**Exhibit10.2**

 

EXCLUSIVE LICENSE AGREEMENT

 

This Agreement, effective as ofApril 16, 1996 (the “Effective Date”), is between the University of Massachusetts (“University”), a publicinstitution of higher education of the Commonwealth of Massachusetts, as representedby its Amherst campus, and Advanced Cell Technology, Inc. (“Company”), aDelaware corporation.

 

R E C I T A L S

 

WHEREAS, University and Companypreviously entered into a Research Agreement dated April 15, 1994 (the “PriorAgreement”), which has been superseded by a Research Collaboration Agreementdated as**of April 16, 1996between the parties (the “Research Agreement”);

 

WHEREAS, in Article 8 of thePrior Agreement, University granted Company a right to acquire an exclusivelicense under University’s rights in any inventions resulting from researchperformed under the Prior Agreement (“Subject Inventions”);

 

WHEREAS, University and Companyacknowledge and agree that three Subject Inventions were developed prior to theEffective Date, which Subject Inventions are described on Exhibit A, andthat Company desires to exercise its right to acquire an exclusive licenseunder the Subject Inventions;

 

WHEREAS, University and Companyhave determined that the financial terms and other provisions set forth inArticle 8 of the Prior Agreement are unclear, and that many essential terms andconditions of an exclusive license agreement, (e.g., diligence requirements,sublicense rights, and payment procedures) remain to be negotiated by theparties;

 

WHEREAS, in addition to licensingthe Subject Invention, Company also desires to acquire from University anexclusive license (with the right to sublicense) under University’s commercialrights in certain biological materials, such as transgenic animals, and any newinventions that may be developed under the Research Agreement;

 

WHEREAS, University and Companyagree that the ambiguities and omissions in Article 8 of the Prior Agreement,together with the need to license biological materials and new inventionsdeveloped under the Research Agreement, justify and necessitate substitution ofa new and complete agreement, as negotiated between parties in good faith, andcancellation of the financial terms and other provisions specified in Article 8of the Prior Agreement; and

 

WHEREAS, this Agreementrepresents the new and complete agreement of the parties with respect to thelicense of the Subject Invention, related biological materials, and new inventionsthat are developed under the Research Agreement.

 

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NOW, THEREFORE, University andCompany hereby agree as follows:

 

1. Definitions.

 

1.1.  “Affiliate” means any legal entity(such as a corporation, partnership, or limited liability company) that iscontrolled by Company. For the purposes of this definition, the term “control”means (i) beneficial ownership of at least fifty percent (50%) of the votingsecurities of a corporation or other business organization with votingsecurities or (ii) a fifty percent (50%) or greater interest in the net assetsor profits of a partnership or other business organization without votingsecurities.

 

1.2.  “Biological Materials” means (i)certain transgenic animals, (ii) Project Materials (as defined in the ResearchAgreement), and (iii) certain other tangible biological materials that are necessaryfor the effective exercise of the Patent Rights, which materials are describedon Exhibit A, as well as tangible materials that are produced throughuse of the original materials, including, for example, any progeny derived froma cell line, monoclonal antibodies produced by hybridoma cells, DNA or RNAreplicated from isolated DNA or RNA, recombinant proteins produced through useof isolated DNA or RNA, and substances routinely purified from a sourcematerial included in the original materials (such as recombinant proteinsisolated from a cell extract or supernatant by non-proprietary affinitypurification methods). These Biological Materials shall be listed on ExhibitA, which will be periodically amended to include any additional BiologicalMaterials that University may furnish to Company, including without limitationany Project Materials (as defined in the Research Agreement) developed underthe Research Agreement.

 

1.3.  “Confidential Information” means anyconfidential or proprietary information furnished by one party (the “DisclosingParty”) to the other party (the “Receiving Party”) in connection with thisAgreement, provided that such information is specifically designated asconfidential.  Such ConfidentialInformation shall include, without limitation, any diligence reports furnishedto University under Section 3.1. and royalty reports furnished to Universityunder Section 5.2.

 

1.4.  “Licensed Product” means any productthat cannot be developed, manufactured, used, or sold without (i) infringingone or more claims under the Patent Rights, (ii) using or incorporating someportion of one or more Biological Materials, or (iii) using some portion of theRelated Technology.

 

1.5.  “Licensed Service” means any servicethat cannot be developed or performed without using at least one process that(i) infringes one or more claims under the Patent Rights, (ii) uses someportion of one or more Biological Materials, or (iii) using some portion of theRelated Technology.

 

1.6.  “Net Sales” means the gross amountbilled or invoiced on sales by Company and its Affiliates of Licensed Productsand Licensed Services, less the following: (i) customary trade, quantity, orcash discounts and commissions to non-affiliated brokers or agents to theextent actually allowed and taken; (ii) amounts repaid or credited by reason ofrejection or return; (iii) to the extent separately stated on purchase orders,invoices, or other documents of sale, any taxes or other governmental chargeslevied on the production, sale, transportation, delivery, or use of a LicensedProduct or Licensed Service which is paid by or on behalf of

 

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Company; and (iv) outbound transportationcosts prepaid or allowed and costs of insurance in transit.

 

In any transfers of LicensedProducts between Company and an Affiliate, Net Sales shall be calculated basedon the final sale of the Licensed Product to an independent third party. In theevent that Company or an Affiliate receives non-monetary consideration for anyLicensed Products or Licensed Services, Net Sales shall be calculated based onthe fair market value of such consideration. In the event that Company or itsAffiliates consume a Licensed Product in the performance of a commercialservice (other than a Licensed Service), the Licensed Product shall beconsidered sold and the Net Sales shall be calculated based on the sales priceof the Licensed Product to an independent third party during the same RoyaltyPeriod or, in the absence of such sales, on the fair market value of theLicensed Product as determined by the parties in good faith.

 

In any sale or transfer ofLicensed Products between Company and a Sublicensee, Net Sales shall becalculated based on the final sale of the Licensed Product to an independentthird party, such that University shall be entitled to receive a portion ofSublicense Income based on the sale by Sublicensee of Licensed Product to anindependent third party rather than on any sale or transfer of Licensed Productby Company to the Sublicensee.  In theevent that a Sublicensee receives non-monetary consideration for any LicensedProducts or Licensed Services.  Net Salesshall be calculated based on the fair market value of such consideration. Inthe event that a Sublicensee consumes a Licensed Product in the performance ofa commercial service (other than a Licensed Service), the Licensed Productshall be considered sold and the Net Sales shall be calculated based on thesales price of the Licensed Product to an independent third party during thesame Royalty Period or, in the absence of such sales, on the fair market valueof the Licensed Product as determined by the parties in good faith.

 

1.7.  “Patent Rights” means the U.S. patentapplications listed on Exhibit A, and any divisional, continuation, orcontinuation-in-part of such patent applications to the extent the claims aredirected to subject matter specifically described therein, as well as anypatent issued thereon and any reissue or reexamination of such patent, and anyforeign counterparts to such patents and patent applications,  Exhibit A shall be periodicallyamended to include any additional Patent Rights that may arise, such as fromcontinuations-in-part and inventions for which Company exercised its option rightunder the Research Agreement.

 

1.8.  “Related Technology” means anyknow-how, technical information, research and development information, testresults, and data that (i) is not available to the general public, (ii) isnecessary for the effective exercise of the Patent Rights, (iii) has beendeveloped in the laboratory of Dr. James Robl as of the Effective Date or isdeveloped in the laboratory of Dr. Ponce de Leon (or any other PrincipalInvestigator under the Research Agreement) during the term of the ResearchAgreement, and (iv) is owned by University.

 

1.9.  “Royally Period” means the partialcalendar quarter commencing on the date on which the first Licensed Product issold or used or the first Licensed Service is performed and every complete or partialcalendar quarter thereafter during which either (i) this Agreement

 

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remains in effect or (ii) Company has theright to complete and sell work-in-progress and inventory of Licensed Productspursuant to Section 8.5.

 

1.10.  “Sublicense Income” means any paymentsthat Company receives from a Sublicensee in consideration of the sublicense ofthe rights granted Company under Section 2.1., including without limitationlicense fees, royalties, milestone payments, equity payments, and licensemaintenance fees, but excluding payments specifically committed to thedevelopment of Licensed Products or Licensed Services.

 

1.11.  “Sublicensee” means any permittedsublicensee of the rights granted Company under this Agreement, as furtherdescribed in Section 2.2.

 

2*.*Grant of Rights.

 

2.1.  License Grants.

 

(a)  Patent Rights and Biological Materials.  Subject to the terms of this Agreement,University hereby grants to Company and its Affiliates an exclusive, worldwide,royalty-bearing license (with the right to sublicense) under its commercialrights in the Patent Rights and Biological Materials to develop, make, havemade, use, and sell Licensed Products in any field and to develop and performLicensed Services in any field.

 

(b)  Related Technology. Subject to theterms of this Agreement, University hereby grants to Company and its Affiliatesa non-exclusive, royalty-bearing license (with the right to sublicense) underits commercial rights in the Related Technology to develop, make, have made,use, and sell Licensed Products in any field and to develop and performLicensed Services in any field.

 

2.2.  Sublicenses. Company shall have theright to grant sublicenses of its rights under Section 2.1. with the consent ofUniversity, which consent shall not be unreasonably withheld or delayed.  All sublicense agreements executed by Companypursuant to this Article 2 shall expressly bind the Sublicensee to the terms ofthis Agreement and shall provide for the automatic assignment of such agreementto University if this Agreement is terminated as described in Article 8 below.Company shall promptly furnish University with a fully executed copy of anysuch sublicense agreement.

 

2.3.  Retained Rights.

 

(a)  University.  University retains the right to make and useLicensed Products and to perform Licensed Services for academic research,teaching, and non-commercial patient care, without payment of compensation toCompany. University may license its retained rights under this Section toresearch collaborators of University faculty members, post-doctoral fellows,and students.

 

(b)  Federal Government.  To the extent that any invention claimed inthe Patent Rights has been partially funded by the federal government, thisAgreement and the grant of any rights in such Patent Rights are subject to andgoverned by federal law as set forth in 35

 

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U.S.C. § 201-211, and the regulationspromulgated thereunder, as amended, or any successor statutes orregulations.  Company acknowledges thatthese statutes and regulations reserve to the federal government aroyalty-free, non-exclusive, non-transferrable license to practice anygovernment-funded invention claimed in any Patent Rights.  If any term of this Agreement fails toconform with such laws and regulations, the relevant term shall be deemed aninvalid provision and modified in accordance with Section 10.11.

 

(c)  Other Organizations.  To the extent that any invention claimed inthe Patent Rights has been partially funded by a non-profit organization orstate or local agency, this Agreement and the grant of any rights in suchPatent Rights are subject to and governed by the terms and conditions of theapplicable research grant.  If any termof this Agreement fails to conform with such terms and conditions, the relevantterm shall be deemed an invalid provision and modified by the parties pursuantto Section 10.11.

 

3.  CompanyObligations Relating to Commercialization.

 

3.1.  Diligence Requirements. Company shalluse diligent efforts, or shall cause its Affiliates and Sublicensees to usediligent efforts, to develop Licensed Products or Licensed Services and tointroduce Licensed Products or Licensed Services into the commercial market; thereafter,Company or its Affiliates or Sublicensees shall make Licensed Products orLicensed Services reasonably available to the public.  Specifically, Company or Affiliate orSublicensee shall fulfill the following obligations:

 

(1)  Within sixty (60) days aftereach anniversary of the Effective Date, Company shall furnish University with awritten report on the progress of its efforts during the prior year to developand commercialize Licensed Products or Licensed Services, including withoutlimitation research and development efforts, efforts to obtain regulatoryapproval, marketing efforts, and sales figures. The report shall also contain a discussion of intended efforts and salesprojections for the current year.

 

(2)  Until such time as LicensedProducts or Licensed Services are introduced into the commercial market,Company will spend at least $300,000 per year (not including Company overhead)on research and development of Licensed Products and Licensed Services,including sponsored research at University.

 

(3)  Company will file,prosecute, and maintain the Patent Rights in the U.S., Japan, Canada, Europe,Australia, and New Zealand; provided, however, that University will consider ingood faith whether to waive this requirement with respect to one or more PatentRights in one or more countries if ACT shows that there is inadequate economicjustification for fulfilling the requirement.

 

In the event that University determines thatCompany (or an Affiliate or Sublicensee) has not fulfilled its obligationsunder this Section 3.1., University shall furnish Company with written noticeof such determination.  Within sixty (60)**days after receipt of such notice,Company shall either (i) fulfill the relevant obligation or (ii) negotiate withUniversity a mutually acceptable schedule of revised diligence obligations,failing which University shall have the right, immediately upon written noticeto Company, to terminate this Agreement or to grant

 

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additional licenses to third parties to thePatent Rights and Biological Materials, In the event that University terminates this Agreement, University shallpay Company a total of fifty percent (50%) of all revenue that University receivesfrom such additional licenses, less reasonable out-of-pocket expenses incurredby University.

 

3.2.  Indemnification.

 

(a)  Indemnity. Company shall indemnify,defend, and hold harmless University and its trustees, officers, faculty,students, employees, and agents and their respective successors, heirs andassigns (the “Indemnitees”), against any liability, damage, loss, or expense(including reasonable attorneys fees and expenses of litigation) incurred by orimposed upon any of the Indemnitees in connection with any claims, suits, actions,demands or judgments arising out of any theory of liability (including withoutlimitation actions in the form of tort, warranty, or strict liability andregardless of whether such action has any factual basis) concerning anyLicensed Product or Licensed Service that is made, used, or sold pursuant toany right or license granted under this Agreement; provided, however, that suchindemnification shall not apply to any liability, damage, loss, or expense tothe extent directly attributable to (i) the negligent activities or intentionalmisconduct of the Indemnitees or (ii) the settlement of a claim, suit, action,or demand by Indemnitees without the prior written approval of Company.

 

(b)  Procedures. The Indemnitees agree toprovide Company with prompt written notice of any claim, suit, action, demand,or judgment for which indemnification is sought under this Agreement. Companyagrees, at its own expense, to provide attorneys reasonably acceptable toUniversity to defend against any such claim. The Indemnitees shall cooperatefully with Company in such defense and will permit Company to conduct andcontrol such defense and the disposition of such claim, suit, or action(including all decisions relative to litigation, appeal, and settlement);provided, however, that any Indemnitee shall have the right to retain its owncounsel, at the expense of Company, if representation of such Indemnitee by thecounsel retained by Company would be inappropriate because of actual orpotential differences in the interests of such Indemnitee and any other partyrepresented by such counsel. Company agrees to keep University informed of theprogress in the defense and disposition of such claim and to consult withUniversity with regard to any proposed settlement.

 

(c)  Insurance. Company shall maintaininsurance or self-insurance that is reasonably adequate to fulfill anypotential obligation to the Indemnitees, but in any event not less than onemillion dollars ($1,000,000) for injuries to any one person arising out of asingle occurrence and five million dollars ($5,000,000) for injuries to allpersons arising out of a single occurrence. Company shall provide University,upon request, with written evidence of such insurance or self-insurance.Company shall continue to maintain such insurance or self-insurance after theexpiration or termination of this Agreement during any period in which Companyor any Affiliate or Sublicensee continues (i) to make, use, or sell a productthat was a Licensed Product under this Agreement or (ii) to perform a servicethat was a Licensed Service under this Agreement, and thereafter for a periodof five (5) years.

 

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3.3.  Use of University Name.  In accordance with Section 7.3., Company andits Affiliates and Sublicensees shall not use the name “University ofMassachusetts” or any variation of that name in connection with the marketingor sale of any Licensed Products or Licensed Services.

 

3.4.  Marking of Licensed Products. To theextent commercially feasible and consistent with prevailing business practices,Company shall mark, and shall cause its Affiliates and Sublicensees to mark,all Licensed Products that are manufactured or sold under this Agreement withthe number of each issued patent under the Patent Rights that applies to suchLicensed Product.

 

3.5.  Compliance with Law. Company shallcomply with, and shall ensure that its Affiliates and Sublicensees comply with,all local, state, federal, and international laws and regulations relating tothe development, manufacture, use, and sale of Licensed Products and LicensedServices.  Company expressly agrees tocomply with the following:

 

(i) Company or its Affiliates or Sublicensees shall obtain allnecessary approvals from the United States Food *&*Drug Administration and any similar governmentalauthorities of any foreign jurisdiction in which Company or an Affiliate orSublicensee intends to make, use, or sell Licensed Products or to performLicensed Services.

 

(ii) Company and its Affiliates and Sublicensees shall comply with allUnited States laws and regulations controlling the export of certaincommodities and technical data including without limitation all ExportAdministration Regulations of the United States Department of Commerce.  Among other things, these laws andregulations prohibit, or require a license for, the export of certain types ofcommodities and technical data to specified countries.  Company hereby gives written assurance thatit will comply with, and will cause its Affiliates and Sublicensees to complywith, all United States export control laws and regulations, that it bears soleresponsibility for any violation of such laws and regulations by itself or itsAffiliates or Sublicensees, and that it will indemnify, defend, and holdUniversity harmless (in accordance with Section 3.2.) for the consequences ofany such violation.

 

(iii) To the extent that any invention claimed in the Patent Rights hasbeen partially funded by the United States government, and only to the extentrequired by applicable laws and regulations, Company agrees that any LicensedProducts used or sold in the United Stales will be manufactured substantiallyin the United States or its territories. Current law provides that if domesticmanufacture is not commercially feasible under the circumstances, Universitymay seek a waiver of this requirement from the relevant federal agency onbehalf of Company.

 

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4.  Considerationfor Grant of Rights.

 

4.1.  Royalties.

 

(a)  Base Royalty.  In partial consideration of the rightsgranted Company under this Agreement, Company shall pay to University thefollowing royalty on Net Sales of, Licensed Products and Licensed Services byCompany and its Affiliates (but not by Sublicensees):

 

2.5%                      on Licensed Products and Licensed Servicesfar use primarily in agriculture (e.g., pigs, poultry, cattle)

 

3.0%                      on Licensed Products and Licensed Servicesfor use primarily in companion animals (e.g., dogs, cats, horses)

 

3.5%                      on Licensed Products and Licensed Servicesfor use primarily in research and diagnostic products

 

4.5%                      on Licensed Products and Licensed Servicesfor use primarily in humantherapeutics

 

2.5%                      on Licensed Products and Licensed Servicesfor use primarily in fields not specified above

 

If a particular Licensed Product or LicensedService is within the definition of “Licensed Product” or “Licensed Service”solely because it uses or incorporates Related Technology, the royalty rateapplicable to such Licensed Product or Licensed Service shall be reduced byfifty percent (50%).

 

(b)  Royalty Reduction. If Universitygrants additional licenses to third parties pursuant to Section 3.1., the royaltyrates set forth in Subsection 4.1.(a) and the minimum royalty set forth in Section4.2. shall be adjusted, if necessary, so as not to exceed the royalty ratescharged any other licensee of the Patent Rights during the term of thenon-exclusive license.

 

(c)  No Multiple Royalty. Company must payonly one royalty with respect to a Licensed Product or Licensed Serviceregardless of the number of patents or patent applications included within thePatent Rights whose claims cover that Licensed Product or Licensed Service.

 

4.2.  Minimum Royalty. In each calendar yearduring the term of this Agreement, University shall receive the followingminimum royalty payments:

 

(i)  commencing after the thirdyear following the Effective Date, $30,000 per year for all uses other than inhuman therapeutics (“Category I”); and

 

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(ii) commencing after the later of the fourth year following theEffective Date or completion of Phase II clinical trials for a humantherapeutic product, $15,000 per year for use in human therapeutics (“CategoryII”).

 

These minimum royalty payments shall bepro-rated during any partial calendar year.

 

If the actual royalty payments toUniversity in any calendar year are less than the minimum royalty paymentrequired for that year in either Category I or Category II, Company shall havethe right to pay University the difference between the actual royalty paymentin that Category and the minimum royalty payment due for that Category in fullsatisfaction of its obligations under this Section with respect to thatCategory, provided such minimum payments are made to University within sixty(60) days after the conclusion of the calendar year. Waiver of any minimumroyalty payment by University shall not be construed as a waiver of anysubsequent minimum royalty payment.  IfCompany fails to make any minimum royalty payment within the sixty-day periodfor a given Category, the rights granted Company under Section 2.1. shall nolonger include uses within that Category but shall continue to include uses inthe other Category. If Company fails to make the required minimum royaltypayment within the sixty-day period for both Categories, such failure shallconstitute a material breach of its obligations under this Agreement, andUniversity shall have the right to terminate this Agreement in accordance withSection 8.3.

 

University agrees to waive theminimum royalty payments set forth above during any calendar year in whichCompany (or another corporation on its behalf) funds research at the Universityin the aggregate amount of three hundred thousand dollars ($300,000).  Company may meet this aggregate researchfunding threshold through sponsored research at multiple University campusesand with multiple principal investigators. If Company funds research at the University in an aggregate amount lessthan three hundred thousand dollars ($300,000) but at least one hundred andfifty thousand dollars ($150,000), University will pro-rate the minimum royaltypayments for that calendar year (e.g., the minimum royalty payments would be $15,000for Category I and $7,500 for Category II if Company funded $150,000 ofresearch rather than $300.000).

 

4.3.  Sublicense Income.  Company shall pay University a total oftwenty-five percent (25%) of all Sublicense Income; provided that, in the caseof royalty-based payments, University shall receive not less than two percent (2%)**ofthe “net sales” of Licensed Products and Licensed Services by any Sublicensee(with “net sales” calculated in accordance with the terms of the relevantsublicense agreement). Except for royalty-based payments, such amounts shall bedue and payable within sixty (60) days after Company receives the relevantpayment from the Sublicensee; royalty-based payments of Sublicense Income shallbe due and payable as provided in Article 5 below.

 

4.4.  Third-Party Royalties. So long asCompany remains the only licensee of the Patent Rights and BiologicalMaterials, in the event that Company is legally required to make royallypayments to one or more third parties in order to make, use, or sell LicensedProducts or to perform Licensed Services, Company may offset a total of fiftypercent (50%) of such third-party payments against any royalty payments thatare due to University in the same Royalty Period, provided that in no eventshall the royalty payments under Section 4.1., when

 

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aggregated with any other offsets and creditsallowed under this Agreement, be reduced below the greater of (i) fifty percent(50%) of the royalty rate set forth in Section 4.1.(a) or (ii) a royalty rateof two percent (2%) of Net Sales. Company may carry forward any unused creditsor offsets for use in subsequent Royalty Periods during the term of thisAgreement.

 

4.5*.  *License Option.As set forth in Section 5.5. of the Research Agreement, Company has the rightto include within the Patent Rights under this Agreement any patent or patentapplication claiming an Invention (as defined in the Research Agreement) uponwritten notice to University and payment of a ten thousand dollar ($10,000)license fee within the Option Period (as defined in the Research Agreement).The parties have determined that this license fee, together with the otherfinancial terms set forth in this Agreement, will constitute fair market valuefor the license grant.  This license feewill be creditable against royalties, payable under Section 4.1. of thisAgreement provided that Company pays all expenses associated with thepreparation, filing, and prosecution of patent applications claiming therelevant Invention in the U.S., Japan, Canada, Europe, Australia, and NewZealand until such time as a patent issues in each jurisdiction or the patentapplication is finally rejected with no further right of appeal in anyjurisdiction in which a patent does not issue.

 

5.  RoyaltyReports; Payments; Records.

 

5.1.  First Sale.  Company shall report to University the dateof first commercial sale of each Licensed Product and the date of firstcommercial performance of each Licensed Service within thirty (30) days of occurrencein each country.

 

5.2.  Reports and Payments. Within sixty(60) days after the conclusion of each Royalty Period, Company shall deliver toUniversity a report containing the following information:

 

(i) the, number of Licensed Products sold to independent third partiesin each country, and the number of Licensed Products used by Company and its Affiliatesin the provision of Licensed Services and other services in each country;

 

(ii) the number of Licensed Services provided by Company and its Affiliatesin each country;

 

(iii) the gross sales price for each Licensed Product and the grosscharge for each Licensed Service by Company and its Affiliates during theapplicable Royalty Period in each country;

 

(iv) calculation of Net Sales for the applicable Royalty Period in eachcountry, including a listing of applicable deductions;

 

(v) total royalty payable on Net Sales in U.S. dollars, together withthe exchange rates used for conversion; and

 

(vii) the amount of royalty-based Sublicense Income due to Universityfor the applicable Royalty Period from each Sublicensee.

 

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All such reports shall be considered CompanyConfidential Information. If no royalties are due to University for any RoyallyPeriod, the report shall so state. Concurrent with this report, Company shall remit to University anypayment due for the applicable Royalty Period.

 

5.3.  Payments in U.S. Dollars.  All payments due under this Agreement shallbe payable in United States dollars. Conversion of foreign currency to U.S.dollars shall be made at the conversion rate existing in the United States (asreported in the Wall Street Journal) on the last working day of thecalendar quarter preceding the applicable Royalty Period.  Such payments shall be without deduction ofexchange, collection, or other charges.

 

5.4.  Payments in Other Currencies. If bylaw, regulation, or fiscal policy of a particular country, conversion intoUnited States dollars or transfer of funds of a convertible currency to theUnited States is restricted or forbidden, Company shall give University promptwritten notice of such restriction, which notice shall satisfy the sixty-daypayment deadline described inSection 5.2. Company shall pay any amounts due University through whateverlawful methods University reasonably designates; provided, however, that ifUniversity fails to designate such payment method within thirty (30) days afterUniversity is notified of the restriction. Company may deposit such payment inlocal currency to the credit of University in a recognized banking institutionselected by Company and identified by written notice to University, and suchdeposit shall fulfill all obligations of Company to University with respect tosuch payment.

 

5.5.  Records.  Company shall maintain, and shall cause itsAffiliates and Sublicensees to maintain, complete and accurate records ofLicensed Products and Licensed Services that are made, used, sold, or performedunder this Agreement and any amounts payable to University in relation to suchLicensed Products and Licensed Services, which records shall contain sufficientinformation to permit University to confirm the accuracy of any reportsdelivered to University under Section 5.2. The relevant party shall retain suchrecords relating to a**givenRoyalty Period for at least three (3) years after the conclusion of thatRoyalty Period, during which time University shall have the right, at itsexpense, to cause its internal accountants or an independent, certified public accountantto inspect such records during normal business hours for the sole purpose ofverifying any reports and payments delivered under this Agreement.  Such accountant shall not disclose toUniversity any information other than information relating to accuracy ofreports and payments delivered under this Agreement. The parties shallreconcile any underpayment or overpayment within thirty (30) days after theaccountant delivers the results of the audit. In the event that any auditperformed under this Section reveals an underpayment in excess of ten percent(10%) in any Royalty Period, Company shall bear the full cost of suchaudit.  University may exercise itsrights under this Section only once every year and only with reasonable priornotice to Company.

 

5.6.  Late Payments.  Any payments by Company that are not paid onor before the date such payments are due under this Agreement shall bearinterest, to the extent permitted by law, at two percentage points above the PrimeRate of interest as reported in the Wall Street Journal on the datepayment is due, with interest calculated based on the number of days thatpayment is delinquent.

 

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5.7.  Method of Payment.  All payments under this Agreement should bemade in the name of the “University of Massachusetts” and sent to the addressidentified below. Each payment should reference this Agreement and identify theobligation under this Agreement that the payment satisfies.

 

5.8.  Withholding and Similar Taxes.  Royalty payments and other payments due toUniversity under this Agreement shall not be reduced by reason of anywithholding or similar taxes applicable to such payments to University.

 

6.  Patentsand Infringement.

 

6.1.  Responsibility for Patent Rights.  Company shall have primary responsibility, atits expense, for the preparation, filing, prosecution, and maintenance of allPatent Rights, using patent counsel reasonably acceptable to University.Company shall consult with University as to the preparation, filing,prosecution, and maintenance of all such Patent Rights reasonably prior to anydeadline or action with the U.S. Patent & Trademark Office or any foreignpatent office and shall furnish University with copies of all relevantdocuments reasonably in advance of such consultation. University shall furnishCompany with its comments regarding any such patent-related document withinsixty (60) days after receipt of the document from Company.

 

6.2.  Abandonment.  In the event that Company desires to abandonany patent or patent application within the Patent Rights, or if Companydeclines to assume the responsibility for obtaining patent protection for anyInvention. Company shall provide University with reasonable prior writtennotice of such intended abandonment or decline of responsibility, andUniversity shall have the right, at its expense, to prepare, file, prosecute,and maintain the relevant Patent Rights. In such event, Company shall lose all rights under this Agreement withrespect to such Patent Rights in such countries.

 

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

 

6.4.  Infringement.

 

(a)  Notification of Infringement. Eachparty agrees to provide written notice to the other party promptly afterbecoming aware of any infringement of the Patent Rights.

 

(b)  Company Right to Prosecute.  So long as Company remains the only licenseeof the Patent Rights and Biological Materials for a given use, Company shallhave the right, under its own control and at its own expense, to prosecute anythird party infringement of the Patent Rights with respect to that use or,together with licensees of the

 

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Patent Rights for other uses (if any), todefend the Patent Rights in any declaratory judgment action brought by a thirdparty which alleges invalidity, unenforceability, or non-infringement of thePatent Rights.  Prior to commencing anysuch action, Company shall consult with University and shall consider the viewsof University regarding the advisability of the proposed action and its effecton the public interest.  Company shallnot enter into any settlement, consent judgment, or other voluntary finaldisposition of any infringement action under this Subsection without the priorwritten consent of University, which consent shall not be unreasonably withheldor delayed. Any recovery obtained in an action under this Subsection shall bedistributed as follows: (i) each party shall be reimbursed for any expensesincurred in the action, (ii) as to ordinary damages, Company shall receive anamount equal to its lost profits or a reasonable royalty on the infringingsales (whichever measure of damages the court shall have applied), less areasonable approximation of the royalties that Company would have paid toUniversity if Company had sold the infringing products and services rather thanthe infringer, and (iii) as to special or punitive damages, the parties shallshare equally in any award.

 

(c)  University as Indispensable Party.University shall permit any action under this Section to be brought in its nameif required by law, provided that Company shall hold University harmless from,and if necessary indemnify University against, any costs, expenses, orliability that University may incur in connection with such action.

 

(d)  University Right to Prosecute.  In the event that Company fails to initiatean infringement action within a reasonable time after it first becomes aware ofthe basis for such action, or to answer a declaratory judgment action within areasonable time after such action is filed, University shall have the right toprosecute such infringement or answer such declaratory judgment action, underits sole control and at its sole expense, and any recovery obtained shall begiven to University.

 

(e)  Cooperation.  Each party agrees to cooperate fully in anyaction under this Section 6.6. which is controlled by the other party, providedthat the controlling party reimburses the cooperating party promptly for anycosts and expenses incurred by the cooperating party in connection withproviding such assistance.

 

7.  ConfidentialInformation; Publications; Publicity.

 

7.1.  Confidential Information.

 

(a)  Designation.  Confidential Information that is disclosed inwriting shall be marked with a legend indicating its confidential status (suchas “Confidential” or “Proprietary”). Confidential Information that is disclosed orally or visually shall bedocumented in a written notice prepared by the Disclosing Party and deliveredto the Receiving Party within thirty (30) days of the date of disclosure; suchnotice shall summarize the Confidential Information disclosed to the ReceivingParty and reference the time and place of disclosure.

 

(b)  Obligations.  For a period of five (5) years afterdisclosure of any portion of Confidential Information, the Receiving Partyshall (i) maintain such Confidential

 

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Information in strict confidence, except thatthe Receiving Party may disclose or permit the disclosure of any ConfidentialInformation to its directors, officers, employees, consultants, and advisorswho are obligated to maintain the confidential nature of such ConfidentialInformation and who need to know such Confidential Information for the purposesof this Agreement; (ii) use such Confidential Information solely for thepurposes of this Agreement; and (iii) allow its trustees or directors,officers, employees, consultants, and advisors to reproduce the ConfidentialInformation only to the extent necessary for the purposes of this Agreement,with all such reproductions being considered Confidential Information.

 

(c)  Exceptions.  The obligations of the Receiving Party underSubsection 7.1.(b) above shall not apply to the extent that the Receiving Partycan demonstrate that certain Confidential Information (i) was in the publicdomain prior to the time of its disclosure under this Agreement; (ii) enteredthe public domain after the time of its disclosure under this Agreement throughmeans other than an unauthorized disclosure resulting from an act or omissionby the Receiving Party: (iii) was independently developed or discovered by theReceiving Party without use of the Confidential Information; (iv) is or wasdisclosed to the Receiving Party at any time, whether prior to or after thetime of its disclosure under this Agreement, by a third party having nofiduciary relationship with the Disclosing Party and having no obligation ofconfidentiality with respect to such Confidential Information; or (v) isrequired to be disclosed to comply with applicable laws or regulations, or witha court or administrative order, provided that the Disclosing Party receivesreasonable prior written notice of such disclosure.

 

(d)  Ownership and Return.  The Receiving Party acknowledges that theDisclosing Party (or any third party entrusting its own information to the DisclosingParty) claims ownership of its Confidential Information in the possession ofthe Receiving Party. Upon the expiration or termination of this Agreement, andat the request of the Disclosing Party, the Receiving Party shall return to theDisclosing Party all originals, copies, and summaries of documents, materials,and other tangible manifestations of Confidential Information in the possessionor control of the Receiving Party, except that the Receiving Party may retainone copy of the Confidential Information in the possession of its legal counselsolely for the purpose of monitoring its obligations under this Agreement.

 

7.2.  Publications.  University and its employees will be free topublicly disclose (through journals, lectures, or otherwise) the results of anyresearch relating to the subject matter of the Patent Rights, except asotherwise provided by written agreement between University and Company (e.g., asponsored research agreement).

 

7.3.  Publicity Restrictions.  Company shall not use the name of Universityor any of its trustees, officers, faculty, students, employees, or agents, orany adaptation of such names, or any terms of this Agreement in any promotionalmaterial or other public announcement or disclosure without the prior written consentof University. The foregoing notwithstanding, Company shall have the right todisclose such information without the consent of University in any prospectus,offering memorandum, or other document or filing required by applicablesecurities laws or other applicable law or regulation, provided that Companyshall have given University at least ten (10) days prior written notice of theproposed text for the purpose of giving University the opportunity to commenton such text.

 

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8. Term and Termination.

 

8.1.  Term. This Agreement shall commence onthe Effective Date and shall remain in effect until (i) the expiration of allissued patents within the Patent Rights or (ii) for a period of ten (10) yearsafter the Effective Date if no such patents have issued within that ten-yearperiod, unless earlier terminated in accordance with the provisions of thisAgreement.

 

8.2.  Voluntary Termination by Company.  Company shall have the right to terminatethis Agreement, for any reason, upon ninety (90) days prior written notice toUniversity.

 

8.3.  Termination for Default.  In the event that either party commits amaterial breach of its obligations under this Agreement and fails to cure thatbreach within sixty (60) days after receiving written notice thereof, the otherparty may terminate this Agreement immediately upon written notice to the partyin breach.  If the alleged breachinvolves nonpayment of any amounts due University under this Agreement, Companyshall have only one opportunity to cure a material breach for which it receivesnotice as described above; any subsequent material breach by Company willentitle University to terminate this Agreement immediately upon written noticeto Company, without the sixty-day cure period.

 

8.4.  Force Majeure.  Neither party will be responsible for delaysresulting from causes beyond the reasonable control of such party, includingwithout limitation fire, explosion, flood, war, strike, or riot, provided thatthe nonperforming party uses commercially reasonable efforts to avoid or removesuch causes of nonperformance and continues performance under this Agreementwith reasonable dispatch whenever such causes are removed.

 

8.5.  Effect of Termination.  The following provisions shall survive theexpiration or termination of this Agreement; Articles 1 and 9; Sections 3.2.,3.5., 5.2. (obligation to provide final report and payment), 5.5.,6*.*4.*,*7.1.,7.3., 8.5., and 10.9.  Upon the earlytermination of this Agreement. Company and its Affiliates and Sublicensees maycomplete and sell any work-in-progress and inventory of Licensed Products thatexist as of the effective date of termination, provided that (i) Company iscurrent in payment of all amounts due University under this Agreement, (ii)Company pays University the applicable royalty on such sales of LicensedProducts in accordance with the terms and conditions of this Agreement, and(iii) Company and its Affiliates and Sublicensees shall complete and sell allwork-in-progress and inventory of Licensed Products within six (6) months afterthe effective date of termination.

 

9. Dispute Resolution.

 

9.1. Procedures Mandatory. The parties agree that any disputearising out of or relating to this Agreement shall be resolved solely by meansof the procedures set forth in this Article, and that such proceduresconstitute legally binding obligations that are an essential provision of thisAgreement; provided, however, that all procedures and deadlines specified inthis Article may be modified by written agreement of the parties. If eitherparty fails to observe the procedures of this Article, as modified by theirwritten agreement, the other party may bring an action for specific performancein any court of competent jurisdiction.

 

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9.2. Dispute ResolutionProcedures.

 

(a)  Negotiation.  In the event of any dispute arising out of orrelating to this Agreement, the affected party shall notify the other party,and the parties shall attempt in good faith to resolve the matter within ten (10) days after the date ofsuch notice (the “Notice Date”). Any disputes not resolved by good faithdiscussions shall be referred to senior executives of each party, who shallmeet at a mutually acceptable time and location within thirty (30) days afterthe Notice Date and attempt to negotiate a settlement.

 

(b)  Mediation.  If the matter remains unresolved within sixty(60) days after the Notice Date, or if the senior executives fail to meetwithin thirty (30) days after the Notice Date, either party may initiatemediation upon written notice to the other party, whereupon both parties shallbe obligated to engage in a mediation proceeding under the then current Centerfor Public Resources (“CPR”) Model Procedure for Mediation of BusinessDisputes, except that specific provisions of this Section shall overrideinconsistent provisions of the CPR Model Procedure. The mediator will beselected from the CPR Panels of Neutrals. If the parties cannot agree upon the selectionof a mediator within ninety (90) days after the Notice Date, then upon therequest of either party, the CPR shall appoint the mediator. The parties shallattempt to resolve the dispute through mediation until one of the followingoccurs: (i) the parties reach a written settlement; (ii) the mediator notifiesthe parties in writing that they have reached an impasse; (iii) the partiesagree in writing that they have reached an impasse; or (iv) the parties have notreached a settlement within one hundred and twenty (120) days after the NoticeDate.

 

(c)  Trial Without Jury.  If the parties fail to resolve the disputethrough mediation, or if neither party elects to initiate mediation, each partyshall have the right to pursue any other remedies legally available to resolvethe dispute. provided, however, that the parties expressly waive any right to ajury trial in any legal proceeding under this Section.

 

9.3.  Preservation of Rights Pending Resolution.

 

(a)  Performance to Continue.  Each party shall continue to perform itsobligations under this Agreement pending final resolution of any disputearising out or relating to this Agreement; provided, however, that a party maysuspend performance of its obligations during any period in which the other partyfails or refuses to perform its obligations.

 

(b)  Provisional Remedies.  Although the procedures specified in thisArticle are the sole and exclusive procedures for the resolution of disputesarising out of relating to this Agreement, either party may seek a preliminaryinjunction or other provisional equitable relief if, in its reasonablejudgment, such action is necessary to avoid irreparable harm to itself or topreserve its rights under this Agreement.

 

(c)  Statute of Limitations.  The parties agree that all applicable statutesof limitation and time-based defenses (such as estoppel and laches) shall be tolledwhile the procedures set forth in Subsections 9.2.(a) and 9.2.(b) are pending.The parties shall take any actions necessary to effectuate this result.

 

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10. Miscellaneous.

 

10.l.  Representations and Warranties.  University represents and warrants that itsemployees have assigned to University their entire right, title, and interestin the Patent Rights and that it has authority to grant the rights and licensesset forth in this Agreement. UNIVERSITY MAKES NO OTHER WARRANTIES CONCERNINGTHE PATENT RIGHTS, RELATED TECHNOLOGY, AND BIOLOGICAL MATERIALS, INCLUDINGWITHOUT LIMITATION ANY EXPRESS OR IMPLIED WARRANTY OF MERCHANTABILITY ORFITNESS FOR A PARTICULAR PURPOSE. Specifically, University makes no warranty orrepresentation (i) regarding the validity or scope of the Patent Rights, (ii)that the exploitation the Patent Rights or any Licensed Product or LicensedService will not infringe any patents or other intellectual property rights ofa third party, and (iii) that any third party is not currently infringing orwill not infringe the Patent Rights.

 

10.2.  Compliance with Law and Policies.  Company agrees to comply with applicable lawand the policies of University in the area of technology transfer, includingMass. Gen. Laws Chap. 268A (state conflict of interest statute), the PatentPolicy, and the Policy on Compensation for Certain Additional ProfessionalServices, and shall promptly notify University of any violation that Companyknows or has reason to believe has occurred or is likely to occur.

 

10.3.  Tax-Exempt Status.  Company acknowledges that University, as apublic institution of the Commonwealth of Massachusetts, holds the status of anexempt organization under the United States Internal Revenue Code.  Company also acknowledges that certainfacilities in which the licensed inventions were developed may have beenfinanced through offerings of tax-exempt bonds. If the Internal Revenue Service determines, or if counsel to Universityreasonably determines, that any term of this Agreement jeopardizes the tax-exemptstatus of University or the bonds used to finance University facilities, the relevantterm shall be deemed an invalid provision and modified in accordance withSection 10.11.

 

10.4.  Counterparts.  This Agreement may be executed in one or morecounterparts, each of which shall be deemed an original, and all of whichtogether shall be deemed to be one and the same instrument.

 

10.5.  Headings.  All headings are for convenience only andshall not affect the meaning of any provision of this Agreement.

 

10.6.  Binding Effect.  This Agreement shall be binding upon andinure to the benefit of the parties and their respective permitted successorsand assigns.

 

10.7.  Assignment.  This Agreement may not be assigned by eitherparty without the prior written consent of the other party, except that Companymay assign this Agreement to an Affiliate or to a successor in connection withthe merger, consolidation, or sale of all or substantially all of its assets orthat portion of its business to which this Agreement relates.

 

10.8.  Amendment and Waiver.  This Agreement may be amended, supplemented,or otherwise modified only by means of a written instrument signed by bothparties. Any

 

17

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waiver of any rights or failure to act in aspecific instance shall relate only to such instance and shall not be construedas an agreement to waive any rights or fail to act in any other instance,whether or not similar.

 

10.9.  Governing Law and Forum.  This Agreement shall be governed by andconstrued in accordance with the laws of the Commonwealth of Massachusettsirrespective of any conflicts of law principles. Each party agrees that anylegal action arising out of or in connection with this Agreement shall bebrought in, as appropriate, the Massachusetts Superior Court in Suffolk Countyor the United States District Court for the Eastern District of Massachusetts.

 

10.10.  Notice. Any notices required or permitted under this Agreement shall be inwriting, shall specifically refer to this Agreement, and shall be sent by hand,recognized national overnight courier, confirmed facsimile transmission,confirmed electronic mail, or registered or certified mail, postage prepaid,return receipt requested, to the following addresses or facsimile numbers ofthe parties:

 

If to University:

 

Office of Commercial Ventures andIntellectual PropertyUniversity of Massachusetts55 Lake Avenue NorthWorcester, MA 01655

Attention:                 Joseph F.X. McGuirlExecutive Director

 

Tel: (508) 856-1626

Fax: (508) 856-5004

 

If to Company:

 

Advanced Cell Technology, Inc.295 Kennedy Memorial DriveWaterville, ME 04901

Attention:                 Thomas A. PowellPresident and Chief Operating Officer

 

Tel: (207) 873-0007Fax: (207) 873-1823

 

All notices under this Agreement shall bedeemed effective upon receipt. A party may change its contact informationimmediately upon written notice to the other party in the manner provided inthis Section.

 

10.11. Severability.  In the event that any provision of thisAgreement shall be held invalid or unenforceable for any reason, suchinvalidity or unenforceability shall not affect

 

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any other provision of this Agreement, andthe parties shall negotiate in good faith to modify the Agreement to preserve(to the extent possible) their original intent. If the parties fail to reach a modified agreement within sixty (60) daysafter the relevant provision is held invalid or unenforceable, then the disputeshall be resolved in accordance with the procedures set forth in Article 9.While the dispute is pending resolution, this Agreement shall be construed asif such provision were deleted by agreement of the parties.

 

10.12. Entire Agreement.  Except for the Research Agreement, thisAgreement constitutes the entire agreement between the parties with respect toits subject matter and supersedes all prior agreements or understandingsbetween the parties relating to its subject matter.  Specifically, the parties agree that the termsof this Agreement supersede any inconsistent terms of the Prior Agreement,which are hereby cancelled and extinguished.

 

IN WITNESS WHEREOF, the partieshave caused this Agreement to be executed by their duly authorizedrepresentatives as of the date first written above.

 

 
| UNIVERSITY OF MASSACHUSETTS  AT AMHERST | ADVANCED CELL TECHNOLOGY, INC. |
|-----------------------------------------|--------------------------------|
|                                    |                           |
|                                    |                           |
| By:                                     | /s/ Frederick W. Byron         |   | By: | /s/ Thomas A. Powell |   |
|                                    | Frederick W. Byron, Jr., Ph.D. |   | Thomas A. Powell |
|                                    | Vice Chancellor for Research   |   | President and Chief Operating Officer |
|                                         |                                |  |  |  |  |

 

19

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EXHIBIT AList of Patent Rights and Biological Materials

 

Patent Rights

 

Patent applications filed in US:

 

“Cultured Inner Cell Mass Cell Lines Derived From Ungulate Embryos” USpatent office filing number 08/626-054 filed on 4/1/96, Burns Doane and Mathisfile #000270-02

 

“Embryonic or Stem-Like Cell Lines Produced by Cross Species NuclearTransplantation” US patent office filing number 08/699-040 filed on 8/19/96,Burns Doane and Mathis file #000270-08

 

Patent applications being prepared:

 

“Cloning Ungulates Using Donor Nuclei From Fetal and Adult Cells”, BurnsDoane and Mathis file #000270-07

 

Biological Materials as of the Execution Date

 

1.             swine and cattle embryonic stem cell lines

2.             transgenic (beta geo construct) swine andcattle embryonic stem cell lines

3.             culture chicken primordial germ cells

4.             transgenic (beta geo construct) swine andcattle fibroblast cell lines

5.             transgenic mice with the PEPCK promotergrowth hormone gene under the tel regulatory system and the DNA constructs tomake them.

6.             transgenic fetuses derived from #2

7.             chickens produced from #3

 

The list of Biological Materials may be amended by addition or deletionduring the term of the Agreement based upon research performed in accordancewith the Research Agreement.

 

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EXCLUSIVE LICENSE AGREEMENTAMENDMENT

 

This Agreement, effective as ofSeptember 1, 1997 (the “Effective Date”), is between the University ofMassachusetts (“University”), a public institution of higher education of theCommonwealth of Massachusetts, as represented by its Amberst campus, andAdvanced Cell Technology, Inc. (“Company”), a Delaware corporation.

 

WHEREAS, University and Company previously enteredinto a Research Agreement dated April 15, 1994 (the “Prior Agreement”), whichhas been superseded by a Research Collaboration Agreement dated as of April 16,1996 (the “Research Agreement”);

 

WHEREAS, University and Companypreviously entered into an Exclusive License Agreement, effective April 16, 1996,granting Company rights to inventions that resulted from the Prior Agreementand options to inventions resulting from the Research Agreement;

 

WHEREAS, the parties agree thatmodification of the Exclusive License Agreement is necessary to clarify itsapplication to transactions of Company to promote development of theinventions;

 

WHEREAS, Company is required toobtain consent from the University for all sublicenses of the rights granted bythe Exclusive License Agreement before they are executed;

 

WHEREAS, Company has entered intoan agreement with Genzyme Transgenics Corporation dated as of September 25, 1997(the “Genzyme Agreement”) to develop and commercialize the inventions forpharmaceutical, nutriceutical, and other therapeutic uses;

 

WHEREAS, income from the GenzymeAgreement is subject to the terms of this Agreement;

 

WHEREAS, Company has entered intoan agreement with Cima Biotechnology, Inc., (the “Cima Agreement”) to developand commercialize the inventions for the production of transgenic chickens;

 

WHEREAS, income from the CimaAgreement is subject to the terms of this Agreement;

 

WHEREAS, Company has formed ACTAgriculture, L.L.C. (“ACTAG”) for sublicensing and not direct manufacture andsale of the inventions in the agricultural field, excluding chickens;

 

WHEREAS, Company has entered intoan agreement with ACTAG, dated as of April 1, 1998 (the “ACTAG Agreement”) todevelop and commercialize the inventions in the agricultural field, excludingchickens;

 

WHEREAS, income from the ACTAGAgreement is subject to the terms of this Agreement;

 

WHEREAS, ACTAG has entered into ajoint venture agreement, with Ultimate Genetics, L.L.C.. and Camp Cooley, Ltd.,to form Ultimate BioServices, L.L.C., effective as of May 20, 1998, to use theinventions for certain agricultural applications; and

 

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WHEREAS, Ultimate BioServices isfifty percent (50%) owned by ACTAG.

 

THEREFORE, in consideration forthe premises and terms of this agreement. University and Company agree thatSections 1.10 and 4.3 are modified and Section 3.6 is added as follows:

 

1.10. “Sublicense Income”  means consideration that Company receives forthe transfer or use of rights that are granted Company under Article 2, whetherthrough sublicense, cooperative development agreement, intermediate salesarrangement, or other agreement or mechanism, including without limitationlicense fees, royalties, milestone payments, equity payments, up front fees,success fees, and license maintenance fees, but excluding payments (1) made inconsideration for the issuance of equity or debt securities of Company at fairmarket value and (2) specifically committed to budgeted research or developmentof Licensed Products or Licensed Services. Sublicense Income does not include(a) ordinary pro rata dividends or distributions from an Affiliate that Companymay receive in its capacity as**anowner of the Affiliate, or (b) proceeds from a transaction of the typecontemplated by Section 10.7 of the Exclusive License Agreement.

 

3.6. March-In Rights.  IfCompany fails to achieve income-generating activity for the University forLicensed Products or Licensed Services in any of the licensed fields listed inSection 4.1(a) before April 16, 2001. the University may terminate theagreement as to that particular field upon written notice to Company.

 

4.3. Sublicense Income.  Companyshall pay University a total of Eighteen Percent (18%) of all SublicenseIncome, except for equity. University shall receive Ten Percent (10%) of thetotal equity received by Company for any transfer of the rights granted by thisAgreement. Except for royalty-based payments, such amounts shall be due andpayable within sixty (60) days after Company receives the relevant payment fromthe Sublicensee; royalty-based payments of Sublicense Income shall be due andpayable as provided in Article 5 below. Company shall direct UltimateBioServices to pay royalties directly to the University according to the ratesset forth in Section 4.1(a) of this Agreement.

 

The parties have caused thisAgreement to be executed by their duly authorized representatives as of thedate first written above.

 
| UNIVERSITY OF MASSACHUSETTS | ADVANCED CELL TECHNOLOGY, INC.                                      |
|-----------------------------|---------------------------------------------------------------------|
|                        |                                                                |
|                        |                                                                |
| By:                         |  /s/ Joseph F.X. McGuirl                                       |   | By: |  /s/ Robert H. Saglio |   |
|                        | Joseph F.X.  McGuirl                                                | Printed Name: | Robert H. Saglio |
|                        |                                                                |   |   |
| Its:                        | Executive  Director, Commercial  Ventures and Intellectual Property | Its: | President and Chief Operating Officer |
|                        |                                                                |   |   |
| Date:                       | 9 July 98                                                           |   | Date: | July 2, 1998 |   |
|                             |                                                                     |  |  |  |  |  |  |  |  |  |

 

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**Exhibit 10.2.2**

 

SECOND AMENDMENT TO EXCLUSIVELICENSE AGREEMENT

 

This Second Amendment toExclusive License Agreement, effective as of May 31, 2000, is between theUniversity of Massachusetts (“University”), a public institution of highereducation of the Commonwealth of Massachusetts, as represented by its Amherstcampus, and Advanced Cell Technology, Inc. (“Company”), a Delaware corporation.

 

WHEREAS, University and Companypreviously entered into an Exclusive License Agreement, effective April 16,1996, which was modified by an Exclusive License Agreement Amendment, effectiveas of September 1, 1997 (together, the “License Agreement”) granting Companyrights to certain inventions;

 

WHEREAS, Company requested thatUniversity agree to rescind a portion of the field of the License Agreementrelating to the production of immunoglobulin in *Bos taurus, Bos indicus,*and *Leporidae*in favor of a direct license from the Universityto Hematech, L.L.C. for that field; and

 

WHEREAS, the University andHematech, L.L.C., have agreed on terms for the license in the field ofproduction of immunoglobulin in *Bos taurus,Bos indicus,*and *Leporidae.*

 

THEREFORE, in consideration forthe premises and terms of this Second Amendment, University and Company agreeas follows:

 

1.             Additionsto the License Agreement.  Section2.1(c) is added to the License Agreement to read -

 

PartialRescission.  Notwithstanding any provisions in thisAgreement to the contrary, the parties agree that (i) the right to use thePatent Rights for production of immunoglobulin in the blood of *Bos taurus*and *Bos indicus*is rescinded from this Agreement, and (ii) theright to use the Patent Rights for production of immunoglobulin in the blood of*Leporidae is*converted tononexclusive. The exclusive right to use the Patent Rights for production ofimmunoglobulin in the blood of *Bos taurus*and*Bos indicus*and the non-exclusiveright to use the Patent Rights for production of immunoglobulin in the blood of*Leporidae*have been granted toHematech, L.L.C. through a direct license with the University.

 

2.             Amendmentsto the License Agreement. Section 2.1(a) is deleted from the LicenseAgreement and replaced with the following –

 

PatentRights and Biological Materials.  Subject to the terms of thisAgreement, University hereby grants to Company and its Affiliates (i) anexclusive, worldwide, royalty-bearing license (with the right to

 

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sublicense)under its commercial rights in the Patent Rights and Biological Materials todevelop, make, have made, use, and sell Licensed Products in any field and todevelop and perform Licensed Services in any field, except as provided inSection 2.1(c) of this Agreement and (ii) a non-exclusive, worldwide,royalty-bearing license (with the right to sublicense) under its commercialrights in the Patent Rights and Biological Materials to develop, make, havemade, use, and sell Licensed Products consisting of immunoglobulin produced inthe blood of *Leporidae*and todevelop and perform Licensed Services relating to immunoglobulin produced inthe blood of *Leporidae.*

 

3.                                       Governing Law.  ThisSecond Amendment is governed by and construed in accordance with the laws ofthe Commonwealth of Massachusetts and is binding upon and inures to the benefitof the parties and their respective successors and assigns.

 

4.                                       Entire Agreement; Amendment.  TheLicense Agreement, as amended by this Second Amendment, contains the entireagreement between the parties with respect to the matters discussed in thisSecond Amendment. This Second Amendment may not be modified except in writingsigned by both parties.

 

5.                                       Ratification of License Agreement.  Exceptto the extent amended by this Second Amendment, the terms of the LicenseAgreement are affirmed in all respects and continue in full force.

 

The parties have caused thisAgreement to be executed by their duly authorized representatives as of thedate first written above.

 
| UNIVERSITY OF MASSACHUSETTS | ADVANCED CELL TECHNOLOGY, INC.                                        |
|-----------------------------|-----------------------------------------------------------------------|
|                        |                                                                  |
|                        |                                                                  |
| By:                         | /s/ Joseph F.X. McGuirl                                               |   | By: | /s/ Michael D.West |   |
|                        | Joseph F.X.  McGuirl                                                  | Michael D.West |
|                        | Executive  Director of Commercial  Ventures and Intellectual Property | President and CEO |
|                        |                                                                  |   |
| Date:                       | 14 Jun 2000                                                           |   | Date: | 6-14-00 |   |
|                             |                                                                       |  |  |  |  |  |  |  |  |

 

2

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**Exhibit 10.2.3**

 

THIRD AMENDMENT TO EXCLUSIVELICENSE AGREEMENT

 

This Agreement, effective as ofSeptember 19, 2002 (the “Effective Date”), is among the University ofMassachusetts (“University”), a public institution of higher education of theCommonwealth of Massachusetts, as represented by its Amherst campus andAdvanced Cell Technology, Inc (“Company”), a Delaware corporation.

 

WHEREAS, University and Companypreviously entered into an Exclusive License Agreement, effective April 16,1996, which was modified by an Exclusive License Agreement Amendment, effectiveas of September 1, 1997, and further amended by the Second Amendment toExclusive License Agreement, effective as of May 31, 2000 (together, the “LicenseAgreement”) granting Company rights to certain inventions;

 

WHEREAS, under the LicenseAgreement, Company is required to obtain consent from the University for allsublicenses of the rights granted by the Exclusive License Agreement beforethey are executed;

 

WHEREAS, Company desires toremove the requirement of University consent for sublicenses; and

 

WHEREAS, University is willing toremove the requirement of University consent for sublicenses under certainconditions in consideration for an equity stake in Company.

 

THEREFORE, in consideration forthe premises and terms of this Third Amendment, University and Company agreethat Section 2.2 is modified and Section 4.5 is replaced as follows:

 

2.2. Sublicenses.  Companymay grant sublicenses of its rights under Section 2.1 only in accordance withthe following requirements:

 

(a)  Company shall provide adraft copy of any sublicense agreement to the University at least thirty (30)days before execution to allow the University to comment on the terms of thesublicense.

 

(b)  Company shall provide afully executed copy of all sublicense agreements within thirty (30) days afterexecution.

 

(c)  Company shall report toUniversity annually regarding the progress of Sublicensees in developing LicensedProducts.

 

(d)  Company shall manageSublicensees’ development efforts under the sublicenses to ensure reasonableand continuous progress in developing Licensed Products to commercialapplication.

 

(e)  All sublicense agreementsshall expressly bind Sublicensees to the terms of the License Agreement.

 

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(f)  Company remains primarilyaccountable for performance of all sublicense agreements and for termination ofSublicensees that fail to make diligent progress in achieving commercialapplication of Licensed Products.

 

(g)  Company may not transfer theright to grant further sublicenses in sublicense agreements, unless thesublicense agreement grants the exclusive right to practice the Patent Rightsin a limited field. Company may not grant Sublicensees the right to transfersublicensing rights to their Sublicensees. By way of illustration, Company maytransfer the right to grant sublicenses to X Corporation in a limited field ofuse.  X Corporation may grant asublicense to Y Corporation, but Y Corporation may not under any circumstanceswithout the consent of Company and the University grant sublicenses to anyother entity which consent will be granted or denied in the Company’s and the University’sdiscretion.

 

(h)  Company shall require inevery sublicense agreement the express, written and discretionary consent ofCompany for any assignment of the sublicense to a different entity.

 

(i) Company shall require in every sublicense agreement the receipt offair consideration (which may be in the form of royalties, lump sum payments,or equity) in exchange for the sublicense

 

4.5. Equity.  In partialconsideration for the removal of the requirement for consent by the Universityfor sublicenses as provided in Section 2.2 above, Company shall issue toUniversity Two Hundred Eighty-Four Thousand (284,000) shares of common stock ofCompany, which represents five percent (5%) of the issued and outstandingcommon stock (the “Shares”) of Company. Within thirty (30) days after theEffective Date of this Third Amendment, Company shall deliver to the Universityone or more stock certificates representing the Shares, such stockcertificate(s) to be issued in the name of the University. Exhibit A to thisThird Amendment sets forth the capitalization of Company. In connection withthe equity consideration described above, the University represents, warrants,and covenants as set forth in Exhibit B attached hereto.

 

The parties have caused thisAgreement to be executed by their duly authorized representatives as of theEffective Date.

 
| UNIVERSITY OF MASSACHUSETTS                                                       | ADVANCED CELL TECHNOLOGY, INC. |
|-----------------------------------------------------------------------------------|--------------------------------|
|                                                                              |                           |
| By:                                                                               | /s/ William S. Rosenberg       |   | By: |  /s/ Michael D.West |   |
|                                                                              | William S.  Rosenberg          | Michael D.West |
|                                                                              |                           |   |
| Its: Executive  Director, Office ofCommercial Ventures and Intellectual  Property | Its: President and CEO         |
|                                                                              |                           |   |
| Date:                                                                             | 9/19/2002                      |   | Date: | 9/23/2002 |   |
|                                                                                   |                                |  |  |  |  |  |  |  |  |

 

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