Document:

Exhibit
10.31

 

MEMBERSHIP
INTEREST EXCHANGE AND ASSET SALE AGREEMENT

 

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

 

WITNESSETH:

 

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

 

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

 

 

WHEREAS, Cyagra wishes to acquire certain of the
assets of CK; and

 

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

 

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

 

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

 

1.                                       Unit Exchange.

 

(a)                                  In consideration for the Cyagra Units being
transferred to ACT pursuant to Section 1(b) hereof, ACT hereby sells,
transfers, assigns and conveys to the Cyagra Holders, free and clear of all
liens, encumbrances, security interests and adverse claims of any nature
whatsoever, the Transferred Hematech Units in the amounts set forth on Exhibit B
attached hereto and made a part hereof.

 

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

 

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

 

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

 

3.                                       Additional Agreements of the Parties.

 

(a)                                  Resignations.  Each
of the Cyagra Holders, Barton and Robl hereby resigns, effective immediately,
from any and all positions held by such persons within Cyagra, including but
not limited to positions as managers, directors, officers, consultants or
employees thereof or thereto.

 

(b)                                 Termination/Modification of Employment and
Consultant Agreements.  Cyagra, effective upon the execution and
delivery of this Agreement, shall (i) terminate the consulting agreements
between Cyagra, on the one hand, and Osborne and Goldsby, on the other hand (as
modified to provide that Sections I and 2 regarding confidentiality and
non-compete shall not survive the termination), (ii) the employment
agreement between CK and Poothappillia Kasinanthan shall be terminated (as
modified to provide that only the confidentiality, non competition,
non-solicitation and technology ownership provisions contained therein shall remain
in effect and enforceable by Cyagra), and that the Confidentiality and
Non-Competition

 

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Agreement
between Cyagra, on the one hand, and Barton, on the other hand, shall be
amended to provide that the non-compete provisions contained in such agreement
shall remain in effect for two (2) years following the date of this
Agreement and that the confidentiality provisions thereof shall remain in
effect in accordance with their terms.  The
Consulting Agreement, dated January 23, 1998, between ACT and Robl
shall be modified to extend the coverage thereof, for purposes of the
consulting services and confidentiality and conflict of interest provisions, to
include the businesses of ACT and all of its affiliates and subsidiaries, and
to extend the termination date thereof to December 31, 2003.  Notwithstanding the foregoing, none of such
agreements, as amended, shall prohibit such persons from being employed by or
providing consulting services to Hematech in connection with activities to be
engaged in by Hematech other than those prohibited under Section 9 of this
Agreement.  The Confidentiality and
Non-Competition Agreement between Cyagra and Robl shall be amended to provide
that the confidentiality and non-compete provisions contained therein shall not
apply to his association with Hematech to the extent of activities not
prohibited to Hematech under Section 9 hereof.

 

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

 

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

 

(d)                                 Payment of Cyagra Creditors.  Upon
the execution and delivery of this Agreement, ACT shall invest funds in Cyagra
or advance funds to Cyagra sufficient to allow Cyagra to pay its creditors
listed on Schedule 3(d) attached hereto and such creditors
will be paid by Cyagra at that time.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

5.6.                              Attached hereto as Schedule 5.6 is a complete and accurate
listing of all permits and licenses held by Cyagra or CK.  Such permits and licenses are in full force and
effect, and neither CK nor Cyagra is in violation of any of the terms or
conditions thereof.  No permits other
than those listed on Schedule 5.6 are necessary in order for Cyagra
or CK to conduct its business as presently conducted.  Cyagra and CK are in compliance with all
applicable laws and regulations.

 

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

 

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

 

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

 

(c) Schedule 5.7 accurately and
completely lists, (i) all licenses, sublicenses and other agreements as to
which Cyagra or CK is a party and pursuant to which any person is authorized to
use any Cyagra Intellectual Property Rights including any trade secret of
Cyagra or CK; and (ii) all licenses, sublicenses and other agreements as
to which Cyagra or CK is a party and pursuant to which Cyagra or CK is
authorized to use any Third-Party patents, licenses, trademarks and service
marks, trade names, trade secrets, technical knowledge and tangible or
intangible proprietary information or other confidential proprietary
information (“Third-Party Intellectual Property”) used by Cyagra or CK in their
respective businesses.

 

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

 

(c) There is no unauthorized use, disclosure,
infringement or misappropriation of any Cyagra Intellectual Property Rights by
any employee of or consultant to, or former employee of or consultant to,
Cyagra or CK, or by any third party.  Neither
Cyagra nor CK has been sued or been charged in writing as a defendant

 

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

 

(f) No employee of or consultant to Cyagra or
CK is in default under any term of any employment contract, agreement or
arrangement relating to the Cyagra Intellectual Property Rights or any
noncompetition arrangement, other contract, or any restrictive covenant
relating to Cyagra Intellectual Property Rights; provided, however, that Audi
Spell has been given permission to own an interest in an embryo transfer
company.  Except as otherwise
specifically indicated on Schedule 5.7, the Cyagra Intellectual
Property Rights were developed entirely by the employees of or consultants to
Cyagra or CK and by Jason Knott during the time they were employed by Cyagra or
CK and such Cyagra Intellectual Property Rights do not include any invention or
other intellectual property of such employees or consultants made prior to the
time such employees or consultants were employed or retained by Cyagra or CK,
nor does it include any intellectual property of any previous employer of such
employees or consultants nor does it include the intellectual property of any
other person or entity.  Every employee
of or consultant to Cyagra or CK (past or present) has executed an invention
and proprietary rights assignment agreement in favor of Cyagra or CK (copies of
which are included in the documents attached as Schedule 5.7), and
such agreements have not been modified and are in full force and effect.  All of the laboratory notebooks of all
employees of and consultants to Cyagra or CK (past or present) are in the possession
of Cyagra or CK or their respective employees and shall remain assets of Cyagra
and CK.

 

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

 

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

 

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

 

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hereto.  The Cyagra Assets and the CK Assets constitute
all of the assets necessary to conduct the businesses conducted and currently
proposed to be conducted by Cyagra and CK.  Since June 1, 1998, other than as
described in Schedule 5.8 hereto, neither Cyagra nor CK has sold,
transferred, licensed or otherwise conveyed to any other person or entity any
intellectual property, including any inventions, improvements, or tangible
embodiments of the same.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

6.2                                 Such Cyagra Holder has paid any and all taxes
of whatever nature accrued, due or payable in respect of the Cyagra Units being
transferred by such Cyagra Holder pursuant to this Agreement, including without
limitation taxes which may become payable at a later date relating to any
period ending on or prior to the date of this Agreement.

 

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

 

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

 

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

 

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

 

7.2.                              ACT has been duly organized and is in good
standing as a corporation under the laws of the State of Delaware, and the
execution and delivery of this Agreement by ACT, and the consummation by ACT of
the transactions contemplated hereby, have been duly authorized by all
necessary corporate action on the part of ACT.

 

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7.3.                              The execution and delivery by ACT of this
Agreement and the consummation by ACT of the transactions contemplated hereby
do not and will not conflict with or violate any agreement or instrument to
which ACT is a party or by which it or its assets are bound, or any laws or
regulations applicable to ACT.

 

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

 

8.                                       Indemnification.

 

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

 

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for the Indemnification
obligations hereunder of BFLP.  ACT
hereby agrees to indemnify and hold the Cyagra Holders and Hematech harmless
from and against any and all losses incurred or experienced by any of such
indemnified parties and arising out of or resulting from the inaccuracy of any
of ACT’s representations or warranties contained herein or the failure of ACT
to comply with any of its covenants contained herein.

 

(b)                                 The indemnifying party shall be entitled to
control the defense and settlement of any action, suit or proceeding as to
which it is obliged to provide indemnification pursuant to Section 8(a) hereof;
provided, however, that the indemnified party shall be entitled to assume
control thereof (at the indemnifying party’s expense) if the indemnifying party
fails promptly and diligently to assume such control and address or defend such
indemnified claims, or in the event that in the reasonable judgment of the
indemnified party, there are material claims or other adverse outcomes that are
either not covered by the indemnification contained herein or as to which the
indemnifying party cannot adequately protect the indemnified party.  Any indemnified party shall promptly notify
the indemnifying party of the assertion of any claim, action, suit or
proceeding as to which the indemnified party will be seeking indemnification
from the indemnifying party; provided, however, that the failure to provide
such prompt notice shall not in any way relieve the indemnifying party of any
obligations to provide indemnification hereunder except in the event and to the
extent that such failure to timely provide such notice materially and
demonstrably impaired the ability of the indemnifying party to defend or otherwise
address such claim, action, suit or proceeding.

 

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

 

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

 

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

 

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

 

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ownership, management or
control of any business which is competitive with Cyagra’s business of cloning
mammals in the field of Agriculture (i.e., the production of food (i.e.,
something of nutritional value) or fiber produced by animals or of animal
origin, and the rendering of services that relate to the production of such
products) as presently or hereafter conducted by Cyagra or its subsidiaries.  In recognition of the geographic extent of
Cyagra’s and its affiliates’ existing and anticipated operations and the nature
of Cyagra’s and its affiliates’ business and competitive circumstances, the
restrictive covenant contained in this Section 9(b) shall apply
worldwide.

 

(c) ACT, its subsidiaries, officers, and
employees agree that, for a period of two (2) years after the date of the
execution of this Agreement, they will not engage in, own (by ownership of
securities or otherwise), manage, operate, control, engage in as an equity
participant or be employed by or act as a consultant to, or be connected in any
manner with, the ownership, management or control of any business which is
competitive with Hematech’s business of the development and production of
immunoglobulin in the blood of Bos taurus and Bos indicus.  Hematech acknowledges, understands and agrees
that the foregoing restrictive covenant applies only to Hematech’s business of
the development and production of immunoglobulin in the blood of Bos taurus and
Bos indicus and except as provided herein does not preclude ACT from conducting
any business relating to the development and production of immunoglobulin in
the blood of Leporidae or the development and production of immunoglobulin or
other products in the blood of any species other than Bos taurus or Bos indicus.
 In recognition of the geographic extent
of Hematech’s and its affiliates’ existing and anticipated operations and the
nature of Hematech’s and its affiliates’ business and competitive
circumstances, the restrictive covenant contained in this Section 9(c) shall
apply worldwide.

 

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

 

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

 

10. Additional Covenants.

 

(a) ACT agrees to cause Cyagra to maintain in
effect, until at least May 31, 2001, the liability insurance policies
currently maintained by Cyagra (or policies providing substantially similar
coverage).

 

18

 

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

 

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

 

(d) At the request of Cyagra, the Cyagra
Holders agree to use their respective reasonable efforts to obtain the consent
of KTEC to the assignment by CK to Cyagra of the KTEC Research Project Grant
Agreement described on Schedule 2(a).  If such consent is not obtained on or prior to
July 31, 2000, within three (3) business days thereafter, Cyagra will
reassign to CK all rights under such agreement, and Hematech will pay to Cyagra
the sum of Forty Thousand Dollars ($40,000) by certified or bank cashier’s
check.  In the event that such consent is
timely obtained or, if not, when Hematech pays Cyagra $40,000 as provided
above, the parties agree that the Cyagra Holders, Hematech, CK, Barton and Robl
will have no further

 

19

 

liability to ACT or
Cyagra in respect of the amounts owed to UMass pursuant to the two agreements
listed on Schedule 5.5 which are in default.

 

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

 

11.                                 Miscellaneous.

 

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

 

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

 

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

 

(d)                                 Time shall be of the essence.

 

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

 

20

 

time in order to better
assure the consummation of the transactions contemplated hereby, including but
not limited to the transfer of title to the Cyagra Units and the Hematech
Units.

 

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

 

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

 

IN WITNESS WHEREOF, the parties have caused this
Agreement to be executed and delivered as of the day and year first above
written.

 

 

	
   

  	
  ADVANCED
  CELL TECHNOLOGY, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael D. West

  	
   

  
	
   

  	
   

  	
  Michael D. West, President

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  HEMATECH,
  LLC

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  James M. Barton

  	
   

  
	
   

  	
   

  	
  James
  M. Barton, CEO

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  CYAGRA, LLC

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James M. Barton

  	
   

  
	
   

  	
   

  	
  James M. Barton, CEO

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  CYAGRA
  OF KANSAS, LLC

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James M. Barton

  	
   

  
	
   

  	
   

  	
  James
  M. Barton, CEO

  	
   

  

 

21

 

	
   

  	
  THE BARTON FAMILY
  LIMITED

  PARTNERSHIP

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  James Barton

  	
   

  
	
   

  	
   

  	
  James
  Barton, General Partner

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  THE
  ROBL FAMILY LIMITED

  PARTNERSHIP

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  James M. Robl

  	
   

  
	
   

  	
   

  	
  James
  M. Robl, General Partner

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Walter M.
  Fiederowicz

  	
   

  
	
   

  	
  Walter M. Fiederowicz

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Richard Goldsby

  	
   

  
	
   

  	
  Richard
  Goldsby

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Barbara Osborne

  	
   

  
	
   

  	
  Barbara Osborne

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ James M. Robl

  	
   

  
	
   

  	
  James M. Robl

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ James Barton

  	
   

  
	
   

  	
  James Barton

  	
   

  

 

22

 

EXHIBIT A

 

to

 

MEMBERSHIP
INTEREST EXCHANGE AND ASSET SALE AGREEMENT

 

	
  Cyagra
  Holder

  	
   

  	
  Number of Cyagra Units Owned and

  Being Transferred to ACT

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  The
  Barton Family Limited Partnership

  	
   

  	
  273,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  The
  Robl Family Limited Partnership

  	
   

  	
  343,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Walter
  M. Fiederowicz

  	
   

  	
  17,500

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Richard
  Goldsby

  	
   

  	
  87,500

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Barbara
  Osborne

  	
   

  	
  87,500

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  TOTAL

  	
   

  	
  808,500

  	
   Units

  

 

 

EXHIBIT B

 

to

 

MEMBERSHIP
INTEREST EXCHANGE AND ASSET SALE AGREEMENT

 

	
  Cyagra
  Holder

  	
   

  	
  Number of Hematech Units Owned

  Being Transferred by ACT to Cyagra Holders

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  The
  Barton Family Limited Partnership

  	
   

  	
  4,216.24

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  The
  Robl Family Limited Partnership

  	
   

  	
  5,297.28

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Walter
  M, Fiederowicz

  	
   

  	
  270.24

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Richard
  Goldsby

  	
   

  	
  1,351.36

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Barbara
  Osborne

  	
   

  	
  1,351.36

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  TOTAL

  	
   

  	
  12,486.48

  	
   UnitsExhibit 10.31.1

BUYOUT OPTION AGREEMENT

 

This BUYOUT OPTION AGREEMENT is entered into
as of May 31, 2000 between Hematech, LLC, a Delaware limited liability
company (“Hematech”) and Advanced Cell Technology, Inc., a Delaware
corporation with an address at One Innovation Drive, Worcester, Massachusetts
01605 (“ACT”).

 

WITNESSETH:

 

WHEREAS, Hematech and ACT are parties to a
Membership Interest Exchange and Asset Sale Agreement of even date herewith by
and among Hematech, ACT, Cyagra of Kansas, LLC, Cyagra, LLC, and certain Class B
Members of Cyagra, LLC (the “Exchange Agreement”) pursuant to which, among
other things, ACT transferred a portion of its 17.50% Membership Interest in
Hematech to such Class B Members of Cyagra, LLC in exchange for the Class B
Members’ membership interests in Cyagra, LLC; and

 

WHEREAS, ACT continues to hold a 1.892%
Membership Interest in Hematech; and

 

WHEREAS, Hematech desires to acquire an
option to redeem all of ACT’s remaining Membership Interest and ACT is willing
to grant such an option on the terms and conditions set forth herein;

 

NOW, THEREFORE, in consideration of the
mutual promises of the parties contained herein, and other good and valuable
consideration the receipt and sufficiency of which arc hereby acknowledged, the
parties hereby agree as follows:

 

1.             Grant
of Option.  For and in consideration of the sum of $10.00
and other good and valuable consideration, receipt of which is hereby
acknowledged, ACT hereby grants to Hematech the exclusive option (the “Option”)
for the period (“Option Period”) commencing on the date hereof and ending ten (10) years
from the date of this Agreement to purchase all of ACT’s Membership Interests
in Hematech.

 

2.             Exercise
of Option.  This Option may be
exercised only by written notice by Hematech or its assigns, either personally
delivered or sent by certified mail or overnight delivery and addressed to ACT
at the address stated above.  If Hematech
exercises this Option, the redemption of ACT’S Membership Interest shall be on
a date designated by Hematech in its notice to ACT, provided that Hematech
shall give ACT at least ten (10) days prior notice of the closing date.

 

3.             Purchase
Price.  If Hematech exercises this
Option, the purchase price shall be the price per Membership Unit at which Hematech
sells additional Membership Interests in an offering of at least $2,000,000
sold to institutional investors not directly involved in a business relationship
with Hematech.  Hematech may only
exercise this option at the time of the closing of such a financing.

 

 

4.             Transfer/Assignment.
 Nothing contained herein shall impair
the right of ACT (or any subsequent owner of such interests) to transfer its
Membership Interest in Hematech, provided that such transfer is in accordance
with the Limited Liability Company Agreement of Hematech and the transferee
agrees in writing to be bound by the terms of this Agreement.

 

5.             Binding
Agreement.  This Agreement shall be
binding upon and inure to the benefit of the parties hereto, and their
respective successors and assigns.

 

6.             Governing
Law.  This Agreement and the rights
and obligations of the parties hereunder shall be construed in accordance with
and governed by the internal laws of the State of Delaware.

 

IN WITNESS WHEREOF, the parties hereto have
executed this Agreement as of the date written above.

 

 

	
   

  	
  ADVANCED CELL TECHNOLOGY, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael D. West

  	
   

  
	
   

  	
   

  	
  Michael D. West, President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  HEMATECH, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James M. Barton

  	
   

  
	
   

  	
   

  	
  James M. Barton, Chief Executive Officer

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