Document:

exv10w14

 

Exhibit 10.14

EXCLUSIVE LICENSE AGREEMENT (UMass IP)

This Exclusive License Agreement (“Agreement”) is made and entered into this 14th
day of May, 2004 (the “Effective Date”), by and between Advanced Cell Technology, Inc., a Delaware
corporation with offices located at One Innovation Drive, Worcester, Massachusetts 01605
(“LICENSOR”), and PacGen Cellco, LLC, a California limited liability company with offices located
at 157 Surfview Drive, Pacific Palisades, CA 90272 (“LICENSEE”) (LICENSOR and LICENSEE sometimes
hereinafter referred to individually as a “Party” and collectively as the “Parties”).

WITNESSETH

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

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

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

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

ARTICLE 1 — DEFINITIONS

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

1.1 “ACT ANIMAL CELL LINES” shall mean cell lines of non-human animal origin developed by ACT.
These cell lines shall include but not be limited to murine and primate embryonic stem cells
derived through parthenogenesis, nuclear transfer or otherwise isolated from fertilized blastocysts
including the relevant information LICENSOR possesses associated with these cells, including but
not limited to information on the cell’s karyotype, gene expression and growth characteristics.

1.2 “AFFILIATE” shall mean, with respect to any PERSON, any other PERSON which directly or
indirectly controls, is controlled by, or is under common control with, such PERSON. A PERSON
shall be regarded as in control of another PERSON if it owns, or directly or indirectly controls,
at least fifty percent (50%) of the voting stock or other ownership interest of the other PERSON,
or if it directly or indirectly possesses the power to direct or cause the direction of the
management and policies of the other PERSON by any means whatsoever.

 

 

 

1.3 “FIELD” shall mean (1) the research, development, manufacture and selling of
human and non-human animal cells and ACT ANIMAL CELL LINES for commercial research use,
including small molecule and other drug testing and basic research, (2) the manufacture and selling
of human cells for therapeutic and diagnostic use in the treatment of human (a) diabetes and (b)
liver diseases, and (3) the use of ACT ANIMAL CELL LINES in the process of manufacturing and
selling human cells for therapeutic and diagnostic use in the treatment of human (a) diabetes and
(b) liver diseases but where the final marketed product does not include ACT ANIMAL CELL LINES
(i.e. does not include the field of xenotransplantation); but FIELD shall exclude applications
involving the use of cells in the treatment of tumors where the primary use of the cells is the
destruction or reduction of tumors and does not involve regeneration of tissue or organ function.

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

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

1.6 “LICENSED PRODUCT” means any product that cannot be developed, manufactured, used,
imported, exported, or sold without (i) infringing, in whole or in part, one or more VALID CLAIMS
of the PATENT RIGHTS, or (ii) using or incorporating some portion of the LICENSED TECHNOLOGY.

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

 

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

1.9 “NET SALES” shall mean the amount billed or invoiced by LICENSEE for the sale or provision
of LICENSED PRODUCTS or LICENSED PROCESSES or LICENSED SERVICES less:

	 	a)	 	discounts, credits, allowances and rebates allowed;
	 
	 	b)	 	sales, tariff duties, use and other taxes or governmental
charges directly imposed with reference to particular sales;
	 
	 	c)	 	special packaging, transportation and insurance costs incurred
and directly related to the sale of LICENSED PRODUCTS;
	 
	 	d)	 	amounts allowed or credited on returns; and
	 
	 	e)	 	uncollected accounts.

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

1.11 “PATENT RIGHTS” means (a) the patent applications and patents identified on Exhibit
A attached hereto and any patents that issue on said applications and (b) any divisions,
continuations, extensions, reissues or reexaminations of any of the patents identified in the
foregoing clause (a). The Parties agree that Exhibit A may be revised from time to time
after the Effective Date to reflect changes thereto that result from the course of patent
prosecution.

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

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

1.14 “TERRITORY” means the entire world.

1.15 “1996 UMASS LICENSE” means the Exclusive License Agreement between LICENSOR and the
University of Massachusetts (the “University”), dated April 16, 1996, as amended by the Amendment
to Exclusive License Agreement dated September 1, 1999, the Second Amendment to Exclusive License
Agreement dated May 31, 2000, and the Third Amendment to Exclusive License Agreement dated
September 19, 2002.

1.16 “2003 UMASS LICENSE” means the Exclusive License Agreement between
LICENSOR and the University dated April 1, 2003.

 

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1.17 “UMASS LICENSES” means the 1996 UMASS LICENSE and the 2003 UMASS LICENSE.

1.18 “VALID CLAIM” means a claim of any issued and unexpired patent within the PATENT RIGHTS
which has not lapsed, become abandoned or been held permanently revoked, invalid, or unenforceable
by a decision of a court or administrative or government authority or agency of competent
jurisdiction from which no appeal can be or has been taken within the time allowed for such appeal,
or a claim of a pending patent application included within the Licensed PATENT RIGHTS, which claim
was filed in good faith and has not been abandoned or finally disallowed without the possibility of
appeal or refiling of such application.

Additional terms may be defined throughout this Agreement.

ARTICLE 2 — GRANT

2.1 LICENSOR hereby grants to LICENSEE, and LICENSEE hereby accepts, subject to the terms and
conditions hereof:

	 	a)	 	A royalty bearing, exclusive license in the TERRITORY in the
FIELD and under the LICENSED TECHNOLOGY to (a) research, develop, make, have
made, use, sell, offer for sale, import and export LICENSED PRODUCTS, (b)
research, develop, use, practice, sell, offer for sale, import and export
LICENSED PROCESSES and (c) develop, use, perform, sell, offer for sale, import
and export LICENSED SERVICES. By way of example, but not in limitation,
LICENSEE shall have the right to use LICENSED TECHNOLOGY within the FIELD for
the following purposes: to produce mammalian embryonic stem (ES) cells and to
produce from those mammalian embryonic cells, differentiated cells for human
therapeutic purposes or for commercial research purposes, including drug
screening assays, and to produce pluripotent cells including ES cells,
differentiated human cells for human diagnostic and therapeutic purposes and/or
for commercial research purposes, including drug screening assays.
	 
	 	b)	 	A royalty bearing, twelve (12) month exclusive license in the
TERRITORY in the FIELD to expand in culture, prepare for sale, sell, offer for
sale, import and export ACT ANIMAL CELL LINES. The twelve-month term of
exclusivity granted to LICENSEE shall begin upon the date of the first sale of
the ACT ANIMAL CELL LINES. LICENSOR and LICENSEE agree that after the
twelve-month period of exclusivity has passed, LICENSOR AND LICENSEE shall
negotiate in good faith to establish reasonable minimum sales goals over
reasonable evaluation periods in order to maintain
LICENSEE’S exclusive rights hereunder. If LICENSOR fails to meet the minimum
sales goals then LICENSEE’s exclusive rights shall revert to nonexclusive
rights.

 

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2.2 LICENSEE shall have the right to sublicense the rights granted in Section 2.1 to
third parties in connection with contracting with such third parties to (a) provide LICENSED
PRODUCT marketing and distribution services to LICENSEE on behalf of LICENSEE, (b) provide LICENSED
SERVICES marketing services to LICENSEE on behalf of LICENSEE or (c) manufacture for LICENSEE
LICENSED PRODUCTS for sale by LICENSEE or a third party pursuant to the foregoing clause (a).

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

	 	a)	 	the sublicensee shall not have the right to grant further
sublicenses;
	 
	 	b)	 	the sublicense shall not be assignable without prior written
approval by LICENSEE and LICENSOR; and
	 
	 	c)	 	the sublicense shall include fair consideration consistent with
industry norms for upfront fees and royalties.

2.4 Within thirty (30) business days of the Effective Date, LICENSOR shall provide and
transfer to LICENSEE, in writing where practicable, all information and data relating to the
LICENSED TECHNOLOGY and the ACT ANIMAL CELL LINES as may be reasonably necessary and requested to
allow LICENSEE to exploit the licenses granted hereunder. LICENSOR shall work with LICENSEE in good
faith to provide the necessary training for up to a total of 60 days, at LICENSOR’s facilities,
necessary to allow LICENSEE to utilize the LICENSED TECHNOLOGY and expand the ACT ANIMAL CELL
LINES. LICENSEE shall pay to LICENSOR all reasonable and customary expenses other than normal
operating expenses incurred by LICENSOR in providing such training and technology transfer,
including but not limited to fees incurred to request documents from patent counsel or the United
States Patent and Trademark Office.

2.5 LICENSEE acknowledges that a portion of the PATENT RIGHTS licensed to LICENSEE hereunder
is owned by the University and is licensed to LICENSOR under the UMASS LICENSES. In the event the
UMASS LICENSES expire or are terminated for any reason pursuant to the provisions of the UMASS
LICENSES or otherwise, the terms of the letter agreement attached hereto as Exhibit B
between LICENSOR, LICENSEE and the University shall apply to this Agreement.

 

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2.6 Notwithstanding anything stated herein, nothing in this Agreement shall be construed as
preventing LICENSOR from practicing the LICENSED TECHNOLOGY within the
FIELD for non-commercial in-house research purposes. In the event that LICENSOR requests that
LICENSEE deliver to LICENSOR the LICENSED TECHNOLOGY or LICENSED PRODUCTS in the FIELD for research
purposes, LICENSEE shall make the LICENSED TECHNOLOGY or LICENSED PRODUCTS available to LICENSOR on
commercially reasonable terms. In the event LICENSOR requires the use of collaborators in its
research, LICENSEE shall also make such LICENSED TECHNOLOGY OR LICENSED PRODUCTS available to such
collaborator if LICENSEE, in its sole but reasonable discretion is satisfied that providing such
items to a collaborator will not endanger its exclusive commercial control of such items or result
in their use by a competitor.

ARTICLE 3 — LICENSEE OBLIGATIONS

RELATING TO COMMERCIALIZATION

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

3.2 LICENSEE shall maintain minimum R&D requirements to maintain exclusivity under this
Agreement. Commencing 30 months following the Effective Date hereof and until the launch of the
first human cell-based therapeutic product, LICENSEE shall be required to invest a minimum of
$400,000 per year in research and development of the FIELD covered by this Agreement or other
agreements with LICENSOR affecting the FIELD in order to maintain the exclusive license rights
granted hereunder. In the event LICENSEE fails to perform this minimum expenditure in R&D in the
FIELD during the course of a calendar year during the above-mentioned period, the license under
this Agreement shall become nonexclusive and such minimum expenditure for research and development
shall be reduced to $200,000 per year.

3.3 LICENSEE shall maintain complete and accurate records of LICENSED PRODUCTS, LICENSED
PROCESSES, LICENSED SERVICES and ACT ANIMAL CELL LINES that are made, used, sold or performed by
LICENSEE under this Agreement. Not later than April 1st of each year following the
Effective Date, LICENSEE shall furnish LICENSOR with a summary report on the progress of its
efforts during the prior year to develop and commercialize LICENSED PRODUCTS, LICENSED PROCESSES,
LICENSED SERVICES or ACT ANIMAL CELL LINES, including without limitation research and development
efforts, efforts to obtain regulatory approval, marketing efforts (including LICENSED PRODUCTS,
LICENSED PROCESSES, LICENSED SERVICES and ACT ANIMAL CELL LINES made, used, sold or performed) and
sales figures, provided that such reports shall be deemed Confidential Information (as defined in
Section 10.1 herein) subject to the provisions of Article 10 of this Agreement.

 

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3.4 In the event that LICENSOR determines that LICENSEE has not fulfilled its obligations
under this Article 3, LICENSOR shall furnish LICENSEE with written notice of such
determination. Within thirty (30) days after receipt of such notice, LICENSEE shall (i) fulfill
the relevant obligation, (ii) negotiate with LICENSOR a mutually acceptable schedule of revised
obligations, or (3) if LICENSEE disputes the alleged failure to fulfill its obligations, it shall
promptly seek appropriate judicial determination of the matter and diligently pursue such action to
a final determination with all appropriate speed; failing which, LICENSOR shall have the right,
immediately upon written notice to LICENSEE, to terminate this Agreement as provided in Section
9.2 hereof.

ARTICLE 4 — CONSIDERATION

4.1 Initial Payment. In partial consideration of the license granted to LICENSEE from
LICENSOR in Article 2 of this Agreement, LICENSEE agrees to pay as a “License Fee” to
LICENSOR $150,000 in a convertible promissory note in the form attached hereto as Exhibit C.

4.2 Royalties.

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

(i) 6% on therapeutics,

(ii) 3% on diagnostics, and

(iii) 10% on commercial research use of LICENSED
TECHNOLOGY in all FIELDS except (iv) below and

(iv) 12% on ACT ANIMAL CELL LINES

	 	b)	 	No multiple royalties shall be payable because any LICENSED PRODUCT, LICENSED
PROCESS or LICENSED SERVICE in the FIELD, its manufacture, use, lease, sale or
performance are or shall be covered by more than one patent or patent application
within the PATENT RIGHTS.
	 
	 	c)	 	The obligation of LICENSEE to pay royalties or Sublicense Income (as defined in
Section 4.5 herein) hereunder shall terminate for each country in the TERRITORY
concurrently with the expiration or termination of the last applicable VALID CLAIM
within the PATENT RIGHTS in such country in which the LICENSED PRODUCT, LICENSED
PROCESS or LICENSED SERVICE is, (as applicable), used, practiced, performed, sold,
offered for sale, imported, exported or manufactured.

 

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4.3 Minimum Royalties. Within 2 business days from the Effective Date hereof,
LICENSEE shall pay to LICENSOR a minimum royalty fee of $100,000 in cash or by wire transfer. In
addition, commencing 12 months following the Effective Date, LICENSEE shall pay to LICENSOR
additional minimum royalty fees equal to the difference between total Royalties actually paid in
the preceding 12 months and the following minimum amounts:

(i) At 12 months, $10,000

(ii) At 24 months, $20,000

(iii) At 36 months, $30,000

(iv) Annually thereafter, $40,000.

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

4.5 Sublicense Income. LICENSEE shall pay to LICENSOR a total of Thirty Three percent
(33%) of all Sublicense Income. “Sublicense Income” means consideration that LICENSEE receives for
the sublicense of rights that are granted LICENSEE under Article 2, including without
limitation license fees, milestone payments, equity payments, up front fees, success fees, and
license maintenance fees.

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

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

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

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

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

 

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4.8 Stacking Milestone Payments. The milestone payments shall be in addition to any
royalties specified elsewhere in this Article 4, but shall not apply to diagnostic,
commercial research, or any other non-therapeutic uses. If LICENSEE is obligated to pay or has
paid to LICENSOR similar Milestone Payments under another license agreement with respect to the
FIELD, then LICENSEE shall have the right to pro-rate such Milestone Payments against the Milestone
Payments owing to LICENSOR under this Agreement such that in no event shall the total of all
Milestone Payments due from LICENSEE to LICENSOR exceed the amounts stated in Section 4.7.
Pro-rating of payments shall be made in the ratio of the minimum royalties payable under this
Agreement to the minimum royalties payable under any other agreement covered hereby under which
Milestone Payments are owed.

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

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

4.11 Taxes. Subject to the limits of Section 1.9 hereof, all payments due
hereunder shall be paid in full without deduction of taxes or other fees which may be imposed by
any government and which shall be paid by LICENSEE; provided, however, that any withholding tax
required to be withheld by LICENSEE on royalty payments under the laws of any country in the
TERRITORY on behalf of LICENSOR will be timely paid by LICENSEE to the appropriate governmental
authority, and LICENSEE will furnish LICENSOR with proof of payment of such tax. Any such tax
actually withheld may be deducted from royalty payments due to LICENSOR under this Agreement. If
at any time legal restrictions prevent the prompt remittance of part or all of any payments owed by
LICENSEE to LICENSOR hereunder with respect to any country in the TERRITORY, payment shall be made
through any lawful means or methods that may be available, and as LICENSEE shall reasonably
determine is appropriate.

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

 

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ARTICLE 5 — REPORTS AND RECORDS

5.1 LICENSEE shall keep full, true and accurate books of account containing all particulars
that may be necessary for the purpose of showing the amounts payable to LICENSOR hereunder and to
enable the reports provided under Section 5.2 to be verified. Said books of account shall
be kept at LICENSEE’s principal place of business. Said books and the supporting data shall be
open upon reasonable advance notice (but not less than five (5) business days notice and no more
frequently than once per calendar year) for three (3) years following the end of the calendar year
to which they pertain, to the inspection of LICENSOR or its agents for the purpose of verifying
LICENSEE’s royalty and Sublicense Income statement or compliance in other respects with this
Agreement. If any such audit determines an error in any royalty or Sublicense Income payment,
LICENSEE shall pay to LICENSOR, within thirty (30) days of the discovery of the error, (a) all
deficiencies in royalty or Sublicense Income payments, (b) interest on such deficiencies from the
date such royalty or Sublicense Income payment was due until the date paid at the rate set forth in
Section 4.12 above, and (c) if such error is in excess of five percent (5%) of any royalty
or Sublicense Income payment, the cost of the audit. In all other cases, the costs of the audit
shall be paid for by LICENSOR. All information disclosed pursuant to an audit shall be treated as
Confidential Information (as defined in Section 10.1 herein) and shall not be disclosed to
any third party or used for any purpose other than to determine the correctness of LICENSEE’s
royalty and Sublicense Income statement or compliance in other respects with this Agreement.

5.2 After the first commercial sale of a LICENSED PRODUCT, LICENSED PROCESS, LICENSED
SERVICES, or ACT ANIMAL CELL LINES, LICENSEE, within forty-five (45) days after March 31, June 30,
September 30 and December 31 of each year, shall deliver to LICENSOR a true and accurate report,
giving such particulars of the business conducted by LICENSEE and its permitted sublicensees during
the preceding three-month period under this Agreement as shall be pertinent to a royalty and
Sublicense Income accounting hereunder. Without limiting the generality of the foregoing, these
reports shall include at least the following:

	 	a)	 	the number of LICENSED PRODUCTS and ACT ANIMAL CELL LINES
manufactured and sold by LICENSEE and all sublicensees;
	 
	 	b)	 	total billings and the amounts actually received for LICENSED
PRODUCTS and ACT ANIMAL CELL LINES sold by LICENSEE and all sublicensees;
	 
	 	c)	 	an accounting for all LICENSED PROCESSES or LICENSED SERVICES
used in the provision of services to others or sold by LICENSEE;
	 
	 	d)	 	the deductions applicable as provided in Section 1.9;
and
	 
	 	e)	 	the names and addresses of all parties making LICENSED PRODUCTS
on
behalf of LICENSEE.

 

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The reports shall provide the above-identified information by product, process, or service
type.

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

ARTICLE 6 — PATENT PROSECUTION

6.1 LICENSOR shall be solely responsible for the continued prosecution of pending patent
applications included in the PATENT RIGHTS and the issuance of such applications after allowance.
The prosecution, filing and maintenance of all patents and applications shall be the primary
responsibility of LICENSOR. LICENSEE agrees to cooperate fully with LICENSOR, as requested by
LICENSOR and at LICENSOR’s expense, in the preparation, filing, prosecution, and maintenance of the
patent applications and patents included in the PATENT RIGHTS. With respect to Australia, Canada,
Europe, Mexico, Japan and Israel, LICENSEE shall pay to LICENSOR on or before the due date one
half (1/2) of any future annuity and maintenance fees with respect to UMA 99-19, provided LICENSOR
notifies LICENSEE of the amount of such payments due at least 30 days prior to their due date.

6.2 Licensors will not allow any patent or patent application within the PATENT RIGHTS to
become expired or abandoned without giving (a) prior written notice to LICENSOR of such expiration
or abandonment, and (b) LICENSOR the right to assume responsibility for such patent or patent
application subject to the rights of the University under the UMASS LICENSES and the rights of
pre-existing licensees under their respective licenses. LICENSOR will then assign such patent or
patent application to LICENSEE and LICENSEE will thereafter assume control thereof and all expenses
related thereto.

ARTICLE 7 — PROSECUTION OF INFRINGERS

AND DEFENSE OF PATENT RIGHTS

The Parties agree to notify each other in writing of any actual or threatened infringement by
a third party of the PATENT RIGHTS or of any claim of invalidity, unenforceability, or
non-infringement of the PATENT RIGHTS. LICENSOR shall have the sole responsibility to prosecute or
defend such claims, as applicable. LICENSEE shall, if requested, provide reasonable assistance to
LICENSOR in connection with the prosecution or defense of such claims.

 

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ARTICLE 8 — INDEMNIFICATION

8.1 Indemnification of the LICENSOR and the University. LICENSEE shall be
responsible for and shall indemnify, defend, and hold harmless LICENSOR and the University,
and their agents, attorneys, representatives, third party beneficiaries and their respective heirs,
executors, successors and assigns (collectively, the “LICENSOR Indemnitees”) from and against all
liabilities of any kind whatsoever, including legal expenses and reasonable attorneys’ fees,
incurred or imposed upon any of the LICENSOR Indemnitees in connection with or as a consequence of
any claims (including third party claims), suits, actions, demands or judgments arising out of the
death of or injury to any person or persons or out of any damage to property resulting from the
development, production, manufacture, sale, use, performance, rendering, consumption or
advertisement of the LICENSED PRODUCT(s) and/or LICENSED PROCESS(es), LICENSED SERVICE(s), and/or
ACT ANIMAL CELL LINES or arising from any obligation, act or omission performed or failed to be
performed hereunder, or from a breach of any representation or warranty of LICENSEE hereunder
unless and to the extent that such liability arises solely from any action of LICENSOR or any of
its Affiliates. If the exercise of LICENSEE’s rights under this Agreement in any country in the
TERRITORY is the subject of a bona fide claim by a third party, filed in a court of competent
jurisdiction after the date hereof, that the exercise of such rights infringes or conflicts with
any intellectual property rights of such third party (a “Third Party Infringement Claim”), then
LICENSEE shall not have any of the rights granted herein in such country and shall have no
obligation to pay LICENSOR any further payments under Article 4 of this Agreement with
respect to any country of the TERRITORY until such claim is resolved by proper adjudication or
settlement permitting LICENSEE to exercise LICENSEE’s rights under this Agreement in the applicable
country of the TERRITORY. Notwithstanding anything herein to the contrary, LICENSOR covenants that
it will not (a) assert or bring any suit, action, claim or other proceeding against LICENSEE based
on, in whole or in part, LICENSEE’s exercise of LICENSEE’s rights, in accordance with the terms and
conditions of this Agreement, with respect to the LICENSED TECHNOLOGY and/or (b) join in any third
party suit, action, claim or other proceeding against LICENSEE based on, in whole or in part, any
intellectual property rights (including without limitation, patent rights and/or know how) owned by
the applicable third party, so long as LICENSEE is not in violation of this Agreement.

8.2 Indemnification of the LICENSEE. LICENSOR shall be responsible for and shall
indemnify, defend, and hold harmless LICENSEE and the officers, directors, shareholders, employees,
agents, attorneys, representatives, and Affiliates, and their respective heirs, executors,
successors and assigns. (the “LICENSEE Indemnitees”) from and against all liabilities of any kind
whatsoever, including legal expenses and reasonable attorneys’ fees, incurred or imposed upon any
of the LICENSEE Indemnitees in connection with or as a consequence of any claims (including third
party claims), suits, actions, demands or judgments arising out of, directly or indirectly, or in
any way relating to: (a) any breach by LICENSOR of any representation, warranty, covenant or
obligation set forth in this Agreement; or (b) arising from LICENSOR’s ownership, management,
control, use or disposition of the LICENSED TECHNOLOGY or ACT ANIMAL CELL LINES unless and to the
extent that such liability arises solely from any action of LICENSEE or any of its Affiliates after
the Effective Date.

 

12

 

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

8.4 Right to Contest and Defend. The Indemnifying Party shall contest and defend, at
its sole cost and expense, by all appropriate legal proceedings any Claim with respect to which it
is called upon to indemnify the Indemnified Party under the provisions of this Agreement; provided,
that notice of the intention to so contest shall be delivered by the Indemnifying Party to the
Indemnified Party as soon as reasonably possible after (but no later than twenty 20 days from) the
date of receipt by the Indemnifying Party of notice by the Indemnified Party of the assertion of
the Claim. Any such contest may be conducted in the name and on behalf of the Indemnifying Party or
the Indemnified Party as may be appropriate. Such contest shall be conducted by reputable counsel
employed by the Indemnifying Party, but the Indemnified Party shall have the right but not the
obligation to participate in such proceedings and to be represented by counsel of its own choosing
at its sole cost and expense. The Indemnifying Party shall have full authority to determine all
action to be taken with respect thereto; provided, however, that the Indemnifying Party will not
have the authority to subject the Indemnified Party to any obligation whatsoever (whether financial
or the imposition of equitable or injunctive relief), other than the performance of purely
ministerial tasks or obligations not involving material expense (for which the Indemnified Party
shall be reimbursed). If the Indemnifying Party does not elect to contest any such Claim, the
Indemnifying Party shall be bound by the result obtained with respect thereto by the Indemnified
Party.

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

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

8.7 Payment of Damages. The Indemnifying Party shall pay to the Indemnified Party in
immediately available funds any amounts to which the Indemnified Party may become entitled by
reason of the provisions of this Agreement, such payment to be made within five (5) days
after any such amounts are finally determined either by mutual agreement of the Parties hereto
or pursuant to the final non-appealable judgment of a court of competent jurisdiction.

 

13

 

8.8 Independent Indemnities. The Parties acknowledge and agree that each of the
indemnities under Sections 8.1 and 8.2 may be relied upon independently.

8.9 Insurance. LICENSEE and LICENSOR mutually agree to maintain insurance or
self-insurance that is reasonably adequate to fulfill any potential obligation to the Indemnified
Parties. LICENSEE and LICENSOR shall continue to maintain such insurance or self-insurance during
the term of this Agreement and after the expiration or termination of this Agreement for a period
of five (5) years. Each Party shall provide to the other Party, upon request, proof of any such
insurance policy maintained by such Party.

ARTICLE 9 — TERMINATION

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

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

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

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

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

 

14

 

9.6 Nothing herein shall be construed to release either Party from any obligation that accrued
prior to expiration or any termination of this Agreement. The following provisions shall survive
any termination or any expiration of the TERM of this Agreement: this Section 9.6 and
Articles/Sections 1, 4, 5, 8, 9.4, 10, 11, 12, 13, 15.1, 15.2, 15.5, 15.6, 15.7, 15.8, 15.10, 15.15
and 15.16, and any other provision which by its nature is intended to survive any such
termination.

ARTICLE 10 — CONFIDENTIALITY AND NON-DISCLOSURE

10.1 Confidential Information; Non-Disclosure. “Confidential Information” shall mean
any technical, business, financial, customer or other information disclosed by one Party (the
“Disclosing Party”) to the other Party (the “Receiving Party”) pursuant to this Agreement which is
marked “Confidential” or “Proprietary,” or which, under all of the given circumstances, ought
reasonably to be treated as confidential information of the Disclosing Party. Such information may
be disclosed in oral, visual or written form (including magnetic, optical or other media). Except
as expressly provided in Section 10.2 below, each Party’s Confidential Information
specifically includes without limitation the respective Party’s business plans and business
practices, the terms of this Agreement, scientific knowledge, research and development or know-how,
processes, inventions, techniques, formulae, products and product plans, business operations,
customer requirements, designs, sketches, photographs, drawings, specifications, reports, studies,
findings, data, plans or other records, biological materials, software, margins, payment terms and
sales forecasts, volumes and activities, designs, computer code, technical information, costs,
pricing, financing, business opportunities, personnel, and information of LICENSOR or LICENSEE
relating to the LICENSED PROCESSES, LICENSED PRODUCTS or LICENSED SERVICES whether or not such
information is marked or identified provided that the Disclosing Party provides notice in writing
reasonably identifying such Confidential Information within 30 days of disclosure. Except to the
extent expressly authorized by this Agreement or by other prior written consent by the Disclosing
Party, the Receiving Party, during the term of this Agreement, and thereafter, shall: (i) treat as
confidential all Confidential Information of the other Party; (ii) use Confidential Information
only for exercising the rights and fulfilling the obligations set forth in this Agreement, (iii)
implement reasonable procedures to prohibit the disclosure, unauthorized duplication, misuse or
removal of the Disclosing Party’s Confidential Information; (iv) not disclose Confidential
Information to any third party, and (v) only disclose the Confidential Information to (a) those of
its employees who have a need to know Confidential Information in order to exercise the rights and
fulfill the obligations set forth in this Agreement and (b) legal and professional advisors and
existing and potential investors and their legal and professional advisors, each of which is bound
by a written agreement (or in the case of attorneys or other professional advisors, formal ethical
duties) requiring such advisors and investors to treat, hold and maintain such Confidential
Information in accordance with the terms and conditions of this Agreement, or (c) recipients of
offering documents in connection with any offering of securities where such disclosure is, in the
opinion of counsel for the

 

15

 

Disclosing Party, reasonably required to comply with the investment disclosure laws of any
applicable jurisdiction. Without limiting the foregoing, the Receiving Party shall protect the
Disclosing Party’s Confidential Information using at least the same procedures and degree of care
that it uses to prevent the disclosure of its own confidential information of like importance, but
in no event less than reasonable care.

10.2 Exceptions. The Receiving Party shall have no obligation or liability to the
Disclosing Party with regard to any Confidential Information of the Disclosing Party: (i) that was
publicly known and available at the time it was disclosed or becomes publicly known and available
through no fault, action, or inaction of the Receiving Party; (ii) was known to the Receiving
Party, without restriction, at the time of disclosure as shown by the files of the Receiving Party
in existence at the time of disclosure; (iii) is disclosed with the prior written approval of the
Disclosing Party; (iv) was independently developed by the Receiving Party without any use of the
disclosing party’s Confidential Information, provided, that the Receiving Party can demonstrate
such independent development by documented evidence prepared contemporaneously with such
independent development; (v) is disclosed pursuant to the order or requirement of a court,
administrative agency, or other governmental body, provided that the Receiving Party shall provide
prompt notice thereof and reasonable assistance to the Disclosing Party to enable the Disclosing
Party to seek a protective order or otherwise prevent such disclosure, and provided further that
such disclosure is limited to the extent necessary to comply with such order and the information
shall otherwise be treated as Confidential Information; or (vi) that is provided to the Receiving
Party by an independent third party without violating any confidentiality obligation to the
Disclosing Party.

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

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

10.5 Survival. The obligations of LICENSOR and LICENSEE under this Article 10
shall survive any expiration or termination of this Agreement.

 

16

 

ARTICLE 11 — PAYMENTS, NOTICES, AND OTHER COMMUNICATIONS

Any payment, notice or other communication pursuant to this Agreement shall be in writing and
sent by certified first class mail, postage prepaid, return receipt requested, or by nationally
recognized overnight carrier addressed to the Parties at the following addresses or such other
addresses as such Party furnishes to the other Party in accordance with this paragraph. Such
notices, payments, or other communications shall be effective upon receipt.

In the case of LICENSOR:

Advanced Cell Technology, Inc.

One Innovation Drive

Worcester, MA 01605

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

With a copy to:

Pierce Atwood

One Monument Square

Portland, ME 04101

Attention: William L. Worden, Esq.

In the case of LICENSEE:

PacGen Cellco, LLC.

157 Surfview Drive

Pacific Palisades, CA 90272

Attention: Kenneth Aldrich

With a copy to:

Gray Cary Ware & Freidenrich

4365 Executive Drive, Suite 1100

San Diego, CA 92121-2133

Attention: Lisa Haile

 

17

 

ARTICLE 12 — RESPRESENTATIONS AND WARRANTIES OF LICENSOR 

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

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

12.2 No Violations. The execution, delivery and performance of this Agreement by
LICENSOR and the consummation by LICENSOR of the transactions contemplated hereby does not,: (a)
violate any statute, ordinance, rule or regulation applicable to LICENSOR or by which any of the
LICENSED TECHNOLOGY may be bound; (b) violate any order, judgment or decree of any court or of any
Governmental Authority or regulatory body, agency or authority applicable to LICENSOR or by which
any of the LICENSED TECHNOLOGY may be bound; (c) require any filing by LICENSOR with, or require
LICENSOR to obtain any permit, consent or approval of, or require LICENSOR to give any notice to,
any Governmental Authority or regulatory body, agency or authority; or (d) result in a violation or
breach by LICENSOR of, conflict with, constitute a default by LICENSOR (or give rise to any right
of termination, cancellation, payment or acceleration) under or result in the creation of any
Encumbrance upon any of the LICENSED TECHNOLOGY.

12.3 Litigation. Except as set forth in Exhibits D and E, there is no action,
suit, proceeding at law or in equity, arbitration or administrative or other proceeding by or
before (or any investigation by) any governmental or other instrumentality or agency, pending, or
threatened, against or affecting the LICENSED TECHNOLOGY, and LICENSOR does not know of any valid
basis for any such action, proceeding or investigation. To the knowledge of LICENSOR, there are no
such suits, actions, claims, proceedings or investigations pending or threatened, seeking to
prevent or challenge the transactions contemplated by this Agreement.

12.4 Disclosure. Neither these representations and warranties made by LICENSOR
pursuant to this Agreement nor any of the exhibits, schedules or certificates attached hereto or
delivered in accordance with the terms hereof knowingly contains any misstatement of fact or omits
any statement of fact necessary in order to make the statements contained herein and therein not
misleading in light of the circumstances under which they were made.

12.5 Copies of Documents. LICENSOR has caused to be made available for inspection and
copying by LICENSEE and its advisers, true, complete and correct copies of all documents in
LICENSOR’s possession referred to in any schedule attached hereto.

12.6 Broker’s or Finder’s Fees. No agent, broker, person or firm acting on behalf of
LICENSOR is, or will be, entitled to any fee, commission or broker’s or finder’s fees for which the
LICENSEE may be liable in connection with this Agreement or any of the transactions contemplated
hereby.

 

18

 

12.7 LICENSED TECHNOLOGY.

	 	(a)	 	Except as set forth on Exhibit D and E, LICENSOR, is
not aware of any interference, infringement, misappropriation, or other
conflict with any intellectual property rights of third parties, and LICENSOR
has never received any charge, complaint, claim, demand, or notice alleging any
such interference, infringement, misappropriation, or violation (including any
claim that LICENSOR must license or refrain from using any intellectual
property rights of any third party). To the knowledge of LICENSOR, no third
party has interfered with, infringed upon, misappropriated, or otherwise come
into conflict with any of the LICENSED TECHNOLOGY.
	 
	 	(b)	 	Exhibit A identifies each patent or registration which
has been issued or licensed to LICENSOR with respect to any of the LICENSED
TECHNOLOGY and identifies each pending patent application or application for
registration which LICENSOR has made with respect to any of the LICENSED
TECHNOLOGY. LICENSOR has made available to LICENSEE correct and complete copies
of all such patents, registrations and applications (as amended to-date) in
LICENSOR’s possession and has made available to LICENSEE correct and complete
copies of all other written documentation in LICENSOR’s possession evidencing
ownership and prosecution (if applicable) of each such item.
	 
	 	(c)	 	Exhibit A identifies each item of LICENSED TECHNOLOGY
that is assigned to the University and that LICENSOR uses pursuant to license,
sublicense, agreement, or permission. LICENSOR has made available to LICENSEE
correct and complete copies of all such licenses, sublicenses, agreements,
patent prosecution files and permissions (as amended to-date) in LICENSOR’s
possession. With respect to each item of LICENSED TECHNOLOGY required to be
identified in Exhibit A and to the knowledge of LICENSOR: (i) the
license, sublicense, agreement, or permission covering the item is legal,
valid, binding, enforceable, and in full force and effect; (ii) the license,
sublicense, agreement, or permission will continue to be legal, valid, binding,
enforceable, and in full force and effect on identical terms following the
consummation of the transactions contemplated hereby; (iii) no Party to the
license, sublicense, agreement, or permission is in breach or default, and no
event has occurred which with notice or lapse of time would constitute a breach
or default or permit termination, modification, or acceleration thereunder;
(iv) no party to the license, sublicense, agreement, or permission has
repudiated any provision thereof; (v) the underlying item of LICENSED
TECHNOLOGY is not subject to any outstanding lien or encumbrance, injunction,
judgment, order, decree, ruling, or charge other than that disclosed in
Exhibits D and E; (vi) no action, suit, proceeding, hearing, investigation,
charge, complaint, claim, or demand is pending or is threatened which
challenges the legality, validity, or enforceability of the underlying
item of LICENSED TECHNOLOGY other than that disclosed in Exhibits D and E; and
(vii) LICENSOR has not granted any sublicense or similar right to the LICENSED
TECHNOLOGY within the FIELD.

 

19

 

12.8 Survival of Representations and Warranties.

	 	(a)	 	Except as otherwise provided herein, notwithstanding any
investigation at any time made by or on behalf of any Party hereto, the
representations and warranties set forth herein and in any certificate
delivered in connection herewith with respect to any of those representations
and warranties will survive the Effective Date until the longer to occur of:
(i) two (2) years or (ii) the expiration of the applicable statutes of
limitation, including all periods of extension and tolling whereupon they will
terminate and expire.
	 
	 	(b)	 	After a representation and warranty has expired, as provided in
Subsection 12.8(a), no claim for claims or costs may be made or
prosecuted by any Person who would have been entitled to claims or costs on the
basis of that representation and warranty prior to its termination and
expiration, provided that no claim presented in writing for claims or costs to
the Person or Persons from which or whom those damages are sought on the basis
of that representation and warranty prior to its termination and expiration
will be affected in any way by that termination and expiration.

12.9 EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS AGREEMENT, LICENSOR, ITS DIRECTORS,
OFFICERS, EMPLOYEES, AND AFFILIATES MAKE NO REPRESENTATIONS AND EXTEND NO WARRANTIES OF ANY KIND,
EITHER EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO WARRANTIES OF MERCHANTABILITY, FITNESS FOR
A PARTICULAR PURPOSE, VALIDITY OF PATENT RIGHTS, ISSUED OR PENDING, AND THE ABSENCE OF LATENT OR
OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE. NOTHING IN THIS AGREEMENT SHALL BE CONSTRUED AS A
REPRESENTATION MADE OR WARRANTY GIVEN BY LICENSOR THAT THE PRACTICE BY LICENSEE OF THE LICENSE
GRANTED HEREUNDER SHALL NOT INFRINGE THE PATENT RIGHTS OF ANY THIRD PARTY.

ARTICLE 13—REPRESENTATIONS AND WARRANTIES OF LICENSEE.

LICENSEE represents and warrants to LICENSOR as follows:

13.1 Existence and Good Standing: Power and Authority. LICENSEE is a limited liability
company duly organized, validly existing and in good standing under the laws of the state of
California. LICENSEE has full corporate power and authority to make, execute, deliver and perform
this Agreement, to perform its obligations hereunder and to consummate the

 

20

 

transactions contemplated hereby. The execution, delivery and performance of this Agreement by
LICENSEE and the consummation by it of the transactions contemplated hereby, have been duly
authorized and approved by all required corporate action of LICENSEE and no other action on the
part of LICENSEE is necessary to authorize the execution, delivery and performance of this
Agreement by LICENSEE and the consummation of the transaction contemplated hereby. This Agreement
has been duly executed and delivered by LICENSEE and is a valid and binding obligation of LICENSEE
enforceable against it in accordance with its terms, except to the extent that its enforceability
may be subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting the enforcement of creditors’ rights generally and by general equitable principles.

13.2 Authorization and Validity of Agreement. LICENSEE has full power and authority,
including full corporate power and authority, to execute and deliver this Agreement, to perform its
obligations hereunder and to consummate the transactions contemplated hereby. Without limiting the
foregoing, the execution, delivery and performance of this Agreement by LICENSEE and the
consummation by it of the transactions contemplated hereby, have been duly authorized and approved
by the members and managers of LICENSEE, and no other action on the part of LICENSEE or its
officers, directors or shareholder is necessary to authorize the execution, delivery and
performance of this Agreement by LICENSEE and the consummation of the transactions contemplated
hereby. This Agreement has been duly executed and delivered by LICENSEE and is a valid and binding
obligation of LICENSEE enforceable against it in accordance with its terms, except to the extent
that its enforceability may be subject to applicable bankruptcy, insolvency, reorganization,
moratorium and similar laws affecting the enforcement of creditors’ rights generally and by general
equitable principles.

13.3 Consents and Approvals; No Violations. The execution, delivery and performance of
this Agreement by LICENSEE and the consummation by LICENSEE of the transactions contemplated hereby
will not, with or without the giving of notice or the lapse of time or both: (a) violate, conflict
with, or result in a breach or default under any provision of the organizational documents of
LICENSEE; (b) violate any statute, ordinance, rule or regulation applicable to LICENSEE, (c)
violate any order, judgment or decree of any court or of any governmental or regulatory body,
agency or authority applicable to LICENSEE or by which any of the LICENSED TECHNOLOGY may be bound;
or (d) require any filing by LICENSEE with, or require LICENSEE to obtain any permit, consent or
approval of, or require LICENSEE to give any notice to, any governmental or regulatory body, agency
or authority, except filings, if any, which may be required under the “Blue Sky” laws of
Massachusetts or as may be required in the future to comply with governmental regulations governing
the production and sale of products by LICENSEE as it conducts its business.

13.4 Survival of Representations and Warranties.

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

 

21

 

(b) After a representation and warranty has expired, as provided in Subsection
13.4(a), no claim for claims or costs may be made or prosecuted by any Person who would have
been entitled to claims or costs on the basis of that representation and warranty prior to its
termination and expiration, provided that no claim presented in writing for claims or costs to the
Person or Persons from which or whom those damages are sought on the basis of that representation
and warranty prior to its termination and expiration will be affected in any way by that
termination and expiration.

ARTICLE 14 — LIMITATION OF LIABILITY

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

ARTICLE 15 — MISCELLANEOUS PROVISIONS

15.1 CORPORATE PARTNERSHIPS. In the event LICENSEE enters into a corporate partnership for
the joint development of any of the LICENSED TECHNOLOGY, and LICENSEE sublicenses the LICENSED
TECHNOLOGY to a third party, then payments required hereunder shall not include funds provided for
sponsored research or equity investments by any third party so long as such payments do not
constitute a majority of funds transferred by such third party. However if the sponsored research
involves fees in excess of industry standard reimbursement for FTEs or equity investment in excess
of fair market value, LICENSEE shall pay to LICENSOR a royalty on such excess fees calculated at
the rates specified herein.

15.2 LICENSEE “REVERSE LICENSE” TO LICENSOR. LICENSEE agrees to license to LICENSOR on a
non-exclusive basis for therapeutic uses in the treatment of blood and cardiovascular diseases the
rights to any technology it currently owns or has licensed or develops or licenses in the future
that is applicable to such diseases (excluding however the use of proprietary techniques now or
hereafter developed by LICENSEE for the enhanced vascularization of transplanted cells or tissues).
Such license shall provide for royalty payments at the same rate as LICENSEE’S royalty payments to
LICENSOR hereunder as provided in Section 4.2(a). Such license will be sublicensable only once in
a given field of use; or for the

 

22

 

purpose of having products produced, made, or distributed; or in connection with a merger or
consolidation of LICENSOR into another company or a sale of all or substantially all of the assets
of LICENSOR. LICENSEE shall also have no obligations hereunder with respect to technology licenses
it has or may acquire if such licenses restrict sublicensing in a manner inconsistent with this
subparagraph. Such “Reverse License shall not apply to any rights acquired by LICENSEE under
Section 15.18 hereof.

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

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

	 	a)	 	LICENSEE shall obtain all necessary approvals from the FDA,
USDA, or any similar governmental authorities of any foreign jurisdiction in
which LICENSEE intends to make, use, or sell LICENSED PRODUCTS or to perform
LICENSED PROCESSES or LICENSED SERVICES.
	 
	 	b)	 	LICENSEE shall comply fully with any and all applicable local,
state, federal and international laws and regulations relating to the LICENSED
PRODUCTS, LICENSED PROCESSES and LICENSED SERVICES, and the PATENT RIGHTS, in
the TERRITORY, including without limitation all export or import regulations
and rules now in effect or as may be issued from time to time by any
governmental authority which has jurisdiction relating to the export of
LICENSED PRODUCTS, LICENSED PROCESSES or

 

23

 

	 	 	 	LICENSED SERVICES and any technology relating thereto. LICENSEE hereby gives
written assurance that it will comply with all such import or export laws and
regulations (including without limitation all Export Administration Regulations
of the United States Department of Commerce), that it bears sole responsibility
for any violation of such laws and regulations, and that it will indemnify,
defend, and hold LICENSOR and the University harmless (in accordance with
Article 8) for the consequences of any such violation.

	 	c)	 	To the extent that any invention claimed in the PATENT RIGHTS
has been partially funded by the United States Government, and only to the
extent required by applicable laws and regulations, LICENSEE agrees that any
LICENSED PRODUCTS used or sold in the United States will be manufactured
substantially in the United States or its territories. Current law provides
that if a domestic manufacturer is not commercially feasible under the
circumstances, LICENSOR and/or the University may seek a waiver of this
requirement from the relevant federal agency on behalf of LICENSEE and, upon
LICENSEE’S request, shall cooperate with LICENSEE in seeking such a waiver.

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

15.6 Neither Party shall originate any publicity, news release or other public announcement
(“Announcements”), written or oral, relating to this Agreement or the existence of an arrangement
between the Parties, without the prior written approval of the other Party, which approval shall
not be unreasonably withheld or delayed, except as otherwise required by law. Any references to
the University in such Announcements shall be subject to the approval of the University. The
foregoing notwithstanding, LICENSOR and LICENSEE shall have the right to make such Announcements
without the consent of the other Party or the University, as applicable, in any prospectus,
offering memorandum, or other document or filing required by applicable securities laws or other
applicable law or regulation, provided that such 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
purpose of giving the other Party or the University, as applicable, the opportunity to comment on
such text.

15.7 No implied licenses are granted pursuant to the terms of this Agreement. No licensed
rights shall be created by implication or estoppel.

 

24

 

15.8 Nothing herein shall be deemed to constitute either Party as the agent or
representative of the Party, or both parties as joint venturers or partners for any purpose. Each
Party shall be an independent contractor, not an employee or partner of the other Party, and the
manner in which each Party renders its services under this Agreement shall be within its sole
discretion. Neither Party shall be responsible for the acts or omissions of the other Party, nor
shall either Party have authority to speak for, represent or obligate the other Party in any way
without prior written authority from the other Party.

15.9 To the extent commercially feasible, and consistent with prevailing business practices
and applicable law, all LICENSED PRODUCTS sold pursuant to this Agreement will be marked with the
number of each issued patent that applies to such LICENSED PRODUCTS.

15.10 This Agreement shall be construed, governed, interpreted and applied in accordance with
the laws of the State of California, U.S.A. without regard to principles of conflicts of law
thereof, except that questions affecting the construction and effect of any patent shall be
determined by the law of the country in which the patent was granted.

15.11 The Parties hereto acknowledge that this Agreement sets forth the entire Agreement and
understanding of the Parties hereto as to the subject matter hereof, and shall not be subject to
any change or modification except by the execution of a written instrument signed by the Parties
hereto.

15.12 The provisions of this Agreement are severable, and in the event that any provision of
this Agreement shall be determined to be invalid or unenforceable under any controlling body of the
law, such invalidity or unenforceability shall not in any way affect the validity or enforceability
of the remaining provisions hereof.

15.13 The failure of either Party to assert a right hereunder or to insist upon compliance
with any term or condition of this Agreement shall not constitute a waiver of that right or excuse
a similar subsequent failure to perform any such term or condition by the other Party.

15.14 This Agreement may not be assigned by LICENSEE without the prior written consent of
LICENSOR, which consent shall be granted or denied in LICENSOR’s sole discretion. LICENSOR may not
assign this Agreement without the consent of LICENSEE, which consent shall not be unreasonably
withheld or delayed, except that LICENSOR may assign this Agreement to an affiliate or to a
successor in connection with the merger, consolidation, or sale of all or substantially all of its
assets or that portion of its business to which this Agreement relates. Notwithstanding the
foregoing to the contrary, this restriction on the assignment by LICENSEE of this Agreement shall
not prevent the assignment of this Agreement in connection with a merger or consolidation of
LICENSEE into another company or a sale of all or substantially all of the assets of LICENSEE, so
long as the purchaser of the assets agrees to assume to any and all outstanding liabilities to
LICENSOR under this Agreement, including but not limited to any outstanding amounts under the
promissory note referred to in Section 4.1.

 

25

 

15.15 This Agreement has been prepared jointly and no rule of strict construction shall be
applied against either Party. In this Agreement, the singular shall include the plural and vice
versa and the word “including” shall be deemed to be followed by the phrase “without limitation.”
The section headings contained in this Agreement are inserted for convenience only and shall not
affect in any way the meaning or interpretation of this Agreement.

15.16 This Agreement may be executed in counterparts, each of which together shall constitute
one and the same Agreement.

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

15.18 In addition to the other rights granted herein, LICENSOR hereby grants to LICENSEE a 90
day right of negotiation with respect to any technology that would constitute LICENSED TECHNOLOGY
if the FIELD included diseases related either to the heart or to neuro degenerative diseases (the
“Added Fields”) prior to LICENSOR entering into any license relating to either of such Added
Fields) with a third party. Such a 90 day period shall commence on the earlier of the 12 month
anniversary of the Effective Date, or such date when LICENSOR notifies LICENSEE that it has opened
negotiations with a third party or that a third party has made inquiry about such a license. If
following the expiration of any such 90-day negotiation period LICENSEE and LICENSOR have not
entered into a license for an Added Field, LICENSOR shall be free to enter into an exclusive or
non-exclusive license for such Added Field with any third party. If LICENSOR enters into a
non-exclusive license for an Added Field with a third party following the 90-day negotiating period
hereunder, LICENSOR shall offer a non-exclusive license to LICENSEE on comparable terms as those
entered into with such third party. LICENSEE shall then have 30 days to enter into such a
nonexclusive license. If LICENSEE does not enter into such a license within said 30-day period,
LICENSOR shall have no further obligations relating to the Added Field.

15.19 LICENSEE shall acknowledge LICENSOR as [co-marketer] through equal size lettering on
the packaging of ACT ANIMAL CELL LINES.

 

26

 

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

ADVANCED CELL TECHNOLOGY, INC.

	 	 	 	 	 
	By:

	 	 	 	 
	 

	 	 	 	 
	Printed Name: Michael D. West, Ph.D.	 	 
	Title: President & Chief Executive Officer	 	 

PACGEN CELLCO, LLC

	 	 	 	 	 
	By:

	 	 	 	 
	 

	 	 	 	 
	Printed Name: Kenneth Aldrich	 	 
	Title: Managing Member	 	 

 

27

 

EXHIBIT A

PATENT RIGHTS

(Reference Section 1.12)

	 	 	 	 	 	 	 	 	 
	Serial No.	 	 	 	Filing Date	 	 	 	 
	Patent No.	 	CO	 	Issue Date	 	Title	 	Assignee
	08/935,052

6,235,970

	 	US
	 	1997-09-22

2001-05-22
	 	CICM Cells and
Non-Human Mammalian
Embryos Prepared by
Nuclear Transfer of
a Proliferating
Differentiated Cell
or its Nucleus
	 	UMASS
	 
	 	 	 	 	 	 	 	 
	09/828,876

	 	US
	 	2001-04-10
	 	Cloning Using Donor
Nuclei from
Differentiated
Fetal and Adult
Cells
	 	UMASS
	 
	 	 	 	 	 	 	 	 
	PI9806872-5

	 	BR
	 	1998-01-05
	 	Cloning Using Donor
Nuclei from
Differentiated
Fetal and Adult
Cells
	 	UMASS
	 
	 	 	 	 	 	 	 	 
	6014598

0742363

	 	AU
	 	1998-01-05

2002-01-03
	 	Cloning Using Donor
Nuclei from
Differentiated
Fetal and Adult
Cells
	 	UMASS
	 
	 	 	 	 	 	 	 	 
	98802794.1

	 	CN
	 	1998-01-05
	 	Cloning Using Donor
Nuclei from
Differentiated
Fetal and Adult
Cells
	 	UMASS
	 
	 	 	 	 	 	 	 	 
	2277192

	 	CA
	 	1998-01-05
	 	Cloning Using Donor
Nuclei from
Differentiated
Fetal and Adult
Cells
	 	UMASS
	 
	 	 	 	 	 	 	 	 
	336612

	 	NZ
	 	1998-01-05
	 	Cloning Using Donor
Nuclei from
Differentiated
Fetal and Adult
Cells
	 	UMASS
	 
	 	 	 	 	 	 	 	 
	9906464

	 	MX
	 	1998-01-05
	 	Cloning Using Donor
Nuclei from
Differentiated
Fetal and Adult
Cells
	 	UMASS
	 
	 	 	 	 	 	 	 	 
	10-530958

	 	JP
	 	1998-01-05
	 	Cloning Using Donor
Nuclei from
Differentiated
Fetal and Adult
Cells
	 	UMASS
	 
	 	 	 	 	 	 	 	 
	130829

	 	IL
	 	1998-01-05
	 	Cloning Using Donor
Nuclei from
Differentiated
Fetal and Adult
Cells
	 	UMASS
	 
	 	 	 	 	 	 	 	 
	98903349.3

	 	EP
	 	1998-01-05
	 	Cloning Using Donor
Nuclei from
Differentiated
Fetal and Adult
Cells
	 	UMASS

 

28

 

	 	 	 	 	 	 	 	 	 
	Serial No.	 	 	 	Filing Date	 	 	 	 
	Patent No.	 	CO	 	Issue Date	 	Title	 	Assignee
	PCT/US00/29551

	 	WO
	 	2000-10-27
	 	Gynogenetic or
Androgenetic
Production of
Pluripotent Cells
and Cell Lines, and
Use Thereof to
Produce
Differentiated
Cells and Tissues
	 	UMASS
	 
	 	 	 	 	 	 	 	 
	10/374,512

	 	US
	 	2003-02-27
	 	Gynogenetic or
Androgenetic
Production of
Pluripotent Cells
and Cell Lines, and
Use Thereof to
Produce
Differentiated
Cells and Tissues
	 	UMASS
	 
	 	 	 	 	 	 	 	 
	60/161,987

	 	US
	 	1999-10-28
	 	Gynogenetic or
Androgenetic
Production of
Pluripotent Cells
and Cell Lines, and
Use Thereof to
Produce
Differentiated
Cells and Tissues
	 	UMASS
	 
	 	 	 	 	 	 	 	 
	518365

	 	NZ
	 	2000-10-27
	 	Gynogenetic or
Androgenetic
Production of
Pluripotent Cells
and Cell Lines, and
Use Thereof to
Produce
Differentiated
Cells and Tissues
	 	UMASS
	 
	 	 	 	 	 	 	 	 
	PA/a/2002/004233

	 	MX
	 	2000-10-27
	 	Gynogenetic or
Androgenetic
Production of
Pluripotent Cells
and Cell Lines, and
Use Thereof to
Produce
Differentiated
Cells and Tissues
	 	UMASS
	 
	 	 	 	 	 	 	 	 
	2001-533962

	 	JP
	 	2000-10-27
	 	Gynogenetic or
Androgenetic
Production of
Pluripotent Cells
and Cell Lines, and
Use Thereof to
Produce
Differentiated
Cells and Tissues
	 	UMASS
	 
	 	 	 	 	 	 	 	 
	149175

	 	IL
	 	2000-10-27
	 	Gynogenetic or
Androgenetic
Production of
Pluripotent Cells
and Cell Lines, and
Use Thereof to
Produce
Differentiated
Cells and Tissues
	 	UMASS
	 
	 	 	 	 	 	 	 	 
	2000000973905

	 	EP
	 	2000-10-27
	 	Gynogenetic or
Androgenetic
Production of
Pluripotent Cells
and Cell Lines, and
Use Thereof to
Produce
Differentiated
Cells and Tissues
	 	UMASS
	 
	 	 	 	 	 	 	 	 
	00816098.8

	 	CN
	 	2000-10-27
	 	Gynogenetic or
Androgenetic
Production of
Pluripotent Cells
and Cell Lines, and
Use Thereof to
Produce
Differentiated
Cells and Tissues
	 	UMASS

 

29

 

	 	 	 	 	 	 	 	 	 
	Serial No.	 	 	 	Filing Date	 	 	 	 
	Patent No.	 	CO	 	Issue Date	 	Title	 	Assignee
	2,387,506

	 	CA
	 	2000-10-27
	 	Gynogenetic or
Androgenetic
Production of
Pluripotent Cells
and Cell Lines, and
Use Thereof to
Produce
Differentiated
Cells and Tissues
	 	UMASS
	 
	 	 	 	 	 	 	 	 
	BR 0015148-3

	 	BR
	 	2000-10-27
	 	Gynogenetic or
Androgenetic
Production of
Pluripotent Cells
and Cell Lines, and
Use Thereof to
Produce
Differentiated
Cells and Tissues
	 	UMASS
	 
	 	 	 	 	 	 	 	 
	12353/01

	 	AU
	 	2000-10-27
	 	Gynogenetic or
Androgenetic
Production of
Pluripotent Cells
and Cell Lines, and
Use Thereof to
Produce
Differentiated
Cells and Tissues
	 	UMASS
	 
	 	 	 	 	 	 	 	 
	Invention Disclosures

	 
	 	 	 	 	 	 	 	 
	UMA 01-02*

	 	 	 	 	 	Reprogramming of
Somatic Cell Nuclei
in vitro for use in
Nuclear
Transplantation
	 	UMASS
	 
	 	 	 	 	 	 	 	 
	UMA 99-19*

	 	 	 	 	 	Reprogramming

Nuclear Function in

Somatic Cell

Cytoplasm
	 	UMASS

			
	*	 	Including patents filed by parties other than LICENSOR based on these Invention Disclosures,
the rights to which LICENSOR would get through the litigation described in Exhibit D.

 

30

 

EXHIBIT B

(Reference Section 2.4)

[Date]

Advanced Cell Technology, Inc.

One Innovation Drive

Worcester, MA 01605

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

University of Massachusetts

Office of the General Counsel

One Beacon Street, 26th Floor

Boston, MA 02108

PacGen Cellco, LLC.

157 Surfview Dr.,

Pacific Palisades, CA 90272

Attention: Kenneth Aldrich

Re: Exclusive License Agreement dated                           , 2004 between Advanced Cell Technology, Inc.
(“LICENSOR”) and PacGen Cellco, LLC (“LICENSEE”) (the “License Agreement”)

Reference is made to the License Agreement identified above.

LICENSOR, the University of Massachusetts (the “University”) and LICENSEE agree that, in the event
the UMASS LICENSES (as defined in the License Agreement) expire or are terminated for any reason
pursuant to the provisions of the UMASS LICENSE or otherwise, (i) LICENSEE will thereafter pay
directly to the University any payments due to LICENSOR under the License Agreement which are
reasonably attributable to the University technology or subject matter of the UMASS LICENSES, and
(ii) promptly following such termination, the University and LICENSEE will enter into a direct
license agreement reflecting the applicable terms of the License Agreement and the UMASS LICENSES.
For the avoidance of doubt, the references to “Sublicensees” in Section 8.5 of the 1996 UMASS
LICENSE shall not apply to LICENSEE and shall not be construed as vitiating the provisions of
Section 2.5 of the License Agreement. LICENSOR and the University agree that the
provisions of Section 2.2 of the 1996 UMASS LICENSE providing for the automatic assignment to the
University of sublicenses granted by LICENSOR under said Section 2.2 shall not apply to the
sublicense by LICENSOR to LICENSEE under the License Agreement, and that the provisions of
Section 2.5 of the License Agreement shall govern in the event that the UMASS LICENSES are
terminated. LICENSOR and the University agree that LICENSEE will not be bound by any amendment to
the UMASS

 

31

 

LICENSES that affects LICENSEE’s rights under the License Agreement in any material respects,
unless LICENSEE agrees in writing to such amendment. Neither LICENSOR nor the University will not
make any change or addition to, or otherwise amend, the UMASS LICENSES in any manner that
materially adversely affects LICENSEE without the prior written consent of LICENSEE (such consent
not to be unreasonably withheld or delayed).

ADVANCED CELL TECHNOLOGY, INC.

	 	 	 	 	 
	By:

	 	 	 	 
	 

	 	 	 	 
	Printed Name: Michael D. West, Ph.D.	 	 
	Title: President & Chief Executive Officer	 	 

THE UNIVERSITY OF MASSACHUSETTS

	 	 	 	 	 
	By:

	 	 	 	 
	 

	 	 	 	 
	Printed Name:	 	 
	Title:	 	 

PACGEN CELLCO, LLC

	 	 	 	 	 
	By:

	 	 	 	 
	 

	 	 	 	 
	Printed Name: Kenneth Aldrich	 	 
	Title: President	 	 

 

32

 

EXHIBIT C

THIS NOTE AND THE SECURITIES ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR UNDER THE SECURITIES LAWS OF APPLICABLE
STATES. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE
TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS
PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM.

FORM OF

CONVERTIBLE PROMISSORY NOTE

OF 

PACGEN CELLCO LLC

 

			
	$150,000.00
	 	Made as of May 14, 2004

For value received, PacGen CellCo LLC, a California limited liability company (the “Company”),
with principal offices at 157 Surfview Drive, Pacific Palisades, CA 90272, hereby promise to pay to
Advanced Cell Technology, Inc., a Delaware corporation (“Holder”), or its registered assigns, the
principal sum of One Hundred Fifty Thousand Dollars ($150,000) (the “Principal Amount”).

Unless earlier paid or converted, the unpaid Principal Amount shall be due and payable on June
1, 2007 (the “Maturity Date”). On the Maturity Date, the principal shall be (i) repaid by the
Company in cash to the Holder or (ii) at the Holder’s election, converted into shares of
Common Stock (as defined below) at the conversion rate set forth in Subsection 2(a) below
based on a determination of the Conversion Price as of the Maturity Date made not later than 60
days following the Maturity Date by the Company’s Board of Managers, acting in good faith.

This Note is issued pursuant to that certain Exclusive License Agreement dated as of May 14,
2004 (the “License Agreement”), by and among the Company and Holder, and is subject to the
provisions thereof.

The following is a statement of the rights of Holder and the conditions to which this Note is
subject, and to which Holder hereof, by the acceptance of this Note, agrees:

	 	1.	 	Definitions. The following definitions shall apply for all purposes of this
Note:

 

33

 

“Common Stock” means shares of or units of or other interests (as the case may be)
of common equity of the Company or its successors or assigns

“Company” means the “Company” as defined above and includes any corporation, which
shall succeed to or assume the obligations of the Company under this Note.

“Conversion Price” means (i) in the case of a First Equity Financing, the price paid
per share for the equity securities issued in such First Equity Financing; or (ii)
in the case of an Acquisition Event (as defined below) the value of one share or
unit of Common Stock based upon the portion of the aggregate sale price or merger or
consolidation consideration which is available to the Company’s common equity
holders in connection with such Acquisition Event; or (iii) on the Maturity, the
value of one share or unit of Common Stock as determined in good faith by the Board
of Managers.

“First Equity Financing” means a sale or series thereof, subsequent to the date of
this Note, by the Company of equity securities in which the Company receives
aggregate cash proceeds of at least $5,000,000 (not including conversion of the this
Note) as result of investments made by one or more bona fide third party
institutional or strategic investors in exchange for the sale of shares of capital
stock of the Company.

“Holder” means any person who shall at the time be the registered holder of this
Note.

“Maturity Date” means the date on which this Note is either repaid or converted in
whole in accordance with the terms hereunder.

“Note” means this Secured Convertible Promissory Note.

“Series A Preferred Stock” means the class of equity securities issued by the
Company in the First Equity Financing.

2. Interest.

The principal sum outstanding under this Note shall bear no interest unless not repaid at the
Maturity Date, in which event it shall thereafter bear interest at a rate equal to the lesser of
(a) ten percent (10%) per annum, or (b) the maximum non-usurious rate allowed under the laws of the
State of California.

 

34

 

3. Conversion.

a) Automatic Conversions. This Note shall be automatically converted into that number of
shares of Series A Preferred Stock equal to the quotient of (a) the aggregate principal amount of
this Note then outstanding divided by (b) the Conversion Price, under the following conditions:

i) Upon the consummation of the First Equity
Financing;

ii) Immediately prior to the closing of any merger, sale or other consolidation of the Company
or of any sale of all or substantially all assets of the Company which occurs prior to the First
Equity Financing (an “Acquisition Event”). Notwithstanding the above, and only in the event that a
conversion resulting from such Acquisition Event would result in a security not traded on a
national stock exchange (including NASDAQ and NASDAQ small cap), upon written notice to the Company
not later than 5 days after the consummation of the Acquisition Event and notice of the Acquisition
Event to the Holder of the Note, the Holder may elect to receive payment in cash of the entire
outstanding principal of this Note.

b. Conversion Mechanics. Upon the effective date of any elective or automatic
conversion of this Note, the outstanding principal of this Note shall be deemed converted into
shares of Series A Preferred Stock or Common Stock automatically as of such effective date without
any further action by the Holder and whether or not the Note is surrendered to the Company or its
transfer agent. However, the Company shall not be obligated to issue certificates evidencing the
shares of the Series A Preferred Stock or Stock issuable upon such elective or automatic conversion
unless such Note is either delivered to the Company or its transfer agent, or the Holder notifies
the Company or its transfer agent that such Note has been lost, stolen or destroyed and executes an
agreement satisfactory to the Company to indemnify the Company from any loss incurred by it in
connection with such Note.

4. Reservation of Stock. If at any time the number of shares of Common Stock or other
securities issuable upon conversion of this Note shall not be sufficient to effect the conversion
of this Note, the Company will take such corporate action as may be necessary to increase its
authorized but unissued shares of Common Stock or other securities issuable upon conversion of this
Note (and any securities of the Company that the Common Stock may convert into) as shall be
sufficient for such purpose.

5. Covenants of the Company. The Company covenants to, and agrees with the Holder that prior
to the Maturity Date, so long as the Notes are outstanding, with the following:

a) Organization, Standing Power. The Company is a limited liability company duly organized,
validly existing and in good standing under the California Limited Liability Company Act (the
“CLLCA”). The Company has all requisite power and authority to conduct its business as now being
conducted under the CLLCA.

 

35

 

b) Authority; Enforceability; No Conflict. The Company has all requisite power and
authority under the CLLCA to issue this Note and to carry out its obligations
hereunder. The issuance of this Note by the Company has been duly and validly authorized by
all requisite proceedings on the part of the Company. This Note when executed and delivered by the
Company is a valid and binding obligation of the Company, enforceable against the Company in
accordance with its terms, except that (i) such enforcement may be subject to bankruptcy,
insolvency, reorganization, moratorium, rehabilitation, liquidation, conservatorship, receivership
or other similar laws now or hereafter in effect relating to creditors’ rights generally and (ii)
the remedy of specific performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court before which any proceeding
therefor may be brought. The execution and delivery of this Note by the Company does not, and the
consummation by the Company of the transaction contemplated hereby and thereby will not result in
or constitute: (i) a default, breach or violation of or under the limited liability agreement of
the Company, (ii) the California Limited Liability Company Act or any applicable law or (iii) any
material agreement to which the Company is a party.

6. No Rights or Liabilities as Shareholder. This Note does not by itself entitle the Holder
to any voting rights or other rights as a shareholder of the Company. In the absence of conversion
of this Note, no provisions of this Note, and no enumeration herein of the rights or privileges of
the Holder, shall cause the Holder to be a shareholder of the Company for any purpose.

7. No Impairment. The Company will not, by amendment of its limited liability agreement, or
through reorganization, consolidation, merger, dissolution, issue or sale of securities, sale of
assets or any other voluntary action, willfully avoid or seek to avoid the observance or
performance of any of the terms of this Note, but will at all times in good faith assist in the
carrying out of all such terms and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the Holder under this Note against wrongful
impairment. Without limiting the generality of the foregoing, the Company will take all such action
as may be necessary or appropriate in order that the Company may duly and validly issue fully paid
and nonassessable shares of Common Stock upon the conversion of this Note.

8. Prepayment. The Company may at any time, without penalty, prepay in whole or in part the
unpaid balance of this Note. All payments will first be applied to the repayment of accrued fees
and expenses, if any, then to accrued interest, if any, until all then outstanding accrued interest
has been paid, and then shall be applied to the repayment of principal.

9. Notice. The Company shall give the Holder of this Note at least ten (10) days notice of
any Acquisition Event.

10. Waiver and Amendment. Any provision of this Note may be amended, waived or modified only
upon written consent of the Company and the Holder of the Note.

11. Waiver of Notice and Fees. The Company and all endorsers of this Note hereby waive
notice, presentment, protest and notice of dishonor.

 

36

 

12. Transfer. This Note and any rights hereunder may not be assigned, conveyed or
transferred, in whole or in part, without the Company’s prior written consent, which consent shall
not be unreasonably withheld. The rights and obligations of the Company and the Holder under this
Note and the License Agreement shall be binding upon and benefit their respective permitted
successors, assigns, heirs, administrators and transferees. However, this Note and the loans
evidenced hereby may be transferred in whole or in part only by registration of such transfer on
the register maintained for such purpose by or on behalf of the Company.

13. Governing Law. This Note shall be governed by and construed under the internal laws of
the State of Delaware, without reference to principles of conflict of laws or choice of laws.

14. Securities Law Representations. This Note is issued to the Holder in reliance upon the
Holder’s representation to the Company, which by such Holder’s execution of this Note Holder hereby
confirms, that the Note will be acquired for investment for such Holder’s own account, not as a
nominee or agent, and not with a view to the sale or distribution of any part thereof, and that
such Holder has no present intention of selling, granting any participation in, or otherwise
distributing the same. By executing this Note, such Holder further represents that such Holder has
no contract, undertaking, agreement or arrangement with any person to sell, transfer, of grant
participations to such person or to any third person, with respect to this Note.

15. Headings. The headings and captions used in this Note are used only for convenience and
are not to be considered in construing or interpreting this Note. All references in this Note to
sections and exhibits shall, unless otherwise provided, refer to sections hereof and exhibits
attached hereto, all of which exhibits are incorporated herein by this reference.

16. Severability. If one or more provisions of this Note are held to be unenforceable under
applicable law, such provision(s) shall be excluded from this Note and the balance of the Note
shall be interpreted as if such provision(s) were so excluded and shall be enforceable in
accordance with its terms.

17. Entire Agreement; Successors and Assigns. This Note constitutes the entire contract
between the Company and the Holder relative to the subject matter hereof. Any previous agreement
between the Company and the Holder is superseded by this Agreement. Subject to the exceptions
specifically set forth in this Note, the terms and conditions of this Note shall inure to the
benefit of and be binding upon the respective executors, administrators, heirs, successors and
assigns of the Parties.

[Remainder of this page intentionally left blank]

 

37

 

IN WITNESS WHEREOF, the Company has caused this Note to be signed in its name as of the date
first above written.

PACGEN CELLCO LLC

	 	 	 	 	 
	By:

	 	/S/ KENNETH ALDRICH
 

Name:
	 	 
	 

	 	Title: MANAGING MEMBER	 	 

ACCEPTED AND AGREED TO:

ADVANCED CELL TECHNOLOGY, INC.

	 	 	 	 	 
	By:

	 	/S/ MICHAEL D. WEST
 

Name:
	 	 
	 

	 	Title: PRESIDENT	 	 

 

 

 

EXHIBIT D

(Reference Section 12.3)

A civil action was filed by the University of Massachusetts on February 3, 2004 against James
M. Robl and Philippe Collas relating to the misappropriation of intellectual property.
Specifically the University of Massachusetts believes that invention disclosures UMA 99-19 and UMA
01-02 were misappropriated and wrongly assigned to third parties. This action is currently pending
as of the signing of this license.

 

 

 

EXHIBIT E

(Reference Section 12.7)

Declared patent interferences:

	a)	 	Patent Interference No. 104,746, involving U.S. Patent No. 5,945,577 and U.S. Patent
Application No. 09/650,194.
	 
	b)	 	Patent Interference No. 105,192, involving U.S. Patent No. 6,235,970 and U.S. Patent
Application No. 09/989,126.

Potential patent interferences, verbally threatened to be filed against the following patents:

	a)	 	6,215,041
	 
	b)	 	6,235,969exv10w15

 

Exhibit 10.15

INTERNATIONAL STEM CELL CORPORATION

2006 EQUITY PARTICIPATION PLAN

 

 

 

INTERNATIONAL
STEM CELL CORPORATION

2006 EQUITY PARTICIPATION PLAN

TABLE OF CONTENTS

	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	1.	 	Purpose.	 	 	1	 
	 
	 	 	 	 	 	 	 	 	 	 
	2.	 	Definitions.	 	 	1	 
	 
	 	 	 	 	 	 	 	 	 	 
	3.	 	Administration	 	 	4	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	3.1.	 	 	Delegation of Administration
	 	 	4	 
	 

	 	 	3.2.	 	 	Powers of the Committee
	 	 	5	 
	 

	 	 	3.3.	 	 	Administration When Common Stock is Publicly Traded
	 	 	6	 
	 
	 	 	 	 	 	 	 	 	 	 
	4.	 	Eligibility.	 	 	6	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	4.1.	 	 	Eligibility for Awards
	 	 	6	 
	 

	 	 	4.2.	 	 	Eligibility of Consultants
	 	 	6	 
	 

	 	 	4.3.	 	 	Limitation on Individual Awards
	 	 	6	 
	 

	 	 	4.4.	 	 	Substitute Awards
	 	 	7	 
	 
	 	 	 	 	 	 	 	 	 	 
	5.	 	Common Stock Subject to Plan.	 	 	7	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	5.1.	 	 	Share Reserve
	 	 	7	 
	 

	 	 	5.2.	 	 	Reversion of Shares
	 	 	7	 
	 

	 	 	5.3.	 	 	Source of Shares.
	 	 	7	 
	 
	 	 	 	 	 	 	 	 	 	 
	6.	 	Options.	 	 	7	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	6.1.	 	 	Award
	 	 	7	 
	 

	 	 	6.2.	 	 	Option Price
	 	 	7	 
	 

	 	 	6.3.	 	 	Maximum Option Period
	 	 	8	 
	 

	 	 	6.4.	 	 	Maximum Value of Options which are Incentive Stock Options
	 	 	8	 

 

- i -

 

	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	6.5.	 	 	Nontransferability
	 	 	8	 
	 

	 	 	6.6.	 	 	Vesting and Termination of Continuous Service
	 	 	9	 
	 

	 	 	6.7.	 	 	Exercise
	 	 	9	 
	 

	 	 	6.8.	 	 	Payment
	 	 	10	 
	 

	 	 	6.9.	 	 	Buyout Provisions
	 	 	10	 
	 

	 	 	6.10.	 	 	Shareholder Rights
	 	 	10	 
	 

	 	 	6.11.	 	 	Disposition and Stock Certificate Legends for Incentive Stock Option Shares
	 	 	10	 
	 
	 	 	 	 	 	 	 	 	 	 
	7.	 	Restricted Stock Awards	 	 	11	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	7.1.	 	 	Restricted Stock Awards
	 	 	11	 
	 
	 	 	 	 	 	 	 	 	 	 
	8.	 	Changes in Capital Structure and Change in Control.	 	 	12	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	8.1.	 	 	No Limitations of Rights
	 	 	12	 
	 

	 	 	8.2.	 	 	Changes in Capitalization
	 	 	12	 
	 

	 	 	8.3.	 	 	Change in Control
	 	 	12	 
	 

	 	 	8.4.	 	 	Limitation on Adjustment
	 	 	13	 
	 
	 	 	 	 	 	 	 	 	 	 
	9.	 	Withholding of Taxes.	 	 	14	 
	 
	 	 	 	 	 	 	 	 	 	 
	10.	 	Compliance with Law and Approval of Regulatory Bodies	 	 	14	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	10.1.	 	 	General Requirements
	 	 	14	 
	 

	 	 	10.2.	 	 	Participant Representations
	 	 	14	 
	 
	 	 	 	 	 	 	 	 	 	 
	11.	 	General Provisions	 	 	15	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	11.1.	 	 	Corporation Repurchase Rights
	 	 	15	 
	 

	 	 	11.2.	 	 	Information to Participants
	 	 	15	 
	 

	 	 	11.3.	 	 	Effect on Employment and Service
	 	 	15	 
	 

	 	 	11.4.	 	 	Use of Proceeds
	 	 	15	 
	 

	 	 	11.5.	 	 	Unfunded Plan
	 	 	15	 
	 

	 	 	11.6.	 	 	Rules of Construction
	 	 	15	 
	 

	 	 	11.7.	 	 	Choice of Law
	 	 	15	 
	 
	 	 	 	 	 	 	 	 	 	 
	12.	 	Amendment and Termination	 	 	16	 
	 
	 	 	 	 	 	 	 	 	 	 
	13.	 	Effective Date of Plan, Duration of Plan	 	 	16	 

 

- ii -

 

INTERNATIONAL STEM CELL CORPORATION

2006 EQUITY PARTICIPATION PLAN

	1.	 	Purpose.

The 2006 Equity Participation Plan (the “Plan”) of International Stem Cell Corporation
(the “Corporation”) is intended to promote the best interests of the Corporation and its
shareholders by: (i) assisting the Corporation and its Affiliates (as defined below) in the
recruitment and retention of persons with ability and initiative; (ii) providing an incentive to
such persons to contribute to the growth and success of the Corporation’s businesses by affording
such persons equity participation in the Corporation; and (iii) associating the interests of such
persons with those of the Corporation and its Affiliates and shareholders.

	2.	 	Definitions.

As used in the Plan, the following definitions shall apply:

“Affiliate” means (i) any Subsidiary; (ii) any Parent; (iii) any corporation, trade or
business (including, without limitation, a partnership or limited liability company) which is
directly or indirectly controlled fifty percent (50%) or more (whether by ownership of stock,
assets or an equivalent ownership interest or voting interest) by the Corporation or one of its
Affiliates; and (iv) any other entity in which the Corporation or any of its Affiliates has a
material equity interest and which is designated as an “Affiliate” by resolution of the Committee.

“Board” means the Board of Directors of the Corporation.

“Cause” means (i) in the case where the Participant does not have an employment,
consulting or similar agreement in effect with the Corporation or its Affiliate at the time of
grant of the Option or Restricted Stock Award or where there is such an agreement but it does not
define “cause” (or words of like import), conduct related to the Participant’s service to the
Corporation or an Affiliate for which either criminal or civil penalties against the Participant
may be sought, misconduct, insubordination, material violation of Corporation or its Affiliate’s
policies, disclosing or misusing any confidential information or material concerning the
Corporation or any Affiliate or material breach of any employment, consulting agreement or similar
agreement; or (ii) in the case where the Participant has an employment agreement, consulting
agreement or similar agreement in effect with the Corporation or its Affiliate at the time of grant
of the Option or Restricted Stock Award that defines a termination for “cause” (or words of like
import), “cause” as defined in such agreement; provided, however, that with regard
to any agreement that defines “cause” on occurrence of or in connection with change of control,
such definition of “cause” shall not apply until a change of control actually occurs and then only
with regard to a termination thereafter.

 

 

 

“Change in Control” means: (i) the acquisition (other than from the Corporation) by
any Independent Third Party of beneficial ownership of more than fifty percent (50%) of the
outstanding voting securities of the Corporation; provided, however, a Change in Control shall not
be deemed to occur solely because more than fifty percent (50%) of the outstanding voting
securities of the Corporation is acquired by (a) a trustee or other fiduciary holding securities
under one (1) or more employee benefit plans maintained by the Corporation or any of its
Subsidiaries, or (b) any individual, corporation, partnership, limited liability company,
association, joint-stock
company, trust, unincorporated association or other entity which, immediately prior to such
acquisition, is owned directly or indirectly by the shareholders of the Corporation in the same
proportion as their ownership of the voting securities of the Corporation immediately prior to such
acquisition; (ii) a merger, consolidation or other reorganization involving the Corporation if the
shareholders of the Corporation, immediately before such merger, consolidation or other
reorganization, do not, as a result of such merger, consolidation or other reorganization, own,
directly or indirectly, more than fifty percent (50%) of the combined voting power of the then
outstanding voting securities of the entity resulting from such merger, consolidation or other
reorganization in substantially the same proportion as their ownership of the Common Stock
outstanding immediately before such merger, consolidation or other reorganization, (iii) a complete
liquidation or dissolution of the Corporation; or (iv) the sale or other disposition of all or
substantially all of the assets of the Corporation and its Subsidiaries determined on a
consolidated basis.

“Change in Control Price” means the highest of (i) if the Common Stock is traded on
the NASDAQ Stock Market or is listed on a national securities exchange, the highest reported sales
price, regular way, of a share of Common Stock in any transaction as reported on the NASDAQ Stock
Market or other national securities exchange or market on which such shares are listed, as
applicable, during the 60-day period prior to and including the date of a Change in Control; (ii)
if the Change in Control is the result of a tender or exchange offer, merger or other corporate
transaction, the highest price per share of Common Stock paid in such tender or exchange offer,
merger or other corporate transaction; and (iii) the Fair Market Value of a share of Common Stock
upon the Change in Control. To the extent that the consideration paid in any such transaction
described above consists all or in part of securities or other non-cash consideration, the value of
such securities or other non-cash consideration shall be determined in the sole discretion of the
Committee. The Participant shall receive the same form of consideration pursuant to the
transaction as holders of Common Stock, subject to the same restrictions and limitations and
indemnification obligations as the holders of Common Stock, and will execute any and all documents
required by the Committee to evidence the same.

“Code” means the Internal Revenue Code of 1986, and any amendments thereto.

“Committee” means the Board or any Committee of the Board to which the Board has
delegated any responsibility for the implementation, interpretation or administration of the Plan.

“Common Stock” means the common stock of the Corporation.

“Consultant” means (i) any person performing consulting or advisory services for the
Corporation or any Affiliate; or (ii) a director of an Affiliate.

“Continuous Service” means that the Participant’s service with the Corporation or an
Affiliate, whether as an employee, Director or Consultant, is not interrupted or terminated. A
Participant’s Continuous Service shall not be deemed to have terminated merely because of a change
in the capacity in which the Participant renders service to the Corporation or an Affiliate as an
employee, Consultant or Director or a change in the entity for which the Participant renders such
service, provided that there is no interruption or termination of the Participant’s Continuous
Service. The Participant’s Continuous Service shall be deemed to have terminated either upon an
actual termination or upon the corporation for which the Participant is performing services ceasing
to be an Affiliate of the Corporation. The Committee shall determine whether Continuous Service
shall be considered interrupted in the case of any leave of absence approved by the
Corporation, including sick leave, military leave or any other personal leave.

 

- 2 -

 

“Corporation Law” means the general corporation law of the jurisdiction of
incorporation of the Corporation.

“Director” means a member of the Board.

“Disability” shall have the meaning provided for in Section 22(e)(3) of the Code or
any successor statute thereto.

“Eligible Person” means, as determined by the Committee, an employee of the
Corporation or an Affiliate (including a corporation that becomes an Affiliate after the adoption
of the Plan), a Director or a Consultant to the Corporation or an Affiliate (including a
corporation that becomes an Affiliate after the adoption of the Plan).

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Fair Market Value” means, on any given date, the current fair market value of a share
of Common Stock as determined as follows:

(i) If the Common Stock is traded on The NASDAQ Stock Market or is listed on a national
securities exchange, the closing price for the day of determination as quoted on such market or
exchange which is the primary market or exchange for trading of the Common Stock or if no trading
occurs on such date, the last day on which trading occurred, or such other appropriate date as
determined by the Committee in its discretion, as reported in The Wall Street Journal or such other
source as the Committee deems reliable;

(ii) If the Common Stock is regularly quoted by a recognized securities dealer but selling
prices are not reported, its Fair Market Value shall be the mean between the high and the low asked
prices for the Common Stock for the day of determination; or

(iii) In the absence of an established market for the Common Stock, Fair Market Value shall be
determined by the Committee in good faith.

Fair Market Value shall be determined in accordance with Code Section 409A and the regulations
and other applicable guidance issued thereunder.

“Independent Third Party” means any individual, corporation, partnership, limited
liability company, association, joint-stock company, trust, unincorporated association or other
entity who does not directly or indirectly own in excess of twenty percent (20%) of the outstanding
Common Stock, who is not controlling, controlled by or under common control with any such twenty
percent (20%) owner, and who is not the spouse or descendent (by birth or adoption) of any such
twenty percent (20%) owner.

“Incentive Stock Option” means an Option (or portion thereof) intended to qualify for
special tax treatment under Section 422 of the Code.

“Listing Date” means the date on which the Corporation has a class of equity
securities registered under Section 12 of the Securities Act.

 

- 3 -

 

“Nonqualified Stock Option” means an Option (or portion thereof) which is not intended
to or for any reason does not qualify as an Incentive Stock Option.

“Option” means any option to purchase shares of Common Stock granted under the Plan.

“Parent” means any corporation (other than the Corporation) in an unbroken chain of
corporations ending with the Corporation if each of the corporations (other than the Corporation)
owns stock possessing at least fifty percent (50%) of the total combined voting power of all
classes of stock in one of the other corporations in such chain.

“Participant” means an Eligible Person who is selected by the Committee to receive an
Option or Restricted Stock Award and is party to a Stock Option Agreement or Restricted Stock
Agreement.

“Plan” means this International Stem Cell Corporation 2006 Equity Participation Plan.

“Restricted Stock Award” means an award of Common Stock under Section 7.1.

“Securities Act” means the Securities Act of 1933, as amended.

“Restricted Stock Agreement” means an agreement (written or electronic) between the
Corporation and a Participant setting forth the specific terms and conditions of a Restricted Stock
Award granted to the Participant under Section 7. Each Restricted Stock Agreement shall be
subject to the terms and conditions of the Plan and shall include such terms and conditions as the
Committee shall authorize.

“Stock Option Agreement” means an agreement (written or electronic) between the
Corporation and a Participant setting forth the specific terms and conditions of an Option granted
to the Participant. Each Stock Option Agreement shall be subject to the terms and conditions of
the Plan and shall include such terms and conditions as the Committee shall authorize.

“Subsidiary” means any corporation (other than the Corporation) in an unbroken chain
of corporations beginning with the Corporation if each of the corporations (other than the last
corporation in the unbroken chain) owns stock possessing at least fifty percent (50%) of the total
combined voting power of all classes of stock in one of the other corporations in such chain.

“Ten Percent Owner” means any Eligible Person owning at the time an Option or
Restricted Stock Award is granted more than ten percent (10%) of the total combined voting power of
all classes of stock of the Corporation or of an Affiliate. An individual shall be considered to
own any voting stock owned (directly or indirectly) by or for his brothers, sisters, spouse,
ancestors and lineal descendants and any voting stock owned (directly or indirectly) by or for a
corporation, partnership, estate or trust shall be considered as being owned proportionately by or
for its shareholders, partners or beneficiaries.

	3.	 	Administration.

3.1. Delegation of Administration. The Board shall serve as the Committee of the Plan
unless the Board delegates all or any portion of its authority to administer the Plan to a
Committee. To the extent not prohibited by the charter or bylaws of the Corporation, the Board may
delegate all
or a portion of its authority to administer the Plan to a Committee of the Board appointed by
the Board and constituted in compliance with the applicable Corporation Law.

 

- 4 -

 

3.2. Powers of the Committee. Subject to the provisions of the Plan and, in the case
of a Committee appointed by the Board, the specific duties delegated to such Committee, the
Committee shall have the authority:

(i) to construe and interpret all provisions of the Plan and all Stock Option Agreements and
Restricted Stock Agreements under the Plan;

(ii) to determine the Fair Market Value of Common Stock;

(iii) to select the Eligible Persons to whom Options or Restricted Stock Awards are granted
from time to time hereunder;

(iv) to determine the number of shares of Common Stock covered by an Option or Restricted
Stock Award; determine whether an Option shall be an Incentive Stock Option or Nonqualified Stock
Option; and determine such other terms and conditions, not inconsistent with the terms of the Plan,
of each such Option or Restricted Stock Award. Such terms and conditions include, but are not
limited to, the exercise price of an Option, the purchase price of Common Stock subject to a
Restricted Stock Award, the time or times when Options or Restricted Stock Awards may be exercised
or Common Stock issued thereunder, the right of the Corporation to repurchase Common Stock issued
pursuant to the exercise of an Option or a Restricted Stock Award and other restrictions or
limitations (in addition to those contained in the Plan) on the forfeitability or transferability
of Options, Restricted Stock Awards or Common Stock issued upon exercise of an Option or pursuant
to a Restricted Stock Award. Such terms may include conditions as determined by the Committee and
need not be uniform with respect to Participants;

(v) to accelerate the time at which any Option or Restricted Stock Award may be exercised, or
the time at which a Restricted Stock Award or Common Stock issued under the Plan may become
transferable or non-forfeitable; provided that the time of exercise of any Option that is subject
to Code Section 409A may not be accelerated;

(vi) to determine whether and under what circumstances an Option may be settled in cash,
shares of Common Stock and/or other property under Section 6.1;

(vii) to amend, cancel, extend, renew, accept the surrender of, modify or accelerate the
vesting of or lapse of restrictions on all or any portion of an outstanding Option or Restricted
Stock Award and reduce the exercise price of any Option, provided that any action taken pursuant to
this Section 3.2(vii) with respect to an Option shall be taken only to the extent that such
action would not violate Code Section 409A or prevent the Plan or the Option from qualifying for an
exemption under Code Section 409A. Except as specifically permitted by the Plan, Stock Option
Agreement or Restricted Stock Agreement or as required to comply with applicable law, regulation or
rule, no amendment, cancellation or modification shall, without a Participant’s consent, adversely
affect any rights of the Participant; provided, however, that an amendment or
modification that may cause an Incentive Stock Option to become a Nonqualified Stock Option shall
not be treated as adversely affecting the rights of the Participant; and

 

- 5 -

 

(viii) to prescribe the form of Stock Option Agreements and Restricted Stock Agreements; to
adopt policies and procedures for the exercise of Options and Restricted Stock
Awards, including the satisfaction of withholding obligations, and the authority to adopt,
amend, and rescind policies and procedures pertaining to the administration of the Plan and make
all other determinations necessary or advisable for the administration of the Plan.

The express grant in the Plan of any specific power to the Committee shall not be construed as
limiting any power or authority of the Committee; provided, however, that a
Committee of the Board may not exercise any right or power reserved to the Board. Any decision
made, or action taken, by the Committee or in connection with the administration of the Plan shall
be final, conclusive and binding on all persons having an interest in the Plan.

3.3. Administration When Common Stock is Publicly Traded. On and following the
Listing Date the Committee authorized by the Board to administer the Plan shall, if so determined
by the Board, consist of solely two (2) or more Non-Employee Directors (within the meaning of Rule
16b-3 under the Exchange Act) and/or two (2) or more persons who qualify as Outside Directors
(within the meaning of Treasury Regulations under Section 162(m) of the Code); provided,
however, that the Board may delegate administrative authority with respect to Eligible
Persons who are not subject to Section 16 of the Exchange Act to a committee of other than
Non-Employee Directors and/or to a committee of other than Outside Directors if either the Board
decides not to comply with Section 162(m) or such authority is limited to Eligible Persons who are
not then and are not reasonably expected to become Covered Employees (within the meaning of Section
162(m) of the Code).

	4.	 	Eligibility.

4.1. Eligibility for Awards. Nonqualified Stock Options and Restricted Stock Awards
may be granted to any Eligible Person selected by the Committee. Incentive Stock Options may be
granted only to employees of the Corporation or a Parent or Subsidiary.

4.2. Eligibility of Consultants. A Consultant shall be an Eligible Person only if the
offer or sale of the Corporation’s securities would be exempt from registration under Rule 701
under the Securities Act prior to the date the Corporation is required to file reports under
Section 13 or 15(d) of the Exchange Act, or eligible for registration on Form S-8 Registration
Statement, on and following the date the Corporation is required to file reports under Section 13
or 15(d) of the Exchange Act, because, in either case, of the identity and nature of the service
provided by such person, unless the Corporation determines that an offer or sale of the
Corporation’s securities to such person satisfies another exemption from registration under the
Securities Act and complies with the security laws of all other jurisdictions applicable to such
offer or sale.

4.3. Limitation on Individual Awards. Following the effective date of this Section as
provided below and subject to adjustment in accordance with Section 8 of the Plan, no
employee shall during any calendar year be granted Options or Restricted Stock Awards for more than
Five Million (5,000,000) shares of Common Stock. The limitation of this Section 4.3 shall
apply following the Listing Date and upon the earlier of (i) a material modification of the Plan;
(ii) the first meeting of shareholders at which directors are elected and which occurs after the
close of the third (3rd) calendar year following the calendar year during which occurs
the first registration of the Corporation’s equity securities under Section 12 of the Securities
Act; or (iii) such date as is required to comply with Section 162(m) of the Code and regulations
thereunder.

 

- 6 -

 

4.4. Substitute Awards. The Committee may make Restricted Stock Awards and may grant
Options under the Plan by assumption, substitution or replacement of performance shares,
phantom shares, stock awards, stock options, stock appreciation rights or similar awards
granted by another company (including an Affiliate), if such assumption, substitution or
replacement is in connection with an asset acquisition, merger, consolidation or similar
transaction involving the Corporation (and/or its Affiliate) and such other company (and/or its
affiliate). Notwithstanding any provision of the Plan (other than the maximum number of shares of
Common Stock that may be issued under the Plan), the terms of such assumed, substituted or replaced
Restricted Stock Awards or Options shall be as the Committee, in its discretion, determines is
appropriate.

	5.	 	Common Stock Subject to Plan.

5.1. Share Reserve. Subject to adjustment as provided in Section 8, the
maximum aggregate number of shares of Common Stock that may be (i) issued under the Plan pursuant
to the exercise of Options; and (ii) issued pursuant to Restricted Stock Awards is Fifteen Million
(15,000,000) shares. At no time shall the total number of securities issuable upon the exercise of
all outstanding options and the total number of shares provided for under any stock bonus or
similar plan or agreement of the Corporation exceed the applicable percentage as calculated in
accordance with the conditions and exclusions of Reg. 260.140.45 of the California Code of
Regulations, based on the securities of the Corporation which are outstanding at the time the
calculation is made.

5.2. Reversion of Shares. If an Option or Restricted Stock Award is terminated,
expires or becomes unexercisable, in whole or in part, for any reason, the unissued or unpurchased
shares of Common Stock which were subject thereto shall become available for future grant under the
Plan. Shares of Common Stock that have been actually issued under the Plan shall not be returned
to the share reserve for future grants under the Plan, except that shares of Common Stock issued
pursuant to a Restricted Stock Award which are repurchased by the Corporation at the original
purchase price of such shares shall be returned to the share reserve for future grant under the
Plan.

5.3. Source of Shares. Common Stock issued under the Plan may be shares of authorized
and unissued Common Stock or shares of previously issued Common Stock that have been reacquired by
the Corporation.

	6.	 	Options.

6.1. Award. In accordance with the provisions of Section 4 above, the Committee shall
designate each Eligible Person to whom an Option is to be granted and shall specify the number of
shares of Common Stock covered by such Option. The Stock Option Agreement shall specify whether
the Option is an Incentive Stock Option or Nonqualified Stock Option, the vesting schedule
applicable to such Option and any other terms of such Option. No Option that is intended to be an
Incentive Stock Option shall be invalid for failure to qualify as an Incentive Stock Option.

6.2. Option Price. The exercise price per share for Common Stock subject to an Option
shall be determined by the Committee, but shall comply with the following:

(i) Unless otherwise determined by the Committee, the exercise price per share for Common
Stock subject to a Nonqualified Stock Option:

(a) granted to a Participant who is deemed to be a Ten Percent Owner on the date such option
is granted, shall not be less than one hundred ten percent (110%) of the Fair Market Value on the
date of grant; and

 

- 7 -

 

(b) granted to any other Participant, shall not be less than one hundred percent (100%) of the
Fair Market Value on the date of grant.

(ii) The exercise price per share for Common Stock subject to an Incentive Stock Option:

(a) granted to a Participant who is deemed to be a Ten Percent Owner on the date such option
is granted, shall not be less than one hundred ten percent (110%) of the Fair Market Value on the
date of grant; and

(b) granted to any other Participant, shall not be less than one hundred percent (100%) of the
Fair Market Value on the date of grant.

6.3. Maximum Option Period. The maximum period during which an Option may be
exercised shall be determined by the Committee on the date of grant, except that no Option shall be
exercisable after the expiration of ten years from the date such Option was granted. In the case
of an Incentive Stock Option that is granted to a Participant who is or is deemed to be a Ten
Percent Owner on the date of grant, such Option shall not be exercisable after the expiration of
five years from the date of grant. The terms of any Option may provide that it is exercisable for
a period less than such maximum period.

6.4. Maximum Value of Options which are Incentive Stock Options. To the extent that
the aggregate Fair Market Value of the Common Stock with respect to which Incentive Stock Options
granted to any person are exercisable for the first time during any calendar year (under all stock
option plans of the Corporation or any of its Affiliates) exceeds One Hundred Thousand Dollars
($100,000) (or such other amount provided in Section 422 of the Code), the Options are not
Incentive Stock Options. For purposes of this Section 6.4, the Fair Market Value of the
Common Stock shall be determined as of the time the Incentive Stock Option with respect to the
Common Stock is granted. This Section 6.4 shall be applied by taking Incentive Stock
Options into account in the order in which they are granted.

6.5. Nontransferability. Options granted under the Plan which are intended to be
Incentive Stock Options shall be nontransferable except by will or by the laws of descent and
distribution and during the lifetime of the Participant shall be exercisable by only the
Participant to whom the Incentive Stock Option is granted. Nonqualified Stock Options granted
under the Plan shall be nontransferable except by will or by the laws of descent and distribution
or, if the Stock Option Agreement so provides or the Committee so approves, as permitted by Rule
701 of the Securities Act, with respect to transfers by a Participant to the Participant’s family
members, provided, however, that the Participant may not receive any consideration for the
transfer. The holder of an Option transferred pursuant to this Section 6.5 shall be bound
by the same terms and conditions that governed the Option during the period that it was held by the
Participant. Except to the extent transferability of a Nonqualified Stock Option is provided for
in the Stock Option Agreement or is approved by the Committee, during the lifetime of the
Participant to whom the Nonqualified Stock Option is granted, such Option may be exercised only by
the Participant. No right or interest of a Participant in any Option shall be liable for, or
subject to, any lien, obligation, or liability of such Participant.

 

- 8 -

 

6.6. Vesting and Termination of Continuous Service. The following rules shall apply:

(i) Options shall vest as provided in the Stock Option Agreement, provided that Options
granted to Eligible Persons other than officers, Directors and Consultants shall vest at a rate of
at least twenty percent (20%) per year over five (5) years from the date the Option is granted
subject to reasonable conditions such as continued employment. An Option shall be exercisable only
to the extent that it is vested on the date of exercise. Except as provided in the Stock Option
Agreement, vesting of an Option shall cease on the date of the Participant’s termination of
Continuous Service and the Option shall be exercisable only to the extent the Option is vested on
the date of termination of Continuous Service;

(ii) If the Participant’s termination of Continuous Service is due to death or Disability, the
Participant may exercise the Option as set forth in the Stock Option Agreement, provided that the
right to exercise the Option (to the extent vested) shall expire six (6) months after the date of
the Participant’s termination of Continuous Service, but in no event later than the tenth (10th)
anniversary of the effective date of the Stock Option Agreement. Until the expiration date, the
Participant’s heirs, legatees or legal representative may exercise the Option, except to the extent
the Option was previously transferred pursuant to Section 6.5;

(iii) If the Participant’s termination of Continuous Service is an involuntary termination by
the Corporation without Cause, or a voluntary termination by the Participant with Cause, the
Participant may exercise the vested portion of the Option as set forth in the Stock Option
Agreement, provided that the right to exercise the Option (to the extent that it is vested) shall
expire ninety (90) days after the date of the Participant’s termination of Continuous Service, but
in no event later than the tenth (10th) anniversary of the effective date of the Stock Option
Agreement. If the Participant’s termination of Continuous Service is an involuntary termination
without Cause or a voluntary termination with cause, and the Participant dies after his or her
termination of Continuous Service but before the right to exercise the Option has expired, the
right to exercise the Option (to the extent vested) shall expire six (6) months after the date of
the Participant’s termination of Continuous Service, but in no event later than the tenth (10th)
anniversary of the effective date of the Stock Option Agreement, and, until expiration, the
Participant’s heirs, legatees or legal representative may exercise the Option, except to the extent
the Option was previously transferred pursuant to Section 6.5; and

(iv) Unless otherwise provided in the Stock Option Agreement, if the Participant’s termination
of Continuous Service is: (a) for Cause by the Corporation; (2) voluntary by the Participant
without Cause; or (3) voluntary by the Participant after an event which would be grounds for
termination by the Corporation of the Participant’s Continuous Service for Cause, then the right to
exercise the Option shall expire as of the date of the Participant’s termination of Continuous
Service.

6.7. Exercise. An Option shall be exercised by completion, execution and delivery of
a notice of exercise (written or electronic) to the Corporation which states: (i) the Option
holder’s intent to exercise the Option; (ii) the number of shares of Common Stock with respect to
which the Option is being exercised; (iii) such other representations and agreements as may be
required by the Corporation; and (iv) the method for satisfying any applicable tax withholding as
provided in Section 9. Such notice of exercise shall be provided on such form or by such
method as the Committee may designate, and payment of the exercise price shall be made in
accordance with Section 6.8. Subject to the provisions of the Plan and the applicable
Stock Option Agreement, an Option may be
exercised to the extent vested in whole at any time or in part from time to time at such times
and in compliance with such requirements as the Committee shall determine. A partial exercise of
an Option shall not affect the right to exercise the Option from time to time in accordance with
the Plan and the applicable Stock Option Agreement with respect to the remaining shares subject to
the Option. An Option may not be exercised with respect to fractional shares of Common Stock.

 

- 9 -

 

6.8. Payment. Unless otherwise provided by the Stock Option Agreement, payment of the
exercise price for an Option shall be made in cash or a cash equivalent acceptable to the
Committee. With the consent of the Committee, payment of all or part of the exercise price of an
Option may also be made (i) by surrendering shares of Common Stock to the Corporation that have
been held for at least six (6) months prior to the date of exercise; (ii) with a full-recourse
promissory note until such time as the Corporation has a class of equity securities registered
under Section 12 of the Securities Act; (iii) if the Common Stock is traded on an established
securities market, the Committee may approve payment of the exercise price by a broker-dealer or by
the Option holder with cash advanced by the broker-dealer if the exercise notice is accompanied by
the Option holder’s written irrevocable instructions to deliver the Common Stock acquired upon
exercise of the Option to the broker-dealer; or (iv) any other method acceptable to the Committee
and in compliance with applicable laws. If Common Stock is used to pay all or part of the exercise
price, the sum of the cash or cash equivalent and the Fair Market Value (determined as of the date
of exercise) of the shares surrendered must not be less than the Option price of the shares for
which the Option is being exercised. If all or part of the exercise price is to be paid with a
full-recourse promissory note, the shares received upon exercise of the Option shall be pledged as
security for payment of the principal amount of the promissory note and interest thereon and the
interest rate payable under the terms of the promissory note shall not be less than the minimum
rate (if any) required to avoid the imputation of additional interest under the Code. Subject to
the foregoing, the Committee (at its sole discretion) shall specify the term, interest rate,
amortization requirements (if any) and other provisions of such note.

6.9. Buyout Provisions. The Committee may at any time offer to buy out an Option
previously granted for a payment in cash, shares of Common Stock or other property. Such buyout
offer shall be on such terms and conditions as the Committee shall determine.

6.10. Shareholder Rights. No Participant shall have any rights as a shareholder with
respect to shares subject to an Option until the date of exercise of such Option and the
certificate for shares of Common Stock to be received on exercise of such Option has been issued by
the Corporation. Voting rights of Common Stock issued pursuant to the Plan shall comply with Reg.
260.140.1 of the California Code of Regulations.

6.11. Disposition and Stock Certificate Legends for Incentive Stock Option Shares. A
Participant shall notify the Corporation of any sale or other disposition of Common Stock acquired
pursuant to an Incentive Stock Option if such sale or disposition occurs (i) within two (2) years
of the grant of an Option; or (ii) within one (1) year of the issuance of the Common Stock to the
Participant. Such notice shall be in writing and directed to the Secretary of the Corporation.
The Corporation may require that certificates evidencing shares of Common Stock purchased upon the
exercise of an Incentive Stock Option issued under the Plan be endorsed with a legend in
substantially the following form:

 

- 10 -

 

THE SHARES EVIDENCED BY THIS CERTIFICATE MAY NOT BE SOLD OR
TRANSFERRED PRIOR TO ___, 20___, IN THE ABSENCE OF A WRITTEN
STATEMENT FROM THE CORPORATION TO THE EFFECT THAT THE CORPORATION IS
AWARE OF THE FACTS OF SUCH SALE OR TRANSFER.

The blank lines contained in this legend shall be filled in with the date that is the later of
(i) one (1) year and one (1) day after the date of the exercise of such Incentive Stock Option; or
(ii) two (2) years and one (1) day after the grant of such Incentive Stock Option.

	7.	 	Restricted Stock Awards.

7.1. Restricted Stock Awards. Each Restricted Stock Agreement for a Restricted Stock
Award shall be in such form and shall contain such terms and conditions as the Committee shall deem
appropriate. The terms and conditions of the Restricted Stock Agreements for Restricted Stock
Awards may change from time to time, and the terms and conditions of separate Restricted Stock
Awards need not be identical, but each Restricted Stock Award shall include (through incorporation
of the provisions hereof by references in the agreement or otherwise), unless the Committee
otherwise provides, the substance of each of the following provisions.

(i) Purchase Price. Unless otherwise determined by the Committee, the purchase price
of Restricted Stock Awards:

(a) granted to a Participant who is deemed to be a Ten Percent Owner on the date of granted,
shall be one hundred percent (100%) of the Fair Market Value either on the date of grant (if the
Restricted Stock Award is an outright grant to the Participant) or at the time the purchase is
consummated (if the Restricted Stock Award requires the Participation to purchase the shares
subject to the Restricted Stock Award); and

(b) granted to any other Participant, shall not be less than eighty-five percent (85%) of the
Fair Market Value on the date of grant (if the Restricted Stock Award in an outright grant to the
Participant) or at the time the purchase is consummated (if the Restricted Stock Award requires the
Participant to purchase the shares subject to the Restricted Stock Award).

(ii) Consideration. The purchase price of Common Stock acquired pursuant to the
Restricted Stock Award shall be paid either (a) in cash at the time of purchase; (b) at the
discretion of the Committee, according to a deferred payment or other similar arrangement with the
Participant; or (c) in any other form of legal consideration that may be acceptable to the
Committee in its discretion.

(iii) Vesting. Shares of Common Stock acquired under a Restricted Stock Award may,
but need not, be subject to a vesting schedule and may, but need not, be subject to a share
repurchase option in favor of the Corporation as determined by the Committee.

(iv) Participant’s Termination of Service. In the event of a Participant’s
termination of Continuous Service, the Corporation may repurchase or otherwise reacquire any or all
of the shares of Common Stock held by the Participant which have not vested as of the date of
termination under the terms of the Restricted Stock Agreement for such Restricted Stock Award,
subject to Section 11.1.

 

- 11 -

 

(v) Nontransferability. Rights to acquire shares of Common Stock under a Restricted
Stock Award shall be nontransferable except by will or by the laws of descent and distribution or,
if the Restricted Stock Agreement so provides or the Committee so approves, as permitted by Rule
701 of the Securities Act, with respect to transfers by a Participant to the Participant’s family
members; provided, however, that the Participant may not receive any consideration for the
transfer.

	8.	 	Changes in Capital Structure and Change in Control.

8.1. No Limitations of Rights. The existence of outstanding Options or Restricted
Stock Awards shall not affect in any way the right or power of the Corporation or its shareholders
to make or authorize any or all adjustments, recapitalizations, reorganizations or other changes in
the Corporation’s capital structure or its business, or any merger or consolidation of the
Corporation, or any issuance of bonds, debentures, preferred or prior preference stock ahead of or
affecting the Common Stock or the rights thereof, or the dissolution or liquidation of the
Corporation, or any sale or transfer of all or any part of its assets or business, or any other
corporate act or proceeding, whether of a similar character or otherwise.

8.2. Changes in Capitalization. If the Corporation effects a subdivision or
consolidation of shares or other capital readjustment, the payment of a stock dividend or other
increase or reduction of the number of shares of the Common Stock outstanding, or a combination,
reclassification or other distribution of shares, without receiving consideration therefor in
money, services or property, then (i) the number, class, and per share price of shares of Common
Stock subject to outstanding Options and Restricted Stock Awards hereunder; and (ii) the number and
class of shares then reserved for issuance under the Plan and the maximum number of shares for
which awards may be granted to a Participant during a specified time period shall be appropriately
and proportionately adjusted. The conversion of convertible securities of the Corporation shall
not be treated as having been effected “without receiving consideration.” No substitution or
adjustment made pursuant to this Section 8.2 shall be made to the extent that such
substitution or adjustment would violate Code Section 409A or prevent the Plan from qualifying from
exemption under Code Section 409A. The Committee shall make such adjustments, and its
determinations shall be final, binding and conclusive.

8.3. Change in Control. Notwithstanding any other provision of the Plan to the
contrary, except to the extent otherwise provided in an agreement granting an Option or a
Restricted Stock Award, in the event of a Change in Control:

(i) The Committee shall have the discretion to accelerate the vesting of any Options and
Restricted Stock Awards outstanding, but not fully vested and exercisable as of the date of such
Change in Control, to the extent it deems appropriate;

(ii) The Committee shall have the discretion to remove all restrictions applicable to any
outstanding Restricted Stock Awards, the effect of which shall be that the Common Stock relating to
such Restricted Stock Awards shall become fully vested and transferable;

(iii) The Committee shall have the discretion to terminate any outstanding repurchase rights
of the Corporation with respect to any outstanding Options and Restricted Stock Awards; and

 

- 12 -

 

(iv) Outstanding Options and Restricted Stock Awards shall be subject to any agreement of
merger or reorganization that effects such Change in Control, which agreement shall provide for:

(a) The continuation of the outstanding Options and Restricted Stock Awards by the
Corporation, if the Corporation is a surviving corporation;

(b) The assumption of the outstanding Options and Restricted Stock Awards by the surviving
corporation or its parent or subsidiary;

(c) The substitution by the surviving corporation or its parent or subsidiary of equivalent
awards for the outstanding Options and Restricted Stock Awards; or

(d) Settlement of each share of Common Stock subject to an outstanding Option or Restricted
Stock Award for the Change in Control Price (less, to the extent applicable, the per share exercise
price), or, if the per share exercise price equals or exceeds the Change in Control Price, the
outstanding Option or Restricted Stock Award, as applicable, shall terminate and be canceled.

(v) In the absence of any agreement of merger or reorganization effecting such Change in
Control, each share of Common Stock subject to an outstanding Option or Restricted Stock Award
shall be settled for the Change in Control Price (less, to the extent applicable, the per share
exercise price), or, if the per share exercise price equals or exceeds the Change in Control Price,
the outstanding Option or Restricted Stock Award shall terminate and be canceled.

No substitution or adjustment made pursuant to this Section 8.3 shall be made to the
extent that such substitution or adjustment would violate Code Section 409A or prevent the Plan
from qualifying from exemption under Code Section 409A.

8.4. Limitation on Adjustment. Except as previously expressly provided, neither the
issuance by the Corporation of shares of stock of any class, or securities convertible into shares
of stock of any class, for cash or property, or for labor or services either upon direct sale or
upon the exercise of rights or warrants to subscribe therefor, or upon conversion of shares or
obligations of the Corporation convertible into such shares or other securities, nor the increase
or decrease of the number of authorized shares of stock, nor the addition or deletion of classes of
stock, shall affect, and no adjustment by reason thereof shall be made with respect to, the number,
class or price of shares of Common Stock then subject to outstanding Options or Restricted Stock
Awards. No adjustment made pursuant to this Section 8.4 shall be made to the extent that
such adjustment would violate Code Section 409A or prevent the Plan from qualifying from exemption
under Code Section 409A.

 

- 13 -

 

	9.	 	Withholding of Taxes.

The Corporation shall have the right, before any certificate for any Common Stock is
delivered, to deduct or withhold from any payment owed to a Participant any amount that is
necessary in order to satisfy any withholding requirement that the Corporation in good faith
believes is imposed upon it in connection with federal, state, or local taxes, including transfer
taxes, as a result of the issuance of, or lapse of restrictions on, such Common Stock, or otherwise
require such
Participant to make provision for payment of any such withholding amount. Subject to such
conditions as may be established by the Committee, the Committee may permit a Participant to (i)
have Common Stock otherwise issuable under an Option or Restricted Stock Award withheld to the
extent necessary to comply with minimum statutory withholding rate requirements for supplemental
income; (ii) tender back to the Corporation shares of Common Stock received pursuant to an Option
or Restricted Stock Award to the extent necessary to comply with minimum statutory withholding rate
requirements for supplemental income; (iii) deliver to the Corporation previously acquired Common
Stock; (iv) have funds withheld from payments of wages, salary or other cash compensation due the
Participant; or (v) pay the Corporation in cash, in order to satisfy part or all of the obligations
for any taxes required to be withheld or otherwise deducted and paid by the Corporation with
respect to the Option or Restricted Stock Award.

	10.	 	Compliance with Law and Approval of Regulatory Bodies.

10.1. General Requirements. No Option or Restricted Stock Award shall be exercisable,
no Common Stock shall be issued, no certificates for shares of Common Stock shall be delivered, and
no payment shall be made under the Plan except in compliance with all applicable federal and state
laws and regulations (including, without limitation, withholding tax requirements), any listing
agreement to which the Corporation is a party, and the rules of all domestic stock exchanges or
quotation systems on which the Corporation’s shares may be listed. The Corporation shall have the
right to rely on an opinion of its counsel as to such compliance. Any share certificate issued to
evidence Common Stock when a Restricted Stock Award is granted or for which an Option or Restricted
Stock Award is exercised may bear such legends and statements as the Committee may deem advisable
to ensure compliance with federal and state laws and regulations. No Option or Restricted Stock
Award shall be exercisable, no Restricted Stock Award shall be granted, no Common Stock shall be
issued, no certificate for shares shall be delivered, and no payment shall be made under the Plan
until the Corporation has obtained such consent or approval as the Committee may deem advisable
from regulatory bodies having jurisdiction over such matters.

10.2. Participant Representations. The Committee may require that a Participant, as a
condition to receipt of a particular award, execute and deliver to the Corporation a written
statement, in form satisfactory to the Committee, in which the Participant represents and warrants
that the shares are being acquired for such person’s own account, for investment only and not with
a view to the resale or distribution thereof. The Participant shall, at the request of the
Committee, be required to represent and warrant in writing that any subsequent resale or
distribution of shares of Common Stock by the Participant shall be made only pursuant to either (i)
a registration statement on an appropriate form under the Securities Act, which registration
statement has become effective and is current with regard to the shares being sold; or (ii) a
specific exemption from the registration requirements of the Securities Act, but in claiming such
exemption the Participant shall, prior to any offer of sale or sale of such shares, obtain a prior
favorable written opinion of counsel, in form and substance satisfactory to counsel for the
Corporation, as to the application of such exemption thereto.

 

- 14 -

 

	11.	 	General Provisions.

11.1. Corporation Repurchase Rights. If the Committee provides for a right of the
Corporation to repurchase shares of Common Stock issued under the Plan to a Participant other than
an officer, Director or Consultant, the Corporation may exercise such right as set forth in the
Stock Option Agreement or Restricted Stock Agreement, provided, however, that such
repurchase
right shall provide (i) that the Common Stock is to be repurchased for its Fair Market Value
on the date of termination of Continuous Service and the repurchase right terminates when the
Common Stock becomes publicly traded; or (ii) that the repurchase is at the original purchase price
for the shares of Common Stock, provided that the right to repurchase lapses at a rate of at least
twenty percent (20%) of the shares per year over five (5) years from the date the right to acquire
the shares was granted (without respect to the date the Option was exercised or became
exercisable). In either case, the right to repurchase the shares of Common Stock may be exercised
for cash or cancellation of purchase money indebtedness for the shares within ninety (90) days of
the Participant’s termination of Continuous Service (or in the case of shares issued upon exercise
of Options after termination of Continuous Service, within ninety (90) days after the exercise).
In addition to the restrictions set forth in this Section 11.1, the securities held by an
officer, director or consultant of the Corporation or an Affiliate may be subject to additional or
greater restrictions.

11.2. Information to Participants. The Corporation shall provide to each Participant
and to any other individual who acquires shares of Common Stock under the Plan, not less frequently
than annually during the period such Participant has an Option or Restricted Stock Award
outstanding under the Plan, and, in the case of an individual who acquires Common Stock pursuant to
the Plan, during the period such individual owns such Common Stock, copies of annual financial
statements for the Corporation. The Corporation shall not be required to provide such statements
to key employees where duties in connection with the Corporation ensure their access to equivalent
information.

11.3. Effect on Employment and Service. None of the adoption of the Plan, its
operation, or any documents describing or referring to the Plan (or any part thereof) shall (i)
confer upon any individual any right to continue in the employ or service of the Corporation or an
Affiliate; (ii) in any way affect any right and power of the Corporation or an Affiliate to change
an individual’s duties or terminate the employment or service of any individual at any time with or
without assigning a reason therefor; or (iii) except to the extent the Committee grants an Option
or Restricted Stock Award to such individual, confer on any individual the right to participate in
the benefits of the Plan.

11.4. Use of Proceeds. The proceeds received by the Corporation from the sale of
Common Stock pursuant to the Plan shall be used for general corporate purposes.

11.5. Unfunded Plan. The Plan, insofar as it provides for grants, shall be unfunded,
and the Corporation shall not be required to segregate any assets that may at any time be
represented by grants under the Plan. Any liability of the Corporation to any person with respect
to any grant under the Plan shall be based solely upon any contractual obligations that may be
created pursuant to the Plan. No such obligation of the Corporation shall be deemed to be secured
by any pledge of, or other encumbrance on, any property of the Corporation.

11.6. Rules of Construction. Headings are given to the Sections of the Plan solely as
a convenience to facilitate reference. The reference to any statute, regulation, or other
provision of law shall be construed to refer to any amendment to or successor of such provision of
law.

11.7. Choice of Law. The Plan and all Stock Option Agreements and Restricted Stock
Agreements entered into under the Plan shall be interpreted under the laws of the State of
California, without regard to any conflict of laws.

 

- 15 -

 

	12.	 	Amendment and Termination.

The Board may amend or terminate the Plan from time to time; provided, however, that
shareholder approval shall be required for any amendment that (i) increases the aggregate number of
shares of Common Stock that may be issued under the Plan; or (ii) changes the class of employees
eligible to receive Incentive Stock Options. Except as specifically permitted by the Plan, Stock
Option Agreement or Restricted Stock Agreement or as required to comply with applicable law,
regulation or rule, no amendment shall, without a Participant’s consent, adversely affect any
rights of such Participant under any Option or Restricted Stock Award outstanding at the time such
amendment is made; provided, however, that an amendment that may cause an Incentive
Stock Option to become a Nonqualified Stock Option shall not be treated as adversely affecting the
rights of the Participant. Any increase in the aggregate number of shares of Common Stock
available under Plan or change in class of employees eligible to receive Incentive Stock Options
shall be approved by the shareholders of the Corporation within twelve (12) months of the date such
amendment is adopted by the Board.

No Option or Restricted Stock Award granted pursuant to this Plan is intended to constitute
“deferred compensation” as defined in Code Section 409A, and the Plan and the terms of all Options
and Restricted Stock Awards shall be interpreted accordingly. If any provision of the Plan, an
Option or a Restricted stock Award contravenes any regulations or Treasury guidance issued under
Code Section 409A, such provision shall be modified to maintain, to the maximum extent practicable,
the original intent of the applicable provision without triggering the penalties and interest under
Code Section 409A.

	13.	 	Effective Date of Plan, Duration of Plan.

13.1.
The Plan became effective as of November 17, 2006, upon adoption by the Board, subject to
approval within twelve (12) months by the shareholders holding of a majority of the shares of
Common Stock entitled to vote thereon. Unless and until the Plan has been approved by the
shareholders of the Corporation, no Option or Restricted Stock Award may be exercised. In the
event that the shareholders of the Corporation do not approve the Plan within such twelve (12)
month period, the Plan and any previously granted Option or Restricted Stock Award shall terminate.

13.2. Unless previously terminated, the Plan shall terminate ten (10) years after the earlier
of (i) the date the Plan is adopted by the Board; or (ii) the date the Plan is approved by the
shareholders, except that Options and Restricted Stock Awards that are granted under the Plan prior
to its termination shall continue to be administered under the terms of the Plan until the Options
and Restricted Stock Awards terminate or are exercised.

	 	 	 	 	 
	 	INTERNATIONAL STEM CELL CORPORATION

 	 
	  	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	President	 
	 
	  	Date:  	 	 

 

- 16 -

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