EXHIBIT 10.10

 

CONFIDENTIAL TREATMENT REQUESTED

 

EXCLUSIVE LICENSE AGREEMENT

 

for

 

ADIPOSE-DERIVED STEM CELLS

 

This exclusive license agreement (“Agreement”) is made effective this 16th day
of October, 2001 (“Effective Date”), between The Regents of the University of
California, a California corporation, having its statewide administrative
offices at 1111 Franklin Street, 12th Floor, Oakland, California 94607-5200
(“The Regents”), and StemSource, Inc., a Delaware corporation, having a
principal place of business at 1125 Business Center Circle, Suite A, Thousand
Oaks, California 91320 (“Licensee”).

 

BACKGROUND

 

A.                                   Certain inventions, generally characterized
as “Connective Tissue Stem Cells” (“Inventions”), were made in the course of
research at the University of California, Los Angeles by Drs. Marc H. Hedrick,
H. Peter Lorenz, Prosper Benhaim and Min Zhu (“Regents’ Inventors”) and at the
University of Pittsburgh (“Pittsburgh”) by Drs. Adam J. Katz, J. Ramón Llull and
J. William Futrell (“Pittsburgh’s Inventors”) (collectively, the “Inventors”).
The Inventions are disclosed in UC Case No. 2000-310 and are covered by Patent
Rights as defined below.

 

B.                                     Licensee acknowledges that The Regents
and Pittsburgh have not entered into any agreement that sets out the rights of
each in regards to patent prosecution matters, inventorship or licensing of the
Inventions.

 

C.                                     Licensee acknowledges that Pittsburgh has
filed and taken the lead in prosecuting PCT/US00/06232 (filed 03/10/2000 and
designating the US) and The Regents has filed and taken the lead in prosecuting
a Continuation-in-Part application (filed 09/10/2001).  No decisions have been
made by the parties concerning Patent Rights.

 

D.                                    Licensee acknowledges that certain of the
Inventions may be jointly owned by The Regents and Pittsburgh and that each
party is licensing its interest in Patent Rights independently of the other.

 

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E.                                      Licensee acknowledges and agrees that
the rights granted under this Agreement may be limited by Pittsburgh’s joint
ownership or sole ownership in certain claims under Patent Rights, and the
licenses granted under this Agreement are granted solely under The Regents
undivided interest in Patent Rights, whatever those rights might be.

 

F.                                      Licensee and The Regents have executed a
Letter of Intent (UC Control No. 2001-30-0642) with an effective date of June 4,
2001.

 

G.                                     Licensee wishes to obtain rights from The
Regents for the exclusive commercial development, use and sale of products from
The Regents’ interest in the Inventions, and The Regents is willing to grant
those rights so that the Inventions may be developed to their fullest and the
benefits enjoyed by the general public.

 

H.                                    Licensee is a “a small business firm” as
defined in 15 U.S.C. § 632.

 

I.                                         Licensee and The Regents recognize
and agree that royalties due under this Agreement on products and methods will
be paid by Licensee on both pending patent applications and issued patents.

 

- - oo 0 oo - -

 

In view of the foregoing, the parties agree:

 

1.                                       DEFINITIONS

 

1.1                                 “Affiliate” means any corporation or other
business entity: (i) in which Licensee owns or controls, directly or indirectly,
at least fifty percent (50%) of the outstanding stock or other voting rights
entitled to elect directors; or (ii) which owns, directly or indirectly, at
least fifty percent (50%) of the outstanding stock or other voting rights
entitled to elect directors of the Licensee; or (iii) which is under common
ownership or control with Licensee to the extent of at least fifty percent (50%)
of the outstanding stock or other voting rights entitled to elect directors.
Notwithstanding the foregoing, in any country where the local law does not
permit foreign equity participation of at least fifty percent (50%), then an
“Affiliate” includes any company in which

 

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Licensee owns or controls, or is owned or controlled by, or is under common
ownership or control with, directly or indirectly, the maximum percentage of
outstanding stock or voting rights permitted by local law.

 

1.2                                 “Cell Replacement Therapy” means the use of
adipose-derived stem cells for the therapeutic replacement of cells and tissues
damaged by disease or injury.

 

1.3                                 “Consumables” means any product derived from
or identified using stems cells such as specialized culture media and protein
factors useful for the proliferation, differentiation and maintenance of
adipose-derived stem cells used as either a therapeutic or in an elective
procedure and for cultured cells/tissues applications in general.

 

1.4                                 “Cosmetic Surgery and Reconstructive
Surgery” means the use of adipose-derived stem cells or matrixes in Cosmetic
Surgery or non life-threatening elective procedures, including but not limited
to wrinkle fills, and breast augmentation.

 

1.5                                 “Field of Use” means:

 

1.5.1                        Cell Replacement Therapy in humans;

 

1.5.2                        Gene Therapy in humans;

 

1.5.3                        Cosmetic Surgery and Reconstructive Surgery in
humans;

 

1.5.4                        Research and Collaboration Services; and

 

1.5.5                        the development and commercialization of
Consumables.

 

1.6                                 “Gene Therapy” means the use of
adipose-derived stem cells as a vehicle to deliver or replace genes and gene
function in a human host.

 

1.7                                 “Licensed Method” means any method that is
covered by or claimed in Patent Rights, or the use of which would constitute,
but for the license granted to Licensee under this Agreement, an infringement of
any unexpired claim of a patent or pending claim of a patent application
included in Patent Rights.

 

1.8                                 “Licensed Product” means any product that is
covered by or claimed in Patent Rights; that is used in a manner requiring the
performance of the Licensed Method; that is produced by the Licensed Method or
that the manufacture, use or sale of which would be an infringement, but for the
license granted to Licensee pursuant to this Agreement, of an unexpired claim of
a patent

 

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or pending claim of a patent application included in Patent Rights.  This
definition of Licensed Product also includes a service either used by Licensee,
an Affiliate or sublicensee or provided by Licensee, an Affiliate or sublicensee
to its customers when such service requires the use of Licensed Product or
performance of Licensed Method.  Additionally, for the avoidance of doubt, if
such product is a component of a larger unit such as a kit, composition of
matter or combination, then such kit, composition of matter or combination is
deemed to be the Licensed Product for purposes of this definition.

 

1.9                                 “Net Sales” means the total of the gross
invoice prices from the Final Sale of Licensed Product or Licensed Method
performed by Licensee, an Affiliate or a sublicensee, less the sum of the
following actual and customary deductions where applicable:  cash, trade or
quantity discounts; sales, use, tariff, import/export duties or other excise
taxes imposed on particular sales (excepting value added taxes or income taxes);
transportation charges, including insurance; and allowances or credits to
customers because of rejections or returns.  Final Sale means the last sale
within the control of Licensee, an Affiliate or sublicensee to an independent,
unaffiliated third party (including without limitation to distributors and
agents), regardless of whether Licensee, an Affiliate or sublicensee had control
over prior infringing acts.  For purposes of calculating Net Sales, any sale
among Licensee, an Affiliate or sublicensee of a Licensed Product for end use
(and not for resale) by Licensee, an Affiliate or sublicensee will be considered
a Final sale at the price normally charged to independent, unaffiliated third
parties, if any, at the time of such end use sale or, in the event there is no
such price, at the fair market value thereof at the time of such end use sale.
Any sale of a Licensed Product among Licensee, an Affiliate or sublicensee will
not be considered a Final Sale where such sale is not for end use by Licensee,
an Affiliate or sublicensee.

 

1.10                           “Patent Rights” means The Regents’ undivided
interest in the following patent applications or patents and continuing
applications thereof including divisions and substitutions

 

UC Case
Number:

 

United States (“U.S.”)
Application Number:

 

Filing Date:

 

Filed by:

2000-310-1

 

U.S. App No. 60/123,711

 

03/10/1999 abandoned

 

Pittsburgh

2000-310-2

 

U.S. App No. 60/162,462

 

10/29/1999 abandoned

 

Pittsburgh

2000-310-3

 

PCT/US00/06232

 

03/10/2000

 

Pittsburgh

2000-310-4

 

 

 

09/10/2001

 

The Regents

 

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but excluding continuation-in-part applications (to the extent that claims are
not supported in the parent); any patents on said applications including
reissues, reexaminations and extensions; and any corresponding foreign
applications or patents.

 

1.11                           “Research and Collaboration Services” means
services provided to a third party in exchange for compensation including but
not limited to the identification of useful chemicals, gene/protein function,
and novel genes, and uses of adipose-derived stem cells as research tools.

 

2.                                       LIFE OF PATENT EXCLUSIVE GRANT

 

2.1                                 Subject to the limitations set forth in this
Agreement, The Regents grants to Licensee a world-wide license under The
Regents’ undivided interest in Patent Rights to make, have made, use, sell,
offer to sell and import Licensed Product and to practice Licensed Method to the
extent permitted by law.

 

2.2                                 Licensee acknowledges that Pittsburgh has
the right to grant licenses to its undivided interest in Patent Rights.

 

2.3                                 Except as otherwise provided in this
Agreement, the license granted in Paragraph 2.1 is exclusive for the life of the
Agreement.

 

2.4                                 The license granted in Paragraphs 2.1 and
2.2 is limited to methods and products that are within the Field of Use.  For
other methods and products, Licensee has no license under this Agreement.

 

2.5                                 The Regents reserves the right to practice,
and for other educational and non-profit institutions to practice, the
Inventions and associated technology for educational and research purposes,
including publication and other communication of research results.

 

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3.                                       SUBLICENSES

 

3.1                                 The Regents also grants to Licensee the
right to issue sublicenses to third parties to make, have made, use, sell, offer
to sell and import Licensed Product and to practice Licensed Method, as long as
Licensee has current exclusive rights thereto under this Agreement, except that
the sublicensee may not be granted the right to further sublicense the
technology.  To the extent applicable, sublicenses must include all of the
rights of and obligations due to The Regents contained in this Agreement.

 

3.2                                 Licensee shall promptly provide The Regents
with a copy of each sublicense issued, collect and guarantee payment of all
payments due The Regents from sublicensees and summarize and deliver all reports
due The Regents from sublicensees.

 

3.3                                 Upon termination of this Agreement for any
reason, The Regents, at its sole discretion, shall determine whether Licensee
shall cancel or assign to The Regents any and all sublicenses.

 

3.4                                 Licensee shall pay to The Regents
              ***              of any compensation, exclusive of the earned
royalty on Net Sales and milestone payments provided for in Article 6 (License
Maintenance Fee and Milestone Payments), received by Licensee from a sublicensee
or development and marketing partner (“Attributed Income”).

 

3.5                                 Attributed Income shall include, but not be
limited to, the following:

 

3.5.1                        license issue fees;

 

3.5.2                        maintenance fees, and

 

3.5.3                        milestone payments.

 

3.6                                 Attributed Income shall not include:

 

3.6.1                        money derived from debt financing;

 

3.6.2                        bona fide equity (and conditional equity, such as
warrants, convertible debt and the like) investments in Licensee at market
value;

 

3.6.3                        reimbursements of patent and patent-related
expenses; and

 

3.6.4                        bona fide research support payments (not in excess
of reasonable and customary rates).

 

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4.                                       PAYMENT TERMS

 

4.1                                 Paragraphs 1.10, 1.7 and 1.8 define Patent
Rights, Licensed Method, and Licensed Product so that royalties are payable on
products and methods covered by both pending patent applications and issued
patents.  Royalties will accrue in each country for the duration of Patent
Rights in that country and are payable to The Regents when Licensed Product is
invoiced or if not invoiced, when delivered to a third party.

 

4.2                                 Licensee shall pay to The Regents earned
royalties quarterly on or before February 28, May 31, August 31 and November 30
of each calendar year.  Each payment will be for earned royalties accrued within
Licensee’s most recently completed calendar quarter.

 

4.3                                 All monies due The Regents are payable in
U.S. dollars.  Licensee is responsible for all bank transfer charges.  When
Licensed Product is sold for monies other than U.S. dollars, Licensee shall
first determine the earned royalty in the currency of the country in which
Licensed Product was sold and then convert the amount into equivalent U.S.
funds, using the exchange rate quoted in The Wall Street Journal on the last
business day of the reporting period.

 

4.4                                 Royalties earned on sales occurring in any
country outside the U.S. may not be reduced by any taxes, fees or other charges
imposed by the government of such country on the payment of royalty income. 
Notwithstanding the foregoing, all payments made by Licensee in fulfillment of
The Regents’ tax liability in any particular country will be credited against
earned royalties or fees due The Regents for that country.

 

4.5                                 If at any time legal restrictions prevent
the prompt remittance of royalties by Licensee from any country where a Licensed
Product is sold, then Licensee shall deposit the amount owed to The Regents into
an interest bearing account and shall pay The Regents directly from this account
or from its U.S. source of funds within a year of the due date.

 

4.6                                 If any patent or patent claim within Patent
Rights is held invalid in a final decision by a court of competent jurisdiction
and last resort and from which no appeal has or can be taken, then all
obligation to pay royalties based on that patent or claim or any claim
patentably indistinct therefrom will cease as of the date of final decision. 
Licensee will not, however, be relieved

 

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from paying any royalties that accrued before the final decision or that are
based on another patent or claim not involved in the final decision or that are
based on The Regents’ property rights.

 

4.7                                 In the event payments, rebillings or fees
are not received by The Regents when due, Licensee shall pay to The Regents
interest charges at a rate of ten percent (10%) per annum.  Interest is
calculated from the date payment was due until actually received by The Regents.

 

5.                                       LICENSE ISSUE FEE

 

Licensee shall pay to The Regents a license issue fee of fifty thousand dollars
($50,000) within seven (7) days of the Effective Date.  This fee is
non-refundable, non-cancelable and is not an advance against royalties.

 

6.                                       LICENSE MAINTENANCE FEE AND MILESTONE
PAYMENTS

 

6.1                                 Licensee shall also pay to The Regents a
royalty in the form of a license maintenance fee of thirty-five thousand dollars
($35,000) beginning on the one-year anniversary of the Effective Date and
continuing annually on each anniversary of the Effective Date.  The license
maintenance fee is not due on any anniversary of the Effective Date if on that
date, Licensee is commercially selling Licensed Product and paying an earned
royalty to The Regents on the sales of that Licensed Product.  License
maintenance fees are non-refundable and not an advance against earned royalties.

 

6.2                                 Licensee shall also pay to The Regents the
following milestone payments for each Licensed Product within thirty (30) days
of the achievement of each milestone event:

 

6.2.1                                          ***                  upon the
filing of an Investigational New Drug Application (“IND”) or a similar
application with the U.S. Food and Drug Administration (“USFDA”) or an
equivalent foreign regulatory agency; and

 

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6.2.2                                          ***                  upon
applying for marketing approval with the USFDA or an equivalent foreign
regulatory agency; and

 

6.2.3                                          ***                  upon
receiving marketing approval from the USFDA or an equivalent foreign regulatory
agency.

 

6.2.4                        Within sixty (60) days of either:

 

6.2.4.1               closing of a public offering of the common stock of
Licensee pursuant to a registration statement filed with the Securities and
Exchange Commission; or

 

6.2.4.2               a Change of Control Transaction,

 

6.2.5                        Licensee shall make to The Regents a cash payment
equal to the larger of:

 

6.2.5.1               50,000 times $P, where $P:

 

6.2.5.1.1      in the case of an initial public offering, is the price per share
to the public in such offering; or

 

6.2.5.1.2      in the case of a Change of Control Transaction, is the average
price per share paid by the acquiring third party for all shares acquired in the
Change of Control Transaction, including the fair market value of any non-cash
consideration paid by such acquiring third party therefore; or

 

6.2.5.2               one million dollars ($1,000,000).

 

6.2.6                        As used herein, a “Change of Control Transaction”
means, any consolidation, merger, reorganization or other transaction or series
of transactions, in which greater than forty percent (40%) of the voting  power
of Licensee is transferred to a third party not previously a shareholder of
Licensee.

 

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7.                                       EARNED ROYALTIES AND MINIMUM ANNUAL
ROYALTIES

 

7.1                                 Licensee shall also pay to The Regents an
earned royalty on the Net Sales of Licensed Product or Licensed Method as
follows:

 

7.1.1

 

***

 

 

***

7.1.2

 

***

7.1.3

 

***

 

 

***

7.1.4

 

***

7.1.5

 

***

 

7.2                                 In the event that any Licensed Product
qualifies as more than one type of Licensed Product under this Agreement, only
the highest earned royalty percentage amongst the relevant types of Licensed
Product shall apply.

 

7.3

 

***

 

 

***

 

 

***

 

7.4                                 Licensee shall pay to The Regents a minimum
annual royalty for the life of Regents’ Patent Rights beginning in the year of
the first commercial sale of Licensed Product or Licensed Method but no later
than the calendar year 2004.  Minimum annual royalties shall be as follows:

 

7.4.1

 

***

7.4.2

 

***

7.4.3

 

***

7.4.4

 

***

7.4.5

 

***

 

 

***

 

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7.5                                 The minimum annual royalty will be paid
semi-annually to The Regents on February 28 and July 31 of each year and will be
credited against the earned royalty due for the calendar year in which the
minimum payment was made.

 

8.                                       DUE DILIGENCE

 

8.1                                 Licensee, upon execution of this Agreement,
shall diligently proceed with the development, manufacture and sale of Licensed
Product and shall earnestly and diligently endeavor to market the same within a
reasonable time after execution of this Agreement and in quantities sufficient
to meet market demands.

 

8.2                                 Licensee shall endeavor to obtain all
necessary governmental approvals for the manufacture, use and sale of Licensed
Product.

 

8.3

 

 

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8.3.1

 

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***

 

 

 

***

 

8.3.2

 

***

 

 

 

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8.4

 

 

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8.4.1

 

***

 

 

 

***

 

 

 

***

 

8.4.2

 

***

 

 

 

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8.5

 

 

***

 

8.5.1

 

***

 

 

 

***

 

 

 

***

 

8.5.2

 

***

8.6

 

 

***

 

8.6.1

 

***

 

 

 

***

8.7

 

 

***

 

8.7.1

 

***

 

 

 

***

8.8

 

***

 

 

 

 

***

 

 

 

 

***

 

 

 

8.9                                 reasonably fill the market demand for
Licensed Product following commencement of marketing at any time during the
exclusive period of this Agreement; or

 

8.10

 

***

 

 

 

 

***

 

 

 

 

***

 

 

 

8.11                           If Licensee is unable to perform any of the above
provisions, then The Regents has the right and option to either terminate this
Agreement or reduce Licensee’s exclusive license to a nonexclusive license. 
This right, if exercised by The Regents, supersedes the rights granted in
Article 2 (Life of Patent Exclusive Grant).

 

8.12                           In addition to the obligations set forth above,
Licensee shall:

 

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8.12.1                  spend an aggregate of not less than five hundred
thousand dollars ($500,000) during the first year, no less than an aggregate of
one million dollars ($1,000,000) during the first two (2) years and an aggregate
of no less than four million dollars ($4,000,000) within the first five (5)
years of the effective date of this Agreement for the development and testing of
Licensed Product; and

 

8.12.2                  Raise a minimum of two million dollars ($2,000,000)
within twenty-four (24) months of the effective date of this Agreement.

 

8.13                           If the requirements set forth in Paragraph 8.12
are not met, then The Regents has the right and option to either terminate this
Agreement or reduce the Licensee’s exclusive license to a non-exclusive license.

 

9.                                       PROGRESS AND ROYALTY REPORTS

 

9.1                                 Beginning December 31, 2001, and
semi-annually thereafter, Licensee shall submit to The Regents a written
progress report covering Licensee’s (and any Affiliate’s or sublicensee’s)
activities related to the development and testing of all Licensed Product and
the obtaining of the governmental approvals necessary for marketing.  Progress
reports are required for each Licensed Product until the first commercial sale
of that Licensed Product occurs in the U.S. and shall be again required if
commercial sales of such Licensed Product are suspended or discontinued.

 

9.2                                 Progress reports submitted under Paragraph
9.1 shall include, but are not limited to, the following topics:

 

9.2.1                        summary of work completed;

 

9.2.2                        key scientific discoveries;

 

9.2.3                        summary of work in progress;

 

9.2.4                        current schedule of anticipated events or
milestones;

 

9.2.5                        market plans for introduction of Licensed Product;
and

 

9.2.6                        a summary of resources (dollar value) spent in the
reporting period.

 

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9.3                                 Licensee has a continuing responsibility to
keep The Regents informed of the large and small business entity status as
defined by the U.S. Patent and Trademark Office of itself and its sublicensees
and Affiliates.

 

9.4                                 Licensee shall report to The Regents in its
immediately subsequent progress and royalty report the date of first commercial
sale of a Licensed Product in each country.

 

9.5                                 After the first commercial sale of a
Licensed Product anywhere in the world, Licensee shall make quarterly royalty
reports to The Regents on or before each February 28 (for the quarter ending
December 31), May 31 (for the quarter ending March 31), August 31 (for the
quarter ending June 30) and November 30 (for the quarter ending September 30) of
each year.  Each royalty report will cover Licensee’s most recently completed
calendar quarter and will show:

 

9.5.1                        the gross sales and Net Sales of Licensed Product
sold during the most recently completed calendar quarter;

 

9.5.2                        the number of each type of Licensed Product sold;

 

9.5.3                        the royalties, in U.S. dollars, payable with
respect to sales of Licensed Product;

 

9.5.4                        the method used to calculate the royalty; and

 

9.5.5                        the exchange rates used.

 

9.6                                 If no sales of Licensed Product have been
made during any reporting period, then a statement to this effect is required.

 

10.                                 BOOKS AND RECORDS

 

10.1                           Licensee shall keep accurate books and records
showing all Licensed Product manufactured, used and/or sold under the terms of
this Agreement.  Books and records must be preserved for at least five (5) years
from the date of the royalty payment to which they pertain.

 

10.2                           Books and records must be open to inspection by
representatives or agents of The Regents at reasonable times.  The Regents shall
bear the fees and expenses of examination but if an error in royalties of more
than five percent (5%) of the total royalties due for any year is discovered in
any examination, then Licensee shall bear the fees and expenses of that
examination.

 

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11.                                 LIFE OF THE AGREEMENT

 

11.1                           Unless otherwise terminated by operation of law
or by acts of the parties in accordance with the terms of this Agreement, this
Agreement will be in force from the Effective Date until the date of expiration
of the last-to-expire patent licensed under this Agreement or until the last
patent application licensed under this Agreement is abandoned and no patent in
Regents’ Patent Rights ever issues.

 

11.2                           Any termination of this Agreement will not affect
the rights and obligations set forth in the following Articles:

 

Article 10

 

Books and Records

Article 14

 

Disposition of Licensed Product on Hand Upon Termination

Article 15

 

Use of Names and Trademarks

Article 20

 

Indemnification

Article 24

 

Failure to Perform

Article 29

 

Secrecy

 

12.                                 TERMINATION BY THE REGENTS

 

If Licensee fails to perform or violates any term of this Agreement, then The
Regents may give written notice of default (“Notice of Default”) to Licensee. 
If Licensee fails to repair the default within sixty (60) days of the effective
date of Notice of Default, then The Regents may terminate this Agreement and its
licenses by a second written notice (“Notice of Termination”).  If a Notice of
Termination is sent to Licensee, then this Agreement will automatically
terminate on the effective date of that notice.  Such termination will not
relieve Licensee of its obligation to pay any fees owing at the time of
termination and will not impair any accrued right of The Regents.  These notices
are subject to Article 21 (Notices).

 

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13.                                 TERMINATION BY LICENSEE

 

13.1                           Licensee has the right at any time to terminate
this Agreement in whole or as to any portion of Regents’ Patent Rights by giving
notice in writing to The Regents.  Such notice of termination will be subject to
Article 21 (Notices) and termination of this Agreement will be effective sixty
(60) days from the effective date of such notice.

 

13.2                           Any termination under the above Paragraph 13.1
does not relieve Licensee of any obligation or liability accrued under this
Agreement prior to termination or rescind any payment made to The Regents or
anything done by Licensee prior to the time termination becomes effective. 
Termination does not affect in any manner any rights of The Regents arising
under this Agreement prior to termination.

 

14.                                 DISPOSITION OF LICENSED PRODUCT ON HAND UPON
TERMINATION

 

Upon termination of this Agreement, Licensee is entitled to dispose of all
previously made or partially made Licensed Product, but no more, within a period
of one hundred and twenty (120) days provided that the sale of Licensed Product
is subject to the terms of this Agreement, including, but not limited to, the
rendering of reports and payment of royalties required under this Agreement.

 

15.                                 USE OF NAMES AND TRADEMARKS

 

15.1                           Nothing contained in this Agreement confers any
right to use in advertising, publicity or other promotional activities any name,
trade name, trademark or other designation of either party hereto (including
contraction, abbreviation or simulation of any of the foregoing).  Unless
required by law, the use by Licensee of the name “The Regents of the University
of California” or the name of any campus of the University of California is
prohibited.

 

15.2                           The Regents is free to release to the inventors
and senior administrators employed by The Regents the terms and conditions of
this Agreement.  If such release is made, then The Regents shall give notice of
the confidential nature and shall request that the recipient does not

 

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disclose such terms and conditions to others.  If a third party inquires whether
a license to Regents’ Patent Rights is available, then The Regents may disclose
the existence of this Agreement and the extent of the grant in Article 2 (Life
of Patent Exclusive Grant) to such third party, but will not disclose the name
of Licensee or any other terms or conditions of this Agreement, except where The
Regents is required to release information under either the California Public
Records Act, a governmental audit requirement or other applicable law.

 

16.                                 LIMITED WARRANTY

 

16.1                           The Regents warrants to Licensee that it has the
lawful right to grant this license.

 

16.2                           This license and the associated Inventions are
provided WITHOUT WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE
OR ANY OTHER WARRANTY, EXPRESS OR IMPLIED.  THE REGENTS MAKES NO REPRESENTATION
OR WARRANTY THAT LICENSED PRODUCT OR LICENSED METHOD WILL NOT INFRINGE ANY
PATENT OR OTHER PROPRIETARY RIGHT.

 

16.3                           IN NO EVENT MAY THE REGENTS BE LIABLE FOR ANY
INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES RESULTING FROM EXERCISE OF THIS
LICENSE OR THE USE OF THE INVENTIONS OR LICENSED PRODUCT.

 

16.4                           This Agreement does not:

 

16.4.1                  express or imply a warranty or representation as to the
validity or scope of any of Patent Rights;

 

16.4.2                  express or imply a warranty or representation that
anything made, used, sold, offered for sale or imported or otherwise disposed of
under any license granted in this Agreement is or will be free from infringement
of patents of third parties;

 

16.4.3                  obligate The Regents to bring or prosecute actions or
suits against third parties for patent infringement except as provided in
Article 19 (Patent Infringement);

 

16.4.4                  confer by implication, estoppel or otherwise any license
or rights under any patents of The Regents other than Patent Rights as defined
in this Agreement,

 

17

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regardless of whether those patents are dominant or subordinate to Patent
Rights; or

 

16.4.5                  obligate The Regents to furnish any know-how not
provided in Patent Rights.

 

17.                                 PATENT PROSECUTION AND MAINTENANCE

 

17.1                           In regard to PCT/US00/06232, filed by Pittsburgh,

 

17.1.1                  The Regents does not control patent prosecution and
there is no agreement in place between The Regents and Pittsburgh regarding
patent prosecution matters.  This Agreement may need to be amended to take into
account the provisions of any agreement to be reached between Pittsburgh and The
Regents in regard to patent prosecution matters and the payment of patent costs
by The Regents.

 

17.2                           In regard to the Continuation-in-Part application
filed 09/10/2001 by The Regents,

 

17.2.1                  As long as Licensee has paid patent costs as provided
for in this Article 17 (Patent Prosecution and Maintenance), The Regents shall
diligently endeavor to prosecute and maintain the U.S. and foreign patents using
counsel of its choice.  The Regents shall provide Licensee with copies of all
relevant documentation so that Licensee may be informed of the continuing
prosecution.  Licensee agrees to keep this documentation confidential.  The
Regents’ counsel will take instructions only from The Regents.

 

17.2.2                  The Regents shall use reasonable effort to amend any
patent application to include claims reasonably requested by Licensee to protect
the products contemplated to be sold under this Agreement.

 

17.2.3                  Licensee may request that The Regents obtain patent
protection on the Inventions in foreign countries if available and if it so
desires.  Licensee shall notify The Regents of its decision to obtain or
maintain foreign patents not less than sixty (60) days prior to the deadline for
any payment, filing or action to be taken in connection therewith.  This notice
concerning foreign filing must be in

 

18

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writing, must identify the countries desired and must reaffirm Licensee’s
obligation to underwrite the costs thereof.  The absence of such a notice from
Licensee to The Regents will be considered an election not to obtain or maintain
foreign rights.

 

17.2.4                  Notwithstanding the above, Licensee understands if an
agreement is reached with Pittsburgh regarding Patent Rights filed by Pittsburgh
that The Regents, at is sole discretion, may discontinue the prosecution of any
and all applications filed by The Regents.

 

17.3                           Licensee shall bear The Regents’ costs of
preparing, filing, prosecuting and maintaining all U.S. and foreign patent
applications contemplated by this Agreement.  Costs billed by The Regents’
counsel will be rebilled to Licensee and are due within thirty (30) days of
rebilling by The Regents.  These costs include patent prosecution costs for the
Inventions incurred by The Regents prior to the execution of this Agreement and
any patent prosecution costs that may be incurred for patentability opinions,
re-examination, re-issue, interferences, oppositions or inventorship
determinations.  Prior prosecution costs will be due upon execution of this
Agreement and billing by The Regents.

 

17.4                           Licensee’s obligation to underwrite and to pay
patent prosecution costs will continue for so long as this Agreement remains in
effect, but Licensee may terminate its obligations with respect to any given
patent application or patent upon three (3) months’ written notice to The
Regents.  The Regents will use its best efforts to curtail patent costs when a
notice of termination is received from Licensee.  The Regents may prosecute and
maintain such application(s) or patent(s) at its sole discretion and expense,
but Licensee will have no further right or licenses thereunder.  Non-payment of
patent costs may be deemed by The Regents as an election by Licensee not to
maintain application(s) or patent(s).

 

17.5                           The Regents may file, prosecute or maintain
patent applications at its own expense in any country in which Licensee has not
elected to file, prosecute or maintain patent applications in accordance with
this Article 17 (Patent Prosecution and Maintenance) and those applications and
resultant patents will not be subject to this Agreement.

 

19

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17.6                           Licensee shall apply for an extension of the term
of any patent included within Patent Rights under the Drug Price Competition and
Patent Term Restoration Act of 1984 and/or European, Japanese and other foreign
counterparts of this Law.  Licensee shall prepare all documents and The Regents
agrees to execute the documents and to take additional action as Licensee
reasonably requests in connection therewith.

 

17.7                           If either party (in the case of The Regents:  the
Licensing Officer responsible for administration of this Agreement) receives
notice pertaining to infringement or potential infringement of any issued patent
included within Patent Rights under the Drug Price Competition and Patent Term
Restoration Act of 1984 and/or foreign counterparts of this Law, then that party
shall notify the other party within ten (10) days after receipt of notice of
infringement.

 

18.                                 PATENT MARKING

 

Licensee shall mark all Licensed Product made, used or sold under the terms of
this Agreement, or their containers, in accordance with the applicable patent
marking laws.

 

19.                                 PATENT INFRINGEMENT

 

19.1                           If Licensee learns of the substantial
infringement of any patent licensed under this Agreement, then Licensee shall
call The Regents’ attention thereto in writing and provide The Regents with
reasonable evidence of infringement.  Neither party will notify a third party of
the infringement of any of Patent Rights without first obtaining consent of the
other party, which consent will not be unreasonably denied.  Both parties shall
use their best efforts in cooperation with each other to terminate infringement
without litigation.

 

19.2                           Licensee may request that The Regents take legal
action against the infringement of Patent Rights.  Such request must be in
writing and must include reasonable evidence of infringement and damages to
Licensee.  If the infringing activity has not abated within ninety (90) days
following the effective date of request, then The Regents has the right to:

 

19.2.1                  commence suit on its own account; or

 

20

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19.2.2                  refuse to participate in the suit, and

 

The Regents shall give notice of its election in writing to Licensee by the end
of the one-hundredth (100th) day after receiving notice of written request from
Licensee.  Licensee may thereafter bring suit for patent infringement, at its
own expense, if and only if The Regents elects not to commence suit and if the
infringement occurred during the period and in a jurisdiction where Licensee had
exclusive rights under this Agreement.  If, however, Licensee elects to bring
suit in accordance with this Paragraph 19.2, then The Regents may thereafter
join that suit at its own expense.  Licensee agrees not to bring suit for patent
infringement without following the procedures of this Paragraph 19.2, and both
parties agree to be bound by an order of a court for patent infringement, patent
infringement issues and patent infringement defenses raised through the pendency
of such a suit under this Paragraph 19.2.

 

19.3                           Legal action, as is decided on, will be at the
expense of the party bringing suit and all damages recovered thereby will belong
to the party bringing suit, but legal action brought jointly by The Regents and
Licensee and fully participated in by both will be at the joint expense of the
parties and all recoveries will be shared jointly by them in proportion to the
share of expense paid by each party.

 

19.4                           Each party shall cooperate with the other in
litigation proceedings instituted hereunder but at the expense of the party
bringing suit.  Litigation will be controlled by the party bringing the suit,
except that The Regents may be represented by counsel of its choice in any suit
brought by Licensee.

 

20.                                 INDEMNIFICATION

 

20.1                           Licensee shall indemnify, hold harmless and
defend The Regents, its officers, employees and agents, the sponsors of the
research that led to the Inventions and the inventors of the patents and patent
applications in Patent Rights and their employers against any and all claims,
suits, losses, liabilities, damages, costs, fees and expenses resulting from or
arising out of exercise of this license or any sublicense.  This indemnification
includes, but is not limited to, any product liability.

 

21

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20.2                           Licensee, at its sole cost and expense, shall
insure its activities in connection with the work under this Agreement and
obtain, keep in force and maintain insurance as follows or an equivalent program
of self-insurance.

 

20.3                           Comprehensive or commercial form general
liability insurance (contractual liability included) with limits as follows:

 

•

 

Each Occurrence $1,000,000

•

 

Products/Completed Operations Aggregate $5,000,000

•

 

Personal and Advertising Injury $1,000,000

•

 

General Aggregate (commercial form only) $5,000,000

 

The coverage and limits referred to under the above do not in any way limit the
liability of Licensee.  Licensee shall furnish The Regents with certificates of
insurance showing compliance with all requirements.  Certificates must:

 

•

 

Provide for thirty (30) days’ advance written notice to The Regents of any
modification.

•

 

Indicate that The Regents has been endorsed as an additional Insured under the
coverage referred to under the above.

•

 

Include a provision that the coverage will be primary and will not participate
with nor will be excess over any valid and collectable insurance or program of
self-insurance carried or maintained by The Regents.

 

20.4                           The Regents shall notify Licensee in writing of
any claim or suit brought against The Regents in respect of which The Regents
intends to invoke the provisions of this Article 20 (Indemnification).  Licensee
shall keep The Regents informed on a current basis of its defense of any claims
under this Article 20 (Indemnification).

 

21.                                 NOTICES

 

21.1                           Any notice or payment required to be given to
either party shall be deemed to have been properly given and to be effective as
of the date specified below if delivered to the respective address given below
or to another address as designated by written notice given to the other party:

 

21.1.1                  on the date of delivery if delivered in person;

 

21.1.2                  on the date of mailing if mailed by first-class
certified mail, postage paid; or

 

22

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21.1.3                  on the date of mailing if mailed by any global express
carrier service that requires recipient to sign the documents demonstrating the
delivery of such notice or payment.

 

In the case of Licensee:

 

StemSource, Inc.

 

 

1125 Business Center Circle

 

 

Thousand Oaks, CA 91320

 

 

Attention: Terry Butler

 

 

 

Chief Financial Officer

 

 

 

In the case of The Regents:

 

The Regents of the University

 

 

of California

 

 

Office of Technology Transfer

 

 

1111 Franklin Street, 5th Floor

 

 

Oakland, CA 94607-5200

 

 

Attention: Executive Director

 

 

 

Research Administration and

 

 

 

Technology Transfer

 

 

RE:

UC Case No. 2000-310-3

 

22.                                 ASSIGNABILITY

 

This Agreement may be assigned by The Regents, but is personal to Licensee and
assignable by Licensee only with the written consent of The Regents, which
consent will not be unreasonably withheld.

 

23.                                 NO WAIVER

 

No waiver by either party of any default of this Agreement may be deemed a
waiver of any subsequent or similar default.  A suspension of duty under this
Agreement due to force majeure shall not be for a period longer than one (1)
year.

 

23

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24.                                 FAILURE TO PERFORM

 

If either party finds it necessary to undertake legal action against the other
on account of failure of performance due under this Agreement, then the
prevailing party is entitled to reasonable attorney’s fees in addition to costs
and necessary disbursements.

 

25.                                 GOVERNING LAWS

 

THIS AGREEMENT WILL BE INTERPRETED AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF CALIFORNIA WITHOUT REGARD TO CONFLICT OF LAWS OR TO WHICH PARTY
DRAFTED PARTICULAR PROVISIONS OF THIS AGREEMENT, but the scope and validity of
any patent or patent application will be governed by the applicable laws of the
country of the patent or patent application.  Disputes between the parties
regarding this Agreement will utilize only trial courts within California for
disputes that go to court.

 

26.                                 PREFERENCE FOR U.S. INDUSTRY

 

Because this Agreement grants the exclusive right to use or sell the Inventions
in the U.S., Licensee agrees that any products sold in the U.S. embodying this
Inventions or produced through the use thereof will be manufactured
substantially in the U.S.

 

27.                                 GOVERNMENT APPROVAL OR REGISTRATION

 

Licensee shall notify The Regents if it becomes aware that this Agreement is
subject to any U.S. or foreign government reporting or approval requirement. 
Licensee shall make all necessary filings and pay all costs including fees,
penalties and all other out-of-pocket costs associated with such reporting or
approval process.

 

28.                                 EXPORT CONTROL LAWS

 

Licensee shall observe all applicable U.S. and foreign laws with respect to the
transfer of Licensed Product and related technical data to foreign countries,
including, without limitation,

 

24

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the International Traffic in Arms Regulations (ITAR) and the Export
Administration Regulations.

 

29.                                 SECRECY

 

29.1                           With regard to confidential information (“Data”),
which can be oral or written or both, received from The Regents regarding this
Inventions, Licensee agrees:

 

29.1.1                  not to use the Data except for the sole purpose of
performing under the terms of this Agreement;

 

29.1.2                  to safeguard Data against disclosure to others with the
same degree of care as it exercises with its own data of a similar nature;

 

29.1.3                  not to disclose Data to others (except to its employees,
agents or consultants who are bound to Licensee by a like obligation of
confidentiality) without the express written permission of The Regents, except
that Licensee is not prevented from using or disclosing any of the Data that:

 

29.1.3.1         Licensee can demonstrate by written records was previously
known to it;

 

29.1.3.2         is now or becomes in the future, public knowledge other than
through acts or omissions of Licensee; or

 

29.1.3.3         is lawfully obtained by Licensee from sources independent of
The Regents;

 

29.1.3.4         is required to be disclosed to a governmental entity or agency
in connection with seeking any governmental or regulatory approval, or pursuant
to the lawful requirement or request of a governmental entity or agency; and

 

29.1.4                  that the secrecy obligations of Licensee with respect to
Data will continue for a period ending five (5) years from the termination date
of this Agreement.

 

29.2                           Upon the termination of this Agreement, Licensee
must destroy or return to The Regents any Data in its possession within thirty
(30) days following the effective date of

 

25

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termination.  However, Licensee may retain one copy of Data solely for archival
purposes, provided that such Data is subject to the confidentiality provisions
set forth in this Article 29 (Secrecy).  Within sixty (60) days following
termination, Licensee must provide The Regents with a written notice that Data
has been returned or destroyed.

 

29.3                           With regard to biological material received by
Licensee from The Regents, if any, including any cell lines, vectors, genetic
material, derivatives, products progeny or material derived therefrom
(“Biological Material”), Licensee agrees:

 

29.3.1                  not to use Biological Material except for the sole
purpose of performing under the terms of this Agreement;

 

29.3.2                  not to transfer Biological Material to others (except to
its employees, agents or consultants who are bound to Licensee by like
obligations conditioning and restricting access, use and continued use of
Biological Material) without the express written permission of The Regents,
except that Licensee is not prevented from transferring Biological Material
that:

 

29.3.2.1         becomes publicly available other than through acts or omissions
of Licensee; or

 

29.3.2.2         is lawfully obtained by Licensee from sources independent of
The Regents;

 

29.3.3                  to safeguard Biological Material against disclosure and
transmission to others with the same degree of care as it exercises with its own
biological materials of a similar nature; and

 

29.3.4                  to destroy all copies of Biological Material at the
termination of this Agreement.

 

30.                                 MISCELLANEOUS

 

30.1                           The headings of the several sections are inserted
for convenience of reference only and are not intended to be a part of or to
affect the meaning or interpretation of this Agreement.

 

26

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30.2                           This Agreement is not binding on the parties
until it has been signed below on behalf of each party.  It is then effective as
of the Effective Date.

 

30.3                           No amendment or modification of this Agreement is
valid or binding on the parties unless made in writing and signed on behalf of
each party.

 

30.4                           This Agreement embodies the entire understanding
of the parties and supersedes all previous communications, representations or
understandings, either oral or written, between the parties relating to the
subject matter hereof.  The Letter of Intent ( UC Control No 2001-30-0642) dated
June 4, 2001 is hereby terminated.

 

(Remainder of this page deliberately left blank)

 

27

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30.5                           In case any of the provisions contained in this
Agreement is held to be invalid, illegal or unenforceable in any respect, that
invalidity, illegality or unenforceability will not affect any other provisions
of this Agreement and this Agreement will be construed as if the invalid,
illegal or unenforceable provisions had never been contained in it.

 

30.6                           None of the provisions of this Agreement is
intended to create any form of joint venture between the parties, rights in
third parties or rights that are enforceable by any third party.

 

IN WITNESS WHEREOF, both The Regents and Licensee have executed this Agreement,
in duplicate originals, by their respective and duly authorized officers on the
day and year written.

 

STEMSOURCE, INC.

 

 

THE REGENTS OF THE UNIVERSITY
OF CALIFORNIA

 

 

 

 

 

 

 

 

 

 

By:

/s/ Terry Butler

 

 

By:

/s/ Alan B. Bennett

 

 

(Signature)

 

 

 

(Signature)

 

 

 

 

 

 

 

 

 

 

 

 

Name:

Terry Butler

 

 

Name:

Alan B. Bennett

 

 

 

(Please Print)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Title:

COO/CFO

 

 

 

Title:

Executive Director

 

 

 

 

 

 

Research Administration and
   Technology Transfer

 

 

 

 

 

 

 

 

 

 

 

Date:

10/3/01

 

 

Date:

October 16, 2001

 

 

 

28

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EXCLUSIVE LICENSE AGREEMENT

 

between

 

THE REGENTS OF THE UNIVERSITY OF CALIFORNIA

 

and

 

STEMSOURCE, INC.

 

for

 

ADIPOSE-DERIVED STEM CELLS

 

UC Case No. 2000-310-3

 

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

 

TABLE OF CONTENTS

 

Article No.

 

Title

 

 

BACKGROUND

1.

 

DEFINITIONS

2.

 

LIFE OF PATENT EXCLUSIVE GRANT

3.

 

SUBLICENSES

4.

 

PAYMENT TERMS

5.

 

LICENSE ISSUE FEE

6.

 

LICENSE MAINTENANCE FEE AND MILESTONE PAYMENTS

7.

 

EARNED ROYALTIES AND MINIMUM ANNUAL ROYALTIES

8.

 

DUE DILIGENCE

9.

 

PROGRESS AND ROYALTY REPORTS

10.

 

BOOKS AND RECORDS

11.

 

LIFE OF THE AGREEMENT

12.

 

TERMINATION BY THE REGENTS

13.

 

TERMINATION BY LICENSEE

14.

 

DISPOSITION OF LICENSED PRODUCT ON HAND UPON TERMINATION

15.

 

USE OF NAMES AND TRADEMARKS

16.

 

LIMITED WARRANTY

17.

 

PATENT PROSECUTION AND MAINTENANCE

18.

 

PATENT MARKING

19.

 

PATENT INFRINGEMENT

20.

 

INDEMNIFICATION

21.

 

NOTICES

22.

 

ASSIGNABILITY

23.

 

NO WAIVER

24.

 

FAILURE TO PERFORM

25.

 

GOVERNING LAWS

26.

 

PREFERENCE FOR U.S. INDUSTRY

27.

 

GOVERNMENT APPROVAL OR REGISTRATION

28.

 

EXPORT CONTROL LAWS

29.

 

SECRECY

30.

 

MISCELLANEOUS

 

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