ex10_31.htm


     

    Exhibit
10.31

    
 

    LICENSE, PRODUCT PRODUCTION,
AND DISTRIBUTION AGREEMENT

    


    This Agreement is made and entered into
this 19th day of June 2008 (the "EFFECTIVE DATE"), by and among LifeLine Cell
Technology, LLC, a California limited liability company with offices located at
2595 Jason Court, Oceanside, CA 92056 (“Lifeline”), BioTime, Inc., a California
corporation with offices located at 1301 Harbor Bay Parkway, Suite 100 Alameda,
California 94502 (“BioTime”), and Embryome Sciences, Inc., a California
corporation and subsidiary of BioTime with offices located at 1301 Harbor Bay
Parkway, Suite 100, Alameda, California 94502 (“ES”) Lifeline, BioTime, and ES
are sometimes hereinafter referred to as the “Parties.”

    


    RECITALS

    


    A.           Lifeline
has rights to use certain cell technology licensed from Advanced Cell
Technology, Inc. (“ACT”), and the expertise and facilities to produce in
commercial quality and quantity cells and media optimized for cells derived from
or based on that technology.

    


    B.           BioTime
and ES have rights to embryonic stem technology, and cells produced from that
technology, under a license from WARF.

    


    C.           Lifeline
also has marketing and distribution capability and a pre-existing relationship
with certain major distributors of cells and media, which have been disclosed to
BioTime and ES.

    


    D.           ES
has both marketing and distributing capability for cell-based products for the
research-only market, particularly through its proprietary “Embryome.com” data
base technology, its proprietary “Embryomics” cell isolation and propagation
technology, and has access to embryonic stem technology under a license from
WARF.

    


    NOW, THEREFORE, in consideration of the
premises and the mutual covenants contained herein, the parties hereto agree as
follows:

    


    ARTICLE 1 -
DEFINITIONS

    


    1.1           Definitions.  For
the purposes of this Agreement, the following words and phrases shall have the
following meanings:

    


    (a)           “Cell
Technology” means technology under patents and know-how licensed or sublicensed
by Lifeline from Advanced Cell Technology, Inc. under the license agreements
listed on Schedule 1.

    


    (b)           “ES
Products” means cells and cell lines developed by ES without the use of Cell
Technology.

    


    (c)           “ES
Technology” means cell isolation and propagation technology that is proprietary
to ES or BioTime, and may include patents, patent applications, and
trade-secrets.


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    


    (d)           “Lifeline
Products” means cells and cell lines developed using Lifeline Technology, but
not ES Technology, WARF Technology, and/or WARF Materials.

    


    (e)           “Lifeline
Technology” means technology other than Cell Technology that is proprietary to
Lifeline, and may include patents, patent applications, and
trade-secrets.

    


    (f)           “Joint
Products” means (i) clonally or oligoclonally derived embryonic progenitor cells
or progenitor cell lines produced using Cell Technology and WARF Technology,
WARF Materials, or ES Technology, and (ii) products derived from the progenitor
cells described in clause (i).

    


    (g)           “Marketing
Cost” means, the reasonable costs associated with promoting, selling, packaging,
transferring title and moving Joint Products to the customer and include direct
costs and overhead costs.  Direct costs of marketing include but are
not limited to: market research; advertising; development, printing and
distribution of collateral materials; selling expenses including salaries,
benefits, commissions and sales-related expenses, and reimbursements paid to
sales employees, customer service employees, and accounting employees involved
with invoicing and accounts receivables, and an overhead burden of 15% of the
employee component of direct cost.  The initial percentage of overhead
costs allocated to marketing will be revised and agreed upon between the Parties
on a periodic basis according to Section 5.11.

    


    (h)           “Production
Cost” means the reasonable costs associated with (i) the initial production and
testing of a new Joint Product in the laboratory, (ii) the preparation of
equipment and procedures for the production of a new Joint Product on a
commercial scale, and (iii) producing, testing and packaging of Joint Products
for distribution and sale.  Production Costs include direct costs and
overhead costs.  Direct costs of production include but are not
limited to: laboratory supplies and materials, WARF Materials, commercial
production and quality control supplies and materials; salaries and benefits
paid to production and quality control employees; and payments to independent
contractors, and an overhead burden of 30% of the employee component of direct
cost.  The
initial estimate of overhead costs allocated to production will be revised and
agreed upon between the parties on a periodic basis according to Section
5.11.

    


    (i)           Net
Revenues means the gross revenues from the sale of Joint Products, less all (i)
shipping costs (including packaging, freight, and insurance costs invoiced to
purchasers), (ii) discounts, (iii) sales, VAT and similar taxes, (iv) returns
and other credits actually allowed to purchasers,  and (v) uncollected
accounts.

    


    (j)           “WARF”
means Wisconsin Alumni Research Foundation.

    


    (k)           “WARF
Technology” means technology under patents licensed by BioTime from
WARF.


    
      
         


      

      
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    (l)           “WARF
Materials” means cells or cell lines obtained by BioTime or ES under a license
from WARF.

    


    


    ARTICLE 2 – PRODUCTION OF
JOINT PRODUCTS

    


    2.1           Production of Joint Products
By ES.  ES shall produce the Joint Products subject to the
rights of Lifeline in Section 2.2:

    


    2.2.                      Production of Joint
Products.

    


    (a)           Lifeline
may also produce Joint Products if (a) ES fails to offer for sale a minimum of
12 new Joint Products per year beginning in 2009, or (b) ES consents to Lifeline
producing a Joint Product.

    


    (b)           Lifeline
may produce any new Joint Product that Lifeline conceives of and offers to ES to
produce but which ES declines to produce, or any other Joint Product the
production of which ES has determined to discontinue.  In this regard,
if Lifeline desires ES to produce a new Joint Product, Lifeline shall provide ES
with written information describing the new Joint Product, including the method
of production, use, and proposed price of the new Joint Product.  The
information from Lifeline shall be in sufficient detail to permit ES to make an
informed decision to produce or not produce the new Joint
Product.  Within thirty (30) days after receipt of such information
from Lifeline, ES shall notify Lifeline of ES’s election to produce the new
Joint Product.  If ES fails to so notify Lifeline, ES shall be deemed
to have elected not to produce the new Joint Product.

    


    (c)           If
Lifeline uses any WARF Technology or WARF Materials to produce any Joint Product
under paragraph (a) or (b) of this Section, ES shall collaborate with Lifeline
by providing technical advice through the review and comment on development
plans and methods, but ES shall not be required to (i) utilize its laboratory or
production facilities, materials, or equipment for the production of the Joint
Product; and (ii) provide personnel to staff laboratory or production
functions.  ES’s cost of providing the services described in this
paragraph shall be deemed Production Costs.

    


    (d)           Lifeline
shall not be deemed to have jointly produced stem cells from the H9 stem cell
line previously cultured by BioTime or ES with assistance from
Lifeline.

    


    2.3           Use of Cell
Technology.  Lifeline hereby grants ES an exclusive sublicense
to use of Cell Technology to the extent required for the purpose of producing,
making, and distributing Joint Products, but, except as required for such
purpose, no other license or sublicense of Cell Technology is granted or shall
be implied by this Agreement.  Lifeline will provide ES with a license
to use Lifeline Technology to permit ES to practice the Cell Technology for the
purpose of producing Joint Products.

    


    2.4           Facilities and
Personnel.  Lifeline will provide laboratory and production
facilities and personnel, as reasonably requested by ES to produce, make, or
distribute Joint Products.


    
      
         


      

      
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    Lifeline
shall use its own laboratory and production facilities and personnel for the
production of any Joint Products that Lifeline produces.  ES will make
available at the Lifeline facilities the services of Dr. Michael West and other
ES personnel as needed to assist Lifeline personnel in developing the techniques
needed to produce a Joint Product.  Lifeline will make available at
the ES facilities the services of Lifeline personnel as needed to assist ES in
developing and implementing standard operating procedures for production Joint
Products, procedures for distribution of Joint Products, and procedures for
Production Cost tracking, accounting and controls.  The Parties
acknowledge and agree that their personnel will not be providing assistance to
each other on a full-time basis, but only to the extent necessary (and subject
to their availability taking into account scheduling issues and their other time
commitments) to permit each Party to commence production of a Joint Product and
to develop and implement operating procedures for commercial production and
distribution of a Joint Product, and to track and account for related Production
Costs, using their own personnel.  Moreover, the assistance of ES
personnel may be limited to the matters described in Section 2.2(c) in cases in
which that paragraph applies.

    


    2.5           WARF and ES
Technology.  ES grants Lifeline a sublicense to use WARF
Technology, and WARF Materials and ES Technology for the purpose of producing,
making, and distributing any Joint Products that Lifeline is entitled to
produce, make, and distribute but, except as required for such purpose, no other
license or sublicense of WARF Technology, WARF Materials, or ES Technology is
granted or shall be implied by this Agreement.  Lifeline agrees that
(a) WARF Technology and WARF Materials may be used by Lifeline only for the
purpose of producing, making, and distributing Joint Products under this
Agreement; (b) Lifeline shall not sell, use, or transfer WARF Materials to any
third party except as permitted by the WARF license; (c) Lifeline shall not use
WARF Technology or WARF Materials in any manner not permitted by the WARF
license, and (d) Lifeline’s right to use WARF Technology and WARF Materials
shall terminate upon the termination of the WARF license.

    


    


    ARTICLE 3 – MARKETING; SALES
AND DISTRIBUTION

    


    3.1           Marketing
Efforts.  The Parties shall each use commercially reasonable
efforts to market and sell Joint Products through each Party’s sales force and
distributor network, and shall use best efforts to collaborate in marketing
Joint Products jointly where appropriate so as to avoid conflicts between the
parties’ sales efforts.

     

    3.2           Embryome.com.  Pricing
and terms of marketing and sale of Joint Products through Embryome.com
technology shall be subject to ES’s approval.

    


    3.3           Branding.  Joint
Products shall be sold under the Lifeline or ES brand as the Parties shall
determine by mutual agreement.

    


    3.4           Use of Joint
Products.  Joint Products will be produced, marketed,
distributed, and sold as research tools only, including in drug discovery and
development, and not for the treatment of disease in humans, or for diagnosis,
prognosis, screening or detection of disease in humans.  Each Party
shall sell Joint Products on terms that provided that the Joint Products will be
used by the purchaser only for the purposes permitted in this
paragraph.


    
      
         


      

      
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    3.5           Limit of
Obligations.  Nothing in this Agreement shall require either
Party to sell Joint Products produced by the other Party.  Any Party
that produces, markets, or distributes a Joint Product may, upon thirty days
notice to the other Parties, discontinue production, marketing, or distribution
of the Joint Product.

    


    3.6           Costs and
Expenses.  Except for royalties payable to WARF and ACT,
Production Costs, and Marketing Costs, which shall be reimbursed as provided in
Article 5, each Party shall pay its own costs and expenses incurred in
connection with the performance of its obligations under this Agreement, unless
otherwise expressly provided in this Agreement.

    


    3.7           Competition.  Nothing
in this Agreement shall prevent, preclude, or limit the right of the parties to
compete with each other in the development, licensing, production, marketing,
distribution, and sale of technology and products, including products that may
directly compete with Joint Products.  Lifeline shall have no interest
in or right to participate in revenues or profits from the sale of ES Products
or from the licensing or sublicensing of ES Technology or WARF Technology by ES
or BioTime, or in any production, marketing, and/or sales agreements ES or
BioTime may make, except to the extent that Net Revenues from sale of Joint
Products are generated through such agreements, in which event such Net Revenues
shall be shared as provided herein.  ES and BioTime shall have no
interest in or right to participate in revenues from the sale of Lifeline
Products or from the licensing or sublicensing of Lifeline Technology or Cell
Technology by Lifeline, or in any production, marketing, and/or sales agreements
Lifeline may make, except to the extent that Net Revenues from sale of Joint
Products are generated through such agreements, in which event such Net Revenues
shall be shared as provided herein.

    


    


    ARTICLE 4—CAPITAL
PAYMENT

    


    4.1           Payment to
Lifeline.  Within two business days after the Parties have
executed and delivered this Agreement, BioTime or ES will pay Lifeline $250,000
to enable Lifeline to engage in the production, making, and distribution of
Joint Products.

    


    


    ARTICLE 5 – NET
REVENUES

    


    5.1           Certain
Distributors.  Regardless of which Party produces the Joint
Product, Net Revenues from the sale of a Joint Product sold to or through those
distributors with which Lifeline has a pre-existing relationship (which have
been disclosed to ES and BioTime by confidential memorandum), shall be allocated
between, and paid to, the Parties as follows:

    


    (a)           First,
to the Parties in an amount equal to their respective royalty obligations under
Article 7 with respect to the sale of the Joint Product;


    
      
         


      

      
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    (b)           Second,
to the Party or Parties that produced the Joint Product, to reimburse their
Production Costs, and to the Parties that marketed the Joint Product, to
reimburse their Marketing Costs; and

    


    (c)           Finally,
50% to ES and 50% to Lifeline.

    


    5.2           Joint
Production.  Net Revenues from the sale of a Joint Product not
covered by Section 5.1 but which is produced by both ES and Lifeline shall be
shall be allocated between, and paid to, the Parties in the manner provided in
Section 5.1.

    


    5.3           Production Requested by
Other Party.  Net Revenues from the sale of a Joint Product not
covered by Section 5.1 or Section 5.2 and which was initially produced by one
Party but which is produced for distribution by the other Party at the request
of the Party that initially produced the Joint Product shall be allocated
between, and paid to, the Parties in the manner provided in Section
5.1.

    


    5.4           Other
Cases.  In the absence of a supplemental agreement between the
Parties, Net Revenues from the sale of a Joint Product not covered by Section
5.1, Section 5.2 or Section 5.3 shall be shall be allocated between, and paid
to, the Parties as follows:

    


    (a)           First,
to the Parties in an amount equal to their respective royalty obligations under
Article 7 with respect to the sale of the Joint Product;

    


    (b)           Second,
subject to Section 5.6(b), to the Party that produced the Joint Product for
distribution, an amount equal to the greater of (i) 90% of the Net Revenues
remaining after the allocation under clause (a) of this Section, and (ii) the
amount that would have been allocated to the Party if the provisions of Section
5.1 applied; and

    


    (c)           The
balance of the Net Revenue will be allocated to the Party that did not produce
the Joint Product for distribution

    


    5.5           Reimbursement
Payment.  The first $250,000 of Net Revenues that otherwise
would be allocated to Lifeline under Section 5.1(c) (including Net Revenues from
Joint Products described in Sections 5.1, 5.2, and 5.3) or Section 5.4(c) shall
be allocated instead to ES as a priority return on its capital investment under
Article 4.

    


    5.6           Recovery of
Costs.

    


    (a)           To
the extent that Net Revenues during any calendar quarter are less than the
Production Costs, Marketing Costs, and royalty payments incurred by the Party
during that period, the unrecovered costs will be carried forward into each
successive calendar quarter until paid from Net Revenues, before Net Revenues
are otherwise allocated to and shared by the Parties.

    


    (b)           If
ES provides collaborative technical assistance to Lifeline under Section 2.2(c),
the Production Cost incurred by ES shall be reimbursed to ES from a portion of
the Net


    
      
         


      

      
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    Revenue
allocable to Lifeline under Section 5.4(b), and such reimbursement shall be paid
contemporaneously with the allocation of Net Revenues to Lifeline.

    


    5.7           Allocation of Net
Revenue.  Net Revenues shall be allocated between the Parties
in the manner provided in this Article 5 regardless of which Party or Parties
sold the Joint Product(s), such that each Party shall pay over to the other
Party such share of Net Revenue as may be required to effect the allocation of
Net Revenues determined under Sections 5.1 through 5.4, as applicable, subject
to Section 5.5 and Section 5.6.

    


    5.8           Payment Due
Date.  Not later than 25 days after the end of each calendar
quarter, the Parties will reconcile accounts of Joint Products sold and shall
remit to each other the other Party’s share of Net Revenue.

    


    5.9           Currency.  All
payments due hereunder shall be paid in United States dollars.  If any
currency conversion shall be required in connection with the payment of Net
Revenues or other amounts due under this Agreement, such conversion shall be at
the rate of conversion reported in the Wall Street Journal on the last working
day of the calendar quarter to which the payment relates.

    


    5.10                      Late
Payment.  If any Net Revenue is not paid by a Party to the
other Party when due, interest shall accrue on the overdue amount at the Prime
Rate plus two percent, or the maximum rate allowed under applicable law,
whichever is less, from the date when such payment should have been made until
paid in full.  Such interest shall be paid with the past due Net
Revenue.  The Prime Rate shall be the interest rate reported as the
“prime rate” in The
Wall Street Journal on the date the payment was due.

    


    5.11                      Overhead
Costs.  Parties will meet, initially on a quarterly basis and
less often upon mutual consent, to: work together in good faith to share
financial information and calculations, within the constraints of SEC rules,
related to: the allocation of overhead costs; develop and agree upon accounting
methods of allocating overhead costs in accordance with Generally Accepted
Accounting Principles; and review and revise the percentage figures used to
allocate overhead costs to Marketing Cost and Production Cost.

    


    


    ARTICLE 6 - REPORTS AND
RECORDS

    


    6.1           Maintenance of
Records.  Each Party shall keep complete and accurate records
and accounts of all Joint Products sold by the Party, all royalties payable by
the Party to ACT or WARF, the Party’s Production Costs and Marketing
Costs.

    


    6.2           Monthly
Reports.  Each Party shall provide each other Party with a
monthly report of Joint Product sales, including a description of each Joint
Product sold, the amount (units) of the Joint Product sold, and the gross sales
price, each deduction from gross sales made in the calculation of Net Revenues,
all royalties paid or payable, and all Production Costs and Marketing
Costs.  The monthly report shall be delivered no later than 15 days
after the end of each calendar month.


    
      
         


      

      
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    6.3           Audit
Rights.  Each Party’s records and accounts of Joint Products
sold shall be kept at their principal place of business or at such other
location as may be agreed upon by the Parties.  Said records and
accounts shall be open, upon reasonable advance notice (and no more frequently
than once per calendar year), for three (3) years following the end of the
calendar year to which they pertain, to the inspection of the other Party or its
agents for the purpose of verifying Net Revenues, Production Costs, and
Marketing Costs, or compliance in other respects with this
Agreement.  If any such audit determines that the reported sales or
Net Revenues were less than 90% of the actual amount for the period in question,
or that royalties paid or Production Costs or Marketing Costs, were less than
90% of the amount reported for the period, the Party whose records were audited
shall bear the cost of such audit.

    


    


    ARTICLE
7—SALE OF ES PROUCTS AND LIFELINE PRODUCTS

    


    7.1           Sale of ES Products by
Lifeline.  Lifeline may sell, for its own account and under
either ES brand names or Lifeline brand names, ES Products consisting of (a)
human embryonic stem cells, (b) differentiated human stem cells, (c) media for
the growth of human embryonic stem cells or differentiated human stem cells, and
(d) materials useful for the culture of cells.  ES agrees to sell ES
Products described in this paragraph to Lifeline at prices to be determined by
mutual agreement, plus shipping, applicable sales and VAT taxes, and
insurance.  This Section 7.1 shall not apply to any ES Product
acquired or developed by ES under a license or other agreement with a third
party that would prohibit ES from selling the ES Product to Lifeline under the
terms of this Section 7.1.

    


    7.2           Sale of Lifeline Products by
ES.  ES may sell, for its own account and under either ES brand
names or Lifeline brand names, Lifeline Products consisting of (a) human
embryonic stem cells, (b) differentiated human stem cells, (c) media for the
growth of human embryonic stem cells or differentiated human stem cells, and (d)
materials useful for the culture of cells.  Lifeline agrees to sell
Lifeline Products described in this paragraph to ES at prices to be determined
by mutual agreement, plus shipping, applicable sales and VAT taxes, and
insurance.  This Section 7.2 shall not apply to any Lifeline Product
acquired or developed by Lifeline under a license or other agreement with a
third party that would prohibit Lifeline from selling the Lifeline Product to ES
under the terms of this Section 7.2.

    


    7.3           Payment
of the purchase price for ES Products sold to Lifeline shall be on such terms as
ES may require.  Payment of the purchase price for Lifeline Products
sold to ES shall be on such terms as Lifeline may require.  Neither
party shall be obligated to extend credit to the other party.

    


    7.4           
The Provisions of Article 5 shall not apply to sales of ES Products by Lifeline,
or sales of Lifeline Products sold by ES, under this Article 7.

    



    
      
         


      

      
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    ARTICLE 8 – LICENSED
TECHNOLOGY AND PATENT RIGHTS

    


    8.1           WARF
License.  BioTime and ES shall fully and timely perform their
respective obligations under its license agreement with WARF in order to keep
its license to use WARF Technology and WARF Materials in full force and
effect.  BioTime or ES shall promptly notify Lifeline of any material
change in the terms of the WARF license, or the termination of the WARF
license.

    


    (a)           ES
shall be responsible for the payment of all royalties owed to WARF from the sale
of Joint Products, as provided in the license agreement between BioTime and
WARF, and such royalties shall be reimbursed from Net Revenues as provided in
Article 5.

    


    8.2           Cell Technology
Licenses.  Lifeline shall fully and timely perform its
obligations under its license agreements with Advanced Cell Technology, Inc.
(“ACT”) in order to keep its licenses to use Cell Technology in full force and
effect.  Lifeline shall promptly notify BioTime and ES of any material
change in the terms of the Cell Technology license, or the termination of the
Cell Technology license.

    


    (a)           Lifeline
shall be responsible for the payment of all royalties owed to ACT from the sale
of Joint Products, as provided in the license agreements between Lifeline and
ACT, and such royalties shall be reimbursed from Net Revenues as provided in
Article 5.

    


    (b)           LifeLine
shall notify BioTime and ES of the occurrence of (i) any failure of LifeLine to
make any payment or to perform any other obligation under the Cell Technology
license agreements, and (ii) the receipt of any notice from ACT stating that any
breach or default under any of the Cell Technology license agreements has
occurred.  Such notice shall be given to BioTime and ES within five
(5) days after the occurrence of the applicable event.  BioTime and ES
shall have the right (but not the obligation) to make any payment or to take any
other action required to cure any default or potential default by LifeLine under
the Cell Technology license agreements.  If BioTime or ES makes any
payment or incurs any expense to cure or prevent a breach or default by LifeLine
under any of the Cell Technology license agreements (“Default Cure Payments”),
120% of the amount of such Default Cure Payments shall be reimbursed to BioTime
and ES upon demand, and if such amount is not paid to BioTime or ES within five
days of a demand for payment, the unpaid amount shall accrue interest at the
rate of 15% per annum until paid in full.  Until 120% of all Default
Cure Payments, with interest accrued, have been repaid to BioTime and ES, Net Revenues that
otherwise would be allocated to Lifeline under Section 5.1(c) (including Net
Revenues from Joint Products described in Sections 5.1, 5.2, and 5.3) or Section
5.4(c) shall be allocated instead to BioTime and ES until BioTime and ES
have received a return of 120% of the Default Cure Payments, plus accrued
interest.  LifeLine agrees that the payment of Default Cure Payments
will impose a financial burden on BioTime and ES and will provide an economic
benefit to LifeLine beyond the financial obligations and benefits that the
Parties have agreed to allocate among themselves under this Agreement, and that
LifeLine estimates that the economic benefit that will inure to it from a cure
of its default will equal or exceed 120% of the Default Cure
Payment.


    
      
         


      

      
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    8.3           Ownership of
Patents.  Any invention or discovery, whether or not
patentable, and any patents, patent applications, or technical know-how
developed through the efforts of any Party to produce a Joint Product shall be
owned by the Party or Parties that employ the inventors.  That is to
say, if all of the inventors on a patent or patent application are employed by
one Party, then the patent or patent application will be owned by that one
Party. If inventors are listed from two or more Parties, then the patent or
patent application shall be jointly owned by the Parties whose employees are so
listed as inventors.

    


    8.4           License of
Patents.  If a Party obtains a patent covering a Joint Product,
the other Party shall have a non-exclusive license to use such patent for the
purpose of producing, distributing and marketing the Joint Product to the extent
permitted under, and subject to the terms of, this Agreement.

    


    8.5           Certain
Acknowledgements.  Lifeline acknowledges that the WARF license
agreement permitting the use of WARF Technology and WARF Materials is
non-exclusive, and grants WARF a non-exclusive license to use for non-commercial
purposes Joint Products and any other materials and patents developed using WARF
Materials and WARF Technology.  BioTime and ES acknowledge that the
Lifeline’s right to some aspects of the Cell Technology is non
exclusive.

    


    8.8           Licenses of Intellectual
Property; Bankruptcy Code.  The Parties agree that the
sublicenses granted to BioTime and ES by Lifeline to use Cell Technology, the
license granted by Lifeline to ES and BioTime to use Lifeline know-how, the
sublicenses granted by BioTime and ES to use WARF Technology, the license
granted by ES to Lifeline to use ES Technology, the license granted by Lifeline
to ES to use Lifeline Technology, and any and all licenses granted by any Party
to the other Party under Section 8.4, constitute licenses of “intellectual
property” as defined in the United States Bankruptcy Code (the “Bankruptcy
Code”) and as used in Section 365(n) of the Bankruptcy Code.  The
Parties agree that the know-how included in Cell Technology sublicensed to
BioTime and ES by Lifeline, the Lifeline Technology licensed by Lifeline to ES
under this Agreement, and the ES Technology licensed by ES to Lifeline under
this Agreement includes trade secrets.  The Parties also agree that
the payments of Net Revenues required to be made by the Parties to each other
under Article 5 of this Agreement constitute “royalties” under Section 365(n) of
the Bankruptcy Code.

    


    


    ARTICLE 9 - PROSECUTION OF
INFRINGERS

    AND DEFENSE OF PATENT
RIGHTS

    


    9.1           Notice.  The
Parties agree to notify each other in writing of (a) any actual or threatened
infringement, by a third person, of any patents covering Cell Technology, WARF
Technology, ES Technology or any other patent pertaining to a Joint Product, or
(b) any claim of invalidity or unenforceability of any patent owned by a Party
covering a Joint Product.

    


    9.2           Prosecution and Defense of
Patent Rights.  The Party or Parties owning the patent covering
a Joint Product shall have the right (but not the obligation) to prosecute any
infringement or defend any claims, as applicable, pertaining to such
patent.  Each Party shall, at


    
      
         


      

      
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    the
expense of the owner of the patent, provide reasonable assistance to the other
Party in connection with the prosecution or defense of such claims.

    


    9.3           Judgments and
Awards.  Any judgment, award, or settlement proceeds arising
from any claim, demand, lawsuit or other proceeding commenced or joined by
either Party against any third person infringing or allegedly infringing a
patent covering a Joint Product (“Proceeds”) shall be allocated between the
Parties in the following manner:  (a) first (in the ratio of expenses
incurred by each Party in the action) to reimburse each Party for any expenses
incurred in the action; and (b) any Proceeds on account of the Party’s
respective lost profits shall be treated as Net Revenues, and shall be allocated
between the Parties in the manner provided in Article 5 for the allocation of
Net Revenues from the sale of such Joint Product; provided, that if royalties
payable, Production Costs, or Marketing Costs were taken into account in
determining the Proceeds, those costs shall not be deducted again in allocating
the Proceeds among the Parties.

    


    9.4           Alleged Infringement of
Patents or Trade Secrets.  If a claim or lawsuit is brought
against a Party (“Defendant”) alleging infringement of any patent or
misappropriation of any trade secret owned by a third person arising from the
production, distribution, sale or use of any Joint Product, the Defendant shall
promptly give each other Party written notice to of such infringement claim and
shall provide to each other Party all information in the Defendant’s possession
regarding such infringement claim, within sixty (60) days after receiving such
notice.  Each Party shall advise the other of the course of action it
intends to take to defend such infringement claim, and shall keep the other
Party informed of the progress of any litigation arising from the infringement
claim.  No Party shall enter into any settlement, consent judgment, or
other voluntary final disposition of any infringement action that admits the
invalidity or unenforceability of any patent pertaining to a Joint Product or
that would adversely affect the rights of any other Party, without the prior
written consent of the other Party whose rights are so affected, which consent
may not be unreasonably withheld, conditioned or delayed.

    


    


    ARTICLE 10 – INDEMNIFICATION
AND

    LIMITATION OF
LIABILITY

    


    10.1                      Indemnification.  BioTime
and ES agree to indemnify, defend and hold harmless Lifeline from and against
all liabilities of any kind whatsoever, including legal expenses and reasonable
attorneys' fees, arising out of or in connection with any breach of any
representation or warranty of BioTime or ES under this
Agreement.  Lifeline agrees to indemnify, defend and hold harmless
BioTime and ES from and against all liabilities of any kind whatsoever,
including legal expenses and reasonable attorneys' fees, arising out of any
breach of any representation or warranty of Lifeline under this
Agreement.  If a claim for indemnification relates to any claim or
lawsuit by a third person against the indemnified Party, any indemnification
obligations set forth in this Agreement shall be subject to the following
conditions: (i) the indemnified Party shall notify the indemnifying Party in
writing promptly upon learning of any claim or lawsuit for which indemnification
is sought; (ii) the indemnifying Party shall have control of the defense or
settlement, provided
that the indemnified Party shall have the right (but not the obligation)
to participate in such defense or settlement with counsel at its selection and
at its sole expense; and


    
      
         


      

      
        11

        
          

        

      

      
         


      

    


    (iii) the
indemnified Party shall reasonably cooperate with the defense, at the
indemnifying Party’s expense.

    


    10.2                      Disclaimer of
Warranties.  EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS
AGREEMENT, EACH PARTY, AND ITS DIRECTORS, MANAGERS, OFFICERS, EMPLOYEES, AND
AFILIATES, MAKES NO REPRESENTATIONS AND EXTENDS NO WARRANTIES OF ANY KIND,
EITHER EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, VALIDITY OF PATENT RIGHTS
CLAIMS, ISSUED OR PENDING, AND THE ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER
OR NOT DISCOVERABLE, WITH RESPECT TO ANY JOINT PRODUCT.

    


    NOTHING IN THIS AGREEMENT SHALL BE
CONSTRUED AS A REPRESENTATION MADE OR WARRANTY GIVEN BY BIOTIME OR ES THAT THE
PRACTICE OF THE WARF TECHNOLOGY OR ES TECHNOLOGY SHALL NOT INFRINGE THE PATENT
RIGHTS OF ANY THIRD PARTY.

    


    NOTHING IN THIS AGREEMENT SHALL BE
CONSTRUED AS A REPRESENTATION MADE OR WARRANTY GIVEN BY LIFELINE THAT THE
PRACTICE OF THE CELL TECHNOLOGY SHALL NOT INFRINGE THE PATENT RIGHTS OF ANY
THIRD PARTY.

    


    10.3                      Limitation on
Liability.  IN NO EVENT SHALL ANY PARTY, OR ITS DIRECTORS,
MANAGERS, OFFICERS, EMPLOYEES AND AFFILIATES, BE LIABLE FOR INCIDENTAL OR
CONSEQUENTIAL DAMAGES OF ANY KIND, INCLUDING ECONOMIC DAMAGE OR INJURY TO
PROPERTY AND LOST PROFITS ARISING FROM THE PRODUCTION AND SALE OF JOINT PRODUCTS
UNDER THIS AGREEMENT.

    


    


    ARTICLE 11 –
TERMINATION

    


    11.1                      Expiration.  This
Agreement shall be effective on the Effective Date and shall terminate in twenty
(20) years or upon the expiration of the last to expire of the patents covering
Cell Technology, WARF Technology, or any Joint Product, whichever is later,
unless sooner terminated as provided in this Article 11.

    


    11.2                      Breach.  Any
Party may terminate this Agreement and the rights, privileges and license
granted hereunder by written notice upon a breach or default of this Agreement
by the other Party, subject to the following notice and cure
provisions:

    


    (a)           If
the breach is non-payment of any amount due, the breach is not cured within
thirty (30) days of receipt of written notice of such non-payment;
or

    


    (b)           If
the breach is one other than non-payment of any amount due, the breach is not
cured within thirty (30) days of a written request to remedy such breach, or if
the breach


    
      
         


      

      
        12

        
          

        

      

      
         


      

    


    cannot be
cured within said thirty (30) day period, the failure of the Party in breach,
within said thirty (30) day period, to commence action necessary to cure the
breach, and to proceed with reasonable diligence thereafter to cure the
breach.

    


    Such
termination shall become automatically effective unless the Party in breach
shall have cured the breach prior to the expiration of the applicable cure
period.

    


    11.3                      Other Grounds for
Termination.

    


    (a)           BioTime
and ES shall have the right to terminate this Agreement at any time immediately
upon notice to Lifeline if any claim is brought against BioTime or ES alleging
that the use of Cell Technology, WARF Technology, or WARF Materials infringes on
the patent or other intellectual property rights of any third
person.  Notwithstanding any such notice of termination, BioTime and
ES shall remain obligated to pay all amounts due Lifeline under this Agreement
through the effective date of the termination.

    


    (b)           Lifeline
shall have the right to terminate this Agreement at any time immediately upon
notice to BioTime and ES if any claim is brought against Lifeline alleging that
the use of ES Technology, WARF Technology, or WARF Materials infringes on the
patent or other intellectual property rights of any third
person.  Notwithstanding any such notice of termination, Lifeline
shall remain obligated to pay all amounts due BioTime and ES under this
Agreement through the effective date of the termination.

    


    11.4                      Survival.  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.  Article1, Article 10, Article 12, Article
13, Article 14, Section 6.2, and this Section 11.4, and any other Sections or
provisions which by their nature are intended to survive termination, shall
survive any such termination.

    


    


    ARTICLE 12 -
CONFIDENTIALITY

    


    12.1                      Confidential
Information  “Confidential Information” means (a) confidential
or proprietary information of BioTime or ES (including scientific knowledge,
know-how, methods, processes, inventions, techniques, and formulae) relating to
ES Technology, (b) confidential or proprietary information relating to Cell
Technology licensed to Lifeline and designated as being confidential or secret
under the Cell Technology license agreement, (c) confidential or proprietary
information relating to WARF Technology or WARF Materials licensed to BioTime or
ES and designated as being confidential or secret under the WARF Technology
license agreement, (d) confidential or proprietary information developed by a
Party (including scientific knowledge, know-how, methods, processes, inventions,
techniques, and formulae) relating to the use of Cell Technology or WARF
Technology in the production or use of a Joint Product, (e) confidential or
proprietary information (including scientific knowledge, know-how, methods,
processes, inventions, techniques, and formulae) developed by a Party relating
to the production or use of a Joint Product, other than information described in
clause (d), (f) Joint Product sales data, (g) marketing plans, methods, and
studies, (h) the identity of customers and customer


    
      
         


      

      
        13

        
          

        

      

      
         


      

    


    requirements,
(i) Production Costs, and (j) such other information that is designated as
Confidential Information in this Agreement, or that a Party maintains as
confidential and designates as Confidential Information in a writing delivered
to another Party.  Confidential Information may be in written,
graphic, oral or physical form and may include designs, sketches, photographs,
drawings, specifications, reports, data, plans or other records, biological
materials, and/or software.  Confidential Information shall not
include:

    


    
      	
               
      

            	
              (a)

            	
              information
      which is, or later becomes, generally available to the public through no
      fault of the recipient;

            


    

    


    
      	
               
      

            	
              (b)

            	
              information
      which is provided to the recipient by an independent third party having no
      obligation to a Party or to WARF or ACT to keep the information
      secret;

            


    

    


    
      	
               
      

            	
              (c)

            	
                information
      which the recipient can establish by written documentation was previously
      known to it;

            


    

    


    
      	
               
      

            	
              (d)

            	
              information
      which the recipient can establish by written documentation was
      independently developed by it without reference to the Confidential
      Information of any other Party; or

            


    

    


    
      	
               
      

            	
              (e)

            	
              information
      required to be disclosed by a Party under any law or government
      regulation, or under any order of any court, government agency, or other
      adjudicative or administrative body having jurisdiction over the
      Party.

            


    

    


    12.2                      Protection of Confidential
Information.  During the term of this Agreement, the Parties
may provide each other with Confidential Information.  Each Party
intends to maintain the confidential or trade secret status of its Confidential
Information.  Each Party shall exercise reasonable care, and not less
than the standard of care it exercises in protecting the secrecy of its own
Confidential Information, to protect the Confidential Information received from
the other Party from disclosure to third persons.  Neither Party shall
disclose Confidential Information (other than the Party’s own Confidential
Information) to any third person without the written permission of the other
Party (or ACT in the case of Confidential Information described in clause (b) of
Section 12.1, or WARF in the case of Confidential Information described in
clause (c) of Section 12.1); provided, that each Party may disclose Confidential
Information to the Party’s employees, officers, directors, attorneys, and
contractors who have a need to know such information in connection with the
performance of services for the Party.  Upon termination or expiration
of this Agreement, each Party shall comply with the other’s written request to
return all of the other Party’s Confidential Information that is in written or
tangible form.  No Party is granted any license to use another Party’s
Confidential Information for any purpose other than the production, marketing,
distribution, and sale of Joint Products under this Agreement or the enforcement
of a Party’s rights under this Agreement.  The obligations of the
Parties under this Article 12 shall survive any expiration or termination of
this Agreement.


    
      
         


      

      
        14

        
          

        

      

      
         


      

    


    ARTICLE 13 - PAYMENTS,
NOTICES, AND OTHER COMMUNICATIONS

    


    Any payment, notice or other
communication required or otherwise given pursuant to this Agreement shall be in
writing and sent by certified first class mail, return receipt requested,
postage prepaid, or by nationally recognized next business day delivery service
addressed to the parties at the following addresses or such other addresses as
such party furnishes to the other party in accordance with this
paragraph.  Such notices, payments or other communications shall be
effective upon receipt.

    


    If to
Lifeline:                                                                LifeLine
Cell Technology, LLC,2595 Jason Court

    Oceanside, CA 92056

    Attention:  Jeffrey
Janus

    


    If to
BioTime:                                                                BioTime,
Inc.

    
      	
               
      

            	
              1301
      Harbor Bay Parkway, Suite 100

            


    

    
      	
               
      

            	
              Alameda,
      California 94502

            


    

    
      	
               
      

            	
              Attention:
      Michael D. West, CEO

            


    

    


    
      	
              If
      to ES:

            	
              Embryome
      Sciences, Inc.

            


    

    
      	
               
      

            	
              1301
      Harbor Bay Parkway, Suite 100

            


    

    
      	
               
      

            	
              Alameda,
      California 94502

            


    

    
      	
               
      

            	
              Attention:
      Michael D. West, CEO

            


    

    


    


    
      	
               
      

            	
              ARTICLE 14 -
      REPRESENTATIONS AND
WARRANTIES

            


    

    


    14.1                      Enforceable
Agreement--Lifeline.  Lifeline represents and warrants that (a)
it has licensed the Cell Technology, (b) it has the full legal and contractual
right and power to grant the sublicenses granted hereunder, (c) this Agreement
constitutes the binding, legal agreement of Lifeline, enforceable in accordance
with its terms, (d) the execution and delivery of this Agreement by Lifeline,
and the performance of Lifeline’s obligations under this Agreement, will not
violate, contravene or conflict with (i) any other agreement to which Lifeline
is a party or by which it is bound, or (ii) any law, rule or regulation
applicable to Lifeline.

    


    14.2                      No Infringement—Cell
Technology.  To the best of Lifeline’s knowledge, the use of
the Cell Technology to produce, make, and distribute Joint Products will not
infringe on any patent or trade secret or other intellectual property right of
any third person.  Lifeline has never received any complaint, claim,
demand, or notice alleging that the Cell Technology infringes on any patent or
trade secret or other intellectual property right of any third
person.

    


    14.3                      Enforceable
Agreement--BioTime. BioTime represents and warrants that (a) it has
licensed the WARF Technology, (b) it has the full legal and contractual right
and power to grant the sublicenses granted hereunder, (c) this Agreement
constitutes the binding, legal agreement of BioTime, enforceable in accordance
with its terms, and (d) the execution and delivery of this Agreement by BioTime,
and the performance of BioTime’s obligations under this
Agreement,


    
      
         


      

      
        15

        
          

        

      

      
         


      

    


    will not
violate, contravene or conflict with (i) any other agreement to which BioTime is
a party or by which it is bound, or (ii) any law, rule or regulation applicable
to BioTime.

    


    14.4                      Enforceable
Agreement--ES.  ES represents and warrants that (a) this
Agreement constitutes the binding, legal agreement of ES, enforceable in
accordance with its terms, and (b) the execution and delivery of this Agreement
by ES, and the performance of ES’s obligations under this Agreement, will not
violate, contravene or conflict with (i) any other agreement to which ES is a
party or by which it is bound, or (ii) any law, rule or regulation applicable to
ES.

    


    14.5                      No Infringement—WARF
Technology.  To the best of BioTime’s knowledge, the use of the
WARF Technology and ES Technology to develop Joint Products will not infringe on
any patent or trade secret or other intellectual property right of any third
person.  BioTime has never received any complaint, claim, demand, or
notice alleging that the WARF Technology or the ES Technology infringes on any
patent or trade secret or other intellectual property right of any third
person.

    


    14.6                      Survival.  This
Article 14 shall survive expiration or termination of this
Agreement.

    


    ARTICLE 15 - MISCELLANEOUS
PROVISIONS

    


    15.1                      Compliance With
Law.  Each party shall comply with all local, state, federal
and international laws and regulations relating to the production, sale, use,
distribution, and export of Joint Products.

    


    15.2                      No Partnership or
Agency.  Nothing herein shall be deemed to constitute any Party
as the agent or representative of any other Party.  Each Party shall
be an independent contractor, not an employee or partner of any other Party, and
the manner in which each Party renders its services under this Agreement shall
be within its sole discretion.  A Party shall not be responsible for
the acts or omissions of any other Party, nor shall a Party have authority to
speak for, represent or obligate any other Party in any way without prior
written authority from the other Party.

    


    15.3                      Patent
Marking.  To the extent commercially feasible, and consistent
with prevailing business practices, all Joint Products distributed or sold under
this Agreement will be marked (or will be contained in packaging that is labeled
or marked) with the number of each issued patent that applies to such Joint
Product.

    


    15.4                      Applicable
Law.  This Agreement shall be construed, governed, interpreted
and applied in accordance with the laws of the State of California, without
regard to principles of conflicts of law thereof.

    


    15.5                      Entire Agreement;
Amendment.  This Agreement sets forth the entire agreement and
understanding of the Parties as to the subject matter of this
Agreement.  This Agreement shall not be amended or modified except by
the execution of a written instrument subscribed to by the Party to be
charged.


    
      
         


      

      
        16

        
          

        

      

      
         


      

    


    


    15.6                      Severability.  The
provisions of this Agreement are severable, and in the event that any provisions
of this Agreement shall be determined to be invalid or unenforceable under any
controlling body of the law, such invalidity or unenforceability shall not in
any way affect the validity or enforceability of the remaining provisions
hereof.

    


    15.7                      Waiver.  The
failure of a Party to assert a right under this Agreement or to insist upon
compliance with any term or condition of this Agreement shall not constitute a
waiver of that right or excuse a similar subsequent failure to perform any such
term or condition by the other Party, in the absence of an express written
waiver signed by the Party to be charged.

    


    15.8                      Parties.  This
Agreement shall be binding on, and shall inure to the benefit of, Lifeline,
BioTime, and ES, and their respective successors and assigns.

    


    15.9                      Sublicense and
Assignment.  BioTime and ES shall not sublicense or assign any
rights to use Cell Technology without first obtaining (a) the prior written
consent of LifeLine, and (b) any consent of ACT required under the ACT license
agreements.  LifeLine shall not sublicense or assign any right to use
WARF Technology or WARF Materials without (a) the prior written consent of
BioTime and ES, and (b) any consent of WARF required under the WARF license
agreement.  LifeLine shall not sublicense or assign any right to use
ES Technology without obtaining the prior written consent of ES.  The
foregoing provisions of this Section 15.9 shall not restrict the rights of the
Parties to sell Joint Products under the terms of this Agreement.

    


    15.10                      Counterparts.  This
Agreement may be executed in any number of counterparts, each of which shall be
deemed an original but all of which together shall constitute one and the same
instrument.  Any document, including, without limitation, counterparts
of this Agreement, may be transmitted by facsimile or other electronic means and
upon receipt shall be deemed an original; provided that upon demand of the
recipient, the sender within a reasonable time of such demand shall mail or
deliver an originally signed copy of such document.

    


    15.11                      Persons.  All
references to a “person” shall include a natural person or a corporation,
partnership, limited liability company, trust, or other legal
entity.

    



    
      
         


      

      
        17

        
          

        

      

      
         


      

    


    IN WITNESS WHEREOF, the Parties have
duly executed this Agreement as of the Effective Date set forth
above.

    


    LifeLine
Cell Technology, LLC

    


    


    By:    /s/
Jeffrey
Janus                                                                                 

    Printed
Name:    Jeffrey
Janus                                                                                            

    Title:    CEO                                                                                 

    


    


    BioTime,
Inc.

    


    


    By:    /s/
Michael
West                                                                                 

    Printed
Name:   Michael
West                                                                                             

    Title:    CEO                                                                                 

    


    


    Embryome
Sciences, Inc.

    


    


    By:   /s/
Michael
West                                                                                 

    Printed
Name:   Michael
West                                                                                             

    Title:    CEO                                                                                 


    
      
         


      

      
        18

        
          

        

      

      
         


      

    


    SCHEDLUE
1

    


    


    Exclusive
License Agreement dated May 14, 2004 by and between Advanced Cell Technology,
Inc., and PacGen Cellco, LLC, as amended, August 25, 2005, pertaining to certain
patents and know-how owned by ACT.

    


    Exclusive
License Agreement dated May 14, 2004 by and between Advanced Cell Technology,
Inc., and PacGen Cellco, LLC, as amended, August 25, 2005, pertaining to certain
patents and know-how owned by Infigen and licensed to ACT.

    


    Exclusive
License Agreement dated May 14, 2004 by and between Advanced Cell Technology,
Inc., and PacGen Cellco, LLC, as amended, August 25, 2005, pertaining to certain
patents and know-how owned by the University of Massachusetts and licensed to
ACT.

    


    


     

     

    
19