**Exhibit 10.8**

 

**NONEXCLUSIVE SUBLICENSE ANDSPONSORED RESEARCH AGREEMENT**

 

**between**

 

**ADVANCED CELL TECHNOLOGY,****INC.**

 

**and**

 

**CHARLES RIVER LABORATORIES, INC.**

 

This Nonexclusive Sublicense and SponsoredResearch Agreement (the “Agreement”) is made and entered into as of June 29,2001 (the “Effective Date”) by and between Advanced Cell Technology, Inc., aDelaware corporation with its principal place of business at One InnovationDrive, Worcester, Massachusetts 01605 (“ACT”) and Charles River Laboratories,Inc., a Delaware Corporation with its principle place of business at 251Ballardvale Street, Wilmington, Massachusetts 01887 (“CHARLES RIVER,” andtogether with ACT, the “parties”).  Asset forth below, the University of Massachusetts (the “University”) has agreed tobe bound by certain provisions of this Agreement.

 

**RECITALS**

 

WHEREAS,CHARLES RIVER is a supplier of laboratory animals for scientific research andprovides certain rodents as well as relatedproducts and services to academic, governmental and industrial researchers; and

 

WHEREAS, the parties recognize that certain rats andmice that are useful for scientific research can be difficult to breed; and

 

WHEREAS, ACT owns or has licensed with asublicensable interest the ACT Patent Rights and the ACT Technology (as definedbelow) which includes certain scientific methods and techniques for cloninganimals that may be valuable in improving the economics of breeding suchrodents; and

 

WHEREAS, CHARLES RIVER wishes to use cloningtechniques for purposes related to its business including, without limitation,improving the efficiency rates of producing certain rodents and/or selectingfor gender in certain rodents; and

 

WHEREAS,CHARLES RIVER and ACT are mutually interested in evaluating, developing andusing the ACT Patent Rights and the ACT Technology for these purposes; and

 

WHEREAS,CHARLES RIVER desires to obtain a non-exclusive sublicense from ACT under theACT Patents Rights and the ACT Technology, and to sponsor research at ACTdirected to evaluating, developing and using the ACT Patent Rights and the ACTTechnology for the purpose of improving the efficiency rates of producingcertain rodents and/or selecting for gender in certain rodents; and

 

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WHEREAS,ACT is willing to grant such a sublicense to CHARLES RIVER, and to perform suchsponsored research, upon the terms and conditions set forth below; and

 

WHEREAS,the sublicense of ACT’S rights under theUMASS Patent Rights (as defined below) to CHARLES RIVER under thisAgreement shall be subject to the relevant terms of the UMASS License (asdefined below);

 

NOWTHEREFORE, in consideration of the mutual covenants, agreements,representations, and warranties contained in this Agreement, and other good andvaluable consideration, the adequacy and receipt of which is herebyacknowledged, ACT and CHARLES RIVER agree as follows:

 

**1.**                                      **DEFINITIONS.**  Asused in this Agreement, the following terms shall have the meanings set forthbelow.

 

1.1                              *“ACT Developments”*means Developments that are conceived,discovered, invented, developed, created, made or reduced to practice solely byACT.

 

1.2                              *“ACT Licensed Property”*means the ACT Patent Rights and the ACT Technology*provided, however,*that ACTLicensed Property shall not include ACT Patent Rights or ACT Technology (i)acquired after the Effective Date as a result of or in connection with a mergeror acquisition with or by another entity, or (ii) obtained on terms whichprohibit the license contemplated by Section 3.1.

 

1.3                              *“ACT Patent Rights”*means the patents and patent applicationsidentified on Schedule A-l attached hereto, all divisionals, continuations, andcontinuations-in-part that derive from the identified patent applications(including from the patent applications for the identified patents), foreignfilings related to the foregoing patents and patent applications, and anypatents issuing on said applications together with all reissues,reexaminations, extensions and substitutions thereof.  The parties agree that Schedule A-l may fromtime to time be amended after the Effective Date to reflect changes thereto.

 

1.4                              *“ACT Technology”*means the following which are owned orcontrolled by ACT during the term of this Agreement which are useful, necessaryor required to clone rats or mice in the Charles River Field: confidentialinformation, knowledge and data, including but not limited to, inventions(whether patentable or not), trade secrets, ideas, designs, drawings, know-how,processes, techniques and like technological information.

 

1.5                              *“Affiliate”*means any corporation, company, partnership,joint venture and/or firm which controls, in whatever country organized, thatis controlled by or is under common control with a party.  For purposes of this definition, “control”means (a) in the case of corporate entities, direct or indirect ownership ofmore than fifty percent (50%) of the stock or shares entitled to vote for theelection of directors; and (b) in the case of non-corporate entities, direct orindirect ownership of more than fifty percent (50%) of the equity interest withthe power to direct the management and policies of such noncorporate entities.

 

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1.6                               *“Charles River Developments”*means Developments that areconceived, discovered, invented, developed, created, made or reduced topractice solely by CHARLES RIVER.

 

1.7                               *“Charles River Field”*means the cloning of rats and mice, excludingrats or mice cloned from cells that have been intentionally geneticallymodified subsequent to the removal; of the cells from the donor animal, for allpurposes related to the development, manufacture, production, use, marketing orsale of products and services useful for scientific research.

 

1.8                               *“Charles River LicensedProperty”*means the CharlesRiver Patent Rights and the Charles River Technology *provided, however,*that Charles River Licensed Propertyshall not include Charles River Patent Rights or Charles River Technology (i)acquired after the Effective Date as a result of or in connection with a mergeror acquisition with or by another entity, or (ii) obtained on terms whichprohibit the license contemplated by Section 3.2.

 

1.9                               *“Charles River PatentRights”*means the patentsand patent applications identified on Schedule A-2 attached hereto, alldivisionals, continuations, and continuations-in- part that derive from theidentified patent applications (including from the patent applications for theIdentified patents), foreign filings related to the foregoing patents andpatent applications, and any patents issuing oh said applications together withall reissues, reexaminations, extensions and substitutions thereof.  The parties agree that Schedule A-2 may fromtime to time be amended after the Effective Date to reflect changes thereto.

 

1.10                         *“Charles River Technology”*means the following which are owned orcontrolled by CHARLES RIVER during the Research Period which are useful,necessary or required for ACT to conduct the Research Project: confidentialinformation, knowledge and data, including but not limited to, inventions(whether patentable or not), trade secrets, ideas, designs, drawings, know-how,processes, techniques and like technological information.

 

1.11                         *“Confidential Information”*includes, without limitation, any scientific,technical, financial, customer, trade business or other information disclosedby one party to the other, or by CHARLES RIVER to the University, whetherdirectly or through ACT, which is specifically designated by the disclosingparty as confidential or proprietary, or which, under all of the given circumstances,ought reasonably to be treated as confidential information of the disclosingparty.  Such information may be disclosedin oral, visual or written form (including magnetic, optical or other media).  Each party’s Confidential Informationspecifically includes without limitation the respective party’s business plansand business practices, the terms of this Agreement, scientific knowledge,research and development or know-how, processes, inventions, techniques, formulae,products and product plans, business operations, customer requirements,designs, sketches, photographs, drawings, specifications, reports, studies,findings, data, plans or other records, biological materials, software,margins, payment terms and sales forecasts, volumes and activities, designs,computer code, technical information, costs, pricing, financing, business opportunities,personnel, and information of ACT or CHARLES RIVER relating to the ACT LicensedProperty or the Charles River Licensed Property, as applicable.  Licensed Products or Licensed Services.  Confidential Information does not includeinformation which (a) was known to the receiving party at the time it wasdisclosed, other than by previous disclosure by the disclosing party, asevidenced by the written records of the receiving party at the time of

 

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disclosure;(b) is at the time of disclosure or later becomes publicly known other thanthrough a breach of this Agreement; (c) is lawfully and in good faith madeavailable to the receiving party by a third party who, to the receiving party’sknowledge after inquiry, did not derive it from the disclosing party and whoimposed no obligation of confidence on the receiving party; or (d) is developedby the receiving party independent of any disclosure by the disclosing party,as evidenced by the written records of the receiving party.

 

1.12                        *“Developments”*include, without limitation, discoveries,inventions, developments, patents and patent rights, know-how, trade secrets,techniques, methodologies, modifications, innovations, improvements, writings,documentation, data and rights (whether or not protectible under state,federal, or foreign patent, trademark, copyright or similar laws) that were orare conceived, discovered, invented, developed, created, made or reduced topractice by ACT or CHARLES RIVER, as applicable, during the term of thisAgreement.

 

1.13                        *“FDA”* means the United States Food and DrugAdministration.

 

1.14                        *“Joint Developments”*means all Developments conceived, discovered,invented, developed, created, made or reduced to practice jointly by bothparties in the Charles River Field.

 

1.15                        *“Joint Patent Rights”*means any and all patents and patentapplications covering Joint Developments which exist as of the Effective Dateor which come into existence during the term of this Agreement, together withreissues, extensions (or other governmental acts which effectively extend theperiod of exclusivity by the patent holder), substitutions, confirmations, registrations,revalidations, additions, continuations, continuations-in-part, divisions, orforeign counterparts of or to the foregoing patent rights.  Joint Patent Rights include, withoutlimitation, the patents and patent applications to be listed on Schedule A-3 tobe attached to this Agreement, which schedule will thereafter be revised fromtime to time to reflect changes thereto.

 

1.16                        *“Licensed Product”*means any product that cannot be developed,manufactured, used, or sold without (i) infringing one or more claims under theACT Patent Rights, or (ii) using or incorporating some portion of the ACTTechnology.  Without limiting thegenerality of the foregoing, and by way of illustration but not limitation,Licensed Products include cloned rats or mice in the Charles River Field andthe progeny (“Progeny”) of such rats and mice.

 

1.17                        *“Licensed Service”*means any service that cannot be developed orperformed without using at least one process that (i) infringes one or moreclaims under the ACT Patent Rights, or (ii) uses some portion of the ACTLicensed Property.

 

1.18                        *“Net Sales”*means the total invoice price charged on allsales by CHARLES RIVER of Licensed Products and/or Licensed Services in anycountry after deducting, to the extent not already deducted, normal andcustomary trade, dealer, quantity, and cash discounts actually allowed;allowances for credits granted on account of rejections, returns, or price reductions;governmental sales taxes and other charges imposed on such sales; and freight, insurance,customs, duties, and other landing charges.  In the event any product is sold as a componentof a combination of functional elements, net sales price for purposes ofdetermining royalty payments on such combination shall be calculated bymultiplying the average per unit net sales price of the Licensed Productportion of the combination when sold separately in the

 

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applicablecountry during the accounting period in which the sale was made by the numberof units of product sold as part of such combination product.  In addition, Net Sales shall include theamount of any milestone payment received based on the performance of CHARLESRIVER in connection with the development of Licensed Products and/or LicensedServices.

 

Inany transfers of Licensed Products between CHARLES RIVER and an Affiliate, NetSales shall be calculated based on the final sale of the Licensed Product to anindependent third party.  In the eventthat CHARLES RIVER or an Affiliate receives non-monetary consideration for anyLicensed Products or Licensed Services, Net Sales shall be calculated based onthe fair market value of such consideration.  In the event that CHARLES RIVER or itsAffiliates use or dispose of a Licensed Product in the provision of acommercial service other than a Licensed Service, the Licensed Product shall beconsidered sold and the Net Sales shall be calculated based on the sales priceof the Licensed Product to an independent third party or, in the absence ofsuch sales, on the fair market value of the Licensed Product as determined bythe parties in good faith.

 

1.19                         *“Principal Investigator”*means an employee of ACT who has primary responsibilityfor the performance of the Research Project.  The Principal Investigator is identified inSection 2.1 below.

 

1.20                         *“Research Period”*shall mean the period commencing on theEffective Date of this Agreement and terminating on the second anniversary ofthe Effective Date or such earlier date as the Research Project is completed orterminated.  The Research Period may beextended by the mutual written consent of the duly authorized representativesof CHARLES RIVER and ACT.

 

1.21                         *“Research Project”*means the research project and budgetdescribed in Schedule B (“Description of Research Project”), which ACTagrees to perform under the terms and conditions of this Agreement.

 

1.22                         *“Research Results”*means all data, test results, laboratorynotes, techniques, know-how, and any other research results that are obtainedin the performance of the Research Plan.  Research Results do not include anyDevelopments or other intellectual property (whether patentable inventions,copyrighted or copyrightable works, trademarks or service marks) based on theResearch Results.

 

1.23                         *“Technical Representative”*means an individual designated by CHARLES RIVERas its principal technical representative for consultation and communicationswith ACT and the Principal Investigator.  The Technical Representative is identified inSection 2.1 below.

 

1.24                         *“UMASS License”*means the Exclusive License Agreement betweenACT and the University dated April 16, 1996, together with any amendmentsthereto.

 

1.25                         “*UMASSPatent Rights”*means ACT Patent Rights licensed by ACT from the Universityunder the UMASS License.

 

1.26                         “*Valid Claim”*means a claim of an issued patent which has not lapsed or become abandonedor declared invalid or unenforceable by a court of competent jurisdiction or an

 

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administrativeagency from which no appeal can be or has been taken within the time allowedfor that appeal.

 

The use herein of the plural shall include the singular and *vice versa*and the use of the masculineshall include the feminine.  Additionalterms may be defined throughout this Agreement.

 

**2.**                                     **SPONSORED RESEARCH**

 

2.1                                 Steering Committee; Principal Investigatorand Technical Representative.Except as otherwise specifically set forth in this Section 2, the ResearchProject shall be conducted under the guidance of a steering committee composedof the Principal Investigator, the Technical Representative and one additionalrepresentative from each of CHARLES RIVER and ACT (which additionalrepresentatives are identified on Schedule C attached hereto) (the “SteeringCommittee”), which shall generally oversee, review and monitor the progress ofthe Research Project.  The PrincipalInvestigator shall be Jose Cibelli.  IfJose Cibelli ceases to serve as Principal Investigator for any reason, ACT willpromptly notify CHARLES RIVER, and ACT and CHARLES RIVER shall use good faithefforts to identify a mutually acceptable replacement within sixty (60) days.  If a suitable replacement PrincipalInvestigator can not be identified within the sixty-day period, CHARLES RIVERshall have the right to terminate this Agreement as provided in Section 5.2.  The Technical Representative shall be RebeccaMenapace.  CHARLES RIVER may change itsTechnical Representative upon thirty (30) days written notice to ACT.  Either party may replace its representativesidentified on Schedule C at any time, upon written notice and mutualagreement of the parties.

 

2.2                                 Performance of Research Project. The Research Project shall be conducted atand coordinated from the facilities of ACT under the supervision and directionof the Principal Investigator.  ACT shallbe responsible for the administrative management of the Research Project.  As soon as practicable after the EffectiveDate, ACT shall assemble and maintain a qualified team of laboratory, technicaland other personnel necessary to support ACT’s obligations hereunder (the “ProjectTeam”) under the supervision and direction of the Principal Investigator tocommence and conduct the Research Project.  The Technical Representative may consultinformally with the Principal Investigator, both in person and by telephone,regarding the performance of the Research Project, and the TechnicalRepresentative shall have reasonable access to the Project Team and ACT’sfacilities where the Research Project is being conducted, but the exact time andmanner of such access shall be determined by the Principal Investigator; provided,however, that the Principal Investigator shall cooperate in good faith with themembers of the Steering Committee to implement the Research Project and toresolve any issues which may arise related to the implementation of theResearch Project.  ACT shall usereasonable commercial efforts to complete the Research Project within theResearch Period; however, ACT makes no warranties regarding the completion ofthe Research Project or the achievement of any particular results.

 

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2.3                                 Research Funding and Payment to ACT. (a) In consideration of ACT’s performance ofthe Research Project, CHARLES RIVER agrees to pay to ACT sponsored researchpayments as follows:

 

(i)                                     CHARLES RIVER shall pay ACT One HundredTwenty Five Thousand Dollars ($125,000) upon the signing of this Agreement bythe parties;

 

(ii)                                 CHARLES RIVER shall pay ACT One HundredThousand Dollars ($100,000) six (6) months after the Effective Date of thisAgreement;

 

(iii)                              CHARLES RIVER shall pay ACT One HundredTwenty Five Thousand Dollars ($125,000) thirteen (13) months after theEffective Date of this Agreement; and

 

(iv)                            CHARLES RIVER shall pay ACT One HundredTwenty Five Thousand Dollars ($125,000) eighteen (18) months after theEffective Date of this Agreement;

 

provided,however, that the payments set forth in clauses (iii) and (iv) above shall becontingent upon CHARLES RIVER’s reasonable satisfaction with the researchconducted during the period commencing on the Effective Date of this Agreementand ending on the first anniversary of the Effective Date (the “InitialResearch Period”), including CHARLES RIVER’s satisfactory review of theprogress reports for such Period.  In theevent CHARLES RIVER is not reasonably satisfied with the research conductedduring the Initial Research Period, CHARLES RIVER may terminate the ResearchProject by notifying ACT in writing within thirty (30) days after the firstanniversary of the Effective Date of its dissatisfaction with the researchconducted during the Initial Research Period and the termination of theResearch Project.

 

(b)                               In no event will CHARLES RIVER be liable forany payment in excess of Four Hundred Seventy Five Thousand Dollars ($475,000)except as mutually agreed by the parties hereto in writing.

 

2.4                              Reports. ACT shall prepare and provide to CHARLES RIVER written progress reportssummarizing the status of the Research Project within thirty (30) days afterthe end of each calendar quarter during the Research Period (each, a “Report”). The Report shall include all ResearchResults, including laboratory notebooks maintained in accordance with customarypractice and issues related to the conduct of Research Project during thepreceding quarter.  During the ResearchPeriod, and at the convenience of the Principal Investigator, the Technical Representativeshall have reasonable access to such records.  Within ninety (90) days after the expirationor termination of the Research Period, the Principal Investigator shall deliverto CHARLES RIVER a final report describing all significant Research Results inreasonable detail; provided, however, that the Principal Investigator mayextend this ninety-day deadline with the consent of CHARLES RIVER, whichconsent shall not be unreasonably withheld.

 

2.5                              Access and Information; Periodic Meetings ofSteering Committee, Duringthe Research Period, and at the convenience of the Principal Investigator, ACTshall provide the Technical Representative on an ongoing basis with such accessto the Project Team and ACT facilities, and with such technical information,assistance and know-how, as may be necessary to enable CHARLES RIVER to reviewand evaluate the progress of the Research Project.  During the Research Period the SteeringCommittee shall meet at least once every three (3) months to discuss theResearch Project.  Any decisions of theSteering Committee shall require an affirmative vote of two-thirds of members.

 

2.6                              Materials to be Provided by Charles River. CHARLES RIVER shall provide, at

 

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nocost to ACT, the materials as set forth in Schedule D for use by ACT inperforming the Research Project.

 

2.7                                 Use of Funds. ACT shall use the funds provided under thisSection 2 solely in support of the activities by the Principal Investigator andthe Project Team in support of the Research Project.

 

2.8                                 Ownership of Equipment. Upon termination or expiration of thisAgreement, ACT shall retain title to all equipment purchased or fabricated byACT with funds provided by CHARLES RIVER pursuant to Section 2.3 hereof.

 

2.9                                 Compliance with Law. ACT agrees that all studies, research, andtesting done by, or on behalf of, CHARLES RIVER under this Agreement shall beperformed in strict compliance with all applicable laws, rules and regulationsgoverning the conduct of studies, research and testing at the site where suchstudies, research and testing are being conducted.

 

2.10                          Acknowledgment of Risks Associated withResearch Project. ACT andCHARLES RIVER acknowledge, understand and agree that the subject of theResearch Project is experimental, that its characteristics and functionalityare not fully understood, and that there may be substantial risks associatedwith the unknown properties of the products of the Research Project or anyother associated materials.

 

2.11                           Publications. During the term of this Agreement, ACT andCHARLES RIVER each acknowledge the other party’s interest in publishing certainof the Research Results to obtain recognition within the scientific communityand to advance the state of scientific knowledge.  Each party also recognizes the mutual interestin obtaining valid patent protection and maintaining as confidential anynonpatentable materials or methods which would have commercial value whenundisclosed.  Consequently, either party,its employees or consultants wishing to make a publication (including any oraldisclosure made without obligation of confidentiality) relating to any workperformed as part of the Research Project (the Publishing Party) shall transmitto the other party (the Reviewing Party) a copy of the proposed writtenpublication at least sixty (60) days prior to submission for publication, or anoutline of such oral disclosure at least thirty (30) days prior topresentation.  The Reviewing Party shallhave the right (a) to propose modifications to the publication for patent orother reasons; and (b) to request a delay in publication in order to protectpatentable information.  If the ReviewingParty requests such a delay, the Publishing Party shall delay submission orpresentation of the publication for a period of fourteen (14) days to enablepatent applications protecting each party’s rights in such information to be filedin accordance with Section 7 below.  Uponthe expiration of sixty (60) days or thirty (30) days from transmission to theReviewing Party, the Publishing Party shall be free to proceed with the writtenpublication or the presentation, respectively, unless the Reviewing Party hasrequested the delay described above.  TheParties expressly agree that research grant proposals submitted to governmentalauthorities or non-profit organizations shall not be subject to review underthis Section.  ACT and CHARLES RIVERagree to recognize each other in any publications arising out of the ResearchProject, as appropriate.

 

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**3.**                                      **GRANT OF****RIGHTS.**

 

3.1                                 (a) License Grant from ACT to CHARLESRIVER. Subject to the terms of this Agreement, ACT hereby grants to CHARLESRIVER a nonexclusive, royalty-bearing, worldwide license under its commercialrights in the ACT Licensed Property and in the Joint Patent Rights to develop,make, have made, import, use, sell and have sold Licensed Products in theCharles River Field and to develop and perform Licensed Services in the CharlesRiver Field.  To the extent this grantincludes a sublicense of any UMASS Patent Rights, such sublicense is subject tothe relevant terms of the UMASS License as it may be amended from time to time,provided that in the event of any inconsistency between the UMASS License andSection 3.1(d) hereof, Section 3.1(d) hereof shall govern.  The parties acknowledge, understand and agreethat the license “to have made” and “to have sold” granted herein means onlythat CHARLES RIVER may contract with a third party or parties to develop,manufacture or sell Licensed Products on behalf of CHARLES RIVER.

 

(c) Retained Rights. To the extent the University, the federalgovernment or any other parties have rights in the ACT Licensed Propertypursuant to Article 2 of the UMASS License, the license granted hereunder issubject to such rights.

 

(d) The UMASS License. CHARLES RIVER acknowledges that a portionof the ACT Patent Rights licensed to CHARLES RIVER hereunder are owned by theUniversity and are licensed to ACT under the UMASS License.  ACT and the University represent and warrantto CHARLES RIVER and CHARLES RIVER agrees that, in the event the UMASS Licenseis terminated for any reason pursuant to the provisions of the UMASS License,(i) CHARLES RIVER will thereafter make any payments due to ACT directly to theUniversity, and (iii) promptly following such termination, CHARLES RIVER andthe University will enter into a direct license agreement reflecting theapplicable terms of this Agreement and the UMASS License.  ACT acknowledges that any payments so made byCHARLES RIVER to the University shall be credited against any payments due andpayable to ACT hereunder.  For theavoidance of doubt, ACT and the University agree that the references to “Sublicensees”in Section 8.5 of the UMASS License shall not apply to CHARLES RIVER and shallnot be construed as vitiating clause (i) of this Section 3.1(d).  ACT and the University agree that theprovisions of Section 2.2 of the UMASS Agreement providing for the automaticassignment to the University of sublicensees granted by ACT under said Section2.2 shall not apply to the sublicense by ACT to CHARLES RIVER under thisAgreement, and that the provisions of this Section 3.l(d) shall govern in theevent that the UMASS License is terminated.  ACT and the University agree that CHARLESRIVER will not be bound by any amendment to the UMASS License that affectsCHARLES RIVER’S rights under this Agreement in any material respect, unlessCHARLES RIVER agrees in writing to such amendment.

 

3.2                                 License Grant and Right of First Option fromCHARLES RIVER to ACT. Subjectto the terms of this Agreement, CHARLES RIVER hereby grants to ACT (i) a non-exclusive,non-transferable (except as provided in Section 13.1), non-sublicenseablelicense, under the Charles River Licensed Property, to use the Charles RiverLicensed Property to perform the Research Project, and (ii) a right of firstoption, exercisable on one occasion only at any time up to and including thethird anniversary of the Effective Date (as provided below) to an exclusivesublicense with the right to further sublicense (provided, however, that nofurther

 

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sublicense shall be grantedto a principal competitor of Charles River in the Field of commercial rodentbreeding for laboratory research purposes, including without limitations,Taconic Farms or Harlan Sprague Dawley, without the prior written consent ofCharles River) to use the Charles River Patent Rights outside the Charles RiverField for the cloning of rats and mice cloned from cells that have beenintentionally genetically modified subsequent to the removal of cells from thedonor animal, for purposes related to the development, manufacture, production,use, marketing or sale of products and services useful for scientific research(the “Genetically Modified Rodent Field”) at a royalty rate of six percent (6%)of the net sales received by ACT for products or services sold by ACT in theGenetically Modified Rodent Field.  CHARLESRIVER shall notify ACT in writing of its intention to enter into a sublicenseof the Charles River Patent Rights for the Genetically Modified Rodent Field.  ACT shall then have a period of thirty (30)days to notify CHARLES RIVER in writing of its desire and willingness to enterinto an exclusive sublicense of the Charles River Patent Rights for theGenetically Modified Rodent Field.  IfACT so notifies CHARLES RIVER, then ACT and CHARLES RIVER shall negotiate ingood faith for not more than thirty (30) days to reach agreement on the termsof the exclusive sublicense (other than the financial terms that are set forthabove), which sublicenses shall require the approval of Tufts University.  If, by the end of such thirty (30) day period,ACT and CHARLES RIVER have not reached agreement, CHARLES RIVER shall be freeto enter into sublicenses with third parties for the license of the CharlesRiver Patent Rights for the Genetically Modified Rodent Field, and ACT’s rightsunder this Section 3.2 shall thereupon terminate.

 

3.3                                Developments.

 

(a)                                   ACT Developments. ACT agrees, on a periodic basis (not lessthan semiannually), to provide to CHARLES RIVER with a written report of allACT Developments, provided that such reports shall be deemed ConfidentialInformation subject to the provisions of Section 8 of this Agreement, and allsuch ACT Developments, whether or not patentable, relevant to the Charles RiverField, are and shall be considered ACT Licensed Property and automaticallylicensed to CHARLES RIVER pursuant to Section 3.l(a).

 

(b)                                  Charles River Developments. CHARLES RIVER agrees, on a periodic basis (notless than semiannually), to provide ACT with a written report of all CharlesRiver Developments, provided that such reports shall be deemed ConfidentialInformation subject to the provisions of Section 8 of this Agreement, and allsuch Charles River Developments, whether or not patentable, are and shall beautomatically licensed to ACT pursuant to Section 3.2.

 

3.4                                Right of First Option and Right of FirstRefusal. (a) ACT herebygrants to CHARLES RIVER a right of first option, exercisable on one occasiononly at any time up to and including the third anniversary of the EffectiveDate (as provided below), to convert the nonexclusive license granted toCHARLES RIVER pursuant to Section 3.1(a) to an exclusive license (the “FirstOption Right”) at an exercise price not to exceed the difference between all amountsthat have actually been paid hereunder by CHARLES RIVER at the time of itsexercise of the option described herein (except for the sponsored researchpayments under Section 2.3) and $1,000,000.  ACT shall notify CHARLES RIVER in writing ofits intention to enter into an additional license of the ACT Licensed Propertyin the Charles River Field with a third party CHARLES RIVER shall then have aperiod of thirty (30) days to notify ACT in writing of its

 

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desire and willingness toenter into an exclusive license of the ACT Licensed Property in the CharlesRiver Field.  If CHARLES RIVER sonotifies ACT, then ACT and CHARLES RIVER shall negotiate in good faith for notmore than thirty (30) days to reach agreement on the terms of the exclusivelicense, which license shall be subject to the approval of the University. (Theparties agree that the terms of the exclusive license will include (i)financial terms that provide for a $10,000 minimum annual royalty payment andan increase in the royalty rate from 6% to 9% in the event that CHARLES RIVER’ssales for any particular cloned rodent model exceeds $5,000,000 per year and(ii) other terms typical and customary for an exclusive license of this type).  If, by the end of such thirty (30) day period,ACT and CHARLES RIVER have not reached agreement, ACT shall be free to enterinto non-exclusive licenses with third parties for the license of the ACTLicensed Property in the Charles River Field, and CHARLES RIVER’s rights underthis Section 3.4 (a) shall thereupon terminate.

 

(b) Notwithstanding anything to the contrary contained in thisAgreement, CHARLES RIVER hereby grants to ACT a right of first refusal toacquire or obtain any sublicense, license, contract or any other agreement thatCHARLES RIVER proposes to enter into for the use of the Licensed Property inconnection with the development or manufacture of Licensed Products (the “FirstRefusal Right”).  CHARLES RIVER shallpromptly notify ACT in writing of its intention to enter into such an agreementwith a third party, and CHARLES RIVER’s notice to ACT shall describe inreasonable detail the terms of the proposed agreement with said third party.  ACT may exercise the First Refusal Right uponwritten notice to CHARLES RIVER within ninety (90) days after ACT’s receipt ofCHARLES RIVER’s notice described above.  Inthe event ACT exercises the First Refusal Right, ACT and CHARLES RIVER shallattempt to negotiate in good faith an agreement on terms and pricing which arethe same as those offered to such third party in all material respects.  If ACT and CHARLES RIVER are unable to reachagreement within ninety (90) days after the date upon which ACT exercised theFirst Refusal Right (the “Negotiation Period”), then CHARLES RIVER will be freeto proceed with an agreement with said third party on terms no less favorableto such third party than were communicated to ACT in the notice described abovewithin a period of one (1) year after the Negotiation Period.

 

**4.**                                   **OBLIGATIONS RELATING TOCOMMERCIALIZATION.**

 

4.1                             Charles River Diligence Requirements. CHARLES RIVER shall use diligent efforts todevelop Licensed Products or Licensed Services and to introduce LicensedProducts or Licensed Services into the commercial market; thereafter, CHARLESRIVER shall make Licensed Products or Licensed Services reasonably available tothe public.  Without limiting thegenerality of the foregoing, CHARLES RIVER shall fulfill the followingobligations:

 

(a)                              at its expense and for a period of two yearsfrom the Effective Date, CHARLES RIVER shall commit a minimum of Four HundredSeventy Five Thousand Dollars ($475,000.00) to product research and developmentdirected to commercialization of Licensed Product and/or Licensed Services inthe Field.

 

(b)                             not later than two (2) years after theconclusion of the Research Project, CHARLES RIVER must make first commercialsale of a cloned mouse as a Licensed Product.

 

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(c)                                  not later than two (2) years after theconclusion of the Research Project, CHARLES RIVER must make first commercialsale of a cloned rat as a Licensed Product.

 

4.2                                 Summary Reports.

 

(a)                                  Reports by CHARLES RIVER. CHARLES RIVER shall maintain complete andaccurate records of Licensed Products and Licensed Services that are made,used, sold or performed by CHARLES RIVER under this Agreement.  Not later than May 1st of each yearfollowing the Effective Date, CHARLES RIVER shall furnish ACT and theUniversity with an executive summary report on the progress of its effortsduring the prior year to develop and commercialize Licensed Products orLicensed Services, including without limitation research and developmentefforts, efforts to obtain regulatory approval, marketing efforts (includingLicensed Products and Licensed Services made, used, sold or performed) andsales figures, provided that such reports shall be deemed ConfidentialInformation subject to the provisions of Section 8 of this Agreement.

 

4.3                                 Failure to Fulfill Obligations. In the event that ACT determines thatCHARLES RIVER has not fulfilled its obligations under this Section 4, ACT shallfurnish CHARLES RIVER with written notice of such determination.  Within sixty (60) days after receipt of such notice,CHARLES RIVER shall either (i) fulfill the relevant obligation or (ii)negotiate with ACT a mutually acceptable schedule of revised obligations,failing which ACT shall have the right immediately upon written notice toCHARLES RIVER to terminate this Agreement.

 

**5.**                                    **TERM****AND TERMINATION.**

 

5.1                               General. The license granted by ACT to CHARLES RIVER under Section 3.1(a) willcommence on the Effective Date and, unless sooner terminated as providedherein, continue until the expiration of all ACT Patent Rights, whereupon thelicense hereunder to CHARLES RIVER shall become paid-up and royalty free.

 

5.2                               Termination for Cause. This Agreement may be terminated by eitherparty for breach by the other party of any material obligation arisinghereunder, by giving thirty (30) days prior written notice to the other partyspecifying the cause of the termination; provided, however, that if the breachis cured within the thirty (30) day period, the notice shall be withdrawn and shallbe of no effect.

 

5.3                               Survival of Obligations; Return ofConfidential Information. Notwithstandingany termination of this Agreement, the obligations of the parties under Section8, as well as under any other provisions which by their nature are intended tosurvive any such termination, shall survive and continue in force.  Upon any termination of this Agreement, eachparty shall promptly return to the other party all written ConfidentialInformation, and all copies thereof, to the other party.

 

5.4                               Additional Termination Provisions. The foregoing termination rights are in additionto any termination rights that may be provided elsewhere in this Agreement.

 

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**6*.***                                      **PAYMENTS.**

 

6.1                               License Fee. CHARLES RIVER shall pay to ACT an initial License Fee of TEN THOUSANDDOLLARS ($10,000.00), one hundred percent (100%) of which payment shall be deemedearned and shall be due fifteen (15) days after the Effective Date.  The License Fee is not refundable and is notcreditable against other payments due to ACT under this Agreement.

 

6.2                               Royalties, Reports and Records.

 

(a)                                For each Licensed Product or Licensed Servicesold by CHARLES RIVER, CHARLES RIVER shall pay to ACT of the followingroyalties or the royalty set out in Section 6.2(b):

 

(1)                               Six percent (6%) of the Net Sales of LicensedProducts or Licensed Services sold by CHARLES RIVER so long as the LicensedProduct or Licensed Service, where sold would, but for this Agreement, infringea Valid Claim of any ACT Patent Right which is licensed exclusively to CHARLESRIVER in such country, provided, however, that where the Licensed Products soldare the Progeny of cloned rats or mice that are Licensed Products, the royaltyshall be three percent (3%) of the Net Sales of such Progeny; or

 

(2)                               Two percent (2%) of the Net Sales of LicensedProducts or Licensed Services (or one percent (1%) of the Net Sales Price ofProgeny) sold by CHARLES RIVER which do not infringe a Valid Claim of any ACTPatent Right exclusively licensed to CHARLES RIVER in such country butincorporate or utilize to a substantial degree ACT Technology.  Such royalty shall be paid for (i) ten (10)years from first commercial sale of a Licensed Product or Licensed Service on acountry-by-country basis, where sales of Licensed Products or Licensed Servicesamount to eighty percent (80%) or more of total sales of products or services(including sales of Licensed Products or Licensed Services) employing similartechnology in such country, or (ii) seven (7) years from first commercial saleof a Licensed product or Licensed Service on a country-by-country basis wheresales of Licensed Products or Licensed Services amount to less than eightypercent (80%) of total sales of products or services (including sales ofLicensed Products or Licensed Services) employing similar technology, in suchcountry, or

 

(b)                           In the case of a pending patent application,royalties shall be paid at the royalty rate set forth in Section 6.2(a)(l)for four (4) years from first commercial sale of Licensed Products or LicensedServices or until the patent has issued, whichever occurs earlier.  If the patent does not issue within four (4)years from first commercial sale of Licensed Products or Licensed Services,royalties shall be payable at the royalty rate set forth in Section 6.2(a)(2) forthe remainder of the applicable period set forth therein or until the patentissues, whichever occurs earlier.  If thepatent does not issue before the end of the applicable period in Section 6.2(a)(2),then royalties shall cease at the time and will only be required thereafter ifthe patent issues prior to the expiration of this Agreement in which caseroyalties will be payable at the rate set forth in Section 6.2(a)(1).

 

(c)                            Notwithstanding anything in this Agreement tothe contrary, royalties shall not be payable for a patent licensed hereunderbeyond the life of such patent.

 

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6.3                                 Payments in U.S. Dollars. All payments due under this Agreement shallbe payable in United States dollars.  Conversionof foreign currency to U.S. dollars shall be made at the conversion ratereported in The Wall Street Journal on the last working day of the calendar quarterto which the payment relates.  Suchpayments shall be without deduction of exchange, collection, or other charges.

 

6.4                                 Audit Rights

 

(a)                                   CHARLES RIVER shall submit a report to ACTquarterly within 45 days after the end of each calendar quarter during the termof this Agreement stating in each such report the aggregate sales and paymentswith respect to Licensed Products and Licensed Services during the precedingcalendar quarter and the royalty amounts as provided herein.  Such reports shall also include a statement ofany credits claimed hereunder (including without limitation any applicablecredits claimed) during the preceding calendar quarter.  The payment of royalty amounts shall be madeconcurrently with such reports.

 

(b)                                  CHARLES RIVER shall keep full, complete, trueand accurate books of account containing all particulars relating to themanufacture and sales with respect to Licensed Products and Licensed Services,and any allowed credits, which may be necessary to ascertain and verify theroyalties payable to ACT.  Said books andaccounts shall be kept at CHARLES RIVER’s principal place of business for thefive years next following the end of the calendar year to which they pertain.

 

(c)                                   At the request of ACT or the University, butnot more than once in each calendar year, CHARLES RIVER shall permit anindependent certified public accountant selected by the ACT or the University(or the University’s internal accountants) to have access, during regularbusiness hours of the CHARLES RIVER, to such records to determine, for any calendarquarter commencing not more than three years prior to the date of such request,the completeness and accuracy of such books and records, and the accuracy ofreports submitted to ACT and/or payments made to ACT.  If any such inspection discloses an error inany royalty payment, CHARLES RIVER shall pay to the other party, within thirty(30) days of the discovery of the error, (a) all deficiencies in royaltypayments, (b) interest on such deficiencies from the date such royalty paymentwas due until the date paid at the rate equal to one and one-half percent (11/2%) per month, and (c) if such error is in excess of five percent (5%) of anyroyalty payment, the cost of the audit.  Inall other cases, the costs of the audit shall be paid for by the partyconducting the audit.  All informationdisclosed pursuant to an audit shall be deemed Confidential Information subjectto the provision of Section 8 hereof.

 

**7.**                                    **PROPRIETARY RIGHTS.**

 

7.1                                Ownership.

 

(a)                                 ACT. ACT or its licensor(s) shall own the ACT Patent Rights, ACT Technologyand the ACT Developments.

 

(b)                                CHARLES RIVER. CHARLES RIVER or its licensor(s) shall ownthe Charles River Patent Rights and the Charles River Developments.

 

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(c)                                   Joint Developments and Joint Patent Rights. The parties shall jointly own all JointDevelopments and Joint Patent Rights.

 

7.2                                 ACT Patent Rights.

 

(a)                                   ACT shall be solely responsible for thecontinued prosecution of pending patent applications included in the ACT PatentRights and the issuance of such applications after allowance.  The prosecution, filing and maintenance of allpatents and applications shall be the responsibility of ACT.  Additionally, ACT shall pay all governmentfees in any given country required to maintain the ACT Patent Rights; and shallsubmit evidence to CHARLES RIVER upon request that such fees have been timelypaid.

 

(b)                                  The parties agree to notify each other inwriting of any actual or threatened infringement by a third party of the ACTPatent Rights or of any claim of invalidity, unenforceability, ornon-infringement of the ACT Patent Rights.  ACT shall have the sole responsibility toprosecute or defend such claims, as applicable.  CHARLES RIVER shall if requested providereasonable assistance to ACT at ACT’s expense, in connection with the prosecutionor defense of such claims.

 

7.3                                 Charles River Patent Rights.

 

(a)                                   CHARLES RIVER shall be solely responsible forthe continued prosecution of pending patent applications included in theCharles River Patent Rights and the issuance of such applications afterallowance.  The prosecution, filing andmaintenance of all patents and applications shall be the responsibility ofCHARLES RIVER.  Additionally, CHARLESRIVER shall pay all government fees in any given country required to maintainthe Patent Rights; and shall submit evidence to ACT upon request that such feeshave been timely paid.

 

(b)                                  The parties agree to notify each other inwriting of any actual or threatened infringement by a third party of theCharles River Patent Rights or of any claim of invalidity, unenforceability, ornon-infringement of the Patent Rights.  CHARLESRIVER shall have the sole responsibility to prosecute or defend such claims, asapplicable.  ACT shall if requested providereasonable assistance to CHARLES RIVER at CHARLES RIVER’s expense, in connectionwith the prosecution or defense of such claims.

 

7.4                                 Joint Patent Rights.

 

(a)                                   Responsibility; Costs. ACT will retain primary responsibility forfiling, prosecution and maintenance of the Joint Patent Rights in allcountries, using patent counsel approved by CHARLES RIVER, which approval shallnot be unreasonably withheld or delayed.  The costs of such filing, prosecution andmaintenance shall be borne equally by CHARLES RIVER and ACT, except thatCHARLES RIVER will bear all of such costs in any countries where CHARLES RIVERrequests patent protection, but where ACT did not otherwise intend to seekprotection.  If either party fails to payits share of such costs with respect to any Joint Patent Rights, its licensefrom the other party under Section 3 withrespect to such Joint Patent Rights shall be automatically revoked, but thelicense from such party to the other party with respect to such Joint PatentRights shall remain effective.

 

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(b)                                  Consultation; Abandonment. CHARLES RIVER’s patent counsel shall begiven a reasonable opportunity to comment on all proposed patent filings (“Filings”)and responses (“Responses”) to patent office actions or other patent officecommunications (collectively, “Office Communications”) with respect to JointPatent Rights.  In the case of Filings,and in the case of Office Communications to which ACT must respond in a periodof time equal to or exceeding sixty (60) days (including extensions), ACT shalldeliver its proposed Filing or Response to CHARLES RIVER for comment not laterthan sixty (60) days prior to the final patent office deadline for such Filingor Response, and ACT will not unreasonably refuse to accept any suggestions ofCHARLES RIVER’s patent counsel regarding such Filing or Response, provided thatCHARLES RIVER’s patent counsel provides such comments to ACT’s patent counselnot less than thirty (30) days prior to the final patent office deadline forsuch Filing or Response.  In the case ofOffice Communications to which ACT must respond in less than sixty (60) days,which deadline may not be extended, ACT shall deliver its proposed Response toCHARLES RIVER for comment not later than ten (10) days after ACT’s receipt ofsuch Office Communication, and ACT will not unreasonably refuse to accept anysuggestions of CHARLES RIVER’s patent counsel regarding such Response, providedthat CHARLES RIVER’s patent counsel provides such comments to ACT’s patentcounsel not less than ten (10) days prior to the final patent office deadlinefor such Response.  To the extent thatany such patent matter relates solely to the Charles River Field and not to theACT Field, CHARLES RIVER’s patent counsel will have the final right todetermine the resolution of the matter.  ACTwill not allow any patent or patent application within the Joint Patent Rightsto become expired or abandoned without giving CHARLES RIVER the right to assumeresponsibility for such patent or patent application, and if CHARLES RIVER soelects, ACT will assign such patent or patent application to CHARLES RIVER, andCHARLES RIVER will thereafter assume control thereof and all expenses relatedthereto.

 

(c)                                   Defense of Joint Patent Rights. CHARLES RIVER and ACT will consult with oneanother in the event of a third party claim that a patent within the JointPatent Rights is invalid, unenforceable, or non-infringing.  ACT will have the first right to control thedefense of such claim at its expense, but CHARLES RIVER will have the right toshare in the control of the defense by sharing 50% of the costs thereof, but ACT shall have the final decisionin the event of a disagreement regarding the conduct of the defense.  If ACT elects not to defend, CHARLES RIVER maydo so at its expense and under its control, but shall have the right to offsetsuch expenses against royalties otherwise due to ACT.  Notwithstanding the foregoing, neither party willenter into a settlement that admits the invalidity, unenforceability, ornon-infringement of any Joint Patent Rights without consent of the other party.

 

(d)                                  Prosecution of Infringers of Joint PatentRights. ACT shall have thefirst right to prosecute infringers of the Joint Patent Rights in all Fieldsother than the Charles River Field at its expense, and shall retain allrecoveries arising out of such prosecutions by ACT.  CHARLES RIVER shall have the right toprosecute such infringers if ACT elects not to do so, at its expense, and shallretain all recoveries arising out of such prosecutions by CHARLES RIVER.  CHARLES RIVER shall have the first right toprosecute infringers of the Joint Patent Rights in the Charles River Field atits expense, and shall retain all recoveries arising out of such prosecutionsby CHARLES RIVER.  ACT shall have theright to prosecute such infringers if CHARLES RIVER elects not to do so, at itsexpense, and shall retain all recoveries arising out of such prosecutions byACT.  Neither party will enter into asettlement that admits the invalidity,

 

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unenforceability,or non-infringement of any Joint Patent Rights without consent of the other party.

 

7.5                                 Cooperation. CHARLES RIVER and ACT shall cooperate fully in the preparation,filing, prosecution, and maintenance of all ACT Patent Rights and Joint PatentRights.  Such cooperation includes,without limitation (i) promptly executing all papers and instruments orrequiring employees of ACT or CHARLES RIVER to execute such papers andinstruments as reasonable and appropriate so as to enable ACT or CHARLES RIVERto file, prosecute and maintain such Patent Rights in any country; and (ii)promptly informing the other party of matters that may affect the preparation,filing, prosecution, or maintenance of any such Patent Rights (such as becomingaware of an additional inventor who is not listed as an inventor in a patentapplication).

 

**8.**                                    **CONFIDENTIAL INFORMATION ANDPUBLICATIONS.**

 

8.1.                             Use and Nondisclosure of ConfidentialInformation. (a) Neitherparty or the University will disclose or make available to any person outsideits organization the disclosing party’s Confidential Information, except thatCHARLES RIVER will have the right to disclose ACT’s Confidential Informationconsisting of ACT Technology to third parties to which sublicensing ispermitted under Section 3.l(b), provided that such third parties agree to bebound to protect the confidentiality of such Confidential Information.  Each party may disclose the other party’sConfidential Information to persons within its organization and that of itsAffiliates to the extent necessary to further the purposes of this Agreement,provided that all such persons are bound to protect the confidentiality of suchConfidential Information.  Each party maydisclose the other party’s Confidential Information if required by law orgovernmental authority, provided that prior notice of any such disclosure isgiven to the other party and that the disclosing party cooperates with theother party in seeking protective orders or other restrictions on disclosure.

 

(b) Except to the extent expressly authorized by this Agreement or byother prior written consent by the disclosing party, each party shall duringthe term of this Agreement and thereafter: (i) treat as confidential allConfidential Information of the other party; (ii) not use such ConfidentialInformation except as authorized herein or otherwise authorized in writing,(iii) implement reasonable procedures to prohibit the disclosure, unauthorizedduplication, misuse or removal of the other party’s Confidential Information;(iv) not disclose such Confidential Information to any third party, and (v)only disclose the Confidential Information to those of its employees who haveneed to know such Confidential Information in order to exercise the rights andfulfill the obligations set forth herein.  Without limiting the foregoing, each of theparties shall protect the Confidential Information using at least the sameprocedures and degree of care that it uses to prevent the disclosure of its ownconfidential information of like importance, but in no event less thanreasonable care.  Each party shall returnthe Confidential Information to the other party upon termination of theAgreement or upon the request of the other party.  Except as expressly provided in thisAgreement, no ownership or license right is granted in any ConfidentialInformation.

 

8.2                             Injunctive Relief. The parties acknowledge and agree that anybreach of the confidentiality obligations imposed by this Section 8 willconstitute immediate and irreparable

 

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harm to the party disclosingthe Confidential Information and/or its successors and assigns, which cannotadequately and fully be compensated by money damages and will warrant, inaddition to all other rights and remedies afforded by law, injunctive relief,specific performance, and/or other equitable relief.  The disclosing party’s rights and remedieshereunder are cumulative and not exclusive.  The disclosing party shall also be entitled toreceive from the receiving party the costs of enforcing this Section 80, includingreasonable attorneys’ fees and expenses of litigation.

 

8.3                                Survival. The obligations of the parties under this Section 8 shall survive anyexpiration or termination of this Agreement.

 

**9.**                                     **REPRESENTATIONS AND****WARRANTIES.**

 

9.1                                 Representations and Warranties by ACT. ACT represents and warrants to CHARLESRIVER that:

 

(a)                                  ACT owns or has a licensable interest in theACT Licensed Property and has the right to grant to CHARLES RIVER the licenseset forth above;

 

(b)                                 ACT has provided CHARLES RIVER with a copy ofthe UMASS License, as amended, with certain terms redacted, and ACT representsand warrants that the said copy is a true and complete (except as redacted)copy of the UMASS License as of the Effective Date; and

 

(c)                                  the execution of this Agreement andperformance of the transactions contemplated by such agreements have beenapproved by the ACT Board of Directors and will not conflict with or result inany breach of any of the terms, conditions or provisions of, or constitute adefault under, any agreement to which ACT is a party or by which ACT is bound.

 

9.2                                 Representation and Warranty by CHARLES RIVER. CHARLES RIVER represents and warrants toACT that:

 

(a)                                 CHARLES RIVER owns or has a licensableinterest in the Charles River Licensed Property and has the right to grant toACT the license set forth above; and

 

(b)                                the execution of this Agreement andperformance of the transactions contemplated by such agreements have beenapproved by the Charles River Board of Directors and will not conflict with orresult in any breach of any of the terms, conditions or provisions of, orconstitute a default under, any agreement to which CHARLES RIVER is a party orby which CHARLES RIVER is bound.

 

9.3                                 Disclaimer. ACT does not make any representation or warranty as to the validity orscope of the ACT Licensed Property, nor does ACT make any representation orwarranty that the exercise of the rights granted to CHARLES RIVER with respectto the ACT Licensed Property will not infringe the patent or other intellectualproperty rights of any third party.

 

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**10.**                             **INDEMNIFICATION.**

 

10.1                         Indemnification by ACT. ACT agrees to defend, indemnify and holdharmless CHARLES RIVER and the University, and their Affiliates, agents, directors,officers and employees, at ACT’s cost and expense, from and against any and alllosses, costs, liabilities, damages, fees and expenses, including reasonableattorneys’ fees and expenses with respect to claims by third parties arisingout of any breach by ACT of any representation or warranty contained in Section9.

 

10.2                         Indemnification by CHARLES RIVER. CHARLES RIVER agrees to defend, indemnifyand hold harmless ACT and the University, and their Affiliates, agents,directors, officers and employees, at CHARLES RIVER’s cost and expense, fromand against any and all losses, costs, liabilities, damages, fees and expenses,including reasonable attorneys’ fees and expenses incurred or imposed upon anyof the indemnified parties in connection with any claims (including third partyclaims), suits, actions, demands or judgments:

 

(a)                                arising out of any breach by CHARLES RIVER ofany representation or warranty contained in Section 9; or

 

(b)                               arising out of the death or injury to anyperson or persons or out of any damage to property resulting from or otherwiseattributable to the making, using, development, testing, registration,distribution and/or sale by or through CHARLES RIVER of any Licensed Productsor Licensed Services under this Agreement, but excepting any claims that theACT Licensed Property infringes the patent or other intellectual propertyrights of any third party.

 

10.3                         Indemnification Claims. Each party shall give the other partyprompt notice of any claim for which indemnification under this Section 10 isor may be applicable and will cooperate with the indemnifying party in thedefense or settlement of such claim at the indemnifying party’s expense.  The indemnifying party shall be required toprovide and be entitled to control the defense of any claim covered hereunder(including the right to settle it at the sole discretion of the indemnifyingparty) with counsel reasonably satisfactory to the other party which may, atits own expense, participate in the defense of any claim after the indemnifyingparty assumes control of the defense thereof.  The indemnification obligations in thisSection 10 shall not apply to amounts paid in settlement of such claim if suchsettlement is effected without the consent of the indemnifying party, whichconsent shall not be unreasonably withheld or delayed.  The failure of the indemnified party todeliver notice to the indemnifying party promptly after the commencement of anysuch action, if prejudicial to the indemnifying party’s ability to defend suchaction, shall relieve the indemnifying party of any liability to the indemnifiedparty under this Section 10, but the failure to promptly deliver notice to the indemnifyingparty will not relieve it of any liability that it may have to the indemnifiedparty other than under this Section 10.

 

**11.**                             **LIMITATION OF LIABILITY.**  IN NOEVENT SHALL EITHER PARTY (OR ITS AFFILIATES, SHAREHOLDERS, DIRECTORS, OFFICERS,EMPLOYEES, OR AGENTS) BE LIABLE FOR ANY SPECIAL, INDIRECT, RELIANCE,INCIDENTAL, EXEMPLARY, COVER, OR CONSEQUENTIAL DAMAGES, INCLUDING LOSS OFPROFITS AND

 

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GOODWILL, EVEN IF SUCHPARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, REGARDLESS OF THETHEORY OF LIABILITY.

 

**12.**                              **INSURANCE.**  Each partyshall obtain and maintain, at all times during the term of this Agreement,general liability insurance with appropriate bodily injury, death and propertydamage limits.  Upon request, a partyshall furnish a certificate of insurance signed by an authorized representativeof its insurance underwriter evidencing such coverage and providing for atleast thirty (30) days’ prior written notice of any cancellation, terminationor reduction of coverage.

 

**13.**                              **MISCELLANEOUS.**

 

13.1                        Assignment.This Agreement, and the rights and obligations thereunder, may not be assignedor transferred, in whole or in part, by either party without the prior writtenconsent of the other party, except that (a) either party may assign thisAgreement to an Affiliate, provided that such party remains primarily liableand/or responsible for the performance of such obligations, and providedfurther that such Affiliate agrees to be bound to the terms and conditions ofthis Agreement, and (b) either party may assign this agreement in connectionwith the merger, consolidation or sale of all or substantially all of theassets of such party which pertain to the subject matter of this Agreement.

 

13.2                        Notices.Any payment, notice or other communication required or otherwise given pursuantto this Agreement shall be in writing and delivered by hand or sent bynationally recognized overnight delivery service, prepaid registered orcertified air mail, or by facsimile confirmed by prepaid first class,registered or certified mail letter, and shall be deemed to have been properlyserved to the addressee upon receipt of such written communication.

 

Addresses: In thecase of CHARLES RIVER, the proper address for communications shall be:

 
|   | Charles River Laboratories, Inc. |
|--------|----------------------------------|
|   | 251 Ballardvale Street           |
|   | Wilmington, Massachusetts 01887  |
|   | Attn:                            | Dennis Shaughnessy, Esq., Senior Vice President, |
|   |                             | Corporate Development, General Counsel and Secretary |
|   | Fax:                             | 978-658-7132 |

 

and in the case of ACT,the proper address for communications and all payments shall be:

 
|   | Advanced Cell Technology, Inc. |
|--------|--------------------------------|
|   | One Innovation Drive           |
|   | Worcester, Massachusetts 01605 |
|   | Attn:                          | Michael D. West, Ph.D., President |
|   | Fax:                           | 508-756-0931 |

 

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| with a copy to: |
|-----------------|
|            |
|            | Pierce Atwood |
|            | One Monument Square |
|            | Portland, Maine 04101 |
|            | Attn: William L. Worden, Esq. |
|            | Fax:   207-791-1350 |

 

13.3                           Choiceof Law. This Agreement is subject to and governed by the laws of the Commonwealthof Massachusetts, without regard to principles of conflicts of law thereof,except that questions affecting the construction and effect of any patent shallbe determined by the law of the country in which the patent was granted.

 

13.4                           DisputeResolution. Any dispute arising under this Agreement which is not promptlysettled by the parties shall be referred to the Chief Executive Officers of theparties.  The Chief Executive Officerswill meet for negotiations within fifteen (15) days of such referral.  If the dispute has not been resolved withinthirty (30) days (which period may be extended by mutual agreement), subject toany rights to injunctive relief and unless otherwise specifically provided forherein, any dispute will be submitted to binding arbitration.  The arbitration shall be conducted before asingle arbitrator in accordance with the Commercial Arbitration Rules of the AmericanArbitration Association (AAA), which shall administer the arbitration and actas appointing authority.  The arbitrationshall take place in Boston, Massachusetts, and shall be the exclusive forum forresolving such dispute, controversy or claim.  The decision of the arbitrator shall be finaland binding upon the parties.  Notwithstandinganything contained above to the contrary, each party shall have the right toinstitute judicial proceedings against the other party in order to enforce theinstituting party’s rights hereunder through specific performance, injunction orsimilar equitable relief.

 

13.5                           Compliancewith Law by CHARLES RIVER. CHARLES RIVER shall comply with all local,state, federal and international laws and regulations relating to thedevelopment, manufacture, use, and sale of Licensed Products and LicensedServices.  CHARLES RIVER shall complywith the following:

 

(a)                                CHARLESRIVER shall obtain all necessary approvals from the FDA and any similar governmentalauthorities of any foreign jurisdiction in which CHARLES RIVER intends to make,use, or sell Licensed Products or to perform Licensed Services.

 

(b)                               CHARLESRIVER shall comply with all United States laws and regulations controlling theexport of certain commodities and technical data, including without limitationall Export Administration Regulations of the United States Department ofCommerce.  Among other things, these lawsand regulations prohibit, or require a license for, the export of certain typesof commodities and technical data to specified countries.  CHARLES RIVER hereby gives written assurancethat it will comply with all United States export control laws and regulations,that it bears sole responsibility for any violation of such laws andregulations, and that it will indemnify, defend, and hold ACT harmless (inaccordance with Section 10.2) for the consequences of any such violation.

 

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(c)                                 Tothe extent that any invention claimed in the Licensed Property has beenpartially funded by the United States government, and only to the extentrequired by applicable laws and regulations, CHARLES RIVER agrees that anyLicensed Products used or sold in the United States will be manufacturedsubstantially in the United States or its territories.  Current law provides that if domesticmanufacture is not commercially feasible under the circumstances, ACT and/orthe University may seek a waiver of this requirement from the relevant federalagency on behalf of CHARLES RIVER and, upon CHARLES RIVER’s request, shallcooperate with CHARLES RIVER in seeking such a waiver.

 

13.6                         NoEncumbrances. CHARLES RIVER will not create or incur or cause to be incurredor to exist any lien, encumbrance, mortgage, pledge, charge, restriction orother security interest of any kind upon the ACT Licensed Property without theprior written consent of the University and ACT.

 

13.7                         Counterparts.This Agreement may be executed in any number of counterparts, each of whichshall be deemed an original but all of which together shall constitute one andthe same instrument.

 

13.8                         Headings.All headings contained in this Agreement are for convenience of reference onlyand shall not be considered in construing this Agreement.

 

13.9                         BindingEffect. This Agreement shall be binding upon and inure to the benefit of theparties and their respective permitted successors and assigns.  The parties acknowledge that the University isa third party beneficiary of the applicable provisions of Sections 3.1, 4.2(a),6.4(c), 7.2, 10.1, 10.2, 13.5(c), 13.6, 13.9, and 13.13 hereof, with the rightto enforce such provisions against the applicable party.

 

13.10                   Amendmentand Waiver. This Agreement may be amended, supplemented, or otherwisemodified only by means of a written instrument signed by both parties.  Any waiver of any rights or failure to act ina specific instance shall relate only to such instance and shall not be construedas an agreement to waive any rights or fail to act in any other instance, whetheror not similar.

 

13.11                   Severability.In the event that any one or more of the provisions contained in this Agreementshall, for any reason, be held to be invalid, illegal or unenforceable in anyrespect, such invalidity, illegality or unenforceability shall not affect anyother provision of this Agreement, and all other provisions shall remain infull force and effect.  If any of theprovisions of this Agreement is held to be excessively broad or invalid,illegal or unenforceable in any jurisdiction, it shall be reformed andconstrued by limiting and reducing it so as to be enforceable to the maximumextent permitted by law in conformance with its original intent.

 

13.12               EntireAgreement. This Agreement, together with the UMASS License, constitute theentire agreement of the parties with regard to its subject matter, andsupersedes all previous written or oral representations, agreements andunderstandings between the parties.  The partiesacknowledge and agree that there are no representations, warranties,arrangements, promises or agreements outstanding between them, whether oral orin writing, other than those contained or referred to in this Agreement or theUMASS License.

 

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13.13                   Publicity.Neither party, nor any of its Affiliates, shall originate any publicity, newsrelease or other public announcement (“Announcements”), written or oral,relating to this Agreement or the existence of an arrangement between theparties, without the prior written approval of the other party, which approvalshall not be unreasonably withheld, except as otherwise required by law.  Any references to the University in suchAnnouncements shall be subject to the approval of the University.  The foregoing notwithstanding, ACT and CHARLESRIVER shall have the right to make such Announcements without the consent ofthe other party or the University, as applicable, in any prospectus, offeringmemorandum, or other document or filing required by securities laws or otherapplicable law or regulation, provided that such party shall have given theother party or the University, as applicable, at least ten (10) days’ prior writtennotice of the proposed text for the purpose of giving the other party or theUniversity, as applicable, the opportunity to comment on such text.

 

13.14                   NoImplied Licenses. No implied licenses are granted pursuant to the terms of thisAgreement.  No license rights shall becreated by implication or estoppel.

 

13.15                  NoAgency. Nothing herein shall be deemed to constitute either party as theagent or representative of the other party, or both parties as joint venturersor partners for any purpose.  Each partyshall be an independent contractor, not an employee or partner of the otherparty, and the manner in which each party renders its services under thisAgreement shall be within its sole discretion.  Neither party shall be responsible for theacts or omissions of the other party, and neither party will have authority tospeak for, represent or obligate the other party in any way without priorwritten authority from the other party.

 

13.16                 Non-Solicitation.During the term of this Agreement and for a period of one (1) year thereafter,neither party may.  solicit any personwho is employed by or a consultant to the other party or any Affiliate of suchparty to terminate such person’s employment by or consultancy to such party orsuch Affiliate.  As used herein, the term“solicit” shall include, without limitation, requesting, encouraging, assistingor causing, directly or indirectly, any such employee or consultant toterminate such person’s employment with or consultancy to such party orAffiliate.

 

13.17                 ProductMarking. To the extent commercially feasible and permitted by law, and consistentwith prevailing business practices, all Licensed Products (or the packaging orproduct label of such Licensed Product(s))manufactured or sold by or throughCHARLES RIVER under this Agreement will be marked with the number of eachissued patent that applies to such product.

 

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**INWITNESS WHEREOF,** the parties hereto and the Universityhave caused this Agreement to be executed the day and year first written above. The persons signing below warrant theirauthority to sign the Agreement.

 
| ADVANCED CELL TECHNOLOGY, INC. | CHARLES RIVER LABORATORIES   |
|--------------------------------|------------------------------|
|                           |                         |
|                           |                         |
| By:                            |   /s/ Michael West |   | By: |   /s/ Dennis R. Shaughnessy |   |
|                           | *Signature*                  |   |   | *  Signature* |   |
|                           |                         |   |   |   |   |
|                           |   MICHAEL WEST     |   |   |   Dennis R. Shaughnessy |   |
|                           | *Printed  Name*              |   |   | *  Printed  Name* |   |
|                           |                         |   |   |   |   |
|                           |   PRES & CEO   |   |   |   Senior Vice President |   |
|                           | *Title*                      |   |   | *  Title* |   |
|                           |                         |   |   |   |   |
|                           |   6-30-01          |   |   |   June 29, 2001 |   |
|                           | *Date*                       |   |   | *  Date* |   |

 

**CONSENT AND AGREEMENT**

 

For value received, the University hereby (a) consents to thesublicense by ACT to CHARLES RIVER of the UMASS Patent Rights under thisAgreement, and (b) agrees to be bound by the applicable provisions of Sections3.1, 4.2(a), 6.4(c), 8.1, and 13.5 hereof.

 

THE UNIVERSITY OFMASSACHUSETTS

 

 
| By:    |   /s/ William S. Rosenberg        |   |
|--------|---------------------------------------------|--------|
|   | *Signature*                                 |   |
|   |                                        |   |
|   |   William S. Rosenberg, Ph.D.     |   |
|   | *Printed  Name*                             |   |
|   |                                        |   |
|   |   Deputy Executive Director, CVIP |   |
|   | *Title*                                     |   |
|   |                                        |   |
|   |   July 2, 2001                    |   |
|   | *Date*                                      |   |

 

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