**Exhibit 10.5**

 

# **SUBSIDIARY GUARANTEE**

# ** **

SUBSIDIARYGUARANTEE, dated as of March 31, 2008 (this “Guarantee”), made byeach of the signatories hereto (together with any other entity that may becomea party hereto as provided herein, the “Guarantors”), in favor of thepurchasers signatory (together with their permitted assigns, the “Purchasers”)to that certain Securities Purchase Agreement, dated as of the date hereof,between Advanced Cell Technology, Inc., a Delaware corporation (the “Company”)and the Purchasers.

 

**W I T N E S S E T H:**

** **

WHEREAS, pursuant to that certain Securities PurchaseAgreement, dated as of the date hereof, by and between the Company and thePurchasers (the “Purchase Agreement”), the Company has agreed to selland issue to the Purchasers, and the Purchasers have agreed to purchase fromthe Company the Debentures, subject to the terms and conditions set forththerein; and

 

WHEREAS, each Guarantor will directly benefit fromthe extension of credit to the Company represented by the issuance of theDebentures; and

 

NOW, THEREFORE, in consideration of the premises andto induce the Purchasers to enter into the Purchase Agreement and to carry outthe transactions contemplated thereby, each Guarantor hereby agrees with thePurchasers as follows:

 

1.             Definitions. Unless otherwise defined herein, terms defined in the Purchase Agreement and used herein shall have the meanings given to them in the Purchase Agreement. The words “hereof,” “herein,” “hereto” and “hereunder” and words of similar import when used in this Guarantee shall refer to this Guarantee as a whole and not to any particular provision of this Guarantee, and Section and Schedule references are to this Guarantee unless otherwise specified. The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms.  The following terms shall have the following meanings:

 

“Guarantee” means this Subsidiary Guarantee,as the same may be amended, supplemented or otherwise modified from time totime.

 

“Obligations”means, in addition to all other costs and expenses of collectionincurred by Purchasers in enforcing any of such Obligations and/or thisGuarantee, all of the liabilities and obligations (primary, secondary, direct,contingent, sole, joint or several) due or to become due, or that are now ormay be hereafter contracted or acquired, or owing to, of the Company or anyGuarantor to the Purchasers, including, without limitation, all obligationsunder this Guarantee, the Debentures and any other instruments, agreements orother documents executed and/or delivered in connection herewith or therewith,in each case, whether now or hereafter existing, voluntary or involuntary,direct or indirect, 

 

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absolute or contingent, liquidated orunliquidated, whether or not jointly owed with others, and whether or not fromtime to time decreased or extinguished and later increased, created orincurred, and all or any portion of such obligations or liabilities that arepaid, to the extent all or any part of such payment is avoided or recovereddirectly or indirectly from any of the Purchasers as a preference, fraudulenttransfer or otherwise as such obligations may be amended, supplemented,converted, extended or modified from time to time.  Without limiting the generality of theforegoing, the term “Obligations” shall include, without limitation: (i) principalof, and interest on the Debentures and the loans extended pursuant thereto; (ii) anyand all other fees, indemnities, costs, obligations and liabilities of theCompany or any Guarantor from time to time under or in connection with thisGuarantee, the Debentures and any other instruments, agreements or otherdocuments executed and/or delivered in connection herewith or therewith; and (iii) allamounts (including but not limited to post-petition interest) in respect of theforegoing that would be payable but for the fact that the obligations to paysuch amounts are unenforceable or not allowable due to the existence of abankruptcy, reorganization or similar proceeding involving the Company or anyGuarantor.

 

2.             Guarantee.

 

(a)           Guarantee.

 

(i)            The Guarantors hereby, jointly and severally,unconditionally and irrevocably, guarantee to the Purchasers and their respectivesuccessors, indorsees, transferees and assigns, the prompt and complete paymentand performance when due (whether at the stated maturity, by acceleration orotherwise) of the Obligations.

 

(ii)           Anything herein or in any other Transaction Document tothe contrary notwithstanding, the maximum liability of each Guarantor hereunderand under the other Transaction Documents shall in no event exceed the amountwhich can be guaranteed by such Guarantor under applicable federal and statelaws, including laws relating to the insolvency of debtors, fraudulentconveyance or transfer or laws affecting the rights of creditors generally(after giving effect to the right of contribution established in Section 2(b)).

 

(iii)          Each Guarantor agrees that the Obligations may at any timeand from time to time exceed the amount of the liability of such Guarantorhereunder without impairing the guarantee contained in this Section 2 oraffecting the rights and remedies of the Purchasers hereunder.

 

(iv)          The guarantee contained in this Section 2 shallremain in full force and effect until all the Obligations and the obligationsof each 

 

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Guarantor under the guarantee contained in this Section 2 shallhave been satisfied by indefeasible payment in full.

 

(v)           No payment made by the Company, any of theGuarantors, any other guarantor or any other Person or received or collected bythe Purchasers from the Company, any of the Guarantors, any other guarantor orany other Person by virtue of any action or proceeding or any set-off orappropriation or application at any time or from time to time in reduction ofor in payment of the Obligations shall be deemed to modify, reduce, release orotherwise affect the liability of any Guarantor hereunder which shall,notwithstanding any such payment (other than any payment made by such Guarantorin respect of the Obligations or any payment received or collected from suchGuarantor in respect of the Obligations), remain liable for the Obligations upto the maximum liability of such Guarantor hereunder until the Obligations areindefeasibly paid in full.

 

(vi)          Notwithstanding anything to the contrary in thisGuarantee, with respect to any defaulted non-monetary Obligations the specificperformance of which by the Guarantors is not reasonably possible (e.g. theissuance of the Company’s Common Stock), the Guarantors shall only be liablefor making the Purchasers whole on a monetary basis for the Company’s failureto perform such Obligations in accordance with the Transaction Documents.

 

(b)           Right ofContribution. Subject to Section 2(c), each Guarantorhereby agrees that to the extent that a Guarantor shall have paid more than itsproportionate share of any payment made hereunder, such Guarantor shall beentitled to seek and receive contribution from and against any other Guarantorhereunder which has not paid its proportionate share of such payment. EachGuarantor’s right of contribution shall be subject to the terms and conditionsof Section 2(c). The provisions of this Section 2(b) shall in norespect limit the obligations and liabilities of any Guarantor to thePurchasers and each Guarantor shall remain liable to the Purchasers for thefull amount guaranteed by such Guarantor hereunder.

 

(c)           No Subrogation.  Notwithstanding any payment made by anyGuarantor hereunder or any set-off or application of funds of any Guarantor bythe Purchasers, no Guarantor shall be entitled to be subrogated to any of therights of the Purchasers against the Company or any other Guarantor or anycollateral security or guarantee or right of offset held by the Purchasers forthe payment of the Obligations, nor shall any Guarantor seek or be entitled toseek any contribution or reimbursement from the Company or any other Guarantorin respect of payments made by such Guarantor hereunder, until all amountsowing to the Purchasers by the Company on account of the Obligations areindefeasibly paid in full. If any amount shall be paid to any Guarantor onaccount of such 

 

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subrogation rights at any time when all of the Obligations shall nothave been paid in full, such amount shall be held by such Guarantor in trustfor the Purchasers, segregated from other funds of such Guarantor, and shall,forthwith upon receipt by such Guarantor, be turned over to the Purchasers inthe exact form received by such Guarantor (duly indorsed by such Guarantor tothe Purchasers, if required), to be applied against the Obligations, whethermatured or unmatured, in such order as the Purchasers may determine.

 

(d)           Amendments,Etc. With Respect to the Obligations. Each Guarantor shall remain obligatedhereunder notwithstanding that, without any reservation of rights against anyGuarantor and without notice to or further assent by any Guarantor, any demandfor payment of any of the Obligations made by the Purchasers may be rescindedby the Purchasers and any of the Obligations continued, and the Obligations, orthe liability of any other Person upon or for any part thereof, or anycollateral security or guarantee therefor or right of offset with respectthereto, may, from time to time, in whole or in part, be renewed, extended,amended, modified, accelerated, compromised, waived, surrendered or released bythe Purchasers, and the Purchase Agreement and the other Transaction Documentsand any other documents executed and delivered in connection therewith may beamended, modified, supplemented or terminated, in whole or in part, as thePurchasers may deem advisable from time to time, and any collateral security,guarantee or right of offset at any time held by the Purchasers for the paymentof the Obligations may be sold, exchanged, waived, surrendered or released. ThePurchasers shall have no obligation to protect, secure, perfect or insure anyLien at any time held by them as security for the Obligations or for theguarantee contained in this Section 2 or any property subject thereto.

 

(e)           GuaranteeAbsolute and Unconditional. Each Guarantor waives any and all notice of thecreation, renewal, extension or accrual of any of the Obligations and notice ofor proof of reliance by the Purchasers upon the guarantee contained in this Section 2or acceptance of the guarantee contained in this Section 2; theObligations, and any of them, shall conclusively be deemed to have beencreated, contracted or incurred, or renewed, extended, amended or waived, inreliance upon the guarantee contained in this Section 2; and all dealingsbetween the Company and any of the Guarantors, on the one hand, and thePurchasers, on the other hand, likewise shall be conclusively presumed to havebeen had or consummated in reliance upon the guarantee contained in this Section 2.Each Guarantor waives to the extent permitted by law diligence, presentment, protest, demand for payment and notice of default or nonpayment toor upon the Company or any of the Guarantors with respect to the Obligations.Each Guarantor understands and agrees that the guarantee contained in this Section 2shall be construed as a continuing, absolute and unconditional guarantee ofpayment and performance without regard to (a) the validity orenforceability of the Purchase Agreement or any other Transaction Document, anyof the Obligations or any other collateral security therefor or guarantee orright of offset with respect thereto at any time or from time to time held bythe Purchasers,

 

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(b) any defense, set-off or counterclaim (other than a defense ofpayment or performance or fraud  ormisconduct by Purchasers) which may at any time be available to or be assertedby the Company or any other Person against the Purchasers, or (c) anyother circumstance whatsoever (with or without notice to or knowledge of theCompany or such Guarantor) which constitutes, or might be construed toconstitute, an equitable or legal discharge of the Company for the Obligations,or of such Guarantor under the guarantee contained in this Section 2, inbankruptcy or in any other instance. When making any demand hereunder orotherwise pursuing its rights and remedies hereunder against any Guarantor, thePurchasers may, but shall be under no obligation to, make a similar demand onor otherwise pursue such rights and remedies as they may have against theCompany, any other Guarantor or any other Person or against any collateralsecurity or guarantee for the Obligations or any right of offset with respectthereto, and any failure by the Purchasers to make any such demand, to pursuesuch other rights or remedies or to collect any payments from the Company, anyother Guarantor or any other Person or to realize upon any such collateralsecurity or guarantee or to exercise any such right of offset, or any releaseof the Company, any other Guarantor or any other Person or any such collateralsecurity, guarantee or right of offset, shall not relieve any Guarantor of anyobligation or liability hereunder, and shall not impair or affect the rightsand remedies, whether express, implied or available as a matter of law, of thePurchasers against any Guarantor. For the purposes hereof, “demand” shallinclude the commencement and continuance of any legal proceedings.

 

(f)            Reinstatement.The guarantee contained in this Section 2 shall continue to be effective,or be reinstated, as the case may be, if at any time payment, or any partthereof, of any of the Obligations is rescinded or must otherwise be restoredor returned by the Purchasers upon the insolvency, bankruptcy, dissolution,liquidation or reorganization of the Company or any Guarantor, or upon or as aresult of the appointment of a receiver, intervenor or conservator of, ortrustee or similar officer for, the Company or any Guarantor or any substantialpart of its property, or otherwise, all as though such payments had not beenmade.

 

(g)           Payments.Each Guarantor hereby guarantees that payments hereunder will be paid to thePurchasers without set-off or counterclaim in U.S. dollars at the address setforth or referred to in the Signature Pages to the Purchase Agreement.

 

3.             Representations and Warranties. Each Guarantor hereby makes the following representations and warranties to Purchasers as of the date hereof:

 

(a)           Organizationand Qualification. The Guarantor is a corporation, duly incorporated,validly existing and in good standing under the laws of the applicablejurisdiction set forth on Schedule 1, with the requisite corporate power andauthority to own and use its properties and assets and to carry on its business

 

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as currently conducted. The Guarantor has no subsidiaries other thanthose identified as such on the Disclosure Schedules to the Purchase Agreement.The Guarantor is duly qualified to do business and is in good standing as aforeign corporation in each jurisdiction in which the nature of the businessconducted or property owned by it makes such qualification necessary, exceptwhere the failure to be so qualified or in good standing, as the case may be,could not, individually or in the aggregate, (x) adversely affect thelegality, validity or enforceability of any of this Guaranty in any materialrespect, (y) have a material adverse effect on the results of operations,assets, prospects, or financial condition of the Guarantor or (z) adverselyimpair in any material respect the Guarantor’s ability to perform fully on atimely basis its obligations under this Guaranty (a “Material Adverse Effect”).

 

(b)           Authorization;Enforcement.  TheGuarantor has the requisite corporate power and authority to enter into and toconsummate the transactions contemplated by this Guaranty, and otherwise tocarry out its obligations hereunder. The execution and delivery of thisGuaranty by the Guarantor and the consummation by it of the transactionscontemplated hereby have been duly authorized by all requisite corporate actionon the part of the Guarantor. This Guaranty has been duly executed anddelivered by the Guarantor and constitutes the valid and binding obligation ofthe Guarantor enforceable against the Guarantor in accordance with its terms,except as such enforceability may be limited by applicable bankruptcy,insolvency, reorganization, moratorium, liquidation or similar laws relatingto, or affecting generally the enforcement of, creditors’ rights and remediesor by other equitable principles of general application.

 

(c)           No Conflicts. The execution,delivery and performance of this Guaranty by the Guarantor and the consummationby the Guarantor of the transactions contemplated thereby do not and will not (i) conflictwith or violate any provision of its Certificate of Incorporation or By-laws or(ii) conflict with, constitute a default (or an event which with notice orlapse of time or both would become a default) under, or give to others anyrights of termination, amendment, acceleration or cancellation of, anyagreement, indenture or instrument to which the Guarantor is a party, or (iii) resultin a violation of any law, rule, regulation, order, judgment, injunction,decree or other restriction of any court or governmental authority to which theGuarantor is subject (including Federal and State securities laws andregulations), or by which any material property or asset of the Guarantor isbound or affected, except in the case of each of clauses (ii) and (iii),such conflicts, defaults, terminations, amendments, accelerations,cancellations and violations as could not, individually or in the aggregate,have or result in a Material Adverse Effect. The business of the Guarantor isnot being conducted in violation of any law, ordinance or regulation of anygovernmental authority, except for violations which, individually or in theaggregate, do not have a Material Adverse Effect.

 

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(d)                                 Consents andApprovals. The Guarantor is not required to obtain anyconsent, waiver, authorization or order of, or make any filing or registrationwith, any court or other federal, state, local, foreign or other governmentalauthority or other person in connection with the execution, delivery andperformance by the Guarantor of this Guaranty.

 

(e)                                  PurchaseAgreement. The representations and warranties of the Companyset forth in the Purchase Agreement as they relate to such Guarantor, each ofwhich is hereby incorporated herein by reference, are true and correct as ofeach time such representations are deemed to be made pursuant to such PurchaseAgreement, and the Purchasers shall be entitled to rely on each of them as ifthey were fully set forth herein, provided that each reference in each suchrepresentation and warranty to the Company’s knowledge shall, for the purposesof this Section 3, be deemed to be a reference to such Guarantor’sknowledge.

 

(f)                                    Foreign Law.  Each Guarantor has consulted with appropriateforeign legal counsel with respect to any of the above representations forwhich non-U.S. law is applicable. Such foreign counsel have advised eachapplicable Guarantor that such counsel knows of no reason why any of the aboverepresentations would not be true and accurate. Such foreign counsel wereprovided with copies of this Subsidiary Guarantee and the Transaction Documentsprior to rendering their advice.

 

4.                                       Covenants.

 

(a)       Each Guarantorcovenants and agrees with the Purchasers that, from and after the date of thisGuarantee until the Obligations shall have been indefeasibly paid in full, suchGuarantor shall take, and/or shall refrain from taking, as the case may be,each commercially reasonable action that is necessary to be taken or not taken,as the case may be, so that no Event of Default (as defined in the Debentures)is caused by the failure to take such action or to refrain from taking suchaction by such Guarantor.

 

(b)       So long as anyof the Obligations are outstanding, unless Purchasers holding at least 67% ofthe aggregate principal amount of the then outstanding Debentures shallotherwise consent in writing, each Guarantor will not directly or indirectly onor after the date of this Guarantee:

 

i.                                          enter into, create, incur, assume or suffer to exist any indebtedness for borrowed money of any kind, including but not limited to, a guarantee, on or with respect to any of its property or assets now owned or hereafter acquired or any interest therein or any income or profits therefrom;

 

ii.                                       enter into, create, incur, assume or suffer to exist any liens of any kind, on or with respect to any of its property or assets now owned 

 

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or hereafter acquired or any interest therein or any income or profits therefrom;

 

iii.                                    amend its certificate of incorporation, bylaws or other charter documents so as to adversely affect any rights of any Purchaser;

 

iv.                                   repay, repurchase or offer to repay, repurchase or otherwise acquire more than a de minimis number of shares of its securities or debt obligations;

 

v.                                      pay cash dividends on any equity securities of the Company;

 

vi.                                   enter into any transaction with any Affiliate of the Guarantor which would be required to be disclosed in any public filing of the Company with the Commission, unless such transaction is made on an arm’s-length basis and expressly approved by a majority of the disinterested directors of the Company (even if less than a quorum otherwise required for board approval); or

 

vii.                                enter into any agreement with respect to any of the foregoing.

 

Provided, however, that the Guarantor shall not be prohibited from undertaking any of the actions described above that the Company is permitted to undertake pursuant to the terms of the Purchase Agreements, Debentures and any and all other agreements or other documents entered into in connection with the financings contemplated by the Purchase Agreements.

 

5.             Miscellaneous.

 

(a)           Amendments inWriting. None of the terms or provisions of this Guarantee may be waived,amended, supplemented or otherwise modified except in writing by Purchasersholding 67% of the principal amount of Debentures then outstanding.

 

(b)           Notices. All notices,requests and demands to or upon the Purchasers or any Guarantor hereunder shallbe effected in the manner provided for in the Purchase Agreement, provided thatany such notice, request or demand to or upon any Guarantor shall be addressedto such Guarantor at its notice address set forth on Schedule 5(b).

 

(c)           No Waiver ByCourse Of Conduct; Cumulative Remedies. The Purchasers shall not byany act (except by a written instrument pursuant to Section 5(a)), delay,indulgence, omission or otherwise be deemed to have waived 

 

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any right or remedy hereunder or to have acquiesced in any default underthe Transaction Documents or Event of Default. No failure to exercise, nor anydelay in exercising, on the part of the Purchasers, any right, power orprivilege hereunder shall operate as a waiver thereof. No single or partial exerciseof any right, power or privilege hereunder shall preclude any other or furtherexercise thereof or the exercise of any other right, power or privilege. Awaiver by the Purchasers of any right or remedy hereunder on any one occasionshall not be construed as a bar to any right or remedy which the Purchaserswould otherwise have on any future occasion. The rights and remedies hereinprovided are cumulative, may be exercised singly or concurrently and are notexclusive of any other rights or remedies provided by law.

 

(d)           EnforcementExpenses; Indemnification.

 

(i)            Each Guarantor agrees to pay, or reimburse thePurchasers for, all its costs and expenses incurred in collecting against suchGuarantor under the guarantee contained in Section 2 or otherwiseenforcing or preserving any rights under this Guarantee and the otherTransaction Documents to which such Guarantor is a party, including, withoutlimitation, the reasonable fees and disbursements of counsel to the Purchasers.

 

(ii)           Each Guarantor agrees to pay, and to save thePurchasers harmless from, any and all liabilities with respect to, or resultingfrom any delay in paying, any and all stamp, excise, sales or other taxes whichmay be payable or determined to be payable in connection with any of thetransactions contemplated by this Guarantee.

 

(iii)          Each Guarantor agrees to pay, and to save thePurchasers harmless from, any and all liabilities, obligations, losses,damages, penalties, actions, judgments, suits, costs, expenses or disbursementsof any kind or nature whatsoever with respect to the execution, delivery,enforcement, performance and administration of this Guarantee to the extent theCompany would be required to do so pursuant to the Purchase Agreement.

 

(iv)          The agreements in this Section shall surviverepayment of the Obligations and all other amounts payable under the PurchaseAgreement and the other Transaction Documents.

 

(e)           Successor andAssigns. This Guarantee shall be binding upon the successors and assigns of eachGuarantor and shall inure to the benefit of the Purchasers and their respectivesuccessors and assigns; provided that no Guarantor may assign, transfer ordelegate any of its rights or obligations under this Guarantee without theprior written consent of the Purchasers.

 

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(f)            Set-Off. Each Guarantorhereby irrevocably authorizes the Purchasers at any time and from time to timewhile an Event of Default under any of the Transaction Documents shall haveoccurred and be continuing, without notice to such Guarantor or any otherGuarantor, any such notice being expressly waived by each Guarantor, to set-offand appropriate and apply any and all deposits, credits, indebtedness orclaims, in any currency, in each case whether direct or indirect, absolute orcontingent, matured or unmatured, at any time held or owing by the Purchasersto or for the credit or the account of such Guarantor, or any part thereof insuch amounts as the Purchasers may elect, against and on account of the obligationsand liabilities of such Guarantor to the Purchasers hereunder and claims ofevery nature and description of the Purchasers against such Guarantor, in anycurrency, whether arising hereunder, under the Purchase Agreement, any otherTransaction Document or otherwise, as the Purchasers may elect, whether or notthe Purchasers have made any demand for payment and although such obligations,liabilities and claims may be contingent or unmatured. The Purchasers shallnotify such Guarantor promptly of any such set-off and the application made bythe Purchasers of the proceeds thereof, provided that the failure to give suchnotice shall not affect the validity of such set-off and application. Therights of the Purchasers under this Section are in addition to otherrights and remedies (including, without limitation, other rights of set-off)which the Purchasers may have.

 

(g)           Counterparts. This Guaranteemay be executed by one or more of the parties to this Guarantee on any numberof separate counterparts (including by telecopy), and all of said counterpartstaken together shall be deemed to constitute one and the same instrument.

 

(h)           Severability. Any provisionof this Guarantee which is prohibited or unenforceable in any jurisdictionshall, as to such jurisdiction, be ineffective to the extent of suchprohibition or unenforceability without invalidating the remaining provisionshereof, and any such prohibition or unenforceability in any jurisdiction shallnot invalidate or render unenforceable such provision in any otherjurisdiction.

 

(i)            Section Headings. The Section headingsused in this Guarantee are for convenience of reference only and are not toaffect the construction hereof or be taken into consideration in theinterpretation hereof.

 

(j)            Integration. This Guaranteeand the other Transaction Documents represent the agreement of the Guarantorsand the Purchasers with respect to the subject matter hereof and thereof, andthere are no promises, undertakings, representations or warranties by thePurchasers relative to subject matter hereof and thereof not expressly setforth or referred to herein or in the other Transaction Documents.

 

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(k)           Governing Laws. All questionsconcerning the construction, validity, enforcement and interpretation of thisGuarantee shall be governed by and construed and enforced in accordance withthe internal laws of the State of New York, without regard to the principles ofconflicts of law thereof.  Each of theCompany and the Guarantors agree that all proceedings concerning theinterpretations, enforcement and defense of the transactions contemplated bythis Guarantee (whether brought against a party hereto or its respectiveaffiliates, directors, officers, shareholders, partners, members, employees oragents) shall be commenced exclusively in the state and federal courts sittingin the City of New York, Borough of Manhattan. Each of the Company and theGuarantors hereby irrevocably submits to the exclusive jurisdiction of the stateand federal courts sitting in the City of New York, Borough of Manhattan forthe adjudication of any dispute hereunder or in connection herewith or with anytransaction contemplated hereby or discussed herein, and hereby irrevocablywaives, and agrees not to assert in any proceeding, any claim that it is notpersonally subject to the jurisdiction of any such court, that such proceedingis improper. Each party hereto hereby irrevocably waives personal service ofprocess and consents to process being served in any such proceeding by mailinga copy thereof via registered or certified mail or overnight delivery (withevidence of delivery) to such party at the address in effect for notices to itunder this Guarantee and agrees that such service shall constitute good andsufficient service of process and notice thereof. Nothing contained hereinshall be deemed to limit in any way any right to serve process in any mannerpermitted by law.  Each party heretohereby irrevocably waives, to the fullest extent permitted by applicable law,any and all right to trial by jury in any legal proceeding arising out of orrelating to this Guarantee or the transactions contemplated hereby.

 

(l)            Acknowledgements.  Each Guarantor hereby acknowledges that:

 

(i)            it has been advised by counsel in the negotiation,execution and delivery of this Guarantee and the other Transaction Documents towhich it is a party;

 

(ii)           the Purchasers have no fiduciary relationship with orduty to any Guarantor arising out of or in connection with this Guarantee orany of the other Transaction Documents, and the relationship between theGuarantors, on the one hand, and the Purchasers, on the other hand, inconnection herewith or therewith is solely that of debtor and creditor; and

 

(iii)          no joint venture is created hereby or by the otherTransaction Documents or otherwise exists by virtue of the transactionscontemplated hereby among the Guarantors and the Purchasers.

 

(m)          AdditionalGuarantors.  The Companyshall cause each of its subsidiaries formed or acquired on or subsequent to thedate hereof to become a 

 

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Guarantor for all purposes of this Guarantee by executing and deliveringan Assumption Agreement in the form of Annex 1 hereto.

 

(n)           Release ofGuarantors. Each Guarantor will be released from all liabilityhereunder concurrently with the indefeasible repayment in full of all amountsowed under the Purchase Agreement, the Debentures and the other TransactionDocuments.

 

(o)           Seniority. The Obligationsof each of the Guarantors hereunder rank senior in priority to any otherIndebtedness (as defined in the Purchase Agreement) of such Guarantor.

 

(p)           WAIVER OF JURYTRIAL. **EACHGUARANTOR AND, BY ACCEPTANCE OF THE BENEFITS HEREOF, THE PURCHASERS, HEREBYIRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION ORPROCEEDING RELATING TO THIS GUARANTEE AND FOR ANY COUNTERCLAIM THEREIN.**

 

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## ***(Signature Pages Follow)***

 

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INWITNESS WHEREOF, each of the undersigned has caused this Guarantee to be dulyexecuted and delivered as of the date first above written.

 
| ** ** | **MYTOGEN, INC.** |
|------------|-------------------|
| ** ** | ** **        |
|       | By:               | /s/ William M. Caldwell, IV |   |   |
|       |              |   Name: William M. Caldwell, IV |
|       |              |   Title: President |

 

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