**Exhibit 10.16**

 

NON-EXCLUSIVE LICENSE AGREEMENT

 

ThisNon-Exclusive License Agreement (“Agreement”) is made and entered into this 3rdday of February, 2004 (the “Effective Date”), by and between AdvancedCell Technology, Inc., a Delaware corporation with offices located at OneInnovation Drive, Worcester, Massachusetts 01605 (“ACT”), and First DegreeGenetics LLC, a Delaware limited liability company with offices located at 18 PlimptonRoad, Westerly, R.I. 02891 (“LICENSEE”) (ACT and LICENSEE sometimes hereinafterreferred to as the “parties”).

 

WITNESSETH

 

WHEREAS,Robert Saglio, the principal of LICENSEE (“Saglio”), has been employed by ACT’sparent company A.C.T. Group, Inc. (“Group”) as an executive; and

 

WHEREAS,Saglio’s employment with Group terminated on August 8, 2002; and

 

WHEREAS,in connection with the termination of Saglio’s employment by Group Saglio andGroup entered into a letter agreement dated July 22, 2002 (the “LetterAgreement”), a copy of which is attached hereto as Exhibit A; and

 

WHEREAS,in connection with the termination of Saglio’s employment by Group Saglio andGroup entered into a General Release and Indemnification Agreement dated February 3,2004 (the “Release”), a copy of which is attached hereto as Exhibit B;and

 

WHEREAS,ACT owns or has licensed with a sublicensable interest the PATENT RIGHTS (asdefined below) and KNOW-HOW (as defined below); and

 

WHEREAS,Saglio owns directly more than fifty percent (50%) of LICENSEE; and

 

WHEREAS,Saglio desires to obtain for LICENSEE a nonexclusive license from ACT in andunder the PATENT RIGHTS and KNOW-HOW; and

 

WHEREAS,the Letter Agreement contemplates that ACT will grant such a license toLICENSEE; and

 

WHEREAS,ACT is willing to grant such a license to LICENSEE upon the terms and conditionsset forth below; and

 

NOW,THEREFORE, in consideration of the premises and the mutual covenants containedherein, the parties hereto agree as follows:

 

ARTICLE 1 - DEFINITIONS

 

Forthe purposes of this Agreement, the following words and phrases shall have thefollowing meanings:

 

1.1                                 “DEVELOPMENTS”means inventions, patents and patent rights not included in the

 

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PATENT RIGHTS that areconceived, discovered, invented, developed, created, made or reduced topractice by ACT during the term of this Agreement.  For the avoidance of doubt, the termDEVELOPMENTS does not include inventions, patents and patent rights obtained byACT from any third party.

 

1.2                                 “FIELDOF COMPANION ANIMALS” means the cloning, development, making, using, selling,offering to sell or importing of animals of the canine or feline species forDOMESTIC PURPOSES.  For purposes ofillustration but not by way of limitation, the FIELD OF COMPANION ANIMALS doesnot include laboratory animals or animals intended for research purposes.

 

1.3                                 “KNOW-HOW”means all compositions of matter, techniques and data and other know-how andtechnical information including inventions (whether or not patentable),improvements and developments, practices, methods, concepts, trade secrets,documents, computer data, computer code, apparatus, clinical and regulatorystrategies, test data, analytical and quality control data, formulation,manufacturing, patent data or descriptions, development information, drawings,specifications, designs, plans, proposals and technical data and manuals andall other proprietary information that is owned or controlled by ACT as of theEffective Date that relates to cloning technology or to any of the subjectmatter described in or claimed by the PATENT RIGHTS and is relevant to theFIELD OF COMPANION ANIMALS.

 

1.4                                 “LICENSEDPROCESS” means any process or method, the researching, developing, using,practicing, selling, offering for sale, importing or exporting of which byLICENSEE would, but for the licenses granted to LICENSEE in Article 2of this Agreement, infringe a VALID CLAIM of the PATENT RIGHTS in the countryin which such process or method is researched, developed, practiced, sold,offered for sale, imported or exported.

 

1.5                                 “LICENSEDPRODUCT” means (a) any product, the making, using, selling, offering forsale, importing or exporting of which by LICENSEE, would, but for the licensesgranted to LICENSEE in Article 2 of this Agreement, infringe aVALID CLAIM of the PATENT RIGHTS in the country in which any such product is somade, used, sold, offered for sale, imported or exported by LICENSEE or (b) anyproduct that is made by LICENSEE using a process or method that would, but forthe licenses granted to LICENSEE in Article 2 of this Agreement,infringe a VALID CLAIM of the PATENT RIGHTS in the country in which any suchprocess or method is used.

 

1.6                                 “LICENSEDSERVICES” means any service, the developing, using, performing, selling,offering for sale, importing or exporting of which by LICENSEE would, but forthe licenses granted to LICENSEE in Article 2 of this Agreement,infringe a VALID CLAIM of the PATENT RIGHTS in the country in which any suchservice is so developed, used, performed, sold, offered for sale, imported orexported by LICENSEE.

 

1.7                                 “LICENSEE”means First Degree Genetics LLC, a Delaware limited liability company withoffices located at 18 Plimpton Road, Westerly, R.I. 02891.

 

1.8                                 “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)                                  discountsallowed;

 

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(b)                                 sales,tariff duties, use and other taxes directly imposed with reference toparticular sales;

 

(c)                                  specialpackaging, transportation and insurance prepaid or allowed; and

 

(d)                                 amountsallowed or credited on returns.

 

1.9                                 “PATENTRIGHTS” means (a) the patent applications and patents identified on Exhibit Cattached hereto and any patents that issue on said applications and (b) anydivisions, continuations, continuations-in-part, extensions, reissues orreexaminations of any of the patents identified in the foregoing clause (a).  The parties agree that Exhibit Cmay be revised from time to time after the Effective Date to reflect changesthereto.

 

1.10                           “TERM”has the meaning set forth in Section 8.1.

 

1.11                           “TERRITORY”means the entire world.

 

1.12                           “UMASSLICENSE” means the Exclusive License Agreement between ACT and the Universityof Massachusetts, dated April 16, 1996, as amended by the Amendment to ExclusiveLicense Agreement dated September 1, 1999, the Second Amendment toExclusive License Agreement dated May 31, 2000, and the Third Amendment toExclusive License Agreement dated September 19, 2002.

 

1.13                           “VALIDCLAIM” means a claim of any issued and unexpired patent within the PATENTRIGHTS which has not lapsed, become abandoned or been held 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, and which has not beenadmitted to be invalid or unenforceable through reissue, disclaimer orotherwise.

 

Additionalterms may be defined throughout this Agreement.

 

ARTICLE 2 - GRANT

 

2.1                                 ACThereby grants to LICENSEE, and LICENSEE hereby accepts, subject to the termsand conditions hereof, a royalty bearing, nonexclusive license in the TERRITORYin the FIELD OF COMPANION ANIMALS and under the PATENT RIGHTS and KNOW-HOW to (a) research,develop, make, have made, use, sell, have sold, offer for sale, have offeredfor sale, import, have imported, export and have exported LICENSED PRODUCTS, (b) research,develop, use, practice, sell, have sold, offer for sale, have offered for sale,import, have imported, export and have exported LICENSED PROCESSES and (c) develop,use, perform, sell, have sold, offer for sale, have offered for sale, import,have imported, export and have exported LICENSED SERVICES.  LICENSEE shall have the right, in connectionwith the licenses to “have made,” “have sold,” “have offered for sale,” “haveimported” and “have exported” to sublicense the rights granted in this Section 2.1to third parties in connection with contracting with such third parties to (x)provide LICENSED PRODUCT marketing and distribution services to LICENSEE onbehalf of LICENSEE, (y) provide Licensed Services

 

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marketing services toLICENSEE on behalf of LICENSEE or (z) manufacture for LICENSEE LICENSED PRODUCTSfor sale by LICENSEE or a third party pursuant to the foregoing clause (x).

 

2.2                                 Exceptas expressly provided by Section 2.1 above, LICENSEE shall not have theright to grant sublicenses without the express prior written approval of ACT,which approval shall be granted or denied in ACT’s sole discretion.

 

2.3                                 Withinthirty (30) business days of the Effective Date, ACT shall provide and transferto LICENSEE all information and data relating to the PATENT RIGHTS and KNOW-HOWas may be reasonably necessary to allow LICENSEE to exploit the licensesgranted hereunder.

 

2.4                                 LICENSEEacknowledges that a portion of the PATENT RIGHTS licensed to LICENSEE hereunderis owned by the University and is licensed to ACT under the UMASS LICENSE.  In the event the UMASS LICENSE expires or isterminated for any reason pursuant to the provisions of the UMASS LICENSE orotherwise, the terms of the letter agreement attached hereto as Exhibit Dbetween ACT, LICENSEE and the University shall apply to this Agreement.

 

ARTICLE 3 - LICENSEE OBLIGATIONSRELATING TO COMMERCIALIZATION

 

3.1                                 LICENSEEshall use its commercially reasonable and diligent efforts to bring one or moreLICENSED PRODUCTS, LICENSED PROCESSES or LICENSED SERVICES to market through anactive and diligent program for exploitation of the PATENT RIGHTS and tocontinue active, diligent marketing efforts for one or more LICENSED PRODUCTS,LICENSED PROCESSES or LICENSED SERVICES throughout the Term of this Agreement.

 

3.2                                 LICENSEEshall maintain complete and accurate records of LICENSED PRODUCTS, LICENSEDPROCESSES and LICENSED SERVICES that are made, used, sold or performed byLICENSEE under this Agreement.  Not laterthan May 1st of each year following the Effective Date,LICENSEE shall furnish ACT with a summary report on the progress of its effortsduring the prior year to develop and commercialize LICENSED PRODUCTS, LICENSEDPROCESSES or LICENSED SERVICES, including without limitation research anddevelopment efforts, efforts to obtain regulatory approval, marketing efforts(including LICENSED PRODUCTS, LICENSED PROCESSES and LICENSED SERVICES made,used, sold or performed) and sales figures, provided that such reports shall bedeemed Confidential Information (as defined in Section 10.1 herein)subject to the provisions of Article 10 of this Agreement.

 

3.3                                 Inthe event that ACT determines that LICENSEE has not fulfilled its obligationsunder this Article 3, ACT shall furnish LICENSEE with written notice ofsuch determination.  Within sixty (60)days after receipt of such notice, LICENSEE shall either (i) fulfill therelevant obligation or (ii) negotiate with ACT a mutually acceptable schedule ofrevised obligations; failing which ACT shall have the right, immediately uponwritten notice to ACT, to terminate this Agreement.

 

ARTICLE 4 - CONSIDERATION

 

4.1                                 InitialPayment.  In partial consideration ofthe license granted to LICENSEE from ACT in Article 2 of this Agreement,LICENSEE agrees to pay a “License Fee” to ACT, by delivery by

 

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LICENSEE within thirty(30) days after the Effective Date, of a convertible promissory note in theform attached hereto as Exhibit E.

 

4.2                                 Royalties.

 

(a)                                  Inpartial consideration of the license in the FIELD OF COMPANION ANIMALS grantedby ACT to LICENSEE in Article 2 of this Agreement, LICENSEE agrees to payto ACT an earned royalty equal to five percent (5%) of the NET SALES in theFIELD OF COMPANION ANIMALS made, used, sold, imported, exported or performed byLICENSEE in the TERRITORY.

 

(b)                                 Nomultiple royalties shall be payable because any LICENSED PRODUCT, LICENSEDPROCESS or LICENSED SERVICE in the FIELD OF COMPANION ANIMALS, its manufacture,use, lease, sale or performance are or shall be covered by more than one patentor patent application within the PATENT RIGHTS.

 

(c)                                  Theobligation of LICENSEE to pay royalties or Sublicense Income (as defined in Section 4.3herein) hereunder shall terminate for each country in the TERRITORYconcurrently with the expiration or termination of the last applicable VALIDCLAIM within the PATENT RIGHTS in such country in which the LICENSED PRODUCT,LICENSED PROCESS or LICENSED SERVICE is, (as applicable), used, practiced,performed, sold, offered for sale, imported, exported or manufactured.

 

4.3                                 SublicenseIncome.  LICENSEE shall pay to ACT atotal of twenty-seven and one-half percent (27.5%) of all Sublicense Income.  “Sublicense Income” means consideration thatLICENSEE receives for the sublicense of rights that are granted LICENSEE under Article 2,approved in writing by ACT, including without limitation license fees,milestone payments, equity payments, up front fees, success fees, and licensemaintenance fees.

 

4.4                                 Paymentsin U.S. Currency.  All payments dueunder this Agreement shall be paid in cash to ACT and all payments shall bemade in United States currency.  Conversionof foreign currency to U.S. dollars shall be made at the conversion ratereported in The Wall Street Journal on the last working day of thecalendar quarter to which the payment relates.

 

4.5                                 Taxes. All payments due hereunder shall be paidin full without deduction of taxes or other fees which may be imposed by anygovernment and which shall be paid by LICENSEE; provided, however, that anywithholding tax required to be withheld by LICENSEE on royalty payments underthe laws of any country in the TERRITORY on behalf of ACT will be timely paidby LICENSEE to the appropriate governmental authority, and LICENSEE willfurnish ACT with proof of payment of such tax.  Any such tax actually withheld may be deductedfrom royalty payments due to ACT under this Agreement.  If at any time legal restrictions prevent theprompt remittance of part or all of any payments owed by LICENSEE to ACThereunder with respect to any country in the TERRITORY, payment shall be madethrough any lawful means or methods that may be available, and as LICENSEEshall reasonably determine is appropriate.

 

4.6                                 OverduePayments.  Any payments to be made byLICENSEE hereunder that are not paid on or before the date such payments aredue under this Agreement shall bear interest, to the extent permitted by law,at two percentage points above the Prime Rate of interest as reported in TheWall

 

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Street Journalon the date payment is due, with interest calculated based on the number ofdays that payment is delinquent.

 

ARTICLE 5 - REPORTS AND RECORDS

 

5.1                                 LICENSEEshall keep full, true and accurate books of account containing all particularsthat may be necessary for the purpose of showing the amounts payable to ACThereunder and to enable the reports provided under Section 5.2 tobe verified.  Said books of account shallbe kept at LICENSEE’s principal place of business.  Said books and the supporting data shall beopen upon reasonable advance notice (but not less than five (5) businessdays notice and no more frequently than once per calendar year) for three (3) yearsfollowing the end of the calendar year to which they pertain, to the inspectionof ACT or its agents for the purpose of verifying LICENSEE’s royalty andSublicense Income statement or compliance in other respects with this Agreement. If any such audit determines an error inany royalty or Sublicense Income payment, LICENSEE shall pay to ACT, withinthirty (30) days of the discovery of the error, (a) all deficiencies inroyalty or Sublicense Income payments, (b) interest on such deficienciesfrom the date such royalty or Sublicense Income payment was due until the datepaid at the rate set forth in Section 4.6 above, and (c) if sucherror is in excess of five percent (5%) of any royalty or Sublicense Incomepayment, the cost of the audit.  In allother cases, the costs of the audit shall be paid for by ACT.  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                                 Afterthe first commercial sale of a LICENSED PRODUCT or LICENSED PROCESS, LICENSEE,within forty-five (45) days after March 31, June 30, September 30and December 31 of each year, shall deliver to ACT a true and accuratereport, giving such particulars of the business conducted by LICENSEE and itspermitted sublicensees during the preceding three-month period under thisAgreement as shall be pertinent to a royalty and Sublicense Income accountinghereunder.  Without limiting thegenerality of the foregoing, these reports shall include at least thefollowing:

 

(a)                                  thenumber of LICENSED PRODUCTS manufactured and sold by LICENSEE and allsublicensees;

 

(b)                                 totalbillings and the amounts actually received for LICENSED PRODUCTS sold byLICENSEE and all sublicensees;

 

(c)                                  anaccounting for all LICENSED PROCESSES or LICENSED SERVICES used in theprovision of services to others or sold by LICENSEE;

 

(d)                                 thedeductions applicable as provided in Section 1.11; and

 

(e)                                  thenames and addresses of all parties making LICENSED PRODUCTS on behalf ofLICENSEE.

 

The reports shall providethe above-identified information by animal.

 

5.3                                 Witheach such report submitted, LICENSEE shall pay to ACT the royalties and

 

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Sublicense Income due andpayable for such three-month period. If no royalties or Sublicense Income shallbe due, LICENSEE shall so report.

 

ARTICLE 6 - PATENT PROSECUTION

 

6.1                                 ACTshall be solely responsible for the continued prosecution of pending patentapplications included in the PATENT RIGHTS and the issuance of suchapplications after allowance.  Additionally,ACT shall pay all government fees in any given country required to maintain thePATENT RIGHTS; and shall submit evidence to LICENSEE upon request that suchfees have been timely paid.  Theprosecution, filing and maintenance of all patents and applications shall bethe primary responsibility of ACT. LICENSEE agrees to cooperate fully with ACT,as requested by ACT and at ACT’s expense, in the preparation, filing,prosecution, and maintenance of the patent applications and patents included inthe PATENT RIGHTS.

 

ARTICLE 7 - PROSECUTION OF INFRINGERSAND DEFENSE OF PATENT RIGHTS

 

Theparties agree to notify each other in writing of any actual or threatenedinfringement by a third party of Patent Rights or of any claim of invalidity,unenforceability, or non-infringement of the Patent Rights.  ACT shall have the sole responsibility toprosecute or defend such claims, as applicable.  LICENSEE shall if requested provide reasonableassistance to ACT, at ACT’s expense, in connection with the prosecution ordefense of such claims.

 

ARTICLE 8 - INDEMNIFICATION

 

8.1                                 LICENSEEshall at all times during the term of this Agreement and thereafter, indemnify,defend and hold harmless ACT and the University and their trustees, directors,officers, employees and affiliates (collectively, the “Indemnified Parties”)against all liabilities of any kind whatsoever, including legal expenses andreasonable attorneys’ fees (excluding, pursuant to Article 13 hereof, anyspecial, indirect, reliance, incidental, exemplary, cover or consequent damagessuffered or incurred by any of the Indemnified Parties directly (as opposed toany special, indirect, reliance, incidental, exemplary, cover or consequentialdamages suffered or incurred by third parties who are, in turn, seeking thesame from the Indemnified Parties, which shall be covered by the indemnity setforth herein)), incurred or imposed upon any of the Indemnified Parties 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) or arising from any obligation, act or omission performed or failedto be performed hereunder, or from a breach of any representation or warrantyof LICENSEE hereunder, excepting only claims that the PATENT RIGHTS or theexercise thereof infringe third party intellectual property or claims thatresult from any breach by ACT of this Agreement.

 

8.2                                 Ifthe exercise 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

 

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shall not have any of therights granted herein in such country and shall have no obligation to pay ACTany further payments under Article 4 of this Agreement with respect to anycountry of the TERRITORY until such claim is resolved by proper adjudication orsettlement permitting LICENSEE to exercise LICENSEE’s rights under thisAgreement in the applicable country of the TERRITORY.  Notwithstanding anything herein to thecontrary, ACT covenants that it will not (a) assert or bring any suit,action, claim or other proceeding against LICENSEE based on, in whole or inpart, LICENSEE’s exercise of LICENSEE’s rights, in accordance with the termsand conditions of this Agreement, with respect to the PATENT RIGHTS and/or KNOW_HOWand/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 bythe applicable third party, so long as LICENSEE is not in violation of thisAgreement.

 

8.3                                 Anyindemnification obligations set forth in this Agreement shall be subject to thefollowing conditions: (i) the indemnified party shall notify theindemnifying party in writing promptly upon learning of any claim or suit forwhich indemnification is sought; (ii) the indemnifying party shall havecontrol of the defense or settlement, provided that the indemnifiedparty shall have the right (but not the obligation) to participate in suchdefense or settlement with counsel at its selection and at its sole expense;and (iii) the indemnified party shall reasonably cooperate with thedefense, at the indemnifying party’s expense.

 

8.4                                 LICENSEEagrees to maintain insurance or self-insurance that is reasonably adequate tofulfill any potential obligation to the indemnified parties.  LICENSEE shall continue to maintain suchinsurance or self-insurance during the term of this Agreement and after theexpiration or termination of this Agreement for a period of five (5) years. LICENSEE shall provide to ACT, uponrequest, proof of any such insurance policy maintained by LICENSEE.

 

ARTICLE 9 - TERMINATION

 

9.1                                 Theterm of this Agreement (“TERM”) shall commence on the Effective Date andcontinue until the expiration of the last VALID CLAIM within the PATENT RIGHTSto expire, unless sooner terminated as provided in this Article 9; providedthat LICENSEE’s obligation to pay royalties or Sublicense Income on NET SALESin any country will terminate pursuant to Section 4.2(c) (subject toLICENSEE’s obligations under Section 9.4 herein).

 

9.2                                 Ifeither party commits a material breach of a material term of this Agreement(including any failure to make any payment due under this Agreement), thenon-breaching party shall have the right to terminate this Agreement effectiveon thirty (30) days prior written notice to the party in breach, unless suchbreach is cured prior to the expiration of such thirty (30) day period.

 

9.3                                 LICENSEEshall have the right to terminate this Agreement at any time on thirty (30)days prior notice to ACT, and upon payment of all amounts due ACT through theeffective date of the termination.

 

9.4.                              Notwithstandinganything herein to the contrary, in the event that this Agreement is terminatedby ACT pursuant to Section 9.2 or by LICENSEE pursuant to Sections9.2 or 9.3, LICENSEE shall retain a license to rights granted in Article 2to the extent reasonably necessary to sell any LICENSED PRODUCTS existing orunder production and to perform LICENSED PROCESSES

 

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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 sellall such work-in-progress and inventory within six (6) months after the effectivedate of termination.

 

9.5                                 Uponthe expiration of the TERM of this Agreement LICENSEE shall have a fullypaid-up, non-exclusive, irrevocable, royalty free license under the rightsgranted in Article 2.

 

9.6                                 Nothingherein shall be construed to release either party from any obligation thataccrued prior to expiration or any termination of this Agreement.  The following provisions shall survive anytermination of this Agreement: this Section 9.6 and Articles/Sections 1,2, 4, 7, 8, 9.4, 10, 11, 12, 13,14.3, 14.4, 14.7, 14.8, 14.9, 14.11 and 14.14, and any other provision which byits nature is intended to survive any such termination.  The following provisions shall survive anyexpiration of the TERM of this Agreement: this Section 9.6 and Articles/Sections1, 2, 8, 9.4, 9.5, 10, 11, 12, 13, 14.3, 14.4, 14.7, 14.8, 14.9, 14.11 and14.14, and any other provision which by its nature is intended to survive anysuch expiration.

 

ARTICLE 10 - CONFIDENTIALITY AND NON-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 Section 10.2below, each party’s Confidential Information specifically includes withoutlimitation the respective party’s business plans and business practices, theterms of this Agreement, scientific knowledge, research and development orknow-how, processes, inventions, techniques, formulae, products and productplans, business operations, customer requirements, designs, sketches,photographs, drawings, specifications, reports, studies, findings, data, plansor other records, biological materials, software, margins, payment terms andsales forecasts, volumes and activities, designs, computer code, technicalinformation, costs, pricing, financing, business opportunities, personnel, andinformation of ACT or LICENSEE relating to the LICENSED PROCESSES, LICENSEDPRODUCTS or LICENSED SERVICES whether or not such information is marked,identified or confirmed. Except to the extent expressly authorized by thisAgreement or by other prior written consent by the disclosing party, thereceiving party, during the term of this Agreement, and thereafter, shall: (i) treatas confidential all Confidential Information of the other party; (ii) useConfidential Information only for exercising the rights and fulfilling theobligations set forth in this Agreement, (iii) implement reasonableprocedures to prohibit the disclosure, unauthorized duplication, misuse orremoval of the disclosing party’s Confidential Information; (iv) notdisclose Confidential Information to any third party, and (v) onlydisclose the Confidential Information to (a) those of its employees whohave a need to know Confidential Information in order to exercise the rightsand fulfill the obligations set forth in this Agreement and (b) legal andprofessional advisors and existing and potential investors and their legal andprofessional advisors, each of which is bound by a written agreement (or in thecase of attorneys or other professional advisors, formal ethical duties)requiring such advisors and investors to treat, hold and maintain suchConfidential Information in accordance with the terms and conditions of thisAgreement.  Without limiting theforegoing, the receiving party shall protect the disclosing

 

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party’s ConfidentialInformation using at least the same procedures and degree of care that it usesto prevent the disclosure of its own confidential information of likeimportance, but in no event less than reasonable care.

 

10.2                           Exceptions. The receiving party shall have noobligation or liability to the disclosing party with regard to any ConfidentialInformation of the disclosing party: (i) that was publicly known andavailable at the time it was disclosed or becomes publicly known and available throughno fault, action, or inaction of the receiving party; (ii) was known tothe receiving party, without restriction, at the time of disclosure as shown bythe files 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 disclosedpursuant to the order or requirement of a court, administrative agency, orother governmental 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 thereceiving party by an independent third party without violating anyconfidentiality obligation to the disclosing party.

 

10.3                           InjunctiveRelief.  ACT and LICENSEE acknowledgeand agree that any breach of the confidentiality obligations imposed by this Section 10will constitute immediate and irreparable harm to the disclosing party and/orits successors and assigns, which cannot adequately and fully be compensated bymoney damages and will warrant, in addition to all other rights and remediesafforded by law, injunctive relief, specific performance, and/or otherequitable relief.  The disclosing party’srights 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 ACT) to return ordestroy any KNOW-HOW (including tangible embodiments of KNOW-HOW) during theTerm of this Agreement.

 

10.5                           Survival. The obligations of ACT and LICENSEEunder this Article 10 shall survive any expiration or termination of thisAgreement.

 

ARTICLE 11 - PAYMENTS, NOTICES, AND OTHERCOMMUNICATIONS

 

Anypayment, notice or other communication pursuant to this Agreement shall be inwriting and sent by certified first class mail, postage prepaid, return receiptrequested, or by nationally recognized overnight carrier addressed to theparties at the following addresses or such other addresses

 

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as such party furnishesto the other party in accordance with this paragraph.  Such notices, payments, or othercommunications shall be effective upon receipt.

 

Inthe case of ACT:

 

AdvancedCell Technology, Inc.

OneInnovation Drive

Worcester,MA 01605

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

 

Witha copy to:

 

PierceAtwood

OneMonument Square

Portland,ME 04101

Attention:William L. Worden, Esq.

 

Inthe case of LICENSEE:

 

FirstDegree Genetics, LLC

18Plimpton Road

Westerly,R.I.02891

Attention:Robert Saglio

 

With a copy to:                                     GoodwinProcter LLP

ExchangePlace

53State Street

Boston,MA 02109

Attention:Andrew F. Viles, P.C.

 

ARTICLE 12 - RESPRESENTATIONS AND WARRANTIES;DISCLAIMER

 

12.1                           ACTrepresents and warrants that it owns or has licensed with a sublicensableinterest the PATENT RIGHTS and KNOW-HOW, that it has the full legal right andpower to grant the licenses granted hereunder, that this Agreement constitutesthe binding legal obligation of ACT, enforceable in accordance with its termsand that the execution and performance of this Agreement by ACT will not violate,contravene or conflict with any other agreement to which ACT is a party or bywhich it is bound or with any law, rule or regulation applicable to ACT.

 

12.2                           LICENSEErepresents and warrants that it has full corporate power and authority to enterinto this Agreement, that this Agreement constitutes the binding legalobligation of LICENSEE and that execution and performance of this Agreement byLICENSEE will not violate, contravene or conflict with any other agreement towhich LICENSEE is a party or by which it is bound or with any law, rule orregulation applicable to LICENSEE.

 

12.3                           EXCEPTAS OTHERWISE EXPRESSLY SET FORTH IN THIS AGREEMENT, ACT, ITS DIRECTORS,OFFICERS, EMPLOYEES, AND AFFILIATES MAKE NO REPRESENTATIONS AND EXTEND NOWARRANTIES OF ANY KIND, EITHER EXPRESS OR

 

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IMPLIED, INCLUDING BUTNOT LIMITED TO WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE,VALIDITY OF PATENT RIGHTS, ISSUED OR PENDING, AND THE ABSENCE OF LATENT OROTHER DEFECTS, WHETHER OR NOT DISCOVERABLE.  NOTHING IN THIS AGREEMENT SHALL BE CONSTRUEDAS A REPRESENTATION MADE OR WARRANTY GIVEN BY ACT THAT THE PRACTICE BY LICENSEEOF THE LICENSE GRANTED HEREUNDER SHALL NOT INFRINGE THE PATENT RIGHTS OF ANYTHIRD PARTY.

 

ARTICLE 13 - LIMITATION OF LIABILITY

 

13.1                           EXCEPTFOR ANY LIABILITY TO ANY THIRD PARTIES PURSUANT TO ARTICLE 8 OF THISAGREEMENT, IN NO EVENT SHALL ACT OR LICENSEE OR THEIR, ITS DIRECTORS, OFFICERS,EMPLOYEES OR AFFILIATES BE LIABLE FOR INCIDENTAL OR CONSEQUENTIAL DAMAGES OFANY KIND, INCLUDING ECONOMIC DAMAGE OR INJURY TO PROPERTY AND LOST PROFITS,REGARDLESS OF WHETHER ACT OR LICENSEE SHALL BE ADVISED, SHALL HAVE OTHER REASONTO KNOW, OR IN FACT SHALL KNOW OF THE POSSIBILITY OF SUCH DAMAGES.

 

ARTICLE 14 - MISCELLANEOUS PROVISIONS

 

14.1                           LICENSEEshall comply with all local, state, federal and international laws andregulations relating to the development, manufacture, use, provision, and saleof LICENSED PRODUCTS, LICENSED PROCESSES and LICENSED SERVICES.  Without limiting the generality of theforegoing, LICENSEE agrees to comply with the following:

 

(a)                                  LICENSEEshall obtain all necessary approvals from the FDA, USDA, or any similargovernmental authorities of any foreign jurisdiction in which LICENSEE intendsto make, use, or sell LICENSED PRODUCTS or to perform LICENSED PROCESSES orLICENSED SERVICES.

 

(b)                                 LICENSEEshall comply fully with any and all applicable local, state, federal andinternational laws and regulations relating to the LICENSED PRODUCTS, LICENSEDPROCESSES and LICENSED SERVICES, and the PATENT RIGHTS, in the TERRITORY,including without limitation all export or import regulations and rules nowin effect or as may be issued from time to time by any governmental authoritywhich has jurisdiction relating to the export of LICENSED PRODUCTS, LICENSEDPROCESSES or LICENSED SERVICES and any technology relating thereto.  LICENSEE hereby gives written assurance thatit will comply with all such import or export laws and regulations (includingwithout limitation all Export Administration Regulations of the United StatesDepartment of Commerce), that it bears sole responsibility for any violation ofsuch laws and regulations, and that it will indemnify, defend, and hold ACT andthe University harmless (in accordance with Article 8) for theconsequences of any such violation.

 

(c)                                  Tothe extent that any invention claimed in the PATENT RIGHTS has been partiallyfunded by the United States Government, and only to the extent required byapplicable laws and regulations, LICENSEE agrees that any LICENSED PRODUCTSused or sold in the United States will be manufactured substantially in theUnited States or its territories.  Currentlaw provides that if a domestic manufacturer is not commercially feasible underthe circumstances, ACT and/or the University may seek a waiver of thisrequirement from the relevant federal agency on behalf of

 

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LICENSEE and, uponLICENSEE’S request, shall cooperate with LICENSEE in seeking such a waiver.

 

14.2                           LICENSEEshall not create or incur or cause to be incurred or to exist any lien,encumbrance, pledge, charge, restriction or other security interest of any kindupon the PATENT RIGHTS.

 

14.3                           Neitherparty shall originate any publicity, news release or other public announcement(“Announcements”), written or oral, relating to this Agreement or the existenceof an arrangement between the parties, without the prior written approval ofthe other party, which approval shall not be unreasonably withheld or delayed,except as otherwise required by law.  Anyreferences to the University in such Announcements shall be subject to theapproval of the University.  Theforegoing notwithstanding, ACT and LICENSEE shall have the right to make such Announcementswithout the consent of the other party or the University, as applicable, in anyprospectus, offering memorandum, or other document or filing required byapplicable securities laws or other applicable law or regulation, provided thatsuch party shall have given the other party or the University, as applicable,at least ten (10) days prior written notice of the proposed text for thepurpose of giving the other party or the University, as applicable, theopportunity to comment on such text.

 

14.4                           Noimplied licenses are granted pursuant to the terms of this Agreement.  No licensed rights shall be created byimplication or estoppel.

 

14.5                           Nothingherein shall be deemed to constitute either party as the agent orrepresentative of the party, or both parties as joint venturers or partners forany purpose.  Each party shall be anindependent contractor, not an employee or partner of the other party, and themanner in which each party renders its services under this Agreement shall bewithin its sole discretion.  Neitherparty shall be responsible for the acts or omissions of the other party, norshall either party have authority to speak for, represent or obligate the otherparty in any way without prior written authority from the other party.

 

14.6                           To theextent commercially feasible, and consistent with prevailing business practicesand applicable law, all LICENSED PRODUCTS sold pursuant to this Agreement willbe marked with the number of each issued patent that applies to such LICENSEDPRODUCTS.

 

14.7                           ThisAgreement shall be construed, governed, interpreted and applied in accordancewith the laws of the Commonwealth of Massachusetts, U.S.A. without regard toprinciples of conflicts of law thereof, except that questions affecting theconstruction and effect of any patent shall be determined by the law of thecountry in which the patent was granted.

 

14.8                           Theparties hereto acknowledge that this Agreement sets forth the entire Agreementand understanding of the parties hereto as to the subject matter hereof, andshall not be subject to any change or modification except by the execution of awritten instrument signed by the parties hereto.

 

14.9                           The provisionsof this Agreement are severable, and in the event that any provision of thisAgreement shall be determined to be invalid or unenforceable under anycontrolling body of the law, such invalidity or unenforceability shall not inany way affect the validity or enforceability of the remaining provisionshereof.

 

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14.10                     The failureof either party to assert a right hereunder or to insist upon compliance withany term or condition of this Agreement shall not constitute a waiver of thatright or excuse a similar subsequent failure to perform any such term or conditionby the other party.

 

14.11                     ThisAgreement may not be assigned by LICENSEE without the prior written consent ofACT, which consent shall be granted or denied in ACT’s sole discretion.  ACT may not assign this Agreement without theconsent of LICENSEE, which consent shall not be unreasonably withheld ordelayed, except that ACT may assign this Agreement to an affiliate or to asuccessor in connection with the merger, consolidation, or 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 sale of all or substantially all of the assets of LICENSEE, so long asthe purchaser of the assets agrees to assume any and all outstandingliabilities to LICENSOR under this Agreement, including but not limited to anyoutstanding amounts under the promissory note referred to in paragraph 4.1.

 

14.12                     ThisAgreement has been prepared jointly and no rule of strict constructionshall be applied against either party.  Inthis Agreement, the singular shall include the plural and vice versa and theword “including” shall be deemed to be followed by the phrase “withoutlimitation.”  The section headingscontained in this Agreement are inserted for convenience only and shall notaffect in any way the meaning or interpretation of this Agreement.

 

14.13                     ThisAgreement may be executed in counterparts, each of which together shallconstitute one and the same Agreement.

 

14.14                     All rightsand licenses granted under or pursuant to this Agreement by ACT 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 ACT 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.

 

INWITNESS WHEREOF, the parties have duly executed this Agreement on the EFFECTIVEDATE.

 
| ADVANCED CELL  TECHNOLOGY, INC. |
|---------------------------------|
|                            |
|                            |
| By:                             | /s/ Michael D. West |   |
| Printed Name:                   | Michael D. West, Ph.D. |
| Title:                          | President &  Chief Executive Officer |
|                                 |  |  |  |  |

 

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| FIRST DEGREE GENETICS,  LLC |
|-----------------------------|
|                        |
|                        |
| By:                         | /s/ Robert Saglio |   |
| Printed Name:               | Robert Saglio |
| Title:                      | President |
|                             |  |  |  |  |

 

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