**Exhibit 10.20**

 

EXCLUSIVE LICENSE AGREEMENT (UMass IP)

 

This Exclusive License Agreement (“Agreement”) is made and entered intothis 14th day of May, 2004 (the “Effective Date”), by and betweenAdvanced Cell Technology, Inc., a Delaware corporation with offices located atOne Innovation Drive, Worcester, Massachusetts 01605 (“LICENSOR”), and PacGenCellco, LLC, a California limited liability company with offices located at 157Surfview Drive, Pacific Palisades, CA 90272 (“LICENSEE”) (LICENSOR and LICENSEEsometimes hereinafter referred to individually as a “Party” and collectively asthe “Parties”).

 

WITNESSETH

 

WHEREAS, LICENSOR owns or has licensed with sublicenseable interest thePATENT RIGHTS (as defined below) and KNOW-HOW (as defined below); and

 

WHEREAS, LICENSEE desires to obtain an exclusive worldwide licenseunder LICENSOR’s rights in such technology in the FIELD; and

 

WHEREAS, LICENSOR is willing to grant such a license to LICENSEE uponthe terms and conditions set forth below; and

 

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

 

ARTICLE 1 - DEFINITIONS

 

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

 

1.1           “ACT ANIMAL CELLLINES” shall mean cell lines of non-human animal origin developed by ACT.  These cell lines shall include but not belimited to murine and primate embryonic stem cells derived throughparthenogenesis, nuclear transfer or otherwise isolated from fertilizedblastocysts including the relevant information LICENSOR possesses associatedwith these cells, including but not limited to information on the cell’skaryotype, gene expression and growth characteristics.

 

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

 

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1.3           “FIELD” shall mean(1) the research, development, manufacture and selling of human and non-humananimal cells and ACT ANIMAL CELL LINES for commercial research use, includingsmall molecule and other drug testing and basic research, (2) the manufactureand selling of human cells for therapeutic and diagnostic use in the treatmentof human (a) diabetes and (b) liver diseases, and (3) the use of ACT ANIMALCELL LINES in the process of manufacturing and selling human cells fortherapeutic and diagnostic use in the treatment of human (a) diabetes and (b)liver diseases but where the final marketed product does not include ACT ANIMALCELL LINES (i.e. does not include the field of xenotransplantation); but FIELDshall exclude applications involving the use of cells in the treatment oftumors where the primary use of the cells is the destruction or reduction oftumors and does not involve regeneration of tissue or organ function.

 

1.4           “KNOW-HOW” means allcompositions of matter, techniques and data and other know-how and technicalinformation including inventions (whether or not patentable), improvements anddevelopments, practices, methods, concepts, trade secrets, documents, computerdata, computer code, apparatus, clinical and regulatory strategies, test data,analytical and quality control data, formulation, manufacturing, patent data ordescriptions, development information, drawings, specifications, designs,plans, proposals and technical data and manuals and all other proprietaryinformation that is owned or controlled by LICENSOR as of the Effective Datethat relates to cloning technology or to any of the subject matter described inor claimed by the PATENT RIGHTS and is relevant to the FIELD.  By way of illustration, but not in limitation,KNOW-HOW shall include commercial rights to any existing potential researchproducts, including reagents, developed by LICENSOR in the course of itsin-house research.  An example of this isthe proprietary culture medium developed by LICENSOR in the course of thedevelopment of LICENSOR’s proprietary ooplasmic transfer technology.

 

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

 

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

 

1.7           “LICENSED SERVICES”means any service, the developing, using, performing, selling, offering forsale, importing or exporting of which by LICENSEE would, but for the licensesgranted to LICENSEE in Article 2 of this Agreement, infringe a VALIDCLAIM of the PATENT RIGHTS in the country in which any such service is sodeveloped, used, performed, sold, offered for sale, imported or exported byLICENSEE.

 

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1.8          “LICENSED TECHNOLOGY”shall mean, collectively, the licensed PATENT RIGHTS and licensed KNOW-HOW.

 

1.9          “NETSALES” shall mean the amount billed or invoiced by LICENSEE for the sale orprovision of LICENSED PRODUCTS or LICENSED PROCESSES or LICENSED SERVICES less:

 

a)             discounts, credits, allowances and rebatesallowed;

 

b)            sales, tariff duties, use and other taxesor governmental charges directly imposed with reference to particular sales;

 

c)             special packaging, transportation andinsurance costs incurred and directly related to the sale of LICENSED PRODUCTS;

 

d)            amounts allowed or credited on returns; and

 

e)             uncollected accounts.

 

1.10         “NEURONAL & HEARTFIELD OPTION” means an option described in Section 15.18 hereof forLICENSEE to negotiate terms for license to the LICENSED TECHNOLOGY for thefield of diseases related to heart or neurodegenerative diseases

 

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

 

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

 

1.13         “TERM” has themeaning set forth in Section 9.1.

 

1.14         “TERRITORY” means theentire world.

 

1.15         “1996 UMASS LICENSE”means the Exclusive License Agreement between LICENSOR and the University ofMassachusetts (the “University”), dated April 16, 1996, as amended by theAmendment to Exclusive License Agreement dated September 1, 1999, the SecondAmendment to Exclusive License Agreement dated May 31, 2000, and the ThirdAmendment to Exclusive License Agreement dated September 19, 2002.

 

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1.16         “2003 UMASS LICENSE”means the Exclusive License Agreement between LICENSOR and the University datedApril 1, 2003.

 

1.17         “UMASS LICENSES”means the 1996 UMASS LICENSE and the 2003 UMASS LICENSE.

 

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

 

Additional terms may be defined throughout this Agreement.

 

ARTICLE 2 - GRANT

 

2.1           LICENSOR herebygrants to LICENSEE, and LICENSEE hereby accepts, subject to the terms andconditions hereof:

 

a)             A royalty bearing, exclusive license inthe TERRITORY in the FIELD and under the LICENSED TECHNOLOGY to (a) research,develop, make, have made, use, sell, offer for sale, import and export LICENSEDPRODUCTS, (b) research, develop, use, practice, sell, offer for sale, importand export LICENSED PROCESSES and (c) develop, use, perform, sell, offer forsale, import and export LICENSED SERVICES.  By way of example, but not in limitation,LICENSEE shall have the right to use LICENSED TECHNOLOGY within the FIELD forthe following purposes: to produce mammalian embryonic stem (ES) cells and toproduce from those mammalian embryonic cells, differentiated cells for humantherapeutic purposes or for commercial research purposes, including drugscreening assays, and to produce pluripotent cells including ES cells,differentiated human cells for human diagnostic and therapeutic purposes and/orfor commercial research purposes, including drug screening assays.

 

b)            A royalty bearing, twelve (12) monthexclusive license in the TERRITORY in the FIELD to expand in culture, preparefor sale, sell, offer for sale, import and export ACT ANIMAL CELL LINES.  The twelve-month term of exclusivity grantedto LICENSEE shall begin upon the date of the first sale of the ACT ANIMAL CELLLINES.  LICENSOR and LICENSEE agree thatafter the twelve-month period of exclusivity has passed, LICENSOR AND

 

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LICENSEE shall negotiate in good faith to establish reasonable minimumsales goals over reasonable evaluation periods in order to maintain LICENSEE’Sexclusive rights hereunder.  If LICENSORfails to meet the minimum sales goals then LICENSEE’s exclusive rights shallrevert to nonexclusive rights.

 

2.2           LICENSEE shall havethe right to sublicense the rights granted in Section 2.1 to thirdparties in connection with contracting with such third parties to (a) provideLICENSED PRODUCT marketing and distribution services to LICENSEE on behalf ofLICENSEE, (b) provide LICENSED SERVICES marketing services to LICENSEE onbehalf of LICENSEE or (c) manufacture for LICENSEE LICENSED PRODUCTS for saleby LICENSEE or a third party pursuant to the foregoing clause (a).

 

2.3           LICENSEE shall havethe right to grant sublicenses beyond the scope of those described in Section2.2 (a), (b), and (c) without the express prior written approval ofLICENSOR, however, LICENSOR shall be given at least 30 days prior writtennotice of an intent to sublicense and at least 30 days to comment on the textof the proposed sublicense agreement.  Inany case, such sublicenses shall meet the following conditions:

 

a)             the sublicensee shall not have the rightto grant further sublicenses;

 

b)            the sublicense shall not be assignablewithout prior written approval by LICENSEE and LICENSOR; and

 

c)             the sublicense shall include fairconsideration consistent with industry norms for upfront fees and royalties.

 

2.4           Within thirty (30)business days of the Effective Date, LICENSOR shall provide and transfer to LICENSEE,in writing where practicable, all information and data relating to the LICENSEDTECHNOLOGY and the ACT ANIMAL CELL LINES as may be reasonably necessary andrequested to allow LICENSEE to exploit the licenses granted hereunder.  LICENSOR shall work with LICENSEE in goodfaith to provide the necessary training for up to a total of 60 days, atLICENSOR’s facilities, necessary to allow LICENSEE to utilize the LICENSEDTECHNOLOGY and expand the ACT ANIMAL CELL LINES.  LICENSEE shall pay to LICENSOR all reasonableand customary expenses other than normal operating expenses incurred byLICENSOR in providing such training and technology transfer, including but notlimited to fees incurred to request documents from patent counsel or the UnitedStates Patent and Trademark Office.

 

2.5           LICENSEEacknowledges that a portion of the PATENT RIGHTS licensed to LICENSEE hereunderis owned by the University and is licensed to LICENSOR under the UMASSLICENSES.  In the event the UMASSLICENSES expire or are terminated for any reason pursuant to the provisions ofthe UMASS LICENSES or otherwise, the terms of the letter agreement attachedhereto as Exhibit B between LICENSOR, LICENSEE and the University shallapply to this Agreement.

 

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

 

ARTICLE 3 - LICENSEE OBLIGATIONSRELATING TO COMMERCIALIZATION

 

3.1           LICENSEE shall useits commercially reasonable and diligent efforts to bring one or more LICENSEDPRODUCTS, LICENSED PROCESSES or LICENSED SERVICES to market through an activeand diligent program for exploitation of the PATENT RIGHTS and to continueactive, diligent marketing efforts for one or more LICENSED PRODUCTS, LICENSEDPROCESSES or LICENSED SERVICES throughout the TERM of this Agreement.

 

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

 

3.3           LICENSEE shallmaintain complete and accurate records of LICENSED PRODUCTS, LICENSEDPROCESSES, LICENSED SERVICES and ACT ANIMAL CELL LINES that are made, used,sold or performed by LICENSEE under this Agreement.  Not later than April 1st of each yearfollowing the Effective Date, LICENSEE shall furnish LICENSOR with a summaryreport on the progress of its efforts during the prior year to develop andcommercialize LICENSED PRODUCTS, LICENSED PROCESSES, LICENSED SERVICES or ACTANIMAL CELL LINES, including without limitation research and developmentefforts, efforts to obtain regulatory approval, marketing efforts (includingLICENSED PRODUCTS, LICENSED PROCESSES, LICENSED SERVICES and ACT ANIMAL CELLLINES made, used, sold or performed) and sales figures, provided that suchreports shall be deemed Confidential Information (as defined in Section 10.1herein) subject to the provisions of Article 10

 

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of thisAgreement.

 

3.4           In the event thatLICENSOR determines that LICENSEE has not fulfilled its obligations under this Article3, LICENSOR shall furnish LICENSEE with written notice of such determination. Within thirty (30) days after receipt ofsuch notice, LICENSEE shall (i) fulfill the relevant obligation, (ii) negotiatewith LICENSOR a mutually acceptable schedule of revised obligations, or (3) ifLICENSEE disputes the alleged failure to fulfill its obligations, it shallpromptly seek appropriate judicial determination of the matter and diligentlypursue such action to a final determination with all appropriate speed; failingwhich, LICENSOR shall have the right, immediately upon written notice toLICENSEE, to terminate this Agreement as provided in Section 9.2 hereof.

 

ARTICLE 4 - CONSIDERATION

 

4.1           Initial Payment. In partial consideration of the licensegranted to LICENSEE from LICENSOR in Article 2 of this Agreement,LICENSEE agrees to pay as a “License Fee” to LICENSOR $150,000 in a convertiblepromissory note in the form attached hereto as Exhibit C.

 

4.2           Royalties.

 

a)              In partial consideration of the licensein the FIELD granted by LICENSOR to LICENSEE in Article 2 of thisAgreement, LICENSEE agrees to pay to LICENSOR an earned royalty equal to thefollowing percentages of the NET SALES in the FIELD made, used, sold, imported,exported or performed by LICENSEE in the TERRITORY.

 

(i)            6%on therapeutics,

(ii)           3%on diagnostics, and

(iii)                               10% on commercialresearch use of LICENSED TECHNOLOGY in all FIELDS except (iv) below and

(iv)                              12% on ACT ANIMAL CELLLINES

 

b)             No multiple royalties shall be payablebecause any LICENSED PRODUCT, LICENSED PROCESS or LICENSED SERVICE in theFIELD, its manufacture, use, lease, sale or performance are or shall be coveredby more than one patent or patent application within the PATENT RIGHTS.

 

c)              The obligation of LICENSEE to payroyalties or Sublicense Income (as defined in Section 4.5 herein)hereunder shall terminate for each country in the TERRITORY concurrently withthe expiration or termination of the last applicable VALID CLAIM within thePATENT RIGHTS in such country in which the LICENSED PRODUCT, LICENSED PROCESSor LICENSED SERVICE is, (as applicable), used, practiced,

 

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performed, sold, offered for sale, imported, exported or manufactured.

 

4.3           Minimum Royalties. Within 2 business days from theEffective Date hereof, LICENSEE shall pay to LICENSOR a minimum royalty fee of$100,000 in cash or by wire transfer.  Inaddition, commencing 12 months following the Effective Date, LICENSEE shall payto LICENSOR additional minimum royalty fees equal to the difference betweentotal Royalties actually paid in the preceding 12 months and the followingminimum amounts:

 

(i)                                     At 12 months,$10,000

(ii)                                  At 24 months, $20,000

(iii)                               At 36 months, $30,000

(iv)                              Annually thereafter,$40,000.

 

4.4           StackingRoyalties.  With the exception ofminimum royalties due to LICENSOR, if LICENSEE, its Affiliates or sublicenseesare required to pay royalties relating to any additional intellectual propertyfrom LICENSOR in order to exercise its rights hereunder to make, have made, useor sell any Product, then LICENSEE shall have the right to credit a pro-ratedportion of such royalty payments against the royalties owing to LICENSOR under Section4.2 of this Agreement with respect to sales of such Product such that in noevent shall the total of royalty payments that are due to LICENSOR in suchroyalty period exceed the royalty payments payable under Subsection 4.2(a)above.  Prorations shall be made in thesame manner as specified for combination products under Section 4.9below.

 

4.5           Sublicense Income. LICENSEE shall pay to LICENSOR a total ofThirty Three percent (33%) of all Sublicense Income.  “Sublicense Income” means consideration thatLICENSEE receives for the sublicense of rights that are granted LICENSEE under Article2, including without limitation license fees, milestone payments, equitypayments, up front fees, success fees, and license maintenance fees.

 

4.6           StackingSublicense Income.  The fees payableon Sublicense Income under Section 4.5 above shall be in addition to anyroyalties specified elsewhere in this Article 4, but if LICENSEE isobligated to pay or has paid to LICENSOR similar fees on Sublicense Incomeunder another license agreement with respect to the FIELD, then LICENSEE shallhave the right to pro-rate such fees against the fees owing to LICENSOR underthis Agreement such that in no event shall the total of fees due from LICENSEE,as a result of Sublicense Income, to LICENSOR exceed the payments payable underSection 4.5.  Pro-rating ofpayments shall be made in the ratio of the minimum royalties payable under thisAgreement to the minimum royalties payable under any other agreement coveredhereby under which fees on Sublicense Income are owed.

 

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

 

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

$500,000 upon reaching $5,000,000 in sales from one or both ProductFields;

$1,000,000 upon reaching $10,000,000 in sales from one or both ProductFields.

 

4.8           StackingMilestone Payments.  The milestonepayments shall be in addition to any royalties specified elsewhere in this Article4, but shall not apply to diagnostic, commercial research, or any othernon-therapeutic uses.  If LICENSEE isobligated to pay or has paid to LICENSOR similar Milestone Payments underanother license agreement with respect to the FIELD, then LICENSEE shall havethe right to pro-rate such Milestone Payments against the Milestone Paymentsowing to LICENSOR under this Agreement such that in no event shall the total ofall Milestone Payments due from LICENSEE to LICENSOR exceed the amounts statedin Section 4.7.  Pro-rating ofpayments shall be made in the ratio of the minimum royalties payable under thisAgreement to the minimum royalties payable under any other agreement coveredhereby under which Milestone Payments are owed.

 

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

 

4.10         Payments in U.S. Currency. All payments due under this Agreementshall be paid in cash to LICENSOR and all payments shall be made in UnitedStates currency.  Conversion of foreigncurrency to U.S. dollars shall be made at the conversion rate reported in TheWall Street Journal on the last working day of the calendar quarter towhich the payment relates.

 

4.11         Taxes.  Subject to the limits of Section 1.9hereof, all payments due hereunder shall be paid in full without deduction oftaxes or other fees which may be imposed by any government and which shall bepaid by LICENSEE; provided, however, that any withholding tax required to bewithheld by LICENSEE on royalty payments under the laws of any country in theTERRITORY on behalf of LICENSOR will be timely paid by LICENSEE to theappropriate governmental authority, and LICENSEE will furnish LICENSOR withproof of payment of such tax.  Any suchtax actually withheld may be deducted from royalty payments due to LICENSORunder this Agreement.  If at any timelegal restrictions prevent the prompt remittance of part or all of any paymentsowed by LICENSEE to LICENSOR hereunder with respect to any country in theTERRITORY, payment shall be made through any lawful means or methods that maybe available, and as LICENSEE shall reasonably determine is appropriate.

 

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4.12         Overdue Payments. Any payments to be made by LICENSEEhereunder that are not paid on or before the date such payments are due underthis Agreement shall bear interest, to the extent permitted by law, at twopercentage points above the Prime Rate of interest as reported in The WallStreet Journal on the date payment is due, with interest calculated basedon the number of days that payment is delinquent.

 

ARTICLE 5 - REPORTS AND RECORDS

 

5.1           LICENSEE shall keepfull, true and accurate books of account containing all particulars that may benecessary for the purpose of showing the amounts payable to LICENSOR hereunderand to enable the reports provided under Section 5.2 to be verified.  Said books of account shall be kept atLICENSEE’s principal place of business.  Saidbooks and the supporting data shall be open upon reasonable advance notice (butnot less than five (5) business days notice and no more frequently than onceper calendar year) for three (3) years following the end of the calendar yearto which they pertain, to the inspection of LICENSOR or its agents for thepurpose of verifying LICENSEE’s royalty and Sublicense Income statement orcompliance in other respects with this Agreement.  If any such audit determines an error in anyroyalty or Sublicense Income payment, LICENSEE shall pay to LICENSOR, withinthirty (30) days of the discovery of the error, (a) all deficiencies in royaltyor Sublicense Income payments, (b) interest on such deficiencies from the datesuch royalty or Sublicense Income payment was due until the date paid at therate set forth in Section 4.12 above, and (c) if such error is in excessof five percent (5%) of any royalty or Sublicense Income payment, the cost ofthe audit.  In all other cases, the costsof the audit shall be paid for by LICENSOR.  All information disclosed pursuant to an auditshall be treated as Confidential Information (as defined in Section 10.1herein) and shall not be disclosed to any third party or used for any purposeother than to determine the correctness of LICENSEE’s royalty and SublicenseIncome statement or compliance in other respects with this Agreement.

 

5.2           After the firstcommercial sale of a LICENSED PRODUCT, LICENSED PROCESS, LICENSED SERVICES, orACT ANIMAL CELL LINES, LICENSEE, within forty-five (45) days after March 31*,*June 30, September 30 and December 31 ofeach year, shall deliver to LICENSOR a trueand accurate report, giving such particulars of the business conductedby LICENSEE and its permitted sublicensees during the preceding three-monthperiod under this Agreement as shall be pertinent to a royalty and SublicenseIncome accounting hereunder.  Withoutlimiting the generality of the foregoing, these reports shall include at leastthe following:

 

a)              the number of LICENSED PRODUCTS and ACTANIMAL CELL LINES manufactured and sold by LICENSEE and all sublicensees;

 

b)             total billings and the amounts actuallyreceived for LICENSED PRODUCTS and ACT ANIMAL CELL LINES sold by LICENSEE andall sublicensees;

 

c)              an accounting for all LICENSED PROCESSESor LICENSED SERVICES used in the provision of services to others or sold byLICENSEE;

 

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d)             the deductions applicable as provided in Section 1.9;and

 

e)              the names and addresses of all partiesmaking LICENSED PRODUCTS on behalf of LICENSEE.

 

The reports shall provide the above-identified information by product,process, or service type.

 

5.3           With each suchreport submitted, LICENSEE shall pay to LICENSOR the royalties and SublicenseIncome due and payable for such three-month period.  If no royalties or Sublicense Income shall bedue, LICENSEE shall so report.

 

ARTICLE 6 - PATENT PROSECUTION

 

6.1           LICENSOR shall besolely responsible for the continued prosecution of pending patent applicationsincluded in the PATENT RIGHTS and the issuance of such applications afterallowance.  The prosecution, filing andmaintenance of all patents and applications shall be the primary responsibilityof LICENSOR.  LICENSEE agrees tocooperate fully with LICENSOR, as requested by LICENSOR and at LICENSOR’sexpense, in the preparation, filing, prosecution, and maintenance of the patentapplications and patents included in the PATENT RIGHTS.  With respect to Australia, Canada, Europe,Mexico, Japan and Israel, LICENSEE shall pay to LICENSOR on or before the duedate one half (1/2) of any future annuity and maintenance fees with respect toUMA 99-19, provided LICENSOR notifies LICENSEE of the amount of such paymentsdue at least 30 days prior to their due date.

 

6.2           Licensors will notallow any patent or patent application within the PATENT RIGHTS to becomeexpired or abandoned without giving (a) prior written notice to LICENSOR ofsuch expiration or abandonment, and (b) LICENSOR the right to assumeresponsibility for such patent or patent application subject to the rights ofthe University under the UMASS LICENSES and the rights of pre-existinglicensees under their respective licenses.  LICENSOR will then assign such patent orpatent application to LICENSEE and LICENSEE will thereafter assume controlthereof and all expenses related thereto.

 

ARTICLE 7 - PROSECUTION OF INFRINGERSAND DEFENSE OF PATENT RIGHTS

 

The Parties agree to notify each other in writing of any actual orthreatened infringement by a third party of the PATENT RIGHTS or of any claimof invalidity, unenforceability, or non-infringement of the PATENT RIGHTS.  LICENSOR shall have the sole responsibility toprosecute or defend such claims, as applicable. LICENSEE shall, if requested, provide reasonable assistance to LICENSORin connection with the prosecution or defense of such claims.

 

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ARTICLE 8 - INDEMNIFICATION

 

8.1           Indemnificationof the LICENSOR and the University.  LICENSEEshall be responsible for and shall indemnify, defend, and hold harmlessLICENSOR and the University, and their agents, attorneys, representatives,third party beneficiaries and their respective heirs, executors, successors andassigns (collectively, the “LICENSOR Indemnitees”) from and against allliabilities of any kind whatsoever, including legal expenses and reasonableattorneys’ fees, incurred or imposed upon any of the LICENSOR Indemnitees inconnection with or as a consequence of any claims (including third partyclaims), suits, actions, demands or judgments arising out of the death of orinjury to any person or persons or out of any damage to property resulting fromthe development, production, manufacture, sale, use, performance, rendering,consumption or advertisement of the LICENSED PRODUCT(s) and/or LICENSEDPROCESS(es), LICENSED SERVICE(s), and/or ACT ANIMAL CELL LINES or arising fromany obligation, act or omission performed or failed to be performed hereunder,or from a breach of any representation or warranty of LICENSEE hereunder unlessand to the extent that such liability arises solely from any action of LICENSORor any of its Affiliates.  If theexercise of LICENSEE’s rights under this Agreement in any country in theTERRITORY is the subject of a bona fide claim by a third party, filed in acourt of competent jurisdiction after the date hereof, that the exercise ofsuch rights infringes or conflicts with any intellectual property rights ofsuch third party (a “Third Party Infringement Claim”), then LICENSEE shall nothave any of the rights granted herein in such country and shall have noobligation to pay LICENSOR any further payments under Article 4 of thisAgreement with respect to any country of the TERRITORY until such claim isresolved by proper adjudication or settlement permitting LICENSEE to exerciseLICENSEE’s rights under this Agreement in the applicable country of theTERRITORY.  Notwithstanding anythingherein to the contrary, LICENSOR covenants that it will not (a) assert or bringany suit, action, claim or other proceeding against LICENSEE based on, in wholeor in part, LICENSEE’s exercise of LICENSEE’s rights, in accordance with theterms and conditions of this Agreement, with respect to the LICENSED TECHNOLOGYand/or (b) join in any third party suit, action, claim or other proceedingagainst LICENSEE based on, in whole or in part, any intellectual propertyrights (including without limitation, patent rights and/or know how) owned by theapplicable third party, so long as LICENSEE is not in violation of thisAgreement.

 

8.2           Indemnificationof the LICENSEE.  LICENSOR shall beresponsible for and shall indemnify, defend, and hold harmless LICENSEE and theofficers, directors, shareholders, employees, agents, attorneys,representatives, and Affiliates, and their respective heirs, executors,successors and assigns, (the “LICENSEE Indemnitees”) from and against allliabilities of any kind whatsoever, including legal expenses and reasonable attorneys’fees, incurred or imposed upon any of the LICENSEE Indemnitees in connectionwith or as a consequence of any claims (including third party claims), suits,actions, demands or judgments arising out of, directly or indirectly, or in anyway relating to: (a) any breach by LICENSOR of any representation, warranty,covenant or obligation set forth in this Agreement; or (b) arising fromLICENSOR’s ownership, management, control, use or disposition of the LICENSEDTECHNOLOGY or ACT

 

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ANIMAL CELLLINES unless and to the extent that such liability arises solely from anyaction of LICENSEE or any of its Affiliates after the Effective Date.

 

8.3           Demands for ThirdParty Claims.  Each indemnified Partyhereunder (an “Indemnified Party”) agrees that promptly upon its discovery offacts giving rise to a claim for indemnity under this Agreement, including thereceipt of any demand, assertion, claim, action or proceeding, judicial orotherwise, by any third party (being referred to herein as a “Claim”), withrespect to any matter as to which it claims to be entitled to indemnity underthe provisions of this Agreement, it will give prompt notice thereof in writingto the Indemnifying Party (the “Indemnifying Party”), together with a statementof such information respecting any of the foregoing as it shall have.  Such notice shall include a formal demand forindemnification under this Agreement.

 

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

 

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

 

8.6           Right toParticipate.  The Indemnified Partyagrees to afford the Indemnifying Party and its counsel the opportunity to bepresent at, and to participate in, conferences with any PERSON, includinggovernmental authorities, asserting any Claim against the Indemnified Party orconferences with representatives of or counsel for such PERSON.

 

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8.7           Payment ofDamages.  The Indemnifying Partyshall pay to the Indemnified Party in immediately available funds any amounts towhich the Indemnified Party may become entitled by reason of the provisions ofthis Agreement, such payment to be made within five (5) days after any suchamounts are finally determined either by mutual agreement of the Parties heretoor pursuant to the final non-appealable judgment of a court of competentjurisdiction.

 

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

 

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

 

ARTICLE 9 – TERMINATION

 

9.1           The term of thisAgreement (“TERM”) shall commence on the Effective Date and continue until theexpiration of the last VALID CLAIM within the PATENT RIGHTS to expire, unlesssooner terminated as provided in this Article 9; provided that LICENSEE’s obligation to pay royalties orSublicense Income on NET SALES in any country will terminate pursuant to Subsection4.2(c)**(subject to LICENSEE’sobligations under Section 9.4 herein).

 

9.2           If either Partycommits a material breach of a material term of this Agreement (including anyfailure to make any payment due under this Agreement), the non-breaching Partyshall have the right to terminate this Agreement effective on thirty (30) daysprior written notice to the Party in breach, unless such breach is cured prior tothe expiration of such thirty (30) day period.

 

9.3           LICENSEE shall havethe right to terminate this Agreement at any time on thirty (30) days priornotice to LICENSOR, and upon payment of all amounts due LICENSOR through theeffective date of the termination.

 

9.4.          Notwithstandinganything herein to the contrary, in the event that this Agreement is terminatedby LICENSOR pursuant to Section 9.2 or by LICENSEE pursuant to Sections9.2 or 9.3, LICENSEE shall retain a license to rights granted in Article2 to the extent reasonably necessary to sell any LICENSED PRODUCTS existingor under production and to perform LICENSED PROCESSES or LICENSED SERVICESrelated to such LICENSED PRODUCTS or that are in process, subject to the termsof this Agreement (including without limitation the obligation to pay royaltiesunder Article 4), provided that LICENSEE shall complete and sell allsuch work-in-progress and inventory within six (6) months after the effectivedate of termination.

 

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9.5           Upon the expirationof the TERM of this Agreement LICENSEE shall have a fully paid-up,non-exclusive, irrevocable, royalty free license under the rights granted in Article2.

 

9.6           Nothing herein shallbe construed to release either Party from any obligation that accrued prior toexpiration or any termination of this Agreement.  The following provisions shall survive anytermination or any expiration of the TERM of this Agreement: this Section9.6 and Articles/Sections 1, 4, 5, 8, 9.4, 10, 11, 12, 13, 15.1, 15.2, 15.5,15.6, 15.7, 15.8, 15.10, 15.15 and 15.16, and any other provision which by itsnature is intended to survive any such termination.

 

ARTICLE 10 – CONFIDENTIALITY ANDNON-DISCLOSURE

 

10.1         ConfidentialInformation; Non-Disclosure.  “ConfidentialInformation” shall mean any technical, business, financial, customer or otherinformation disclosed by one Party (the “Disclosing Party”) to the other Party(the “Receiving Party”) pursuant to this Agreement which is marked “Confidential”or “Proprietary,” or which, under all of the given circumstances, oughtreasonably to be treated as confidential information of the Disclosing Party.  Such information may be disclosed in oral,visual or written form (including magnetic, optical or other media).  Except as expressly provided in Section10.2 below, each Party’s Confidential Information specifically includeswithout limitation the respective Party’s business plans and businesspractices, the terms of this Agreement, scientific knowledge, research anddevelopment or know-how, processes, inventions, techniques, formulae, productsand product plans, business operations, customer requirements, designs,sketches, photographs, drawings, specifications, reports, studies, findings,data, plans or other records, biological materials, software, margins, paymentterms and sales forecasts, volumes and activities, designs, computer code,technical information, costs, pricing, financing, business opportunities,personnel, and information of LICENSOR or LICENSEE relating to the LICENSEDPROCESSES, LICENSED PRODUCTS or LICENSED SERVICES whether or not suchinformation is marked or identified provided that the Disclosing Party providesnotice in writing reasonably identifying such Confidential Information within30 days of disclosure.  Except to theextent expressly authorized by this Agreement or by other prior written consentby the Disclosing Party, the Receiving Party, during the term of thisAgreement, and thereafter, shall: (i) treat as confidential all ConfidentialInformation of the other Party; (ii) use Confidential Information only forexercising the rights and fulfilling the obligations set forth in thisAgreement, (iii) implement reasonable procedures to prohibit the disclosure,unauthorized duplication, misuse or removal of the Disclosing Party’sConfidential Information; (iv) not disclose Confidential Information to anythird party, and (v) only disclose the Confidential Information to (a) those ofits employees who have a need to know Confidential Information in order toexercise the rights and fulfill the obligations set forth in this Agreement and(b) legal and professional advisors and existing and potential investors andtheir legal and professional advisors, each of which is bound by a writtenagreement (or in the case of attorneys or other professional advisors, formalethical duties) requiring such advisors and investors to treat, hold andmaintain such Confidential Information in accordance with the terms

 

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and conditionsof this Agreement, or (c) recipients of offering documents in connection withany offering of securities where such disclosure is, in the opinion of counselfor the Disclosing Party, reasonably required to comply with the investmentdisclosure laws of any applicable jurisdiction.  Without limiting the foregoing, the ReceivingParty shall protect the Disclosing Party’s Confidential Information using atleast the same procedures and degree of care that it uses to prevent the disclosureof its own confidential information of like importance, but in no event lessthan reasonable care.

 

10.2         Exceptions.  The Receiving Party shall have no obligationor liability to the Disclosing Party with regard to any ConfidentialInformation of the Disclosing Party: (i) that was publicly known and availableat the time it was disclosed or becomes publicly known and available through nofault, action, or inaction of the Receiving Party; (ii) was known to theReceiving Party, without restriction, at the time of disclosure as shown by thefiles of the Receiving Party in existence at the time of disclosure; (iii) isdisclosed with the prior written approval of the Disclosing Party; (iv) wasindependently developed by the Receiving Party without any use of thedisclosing party’s Confidential Information, provided, that the Receiving Partycan demonstrate such independent development by documented evidence preparedcontemporaneously with such independent development; (v) is disclosed pursuantto the order or requirement of a court, administrative agency, or othergovernmental body, provided that the Receiving Party shall provide promptnotice thereof and reasonable assistance to the Disclosing Party to enable theDisclosing Party to seek a protective order or otherwise prevent suchdisclosure, and provided further that such disclosure is limited to the extentnecessary to comply with such order and the information shall otherwise betreated as Confidential Information; or (vi) that is provided to the ReceivingParty by an independent third party without violating any confidentialityobligation to the Disclosing Party.

 

10.3         Injunctive Relief. LICENSOR and LICENSEE acknowledge andagree that any breach of the confidentiality obligations imposed by this Article10 will constitute immediate and irreparable harm to the Disclosing Partyand/or its successors and assigns, which cannot adequately and fully becompensated by money damages and will warrant, in addition to all other rightsand remedies afforded by law, injunctive relief, specific performance, and/orother equitable relief.  The DisclosingParty’s rights and remedies hereunder are cumulative and not exclusive.  The Disclosing Party shall also be entitled toreceive from the Receiving Party the costs of enforcing this Article 10,including reasonable attorneys’ fees and expenses of litigation.

 

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

 

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10.5         Survival.  The obligations of LICENSOR and LICENSEE underthis Article 10 shall survive any expiration or termination of thisAgreement.

 

ARTICLE 11 - PAYMENTS, NOTICES, AND OTHERCOMMUNICATIONS

 

Any payment, notice or other communication pursuant to this Agreementshall be in writing and sent by certified first class mail, postage prepaid,return receipt requested, or by nationally recognized overnight carrier addressedto the Parties at the following addresses or such other addresses as such Partyfurnishes to the other Party in accordance with this paragraph.  Such notices, payments, or othercommunications shall be effective upon receipt.

 

In the case of LICENSOR:

Advanced Cell Technology, Inc.

One Innovation Drive

Worcester, MA 01605

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

 

With a copy to:

Pierce Atwood

One Monument Square

Portland, ME 04101

Attention: William L. Worden, Esq.

 

In the case of LICENSEE:

PacGen Cellco, LLC.

157 Surfview Drive

Pacific Palisades, CA 90272

Attention: Kenneth Aldrich

 

With a copy to:

Gray Cary Ware & Freidenrich

4365 Executive Drive, Suite 1100

San Diego, CA 92121-2133

Attention: Lisa Haile

 

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ARTICLE 12 - RESPRESENTATIONS AND WARRANTIESOF LICENSOR

 

As an inducement to LICENSEE to enter into and perform this Agreement,LICENSOR represents and warrants to LICENSEE as follows:

 

12.1         Title to LICENSEDTECHNOLOGY; Encumbrances.  LICENSORhas good and valid title or valid licenses (with the right of sublicense) tothe LICENSED TECHNOLOGY.

 

12.2         No Violations. The execution, delivery and performanceof this Agreement by LICENSOR and the consummation by LICENSOR of thetransactions contemplated hereby does not,: (a) violate any statute, ordinance,rule or regulation applicable to LICENSOR or by which any of the LICENSEDTECHNOLOGY may be bound; (b) violate any order, judgment or decree of any courtor of any Governmental Authority or regulatory body, agency or authorityapplicable to LICENSOR or by which any of the LICENSED TECHNOLOGY may be bound;(c) require any filing by LICENSOR with, or require LICENSOR to obtain anypermit, consent or approval of, or require LICENSOR to give any notice to, anyGovernmental Authority or regulatory body, agency or authority; or (d) resultin a violation or breach by LICENSOR of, conflict with, constitute a default byLICENSOR (or give rise to any right of termination, cancellation, payment oracceleration) under or result in the creation of any Encumbrance upon any ofthe LICENSED TECHNOLOGY.

 

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

 

12.4         Disclosure.-Neitherthese representations and warranties made by LICENSOR pursuant to thisAgreement nor any of the exhibits, schedules or certificates attached hereto ordelivered in accordance with the terms hereof knowingly contains anymisstatement of fact or omits any statement of fact necessary in order to makethe statements contained herein and therein not misleading in light of thecircumstances under which they were made.

 

12.5         Copies ofDocuments.  LICENSOR has caused to bemade available for inspection and copying by LICENSEE and its advisers, true,complete and correct copies of all documents in LICENSOR’s possession referredto in any schedule attached hereto.

 

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

 

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12.7                           LICENSED TECHNOLOGY.

 

(a)          Except as set forth on Exhibit D and E,LICENSOR, is not aware of any interference, infringement, misappropriation, orother conflict with any intellectual property rights of third parties, andLICENSOR has never received any charge, complaint, claim, demand, or noticealleging any such interference, infringement, misappropriation, or violation(including any claim that LICENSOR must license or refrain from using anyintellectual property rights of any third party).  To the knowledge of LICENSOR, no third partyhas interfered with, infringed upon, misappropriated, or otherwise come intoconflict with any of the LICENSED TECHNOLOGY.

 

(b)         Exhibit A identifies each patent orregistration which has been issued or licensed to LICENSOR with respect to anyof the LICENSED TECHNOLOGY and identifies each pending patent application orapplication for registration which LICENSOR has made with respect to any of theLICENSED TECHNOLOGY.  LICENSOR has madeavailable to LICENSEE correct and complete copies of all such patents,registrations and applications (as amended to-date) in LICENSOR’s possessionand has made available to LICENSEE correct and complete copies of all otherwritten documentation in LICENSOR’s possession evidencing ownership andprosecution (if applicable) of each such item.

 

(c)          Exhibit A identifies each item ofLICENSED TECHNOLOGY that is assigned to the University and that LICENSOR usespursuant to license, sublicense, agreement, or permission.  LICENSOR has made available to LICENSEEcorrect and complete copies of all such licenses, sublicenses, agreements,patent prosecution files and permissions (as amended to-date) in LICENSOR’spossession.  With respect to each item ofLICENSED TECHNOLOGY required to be identified in Exhibit A and to theknowledge of LICENSOR: (i) the license, sublicense, agreement, or permissioncovering the item is legal, valid, binding, enforceable, and in full force andeffect; (ii) the license, sublicense, agreement, or permission will continue tobe legal, valid, binding, enforceable, and in full force and effect onidentical terms following the consummation of the transactions contemplatedhereby; (iii) no Party to the license, sublicense, agreement, or permission isin breach or default, and no event has occurred which with notice or lapse oftime would constitute a breach or default or permit termination, modification,or acceleration thereunder; (iv) no party to the license, sublicense,agreement, or permission has repudiated any provision thereof; (v) theunderlying item of LICENSED TECHNOLOGY is not subject to any outstanding lienor encumbrance, injunction, judgment, order, decree, ruling, or charge otherthan that disclosed in Exhibits D and E; (vi) no action, suit, proceeding,hearing,

 

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investigation, charge, complaint, claim, or demand is pending or isthreatened which challenges the legality, validity, or enforceability of theunderlying item of LICENSED TECHNOLOGY other than that disclosed in Exhibits Dand E; and (vii) LICENSOR has not granted any sublicense or similar right tothe LICENSED TECHNOLOGY within the FIELD.

 

12.8            Survival of Representations andWarranties.

 

(a)          Except as otherwise provided herein,notwithstanding any investigation at any time made by or on behalf of any Partyhereto, the representations and warranties set forth herein and in anycertificate delivered in connection herewith with respect to any of thoserepresentations and warranties will survive the Effective Date until the longerto occur of: (i) two (2) years or (ii) the expiration of the applicablestatutes of limitation, including all periods of extension and tollingwhereupon they will terminate and expire.

 

(b)         After a representation and warranty hasexpired, as provided in Subsection 12.8(a), no claim for claims or costsmay be made or prosecuted by any Person who would have been entitled to claimsor costs on the basis of that representation and warranty prior to itstermination and expiration, provided that no claim presented in writing forclaims or costs to the Person or Persons from which or whom those damages aresought on the basis of that representation and warranty prior to itstermination and expiration will be affected in any way by that termination andexpiration.

 

12.9          EXCEPTAS OTHERWISE EXPRESSLY SET FORTH IN THIS AGREEMENT, LICENSOR, ITS DIRECTORS,OFFICERS, EMPLOYEES, AND AFFILIATES MAKE NO REPRESENTATIONS AND EXTEND NOWARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TOWARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, VALIDITY OFPATENT RIGHTS, ISSUED OR PENDING, AND THE ABSENCE OF LATENT OR OTHER DEFECTS,WHETHER OR NOT DISCOVERABLE.  NOTHING INTHIS AGREEMENT SHALL BE CONSTRUED AS A REPRESENTATION MADE OR WARRANTY GIVEN BYLICENSOR THAT THE PRACTICE BY LICENSEE OF THE LICENSE GRANTED HEREUNDER SHALLNOT INFRINGE THE PATENT RIGHTS OF ANY THIRD PARTY.

 

ARTICLE 13—REPRESENTATIONS AND WARRANTIES OFLICENSEE.

 

LICENSEE represents and warrants to LICENSOR as follows:

 

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13.1         Existence and GoodStanding: Power and Authority.  LICENSEEis a limited liability company duly organized, validly existing and in goodstanding under the laws of the state of California.  LICENSEE has full corporate power andauthority to make, execute, deliver and perform this Agreement, to perform itsobligations hereunder and to consummate the transactions contemplated hereby.  The execution, delivery and performance ofthis Agreement by LICENSEE and the consummation by it of the transactionscontemplated hereby, have been duly authorized and approved by all requiredcorporate action of LICENSEE and no other action on the part of LICENSEE isnecessary to authorize the execution, delivery and performance of this Agreementby LICENSEE and the consummation of the transaction contemplated hereby.  This Agreement has been duly executed anddelivered by LICENSEE and is a valid and binding obligation of LICENSEEenforceable against it in accordance with its terms, except to the extent thatits enforceability may be subject to applicable bankruptcy, insolvency,reorganization, moratorium and similar laws affecting the enforcement ofcreditors’ rights generally and by general equitable principles.

 

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

 

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

 

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13.4         Survival ofRepresentations and Warranties.

 

(a)           Except as otherwiseprovided herein, notwithstanding any investigation at any time made by or onbehalf of any Party hereto, the representations and warranties set forth hereinand in any certificate delivered in connection herewith with respect to any ofthose representations and warranties will survive the Effective Date until thelonger to occur of: (i) two (2) years or (ii) the expiration of the applicablestatutes of limitation, including all periods of extension and tollingwhereupon they will terminate and expire.

 

(b)           After arepresentation and warranty has expired, as provided in Subsection 13.4(a),no claim for claims or costs may be made or prosecuted by any Person who wouldhave been entitled to claims or costs on the basis of that representation andwarranty prior to its termination and expiration, provided that no claimpresented in writing for claims or costs to the Person or Persons from which orwhom those damages are sought on the basis of that representation and warrantyprior to its termination and expiration will be affected in any way by thattermination and expiration.

 

ARTICLE 14 – LIMITATION OF LIABILITY

 

EXCEPT FOR ANY LIABILITY TO ANY THIRD PARTIES PURSUANT TO ARTICLE 8 ORTO A PARTY PURSUANT TO ARTICLES 12 AND 13 OF THIS AGREEMENT, IN NO EVENT SHALLLICENSOR OR LICENSEE OR THEIR, ITS DIRECTORS, OFFICERS, EMPLOYEES OR AFFILIATESBE LIABLE FOR INCIDENTAL OR CONSEQUENTIAL DAMAGES OF ANY KIND, INCLUDINGECONOMIC DAMAGE OR INJURY TO PROPERTY AND LOST PROFITS, REGARDLESS OF WHETHERLICENSOR OR LICENSEE SHALL BE ADVISED, SHALL HAVE OTHER REASON TO KNOW, OR INFACT SHALL KNOW OF THE POSSIBILITY OF SUCH DAMAGES.

 

ARTICLE 15 - MISCELLANEOUS PROVISIONS

 

15.1         CORPORATE PARTNERSHIPS. In the event LICENSEE enters into acorporate partnership for the joint development of any of the LICENSEDTECHNOLOGY, and LICENSEE sublicenses the LICENSED TECHNOLOGY to a third party,then payments required hereunder shall not include funds provided for sponsoredresearch or equity investments by any third party so long as such payments donot constitute a majority of funds transferred by such third party.  However if the sponsored research involvesfees in excess of industry standard reimbursement for FTEs or equity investmentin excess of fair market value, LICENSEE shall pay to LICENSOR a royalty onsuch excess fees calculated at the rates specified herein.

 

15.2         LICENSEE “REVERSELICENSE” TO LICENSOR.  LICENSEE agrees tolicense to LICENSOR on a non-exclusive basis for therapeutic uses in thetreatment of blood and

 

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cardiovasculardiseases the rights to any technology it currently owns or has licensed ordevelops or licenses in the future that is applicable to such diseases(excluding however the use of proprietary techniques now or hereafter developedby LICENSEE for the enhanced vascularization of transplanted cells or tissues). Such license shall provide for royaltypayments at the same rate as LICENSEE’S royalty payments to LICENSOR hereunderas provided in Section 4.2(a).  Suchlicense will be sublicensable only once in a given field of use; or for thepurpose of having products produced, made, or distributed; or in connectionwith a merger or consolidation of LICENSOR into another company or a sale ofall or substantially all of the assets of LICENSOR.  LICENSEE shall also have no obligationshereunder with respect to technology licenses it has or may acquire if suchlicenses restrict sublicensing in a manner inconsistent with this subparagraph. Such “Reverse License shall not apply toany rights acquired by LICENSEE under Section 15.18 hereof.

 

15.3         FUTURE TECHNOLOGYLICENSES.  LICENSOR acknowledges that itis continuing to develop cell-based technology, the existence or significanceof which it may not have disclosed to LICENSEE.  Therefore, LICENSOR further agrees that in theevent any of its technology now perfected or pending as of the date of thisagreement but not specifically enumerated herein would inhibit or adverselyaffect the commercial use by LICENSEE of the PATENT RIGHTS in the field,LICENSOR shall waive any claim of infringement to the extent necessary topermit LICENSEE to continue the use of the PATENT RIGHTS under this Agreement.  In addition, LICENSOR agrees to license toLICENSEE on a non-exclusive basis for uses in the FIELDS, including any rightsacquired under Section 15.18 hereof, the rights to any technology it currentlyowns or has licensed or develops or licenses in the future that is applicableto such FIELDS (but specifically excluding applications involving the use ofcells in the treatment of tumors where the primary use of the cells is thedestruction or reduction of tumors and does not involve regeneration of tissueor organ function).  Such license shallprovide for royalty payments at the same rate as LICENSEE’S royalty to LICENSORhereunder as provided in Section 4.2(a).  Such license will be sublicensable only oncein a given field of use; or for the purpose of having products produced, made,or distributed; or in connection with a merger or consolidation of LICENSEEinto another company or a sale of all or substantially all of the assets ofLICENSEE.  LICENSOR shall also have noobligations hereunder with respect to technology licenses it has or may acquireif such licenses restrict sublicensing in a manner inconsistent with thissubparagraph.

 

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

 

a)              LICENSEE shall obtain all necessaryapprovals from the FDA, USDA, or any similar governmental authorities of anyforeign jurisdiction in which LICENSEE intends to make, use, or sell LICENSEDPRODUCTS or to perform LICENSED PROCESSES or LICENSED SERVICES.

 

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b)             LICENSEE shall comply fully with any andall applicable local, state, federal and international laws and regulationsrelating to the LICENSED PRODUCTS, LICENSED PROCESSES and LICENSED SERVICES,and the PATENT RIGHTS, in the TERRITORY, including without limitation allexport or import regulations and rules now in effect or as may be issued fromtime to time by any governmental authority which has jurisdiction relating tothe export of LICENSED PRODUCTS, LICENSED PROCESSES or LICENSED SERVICES and anytechnology relating thereto.  LICENSEEhereby gives written assurance that it will comply with all such import orexport laws and regulations (including without limitation all ExportAdministration Regulations of the United States Department of Commerce), thatit bears sole responsibility for any violation of such laws and regulations,and that it will indemnify, defend, and hold LICENSOR and the Universityharmless (in accordance with Article 8) for the consequences of any suchviolation.

 

c)              To the extent that any invention claimedin the PATENT RIGHTS has been partially funded by the United States Government,and only to the extent required by applicable laws and regulations, LICENSEEagrees that any LICENSED PRODUCTS used or sold in the United States will bemanufactured substantially in the United States or its territories.  Current law provides that if a domesticmanufacturer is not commercially feasible under the circumstances, LICENSORand/or the University may seek a waiver of this requirement from the relevantfederal agency on behalf of LICENSEE and, upon LICENSEE’S request, shallcooperate with LICENSEE in seeking such a waiver.

 

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

 

15.6         Neither Party shalloriginate any publicity, news release or other public announcement (“Announcements”),written or oral, relating to this Agreement or the existence of an arrangementbetween the Parties, without the prior written approval of the other Party,which approval shall not be unreasonably withheld or delayed, except asotherwise required by law.  Anyreferences to the University in such Announcements shall be subject to theapproval of the University.  Theforegoing notwithstanding, LICENSOR and LICENSEE shall have the right to makesuch Announcements without the consent of the other Party or the University, asapplicable, in any prospectus, offering memorandum, or other document or filingrequired by applicable securities laws or other applicable law or regulation,provided that such Party shall

 

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have given theother Party or the University, as applicable, at least ten (10) days priorwritten notice of the proposed text for the purpose of giving the other Partyor the University, as applicable, the opportunity to comment on such text.

 

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

 

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

 

15.9         To the extentcommercially feasible, and consistent with prevailing business practices andapplicable law, all LICENSED PRODUCTS sold pursuant to this Agreement will bemarked with the number of each issued patent that applies to such LICENSEDPRODUCTS.

 

15.10       This Agreement shall beconstrued, governed, interpreted and applied in accordance with the laws of theState of California, U.S.A. without regard to principles of conflicts of lawthereof, except that questions affecting the construction and effect of anypatent shall be determined by the law of the country in which the patent wasgranted.

 

15.11       The Parties heretoacknowledge that this Agreement sets forth the entire Agreement andunderstanding of the Parties hereto as to the subject matter hereof, and shallnot be subject to any change or modification except by the execution of awritten instrument signed by the Parties hereto.

 

15.12       The provisions of thisAgreement are severable, and in**theevent that any provision of this Agreement shall be determined to be invalid orunenforceable under any controlling body of the law, such invalidity orunenforceability shall not in any way affect the validity or enforceability ofthe remaining provisions hereof.

 

15.13       The failure of eitherParty to assert a right hereunder or to insist upon compliance with any term orcondition of this Agreement shall not constitute a waiver of that right orexcuse a similar subsequent failure to perform any such term or condition bythe other Party.

 

15.14       This Agreement may notbe assigned by LICENSEE without the prior written consent of LICENSOR, whichconsent shall be granted or denied in LICENSOR’s sole discretion.  LICENSOR may not assign this Agreement withoutthe consent of LICENSEE, which consent shall not be unreasonably withheld ordelayed, except that LICENSOR may assign this Agreement to an affiliate or to asuccessor in connection with the merger, consolidation, or

 

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sale of all orsubstantially all of its assets or that portion of its business to which thisAgreement relates.  Notwithstanding theforegoing to the contrary, this restriction on the assignment by LICENSEE ofthis Agreement shall not prevent the assignment of this Agreement in connectionwith a merger or consolidation of LICENSEE into another company or a sale ofall or substantially all of the assets of LICENSEE, so long as the purchaser ofthe assets agrees to assume to any and all outstanding liabilities to LICENSORunder this Agreement, including but not limited to any outstanding amountsunder the promissory note referred to in Section 4.1.

 

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

 

15.16       This Agreement may beexecuted in counterparts, each of which together shall constitute one and thesame Agreement.

 

15.17       All rights andlicenses granted under or pursuant to this Agreement by LICENSOR to LICENSEEare, and shall otherwise be deemed to be, for purposes of Paragraph 365(n) ofthe U.S. Bankruptcy Code (the “Code”), licenses to rights in “intellectualproperty” as defined in the Code.  TheParties hereto agree that LICENSEE, as a LICENSEE of such rights under thisAgreement, shall retain and may fully exercise all of its rights and electionsunder the Code.  The Parties heretofurther agree that, in the event of the commencement of a bankruptcy proceedingby or against LICENSOR including a proceeding under the Code, LICENSEE shall beentitled to a complete duplicate of (or complete access to, as appropriate) anysuch intellectual property and all embodiments of such intellectual property,including the PATENT RIGHTS and KNOW-HOW, and the same, if not already inLICENSEE’s possession, shall be promptly delivered to LICENSEE upon any suchcommencement of a bankruptcy proceeding upon written request therefore byLICENSEE.

 

15.18       In addition to theother rights granted herein, LICENSOR hereby grants to LICENSEE a 90 day rightof negotiation with respect to any technology that would constitute LICENSEDTECHNOLOGY if the FIELD included diseases related either to the heart or toneuro degenerative diseases (the “Added Fields”) prior to LICENSOR enteringinto any license relating to either of such Added Fields) with a third party.  Such a 90 day period shall commence on theearlier of the 12 month anniversary of the Effective Date, or such date whenLICENSOR notifies LICENSEE that it has opened negotiations with a third partyor that a third party has made inquiry about such a license.  If following the expiration of any such 90-daynegotiation period LICENSEE and LICENSOR have not entered into a license for anAdded Field, LICENSOR shall be free to enter into an exclusive or non-exclusivelicense for such Added Field with any third party.  If LICENSOR enters into a non-exclusivelicense for an Added Field with a third party following the 90-day negotiatingperiod hereunder, LICENSOR shall offer a non-exclusive license to LICENSEE oncomparable terms as those entered into with such third party.

 

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LICENSEE shallthen have 30 days to enter into such a nonexclusive license.  If LICENSEE does not enter into such a licensewithin said 30-day period, LICENSOR shall have no further obligations relatingto the Added Field.

 

15.19       LICENSEE shallacknowledge LICENSOR as [co-marketer] through equal size lettering on the packagingof ACT ANIMAL CELLINES.

 

IN WITNESS WHEREOF, the Parties have duly executed this Agreement onthe EFFECTIVE DATE.

 

ADVANCED CELL TECHNOLOGY, INC.

 

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

 

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