**Exhibit10.21**

 

EXCLUSIVE LICENSEAGREEMENT (ACT IP)

 

ThisExclusive License Agreement (“Agreement”) is made and entered into this 14thday of May, 2004 (the “Effective Date”), by and between Advanced CellTechnology, Inc., a Delaware corporation with offices located at OneInnovation Drive, Worcester, Massachusetts 01605 (“LICENSOR”), and PacGenCellco, LLC, a California limited liability company with offices located at 157Surfview Drive, Pacific Palisades, CA 90272 (“LICENSEE”) (LICENSOR and LICENSEEsometimes hereinafter referred to individually as a “Party” and collectively asthe “Parties”).

 

WITNESSETH

 

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

 

WHEREAS,LICENSEE desires to obtain an exclusive worldwide license under LICENSOR’srights in such technology in the FIELD; and

 

WHEREAS,LICENSOR is willing to grant such a license to LICENSEE upon the terms andconditions set forth below; and

 

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

 

ARTICLE 1- DEFINITIONS

 

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

 

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

 

1.2           “FIELD” shall mean (1) the research,development, manufacture and selling of human and non-human animal cells forcommercial research use, including small molecule and other drug testing andbasic research and (2) the manufacture and selling of human cells fortherapeutic and diagnostic use in the treatment of human (a) diabetes and (b) liverdiseases; but FIELD shall exclude applications involving the use of cells inthe treatment of tumors where the primary use of the cells is the destructionor reduction of tumors and does not involve regeneration of tissue or organfunction.

 

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1.3           “KNOW-HOW” means all compositions of matter,techniques and data and other know-how and technical information includinginventions (whether or not patentable), improvements and developments,practices, methods, concepts, trade secrets, documents, computer data, computercode, apparatus, clinical and regulatory strategies, test data, analytical andquality control data, formulation, manufacturing, patent data or descriptions,development information, drawings, specifications, designs, plans, proposalsand technical data and manuals and all other proprietary information that isowned or controlled by LICENSOR as of the Effective Date that relates tocloning technology or to any of the subject matter described in or claimed bythe PATENT RIGHTS and is relevant to the FIELD.  By way of illustration, but not in limitation,KNOW-HOW shall include commercial rights to any existing potential research products,including reagents, developed by LICENSOR in the course of its in-houseresearch.  An example of this is theproprietary culture medium developed by LICENSOR in the course of thedevelopment of LICENSOR’s proprietary ooplasmic transfer technology.

 

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

 

1.5           “LICENSED PRODUCT” means any product thatcannot be developed, manufactured, used, imported, exported, or sold without (i) infringing,in whole or in part, one or more VALID CLAIMS of the PATENT RIGHTS, or (ii) usingor incorporating some portion of the LICENSED TECHNOLOGY.

 

1.6           “LICENSED SERVICES” means any service, thedeveloping, using, performing, selling, offering for sale, importing orexporting of which by LICENSEE would, but for the licenses granted to LICENSEEin Article 2 of this Agreement, infringe a VALID CLAIM of the PATENTRIGHTS in the country in which any such service is so developed, used,performed, sold, offered for sale, imported or exported by LICENSEE.

 

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

 

1.8           “NET SALES” shall mean the amount billed orinvoiced by LICENSEE for the sale or provision of LICENSED PRODUCTS or LICENSEDPROCESSES or LICENSED SERVICES less:

 

a)             discounts, credits, allowances and rebatesallowed;

 

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

 

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

 

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d)            amounts allowed or credited on returns; and

 

e)             uncollected accounts.

 

1.9           “NEURONAL & HEART FIELD OPTION”means an option described in Section 15.18 hereof for LICENSEE tonegotiate terms for license to the LICENSED TECHNOLOGY for the field ofdiseases related to heart or neurodegenerative diseases

 

1.10         “PATENT RIGHTS” means (a) the patentapplications and patents identified on Exhibit A attached heretoand any patents that issue on said applications and (b) any divisions, continuations,extensions, reissues or reexaminations of any of the patents identified in the foregoingclause (a).  The Parties agree that Exhibit Amay be revised from time to time after the Effective Date to reflect changesthereto that result from the course of patent prosecution.

 

1.11         “PERSON” shall mean an individual,corporation, partnership, limited liability company, trust, business trust,association, joint stock company, joint venture, pool, syndicate, soleproprietorship, unincorporated organization, governmental authority or anyother form of entity not specifically listed herein.

 

1.12         “TERM” has the meaning set forth in Section 9.1.

 

1.13         “TERRITORY” means the entire world.

 

1.14         “VALID CLAIM” means a claim of any issued andunexpired patent within the PATENT RIGHTS which has not lapsed, becomeabandoned or been held permanently revoked, invalid, or unenforceable by adecision of a court or administrative or government authority or agency ofcompetent jurisdiction from which no appeal can be or has been taken within thetime allowed for such appeal, or a claim of a pending patent applicationincluded within the Licensed PATENT RIGHTS, which claim was filed in good faithand has not been abandoned or finally disallowed without the possibility ofappeal or refiling of such application.

 

Additionalterms may be defined throughout this Agreement.

 

ARTICLE 2 - GRANT

 

2.1           LICENSOR hereby grants to LICENSEE, andLICENSEE hereby accepts, subject to the terms and conditions hereof, a royaltybearing, exclusive license in the TERRITORY in the FIELD and under the LICENSEDTECHNOLOGY to (a) research, develop, make, have made, use, sell, offer forsale, import and export LICENSED PRODUCTS, (b) research, develop, use,practice, sell, offer for sale, import and export LICENSED PROCESSES and (c) develop,use, perform, sell, offer for sale, import and export LICENSED SERVICES.  By way of example, but not in limitation,LICENSEE shall have the right to use LICENSED TECHNOLOGY within the FIELD toproduce mammalian embryonic stem (ES) cells and to produce from those mammalian

 

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embryonic cells, differentiated cells for human therapeutic purposes orfor commercial research purposes, including drug screening assays, and toproduce pluripotent cells including ES cells, differentiated human cells forhuman diagnostic and therapeutic purposes and/or for commercial researchpurposes, including drug screening assays.

 

2.2           LICENSEE shall have the right to sublicensethe rights granted in Section 2.1 to third parties in connectionwith contracting with such third parties to (a) provide LICENSED PRODUCTmarketing and distribution services to LICENSEE on behalf of LICENSEE, (b) provideLICENSED SERVICES marketing services to LICENSEE on behalf of LICENSEE or (c) manufacturefor LICENSEE LICENSED PRODUCTS for sale by LICENSEE or a third party pursuantto the foregoing clause (a).

 

2.3           LICENSEE shall have the right to grantsublicenses beyond the scope of those described in Subsections 2.2(a), (b),and (c) without the express prior written approval of LICENSOR,however, LICENSOR shall be given at least 30 days prior written notice of an intentto sublicense and at least 30 days to comment on the text of the proposedsublicense agreement.  In any case, suchsublicenses shall meet the following conditions:

 

a)             the sublicensee shall not have the right togrant further sublicenses;

 

b)            the sublicense shall not be assignable withoutprior written approval by LICENSEE and LICENSOR; and

 

c)             the sublicense shall include fairconsideration.

 

2.4           Within thirty (30) business days of theEffective Date, LICENSOR shall provide and transfer to LICENSEE, in writingwhere practicable, all information and data relating to the LICENSED TECHNOLOGYas may be reasonably necessary and requested to allow LICENSEE to exploit thelicenses granted hereunder.  LICENSORshall work with LICENSEE in good faith to provide the necessary training for upto a total of 60 days, at LICENSOR’s facilities, necessary to allow LICENSEE toutilize the LICENSED TECHNOLOGY.  LICENSEEshall pay to LICENSOR all reasonable and customary expenses other than normaloperating expenses incurred by LICENSOR in providing such training andtechnology transfer, including but not limited to fees incurred to requestdocuments from patent counsel or the United States Patent and Trademark Office.

 

2.5           Notwithstanding anything stated herein,nothing in this Agreement shall be construed as preventing LICENSOR frompracticing the LICENSED TECHNOLOGY within the FIELD for non-commercial in-houseresearch purposes.

 

2.6           Notwithstanding anything stated herein,nothing in this Agreement shall be construed as preventing LICENSOR frompracticing the LICENSED TECHNOLOGY within the FIELD for non-commercial in-houseresearch purposes.  In the event thatLICENSOR requests that LICENSEE deliver to LICENSOR the LICENSED TECHNOLOGY orLICENSED PRODUCTS in the FIELD for research purposes, LICENSEE shall make theLICENSED

 

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TECHNOLOGY or LICENSED PRODUCTS available to LICENSOR on commerciallyreasonable terms.  In the event LICENSORrequires the use of collaborators in its research, LICENSEE shall also make suchLICENSED TECHNOLOGY OR LICENSED PRODUCTS available to such collaborator ifLICENSEE, in its**sole butreasonable discretion is satisfied that providing such items to a collaboratorwill not endanger its exclusive commercial control of such items or result intheir use by a competitor.

 

ARTICLE 3 - LICENSEEOBLIGATIONS RELATING TO COMMERCIALIZATION

 

3.1           LICENSEE shall use its commerciallyreasonable and diligent efforts to bring one or more LICENSED PRODUCTS,LICENSED PROCESSES or LICENSED SERVICES to market through an active anddiligent program for exploitation of the PATENT RIGHTS and to continue active,diligent marketing efforts for one or more LICENSED PRODUCTS, LICENSEDPROCESSES or LICENSED SERVICES throughout the TERM of this Agreement.

 

3.2           LICENSEE shall maintain minimum R&Drequirements to maintain exclusivity under this Agreement.  Commencing 30 months following the EffectiveDate hereof and until the launch of the first human cell-based therapeuticproduct, LICENSEE shall be required to invest a minimum of $400,000 per year inresearch and development of the FIELD covered by this Agreement or otheragreements with LICENSOR affecting the FIELD in order to maintain the exclusivelicense rights granted hereunder.  In theevent LICENSEE fails to perform this minimum expenditure in R&D in theFIELD during the course of a calendar year during the above- mentioned period,the license under this Agreement shall become nonexclusive and such minimumexpenditure for research and development shall be reduced to $200,000 per year.

 

3.3           LICENSEE shall maintain complete and accuraterecords of LICENSED PRODUCTS, LICENSED PROCESSES and LICENSED SERVICES that aremade, used, sold or performed by LICENSEE under this Agreement.  Not later than April 1st ofeach year following the Effective Date, LICENSEE shall furnish LICENSOR with asummary report on the progress of its efforts during the prior year to developand commercialize LICENSED PRODUCTS, LICENSED PROCESSES, or LICENSED SERVICES,including without limitation research and development efforts, efforts toobtain regulatory approval, marketing efforts (including LICENSED PRODUCTS,LICENSED PROCESSES and LICENSED SERVICES made, used, sold or performed) andsales figures, provided that such reports shall be deemed ConfidentialInformation (as defined in Section 10.1 herein) subject to theprovisions of Article 10 of this Agreement.

 

3.4           In the event that LICENSOR determines thatLICENSEE has not fulfilled its obligations under this Article 3,LICENSOR shall furnish LICENSEE with written notice of such determination.  Within thirty (30) days after receipt of suchnotice, LICENSEE shall (i) fulfill the relevant obligation, (ii) negotiatewith LICENSOR a mutually acceptable schedule of revised

 

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obligations, or (3) if LICENSEE disputes the alleged failure tofulfill its obligations, it shall promptly seek appropriate judicialdetermination of the matter and diligently pursue such action to a finaldetermination with all appropriate speed; failing which, LICENSOR shall havethe right, immediately upon written notice to LICENSEE, to terminate thisAgreement as provided in Section 9.2 hereof.

 

ARTICLE 4 *-*CONSIDERATION

 

4.1           Initial Payment.  Inpartial consideration of the license granted to LICENSEE from LICENSOR in Article 2of this Agreement, LICENSEE agrees to pay as a “License Fee” to LICENSOR$225,000 in a convertible promissory note in the form attached hereto as Exhibit B.

 

4.2           Royalties.

 

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

 

(i)            6% on therapeutics,

(ii)           3% on diagnostics, and

(iii)          10% on commercial research use.

 

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

 

c)             The obligation of LICENSEE to pay royaltiesor Sublicense Income (as defined in Section 4.5 herein) hereundershall terminate for each country in the TERRITORY concurrently with theexpiration or termination of the last applicable VALID CLAIM within the PATENTRIGHTS in such country in which the LICENSED PRODUCT, LICENSED PROCESS orLICENSED SERVICE is, (as applicable), used, practiced, performed, sold, offeredfor sale, imported, exported or manufactured.

 

4.3           Minimum Royalties.  Within2 business days from the Effective Date hereof, LICENSEE shall pay to LICENSORa minimum royalty fee of $175,000 in cash or by wire transfer.  In addition, commencing 12 months followingthe Effective Date, LICENSEE shall pay to LICENSOR additional minimum royaltyfees equal to the difference between total Royalties actually paid in thepreceding 12 months and the following minimum amounts:

 

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At12 months, $10,000

At24 months, $25,000

At36 months, $40,000

Annuallythereafter, $50,000.

 

4.4           Stacking Royalties.  Withthe exception of minimum royalties due to LICENSOR, if LICENSEE, its Affiliatesor sublicensees are required to pay royalties relating to any additional intellectualproperty from LICENSOR in order to exercise its rights hereunder to make, have made,use or sell any Product, then LICENSEE shall have the right to credit a pro-ratedportion of such royalty payments against the royalties owing to LICENSOR under Section 4.2of this Agreement with respect to sales of such Product such that in no eventshall the total of royalty payments that are due to LICENSOR in such royaltyperiod exceed the payments payable under Subsection 4.2(a) above.  Prorations shall be made in the same manner asspecified for combination products under Section 4.9 below.

 

4.5           Sublicense Income.  LICENSEEshall pay to LICENSOR a total of Thirty Three percent (33%) of all SublicenseIncome.  “Sublicense Income” meansconsideration that LICENSEE receives for the sublicense of rights that aregranted LICENSEE under Article 2, including without limitationlicense fees, milestone payments, equity payments, up front fees, success fees,and license maintenance fees.

 

4.6           Stacking Sublicense Income.  Thefees payable on Sublicense Income under Section 4.5 above shall bein addition to any royalties specified elsewhere in this Article 4,but if LICENSEE is obligated to pay or has paid to LICENSOR similar fees onSublicense Income under another license agreement with respect to the FIELD,then LICENSEE shall have the right to pro-rate such fees against the fees owingto LICENSOR under this Agreement such that in no event shall the total of feesdue from LICENSEE, as a result of Sublicense Income, to LICENSOR exceed thepayments payable under Section 4.5.  Pro-rating of payments shall be made in theratio of the minimum royalties payable under this Agreement to the minimum royaltiespayable under any other agreement covered hereby under which fees on SublicenseIncome are owed.

 

4.7           Milestone Payments.  Uponthe launch of a commercial therapeutic product based on the LICENSEDTECHNOLOGY, LICENSEE shall pay additional Milestone Payments totaling$1,750,000 on the following schedule:

 

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

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

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

 

4.8           Stacking Milestone Payments.  Themilestone payments shall be in addition to any royalties specified elsewhere inthis Article 4, but shall not apply to diagnostic, commercial research,or any other non-therapeutic uses.  IfLICENSEE is obligated to pay or has paid to LICENSOR similar Milestone Paymentsunder another license agreement with respect to the

 

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FIELD, then LICENSEE shall have the right to pro-rate such MilestonePayments against the Milestone Payments owing to LICENSOR under this Agreementsuch that in no event shall the total of all Milestone Payments due fromLICENSEE to LICENSOR exceed the amounts stated in Section 4.7.  Pro-rating of payments shall be made in theratio of the minimum royalties payable under this Agreement to the minimumroyalties payable under any other agreement covered hereby under whichMilestone Payments are owed.

 

4.9           Combination Product.  Inthe event a Product is sold in a combination product with other devices orbiologically active components, NET SALES, for purposes of royalty payments onthe combination product, shall be calculated by multiplying the NET SALES ofthat combination by the fraction A/B, where A is the gross selling price of theProduct sold separately and B is the gross selling price of the combinationproduct.  In the event that no suchseparate sales are made by LICENSEE, its Affiliates or permitted sublicensees,NET SALES for royalty determination shall be calculated by multiplying NETSALES of the combination by the fraction C/(C+D), where C is the fullyallocated cost of the Product and D is the fully allocated cost of such otherbiologically active components.

 

4.10         Payments in U.S. Currency.  Allpayments due under this Agreement shall be paid in cash to LICENSOR and allpayments shall be made in United States currency.  Conversion of foreign currency to U.S. dollarsshall be made at the conversion rate reported in The Wall Street Journalon the last working day of the calendar quarter to which the payment relates.

 

4.11         Taxes.  Subject to the limits of Section 1.8hereof, all payments due hereunder shall be paid in full without deduction oftaxes or other fees which may be imposed by any government and which shall bepaid by LICENSEE; provided, however, that any withholding tax required to bewithheld by LICENSEE on royalty payments under the laws of any country in the TERRITORYon behalf of LICENSOR will be timely paid by LICENSEE to the appropriate governmentalauthority, and LICENSEE will furnish LICENSOR with proof of payment of such tax. Any such tax actually withheld may bededucted from royalty payments due to LICENSOR under this Agreement.  If at any time legal restrictions prevent theprompt remittance of part or all of any payments owed by LICENSEE to LICENSORhereunder with respect to any country in the TERRITORY, payment shall be madethrough any lawful means or methods that may be available, and as LICENSEEshall reasonably determine is appropriate.

 

4.12         Overdue Payments.  Anypayments to be made by LICENSEE hereunder that are not paid on or before thedate such payments are due under this Agreement shall bear interest, to theextent permitted by law, at two percentage points above the Prime Rate ofinterest as reported in The Wall Street Journal on the date payment isdue, with interest calculated based on the number of days that payment isdelinquent.

 

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ARTICLE 5 - REPORTS ANDRECORDS

 

5.1           LICENSEE shall keep full, true and accuratebooks of account containing all particulars that may be necessary for thepurpose of showing the amounts payable to LICENSOR hereunder and to enable thereports provided under Section 5.2 to be verified.  Said books of account shall be kept atLICENSEE’S principal place of business.  Saidbooks and the supporting data shall be open upon reasonable advance notice (butnot less than five (5) business days notice and no more frequently thanonce per calendar year) for three (3) years following the end of the calendaryear to which they pertain, to the inspection of LICENSOR or its agents for thepurpose of verifying LICENSEE’s royalty and Sublicense Income statement orcompliance in other respects with this Agreement.  If any such audit determines an error in anyroyalty or Sublicense Income payment, LICENSEE shall pay to LICENSOR, withinthirty (30) days of the discovery of the error, (a) all deficiencies inroyalty or Sublicense Income payments, (b) interest on such deficienciesfrom the date such royalty or Sublicense Income payment was due until the datepaid at the rate set forth in Section 4.10 above, and (c) ifsuch error is in excess of five percent (5%) of any royalty or SublicenseIncome payment, the cost of the audit.  Inall other cases, the costs of the audit shall be paid for by LICENSOR.  All information disclosed pursuant to an auditshall be treated as Confidential Information (as defined in Section 10.1herein) and shall not be disclosed to any third party or used for any purposeother than to determine the correctness of LICENSEE’s royalty and SublicenseIncome statement or compliance in other respects with this Agreement

 

5.2           After the first commercial sale of a LICENSEDPRODUCT, LICENSED PROCESS, or LICENSED SERVICE, LICENSEE, within forty-five(45) days after March 31, June 30, September 30 and December 31of each year, shall deliver to LICENSOR a true and accurate report, giving suchparticulars of the business conducted by LICENSEE and its permitted sublicenseesduring the preceding three-month period under this Agreement as shall be pertinentto a royalty and Sublicense Income accounting hereunder.  Without limiting the generality of theforegoing, these reports shall include at least the following:

 

a)             the number of LICENSED PRODUCTS manufacturedand sold by LICENSEE and all sublicensees;

 

b)            total billings and the amounts actuallyreceived for LICENSED PRODUCTS sold by LICENSEE and all sublicensees;

 

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

 

d)            the deductions applicable as provided in Section 1.8;and

 

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

 

Thereports shall provide the above-identified information by product, process, orservice type.

 

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5.3           With each such report submitted, LICENSEEshall pay to LICENSOR the royalties and Sublicense Income due and payable forsuch three-month period.  If no royaltiesor Sublicense Income shall be due, LICENSEE shall so report.

 

ARTICLE 6 - PATENTPROSECUTION

 

6.1           LICENSOR shall be solely responsible for thecontinued prosecution of pending patent applications included in the PATENTRIGHTS and the issuance of such applications after allowance.  The prosecution, filing and maintenance of allpatents and applications shall be the primary responsibility of LICENSOR.  LICENSEE agrees to cooperate fully withLICENSOR, as requested by LICENSOR and at LICENSOR’s expense, in thepreparation, filing, prosecution, and maintenance of the patent applicationsand patents included in the PATENT RIGHTS.  With respect to Australia, Canada, Europe,Mexico, Japan and Israel, LICENSEE shall pay to LICENSOR on or before the duedate one half (1/2) of any future annuity and maintenance fees with respect tofilings stemming from applications 10/227,282, PCT/US02/26945 and 60/539,796,provided LICENSOR notifies LICENSEE of the amount of such payments due at least30 days prior to their due date.

 

ARTICLE 7 - PROSECUTION OF INFRINGERSAND DEFENSE OF PATENT RIGHTS

 

TheParties agree to notify each other in writing of any actual or threatenedinfringement by a third party of the PATENT RIGHTS or of any claim of invalidity,unenforceability, or non-infringement of the PATENT RIGHTS.  LICENSOR shall have the sole responsibility toprosecute or defend such claims, as applicable.  LICENSEE shall, if requested, providereasonable assistance to LICENSOR in connection with the prosecution or defenseof such claims.

 

ARTICLE 8 -INDEMNIFICATION

 

8.1           Indemnification of the LICENSOR.  LICENSEEshall be responsible for and shall indemnify, defend, and hold harmlessLICENSOR, its agents, attorneys, representatives, third party beneficiaries andtheir respective heirs, executors, successors and assigns (collectively, the “LICENSORIndemnitees”) from and against all liabilities of any kind whatsoever,including legal expenses and reasonable attorneys’ fees, incurred or imposedupon any of the LICENSOR Indemnitees in connection with or as a consequence ofany claims (including third party claims), suits, actions, demands or judgmentsarising out of the death of or injury to any person or persons or out of anydamage to property resulting from the development, production, manufacture,sale, use, performance, rendering, consumption or advertisement of the LICENSEDPRODUCT(s), LICENSED PROCESS(es), and/or LICENSED SERVICE(s), or arising fromany obligation, act

 

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or omission performed or failed to be performed hereunder, or from abreach of any representation or warranty of LICENSEE hereunder unless and tothe extent that such liability arises solely from any action of LICENSOR or anyof its Affiliates.  If the exercise ofLICENSEE’s rights under this Agreement in any country in the TERRITORY is thesubject of a bona fide claim by a third party, filed in a court of competentjurisdiction after the date hereof, that the exercise of such rights infringesor conflicts with any intellectual property rights of such third party (a “ThirdParty Infringement Claim”), then LICENSEE shall not have any of the rightsgranted herein in such country and shall have no obligation to pay LICENSOR anyfurther payments under Article 4 of this Agreement with respect toany country of the TERRITORY until such claim is resolved by properadjudication or settlement permitting LICENSEE to exercise LICENSEE’s rightsunder this Agreement in the applicable country of the TERRITORY.  Notwithstanding anything herein to thecontrary, LICENSOR covenants that it will not (a) assert or bring anysuit, action, claim or other proceeding against LICENSEE based on, in whole orin part, LICENSEE’s exercise of LICENSEE’s rights, in accordance with the termsand conditions of this Agreement, with respect to the LICENSED TECHNOLOGYand/or (b) join in any third party suit, action, claim or other proceedingagainst LICENSEE based on, in whole or in part, any intellectual propertyrights (including without limitation, patent rights and/or know how) owned bythe applicable third party, so long as LICENSEE is not in violation of thisAgreement.

 

8.2           Indemnification of the LICENSEE.  LICENSORshall be responsible for and shall indemnify, defend, and hold harmlessLICENSEE and the officers, directors, shareholders, employees, agents,attorneys, representatives, and Affiliates, and their respective heirs,executors, successors and assigns (the “LICENSEE Indemnitees”) from and againstall liabilities of any kind whatsoever, including legal expenses and reasonableattorneys’ fees, incurred or imposed upon any of the LICENSEE Indemnitees inconnection with or as a consequence of any claims (including third partyclaims), suits, actions, demands or judgments arising out of, directly or indirectly,or in any way relating to: (a) any breach by LICENSOR of anyrepresentation, warranty, covenant or obligation set forth in this Agreement;or (b) arising from LICENSOR’s ownership, management, control, use ordisposition of the LICENSED TECHNOLOGY unless and to the extent that suchliability arises solely from any action of LICENSEE or any of its Affiliatesafter the Effective Date.

 

8.3           Demands for Third Party Claims.  Eachindemnified Party hereunder (an “Indemnified Party”) agrees that promptly uponits discovery of facts giving rise to a claim for indemnity under thisAgreement, including the receipt of any demand, assertion, claim, action or proceeding,judicial or otherwise, by any third party (being referred to herein as a “Claim”),with respect to any matter as to which it claims to be entitled to indemnityunder the provisions of this Agreement, it will give prompt notice thereof inwriting to the Indemnifying Party (the “Indemnifying Party”), together with astatement of such information respecting any of the foregoing as it shall have. Such notice shall include a formaldemand for indemnification under this Agreement.

 

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

 

8.5           Cooperation.  If requested by theIndemnifying Party, the Indemnified Party agrees to cooperate with theIndemnifying Party and its counsel in contesting any Claim that the IndemnifyingParty elects to contest or, if appropriate, in making any counterclaim againstthe PERSON asserting the Claim, or any cross-complaint against any PERSON, andthe Indemnifying Party will reimburse the Indemnified Party for any expenses incurredby it in so cooperating.

 

8.6           Right to Participate.  TheIndemnified Party agrees to afford the Indemnifying Party and its counsel theopportunity to be present at, and to participate in, conferences with any PERSON,including governmental authorities, asserting any Claim against the IndemnifiedParty or conferences with representatives of or counsel for such PERSON.

 

8.7           Payment of Damages.  TheIndemnifying Party shall pay to the Indemnified Party in immediately availablefunds any amounts to which the Indemnified Party may become entitled by reasonof the provisions of this Agreement, such payment to be made within five (5) daysafter any such amounts are finally determined either by mutual agreement of theParties hereto or pursuant to the final non-appealable judgment of a court ofcompetent jurisdiction.

 

8.8           Independent Indemnities.  TheParties acknowledge and agree that each of the indemnities under Sections8.1 and 8.2 may be relied upon independently.

 

8.9           Insurance.  LICENSEE and LICENSOR mutuallyagree to maintain insurance or self-insurance that is reasonably adequate tofulfill any potential obligation to the Indemnified Parties.  LICENSEE and LICENSOR shall continue tomaintain such insurance or self-insurance

 

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during the term of this Agreement and after the expiration ortermination of this Agreement for a period of five (5) years.  Each Party shall provide to the other Party,upon request, proof of any such insurance policy maintained by such Party.

 

ARTICLE 9 – TERMINATION

 

9.1           The term of this Agreement (“TERM”) shallcommence on the Effective Date and continue until the expiration of the lastVALID CLAIM within the PATENT RIGHTS to expire, unless sooner terminated asprovided in this Article 9; provided that LICENSEE’s obligation to payroyalties or Sublicense Income on NET SALES in any country will terminatepursuant to Subsection 4.2(c) (subject to LICENSEE’sobligations under Section 9.4 herein).

 

9.2           If either Party commits a material breach ofa material term of this Agreement (including any failure to make any paymentdue under this Agreement), the non-breaching Party shall have the right toterminate this Agreement effective on thirty (30) days prior written notice tothe Party in breach, unless such breach is cured prior to the expiration ofsuch thirty (30) day period.

 

9.3           LICENSEE shall have the right to terminatethis Agreement at any time on thirty (30) days prior notice to LICENSOR, andupon payment of all amounts due LICENSOR through the effective date of thetermination.

 

9.4.          Notwithstanding anything herein to thecontrary, in the event that this Agreement is terminated by LICENSOR pursuantto Section 9.2 or by LICENSEE pursuant to Sections 9.2 or 9.3,LICENSEE shall retain a license to rights granted in Article 2 tothe extent reasonably necessary to sell any LICENSED PRODUCTS existing or underproduction and to perform LICENSED PROCESSES or LICENSED SERVICES related tosuch LICENSED PRODUCTS or that are in process, subject to the terms of thisAgreement (including without limitation the obligation to pay royalties under Article 4),provided that LICENSEE shall complete and sell all such work-in-progress and inventorywithin six (6) months after the effective date of termination.

 

9.5           Upon the expiration of the TERM of thisAgreement LICENSEE shall have a fully paid-up, non-exclusive, irrevocable,royalty free license under the rights granted in Article 2.

 

9.6           Nothing herein shall be construed to releaseeither Party from any obligation that accrued prior to expiration or anytermination of this Agreement.  Thefollowing provisions shall survive any termination or any expiration of theTERM of this Agreement: this Section 9.6 and Articles/Sections 1, 4, 5,8, 9.4, 10, 11, 12, 13, 15.1, 15.2, 15.5, 15.6, 15.7, 15.8, 15.10, 15.15 and15.16, and any other provision which by its nature is intended to surviveany such termination.

 

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ARTICLE 10 – CONFIDENTIALITYAND NON-DISCLOSURE

 

10.1         Confidential Information; Non-Disclosure.  “ConfidentialInformation” shall mean any technical, business, financial, customer or otherinformation disclosed by one Party (the “Disclosing Party”) to the other Party(the “Receiving Party”) pursuant to this Agreement which is marked “Confidential”or “Proprietary,” or which, under all of the given circumstances, oughtreasonably to be treated as confidential information of the Disclosing Party.  Such information may be disclosed in oral,visual or written form (including magnetic, optical or other media).  Except as expressly provided in Section 10.2below, each Party’s Confidential Information specifically includes withoutlimitation the respective Party’s business plans and business practices, the termsof this Agreement, scientific knowledge, research and development or know-how,processes, inventions, techniques, formulae, products and product plans,business operations, customer requirements, designs, sketches, photographs,drawings, specifications, reports, studies, findings, data, plans or otherrecords, biological materials, software, margins, payment terms and salesforecasts, volumes and activities, designs, computer code, technical information,costs, pricing, financing, business opportunities, personnel, and informationof LICENSOR or LICENSEE relating to the LICENSED PROCESSES, LICENSED PRODUCTS orLICENSED SERVICES whether or not such information is marked or identifiedprovided that the Disclosing Party provides notice in writing reasonablyidentifying such Confidential Information within 30 days of disclosure.  Except to the extent expressly authorized bythis Agreement or by other prior written consent by the Disclosing Party, theReceiving Party, during the term of this Agreement, and thereafter, shall: (i) treatas confidential all Confidential Information of the other Party; (ii) useConfidential Information only for exercising the rights and fulfilling theobligations set forth in this Agreement, (iii) implement reasonableprocedures to prohibit the disclosure, unauthorized duplication, misuse orremoval of the Disclosing Party’s Confidential Information; (iv) notdisclose Confidential Information to any third party, and (v) only disclose theConfidential Information to (a) those of its employees who have a need toknow Confidential Information in order to exercise the rights and fulfill theobligations set forth in this Agreement and (b) legal and professionaladvisors and existing and potential investors and their legal and professionaladvisors, each of which is bound by a written agreement (or in the case of attorneysor other professional advisors, formal ethical duties) requiring such advisorsand investors to treat, hold and maintain such Confidential Information inaccordance with the terms and conditions of this Agreement, or (c) recipientsof offering documents in connection with any offering of securities where suchdisclosure is, in the opinion of counsel for the Disclosing Party, reasonablyrequired to comply with the investment disclosure laws of any applicablejurisdiction.  Without limiting theforegoing, the Receiving Party shall protect the Disclosing Party’s ConfidentialInformation using at least the same procedures and degree of care that it usesto prevent the disclosure of its own confidential information of likeimportance, but in no event less than reasonable care.

 

10.2         Exceptions.  The Receiving Party shall haveno obligation or liability to the Disclosing Party with regard to anyConfidential Information of the Disclosing Party: (i) that was publiclyknown and available at the time it was disclosed or becomes publicly known and

 

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available through no fault, action, or inaction of the Receiving Party;(ii) was known to the Receiving Party, without restriction, at the time ofdisclosure as shown by the files of the Receiving Party in existence at thetime of disclosure; (iii) is disclosed with the prior written approval ofthe Disclosing Party; (iv) was independently developed by the ReceivingParty without any use of the disclosing party’s Confidential Information,provided, that the Receiving Party can demonstrate such independent developmentby documented evidence prepared contemporaneously with such independent development;(v) is disclosed pursuant to the order or requirement of a court,administrative agency, or other governmental body, provided that the ReceivingParty shall provide prompt notice thereof and reasonable assistance to theDisclosing Party to enable the Disclosing Party to seek a protective order orotherwise prevent such disclosure, and provided further that such disclosure islimited to the extent necessary to comply with such order and the informationshall otherwise be treated as Confidential Information; or (vi) that isprovided to the Receiving Party by an independent third party without violatingany confidentiality obligation to the Disclosing Party.

 

10.3         Injunctive Relief.  LICENSORand LICENSEE acknowledge and agree that any breach of the confidentialityobligations imposed by this Article 10 will constitute immediateand irreparable harm to the Disclosing Party and/or its successors and assigns,which cannot adequately and fully be compensated by money damages and willwarrant, in addition to all other rights and remedies afforded by law,injunctive relief, specific performance, and/or other equitable relief.  The Disclosing Party’s rights and remedieshereunder are cumulative and not exclusive.  The Disclosing Party shall also be entitled toreceive from the Receiving Party the costs of enforcing this Article 10,including reasonable attorneys’ fees and expenses of litigation.

 

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

 

10.5         Survival.  The obligations of LICENSORand LICENSEE under this Article 10 shall survive any expiration ortermination of this Agreement.

 

ARTICLE 11 - PAYMENTS,NOTICES, AND OTHER COMMUNICATIONS

 

Anypayment, notice or other communication pursuant to this Agreement shall be inwriting and sent by certified first class mail, postage prepaid, return receiptrequested, or by nationally recognized overnight carrier addressed to theParties at the following addresses or such other addresses as such Partyfurnishes to the other Party in accordance with this paragraph.

 

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Such notices, payments, or other communications shall be effective uponreceipt.

 
| In the case of LICENSOR: |
|--------------------------|
|                     | Advanced Cell  Technology, Inc. |
|                     | One  Innovation Drive |
|                     | Worcester,  MA 01605 |
|                     | Attention: Michael D.  West, Ph.D., President |
|                     |   |
| With a copy to:          |
|                     | Pierce Atwood |
|                     | One Monument Square |
|                     | Portland,  ME 04101 |
|                     | Attention: William L.  Worden, Esq. |
|                     |   |
| In the case of LICENSEE: |
|                     | PacGen Cellco, LLC. |
|                     | 157 Surfview Drive |
|                     | Pacific Palisades, CA  90272 |
|                     | Attention: Kenneth Aldrich |
|                     |   |
| With a copy to:          |
|                     | Gray Cary Ware &  Freidenrich |
|                     | 4365 Executive Drive,  Suite 1100 |
|                     | San Diego, CA 92121-2133 |
|                     | Attention: Lisa Haile |

 

ARTICLE 12 -RESPRESENTATIONS AND WARRANTIES OF LICENSOR

 

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

 

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

 

12.2         No Violations.  Theexecution, delivery and performance of this Agreement by LICENSOR and theconsummation by LICENSOR of the transactions contemplated hereby does not,: (a) violateany statute, ordinance, rule or regulation applicable to LICENSOR or bywhich any of the LICENSED TECHNOLOGY may be bound; (b) violate any order,judgment or decree of any court or of any Governmental Authority or regulatorybody, agency or authority applicable to LICENSOR or by which any of theLICENSED TECHNOLOGY may be bound; (c) require any filing by LICENSOR with,or require LICENSOR to obtain any permit, consent or approval of, or requireLICENSOR to give any notice to, any Governmental Authority or regulatory body,

 

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agency or authority; or (d) result in a violation or breach byLICENSOR of, conflict with, constitute a default by LICENSOR (or give rise toany right of termination, cancellation, payment or acceleration) under orresult in the creation of any Encumbrance upon any of the LICENSED TECHNOLOGY.

 

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

 

12.4         Disclosure.  Neither these representationsand warranties made by LICENSOR pursuant to this Agreement nor any of theexhibits, schedules or certificates attached hereto or delivered in accordancewith the terms hereof knowingly contains any misstatement of fact or omits anystatement of fact necessary in order to make the statements contained hereinand therein not misleading in light of the circumstances under which they weremade.

 

12.5         Copies of Documents.  LICENSORhas caused to be made available for inspection and copying by LICENSEE and itsadvisers, true, complete and correct copies of all documents in LICENSOR’Spossession referred to in any schedule attached hereto.

 

12.6         Broker’s or Finder’s Fees.  Noagent, broker, person or firm acting on behalf of LICENSOR is, or will be,entitled to any fee, commission or broker’s or finder’s fees for which theLICENSEE may be liable in connection with this Agreement or any of thetransactions contemplated hereby.

 

12.7         LICENSED TECHNOLOGY.

 

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

 

(b)           Exhibit A identifies each patent orregistration which has been issued to LICENSOR with respect to any of theLICENSED TECHNOLOGY and identifies each pending patent application orapplication for registration which

 

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LICENSORhas made with respect to any of the LICENSED TECHNOLOGY.  LICENSOR has made available to LICENSEEcorrect and complete copies of all such patents, registrations and applications(as amended to-date) in LICENSOR’s possession and has made available toLICENSEE correct and complete copies of all other written documentation in LICENSOR’spossession evidencing ownership and prosecution (if applicable) of each suchitem.

 

(c)           Exhibit A identifies each item ofLICENSED TECHNOLOGY that is assigned to LICENSOR or that LICENSOR uses pursuantto license, sublicense, agreement, or permission.  LICENSOR has made available to LICENSEEcorrect and complete copies of all such licenses, sublicenses, agreements,patent prosecution files and permissions (as amended to-date) in LICENSOR’spossession.  With respect to each item ofLICENSED TECHNOLOGY required to be identified in Exhibit A and to theknowledge of LICENSOR: (i) the license, sublicense, agreement, orpermission covering the item is legal, valid, binding, enforceable, and in fullforce and effect; (ii) the license, sublicense, agreement, or permissionwill continue to be legal, valid, binding, enforceable, and in full force andeffect on identical terms following the consummation of the transactionscontemplated hereby; (iii) no Party to the license, sublicense, agreement,or permission is in breach or default, and no event has occurred which withnotice or lapse of time would constitute a breach or default or permittermination, modification, or acceleration thereunder; (iv) no party tothe license, sublicense, agreement, or permission has repudiated any provisionthereof; (v) the underlying item of LICENSED TECHNOLOGY is not subject toany outstanding lien or encumbrance, injunction, judgment, order, decree,ruling, or charge; (vi) no action, suit, proceeding, hearing,investigation, charge, complaint, claim, or demand is pending or is threatenedwhich challenges the legality, validity, or enforceability of the underlyingitem of LICENSED TECHNOLOGY; and (vii) LICENSOR has not granted anysublicense or similar right to the LICENSED TECHNOLOGY within the FIELD.

 

12.8         Survival of Representations and Warranties.

 

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

 

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(b)           After a representation and warranty hasexpired, as provided in Subsection 12.8(a), no claim forclaims or costs may be made or prosecuted by any Person who would have beenentitled to claims or costs on the basis of that representation and warrantyprior to its termination and expiration, provided that no claim presented inwriting for claims or costs to the Person or Persons from which or whom thosedamages are sought on the basis of that representation and warranty prior toits termination and expiration will be affected in any way by that terminationand expiration.

 

12.9         EXCEPT AS OTHERWISE EXPRESSLY SET FORTHIN THIS AGREEMENT, LICENSOR, ITS DIRECTORS, OFFICERS, EMPLOYEES, AND AFFILIATESMAKE NO REPRESENTATIONS AND EXTEND NO WARRANTIES OF ANY KIND, EITHER EXPRESS ORIMPLIED, INCLUDING BUT NOT LIMITED TO WARRANTIES OF MERCHANTABILITY, FITNESSFOR A PARTICULAR PURPOSE, VALIDITY OF PATENT RIGHTS, ISSUED OR PENDING, AND THEABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE.  NOTHING IN THIS AGREEMENT SHALL BE CONSTRUEDAS A REPRESENTATION MADE OR WARRANTY GIVEN BY LICENSOR THAT THE PRACTICE BY LICENSEEOF THE LICENSE GRANTED HEREUNDER SHALL NOT INFRINGE THE PATENT RIGHTS OF ANYTHIRD PARTY.

 

ARTICLE 13—REPRESENTATIONSAND WARRANTIES OF LICENSEE.

 

LICENSEErepresents and warrants to LICENSOR as follows:

 

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

 

13.2         Authorization and Validity of Agreement.  LICENSEEhas full power and authority, including full corporate power and authority, toexecute and deliver this Agreement, to

 

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perform its obligations hereunder and to consummate the transactionscontemplated hereby.  Without limitingthe foregoing, the execution, delivery and performance of this Agreement byLICENSEE and the consummation by it of the transactions contemplated hereby,have been duly authorized and approved by the members and managers of LICENSEE,and no other action on the part of LICENSEE or its officers, directors orshareholder is necessary to authorize the execution, delivery and performanceof this Agreement by LICENSEE and the consummation of the transactionscontemplated hereby.  This Agreement hasbeen duly executed and delivered by LICENSEE and is a valid and bindingobligation of LICENSEE enforceable against it in accordance with its terms,except to the extent that its enforceability may be subject to applicablebankruptcy, insolvency, reorganization, moratorium and similar laws affectingthe enforcement of creditors’ rights generally and by general equitableprinciples.

 

13.3         Consents and Approvals; No Violations.  Theexecution, delivery and performance of this Agreement by LICENSEE and theconsummation by LICENSEE of the transactions contemplated hereby will not, withor without the giving of notice or the lapse of time or both; (a) violate,conflict with, or result in a breach or default under any provision of theorganizational documents of LICENSEE; (b) violate any statute, ordinance, rule orregulation applicable to LICENSEE, (c) violate any order, judgment ordecree of any court or of any governmental or regulatory body, agency orauthority applicable to LICENSEE or by which any of the LICENSED TECHNOLOGY maybe bound; or (d) require any filing by LICENSEE with, or require LICENSEEto obtain any permit, consent or approval of, or require LICENSEE to give anynotice to, any governmental or regulatory body, agency or authority, exceptfilings, if any, which may be required under the “Blue Sky” laws ofMassachusetts or as may be required in the future to comply with governmentalregulations governing the production and sale of products by LICENSEE as itconducts its business.

 

13.4         Survival of Representations and Warranties.

 

(a)           Except as otherwise provided herein,notwithstanding any investigation at any time made by or on behalf of any Partyhereto, the representations and warranties set forth herein and in anycertificate delivered in connection herewith with respect to any of those representationsand warranties will survive the Effective Date until the longer to occur of: (i) two(2) years or (ii) the expiration of the applicable statutes oflimitation, including all periods of extension and tolling whereupon they willterminate and expire.

 

(b)           After a representation and warranty hasexpired, as provided in Subsection 13.4(a), no claim for claims orcosts may be made or prosecuted by any Person who would have been entitled toclaims or costs on the basis of that representation and warranty prior to itstermination and expiration, provided that no claim presented in writing forclaims or costs to the Person or Persons from which or whom those damages aresought on the basis of that

 

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representation and warranty prior to itstermination and expiration will be affected in any way by that termination andexpiration.

 

ARTICLE 14 – LIMITATIONOF LIABILITY

 

EXCEPTFOR ANY LIABILITY TO ANY THIRD PARTIES PURSUANT TO ARTICLE 8 OR TO A PARTYPURSUANT TO ARTICLES 12 AND 13 OF THIS AGREEMENT, IN NO EVENT SHALL LICENSOR ORLICENSEE OR THEIR, ITS DIRECTORS, OFFICERS, EMPLOYEES OR AFFILIATES BE LIABLEFOR INCIDENTAL OR CONSEQUENTIAL DAMAGES OF ANY KIND, INCLUDING ECONOMIC DAMAGEOR INJURY TO PROPERTY AND LOST PROFITS, REGARDLESS OF WHETHER LICENSOR ORLICENSEE SHALL BE ADVISED, SHALL HAVE OTHER REASON TO KNOW, OR IN FACT SHALLKNOW OF THE POSSIBILITY OF SUCH DAMAGES.

 

ARTICLE 15 -MISCELLANEOUS PROVISIONS

 

15.1         CORPORATE PARTNERSHIPS.  In the event LICENSEE enters into a corporate partnershipfor the joint development of any of the LICENSED TECHNOLOGY, and LICENSEEsublicenses the LICENSED TECHNOLOGY to a third party, then payments requiredhereunder shall not include funds provided for sponsored research or equityinvestments by any third party so long as such payments do not constitute amajority of funds transferred by such third party.  However if the sponsored research involvesfees in excess of industry standard reimbursement for FTEs or any equity investmentin excess of fair market value, LICENSEE shall pay to LICENSOR a royalty onsuch excess fees calculated at the rates specified herein.

 

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

 

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15.3         FUTURE TECHNOLOGY LICENSES.  LICENSOR acknowledges that it is continuingto develop cell-based technology, the existence or significance of which it maynot have disclosed to LICENSEE.  Therefore,LICENSOR further agrees that in the event any of its technology now perfectedor pending as of the date of this agreement but not specifically enumeratedherein would inhibit or adversely affect the commercial use by LICENSEE of the PATENTRIGHTS in the field, LICENSOR shall waive any claim of infringement to theextent necessary to permit LICENSEE to continue the use of the PATENT RIGHTSunder this Agreement.  In addition, LICENSORagrees to license to LICENSEE on a non-exclusive basis for uses in the FIELDS,including any rights acquired under Section 15.18 hereof, the rights to anytechnology it currently owns or has licensed or develops or licenses in thefuture that is applicable to such FIELDS (but specifically excludingapplications involving the use of cells in the treatment of tumors where theprimary use of the cells is the destruction or reduction of tumors and does notinvolve regeneration of tissue or organ function). Such license shall provide forroyalty payments at the same rate as LICENSEE’S royalty to LICENSOR hereunderas provided in Section 4.2(a).  Suchlicense will be sublicensable only once in a given field of use; or for thepurpose of having products produced, made, or distributed; or in connectionwith a merger or consolidation of LICENSEE into another company or a sale ofall or substantially all of the assets of LICENSEE.  LICENSOR shall also have no obligationshereunder with respect to technology licenses it has or may acquire if suchlicenses restrict sublicensing in a manner inconsistent with this subparagraph.

 

15.4         LICENSEE shall comply with all local, state,federal and international laws and regulations relating to the development,manufacture, use, provision, and sale of LICENSED PRODUCTS, LICENSED PROCESSESand LICENSED SERVICES.  Without limitingthe generality of the foregoing, LICENSEE agrees to comply with the following:

 

a)             LICENSEE shall obtain all necessary approvalsfrom the FDA, USDA, or any similar governmental authorities of any foreignjurisdiction in which LICENSEE intends to make, use, or sell LICENSED PRODUCTSor to perform LICENSED PROCESSES or LICENSED SERVICES.

 

b)            LICENSEE shall comply fully with any and allapplicable local, state, federal and international laws and regulationsrelating to the LICENSED PRODUCTS, LICENSED PROCESSES and LICENSED SERVICES,and the PATENT RIGHTS, in the TERRITORY, including without limitation all exportor import regulations and rules now in effect or as may be issued from timeto time by any governmental authority which has jurisdiction relating to theexport of LICENSED PRODUCTS, LICENSED PROCESSES or LICENSED SERVICES and anytechnology relating thereto.  LICENSEE herebygives written assurance that it will comply with all such import or export lawsand regulations (including without limitation all Export AdministrationRegulations of the United States Department of Commerce), that it bears soleresponsibility for any violation of such laws and regulations,

 

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and that it will indemnify, defend, and holdLICENSOR harmless (in accordance with Article 8) for theconsequences of any such violation.

 

c)             To the extent that any invention claimed inthe PATENT RIGHTS has been partially funded by the United States Government,and only to the extent required by applicable laws and regulations, LICENSEEagrees that any LICENSED PRODUCTS used or sold in the United States will bemanufactured substantially in the United States or its territories.  Current law provides that if a domesticmanufacturer is not commercially feasible under the circumstances, LICENSOR mayseek a waiver of this requirement from the relevant federal agency on behalf ofLICENSEE and, upon LICENSEE’S request, shall cooperate with LICENSEE in seekingsuch a waiver.

 

15.5         LICENSEE shall not create or incur or causeto be incurred or to exist any lien, encumbrance, pledge, charge, restrictionor other security interest of any kind upon the PATENT RIGHTS, but may cause tobe incurred or to exist a lien, encumbrance, pledge, charge, restriction orother security interest on its rights to the LICENSED TECHNOLOGY hereunder,provided such security interest does not affect LICENSOR’s rights to the LICENSEDTECHNOLOGY, or any of LICENSOR’s rights under this Agreement.

 

15.6         Neither Party shall originate any publicity,news release 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 or delayed, except as otherwise required bylaw.  The foregoing notwithstanding,LICENSOR and LICENSEE shall have the right to make such Announcements withoutthe consent of the other Party in any prospectus, offering memorandum, or otherdocument or filing required by applicable securities laws or other applicablelaw or regulation, provided that such Party shall have given the other Party atleast ten (10) days prior written notice of the proposed text for thepurpose of giving the other Party the opportunity to comment on such text.

 

15.7         No implied licenses are granted pursuant tothe terms of this Agreement.  No licensedrights shall be created by implication or estoppel.

 

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

 

15.9         To the extent commercially feasible, andconsistent with prevailing business

 

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practices and applicable law, all LICENSED PRODUCTS sold pursuant tothis Agreement will be marked with the number of each issued patent thatapplies to such LICENSED PRODUCTS.

 

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

 

15.11       The Parties hereto acknowledge that thisAgreement sets forth the entire Agreement and understanding of the Partieshereto as**to the subject matter hereof, and shall not besubject to any change or modification except by the execution of a writteninstrument signed by the Parties hereto.

 

15.12       The provisions of this Agreement areseverable, and in the event that any provision of this Agreement shall bedetermined to be invalid or unenforceable under any controlling body of thelaw, such invalidity or unenforceability shall not in any way affect the validityor enforceability of the remaining provisions hereof.

 

15.13       The failure of either Party to assert a righthereunder or to insist upon compliance with any term or condition of thisAgreement shall not constitute a waiver of that right or excuse a similarsubsequent failure to perform any such term or condition by the other Party.

 

15.14       This Agreement may not be assigned byLICENSEE without the prior written consent of LICENSOR, which consent shall begranted or denied in LICENSOR’s sole discretion.  LICENSOR may not assign this Agreement withoutthe consent of LICENSEE, which consent shall not be unreasonably withheld ordelayed, except that LICENSOR may assign this Agreement to an affiliate or to asuccessor in connection with the merger, consolidation, or sale of all orsubstantially all of its assets or that portion of its business to which thisAgreement relates.  Notwithstanding theforegoing to the contrary, this restriction on the assignment by LICENSEE ofthis Agreement shall not prevent the assignment of this Agreement in connectionwith a merger or consolidation of LICENSEE into another company or a sale ofall or substantially all of the assets of LICENSEE, so long as the purchaser ofthe assets agrees to assume to any and all outstanding liabilities to LICENSORunder this Agreement, including but not limited to any outstanding amountsunder the promissory note referred to in Section 4.1.

 

15.15       This Agreement has been prepared jointly andno rule of strict construction shall be applied against either Party. Inthis Agreement, the singular shall include the plural and vice versa and theword “including” shall be deemed to be followed by the phrase “without limitation.”  The section headings contained in thisAgreement are inserted for convenience only and shall not affect in any way themeaning or interpretation of this Agreement.

 

15.16       This Agreement may be executed incounterparts, each of which together shall constitute one and the sameAgreement.

 

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15.17       All rights and licenses granted under orpursuant to this Agreement by LICENSOR to LICENSEE are, and shall otherwise bedeemed to be, for purposes of Paragraph 365(n) of the U.S. Bankruptcy Code (the“Code”), licenses to rights in “intellectual property” as defined in the Code.  The Parties hereto agree that LICENSEE, as aLICENSEE of such rights under this Agreement, shall retain and may fullyexercise all of its rights and elections under the Code.  The Parties hereto further agree that, in theevent of the commencement of a bankruptcy proceeding by or against LICENSORincluding a proceeding under the Code, LICENSEE shall be entitled to a completeduplicate of (or complete access to, as appropriate) any such intellectual propertyand all embodiments of such intellectual property, including the PATENT RIGHTSand KNOW-HOW, and the same, if not already in LICENSEE’s possession, shall bepromptly delivered to LICENSEE upon any such commencement of a bankruptcyproceeding upon written request therefore by LICENSEE.

 

15.18       In addition to the other rights grantedherein, LICENSOR hereby grants to LICENSEE a 90 day right of negotiation withrespect to any technology that would constitute LICENSED TECHNOLOGY if theFIELD included diseases related either to the heart or to neuro degenerativediseases (the “Added Fields”) prior to LICENSOR entering into any license relatingto either of such Added Fields) with a third party.  Such a 90 day period shall commence on theearlier of the 12 month anniversary of the Effective Date, or such date whenLICENSOR notifies LICENSEE that it has opened negotiations with a third partyor that a third party has made inquiry about such a license.  If following the expiration of any such 90-daynegotiation period LICENSEE and LICENSOR have not entered into a license for anAdded Field, LICENSOR shall be free to enter into an exclusive or non-exclusivelicense for such Added Field with any third party. If LICENSOR enters into anon-exclusive license for an Added Field with a third party following the 90-daynegotiating period hereunder, LICENSOR shall offer a non-exclusive license toLICENSEE on comparable terms as those entered into with such third party.  LICENSEE shall then have 30 days to enter intosuch a nonexclusive license.  If LICENSEEdoes not enter into such a license within said 30-day period, LICENSORshall have no further obligations relating to the Added Field.

 

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

 

 
| ADVANCED  CELL TECHNOLOGY, INC.                      |
|------------------------------------------------------|
|                                                 |
|                                                 |
| By:                                                  | /s/ Michael D. West                                 5-14-04 |   |
| Printed Name: Michael D.  West, Ph.D.                |
| Title:  President & Chief Executive Officer |

 

 
| PACGEN CELLCO, LLC            |
|-------------------------------|
|                          |
|                          |
| By:                           | /s/ Kenneth Aldrich                                  5-14-04 |   |
| Printed Name: Kenneth Aldrich |
| Title: Managing Member        |

 

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