**Exhibit10.31**

 

MEMBERSHIPINTEREST EXCHANGE AND ASSET SALE AGREEMENT

 

This Membership InterestExchange and Asset Sale Agreement, dated as of the 31st day of May,2000, is by and among ADVANCED CELL TECHNOLOGY; INC. (“ACT”), a Delawarecorporation, HEMATECH, LLC (“Hematech”), a Delaware limited liability company,CYAGRA, LLC (“Cyagra”), a Delaware limited liability company, CYAGRA OF KANSAS,LLC (“CK”), a Kansas limited liability company, THE BARTON FAMILY LIMITEDPARTNERSHIP (“BFLP”), a Connecticut limited partnership, THE ROBL FAMILYLIMITED PARTNERSHIP (“RFLP”), a Connecticut limited partnership, WALTER M.FIEDEROWICZ (“Fiederowicz”), an individual residing in Connecticut, RICHARDGOLDSBY (“Goldsby”), an individual residing in Massachusetts, BARBARA OSBORNE (“Osborne”),an individual residing in Massachusetts, JAMES M. ROBL (“Robl”), an individualresiding in Massachusetts, and JAMES BARTON (“Barton”), an individual residingin Connecticut, (BFLP, RFLP, Fiederowicz, Goldsby, and Osborne beinghereinafter referred to as the “Cyagra Holders”).

 

WITNESSETH:

 

WHEREAS, ACT is the owner of 17.5% of theoutstanding Hematech Membership Interests (the “Hematech Units”), and theCyagra Holders are, collectively, the holders of 808,500 Units of MembershipInterest in Cyagra (the “Cyagra Units”), with each Cyagra Holder’s ownership ofCyagra Units set forth on Exhibit A attached hereto and made a parthereof; and

 

WHEREAS, ACT wishes to become the owner of all ofthe outstanding Units of Membership Interest in Cyagra (other than those heldby Dr. Jose Cibelli, Milton Boyle and F. Abel Ponce de Leon), and theCyagra Holders wish to acquire from ACT the Hematech Units reflected on Exhibit Bhereto (the “Transferred Hematech Units”); and

 

----

 

WHEREAS, Cyagra wishes to acquire certain of theassets of CK; and

 

WHEREAS, concurrently with the execution anddelivery of this Agreement, ACT, Hematech and the University ofMassachusetts/Amherst (“UMass”) are entering into various agreements andamendments to existing agreements relating to the licensing and sublicensing ofcertain technology that is relevant to respective businesses of ACT andHematech; and

 

WHEREAS, in connection with the exchange of theCyagra Units for the Transferred Hematech Units and the transfer to Cyagra of certainassets of CK, the parties wish to enter into certain other agreements andtransactions relating to ACT, Cyagra, Hematech, CK, and the Cyagra Holders, asmore fully set forth in this Agreement;

 

NOW, THEREFORE, in consideration of the mutualpromises of the parties contained herein, and other good and valuableconsideration, the receipt and sufficiency of which are hereby acknowledged,the parties hereby agree as follows:

 

1.                                       Unit Exchange.

 

(a)                                  In consideration for the Cyagra Units beingtransferred to ACT pursuant to Section 1(b) hereof, ACT hereby sells,transfers, assigns and conveys to the Cyagra Holders, free and clear of allliens, encumbrances, security interests and adverse claims of any naturewhatsoever, the Transferred Hematech Units in the amounts set forth on Exhibit Battached hereto and made a part hereof.

 

(b)                                 In consideration for the Transferred HematechUnits being transferred to such Cyagra Holder pursuant to Section 1(a) hereof,each of the Cyagra Holders hereby sells, transfers, assigns, conveys to ACT,free and clear of all liens, encumbrances, security interests and adverseclaims of any nature whatsoever, the Cyagra Units set forth opposite his, heror its name on Exhibit A attached hereto and made a part hereof.

 

2

----

 

2.                                       CK Asset Transfer.  (a) Inconsideration of the payment to CK of Seven Hundred Thousand Dollars ($700,000)by or for the account of Cyagra by wire transfer into a bank account of CK, CKhereby sells, assigns, transfers, sets over and conveys to Cyagra, free and clearof all liens, encumbrances, security interests and adverse claims whatsoever,the assets described on Schedule 2(a) hereof (the “CK Assets”).  Cyagra is assuming none of the liabilities ofCK, other than those relating to periods on or after the date of this Agreementand arising under the agreements being assigned by CK to Cyagra hereunder andlisted on Schedule 2(a) hereto.

 

(b)                                 Effective June 1, 2000, Cyagra willemploy the CK employees listed on Schedule 2(b) hereto.

 

3.                                       Additional Agreements of the Parties.

 

(a)                                  Resignations.  Eachof the Cyagra Holders, Barton and Robl hereby resigns, effective immediately,from any and all positions held by such persons within Cyagra, including butnot limited to positions as managers, directors, officers, consultants oremployees thereof or thereto.

 

(b)                                 Termination/Modification of Employment andConsultant Agreements.  Cyagra, effective upon the execution anddelivery of this Agreement, shall (i) terminate the consulting agreementsbetween Cyagra, on the one hand, and Osborne and Goldsby, on the other hand (asmodified to provide that Sections I and 2 regarding confidentiality andnon-compete shall not survive the termination), (ii) the employmentagreement between CK and Poothappillia Kasinanthan shall be terminated (asmodified to provide that only the confidentiality, non competition,non-solicitation and technology ownership provisions contained therein shall remainin effect and enforceable by Cyagra), and that the Confidentiality andNon-Competition

 

3

----

 

Agreementbetween Cyagra, on the one hand, and Barton, on the other hand, shall beamended to provide that the non-compete provisions contained in such agreementshall remain in effect for two (2) years following the date of thisAgreement and that the confidentiality provisions thereof shall remain ineffect in accordance with their terms.  TheConsulting Agreement, dated January 23, 1998, between ACT and Roblshall be modified to extend the coverage thereof, for purposes of theconsulting services and confidentiality and conflict of interest provisions, toinclude the businesses of ACT and all of its affiliates and subsidiaries, andto extend the termination date thereof to December 31, 2003.  Notwithstanding the foregoing, none of suchagreements, as amended, shall prohibit such persons from being employed by orproviding consulting services to Hematech in connection with activities to beengaged in by Hematech other than those prohibited under Section 9 of thisAgreement.  The Confidentiality andNon-Competition Agreement between Cyagra and Robl shall be amended to providethat the confidentiality and non-compete provisions contained therein shall notapply to his association with Hematech to the extent of activities notprohibited to Hematech under Section 9 hereof.

 

(c)                                  Releases.  ACT, its subsidiaries andtheir officers, directors, shareholders, employees, and agents, hereby foreverrelease, acquit and discharge Hematech and its subsidiaries, the CyagraHolders, Barton, Robl and their respective officers, directors, members,agents, heirs, successors and assigns, from and against any and all claims,damages, actions or causes of action, known or unknown, matured or unmatured,fixed or contingent, relating to or arising out of or in connection with thebusinesses of Hematech or Cyagra but not including any claims or causes ofaction arising out of a breach of this Agreement by the Cyagra Holders, Cyagra,CK, Barton or Robl or the inaccuracy of any of the representations andwarranties made by any of such persons or entities in this Agreement.  Hematech and the Cyagra Holders, CK,

 

4

----

 

Bartonand Robl hereby forever release, acquit and discharge ACT, Cyagra, theirrespective subsidiaries and parent corporations and their respective directors,officers and shareholders from and against any and all claims, damages, actionsor causes of action, known or unknown, matured or unmatured, fixed orcontingent, arising out of or relating to the business of Cyagra or Hematech ortheir subsidiaries, but not including any claims or causes of action relatingto or arising out of a breach of this Agreement by Cyagra (with respect to breachesoccurring after the date of this Agreement) or ACT or the inaccuracy of any ofthe representations and warranties made by ACT in this Agreement.

 

(d)                                 Payment of Cyagra Creditors.  Uponthe execution and delivery of this Agreement, ACT shall invest funds in Cyagraor advance funds to Cyagra sufficient to allow Cyagra to pay its creditorslisted on Schedule 3(d) attached hereto and such creditorswill be paid by Cyagra at that time.

 

4.                                       Concurrent Transactions.  Theparties hereto agree and acknowledge that, concurrently with the execution anddelivery of this Agreement, ACT, Hematech and/or UMass are (a) enteringinto an amendment of the Exclusive License Agreement between UMass and ACT,effective April 16, 1996, as amended September 1, 1997, (b) terminatingthe existing Exclusive Sublicense Agreement dated August 5, 1999 betweenACT and Hematech, (c) entering into an Exclusive License Agreement betweenUMass and Hematech, and (d) terminating the Management Agreement dated August 5,1999 between ACT and Hematech .

 

5.                                       Representations and Warranties of Barton.  Bartonhereby represents and warrants to ACT as follows (provided that Barton’srepresentations and warranties contained in Section 5.7 hereof are madeonly to Barton’s knowledge):

 

5

----

 

5.1.                              Cyagra has been duly organized and is validly existing as a limited liabilitycompany under the laws of the State of Delaware.  The execution and delivery by Cyagra of thisAgreement and the consummation of the transactions contemplated hereby havebeen duly authorized by all necessary action on the part of Cyagra.  CK has been duly organized and is validlyexisting as a limited liability company under the laws of the State of Kansas.  The execution and delivery by CK of thisAgreement and the consummation of the transactions contemplated hereby havebeen duly authorized by all necessary action on the part of CK.

 

5.2.                              The execution and delivery by Cyagra and CK of this Agreement and the consummationof the transactions contemplated hereby do not and will not conflict with orviolate any agreement or instrument to which Cyagra or CK is a party or bywhich their respective assets are bound, or any law or regulation applicable toeither of them or any permit or license held by either of them.

 

5.3.                              As of May 31, 2000, the existing capitalization of Cyagra consistssolely of 1,592,500 Units of Membership Interest, of which 644,000 Units areowned of record by ACT before giving effect to the transactions contemplated bythis Agreement, and, other than unvested options in favor of John Balise toacquire 4,375 Units, there are no outstanding options, warrants or other rightsto acquire any interest in Cyagra or any obligation to issue any interest inCyagra.

 

5.4.                              Attached hereto as Schedule 5.4 is a true, correct andcomplete copy of Cyagra’s financial statements as of and for the period ended December 31,1999, as reviewed by David Gronsbel & Co., Cyagra’s independent publicaccountants, whose report with respect thereto is included in such Schedule 5.4,and Cyagra’s unaudited

 

6

----

 

balancesheet and statement of income for the period ending April 1, 2000(collectively, the “Financial Statements”), which Financial Statements areaccurate in all respects and have been prepared in accordance with generallyaccepted accounting principles applied on a basis consistent with thoseutilized by Cyagra in prior periods.  SinceDecember 31, 1999, there has been no adverse change in the business,assets, financial condition, results of operations or prospects of Cyagra,except as described in Schedule 5.4 attached hereto.

 

5.5.                              Attached as Schedules 5.5 and 2(a) are true, correct andcomplete copies of all agreements to which Cyagra or CK, respectively, is aparty and all instruments by which either of them is bound.  Each of such agreements and instruments is infull force and effect, and neither Cyagra nor CK (as applicable) nor, to theknowledge of Barton, any of the other parties thereto is in violation of any ofthe terms or conditions of any of such agreements or instruments.  Other than such as have been obtained andother than as set forth in Schedule 2 (a), no consent of any partyto any of the agreements being assigned to Cyagra by CK pursuant to thisAgreement is required in order for CK to assign to Cyagra its rights andobligations under such Agreements.

 

5.6.                              Attached hereto as Schedule 5.6 is a complete and accuratelisting of all permits and licenses held by Cyagra or CK.  Such permits and licenses are in full force andeffect, and neither CK nor Cyagra is in violation of any of the terms orconditions thereof.  No permits otherthan those listed on Schedule 5.6 are necessary in order for Cyagraor CK to conduct its business as presently conducted.  Cyagra and CK are in compliance with allapplicable laws and regulations.

 

5.7.                              (a) Attached hereto as Schedule 5.7 is a complete andaccurate listing of all inventions, patents, patent applications, trademarks,tradenames, copyrights, trade

 

7

----

 

secrets,know-how and other intellectual property owned or utilized by Cyagra or CK intheir respective businesses (the “Cyagra Intellectual Property Rights”).

 

(b) Except as set forth in Schedule 5.7,Cyagra or CK (as indicated on said Schedule 5.7) owns all right,title, and interest in and to the Cyagra Intellectual Property Rights,including without limitation the right to make, use, sell, import, assign andlicense the same, except as otherwise limited in such licenses.

 

(c) Schedule 5.7 accurately andcompletely lists, (i) all licenses, sublicenses and other agreements as towhich Cyagra or CK is a party and pursuant to which any person is authorized touse any Cyagra Intellectual Property Rights including any trade secret ofCyagra or CK; and (ii) all licenses, sublicenses and other agreements asto which Cyagra or CK is a party and pursuant to which Cyagra or CK isauthorized to use any Third-Party patents, licenses, trademarks and servicemarks, trade names, trade secrets, technical knowledge and tangible orintangible proprietary information or other confidential proprietaryinformation (“Third-Party Intellectual Property”) used by Cyagra or CK in theirrespective businesses.

 

(d) No claim or action with respect to theCyagra Intellectual Property Rights or Third-Party Intellectual Property (tothe extent arising out of any use, reproduction or distribution of suchThird-Party Intellectual Property by or through Cyagra or CK) has been assertedor is pending or is threatened by any person.

 

(c) There is no unauthorized use, disclosure,infringement or misappropriation of any Cyagra Intellectual Property Rights byany employee of or consultant to, or former employee of or consultant to,Cyagra or CK, or by any third party.  NeitherCyagra nor CK has been sued or been charged in writing as a defendant

 

8

----

 

in any claim, suit,action, or proceeding which involves a claim of infringement of any Third-Party Intellectual Property.

 

(f) No employee of or consultant to Cyagra orCK is in default under any term of any employment contract, agreement orarrangement relating to the Cyagra Intellectual Property Rights or anynoncompetition arrangement, other contract, or any restrictive covenantrelating to Cyagra Intellectual Property Rights; provided, however, that AudiSpell has been given permission to own an interest in an embryo transfercompany.  Except as otherwisespecifically indicated on Schedule 5.7, the Cyagra IntellectualProperty Rights were developed entirely by the employees of or consultants toCyagra or CK and by Jason Knott during the time they were employed by Cyagra orCK and such Cyagra Intellectual Property Rights do not include any invention orother intellectual property of such employees or consultants made prior to thetime such employees or consultants were employed or retained by Cyagra or CK,nor does it include any intellectual property of any previous employer of suchemployees or consultants nor does it include the intellectual property of anyother person or entity.  Every employeeof or consultant to Cyagra or CK (past or present) has executed an inventionand proprietary rights assignment agreement in favor of Cyagra or CK (copies ofwhich are included in the documents attached as Schedule 5.7), andsuch agreements have not been modified and are in full force and effect.  All of the laboratory notebooks of allemployees of and consultants to Cyagra or CK (past or present) are in the possessionof Cyagra or CK or their respective employees and shall remain assets of Cyagraand CK.

 

9

----

 

(g) Cyagra and CK have required all of theirrespective employees and consultants to sign confidentiality agreements andassignments of intellectual property immediately upon their retention by Cyagraor CK.

 

(h) The parties agree that Cyagra shall havethe rights to all intellectual property, including any inventions,improvements, concepts, or ideas and the tangible embodiments of the sameconceived of, developed, made or created by Poothappillia Kasinanthan (“Kasi”), during the 6 month period following the execution and delivery of thisAgreement, and which derives from his Ph.D. research project identified asUMass Reference #UMA 99-29, patent pending, and is directly related to oruseful in Cyagra’s business of cloning mammals in the field of Agriculture (asdefined in the Assignment Agreement between ACT and Cyagra effective April 1,1998, as amended) (i.e., the production of food (i.e., something ofnutritional value) or fiber produced by animals or of animal origin, and therendering of services that relate to the production of such products), subjectto the rights of UMass.  Hematech shallcause Kasi to promptly and fully report all such intellectual property toCyagra and to promptly execute such documents and take such further steps asCyagra may request from time to time in order to reflect Cyagra’s ownershipthereof.

 

5.8.                              Cyagra is the owner of all of its assets (which are listed in detail onSchedulers 5.8 attached hereto) (the “Cyagra Assets”) free and clear ofall liens, encumbrances, security interests and adverse claims of any naturewhatsoever, other than such as are expressly described in Schedules 5.5 and5.7 hereto.  CK is the owner of allof the CK Assets free and clear of all liens, encumbrances, security interestsand adverse claims of any nature whatsoever, other than such as are expresslydescribed in Schedule 2(a)

 

10

----

 

hereto.  The Cyagra Assets and the CK Assets constituteall of the assets necessary to conduct the businesses conducted and currentlyproposed to be conducted by Cyagra and CK.  Since June 1, 1998, other than asdescribed in Schedule 5.8 hereto, neither Cyagra nor CK has sold,transferred, licensed or otherwise conveyed to any other person or entity anyintellectual property, including any inventions, improvements, or tangibleembodiments of the same.

 

5.9.                              The liabilities of Cyagra (fixed or contingent, matured or unmatured)are listed and described on Schedule 5.9 attached hereto and made apart hereof, and there are no other liabilities to which Cyagra or its assetsare subject.

 

5.10.                        Attached hereto as Schedule 5.10 is a true, correct andcomplete copy of the Limited Liability Company Agreement of Cyagra as presentlyin effect.  Cyagra has delivered to ACT acomplete and accurate set of the minutes of meetings (and actions taken inwriting in lieu of such meetings) by the Board of Directors and Members, of Cyagraand any committee or other representative body thereof.

 

5.11.                        Other than as set forth in Schedule 5.11 attached hereto,neither Cyagra nor CK is a party to any pending or threatened litigation oradministrative or regulatory proceedings.

 

5.12.                        Each of Cyagra and CK has paid or made adequate provision for any and alltaxes of whatever nature due or payable by Cyagra or CK, respectively, or inrespect of its assets.

 

5.13.                        Neither CK nor Cyagra has retained any broker, finder or other personwho shall be entitled to a fee in connection with the consummation of thetransactions contemplated hereby.

 

11

----

 

6.                                       Representations and Warranties of CyagraHolders.  Each Cyagra Holder represents and warrants,individually as to himself, herself or itself and not as to any other CyagraHolder (with respect to BFLP, such representations and warranties being madejointly and severally by Barton) as follows:

 

6.1.                              He, she or it is the owner of the CyagraUnits set forth opposite his, her or its name on Exhibit A attachedhereto and made a part hereof, free and clear of all liens, encumbrances,security interests, pledges or adverse claims of any nature whatsoever.  In the case of a Cyagra Holder that is anentity, the execution and delivery of this Agreement and the consummation bysuch Cyagra Holder of the transactions contemplated hereby have been dulyauthorized by all necessary action.  Theexecution and delivery of this Agreement by such Cyagra Holder and theconsummation by such Cyagra Holder of the transactions contemplated hereby donot and will not violate or conflict with any agreement or instrument to whichsuch Cyagra Holder is a party or by which such Cyagra Holder or such CyagraHolder’s Cyagra Units are bound.

 

6.2                                 Such Cyagra Holder has paid any and all taxesof whatever nature accrued, due or payable in respect of the Cyagra Units beingtransferred by such Cyagra Holder pursuant to this Agreement, including withoutlimitation taxes which may become payable at a later date relating to anyperiod ending on or prior to the date of this Agreement.

 

6.3                                 Such Cyagra Holder has not retained anybroker, finder or other person who shall be entitled to a fee in connectionwith the consummation of the transactions contemplated hereby.

 

12

----

 

6.4.                              The Cyagra Holders acknowledge that JamesBarton, the General Partner of BFLP, has acted as Chief Executive Officer ofHematech since its formation, and is fully familiar with the business,financial condition, assets, liabilities and prospects of Hematech, having hadfull and complete access to the books, records, personnel and operations ofHematech for the duration of such period.  Directly or through Mr. Barton, theCyagra Holders have had a full and adequate opportunity to inform themselves asto Hematech, its business, financial condition, operating results andprospects, and to consult with counsel and other advisers in connection withthe transactions contemplated hereby.  TheCyagra Holders acknowledge that any and all requests for information concerningHematech have been addressed to their satisfaction, and that they understandthat an investment in Hematech is illiquid and subject to considerable risk.  The Cyagra Holders represent and warrant thatthey are acquiring the Hematech Units for investment and not for the purposeof, or with a view to, the resale or distribution of the Hematech Units.

 

7.                                       Representations and Warranties of ACT.  ACThereby represents and warrants to the Cyagra Holders as follows:

 

7.1.                              ACT is the owner of the Transferred HematechUnits, free and clear of all liens, encumbrances, security interests, pledgesand adverse claims of any nature whatsoever.

 

7.2.                              ACT has been duly organized and is in goodstanding as a corporation under the laws of the State of Delaware, and theexecution and delivery of this Agreement by ACT, and the consummation by ACT ofthe transactions contemplated hereby, have been duly authorized by allnecessary corporate action on the part of ACT.

 

13

----

 

7.3.                              The execution and delivery by ACT of thisAgreement and the consummation by ACT of the transactions contemplated herebydo not and will not conflict with or violate any agreement or instrument towhich ACT is a party or by which it or its assets are bound, or any laws orregulations applicable to ACT.

 

7.4.                              ACT is acquiring the Cyagra Units forinvestment and not for the purpose of, or with a view to, the resale ordistribution thereof.  ACT acknowledgesthat the Cyagra Units are illiquid and that investment in the Cyagra Units isspeculative and subject to significant risk.

 

8.                                       Indemnification.

 

(a)                                  Barton hereby agrees to indemnify and holdharmless ACT, Cyagra and their respective directors, officers, shareholders,members, employees and agents from and against any and all costs, damages,losses, expenses (including reasonable attorneys’ fees), liabilities, fines orpenalties (collectively “Losses”) incurred or experienced by any of suchindemnified parties and arising out of or resulting from the inaccuracy of anyof the representations or warranties contained in Section 5 hereof or thefailure of Cyagra or CK to perform any of their covenants contained herein.  Each of the Cyagra Holders hereby agrees toseverally indemnify and hold harmless ACT, its directors, officers,shareholders, employees and agents from and against any and all Losses incurredor experienced by any of such indemnified parties and arising out of orresulting from any inaccuracy in the representations or warranties made by suchCyagra Holder under Section 6 of this Agreement or the failure of suchCyagra Holder to perform any of its covenants contained in this Agreement,provided that such indemnity by any Cyagra Holder shall be limited to theLosses incurred by reason of such Cyagra Holder’s own breaches only.  Barton agrees that he shall be jointly andseverally liable

 

14

----

 

for the Indemnificationobligations hereunder of BFLP.  ACThereby agrees to indemnify and hold the Cyagra Holders and Hematech harmlessfrom and against any and all losses incurred or experienced by any of suchindemnified parties and arising out of or resulting from the inaccuracy of anyof ACT’s representations or warranties contained herein or the failure of ACTto comply with any of its covenants contained herein.

 

(b)                                 The indemnifying party shall be entitled tocontrol the defense and settlement of any action, suit or proceeding as towhich it is obliged to provide indemnification pursuant to Section 8(a) hereof;provided, however, that the indemnified party shall be entitled to assumecontrol thereof (at the indemnifying party’s expense) if the indemnifying partyfails promptly and diligently to assume such control and address or defend suchindemnified claims, or in the event that in the reasonable judgment of theindemnified party, there are material claims or other adverse outcomes that areeither not covered by the indemnification contained herein or as to which theindemnifying party cannot adequately protect the indemnified party.  Any indemnified party shall promptly notifythe indemnifying party of the assertion of any claim, action, suit orproceeding as to which the indemnified party will be seeking indemnificationfrom the indemnifying party; provided, however, that the failure to providesuch prompt notice shall not in any way relieve the indemnifying party of anyobligations to provide indemnification hereunder except in the event and to theextent that such failure to timely provide such notice materially anddemonstrably impaired the ability of the indemnifying party to defend or otherwiseaddress such claim, action, suit or proceeding.

 

(c)                                  The indemnification obligations of theparties under this Agreement (excluding those relating to breaches ofcovenants, which shall survive indefinitely) shall survive until May 31, 2002.

 

15

----

 

9.                                       Confidentiality, Non-Solicitation andNon-Competition Covenants.

 

(a) Barton and Fiederowicz each herebycovenants with ACT, to maintain in strictest confidence all proprietary dataand other confidential information (whether concerning Cyagra, CK or any oftheir customers or proposed customers) learned, obtained or developed duringthe course of his employment, engagement or other relationship with Cyagra orCK.  Such information and data includes,but is not limited to, Cyagra’s and CK’s trade secrets, patents, patent applications,inventions, ideas, methods, processes, techniques, systems, computer programsand software, procedures, manuals, confidential reports and communications andlists of customers and clients, as well as information that was obtained fromthird parties in confidence or subject to non-disclosure or similar agreements,but does not include publicly available information that did not become publicdue to the act or omission of Barton or Fiederowicz in violation of thisAgreement.  All such information and datais and shall remain the exclusive property of Cyagra or CK, as applicable (or,in certain circumstances, its particular customer).  Any such information and data in thepossession of Barton or Fiederowicz at the time of the execution and deliveryof this Agreement shall be immediately returned to Cyagra.  The obligations of Barton and Fiederowiczunder this Section 9(a) shall continue for an indefinite period oftime.  Nothing contained in this Section 9(a) shallprohibit Barton or Fiederowicz from being employed by or providing consultingservices to Hematech in connection with activities permitted under Section 9(b) hereof.

 

(b) Hematech, and its subsidiaries andaffiliated entities, agree that, for a period of two (2) years after thedate of the execution of this Agreement, they will not engage in, own (byownership of securities or otherwise), manage, operate, control, engage in asan equity participant or be employed by or act as a consultant to, or beconnected in any manner with, the

 

16

----

 

ownership, management orcontrol of any business which is competitive with Cyagra’s business of cloningmammals in the field of Agriculture (i.e., the production of food (i.e.,something of nutritional value) or fiber produced by animals or of animalorigin, and the rendering of services that relate to the production of suchproducts) as presently or hereafter conducted by Cyagra or its subsidiaries.  In recognition of the geographic extent ofCyagra’s and its affiliates’ existing and anticipated operations and the natureof Cyagra’s and its affiliates’ business and competitive circumstances, therestrictive covenant contained in this Section 9(b) shall applyworldwide.

 

(c) ACT, its subsidiaries, officers, andemployees agree that, for a period of two (2) years after the date of theexecution of this Agreement, they will not engage in, own (by ownership ofsecurities or otherwise), manage, operate, control, engage in as an equityparticipant or be employed by or act as a consultant to, or be connected in anymanner with, the ownership, management or control of any business which iscompetitive with Hematech’s business of the development and production ofimmunoglobulin in the blood of Bos taurus and Bos indicus.  Hematech acknowledges, understands and agreesthat the foregoing restrictive covenant applies only to Hematech’s business ofthe development and production of immunoglobulin in the blood of Bos taurus andBos indicus and except as provided herein does not preclude ACT from conductingany business relating to the development and production of immunoglobulin inthe blood of Leporidae or the development and production of immunoglobulin orother products in the blood of any species other than Bos taurus or Bos indicus. In recognition of the geographic extentof Hematech’s and its affiliates’ existing and anticipated operations and thenature of Hematech’s and its affiliates’ business and competitivecircumstances, the restrictive covenant contained in this Section 9(c) shallapply worldwide.

 

17

----

 

(d) Except as otherwise provided herein, eachparty agrees that for a period of one (1) year after the date of theexecution of this Agreement, no party shall solicit or induce any employee orconsultant of any other party or any of its affiliates to terminate his, her orits employment or consulting relationship with such party, or to hire orattempt to hire any such employee or consultant on behalf of such party or onbehalf of any other person or entity, and each party further agrees not tointerfere with, disrupt or attempt to disrupt any past, present or prospectivecontractual or other relationship between Cyagra, Hematech, ACT or any of ACT’ssubsidiaries and any of the clients, customers, suppliers, consultants oremployees of Cyagra, Hematech, ACT or any of ACT’s subsidiaries.  Nothing contained herein shall prohibit (i) ACTor Cyagra from engaging Philippe Collas Associates to perform consultingservices with respect to activities not prohibited to ACT and Cyagra under thisSection 9, or (ii) Hematech from engaging Kasi to perform serviceswith respect to activities not prohibited to Hematech under this Section 9.

 

(e) Each party agrees that the restrictions inthis Section 9 are necessary and reasonable to protect the other parties’Confidential Information and Trade Secrets, which are essential to such otherparties’ business, that an actual or threatened breach thereof would result inirreparable harm to such other parties which is not adequately compensable withmonetary damages, and that, therefore, such other parties shall be entitled toinjunctive or similar relief in connection with any such actual or threatenedbreach.

 

10. Additional Covenants.

 

(a) ACT agrees to cause Cyagra to maintain ineffect, until at least May 31, 2001, the liability insurance policiescurrently maintained by Cyagra (or policies providing substantially similarcoverage).

 

18

----

 

(b) Hematech agrees to cause Kasi to take allsteps as Cyagra may request from time to time during the period ending November 30,2000 in order to enable Cyagra to obtain patent protection for any intellectualproperty related to the fields in which Cyagra and ACT are not restricted underSection 9 hereof and which is containedin any of the laboratory notebooks to which Kasi contributed and which arebeing transferred or delivered to Cyagra pursuant to this Agreement.

 

(c) To the extent permitted under theapplicable license granted by the University of Massachusetts, if any, Cyagra(or ACT, as applicable) agrees to grant to Hematech a royalty-free, fully paidup, non-exclusive world-wide sublicense limited to the field as to which ACT isprohibited under Section 9 hereof, to utilize any patents that arise outof the research projects identified in item 13 of Schedule 2(a) heretoin connection with such field.  Theduration of any such sublicense shall be for the life of the subject patent(s). Cyagra and ACT agree to exercise theirreasonable best efforts to avoid the imposition in the applicable UMass licenseof restrictions on the ability to grant such sublicense(s) to Hematech.

 

(d) At the request of Cyagra, the CyagraHolders agree to use their respective reasonable efforts to obtain the consentof KTEC to the assignment by CK to Cyagra of the KTEC Research Project GrantAgreement described on Schedule 2(a).  If such consent is not obtained on or prior toJuly 31, 2000, within three (3) business days thereafter, Cyagra willreassign to CK all rights under such agreement, and Hematech will pay to Cyagrathe sum of Forty Thousand Dollars ($40,000) by certified or bank cashier’scheck.  In the event that such consent istimely obtained or, if not, when Hematech pays Cyagra $40,000 as providedabove, the parties agree that the Cyagra Holders, Hematech, CK, Barton and Roblwill have no further

 

19

----

 

liability to ACT orCyagra in respect of the amounts owed to UMass pursuant to the two agreementslisted on Schedule 5.5 which are in default.

 

(e) Not later than June 30, 2000, Hematechwill take all necessary action to cause CK to change its name to a name notincluding “Cyagra” and to cease using the name “Cyagra” in any manner in its operations.

 

11.                                 Miscellaneous.

 

(a)                                  This Agreement shall be governed by andconstrued in accordance with the laws of the Commonwealth of Massachusetts,without regard to principles of conflicts of law thereof.  Any legal action or proceeding relating to thisAgreement shall be instituted in any state or federal court in the Commonwealthof Massachusetts.  The parties to thisAgreement hereby irrevocably agree to submit to the jurisdiction of, andirrevocably agree that venue is proper in, the aforesaid courts in any suchlegal action or proceeding.

 

(b)                                 This Agreement constitutes the parties’entire understanding with respect to the subject matter hereof, and supersedesany and all prior oral or written agreements, expressions or understandingswith respect thereto.  This Agreement maybe amended only by a writing duly executed by each of the parties hereto.

 

(c)                                  For purposes of construing and interpretingthis Agreement, neither party shall be deemed the draftsman hereof, each partyhaving been represented by counsel, being a sophisticated party and having hada full opportunity to negotiate the provisions hereof.

 

(d)                                 Time shall be of the essence.

 

(e)                                  Each of the parties hereto agrees to executesuch further documents and to take such further actions as any of the otherparties hereto may reasonably request from time to

 

20

----

 

time in order to betterassure the consummation of the transactions contemplated hereby, including butnot limited to the transfer of title to the Cyagra Units and the HematechUnits.

 

(f)                                    This Agreement shall be binding upon andinure to the benefit of the parties and their respective successors andassigns.  The parties shall be entitledto assign their rights, but not their obligations, pursuant to this Agreement.

 

(g)                                 This Agreement may be executed in one or morecounterparts, each of which shall be charged an original, but all of whichtogether shall constitute one and the same instrument.

 

IN WITNESS WHEREOF, the parties have caused thisAgreement to be executed and delivered as of the day and year first abovewritten.

 

 
|   | ADVANCED  CELL TECHNOLOGY, INC. |
|--------|---------------------------------|
|   |                            |
|   |                            |
|   | By:                             | /s/ Michael D. West |   |
|   |                            | Michael D. West, President |   |
|   |                            |   |   |
|   | HEMATECH,  LLC                  |   |
|   |                            |   |   |
|   |                            |   |   |
|   | By:                             | /s/  James M. Barton |   |
|   |                            | James  M. Barton, CEO |   |
|   |                            |   |   |
|   | CYAGRA, LLC                     |   |
|   |                            |   |   |
|   |                            |   |   |
|   | By:                             | /s/ James M. Barton |   |
|   |                            | James M. Barton, CEO |   |
|   |                            |   |   |
|   | CYAGRA  OF KANSAS, LLC          |   |
|   |                            |   |   |
|   |                            |   |   |
|   | By:                             | /s/ James M. Barton |   |
|   |                            | James  M. Barton, CEO |   |

 

21

----

 
|   | THE BARTON FAMILY  LIMITED  PARTNERSHIP |                            |
|--------|-----------------------------------------|---------------------------------|
|   |                                    |                            |
|   |                                    |                            |
|   | By:                                     | /s/  James Barton               |   |
|   |                                    | James  Barton, General Partner  |   |
|   |                                    |                            |
|   | THE  ROBL FAMILY LIMITED  PARTNERSHIP   |                            |
|   |                                    |                            |
|   |                                    |                            |
|   | By:                                     | /s/  James M. Robl              |   |
|   |                                    | James  M. Robl, General Partner |   |
|   |                                    |                            |
|   |                                    |                            |
|   | /s/ Walter M.  Fiederowicz              |                            |
|   | Walter M. Fiederowicz                   |                            |
|   |                                    |                            |
|   |                                    |                            |
|   | /s/ Richard Goldsby                     |                            |
|   | Richard  Goldsby                        |                            |
|   |                                    |                            |
|   |                                    |                            |
|   | /s/ Barbara Osborne                     |                            |
|   | Barbara Osborne                         |                            |
|   |                                    |                            |
|   |                                    |                            |
|   | /s/ James M. Robl                       |                            |
|   | James M. Robl                           |                            |
|   |                                    |                            |
|   |                                    |                            |
|   | /s/ James Barton                        |                            |
|   | James Barton                            |                            |

 

22

----

 

EXHIBIT A

 

to

 

MEMBERSHIPINTEREST EXCHANGE AND ASSET SALE AGREEMENT

 
| **Cyagra  Holder**                     | ** ** | **Number of Cyagra Units Owned and  Being Transferred to ACT** | ** **  |
|----------------------------------------|------------|----------------------------------------------------------------|-------------|
|                                   |       |                                                           |        |
| The  Barton Family Limited Partnership |       | 273,000                                                        |        |
|                                   |       |                                                           |        |
| The  Robl Family Limited Partnership   |       | 343,000                                                        |        |
|                                   |       |                                                           |        |
| Walter  M. Fiederowicz                 |       | 17,500                                                         |        |
|                                   |       |                                                           |        |
| Richard  Goldsby                       |       | 87,500                                                         |        |
|                                   |       |                                                           |        |
| Barbara  Osborne                       |       | 87,500                                                         |        |
|                                   |       |                                                           |        |
| TOTAL                                  |       | 808,500                                                        |  Units |

 

----

 

EXHIBIT B

 

to

 

MEMBERSHIPINTEREST EXCHANGE AND ASSET SALE AGREEMENT

 
| **Cyagra  Holder**                     | ** ** | **Number of Hematech Units Owned  Being Transferred by ACT to Cyagra Holders** | ** **  |
|----------------------------------------|------------|--------------------------------------------------------------------------------|-------------|
|                                   |       |                                                                           |        |
| The  Barton Family Limited Partnership |       | 4,216.24                                                                       |        |
|                                   |       |                                                                           |        |
| The  Robl Family Limited Partnership   |       | 5,297.28                                                                       |        |
|                                   |       |                                                                           |        |
| Walter  M, Fiederowicz                 |       | 270.24                                                                         |        |
|                                   |       |                                                                           |        |
| Richard  Goldsby                       |       | 1,351.36                                                                       |        |
|                                   |       |                                                                           |        |
| Barbara  Osborne                       |       | 1,351.36                                                                       |        |
|                                   |       |                                                                           |        |
| TOTAL                                  |       | 12,486.48                                                                      |  Units |

 

----