**Exhibit 10.19**

 

EXCLUSIVE LICENSE AGREEMENT (Infigen IP)

 

ThisExclusive License Agreement (“Agreement”) is made and entered into this 14thday of May, 2004 (the “Effective Date”), by and between Advanced CellTechnology, Inc., a Delaware corporation with offices located at One InnovationDrive, Worcester, Massachusetts 01605 (“LICENSOR”), and PacGen Cellco, LLC, aCalifornia limited liability company with offices located at 157 SurfviewDrive, Pacific Palisades, CA 90272 (“LICENSEE”) (LICENSOR and LICENSEE sometimeshereinafter referred to individually as a “Party” and collectively as the “Parties”).

 

WITNESSETH

 

WHEREAS,LICENSOR has licensed with sublicenseable interest the PATENT RIGHTS (asdefined below) and KNOW-HOW (as defined below); and

 

WHEREAS,LICENSEE desires to obtain an exclusive worldwide license under LICENSOR’srights in such technology in the FIELD; and

 

WHEREAS,LICENSOR is willing to grant such a license to LICENSEE upon the terms andconditions set forth below; and

 

NOW,THEREFORE, in consideration of the premises and the mutual covenants containedherein, the Parties hereto agree as follows:

 

ARTICLE 1- DEFINITIONS

 

Forthe purposes of this Agreement, the following words and phrases shall have thefollowing meanings:

 

1.1                  “AFFILIATE” shallmean, with respect to any PERSON, any other PERSON which directly or indirectlycontrols, is controlled by, or is under common control with, such PERSON.  A PERSON shall be regarded as in control ofanother PERSON if it owns, or directly or indirectly controls, at least fiftypercent (50%) of the voting stock or other ownership interest of the otherPERSON, or if it directly or indirectly possesses the power to direct or causethe direction of the management and policies of the other PERSON by any means whatsoever.

 

1.2                  “FIELD” shallmean the research, development, manufacture and selling of human cells for celltherapy in the treatment of human (a) diabetes and (b) liver diseases; butFIELD shall exclude applications involving the use of cells in the treatment oftumors where the primary use of the cells is the destruction or reduction oftumors and does not involve regeneration of tissue or organ function.

 

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1.3                  “KNOW-HOW” meansall compositions of matter, techniques and data and other know-how andtechnical information including inventions (whether or not patentable),improvements and developments, practices, methods, concepts, trade secrets,documents, computer data, computer code, apparatus, clinical and regulatorystrategies, test data, analytical and quality control data, formulation,manufacturing, patent data or descriptions, development information, drawings,specifications, designs, plans, proposals and technical data and manuals andall other proprietary information that is owned or controlled by LICENSOR as ofthe Effective Date that relates to cloning technology or to any of the subjectmatter described in or claimed by the PATENT RIGHTS and is relevant to theFIELD.  By way of illustration, but notin limitation, KNOW-HOW shall include commercial rights to any existingpotential research products, including reagents, developed by LICENSOR in thecourse of its in-house research.  Anexample of this is the proprietary culture medium developed by LICENSOR in thecourse of the development of LICENSOR’s proprietary ooplasmic transfertechnology.

 

1.4                  “LICENSEDPROCESS” means any process or method, the research, development, use, practice,sale, offer for sale, import or export of which cannot be performed without (i)infringing, in whole or in part, one or more VALID CLAIMS of the PATENT RIGHTS,or (ii) using or incorporating some portion of the LICENSED TECHNOLOGY.

 

1.5                  “LICENSEDPRODUCT” means any product that cannot be developed, manufactured, used, imported,exported, or sold without (i) infringing, in whole or in part, one or moreVALID CLAIMS of the PATENT RIGHTS, or (ii) using or incorporating some portionof the LICENSED TECHNOLOGY.

 

1.6      “LICENSED SERVICES” means any service, thedeveloping, using, performing, selling, offering for sale, importing orexporting of which by LICENSEE would, but for the licenses granted to LICENSEEin Article 2 of this Agreement, infringe a VALID CLAIM of thePATENT RIGHTS in the country in which any such service is so developed, used,performed, sold, offered for sale, imported or exported by LICENSEE.

 

1.7                  “LICENSEDTECHNOLOGY” shall mean, collectively, the licensed PATENT RIGHTS and licensedKNOW-HOW.

 

1.8                  “NET SALES”shall mean the amount billed or invoiced by LICENSEE for the sale or provisionof LICENSED PRODUCTS or LICENSED PROCESSES or LICENSED SERVICES less:

 

a)              discounts,credits, allowances and rebates allowed;

 

b)             sales,tariff duties, use and other taxes or governmental charges directly imposedwith reference to particular sales;

 

c)              specialpackaging, transportation and insurance costs incurred and directly related tothe sale of LICENSED PRODUCTS;

 

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d)             amountsallowed or credited on returns; and

 

e)              uncollectedaccounts.

 

1.9                  “NEURONAL &HEART FIELD OPTION” means an option described in Section 15.18hereof for LICENSEE to negotiate terms for license to the LICENSED TECHNOLOGYfor the field of diseases related to heart or neurodegenerative diseases

 

1.10            “PATENT RIGHTS” means(a) the patent applications and patents identified on Exhibit A attachedhereto and any patents that issue on said applications and (b) any divisions,continuations, extensions, reissues or reexaminations of any of the patentsidentified in the foregoing clause (a).  TheParties agree that Exhibit A may be revised from time to time after theEffective Date to reflect changes thereto that result from the course of patentprosecution.

 

1.11            “PERSON” shall mean anindividual, corporation, partnership, limited liability company, trust,business trust, association, joint stock company, joint venture, pool,syndicate, sole proprietorship, unincorporated organization, governmentalauthority or any other form of entity not specifically listed herein.

 

1.12            “TERM” has the meaningset forth in Section 9.1.

 

1.13            “TERRITORY” means theentire world.

 

1.14            “VALID CLAIM” means aclaim of any issued and unexpired patent within the PATENT RIGHTS which has notlapsed, become abandoned or been held permanently revoked, invalid, orunenforceable by a decision of a court or administrative or governmentauthority or agency of competent jurisdiction from which no appeal can be orhas been taken within the time allowed for such appeal, or a claim of a pendingpatent application included within the Licensed PATENT RIGHTS, which claim wasfiled in good faith and has not been abandoned or finally disallowed withoutthe possibility of appeal or refiling of such application.

 

Additionalterms may be defined throughout this Agreement.

 

ARTICLE 2 - GRANT

 

2.1                  LICENSOR herebygrants to LICENSEE, and LICENSEE hereby accepts, subject to the terms andconditions hereof, a royalty bearing, exclusive, as to LICENSOR’S rights,license in the TERRITORY in the FIELD and under the LICENSED TECHNOLOGY to (a)research, develop, make, have made, use, sell, offer for sale, import andexport LICENSED PRODUCTS, (b) research, develop, use, practice, sell, offer forsale, import and export LICENSED PROCESSES and (c) develop, use, perform, sell,offer for sale, import and export LICENSED SERVICES.  By way of example, but not in limitation,LICENSEE shall have the right to use LICENSED TECHNOLOGY within the FIELD forthe following purpose: to

 

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produce humanembryonic stem (ES) cells and to produce from those mammalian embryonic cells,differentiated cells for human cell therapy within the FIELD, and to producepluripotent cells including ES cells, differentiated human cells for celltherapy within the FIELD.

 

2.2                  LICENSEE shallhave the right to contract with third parties to (a) provide LICENSED PRODUCTmarketing and distribution services to LICENSEE on behalf of LICENSEE, (b)provide LICENSED SERVICES marketing services to LICENSEE on behalf of LICENSEEor (c) manufacture for LICENSEE LICENSED PRODUCTS for sale by LICENSEE or athird party pursuant to the foregoing clause (a).

 

2.3                  LICENSEE shallnot have the right to grant sublicenses.

 

2.4                  Within thirty(30) business days of the Effective Date, LICENSOR shall provide and transferto LICENSEE, in writing where practicable, all information and data relating tothe LICENSED TECHNOLOGY as may be reasonably necessary and requested to allowLICENSEE to exploit the licenses granted hereunder.  LICENSOR shall work with LICENSEE in goodfaith to provide the necessary training for up to a total of 60 days, atLICENSOR’S facilities, necessary to allow LICENSEE to utilize the LICENSEDTECHNOLOGY.  LICENSEE shall pay toLICENSOR all reasonable and customary expenses other than normal operatingexpenses incurred by LICENSOR in providing such training and technologytransfer, including but not limited to fees incurred to request documents frompatent counsel or the United States Patent and Trademark Office.

 

2.5                  Notwithstandinganything stated herein, nothing in this Agreement shall be construed aspreventing LICENSOR from practicing the LICENSED TECHNOLOGY within the FIELDfor non-commercial in-house research purposes.

 

2.6                  Notwithstandinganything stated herein, nothing in this Agreement shall be construed aspreventing LICENSOR from practicing the LICENSED TECHNOLOGY within the FIELDfor non-commercial in-house research purposes. In the event that LICENSOR requests that LICENSEE deliver to LICENSORthe LICENSED TECHNOLOGY or LICENSED PRODUCTS in the FIELD for researchpurposes, LICENSEE shall make the LICENSED TECHNOLOGY or LICENSED PRODUCTSavailable to LICENSOR on commercially reasonable terms.  In the event LICENSOR requires the use ofcollaborators in its research, LICENSEE shall also make such LICENSEDTECHNOLOGY OR LICENSED PRODUCTS available to such collaborator if LICENSEE, inits sole but reasonable discretion is satisfied that providing such items to acollaborator will not endanger its exclusive commercial control of such itemsor result in their use by a competitor.

 

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ARTICLE 3 - LICENSEE OBLIGATIONSRELATING TO COMMERCIALIZATION

 

3.1                  LICENSEE shalluse its commercially reasonable and diligent efforts to bring one or moreLICENSED PRODUCTS, LICENSED PROCESSES or LICENSED SERVICES to market through anactive and diligent program for exploitation of the PATENT RIGHTS and tocontinue active, diligent marketing efforts for one or more LICENSED PRODUCTS,LICENSED PROCESSES or LICENSED SERVICES throughout the TERM of this Agreement.

 

3.2                  LICENSEE shallmaintain minimum R&D requirements to maintain exclusivity under thisAgreement.  Commencing 30 monthsfollowing the Effective Date hereof and until the launch of the first humancell-based therapeutic product, LICENSEE shall be required to invest a minimumof $400,000 per year in research and development of the FIELD covered by thisAgreement or other agreements with LICENSOR affecting the FIELD in order tomaintain the exclusive license rights granted hereunder.  In the event LICENSEE fails to perform thisminimum expenditure in R&D in the FIELD during the course of a calendaryear during the        above-mentioned period,the license under this Agreement shall become nonexclusive and such minimumexpenditure for research and development shall be reduced to $200,000 per year.

 

3.3                  LICENSEE shallmaintain complete and accurate records of LICENSED PRODUCTS, LICENSED PROCESSESand LICENSED SERVICES that are made, used, sold or performed by LICENSEE underthis Agreement.  Not later than April 1stof each year following the Effective Date, LICENSEE shall furnish LICENSOR witha summary report on the progress of its efforts during the prior year todevelop and commercialize LICENSED PRODUCTS, LICENSED PROCESSES or LICENSEDSERVICES, including without limitation research and development efforts,efforts to obtain regulatory approval, marketing efforts (including LICENSEDPRODUCTS, LICENSED PROCESSES and LICENSED SERVICES made, used, sold orperformed) and sales figures, provided that such reports shall be deemedConfidential Information (as defined in Section 10.1 herein)subject to the provisions of Article 10 of this Agreement.

 

3.4                  In the eventthat LICENSOR determines that LICENSEE has not fulfilled its obligations underthis Article 3, LICENSOR shall furnish LICENSEE with written noticeof such determination.  Within thirty(30) days after receipt of such notice, LICENSEE shall (i) fulfill the relevantobligation, (ii) negotiate with LICENSOR a mutually acceptable schedule ofrevised obligations, or (3) if LICENSEE disputes the alleged failure to fulfillits obligations, it shall promptly seek appropriate judicial determination ofthe matter and diligently pursue such action to a final determination with allappropriate speed; failing which, LICENSOR shall have the right, immediatelyupon written notice to LICENSEE, to terminate this Agreement as provided in Section 9.2hereof.

 

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ARTICLE 4 - CONSIDERATION

 

4.1                                 InitialPayment.  In partial consideration ofthe license granted to LICENSEE from LICENSOR in Article 2 of thisAgreement, LICENSEE agrees to pay a “License Fee” to LICENSOR $25,000 in aconvertible promissory note in the form attached hereto as Exhibit C.

 

4.2                                 Royalties.

 

a)              Inpartial consideration of the license in the FIELD granted by LICENSOR toLICENSEE in Article 2 of this Agreement, LICENSEE agrees to pay toLICENSOR an earned royalty equal to six percent (6%) of the NET SALES in theFIELD made, used, sold, imported, exported or performed by LICENSEE in theTERRITORY.

 

b)             Nomultiple royalties shall be payable because any LICENSED PRODUCT, LICENSEDPROCESS or LICENSED SERVICE in the FIELD, its manufacture, use, lease, sale orperformance are or shall be covered by more than one patent or patentapplication within the PATENT RIGHTS.

 

c)              Theobligation of LICENSEE to pay royalties hereunder shall terminate for eachcountry in the TERRITORY concurrently with the expiration or termination of thelast applicable VALID CLAIM within the PATENT RIGHTS in such country in whichthe LICENSED PRODUCT, LICENSED PROCESS or LICENSED SERVICE is, (as applicable),used, practiced, performed, sold, offered for sale, imported, exported ormanufactured.

 

4.3                                 MinimumRoyalties.  Within 2 business daysfrom the Effective Date hereof, LICENSEE shall pay to LICENSOR a minimumroyalty fee of $25,000 in cash or by wire transfer.  In addition, commencing 12 months followingthe Effective Date, LICENSEE shall pay to LICENSOR additional minimum royaltyfees equal to the difference between total Royalties actually paid in thepreceding 12 months and the following minimum amounts:

 

At 12 months, $5,000

At 24 months, $5,000

At 36 months, $5,000

Annually thereafter, $10,000.

 

4.4                                 StackingRoyalties.  With the exception ofminimum royalties due to LICENSOR, if LICENSEE or its Affiliates are requiredto pay royalties relating to any additional intellectual property from LICENSORin order to exercise its rights hereunder to make, have made, use or sell**anyProduct, then LICENSEE shall have the right to credit a pro-rated portion ofsuch royalty payments against the royalties owing to LICENSOR under Section 4.2of this Agreement with respect to sales of such Product such that in no eventshall the total of royalty payments that are

 

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due to LICENSOR insuch royalty period exceed the payments payable under Section 4.2above.  Prorations shall be made in the samemanner as specified for combination products under Section 4.7below.

 

4.5                                 MilestonePayments.  Upon the launch of acommercial therapeutic product based on the LICENSED TECHNOLOGY, LICENSEE shallpay additional Milestone Payments totaling $1,750,000 on the followingschedule:

 

$250,000within 30 days following the launch of the first commercial Product;

$500,000upon reaching $5,000,000 in sales;

$1,000,000upon reaching $10,000,000 in sales.

 

4.6                                 StackingMilestone Payments.  The milestonepayments shall be in addition to any royalties specified elsewhere in this Article 4. If LICENSEE is obligated to pay or haspaid to LICENSOR similar Milestone Payments under another license agreementwith respect to the FIELD, then LICENSEE shall have the right to pro-rate suchMilestone Payments against the Milestone Payments owing to LICENSOR under thisAgreement such that in no event shall the total of all Milestone Payments duefrom LICENSEE to LICENSOR exceed the payments payable under Section 4.5.  Pro-rating of payments shall be made in theratio of the minimum royalties payable under this Agreement to the minimumroyalties payable under any other agreement covered hereby under whichMilestone Payments are owed.

 

4.7                                 CombinationProduct.  In the event a Product issold in a combination product with other devices or biologically activecomponents, NET SALES, for purposes of royalty payments on the combinationproduct, shall be calculated by multiplying the NET SALES of that combinationby the fraction A/B, where A is the gross selling price of the Product soldseparately and B is the gross selling price of the combination product.  In the event that no such separate sales aremade by LICENSEE or its Affiliates, NET SALES for royalty determination shallbe calculated by multiplying NET SALES of the combination by the fractionC/(C+D), where C is the fully allocated cost of the Product and D is the fullyallocated cost of such other biologically active components.

 

4.8                                 Paymentsin U.S. Currency.  All payments due underthis Agreement shall be paid in cash to LICENSOR and all payments shall be madein United States currency.  Conversion offoreign currency to U.S. dollars shall be made at the conversion rate reportedin The Wall Street Journal on the last working day of the calendarquarter to which the payment relates.

 

4.9                                 Taxes. Subject to the limits of Section 1.8hereof, all payments due hereunder shall be paid in full without deduction oftaxes or other fees which may be imposed by any government and which shall bepaid by LICENSEE; provided, however, that any withholding tax required to bewithheld by LICENSEE on royalty payments under the laws of any country in theTERRITORY on behalf of LICENSOR will be timely paid by LICENSEE to theappropriate governmental authority, and LICENSEE will furnish LICENSOR withproof of payment of such

 

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tax.  Any such tax actually withheld may be deductedfrom royalty payments due to LICENSOR under this Agreement.  If at any time legal restrictions prevent theprompt remittance of part or all of any payments owed by LICENSEE to LICENSORhereunder with respect to any country in the TERRITORY, payment shall be madethrough any lawful means or methods that may be available, and as LICENSEEshall reasonably determine is appropriate.

 

4.10                           OverduePayments.  Any payments to be made byLICENSEE hereunder that are not paid on or before the date such payments aredue under this Agreement shall bear interest, to the extent permitted by law,at two percentage points above the Prime Rate of interest as reported in TheWall Street Journal on the date payment is due, with interest calculatedbased on the number of days that payment is delinquent.

 

ARTICLE 5 - REPORTS AND RECORDS

 

5.1                                 LICENSEEshall keep full, true and accurate books of account containing all particularsthat may be necessary for the purpose of showing the amounts payable toLICENSOR hereunder and to enable the reports provided under Section 5.2to be verified.  Said books of accountshall be kept at LICENSEE’S principal place of business.  Said books and the supporting data shall beopen upon reasonable advance notice (but not less than five (5) business daysnotice and no more frequently than once per calendar year) for three (3) yearsfollowing the end of the calendar year to which they pertain, to the inspectionof LICENSOR or its agents for the purpose of verifying LICENSEE’S royaltystatement or compliance in other respects with this Agreement.  If any such audit determines an error in anyroyalty payment, LICENSEE shall pay to LICENSOR, within thirty (30) days of thediscovery of the error, (a) all deficiencies in royalty payments, (b) intereston such deficiencies from the date such royalty was due until the date paid atthe rate set forth in Section 4.10 above, and (c) if such error isin excess of five percent (5%) of any royalty payment, the cost of the audit.  In all other cases, the costs of the auditshall be paid for by LICENSOR.  Allinformation disclosed pursuant to an audit shall be treated as ConfidentialInformation (as defined in Section 10.1 herein) and shall not bedisclosed to any third party or used for any purpose other than to determinethe correctness of LICENSEE’s royalty statement or compliance in other respectswith this Agreement.

 

5.2                                 Afterthe first commercial sale of a LICENSED PRODUCT or LICENSED PROCESS, LICENSEDSERVICE, LICENSEE, within forty-five (45) days after March 31, June 30,September 30 and December 31 of each year, shall deliver to LICENSORa true and accurate report, giving such particulars of the business conductedby LICENSEE during the preceding       three-monthperiod under this Agreement as shall be pertinent to a royalty accountinghereunder.  Without limiting thegenerality of the foregoing, these reports shall include at least thefollowing;

 

a)              thenumber of LICENSED PRODUCTS manufactured and sold by LICENSEE;

 

b)             totalbillings and the amounts actually received for LICENSED PRODUCTS

 

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soldby LICENSEE;

 

c)              anaccounting for all LICENSED PROCESSES or LICENSED SERVICES used in theprovision of services to others or sold by LICENSEE;

 

d)             thedeductions applicable as provided in Section 1.9; and

 

e)              thenames and addresses of all parties making LICENSED PRODUCTS on behalf ofLICENSEE.

 

Thereports shall provide the above-identified information by product, process, orservice type.

 

5.3                                 Witheach such report submitted, LICENSEE shall pay to LICENSOR the royalties dueand payable for such three-month period.  If no royalties shall be due, LICENSEE shallso report.

 

ARTICLE 6 - PATENT PROSECUTION

 

LICENSORshall be solely responsible for the continued prosecution of pending patentapplications included in the PATENT RIGHTS and the issuance of suchapplications after allowance, to the extent that it has such prosecutionrights.  The prosecution, filing andmaintenance of all patents and applications shall be the primary responsibilityof LICENSOR, to the extent that it has such prosecution rights.  LICENSEE agrees to cooperate fully withLICENSOR, as requested by LICENSOR and at LICENSOR’s expense, in thepreparation, filing, prosecution, and maintenance of the patent applicationsand patents included in the PATENT RIGHTS.

 

ARTICLE 7 - PROSECUTION OF INFRINGERS AND DEFENSEOF PATENT RIGHTS

 

TheParties agree to notify each other in writing of any actual or threatenedinfringement by a third party of the PATENT RIGHTS or of any claim ofinvalidity, unenforceability, or non-infringement of the PATENT RIGHTS.  LICENSOR shall have the sole responsibility toprosecute or defend such claims, as applicable.  LICENSEE shall, if requested, providereasonable assistance to LICENSOR in connection with the prosecution or defenseof such claims.

 

ARTICLE 8 - INDEMNIFICATION

 

8.1                                 Indemnificationof the LICENSOR.  LICENSEE shall beresponsible for and shall indemnify, defend, and hold harmless LICENSOR, itsagents, attorneys, representatives, third

 

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party beneficiaries andtheir respective heirs, executors, successors and assigns (collectively, the “LICENSORIndemnitees”) from and against all liabilities of any kind whatsoever,including legal expenses and reasonable attorneys’ fees, incurred or imposedupon any of the LICENSOR Indemnitees in connection with or as a consequence ofany claims (including third party claims), suits, actions, demands or judgmentsarising out of the death of or injury to any person or persons or out of anydamage to property resulting from the development, production, manufacture,sale, use, performance, rendering, consumption or advertisement of the LICENSEDPRODUCT(s) and/or LICENSED PROCESS(es), LICENSED SERVICE(s), or arising fromany obligation, act or omission performed or failed to be performed hereunder,or from a breach of any representation or warranty of LICENSEE hereunder unlessand to the extent that such liability arises solely from any action of LICENSORor any of its Affiliates.  If theexercise of LICENSEE’s rights under this Agreement in any country in theTERRITORY is the subject of a bona fide claim by a third party, filed in acourt of competent jurisdiction after the date hereof, that the exercise ofsuch rights infringes or conflicts with any intellectual property rights ofsuch third party (a “Third Party Infringement Claim”), then LICENSEE shall nothave any of the rights granted herein in such country and shall have noobligation to pay LICENSOR any further payments under Article 4 ofthis Agreement with respect to any country of the TERRITORY until such claim isresolved by proper adjudication or settlement permitting LICENSEE to exerciseLICENSEE’s rights under this Agreement in the applicable country of theTERRITORY.  Notwithstanding anythingherein to the contrary, LICENSOR covenants that it will not (a) assert or bringany suit, action, claim or other proceeding against LICENSEE based on, in wholeor in part, LICENSEE’s exercise of LICENSEE’s rights, in accordance with theterms and conditions of this Agreement, with respect to the LICENSED TECHNOLOGYand/or (b) join in any third party suit, action, claim or other proceedingagainst LICENSEE based on, in whole or in part, any intellectual propertyrights (including without limitation, patent rights and/or know how) owned bythe applicable third party, so long as LICENSEE is not in violation of thisAgreement.

 

8.2                  Indemnificationof the LICENSEE.  LICENSOR shall beresponsible for and shall indemnify, defend, and hold harmless LICENSEE and theofficers, directors, shareholders, employees, agents, attorneys,representatives, and Affiliates, and their respective heirs, executors,successors and assigns.  (the “LICENSEEIndemnitees”) from and against all liabilities of any kind whatsoever,including legal expenses and reasonable attorneys’ fees, incurred or imposedupon any of the LICENSEE Indemnitees in connection with or as a consequence ofany claims (including third party claims), suits, actions, demands or judgmentsarising out of, directly or indirectly, or in any way relating to: (a) anybreach by LICENSOR of any representation, warranty, covenant or obligation setforth in this Agreement; or (b) arising from LICENSOR’s ownership, management,control, use or disposition of the LICENSED TECHNOLOGY unless and to the extentthat such liability arises solely from any action of LICENSEE or any of itsAffiliates after the Effective Date.

 

8.3                                 Demandsfor Third Party Claims.  Eachindemnified Party hereunder (an “Indemnified Party”) agrees that promptly uponits discovery of facts giving rise to a claim for

 

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indemnity under thisAgreement, including the receipt of any demand, assertion, claim, action orproceeding, judicial or otherwise, by any third party (being referred to hereinas a “Claim”), with respect to any matter as to which it claims to be entitledto indemnity under the provisions of this Agreement, it will give prompt noticethereof in writing to the Indemnifying Party (the “Indemnifying Party”),together with a statement of such information respecting any of the foregoingas it shall have.  Such notice shallinclude a formal demand for indemnification under this Agreement.

 

8.4                                 Rightto Contest and Defend.  TheIndemnifying Party shall contest and defend, at its sole cost and expense, byall appropriate legal proceedings any Claim with respect to which it is calledupon to indemnify the Indemnified Party under the provisions of this Agreement;provided, that notice of the intention to so contest shall be delivered by theIndemnifying Party to the Indemnified Party as soon as reasonably possibleafter (but no later than twenty [20] days from) the date of receipt by theIndemnifying Party of notice by the Indemnified Party of the assertion of theClaim.  Any such contest may be conductedin the name and on behalf of the Indemnifying Party or the Indemnified Party asmay be appropriate.  Such contest shallbe conducted by reputable counsel employed by the Indemnifying Party, but theIndemnified Party shall have the right but not the obligation to participate insuch proceedings and to be represented by counsel of its own choosing at itssole cost and expense.  The IndemnifyingParty shall have full authority to determine all action to be taken withrespect thereto; provided, however, that the Indemnifying Party will not havethe authority to subject the Indemnified Party to any obligation whatsoever(whether financial or the imposition of equitable or injunctive relief), otherthan the performance of purely ministerial tasks or obligations not involvingmaterial expense (for which the Indemnified Party shall be reimbursed).  If the Indemnifying Party does not elect tocontest any such Claim, the Indemnifying Party shall be bound by the resultobtained with respect thereto by the Indemnified Party.

 

8.5                                 Cooperation. If requested by the Indemnifying Party,the Indemnified Party agrees to cooperate with the Indemnifying Party and itscounsel in contesting any Claim that the Indemnifying Party elects to contestor, if appropriate, in making any counterclaim against the PERSON asserting theClaim, or any cross-complaint against any PERSON, and the Indemnifying Partywill reimburse the Indemnified Party for any expenses incurred by it in socooperating.

 

8.6                                 Rightto Participate.  The IndemnifiedParty agrees to afford the Indemnifying Party and its counsel the opportunityto be present at, and to participate in, conferences with any PERSON, includinggovernmental authorities, asserting any Claim against the Indemnified Party orconferences with representatives of or counsel for such PERSON.

 

8.7                                 Paymentof Damages.  The Indemnifying Partyshall pay to the Indemnified Party in immediately available funds any amountsto which the Indemnified Party may become entitled by reason of the provisionsof this Agreement, such payment to be made within five (5) days after

 

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any such amounts arefinally determined either by mutual agreement of the Parties hereto or pursuantto the final non-appealable judgment of a court of competent jurisdiction.

 

8.8                                 IndependentIndemnities.  The Parties acknowledgeand agree that each of the indemnities under Sections 8.1 and 8.2 may berelied upon independently.

 

8.9                                 Insurance. LICENSEE and LICENSOR mutually agree tomaintain insurance or self-insurance that is reasonably adequate to fulfill anypotential obligation to the Indemnified Parties.  LICENSEE and LICENSOR shall continue tomaintain such insurance or self-insurance during the term of this Agreement andafter the expiration or termination of this Agreement for a period of five (5)years.  Each Party shall provide to theother Patty, upon request, proof of any such insurance policy maintained bysuch Party.

 

ARTICLE 9 - TERMINATION

 

9.1                                 Theterm of this Agreement (“TERM”) shall commence on the Effective Date and continueuntil the expiration of the last VALID CLAIM within the PATENT RIGHTS toexpire, unless sooner terminated as provided in this Article 9;provided that LICENSEE’s obligation to pay royalties on NET SALES in anycountry will terminate pursuant to Subsection 4.2(c) (subject toLICENSEE’s obligations under Section 9.4 herein).

 

9.2                                 Ifeither Party commits a material breach of a material term of this Agreement(including any failure to make any payment due under this Agreement), thenon-breaching Party shall have the right to terminate this Agreement effectiveon thirty (30) days prior written notice to the Party in breach, unless suchbreach is cured prior to the expiration of such thirty (30) day period.

 

9.3                                 LICENSEEshall have the right to terminate this Agreement at any time on thirty (30)days prior notice to LICENSOR, and upon payment of all amounts due LICENSORthrough the effective date of the termination.

 

9.4.                              Notwithstandinganything herein to the contrary, in the event that this Agreement is terminatedby LICENSOR pursuant to Section 9.2 or by LICENSEE pursuant to Sections9.2 or 9.3, LICENSEE shall retain a license to rights granted in Article 2to the extent reasonably necessary to sell any LICENSED PRODUCTS existing orunder production and to perform LICENSED PROCESSES or LICENSED SERVICES relatedto such LICENSED PRODUCTS or that are in process, subject to the terms of thisAgreement (including without limitation the obligation to pay royalties under Article 4),provided that LICENSEE shall complete and sell all such work-in-progress andinventory within six (6) months after the effective date of termination.

 

9.5                                 Uponthe expiration of the TERM of this Agreement LICENSEE shall have a fullypaid-up, non-exclusive, irrevocable, royalty free license under the rightsgranted in Article 2.

 

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9.6                                 Nothingherein shall be construed to release either Party from any obligation thataccrued prior to expiration or any termination of this Agreement.  The following provisions shall survive anytermination or any expiration of the TERM of this Agreement: this Section 9.6and Articles/Sections 1, 4, 5, 8 9.4, 10, 11, 12, 13, 15.1, 15.2, 15.5, 15.6,15.7, 15.8, 15.10, 15.15 and 15.16, and any other provision which by itsnature is intended to survive any such termination.

 

ARTICLE 10 - CONFIDENTIALITY AND NON-DISCLOSURE

 

10.1                           ConfidentialInformation; Non-Disclosure.  “ConfidentialInformation” shall mean any technical, business, financial, customer or otherinformation disclosed by one Party (the “Disclosing Party”) to the other Party(the “Receiving Party”) pursuant to this Agreement which is marked “Confidential”or “Proprietary,” or which, under all of the given circumstances, oughtreasonably to be treated as confidential information of the Disclosing Party.  Such information may be disclosed in oral,visual or written form (including magnetic, optical or other media).  Except as expressly provided in Section 10.2below, each Party’s Confidential Information specifically includes withoutlimitation the respective Party’s business plans and business practices, theterms 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 otherrecords, biological materials, software, margins, payment terms and salesforecasts, volumes and activities, designs, computer code, technicalinformation, costs, pricing, financing, business opportunities, personnel, andinformation of LICENSOR or LICENSEE relating to the LICENSED PROCESSES,LICENSED PRODUCTS or LICENSED SERVICES whether or not such information ismarked or identified provided that the Disclosing Party provides notice inwriting reasonably identifying such Confidential Information within 30 days ofdisclosure.  Except to the extentexpressly authorized by this Agreement or by other prior written consent by theDisclosing Party, the Receiving Party, during the term of this Agreement, andthereafter, shall: (i) treat as confidential all Confidential Information ofthe other Party, (ii) use Confidential Information only for exercising therights and fulfilling the obligations set forth in this Agreement, (iii)implement reasonable procedures to prohibit the disclosure, unauthorizedduplication, misuse or removal of the Disclosing Party’s ConfidentialInformation; (iv) not disclose Confidential Information to any third party, and(v) only disclose the Confidential Information to (a) those of its employeeswho have a need to know Confidential Information in order to exercise therights and fulfill the obligations set forth in this Agreement and (b) legaland professional advisors and existing and potential investors and their legaland professional advisors, each of which is bound by a written agreement (or inthe case of attorneys or other professional advisors, formal ethical duties)requiring such advisors and investors to treat, hold and maintain suchConfidential Information in accordance with the terms and conditions of thisAgreement, or (c) recipients of offering documents in connection with anyoffering of securities where such disclosure is, in the opinion of counsel forthe Disclosing Party, reasonably required to comply with the investmentdisclosure laws of any applicable jurisdiction.

 

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Without limiting theforegoing, the Receiving Party shall protect the Disclosing Party’sConfidential Information using at least the same procedures and degree of carethat it uses to prevent the disclosure of its own confidential information oflike importance, but in no event less than reasonable care.

 

10.2                           Exceptions. The Receiving Party shall have noobligation or liability to the Disclosing Party with regard to any ConfidentialInformation of the Disclosing Party: (i) that was publicly known and availableat the time it was disclosed or becomes publicly known and available through nofault, action, or inaction of the Receiving Party; (ii) was known to theReceiving Party, without restriction, at the time of disclosure as shown by thefiles of the Receiving Party in existence at the time of disclosure; (iii) isdisclosed with the prior written approval of the Disclosing Party; (iv) wasindependently developed by the Receiving Party without any use of thedisclosing party’s Confidential Information, provided, that the Receiving Partycan demonstrate such independent development by documented evidence preparedcontemporaneously with such independent development; (v) is disclosed pursuantto the order or requirement of a court, administrative agency, or othergovernmental body, provided that the Receiving Party shall provide promptnotice thereof and reasonable assistance to the Disclosing Party to enable theDisclosing Party to seek a protective order or otherwise prevent such disclosure,and provided further that such disclosure is limited to the extent necessary tocomply with such order and the information shall otherwise be treated asConfidential Information; or (vi) that is provided to the Receiving Party by anindependent third party without violating any confidentiality obligation to theDisclosing Party.

 

10.3                           InjunctiveRelief.  LICENSOR and LICENSEEacknowledge and agree that any breach of the confidentiality obligationsimposed by this Article 10 will constitute immediate and irreparable harmto the Disclosing Party 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 Article 10,including reasonable attorneys’ fees and expenses of litigation.

 

10.4                           Termination. Upon termination or expiration of thisAgreement, or upon the request of the Disclosing Party at any time, theReceiving Party shall promptly return to the Disclosing Party, at its request,all copies of Confidential Information received from the Disclosing Party, andshall return or destroy, and document the destruction of, all summaries,abstracts, extracts, or other documents which contain any ConfidentialInformation of the Disclosing Party in any form.  Notwithstanding the foregoing to the contrary,LICENSEE shall have no obligation (even upon a request by LICENSOR) to returnor destroy any KNOW-HOW (including tangible embodiments of KNOW-HOW) during theTERM of this Agreement.

 

10.5                           Survival. The obligations of LICENSOR and LICENSEEunder this Article 10 shall survive any expiration or terminationof this Agreement.

 

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ARTICLE 11 *-*PAYMENTS,NOTICES, AND OTHER COMMUNICATIONS

 

Anypayment, notice or other communication pursuant to this Agreement shall be inwriting and sent by certified first class mail, postage prepaid, return receiptrequested, or by nationally recognized overnight carrier addressed to theParties at the following addresses or such other addresses as such Partyfurnishes to the other Party in accordance with this paragraph.  Such notices, payments, or othercommunications shall be effective upon receipt.

 

Inthe case of LICENSOR:

AdvancedCell Technology, Inc.

OneInnovation Drive

Worcester,MA 01605

Attention:Michael D. West, Ph.D., President

 

Witha copy to:

PierceAtwood

OneMonument Square

Portland,ME 04101

Attention:William L. Worden, Esq.

 

Inthe case of LICENSEE:

PacGenCellco, LLC.

157Surfview Drive

PacificPalisades, CA 90272

Attention:Kenneth Aldrich

 

Witha copy to:

GrayCary Ware & Freidenrich

4365Executive Drive, Suite 1100

SanDiego, CA 92121-2133

Attention:Lisa Haile

 

ARTICLE 12 - RESPRESENTATIONS AND WARRANTIES OFLICENSOR

 

As aninducement to LICENSEE to enter into and perform this Agreement, LICENSORrepresents and warrants to LICENSEE as follows:

 

12.1                           Titleto LICENSED TECHNOLOGY; Encumbrances.  LICENSOR has good and valid title or validlicenses (with the right of sublicense) to the LICENSED TECHNOLOGY.

 

12.2                           NoViolations.  The execution, deliveryand performance of this Agreement by LICENSOR and the consummation by LICENSORof the transactions contemplated hereby does

 

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not,: (a) violate anystatute, ordinance, rule or regulation applicable to LICENSOR or by which anyof the LICENSED TECHNOLOGY may be bound; (b) violate any order, judgment ordecree of any court or of any Governmental Authority or regulatory body, agencyor authority applicable to LICENSOR or by which any of the LICENSED TECHNOLOGYmay be bound; (c) require any filing by LICENSOR with, or require LICENSOR toobtain any permit, consent or approval of, or require LICENSOR to give anynotice to, any Governmental Authority or regulatory body, agency or authority;or (d) result in a violation or breach by LICENSOR of, conflict with,constitute a default by LICENSOR (or give rise to any right of termination,cancellation, payment or acceleration) under or result in the creation of anyEncumbrance upon any of the LICENSED TECHNOLOGY.

 

12.3          Litigation. Except as set forth in Exhibit C,there is no action, suit, proceeding at law or in equity, arbitration oradministrative or other proceeding by or before (or any investigation by) anygovernmental or other instrumentality or agency, pending, or threatened,against or affecting the LICENSED TECHNOLOGY, and LICENSOR does not know of anyvalid basis for any such action, proceeding or investigation.  To the knowledge of LICENSOR, there are nosuch suits, actions, claims, proceedings or investigations pending orthreatened, seeking to prevent or challenge the transactions contemplated bythis Agreement.

 

12.4            Disclosure.  Neither these representations and warrantiesmade by LICENSOR pursuant to this Agreement nor any of the exhibits, schedulesor certificates attached hereto or delivered in accordance with the termshereof knowingly contains any misstatement of fact or omits any statement offact necessary in order to make the statements contained herein and therein notmisleading in light of the circumstances under which they were made.

 

12.5            Copies of Documents. LICENSOR has caused to be made availablefor inspection and copying by LICENSEE and its advisers, true, complete and correctcopies of all documents in LICENSOR’s possession referred to in any schedule attachedhereto.

 

12.6            Broker’s or Finder’sFees.  No agent, broker, person orfirm acting on behalf of LICENSOR is, or will be, entitled to any fee,commission or broker’s or finder’s fees for which the LICENSEE may be liable inconnection with this Agreement or any of the transactions contemplated hereby.

 

12.7            LICENSED TECHNOLOGY.

 

(a)              Exceptas set forth on Exhibit D, LICENSOR, LICENSOR is not aware of anyinterference, infringement, misappropriation, or other conflict with anyintellectual property rights of third parties, and LICENSOR has never receivedany charge, complaint, claim, demand, or notice alleging any such interference,infringement, misappropriation, or violation (including any claim that LICENSORmust license or refrain from using any intellectual property rights of anythird party).  To the knowledge ofLICENSOR, no third party has

 

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interferedwith, infringed upon, misappropriated, or otherwise come into conflict with anyof the LICENSED TECHNOLOGY.

 

(b)             ExhibitA identifies each patent or registration which has been issued to LICENSORwith respect to any of the LICENSED TECHNOLOGY and identifies each pendingpatent application or application for registration which LICENSOR has made withrespect to any of the LICENSED TECHNOLOGY.  LICENSOR has made available to LICENSEEcorrect and complete copies of all such patents, registrations and applications(as amended to-date) in LICENSOR’s possession and has made available toLICENSEE correct and complete copies of all other written documentation inLICENSOR’s possession evidencing ownership and prosecution (if applicable) ofeach such item.

 

(c)              ExhibitA identifies each item of LICENSED TECHNOLOGY that LICENSOR uses pursuantto license, sublicense, agreement, or permission.  LICENSOR has made available to LICENSEEcorrect and complete copies of all such licenses, sublicenses, agreements,patent prosecution files and permissions (as amended to-date) in LICENSOR’spossession.  With respect to each item ofLICENSED TECHNOLOGY required to be identified in Exhibit A and to theknowledge of LICENSOR: (i) the license, sublicense, agreement, or permissioncovering the item is legal, valid, binding, enforceable, and in full force andeffect; (ii) the license, sublicense, agreement, or permission will continue tobe legal, valid, binding, enforceable, and in full force and effect onidentical terms following the consummation of the transactions contemplatedhereby; (iii) no Party to the license, sublicense, agreement, or permission isin breach or default, and no event has occurred which with notice or lapse oftime would constitute a breach or default or permit termination, modification,or acceleration thereunder; (iv) no party to the license, sublicense,agreement, or permission has repudiated any provision thereof; (v) theunderlying item of LICENSED TECHNOLOGY is not subject to any outstanding lienor encumbrance, injunction, judgment, order, decree, ruling, or charge; (vi) noaction, suit, proceeding, hearing, investigation, charge, complaint, claim, ordemand is pending or is threatened which challenges the legality, validity, orenforceability of the underlying item of LICENSED TECHNOLOGY; and (vii)LICENSOR has not granted any sublicense or similar right to the LICENSEDTECHNOLOGY within the FIELD.

 

12.8            Survival ofRepresentations and Warranties.

 

(a)              Exceptas otherwise provided herein, notwithstanding any investigation at any timemade by or on behalf of any Party hereto, the representations and warrantiesset forth herein and in any certificate delivered in connection

 

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herewithwith respect to any of those representations and warranties will survive theEffective Date until the longer to occur of: (i) two (2) years or (ii) theexpiration of the applicable statutes of limitation, including all periods ofextension and tolling whereupon they will terminate and expire.

 

(b)             Aftera representation and warranty has expired, as provided in Subsection 12.8(a),no claim for claims or costs may be made or prosecuted by any Person who wouldhave been entitled to claims or costs on the basis of that representation andwarranty prior to its termination and expiration, provided that no claimpresented in writing for claims or costs to the Person or Persons from which orwhom those damages are sought on the basis of that representation and warrantyprior to its termination and expiration will be affected in any way by thattermination and expiration.

 

12.9            EXCEPT AS OTHERWISEEXPRESSLY SET FORTH IN THIS AGREEMENT, LICENSOR, ITS DIRECTORS, OFFICERS,EMPLOYEES, AND AFFILIATES MAKE NO REPRESENTATIONS AND EXTEND NO WARRANTIES OFANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO WARRANTIES OFMERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, VALIDITY OF PATENT RIGHTS,ISSUED OR PENDING, AND THE ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOTDISCOVERABLE.  NOTHING IN THIS AGREEMENTSHALL BE CONSTRUED AS A REPRESENTATION MADE OR WARRANTY GIVEN BY LICENSOR THATTHE PRACTICE BY LICENSEE OF THE LICENSE GRANTED HEREUNDER SHALL NOT INFRINGETHE PATENT RIGHTS OF ANY THIRD PARTY.

 

ARTICLE 13—REPRESENTATIONS AND WARRANTIES OFLICENSEE.

 

LICENSEErepresents and warrants to LICENSOR as follows:

 

13.1            Existence and GoodStanding: Power and Authority. LICENSEE is a limited liability company duly organized, validly existingand in good standing under the laws of the state of California.  LICENSEE has full corporate power andauthority to make, execute, deliver and perform this Agreement, to perform itsobligations hereunder and to consummate the transactions contemplated hereby.  The execution, delivery and performance ofthis Agreement by LICENSEE and the consummation by it of the transactionscontemplated hereby, have been duly authorized and approved by all requiredcorporate action of LICENSEE and no other action on the part of LICENSEE isnecessary to authorize the execution, delivery and performance of thisAgreement by LICENSEE and the consummation of the transaction contemplatedhereby.  This Agreement has been dulyexecuted and delivered by LICENSEE and is a valid and binding obligation ofLICENSEE enforceable against it in accordance with its terms, except to theextent that its enforceability may be subject to applicable bankruptcy,insolvency, reorganization,

 

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moratorium andsimilar laws affecting the enforcement of creditors’ rights generally and bygeneral equitable principles.

 

13.2            Authorization andValidity of Agreement.  LICENSEE hasfull power and authority, including full corporate power and authority, toexecute and deliver this Agreement, to perform its obligations hereunder and toconsummate the transactions contemplated hereby.  Without limiting the foregoing, the execution,delivery and performance of this Agreement by LICENSEE and the consummation byit of the transactions contemplated hereby, have been duly authorized andapproved by the members and managers of LICENSEE, and no other action on thepart of LICENSEE or its officers, directors or shareholder is necessary toauthorize the execution, delivery and performance of this Agreement by LICENSEEand the consummation of the transactions contemplated hereby.  This Agreement has been duly executed anddelivered by LICENSEE and is a valid and binding obligation of LICENSEEenforceable against it in accordance with its terms, except to the extent thatits enforceability may be subject to applicable bankruptcy, insolvency,reorganization, moratorium and similar laws affecting the enforcement ofcreditors’ rights generally and by general equitable principles.

 

13.3            Consents andApprovals: No Violations.  Theexecution, delivery and performance of this Agreement by LICENSEE and theconsummation by LICENSEE of the transactions contemplated hereby will not, withor without the giving of notice or the lapse of time or both: (a) violate,conflict with, or result in a breach or default under any provision of theorganizational documents of LICENSEE; (b) violate any statute, ordinance, ruleor regulation applicable to LICENSEE, (c) violate any order, judgment or decreeof any court or of any governmental or regulatory body, agency or authorityapplicable to LICENSEE or by which any of the LICENSED TECHNOLOGY may be bound;or (d) require any filing by LICENSEE with, or require LICENSEE to obtain anypermit, consent or approval of, or require LICENSEE to give any notice to, anygovernmental or regulatory body, agency or authority, except filings, if any,which may be required under the “Blue Sky” laws of Massachusetts or as may berequired in the future to comply with governmental regulations governing theproduction and sale of products by LICENSEE as it conducts its business.

 

13.4            Survival ofRepresentations and Warranties.

 

(a)              Exceptas otherwise provided herein, notwithstanding any investigation at any timemade by or on behalf of any Party hereto, the representations and warrantiesset forth herein and in any certificate delivered in connection herewith withrespect to any of those representations and warranties will survive theEffective Date until the longer to occur of: (i) two (2) years or (ii) theexpiration of the applicable statutes of limitation, including all periods ofextension and tolling whereupon they will terminate and expire.

 

(b)             Aftera representation and warranty has expired, as provided in Subsection 13.4(a),no claim for claims or costs may be made or prosecuted by

 

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anyPerson who would have been entitled to claims or costs on the basis of thatrepresentation and warranty prior to its termination and expiration, providedthat no claim presented in writing for claims or costs to the Person or Personsfrom which or whom those damages are sought on the basis of that representationand warranty prior to its termination and expiration will be affected in anyway by that termination and expiration.

 

ARTICLE 14 – LIMITATION OF LIABILITY

 

EXCEPTFOR ANY LIABILITY TO ANY THIRD PARTIES PURSUANT TO ARTICLE 8 OR TO A PARTYPURSUANT TO ARTICLES 12 AND 13 OF THIS AGREEMENT, IN NO EVENT SHALL LICENSOR ORLICENSEE OR THEIR, ITS DIRECTORS, OFFICERS, EMPLOYEES OR AFFILIATES BE LIABLEFOR INCIDENTAL OR CONSEQUENTIAL DAMAGES OF ANY KIND, INCLUDING ECONOMIC DAMAGEOR INJURY TO PROPERTY AND LOST PROFITS, REGARDLESS OF WHETHER LICENSOR ORLICENSEE SHALL BE ADVISED, SHALL HAVE OTHER REASON TO KNOW, OR IN FACT SHALLKNOW OF THE POSSIBILITY OF SUCH DAMAGES.

 

ARTICLE 15 - MISCELLANEOUS PROVISIONS

 

15.1            CORPORATEPARTNERSHIPS.  In the event LICENSEEenters into a corporate partnership for the joint development of any of theLICENSED TECHNOLOGY, then payments required hereunder shall not include fundsprovided for sponsored research or equity investments by any third party solong as such payments do not constitute a majority of funds transferred by suchthird party.  However if the sponsoredresearch involves fees in excess of industry standard reimbursement for FTEs orany equity investment in excess of fair market value, LICENSEE shall pay toLICENSOR a royalty on such excess fees calculated at the rates specifiedherein.

 

15.2            LICENSEE “REVERSELICENSE” TO LICENSOR.  LICENSEE agrees tolicense to LICENSOR on a non-exclusive basis for therapeutic uses in thetreatment of blood and cardiovascular diseases the rights to any technology itcurrently owns or has licensed or develops or licenses in the future that isapplicable to such diseases (excluding however the use of proprietarytechniques now or hereafter developed by LICENSEE for the enhancedvascularization of transplanted cells or tissues).  Such license shall provide for royaltypayments at the same rate as LICENSEE’S royalty payments to LICENSOR hereunderas provided in Section 4.2(a).  Suchlicense will be sublicensable only once in a given field of use; or for thepurpose of having products produced, made, or distributed; or in connectionwith a merger or consolidation of LICENSOR into another company or a sale ofall or substantially all of the assets of LICENSOR.  LICENSEE shall also have no obligationshereunder with respect to technology licenses it has or may acquire if suchlicenses restrict sublicensing in a manner inconsistent with this subparagraph.  Such “Reverse License shall not apply to anyrights acquired

 

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by LICENSEE under Section 15.18hereof.

 

15.3            FUTURE TECHNOLOGYLICENSES.  LICENSOR acknowledges that itis continuing to develop cell-based technology, the existence or significanceof which it may not have disclosed to LICENSEE. Therefore, LICENSOR further agrees that in the event any of itstechnology now perfected or pending as of the date of this agreement but not specificallyenumerated herein would inhibit or adversely affect the commercial use byLICENSEE of the PATENT RIGHTS in the field, LICENSOR shall waive any claim ofinfringement to the extent necessary to permit LICENSEE to continue the use ofthe PATENT RIGHTS under this Agreement.  In addition, LICENSOR agrees to license toLICENSEE on a non-exclusive basis for uses in the FIELDS, including any rightsacquired under Section 15.18 hereof, the rights to any technology itcurrently owns or has licensed or develops or licenses in the future that isapplicable to such FIELDS (but specifically excluding applications involvingthe use of cells in the treatment of tumors where the primary use of the cellsis the destruction or reduction of tumors and does not involve regeneration oftissue or organ function). Such license shall provide for royalty payments atthe same rate as LICENSEE’S royalty to LICENSOR hereunder as provided in Section 4.2(a).  Such license will be sublicensable only oncein a given field of use; or for the purpose of having products produced, made,or distributed; or in connection with a merger or consolidation of LICENSEEinto another company or a sale of all or substantially all of the assets ofLICENSEE.  LICENSOR shall also have noobligations hereunder with respect to technology licenses it has or may acquireif such licenses restrict sublicensing in a manner inconsistent with thissubparagraph.

 

15.4            LICENSEE shall complywith all local, state, federal and international laws and regulations relatingto the development, manufacture, use, provision, and sale of LICENSED PRODUCTS,LICENSED PROCESSES and LICENSED SERVICES.  Without limiting the generality of theforegoing, LICENSEE agrees to comply with the following:

 

a)                  LICENSEEshall obtain all necessary approvals from the FDA, USDA, or any similargovernmental authorities of any foreign jurisdiction in which LICENSEE intendsto make, use, or sell LICENSED PRODUCTS or to perform LICENSED PROCESSES orLICENSED SERVICES.

 

b)                 LICENSEEshall comply fully with any and all applicable local, state, federal andinternational laws and regulations relating to the LICENSED PRODUCTS, LICENSEDPROCESSES, and LICENSED SERVICES, and the PATENT RIGHTS, in the TERRITORY,including without limitation all export or import regulations and rules now ineffect or as may be issued from time to time by any governmental authoritywhich has jurisdiction relating to the export of LICENSED PRODUCTS, LICENSEDPROCESSES, or LICENSED SERVICES and any technology relating thereto.  LICENSEE hereby gives written assurance thatit will comply with all such import or export laws and regulations (includingwithout limitation all Export

 

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AdministrationRegulations of the United States Department of Commerce), that it bears soleresponsibility for any violation of such laws and regulations, and that it willindemnify, defend, and hold LICENSOR harmless (in accordance with Article 8)for the consequences of any such violation.

 

c)                  Tothe extent that any invention claimed in the PATENT RIGHTS has been partiallyfunded by the United States Government, and only to the extent required byapplicable laws and regulations, LICENSEE agrees that any LICENSED PRODUCTSused or sold in the United States will be manufactured substantially in theUnited States or its territories.  Currentlaw provides that if a domestic manufacturer is not commercially feasible underthe circumstances, LICENSOR may seek a waiver of this requirement from therelevant federal agency on behalf of LICENSEE and, upon LICENSEE’S request,shall cooperate with LICENSEE in seeking such a waiver.

 

15.5            LICENSEE shall notcreate or incur or cause to be incurred or to exist any lien, encumbrance,pledge, charge, restriction or other security interest of any kind upon thePATENT RIGHTS, but may cause to be incurred or to exist a lien, encumbrance,pledge, charge, restriction or other security interest on its rights to theLICENSED TECHNOLOGY hereunder, provided such security interest does not affectLICENSOR’s rights to the LICENSED TECHNOLOGY, or any of LICENSOR’s rights underthis Agreement.

 

15.6            Neither Party shalloriginate any publicity, news release or other public announcement (“Announcements”),written or oral, relating to this Agreement or the existence of an arrangementbetween the Parties, without the prior written approval of the other Party,which approval shall not be unreasonably withheld or delayed, except asotherwise required by law.  The foregoingnotwithstanding, LICENSOR and LICENSEE shall have the right to make suchAnnouncements without the consent of the other Party in any prospectus,offering memorandum, or other document or filing required by applicablesecurities laws or other applicable law or regulation, provided that such Partyshall have given the other Party at least ten (10) days prior written notice ofthe proposed text for the purpose of giving the other Party the opportunity tocomment on such text.

 

15.7            No implied licensesare granted pursuant to the terms of this Agreement.  No licensed rights shall be created byimplication or estoppel.

 

15.8            Nothing herein shallbe deemed to constitute either Party as the agent or representative of theParty, or both parties as joint venturers or partners for any purpose.  Each Party shall be an independent contractor,not an employee or partner of the other Party, and the manner in which eachParty renders its services under this Agreement shall be within its solediscretion.  Neither Party shall beresponsible for the acts or omissions of the other Party, nor shall eitherParty have authority to speak for, represent or obligate the other Party in anyway without prior written authority from the other Party.

 

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15.9                          Tothe extent commercially feasible, and consistent with prevailing businesspractices and applicable law, all LICENSED PRODUCTS sold pursuant to thisAgreement will be marked with the number of each issued patent that applies tosuch LICENSED PRODUCTS.

 

15.10                    ThisAgreement shall be construed, governed, interpreted and applied in accordancewith the laws of the State of California, U.S.A. without regard to principlesof conflicts of law thereof, except that questions affecting the constructionand effect of any patent shall be determined by the law of the country in whichthe patent was granted.

 

15.11                    TheParties hereto acknowledge that this Agreement sets forth the entire Agreementand understanding of the Parties hereto as to the subject matter hereof, andshall not be subject to any change or modification except by the execution of awritten instrument signed by the Parties hereto.

 

15.12                    Theprovisions of this Agreement are severable, and in the event that any provisionof this Agreement shall be determined to be invalid or unenforceable under anycontrolling body of the law, such invalidity or unenforceability shall not inany way affect the validity or enforceability of the remaining provisionshereof.

 

15.13                    Thefailure of either Party to assert a right hereunder or to insist uponcompliance with any term or condition of this Agreement shall not constitute awaiver of that right or excuse a similar subsequent failure to perform any suchterm or condition by the other Party.

 

15.14                    ThisAgreement may not be assigned by LICENSEE without the prior written consent ofLICENSOR, which consent shall be granted or denied in LICENSOR’s solediscretion.  LICENSOR may not assign thisAgreement without the consent of LICENSEE, which consent shall not be unreasonablywithheld or delayed, except that LICENSOR may assign this Agreement to anaffiliate or to a successor in connection with the merger, consolidation, orsale of all or substantially all of its assets or that portion of its businessto which this Agreement relates.  Notwithstandingthe foregoing to the contrary, this restriction on the assignment by LICENSEEof this Agreement shall not prevent the assignment of this Agreement inconnection with a sale of all or substantially all of the assets of LICENSEE, solong as the purchaser of the assets agrees to assume to any and all outstandingliabilities to LICENSOR under this Agreement, including but not limited to anyoutstanding amounts under the promissory note referred to in Section 4.1.

 

15.15                    ThisAgreement has been prepared jointly and no rule of strict construction shall beapplied against either Party.  In thisAgreement, the singular shall include the plural and vice versa and the word “including”shall be deemed to be followed by the phrase “without limitation.”  The section headings contained in thisAgreement are inserted for convenience only and shall not affect in any way themeaning or interpretation of this Agreement.

 

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15.16                    ThisAgreement may be executed in counterparts, each of which together shallconstitute one and the same Agreement.

 

15.17                    Allrights and licenses granted under or pursuant to this Agreement by LICENSOR toLICENSEE are, and shall otherwise be deemed to be, for purposes of Paragraph365(n) of the U.S.  Bankruptcy Code (the “Code”),licenses to rights in “intellectual property” as defined in the Code.  The Parties hereto agree that LICENSEE, as aLICENSEE of such rights under this Agreement, shall retain and may fullyexercise all of its rights and elections under the Code.  The Parties hereto further agree that, in theevent of the commencement of a bankruptcy proceeding by or against LICENSORincluding a proceeding under the Code, LICENSEE shall be entitled to a completeduplicate of (or complete access to, as appropriate) any such intellectualproperty and all embodiments of such intellectual property, including thePATENT RIGHTS and KNOW-HOW, and the same, if not already in LICENSEE’spossession, shall be promptly delivered to LICENSEE upon any such commencementof a bankruptcy proceeding upon written request therefore by LICENSEE.

 

15.18                    Inaddition to the other rights granted herein, LICENSOR hereby grants to LICENSEEa 90 day right of negotiation with respect to any technology that wouldconstitute LICENSED TECHNOLOGY if the FIELD included diseases related either tothe heart or to neuro degenerative diseases (the “Added Fields”) prior toLICENSOR entering into any license relating to either of such Added Fields)with a third party.  Such a 90 day periodshall commence on the earlier of the 12 month anniversary of the EffectiveDate, or such date when LICENSOR notifies LICENSEE that it has openednegotiations with a third party or that a third party has made inquiry aboutsuch a license.  If following theexpiration of any such 90-day negotiation period LICENSEE and LICENSOR have notentered into a license for an Added Field, LICENSOR shall be free to enter intoan exclusive or non-exclusive license for such Added Field with any thirdparty.  If LICENSOR enters into anon-exclusive license for an Added Field with a third party following the90-day negotiating period hereunder, LICENSOR shall offer a non exclusivelicense to LICENSEE on comparable terms as those entered into with such thirdparty.  LICENSEE shall then have 30 daysto enter into such a nonexclusive license.  If LICENSEE does not enter into such a licensewithin said 30-day period, LICENSOR shall have no further obligations relatingto the Added Field.

 

**[Reminder of this page intentionally left blank]**

 

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INWITNESS WHEREOF, the Parties have duly executed this Agreement on the EFFECTIVEDATE.

 

ADVANCED CELL TECHNOLOGY.INC.

 

 
| By:                                                  | /s/ Michael D.  West                                                      5-14-04 |   |
|------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| Printed Name:  Michael D. West, Ph.D.           |                                                                                                                                                                                                                                                                                                                                                            |
| Title:  President & Chief Executive Officer |                                                                                                                                                                                                                                                                                                                                                            |
|                                                 |                                                                                                                                                                                                                                                                                                                                                            |
|                                                 |                                                                                                                                                                                                                                                                                                                                                            |
| PACGEN CELLCO LLC                                    |                                                                                                                                                                                                                                                                                                                                                            |
|                                                 |                                                                                                                                                                                                                                                                                                                                                            |
|                                                 |                                                                                                                                                                                                                                                                                                                                                            |
| By:                                                  | /s/ Kenneth  Aldrich                                                      5-14-04 |   |
| Printed Name: Kenneth  Aldrich                       |                                                                                                                                                                                                                                                                                                                                                            |
| Title:  Managing Member                         |                                                                                                                                                                                                                                                                                                                                                            |

 

25

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