**Exhibit 10.1**

 

EXCLUSIVEDEVELOPMENT AND LICENSE AGREEMENT

 

between

 

GENZYMETRANSGENICS CORPORATION

 

and

 

ADVANCED CELL TECHNOLOGY

 

This ExclusiveDevelopment and License Agreement [ILLEGIBLE] entered into as of June 8,1999 (the “Effective Date”) by and between Genzyme Transgenics Corporation, aMassachusetts corporation with its principal place of business at Five MountainRoad, Framingham, Massachusetts 01701 (“GTC”) and Advanced Cell Technology, Inc.,a Delaware corporation with its principal place of business at One InnovationDrive, Worcester, Massachusetts 01605 (“ACT,” and together with GTC, the “parties”).  As set forth below, the University ofMassachusetts (the “University”) has agreed to be bound by certain provisionsof this Agreement.

 

RECITALS

 

A.                                   ACTowns or has licensed with a sublicensable interest the ACT Patent Rights andthe ACT Technology (as defined below).

 

B.                                     Pursuantto an existing Development Agreement (as defined below) between GTC and ACT,ACT has been engaged in certain animal cloning activities on behalf of GTC.

 

C.                                     GTCand ACT now desire to supersede the Development Agreement and replace it withthis Agreement under which (i) certain cloning work begun under orcontemplated by the Development Agreement will be completed, (ii) ACT willgrant an exclusive license to GTC to use the ACT Patent Rights and ACTTechnology in the GTC Field (as such terms are defined below), and (iii) GTCwill grant an exclusive license to ACT to use the GTC Patent Rights and GTCTechnology in the ACT Field (as such terms are defined below).

 

D.                                    Thesublicense of ACT’s rights under the UMASS Patent Rights (as defined below) toGTC under this Agreement shall be subject to the relevant terms of the UMASSLicense (as defined below).

 

**THEREFORE,** theparties agree as follows:

 

**1.****                                      DEFINITIONS.     **Asused in this Agreement, the following terms shall have the meanings set forthbelow.

 

1.1                                 *“ACT Developments”*means Developments thatare conceived, discovered, invented, developed, created, made or reduced topractice solely by ACT.

 

1.2                                 *“ACT Field”*means (i) human somaticcell nuclear transfer applications for therapeutic purposes and (ii) thecloning of animals for agricultural purposes, for the production

 

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of recombinant proteins,peptides and polypeptides for human transplantation, cells for humantransplantation and tissues for human transplantation, but excluding the GTCField.

 

1.3                                 *“ACT Licensed Property”*means the ACT Patent Rights and the ACTTechnology *provided, however,*thatACT Licensed Property shall not include ACT Patent Rights or ACT Technology (i) acquiredafter the Effective Date as a result of or in connection with a merger oracquisition with or by another entity, or (ii) obtained on terms whichprohibit the license contemplated by Section 3.1.

 

1.4                                 *“ACT Patent Rights”*means any and all patents and patentapplications in the GTC Field, including methods of doing business with respectto the GTC Field, owned or licensed by ACT in which ACT has a licensableinterest and which exist as of the Effective Date or which come into existenceduring the term of this Agreement, together with reissues, extensions (or othergovernmental acts which effectively extend the period of exclusivity by thepatent holder), substitutions, confirmations, registrations, revalidations,additions, continuations, continuations-in-part, divisions, or foreigncounterparts of or to the foregoing patent rights. ACT Patent Rights include,without limitation, the patents and patent applications listed on Schedule A-1attached to this Agreement, which schedule will be revised from time totime after the Effective Date to reflect changes thereto.

 

1.5                                 *“ACT Product”*means any product that cannot be developed,manufactured, used, or sold without (i) infringing one or more claimsunder the ACT Patent Rights, or (ii) using or incorporating some portionof the ACT Licensed Property.

 

1.6                                 *“ACT Service”*means any service that cannot be developed orperformed without using at least one process that (i) infringes one ormore claims under the ACT Patent Rights, or (ii) uses some portion of theACT Licensed Property.

 

1.7                                 *“ACT Team”*means a team of at least two individualssupplied by ACT to supply expertise in the areas of oocyte recovery, activationand enucleation; embryo cloning; fetal fibroblast cell line derivation,maintenance and transfection; culture of bovine fetal fibroblasts; bovineembryo transfer and recipient management; and the calving, screening andrearing of transgenic founder animals.

 

l.8                                    *“ACT Technology”*means the following which are owned orcontrolled by ACT during the term of this Agreement which are useful, necessaryor required to clone animals for the production of biopharmaceutical agents inmilk: confidential information, knowledge and data, including but not limitedto, inventions (whether patentable or not), trade secrets, ideas, designs,drawings, know-how, processes, techniques and like technological information inthe GTC Field, Additionally, ACT Technology shall include any process describedwithin the ACT Patent Rights.

 

1.9                                 *“Affiliate”*means any corporation, company, partnership,joint venture and/or firm which controls, is controlled by or is under commoncontrol with a party. For purposes of this definition, “control” means (a) inthe case of corporate entities, direct or indirect ownership of more than fiftypercent (50%) of the stock or shares entitled to vote for the election ofdirectors; and (b) in the case of non-corporate entities, direct orindirect ownership of more than

 

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fifty percent (50%) of the equity interestwith the power to direct the management and policies of such noncorporateentities.

 

1.10                           *“Confidential Information”*includes,without limitation, any scientific, technical, trade or business informationdisclosed by one party to the other, or by GTC to the University, whetherdirectly or through ACT, which is specifically designated by the disclosingparty as confidential or proprietary, “Confidential Information” does notinclude information which (a) was known to the receiving party at the timeit was disclosed, other than by previous disclosure by the disclosing party, asevidenced by written records at the time of disclosure; (b) is at the timeof disclosure or later becomes publicly known other than through a breach ofthis Agreement; (c) is lawfully and in good faith made available to thereceiving party by a third party who, to the receiving party’s knowledge afterinquiry, did not derive it from the disclosing party and who imposed noobligation of confidence on the receiving party; or (d) is developed bythe receiving party independent of any disclosure by the disclosing party.

 

1.11                           *“Development Agreement”*means theDevelopment and Commercialization Agreement between GTC and ACT dated September 25,1997, together with any amendments thereto as of the Effective Date.

 

1.12                           *“Developments”*include, withoutlimitation, discoveries, business methods, inventions, developments, patentsand patent rights, know-how, trade secrets, techniques, methodologies,modifications, innovations, improvements, writings, documentation, data andrights (whether or not protectible under state, federal, or foreign patent,trademark, copyright or similar laws) that were or are conceived, discovered,invented, developed, created, made or reduced to practice by ACT or GTC, asapplicable, in the performance of the Development Agreement or during the termof this Agreement.

 

1.13                           *“FDA”*means the United States Food andDrug Administration.

 

1.14                           *“GTC Developments”*means Developments thatare conceived, discovered, invented, developed, created, made or reduced topractice solely by GTC.

 

1.15                           *“GTC Field”*means the cloning of animalsfor all purposes related to the production of biopharmaceutical agents in milk,including, but not limited to, proteins, peptides and polypeptides forpharmaceutical, nutraceutical or other use.

 

1.16                           *“GTC Licensed Property”*means all GTCPatent Rights and GTC Technology, *provided,however,*that GTC Licensed Property shall not include GTC PatentRights or GTC Technology (i) acquired as a result of or in connection witha merger or acquisition with or by another entity, or (ii) obtained onterms which prohibit the license contemplated by Section 3.2.

 

1.17                           *“GTC Patent Rights”*means any and allpatents and patent applications in the field of cloning technology, includingmethods of doing business with respect to cloning technology, owned or licensedby GTC in which GTC has a licensable interest and which exist as of theEffective Date or which come into existence during the term of this Agreement,together with reissues, extensions (or other governmental acts whicheffectively extend the period of exclusivity by the patent holder),substitutions, confirmations, registrations, revalidations, additions,continuations, continuations-in-part, divisions, or foreign counterparts of

 

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or to the foregoing patent rights. GTC PatentRights include, without limitation, the patents and patent applications to belisted on Schedule A-2 to be attached to this Agreement,which schedule will thereafter be revised from time to time to reflectchanges thereto.

 

1.18                           *“GTC Product”*means any product thatcannot be developed, manufactured, used, or sold without (i) infringingone or more claims under the GTC Patent Rights, or (ii) using orincorporating some portion of the GTC Licensed Property.

 

1.19                           “G*TC Service”*means any service that cannotbe developed or performed without using at least one process that (i) infringesone or more claims under the GTC Patent Rights, or (ii) uses some portionof the GTC Licensed Property.

 

1.20                           *“GTC Team”*means a team of two individuals supplied byGTC to supply expertise in transgenic expression of hSA in the milk of cattle.

 

1.21                           *“GTC Technology”*means the following whichare owned or controlled by GTC during the term of this Agreement in the fieldof cloning technology: confidential information, knowledge and data, includingbut not limited to, inventions (whether patentable or not), trade secrets,ideas, designs, drawings, know-how, processes, techniques and liketechnological information. Additionally, GTC Technology shall include anyprocess described within the GTC Patent Rights.

 

1.22                           *“hSA**Cows*” meanscows (including, without limitation, transgenic eggs, semen, and embryos andprogeny thereof) that are produced under the hSA Program (a) with or byuse of the ACT Patent Rights or ACT Technology, (b) are transfected withGTC’s recombinant DNA constructs, (c) contain the hSA transgene andexpress hSA in their milk as set forth in the hSA Program Summary attached as Schedule B,and (d) are used for the sole purpose of transgenic production of the MilkProducts.

 

1.23                           *“hSA Program”*means the production,through application of the ACT Technology, of hSA Cows which contain the hSAtransgene and express hSA in their milk, as set forth in the hSA ProgramSummary attached as Schedule B.

 

1.24                           *“hSA Program Summary”*means the programsummary attached to this Agreement as Schedule B.

 

1.25                           *“Joint Developments”*means allDevelopments conceived, discovered, invented, developed, created, made orreduced to practice jointly by both parties in the ACT Field or GTC Field.

 

1.26                           *“Joint Patent Rights”*means any and allpatents and patent applications covering Joint Developments which exist as ofthe Effective Date or which come into existence during the term of thisAgreement, together with reissues, extensions (or other governmental acts whicheffectively extend the period of exclusivity by the patent holder),substitutions, confirmations, registrations, revalidations, additions,continuations, continuations-in-part, divisions, or foreign counterparts of orto the foregoing patent rights. Joint Patent Rights include, withoutlimitation, the patents and patent applications to be listed on Schedule A-3to be attached to this Agreement, which schedule will thereafter berevised from time to time to reflect changes thereto.

 

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1.27                           *“Milk Products”*means the milk of the hSACows and the hSA expressed in such milk.

 

1.28                           *“Named Competitors”*means Pharming, B.V.,PPL Therapeutics, Inc., Roslin Bio-Med, Infigen, Inc., and NexiaBiotechnologies, Inc., and their respective successors, assigns,subsidiaries and affiliates.

 

1.29                           *“Net Sales”*means the total invoice pricecharged on all sales (i) by ACT of GTC Products and/or Services, or (ii) byGTC of ACT Products and/or Services, as applicable, in any country afterdeducting, to the extent not already deducted, normal and customary trade,dealer, quantity, and cash discounts actually allowed; allowances for creditsgranted on account of rejections, returns, or price reductions; governmentalsales taxes and other charges imposed on such sales; and freight, insurance,customs, duties, and other landing charges. In the event any product is sold asa component of a combination of functional elements, net sales price forpurposes of determining royalty payments on such combination shall becalculated by multiplying the average per unit net sales price of the productportion of the combination when sold separately in the applicable countryduring the accounting period in which the sale was made by the number of unitsof product sold as part of such combination product. In addition, Net Sales ofa party shall include the amount of any milestone payment received based on theperformance of such party in connection with the development (i) of GTCProducts and/or Services by ACT or (ii) of ACT Products and/or Services byGTC, as applicable.

 

1.30                           *“Nutraceutical”*means any food or otherpreparation intended for oral consumption by humans whose primary function,when taken into the human body, (a) serves to nourish or build up tissuesor supply energy and/or (b) maintains, restores or supports adequatenutritional status or nutritional metabolic function.

 

1.31                           *“UMASS License”*means the ExclusiveLicense Agreement between ACT and the University dated April 16, 1996,together with any amendments thereto.

 

1.32                           *“UMASS Patent Rights”*means ACT PatentRights licensed by ACT from the University under the UMASS License.

 

**2.****                                      THEDEVELOPMENT AGREEMENT.**

 

2.1                                 Supersession.    The Development Agreement is herebyterminated by mutual agreement and all of its provisions are superseded intheir entirety.

 

2.2                                 MutualRelease.  GTC and ACT each releaseeach other and all of each other’s officers, directors, agents and employeesfrom any and all claims, demands, actions, causes of action, suits, covenants,contracts or agreements, including without limitation GTC’s claim(s) ofPerformance Failures by ACT under the Development Agreement, and any and allexpenses, costs, losses or damages which either GTC or ACT now has or at anytime has had against the other based on or arising out of any provisions of theDevelopment Agreement that are terminated hereby.

 

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**3.****                ****GRANT OF RIGHTS.**

 

3.1                                 Grants from ACT to GTC.

 

(a)                                  LicenseGrant. Subject to the terms of this Agreement, ACT hereby grants to GTC anexclusive, royalty-bearing, worldwide license, with the limited right tosublicense, under its commercial rights in the ACT Licensed Property and in theJoint Patent Rights to develop, make, have made, import, use, and sell ACT Productsin the GTC Field and to develop and perform ACT Services in the GTC Field. Tothe extent this grant includes a sublicense of any UMASS Patent Rights, suchsublicense is subject to the relevant terms of the UMASS License as it may beamended from time to time, provided that in the event of any inconsistencybetween the UMASS License and Section 3.1(e) hereof, Section 3.1(e) hereofshall govern.

 

(b)                                 Sublicenses.The parties acknowledge that it may be mutually advantageous for GTC tosublicense the ACT Licensed Property to third parties, including withoutlimitation the Named Competitors. GTC shall have the right to grant sublicensesof its rights-under Section 3.1(a) subject to the limitations setforth in this Section 3.1(b).

 

i.                                          Anysublicenses by GTC of the UMASS Patent Rights may not transfer the right togrant farther sublicenses and shall be subject to the consent of theUniversity, which consent will be granted at the sole discretion of theUniversity, provided that such consent shall not be unreasonably withheld ordelayed in the following circumstances:

 

(1)                                  Consentto sublicense will not be unreasonably withheld or delayed by the Universitywhere GTC has determined that defending its right to practice under the UMASSPatent Rights is not commercially prudent, and it is therefore commerciallynecessary for GTC to grant a sublicense in exchange for rights to third partytechnology to enable GTC to practice the UMASS Patent Rights.

 

(2)                                  Consentto sublicense will not be unreasonably withheld or delayed by the Universitywhere it is commercially necessary for GTC to grant a sublicense to enable GTC’scustomers to maintain adequate production of products within the GTC Field;provided that reasonable efforts are first used to avoid sublicensing the rightto practice the UMASS Patent Rights. If it has been determined thatsublicensing is commercially necessary, GTC shall limit the scope of any suchsublicensing to the delivery to such customers of transgenic animals for use inthe production of GTC Products and any sublicensing of the right to practicenuclear transfer technology would occur only after all other reasonablealternatives have been exhausted, e.g., supplying transgenic animals, embryos,or cell lines.

 

(3)                                  Consentto sublicense will not be unreasonably withheld or delayed by the Universitywhere GTC proposes to grant a sublicense for research purposes only.

 

ii.                                       Anysublicenses by GTC to third parties who will have the right to grant furthersublicenses, any sublicenses by GTC of ACT Technology, and any sublicenses byGTC to the Named Competitors shall also be subject to ACT’s consent, whichconsent shall not be unreasonably withheld or delayed, provided that if GTCengages in sublicense discussions with the Named Competitors, GTC agrees toconsult with ACT, to permit ACT to participate in such discussions, and topermit ACT to review copies of the proposed sublicense agreements.

 

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For purposesof the preceding sentence, ACT’s consent may be reasonably withheld only if itcan show that the proposed sublicense would be materially adverse to itsbusiness interests.

 

iii.                                    Anysublicenses by GTC of ACT Patent Rights only to third parties other than theNamed Competitors whose rights under the ACT Licensed Property are limited totheir own research and commercial activities and who will have no right togrant further sublicenses (“End Users”) are expressly permitted hereunder andshall not require the consent of ACT.

 

iv.                                   GTCshall promptly furnish ACT with a fully executed copy of all sublicenseagreements of GTC (other than sublicense agreements to End Users) and shallpromptly furnish the University with a fully executed copy of all sublicenseagreements of GTC involving the UMASS Patent Rights, all of which shall bedeemed Confidential Information subject to the provisions of Section 10.

 

v.                                      Allsublicense agreements executed by GTC pursuant to this Section 3.1(b) shallexpressly bind the sublicensee to Sections 3.l(c), 9 (to the extentapplicable), 10, 12, and 14 of this Agreement and shall provide for theautomatic assignment of the relevant provisions of such agreements to ACT ifthis Agreement is terminated as described in Section 7.2 below.

 

(c)                                  RetainedRights. To the extent the University, the federal government or any otherparties have rights in the ACT Licensed Property pursuant to Article 2 ofthe UMASS License, the license granted hereunder is subject to such rights.

 

(d)                                 Nutraceuticals.The licenses granted in Section 3.1(a) shall be co-exclusive with ACTfor ACT Products consisting of or incorporating Nutraceuticals, *provided, however,*that GTC shall have aright of first refusal with respect to any license or any other collaborationor partnering agreement that ACT intends to enter into with any other party inthe GTC Field for products consisting of or incorporating Nutraceuticals. ACTshall give GTC prior written notice providing full particulars of any suchproposed transaction, and GTC shall have a period of thirty (30) days to notifyACT in writing of its willingness to enter into such transaction onsubstantially the terms proposed. If, by the end of such thirty (30)-day periodGTC has not so notified ACT, ACT shall be free to enter into such transaction,but only on substantially the same terms offered to GTC in writing.

 

(e)                                  TheUMASS License. GTC acknowledges that a portion of the ACT Patent Rightslicensed to GTC hereunder are owned by the University and are licensed to ACTunder the UMASS License. ACT and the University represent and warrant to GTCand GTC agrees that, in the event the UMASS License is terminated for anyreason pursuant to the provisions of the UMASS License, (i) anysublicenses granted by GTC hereunder with respect to any UMASS Patent Rightsshall remain in effect in accordancewith their terms, (ii) GTC will thereafter make any payments due to ACTwith respect to such sublicenses directly to the University, and (iii) promptlyfollowing such termination, GTC and the University will enter into a directlicense agreement reflecting the applicable terms of this Agreement and theUMASS License. ACT acknowledges that any payments so made by GTC to theUniversity shall be credited against any payments due and payable to ACThereundcr. For the avoidance of doubt,

 

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ACT and the University agree that the references to “Sublicensees”in Section 8.5 of the UMASS License shall not apply to GTC and shall notbe construed as vitiating clause (i) of this Section 3.1(e). ACT andthe University agree that the provisions of Section 2.2 of the UMASSAgreement providing for the automatic assignment to the University ofsublicenses granted by ACT under said Section 2.2 shall not apply to thesublicense by ACT to GTC under this Agreement, and that the provisions of this Section 3.1(e) shallgovern in the event that the UMASS License is terminated. ACT and theUniversity agree that GTC will not be bound by any amendment to the UMASSLicense that affects GTC’s rights under this Agreement in any material respect,unless GTC agrees in writing to such amendment.

 

3.2                                 Grants from GTC to ACT.

 

(a)                                  License Grant. Subject to the terms of this Agreement, GTChereby grants to ACT an exclusive, royalty-bearing, worldwide license in theACT Field, with the limited right to sublicense, under its commercial rights inthe GTC Licensed Property and in the Joint Patent Rights, to develop, make,have made, import, use, and sell GTC Products in the ACT Field and to developand perform GTC Services in the ACT Field.

 

(b)                                 Sublicenses.      The parties acknowledgethat it may be mutually advantageous for ACT to sublicense the GTC LicensedProperty to the Named Competitors. ACT shall have the right to grantsublicenses of its rights under Section 3.2(a) subject to the limitationsset forth in this Section 3.2(b).

 

i.                                          Any sublicenses by ACT to third parties whowill have the right to grant further sublicenses, any sublicenses by ACT of GTCTechnology, and any sublicenses by ACT to the Named Competitors shall besubject to GTC’s consent, which consent shall not be unreasonably withheld ordelayed, *provided that*if ACTengages in sublicense discussions with the Named Competitors, ACT agrees toconsult with GTC and permit GTC to participate in such discussions.

 

ii.                                       Any sublicenses by ACT of GTC Patent Rightsonly to third parties other than the Named Competitors whose rights under theGTC Licensed Property are limited to their own research and commercialactivities and who will have no right to grant further sublicenses (“End Users”)are expressly permitted hereunder and shall not require the consent of GTC.

 

iii.                                    ACT shall promptly furnish GTC with a fullyexecuted copy of all sublicense agreements of ACT (other than sublicenseagreements to End Users), which shall be deemed Confidential Informationsubject to the provisions of Section 10.

 

iv.                                   All sublicense agreements executed by ACTpursuant to this Section 3.2(b) shall expressly bind the sublicenseeto Sections 9 (to the extent applicable), 10, 12, and 14 of this Agreement andshall provide for the automatic assignment of the relevant provisions of suchagreements to GTC if this Agreement is terminated as described in Section 7.2below.

 

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**4.****                 OBLIGATIONSRELATING TO COMMERCIALIZATION.**

 

4.1                                 GTCDiligence Requirements. GTC shall use diligent efforts, or shall cause itssublicensees to use diligent efforts, to develop ACT Products or ACT Servicesand to introduce ACT Products or ACT Services into the commercial market;thereafter, GTC or its sublicensees shall make ACT Products or ACT Servicesreasonably available to the public.

 

4.2                                 ACTDiligence Requirements. ACT shall use diligent efforts, or shall cause itssublicensees to use diligent efforts, to develop GTC Products or GTC Servicesand to introduce GTC Products or GTC Services into the commercial market;thereafter, ACT or its sublicensees shall make GTC Products or GTC Servicesreasonably available to the public.

 

4.3                                 Summary Reports.

 

(a)                                  Reportsby GTC.  GTC shall maintain completeand accurate records of ACT Products and ACT Services that are made, used, soldor performed by GTC under this Agreement. Not later than May lst of each year following theEffective Date, GTC shall furnish ACT and the University with an executivesummary report on the progress of its efforts during the prior year to developand commercialize ACT Products or ACT Services, including without limitationresearch and development efforts, efforts to obtain regulatory approval,marketing efforts (including ACT Products and ACT Services made, used, sold orperformed) and sales figures, provided that such reports shall be deemedConfidential Information subject to the provisions of Section 10 of thisAgreement.

 

(b)                                 Reportsby ACT.  ACT shall maintain completeand accurate records of GTC Products and GTC Services that are made, used, soldor performed by ACT under this Agreement. Not later than May lst of each year following theEffective Date, ACT shall furnish GTC with an executive summary report on theprogress of its efforts during the prior year to develop and commercialize GTCProducts or GTC Services, including without limitation research and developmentefforts, efforts to obtain regulatory approval, marketing efforts (includingGTC Products and GTC Services made, used, sold or performed) and sales figures,provided that such reports shall be deemed Confidential Information subject tothe provisions of Section 10 of this Agreement.

 

**5.****                 DEVELOPMENTS.**

 

5.1                                 GTCDevelopments.             GTC agrees,on a periodic basis (not less than semiannually), to provide to ACT and theUniversity a written report of all GTC Developments provided that such reportsshall be deemed Confidential Information subject to the provisions of Section 10of this Agreement, and all such Developments, whether or not patentable,relevant to the ACT Field, are and shall be considered GTC Licensed Propertyand automatically licensed to ACT pursuant to Section 3.2.

 

5.2                                 ACTDevelopments.           ACT agrees,on a periodic basis (not less than semiannually), to provide to GTC a writtenreport of all ACT Developments, provided that such reports shall be deemedConfidential Information subject to the provisions of Section 10 of thisAgreement, and all such Developments, whether or not patentable, relevant tothe GTC Field, are

 

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and shall be considered ACT Licensed Propertyand automatically licensed to GTC pursuant to Section 3.1.

 

5.3                                 TechnicalAssistance. Each party shall make reasonably available to the other party,upon request, qualified technical personnel of such party for the purpose ofproviding technical assistance to facilitate the transfer to the other party oftechnology licensed to the other party hereunder, the reasonable *per**diem*charges and expenses of which shall be borne by the party requiringsuch assistance.

 

**6.****               CLONING PROGRAMS.**

 

6.1                                 hSAProgram. ACT agrees to use commercially reasonable efforts to produce, onor before September 1, 2000, at least twenty (20) cloned hSA Cows.

 

6.2                                 NewCloning Programs or Other Services.  In the event GTC wishes ACT to engage in a new cloning program or toperform other services for GTC, the parties will negotiate a written, mutuallyagreed upon budgeted level of effort, including any compensation to be paid byGTC to ACT, and any other relevant terms and conditions for any such cloningprogram or other services.

 

6.3                                 Responsibilities of ACT for the hSA Program.

 

(a)                                  Conductof the hSA Program. The ACT Team (and any other necessary and qualifiedtechnical and managerial staff) and the GTC Team shall collaborate as set forthin Schedule B to ensure the transfection of hSA constructs into bovinefetal fibroblast cell lines and the selection of recombinant fetal fibroblastcell lines.

 

(b)                                 Provisionof Facilities. ACT shall, through its subcontractor Trans Ova or such othersubcontractor as is mutually agreed upon by the parties, provide all facilitiesand equipment acceptable to GTC which are necessary for the conduct of the hSAProgram, including space, housing and utilities services necessary to maintainbovine fetal fibroblast cell lines and livestock. All bovine stock for the hSAProgram will be housed at a facility controlled by ACT’s subcontractor, TransOva or such other subcontractor as is mutually agreed upon by the parties untilsuch stock is determined to have the capability to express the hSA protein inmilk or such stock reaches the age of six (6) months, whichever isearlier. Upon determination that such stock has expressed the hSA protein inmilk pursuant to Schedule B or such stock reaches the age of six (6) months,whichever is earlier, all such bovine stock for the hSA Program will be housedat a facility identified by GTC, and GTC shall then be responsible for theconduct of the hSA Program with respect to such stock, including space, housingand utilities services necessary to maintain bovine fetal fibroblast cell linesand livestock.   The foregoingnotwithstanding, in the case of stock which has not expressed the hSA proteinat the age of six (6) months, GTC may instruct ACT to destroy the stock inlieu of assuming responsibility for such stock.

 

(c)                                  Sourcesof Cattle. ACT shall provide heifers selected in accordance with goodagricultural practice (“GAP”) criteria mutually agreed upon by ACT and GTC asnecessary to conduct the hSA Program. All hSA Cows used and/or produced by ACTunder this Agreement shall be free from bovine spongiform encephalopathy and/orother infectious agents reasonably

 

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identified as detrimental to thecommercialization of Milk Products. If, at any time during the term of thisAgreement, ACT and/or GTC have any reason to believe (or have any reason toconclude that a governmental regulatory authority believes) that bovine spongiformencephalopathy and/or such other infectious agents have or may be detected incattle in the United States, ACT will promptly institute procedures mutuallyagreed upon by the parties to ensure the health of the hSA Cows used and/orproduced by ACT under this Agreement.

 

(d)                                 BovineFetal Fibroblast Cell Lines. ACT shall provide all necessary bovine fetalfibroblast cell lines to conduct the hSA Program.

 

(e)                                  Careof Animals. ACT, through its subcontractor Trans Ova or such othersubcontractor as is mutually agreed upon by the parties, shall have soleresponsibility for the care and maintenance (including all required feed andveterinary care) of all bovine stock used and generated during the hSA Program,as defined in the hSA Program Summary, *provided,however,*that upon determination that such stock has expressed thehSA protein in milk pursuant to Schedule B or such stock reachesthe age of six (6) months, whichever is earlier, all such bovine stock forthe hSA Program will be housed at a facility identified by GTC and GTC shallthen be responsible for the conduct of the hSA Program with respect to suchstock, including space, housing and utilities services necessary to maintainbovine fetal fibroblast cell lines and livestock. The foregoing notwithstanding,in the case of stock which has not expressed the hSA protein at the age of six (6) months,GTC may instruct ACT to destroy the stock in lieu of assuming responsibilityfor such stock.

 

(f)                                    AnimalWelfare Regulations. The hSA Program shall undergo applicable animalwelfare and animal research committee review and approval by GTC and ACT inaccordance with applicable legal and regulatory standards.

 

(g)                                 Compliancewith Other Regulations.    ACT andGTC shall mutually conduct and manage all aspects of the hSA Project in fullcompliance with USDA, FDA and other regulatory requirements for the productionof clinical-grade proteins/products in the milk of transgenic animals.    Each party shall have the ongoing right toaudit the other party’s compliance with this Section and other Sections ofthe Agreement to ensure such compliance.

 

6.4                                 Responsibilitiesof GTC for the hSA Program.

 

(a)                                  ThehSA Program.   The GTC Team shallconsult with the ACT Team regarding the transfection of hSA constructs intobovine fetal fibroblast cell lines and the selection of recombinant bovinefetal fibroblast cell lines.

 

(b)                                 DNAConstruct. The GTC Team shall assist the ACT Team by providing allnecessary DNA constructs jointly deemed necessary by the parties for use in thehSA Program, including, without limitation, the beasein-hSA-NeoConstruct and/or other suitable selectable markers.

 

(c)                                  Identificationof Transgenic Lines and Animals.  GTC shall provide all materials and resources necessary for theidentification and evaluation of transgenic bovine fetal

 

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fibroblast cell lines, embryos, fetuses andcalves.  Such materials shall include,without limitation, DNA probes and polymerase chain reaction (“PCR”) primers.

 

(d)                                 Other Expertise.   TheGTC Team shall provide additional expertise, as reasonably necessary, duringthe course of the hSA Program, including, without limitation, lactationinduction and pharmaceutical protein purification, characterization andregulatory advice.

 

(e)                                  Characterization of hSA Cows.  Following the birth of cows generated during the hSA Program, GTC shallcharacterize individual animals derived from specific recombinant cell linesand elect whether to expand the hSA Cows from select cell lines. Characterizationshall be comprised of genotyping, animal health and measurement of the levelsof hSA in the induced and/or natural lactation of such hSA Cows.

 

**7.****                                  ****TERM AND TERMINATION.**

 

7.1                                 General.    The licenses granted by ACT to GTC under Section 3.l(a) willcommence on the Effective Date and, unless sooner terminated as providedherein, continue until the expiration of all ACT Patent Rights, whereupon thelicense hereunder to GTC shall become paid-up and royalty free.   The licenses granted by GTC to ACT under Section 3.2(a) willcommence on the Effective Date and, unless sooner terminated as providedherein, continue until the expiration of all GTC Patent Rights, whereupon thelicense hereunder to ACT shall become paid-up and royalty free.   This Agreement will commence on theEffective Date and, unless sooner terminated as provided herein, continue untilthe expiration of all ACT Patent Rights and GTC Patent Rights.

 

7.2                                 Termination for Cause. This Agreement may be terminated by eitherparty for breach by the other party of any material obligation arisinghereunder, by giving thirty (30) days prior written notice to the other partyspecifying the cause of the termination; provided, however, that if the breachis cured within the thirty (30) day period, the notice shall be withdrawn andshall be of no effect.

 

7.3                                 Survival of Obligations; Return ofConfidential Information.   Notwithstanding any termination of thisAgreement, the obligations of the parties under Section 10, as well asunder any other provisions which by their nature are intended to survive anysuch termination, shall survive and continue in force. Upon any termination ofthis Agreement, each party shall promptly return to the other party all writtenConfidential Information, and all copies thereof, to the other party.

 

7.4                                 Sublicenses.

 

(a)                                  GTC’s Sublicenses. Upon termination of this Agreement, therelevant provisions of any existing sublicenses of GTC shall be automatically assigned to ACT, and ACT shall be bound bythe terms of such sublicenses, provided that the sublicensees continue toperform in accordance with their respective sublicense agreements.Notwithstanding the foregoing, ACT’s obligations to any such sublicensee shallnot be interpreted to extend beyond any of its obligations to GTC hereunderwith respect to the subject matter of the sublicense.

 

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(b)                                 ACT’s Sublicenses.   Upon termination of thisAgreement, the relevant provisions of any existing sublicenses of ACT shall beautomatically assigned to GTC, and GTC shall be bound by the terms of suchsublicenses, provided that the sublicensees continue to perform in accordancewith their respective sublicense agreements. Notwithstanding the foregoing, GTC’sobligations to any such sublicenseeshall not be interpreted to extend beyond any of its obligations to ACThereunder with respect to the subject matter of the sublicense.

 

**8.****           ****PAYMENTS.**

 

8.1                                 Initial Payment.    Onthe Effective Date, GTC will pay ACT the sum of $1,000,000, $750,000 of whichshall be in consideration of the license granted to GTC from ACT in Section 3.1(a) of this Agreement, and $250,000 of which shall be an advance paymentwhich shall be fully creditable against ACT services for which the parties haveseparately contracted, milestone payments (including those listed in Section 8.3below), royalties, sublicense revenues or other payments payable or to becomepayable to ACT from GTC under this Agreement or under any other agreementbetween the parties.

 

8.2                                 Shares of GTC.

 

(a)                                  Authorization of Issuance of the Shares.  Asadditional consideration for the license granted to GTC from ACT in Section 3.1(a) ofthis Agreement, GTC will issue to (x) ACT that number of shares of the CommonStock of GTC, par value $0.01 per share (“ACT’s Shares”), equal to the quotientobtained by dividing (i) $900,000 by (ii) the average of the closingprice of the Common Stock of GTC on the NASDAQ National Market (or on aprincipal national securities exchange on which the Common Stock is listed oradmitted to trading) for the five (5) trading days ending on the day priorto the Effective Date of this Agreement and (y) the University that number ofshares of the Common Stock of GTC, par value $0.01 per share (the “University’sShares,” and together with ACT’s Shares, the “Shares”), equal to the quotientobtained by dividing (i) $100,000 by (ii) the average of the closingprice of the Common Stock of GTC on the NASDAQ National Market (or on aprincipal national securities exchange on which the Common Stock is listed oradmitted to trading) for the five (5) trading days ending on the day priorto the Effective Date of this Agreement.

 

(b)                                 Issuance of the Shares and Delivery ofCertificates. Within five (5) daysafter the Effective Date, GTC shall (i) issue the Shares in considerationof the agreements of ACT and the University contained herein and for no furtherconsideration, (ii) deliver to ACT one or more stock certificates representing ACT’s Shares, suchstock certificates to be registered in the name of ACT or in such nomineename(s) as designated by ACT, and (iii) deliver to the University one ormore stock certificates representing the University’s Shares, such stockcertificates to be registered in the name of the University or in such nomineename(s) as designated by the University.

 

(c)                                  Investment Representations.   ACT and the University represent and warrant to, and covenant with, GTCthat:

 

i.                                          ACT and the University are knowledgeable,sophisticated and experienced in making, and are qualified to make, decisionswith respect to investments in shares

 

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presenting an investment decision like thatinvolved in the acquisition of the Shares, including investments in securitiesissued by companies comparable to GTC, and have requested, received, reviewedand considered all information they deem relevant in making an informeddecision to acquire the applicable Shares.

 

ii.                                       ACTand the University are acquiring the applicable Shares in the ordinary courseof their businesses and for their own account for investment only and with nopresent intention of distributing any of such Shares or any arrangement orunderstanding with any other persons regarding the distribution of such Shares.

 

iii.                                    ACTand the University understand that the Shares are “restricted securities” underthe federal securities laws inasmuch as they are being acquired from GTC in atransaction not involving a public offering and that under such laws andapplicable regulations such securities may be resold without registration underthe Securities Act only in certain limited circumstances. In this connection,ACT and the University represent that they are familiar with SEC Rule 144,as presently in effect, and understand the resale limitations imposed therebyand by the Securities Act.

 

iv.                                   ACTand the University will not, directly or indirectly, offer, sell, pledge,transfer or otherwise dispose of (or solicit any offers to buy, purchase orotherwise acquire or take a pledge of) any of the Shares except in compliancewith the Securities Act, and the rules and regulations promulgatedthereunder.

 

v.                                      ACTand the University each qualifies as an “accredited investor” within themeaning of Rule 501(a)(3) of Regulation D promulgated under the Securities Act and is a resident of theUnited States of America.

 

vi.                                   Itis understood that the certificates evidencing the Shares shall bear thefollowing legend unless and until the resale of the Shares pursuant to aneffective Registration Statement or until the Shares may be sold under Rule 144without restrictions:

 

THESESECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. THEY MAY NOTBE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AREGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACTOR, IF REQUESTED BY GTC, AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO GTCAND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED UNDER SUCH ACT.

 

(d)                                 Restrictionon Sale of Shares. The Shares shall be “restricted securities” and noteligible for resale under Rule 144 or otherwise until twelve (12) monthsfrom the date of issuance, provided that thereafter one-twelfth (1/12) of theShares shall become saleable each month, and further provided that ACT and theUniversity agree to sell no more than 5,000 Shares in the aggregate in any day.

 

8.3                                 hSAMilestone Payments. GTC will pay to ACT the sum of $12,500 for each clonedhSA Cow (up to a maximum of twenty (20) cows) made by or for ACT using the ACTPatent Rights or ACT Technology on or before March 21, 2000. Each such$12,500 payment

 

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will be made by GTC within thirty (30) daysafter written notice from ACT that a cloned cow has achieved the hSA expressionlevel set forth in Schedule B over a thirty (30)-day period. Thepayments made under this Section 8.3 will represent full compensation foractivities conducted by ACT on the hSA Program through the date of completionof the milestone.

 

8.4                                 Royalties,Reports and Records.

 

(a)                                  GTCRoyalty Obligations.

 

i.                                          NetSales of hSA. GTC agrees to pay ACT, on a calendar quarterly basis, aroyalty of two percent (2%) of Net Sales by GTC of ACT Products consisting ofhSA produced in the milk of hSA Cows, *provided,however,*that in the event Net Sales of ACT Products consisting ofhSA produced in the milk of hSA Cows exceed $12,500,000 per calendar quarterfor two consecutive calendar quarters, the royalty will thereafter be 1% ofsuch Net Sales.

 

ii.                                       NetSates of Other Products. GTC agrees to pay ACT, on a calendar quarterlybasis, a royalty of three percent (3%) of the Net Sales by GTC of ACT Productsconsisting of proteins (other than hSA) produced in the milk of transgenicanimals and ACT Services relating to such ACT Products, *provided, however,*that in the event NetSales of ACT Products consisting of proteins (other than hSA) produced in themilk of transgenic animals and ACT Services relating to such Products exceed $25,000,000per calendar quarter for two consecutive calendar quarters, the royalty willthereafter be 2%**of such Net Sales.

 

(b)                                 ACTRoyalty Obligations. ACT will pay to GTC a royalty in the amount of threepercent (3%) of Net Sales by ACT of any GTC Products or Services, *provided, however,*that in the event NetSales of any GTC Products or Services exceed $25,000,000 per calendar quarterfor two consecutive calendar quarters, the royalty will thereafter be 2% ofsuch Net Sales.

 

8.5                                 Sublicense Revenues.

 

(a)                                  GTCagrees to pay ACT twenty-five percent (25%) of any and all license fees andup-front fees, (whether paid in cash, equity of the sublicensee or otherconsideration), royalties, milestone payments based on the sublicensee’sperformance, and premiums over market value paid to GTC for equity investmentsin GTC by the sublicensee, received in consideration of the grant ofsublicenses of the ACT Patent Rights or ACT Technology, however suchsublicenses may be characterized, but excluding payments for services of GTC,milestone payments based on performance by GTC, or equity investments in GTC atmarket value (“GTC Sublicense Revenues”).  For the avoidance of doubt, no GTC Sublicense Revenues shall be deemedreceived by GTC in connection with the sublicensing of the ACT Patent Rights orACT Technology to a third party in exchange for a license under such thirdparty’s technology which is necessary for the manufacture or sale of ACTProducts or ACT Services, provided that no additional consideration (other thanthe license under such third party’s technology) is paid by such third partyfor such sublicense.

 

(b)                                 ACTagrees to pay GTC twenty-five percent (25%) of any and all license fees orup-front fees (whether paid in cash, equity of the sublicensee or otherconsideration).

 

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milestone payments based on the sublicensee’sperformance, royalties or premiums over market value paid to ACT for equityinvestments in ACT by the sublicensee, received in consideration of the grantof sublicenses of GTC Patent Rights or GTC Technology, however such sublicensesmay be characterized, but excluding payments for services of ACT, milestonepayments based on performance by ACT, or equity investments in ACT at marketvalue (“ACT Sublicense Revenues”). For the avoidance of doubt, no ACTSublicense Revenues shall be deemed received by ACT in connection with thesublicensing of the GTC Patent Rights or GTC Technology to a third party inexchange for a license under such third party’s technology which is necessaryfor the manufacture or sale of GTC Products or GTC Services, provided that noadditional consideration (other than the license under such third party’stechnology) is paid by such third party for such sublicense.

 

8.6                                 Minimum Annual Payments.

 

(a)                                  Effective January 5, 2000, GTC shall payto ACT an annual fee of $100,000 to maintain exclusivity of the license grantedunder Section 3.1(a) (the “Exclusivity Fee”). Except as providedbelow, the Exclusivity Fee shall be payable in advance on January 5th of each year.

 

(b)                                 If, by June 30, 2001, GTC enters intoagreements with third-party(s) to develop two (2) products covered by theACT Patent Rights and/or using the ACT Technology intended for use astherapeutics, the Exclusivity Fee shall remain at $100,000 per year; otherwisethe Exclusivity Fee shall increase to $1 million per year thereafter. In theevent of unanticipated technical difficulties, which technical difficulties areconfirmed by ACT, the parties may extend the above deadline of June 30,2001 to a date mutually agreed on.

 

(c)                                  Provided that the Exclusivity Fee was notalready raised to $1 million pursuant to Section 8.6(b), then if, by June 30thof every second year following June 30, 2001 (i.e., June 30, 2003; June 30,2005; etc.), GTC enters into agreements with third party(s) to develop two (2) additionalproducts covered by the ACT Patent Rights and/or using the ACT Technologyintended for use as therapeutics, the Exclusivity Fee shall remain at $100,000per year; otherwise the Exclusivity Fee shall increase to $1 million per yearthereafter.

 

(d)                                 If the Exclusivity Fee increases to $1million in any year pursuant to Section 8.6(b) or (c) above,such increase shall be applied *pro rata*onlyfor the remainder of such year (i.e., the Exclusivity Fee due for the remainderof such year shall be $450,000, payable on or about July 1st of such year, and thereafter the Exclusivity Fee shall be $1 millionper year, payable on or about January 5th of eachsubsequent year).

 

(e)                                  The above fees will be creditable by GTCagainst amounts due or to become due to ACT thereafter under this Agreement orunder any other agreement between the parties including, but not limited to,fees for ACT services, sublicense revenue, and royalties.

 

(f)                                    GTC may elect to allow the license grantedunder Section 3.1(a) to become non-exclusive at any time by electingnot to pay the applicable Exclusivity Fee.

 

(g)                                 If at any time the license granted under Section 3.1(a) toGTC hereunder becomes non-exclusive, (i) the royalties and other feespayable by GTC to ACT hereunder shall

 

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be automatically reduced to the mostfavorable rates charged by ACT to its other licensees of such rights, and (ii) thelicense granted by GTC to ACT with respect to the GTC Licensed Property under Section 3.2(a) shallbe restricted such that ACT shall not be permitted to use or sublicense the useof the GTC Licensed Property in programs with GTC’s competitors, as determinedin GTC’s reasonable discretion.

 

8.7                                 Paymentsin U.S. Dollars.   All payments dueunder this Agreement shall be payable in United States dollars. Conversion offoreign currency to U.S. dollars shall be made at the conversion rate reportedin The Wall Street Journal on the last working day of the calendar quarter towhich the payment relates.  Such paymentsshall be without deduction of exchange, collection, or other charges.

 

8.8                                 BlockedPayments. If by law, regulation, or fiscal policy of a particular country,conversion into United States dollars or transfer of funds of a convertiblecurrency to the United States is restricted or forbidden, the party having thepayment obligation (the “Payor”) shall give the other party (the “Payee”)prompt notice in writing and shall pay the royalty and other amounts due throughsuch means or methods as are lawful in such country as Payee may reasonablydesignate. Failing the designation by Payee of such lawful means or methodswithin thirty (30) days after such notice is given to Payee, Payor shalldeposit such royalty payment in local currency to the credit of Payee in arecognized banking institution selected by Payor and identified in a writtennotice to Payee by Payor, and such deposit shall fulfill all obligations ofPayor to Payee with respect to such royalties.

 

8.9                                 AuditRights

 

(a)                                  Eachparty shall submit a report to the other party quarterly within 45 days afterthe end of each calendar quarter during the term of this Agreement stating ineach such report the aggregate sales and payments with respect to ACT Productsand Services, or GTC Products and Services, as applicable, during the precedingcalendar quarter and the royalty and sublicense revenue as provided herein.Such reports shall also include a statement of any credits claimed (includingwithout limitation any credits under Sections 3.1(e), 8.1, 8.4(a)(ii) and8.6(e) hereunder) during the preceding calendar quarter. The payment ofroyalty and sublicense revenue amounts shall be made concurrently with suchreports.

 

(b)                                 Eachparty shall keep full, complete, true and accurate books of account containingall particulars relating to the manufacture and sales with respect to ACTProducts and Services, or GTC Products and Services, as applicable, and anyallowed credits, which may be necessary to ascertain and verify the royaltiesand sublicense revenue payable to the other party. Said books and accountsshall be kept at the respective party’s principal place of business.

 

(c)                                  Atthe request of a party or the University, but not more than once in eachcalendar year, the other party shall permit an independent certified publicaccountant selected by the requesting party (or the University’s internalaccountants) to have access, during regular business hours of the auditedparty, to such records to determine, for any calendar quarter commencing notmore than three years prior to the date of such request, the completeness andaccuracy of such books and records, and the accuracy of reports submitted tothe other party and/or payments made to the other party. If any such inspectiondiscloses an error in any royalty

 

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or sublicense revenue payment, the audited partyshall pay to the other party, within, thirty (30) days of the discovery of theerror, (a) all deficiencies in royalty or sublicense revenue payments, (b) intereston such deficiencies from the date such royalty or sublicense revenue paymentwas due until the date paid at the rate equal to one and one-half percent (11/2%)per month, and (c) if such error is in excess of ten percent (10%) of anyroyalty or sublicense revenue payment, the cost of the audit. In all othercases, the costs of the audit shall be paid for by the party conducting theaudit. All information disclosed pursuant to an audit shall be deemed ConfidentialInformation subject to the provisions of Section 10 hereof.

 

**9.****                                     ****PROPRIETARY RIGHTS.**

 

9.1                                 Ownership.

 

(a)                                  GTC.   GTCshall own all hSA Cows, GTC Patent Rights, GTC Technology, GTC Developments,all proprietary DNA constructs, and all recombinant cell lines generated withGTC’s DNA constructs.

 

(b)                                 ACT.   ACTor its licensor(s) shall own the ACT Patent Rights, ACT Technology, and ACTDevelopments.

 

(c)                                  JointDevelopments. The parties shall jointly own all Joint Developments.

 

9.2                                 ACTPatent Rights.

 

(a)                                  Responsibility; Costs.   ACTwill retain primary responsibility for filing, prosecution and maintenance ofthe ACT Patent Rights in all countries and for all ACT Technology where GTCrequests patent protection, using patent counsel approved by GTC, whichapproval shall not be unreasonably withheld or delayed.   The costs of such filing, prosecution andmaintenance shall be borne by ACT, except that GTC will reimburse ACT for suchcosts for any countries where GTC requests patent protection, but where ACT didnot otherwise intend to seek protection. Except as provided above, ACT and GTCwill pay the fees and expenses of their respective outside patent counsel forthe activities described in this Section 9.2.

 

(b)                                 Consultation; Abandonment.   GTC’s patent counsel shall be given a reasonable opportunity to commenton all proposed patent filings (“Filings”) and responses (“Responses”) topatent office actions or other patent office communications (collectively, “OfficeCommunications”) with respect toACT Patent Rights. In the case of Filings, and in the case of OfficeCommunications to which ACT must respond in a period of time equal to orexceeding sixty (60) days (including extensions), ACT shall deliver itsproposed Filing or Response to GTC for comment not later than sixty (60) daysprior to the final patent office deadline for such Filing or Response, and ACTwill not unreasonably refuse to accept, any suggestions of GTC’s patent counselregarding such Filing or Response, provided that GTC’s patent counsel providessuch comments to ACT’s patent counsel not less than thirty (30) days prior tothe final patent office deadline for such Filing or Response.   In the case of Office Communications towhich ACT must respond in less than sixty (60) days, which deadline may not beextended, ACT shall deliver its proposed Response to GTC for comment not laterthan ten (10) days after ACT’s receipt of such Office Communication, andACT will not unreasonably

 

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refuse to accept any suggestions of GTC’spatent counsel regarding such Response, provided that GTC’s patent counselprovides such comments to ACT’s patent counsel not less than ten (10) daysprior to the final patent office deadline for such Response. To the extent thatany such patent matter relates solely to the GTC Field and not to the ACTField, GTC’s patent counsel will have the final right to determine theresolution of the matter, subject to the right of the University toconsultation as provided in the UMASS License. ACT will not allow any patent orpatent application within the ACT Patent Rights to become expired or abandonedwithout giving GTC the right to assume responsibility for such patent or patentapplication, and if GTC so elects, ACT will assign such patent or patentapplication to GTC, and GTC will thereafter assume control thereof and allexpenses related thereto. With respect to the UMASS Patent Rights, GTC’s rightsunder this subsection 9.2(b) shall be subject to the rights of theUniversity under Section 6 of the UMASS License.

 

(c)                                  Defenseof ACT Patent Rights.    ACT and GTCwill consult with one another in the event of a third party claim that a patentwithin the ACT Patent Rights in the GTC Field is invalid, unenforceable, ornon-infringing. ACT will have the first right to control the defense of suchclaim at its expense, but GTC will have the right to share in the control ofthe defense by sharing 50% of the costs thereof, but ACT shall have the finaldecision in the event of a disagreement regarding the conduct of the defense.If ACT elects not to defend, GTC may do so at its expense and under itscontrol, but shall have the right to offset such expenses against royaltiesotherwise due to ACT (other than royalties attributable to the UMASS PatentRights) until such time as the ACT Patent Rights have been upheld, providedthat such offset shall not exceed 50% of such royalties.   Notwithstanding the foregoing, neither partywill enter into a settlement that admits the invalidity, unenforceability, ornon-infringement of any ACT Patent Rights without consent of the otherparty.  With respect to the UMASS PatentRights, GTC’s rights under this subsection 9.2(c) shall be subject tothe rights of the University under Section 6 of the UMASS License.

 

(d)                                 Prosecutionof Infringers of ACT Patent Rights. GTC shall have the first right toprosecute infringers of the ACT Patent Rights in the GTC Field at its expense,and shall retain all recoveries arising out of such prosecutions by GTC.   ACT shall have the right to prosecute suchinfringers if GTC elects not to do so, at its expense, and shall retain allrecoveries arising out of such prosecutions by ACT. Neither party will enterinto a settlement that admits the invalidity, unenforceability, or non-infringementof any ACT Patent Rights without consent of the other party. With respect tothe UMASS Patent Rights, GTC’s rights under this subsection 9.2(d) shallbe subject to the rights of the University under Section 6 of the UMASSLicense.

 

9.3                                 GTC Patent Rights.

 

(a)                                  Responsibility;Costs. GTC will retain primary responsibility for filing, prosecution andmaintenance of the GTC Patent Rights in all countries and for all GTCTechnology where ACT requests patent protection, using patent counsel approvedby ACT, which approval shall not be unreasonably withheld or delayed. The costsof such filing, prosecution and maintenance shall be borne by GTC, except thatACT will reimburse GTC for such costs for any countries where ACT requestspatent protection, but where GTC did not otherwise intend to seek protection.Except as provided above, GTC and ACT will pay the fees

 

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and expenses of their respective outside patentcounsel for the activities described in this Section 9.3.

 

(b)                                 Consultation; Abandonment.   ACT’s patent counsel shall be given a reasonable opportunity to commenton all proposed patent filings (“Filings”) and responses (“Responses”) topatent office actions or other patent office communications (collectively, “OfficeCommunications”) with respect to GTC Patent Rights. In the case of Filings, andin the case of Office Communications to which GTC must respond in a period oftime equal to or exceeding sixty (60) days (including extensions), GTC shall deliverits proposed Filing or Response to ACT for comment not later than sixty (60)days prior to the final patent office deadline for such Filing or Response, andGTC will not unreasonably refuse to accept any suggestions of ACT’s patentcounsel regarding such Filing or Response, provided that ACT’s patent counselprovides such comments to GTC’s patent counsel not less than thirty (30) daysprior to the final patent office deadline for such Filing or Response.   In the case of Office Communications to whichGTC must respond in less than sixty (60) days, which deadline may not beextended, GTC shall deliver its proposed Response to ACT for comment not laterthan ten (10) days after GTC’s receipt of such Office Communication, andGTC will not unreasonably refuse to accept any suggestions of ACT’s patentcounsel regarding such Response, provided that ACT’s patent counsel providessuch comments to GTC’s patent counsel not less than ten (10) days prior tothe final patent office deadline for such Response.   To the extent that any such patent matterrelates solely to the ACT Field and not to the GTC Field, ACT’s patent counselwill have the final right to determine the resolution of the matter. GTC willnot allow any patent or patent application within the GTC Patent Rights tobecome expired or abandoned without giving ACT the right to assumeresponsibility for such patent or patent application, and if ACT so elects, GTCwill assign such patent or patent application to ACT, and ACT will thereafterassume control thereof and all expenses related thereto.

 

(c)                                  Defense of GTC Patent Rights.   GTCand ACT will consult with one another in the event of a third party claim thata patent within the GTC Patent Rights in the ACT Field is invalid,unenforceable, or non-infringing.   GTCwill have the first right to control the defense of such claim at its expense,but ACT will have the right to share in the control of the defense by sharing50% of the costs thereof, but GTC shall have the final decision in the event ofa disagreement regarding the conduct of the defense. If GTC elects not todefend, ACT may do so at its expense and under its control, but shall have theright to offset such expenses against royalties otherwise due to GTC until suchtime as the GTC Patent Rights have been upheld, provided that such offset shallnot exceed 50% of such royalties. Notwithstanding the foregoing, neither partywill enter into a settlement that admits the invalidity, unenforceability, ornon-infringement of any GTC Patent Rights without consent of the other party.

 

(d)                                 Prosecution of Infringers of GTC PatentRights. ACT shall have thefirst right to prosecute infringers of the GTC Patent Rights in the ACT Fieldat its expense, and shall retain all recoveries arising out of such prosecutionsby ACT. GTC shall have the right to prosecute such infringers if ACT elects notto do so, at its expense, and shall retain all recoveries arising out of suchprosecutions by GTC. Neither party will enter into a settlement that admits theinvalidity, unenforceability, or non-infringement of any GTC Patent Rightswithout consent of the other party.

 

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9.4                                 JointPatent Rights.

 

(a)                                  Responsibility;Costs.   GTC will retain primaryresponsibility for filing, prosecution and maintenance of the Joint PatentRights in all countries, using patent counsel approved by ACT, which approvalshall not be unreasonably withheld or delayed.The costs of such filing, prosecution and maintenance shall be borne equally byGTC and ACT, except that ACT will bear all of such costs in any countries whereACT requests patent protection, but where GTC did not otherwise intend to seekprotection. If either party fails to pay its share of such costs with respectto any Joint Patent Rights, its exclusive license from the other party under Article 3with respect to such Joint Patent Rights shall be automatically revoked, butthe exclusive license from such party to the other party with respect to suchJoint Patent Rights shall remain effective.

 

(b)                                 Consultation;Abandonment.    ACT’s patent counselshall be given a reasonable opportunity to comment on all proposed patentfilings (“Filings”) and responses (“Responses”) to patent office actions orother patent office communications (collectively, “Office Communications”) withrespect to Joint Patent Rights. In the case of Filings, and in the case ofOffice Communications to which GTC must respond in a period of time equal to orexceeding sixty (60) days (including extensions), GTC shall deliver itsproposed Filing or Response to ACT for comment not later than sixty (60) daysprior to the final patent office deadline for such Filing or Response, and GTCwill not unreasonably refuse to accept any suggestions of ACT’s patent counselregarding such Filing or Response, provided that ACT’s patent counsel providessuch comments to GTC’s patent counsel not less than thirty (30) days prior tothe final patent office deadline for such Filing or Response.   In the case of Office Communications towhich GTC must respond in less than sixty (60) days, which deadline may not beextended, GTC shall deliver its proposed Response to ACT for comment not laterthan ten (10) days after GTC’s receipt of such Office Communication, andGTC will not unreasonably refuse to accept any suggestions of ACT’s patentcounsel regarding such Response, provided that ACT’s patent counsel providessuch comments to GTC’s patent counsel not less than ten (10) days prior tothe final patent office deadline for such Response.   To the extent that any such patent matterrelates solely to the ACT Field and not to the GTC Field, ACT’s patent counselwill have the final right to determine the resolution of the matter. GTC willnot allow any patent or patent application within the Joint Patent Rights tobecome expired or abandoned without giving ACT the right to assumeresponsibility for such patent or patent application, and if ACT so elects, GTCwill assign such patent or patent application to ACT, and ACT will thereafterassume control thereof and all expenses related thereto.

 

(c)                                  Defenseof Joint Patent Rights. GTC and ACT will consult with one another in theevent of a third party claim that a patent within the Joint Patent Rights isinvalid, unenforceable, or non-infringing. GTC will have the first right tocontrol the defense of such claim at its expense, but ACT will have the rightto share in the control of the defense by sharing 50% of the costs thereof, butGTC shall have the final decision in the event of a disagreement regarding theconduct of the defense. If GTC elects not to defend, ACT may do so at itsexpense and under its control, but shall have the right to offset such expensesagainst royalties otherwise due to GTC. Notwithstanding the foregoing, neitherparty will enter into a settlement that admits the invalidity,unenforceability, or non-infringement of any Joint Patent Rights withoutconsent of the other party.

 

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(d)                                 Prosecutionof Infringers of Joint Patent Rights. ACT shall have the first right toprosecute infringers of the Joint Patent Rights in the ACT Field at itsexpense, and shall retain all recoveries arising out of such prosecutions byACT. GTC shall have the right to prosecute such infringers if ACT elects not todo so, at its expense, and shall retain all recoveries arising out of suchprosecutions by GTC. GTC shall have the first right to prosecute infringers ofthe Joint Patent Rights in the GTC Field at its expense, and shall retain allrecoveries arising out of such prosecutions by GTC. ACT shall have the right toprosecute such infringers if GTC elects not to do so, at its expense, and shallretain all recoveries arising out of such prosecutions by ACT. Neither partywill enter into a settlement that admits the invalidity, unenforceability, ornon-infringement of any Joint Patent Rights without consent of the other party.

 

9.5                                 Cooperation.GTC and ACT shall cooperate fully in the preparation, filing, prosecution, andmaintenance of all ACT Patent Rights, GTC Patent Rights, and Joint PatentRights. Such cooperation includes, without limitation, (i) promptlyexecuting all papers and instruments or requiring employees of GTC or ACT toexecute such papers and instruments as reasonable and appropriate so as to enableGTC or ACT to file, prosecute, and maintain such Patent Rights in any country;and (ii) promptly informing the other party of matters that may affect thepreparation, filing, prosecution, or maintenance of any such Patent Rights(such as becoming aware of an additional inventor who is not listed as aninventor in a patent application).

 

**10.****                               CONFIDENTIALINFORMATION.**

 

10.1                           Nondisclosureof Confidential Information.   Duringthe term of this Agreement and for five (5) years thereafter, neitherparty nor the University will disclose or make available to any person outsideits organization the disclosing party’s Confidential Information, except thateach party will have the right to disclose such of the other party’sConfidential Information consisting of ACT Technology or GTC Technology, asapplicable, to third parties to which sublicensing is permitted under Section 3.1(b) or3.2(b), provided that such third parties are bound to protect theconfidentiality of such Confidential Information. Each party may disclose theother party’s Confidential Information to persons within its organization andthat of its Affiliates to the extent necessary to further the purposes of thisAgreement, provided that all such persons are bound to protect theconfidentiality of such Confidential Information.  Each party may disclose the other party’sConfidential Information if required by law or governmental authority, providedthat prior notice of any such disclosure is given to the other party and thatthe disclosing party cooperates with the other party in seeking protectiveorders or other restrictions on disclosure.

 

10.2                           Useof Confidential Information. Each party will use the ConfidentialInformation of the other party only for the purposes contemplated by thisAgreement.

 

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**11.****                               REPRESENTATIONSAND WARRANTIES.**

 

11.1                           Representationsand Warranties by ACT.  ACTrepresents and warrants to GTC that:

 

(a)                                  ACT owns or has a licensable interest in theACT Licensed Property and has the right to grant to GTC the licenses set forthabove. As of the Effective Date, GTC is in receipt of proposed claims to an ACTpatent concerning cloning a non-human mammal by nuclear transfer which ACTrepresents it believes will issue in the U.S. in the near term.

 

(b)                                 ACT has provided GTC with a copy of the UMASSLicense, as amended, with certain terms redacted, and ACT represents and warrants that the said copy is a true andcomplete (except as redacted) copy of the UMASS License as of the EffectiveDate.

 

(c)                                  ACT shall have the unrestricted right totransfer good and marketable title to the Milk Products and the hSA Cows to GTCpursuant to this Agreement, freeand clear of any lien, charge or encumbrance created or permitted by ACT;

 

(d)                                 the Milk Products and hSA Cows will conformto the applicable specifications set forth in Schedule B. The partiesagree that any hSA Cows that do not conform to the specifications set forth in ScheduleB shall be destroyed.

 

(e)                                  the Milk Products shall not be (i) adulteratedor misbranded within the meaning of the Federal Food, Drug and Cosmetic Act, asamended, or within the meaning of any applicable state or municipal law inwhich the definitions of adulteration and misbranding are substantially thesame as those contained in the Federal Food, Drug and Cosmetic Act, as such Actand laws are constituted and effective at the time of delivery of the MilkProducts, or (ii) an article which may not be introduced intointerstate commerce under the provisions of Sections 404, 505 or 512 of suchAct, as amended;

 

(f)                                    as of the date of delivery of each hSA Cow,each hSA Cow and the Milk Products of such hSA Cow have been manufactured in accordance with all current materialapplicable federal, state and local laws and regulations relating to ACT’sactivities under this Agreement, including without limitation applicable GMPsand GAPs;

 

(g)                                 with respect to the ACT Patent Rights and ACTTechnology only, to the knowledge of ACT, the commercialization of the Milk Products will not infringe thepatent or other intellectual property rights of any third party; and

 

(h)                                 the execution of this Agreement andperformance of the transactions contemplated by such agreements have beenapproved by the ACT Board Of Directors and will not conflict with or result inany breach of any of the terms, conditions or provisions of or constitute adefault under, any agreement to which ACT is a party or by which ACT is bound.

 

11.2                           RepresentationWarranty by GTC. GTC represents and warrants to ACT that:

 

(a)                                  it owns the GTC Licensed Property and has theright to grant to ACT the licenses set forth above;

 

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(b)                                 itshall have the unrestricted right to transfer good and marketable title to allDNA constructs and/or other suitable selectable markers used in the hSA Programand all materials and resources necessary for the identification and evaluationof transgenic bovine fetal fibroblast cell lines, embryos, fetuses and calvesincluding, without limitation, DNA probes and polymerase chain reaction (“PCR”)primers;

 

(c)                                  theexecution of this Agreement and performance of the transactions contemplated bysuch agreements have been approved by all necessary corporate action and willnot conflict with or result in any breach of any of the terms, conditions orprovisions of, or constitute adefault under, any agreement to which GTC is a party or by which GTC is bound;and

 

(d)                                 tothe knowledge of GTC, the transgenic activities described in Schedule Bperformed or to be performed by ACTwill not infringe the patent or other intellectual property rights of any thirdparty.

 

11.3                           Disclaimer.Except as expressly set forth in Section 11.1(g) and 11.2(d), neitherparty makes any representation or warranty as to the validity or scope of theACT Licensed Property or the GTC Licensed Property, nor does either party makeany representation or warranty that the exercise of the rights granted toeither party with respect to the ACT Licensed Property or the GTC LicensedProperty will not infringe the patent or other intellectual property rights ofany third party.

 

**12.****                               INDEMNIFICATION.**

 

12.1                           Indemnificationby ACT.   ACT agrees to defend,indemnify and hold harmless GTC, the University, and their Affiliates, agents,directors, officers and employees, at ACT’s cost and expense, from and againstany and all losses, costs, liabilities, damages, fees and expenses, includingreasonable attorneys’ fees and expenses with respect to claims by thirdparties:

 

(a)                                  arisingout of any breach by ACT of any representation or warranty contained in Section 11.1;and

 

(b)                                 inthe nature of product liability or otherwise attributable to the making, using,development, testing, registration, distribution and/or sale by or through ACTof any GTC Products or GTC Services under this Agreement.

 

12.2                           Indemnificationby GTC.   GTC agrees to defend,indemnify and hold harmless ACT, the University, and their Affiliates, agents,directors, officers and employees, at GTC’s cost and expense, from and againstany and all losses, costs, liabilities, damages, fees and expenses, includingreasonable attorneys’ fees and expenses with respect to claims by third parties:

 

(a)                                  arisingout of any breach by GTC of any representation or warranty contained in Section 11.2;and

 

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(b)                                 inthe nature of product liability or otherwise attributable to the making, using,development, testing, registration, distribution and/or sale by or through GTCof any ACT Products or ACT Services under this Agreement; and

 

(c)                                  thatthe transgenic activities of ACT under the hSA Program described in Schedule Binfringe the patent or other intellectual property rights of such thirdparties.

 

12.3                           IndemnificationClaims.    Each party shall give theother party prompt notice of any claim for which indemnification under this Section 12is or may be applicable and will cooperate with the indemnifying party in thedefense or settlement of such claim at the indemnifying party’s expense. Theindemnifying party shall be required to provide and be entitled to control thedefense of any claim covered hereunder (including the right to settle it at thesole discretion of the indemnifying party) with counsel reasonably satisfactoryto the other party which may, at its own expense, participate in the defense ofany claim after the indemnifying party assumes control of the defense thereof.The indemnification obligations in this Section 12**shall not apply to amounts paid insettlement of such claim if such settlement is effected without the consent ofthe indemnifying party, which consent shall not be unreasonably withheld ordelayed. The failure of the indemnified party to deliver notice to theindemnifying party promptly after the commencement of any such action, ifprejudicial to the indemnifying party’s ability to defend such action, shallrelieve the indemnifying party of any liability to the indemnified party underthis Section 12, but the failure to promptly deliver notice to theindemnifying party will not relieve it of any liability that it may have to theindemnified party other than under this Section 12.

 

**13.****                               LIMITATIONOF LIABILITY.**  IN NO EVENT SHALLEITHER PARTY (OR ITS AFFILIATES, SHAREHOLDERS, DIRECTORS, OFFICERS, EMPLOYEES,OR AGENTS) BE LIABLE FOR ANY SPECIAL, INDIRECT, RELIANCE, INCIDENTAL,EXEMPLARY, COVER, OR CONSEQUENTIAL DAMAGES, INCLUDING LOSS OF PROFITS ANDGOODWILL, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCHDAMAGES, REGARDLESS OF THE THEORY OF LIABILITY.

 

**14.****                               INSURANCE.  **Prior to the commencement of the first Phase I clinical trial of anyproteins/products produced in hSA Cows developed by ACT under this Agreement,each party shall obtain and maintain, at all times during the term of thisAgreement, general liability insurance with appropriate bodily injury, deathand property damage limits. Upon request, a party shall furnish a certificateof insurance signed by an authorized representative of its insuranceunderwriter evidencing such coverage and providing for at least thirty (30) days’prior written notice of any cancellation, termination or reduction of coverage.

 

**15.****                               MISCELLANEOUS.**

 

15.1                           Assignment. This Agreement, and the rights andobligations thereunder, may not be assigned or transferred, in whole or inpart, by either party without the prior written consent of the other party,except that (a) either party may assign this Agreement to an Affiliate,provided that such party remains primarily liable and/or responsible for theperformance of such obligations, and provided further that such Affiliateagrees to be bound to the terms and conditions of this Agreement, and (b) eitherparty may assign this agreement in connection with

 

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the merger, consolidation or sale of all or substantiallyall of the assets of such party which pertain to the subject matter of thisAgreement.

 

15.2                           Notices. Notices shall be in writing and delivered by hand or sent bynationally recognized overnight delivery service, prepaid registered orcertified air mail, or by facsimile confirmed by prepaid first class,registered or certified mail letter, and shall be deemed to have been properlyserved to the addressee upon receipt of such written communication.

 

Addresses: In the case ofGTC, the proper address for communications shall be:

 

Genzyme TransgenicsCorporation

Five Mountain Road

Framingham, Massachusetts01701-9322

Attn:   President

Fax: (508) 370-3797

 

witha copy to:                                         Palmer & Dodge

One Beacon Street

Boston, MA 02108

Fax: (617) 227-4420

 

and in the case of ACT, theproper address for communications and all payments shall be:

 

Advanced Cell Technology, Inc.

One Innovation Drive

Worcester, Massachusetts01605

Attn:   President 

Fax: (508) 756-0931

 

witha copy to:                                         Pierce Atwood

One Monument Square

Portland, ME

Fax: (207) 791-1350

 

15.3                           Choice of Law. This Agreement is subject to and governedby the laws of the Commonwealth of Massachusetts, without regard to principlesof conflicts of law thereof.

 

15.4                           Dispute Resolution.   Anydispute arising under this Agreement which is not promptly settled by theparties shall be referred to the Chief Executive Officers of the parties. TheChief Executive Officers will meet for negotiations within fifteen (15) days ofsuch referral. If the dispute has not been resolved within thirty (30) days(which period may be extended by mutual agreement), subject to any rights toinjunctive relief and unless otherwise specifically provided for herein, anydispute will be submitted to binding arbitration. The arbitration shall be conductedbefore a single arbitrator in accordance with the Commercial Arbitration Rules ofthe American Arbitration Association (AAA), which shall administer thearbitration and act as appointing authority. The arbitration shall take placein Boston, Massachusetts, and shall be the exclusive forum for resolving suchdispute, controversy or claim. The decision of the arbitrator

 

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shall be final and binding upon the parties.Notwithstanding anything contained above to the contrary, each party shall havethe right to institute judicial proceedings against the other party in order toenforce the instituting party’s rights hereunder through specific performance,injunction or similar equitable relief.

 

15.5                           Compliancewith Law by GTC. GTC shall comply with, and shall ensure that itssublicensees comply with, all local, state, federal and international laws andregulations relating to the development, manufacture, use, and sale of ACTProducts and ACT Services. GTC shall, and shall cause its sublicensees to,comply with the following:

 

(a)                                  GTCand its sublicensees shall obtain all necessary approvals from the FDA and anysimilar governmental authorities of any foreign jurisdiction in which GTC or apermitted sublicensee intends to make, use, or sell ACT Products or to performACT Services.

 

(b)                                 GTCand its sublicensees shall comply with all United States laws and regulationscontrolling the export of certain commodities and technical data, includingwithout limitation all Export Administration Regulations of the United StatesDepartment of Commerce. Among other things, these laws and regulationsprohibit, or require a license for, the export of certain types of commoditiesand technical data to specified countries. GTC hereby gives written assurance that it will comply with, and willcause its sublicensees to comply with, all United States export control lawsand regulations, that it bears sole responsibility for any violation of suchlaws and regulations by itself or its sublicensees, and that it will indemnify,defend, and hold ACT harmless (in accordance with Section 12.1) for theconsequences of any such violation.

 

(c)                                  Tothe extent that any invention claimed in the ACT Licensed Property has beenpartially funded by the United States government, and only to the extentrequired by applicable laws and regulations, GTC agrees that any ACT Productsused or sold in the United States will be manufactured substantially in theUnited States or its territories.  Current law provides that if domestic manufacture is not commerciallyfeasible under the circumstances, ACT and/or the University may seek a waiverof this requirement from the relevant federal agency on behalf of GTC and, uponGTC’s request, shall cooperate with GTC in seeking such a waiver.

 

15.6                           Compliancewith Law by ACT. ACT shall comply with, and shall ensure that itssublicensees comply with, all local, state, federal and international laws andregulations relating to the development, manufacture, use, and sale of GTCProducts and GTC Services. ACT shall, and shall cause its sublicensees to,comply with the following;

 

(a)                                  ACTand its sublicensees shall obtain all necessary approvals from the FDA and anysimilar governmental authorities of any foreign jurisdiction in which ACT or apermitted sublicensee intends to make, use, or sell GTC Products or to performGTC Services.

 

(b)                                 ACTand its sublicensees shall comply with all United States laws and regulationscontrolling the export of certain commodities and technical data, includingwithout limitation all Export Administration Regulations of the United StatesDepartment of Commerce. Among other things, these laws and regulationsprohibit, or require a license for, the export of

 

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certain typesof commodities and technical data to specified countries. ACT hereby giveswritten assurance that it will comply with, and will cause its sublicensees tocomply with, all United States export control laws and regulations, that itbears sole responsibility for any violation of such laws and regulations byitself or its sublicensees, and that it will indemnify, defend, and hold GTCharmless (in accordance with Section 12.1) for the consequences of anysuch violation.

 

15.7                           NoEncumbrances.   GTC will not createor incur or cause to be incurred or to exist any lien, encumbrance, mortgage,pledge, charge, restriction or other security interest of any kind upon the ACTLicensed Property without the prior written consent of the University and ACT.ACT will not create or incur or cause to be incurred or to exist any lien,encumbrance, mortgage, pledge, charge, restriction or other security interestof any kind upon the GTC Licensed Property without the prior written consent ofGTC.

 

15.8                           Counterparts.This Agreement may be executed in any number of counterparts, each of whichshall be deemed an original but all of which together shall constitute one andthe same instrument.

 

15.9                           Headings.   All headings contained in this Agreement arefor convenience of reference only and shall not be considered in construingthis Agreement.

 

15.10                     BindingEffect. This Agreement shall be binding upon and inure to the benefit ofthe parties and their respective permitted successors and assigns. The partiesacknowledge that the University is a third party beneficiary of the applicableprovisions of Sections 3.1, 4.3(a), 5.1, 8.2, 8.9(c), 9.2, 12.1, 12.2, 15.5(c),15.7, 15.10, and 15.14 hereof, with the right to enforce such provisionsagainst the applicable party.

 

15.11                     Amendmentand Waiver.   This Agreement may beamended, supplemented, or otherwise modified only by means of a writteninstrument signed by both parties. Any waiver of any rights or failure to actin a specific instance shall relate only to such instance and shall not beconstrued as an agreement to waive any rights or fail to act in any otherinstance, whether or not similar.

 

15.12                     Severability.In the event that any one or more of the provisions contained in this Agreementshall, for any reason, be held to be invalid, illegal or unenforceable in anyrespect, such invalidity, illegality or unenforceability shall not affect anyother provision of this Agreement, and all other provisions shall remain infull force and effect. If any of the provisions of this Agreement is held to beexcessively broad or invalid, illegal or unenforceable in any jurisdiction, itshall be reformed and construed by limiting and reducing it so as to beenforceable to the maximum extent permitted by law in conformance with itsoriginal intent.

 

15.13                     EntireAgreement. This Agreement, together with the UMASS License, constitute theentire agreement of the parties with regard to its subject matter, andsupersedes all previous written or oral representations, agreements andunderstandings between the parties. The parties acknowledge and agree thatthere are no representations, warranties, arrangements, promises or agreementsoutstanding between them, whether oral or in writing, other than thosecontained or referred to in this Agreement or the UMASS License.

 

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15.l4                        Publicity.Neither party, nor any of its Affiliates, shall originate any publicity, newsrelease or other public announcement (“Announcements”), written or oral,relating to this Agreement or the existence of an arrangement between theparties, without the prior written approval of the other party, which approvalshall not be unreasonably withheld, except as otherwise required by law. Anyreferences to the University in such Announcements shall be subject to theapproval of the University. The foregoing notwithstanding, ACT and GTC shallhave the right to make such Announcements without the consent of the otherparty or the University, as applicable, in any prospectus, offering memorandum,or other document or filing required by applicable securities laws or otherapplicable law or regulation, provided that such party shall have given theother party or the University, as applicable, at least ten (10) days’prior written notice of the proposed text for the purpose of giving the otherparty or the University, as applicable, the opportunity to comment on suchtext.

 

15.15                     No ImpliedLicenses.  No implied licenses are****granted pursuant to the terms of thisAgreement. No license rights shall be created by implication or estoppel.

 

15.16                     No Agency.   Nothing herein shall be deemed to constituteeither party as the agent or representative of the other party, or both partiesas joint venturers or partners for any 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. Neither party shall be responsible for the acts oromissions of the other party, and neither party will have authority to speakfor, represent or obligate the other party in any way without prior writtenauthority from the other party.

 

15.17                     Non-Solicitation.During the term of the hSA Program and for a period of one (1) yearthereafter, neither party may solicit any person who is employed by or aconsultant to the other party or any Affiliate of such party and who has workedon the hSA Program under this Agreement to terminate such person’s employmentby or consultancy to such party or such Affiliate. As used herein, the term “solicit”shall include, without limitation, requesting, encouraging, assisting orcausing, directly or indirectly, any such employee or consultant to terminatesuch person’s employment with or consultancy to such party or Affiliate.

 

15.18                     ProductMarking.   To the extent commerciallyfeasible, and consistent with prevailing business practices, all productsmanufactured or sold by either party under this Agreement will be marked withthe number of each issued patent of the other party that applies to suchproduct.

 

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**IN WITNESS WHEREOF**, the parties hereto and the University havecaused this Exclusive Development and License Agreement to be executed the dayand year first written above. The persons signing below warrant their authorityto sign the Agreement.

 
| GENZYME TRANSGENICS CORPORATION | ADVANCED CELL TECHNOLOGY, INC.             |
|---------------------------------|--------------------------------------------|
|                            |                                       |   |   |
|                            |                                       |   |   |
| By:                             | /s/ John B. Green                          |   | By: | /s/ Michael West |   |
|                            | *Signature*                                |   | *Signature *Michael West |   |
|                            | John  B. Green                             |   |   | PRES &  CEO |   |
|                            | *Printed Name*                             |   | *Printed Name* |   |
|                            | Vice President and Chief Financial Officer |   |   |   |   |
|                            | *Title*                                    |   | *Title* |   |
|                                 |                                            |  |  |  |  |  |  |

 

**CONSENT ANDAGREEMENT**

 

For value received, theUniversity hereby (a) consents to the sublicense by ACT to GTC of theUMASS Patent Rights under this Agreement, (b) agrees to be bound by theapplicable provisions of Sections 3.1, 4.3(a), 5.1, 8.9(c), 10.1, and 15.5hereof, and (c) affirms its representations, warranties, and covenants setforth in Section 8.2(c) hereof.

 

 
| THE UNIVERSlTY OF MASSACHUSETTS |                                           |
|---------------------------------|------------------------------------------------|
|                            |                                           |   |   |
|                            |                                           |   |   |
| By:                             | /s/ Joseph F.X. McGuirl                        |   |   |   |   |
|                            | *Signature*                                    |   |   |   |
|                            | Joseph F.X.  McGuirl                           |   |   |   |   |
|                            | *Printed Name*                                 |   |   |   |
|                            | Executive Director                             |   |   |   |   |
|                            | *Title*                                        |   |   |   |
|                            | Commercial Ventures and  Intellectual Property |   |   |   |
|                                 |                                                |  |  |  |  |  |  |

 

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