights and Inventions of a third party acquiree or transferor, or a third
   party merger or consolidation partner, of or with Control Delivery Systems,
   Inc., or a third party acquiror or transferee of substantially all of the
   assets or stock of Control Delivery Systems, Inc.'s opthalmics business.

   1.24 Licensed Product. "Licensed Product" means First Generation Exclusive
   Licensed Product, Vitrasert Licensed Product, and Non-Exclusive Licensed
   Product.

   1.25 Licensed Territory. "Licensed Territory" means the world.

   1.26 Licensee Improvement. "Licensee Improvement" is defined in Section
   8.3(a) of this Agreement.

   1.27 Licensee Improvement Application. "Licensee Improvement Application" is
   defined in Section 8.3(a) of this Agreement.

   1.28 Licensee Improvement Patent. "Licensee Improvement Patent" is defined in
   Section 8.3(b) of this Agreement.

   1.29 Licensor Improvement Product. "Licensee Improvement Product" is defined
   in Section 8.3(b) of this Agreement.

1.29A Licensor Improvement. "Licensor Improvement" means any Improvement
created, invented or discovered by Licensor, after June 18, 2003 and before
[*], provided, however, that in the event of (i) any transfer by
Licensee of substantially all of the assets or stock of Licensee's proprietary
(branded and/or generic) ophthalmic pharmaceutical business; or (ii) any
transfer by Licensor of substantially all of the assets or stock of Licensor's
ophthalmics business, "Licensor Improvement" shall only include Improvements
created, invented or discovered by Licensor after June 18, 2003 and before the
earlier of (x) the effective date of such transfer or (y) [*]. For
the purposes of this Section 1.29A,

[*]-INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES AND EXCHANGE
ACT OF 1934, AS AMENDED.

                                      -4-

<PAGE>

Improvements shall only mean Improvements of Control Delivery Systems, Inc., and
shall not include Improvements of a third party acquiree or transferor, or a
third party merger or consolidation partner, of or with Control Delivery
Systems, Inc., or a third party acquiror or transferee of substantially all of
the assets or stock of Control Delivery Systems, Inc.'s opthalmics business.

1.29B Licensor Improvement Patents. Any patent application filed by Licensor to
the extent it claims a Licensor Improvement, and any issued patents or patent
applications to the extent they claim priority thereto.

   1.30 Milestone Payment. "Milestone Payment" is defined in Article 4 of this
   Agreement.

   1.31 NDA. "NDA" means a New Drug Application and all associated documents,
   components thereof, or corresponding applications and associated documents
   for devices or combination products, required to be filed with the FDA in
   order to obtain approval to market a particular product in the United States.

   1.32 Net Sales. "Net Sales" means, in any case where a Licensed Product is
   sold or commercially disposed of for value by Licensee or any Sublicensee in
   an arm's length transaction with a third party (other than an Affiliate of,
   respectively, Licensee or Sublicensee), the gross invoice price for such
   Licensed Product, less the following: (i) discounts, chargebacks, Medicare or
   other government rebates, and rebates to purchasers actually taken or
   allowed; (ii) credits or allowances given or made for rejections or return of
   any previously sold Products actually taken or allowed; (iii) to the extent
   included in such gross invoice price any tax or government charge imposed on
   the production, import, export, sale, delivery or use of such Products,
   including, without limitation, any value added or similar tax or government
   charge, but not including any tax levied with respect to income; and (iv) to
   the extent included in such gross invoice price any reasonable and documented
   packaging and distribution charges. Net Sales shall also include and be
   deemed to have been made with respect to (a) any Licensed Product not sold or
   otherwise transferred to any third party but rather used by Licensee or any
   Sublicensee to provide a commercial service and (b) any other transfer of a
   Licensed Product for less than arm's length value other than intercompany
   transfers where the transferee is not the end user. The amount of any Net
   Sale as defined in the preceding sentence shall be imputed using the price or
   prices at which the Licensed Product at issue is then being sold in
   transactions covered by the first sentence of this Section or, if no such
   transactions have occurred, on a reasonable basis to be determined at the
   time by the Parties. Notwithstanding any other provision of this Section, Net
   Sales shall not include the transfer without consideration of any Licensed
   Product by Licensee or any Sublicensee (x) for use in any clinical trial or
   in any preclinical or other research, (y) as detailing samples or other use
   to promote additional Net Sales in amounts consistent with the normal
   business practices of Licensee or any Sublicensee, or (z) for compassionate
   use.

   1.33 Non-Exclusive Licensed Product. "Non-Exclusive Licensed Product" means a
   product (a) that meets the following criteria: (i) uses as its active
   ingredient only one or more of the active ingredients set forth in column A
   of Exhibit 1.33, and no others, and (ii) uses one of the delivery systems in
   column B of Exhibit 1.33, and (iii) uses one of the methods of delivery set
   forth in column C of Exhibit 1.33; and (iv) uses one of the anchoring methods
   set forth in

                                      -5-

<PAGE>

   column D of Exhibit 1.33; and (v) is applied in one of the locations set
   forth in column E of Exhibit 1.33; and (vi) is approved, or is designed to be
   approved, for the treatment of one or more of the indications set forth in
   Column F of Exhibit 1.33, and no others; and (b) the manufacture, use, sale,
   offering for sale or importing of which, absent the license granted by
   Licensor to Licensee herein, would infringe any Valid Claim included in any
   Licensed Patent or Licensor Improvement Patent. Notwithstanding the
   foregoing, Non-Exclusive Licensed Product shall exclude First Generation
   Exclusive Licensed Product.

   1.34 Original Effective Date. "Original Effective Date" means December 31,
   1992, for rights and obligations hereunder related to Vitrasert Licensed
   Product and June 9, 1999, for all other rights and obligations hereunder.

   1.35 Other Technology. "Other Technology" means Patent Rights owned or
   controlled by Licensor and not included as a Licensed Patent or Licensor
   Improvement Patent.

   1.36 Patent Rights. "Patent Rights" means any and all forms of patents issued
   or granted anywhere in the world, including, without limitation, utility,
   model and design patents, patents of addition, patents of importation or
   innovation, improvement patents, reissued and reexamined patents, all
   renewals and extensions thereof, and all applications for such patents
   (including original, divisional, continuation and continuation-in-part
   applications) pending before any national Patent Office and which have not
   been abandoned or expired.

   1.37 Person. "Person" means any individual, partnership, association,
   corporation, trust, or other legal person or entity.

   1.38 Regulatory Approval. "Regulatory Approval" means (a) approval by the FDA
   of an NDA and satisfaction of any related applicable FDA requirements (if
   any) or (b) in any country other than the United States, approval by
   regulatory authorities having jurisdiction over such country of a single
   application or set of applications comparable to an IND, NDA, and
   satisfaction of any related applicable regulatory and notification
   requirements, if any, together with any other approvals necessary to make and
   sell pharmaceuticals or delivery systems in such country.

   1.39 Right of Access to Clinical IP. "Right of Access to Clinical IP" means
   the right to reference, cross-reference, review, have access to, incorporate
   and use Clinical IP in any regulatory, applications or filings or for any
   research or development purpose.

   1.40 Sublicense. "Sublicense" means any sublicense of, or other agreement
   permitting the commercial exploitation of, some or all of the rights granted
   to Licensee under this Agreement.

   1.41 Sublicensee. "Sublicensee" means any Person to whom Licensee grants a
   Sublicense.

   1.42 Target Market. "Target Market" means each of the [*].

   1.43 Term of this Agreement. "Term of this Agreement", "term of this
   Agreement", or "Term" shall mean the period beginning on the Original
   Effective Date and continuing only for so long as (a) Licensee has any right
   to exercise any of its rights with respect to any Licensed Patent or Licensor
   Improvement Patent in the Licensed Territory, or (b) royalty payments are

[*]-INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES AND EXCHANGE
ACT OF 1934, AS AMENDED.

                                      -6-

<PAGE>

   due under this Agreement, unless earlier terminated by Licensor or Licensee
   as provided herein.

   1.44 Third Party Licensed Product. "Third Party Licensed Product" means a
   First Generation Exclusive Licensed Product or a Non-Exclusive Licensed
   Product, the therapeutic effect of which is derived in part from any
   proprietary product, compound, method or process in-licensed or acquired by
   Licensee from an unaffiliated third party on an arm's length basis; provided
   that such First Generation Exclusive Licensed Product or Non-Exclusive
   Licensed Product is subject to a running royalty equal to the Base Royalty.

1.44A Third Party Licensor Improvement Product. "Third Party Licensor
Improvement Product" is defined in Section 8.3(d) of this Agreement.

   1.45 Total Relevant Sales. "Total Relevant Sales" is defined in Section 3.2
   of this Agreement.

   1.46 UKRF. "UKRF" means University of Kentucky Research Foundation.

   1.47 UKRF Licenses. "UKRF Licenses" mean the licenses set forth in Exhibit
   1.47.

   1.48 Uveitis Base Royalty Product. "Uveitis Base Royalty Product" means a
   Uveitis Product the Net Sales of which bear, or for a product that has not
   yet received Regulatory Approval, will bear, the Base Royalty payable to
   Licensor that is not subject to any royalty reduction or offset under this
   Agreement.

   1.49 Uveitis Product. "Uveitis Product" means any product which has received
   or is designed to receive Regulatory Approval to treat Uveitis.

   1.50 Valid Claim. "Valid Claim" means (i) 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, unappealed or unappealable within the time allowed for appeal,
   and which has not been admitted to be invalid or unenforceable through
   reissue or disclaimer or otherwise (an "Issued Patent Claim"), and/or (ii) a
   pending claim of any pending patent application which has been filed and
   continues to be prosecuted in good faith and is not abandoned or finally
   disallowed without the possibility of appeal or refiling (a "Pending Claim");
   provided, however, that, with respect to any Licensed Product or Licensor
   Improvement Product, no Pending Claim which has not become an Issued Patent
   Claim shall continue to constitute a Valid Claim for more than five years
   following the first approved commercial sale of the first Licensed Product or
   Licensor Improvement Product which qualifies as a Licensed Product or
   Licensor Improvement Product solely as a result of such Pending Claim.

   1.51 Vitrasert Licensed Product. "Vitrasert Licensed Product" means the
   product that has received FDA regulatory approval pursuant to application
   #20-569 as approved on March 4, 1996, and the manufacture, use, sale, or
   importation of which would, absent the license granted by Licensor to
   Licensee herein, infringe any Valid Claim included in the Licensed Patents.

                                      -7-

<PAGE>

ARTICLE 2. GRANTING CLAUSE:

2.1   License Grant.

2.1.1 License to First Generation Exclusive Licensed Product and Vitrasert
      Licensed Product. Licensor grants to Licensee, and Licensee accepts, an
      exclusive, royalty-bearing, worldwide right and license, with exclusive
      right to sublicense, under Licensor's interest (i.e., subject to the UKRF
      Licenses) in the Licensed Patents and Licensor Improvement Patents, solely
      to make, have made, use, sell, offer to sell, and import First Generation
      Exclusive Licensed Products and Vitrasert Licensed Product in the Licensed
      Field.

2.1.2 License to Non-Exclusive Licensed Product. Licensor grants to Licensee,
      and Licensee accepts a non-exclusive, royalty-bearing, worldwide right and
      license, without the right to sublicense, under Licensor's interest (i.e.,
      subject to the UKRF Licenses) in the Licensed Patents and Licensor
      Improvement Patents solely to make, have made (including by
      manufacturers), use, sell, offer to sell, have sold (including by
      distributors), and import Non-Exclusive Licensed Products in the Licensed
      Field.

2.1.3 Intentionally Omitted.

2.1.4 No License. Nothing in this Agreement shall be construed as granting a
      license, whether express, implied or by operation of law, to Licensee
      under any Patent Rights, Know-how, or other proprietary rights owned,
      acquired or controlled by Licensor other than the rights expressly granted
      by Licensor to Licensee in this Agreement, including, without limitation,
      Sections 2.3 and 2.8. Licensee shall have no rights in any Other
      Technology or in any inventions disclosed in any patents, patent
      applications or invention disclosure forms listed in Exhibit 1.23(b),
      regardless of whether such Other Technology or such inventions disclosed
      in Exhibit 1.23(b) incorporate, or are infringed by the use of, Licensor
      Know-how. This Agreement does not create, and shall under no circumstances
      be construed or interpreted as creating, an obligation on the part of
      Licensor to grant any license to Licensee other than as expressly set
      forth herein. Any further contract or license agreement between the
      Parties shall be in writing.

2.1.5 Reserved Rights. All rights not expressly granted to Licensee in this
      Agreement are reserved to Licensor for itself, its partners and Affiliates
      (other than Licensee) and other licensees and sublicensees.
      Notwithstanding the licenses granted in Article 2, Licensor hereby retains
      and reserves a royalty-free right and license to use and permit others to
      use the Licensed Patents and Licensor Improvement Patents for research,
      but not for making, using, selling, or importing any commercial products
      or processes for First Generation Exclusive Licensed Products and the
      Vitrasert Licensed Product, and for development purposes, subject in all
      cases to Section 2.5.

2.2   Sublicensing. Licensee shall have the right to grant Sublicenses under
the license granted pursuant to Section 2.1.1, provided, however, that any such
Sublicense shall not be inconsistent with the terms and conditions of this
Agreement and that Licensee shall be responsible for the operations of any
Sublicensee relative to this Agreement as if such operations were carried out by
Licensee itself, including (without limitation) the payment of any royalties
provided for

                                      -8-
<PAGE>
   hereunder, regardless of whether the terms of any Sublicense provide for such
   amount to be paid by the Sublicensee directly to Licensor, but Sublicensees
   shall not be required to pay Milestones Payments pursuant to Article 4.

   2.3 Non-suit. While the licenses granted hereby only include rights to
   Licensed Patents and Licensor Improvement Patents as expressly stated in this
   Agreement, and do not include rights to Other Technology, Licensor shall not
   bring (and shall not authorize or assist a third party to bring) any action
   under Other Technology owned by Licensor or controlled and able to be
   licensed by Licensor to block Licensee or any Sublicensee from:

      (a) exercising its rights with respect to a Uveitis Base Royalty Product
that is an implant that is required to be surgically inserted through an
incision of at least 2 mm (and which cannot be inserted through an incision of
less than 2 mm) in the scelera into the vitreous, is secured by a suture
attaching a tab to the scelera in the posterior of the eye, uses the
reservoir/suture tab design currently used in clinical trial #001 for Uveitis,
uses fluocinolone acetonide as an active ingredient with no other active
ingredients, and generally conforms with the drawings and meets the
specifications shown in Exhibit 1.14 of this Agreement and any prior iterations
thereof, with only such modifications to the design that do not modify the
parameters set forth above and that are required to obtain Regulatory Approval
for the implant in the above clinical trials as a result of the current
stability issue or another safety issue that may arise during the course of such
clinical trials; and

      (b) exercising those rights (but only those rights) granted by Licensor to
Licensee pursuant to Section 2.1.1, provided that:

            (i) the Other Technology is filed on or before or claims priority to
      an application filed on or before December 31, 2004 (provided the non-suit
      only applies to the extent of claims directed to the subject matter in the
      application to which such Other Technology claims priority); and

            (ii) the Other Technology claims an invention for which Licensee,
      prior to any public disclosure of the Invention by the Licensor, has
      recorded an invention disclosure form including one or more claims to the
      same Invention, provided that such invention disclosure form has described
      such Invention with enough particularity to demonstrate that Licensee was
      in possession of the Invention at the time such invention disclosure form
      was recorded.

For the purposes of this Section 2.3, Other Technology shall not include those
patents, patent applications and invention disclosure forms set forth in Exhibit
2.3 (i.e., Licensor shall not be precluded from bringing an action based on
those patents, patent applications and invention disclosure forms set forth in
Exhibit 2.3). Also, for the purposes of this Section 2.3, the non-suit granted
herein shall not preclude Licensor from enforcing any of its rights in Other
Technology that are directed to the composition of active ingredients,
formulations, indications or novel polymers that are not limited in use or
application to First Generation Exclusive Licensed Products. For the purposes of
this Section 2.3, patents, patent applications, Patent Rights, Inventions and
Other Technology shall only mean patents, patent applications, Patent Rights,
Inventions and Other Technology of Control Delivery Systems, Inc., and shall not
include

                                      -9-
<PAGE>

patents, patent applications, Patent Rights, Inventions and other technology of
a third party acquiree or transferor, or a third party merger or consolidation
partner, of or with Control Delivery Systems, Inc., or a third party acquiror or
transferee of substantially all of the assets or stock of Control Delivery
Systems, Inc.'s opthalmics business. The provisions of this Section 2.3 shall in
no way limit Licensee's rights under Licensor Improvement Patents as set forth
in this Agreement.

   2.4 Non-assert of Know-how. Licensor shall not bring (and shall not authorize
   or assist a third party to bring) any action against Licensee or a
   Sublicensee alleging misappropriation of Licensor's Know-how. Licensee shall
   not bring (and shall not authorize or assist a third party to bring) any
   action against Licensor or a sublicensee of Licensor alleging
   misappropriation of Licensee's Know-how. For the purposes of this Section,
   Licensor's Know-how shall be limited to Know-how known by Licensor as of June
   18, 2003, and Licensee's Know-how shall be limited to Know-how known by
   Licensee as of June 18, 2003. The prohibitions of this Section shall not
   apply to any action which the aggrieved Party may bring if such action is
   limited to the intentional and willful theft or misappropriation of the
   Know-how based on misappropriation actions occurring by the other Party
   solely after the Amendment Date. For the purposes of this Section 2.4,
   Know-how shall only mean Know-how of Control Delivery Systems, Inc., and
   shall not include Know-how of a third party acquiree or transferor, or a
   third party merger or consolidation partner, of or with Control Delivery
   Systems, Inc., or a third party acquiror or transferee of substantially all
   of the assets or stock of Control Delivery Systems, Inc.'s opthalmics
   business.

   2.5 Non-Compete.

   (a) Non-Compete for Uveitis Product. Licensor shall not Develop, or license a
   third party to Develop, a Uveitis Product, but only for so long as (1)
   Licensee is Actively Commercializing a Uveitis Base Royalty Product; and (2)
   Licensee is not Developing or Commercializing a Uveitis Product that is not a
   Uveitis Base Royalty Product. Licensor further agrees not to Commercialize,
   or license a third party to Commercialize, a Uveitis Product but only for so
   long as (3) Licensee is Actively Commercializing a Uveitis Base Royalty
   Product; and (4) Licensee is not Commercializing a Uveitis Product that is
   not a Uveitis Base Royalty Product. Notwithstanding the foregoing, the
   prohibitions under this Section 2.5(a) shall not apply to the Development and
   Commercialization activities of a third party acquiree or transferor, or a
   third party merger or consolidation partner, of or with Licensor, or a third
   party acquiror or transferee of substantially all of the assets or stock of
   Licensor's opthalmics business, provided that such acquiror, acquiree,
   transferor, transferee, or a merger or consolidation partner does not use in
   such Development or Commercialization activities for a Uveitis Product any
   (i) Licensed Patent or (ii) Know-how owned or controlled by Licensor as of
   the date of such acquisition, transfer, merger or consolidation. For the
   purposes of this Section 2.5(a), patents, patent applications, Patent Rights,
   Inventions and Know-how shall only mean patents, patent applications, Patent
   Rights, Inventions and Know-how of Control Delivery Systems, Inc., and shall
   not include patents, patent applications, Patent Rights, Inventions and
   Know-how of a third party acquiree or transferor, or a third party merger or
   consolidation partner, of or with Control Delivery Systems, Inc., or a third
   party acquiror or transferee of substantially all of the assets or stock of
   Control Delivery Systems, Inc.'s opthalmics business. In addition, the
   Parties

                                      -10-
<PAGE>

      agree that whenever Licensee realizes revenue from Commercializing a
      Uveitis Product, Licensee will receive a royalty on such revenue.

   Licensee shall provide written notice to Licensor within ninety (90) days
   after: (x) Licensee's filing of an IND for a Uveitis Product that is not a
   Uveitis Base Royalty Product; (y) Licensee's ceasing to Actively
   Commercialize a Uveitis Base Royalty Product; and (z) Licensee's
   Commercialization of a Uveitis Product that is not a Uveitis Base Royalty
   Product. Such written notice shall set forth in reasonable detail the basis
   for Licensee's determination of whether a Uveitis Product is or is not a
   Uveitis Base Royalty Product.

   If Licensee no longer satisfies the requirements of Sections 2.5(a)(1), (2),
   (3) or (4) and Licensor has commenced animal pre-clinical trials, the
   restrictions of this Section 2.5 shall no longer be applicable to Licensor
   and shall thereafter terminate, regardless of whether Sections 2.5(a)(1),
   (2), (3) or (4) are subsequently satisfied by Licensee. Notwithstanding the
   foregoing, Licensor shall not be prohibited under this Section from
   Developing or Commercializing a product designed and approved for an
   indication other than Uveitis, regardless of whether such product is or could
   be subject to off-label or other unapproved sales or uses for the prevention,
   treatment or diagnosis of Uveitis.

   (b) Non-Compete for First Generation Exclusive Licensed Product. Licensor
   agrees that during the Term of this Agreement, Licensor shall not Develop or
   Commercialize a First Generation Exclusive Licensed Product so long as
   Licensee has exclusive rights to such First Generation Exclusive Licensed
   Product under this Agreement. Notwithstanding the foregoing, the prohibitions
   under this Section 2.5(b) shall not apply to the Development or
   Commercialization activities of a third party acquiree or transferor, or a
   third party merger or consolidation partner, of or with Licensor, or a third
   party acquiror or transferee of substantially all of the assets or stock of
   Licensor's opthalmics business, provided that such acquiror, acquiree,
   transferor, transferee, or a merger or consolidation partner does not use in
   such Development or Commercialization activities for a First Generation
   Exclusive Licensed Product any (i) Licensed Patent or (ii) Know-how owned or
   controlled by Licensor as of the date of such acquisition, transfer, merger
   or consolidation. In consideration of the non-compete as set forth in this
   Section 2.5(b), as well as all other rights granted and information provided
   by Licensor to Licensee under this Agreement with respect to First Generation
   Exclusive Licensed Products, including without limitation the rights granted
   pursuant to Sections 2.1.1, 2.2, 2.3, 2.4, 2.5 and 2.6 herein, the Parties
   agree that the royalty rate set forth in Section 3.1.1 reflects the value of
   all such rights granted and information provided and shall be paid whether or
   not such First Generation Exclusive Licensed Product is covered by a Valid
   Claim in the Licensed Patents or Licensor Improvement Patents, and whether or
   not such royalty payments under Section 3.1.1 extend beyond the term of any
   Licensed Patent or Licensor Improvement Patent containing Valid Claims
   covering such First Generation Exclusive Licensed Product. For the purposes
   of this Section 2.5(b), patents, patent applications, Patent Rights,
   Inventions and Know-how shall only mean patents, patent applications, Patent
   Rights, Inventions and Know-how of Control Delivery Systems, Inc., and shall
   not include patents, patent applications, Patent Rights, Inventions and
   Know-how of a third party acquiree or transferor, or a third party merger or
   consolidation partner, of or with Control Delivery Systems, Inc., or a third
   party acquiror or transferee of substantially all of the assets or stock of
   Control Delivery Systems, Inc.'s opthalmics business.

                                      -11-
<PAGE>

   2.6 Licensor Disclosure of Inventions. Licensor represents that the patents,
   patent applications and invention disclosure forms listed on Exhibits 1.23(a)
   and (b) disclose all Inventions conceived or made by or on behalf of Licensor
   prior to June 18, 2003. Licensor agrees that any Invention conceived or made
   by or on behalf of Licensor prior to June 18, 2003, which is not listed on
   Exhibits 1.23(a) or (b) shall be deemed a Licensed Patent and added to
   Exhibit 1.23(a). For the purposes of this Section 2.6, patents, patent
   applications, Patent Rights and Inventions shall only mean patents, patent
   applications, Patent Rights and Inventions of Control Delivery Systems, Inc.,
   and shall not include patents, patent applications, Patent Rights and
   Inventions of a third party acquiree or transferor, or a third party merger
   or consolidation partner, of or with Control Delivery Systems, Inc., or a
   third party acquiror or transferee of substantially all of the assets or
   stock of Control Delivery Systems, Inc.'s opthalmics business.

   2.7 Licensee Disclosure of Inventions. Licensee represents that all
   Inventions conceived or made by or on behalf of Licensee after June 9, 1999,
   and before June 18, 2003, that: (a) directly relate to (i) treatment by (A)
   intraocular local delivery of an active ingredient into the eye, (B) local
   delivery of an active ingredient into the eye by injection into the scelera
   (provided that the foregoing in subparts (A) and (B) shall not include
   technology developed for the cataract, refractive surgical and contact lens
   businesses of Licensee), (ii) non-topical sustained ophthalmic release of an
   active ingredient (provided that the foregoing in this subsection (ii) shall
   not include technology developed for the cataract, refractive surgical and
   contact lens businesses of Licensee), (iii) co-drug modifications for
   altering the bioavailability or rate of release of a drug, where "co-drug" is
   defined as two or more pharmaceutically active ingredients that are linked by
   a covalent or ionic bond with each other, which bond dissolves in vivo, and
   where "co-drug" specifically excludes any natural extracts; or (iv) pro-drug
   modifications for altering the bioavailability or rate of release of a drug
   for non-topical applications; or (b) would interfere with the subject matter
   of, or dominate the practice of any invention disclosed in, Licensed Patents
   or invention disclosure forms disclosed in Exhibits 1.23(a) or (b) (all such
   inventions in subparts (a) and (b) of this Section 2.7 are referred to
   collectively as "Licensee Relevant Inventions") are disclosed in the
   invention disclosure forms and unpublished patent applications that have been
   disclosed to Licensor's counsel by Licensee. In addition to any other
   remedies available to Licensor, Licensee shall grant and hereby grants
   Licensor a world-wide perpetual, non-exclusive royalty-free license, with the
   right to sublicense, to use any Licensee Relevant Invention made by Licensee
   after June 9, 1999, and before June 18, 2003, that was not disclosed to
   Licensor's counsel by Licensee; provided, however, that such right and
   license shall be subject to Licensee's other rights hereunder, e.g., the
   exclusive rights granted under Section 2.1.1 and Section 2.5.

                                      -12-
<PAGE>

   2.8 Co-Owned Patents. With respect to the patents and patent applications
   listed in Exhibit 2.8 and any inventions disclosed in the invention
   disclosure forms listed in Exhibit 2.8, including all Patent Rights in the
   foregoing (the "Co-Owned Patents"), Licensee shall assign and hereby assigns
   to Licensor a one-half interest in the Co-Owned Patents, and to the extent of
   Licensor's interest in the Co-Owned Patents, such Co-Owned Patents shall be
   deemed to be Licensed Patents, provided that Licensor's interest in the
   Co-Owned Patents shall be exclusively licensed to Licensee solely to make,
   have made, use, sell, offer to sell, and import Licensed Products in the
   field of ophthalmology, and further provided that such license shall (a)
   become non-exclusive in the event Licensee's rights to First Generation
   Exclusive Licensed Product become non-exclusive; and (b) terminate in the
   event this Agreement terminates. Licensee shall fully cooperate with
   Licensor, at Licensor's expense, with any activities necessary to perfect the
   rights assigned to Licensor, including the execution of assignments of any
   patents or patent applications or the filing of any patent applications.

   2.9 Licensee Non-suit. Licensee shall not bring (and shall not authorize or
   assist a third party to bring) any action under any patents or patent
   applications listed in Exhibit 2.9 or any Inventions disclosed in the
   invention disclosure forms listed in Exhibit 2.9, including all Patent Rights
   or other intellectual property rights in the foregoing, against Licensor or
   any sublicensee of Licensor.

   2.10 Licensee Covenant Not to File. Licensee shall not file (and shall not
   authorize or assist an Affiliate or other third party to file) an application
   for Patent Rights, either in the United States or in any other foreign
   jurisdiction, containing claims covering any inventions disclosed in the
   invention disclosure forms listed in Exhibit 2.10.

   2.11 Frustration Regarding Vitrasert Product. Subject to the last sentence of
   Section 14.1 of this Agreement, if any third party brings any cause of
   action, claim, or other challenge which has the result of frustrating in a
   material way the licensing of the intellectual property applicable to
   Licensee's rights with respect to the Vitrasert Licensed Product (a
   "Frustration Claim"), Licensor shall cooperate with Licensee in any
   reasonable arrangement designed to give Licensee as nearly as possible the
   same economic benefits with respect to a Vitrasert Licensed Product and to
   have Licensee assume the same obligations and expenses as if such Frustration
   Claim with respect to a Vitrasert Licensed Product had not occurred.

ARTICLE 3. ROYALTIES AND REPAYMENT OBLIGATIONS

  3.1 Running Royalties. Licensee shall pay running royalties to Licensor as
      follows:

3.1.1 Net Sales of First Generation Exclusive Licensed Products. Subject to
      Sections 3.2 and 3.3, on all Net Sales of First Generation Exclusive
      Licensed Products, Licensee shall pay to Licensor a running royalty rate
      equal to the Base Royalty.

3.1.2 Net Sales of Third Party Licensed Products. Subject to Section 3.3, on all
      Net Sales of any Third Party Licensed Product Licensee shall pay to
      Licensor a running royalty equal to the Base Royalty reduced by [*] of the
      amount of any running royalty payable or "deemed paid or payable" by
      Licensee with respect to such Net Sales to any third party licensor of
      proprietary technology or other proprietary property included in such
      Third

[*]-INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES AND EXCHANGE
ACT OF 1934, AS AMENDED.

                                      -13-
<PAGE>

      Party Licensed Product, provided, however, that the total running royalty
      due to Licensor with respect to such Net Sales shall in no event be less
      than [*] of the Base Royalty. Where Licensee acquires rights to a Third
      Party Licensed Product but doesn't pay a royalty based on net sales, units
      sold, etc., royalties "deemed paid or payable" shall be the imputed
      royalty paid by Licensee in connection with the payment of the purchase
      price or other consideration to acquire those rights needed to use the
      applicable proprietary product, compound, method, or process in such Third
      Party Licensed Product. Where Licensee acquires rights to such proprietary
      product, compound, method or process which permit Licensee to use such
      product, compound, method or process for purposes other than use in
      connection with such Third Party Licensed Product or where Licensee
      acquires the applicable proprietary product, compound, method or process
      in connection with the acquisition of any other rights or assets, a
      reasonably allocable share of such purchase price or other consideration
      shall be allocated to the right to use such product, compound, method or
      process in connection with such Third Party Licensed Product. The
      allocated portion of the purchase price or other consideration shall then
      be converted into an imputed royalty, taking into account all relevant
      factors, including, without limitation, the length of time over which
      Licensee may exercise the rights involved, the likely sales of such Third
      Party Licensed Product over such period of time, and/or other factors
      considered relevant at the time. In no event shall the deemed royalty so
      derived exceed the royalty that would have been paid for the rights
      involved in an arms-length transaction with such third party had Licensee
      licensed such rights for use in connection with such Third Party Licensed
      Product on a purely royalty-bearing basis. If Licensor and Licensee cannot
      agree on the amount of any deemed royalty, the issue shall be resolved by
      the dispute resolution provisions of this Agreement.

3.1.3 Net Sales of Vitrasert Licensed Products. Subject to Section 3.3, on all
      Net Sales of Vitrasert Licensed Product, Licensee shall pay to Licensor a
      running royalty equal to [*] of Net Sales. In addition to
      payment of the royalty under this Section 3.1.3, Licensee shall also pay
      to Licensor all amounts due to UKRF under the UKRF Licenses for Net Sales
      of Vitrasert Licensed Product.

3.1.4 Net Sales of Non-Exclusive Licensed Products. For Non-Exclusive Licensed
      Products, other than Third Party Licensed Products, Licensee shall pay to
      Licensor a running royalty rate equal to: (a) the Base Royalty on all Net
      Sales of Non-Exclusive Licensed Product employing a delivery system, which
      delivery system would, absent the license granted by Licensor to Licensee
      herein, infringe any Valid Claim included in a Licensed Patent or Licensor
      Improvement Patent; (b) [*] of Net Sales of Non-Exclusive Licensed Product
      that employs an anchoring method, which anchoring method would, absent the
      license granted by Licensor to Licensee herein, infringe only a Valid
      Claim of a Licensed Patent or Licensor Improvement Patent related to the
      anchoring method, and that is not subject to payment of a running royalty
      pursuant to Section 3.1.4(a); and (c) a royalty rate to be determined by
      arbitration through the American Arbitration Association ("AAA") for any
      Non-Exclusive Licensed Product that is not subject to payment of a running
      royalty pursuant to Sections 3.1.4(a) or 3.1.4(b) and which would, absent
      the license granted by Licensor to Licensee herein, infringe any Valid
      Claim included in a Licensed Patent or Licensor Improvement Patent,
      provided that such rate shall be not less than [*] of Net Sales and not
      greater than

      [*] - INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
      TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED
      WITH THE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE
      SECURITIES AND EXCHANGE ACT OF 1934, AS AMENDED.

                                      -14-
<PAGE>

      [*] of Net Sales. For the purposes of the AAA arbitration, all Valid
      Claims included in any Licensed Patent or Licensor Improvement Patent
      shall be deemed valid and enforceable.

  3.2 Royalty Step-Down for Generic Competition.

      (a) Notwithstanding anything in this Agreement to the contrary, in each
country where (i) the making, using, selling, offering to sell or importing of a
particular Uveitis Base Royalty Product or a particular First Generation
Exclusive Licensed Product does not infringe a Valid Claim of a Licensed Patent
or a Licensor Improvement Patent; and (ii) such Uveitis Base Royalty Product or
First Generation Exclusive Licensed Product is no longer covered under
Hatch-Waxman, Orphan Drug, Pediatric, or other non-patent exclusivity, including
applicable similar standards outside the United States; and (iii) with respect
to First Generation Exclusive Licensed Product, such product is subject to a
running royalty equal to the Base Royalty, and is not subject to a royalty
reduction or offset, including without limitation an offset under Section 3.1.2
of this Agreement, then with respect to each such Uveitis Base Royalty Product
or First Generation Exclusive Licensed Product (each an "Eligible Licensed
Product") in such country, Licensee shall be entitled to a royalty adjustment
for each such Eligible Licensed Product as follows:

         If sales of Generic Product (as defined in subsection (b) below) in a
         particular fiscal quarter are greater than [*] of Total Relevant Sales
         (as defined in subsection (b) below) for a particular Eligible Licensed
         Product, then the running royalty on Net Sales of such Eligible
         Licensed Product in such fiscal quarter shall be [*].

      (b) For the purposes of this Section 3.2, "Generic Product" shall mean a
product or products sold by a third party without a license from Licensor that
has been approved under an ANDA pursuant to 21 U.S.C. Section 355(j) (or a
substantially similar application or filing in jurisdictions outside the United
States) that references safety and efficacy data of an Eligible Licensed
Product. For the purposes of this Section 3.2, "Total Relevant Sales" shall
mean, in a fiscal quarter, the total combined sales by all Persons, including
Licensee or Sublicensees, of (i) all Generic Product (with respect to a
particular Eligible Licensed Product); and (ii) the relevant Eligible Licensed
Product.

      (c) In the event of any adjustments to the running royalty pursuant to
this Section 3.2, Licensee shall provide to Licensor written notice of such
adjustment, along with reasonably detailed documentation (including market
reports and other data) supporting Licensee's determination of the Total
Relevant Sales. Such written notice and documentation shall be supplied to
Licensor with any Royalty Reports due to Licensor pursuant to Section 7.1, and
shall be subject to the record keeping and audit rights as set forth in Section
7.2. In addition, in the event Licensee has made an adjustment to the running
royalty of a Uveitis Base Royalty Product pursuant to this Section 3.2 such that
the running royalty for such Uveitis Base Royalty Product in a country is less
than the Base Royalty for two consecutive fiscal quarters, then Licensor shall
have the right, at its sole discretion, to Develop and Commercialize a Uveitis
Product in such country, notwithstanding the provisions of Section 2.5(a).
Licensor shall retain such right to Develop and Commercialize a Uveitis Product
in such country, even if the running royalty for

      [*] - INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
      TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED
      WITH THE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE
      SECURITIES AND EXCHANGE ACT OF 1934, AS AMENDED.

                                      -15-
<PAGE>

such Uveitis Base Royalty Product in such country is equal to the Base Royalty
in subsequent fiscal quarters.

   3.3 Royalties Payable Only Once. Licensee's obligation to pay royalties under
   this Article 3 shall be imposed only once at the highest applicable royalty
   rate, with respect to any Net Sale of any Licensed Product. Only a single
   royalty shall be due and payable by Licensee under this Agreement with
   respect to a Licensed Product regardless of whether the Licensed Product is
   covered by more than one claim of a Licensed Patent or Licensor Improvement
   Patent and in no event will such royalty exceed [*].

   3.4 Timing of Royalty Payments. Within thirty (30) days after the end of each
   fiscal quarter of Licensee, Licensee shall pay to Licensor the royalty
   payment due for each such quarter in U.S. dollars, provided, however, that
   solely with respect to any royalty payment due with respect to Net Sales made
   pursuant to Sections 1.32(a) or (b) herein, such thirty (30) day period may
   be extended to such longer period as Licensee may reasonably require, not to
   exceed ninety (90) days, to determine the amount of such Net Sales for such
   fiscal quarter. If a Sublicensee adjusts any of its Net Sales for any
   applicable quarter on account of misreported or late-reported Net Sales,
   Licensee shall promptly pay (or cause the Sublicensee to pay) any royalties
   due within 30 days after such adjustment. If Net Sales are in a currency
   other than U.S. Dollars, the sales shall be converted from the currency of
   the country in which the sales were made into U.S. Dollars at the month-end
   exchange rate for such currency for such sales made during such month as
   determined by Licensee in accordance with its standard accounting policies
   and procedures consistently applied during each of Licensee's fiscal
   quarters. If any royalty or other amount due Licensor is in a non-U.S. Dollar
   currency, and Licensee or any Sublicensee is prohibited from exporting that
   currency from that jurisdiction, Licensee or such Sublicensee shall pay an
   amount equal to the royalty or other amount due in such blocked currency into
   a bank account of Licensor's choice in such jurisdiction, and such deposit
   shall be deemed to be full satisfaction of Licensee and Sublicensee's
   obligation to make the applicable payment to Licensor.

   3.5 Withholding Taxes. Licensee and Licensor shall use all commercially
   reasonable and legal efforts to reduce tax withholding on any payments to be
   made to Licensor hereunder. If Licensee concludes that, notwithstanding such
   efforts, tax withholding under the laws of any country is required with
   respect to any royalty payment to be made to Licensor under this Agreement,
   Licensee shall pay or cause its Sublicensee to pay any applicable withholding
   taxes imposed by any such political jurisdiction on such royalty payments,
   and the amount of any such payments shall be credited against Licensee's
   royalty obligation under this Agreement. Licensee shall promptly provide
   Licensor with, or promptly cause Licensor to be provided with, original
   receipts or other evidence sufficient to allow Licensor to obtain the
   benefits of any such tax withholding.

   3.6 Intentionally Omitted.

   3.7 Repayment of Advanced Amount. The Parties acknowledge that Licensee has
   made advances to Licensor (collectively, "Advanced Amount") totaling Ten
   Million Forty-Four Thousand Seven Hundred Nineteen Dollars ($10,044,719),
   which are still outstanding under the 1999 Agreement immediately preceding
   the Amendment Date. The Parties stipulate that

   [*] - INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
   TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH
   THE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES AND
   EXCHANGE ACT OF 1934, AS AMENDED.

                                      -16-
<PAGE>

   the Advanced Amount constitutes all known financial liabilities of the
   Parties under all prior agreements between the Parties, including without
   limitation the 1999 Agreement, and no other amounts are due to Licensee by
   Licensor except as set forth in this Agreement. The Parties also acknowledge
   that the Advanced Amount is liquidated and that Licensee's right to payment
   of the Advanced Amount will not be subject to invocation of the dispute
   resolution procedure under Article 22. The Advanced Amount will be repaid and
   reduced as described in this Section 3.7. Any remaining amounts due after
   such repayment and reduction shall be the "Unpaid Advanced Amount." In
   addition, the Parties acknowledge that Licensor has provided services to
   Licensee between June 18, 2003, and the Amendment Date, for which Licensee
   will reimburse Licensor $250,000. The reimbursement of the $250,000 will be
   accomplished by reducing the Advanced Amount by $250,000 such that the Unpaid
   Advanced Amount hereby is reduced to $9,794,719. Licensor will repay, and, in
   addition to any other rights provided at law or equity, Licensee may recoup,
   such Unpaid Advanced Amount as follows:

3.7.1 Cash Payment. Licensor will pay Three Million Dollars ($3,000,000) to
      Licensee in cash promptly upon the execution of this Agreement. Licensor
      will wire transfer such amount to Licensee pursuant to Licensee's
      instructions, and this Agreement will not be effective until Licensee has
      actually received such payment. This payment shall reduce the Unpaid
      Advanced Amount.

3.7.2 Milestone/Royalty Recoupment. After the reduction described in the first
      paragraph of Section 3.7 and the payment described in Section 3.7.1, the
      Unpaid Advanced Amount will be reduced to $6,794,719. Licensee may further
      recoup the Unpaid Advanced Amount from (i) any Milestone Payments (as
      defined in Section 4.1), and (ii) royalty payments otherwise due Licensor
      hereunder in each case until the entire remaining Unpaid Advanced Amount
      has been fully repaid.

3.7.3 Equity Option. Licensor may make an optional payment of $1,000,000 (One
      Million Dollars) to Licensee by December 27, 2003, which payment, if made,
      shall reduce the Unpaid Advanced Amount. Effective upon such payment,
      Licensee shall grant to Licensor an option to acquire all of Licensee's
      holdings of Licensor's common stock (600,000 shares, collectively the
      "Stock") at an exercise price of $5.00 per share. This option must be in
      the form of Exhibit 3.7.3, and Licensee shall deliver the option
      certificate evidencing the option within 5 days of the payment that
      reduces the Unpaid Advanced Amount. Payments to Licensee as a result of
      exercising the option will not reduce the remaining Unpaid Advanced
      Amount, if any. The foregoing per share option price is not intended by
      the Parties to in any way represent the fair market value of such shares,
      and shall in no way be used by either Party to support a valuation of
      Licensor.

3.7.4 July 1, 2007. Irrespective of any other circumstances whatsoever, the
      Unpaid Advanced Amount, if any, shall be absolutely due and payable by
      Licensor to Licensee on July 1, 2007, and Licensor shall make immediate
      payment of such amount to Licensee without Licensee having to make any
      further demand or provide any further notice. Licensor will be liable for
      and shall pay a late charge equal to one and one-half (1.5) times the
      prime rate in effect as announced by Chase Manhattan Bank, N.A. from time
      to time on any outstanding balance of the Unpaid Advanced Amount remaining
      after July 1, 2007, until the entire Advanced Amount has been repaid in
      full to Licensee. The Parties agree that

                                      -17-
<PAGE>

      as of the Amendment Date, Licensor shall execute a promissory note, the
      form of which is attached as Exhibit 3.7.4 (the "Note"), in the amount of
      the Unpaid Advanced Amount as of the Amendment Date (and as may be reduced
      pursuant to the terms of this Agreement and the terms of the attached
      Note).

   3.8 Royalty Calculation. In addition to any other rights provided at law or
   equity, if the Advanced Amount has not been fully repaid by Licensor to
   Licensee as required hereunder, the amount of any royalties that might
   otherwise be due and owing from Licensee to Licensor under this Agreement
   shall in all instances be the amount determined in accordance with the other
   Sections of this Article 3, less the amount of Unpaid Advanced Amount at the
   time of such determination.

ARTICLE 4. LICENSE AND MAINTENANCE FEES.

   4.1 License and Maintenance Fees. Licensee shall pay one-time license and
   maintenance fees ("Milestone Payments") for the achievement of certain goals
   set forth in Exhibit 4.1 to Licensor within ten (10) business days after each
   of the events specified in Exhibit 4.1.

ARTICLE 5. DEVELOPMENT OF LICENSED PRODUCTS

   5.1 Joint Diligence Obligation. Licensor and Licensee shall both use
   reasonable commercial efforts to comply with all diligence obligations under
   the UKRF Licenses to the extent required by the UKRF Licenses.

   5.2 Licensee's General Diligence Obligations. Licensee shall use commercially
   reasonable efforts to Develop and Commercialize First Generation Exclusive
   Licensed Products.

   5.3 (a) Licensee's Specific Diligence Obligations - Uveitis. Licensee agrees
   to the following specific obligations:

      (i)   Licensee shall file an NDA with respect to a First Generation
            Exclusive Licensed Product for Uveitis by the later of (a) [*] or
            (b) [*] then within a commercially reasonable time after [*] has
            been identified and found to be acceptable to the FDA, provided
            that Licensee has diligently pursued [*].

      (ii)  Licensee shall make the first commercial sale of a First Generation
            Exclusive Licensed Product for Uveitis in the United States within
            six (6) months after approval of an NDA for such First Generation
            Exclusive Licensed Product.

      (b) Licensee's Specific Diligence Obligations - Other First Generation
      Exclusive Licensed Product. In the event Licensee has failed to meet its
      diligence obligations with respect to First Generation Exclusive Licensed
      Product for Uveitis pursuant to Section 5.3(a) above, then Licensee agrees
      to the specific obligations with respect to at least one First Generation
      Exclusive Licensed Product for an indication other than Uveitis as set
      forth in Exhibit 5.3.

[*]-INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES AND EXCHANGE
ACT OF 1934, AS AMENDED.

                                      -18-
<PAGE>

   5.4 Licensee's Specific Diligence Obligations - Non-Exclusive Licensed
   Products. In addition to the general obligations set forth in Section 5.2,
   Licensee further agrees to the specific obligations with respect to
   Non-Exclusive Licensed Products set forth in Exhibit 5.4.

   5.5 Failure to Comply with Diligence Obligations.

      (a) If Licensee fails to meet its obligations under Article 5 with respect
to a First Generation Exclusive Licensed Product for Uveitis, and does not cure
such breach within 90 days after written notice from Licensor, Licensee shall
lose its exclusive rights with respect to First Generation Exclusive Licensed
Products for Uveitis. In addition, if Licensee fails to meet the specific
obligations as set forth in Section 5.3(b) for a First Generation Exclusive
Licensed Product for an indication other than Uveitis, and does not cure such
breach within 90 days after written notice from Licensor, Licensee shall lose
its exclusive rights with respect to First Generation Exclusive Licensed
Products.

      (b) If Licensee fails to meet its obligations under Article 5 with respect
to any Non-Exclusive Licensed Product and does not cure such breach within 90
days after written notice from Licensor, Licensee shall lose its rights with
respect to the applicable Non-Exclusive Licensed Product. For example, if the
diligence obligations as set forth in Exhibit 5.4 have not been met with respect
to a Non-Exclusive Licensed Product that (a) has [*] as an active ingredient;
(b) is [*]; (c) is [*]; (d) has a [*] delivery system; (e) is located [*]; and
(f) is for [*] indications, then Licensee would lose its rights with respect to
such Non-Exclusive Licensed Product ("Product A"). As a further example, if the
diligence obligations for the above Product A have been met, but any diligence
obligation has not been met with respect to a Non-Exclusive Licensed Product
that (a) has [*] as an active ingredient; (b) is [*]; (c) is [*]; (d) has a [*];
(e) is located [*]; and (f) is for [*] indications rather than [*] indications
("Product B"), then Licensee would not lose rights to Product A, but would lose
rights to Product B.

      (c) The parties agree that Licensee's failure to meet its diligence
obligations under Article 5 shall not constitute a basis for termination of this
Agreement under Section 11.3.2.

ARTICLE 6. MARKETING OBLIGATIONS. During the term of this Agreement, Licensee
and its Affiliates shall use commercially reasonable efforts, consistent with
the efforts expended by Licensee with respect to its own proprietary ophthalmic
products to:

      (i)   Market, sell, distribute, and support the First Generation Exclusive
            Licensed Product - Uveitis, including, without limitation,
            establishing, directly or through Sublicensees, an adequate sales
            force in each Target Market;

      (ii)  Obtain third party reimbursement for such Licensed Product, where
            applicable;

      (iii) Maintain and provide Licensor with such sales and other information
            customarily maintained by Licensee for purposes of monitoring sales
            progress on a country by country basis;

[*]-INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES AND EXCHANGE
ACT OF 1934, AS AMENDED.

                                      -19-
<PAGE>

      (iv)  Keep Licensor promptly and fully informed of developments in the
            markets where such Licensed Product is being sold; and

      (v)   Comply with export laws and restrictions and regulations of the
            Department of Commerce or other United States or foreign agency or
            authority.

      Nothing contained in this Article 6 shall limit any other obligations
Licensee may have under this Agreement.

ARTICLE 7. REPORTING AND ACCOUNTING PROVISIONS:

   7.1 Royalty Report. Licensee shall make written royalty reports ("Royalty
   Reports") to Licensor within thirty (30) days after the end of each fiscal
   quarter of Licensee during the term of this Agreement, stating in each such
   report the number, description, and aggregate Net Sales of each Licensed
   Product sold during the preceding three (3) fiscal months of Licensee and
   upon which a royalty is payable as provided in Article 3 (on a Licensed
   Product-by-Licensed Product basis; provided, however, that solely with
   respect to any report with respect to Net Sales made pursuant to Sections
   1.28(a) and (b) herein, such thirty (30) day period may be extended to such
   longer period as Licensee may reasonably require, not to exceed ninety (90)
   days, to determine the amount of such Net Sales for such fiscal quarter. The
   first such report shall include all such Licensed Products so sold prior to
   the date of such report. The first such report shall include all such
   Licensed Products so sold prior to the date of such report, provided that
   with respect to Vitrasert Licensed Product, the first such report after the
   Amendment Date shall reflect only the preceding fiscal months since the last
   such report for Vitrasert Licensed Product.

   7.2 Record Keeping by Licensee. Licensee shall keep records showing the sales
   of Licensed Products and Third Party Licensed Products in sufficient detail
   to enable the royalties payable hereunder to be determined. Licensee shall
   permit its books and records to be examined at Licensor's expense by an
   independent auditor chosen by Licensor and reasonably acceptable to Licensee
   during regular business hours and upon reasonable advance notice, but not
   later than two years following the rendering of any written report and no
   more often than once per calendar year. Such audit shall be permitted only to
   the extent necessary to verify the reports provided for in this Article 7.
   The auditor shall report to Licensor only the amount of royalty payable for
   the period under audit and shall keep confidential any information learned or
   obtained during the examination. If the audit shows an underpayment of more
   than the greater of (i) $50,000, or (ii) five percent (5%) of the amount
   otherwise due, Licensee shall reimburse Licensor for the reasonable costs of
   the audit. Licensee shall promptly remit any underpayment to Licensor. If the
   audit shows an overpayment, Licensor shall promptly pay such overpayment
   amount to Licensee upon request, or, at Licensee's election, Licensee may
   offset such amount against the next payment of royalties or other amounts due
   Licensor hereunder.

   7.3 Termination Report. Licensee also shall make a written report to Licensor
   within thirty (30) days after the date of any termination of this Agreement
   providing to Licensor the same information described in Section 7.1 with
   respect to any Net Sales which were not previously reported to Licensor.

                                      -20-
<PAGE>

ARTICLE 8. OWNERSHIP:

   8.1 Ownership. Except as expressly provided otherwise in this Agreement,
   ownership of Inventions will be determined in accordance with United States
   patent law and related principles.

   8.2 Inventorship. Inventorship of all Inventions (including, without
   limitation, Improvements) made during the term of this Agreement will be
   determined in accordance with United States patent law and related
   principles.

8.3 Licensee Improvements.

      (a) Licensee Improvements. If Licensee files any patent application
("Licensee Improvement Application") for any Improvement created, invented or
discovered before [*] ("Licensee Improvement"), Licensee agrees to grant, and
hereby grants, to Licensor a non-exclusive, worldwide right and license, with
the right to sublicense, under Licensee's interest in such Licensee Improvement
Applications, and in any issued patents claiming priority thereto ("Licensee
Improvement Patent") or any patent applications claiming priority thereto, to
make, have made, use, sell, offer to sell, and import. For the sake of clarity,
a Licensee Improvement shall be any Improvement of a product, if the product
with respect to which the Improvement was made was a Licensed Product at the
time such Improvement was made. Licensee shall promptly notify Licensor of the
filing of such Licensee Improvement Application. Notwithstanding the foregoing,
in the event of (i) any transfer by Licensee of substantially all of the assets
or stock of Licensee's proprietary (branded and/or generic) ophthalmic
pharmaceutical business; or (ii) any transfer by Licensor of substantially all
of the assets or stock of Licensor's ophthalmics business, "Licensee
Improvement" shall only include Improvements created, invented or discovered
before the earlier of (x) the effective date of such transfer or (y) [*].

      (b) Royalties. Upon issuance of a Licensee Improvement Patent, and for so
long as the making, using, selling, offering to sell, or importing of the
Licensee Improvement covered by such Licensee Improvement Patent does not
infringe a Valid Claim of a Licensed Patent, Licensor Improvement Patent or
other Patent Rights of Licensor, Licensor will owe a royalty to Licensee equal
to the lesser of: (i) [*] of net sales of products the making, using, selling,
offering for sale or importing of which would infringe an Issued Patent Claim of
a Licensee Improvement Patent ("Licensor Improvement Product"), or (ii) [*] of
all running royalties received by Licensor based on net sales of Licensor
Improvement Product by licensees or sublicensees of Licensor. For the avoidance
of doubt, if the making, using, selling, offering to sell, or importing of such
Licensee Improvement infringes a Valid Claim of a Licensed Patent, Licensor
Improvement Patent or other Patent Rights of Licensor, then Licensor will not
owe a royalty to Licensee.

      (c) Net Sales. For the purposes of this Section 8.3, net sales means, in
any case where a Licensor Improvement Product is sold or commercially disposed
of for value by Licensor or any sublicensee of Licensor in an arm's length
transaction with a third party (other than an Affiliate of Licensor or
sublicensee of Licensor), the gross invoice price for such Licensor Improvement
Product, less the following: (i) discounts, chargebacks, Medicare or other

[*] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES AND EXCHANGE
ACT OF 1934, AS AMENDED.

                                      -21-
<PAGE>

government rebates, and rebates to purchasers actually taken or allowed; (ii)
credits or allowances given or made for rejections or return of any previously
sold products actually taken or allowed; (iii) to the extent included in such
gross invoice price any tax or government charge imposed on the production,
import, export, sale, delivery or use of such products, including, without
limitation, any value added or similar tax or government charge, but not
including any tax levied with respect to income; and (iv) to the extent included
in such gross invoice price any reasonable and documented packaging and
distribution charges. Net sales shall also include and be deemed to have been
made with respect to (A) any Licensor Improvement Product not sold or otherwise
transferred to any third party but rather used by Licensor to provide a
commercial service and (B) any other transfer of a Licensor Improvement Product
for less than arm's length value other than intercompany transfers where the
transferee is not the end user. The amount of any net sale as defined in the
preceding sentence shall be imputed using the price or prices at which the
Licensor Improvement Product at issue is then being sold in transactions covered
by the first sentence of this Section or, if no such transactions have occurred,
on a reasonable basis to be determined at the time by the Parties.
Notwithstanding any other provision of this Section, net sales shall not include
the transfer without consideration of any Licensor Improvement Product by
Licensor (x) for use in any clinical trial or in any preclinical or other
research, (y) as detailing samples or other use to promote additional net sales
in amounts consistent with the normal business practices of Licensor, or (z) for
compassionate use.

      (d) Offsets. If (a) any Licensor Improvement Product is covered by an
issued patent or other intellectual property right held by one or more third
parties and it becomes necessary for Licensor to obtain a license from such
third party or parties under such patent, and/or other intellectual property
right and accordingly to pay royalties to such third party(ies) with respect to
any net sale or transfer of any Licensor Improvement Product or (b) the
therapeutic effect of any Licensor Improvement Product is derived in part from
any proprietary product, compound, method or process in-licensed or acquired by
Licensor from an unaffiliated third party on an arm's length basis (a "Third
Party Licensor Improvement Product"), then Licensor may reduce any royalty
otherwise due Licensee by [*] of the amount of royalty due to such third party,
but in no event to less than [*] of the royalty or other payment which may then
be due to Licensee. In addition, if Licensor is required to pay any an upfront
or similar fee to any third party(ies), Licensee shall share in the payment of
any such consideration which involves more than a running royalty as follows.
If, for example, Licensor is required to pay an upfront fee of $1 Million to a
third party, the total consideration then due under Section 8.3 to Licensee
shall be reduced by [*] until [*] of the upfront fee [*] has been recouped by
Licensor.

      (e) Royalties Payable Only Once. Licensor's obligation to pay royalties
under this Section 8.3 shall be imposed only once with respect to any net sale
of any Licensor Improvement Product. Only a single royalty shall be due and
payable by Licensor under this section 8.3 with respect to a Licensor
Improvement Product regardless of whether the Licensor Improvement Product is
covered by more than one claim of a Licensee Improvement Patent.

      (f) Timing of Royalty Payments. Within thirty (30) days after the end of
each fiscal quarter of Licensor, Licensor shall pay to Licensee the royalty
payment due for each such quarter in U.S. dollars, provided, however, that
solely with respect to any royalty payment due with respect to net sales made
pursuant to Sections 8.3(c)(A) or (B) herein, such thirty (30) day period

[*] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES AND EXCHANGE
ACT OF 1934, AS AMENDED.

                                      -22-
<PAGE>

may be extended to such longer period as Licensor may reasonably require, not to
exceed ninety (90) days, to determine the amount of such net sales for such
fiscal quarter. If consideration received by Licensor, or a sublicensee of
Licensor, pursuant to Section 8.3(c) is in a currency other than U.S. Dollars,
the consideration shall be converted from the currency of the country in which
the sales were made into U.S. Dollars at the month-end exchange rate for such
currency for such sales made during such month as determined by Licensor in
accordance with its standard accounting policies and procedures consistently
applied during each of Licensor's fiscal quarters. If any royalty or other
amount due Licensee is in a non-U.S. Dollar currency, and Licensor is prohibited
from exporting that currency from that jurisdiction, Licensor shall pay an
amount equal to the royalty or other amount due in such blocked currency into a
bank account of Licensee's choice in such jurisdiction, and such deposit shall
be deemed to be full satisfaction of Licensor's obligation to make the
applicable payment to Licensee.

      (g) Withholding Taxes. Licensee and Licensor shall use all commercially
reasonable and legal efforts to reduce tax withholding on any payments to be
made to Licensee pursuant to Section 8.3. If Licensor concludes that,
notwithstanding such efforts, tax withholding under the laws of any country is
required with respect to any royalty payment to be made to Licensee under this
Agreement, Licensor shall pay any applicable withholding taxes imposed by any
such political jurisdiction on such royalty payments, and the amount of any such
payments shall be credited against Licensor's royalty obligation under Section
8.3. Licensor shall promptly provide Licensee with, or promptly cause Licensee
to be provided with, original receipts or other evidence sufficient to allow
Licensee to obtain the benefits of any such tax withholding.

      (h) Expiration of Royalty Obligations. Subject to the next sentence, with
respect to Licensor Improvement Product, Licensor's obligation to pay a running
royalty shall terminate on a Licensor Improvement Product -by- Licensor
Improvement Product and country-by-country basis, upon the date that the last to
expire of any issued and enforceable Licensee Improvement Patent which covers
the manufacture, use, sale, or importing of such Licensor Improvement Product.
At the end of each such term, and on a country by country basis, Licensor shall
have a non-exclusive, worldwide, irrevocable, fully paid up license to make,
have made, use, offer to sell, sell, have sold (including through distributors),
and import such Licensor Improvement Product in such country. Notwithstanding
any other provision of this Agreement, the provisions of this Section 8.3 shall
survive any termination of this Agreement, except in the event Licensee
terminates this Agreement pursuant to Section 11.4.2 for Licensor's breach of
Section 8.3.

ARTICLE 9. FILING AND MAINTENANCE OF PATENTS:

Licensor shall in good faith file, prosecute, and maintain all Licensed Patents
in the Licensed Territory at its sole discretion and expense (except for
Co-Owned Patents for so long as Licensee has exclusive rights to First
Generation Exclusive Licensed Products), and except as follows. With respect to
Licensed Patents which include claims that cover First Generation Exclusive
Licensed Products, for so long as Licensee has exclusive rights to any First
Generation Exclusive Licensed Product, Licensor shall keep Licensee informed
with respect to the course and conduct of patent applications and prosecution
matters. With respect only to Licensed Patents which include claims that cover
First Generation Exclusive Licensed Products, Licensor shall use best efforts to
incorporate claims and arguments suggested by Licensee, provided said arguments
would not materially limit Licensor's ability to prosecute or enforce claims
directed to products

                                      -23-
<PAGE>

and methods outside the definition of First Generation Exclusive Licensed
Products. Licensee represents, warrants and covenants that it will not make
suggestions for claims and arguments that, in good faith, Licensee knows or
should know would limit the scope of Licensed Patents so as to not cover
(directly or under the Doctrine of Equivalents) any product or method of use of
a product marketed or to be marketed by Licensee. Licensor shall prosecute and
maintain Licensed Patents in the [*]. At
Licensee's expense, Licensor will prosecute and maintain Licensed Patents in
[*] and any other countries as
Licensee may request. Notwithstanding the foregoing in this Article 9, Licensee
shall have the sole right to file, prosecute, and maintain the Co-Owned Patents
for so long as Licensee has exclusive rights to First Generation Exclusive
Licensed Products, provided that Licensee shall keep Licensor informed with
respect to the course and conduct of patent applications and prosecution
matters.

ARTICLE 10. ENFORCEMENT OF INTELLECTUAL PROPERTY RIGHTS:

   10.1 Notice to Licensor. Licensee shall inform Licensor promptly in writing
   of any activity by a third party (an "Infringer"), if Licensee believes such
   activity might constitute infringement of any Licensed Patent in the Licensed
   Field, including details then known to Licensee, and provided that Licensee's
   failure to provide notice under this Section 10.1 shall not impact Licensee's
   rights under Section 10.6.

   10.2 Right to Bring Suit - Licensor; Settlement. With respect only to suits
   brought against Infringers by Licensor with respect to infringing products
   that fall within the definition of First Generation Exclusive Licensed
   Products for which Licensee has exclusive rights under this Agreement,
   Licensor shall consult with and keep Licensee informed of the progress of
   such proceedings, including, without limitation, furnishing copies of
   communications, pleadings and other documents and keeping Licensee informed
   of settlement efforts and developments, and Licensee shall be entitled to
   participate with counsel in such proceedings, but at its own expense. With
   respect only to suits brought against Infringers by Licensor with respect to
   infringing products that fall within the definition of First Generation
   Exclusive Licensed Products for which Licensee has exclusive rights under
   this Agreement, no settlement, consent, judgment, or other voluntary final
   disposition of a suit with respect to infringement of any Licensed Patent may
   be entered into without the consent of Licensee, which consent may only be
   withheld based on Licensee's reasonable business judgment. Notwithstanding
   the foregoing, Licensor shall not have the right to bring suit under any
   Co-Owned Patents for so long as Licensee has exclusive rights to First
   Generation Exclusive Licensed Products.

   10.3 Right to Bring Suit - Licensee. With respect only to Licensed Patents
   (except for Co-Owned Patents for so long as Licensee has exclusive rights to
   First Generation Exclusive Licensed Products) and with respect to infringing
   products that fall within the definition of First Generation Exclusive
   Licensed Products or the Vitrasert Licensed Product for which Licensee has
   exclusive rights under this Agreement, if Licensor has not taken legal action
   or been successful in obtaining cessation of the infringement within (a)
   ninety (90) days from the date of notice by Licensee; (b) thirty (30) days
   after Licensee notifies Licensor that Licensee would like to move for
   injunctive relief; or (c) ten (10) days before the expiration of a period of
   time set by applicable law in which action must be taken with respect to the
   alleged infringement (e.g., as may be required under the Hatch-Waxman Act and
   35 USC Section 271),

   [*] - INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
   TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH
   THE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES AND
   EXCHANGE ACT OF 1934, AS AMENDED.

                                   -24-
<PAGE>

   Licensee has the right but not the obligation to bring suit against an
   Infringer at Licensee's own expense. This right of Licensee to bring suit, as
   well as to continue an existing suit, is also conditioned on all of the
   following requirements:

      (i)   If Licensee owns (or has licensed from a third party and has the
            right to enforce) any patent(s) that literally reads-on the
            allegedly infringing device or method (collectively, the "Accused
            Device") practiced by the Infringer, Licensee will include in the
            complaint one or more claims alleging infringement of all such other
            patent(s);

      (ii)  Licensee has provided evidence to Licensor that there is a good
            faith basis to believe that the Accused Device is being prepared for
            commercialization;

      (iii) Licensee will use reasonable efforts to keep Licensor reasonably and
            timely informed of the pre-litigation and litigation issues and
            strategy (including, without limitation, furnishing copies of
            communications, pleading, and other documents and keeping Licensor
            informed of settlement efforts and developments), and will use
            reasonable effort to obtain suggestions and strategy from Licensor,
            including during pre-trial motions and discovery;

      (iv)  In the instance of litigation issues and strategies pertaining to
            defenses or setting strategy for the scope of claims, Licensee shall
            incorporate all suggestions and strategy from Licensor as may be
            deemed appropriate in the reasonable business judgment of Licensor;
            and

Except for joining the legal actions described in this Section 10.3 as a party
at Licensee's request, Licensor shall have no obligation regarding such actions
unless required to participate by law or contract, but Licensor will provide
reasonable assistance at the request of Licensee as provided in Section 10.5
below. However, Licensor shall have the right to participate in any such actions
through its own counsel and at its expense.

No settlement, consent judgment or other voluntary disposition of a suit
(collectively, "Settlements") with respect to infringement of any Licensed
Patent (except for Co-Owned Patents for so long as Licensee has exclusive rights
to First Generation Exclusive Licensed Products) may be entered into without the
consent of Licensor, which shall not be unreasonably withheld or delayed, and
provided that no such consent shall be required where the impact of the
settlement, consent judgment or other voluntary disposition is limited to the
Licensed Field for First Generation Exclusive Licensed Product for which
Licensee has exclusive rights under this Agreement.

   10.4 UKRF. If neither Party commences actions or proceedings against
   Infringers or unauthorized users of any Licensed Patent or Know-how that has
   been licensed from UKRF within the time periods specified above, UKRF shall,
   at its expense, have the right to initiate and pursue such action and receive
   all resulting benefits.

   10.5 Expense. If either Party shall initiate or carry on legal proceedings
   against any Infringer as contemplated hereby, the other Party shall fully
   cooperate with and supply all assistance

                                      -25-
<PAGE>

   reasonably required by the first Party. The first Party shall consult with
   and keep the other Party informed of the progress of such proceedings,
   including, without limitation, furnishing copies of communications, pleadings
   and other documents and keeping the other Party informed of settlement
   efforts and developments, and the other Party shall be entitled to
   participate with counsel in such proceedings, but at its own expense.

If Licensee initiates and carries on such proceedings, it may offset [*],
including reasonable legal expenses, incurred in regard thereto against any
payments owed to Licensor under Article 3 of this Agreement, provided, however,
that after the initiation of any such proceedings, no such payment shall be
reduced by more than [*].

Any award paid by any third party as a result of such proceedings (whether by
way of settlement or otherwise) shall be first applied to reimbursement of the
unreimbursed legal fees and expenses incurred by the Parties, pro rata in
proportion to such fees and expenses, then to the payment to Licensor of any
amounts that were offset against royalty or other payments as provided above,
and then the remainder shall be divided by the Parties pro rata in proportion to
the fees and expenses incurred by the Parties, after reimbursement by Licensor
of Licensee's expenses pursuant to the royalty off-set set forth above, in
connection with any action against the Infringer; provided, however, that each
Party (regardless of the extent, if any, to which such Party participates in
such action) shall be entitled, after reimbursement of any applicable expenses
and royalties as provided herein, to no less than [*] of any net recovery.

   10.6 Co-Owned Patents. Notwithstanding anything to the contrary in this
   Section 10.6, Licensee has the sole right, at Licensee's own expense, to
   bring and control any suits under the Co-Owned Patents against a third party
   for so long as Licensee has exclusive rights to First Generation Exclusive
   Licensed Products. Licensor shall have the right to participate in any such
   suits through its own counsel and at its expense. Licensor shall reasonably
   assist Licensee, with respect to such suits, at Licensee's request and
   expense. If required by law, Licensee may join Licensor as a party to any
   such suit, provided that Licensee shall hold Licensor harmless from, and
   indemnify Licensor against, any costs, expenses, or liability that Licensor
   incurs in connection with such suit. To the extent a suit is related to
   Co-Owned Patents and not any Licensed Patents, Licensor Improvement Patents
   or Other Technology, Licensee shall have the right to settle any such suit
   for so long as Licensee has exclusive rights to First Generation Exclusive
   Licensed Products. Any award paid by any third party as a result of such
   proceedings (whether by way of settlement or otherwise) (a) shall be first
   applied to reimbursement of the unreimbursed legal fees and expenses incurred
   by either Party pro rata in proportion to such fees and expenses, then (b)
   Licensor shall receive an amount equal to such reasonable approximation of
   the royalties that Licensee would have paid to Licensor if Licensee had sold
   the infringing products and services rather than the infringer. Any remaining
   amounts after reimbursement pursuant to (a) and (b) above shall be solely for
   the account of Licensee for proceedings under this Section 10.6.

   [*] - INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
   TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH
   THE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES AND
   EXCHANGE ACT OF 1934, AS AMENDED.
<PAGE>
ARTICLE 11. TERM; TERMINATION:

   11.1 Expiration of Royalty Obligations. Subject to the next sentence, with
   respect to Non-Exclusive Licensed Products, Licensee's obligation to pay a
   running royalty shall terminate on a Licensed Product-by-Licensed Product
   and country-by-country basis, upon the date that the last to expire of any
   issued and enforceable Licensed Patent or Licensor Improvement Patent
   which covers the manufacture, use, sale, or importing of such
   Non-Exclusive Licensed Product in such country expires. At the end of each
   such term, and on a country by country basis, Licensee shall have a
   non-exclusive, worldwide, irrevocable, fully paid up license to make, have
   made, use, offer to sell, sell, have sold (including through
   distributors), and import such Licensed Products in such country. Subject
   to the next sentence, with respect to First Generation Exclusive Licensed
   Products, Licensee's obligation to pay a running royalty shall terminate
   on a Licensed Product-by-Licensed Product and country-by-country basis,
   upon the date that is the later of (i) the last to expire of any issued
   and enforceable Licensed Patent or Licensor Improvement Patent which
   covers the actual manufacture, use, sale, or importing of such Licensed
   Product in such country, or (ii) ten (10) years from the last new FDA or
   other comparable approval with respect to an indication for the applicable
   Licensed Product in the applicable country but in no event more than
   twenty (20) years from the date of the first FDA or comparable approval
   for the first indication with respect to such Licensed Product in such
   country. At the end of each such term, and on a country by country basis,
   Licensee shall have an irrevocable, fully paid up license under the
   Licensed Patents in the Licensed Field to make, have made, use, offer to
   sell, sell, and import such Licensed Product in such country.

   11.2 Term. This Agreement shall continue for the Term, unless earlier
   terminated by Licensor or Licensee as provided herein.

   11.3 Termination by Licensor. Licensor shall have the right to terminate
   this Agreement and the licenses granted hereunder upon the happening of
   any of the following events:

11.3.1 Failure to Pay. Licensee fails to pay or cause to be paid any royalty or
      other payment which has become due to Licensor under this Agreement,
      within thirty (30) days after receiving a written request from Licensor to
      make such payment or to cause such payment to be made; provided, however,
      that if any payment is disputed in good faith by Licensee, Licensee may
      delay paying the disputed portion of such payment by invoking the dispute
      resolution procedure set forth in Article 22. If the dispute resolution
      procedure results in a final determination that Licensee owes some or all
      of such disputed amount, Licensee shall pay such owed amount within thirty
      (30) days of the determination pursuant to Article 22 as provided therein,
      together with interest thereon from the date such amount was due at one
      and one-half (1.5) times the prime rate in effect at such determination as
      announced by Chase Manhattan Bank, N.A. In addition to any other
      termination rights Licensor may have under this Section, if Licensee fails
      to pay Licensor such owed amount within thirty (30) days of the final
      determination as set forth above, Licensor may, subject to the next
      sentence, terminate this Agreement upon thirty (30) days' written notice
      to Licensee. Notwithstanding the foregoing, if Licensee's failure to pay
      or cause to be paid royalties or other payments is limited to royalties or
      payments for: (a) a First Generation Exclusive Licensed Product, then
      Licensor's right to terminate pursuant to the provisions of this Section
      11.3.1 shall be limited to termination

                                      -27-
<PAGE>

      of Licensee's rights to all First Generation Exclusive Licensed Product;
      (b) a Non-Exclusive Licensed Product, then Licensor's right to terminate
      pursuant to the provisions of this Section 11.3.1 shall be limited to
      termination of Licensee's rights to all Non-Exclusive Licensed Product;
      and (c) a Vitrasert Licensed Product, then Licensor's right to terminate
      pursuant to the provisions of this Section 11.3.1 shall be limited to
      termination of Licensee's rights to all Vitrasert Licensed Product;

11.3.2 Breach. Licensee has materially breached or materially defaulted under
      this Agreement as a result of a breach or default of any other provision
      of this Agreement and has not cured such breach or default within ninety
      (90) days after written notice from Licensor to Licensee specifying the
      nature of such breach or default in reasonable detail; provided, however,
      that if Licensee has invoked the dispute resolution procedure set forth in
      Article 22, this Agreement may not be terminated except in accordance with
      such Article; and further provided that if Licensee's material breach or
      default is limited to a material breach or default relating to: (a) First
      Generation Exclusive Licensed Product, then Licensor's right to terminate
      pursuant to the provisions of this Section 11.3.2 shall be limited to
      termination of (i) the specific First Generation Exclusive Licensed
      Product for which the breach or default occurred; or (ii) with respect to
      any further material breach or default thereafter, Licensee's rights to
      all First Generation Exclusive Licensed Product; (b) Non-Exclusive
      Licensed Product, then Licensor's right to terminate pursuant to the
      provisions of this Section 11.3.2 shall be limited to termination of (i)
      the specific Non- Exclusive Licensed Product for which the breach or
      default occurred; or (ii) with respect to any further material breach or
      default thereafter, Licensee's rights to all Non-Exclusive Licensed
      Product; and (c) Vitrasert Licensed Product, then Licensor's right to
      terminate pursuant to the provisions of this Section 11.3.2 shall be
      limited to termination of Licensee's rights to all Vitrasert Licensed
      Product; or

11.3.3 Bankruptcy. The filing of a bankruptcy petition by or against the
      Licensee, the entry by Licensee into a trust deed, creditor's arrangement
      or comparable proceeding, or the appointment of a receiver for
      substantially all of the assets or business of Licensee that is not
      dismissed within ninety (90) days from the date of such filing or
      appointment.

   11.4 Termination by Licensee. Licensee shall have the right to terminate
   this Agreement and the licenses granted hereunder upon the happening of
   any of the following events:

11.4.1 Without Cause. Licensee may terminate this Agreement at any time without
      cause in its entirety or with respect to a Vitrasert Licensed Product or a
      Non-Exclusive Licensed Product on ninety (90) days' written notice to
      Licensor. Upon termination of this Agreement in its entirety, Licensee
      shall remain liable for all Milestone Payments, royalty payments, and
      other payments under this Agreement falling due before the end of the
      first ninety (90) days after Licensor's receipt of the notice of
      termination without cause. Thereafter, for an additional ninety (90) days
      (for a total of one hundred eighty (180) days after Licensor's receipt of
      the notice of termination), Licensee shall continue to be liable for all
      payments, including, but not limited to, royalty payments, due under the
      Agreement, excluding Milestone Payments. Upon termination of this
      Agreement with respect to a Vitrasert Licensed Product or a Non-Exclusive
      Licensed Product, Licensee shall remain liable for all payments then due
      with respect to such Licensed

                                      -28-
<PAGE>

      Product(s), and thereafter Licensee shall have the right for one hundred
      eighty (180) days to sell off any inventory of such Licensed Product(s),
      and shall remain liable for the royalties due, if any, with respect to
      such sales.

11.4.2 Breach. Licensee may terminate this Agreement if Licensor has materially
      breached or defaulted under any provision of this Agreement and has not
      cured such breach or default within ninety (90) days after written notice
      from Licensee to Licensor specifying the nature of such breach or default
      in reasonable detail; provided, however, that if Licensor has invoked the
      dispute resolution procedure set forth in Article 22, this Agreement may
      not be terminated except in accordance with such Article.

      11.5 Bankruptcy. All rights and licenses granted under or pursuant to this
      Agreement by one Party to the other are, for all purposes of Section
      365(n) of Title 11 of the United States Code ("Title 11"), licenses of
      rights to "intellectual property" as defined in Title 11. During the term
      of this Agreement each Party shall create and maintain current copies to
      the extent practicable of all such intellectual property. If a bankruptcy
      proceeding is commenced by or against one Party under Title 11, the other
      Party shall be entitled to a copy of any and all such intellectual
      property and all embodiments of such intellectual property, and the same,
      if not in the possession of such other Party, shall be promptly delivered
      to it (a) upon such Party's written request following the commencement of
      such bankruptcy proceeding, unless the Party subject to such bankruptcy
      proceeding, or its trustee or receiver, elects within thirty (30) days to
      continue to perform all of its obligations under this Agreement, or (b) if
      not delivered as provided under clause (a) above, upon such other Party's
      request following the rejection of this Agreement by or on behalf of the
      Party subject to such bankruptcy proceeding. If Licensee has taken
      possession of all applicable embodiments of the intellectual property of
      Licensor pursuant to this Section 10.5 and the trustee in bankruptcy of
      Licensor does not reject this Agreement, Licensee shall return such
      embodiments upon request. If Licensor seeks or involuntarily is placed
      under Title 11 and the trustee rejects this Agreement as contemplated
      under 11 U.S.C. 365(n)(1), Licensee hereby elects, pursuant to Section
      365(n) to retain all rights granted to Licensee under this Agreement to
      the extent permitted by law.

      11.6 Effect of Termination. Upon termination of this Agreement for any
      reason, nothing herein shall be construed to release either Party from any
      obligation that matured prior to the effective date of such termination.
      The provisions of the following Sections shall survive termination of this
      Agreement for any reason: Article 1, Sections 2.4, 2.7, 2.8 (except as set
      forth therein), 2.9, 2.10, 3.5, 3.7, 7.2, 7.3, 8.1, 8.2, 8.3 (except where
      termination of this Agreement is pursuant to Section 11.4.2 for Licensor's
      breach of Sections 8.3), Sections 11.1, 11.3, 11.4, 11.5, 11.6, 11.7,
      Articles 12, 14, 15, 16, 17, 21, 22, 23, 24, 25, 26, 27, 28, 30, 31, 32,
      34, 35 and 36. Licensee and any Sublicensee may, after a termination, sell
      all Licensed Products which are in inventory at the time of termination
      and complete and sell Licensed Products which Licensee can clearly
      demonstrate were in the process of manufacture at the time of such
      termination, provided that Licensee shall pay to Licensor any royalties or
      other payments due on the sale of such Licensed Products and shall submit
      reports, in accordance with this Agreement.

      11.7 Grant Back. Except under the circumstances described in the last
      sentence of this Section, solely for the purpose of enabling Licensor and
      its licensees to continue the

                                      -29-
<PAGE>

   development and commercialization of First Generation Exclusive Licensed
   Products to which Licensee no longer has rights, Licensee shall grant to
   Licensor a fully paid-up, irrevocable, non-exclusive, worldwide license,
   with the right to grant sublicenses under the Licensee Patents (as defined
   below), if any, to make, have made, use, sell, and import any First
   Generation Exclusive Licensed Product that is at the time being
   commercialized (other than a Third Party Licensed Product) and for no
   other purpose. For purposes of the foregoing, "Licensee Patent" means any
   Patent Right existing at the time of termination of this Agreement which
   would block Licensor from practicing any Patent Right included in the
   Licensed Patents. Licensor shall not be entitled to any grant back under
   this Section if this Agreement is terminated by Licensee under Section
   11.4.2 or 11.5 or if Licensee's obligation to pay royalties has expired
   pursuant to Section 11.1.

ARTICLE 12. OWNERSHIP OF CLINICAL IP:

   12.1 Clinical IP Outside Licensees License Rights. Subject to any rights
   or restrictions imposed by applicable third parties, and to protections
   for Confidential Information herein, Licensee shall provide Licensor with
   a Right of Access to Clinical IP, provided that Licensor shall not use
   such Clinical IP for a Licensed Product in the Licensed Field so long as
   Licensee has a license for such Licensed Product under this Agreement.

   12.2 Clinical IP-Cooperation. Licensee shall use commercially reasonable
   efforts, and shall reasonably cooperate with Licensor, to provide Licensor
   with such waivers, irrevocable cross reference letters, assignments,
   and/or other reasonable documentation as may be necessary or useful for
   Licensor's full exercise of any Right of Access to Clinical IP granted by
   Licensee to Licensor pursuant to this Article 12.

ARTICLE 13. UNIVERSITY OF KENTUCKY RESEARCH FOUNDATION LICENSES:

Licensor shall maintain the UKRF Licenses in full force and effect, including
(without limitation) making all royalty payments. Licensor shall not, after the
Amendment Date, amend or modify the UKRF Licenses without Licensee's prior
written consent, which consent shall not be unreasonably withheld or delayed,
provided, however, that after providing prior written notice to Licensee,
Licensor may amend or modify the UKRF Licenses without Licensee's prior written
consent so long as such amendment would not have an adverse impact on Licensee's
rights or increase the cost to Licensee of exercising such rights.
Notwithstanding the foregoing, if UKRF delivers a notice of nonpayment of
royalties or of any other breach of any of the UKRF Licenses to Licensor,
Licensor shall immediately notify Licensee and Licensee shall have the right to
make such payments directly to UKRF or otherwise to cure such breach. In
addition, Licensor shall inform UKRF of the existence of this Agreement and
request UKRF to send a copy of all default notices to Licensee simultaneously
with any notice of default to Licensor and to permit Licensee to assume, upon
receipt of written notice from Licensee to UKRF, Licensor's obligations under
the UKRF License(s) to which such default notice applies. Licensee shall have
the right to offset the payments made to UKRF and the cost of curing any default
under any of the UKRF Licenses against future royalties or other payments due
Licensor under this Agreement as provided in Article 19.

                                      -30-
<PAGE>

ARTICLE 14. INDEMNIFICATION:

   14.1 Indemnification of Licensee. Subject to Sections 14.2 and 14.3,
   Licensor shall indemnify, defend and hold Licensee and each of its
   officers, directors, employees, agents and consultants (each a "Licensee
   Indemnitee") harmless from and against all third party costs, claims,
   suits, expenses (including reasonable attorneys' fees and expenses,
   whether incurred as a result of a third party claim or a claim to enforce
   this provision), damages, and, solely with respect to the Vitrasert
   Licensed Product, any amounts paid by Licensee to a third party pursuant
   to any agreement between Licensee and the third party for the manufacture,
   distribution, promotion, or sale of the Vitrasert Licensed Product (a
   "Vitrasert Third Party Loss") (collectively, including a Vitrasert Third
   Party Loss, "Losses") to the extent arising out of or resulting from (i)
   any material breach or failure by Licensor in the performance or
   non-performance of its obligations or covenants under this Agreement; (ii)
   any breach by Licensor of any representation or warranty hereunder; (iii)
   the manufacture, marketing, possession, use, sale or other disposition by
   Licensor or any of its sublicensees other than Licensee or any Sublicensee
   of any Licensed Product (except to the extent where such Losses arise or
   result from any negligence of Licensee (or any contract manufacturer of
   Licensee) in the manufacture of any such Licensed Product or the failure
   of Licensee (or any contract manufacturer of Licensee) to manufacture such
   Licensed Product in accordance with GMPs); (iv) FDA enforcement actions,
   inspections, product recalls or market withdrawals relating to a Licensed
   Product to the extent arising out of or resulting from Licensor's
   marketing, possession, use, sale or other disposition of the Licensed
   Product; and (v) any material breach or failure by Licensor in the
   performance of any Clinical Agreement or Trial Agreement except for (a)
   the payment obligations expressly assumed by Licensee pursuant to Article
   36, and (b) breaches of a Clinical Agreement or Trial Agreement to the
   extent resulting from a delay by Licensee in providing notice of
   termination or assignment and assumption to third parties pursuant to
   Article 36. Notwithstanding the foregoing or anything else in the
   Agreement to the contrary, Licensee's remedies under this Section 14.1 or
   any other provision of this Agreement, including without limitation
   Section 2.11, for any Vitrasert Third Party Loss and for Frustration
   Claims pursuant to Section 2.11 herein, shall be limited to, in the
   aggregate, and satisfied solely out of, the amount of royalties for
   Vitrasert Licensed Products received by Licensor after the date of
   Licensor's receipt of written notice from Licensee of such Frustration
   Claim or Vitrasert Third Party Loss specifying the nature and amount of
   the claim or loss in reasonable detail.

   14.2 Indemnification of Licensor. Subject to Sections 14.1 and 14.2,
   Licensee shall indemnify, defend and hold Licensor and each of its
   officers, directors, employees, agents and consultants (each a "Licensor
   Indemnitee") harmless from and against all Losses to the extent arising
   out of or resulting from (i) any material breach or failure by Licensee in
   the performance or non-performance of its obligations or covenants under
   this Agreement; (ii) any breach by Licensee of any representation or
   warranty hereunder; (iii) the manufacture, marketing, possession, use,
   sale or other disposition of any Licensed Product by Licensee or any
   Sublicensee (except to the extent where such Losses arise or result from
   any negligence of Licensor (or any contract manufacturer of Licensor) in
   the manufacture of any such Licensed Product or the failure of Licensor
   (or any contract manufacturer of Licensor) to manufacture the Licensed
   Product in accordance with GMPs); and (iv) FDA enforcement actions,
   inspections, product recalls or market withdrawals relating to a Licensed
   Product to the extent

                                      -31-
<PAGE>

   arising out of or resulting from Licensee's marketing, possession, use,
   sale or other disposition of the Licensed Product or the failure of
   Licensee (or any contract manufacturer of Licensee) to manufacture the
   Licensed Product in accordance with GMPs or the specifications for the
   Licensed Product.

   14.3 Limitation of Liability. Except where a Party commits a willful,
   intentional breach of any material provision of this Agreement, no
   breaching Party shall be responsible or liable under any provision of this
   Agreement or under any contract, theory of negligence or strict liability,
   or under any other legal or equitable theory for any resulting indirect,
   special, incidental, consequential, punitive, or exemplary damages of the
   other Party, including (without limitation) damages such as lost revenues
   or profits and damage to goodwill or reputation. Nothing in this Section
   shall relieve any Party of any obligation with respect to any third party
   claim.

   14.4 Procedure for Indemnification. If an event occurs which a Party
   believes requires indemnification (Indemnification Event"), the Party
   seeking indemnification ("Indemnified Party") shall give prompt written
   notice to the other Party ("Indemnifying Party") providing reasonable
   details of the nature of the event and the basis of the indemnity claim.
   The Indemnifying Party shall then have the right, at its expense and with
   counsel of its choice, to defend, contest, or otherwise protect against
   any such action. The Indemnified Party shall also have the right, but not
   the obligation, to participate at its own expense in the defense with
   counsel of its choice. The Indemnified Party shall cooperate as requested
   by the Indemnifying Party to assist it in defending or contesting any such
   action. If the Indemnified Party fails to promptly notify the Indemnified
   Party of the occurrence of an Indemnification Event, to the extent, but
   only to the extent, that such failure results in a material adverse effect
   on the Indemnifying Party, the Indemnified Party shall not be entitled to
   indemnification with respect to such Indemnification Event. If the
   Indemnifying Party fails within thirty (30) days after receipt of such
   notice: (a) to notify the Indemnified Party of its intent to defend, or
   (b) to defend, contest, or otherwise protect against such suit, action,
   investigation, claim or proceeding, or fails to diligently continue to
   provide such defense after undertaking to do so, the Indemnified Party
   shall have the right, upon ten (10) days' prior written notice to the
   Indemnifying Party, to defend, settle and satisfy any such suit, action,
   claim, investigation or proceeding and recover the costs of the same from
   the Indemnifying Party.

   14.5 Insurance. To the extent required by the UKRF Licenses, Licensee will
   maintain product liability insurance, with an endorsement naming UKRF, the
   University of Kentucky, its Board of Trustees, agents, officers, and
   employees as additional insureds covering liabilities for the production,
   manufacture and/or sale of the Licensed Product by Licensee or any
   Sublicensee. The policy of insurance shall contain a provision of
   non-cancellation except upon the provision of thirty (30) days' notice to
   the University of Kentucky. Policy limits shall be not less than
   $1,000,000 per occurrence.

ARTICLE 15. TRADEMARKS:

Licensee shall own the logos, trade names, copyrights, trademarks, and other
commercial symbols ("Marks") developed or used in connection with any and all
Licensed Products. During and after the term of this Agreement, Licensor shall
not directly or indirectly contest the

                                      -32-
<PAGE>

ownership, validity or originality of the Marks for the Licensed Products, the
Third Party Licensed Products, and the goodwill represented by any of the
foregoing Marks. Licensor will not use any name or other symbol confusingly
similar to or, in the reasonable judgment of Licensee, suggestive of any of the
foregoing Marks. If Licensor learns of any unauthorized use of any such Marks it
shall promptly inform Licensee in writing.

ARTICLE 16. REPRESENTATIONS AND WARRANTIES:

   16.1 Representations and Warranties of Both Parties. As of the Amendment
   Date, each Party hereby represents and warrants to the other Party that:

      (i)   It is a corporation duly organized, validly existing, and in good
            standing under the laws of the jurisdiction of its incorporation.

      (ii)  It has all requisite corporate power and authority and is free to
            enter into this Agreement and to perform its obligations hereunder
            without the need for any other action or consent;

      (iii) It has taken all corporate and other action to authorize the
            execution and delivery of this Agreement, any other documents
            executed and delivered in connection herewith and the performance of
            its obligations hereunder and thereunder, all of which shall be
            valid, binding and enforceable in accordance with its or their
            terms;

      (iv)  The execution, delivery, and performance of this Agreement (a) will
            not violate or require it to obtain any consent or approval, to make
            any filing or to provide any notice, or (b) will not conflict with
            or result in a breach of any agreement or other instrument to which
            it is a party or by which it is bound;

      (v)   It is not a party to any agreement with any third party which is in
            conflict with the rights granted to the other pursuant to this
            Agreement, including, without limitation, with respect to the
            Licensed Patents; and

      (vi)  Except as described in Exhibit 16.1(vi), there is no litigation,
            proceeding, or governmental investigation to which it is a party
            pending or threatened against it, or, to its knowledge, against any
            third party, as to which there is a likelihood of an outcome(s) that
            would, individually or in the aggregate, reasonably be expected to
            delay or otherwise materially impair its ability to perform its
            obligations contemplated by this Agreement.

16.2 Representations and Warranties of Licensor. Licensor hereby represents and
warrants to Licensee as of the Amendment Date that:

      (i)   The UKRF Licenses set forth in Exhibit 1.47 are the only UKRF
            Licenses, all of which are in full force and effect and have not
            been amended or modified without Licensee's written consent;
            Licensor has complied with all provisions of the UKRF Licenses;
            Licensor owes no royalty or other payment to UKRF or any affiliate
            of UKRF under the UKRF Licenses and there does not exist any event
            of

                                      -33-
<PAGE>

            default with respect to Licensor under any of the UKRF Licenses
            which, after notice or lapse of time or both, would constitute an
            event of default with respect to Licensor;

      (ii)  Licensor has all rights and consents necessary to grant the rights
            and licenses granted to Licensee under this Agreement;

      (iii) Except for the Co-Owned Patents, and as described in Exhibit
            16.2(iii), Licensor warrants that it owns the entire right, title,
            interest in and to the Licensed Patents and that the entire interest
            is not encumbered in any manner;

      (iv)  Licensor has made written request of all patent counsel engaged by
            Licensor for all opinions of counsel, clearances, studies, licenses,
            and agreements relating to Licensed Products, and has provided
            Licensee with all information relating to Licensed Products received
            by Licensor as of the Amendment Date in response to such requests
            and further, has provided Licensor all other formal written opinions
            of counsel, licenses, and agreements relating to First Generation
            Exclusive Licensed Products;

      (v)   The Persons who are listed on Exhibit 16.2(v) are all of the
            officers, employees, and consultants of Licensor as of the Amendment
            Date. Except as set forth in Exhibit 16.2(v), each of such Persons
            has signed a confidentiality and invention disclosure and assignment
            agreement (a) which requires such individual to observe
            confidentiality restrictions at least as strict as those between the
            Parties, and (b) which results in Licensor having unrestricted
            ownership of any intellectual property created by such individual
            during his or her employment or engagement by Licensor, including
            (without limitation) all intellectual property created or developed
            by such individual before the date of this Agreement during such
            employment or engagement; and

      (vi)  Licensor has not received any written communication from a third
            party that a Licensed Product may or actually does infringe or
            otherwise violate any intellectual property right of such third
            party. Licensor's officers as of the Amendment Date have not
            received any oral communication from a third party that a Licensed
            Product may or actually does infringe or otherwise violate any
            intellectual property right of such third party.

As used in this Agreement, (i) "to Licensor's knowledge" (or any equivalent
term) means to the best actual knowledge, as of the date of this Agreement, of
Licensor and its officers after diligent investigation, without commissioning
special searches or studies, and (ii) "to Licensee's knowledge" (or any
equivalent term) means to the best actual knowledge, as of the date of this
Agreement, of Licensee and its officers after diligent investigation, without
commissioning special searches or studies.

ARTICLE 17. WARRANTY DISCLAIMER:

EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS AGREEMENT, NEITHER PARTY MAKES,
AND HEREBY DISCLAIMS, ANY EXPRESS OR IMPLIED WARRANTY INCLUDING, WITHOUT
LIMITATION, ANY IMPLIED

                                      -34-
<PAGE>

WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, OR
NON-INFRINGEMENT WITH RESPECT TO ANY OF THE RIGHTS OR INTERESTS GRANTED
HEREUNDER, INCLUDING WITHOUT LIMITATION THOSE WITH RESPECT TO THE LICENSED
PATENTS OR LICENSOR IMPROVEMENT PATENTS OR KNOW-HOW OR ANY LICENSED PRODUCT.

ARTICLE 18. OPERATIONS IN COMPLIANCE WITH LAW:

Up to the date of this Agreement, each Party has complied, and in exercising the
rights granted to each Party by this Agreement, each Party shall comply, in all
material respects with all applicable laws, including, without limitation, the
requirements of 35 U.S.C. Section 200 et seq. and all regulations promulgated
thereunder, as amended, and any similar or successor statutory regulations
(collectively, the "Federal Patent Policy"). To the extent that any Licensed
Patent or Licensor Improvement Patent claims an invention subject to Federal
Patent Policy, the license granted to Licensee hereunder with respect to such
Licensed Patent or Licensor Improvement Patent may be subject to any
royalty-free, non-exclusive license granted to the United States Government
pursuant to 35 U.S.C. Section 204(c)(4).

ARTICLE 19. INFRINGEMENT OF THIRD PARTY'S PATENTS:

Licensee shall promptly send Licensor a copy of any notice or communication from
a third party alleging that Licensee's exercise of its rights under this
Agreement infringe or otherwise violate such third party's intellectual property
rights ("Notice"). Licensor shall have the first right, but shall not be
obligated, to respond to the Notice. If Licensor does not elect to respond,
Licensor shall promptly inform Licensee and Licensee may respond to the Notice.
If Licensee defends such proceedings, it may offset [*], including reasonable
legal expenses, incurred in regard thereto against any payments owed to Licensor
under Article 3, provided, however, that no such payment shall be reduced by
more than [*] by any such offset [*]. Licensee shall continue to perform its
reporting obligations under Article 7 and otherwise continue to perform its
obligations hereunder.

Licensee shall not settle any infringement, misappropriation, or other claim
subject to this Article 19 without the consent of Licensor.

If any Licensed Product is covered by an issued patent or other intellectual
property right held by one or more third parties and it becomes necessary for
Licensee to obtain a license from such third party or parties under such patent,
and/or other intellectual property right and accordingly to pay royalties to
such third party(ies) with respect to any Net Sale of any Licensed Product, then
Licensee may reduce any royalty otherwise due Licensor by [*] of the amount of
royalty payment due to such third party, but in no event to less than [*] of the
royalty which may then be due to Licensor. In addition, if Licensee is required
to pay any an upfront or similar fee to any third party(ies), Licensor shall
share in the payment of any such consideration which involves more than a
running royalty as follows. If, for example, Licensee is required to pay an
upfront fee of $1 Million to a third party, the royalty payments then due
Licensor shall be reduced by [*] until [*] of the upfront fee [*] has been
recouped by Licensee.

[*] - INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES AND EXCHANGE
ACT OF 1934, AS AMENDED.

                                      -35-
<PAGE>

If Licensee is required to pay any damages (i.e., something other than
prospective royalties and upfront or similar fees ) to the third party, Licensee
shall be responsible for the payment of any such damages to the third party and
shall be permitted to recoup one-half (1/2) of such payment from Licensor as
follows: If, for example, Licensee is required to pay damages of $1 Million to
the third party, Licensor's royalty payments otherwise due under this Agreement
shall be reduced by [*] until [*] of the damages [*] have been recouped by
Licensee.

Except as set forth below, any reduction of royalties due to Licensor as a
result of a recoupment of running royalties, upfront fees, and damages in the
aggregate arising out of a third party claim of infringement or violation of
intellectual property rights under this Section shall not reduce any single
royalty payment otherwise due Licensor hereunder by more than [*].

Licensor shall provide Licensee with a copy of any notice of default or breach
received by Licensor which relates in any way to the UKRF Rights within five (5)
business days of receipt of such notice. If Licensor fails to make any payment
before any applicable cure period has expired, Licensee may make such payment in
Licensor's name and on Licensor's behalf before such cure period expires, and
Licensee may fully recover any payment made by Licensee under this paragraph at
the applicable rate described in the next paragraph. Licensor's remedy for
recovering payments made by Licensee to any third party pursuant to this
paragraph shall be limited to recovery from such third party and not Licensee.

Except as set forth below, where Licensee seeks recoupment for payment(s) made
to UKRF as a result of Licensor's failure to make any payment to UKRF, Licensee
shall be permitted to recoup [*] of such payment to UKRF against [*] percent of
the royalty then due to Licensor as follows ("[*] Recoupment Rate"): Licensee
may reduce any royalty payment otherwise due to Licensor hereunder by [*] of
such royalty payment less any royalties payable by Licensor to UKRF ("Net
Royalty Amount"). [*]. The [*] Recoupment Rate shall not apply where Licensee
seeks recoupment for payment(s) made to UKRF where Licensor's decision not to
make any payment to UKRF (i) was made on the basis of a written opinion of
reputable outside patent counsel; (ii) the opinion and any other relevant
information was fully disclosed to Licensee within a reasonable time prior to
Licensor's decision not to pay; and (iii) where, following such disclosure,
Licensee failed to require Licensor to make the payment in accordance with the
provisions of the previous paragraph on the basis of the written opinion of
counsel as provided therein. In such case Licensee shall be permitted to recoup
[*] of Licensee's payment to UKRF by reducing any royalty payment otherwise due
to Licensor hereunder by [*].

[*] - INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES AND EXCHANGE
ACT OF 1934, AS AMENDED.

                                      -36-
<PAGE>

ARTICLE 20. FORCE MAJEURE:

Neither Party shall be liable for any failure to perform arising out of causes
beyond the control and without the fault or negligence of such Party. Such
causes include, but are not limited to, acts of God; acts of the public enemy;
acts of terrorism, natural disasters such as fire or flood or unusually severe
weather; quarantine restrictions; strikes; and freight embargoes.

ARTICLE 21. CHOICE OF LAW/FORUM:

Any legal or other action hereunder shall be brought in the State and federal
courts nearest the principal place of business of the defendant in any such
action, and this Agreement shall be construed and interpreted and its
performance shall be governed by the substantive laws of the State where such
courts are located, i.e., New York, if Licensee is the defendant, and
Massachusetts, if Licensor is the defendant, without regard to the state's
conflict of laws principles. The Parties consent to the exclusive personal
jurisdiction and venue of such courts in the event of such action. In construing
this Agreement, neither Party shall have been deemed to have drafted this
Agreement, and no court or arbitrator will construe or interpret this Agreement
in favor of a Party based on the presumption that it did not draft the term or
clause at issue, it being agreed that each Party has ably represented itself and
has been ably represented by counsel.

ARTICLE 22. DISPUTE RESOLUTION:

If there is any dispute arising out of or relating to this Agreement or a
Party's performance or failure to perform hereunder, such dispute shall, at the
written request of either Party be submitted to the top executive officer of
each Party, or another executive officer of a Party designated by the top
executive officer as his or her representative for such purpose. The initial
Representatives are the General Manager, North American Pharmaceuticals, for
Licensee, and the President of Licensor. The Representatives shall meet as soon
as reasonably practicable to consider the matter and each shall each use
reasonable commercial efforts to effect a resolution. If the Representatives are
able to resolve the dispute, the resolution shall be set forth in a written
instrument signed by each of them.

If the Representatives are not able to resolve the dispute within thirty (30)
days of their first meeting or within such extended period they agree upon, they
shall proceed to non-binding arbitration by a skilled mediator familiar with the
commercial and manufacturing processes of the pharmaceutical industry and
pursuant to the rules of an organization specializing in alternatives to
disputes, such as the CPR Institute for Dispute Resolution, End Dispute, or the
AAA. If the Parties cannot agree upon a single mediator within the next 30 days,
they shall each select a mediator and the two selected shall select the sole
mediator. If a Party does not select a mediator, the mediator selected by the
other Party shall be the sole mediator. The selected mediator shall use his best
efforts to make a nonbinding decision on the merits of the case within sixty
(60) days, and the Parties shall use their best reasonable commercial efforts to
cooperate with the mediator. The mediator need not give reasons for his
decision.

If the Parties are not able to resolve their dispute through mediation, such
dispute may, if they agree, be submitted to binding arbitration pursuant to the
expedited procedures and in accordance

                                      -37-
<PAGE>

with the Patent Licensing Rules of the AAA. The arbitrator shall be mutually
selected by the Parties or, if they cannot agree, each Party shall designate one
arbitrator to represent it in the selection process and the two arbitrators
shall appoint a third arbitrator who shall arbitrate such dispute or difference.
Such selection process shall be completed within sixty (60) days from the end of
the period during which they attempted to resolve the dispute through the
mediation process. The disputed matter shall be arbitrated at such location as
the Parties shall mutually designate or, if they are not able to agree on such
location, at a location selected by the arbitrator. The selected arbitrator
shall, if reasonably possible, be one who is familiar with the commercial and
manufacturing practices of the pharmaceutical industry.

The arbitrator's award shall be final and binding on the Parties and enforceable
by either Party in any court of competent jurisdiction. The fees and expenses of
the arbitrator shall be shared equally by the Parties.

ARTICLE 23. NOTICES:

Any notice, request, instruction or other communication required or permitted to
be given under this Agreement shall be in writing and shall be given by sending
such notice properly addressed to the other Party's address shown below (or any
other address as either Party may indicate by notice in writing to the other
from time to time as required by this Article): (i) by hand or by prepaid
registered or certified mail, return receipt requested, (ii) by a nationally
recognized overnight courier service, or (iii) via facsimile (provided such
facsimile is sent by a machine which acknowledges receipt of the transmission)
at the following addresses:

If to Licensor:

                  Control Delivery Systems
                  400 Pleasant Street
                  Watertown, MA 02472
                  Attn: Paul Ashton, Ph.D., President
                  Facsimile Number:  617-926-2313

With a copy to:

                  Control Delivery Systems
                  400 Pleasant Street
                  Watertown, MA  02472
                  Attn: Lori Freedman, General Counsel
                  Facsimile Number: (617) 926-5050

                                      -38-
<PAGE>

and to:

                  Ropes & Gray
                  One International Place
                  Boston, MA  02110
                  Attn: Mary E. Weber
                  Facsimile Number: (617) 951-7050

If to Licensee:

                  Bausch & Lomb Incorporated
                  1400 N. Goodman Street
                  Rochester, NY 14609
                  Attn: Gary Phillips, M.D.
                        Corporate Vice President, Global Pharmaceutical and
                        Vitreoretinal
                  Facsimile Number: (585) 338-0811

With a copy to:

                  Bausch & Lomb Pharmaceuticals, Inc.
                  One Bausch & Lomb Place
                  Rochester, NY 14604
                  Attn: Robert B. Stiles
                        Senior Vice President and General Counsel
                  Facsimile Number: (585) 338-8706

Any notice, if mailed properly addressed, postage prepaid, shall be deemed made
(i) three (3) days after the date of mailing as indicated on the certified or
registered mail receipt, (ii) on the next business day if sent by overnight
courier service, or (iii) on the date of delivery if hand delivered or the date
of transmission if sent by facsimile transmission.

ARTICLE 24. MERGER CLAUSE:

This Agreement contains the entire understanding between the Parties and
supersedes all proposals, oral and written, all negotiations, conversations or
discussions between or among the Parties relating to the subject matter of this
Agreement and restates the 1999 Agreement and the Vitrasert Agreement, both as
amended, in their entirety.

ARTICLE 25. INTEGRATION CLAUSE:

No amendment or modification to this Agreement shall be valid or binding upon
the Parties unless made in writing and executed by authorized representatives of
both Parties.

ARTICLE 26. SEVERABILITY CLAUSE:

Any terms or provision of this Agreement which is found to be invalid or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such invalidity or unenforceability without rendering invalid
or unenforceable the remaining terms and provisions of this Agreement or
affecting the validity of enforceability of any of the terms or provisions of
this Agreement in any other jurisdiction.

                                      -39-
<PAGE>

ARTICLE 27. NO WAIVER:

The failure of either Party to terminate, seek redress for a breach of, or to
insist on strict performance of any term, covenant, condition, or provision
contained in this Agreement shall not act as a waiver of rights or of the right
to require future compliance and the term, covenant or provision in question
shall remain in full force and effect.

ARTICLE 28. TRANSFERABILITY OF RIGHTS AND OBLIGATIONS:

This License and Agreement shall inure to the benefit of and be binding upon the
successors, assigns, or other legal representatives of the Parties.
Notwithstanding the foregoing, neither Party may assign, delegate, or
subcontract its right and obligations hereunder without the prior written
consent of the other Party, which shall not be unreasonably withheld, except
that (i) no consent to assignment shall be necessary in the case of any transfer
by Licensee of substantially all of the assets or stock of Licensee's
proprietary (branded and/or generic) ophthalmic pharmaceutical business, (ii) no
consent shall be necessary in the case of any Sublicense pursuant to Section
2.1.1, and (iii) no consent to assignment shall be necessary in the case of any
transfer by Licensor of substantially all of the assets or stock of Licensor's
ophthalmics business. In addition, if Licensor directly or indirectly delegates
or transfers any rights or obligations under this Agreement, it shall be a
condition of such delegation or transfer that its obligations under Sections 2.3
and 2.4 are expressly assumed by, and become binding upon, such delegatee or
transferee.

ARTICLE 29. PATENT MARKING:

Licensee shall mark all Licensed Products sold or otherwise disposed of by it in
the United States under the license granted in this Agreement with the word
"Patent" and the number of the Licensed Patent. All License Products shipped of
sold in other countries shall be marked in such a manner as to conform with the
patent laws and practice of the country to which such products are shipped or in
which such products are sold.

ARTICLE 30. INTENTIONALLY OMITTED

ARTICLE 31. INDEPENDENT CONTRACTORS:

Licensor and Licensee are not partners, joint venturers or agents of one another
and shall at all times act as independent contractors without the right or
authority to bind each other with respect to any agreement, representation, or
warranty made with or to any third party. Except as otherwise stated herein,
Licensor and Licensee each shall be responsible for all costs, expenses, and
taxes, arising from the conduct of its own business.

ARTICLE 32. CONFIDENTIALITY:

   32.1 Confidentiality. Notwithstanding any other provision herein, during
   the term of this Agreement and for a period of ten (10) years from
   termination of this Agreement, each Party ("Receiver") will hold in
   confidence, will not disclose to others (except those Affiliates,
   attorneys, accountants, stockholders, investment bankers, advisers or
   other consultants who are bound by an obligation of confidentiality), and
   will not use for any purpose not contemplated

                                      -40-
<PAGE>

   by this Agreement, any technical or business information (including the
   terms and conditions of this Agreement) Receiver obtains from the other
   Party ("Discloser") in connection with this Agreement (collectively, the
   "Confidential Information") provided that the Receiver may disclose
   Confidential Information: (a) as otherwise expressly provided in this
   Agreement, (b) as required by applicable law or any listing agreement
   with, or the rules and regulations of, any applicable securities exchange
   or the National Association of Securities Dealers, (c) necessary to secure
   any required consents under this Agreement as to which the other Party has
   been advised, (d) consented to in writing by the furnishing Party, (e) in
   confidence, to accountants, banks, and financing sources and their
   advisers, or (f) in confidence, to the other party (and their Affiliates,
   attorneys, accountants, stockholders, investment bankers, advisers or
   other consultants who are bound by an obligation of confidentiality) in a
   merger, acquisition or license or proposed merger, acquisition or license,
   or the like, and further provided that with respect to disclosures of the
   terms and conditions of this Agreement made pursuant to the filing of this
   Agreement as an exhibit to a document filed with the SEC, the filing Party
   shall use commercially reasonable efforts to obtain confidential treatment
   under the Securities Act of 1933 or the Securities Exchange Act of 1934 of
   those portions of this Agreement identified to the filing Party in writing
   by the other Party in advance of the filing (the filing party shall
   provide the other Party with reasonable advance notice of the filing to
   permit the other Party to make the confidentiality request described
   above). Except as otherwise set forth above, Receiver shall make
   Discloser's Confidential Information available to persons within
   Receiver's organization only on a "need to know" basis, and Receiver shall
   inform all persons to whom such Confidential Information is made available
   of the confidential nature of the Confidential Information and the
   restrictions comprised hereunder and shall require such persons to keep
   the Confidential Information confidential as provided in this Section.
   However, this confidentiality obligation shall not extend to any portion
   of the Confidential Information which: (i) is known to Receiver as
   documented by its written records at the time of disclosure; or (ii) is or
   becomes public or generally available to the public through publication or
   otherwise but through no fault of Receiver; or (iii) corresponds in
   substance to information furnished to Receiver on a nonconfidential basis
   by a third party having a bona fide right to do so and not having any
   confidential obligation, direct or indirect, to Discloser with respect to
   the same; or (iv) corresponds to information furnished by Discloser to any
   third party on a nonconfidential basis except in limited consumer testing;
   or (v) Receiver can demonstrate was developed by Receiver independently of
   the disclosure of the Confidential Information by Discloser; or (vi) is
   disclosed by Receiver pursuant to a legal requirement, provided Receiver
   has complied with the provisions set forth in Section 32.2 below.

   32.2 External Disclosure. If Receiver becomes legally required to disclose
   any of Discloser's Confidential Information, Receiver shall notify
   Discloser promptly of such requirement so that Discloser may seek a
   protective order or other appropriate remedy concerning such disclosure.
   Receiver will consult with Discloser, if requested to do so, regarding the
   nature and extent of the required disclosure and will cooperate to limit
   such disclosure to the extent practical. Unless specifically requested
   otherwise by Control Delivery Systems Inc., Bausch & Lomb Incorporated
   will direct all communications it receives from potential or existing
   investors in Control Delivery Systems, Inc. to Steve McCluski (Senior Vice
   President and Chief Financial Officer), Robert Bailey (Vice President,
   Assistant General Counsel and Assistant Secretary), or Gary Phillips
   (Corporate Vice President, Global Pharmaceutical and Vitreoretinal) (or
   their respective successors).

                                   -41-
<PAGE>

ARTICLE 33. RELINQUISHMENT:

   33.1 UKRF Letter Agreement. The Licensee hereby relinquishes, agrees to
   relinquish and shall not exercise, any and all rights or causes of actions
   Licensee has, now, in the past, or in the future, pursuant to the Letter
   Agreement dated June 9, 1999, as between UKRF, Licensor and Licensee (the
   "UKRF Letter Agreement"). Licensee hereby agrees that the relinquishment
   of its rights under the UKRF Letter Agreement shall be fully evidenced by
   this Amendment without the need for further documentation of such
   relinquishment, and supercedes any prior negotiations, understandings,
   agreements, instruments and representations with respect to the UKRF
   Letter Agreement.

   33.2 Covenant Not to Compete. The Licensee hereby relinquishes, agrees to
   relinquish and shall not exercise, any and all rights or causes of actions
   Licensee has, now, in the past, or in the future, pursuant to the Covenant
   Not to Compete dated June 9, 1999, as between Licensee and Paul Ashton,
   Ph.D. (the "Covenant Not to Compete"). Licensee hereby agrees that waiver
   of its rights under the Covenant Not to Compete shall be fully evidenced
   by this Amendment, and supersedes any prior negotiations, understandings,
   agreements, instruments and representations with respect to the Covenant
   Not to Compete.

ARTICLE 34. NO LIMIT TO REMEDIES:

Subject to the terms of this Agreement, the existence or choice of any one
remedy available to a Party shall not limit or otherwise restrict a Party from
choosing any remedy available, it being understood that a Party's remedies are
cumulative.

ARTICLE 35. COUNTERPARTS:

This Agreement may be executed in counterparts, each of which shall be
enforceable against the Party actually executing such counterpart, and which
together shall constitute one instrument.

ARTICLE 36. TRANSITION OBLIGATIONS:

   36.1 Clinical/Trial Agreements. The Parties wish to reflect the transfer
   to Licensee of pre-clinical, clinical, manufacturing and regulatory
   activities which were being performed by Licensor and/or Licensee with
   respect to current clinical trials relating to DME, Uveitis and ARMD (the
   "Clinical Activities"). As agreed upon by the Parties, prior to Licensor's
   withdrawal of its IND covering such Clinical Activities, Licensee has
   provided: (a) notice of assignment and assumption to third parties under
   the third party contracts related to the Clinical Activities listed on
   Exhibit 36.1A (the "Clinical Agreements"); and (b) a notice of termination
   (as executed by Licensor) to third parties under third party clinical
   trial agreements listed on Exhibit 36.1B ("Trial Agreements").
   Consequently, Licensor hereby transfers and assigns to Licensee, and
   Licensee hereby assumes, (i) all Clinical Agreements; (ii) all outstanding
   bills for Clinical Activities provided by Licensor to Licensee as of June
   18, 2003; (iii) all payment obligations arising on or after June 18, 2003
   under the Clinical Agreements; and (iv) all payments obligations for
   services required under the Trial Agreements through the date of
   termination of such Trial Agreements. However, notwithstanding any
   payments by Licensee with respect to any Clinical or Trial Agreement,
   Licensor shall be responsible for any material breach or failure by
   Licensor in the performance of any such agreement prior to the

                                      -42-
<PAGE>

   assumption by Licensee, or the termination, of such agreement, except for
   (x) the payment obligations assumed by Licensee pursuant to this Section
   36.1; or (y) breaches of a Clinical or Trial Agreement resulting from a
   delay by Licensee in providing notice of termination or assignment and
   assumption to third parties pursuant to subsections (a) or (b) above.

   36.2 Clinical Activities Data. Up through December 31, 2003 ("Transition
   Period"), Licensor shall cooperate with Licensee and provide reasonable
   access to, answer questions regarding, and transfer to Licensee, all
   relevant information possessed by Licensor regarding the Clinical
   Activities.

   36.3 Transition Space. Licensor shall have the right to control its
   premises, but Licensor shall provide space at its premises during the
   Transition Period through November 30, 2003, to permit Licensee and its
   consultants and representatives ("Licensee Transition Personnel") to
   transition the Clinical Activities to Licensee. Licensor hereby grants to
   Licensee a license to permit Licensee Transition Personnel to use and
   occupy such portions of Licensor's premises as are reasonably designated
   by Licensor to the extent needed to perform such transition activities on
   behalf of Licensee. The Licensee Transition Personnel shall have access to
   all applicable records and information reasonably necessary to complete
   the transition of the Clinical Activities to Licensee as contemplated in
   this Article 36. Licensee shall require all Licensee Transition Personnel
   to (i) observe Licensor's codes of conduct and attire; (ii) observe all
   building security rules and procedures at Licensor's premises; (iii)
   return all building passes, security cards or other access materials
   immediately upon completion and delivery of the transition activities
   contemplated under this Agreement; (iv) work during Licensor's ordinary
   business hours, unless otherwise agreed, and follow Licensor's reasonable
   instructions as to where to work; and (v) adhere to Licensor's reasonable
   restrictions regarding confidential information they may be exposed to at
   Licensor's premises. As soon as possible after receipt of Licensor's
   reasonable request that Licensee remove from Licensor's premises any
   Licensee Transition Personnel failing to adhere to such restrictions,
   Licensee will cause such individual to be removed.

   36.4 Insurance. In connection with the assumption of the payment
   obligations pursuant to Section 36.1, Licensor shall promptly provide
   Licensee with a copy of all insurance policies maintained as of the date
   hereof in connection with Clinical Activities, including without
   limitation the Clinical and Trial Agreements. Such insurance shall be in
   form, substance, and amount reasonably satisfactory to Licensee. Licensor
   shall maintain such insurance in force for as long as any obligation under
   any Clinical or Trial Agreement. Licensee shall be named as an additional
   insured on all such policies, none of which may be cancelled or materially
   amended without prior notice to, and the written consent of, Licensee,
   which consent will not be unreasonably withheld. If there is any default
   under any such policy, Licensee shall have the right, but not the
   obligation, to cure such default, including paying any premiums
   thereunder. If Licensee pays any premium or other amount due from Licensor
   under any such policy or otherwise incurs any out-of-pocket cost in curing
   any such default, such amount(s) will be deemed part of and added to the
   Unpaid Advanced Amount under Article 3.

                                      -43-
<PAGE>

IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be executed
in duplicate originals by its duly authorized officer or representative.

BAUSCH & LOMB INCORPORATED                      CONTROL DELIVERY SYSTEMS, INC.

By:  /s/Gary Phillips                           By:  /s/ Michael J. Soja
   ------------------------------                 ----------------------------
Printed Name: Gary Phillips                     Printed Name: Michael J. Soja
             --------------------                            -----------------
Title: Corporate Vice President                 Title: V. Ex President and CFO
      ---------------------------                     ------------------------
<PAGE>

                                  EXHIBIT 1.14
       FIRST GENERATION EXCLUSIVE LICENSED PRODUCT SPECIFICATIONS/DRAWINGS

                                    FIGURE 1
                                      [*]

                                    FIGURE 2
                                      [*]

[*] - INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES AND EXCHANGE
ACT OF 1934, AS AMENDED.

                                      -45-

<PAGE>

                                 EXHIBIT 1.23(a)
                 LICENSED PATENTS, PATENT APPLICATIONS AND IDFs

I.    ISSUED PATENTS AND PENDING PATENT APPLICATIONS

[*]

[*]-INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES AND EXCHANGE
ACT OF 1934, AS AMENDED.

                                      -46-
<PAGE>
                                 EXHIBIT 1.23(b)
                 EXCLUDED PATENTS, PATENT APPLICATIONS AND IDFs

[*]

[*] - INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES AND EXCHANGE
ACT OF 1934, AS AMENDED.

                                      -52-
<PAGE>
                                  EXHIBIT 1.33
                         NON-EXCLUSIVE LICENSED PRODUCT

[*]

[*]-INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES AND EXCHANGE
ACT OF 1934, AS AMENDED.

                                      -58-

<PAGE>

                                  EXHIBIT 1.47
                                 UKRF LICENSES

1.     License Agreement By and Between University of Kentucky Research
Foundation and Controlled Delivery Systems, Inc., dated October 20, 1991, as
amended August 10, 1993

       -Patent Rights:  US Patent No. 5,378,475 "Sustained Release Drug
Delivery Devices"

2.     License Agreement By and Between University of Kentucky Research
Foundation and Controlled Delivery Systems, Inc. dated October 31, 1995

       -Patent Rights:  USSN 08/187,462 "Co-drugs as a Method of Controlled
Delivery" (abandoned)

3.     License Agreement By and Between University of Kentucky Research
Foundation and Controlled Delivery Systems, Inc. dated September 9, 1997

       -Patent Rights:  US Patent No. 5,836,935 "Implantable Refillable
Controlled release Device to Delivery Drugs Directly into an Internal Portion
of the Body"

4.     License Agreement By and Between University of Kentucky Research
Foundation and Controlled Delivery Systems, Inc. dated September 9, 1997

       -Patent Rights:  US Patent No. 5,773,019 "Implantable Controlled
Release Device to Delivery Drugs to an Internal Portion of the Body"

5.     License Agreement By and Between University of Kentucky Research
Foundation and Controlled Delivery Systems, Inc. dated September 9, 1997

       -Patent Rights:  US Patent No. 5,681,964 "Permeable Non-Irritating
Prodrugs of non-steroidal, anti-inflammatory agents"

                                      -61-
<PAGE>

                                  EXHIBIT 2.3
          PATENTS, PATENT APPLICATIONS, AND INVENTION DISCLOSURE FORMS
                             NOT SUBJECT TO NON-SUIT

[*]

[*]-INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES AND EXCHANGE
ACT OF 1934, AS AMENDED.

                                     -62-

<PAGE>

                                   EXHIBIT 2.8
                                CO-OWNED PATENTS

[*]

[*]-INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES AND EXCHANGE
ACT OF 1934, AS AMENDED.

                                      -63-
<PAGE>

                                  EXHIBIT 2.9
                               LICENSEE NON-SUIT

[*]

[*]-INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES AND EXCHANGE
ACT OF 1934, AS AMENDED.
                                      -64-
<PAGE>
                                  EXHIBIT 2.10
                       LICENSEE COVENANT NOT TO FILE: IDFS

                                      -65-
[*]
[*]- Indicates material that has been omitted and for which confidential
treatment has been requested. All such information has been filed with the
Commission pursuant to Rule 24b-2 promulgated under the Securities and Exchange
Act of 1934, as amended.
<PAGE>

                                  EXHIBIT 3.7.3
                                 FORM OF OPTION

                               OPTION CERTIFICATE

No. [___]                                                                [DATE]

      BAUSCH & LOMB INCORPORATED, a New York corporation ( "B&L"), for value
received and pursuant to Section 3.7.3 of an Amended and Restated License
Agreement (the "License Agreement"), dated as of December 9th, 2003, by and
between B&L and Control Delivery Systems, Inc., a Delaware corporation ("CDS"),
hereby certifies that CDS, or its registered assigns (the "Option Holder"), is
entitled to purchase from B&L, in whole or in part, 600,000 shares (the "Option
Shares") of CDS common stock, par value $0.01 per share ("Common Stock"), at the
purchase price of $5.00 per share (the "Exercise Price"), at any time or from
time to time prior to 5:00 P.M., New York, New York time, on JUNE 30, 2004 (the
"Expiration Time"), all subject to the terms, conditions and adjustments set
forth below in this Option Certificate.

1.    Exercise.

      a.    Notice of Exercise. The Option Holder may exercise this option, from
            time to time, in whole or in part, by delivering a notice of
            exercise to B&L in substantially the attached form at any time prior
            to the Expiration Time.

      b.    Closing of Exercise. The closing of any exercise of this option must
            occur at the offices of B&L.

            i.    B&L Deliveries. At the closing, B&L shall deliver to the
                  Option Holder:

                  A.    certificates representing the Option Shares being
                        purchased endorsed for transfer or accompanied by
                        executed stock powers,

                  B.    customary representations regarding ownership of the
                        Option Shares, and

                  C.    an agreement to indemnify the Option Holder for any
                        breach of the representations regarding ownership of the
                        Option Shares

            ii.   Option Holder Deliveries. At the closing, the Option Holder
                  shall deliver to B&L the aggregate exercise price for the
                  Option Shares being purchased by wire transfer or check drawn
                  on immediately available funds.

2. Transferability of Option. This option is transferable by the Option Holder
in whole or in part. B&L shall maintain a register of the names and addresses of
Option Holders and the transferees of this option. Upon the surrender of this
Option Certificate and a completed assignment form in substantially the attached
form, B&L shall at its expense execute and deliver

                                                                              66
<PAGE>

to the Option Holder, its transferees, or both a new Option Certificate or
Certificates covering the total number of Option Shares covered by the
surrendered Option Certificate or Certificates.

3.    Representations, Warranties and Covenants.

      a.    Representations. B&L represents and warrants to the Option Holder as
            follows as of the date of this Option Certificate:

            i.    B&L has the full power and authority to grant this option.

            ii.   B&L is the registered holder and beneficial owner of the
                  Option Shares.

            iii.  The Option Shares are unencumbered except for encumbrances
                  imposed by the Stockholders' Agreement (the "Stockholders
                  Agreement"), dated as of August 8, 2000, by and among CDS and
                  the stockholders party thereto, and the Standstill Agreement
                  (the "Standstill Agreement"), entered into in connection with
                  the License Agreement by CDS and B&L.

      b.    No Disposition of Option Shares. Until the Expiration Time, B&L
            shall not and shall not agree to dispose of any interest in the
            Option Shares or create or allow to be created any encumbrance on
            the Option Shares.

      c.    Cooperation. B&L shall cooperate with the Option Holder to
            effectuate any amendments or waivers to the Stockholders Agreement,
            the Standstill Agreement or any other similar agreement, or any
            amendment to CDS' Certificate of Incorporation, to enable the
            closing of any purchase of Option Shares to occur, provided that B&L
            shall not be required to incur any costs or expenses other than out
            of pocket expenses or costs to its own advisors in connection
            therewith.

4.    Adjustment to Option Shares.

      a.    Recapitalization. If the outstanding shares of Common Stock are
            changed into or exchanged for a different number or kind of shares
            or other CDS securities by reason of any recapitalization,
            reclassification, stock split, stock dividend, combination,
            subdivision or similar transaction, the number and kind of Option
            Shares and the Exercise Price shall be appropriately and
            proportionally adjusted.

      b.    Sale of CDS. If CDS consolidates or merges with any other entity and
            the Common Stock is converted into or exchanged for stock or other
            securities of another entity or for cash or other property (any of
            the foregoing, "Merger Consideration"), B&L shall retain the Merger
            Consideration, and the Option Holder shall receive upon exercise the
            Merger Consideration attributable to the shares of Common Stock
            being purchased.

5.    Miscellaneous.

      a.    Remedies/No Waivers. B&L stipulates that in the event of any default
            or threatened default by B&L in the performance of this Option
            Certificate, the Option Holder's remedies at law will be inadequate.
            A court may specifically enforce the terms of this

                                                                              67
<PAGE>

            Option Certificate or enjoin any violation or impending violation of
            the terms of this Option Certificate. Any delay or failure to
            enforce this Option Certificate does not impair the right to
            enforcement and is not a waiver of any breach or any future breach.
            All remedies of the Option Holder shall be cumulative and not
            alternative.

      b.    Choice of Law/Forum. Any legal or other action pertaining to the
            terms of this Certificate must be brought in the state and federal
            courts nearest the principal place of business of the defendant in
            the action. This Option Certificate shall be construed and
            interpreted in accordance with, and its performance shall be
            governed by, the substantive laws of the state where such courts are
            located, without regard to the state's conflict of laws principles.
            B&L and the Option Holder consent to the exclusive personal
            jurisdiction and venue of such courts in the event of such action.

      c.    Notices.

            i.    Delivery. Any notice, request, instruction or other
                  communication required or permitted to be given pursuant to
                  this Option Certificate shall be in writing and shall be given
                  as follows to the address indicated in Section 5(c)(iii):

                  A.    by hand,

                  B.    by prepaid registered or certified mail, return receipt
                        requested,

                  C.    by a nationally recognized overnight courier service, or

                  D.    via facsimile.

            ii.   Timing of Effectiveness. Any notice shall be deemed made as of
                  the time set forth in this Section 5(c)(ii).

                  A.    If delivered by hand, upon delivery.

                  B.    If sent by mail, 3 days after the date of mailing
                        indicated on the certified or registered mail receipt.

                  C.    If sent by overnight courier service, on the next
                        business day.

                  D.    If sent by facsimile, on the date of confirmed
                        receipt.

            iii.  Addresses for Notice. The addresses for notice are as
                  follows:

                  A.    If to the original Option Holder

                        Control Delivery Systems
                        400 Pleasant Street
                        Watertown, MA 02472
                        Attn:  Paul Ashton, Ph.D., President
                        Facsimile Number:  617-926-2313

                                                                              68
<PAGE>

                        with a copy to:

                        Control Delivery Systems
                        400 Pleasant Street
                        Watertown, MA  02472
                        Attn:  Lori Freedman, General Counsel
                        Facsimile Number:  (617) 926-5050

                        and to:

                        Ropes & Gray
                        One International Place
                        Boston, MA  02110
                        Attn:  Mary E. Weber
                        Facsimile Number:  (617) 951-7050.

                  B.    If to a subsequent Option Holder, to the address showing
                        on the transfer register maintained by B&L for such
                        Option Holder.

                  C.    If to B&L:

                        Bausch & Lomb Incorporated
                        1400 N. Goodman Street
                        Rochester, NY  14609
                        Attn:  Gary Phillips, M.D.
                               Corporate Vice President, Global Pharmaceutical
                               and Vitreoretinal
                        Facsimile Number:  (585) 338-0811

                        with a copy to:

                        Bausch & Lomb Pharmaceuticals, Inc.
                        One Bausch & Lomb Place
                        Rochester, NY 14604
                        Attn:  Robert B. Stiles
                                 Senior Vice President and General Counsel
                        Facsimile Number: (585) 338-8706

      d.    Amendments and Waivers. This Option Certificate may be amended only
            by a written instrument signed by B&L and the Option Holder. B&L
            shall record any amendments of this Option Certificate in the
            register maintained to record transfers. Any term of this Option
            Certificate may be waived only by a written instrument signed by the
            waiving party.

      e.    Severability. Any terms or provision of this Option Certificate
            which are invalid or unenforceable in any jurisdiction are
            ineffective only to the extent of such invalidity or
            unenforceability and only in such jurisdiction. The invalidity of
            any term of this Option Certificate in one jurisdiction does not
            impair the enforceability of the

                                                                              69
<PAGE>

            remaining terms or affect the validity of the term in any other
            jurisdiction.

      f.    Construction. The headings contained in this Option Certificate are
            for convenience only and are not a part of this Option Certificate.

                                                                              70
<PAGE>

      IN WITNESS WHEREOF, this Option Certificate has been duly executed by B&L
and as of the date first written above.

                                             BAUSCH & LOMB INCORPORATED

                                             By:_____________________________
                                             Name:
                                             Title:

                   [SIGNATURE PAGE TO B&L OPTION CERTIFICATE]
<PAGE>

                           FORM OF NOTICE OF EXERCISE

           [To be executed and delivered only upon exercise of option]

To:Bausch & Lomb Incorporated

      The undersigned registered holder of an option to purchase Control
Delivery Systems, Inc. common stock, par value $.01 per share, from Bausch &
Lomb Incorporated hereby exercises such Option for [_______________] shares. The
closing of this exercise shall occur on [_______________].(1) At the closing,
the undersigned requests that B&L transfer the shares being purchased to
[______________], whose address is [________________].

Dated: [_____________]

                                               _________________________________
                                               Signature(2)

----------
(1) This date must be a business day on or before the 30th day following the
        date of the notice of exercise.

(2) The signature must conform to the name of the holder as specified on
        the face of the Option Certificate or to a registered assign on the
        transfer register maintained by B&L. Otherwise, the person or entity
        must provide B&L with evidence of valid assignment.

                 [FORM OF EXERCISE FOR B&L OPTION CERTIFICATE]

<PAGE>

                               FORM OF ASSIGNMENT

 [To be executed and delivered to Bausch & Lomb only upon assignment of option,
                              in whole or in part]

      For value received, the undersigned registered holder of an option to
purchase Control Delivery Systems, Inc. common stock, par value $.01 per share,
from Bausch & Lomb Incorporated hereby sells, assigns and transfers unto
[________________], whose address is [____________], the rights represented by
such option to purchase [______________](3) shares of Control Delivery Systems,
Inc. common stock and appoints [____________] attorney to make such transfer on
the transfer register maintained by Bausch & Lomb Incorporated for such
purposes, with full power of substitution in the premises.

Dated: [________________]

                                        _____________________________
                                              Signature(4)

----------
(3) Insert the number of shares assigned. In the case of a partial assignment,
      Bausch & Lomb Incorporated will execute and deliver a new Option
      Certificate representing the unassigned portion of the option to the
      assigning holder.

(4) The signature must conform to the name of the holder as specified on
      the face of the Option Certificate or to a registered assign on the
      transfer register maintained by B&L. Otherwise, the person or entity must
      provide B&L with evidence of valid assignment.

<PAGE>

                                  EXHIBIT 3.7.4
                             FORM OF PROMISSORY NOTE

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT"), OR APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT OR SUCH LAWS COVERING THE TRANSFER OR AN
OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE BORROWER THAT SUCH
REGISTRATION IS NOT REQUIRED.

                                 PROMISSORY NOTE

$6,794,719.00                                                 December 9th, 2003

      FOR VALUE RECEIVED, the undersigned Control Delivery Systems, Inc. (the
"Borrower") promises to pay to Bausch & Lomb Incorporated (the "Lender") on the
Maturity Date (as hereinafter defined), the principal sum of Six Million Seven
Hundred Ninety-Four Thousand Seven Hundred and Nineteen Dollars ($6,794,719), or
such lesser principal amount as may be outstanding hereunder. Payments hereunder
shall be made to the Lender at 1400 N. Goodman Street, Rochester, New York or at
such other address as the Lender may specify.

      1.   MATURITY DATE. The term "Maturity Date" means July 1, 2007. If the
Borrower has not repaid the entire principal amount due to the Lender under this
Note by the Maturity Date (whether by prepayment or by offset as described
below), the Borrower will be liable for and shall pay a late charge at an annual
rate of one and one-half (1.5) times the prime rate in effect as announced by
the JPMorgan Chase Bank, N.A. from time to time, on any outstanding balance of
the principal amount remaining after the Maturity Date. This late charge will
compound annually and will accrue commencing on the day following the Maturity
Date until the entire remaining principal amount of this Note has been repaid.

                                       -74-
<PAGE>

      2.   OFFSET. The Borrower agrees that the Lender will have the right to
offset and apply certain amounts owing by the Lender to the Borrower under the
Amended and Restated License Agreement dated as of December 9th, 2003 between
the Borrower and the Lender (the "License Agreement") against the amount of
principal due under this Note. Such amounts that may be offset include (a) any
Milestone Payments (as defined in the License Agreement) owing from Lender to
Borrower, and (b) any royalty payments otherwise due Borrower under Article 3 of
the License Agreement, in each case until the entire remaining principal amount
of this Note has been fully repaid. If the Lender elects to apply any amounts
described in the preceding sentence against principal due hereunder, the Lender
shall provide an executed Certificate of Offset of Principal in the form of
Exhibit A to the Borrower promptly after each such application; provided,
however, that if such application is with respect to royalty payments owed by
the Lender to the Borrower, Lender shall furnish the Certificate of Offset of
Principal to the Borrower in conjunction with the Royalty Report referenced in
Section 7.1 of the License Agreement. The remaining principal amount owed under
this Note shall be reduced to the amount indicated on such Certificate.
Notwithstanding the foregoing, neither the existence of this Note nor the
provision of one or more Certificates of Offset of Principal by the Lender shall
affect any of the Borrower's rights under the License Agreement, including
without limitation the Borrower's right to audit and dispute the amounts of any
royalty payments pursuant to Sections 7.1 and 7.2 of the License Agreement.

      3.   PREPAYMENTS. This Note may be prepaid in whole or from time to time
in part without premium or penalty, including without limitation by means of any
payment made by the Borrower under Section 3.7.3 of the License Agreement.

      4.    UNSECURED. The indebtedness represented by this Note is unsecured.

      5.    DEFAULT.

            5.1   Each of the following shall constitute an "Event of Default"
for purposes of this Note:

                                       -75-
<PAGE>

            5.1.1 the Borrower fails to pay any amount
      on this Note when it is due and payable;

            5.1.2 there occurs any material event of default by the Borrower
      under the License Agreement, and any applicable grace period shall have
      expired;

            5.1.3 if the Borrower files a petition in bankruptcy
      or is adjudicated bankrupt, or if a petition in bankruptcy is filed
      against the Borrower and such petition is not discharged or dismissed
      within sixty (60) days thereafter, or if the Borrower makes any assignment
      for the benefit of its creditors or any arrangement pursuant to any
      bankruptcy law, or if a trustee, custodian or receiver is appointed for
      the Borrower or any of its assets or property;

            5.1.4 there occurs any material event of default by
      Borrower under any agreement relating to its Material Financing Debt.
      "Material Financing Debt" means any financing debt (other than under this
      Note) outstanding in an aggregate amount of principal (whether or not due)
      and accrued interest exceeding $5,000,000; or

            5.1.5 the dissolution or liquidation of Borrower.

      5.2   If there shall occur an Event of Default under subparagraphs 5.1.1,
5.1.2 or 5.1.4 above, Lender shall be entitled by notice to Borrower to declare
this Note and any interest accrued hereon and all liabilities of Borrower
hereunder to be forthwith due and payable; and if there shall occur an Event of
Default under subparagraphs 5.1.3 or 5.1.5 above, then this Note and any
interest accrued hereon and all liabilities of Borrower hereunder to Lender
shall automatically become forthwith due and payable; and in each case the same
shall thereupon become due and payable without presentment, demand, protest or
notice of any kind, all of which are hereby expressly waived.

      5.3   Borrower agrees to pay all reasonable costs and expenses incurred by
Lender (including reasonable attorney's fees), if any, in connection with the
enforcement or collection of this Note arising after the occurrence of any Event
of Default or any event which with notice or lapse of time or both would
constitute an Event of Default, unless such occurrence is cured by Borrower
within any applicable grace period or such reimbursement is not required

                                      -76-
<PAGE>

by the terms of any waiver granted by Lender in respect of such occurrence. The
obligations of Borrower under this paragraph shall survive the payment of this
Note.

      6.    WAIVERS. The Borrower waives to the extent not prohibited by
applicable law (a) all presentments, demands for performance, notices of
nonperformance (except to the extent required by the provisions hereof),
protests, notices of protest and notices of dishonor, (b) any requirement of
diligence or promptness on the part of the Lender in the enforcement of its
rights under this Note, (c) all notices of every kind which may be required to
be given by any statute or rule of law, (d) any valuation, stay, appraisement or
redemption laws and (e) any defense of any kind (other than payment) which the
Borrower may now or hereafter have with respect to its liability under this
Note. No failure or delay on the part of Lender in the exercise of any power or
right in this Note shall operate as a waiver thereof, and no exercise or waiver
of any single power or right, or the partial exercise thereof, shall affect the
Lender's rights with respect to any and all other rights and powers.

      7.    ASSIGNABILITY. This Note shall bind and inure to the benefit of the
Borrower and the Lender and their permitted successors and assigns.
Notwithstanding the foregoing, neither party may assign, delegate, or
subcontract its rights and obligations hereunder without the prior written
consent of the other party, which shall not be unreasonably withheld or delayed,
except that (i) no consent to assignment shall be necessary in the case of any
transfer by the Lender of substantially all of the assets or stock of Lender's
proprietary (branded and/or generic) ophthalmic pharmaceutical business, and
(ii) no consent to assignment shall be necessary in the case of any transfer by
the Borrower of substantially all of the assets or stock of the Borrower's
opthalmics business, and provided that such assignee, delegatee or transferee
shall be at least as creditworthy as the Borrower (where creditworthiness of the
assignee, delegatee or transferee shall take into account the fair value of the
opthalmics business being transferred to such assignee, delegatee or
transferee)

                                       -77-
<PAGE>

      8.    LOSS OR MUTILATION OF NOTE. Upon receipt by the Borrower of evidence
satisfactory to the Borrower of the loss, theft, destruction or mutilation of
this Note, together with indemnity reasonably satisfactory to the Borrower, in
the case of loss, theft or destruction, or the surrender and cancellation of the
Note, in the case of mutilation, the Borrower shall execute and deliver to
Lender a new Note of like tenor as this Note.

      9.    NOTICES. Any notice, request, instruction or other communication
required or permitted to be given under this Note shall be in writing and shall
be given by sending such notice properly addressed to the other party's address
shown below (or any other address as either party may indicate by notice in
writing to the other from time to time as required by this paragraph): (i) by
hand or by prepaid registered or certified mail, return receipt requested, (ii)
by a nationally recognized overnight courier service, or (iii) via facsimile
(provided such facsimile is sent by a machine which acknowledges receipt of the
transmission) at the following addresses:

      If to the Borrower:

            Control Delivery Systems
            400 Pleasant Street
            Watertown, MA 02472
            Attn: Chief Executive Officer
            Facsimile Number:  617-926-2313

      With a copy to:

            Control Delivery Systems
            400 Pleasant Street
            Watertown, MA  02472
            Attn: Lori Freedman, General Counsel
            Facsimile Number: (617) 926-5050

                                       -78-
<PAGE>

       and to:

            Ropes & Gray
            One International Place
            Boston, MA  02110
            Attn: Mary E. Weber
            Facsimile Number: (617) 951-7050

       If to the Lender:

            Bausch & Lomb Incorporated
            1400 N. Goodman Street
            Rochester, NY 14609
            Attn: Gary Phillips, M.D.
                  Corporate Vice President, Global Pharmaceutical and
            Vitreoretinal
            Facsimile Number: (585) 338-0811

       With a copy to:

            Bausch & Lomb Pharmaceuticals, Inc.
            One Bausch & Lomb Place
            Rochester, NY 14604
            Attn: Robert B. Stiles
                  Senior Vice President and General Counsel
            Facsimile Number: (585) 338-8706

Any notice, if mailed properly addressed, postage prepaid, shall be deemed made
(i) three (3) days after the date of mailing as indicated on the certified or
registered mail receipt, (ii) on the next business day if sent by overnight
courier service, or (iii) on the date of delivery if hand delivered or the date
of transmission if sent by facsimile transmission.

      10.   GOVERNING LAW; CONSENT TO JURISDICTION. This Note shall be governed
by and construed in accordance with the internal laws of the State of New York
applicable to agreements made and to be performed entirely within such State,
including all matters of construction, validity and performance (including
Section 5-1401 and 5-1402 of the New York General Obligations Law but excluding
all other choice of law and conflicts of law rules). Any legal or other action
hereunder shall be brought in the State and federal courts nearest the

                                      -79-
<PAGE>

principal place of business of the defendant in any such action, and the parties
consent to the exclusive personal jurisdiction and venue of such courts in the
event of such action.

      11.   CONSTRUCTION. In construing this Note, neither party shall have been
deemed to have drafted this Note, and no court or arbitrator will construe or
interpret this Note in favor of a party based on the presumption that it did not
draft the term or clause at issue, it being agreed that each party has ably
represented itself and has been ably represented by counsel.

      12.   WAIVER AND AMENDMENT. Any term of this Note may only be amended,
waived or modified with the written consent of the Borrower and the Lender of
this Note.

            [The remainder of this page is intentionally left blank.]

                                      -80-
<PAGE>

      IN WITNESS WHEREOF, the undersigned has caused this Note to be executed as
of the date first above written.

BORROWER                                    CONTROL DELIVERY SYSTEMS, INC.

                                            By:_________________________________

                                            Name:_______________________________

                                            Title:______________________________

LENDER                                      BAUSCH & LOMB INCORPORATED

                                            By:_________________________________

                                            Name:_______________________________

                                            Title:______________________________

                                      -81-

<PAGE>

                              PAYMENTS OF PRINCIPAL

<TABLE>
<CAPTION>
                            Amount of                     Unpaid
                            Principal                    Principal             Notation
Date                      Repaid/Offset                   Balance               Made By
<S>                       <C>                            <C>                   <C>

---------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------

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</TABLE>

                                      -82-

<PAGE>

                                                                    Exhibit A to
                                                                 Promissory Note

                       CERTIFICATE OF OFFSET OF PRINCIPAL

      Reference is hereby made to the Promissory Note dated December 9th, 2003
by Control Delivery Systems, Inc. in favor of Bausch & Lomb Incorporated in the
original principal amount of $6,794,719 (the "Note"). Capitalized terms not
defined herein have the meanings given such terms in the Note.

      In accordance with paragraph 2 of the Note, the Lender hereby certifies to
the Borrower that the Lender has elected to offset against the remaining
principal amount of the Note the following funds owed by the Lender to the
Borrower under the License Agreement:

<TABLE>
<CAPTION>
                    Description of                  Amount      Remaining Principal Balance
Date of Offset      Amounts Offset                  Offset         of Note (after Offset)
--------------      --------------                  ------      ---------------------------
<S>                 <C>                             <C>         <C>

</TABLE>

      IN WITNESS WHEREOF, the undersigned has caused this Certificate to be
executed as of the date first above written.

LENDER                                         BAUSCH & LOMB INCORPORATED

                                               By:______________________________

                                               Name:____________________________

                                               Title:___________________________

                                      -83-

<PAGE>

                                   EXHIBIT 4.1
                               MILESTONE PAYMENTS

Licensee shall make the following one-time Milestone Payments to Licensor within
ten (10) business days after each of the following events:

(i)   [*] - the later of (a) June 1, 2000, or (b) the date Phase III
clinicals for uveitis have begun for the first Licensed Product;

(ii)  [*] - the later of (a) March 1, 2001, or (b) the date Phase III
clinicals for the first Licensed Product for DME or ARMD have begun;

(iii) [*] - the later of (a) September 1, 2002, or (b) the date an NDA
has been filed for the first Licensed Product for uveitis;

(iv)  [*] - the later of (a) March 1, 2003, or (b) the date an NDA has
been filed for the first First Generation Exclusive Licensed Product for either
DME or ARMD;

(v)   [*] - the later of (a) November 1, 2003, or (b) the date the FDA
has approved the NDA for the first First Generation Exclusive Licensed Product
for a uveitis related indication; and

(vi)  [*] - the later of (a) April 1, 2004, or (b) the date the FDA has
approved the NDA for the first First Generation Exclusive Licensed Product for
either a DME or ARMD related indication.

[*]-INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES AND EXCHANGE
ACT OF 1934, AS AMENDED.
                                      -84-

<PAGE>

                                   EXHIBIT 5.3

     LICENSEE'S SPECIFIC DILIGENCE OBLIGATIONS - FIRST GENERATION EXCLUSIVE
                   LICENSED PRODUCT (NON-UVEITIS INDICATIONS)

[*]

[*]-INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES AND EXCHANGE
ACT OF 1934, AS AMENDED.

                                      -85-

<PAGE>

                                   EXHIBIT 5.4

   LICENSEE'S SPECIFIC DILIGENCE OBLIGATIONS - NON-EXCLUSIVE LICENSED PRODUCTS

[*]

[*]-INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES AND EXCHANGE
ACT OF 1934, AS AMENDED.

                                      -86-

<PAGE>

                                EXHIBIT 16.1(vi)
              LITIGATION, PROCEEDINGS, GOVERNMENTAL INVESTIGATIONS

                                 Not Applicable

                                      -87-

<PAGE>

                                EXHIBIT 16.2(iii)
                   EXCEPTIONS TO OWNERSHIP OF LICENSED PATENTS

1. US Patent No. 5,378,475 "Sustained Release Drug Delivery Devices"

Owned by University of Kentucky Research Foundation and licensed to Control
Delivery Systems, Inc. pursuant to the License Agreement By and Between
University of Kentucky Research Foundation and Control Delivery Systems, Inc.,
dated October 20, 1991, as amended August 10, 1993

2. USSN 08/187,462 "Co-drugs as a Method of Controlled Delivery" (abandoned)

Owned by University of Kentucky Research Foundation and licensed to Control
Delivery Systems, Inc. pursuant to the License Agreement By and Between
University of Kentucky Research Foundation and Control Delivery Systems, Inc.
dated October 31, 1995

3. US Patent No. 5,836,935 "Implantable Refillable Controlled release Device to
Delivery Drugs Directly into an Internal Portion of the Body"

Owned by University of Kentucky Research Foundation and licensed to Control
Delivery Systems, Inc. pursuant to the License Agreement By and Between
University of Kentucky Research Foundation and Control Delivery Systems, Inc.
dated September 9, 1997

4. US Patent No. 5,773,019 "Implantable Controlled Release Device to Delivery
Drugs to an Internal Portion of the Body"

Owned by University of Kentucky Research Foundation and licensed to Control
Delivery Systems, Inc. pursuant to the License Agreement By and Between
University of Kentucky Research Foundation and Control Delivery Systems, Inc.
dated September 9, 1997

5. US Patent No. 5,681,964 "Permeable Non-Irritating Prodrugs of non-steroidal,
anti-inflammatory agents"

Owned by University of Kentucky Research Foundation and licensed to Control
Delivery Systems, Inc. pursuant to the License Agreement By and Between
University of Kentucky Research Foundation and Controlled Delivery Systems, Inc.
dated September 9, 1997

                                      -88-

<PAGE>

                                 EXHIBIT 16.2(v)
                               LICENSOR DISCLOSEES

I. ALL OFFICERS, EMPLOYEES, AND CONSULTANTS OF LICENSOR AS OF THE AMENDMENT DATE

[*]

[*]-INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES AND EXCHANGE
ACT OF 1934, AS AMENDED.

                                      -89-

<PAGE>

                                  EXHIBIT 36.1A
                               CLINICAL AGREEMENTS

[*]

[*]-INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES AND EXCHANGE
ACT OF 1934, AS AMENDED.
                                      -92-

<PAGE>

                                  EXHIBIT 36.1B
                                TRIAL AGREEMENTS

[*]

[*]-INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES AND EXCHANGE
ACT OF 1934, AS AMENDED.

                                      -93-

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