**Exhibit 10.13.2**

 

SPONSORED RESEARCH AGREEMENT

 

THIS SPONSORED RESEARCHAND LICENSING AGREEMENT (“Agreement”) is made this 16th day ofMarch, 2003, by and between Blue Horse Labs, Inc. (“Blue Horse,”) andAdvanced Cell Technology; Inc. (“Contractor”).

 

BlueHorse desires to have certain research conducted as set forth in the researchprotocol attached hereto as Exhibit A (“Research”); and

 

Contractordesires to conduct this research for Blue Horse and to subsequentlycommercialize the results of the research where Blue Horse so requests;

 

NOW, THEREFORE, in consideration of the mutual promises and covenantscontained herein, and other good and valuable consideration, the receipt andsufficiency of which is hereby acknowledged, the parties hereby agree as follows:

 

Agreement

 

1.             Funding. Blue Horse will pay Contractor theamount and according to the schedule and terms as set forth on theattached Exhibit B.

 

2.             ProgressReports.  Contractor shall providewritten progress reports concerning the conduct and results of the Research asrequested by Blue Horse, in any event no more frequently than once per calendarquarter.  Where such request is made,reports shall be forwarded within thirty (30) calendar days of such request.

 

3.             Conductof Research.  Contractor agrees touse its commercially reasonable best efforts to conduct the Research as setforth and described on Exhibit A attached hereto.

 

4.             IntellectualProperty.  “Intellectual Property”shall mean all inventions, discoveries, know-how, technical information, worksof authorship, improvements and other information, together with all patentrights, trade secret rights, copyright rights and other intellectual propertyand proprietary rights therein, hereunder and thereto, which are or wereconceived (whether or not reduced to practice), invented, created and/or made (i) byemployees of Contractor, (ii) jointly by at least one employee orconsultant of Contractor and at least one employee or consultant of Blue Horseor Blue Horse affiliates, if any, or (iii) by consultants to Contractor,if any, in all such cases (i), (ii) and/or (iii) in the course ofperformance of the Research hereunder.

 

5.             Ownershipof Intellectual Property.  Inconsideration of the research support set out above and other good and valuableconsideration.  Contractor hereby assignsto Blue Horse all of its rights to all Intellectual Property resulting, orarising from or in connection with, the performance of the Research hereunder,including all patents and patent applications.

 

6.             Disclosureand Protection of Intellectual Property.  Contractor hereby agrees that it will promptlydisclose to Blue Horse all material and potentially parentable Intellectual

 

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Property, and that, uponrequest, authorized officials of Contractor will execute and deliver any andall documents or instruments and take any other action which Blue Horse shallreasonably deem necessary to transfer and vest the rights and licenses grantedhereunder, to perfect copyright and patent protection with respect to, or toprotect Blue Horse’s interest in, any rights, title and interests in and tosuch Intellectual Property.  Blue Horseshall have the sole right to prepare, file, prosecute and maintain, at its ownexpenses, by counsel of its choice, any U.S. and foreign patent applicationscovering inventions within the Intellectual Property.  Contractor shall cooperate with Blue Horse inconnection with the filing, prosecution and maintenance of such patents andpatent applications.  Contractorspecifically agrees to execute all documents, to ensure the cooperation of itsemployees and independent contractors, and take any other reasonable actionsnecessary to assist Blue Horse in filing, prosecuting and maintaining suchpatents and patent applications in the U.S. Patent and Trademark Office and inapplicable foreign patent offices.  Theobligations of this section shall continue beyond the termination of thisagreement with respect to such Intellectual Property and shall be binding uponthe successors and assigns of Contractor. Blue Horse agrees to pay all copyright and patent fees and expensesincurred by the Contractor for any assistance rendered pursuant to theforegoing.

 

7.             License. Blue Horse hereby grants, and agrees togrant, to Contractor an exclusive, worldwide license, with unlimited rights tosublicense, to all rights in, to and under the Intellectual Property, includingthe right to make, use, sell, offer to sell, import and otherwise practice andexploit products, processes and services, subject to the Net Sales Minimums setforth in Exhibit B.  In return forthis license, Contractor shall pay royalties to Blue Horse as set forth in Exhibit Bon all Net Sales of Licensed Products and Net Royalty Revenue.  Net Royalty Revenue shall mean revenuereceived from sublicenses of any patent rights within the Intellectual Propertylicensed to Contractor hereunder.  Theforegoing royalty obligation shall last from the date hereof until the date thelast remaining patent within the Intellectual Property has expired, isabandoned or is invalidated.  Forpurposes of this Agreement “Net Sales” shall mean the gross amount billed orinvoiced by Contractor for the sale or other disposition of Licensed Products,less the following deductions: (a) discounts, chargebacks, allowances forbad debts or uncollectible amounts, Medicaid/Medicare rebates (other than asdescribed in (d) below) and allowances actually taken; (b) sales,use, value added and excise taxes, import and custom duties, tariffs, and anyother similar taxes, duties or tariffs, to the extent actually paid by theselling party; (c) freight, insurance, packaging costs and othertransportation charges to the extent added to the sales price; and (d) amountsrepaid or credits taken by reason of rejections, defects or returns or becauseof retroactive price reductions or due to recalls or government laws orregulations requiring rebates. “Licensed Product” shall mean any product,device, or procedure, the manufacture, use or sale of which would infringe avalid claim of any issued, unexpired patent within the intellectual Property(which patent has not been invalidated) in the country of such manufacture, useor sale, but for the license granted herein.

 

8.             NetSales Minimums.  Contractor shall useits commercially reasonable best efforts to commercialize the IntellectualProperty as set forth in Exhibit B.  Where one or more commercialization provisionsof Exhibit B are not met, it shall be deemed a material default underparagraph 16.

 

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9.             RoyaltyPayments and Reporting.  On or beforethe forty-fifth (45th) day following the end of each fiscal quarter, Contractorshall submit to Blue Horse full and accurate statements showing the quantity,description and Net Sales of any Licensed Products distributed and/or soldduring the preceding fiscal quarter and the amount of any sublicense revenuereceived by Contractor during such fiscal quarter (together with thecalculation of Net Sales, net sublicense revenue and corresponding royaltiesowned hereunder), including any additional information kept in the ordinarycourse of business by Contractor.  Allpayments for royalties with respect to such fiscal quarter and statement shallbe made by Contractor to Blue Horse simultaneously with the submission of thestatements.  Such quarterly statementsshall be submitted only when they reflect any amounts due hereunder.  Contractor shall inform Blue Horse withinthirty (30) days of the first sale of License Products and the first receipt ofnet sublicense revenue.  In addition,Contractor will provide Blue Horse with its audited financial statement withinone hundred eighty (180) days of the end of Contractor’s fiscal year provided,however, that Contractor shall not be required to deliver audited financialstatements until such time as there are Net Sales or net sublicense revenuehereunder.

 

10.           Dutyto Maintain Blue Horse Rights.  WhereContractor subcontracts any part of the conduct of the Research, Contractorshall require the subcontractor to perform subcontractor’s duties under thesame requirements as those set forth for Contractor under this Agreement.

 

11.           Infringement. In the event a party to this Agreementacquires information that a third party is infringing one or more of thepatents within the Intellectual Property, the party acquiring such informationshall promptly notify the other party to the Agreement in writing of suchinfringement.

 

In the event of aninfringement of an Intellectual Property patent Contractor shall have anexclusive right (but not the obligation) to bring suit against the infringerfor a period of six (6) months after acquiring information that a thirdparty is infringing.  Should Contractorelect to bring suit against an infringer and Blue Horse is joined as a partyplaintiff in any such suit, Blue Horse shall have the right to approve thecounsel selected by Contractor to represent Contractor and Blue Horse, whichapproval shall not be unreasonably withheld.  The expenses of such suit or suits thatContractor elects to bring, including any reasonable out-of-pocket expenses ofBlue Horse incurred in conjunction with the prosecution of such suit or thesettlement thereof, shall be paid for entirely by Contractor and Contractorshall hold Blue Horse free, clear and harmless from and against any and allcosts of such litigation, including attorneys’ fees.  In the event Contractor exercises the right tosue herein conferred, it shall have the right to first reimburse itself out ofany sums actually recovered in such suit or in settlement thereof for all costsand expenses of every kind and character, including attorneys’ fees,necessarily involved in the prosecution of any such suit, and if after suchreimbursement, any funds shall remain from said recovery, Contractor shallpromptly pay to Blue Horse a percentage of such remainder according to theInfringement Recovery

 

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Percentage set forth inExhibit B, and Contractor shall be entitled to receive and retain the balanceof the remainder of such recovery.

 

In the event Contractordoes not bring suit by the end of the six (6) month period describedabove, Blue Horse shall have the right (but not the obligation) to bring suit,after written notice to Contractor of its intention.  If Contractor is joined as a party plaintiffin any such suit, Contractor shall have the right to approve the counselselected by Blue Horse to represent Blue Horse and Contractor, which approvalshall not be unreasonably withheld.  Theexpense of such suit or suits that Blue Horse elects to bring, including any reasonableout-of-pocket expenses of Contractor incurred in conjunction with theprosecution of such suit or the settlement thereof, shall be paid for entirelyby Blue Horse and Blue Horse shall hold Contractor free, clear and harmlessfrom and against any and all costs of such litigation, including attorneys'fees.  In the event Blue Horse exercisesthe right to sue herein conferred, it shall have the right to first reimburseitself out of any sums actually recovered in such suit or in settlement thereoffor all costs and expenses of every kind and character, including attorneys’fees, necessarily involved in the prosecution of any such suit, and if aftersuch reimbursement, any funds shall remain from said recovery, Blue Horse shallpay Contractor a percentage of such remainder according to the infringementRecovery Percentage set forth in Exhibit B, and Blue Horse shall beentitled to receive and retain the balance of the remainder of such recovery.

 

12.           Indemnification.  Each Party shall indemnify and hold harmlessthe other, its parent, subsidiaries, affiliates, successors, assigns,employees, officers, directors, agents, or subcontractors from and against anyand all suits, claims, losses, forfeitures, demands, fees, damages,liabilities, costs, expenses, obligations, proceedings, or injuries, of anykind or nature, including reasonable attorney’s fees which that Party mayhereafter incur, become responsible for, or pay out as a result of death orpersonal injury (including bodily injury) to any person, destruction or damageto any property, contamination of or adverse effects on the environment, orviolation of governmental law, regulation, or orders, arising out of orconnected with the other Party’s breach of any term or provision of thisAgreement or any negligent act or omission or willful misconduct of the otherParty, its agents, employees or subcontractors in the course of performing thisAgreement.

 

13.           LegalMatters.  This Agreement shall begoverned in all respects by the laws of the State of Arizona (without referenceto or application of its conflicts of laws rules or principles) and theUnited States of America.  Each of theParties irrevocably consents to the exclusive personal jurisdiction of thefederal and state courts located in Arizona, as applicable, for any matterarising out of or relating to this Agreement, except that in actions seeking toenforce any order or any judgment of such federal or state courts located inArizona, such personal jurisdiction shall be nonexclusive.  If any dispute arises between the Parties withrespect to this Agreement which leads to a proceeding to resolve such dispute,the prevailing Party shall be entitled to receive reasonable attorneys’ fees,expert witness fees and out-of-pocket costs incurred in such proceeding, inaddition to any other relief.

 

Notwithstanding theforegoing, the Parties agree that prior to initiating any legal proceedingsagainst the other, the Parties will engage a neutral mediator who will becharged with

 

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assisting the parties toreach a mutually agreeable resolution of all contested matters.  The mediation shall take place in Arizona.  The mediator shall be chosen by mutualagreement of the Parties and the mediator’s fees shall be borne equally by theParties.  In the event that a mediatorcannot be agreed upon by the Parties, each Party shall chose a mediator and thetwo mediators shall together chose a third mediator who will conduct themediation.  The costs of the twomediators chosen to choose the third mediator shall be borne equally by theParties.  The Parties agree toparticipate in the mediation in good faith.

 

14.           Publicity.  Neither party may use each other’s names orthat of any affiliates, officers or employees in any public announcement,advertising, promotional, or sales literature without the prior written consentof the named party.

 

15.           Headings.  The descriptive headings contained in thisAgreement are included for convenience and reference only and shall not be heldto expand, modify or aid in the interpretation, construction or meaning of thisAgreement.

 

16.           Term/Termination.  This Agreement may be terminated by eitherparty immediately by written notice upon the occurrence of any of the followingevents: (i) if the other ceases to do business, or otherwise terminatesits business; (ii) if the other breaches any material provision of thisAgreement and fails to fully cure such breach within forty-five (45) days’ of writtennotice describing the breach; or (iii) if the other seeks protection underany bankruptcy, receivership, trust, deed, creditor’s arrangement, orcomparable proceeding, or if any such proceeding is instituted against theother and not dismissed within forty-five (45) days.  Upon termination or expiration of thisAgreement, all rights and licenses of Contractor hereunder shall terminate.

 

Notwithstanding theforegoing, where Contractor receives notice that Blue Horse is terminating thisAgreement according to the provisions of section 16(i), Contractor shallhave thirty (30) days in which to exercise a first right of refusal to purchaseall of Blue Horse’s rights in and to this Agreement.  Contractor may exercise this right bynotifying Blue Horse in writing of its election (“Notice of Election”).  Where no Notice of Election has been receivedby Blue Horse within the time set forth herein.  Contractor shall have waived its purchaserights.  The purchase price of Blue Horse’srights herein shall be the fair market value of the underlying IntellectualProperty as determined by averaging the appraised value of the intellectualproperty proposed to be purchased as determined in good faith by an appraiserretained by Blue Horse and an appraiser retained by Contractor.  The party who hires the appraiser shall paythat appraiser.  The payment of fairmarket value and documentation of any resulting assignment shall occur withinninety (90) days of Contractor’s Notice of Election unless mutually agreed inwriting by the parties.  Where Contractorelects not to purchase Blue Horse’s rights herein, and any rights of Blue Horsein this Agreement or the underlying Intellectual Property are transferred to athird party as a result of the termination or cessation of business of BlueHorse, this Agreement shall not terminate and the successor in interest to BlueHorse shall automatically succeed to all Blue Horse’s rights and obligationshereunder without change in the terms or other provisions of this Agreement.

 

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If Contractor is declaredinsolvent or is subject to liquidation in bankruptcy, all rights granted toContractor herein shall revert to Blue Horse exclusively and Contractor’sbankruptcy estate shall have no right or claim to any Intellectual Property orother assets funded by Blue Horse.  AllContractor obligations related to the Intellectual Property shall survive anyexpiration or termination of this Agreement.  Notwithstanding the foregoing, Contractor may,by written notice to Blue Horse, terminate the licenses in, to and under theIntellectual Property granted to it hereunder, or any portion thereof, and allcorresponding royalty obligations shall thereupon terminate as well.  All other provisions that logically ought tosurvive termination or expiration of this Agreement, as well as any obligationsthat have accrued prior to termination or expiration, shall survive.

 

17.           Confidentiality. The Parties hereto have executed amutual confidentiality agreement attached as Exhibit C hereto which shallbe considered a part of this Agreement.

 

18.           Disclaimerof Warranty.  EXCEPT AS EXPRESSLYPROVIDED FOR IN THIS AGREEMENT, NEITHER PARTY MAKES, AND EACH PARTY HEREBYDISCLAIMS, ANY AND ALL REPRESENTATIONS AND WARRANTIES OF ANY KIND, EXPRESS ORIMPLIED, WITH RESPECT TO THE SUBJECT MATTER OF THIS AGREEMENT, INCLUDINGWITHOUT LIMITATION, WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULARPURPOSE AND NON-INFRINGEMENT.

 

19.           Assignment. This Agreement and the rights andprivileges thereof are not assignable or otherwise transferable by either partywithout the express written consent of the other party, provided however thateither party may assign this agreement to a successor in connection with amerger, acquisition or sale of the substantially all the business related tothe subject matter of this agreement.

 

20.           Notices. All notices required to be givenhereunder shall be deemed so given when hand-delivered, by registered mail,postage prepaid and return-receipt requested, or by a courier serviceguaranteeing next-day delivery, charges prepaid, and properly addressed to suchother party as set forth below or at such other address as may be specified byeither party hereto by written notice similarly sent or delivered.

 
| To Blue Horse:                             |   | To Contractor:                       |
|--------------------------------------------|--------|--------------------------------------|
|                                       |   |                                 |
| Blue Horse Labs, Inc.                 |   | Advanced Cell  Technology, Inc. |
| 4455 East  Camelback Road, Suite B100 |   | One Innovation  Drive                |
| Phoenix AZ 85018                           |   | Worcester, MA  01605                 |

 

21.           Independent Contractor.  Contractor is an independent contractor and,as such, will not be entitled to any benefits applicable to employees of BlueHorse.  Neither party is authorized orempowered to act as agent for the other for any purpose and shall not on behalfof the other enter into any Agreement, warranty, or representation as to anymatter.  Neither shall be bound by theacts or conduct of the other.

 

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22.           Compliancewith Laws.  Contractor shall complywith all applicable laws, rules, ordinances and regulations governing conductof the Research.  If approvals from anygovernment or other agencies are required by Contractor to perform its dutiesand obligations under this Agreement, Contractor will obtain those approvalsprior to the effective date of this Agreement.

 

23.           Limiton Liability.  IN NO EVENT SHALLEITHER PARTY BE LIABLE TO THE OTHER IN CONTRACT, TORT OR OTHERWISE FORINCIDENTAL, INDIRECT OR CONSEQUENTIAL DAMAGES OF ANY KIND ARISING OUT OF OR RELATINGTO THIS AGREEMENT, INCLUDING, WITHOUT LIMITATION, ECONOMIC DAMAGE OR LOSTPROFITS, REGARDLESS OF WHETHER THE PARTY SHALL BE ADVISED, SHALL HAVE OTHERREASON TO KNOW, OR IN FACT SHALL KNOW OF THE POSSIBILITY OF SUCH DAMAGES.

 

24.           Survival. If any provision of this Agreement isheld by a court of law to be illegal, invalid or unenforceable that provisionshall be deemed amended to achieve as nearly as possible the same economiceffect as the original provision, and the legality, validity and enforceabilityof the remaining provisions of this Agreement shall not be affected orimpaired.

 

25.           EntireAgreement.  This Agreement, alongwith the referenced mutual confidentiality agreement executed by the partiesprior to or contemporaneously with this Agreement, supersedes, terminates, andotherwise readers null and void any and all prior written or oral agreements orunderstandings between the Parties relating to the subject matter of thisAgreement.  Except as otherwise providedin this Agreement, only a written instrument signed by both Parties may modifythis Agreement.

 

INWITNESS WHEREOF, the parties hereto have executed this Agreement as of the datefirst set forth above.

 
| BLUE HORSE LABS,  INC. | ADVANCED CELL  TECHNOLOGY |
|------------------------|---------------------------|
|                   |                      |
|                   |                      |
| By:                    | /s/ Jonathan  Thatcher    |   | By: | /s/ Michael West |   |
| Name:                  | Jonathan  Thatcher        |   | Name: | MICHAEL WEST |   |
| Title:                 | Treasurer                 |   | Title: | President |   |
|                   |                      |   |   | 3-16-03 |   |
|                        |                           |  |  |  |  |  |  |  |  |  |

 

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