**Exhibit10.13**

 

EXCLUSIVE LICENSE AGREEMENT

 

This Exclusive License Agreement (“Agreement”) is made andentered into as of October 22nd, 2003 (the “EffectiveDate”), by and between Advanced Cell Technology, Inc., a Delawarecorporation with offices located at One Innovation Drive, Worcester,Massachusetts 01605 (“ACT”), and Exeter Life Sciences, Inc., anArizona corporation with offices located at 4455 Camelback Road, Phoenix,Arizona 85018 (“Licensee” or “EXETER”) (ACT and Licenseesometimes hereinafter referred to as the “parties”, or individually as a“party”).

 

WITNESSETH

 

WHEREAS, ACT owns and/or has licensed with a sublicensable interest thePatent Rights (as defined below); and

 

WHEREAS, Licensee desires to obtain an exclusive license from ACT underthe Patent Rights upon the terms and conditions hereinafter set forth below;and

 

WHEREAS, ACT is willing to grant such a license to Licensee upon theterms and conditions set forth below;

 

WHEREAS, such license is subject to the terms and conditions of the UMASSLicense (as defined below) applicable to sublicensees, as incorporated herein;

 

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

 

ARTICLE 1 - DEFINITIONS

 

For the purposes of this Agreement, the following words and phrasesshall have the following meanings:

 

1.1          “ACT Technology” means know-how,technical information, research and development information, test results,knowledge, inventions, discoveries, developments, methods, techniques,improvements, designs, drawings, specifications, schematics, software programs(including, without limitation, source and object codes), manuals and other documentation,data, databases, processes, methods of production and other information and materials,whether tangible or intangible, owned or controlled by or licensed to ACT orits Affiliates during the term of this Agreement relating to the Patent Rights. For the avoidance of doubt, it is theparties’ intention that ACT Technology covers unpatented items of the type articulatedabove, and that in appropriate circumstances, certain ACT Technology may in thefuture become included within the Patent Rights (as defined below).

 

1.2         “Affiliate” means a corporation,partnership or other entity that is controlled by a

 

 

 

----

 

party,but only so long as such control continues to exist.  For purposes of this Section 1.2, “control”means ownership, directly or indirectly, of at least fifty percent (50%) of thevoting rights in such entity (or, in the case of a noncorporate entity,equivalent rights).

 

1.3          “Combination Product” means a productthat contains a Licensed Product component and at least one other componentthat could reasonably be sold separately and has economic value on its own.

 

1.4          “Cyagra Agreement” means the ExclusiveSublicense Agreement between ACT and A.C.T. Group, Inc., on the one hand,and Cyagra, Inc., on the other, signed on June 28, 2002, in the formoriginally executed.

 

1.5          “Field of Use” means non-human animalsfor agriculture, endangered animals and companion animals; *excluding*production of such animals forthe primary purpose of producing human and non-human animal therapeutics andhuman healthcare products, including without limitation the production ofbiopharmaceutical agents in milk, including, but not limited to, proteins,peptides and polypeptides for pharmaceutical, nutraceutical or other use, *and excluding*the production ofimmunoglobulin in the blood of *Bos taurus*and*Bos indicus.  *Without limiting the generality ofthe foregoing, and by way of illustration but not limitation, each subfieldwithin the “Field of Use” includes:

 

(a) the cloning,development, making, using, selling, offering to sell, importing or exportingof cloned non-human animals, including without limitation, bovine, hircine,ovine, porcine, equine animals and ungulates (as well as any transgenicvariants or enhancements thereto) or products that are composed of, made in orderived, extracted or isolated from cells or tissues of such animals for theproduction of food or fiber, and the rendering of services or uses that relateto the production of such products (“Agricultural Animals Subfield”);

 

(b) the cloning,development, making, using, selling, offering to sell, importing or exportingof “Endangered Species” for purposes of researching, aiding, reproducing orassisting in the reproduction of such Endangered Species (“EndangeredSpecies Subfield”).  “Endangered Species”includes without limitation any species that is or has ever been (i) extinctor (ii) classified as threatened, vulnerable or in danger of extinctionthroughout all or a significant portion of its range by any governmental orinternational authority, treaty, law or regulation or (iii) classifiedunder the guidelines of the Convention of International Trade of Endangered Speciesof Wild Fauna and Flora;

 

(c) the cloning,development, making, using, selling, offering to sell, importing or exportingof hircine, ovine, feline, canine and equine animals (as well as any transgenicvariants or enhancements thereto) for personal, business or commercialpurposes, specifically excluding the sale of these animals as scientificresearch laboratory subjects (“Companion Animals Subfield”); and

 

(d) the cloning,development, making, using, selling, offering to sell, importing or exportingof cloned equine animals (as well as any transgenic variants or enhancementsthereto)

 

2

----

 

or productsthat are composed of, made in or derived, extracted or isolated from cells ortissues of such animals for nontherapeutic purposes, including but not limitedto, for use in agriculture, for use as food, for use as companion, service,work or recreational animals, or for use as racing or other equine eventanimals, and the rendering of services or uses that relate to the production ofsuch products (“Equine Subfield”).

 

1.6          “Improvement Patents” means any inventions, invention disclosures,patents and patent applications (other than the Patent Rights) (a) issuedor licensed to, or made, filed, owned or controlled by, ACT or its Affiliates(including its and their employees and agents) or licensed to ACT or itsAffiliates from the University of Massachusetts (the “University”) and (b) (i)relating to the specification or claims of the Patent Rights, or (ii) useful,necessary or required to develop or manufacture cloned and/or transgenicnon-human animals and cloned and/or transgenic cells and tissues from non-humananimals within the Field of Use (including, without limitation, (x)improvements relating to the Patent Rights in Exhibit A and (y) anyrights obtained directly or indirectly from AUROX LLC, Hematech LLC orNucleotech LLC (each with offices at 33 Riverside Ave., 2nd Floor, Westport, CT06880) relating to the Patent Rights); together in each case with all relatedcontinuation, continuation-in-part, divisional, reissue, revision, extension,substitution and reexamination patents and patent applications, and all correspondingforeign patents and patent applications and other counterparts of the patents describedherein.  Notwithstanding the foregoing, “ImprovementPatents” does not include any Robl Patents (including UMass Robl Rights) or anyrights or benefits obtained by Licensee pursuant to Section 7.6 (PatentInterference Proceeding), which Robl Patents and rights and benefits shall belicensed and provided to Licensee in accordance with Section 1.10 (and Section 7.4)and Section 7.6, respectively, at no charge to Licensee.

 

1.7          “Licensee” means Exeter Life Sciences, Inc., an Arizonacorporation with offices located at 4455 Camelback Road, Phoenix, Arizona85018.

 

1.8          “Licensed Product” means any product:

 

(a)         the selling or offering for sale of whichwould infringe one or more Valid Claims of the Patent Rights, but for thelicenses granted herein; or

 

(b)        which is manufactured by using a process ormethod that would infringe one or more Valid Claims of the Patent Rights, butfor the licenses granted herein.

 

Without limiting the generality of the foregoing, and by way ofillustration but not limitation, Licensed Products may include cloned and/ortransgenic non-human animals (and any transgenic variants or enhancementsthereto) in the Agricultural Animals Subfield; cloned cats, dogs and horses(and any transgenic variants or enhancements thereto) in the Companion AnimalsSubfield; and the progeny of all such animals and semen, ova and embryosobtained from such animals.

 

1.9         “Licensed Service” means any servicethat would infringe one or more Valid

 

3

----

 

Claims under the PatentRights, but for the licenses granted hereunder.

 

1.10        “Net Sales” means the total invoiceamount earned on sales by Licensee or its Affiliates of Licensed Products andLicensed Services to any third person or entity (except for an Affiliate ofLicensee), less, to the extent applicable, the following:

 

(a)               discounts allowed;

 

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

 

(c)               packaging, transportation and insurance prepaid orallowed; and

 

(d)               amounts repaid, allowed or credited on returns orrejection.

 

In the case of CombinationProducts, Net Sales means the total invoice amount earned on sales by Licenseeor its Affiliates of Combination Products to any third person or entity (exceptfor an Affiliate of Licensee), less, to the extent applicable, the deductionsset forth above, multiplied by a proration factor that is determined asfollows:

 

(i)            If all componentsof the Combination Product were sold separately during the same or immediatelypreceding calendar quarter, the proration factor shall be determined by theformula [A/(A+B)], where A is the average invoice amount earned on the LicensedProduct during such period when sold separately in finished form, and B is theaverage invoice amount earned on all other components of the CombinationProduct during such period when sold separately in finished form; or

 

(ii)           if all components of the Combination Productwere not sold separately during the same or immediately preceding calendarquarter, the proration factor shall be determined by the formula [C/(C+D)],where C is the average fully absorbed cost of the Licensed Product componentduring the prior quarter and D is the average fully absorbed cost of all othercomponents of the Combination Product during the prior quarter.

 

1.11        “Patent Rights” means (a) theinventions, invention disclosures, patent applications and patents listed in Exhibit A(“Inventions”); (b) any patents or patent applications claiminginventions disclosed in the Inventions; (c) any continuations,continuations-in-parts, or divisionals of, or other patent applicationsclaiming priority to, patent applications identified in the precedingsubsections (a) or (b) and patents issuing therefrom; (d) anyextension, renewal, reexamination, substitution, or reissue of a patentidentified in subsections (a), (b), or (c); and (e) all foreign equivalents ofsubsections (a), (b), (c) and (d). Any Robl Patents (including UMass RoblRights) directly or indirectly owned or controlled by or licensed to the Universityor ACT or its Affiliates during the term of this Agreement shall be deemedPatent Rights.

 

1.12        “Robl Patents” means any and all of (a) thepatent applications and patents issued on or claiming priority from the U.S.provisional patent applications 60/258,152 or 60/258,151 or

 

4

----

 

the U.S.patent applications 10/015,824 or 10/032,191 or the PCT applicationsPCT/US01/47882 or PCT/US01/50406, (b) any other patent applications filedon inventions that James Robl participated in the development, descriptionand/or conception of related to inventions disclosed in the patent applicationsidentified in (a), and any other rights, licenses, immunities or interests thatACT or the University acquires or obtains in connection with resolvingownership issues relating to the items in (a); (c) any continuations,continuations-in-parts, or divisionals of, or other patent applicationsclaiming priority to, patent applications identified in the preceding subsection (a) or(b) and patents issuing therefrom; (d) any extension, renewal,reexamination, substitution, or reissue of a patent identified in subsections(a), (b) or (c); and (e) all foreign equivalents of subsections (a),(b), (c), and (d).

 

1.13         “Sublicense Income” means consideration that Licensee receives forgranting a sublicense pursuant to Section 2.2 of this Agreement to anythird party not an Affiliate of Licensee, by way of sublicense or other form ofagreement, including without limitation license fees, royalties, milestonepayments, equity, up-front fees, success fees and license maintenance fees, butexcluding payments specifically committed to the development of LicensedProducts or Licensed Services.  For theavoidance of doubt, “Sublicense Income” excludes payments made in considerationfor the issuance of equity or debt securities of Licensee up to fair marketvalue.

 

1.14         “Territory” means the world.

 

1.15         “UMASS License” means the Exclusive License Agreement between ACTand the University, effective as of April 1, 2003, a copy of which isattached hereto as Exhibit C, as it may be amended from time totime after the Effective Date (but excluding any amendments or portions thereofto the extent not consented to by Licensee).

 

1.16         “UMASS Patent Rights” means Patent Rights licensed by ACT from theUniversity under the UMASS License.

 

1.17         “Valid Claim” means (a) a claimof any issued and unexpired United States or foreign patent within the PatentRights owned or controlled by ACT which has not lapsed or become abandoned orbeen declared invalid or unenforceable by a court of competent jurisdiction oran administrative agency from which no appeal can be or has been taken within thetime allowed for such appeal and which has not been disclaimed or admitted tobe invalid or unenforceable through reissue, disclaimer or otherwise, or (b) tothe extent rights are granted by a governmental patent authority thereunder (i.e.,to the extent that the owner would be able to enforce a right to a patentroyalty thereunder under applicable patent law), a pending claim of a publishedpatent application within the Patent Rights owned or controlled by ACT.

 

1.18         Collective Terms.  Forpurposes of this Agreement, except as otherwise expressly provided herein orunless the context otherwise requires: (a) the use herein of the pluralshall include the single and *vice versa*andthe use of the masculine shall include the feminine; (b) unless otherwiseset forth herein, the use of the term “including” or “includes”means “including [includes] but [is] not limited to”; and (c) thewords “herein,” “hereof,” “hereunder” and other words ofsimilar import refer to this Agreement as a whole and not to any particularprovision.

 

5

----

 

Additionalterms may be defined throughout this Agreement.

 

ARTICLE 2 - GRANT

 

2.1           (a)           LicenseGrant.  Subject to the terms and conditions of thisAgreement, ACT hereby grants to Licensee a royalty-bearing, exclusive (even asto ACT), transferable (in accordance with Section 12.1), sublicensablelicense, under its rights in the Patent Rights and ACT Technology, to develop,make, have made, use, sell, have sold, offer to sell, import, export,reproduce, distribute, make derivative works based on, perform and display, andotherwise dispose of Licensed Products, to develop and perform LicensedServices, and to use and practice any process; art or method, and to use andincorporate the ACT Technology in products and services, in the Territory inthe Field of Use; provided, however, that the exclusive nature of the licensegranted herein shall be subject to the rights of the licensee(s) identified inthe license agreement(s) described in Exhibit B attached hereto(the “Pre-Existing License”). Licensee acknowledges that thePre-Existing License shall remain in effect in accordance with the terms ofsaid agreement(s) without modification.  This Agreement is subject to the relevantterms of the UMASS License applicable to sublicensees as such terms have beenincorporated herein, as the UMASS License may be amended from time to time, providedthat (i) as provided in Section 2.1(b) below, the UMASSLicense may not be amended in a manner that materially and adversely affectsthe rights and benefits extended to Licensee hereunder without the priorwritten consent of Licensee, and (ii) in the event of any inconsistencybetween the UMASS License and Section 2.1(b) hereof, Section 2.1(b) hereofshall govern.  ACT agrees to provideLicensee with prior written notice of any amendments to the UMASS License andprovide Licensee with the opportunity to consent to such amendments, in wholeor part, in which case this Agreement will be subject to such amendments to theextent consented to by Licensee.

 

(b)           The UMASS License.  Licensee acknowledges that the UMASS PatentRights licensed to Licensee hereunder are owned by the University and arelicensed to ACT under the UMASS License.  ACT, the University and Licensee agree that,in the event the UMASS License is terminated for any reason (or this Agreementis rejected by ACT in bankruptcy or terminated by Licensee pursuant to Section 8.2or 8.7), (i) promptly following such termination (or rejection) of theUMASS License, the University shall directly license the UMASS Rights toLicensee in a license agreement with the terms of such license agreement noless favorable than the UMASS License and Licensee will thereafter make anypayments due to ACT directly to the University during the term of thisAgreement; and (ii) Licensee shall not be liable for any payments that maybe due and payable to the University by ACT.  ACT AND THE UNIVERSITY ACKNOWLEDGE AND AGREETHAT LICENSEE SHALL BE ENTITLED TO SPECIFIC PERFORMANCE OF THE UNIVERSITY’SOBLIGATIONS UNDER THIS SECTION 2.1(b). ACT acknowledges and agrees that any payments so made by Licensee to theUniversity shall be credited against any payments due and payable to ACThereunder.  For the avoidance of doubt,ACT and the University agree that Section 8.5 of the UMASS License shallnot apply to Licensee on any expiration or termination of the UMASS License andshall not be construed as vitiating the provisions of this Agreement (includingSections 2.1(a) and this Section 2.1(b)).  ACT and the University agree that theprovisions of this Section 2.1(b) shall govern in the event that the

 

6

----

 

UMASSLicense is terminated.  ACT and theUniversity agree that Licensee will not be bound by any amendment to the UMASSLicense that adversely affects Licensee’s rights or obligations under thisAgreement in any material respect, unless Licensee agrees in writing to suchamendment.  For the avoidance of doubt,ACT and the University agree that Licensee has no obligations to the Universityunder the UMASS License, including without limitation any obligation to makeany payments to the University thereunder.

 

2.2           Sublicenses to Patent Rights.  Licenseeshall have the right to grant further sublicenses to or under the PatentRights. Licensee shall make reasonable commercial efforts to provide ACT with acopy of all sublicense agreements of the Patent Rights prior to execution, whichshall be deemed Licensee’s Confidential Information subject to the provisionsof Article 9 of this Agreement, provided that failure to provide a copyprior to execution shall not be deemed a material breach of this Agreement.  Licensee shall report to ACT annuallyregarding the progress of its sublicensees in developing Licensed Products.  Licensee shall include in its sublicenseagreements the right to terminate sublicenses of the Patent Rights where its sublicenseesfail to make reasonable progress toward commercial application of Licensed Products. Licensee may not transfer the rights togrant further sublicenses of the Patent Rights in sublicense agreements, unlessthe sublicense agreement grants the exclusive right to practice technology in alimited field.  Licensee may not grant itssublicensees of the Patent Rights the right to transfer sublicensing rights totheir sublicensees.  Licensee shallrequire in every sublicense agreement of the Patent Rights the receipt of fairvalue (which may be the form of royalties, lump sum payments, or equity) inexchange for the sublicense, which assessment of fair value may be made byLicensee in its sole discretion.

 

2.3           Technology Transfer.  Promptlyupon execution of this Agreement ACT shall provide Licensee with all existingACT Technology (including without limitation information and materials as maybe reasonably necessary to allow Licensee to fully exploit the licenses grantedhereunder, including any such information, data or know-how obtained from the University).  From time to time thereafter during the termof the Agreement, ACT shall provide Licensee with any additional ACT Technologyand such technical assistance as Licensee reasonably shall request, providedthat such requests do not unreasonably interfere with the regular business operationsof ACT.

 

2.4           Right of First Negotiation.  Notwithstandinganything to the contrary in this Agreement, in the event that ACT acquires,licenses, controls or otherwise comes to have rights in or to any ImprovementPatents, Licensee shall have a right of first negotiation to obtain an exclusiveor, at Licensee’s option, non-exclusive right and license to such ImprovementPatents and all related intellectual property rights in the Field of Use to themaximum extent of ACT’s rights to grant such a license.  ACT shall promptly notify Licensee uponobtaining any such rights and shall, prior to any discussion with any thirdparty, present to Licensee, a proposal of terms and conditions both to obtainan (x) exclusive or (y) nonexclusive right and license to such ImprovementPatents and all related intellectual property rights in the Field of Use.  In the event that Licensee and ACT have notagreed upon the terms and conditions pursuant to which Licensee would receivesuch a right and license within 120 days after Licensee’s receipt of ACT’sproposal, ACT shall be free to discuss terms and conditions for granting ofrights and

 

7

----

 

license withrespect to such specific Improvement Patent(s) with any third party withoutfurther obligation to Licensee; provided, however, that no right or licensewith respect to any such Improvement Patent will be granted to a third partywithin 12 months of the later of (i) termination of negotiations betweenLicensee and ACT, or (ii) the expiration of the above mentioned 120 days,under terms and conditions more favorable to the third party than the terms andconditions last discussed with Licensee without first offering such morefavorable terms and conditions to Licensee for Licensee’s consideration andpossible acceptance.  Notwithstanding theforegoing, to the extent that any Improvement Patent is subject to Cyagra, Inc.’sright of first offer/negotiation as set forth in Section 2.3 of the CyagraAgreement, ACT’s obligation to present a proposal to Licensee and to negotiatewith Licensee in good faith shall be suspended (but only if an ImprovementPatent constitutes a Cyagra Development and only to the extent of Cyagra’sspecified fields of use) until the Option Period or, if applicable, theNegotiation Period expires.  If ACT andCyagra, Inc. have executed a written license agreement to such ImprovementPatent within the scope of Cyagra’s option rights in Section 2.3 of theCyagra Agreement prior to such expiration, ACT’s obligations under this Section 2.4shall not apply to those rights to the Improvement Patent thereby licensed toCyagra.  (Capitalized terms in thepreceding two sentences shall have the meanings ascribed to them in the CyagraAgreement, unless otherwise defined herein.)

 

ARTICLE 3 - LICENSEE OBLIGATIONSRELATING TO COMMERCIALIZATION

 

3.1           Licensee shall use commercially reasonableand diligent efforts to develop Licensed Products or Licensed Services and tointroduce Licensed Products or Licensed Services into the commercial market.  Licensee shall spend at least Two HundredThousand Dollars ($200,000) per year for the first two (2) years and OneHundred Thousand Dollars for the following six (6) months of the term ofthis Agreement on research and development and other activities directed to thecommercialization of the Patent Rights and other University technology relatedto the cloning of animals.

 

3.2           Licensee shall maintain complete and accuraterecords of Licensed Products that are made or sold and Licensed Services thatare sold by Licensee under this Agreement. Not later than May 1st of each year following theEffective Date, Licensee shall furnish ACT with an executive summary report onthe progress of its efforts during the prior year to develop and commercializeLicensed Products or Licensed Services, including without limitation researchand development efforts, efforts to obtain regulatory approval (if applicable),marketing efforts (including Licensed Products made or sold and LicensedServices sold or performed) and sales figures, provided that such reports shallbe deemed Licensee’s Confidential Information subject to the provisions of Article 9of this Agreement.

 

ARTICLE 4- CONSIDERATION

 

4.1           Initial Payment.  Inpartial consideration of the rights and licenses granted to Licensee by ACT inthis Agreement, Licensee agrees to pay to ACT an initial license fee of ONEMILLION DOLLARS ($1,000,000.00) (the “License Fee”),

 

 

8

----

 

 

payable as follows: FIVE HUNDREDTHOUSAND DOLLARS ($500,000) due five (5) business days after the EffectiveDate; and five (5) additional payments of ONE HUNDRED THOUSAND DOLLARS($l00,000) each (“Installments”), with one Installment due**at each of the five (5) successiveone-month intervals after the Effective Date (i.e. one Installment due on theone-month, two-month, three-month, four-month and five-month anniversary of theEffective Date).  One hundred percent(100%) of the License Fee shall be deemed earned (subject to Section 7.4).  The License Fee is not refundable and is notcreditable against other payments due to ACT under this Agreement except as setforth in Section 7.4 (Sufficiency of Rights).

 

4.2           Royalties.

 

(a)           In partial consideration of the license rights andlicenses granted by ACT to Licensee in this Agreement, Licensee agrees to payto ACT an earned royalty equal to five percent (5%) of the Net Sales of allLicensed Products and Licensed Services sold by Licensee in each country wheresuch sales would infringe a Valid Claim in such country but for the licenses grantedherein; provided, however, that where the Licensed Products sold are theprogeny of cloned animals that are Licensed Products (or products obtained fromsuch progeny (such as semen or ova)) (“Progeny Products”), the royalty shall beonly three percent (3%) of the Net Sales of such Progeny Products. For theavoidance of doubt, no multiple royalties shall be payable because any LicensedProduct or Licensed Service is covered by more than one patent or patentapplication within the Patent Rights.

 

(b)           The obligation of Licensee to pay royalties on salesof Licensed Products or Licensed Services covered by a Valid Claim of thePatent Rights shall terminate on a country-by-country basis concurrently withthe expiration or termination of the last applicable Valid Claim within thePatent Rights in the country in the Territory in which the Licensed Product orLicensed Service is sold.

 

4.3           License MaintenanceFee.

 

(a)           Subject to the terms and conditions of thisAgreement (including without limitation subsections (b) and (c) ofthis Section 4.3), commencing on October 1, 2005, Licensee shall,thereafter during the term of this Agreement, pay an annual maintenance fee foreach twelve-month period beginning on October 1 and ending on September 30of the following year (the “Maintenance Fee Period”).  The amount of the maintenance fee shall beONE HUNDRED THOUSAND DOLLARS ($100,000.00) for the Maintenance Fee Periodbeginning on October 1, 2005 and shall thereafter increase by FIFTYTHOUSAND DOLLARS ($50,000.00) for each successive Maintenance Fee Periodthereafter until such time that the maintenance fee equals FIVE HUNDREDTHOUSAND DOLLARS ($500,000.00) at which time the maintenance fee shall remainat FIVE HUNDRED THOUSAND DOLLARS ($500,000.00) for the remaining term of theAgreement (as illustrated in the chart below); provided however that for any

 

 

9

----

 

Maintenance Fee Period duringwhich at least one Valid Claim does not exist and remain enforceable throughoutthe Maintenance Fee Period, the maintenance fee shall be Fifteen ThousandDollars ($15,000).  Subject to the termsand conditions of this Agreement, the first annual maintenance fee is due on October 1,2005 and subsequent maintenance fee payments are due on October 1 of eachsubsequent year.

 
| **Maintenance Fee Period**                                                     | ** ** | **Maintenance Fee** | ** ** |
|--------------------------------------------------------------------------------|------------|---------------------|------------|
| October 1, 2005-September 30,  2006                                  |       | $                   |       | 100,000.00 |   |
| October 1, 2006-September 30,  2007                                  |       | $                   |       | 150,000.00 |   |
| October 1, 2007-September 30,  2008                                  |       | $                   |       | 200,000.00 |   |
| October 1, 2008-September 30,  2009                                  |       | $                   |       | 250,000.00 |   |
| October 1, 2009-September 30,  2010                                  |       | $                   |       | 300,000.00 |   |
| October 1, 2010-September 30,  2011                                  |       | $                   |       | 350,000.00 |   |
| October 1, 2011-September 30,  2012                                  |       | $                   |       | 400,000.00 |   |
| October 1, 2012-September 30,  2013                                  |       | $                   |       | 450,000.00 |   |
| October 1, 2013-September 30,  2014                                  |       | $                   |       | 500,000.00 |   |
| October 1, 2014-September 30,  2015                                  |       | $                   |       | 500,000.00 |   |
| October 1, 2015-September 30,  2016                                  |       | $                   |       | 500,000.00 |   |
| Each annual 12-month period  starting from October 1, 2016 and thereafter |       | $                   |       | 500,000.00 |   |

 

(b)           The maintenance fee payments shall be considered an advance against royaltiesand Sublicense Income payable to ACT hereunder and shall be fully creditableagainst any royalties and SublicenseIncome payable to ACT hereunder.  Accordingly,Licensee shall not be obligated to pay ACT any royalties or Sublicense Incomeotherwise payable hereunder to the extent that the total accrued royalties andSublicense Income to date do not exceed the total maintenance fees paid to suchdate.  Waiver of any payment of theannual maintenance fee by ACT shall not be construed as a waiver of anysubsequent payment of the annual maintenance fee.

 

(c)           The obligation of Licensee to pay maintenance fees shall terminate concurrently with the expiration or termination ofthe last applicable Valid Claim within the Patent Rights in the Territory.

 

4.4           Third Party Royalties.  Inthe event that Licensee is required to make royalty payments to one or morethird parties for licensed intellectual property in order to develop, make,have made, use, import, export, sell, offer for sale or otherwise exploitLicensed Products or to perform Licensed Services, Licensee may offset suchthird-party payments against any royalty payments that are due to ACT in thesame royalty period, provided, however, that in no event shall the royaltypayments that are due to ACT in such royalty period be reduced below threepercent (3%) of Net Sales by such third-party royalty payments.

 

10

----

 

4.5           Other ACT Royalties.  Inthe event that (i) Licensee and/or any of its Affiliates is required topay any royalties to ACT and/or its Affiliates under any other agreement(s) (“ACTAgreements”) during the term hereof in connection with developing, making,having made, using, importing, exporting, selling, offering for sale orotherwise exploiting Licensed Products or performing Licensed Services and (ii) ona product-by-product or service-by-service basis Licensee and/or its Affiliatesare obligated (under such ACT Agreements and this Agreement) to pay aggregateroyalties of greater than six percent (6%) of Net Sales to ACT and itsAffiliates, Licensee may offset royalty payments due under the ACT Agreementsagainst any royalty payments that are due to ACT hereunder on the sale of eachLicensed Product or Licensed Service such that the total aggregate royalty,excluding (i.e. without taking into account) maintenance fees and/or minimumroyalty obligations, due by Licensee does not exceed six percent (6%)**of Net Sales of such Licensed Products orLicensed Services.

 

4.6           Sublicense Income.  Licenseeshall pay to ACT a total of twenty-five percent (25%) of all Sublicense Income,except that for Sublicense Income comprising equity, Licensee shall have theoption of (a) transferring (or otherwise arranging issuance) to ACTtwenty-five percent (25%) of the shares (or other form of equity interest) or (b) payingto ACT an amount equal to ten percent (10%) of the fair market value of suchshares (or other form of equity interest) as determined by the board ofdirectors of the issuing entity at the time of issuance to Licensee (or if notso determined, as determined by the most recent per-share price at which such sameclass of shares (or other equity) were sold to unaffiliated third parties bythe issuing entity on comparable terms).

 

4.7           Payment Method.  All paymentsdue under this Agreement shall be paid to ACT in Worcester, Massachusetts,U.S.A., and shall be made in United States currency without deduction fortaxes, assessments, exchanges, collection or other charges of any kind;provided, however, that any withholding tax required to be withheld by Licenseeon royalty or Sublicense Income payments under the laws of any country in theTerritory for the account of ACT will be promptly paid by Licensee for and onbehalf of ACT to the appropriate governmental authority, and Licensee willfurnish ACT with proof of payment of such tax.  Any such tax actually paid on behalf of ACTmay be deducted from royalty payments or Sublicense Income due ACT.  Conversion of foreign currency to U.S. dollarsshall be made at the conversion rate reported in The Wall Street Journal on thelast working day of the calendar quarter to which the payment relates.

 

4.8           Late Fee.  Licensee shall pay ACT intereston any overdue amounts at the rate of ten percent (10%) per annum, from the datewhen such payment should have been made pursuant to Section 4.1, 4.2, 4.3and/or 4.6, as applicable.

 

ARTICLE 5 -**REPORTS AND RECORDS

 

5.1           Audit Right.  Licensee shall keep full, trueand accurate books of account containing all particulars necessary for thepurpose of showing the amounts payable to ACT hereunder.  Said books of account shall be kept atLicensee’s principal place of business for three and one half (3-1/2) yearsfollowing the end of the calendar year to which they pertain.  Said

 

11

----

 

books and the supportingdata shall be open upon reasonable advance notice during Licensee’s normalbusiness hours (and no more frequently than once per calendar year) for threeand one half (3-1/2) years following the end of the calendar year to which theypertain, to the inspection of an independent auditor reasonably acceptable toLicensee for the purpose of verifying Licensee’s royalty statement orcompliance with payment obligations under this Agreement.  If any such audit determines that thereported payments to ACT were less than ninety five percent (95%) of the actualamount due to ACT for the calendar year in question, Licensee shall bear thereasonable cost of such auditor’s inspection and pay any undisputed deficitamounts within 30 days.  In all othercases, ACT shall pay the costs of the audit.  All information disclosed pursuant to an auditshall be treated as Licensee’s Confidential Information and, other than theamount of any shortfall, which may be disclosed to ACT, shall not be disclosedto any third party (including ACT) or used for any purpose other than todetermine the correctness of Licensee’s royalty statement or paymentobligations under this Agreement.

 

5.2           Reports.  After the first commercial sale of a LicensedProduct or Licensed Service, Licensee, within forty-five (45) days after March 31,June 30, September 30 and December 31, of each year, shalldeliver to ACT a true and accurate report, giving such particulars of thebusiness conducted by Licensee during the preceding three-month period under thisAgreement necessary for the purpose of accounting hereunder.  Without limiting the generality of theforegoing, these reports shall include the following:

 

(a)           number of Licensed Products manufactured by Licenseeor by any third party on Licensee’s behalf;

 

(b)           number of Licensed Products sold by Licensee;

 

(c)           total receipts for Licensed Products sold byLicensee;

 

(d)           total receipts for all Licensed Services sold byLicensee;

 

(e)           deductions applicable as provided in Section 1.8;and

 

(f)            the amount of Sublicense Income due to ACT for the applicableroyalty period from each sublicensee.

 

5.3           Royalty Report.  With each such report submitted, Licenseeshall pay to ACT the royalties due and payable under this Agreement.  If no royalties shall be due, Licensee shallso report.  All information disclosed insuch report shall be Licensee’s Confidential Information.

 

ARTICLE 6- PATENT RIGHTS

 

6.1           Responsibility forthe Patent Rights.  ACT shall be solely responsiblefor the preparation, filing, prosecution and maintenance of the Patent Rights.  The costs of such filing, prosecution andmaintenance (including without limitation the payment of all government fees inany given country required to maintain the Patent Rights) shall be borne byACT.

 

12

----

 

6.2           Licensee’s Participation.  Licensee’spatent counsel shall be given a reasonable opportunity to comment, at Licensee’sexpense, on all proposed patent filings (“Filings”) and responses (“Responses”)to patent office actions or other patent office communications that may affectthe Patent Rights or Licensee’s rights and obligations hereunder eitherdirectly or in combination with any response thereto (collectively, “OfficeCommunications”) with respect to the Patent Rights.  In the case of Filings, and in the case ofOffice Communications to which ACT must respond in a period of time equal to orexceeding sixty (60) days (excluding extensions), ACT shall deliver copies ofits proposed Filings or Response to Licensee not later than fifteen (15) businessdays prior to the patent office deadline (excluding extensions) for such Response. ACT will not unreasonably refuse toaccept any suggestions of Licensee’s patent counsel regarding such Filing orResponse, provided that Licensee’s patent counsel provides such comments to ACT’spatent counsel not less than five (5) days prior to the patent office deadline(excluding extensions) for such Filing or Response.  In the case of Office Communications to whichACT must respond in less than sixty (60) days (including any extensions), ACTshall deliver copies of its proposed Response to Licensee not later than ten(10) days prior to the patent office deadline, and ACT will not unreasonablyrefuse to accept any suggestions of Licensee’s patent counsel regarding suchResponse, provided that Licensee’s patent counsel provides such comments to ACT’spatent counsel not less than five (5) days prior to the final patentoffice deadline for such Response.  Inany event, ACT will provide Licensee with copies of all Office Communicationsrelating to the Patent Rights reasonably promptly after ACT’s receipt thereof,but in any event within five (5) business days of receipt.  Where ACT fails to forward OfficeCommunications within the time frame indicated, ACT shall use its best efforts andown expense to obtain an extension of time to file the Office Communication soas to provide Licensee fifteen (15) business days to review and comment on suchOffice Communication prior to filing.  ACTagrees to make best efforts to secure and perfect valid U.S. patents coveringthe inventions of invention disclosures UMA 01-02 and UMA 99-19 and, if Licenseerequests, to consult closely with Licensee’s patent counsel in these efforts.

 

6.3           Abandonment.  ACT will not allow any patent orpatent application within the Patent Rights to become expired or abandoned, orfail to diligently pursue patent protection for any invention within the PatentRights, without giving (a) prior written notice to Licensee of such expirationor abandonment or failure to pursue patent protection, and (b) Licenseethe right to assume responsibility for such patent or patent application,subject to the priority right of Goyaike, S.A., to assume such responsibilityin South America pursuant to the Pre-existing License.  If Licensee so elects, (i) ACT willexecute a power of attorney to assign all its rights to, including the right toprosecute, such patent or patent application in the applicable jurisdiction(s) toLicensee and will otherwise perform all acts and make all filings necessary topermit Licensee’s designees to prosecute and maintain such patent orapplication in such jurisdiction(s) and transact all matters connectedtherewith (including, as necessary, appointing Licensee as ACT’s delegatee oragent for the purpose of continuing to exercise ACT’s prosecution and maintenancerights under the UMass License, appointing Licensee’s patent counsel asassociate attorneys of record, and changing address of the patent attorney ofrecord with the appropriate patent authorities), (ii) Licensee willthereafter assume control thereof and all expenses (arising thereafter) forsuch prosecution and maintenance by Licensee, (iii) Licensee’s license andrights

 

13

----

 

to suchPatent Rights shall be irrevocable and royalty-free for so long as Licenseeprosecutes or maintains such patent or patent application and meets thecommercialization standards in Section 3.1 with respect to such patent,and (iv) notwithstanding Section 4, the maintenance fees (and, untilthe UMass Robl Rights are included within the Patent Rights licensed toLicensee hereunder and licensed to Licensee under the full scope of thelicenses granted hereunder, any other amounts) due by Licensee hereunder shallbe reduced by Licensee’s expenses incurred in such prosecution and maintenance,up to a maximum of the average annual prosecution and maintenance costs(regardless of who incurred such costs) for the otherwise abandoned orunpursued claims incurred in the preceding three calendar years in a particularcountry or jurisdiction where they would have been abandoned or unpursued,provided, however, that Licensee may deduct *all*costs incurred by Licensee from maintenance fees (and, until theUMass Robl Rights are included within the Patent Rights licensed to Licenseehereunder and licensed to Licensee under the full scope of the licenses grantedhereunder, any other amounts) otherwise due hereunder (x) for any patents andpatent applications within the Robl Patents that are licensed to Licenseehereunder and/or (y) for the following countries: United States, Canada,Europe, Australia, New Zealand and Japan.  At Licensee’s request, ACT shall provideLicensee with its costs of prosecution and maintenance for any Patent Rights insufficient detail for purposes of the foregoing calculation.  Licensee’s rights under this Section 6.3shall be subject to the rights of the University under the UMASS License (i.e. Section 6thereof), provided that the University agrees to, and ACT shall cause theUniversity to, permit Licensee to assume control and responsibility forprosecution and maintenance in accordance with this Section 6.3 providedLicensee also complies with the obligations of Sections 6.1, 6.2, and 6.3**(mistakenly renumbered as a second section ”6.2”)of the UMASS License with respect to any patent or patent application for whichLicensee has assumed responsibility under this Section 6.3. Licensee mayelect to return control to ACT of prosecution and maintenance of any patent orpatent application in any jurisdiction at any time by providing notice to ACTthereof, in which event Licensee will have no further obligation to pay anyexpenses arising thereafter for prosecution and maintenance of such patent orpatent application, Licensee’s license to such patent or patent application insuch jurisdiction will, as of the notice date, become royalty-bearing, asapplicable, and Licensee will cooperate in transferring control back to ACT.

 

6.4           Cooperation.  If Licensee elects to assumeresponsibility for any Patent Rights in accordance with Section 6.3, ACTwill cooperate fully with Licensee in the preparation, filing, prosecution, andmaintenance of all Patent Rights.  Cooperationincludes, without limitation, (a) promptly executing all papers and instrumentsor requiring employees of ACT to execute papers and instruments as reasonablyappropriate to enable Licensee to file, prosecute, and maintain Patent Rightsin any country; and (b) promptly informing Licensee of matters that mayaffect preparation, filing, prosecution, or maintenance of Patent Rights (suchas becoming aware of an additional inventor who is not listed as an inventor ina patent application). In addition, ACT agrees to keep Licensee informed of thestatus of its and the University’s activities regarding the Robl Patents,reporting no less frequently than semimonthly to Licensee and promptlyproviding Licensee with copies of all Filings and Responses by ACT or theUniversity relating thereto.

 

6.5           Enforcement of the 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

 

14

----

 

third-partyclaim of invalidity or unenforceability of the Patent Rights.  ACT shall have the first right to prosecuteand defend such claims under its sole control and at its sole expense.  If ACT does proceed with such prosecution ordefense, Licensee shall provide reasonable assistance to ACT at ACT’s request,provided ACT pays Licensee for the reasonable out-of-pockets costs incurred byLicensee in such assistance.  Anyrecovery obtained in an action under this Section 6.5 shall be distributedas follows, in this order: (i) each party shall be reimbursed for any expensesincurred in the action; (ii) as to ordinary damages, Licensee shall receivean amount equal to lost profits or a reasonable royalty on the infringing sales(whichever measure the court applied), less a reasonable approximation of theroyalties that Licensee would have paid to ACT if Licensee had received suchamount as Net Sales of Licensed Products sold by Licensee; and (iii) as toany additional damages, the parties shall share equally in any award.

 

6.6           Licensee Rights to Enforce.  Inthe event that ACT fails to initiate an infringement action within a reasonabletime (but no more than one hundred eighty (180) days) after ACT becomes awareof the basis for such action (e.g., the actual or threatened infringement) orfails to answer a declaratory judgment action within a reasonable time (but nomore than ninety (90) days) after ACT receives or becomes aware of suchinfringement or action, Licensee shall have the right, after notifying ACT inwriting, to prosecute such infringement or answer such declaratory judgmentaction, under its sole control and at its sole expense.  If Licensee does proceed with such prosecutionor defense, ACT shall provide reasonable assistance to Licensee at Licensee’srequest, provided Licensee pays ACT for its reasonable out-of-pockets costsincurred in such assistance.  In theevent either party exercises its rights hereunder to proceed with any suchprosecution or defense, such party shall consult with the other party regardingthe course of such proceedings and shall not enter into any settlement, consentjudgment, or other voluntary final disposition of any infringement action thatadmits the invalidity or unenforceability of any Patent Rights or that wouldadversely affect the rights of the other party without the prior writtenconsent of the other party, which consent may not be unreasonably withheld,conditioned or delayed.  Licensee’srights under this Section 6.6 shall be subject to the rights of theUniversity under the UMASS License (i.e. Section 6.3(d) thereof),provided that the University agrees to, and ACT shall cause the University to,permit Licensee to assume control of and responsibility for such infringementaction or defense in accordance with this Section 6.6 provided Licenseeconsults and cooperates with the University in accordance with Section 6.3(b) and(e) of the UMASS License.  ACT willotherwise perform all acts and effect all filings necessary to permit Licenseeto exercise its rights under this Section 6.6.  Any recovery obtained in an action under thisSection 6.6 shall be distributed as follows, in this order: (i) Licenseeshall be reimbursed for any expenses incurred in the action; (ii) Licenseeshall receive the remaining recovery, less a reasonable approximation of theroyalties that Licensee would have paid to ACT if Licensee had received theamount awarded as ordinary damages as Net Sales of Licensed Products sold byLicensee.  Licensee may offset 100% ofany unreimbursed expenses incurred under this Section 6.6 (including thoseincurred in connection with any patents and patent applications within the RoblPatents licensed to Licensee hereunder) against any royalty, maintenance fee orother payments due to ACT under this Agreement.

 

15

----

 

ARTICLE 7– INDEMNIFICATION; LIMITATION OF LIABILITY

 

7.1           Indemnification by ACT.  ACTshall defend, indemnify and hold harmless Licensee, the University, and theirAffiliates, sublicensees, successors and assigns, and their respectivetrustees, agents, directors, officers, shareholders, partners and employees(each, an “Indemnified Party”), at ACT’s cost and expense, from andagainst any and all losses, costs, liabilities, licensing fees, damages, fees andexpenses, including reasonable attorneys’ fees and expenses (“Losses”)incurred or imposed upon any of the indemnified parties in connection with anyclaims (including third party claims), suits, actions, demands or judgments (‘‘Claims”):

 

(a) arising out of any breach byACT of any representation or warranty of ACT hereunder;

 

(b) arising out of any third party claimasserted against an Indemnified Party based on the alleged infringement,violation or misappropriation of a patent or other protected intellectualproperty right which arises from the practice of the Patent Rights;

 

(c) arising out of any consequences of anypatent interference proceedings or opposition proceedings before the U.S.Patent and Trademark Office or similar authorities in the Territory involvingthe Patent Rights;

 

(d) arising out of any third party claimasserted against an Indemnified Party that the use of the ACT Technologyinfringes, violates or misappropriates the intellectual property or otherrights (excluding patent rights) of such third party;

 

(e) arising out of failure by the Universityor ACT to permit Licensee to assume (i) control of prosecution andmaintenance of any patent or patent application in accordance with Section 6.3or (ii) control of prosecution of infringement or declaratory judgmentactions in accordance with Section 6.6; including Losses arising fromremoval of any rights from the UMass License (and thus this Agreement)resulting from such failure and loss of any recovery otherwise distributable toLicensee under Section 6.6; or

 

(f) arising out of any claim by the University (or its trustees,agents, directors, officers, shareholders, partners or employees or theirsuccessors or assigns) (i) asserted against Licensee or its Affiliates orsublicensees seeking performance under or direct compliance with the UMassLicense or (ii) asserting that Licensee may not assign this Agreement inaccordance with Section 12.1 or that assignment of this Agreement byLicensee in accordance with Section 12.1 is void or ineffective.

 

7.2           Indemnification by Licensee.  Licenseeshall defend, indemnify and hold harmless ACT, the University and theirAffiliates, successors and assigns, and their respective trustees, agents,directors, officers, shareholders, partners and employees, at Licensee’s costand expense, from and against any and all losses, costs, liabilities, damages,fees and expenses, including reasonable attorneys’ fees and expenses incurredor imposed upon any of the indemnified parties in connection with any claims(including third party claims), suits, actions, demands or judgments:

 

16

----

 

(a) arising out of any breach byLicensee of any representation or warranty of Licensee hereunder, or

 

(b) arising out of the death orinjury to any person or persons or out of any damage to tangible propertyresulting from, or otherwise attributable to, the making, using, development, and/orsale by Licensee of any Licensed Products or Licensed Services under thisAgreement.

 

7.3           Indemnification Claims.  Eachparty shall give the other party prompt notice of any claim for whichindemnification under this Section 7 is or may be applicable and will cooperatewith the indemnifying party in the defense or settlement of such claim at the indemnifyingparty’s expense.  The indemnifying partyshall be required to provide and be entitled to control the defense of anyclaim covered hereunder (including the right to control settlement discussions)with counsel reasonably satisfactory to the other party, which other party may,at its own expense, participate in the defense of any claim after theindemnifying party assumes control of the defense thereof.  No claim that is subject to indemnification under this Article 7shall be settled or otherwise compromised other than by the party defendingsuch claim, and then only with the prior written consent of the other party,which shall not be unreasonably withheld or delayed; it shall not beunreasonable to withhold consent if the settlement or compromise either (a) imposeson the indemnified party any liability or obligation which cannot be assumedand performed in full by the indemnifying party, or (b) materiallyadversely affects the indemnified party or its rights hereunder.  The failure of the indemnified party todeliver notice to the indemnifying party promptly after the commencement of anysuch action shall not release the indemnifying party from any liability to theindemnified party under this Section 7 other than any liabilities directlyattributable to such failure.  Anyamounts for which ACT is liable under Section 7.1 or Section 7.4 maybe offset by Licensee against any payments required hereunder.

 

7.4           Sufficiency of Rights.  (a) ACTand the University agree and acknowledge that the Robl Patents are intended tobe included in the licenses granted to Licensee hereunder and that suchinclusion is an essential basis of the bargain between ACT and Licensee.  Accordingly, any rights, licenses, immunitiesor interests that ACT or the University acquires or obtains in connection withresolving ownership issues relating to the Robl Patents described in Section 1.12(a) (whetherthrough assignment, license, settlement, interference proceeding or otherwise) shallbe deemed automatically licensed by the University to ACT pursuant to the UMASSLicense and thus automatically licensed by ACT to Licensee under this Agreement(or in the case of immunities,the benefits shall be extended to Licensee and its Affiliates andsublicensees).

 

(b) Notwithstanding any other provision of this Agreement, in theevent that, by October 1, 2005, the UMass Robl Rights (as defined below)are not included within the Patent Rights licensed to Licensee hereunder andlicensed to Licensee under the full scope of the licenses granted hereunder,then the following provisions shall take effect:

 

(i) Licensee’s obligationsto pay (A) the maintenance fee otherwise due on such date for the firstMaintenance Fee Period and (B) the maintenance fee otherwise due for anysubsequent Maintenance Fee Period during which entire period the UMass RoblRights are not included within the Patent Rights and licensed to Licensee underthe full scope of the licenses

 

17

----

 

grantedhereunder, shall be suspended and such fees shall not be due or payable unlessand until the UMass Robl Rights become licensed by ACT to Licensee as PatentRights under the full scope of the licenses granted hereunder (in which case,ACT shall provide notice and adequate written evidence of such license to Licensee,and Licensee shall have thirty (30) days from such notice to pay allmaintenance fees accrued and otherwise payable through such notice date).  For the avoidance of doubt, such fees shallaccrue but shall not be earned, due, or payable unless and until the precedingconditions are met.

 

(ii) ACT shall (A) refund to Licensee the amount of FiveHundred Thousand Dollars ($500,000) within thirty (30) days of receipt ofnotice from Licensee requesting such refund and (B) at the sole option ofLicensee, either issue equity in ACT to Licensee or grant a license ofintellectual property useful to Licensee (as determined by Licensee in its solediscretion), in either case having a fair market value of Five Hundred ThousandDollars ($500,000) and on terms no less favorable than offered to any thirdparty (or to Licensee under this Agreement or any other equity agreement withACT), within ninety (90) days of receipt of notice from Licensee, *provided that*if the parties areunable to reach agreement on the terms of any such equity issuance, licenseagreement, or other substitute consideration within ninety (90) days of ACT’sreceipt of such notice, or if ACT is no longer conducting business operationsin the ordinary course or is unable to license sufficient intellectual propertyuseful to Licensee (as determined by Licensee in its sole discretion), then ACTshall, within thirty (30) days of Licensee’s written request, pay Licensee theamount of Four Hundred Thousand Fifty Dollars ($450,000) in lieu of equity or alicense (the foregoing subsections (A) and (B), “Refund Rights”); *provided further, however, that*if theUniversity and/or ACT has commenced a suit against James Robl within ninety(90) days of the Effective Date seeking return of the UMass Robl Rights to theUniversity, such suit is being actively pursued in good faith by the Universityand/or ACT, and such suit has not resulted in any court decision, judgment orruling, or other settlement or compromise, detrimental to the University’sclaim to ownership of the UMass Robl Rights or detrimental to the University’sand ACT’s right to license such rights to ACT and Licensee, respectively, thenLicensee’s Refund Rights shall be suspended until (x) any such detrimentaldecision, judgment or ruling, or other settlement or compromise, (y) the suitis otherwise abandoned, dismissed or terminated, or (z) both the University andACT cease to actively pursue the suit in good faith.  Upon any final, enforceable court decision,judgment or ruling or other settlement or compromise, in each case which is notsubject to further appeal, as a result of which the UMass Robl Rights may beincluded within the Patent Rights licensed to Licensee hereunder, and *are*licensed to Licensee under the fullscope of the licenses granted hereunder, Licensee’s Refund Rights shallterminate.

 

(c) As used herein, “UMass Robl Rights” shall mean theinventions and invention disclosures that James Robl participated in thedevelopment, description and/or conception of prior to terminating employmentwith the University and that are disclosed in or related to the Robl Patentsdescribed in Section 1.12(a), including without limitation all inventionsdisclosed in or encompassed by invention disclosures UMA 99-19 and UMA 01-02;and any patent applications and patents to the extent claiming such inventions.

 

18

----

 

(d)           The parties acknowledge that the provisionsof Section 7.4(b) and (e) are intended to reflect fairly thecosts to Licensee of failing to obtain any material benefit for its license feehereunder and are not a penalty.

 

(e)           Notwithstanding any other provision of thisAgreement, as between ACT and Licensee, all fees, costs, expenses, royalties,and other payments incurred in connection with obtaining or reclaiming theUMass Robl Rights and/or contesting the ownership or validity of the UMass RoblRights or any underlying patent(s) or patent applications, whether incurred by Licensee,ACT or otherwise (including any fees, costs, expenses, royalties or otherpayments required to paid under or in connection with any agreement concerningthe UMass Robl Rights) (collectively, the “Robl Costs”) shall be borne,as between ACT and Licensee, by ACT alone, and notwithstanding any otherprovision of this Agreement, Licensee shall not be required to reimburse ACTfor, or otherwise pay, and ACT shall indemnify Licensee and hold Licensee harmlessfrom and against any such Robl Costs.  ACTshall indemnify Licensee, its Affiliates and its sublicensees and hold themharmless from and against any Losses (as defined in Section 7.1) arisingout of or relating to any claim or allegation that Licensee or any of itsAffiliates or sublicensees, or their successors or assigns, have infringed anyUMass Robl Rights.

 

7.5           LIMITATION OF LIABILITY.  EXCEPTWITH RESPECT TO (I) LIABILITY THAT RESULTS FROM EITHER PARTY’S MATERIAL BREACHOF SECTION 9 (CONFIDENTIALITY), (II) LIABILITY ARISING UNDER SECTIONS 7.1OR 7.2 (INDEMNIFICATION) OR 7.4 (SUFFICIENCY OF RIGHTS), OR (III) CLAIMS BASEDON FRAUD BY THE OTHER PARTY, IN NO EVENT SHALL EITHER PARTY (OR ITS DIRECTORS,OFFICERS, EMPLOYEES, OR AGENTS) BE LIABLE FOR ANY SPECIAL, INDIRECT,INCIDENTAL, EXEMPLARY, OR CONSEQUENTIAL DAMAGES ARISING OUT OF OR RELATED TOTHIS AGREEMENT, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCHDAMAGES, REGARDLESS OF THE THEORY OF LIABILITY.

 

7.6           Insurance.  Each party shall obtain andmaintain, at all times during the term of this Agreement, general liabilityinsurance with appropriate bodily injury, death and property damage limits.  Upon request, a party shall furnish acertificate of insurance signed by an authorized representative of itsinsurance underwriter evidencing such coverage and providing for at leastthirty (30) days’ prior written notice of any cancellation, termination orreduction of coverage.

 

7.7           Patent Interference Proceeding.  Inthe event that ACT or any of its Affiliates or the University enters into anysettlement agreements, consent orders or compromises arising out of any patentinterference or opposition proceedings pending before the U.S. Patent and TrademarkOffice or similar authorities in the Territory or any court of competentjurisdiction involving the Patent Rights, ACT and the University shall ensurethat Licensee and its Affiliates and sublicensees will obtain the benefits ofsuch settlements, orders or compromises.  Any out-of-pocket expenses incurred byLicensee in assisting with or participating in any such proceedings at therequest of ACT may be deducted from any amounts owed by Licensee to ACT underthis Agreement.

 

19

----

 

ARTICLE 8– TERMINATION

 

8.1           Term.  The term of this Agreement shallcommence on the Effective Date and shall remain in effect unless soonerterminated as provided herein.

 

8.2           Termination for Cause.  Ifeither party materially breaches any material provision of this Agreement andif such breach is not cured within ninety (90) days (the “Cure Period”)after receiving written notice from the other party specifying such breach inreasonable detail, the non-breaching party shall have the right to terminatethis Agreement by giving written notice thereof to the party in breach, whichtermination shall go into effect immediately on receipt unless the allegedlybreaching party delivers a Resolution Notice (pursuant to Section 12.8;provided that the Negotiation Period shall be reduced to ten (10) businessdays) to the other party within five (5) days of such second notice (inwhich event, such termination shall not be effective unless and until there hasbeen a final mutually agreed resolution by the parties to terminate or a finaldecision of the arbitrator that the allegedly breaching party has materiallybreached a material provision hereof and that the Agreement should beterminated as a result thereof).

 

8.3           Termination for Convenience.  Licensee shall have the right to terminatethis Agreement at any time without cause on sixty (60) days’ prior notice toACT.

 

8.4           Existing Stock.  Inthe event that this Agreement terminates or expires, Licensee and itssublicensees hereunder shall retain limited rights to sell any LicensedProducts existing or under production (e.g., a cloned animal in utero or acloned embryo) and to perform Licensed Services related to such LicensedProducts, subject to the terms of this Agreement (including without limitationthe obligation to pay royalties under Article 4 to the extent notcreditable or offsetable against maintenance fees), but Licensee shall have noobligation to pay any annual maintenance fees or portion thereof, except forany such payment due and payable prior to the effective termination date.

 

8.5           Survival.  Uponany termination or expiration of this Agreement: nothing herein shall beconstrued to release either party from any obligation incurred prior to theeffective date of such termination (except as set forth below);Articles/Sections 1,7, 8, 9,11,12.1,12.7 through 12.13, and (only with respectto any patent or patent application for which Licensee has assumedresponsibility) 6.3 (iii), and (only with respect to any action alreadycommenced as of the date of termination notice) the provisions allocatingrecoveries in 6.3 and 6.6, shall survive and continue in full force and effect;as of the date of termination notice, Licensee shall have no further obligationwith respect to any maintenance fee amounts accrued but not due under Section 7.4(b);Licensee may exercise its Refund Rights under Section 7.4(b), if notpreviously exercised; if termination notice is provided by Licensee after thefourth anniversary date of the Effective Date and its Refund Rights are thensuspended pursuant to Section 7.4(b), Licensee may nevertheless exercisethe Refund Rights; any sublicensee shall have the option to retain its licenserights in accordance with the terms of its sublicense granted by Licensee priorto the effective termination date of this Agreement, provided such sublicenseeagrees to remit to ACT all amounts owing thereunder after the effectivetermination date that are attributable to its sublicense of the Patent Rights.  Upon any termination or expiration of thisAgreement, each

 

20

----

 

party shall promptlyreturn to the other party, or destroy, all written Confidential Information ofthe other party, and all copies, notes or extracts thereof (except to theextent reasonably necessary to exercise the license in the following sentence,if applicable).  Upon the expiration,determination, disclaimer or admission of invalidity or unenforceability of thelast Valid Claim within the Licensed Patents, the license to ACT Technologygranted under Section 2.1 shall become irrevocable, non-exclusive, fullypaid up androyalty-free.  Upon any rejection of thisAgreement by ACT in bankruptcy or termination of this Agreement by Licenseepursuant to Section 8.2 or 8.7, Section 2.1(b) shall survive andcontinue in full force and effect.

 

8.6           Termination for Change in Law.  Licensee may immediately terminate this Agreementon written notice to ACT in the event that there are any changes in law thatmay have material adverse effect on Licensee’s right to develop, make, havemade, import, export, use, sell or otherwise exploit or perform LicensedProducts or Licensed Services.

 

8.7           Termination of UMASS License.  Licensee may immediately terminate this Agreementeffective on written notice to ACT in the event that the UMASS Licenseterminates or expires for any reason.

 

ARTICLE 9– CONFIDENTIALITY AND NON-DISCLOSURE

 

9.1           ConfidentialInformation: Non-Disclosure.  “ConfidentialInformation” shall mean any technical, business, financial, customer orother information disclosed by one party (“Disclosing Party”) to the otherparty (“Receiving Party”) pursuant to this Agreement which, if disclosed inwritten form, is marked “Confidential” or “Proprietary” or by a similar legendor which, if disclosed orally or visually, is identified as confidentialinformation at the time of disclosure and confirmed by written outline mailedto the other party within thirty (30) days of the original disclosure.  Licensee’s Confidential Informationspecifically includes the terms of this Agreement and any sublicense agreementsand all information, data, reports and statements relating to Licensed Productsand Licensed Services.  Except to theextent authorized by this Agreement or by other prior written consent by theDisclosing Party, each party shall during the term of this Agreement and forfive (5) years after its termination: (i) not use ConfidentialInformation of the Disclosing Party except for the purposes of fulfilling itsobligations or exercising or enforcing its rights under this Agreement, or asotherwise authorized herein or in writing by the Disclosing Party, (ii) disclosethe Confidential Information of the Disclosing Party only to those of itsemployees, directors, and consultants who have need to know or use suchConfidential Information for the foregoing purposes or as authorized by theDisclosing Party, provided that the Receiving Party will ensure such discloseesare bound by obligations of confidentiality at least as restrictive as thoseset forth in this Section 9.1. In addition, Licensee may discloseConfidential Information of ACT to its Affiliates (and their employees,directors and consultants) or permitted sublicensees or distributors for theforegoing purposes or as authorized by ACT, provided such disclosees are boundby obligations of confidentiality at least as restrictive as those set forth inthis Section 9.1.  Each of theparties shall protect the Confidential Information of the Disclosing Partyusing at least the same procedures and degree of care that it uses to preventthe disclosure of its own confidential information of like importance, but inno event less than reasonable care.  Exceptas expressly provided in this Agreement, no

 

21

----

 

ownership right is grantedin any Confidential Information.

 

9.2           Exclusions.  NotwithstandingSection 9.1, Confidential Information excludes information that: (i) waspublicly known or available at the time it was disclosed or becomes publiclyknown or available through no fault, action, or inaction of the ReceivingParty; (ii) was known to the Receiving Party 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 theConfidential Information; or (v) is provided to the recipient by an independentthird party having no fiduciary relationship with the Disclosing Party andhaving no obligation to keep the information secret.

 

9.3           Permitted Disclosures.  Notwithstanding any other provision of thisAgreement, each party may disclose Confidential Information of the other party:(i) to the extent and to the persons and entities required to comply withan applicable governmental law, rule or regulation or court oradministrative order; provided, however, that the party required to disclose ConfidentialInformation shall first have given prompt notice to the other party hereto toenable it to seek any available exemptions from or limitations on suchdisclosure requirement and shall reasonably cooperate in such efforts by theother party; or (ii) as necessary to file or prosecute patentapplications, enforce patents, prosecute or defend litigation, or otherwiseestablish or enforce rights or obligations under this Agreement, but only tothe extent that any such disclosure is reasonably necessary.

 

9.4           Financial Disclosure.  The parties agree not to disclose the economicterms of this Agreement to any third party other than their Affiliates withoutthe prior written consent of the other party hereto except (a) as requiredby applicable securities laws or the requirements of any applicable stockexchange, including, without limitation, requirements to file a copy of this Agreement(redacted to the extent reasonably permitted by applicable law); (b) inconfidence, to legal counsel; (c) in confidence, to accountants, banks,and financing sources and their advisors; and (d) to the extent necessaryto enforce this Agreement or any rights or obligations hereunder.

 

9.5           Injunctive Relief.  ACTand Licensee acknowledge and agree that any breach of the confidentialityobligations imposed by this Section 9 may constitute immediate and irreparableharm to the party disclosing the Confidential Information and/or its successorsand assigns, which cannot adequately and fully be compensated by money damagesand may warrant, in addition to all other rights and remedies afforded by law,injunctive relief, specific performance, and/or other equitable relief.

 

9.6           Survival.  Theobligations of ACT and Licensee under this Article 9 shall survive forfive (5) years after the expiration or termination of this Agreement.

 

ARTICLE 10- 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

 

22

----

 

nationally recognizedovernight carrier addressed to the parties at the following addresses or suchother addresses as such party furnishes to the other party inaccordance with this paragraph.  Suchnotices, payments, or other communications shall be effective upon receipt.

 
| In the case of ACT:      |   | Advanced Cell Technology, Inc.           |
|--------------------------|--------|-----------------------------------------------|
|                     |   | One Innovation Drive                          |
|                     |   | Worcester, MA 01605                           |
|                     |   | Attention: Michael D. West, Ph.D.,  President |
|                     |   |                                          |
| With a copy to:          |   | Pierce Atwood                                 |
|                     |   | One Monument Square                           |
|                     |   | Portland, ME 04101                            |
|                     |   | Attention: William L. Worden, Esq.       |
|                     |   |                                          |
| In the case of Licensee: |   | Exeter Life Sciences, Inc.               |
|                     |   | 4455 Camelback Road                           |
|                     |   | Phoenix, AZ 85018                             |
|                     |   | Attention: Jonathan Thatcher, President       |
|                     |   |                                          |
| With a copy to:          |   | ViaGen, Inc.                             |
|                     |   | 12357A Riata Trace Pkwy, Suite 100       |
|                     |   | Austin, Texas 78727                           |
|                     |   | Attention: President                          |

 

ARTICLE 11 - REPRESENTATIONS ANDWARRANTIES

 

11.1         Representations andWarranties by ACT.  ACT represents and warrantsthat:

 

(a)           ACT has licensed the UMass Patent Rightswith a sublicensable interest, owns the remaining Patent Rights, and hasthe full legal right and power to grant to Licensee the licenses of the scopeand on the terms granted herein;

 

(b)           the execution, delivery and performance ofthis Agreement by ACT (i) are within its corporate powers, (ii) havebeen duly authorized by all necessary corporate action on ACT’s part, and (iii) havebeen approved by the ACT Board of Directors;

 

(c)           the execution, delivery and performance ofthis Agreement by ACT, including the grant of rights and licenses herein, donot and will not contravene, conflict, constitute or result in a default underor breach of, and are not and will not be inconsistent with, any law orregulation, any judgment, decree or order, or any term, condition or provisionof any contract, agreement (including without limitation the UMASS License) orother undertaking applicable to ACT or the Patent Rights or the ACT Technologyand the intellectual property rights thereto;

 

23

----

 

(d)           ACT has obtained all necessary consents to grant to Licensee the rights andlicenses granted herein;

 

(e)           ACT has provided to Licensee a copy of the UMASS License in effect as ofthe Effective Date, and ACT represents and warrants that said copy, as setforth in Exhibit C, is a true and complete copy of the UMASSLicense (including without limitation any amendments, schedules, exhibits, oraddenda thereto) as of the Effective Date;

 

(f)            Neither ACT nor any of its Affiliates is aparty of any agreement with the University governing the license of, or optionto license, any intellectual property rights other than those agreements listedin Exhibit D;

 

(g)           ACT has taken and hereby covenants that it will continue to take all appropriateactions pursuant to applicable law to perfect, protect its interest in, andenforce the UMass Patent Rights to the extent permitted by the UMASS Licenseand the remaining Patent Rights, including without limitation, using diligenceto file and prosecute applications relating to the UMA 99-19 invention disclosureand UMA 01-02 invention disclosure having claims that are as broad as can beobtained as well as claims of intermediate breadth, in at least the United States,Canada, Europe, Australia, New Zealand and Japan;

 

(h)           to the best knowledge of ACT, the exercise of the rights and licensesgranted to Licensee under this Agreement, including the development,manufacture, use or sale of the Licensed Products or Licensed Services, shallnot infringe or misappropriate the intellectual property or other rights(excluding patent rights) of any third party;

 

(i)            ACT’s rights and interests in the PatentRights are free and clear of all liens, encumbrances and security interests ofevery kind;

 

(j)            ACT has received no written communicationclaiming (or threatening to claim), and to the knowledge of ACT there is nopending claim, that the practice of the inventions described in the PatentRights or any use of the ACT Technology infringes any patents or patentapplications or other rights of any third party, and, to the knowledge of ACT,there is no basis for any such claim, and no other party has any rights withrespect to any inventions or discoveries described in the Patent Rights or inthe Patent Rights;

 

24

----

 

(k)           in combination with the rights granted by ACT under the NonexclusiveLicense Agreement between ACT and Genetic Savings & Clone dated January 2,2002, which is being assigned to an Affiliate of Licensee as of the EffectiveDate hereof (“GSC License”), the practice of the inventions described inthe Patent Rights does not infringe, violate or misappropriate, and will notrequire any payment to ACT or any of its Affiliates (other than the paymentsset forth in this Agreement and/or in the GSC License) with respect to anyother technology, intellectual property rights, or patents owned or controlledby or licensed to ACT or any of its Affiliates, or claims of patentapplications that ACT or its Affiliates have made or contemplate making(collectively, “Other Rights”). To the extent, if any, there is a breachof the representations and warranties set forth in this Section 11.2(k),and, as a result of such breach, Licensee or an Affiliate, in practicing aninvention described in the Patent Rights, infringes any Other Rights, Licenseeand its Affiliates (and the users and purchasers of products and servicesinfringing such Other Rights made or sold by Licensee and its Affiliates andsublicensees) shall be immunized and indemnified by ACT from liability, suit orother claims (by ACT, the University, and any of their licensees, successorsand assignees) under such Other Rights.

 

(1)           (i) the UMASS License is valid, binding and enforceable, and to thebest of ACT’s knowledge, neither ACT nor the University is in default incomplying with any provision thereof and no condition or event or facts existwhich, with notice or lapse of time or both, would constitute a defaultthereunder; (ii) ACT will comply with all terms of the UMASS License, andwill be responsible for making all payments due under the UMASS License; (iii) ACTwill notify Licensee promptly if ACT receives any notice or writtencommunication threatening or stating that the University intends to terminatethe UMASS License or modify, assign or amend such agreement in any way thatadversely affects this Agreement or Licensee’s rights hereunder; (iv) ACTwill not terminate, amend or assign, nor by act or omission permit thetermination, amendment or assignment of, the UMASS License without the priorwritten consent of Licensee in the event such termination, amendment orassignment would adversely affect Licensee’s rights hereunder; and (v) ACTwill provide Licensee with copies of all communications regarding any allegedor actual breach of the UMASS License;

 

(m)          ACT has provided to Licensee a copy of the Cyagra Agreement, and ACTrepresents and warrants that said copy is a true and complete copy of theCyagra Agreement (including without limitation any amendments, schedules,exhibits, or addenda thereto) as of the Effective Date; and

 

(n)           ACT shall work diligently, using its commercially reasonable bestefforts, with, the University to perfect and reclaim the ownership of any andall rights and interests of the University in and to the Robl Patents and toacquire a sublicensable (to Licensee under this Agreement) interest therein.

 

25

----

 

11.2         Representations and Warranties by Licensee.  Licenseerepresents and warrants that:

 

(a)           the execution, delivery and performance of this Agreement by Licensee (i)are within its corporate powers, and (ii) have been duly authorized by allnecessary corporate action on Licensee’s part; and

 

(b)           the execution, delivery and performance of this Agreement by Licensee do notand will not contravene, conflict, constitute or result in a default under or breachof, and are not and will not be inconsistent with, any judgment, decree or order,or any term condition or provision of any contract, agreement or other undertakingapplicable to Licensee.

 

11.3         Disclaimer.  EXCEPT AS OTHERWISE SET FORTH INSECTION 11 OF THIS AGREEMENT, NEITHER ACT NOR LICENSEE, NOR THEIRDIRECTORS, OFFICERS, EMPLOYEES, AND AFFILIATES, MAKE ANY REPRESENTATIONS OR EXTENDANY WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING BUT NOTLIMITED TO WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, ANDVALIDITY OF THE PATENT RIGHTS CLAIMS, ISSUED OR PENDING.

 

ARTICLE 12 - MISCELLANEOUS PROVISIONS

 

12.1         Assignment.  This Agreement, and the rightsand obligations hereunder, may not be assigned or transferred, in whole or inpart, voluntarily, by operation of law or otherwise, by either party withoutthe prior written approval of the other party; provided that, ACT hereby providessuch prior written approval in advance to any such assignment or transfer byLicensee in the following circumstances: (a) to an Affiliate of EXETER, (b) toany entity established to serve as a holding company for cloning patent rights,or (c) to any third party that acquires all or substantially all of theassets of Licensee or its animal cloning business, or that is the surviving personin a merger or consolidation with Licensee, provided that such assignee agreesto accept and assume any and all obligations and liabilities of the assigneearising thereafter under this Agreement.  Any assignment or transfer in violation of thisSection 12.1 shall be null and void.

 

12.2         Compliance with Law.  Licenseeshall comply in all material respects with all local, state, federal andinternational laws and regulations relating to the development, manufacture,use, provision, and sale of Licensed Products and Licensed Services.  Without limiting the generality of theforegoing, Licensee agrees to comply with the following:

 

(a)           Licensee shall obtain all necessary approvals from the US Department of Agriculture(USDA) and any similar governmental authorities of any foreign jurisdiction inthe Territory in which Licensee intends to make, use, or sell Licensed Productsor to perform Licensed Services.

 

(b)           Licensee shall comply in all material respects withany and all material

 

26

----

 

applicable local, state, federaland international laws and regulations relating to the Licensed Products andLicensed Services, and the Patent Rights, in the Territory, including withoutlimitation all material 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 or LicensedServices and any technology relating thereto.

 

(c)           To the extent that any invention claimed in the Patent Rights has beenpartially funded by the United States Government, and only to the extentrequired by applicable laws and regulations, Licensee agrees that any LicensedProducts used or sold in the United States will be manufactured substantiallyin the United States or its territories, unless a waiver is obtained inaccordance with applicable law.  Currentlaw provides that if domestic manufacture is not commercially feasible underthe circumstances, a waiver of this requirement may be sought from the relevantfederal agency; upon Licensee’s request, ACT and the University shall cooperatein all respects with Licensee in seeking such a waiver and ACT shall use itsbest efforts to obtain the University’s cooperation.

 

12.3         Encumbrances.  ACTshall not create or incur or cause to be incurred or to exist any lien,encumbrance, pledge, charge, restriction or other security interest of any kindupon the Patent Rights without the prior written consent of Licensee and theUniversity.

 

12.4         Publicity.  Neither party shall originate orissue any publicity, news release or other public announcement (“Announcements“), written or oral, relating to this Agreement or the existence of anarrangement between the parties, without the prior written approval of theother party, which approval shall not be unreasonably withheld, except asotherwise required by law.  Anyreferences to the University in such Announcements shall be subject to theapproval of the University.  Theforegoing and Section 9.1 notwithstanding, ACT and Licensee shall have theright to make such Announcements without the consent of the other party or theUniversity, as applicable, in any prospectus, offering memorandum, or otherdocument or filing required by applicable securities laws or other applicablelaw or regulation, provided that such party shall have given the other party orthe University, as applicable, at least ten (10) days prior written noticeof the proposed text for the purpose of giving the other party or theUniversity, as applicable, the opportunity to comment on such text.

 

12.5         No Implied Licenses.  Noimplied licenses are granted pursuant to the terms of this Agreement.

 

12.6         No Agency.  Nothing herein shall be deemedto constitute either party as the agent or representative of the party, or bothparties 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 sole discretion. Neither party shall be responsible forthe acts or omissions of the other party, nor shall either party have authorityto speak for, represent or obligate the other party in any way without priorwritten authority from the other party.

 

27

----

 

12.7         Choice of Law; Submission to Jurisdiction.  This Agreement shall be construed, governed,interpreted and applied in accordance with the laws of the Commonwealth of Massachusetts,U.S.A. without regard to principles of conflicts of law thereof, except that questionsaffecting the construction and effect of any patent included in the PatentRights shall be determined by the law of the country in which the patent wasgranted.

 

12.8         Dispute Resolution.

 

(a)           Informal Resolution.  The parties agree to follow the procedures setforth in this Section 12.8 to resolve any dispute, controversy or claim arising out of or relating to this Agreement or thebreach, termination or invalidity thereof (each, a “Dispute”).  Prior to engaging in any formal dispute resolutionwith respect to any Dispute, the president or CEO of each party, or theirrespective designees, shall, if either party provides written notice to theother party requesting resolution of such Dispute (“Resolution Notice”),attempt to resolve such Dispute through good faith negotiations.  If any Dispute cannot be settled by agreementof the parties pursuant to the preceding sentence within sixty (60) days ofreceipt of the Resolution Notice (“Negotiation Period”), then eitherparty may, by written notice to the other requesting resolution by arbitration(“Arbitration Notice”), invoke the dispute resolution provisions of Section 12.8(b).

 

(b)           Arbitration.  Inthe event that the dispute resolution provisions of Section 12.8(a) donot result in a mutually agreed resolution of the Dispute, then the parties agree to submit toconfidential arbitration, which shall be commenced as soon aspracticable following the receipt by one party of the other party’s ArbitrationNotice.  Any arbitration proceeding relating to theAgreement shall be presided over by a single independent arbitrator experiencedin the biopharmaceutical industry and having relevant and significantexperience relating to the subject matter of the dispute, who shall be agreedto by the parties, *provided*thatif the parties are unable to agree on an arbitrator, then each party shall nameone (1) such arbitrator (whose sole role shall be to select an impartialarbitrator) and the two (2) arbitrators will together designate animpartial, independent arbitrator experienced in the biopharmaceutical industryto preside over the arbitration proceeding.  Each of the parties agrees to use itsreasonable best efforts to cause the arbitrator to be selected by the thirtieth(30th) day after the receipt of the Arbitration Notice.  The arbitration shall be held in the City ofSan Francisco in the State of California in accordance with the rules ofthe American Arbitration Association then in force (as modified herein), andshall be held on an expedited basis and in confidence.  The arbitrator shall not have the power toaward exemplary or punitive damages.  Eachparty agrees that the final determination/decision of the arbitrator presidingover the proceeding shall be binding on it.  Notwithstanding the foregoing or anything inthis Section 12.8, the parties may apply to any court of competentjurisdiction for preliminary or interim equitable relief, including such relieffor compelling the commencement of the dispute resolution provisions inaccordance with Section 12.8, without breach of

 

28

----

 

this arbitration provision.  The prevailing party in any dispute relatedhereto, whether in a court of law or in arbitration, shall have its reasonablecosts and expenses related to such dispute reimbursed by the non-prevailingparty; *provided, however,*that ifthe arbitrator rules in favor of one party on some issues and the otherparty on other issues, the arbitrator shall allocate such costs and expensesbetween the parties in a manner that bears a reasonable relationship to theoutcome of the arbitration.  The rulingsof the arbitrator and the allocation of fees and expenses shall be binding,non-reviewable, and non-appealable, except as permitted by law, and may beentered as a final judgment in any court having jurisdiction.

 

12.9         Binding Effect.  ThisAgreement shall be binding upon and inure to the benefit of the parties andtheir respective successors and permitted assigns.

 

12.10       Entire Agreement.  Theparties hereto acknowledge that this Agreement sets forth the entire Agreementand understanding of the parties hereto as to the subject matter hereof.

 

12.11       Severability.  Theprovisions of this Agreement are severable, and in the event that anyprovisions of this Agreement shall be determined to be invalid or unenforceableunder any controlling body of the law, such invalidity or unenforceabilityshall not in any way affect the validity or enforceability of the remainingprovisions hereof.

 

12.12       Amendment and Waiver.  This Agreement may be amended, supplemented,or otherwise modified only by means of a written instrument signed by bothparties.  The failure of either party toassert a right hereunder or to insist upon compliance with any term orcondition of this Agreement shall not constitute a waiver of that right orexcuse a similar subsequent failure to perform any such term or condition bythe other party.

 

12.13       Effect of Bankruptcy Filing.  The parties agree and acknowledge that this Agreementis a contract under which ACT is a licensor to Licensee of rights with respectto intellectual property (including without limitation, “intellectual property”within the meaning of Section 101 of the Bankruptcy Code of the UnitedStates (“Bankruptcy Code”)).  Allrights, licenses, immunities and other rights granted under or pursuant to orotherwise described in this Agreement are, and shall be deemed to be, forpurposes of Section 365(n) of the Bankruptcy Code, licenses of rights to “intellectualproperty” within the meaning of Section 101 of the Bankruptcy Code.  The parties agree that Licensee and itssublicensees, as licensees of such rights under this Agreement, shall retainand may fully exercise all of their rights and elections under the BankruptcyCode.  The parties further agree that, inthe event of the commencement of a bankruptcy proceeding by or against ACTincluding under the Bankruptcy Code, Licensee shall be entitled to a completeduplicate of (or complete access to, as appropriate) any such intellectual propertyand all embodiments of such intellectual property, including without limitationcopies of invention disclosures and filings and communications relating to thePatent Rights, and the same, if not already in Licensee’s possession, shall bepromptly delivered to Licensee upon any such commencement of a bankruptcyproceeding upon written request therefor by Licensee.

 

29

----

 

12.14  Immunity.  The rights and license granted to Licenseepursuant to Section 2.1 shall inure to the benefit of,**and include an immunity from suitagainst, any direct or indirect distributor, reseller, customer or other userof Licensed Products and Licensed Services sold by or for Licensee, anyAffiliate and/or any sublicensee of Licensee under this Agreement, whether suchLicensed Products or Licensed Services (or results thereof) are used, imported,sold, offered for sale, leased or otherwise disposed of alone or in combinationwith other products or services, although such immunity will not extend to anysuch combinations:

 

[REST OF PAGE LEFT INTENTIONALLY BLANK]

 

30

----

 

SignaturePage to Exclusive License Agreement

 

INWITNESS WHEREOF, the parties have duly executed this Agreement the day and yearfirst set forth above.

 

 
| ADVANCED CELL TECHNOLOGY, INC.                                   |                  |
|------------------------------------------------------------------|-----------------------|
|                                                             |                  |
|                                                             |                  |
| By:                                                              | /s/ Michael D. West   |   |   |
| Name: Michael D. West, Ph.D.                                     |                  |
| Title:   President & Chief Executive  Officer |                  |
|                                                             |                  |
|                                                             |                  |
| EXETER LIFE SCIENCES, INC.                                       |                  |
|                                                             |                  |
|                                                             |                  |
| By:                                                              | /s/ Jonathan Thatcher |   |   |
| Name: Jonathan Thatcher                                          |                  |
| Title:   President                                     |                  |
|                                                                  |                       |  |  |  |  |

 

----