**Exhibit 10.14**

 

NON-EXCLUSIVELICENSE AGREEMENT

 

ThisNon-Exclusive License Agreement (“Agreement”) is made and entered into as ofthe 4th day of January, 2002 (the “EFFECTIVE DATE”), by and between AdvancedCell Technology, Inc., a Delaware corporation with offices located at OneInnovation Drive, Worcester, Massachusetts 01605 (“ACT”), and Genetic Savings& Clone, a California corporation with offices located at 3312 LongmireDrive, College Station, Texas 77845 (“LICENSEE” or “GSC”) (ACT and LICENSEEsometimes hereinafter referred to as the “parties”). As set forth below, theUniversity of Massachusetts, a public institution of higher education of theCommonwealth of Massachusetts (the “University”), has agreed to certainprovisions of this Agreement.

 

WITNESSETH

 

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

 

WHEREAS,LICENSEE desires to obtain a nonexclusive license from ACT under the PATENTRIGHTS upon the terms and conditions hereinafter set forth below; and

 

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

 

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                                 “LICENSEE” meansGenetic Savings & Clone, a California corporation with offices located at3312 Longmire Drive, College Station, Texas 77845.

 

1.2                                 “LICENSED PRODUCT”means any product or part thereof which:

 

(a)                                  is covered in wholeor in part by a VALID CLAIM of the PATENT RIGHTS; or

 

(b)                                 is manufactured byusing a process or method covered in whole or in part by a VALID CLAIM of thePATENT RIGHTS.

 

Without limiting thegenerality of the foregoing, and by way of illustration but not limitation,LICENSED PRODUCTS include cloned cattle (and any transgenic variants orenhancements thereto) in the FIELD OF CATTLE, cloned goats, sheep, cats, dogsor horses (and any transgenic variants or enhancements thereto) in the FIELD OFOTHER ANIMALS, and cloned ENDANGERED SPECIES in the FIELD OF ENDANGEREDSPECIES, the progeny of all such

 

----

 

animals and semen, ova orembryos obtained from such animals.

 

1.3                                 “LICENSED PROCESS”means any process that is covered in whole or in part by a VALID CLAIM of thePATENT RIGHTS.

 

1.4                                 “NET SALES” meansthe gross amount of any and all cash payments, royalties, milestone payments,success fees, equity payments and any other consideration of any kind whatsoeverreceived by (or which, directly or indirectly inures to the benefit of)LICENSEE from any person or entity in consideration for the sale or provisionof LICENSED PRODUCTS or LICENSED PROCESSES in the pertinent FIELD OF USE less,to the extent applicable, the following:

 

(a)                                  discounts allowed;

 

(b)                                 sales, tariffduties, use and other taxes directly imposed with reference to particularsales;

 

(c)                                  special packaging,transportation and insurance prepaid or allowed; and

 

(d)                                 amounts allowed orcredited on returns.

 

1.5                                 “PATENT RIGHTS”means the patents and patent applications identified in Exhibit A attachedhereto, all continuations, continuations-in-part, divisionals and foreignfilings in the TERRITORY related thereto, and any reissues, reexaminations,extensions and substitutions.  The partiesagree that Exhibit A may be revised from time to time after the Effective Dateto reflect changes thereto.

 

1.6                                 “FIELD OF CATTLE”means the cloning, development, making, using, selling, offering to sell,importing or exporting of cloned cattle (as well as any transgenic variants or enhancementsthereto) or products that are composed of, made in or derived, extracted orisolated from cloned cattle cells or tissues for the production of food orfiber, and the rendering of services or uses that relate to the production ofsuch products.  Specifically excludedfrom the FIELD OF CATTLE is the cloning of such animals for all purposesrelated to veterinary or medical therapies, including, but not limited to, theproduction of biopharmaceutical agents, proteins, peptides and polypeptides inmilk for pharmaceutical, nutraceutical or other use; provided, however,LICENSEE may make transgenic cloned animals whereby gene therapy has beenemployed to correct a particular medical or health defect in that animal.

 

1.7                                 “FIELD OF OTHERANIMALS” means the cloning, development, making, using, selling, offering tosell, importing or exporting of goats, sheep, cats, dogs and horses (as well asany transgenic variants or enhancements thereto) for personal, business orcommercial purposes.  Specificallyexcluded from the FIELD OF OTHER ANIMALS is the cloning of such animals for allpurposes related to veterinary or medical therapies, including, but not limitedto, the production of biopharmaceutical agents, proteins, peptides andpolypeptides in milk for pharmaceutical, nutraceutical or other use; provided,however, LICENSEE may make transgenic cloned animals whereby gene therapy hasbeen employed to correct a particular medical or health defect in that

 

2

----

 

animal.

 

1.8                                 “FIELD OFENDANGERED SPECIES” means the cloning, development, making, using, selling,offering to sell, importing or exporting of ‘‘ENDANGERED SPECIES” for purposes ofresearching, aiding, reproducing or assisting in the reproduction of suchENDANGERED SPECIES.  For purposes of thisAgreement ENDANGERED SPECIES means any species that is (i) extinct or (ii)classified as threatened, vulnerable or in danger of extinction throughout allor a significant portion of its range and is classified under the guidelines ofthe Convention of International Trade of Endangered Species of Wild Fauna andFlora.  Notwithstanding Section 13.3or any other applicable terms of this Agreement, in the event that LICENSEEsuccessfully clones an extinct species using a LICENSED PROCESS, LICENSEE andACT agree to negotiate in good faith as to whether ACT’s name or the LICENSEDPROCESS shall be referenced within any press releases describing the successfulcloning of the extinct species by LICENSEE.

 

1.9                                 “FIELDS OF USE”means the FIELD OF CATTLE, the FIELD OF OTHER ANIMALS and the FIELD OFENDANGERED SPECIES (each sometimes referred to as a “FIELD OF USE”).

 

1.10                           “TERRITORY” meansthe world, except for South America.

 

1.11                           “UMASS LICENSE”means the Exclusive License Agreement between ACT and the University, dated April 16,1996, as amended by the Amendment to Exclusive License Agreement dated September 1,1999 and the Second Amendment to Exclusive License Agreement dated May 31,2000, a copy of which is attached hereto as Exhibit B.

 

1.12                           “UMASS PATENTRIGHTS” means PATENT RIGHTS licensed by ACT from the University under the UMASSLICENSE.

 

1.13                           “VALID CLAIM” meansa claim of any issued and unexpired United States or foreign patent or patentapplication within the PATENT RIGHTS which has not lapsed or become abandonedor declared invalid by a court of competent jurisdiction or an administrativeagency from which no appeal can be or has been taken within the time allowedfor such appeal.

 

Theuse herein of the plural shall include the single and *vice**versa*and the use of the masculine shall include the feminine.  Additional terms may be defined throughoutthis Agreement.

 

ARTICLE 2- GRANT

 

2.1                                 ACT hereby grantsto LICENSEE and LICENSEE accepts, subject to the terms and conditions hereof, aroyalty bearing, nonexclusive license in the FIELDS OF USE to use the PATENTRIGHTS to make, have made, use, sell, have sold and import LICENSED PRODUCTSand to practice the LICENSED PROCESSES in the TERRITORY.  To the extent this grant includes asublicense of any UMASS PATENT RIGHTS, such sublicense is subject to therelevant terms of the UMASS LICENSE as it may be amended from time to time.

 

3

----

 

2.2                                 LICENSEEacknowledges, understands and agrees that the license granted herein does notinclude the right to grant further sublicenses to or under the PATENT RIGHTS;the license “to have made” granted in Section 2.1 means only that LICENSEEmay contract with a third party or parties to manufacture for LICENSEE LICENSEDPRODUCTS to be sold by LICENSEE.

 

2.3                                 Immediately uponexecution of this Agreement ACT shall provide LICENSEE with all information anddata relating to the PATENT RIGHTS as may be reasonably necessary to allow LICENSEEto fully exploit the license granted hereunder. From time to time thereafter ACT shall provide LICENSEE, at LICENSEE’sexpense, with such information and technological assistance as LICENSEEreasonably shall request, provided that such requests do not unreasonablyinterfere with the regular business operations of ACT.

 

2.4                                 ACT hereby grantsto LICENSEE an option, exercisable at any time during the term of the Agreement,to a nonexclusive license in the FIELD OF CATTLE to use the PATENT RIGHTS tomake, have made, use, and sell LICENSED PRODUCTS and to practice the LICENSED PROCESSESin South America (the “South America License”). LICENSEE shall notify ACT in writing of its desire to acquire such anonexclusive license.  ACT shall thenpromptly provide LICENSEE with the proposed terms of the South America Licensefor LICENSEE’s review.

 

2.5                                 ACT and LICENSEEagree that in proceeding with the development, making, using and selling ofLICENSED PRODUCTS and the performance of LICENSED PROCESSES in the FIELDS OFUSE, each party will, subject to mutually acceptable fees and terms of use,accept for cloning “cell lines” of animals (a cell or collection of cells ofthe subject animal that has been cultured in vitro) developed and provided bythe other party.

 

2.6                                 LICENSEEacknowledges that a portion of the PATENT RIGHTS licensed to LICENSEE hereunderis owned by the University and is licensed to ACT under the UMASS LICENSE.  ACT, the University and LICENSEE agree that,in the event the UMASS LICENSE is terminated for any reason pursuant to theprovisions of the UMASS LICENSE, (i) this Agreement shall be automaticallyassigned to the University, (ii) LICENSEE will thereafter make any payments dueto ACT under this Agreement directly to the University, and (iii) promptlyfollowing such termination, LICENSEE and the University will enter into adirect license agreement reflecting the applicable terms of this Agreement andthe UMASS LICENSE. For the avoidance of doubt, ACT and the University agreethat the references to “Sublicensees” in Section 8.5 of the UMASS LICENSEshall not apply to LICENSEE and shall not be construed as vitiating theprovisions of this Section 2.6.

 

2.7                                 ACT agrees that inpartial consideration for the License Fee (as defined in Section 4.1), ACThereby forever and irrevocably releases and discharges LICENSEE and allpurchasers and users of LICENSED PRODUCTS acquired, mediately or immediately,from LICENSEE from all claims, demands, or rights of action that ACT may nowhave, if any, on account of any infringement of any PATENT RIGHTS by themanufacture, use, lease, sale, offer for sale, import, or other disposition ofLICENSED PRODUCTS that, prior to the date of this Agreement, may have been manufactured,used, sold, offered for sale, imported, or otherwise disposed of by LICENSEE.

 

4

----

 

ARTICLE 3- LICENSEE OBLIGATIONS RELATING TO COMMERCIALIZATION

 

3.1                                 LICENSEE shall usecommercially reasonable and diligent efforts to bring one or more LICENSEDPRODUCTS or LICENSED PROCESSES in each FIELD OF USE to market through an activeand diligent program for exploitation of the PATENT RIGHTS and to continueactive, diligent marketing efforts for one or more LICENSED PRODUCTS orLICENSED PROCESSES in each FIELD OF USE throughout the life of this Agreement.

 

3.2                                 LICENSEE shallmaintain complete and accurate records of LICENSED PRODUCTS and LICENSEDPROCESSES that are made, used, sold or performed by LICENSEE under thisAgreement.  Not later than May 1stof each year following the EFFECTIVE DATE, LICENSEE shall furnish ACT and theUniversity with a summary report on the progress of its efforts during theprior year to develop and commercialize LICENSED PRODUCTS or LICENSED PROCESSESin each FIELD OF USE, including without limitation research and development efforts,efforts to obtain regulatory approval (if applicable), marketing efforts(including LICENSED PRODUCTS and LICENSED PROCESSES made, used, sold orperformed) and sales figures (all specified by FIELD OF USE), provided thatsuch reports shall be deemed CONFIDENTIAL INFORMATION subject to the provisionsof Article 10 of this Agreement.

 

3.3                                 In the event thatACT reasonably determines that LICENSEE has not fulfilled its obligations underthis Article 3, ACT shall furnish LICENSEE with written notice of such determination.  Within sixty days after receipt of suchnotice, LICENSEE shall either (i) fulfill the relevant obligation or (ii)negotiate with ACT a mutually acceptable schedule of revised obligations; failingwhich ACT shall have the right, immediately upon written notice to LICENSEE, toterminate this Agreement.

 

ARTICLE 4- CONSIDERATION

 

4.1                                 Initial Payment.  In partial consideration of the licensesgranted to LICENSEE from ACT in Article 2 of this Agreement, LICENSEEagrees to pay to ACT an initial license fee of ONE HUNDRED THOUSAND DOLLARS ($100,000.00)(the “License Fee”).  One hundred percent(100%) of the License Fee shall be deemed earned and shall be due 30 days afterthe EFFECTIVE DATE.  The License Fee isnot refundable and is not creditable against other payments due to ACT underthis Agreement.

 

4.2                                 Royalties.

 

(a)In partial consideration of the license in the FIELD OF CATTLE granted by ACTto LICENSEE in Article 2 of this Agreement, LICENSEE agrees to pay to ACTan earned royalty equal to 5% of the NET SALES of all LICENSED PRODUCTS andLICENSED PROCESSES in the FIELD OF CATTLE made, used, sold, imported, exportedor performed by LICENSEE in the TERRITORY: provided, however, thatLICENSEE shall pay to ACT an earned royalty equal to: (i) only 3% of the NETSALES on LICENSEE’s sale of all progeny of cloned transgenic animals (andproducts obtained from such cloned transgenic animals (such as semen or ova))in the FIELD OF CATTLE produced under this Agreement, and (ii) only 5% of theNET SALES on LICENSEE’s sale

 

5

----

 

ofthe first five progeny of each cloned non-transgenic animal (and productsobtained from such cloned non-transgenic animals (such as semen or ova)) in theFIELD OF CATTLE produced under this Agreement.

 

(b)                                 In partialconsideration of the license in the FIELDS OF OTHER ANIMALS and ENDANGEREDSPECIES granted by ACT to LICENSEE in Article 2 of this Agreement, LICENSEEagrees to pay to ACT an earned royalty equal to 4% of the NET SALES of all LICENSEDPRODUCTS and LICENSED PROCESSES in the FIELDS OF OTHER ANIMALS and ENDANGEREDSPECIES made, used, sold, imported, exported or performed by LICENSEE in the TERRITORY;provided, however, that LICENSEE shall pay to ACT an earned royaltyequal to: (i) only 2% of the NET SALES on LICENSEE’s sale of all progeny ofcloned transgenic animals (and products obtained from such cloned transgenicanimals (such as semen or ova)) in the FIELDS OF OTHER ANIMALS AND ENDANGEREDSPECIES produced under this Agreement, and (ii) only 4% of the NET SALES onLICENSEE’s sale of the first five progeny of each cloned non-transgenic animal(and products obtained from such cloned non-transgenic animals (such as semenor ova)) in the FIELDS OF OTHER ANIMALS AND ENDANGERED SPECIES produced underthis Agreement.

 

(c)                                  No multipleroyalties shall be payable because any LICENSED PRODUCT or LICENSED PROCESS ina FIELD OF USE, its manufacture, use, lease, sale or performance are or shallbe covered by more than one patent or patent application within the PATENTRIGHTS.

 

(d)                                 The obligation ofLICENSEE to pay royalties on sales of LICENSED PRODUCTS or LICENSED PROCESSEScovered by a VALID CLAIM of the PATENT RIGHTS shall terminate on acountry-by-country basis concurrently with the expiration or termination of thelast applicable VALID CLAIM within the PATENT RIGHTS in the country in theTERRITORY in which the LICENSED PRODUCT or LICENSED PROCESS is manufactured,sold or performed.

 

4.3                                 Minimum AnnualRoyalties.  (a) Following the third fullcalendar year of this Agreement (i.e., commencing with the calendar year2005), LICENSEE shall, during the term of this Agreement pay, minimum annualroyalty payments to ACT as follows:

 

(1)                                  LICENSEE shall payACT a minimum annual royalty payment of ONE HUNDRED THOUSAND DOLLARS($100,000.00) for the fourth through the seventh full calendar years of thisAgreement (i.e., the years 2005 through 2008); and

 

(2)                                  thereafter(commencing with the eighth full calendar year of this Agreement(i.e., the year 2009)), LICENSEE shall pay ACT a minimum annual royalty paymentof ONE HUNDRED FIFTY THOUSAND DOLLARS ($150,000.00), increasing by FIFTYTHOUSAND DOLLARS ($50,000.00) each year thereafter until such time as theminimum annual royalty is FIVE HUNDRED THOUSAND DOLLARS ($500,000.00) at whichtime the minimum annual royalty payment shall continue to be FIVE HUNDREDTHOUSAND DOLLARS ($500,000.00) for the remaining term of the Agreement.

 

(b)                                 The minimum annualroyalty payments shall be payable within forty-five (45) days after the end ofeach applicable calendar year.  If theactual royalty payments by LICENSEE to

 

6

----

 

ACT in any calendar yearare less than the minimum annual royalty, LICENSEE shall have the right to payACT the difference between the actual royalty payments and the minimum annualroyalty in full satisfaction of its obligations under this Section providedthat such minimum annual royalty is paid to ACT within forty-five (45) daysafter the conclusion of the applicable calendar year.  Waiver of any payment of the minimum annualroyalty by ACT shall not be construed as a waiver of any subsequent payment ofthe minimum annual royalty.  If LICENSEEfails to make any payment of the minimum annual royalty within said forty-five(45) day period, such failure shall constitute a material breach of LICENSEE’sobligations under this Agreement and ACT shall have the right to terminate thisAgreement in accordance with Section 9.2 hereof.

 

4.4                                 All payments dueunder this Agreement shall be paid to ACT in Worcester, Massachusetts, U.S.A.,and shall be made in United States currency without deduction for taxes, assessments,exchanges, collection or other charges of any kind; provided, however, that anywithholding tax required to be withheld by LICENSEE on royalty payments underthe laws of any country in the Territory for the account of ACT will bepromptly paid by LICENSEE for and on behalf of ACT to the appropriategovernmental authority, and LICENSEE will furnish ACT with proof of payment ofsuch tax. Any such tax actually paid on behalf of ACT may be deducted from royaltypayments due ACT.  Conversion of foreigncurrency to U.S. dollars shall be made at the conversion rate reported in TheWall Street Journal on the last working day of the calendar quarter to whichthe payment relates.

 

4.5                                 LICENSEE shall payACT interest on any overdue amounts at the rate of eighteen percent (18%) perannum, or the maximum rate allowed by law, from the date when such payment shouldhave been made pursuant to Section 4.1, 4.2, 4.3 and/or 5.3, asapplicable.

 

4.6                                 If LICENSEE failsto timely make any payments to ACT as provided in this Agreement, such failureshall constitute a material breach of LICENSEE’s obligations under this Agreement,and ACT shall have the right to terminate this Agreement in accordance with Article 9.

 

ARTICLE 5- REPORTS AND RECORDS

 

5.1                                 LICENSEE shall keepfull, true and accurate books of account containing all particulars that may benecessary for the purpose of showing the amounts payable to ACT hereunder.  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 (andno more frequently than once per calendar year) for three and one half (3-1/2)years following the end of the calendar year to which they pertain, to theinspection of ACT or its agents for the purpose of verifying LICENSEE’s royaltystatement or compliance in other respects with this Agreement.  If any such audit determines that thereported payments to ACT were less than ninety five percent (95%) of the actualamount due to ACT for the period in question, LICENSEE shall bear the cost ofsuch audit.  In all other cases, thecosts of the audit shall be paid by ACT. All information disclosed pursuant to an audit shall be treated asCONFIDENTIAL INFORMATION and shall not be disclosed to any third party or usedfor any purpose other than to determine the correctness of LICENSEE’s royaltystatement or compliance in other respects with this Agreement.

 

7

----

 

5.2                                 After the first commercialsale of a LICENSED PRODUCT or LICENSED PROCESS, LICENSEE, within forty-five(45) days after March 31, June 30, September 30 and December 31,of each year, shall deliver to ACT a true and accurate report, giving suchparticulars of the business conducted by LICENSEE during the precedingthree-month period under this Agreement necessary for the purpose of accountinghereunder.  Without limiting thegenerality of the foregoing, these reports shall include the following:

 

(a)                                  number of LICENSEDPRODUCTS manufactured by LICENSEE or by any third parry on LICENSEE’s behalf;

 

(b)                                 number of LICENSEDPRODUCTS sold by LICENSEE;

 

(c)                                  total receipts forLICENSED PRODUCTS sold by LICENSEE;

 

(d)                                 accounting for allLICENSED PROCESSES used in the provision of services to others or sold byLICENSEE;

 

(e)                                  deductionsapplicable as provided in Section 1.5; and

 

(f)                                    the names andaddresses of all parties making LICENSED PRODUCTS on behalf of LICENSEE.

 

The reports shall providethe above-identified information, and any additional information, on a FIELD OFUSE (and by animal within each FIELD OF USE) basis.

 

5.3                                 With each suchreport submitted, LICENSEE shall pay to ACT the royalties due and payable underthis Agreement.  If no royalties shall bedue, LICENSEE shall so report.

 

ARTICLE 6- PATENT PROSECUTION

 

6.1                                 ACT shall be solelyresponsible for the continued prosecution of pending patent applicationsincluded in the PATENT RIGHTS and the issuance of such applications afterallowance.  Additionally, ACT shall payall government fees in any given country required to maintain the PATENTRIGHTS; and shall submit evidence to LICENSEE upon request that such fees havebeen timely paid.  The prosecution,filing and maintenance of all patents and applications (including with respectto any decision(s) whether to continue to prosecute any such application(s))included in the PATENT RIGHTS shall be the sole responsibility of ACT.

 

ARTICLE 7- PROSECUTION OF INFRINGERS AND DEFENSE OF PATENT RIGHTS

 

Theparties agree to notify each other in writing of any actual or threatenedinfringement by a third party of PATENT RIGHTS or of any claim of invalidity,unenforceability, or non-infringement of the PATENT RIGHTS.  ACT shall have the sole responsibility toprosecute or defend such claims, as applicable. LICENSEE shall if requested provide reasonable assistance to ACT, at ACT’sexpense, in connection with the prosecution or defense of such claims.

 

8

----

 

ARTICLE 8- INDEMNIFICATION; LIMITATION OF LIABILITY; INSURANCE

 

8.1                                 LICENSEE shall atall times during the term of this Agreement and thereafter, indemnify, defendand hold harmless ACT and the University and their trustees, directors,officers, employees and affiliates against all liabilities of any kindwhatsoever, including legal expenses and reasonable attorneys’ fees, arisingout of the death of or injury to any person or persons or out of any damage toproperty resulting from the development, production, manufacture, sale, use, performance,rendering, consumption or advertisement of the LICENSED PRODUCT(s) and/or LICENSEDPROCESS(es) or arising from any obligation, act or omission, or from a breachof any representation or warranty of LICENSEE hereunder, excepting only claimsthat the PATENT RIGHTS infringe third party intellectual property or claimsthat result from any breach by ACT of this Agreement or claims that result fromACT’s negligence or willful misconduct. Any indemnification obligations setforth in this Agreement shall be subject to the following conditions: (i) theindemnified party shall notify the indemnifying party in writing promptly uponlearning of any claim or suit for which indemnification is sought; (ii) theindemnifying party shall have control of the defense or settlement, providedthat the indemnified party shall have the right (but not the obligation) toparticipate in such defense or settlement with counsel at its selection and atits sole expense; and (iii) the indemnified party shall reasonably cooperatewith the defense, at the indemnifying party’s expense.

 

8.2                                 IN NO EVENT SHALLEITHER PARTY, ITS TRUSTEES, DIRECTORS, OFFICERS, EMPLOYEES AND AFFILIATES BELIABLE FOR INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES OF ANY KIND, INCLUDINGECONOMIC DAMAGE OR INJURY TO PROPERTY AND LOST PROFITS, REGARDLESS OF WHETHER APARTY SHALL BE ADVISED, SHALL HAVE OTHER REASON TO KNOW, OR IN FACT SHALL KNOWOF THE POSSIBILITY; PROVIDED, HOWEVER, THAT THIS SECTION 8.2 SHALL NOT BEDEEMED TO LIMIT IN ANY WAY LICENSEE’S DUTY TO INDEMNIFY ACT FOR CLAIMS BROUGHTBY THIRD PARTIES AS SET FORTH IN SECTION 8.1 OF THIS AGREEMENT (INCLUDINGANY INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES SUFFERED OR INCURRED BY ANYTHIRD PARTIES WHO ARE, IN TURN, SEEKING THE SAME FROM LICENSEE, WHICH SHALL BE COVEREDBY THE INDEMNITY SET FORTH IN SECTION 8.1) (AS OPPOSED TO ANY INDIRECT ORCONSEQUENTIAL DAMAGES SUFFERED OR INCURRED BY ACT DIRECTLY).

 

8.3                                 LICENSEE agrees tomaintain insurance or self-insurance that is reasonably adequate to fulfill anypotential obligation to the indemnified parties.  LICENSEE shall continue to maintain suchinsurance or self-insurance during the term of this Agreement and after theexpiration or termination of this Agreement for a period of five (5) years.

 

9

----

 

ARTICLE 9*-*TERMINATION 

 

9.1                                 This Agreementshall be effective on the EFFECTIVE DATE and continue until the expiration ofthe last to expire of the PATENT RIGHTS, unless sooner terminated as providedin this Article 9.

 

9.2                                 Upon any materialbreach or default of this Agreement by LICENSEE, ACT shall have the right toterminate this Agreement and the rights, privileges and licenses grantedhereunder effective on 90 days’ notice to LICENSEE.  Such termination shall become automaticallyeffective unless LICENSEE shall have cured any such material breach or defaultprior to the expiration of the 90 day period.

 

9.3                                 LICENSEE shall havethe right to terminate this Agreement at any time on six (6) months’ priornotice to ACT.

 

9.4                                 In the event thatthis Agreement is terminated or expires, LICENSEE shall retain limited rightsto sell any LICENSED PRODUCTS existing or under production (e.g., a clonedanimal in utero) and to perform LICENSED PROCESSES related to such LICENSEDPRODUCTS, subject to the terms of this Agreement (including without limitationthe obligation to pay royalties under Article 4).

 

9.5                                 Upon termination ofthis Agreement for any reason, nothing herein shall be construed to releaseeither party from any obligation that matured prior to the effective date ofsuch termination; and Articles/Sections 1, 8, 9, 9.4, 10, 12, 13.7 and 13.10,and any other provision which by its nature is intended to survive any suchtermination, shall survive and continue in full force and effect.  Upon any termination of this Agreement, eachparty shall promptly return to the other party all written CONFIDENTIALINFORMATION, and all copies, notes or extracts thereof, to the other party.

 

9.6                                 The foregoingtermination rights are in addition to any termination rights that may be providedelsewhere in this Agreement.

 

ARTICLE 10- CONFIDENTIALITY AND NON-DISCLOSURE

 

10.1                           ConfidentialInformation; Non-Disclosure.  “ConfidentialInformation” shall mean any technical, business, financial, customer or otherinformation disclosed by one party to the other party pursuant to thisAgreement which is marked “Confidential” or “Proprietary,” or which, under allof the given circumstances, ought reasonably to be treated as confidentialinformation of the disclosing party.  Suchinformation may be disclosed in oral, visual or written form (includingmagnetic, optical or other media).  Eachparty’s Confidential Information specifically includes without limitation therespective party’s business plans and business practices, scientific knowledge,research and development or know-how, processes, inventions, techniques,formulae, products and product plans, business operations, customerrequirements, designs, sketches, photographs, drawings, specifications, reports,studies, findings, data, plans or other records, biological materials,software, margins, payment terms and sales forecasts, volumes and activities,designs, computer

 

10

----

 

code, technicalinformation, costs, pricing, financing, business opportunities, personnel, andinformation of ACT or LICENSEE relating to the LICENSED PROPERTY, LICENSEDPRODUCTS or LICENSED SERVICES.  Except tothe extent expressly authorized by this Agreement or by other prior writtenconsent by the disclosing party, each party shall during the term of thisAgreement and thereafter: (i) treat as confidential all ConfidentialInformation of the other party; (ii) not use such Confidential Informationexcept as authorized herein or otherwise authorized in writing, (iii) implementreasonable procedures to prohibit the disclosure, unauthorized duplication,misuse or removal of the other party’s Confidential Information; (iv) notdisclose such Confidential Information to any third party; and (v) onlydisclose the Confidential Information to those of its employees who have needto know such Confidential Information in order to exercise the rights andfulfill the obligations set forth herein. Without limiting the foregoing, eachof the parties shall protect the Confidential Information using at least thesame procedures and degree of care that it uses to prevent the disclosure ofits own confidential information of like importance, but in no event less thanreasonable care.  Each party shall returnthe Confidential Information to the other party upon termination of theAgreement or upon the request of the other party.  Except as expressly provided in thisAgreement, no ownership or license right is granted in any ConfidentialInformation.

 

10.2                           Exceptions.  Neither party shall have obligation orliability to the other with regard to any Confidential Information of the other:(i) that was publicly known and available at the time it was disclosed orbecomes publicly known and available through no fault, action, or inaction ofthe receiver; (ii) was known to the receiving party, without restriction, atthe time of disclosure as shown by the files of the receiving party inexistence at the time of disclosure; (iii) is disclosed with the prior writtenapproval of the disclosing party; (iv) was independently developed by thereceiving party without any use of the Confidential Information, provided, thatthe receiving party can demonstrate such independent development by documentedevidence prepared contemporaneously with such independent development; (v) isdisclosed pursuant to the order or requirement of a court, administrativeagency, or other governmental body, provided that the receiving party shallprovide prompt advanced notice thereof to enable the disclosing party to seek aprotective order or otherwise prevent such disclosure; or (vi) that is providedto the recipient by an independent third party having no obligation to keep theinformation secret.

 

10.3                           Injunctive Relief.  ACT and LICENSEE acknowledge and agree thatany breach of the confidentiality obligations imposed by this Section 10will constitute immediate and irreparable harm to the party disclosing theConfidential Information and/or its successors and assigns, which cannotadequately and fully be compensated by money damages and will warrant, inaddition 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 to receive from thereceiving party the costs of enforcing this Section 10, includingreasonable attorneys’ fees and expenses of litigation.

 

10.4                           Survival.  The obligations of ACT and LICENSEE under thisArticle 10 shall survive any expiration or termination 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

 

11

----

 

recognized overnightcarrier addressed to the parties at the following addresses or such otheraddresses as such party furnishes to the other party in accordance with thisparagraph.  Such notices, payments, orother communications shall be effective upon receipt.

 

Inthe case of ACT:

 

AdvancedCell Technology, Inc.

OneInnovation Drive

Worcester,MA 01605

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

 

Witha copy to:

 

PierceAtwood

OneMonument Square

Portland,ME 04101

Attention:William L. Worden, Esq.

 

Inthe case of LICENSEE:

 

GeneticSavings & Clone

3312Longmire Drive

CollegeStation, TX 77845

Attention:Charles Long, Ph.D. General Manager

 

Witha copy to:

 

HellerEhrman White & McAuliffe LLP 

4350La Jolla Village Drive 

SanDiego, CA 92122 

Attention:Ryan Murr, Esq.

 

ARTICLE 12- REPRESENTATIONS AND WARRANTIES

 

12.1                           ACT represents andwarrants that it owns or has licensed with a sublicenseable interest the PATENTRIGHTS, that it has the full legal right and power to grant the licensesgranted hereunder, that this Agreement constitutes the binding legal obligationof ACT, enforceable in accordance with its terms, and that the execution andperformance of this Agreement by ACT will not violate, contravene or conflictwith any other agreement to which ACT is a party or by which it is bound orwith any law, rule or regulation applicable to ACT.

 

12.2                           LICENSEE representsand warrants that it has full corporate power and authority to enter into thisAgreement, that this Agreement constitutes the binding legal obligation of LICENSEE,enforceable in accordance with its terms, and that execution and performance ofthis Agreement by LICENSEE will not violate, contravene or conflict with anyother agreement to which LICENSEE is a party or by which it is bound or withany law, rule or regulation applicable to LICENSEE.

 

12

----

 

12.3                           The Universityrepresents and warrants that it owns the UMASS PATENT RIGHTS, and that it hasexclusively licensed the UMASS PATENT RIGHTS to ACT pursuant to the UMASS LICENSE.

 

12.4                           EXCEPT AS OTHERWISEEXPRESSLY SET FORTH IN THIS AGREEMENT, ACT AND THE UNIVERSITY, ITS TRUSTEES,DIRECTORS, OFFICERS, EMPLOYEES, AND AFFILIATES MAKE NO REPRESENTATIONS AND EXTENDNO WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITEDTO WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, VALIDITY OFPATENT RIGHTS CLAIMS, ISSUED OR PENDING, AND THE ABSENCE OF LATENT OR OTHER DEFECTS,WHETHER OR NOT DISCOVERABLE.  NOTHING INTHIS AGREEMENT SHALL BE CONSTRUED AS A REPRESENTATION MADE OR WARRANTY GIVEN BYACT OR THE UNIVERSITY THAT THE PRACTICE BY LICENSEE OF THE LICENSE GRANTED HEREUNDERSHALL NOT INFRINGE THE PATENT RIGHTS OF ANY THIRD PARTY.

 

ARTICLE 13- MISCELLANEOUS PROVISIONS

 

13.1                           LICENSEE shallcomply with all local, state, federal and international laws and regulationsrelating to the development, manufacture, use, provision, and sale of LICENSEDPRODUCTS and LICENSED PROCESSES.  Withoutlimiting the generality of the foregoing, LICENSEE agrees to comply with thefollowing:

 

(a)                                  LICENSEE shallobtain all necessary approvals from the USDA and any similar governmentalauthorities of any foreign jurisdiction in the Territory in which LICENSEEintends to make, use, or sell LICENSED PRODUCTS or to perform LICENSEDPROCESSES.

 

(b)                                 LICENSEE shallcomply fully with any and all applicable local, state, federal andinternational laws and regulations relating to the LICENSED PRODUCTS and LICENSEDSERVICES, and the PATENT RIGHTS, in the Territory, including without limitationall export or import regulations and rules now in effect or as may be issuedfrom time to time by any governmental authority which has jurisdiction relatingto the export of LICENSED PRODUCTS or LICENSED SERVICES and any technologyrelating thereto.  LICENSEE hereby giveswritten assurance that it will comply with all such import or export laws andregulations (including without limitation all Export Administration Regulationsof the United States Department of Commerce), that it bears sole responsibilityfor any violation of such laws and regulations, and that it will indemnify,defend, and hold ACT and the University harmless (in accordance with Article 8)for the consequences of any such violation.

 

(c)                                  To the extent thatany invention claimed in the PATENT RIGHTS has been partially funded by theUnited States Government, and only to the extent required by applicable lawsand regulations, LICENSEE agrees that any LICENSED PRODUCTS used or sold in theUnited States will be manufactured substantially in the United States or itsterritories.  Current law provides thatif domestic manufacturer is not commercially feasible under the circumstances,ACT and/or the

 

13

----

 

Universitymay seek a waiver of this requirement from the relevant federal agency onbehalf of LICENSEE and, upon LICENSEE’S request, shall cooperate with LICENSEEin seeking such a waiver.

 

13.2                           LICENSEE shall notcreate or incur or cause to be incurred or to exist any lien, encumbrance,pledge, charge, restriction or other security interest of any kind upon thePATENT RIGHTS without the prior written consent of ACT and the University.

 

13.3                           Neither party shalloriginate any publicity, news release or other public announcement (“Announcements”),written or oral, relating to this Agreement or the existence of an arrangementbetween the parties, without the prior written approval of the other party,which approval shall not be unreasonably withheld, except as otherwise requiredby law.  Any references to the Universityin such Announcements shall be subject to the approval of the University.  The foregoing and Section 10.1notwithstanding, ACT and LICENSEE shall have the right to make such Announcementswithout the consent of the other party or the University, as applicable, in anyprospectus, offering memorandum, or other document or filing required byapplicable securities laws or other applicable law or regulation, provided thatsuch party shall have given the other party or the University, as applicable,at least ten (10) days prior written notice of the proposed text for the purposeof giving the other party or the University, as applicable, the opportunity tocomment on such text.

 

13.4                           No implied licensesare granted pursuant to the terms of this Agreement.  No Licensed Rights shall be created byimplication or estoppel.

 

13.5                           Nothing hereinshall be deemed to constitute either party as the agent or representative ofthe party, or both parties as joint venturers or partners for any purpose.  Each party shall be an independentcontractor, not an employee or partner of the other party, and the manner in whicheach party 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.

 

13.6                           To the extentcommercially feasible, and consistent with prevailing business practices, allproducts manufactured or sold under this Agreement will be marked with thenumber of each issued patent that applies to such product.

 

13.7                           This Agreementshall be construed, governed, interpreted and applied in accordance with thelaws of the Commonwealth of Massachusetts, U.S.A. without regard to principlesof conflicts of law thereof, except that questions affecting the constructionand effect of any patent included in the PATENT RIGHTS shall be determined bythe law of the country in which the patent was granted.

 

13.8                           This Agreementshall be binding upon and inure to the benefit of the parties and their respectivepermitted successors and assigns.  Theparties acknowledge that the University is a third party beneficiary of theapplicable provisions of Sections 2.1, 2.6, 2.7, 3.2, 5.1, 6.1, 8.1, 8.2, 8.3,

 

14

----

 

13.1, 13.2, 13.3 and 13.8hereof, with the right to enforce such provisions against the applicable party.

 

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

 

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

 

13.11                     The failure ofeither party to assert a right hereunder or to insist upon compliance with anyterm or condition of this Agreement shall not constitute a waiver of that rightor excuse a similar subsequent failure to perform any such term or condition bythe other party.

 

13.12                     This Agreement maynot be assigned by LICENSEE without the prior written consent of ACT and theUniversity, which consent maybe granted or denied in the sole discretion of ACTor the University, as applicable.  This Agreementmay not be assigned by ACT without the consent of LICENSEE, except that ACT mayassign this Agreement to an affiliate or to a successor in connection with themerger, consolidation, or sale of all or substantially all of its assets orthat portion of its business to which this Agreement relates.

 

*     *     *

 

15

----

 

INWITNESS WHEREOF, the parties have duly executed this Agreement the day and yearfirst set forth above.

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

 

CONSENTAND AGREEMENT

 

Forvalue received, the University hereby consents to the sublicense by ACT toLICENSEE of the UMASS PATENT RIGHTS under this Agreement.

 

 
| THE UNIVERSITY OF MASSACHUSETTS                              |                    |
|--------------------------------------------------------------|-------------------------|
|                                                         |                    |
|                                                         |                    |
| By:                                                          | /s/ Joseph F.X. McGuirl |   |
| /s/ Thomas J. Chmura                                         |
| Printed Name: Joseph F.X. McGuirl, Executive Director,  CVIP |                    |
| Title:                                                       |                    |
| Thomas J. Chmura, Executive V.P. for  Economic Development   |                    |

 

16

----