Document:

Exhibit 10.94 - Manufacturing Support Services Agreement

EXHIBIT 10.94

MANUFACTURING SUPPORT SERVICES AGREEMENT

This MANUFACTURING SUPPORT SERVICES AGREEMENT (this “Agreement”) is made and dated to be effective on the 1st day of August2007 (the “Effective Date”) by and between PROGENITOR CELL THERAPY, LLC, a Delaware limited liability company (“PCT”), having a place of business at 21 Main St, Court Plaza South, East Wing, Suite 304, Hackensack, New Jersey 07601, and Cord Blood America Inc., 

a

Florida  

corporation

(“CBAI”),

 having a place of business at 9000 Sunset Blvd., Suit 400, Los Angeles, CA 90069.  PCT and CBAI

are also, at times, referred to herein as a “Party” and collectively as the “Parties.”  Capitalized terms not otherwise defined in this Agreement shall have the meanings given to them in Section 1, below.

WITNESSETH:

WHEREAS, PCT is a services company providing services and expertise to organizations in the cell therapeutics industry which services include stem cell processing and storage;

WHEREAS, CBAI is a cord blood banking company requiring cord blood processing and storage services; and 

WHEREAS, CBAI wishes PCT to provide Services (defined below) pursuant to the terms of this Agreement;

NOW, THEREFORE, in consideration of the mutual promises of the Parties and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by each Party to the other, the Parties, intending to be legally bound, hereby covenant and agree as follows.

TERMS

1 

Definitions.

1.1

As used in this Agreement the following capitalized terms shall have the following meanings:

Affiliate

With regard to a Party, any corporation, association or other business entity which directly or indirectly controls, is controlled by or is under common control with such Party.  As used herein, “control” means the legal power to direct or cause the direction of the general management and policies of such entity whether through the ownership of at least 50% of voting securities or capital stock of such business entity or, with respect to a business entity other than a corporation, any other comparable equity or ownership interest.  

An entity shall only be considered an Affiliate of a Party for so long as such control exists.

Applicable Laws

Except as stated to the contrary in this Agreement, all laws, ordinances, rules, orders and regulations of any state, federal or local governmental or regulatory authority that govern the Services or Product including, without limitation, the United States Federal Food, Drug and Cosmetic Act, HIPAA and the regulations and guidelines of the FDA and other Regulatory Agencies.

1

Background Intellectual Property

Any Intellectual Property owned by a Party at the Effective Date of this Agreement and any Intellectual Property developed independent of this

Agreement at any time by any employee of that Party without access or reference to any of the Confidential Information disclosed by the other Party.

Cancellation Period

The period from and including the date upon which notice of  termination is provided and through and including the Termination Date, as further defined in section 10, and accompanied by an associated fee calculated in accordance with section 11.

Cancellation Services

In accordance with the terms of section 11, PCT will provide services in relation 

to the termination of the contract comprised of transferring applicable documentation, records, data, SOPs, BPRs, licenses, Product, freezers, contracts, materials, and supplies from PCT to CBAI or its designee and make all such efforts as can be reasonably expected to facilitate a smooth operational transition of the Services from PCT to CBAI or its designee.

Confidential Information

Any technical, scientific or commercial information relating to the Program and any other information of a confidential nature disclosed by either Party (the “Disclosing Party”) to the other (the “Receiving Party”), including any and all information of such nature disclosed prior to and/or after the Effective Date of this Agreement, including and without limitation any information relating to the Disclosing Party’s business affairs, which is either marked as “confidential” or “proprietary”, or which given the substance and circumstances surrounding its disclosure would reasonably be considered confidential or proprietary information of such Party.    

Facilities

Means the manufacturing and storage facilities belonging to PCT intended to be used to perform the Services, including but not limited to such facilities at Hackensack, New Jersey (the “New Jersey Facility”) and Mountain View, California (the “California Facility”) and any such facilities as PCT may subsequently operate.  Any one such Facility shall be referred to in the singular as a “Facility”.

FDA

Means the United States Food and Drug Administration.

Force Majeure

Any cause beyond the reasonable control of the Party in question which for the avoidance of doubt and without prejudice to the generality of the foregoing includes governmental actions, war, riots, terrorism, civil commotion, fire, flood, epidemic, labor disputes (excluding labor disputes involving the work force or any part thereof of the Party in question), restraints or delays affecting shipping or carriers, and

 acts o

f God.

2

cGMP

Current Good Manufacturing Practice regulations, as set forth in the United States Code of Federal Regulations Title 21 (21 C.F.R. §§ 210 and 211)

, as amended from time to time, and subject to the r

equirements set forth

 in the Quality Agreement, attached hereto.

cGTP

Current Good Tissue Practice

 regulations,

 as set forth in the United States Code of Federal Regulations Title 21

 (21 C.F.R. § 1271 subpart 2

), as amended from time to time,

and

subject to 

the requirements set forth

 in the Quality Agreement.

Manufacture

Means manufacture of the Product by PCT in accordance with this Agreement and Quality Agreement, including any amendments made thereto in accordance with section 2.

Intellectual Property

All know-how, inventions, discoveries, devices, data, designs, and other technology, and all patent, copyright, and other intellectual property rights therein.  

Product

A unit of cord blood-derived stem cells processed and stored by PCT in compliance with this Agreement, its attachments, schedules, and any subsequent amendments made in accordance with section 2. (collectively referred to as “Products”)

Program

The Services as set out in Stages 1 through 5 of the Schedule A.

Program Amendment Order

A document detailing changes to any part of this Agreement, including changes to the Program , which has been agreed to and signed by both Parties and is in the form attached to and made a part of this Agreement as “Schedule C”.  The elements and conditions of a Program Amendment Order are described in section 2.

Quality Agreement

The document agreed to by the Parties which sets forth and governs the roles and responsibilities of each Party’s personnel in relation to quality assurance matters relating to the transactions contemplated under this Agreement, a copy of which is attached to and made a part of this Agreement as “Schedule B” (the “Quality Agreement”).

3

Regulatory Agency

Any state, federal or local governmental regulatory authority involved in regulating any aspect of the conduct, development, manufacture, storage, distribution, market approval, sale, packaging or use of the Services, the Program or the Product, including the FDA.

Services

Only those services to be provided by PCT as expressly set forth and more particularly described in Stages 1 through 5 in Schedule A.

Stage

Each distinct step or

 stage of the Program as 

generally described

 in Schedule A

..

Termination Date     

June 30, 2012, or such other date upon which this Agreement (i) expires pursuant to the terms of any extension of this Agreement as agreed to by the Parties; or (ii) is effectively terminated in accordance with the terms and conditions set forth herein and after any applicable notice or cure period

 has been exhausted

..

Third Party

Any person other than the Parties or their respective Affiliates.

1.2

Any reference to “day” or “days” means any day other than a Saturday, Sunday or the following United States holidays: New Year’s Day, President’s Day, Memorial Day, Fourth of July, Columbus Day, Thanksgiving Day, Christmas Eve, Christmas Day and New Year’s Eve. Any reference to “calendar days” means any day including a Saturday, Sunday, or the holidays listed above.

2

Performance of the Program.

2.1

Standards of Performance.

(a)

Performance of Services

.. Generally, PCT agrees to perform Services in accordance with the provisions of this Agreement, its attachments, schedules, and any amendments made pursuant to section 2.  All Services shall be conducted in compliance with Applicable Laws.

(b)     

Quality Agreement

.. 

Each Party shall fulfill its responsibilities as set forth in the Quality Agreement.  CBAI hereby acknowledges and agrees that in order for PCT to carry out the Program, CBAI must satisfy its obligations under this Agreement, including the Quality Agreement.

2.2

Term. This Agreement and the Program shall terminate on the Termination Date of June 30, 2012 unless (i) terminated earlier in accordance with the provisions of this Agreement or (ii) extended by Program Amendment Order in accordance with section 2.5.

2.3

Conduct of the Program.  It shall not be considered a breach of this Agreement by either Party if an objective of the Program is not achieved due to a 

delay

 caused by the other Party.  

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2.4

Information Exchange.  The Parties shall conduct regular information exchanges in a manner to be agreed between the Parties to enable ongoing review of the Program and its continuation.  Each Party shall nominate a person to act as the key point of contact for such information exchange.  At the date of this Agreement, the points of contact are as follows:

(a)

for PCT: 

Robert A. Preti

President & Chief Scientific Officer

Progenitor Cell Therapy, LLC

21 Main St., Court Plaza South, East Wing, Suite 304

Hackensack, NJ  07601

Telephone: (201) 883-5300 

Fax: (201) 883-1409

(b)

for CBAI:

Marion Malone

VP of Business Development

CorCell Companies

906 Princess Drive

West Lafayette, IN  47906

Tel (765) 463-9354

mmalone@corcell.com

2.5

Program Amendment Orders.  

(a)

No variation or change of any nature whatsoever to the Agreement, including no change in any of the terms of the Program or Quality Agreement, may be made except by means of a fully executed Program Amendment Order.

(b)

The Parties hereby acknowledge that, in the event of a Program Amendment Order this may result in additional costs or cause a change in the payments set out in section 3 below.

2.6

Prospective Events.  

(a)

Definitions.  For purposes of this section, the following terms shall have the meanings given to them as set forth below:

“Prospective Illegality” means any state or federal statute or common law, or state or federal administrative agency rule, guidance or directive now existing or enacted or promulgated or re-interpreted after the Effective Date of this Agreement that is interpreted by judicial decision, a regulatory agency or legal counsel in such manner as to result in the conclusion that any act or service required of PCT or CBAI under this Agreement is in violation of such law, rule, guidance or directive.  

“Prospective Cost Increase” means the enactment of a state or federal statute, common law, state or federal administrative agency rule, guidance or directive or amendment thereof after the Effective Date of this Agreement and not contemplated before the Effective Date as to which compliance by PCT imposes an extraordinary and unanticipated financial burden that is generally applicable to all providers of cell processing services.  

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(b)

Effect of a Prospective Illegality.  In the event of a Prospective Illegality, CBAI and PCT shall promptly negotiate in good faith amendments to this Agreement as necessary to address such Prospective Illegality.  Pending agreement on the appropriate amendment, either CBAI or PCT, on fourteen (14) calendar days written notice to the other, may cease to perform a questioned act; provided, however, that the unaffected provisions and obligations of this Agreement will remain in full force and effect and be enforceable by both CBAI and PCT to the extent possible.  

(c)

Effect of a Prospective Cost Increase.  In the event of a Prospective Cost Increase, CBAI and PCT shall negotiate in good faith amendments to the payment terms of this Agreement to address such cost increase.  To the maximum extent possible, any such amendment agreed to under this section shall preserve the primary benefits sought to be achieved by this Agreement and the underlying economic and financial arrangements between the Parties.  If CBAI and PCT agree that the primary benefits sought to be achieved by this Agreement cannot be achieved through an appropriate amendment, then this Agreement will be automatically terminated one hundred twenty (120) calendar days thereafter, or on a sooner date as may be mutually agreed upon by the Parties.  If CBAI and PCT are unable to reach agreement as required by this section, then the matter shall be submitted to arbitration in accordance with the terms of this Agreement.        

2.7

Regulatory Assistance

..  

(a)

Regulatory Actions

..  PCT shall permit the FDA and other Regulatory Agencies to conduct inspections of PCT’s Facilities as they may request,  and shall cooperate with such Regulatory Agencies with respect to the inspections related to the Services or the Product.  PCT shall give CBAI prior notice, to the extent practicable, of any such inspections, and keep CBAI informed about the results and conclusions of each regulatory inspection, including actions taken by PCT to remedy any conditions cited in the inspections. If prior notice is not possible, PCT shall promptly (i.e., within one day of the said inspection) inform CBAI in the event that a regulatory inspection affects work carried out at PCT’s facilities on behalf of CBAI.  In addition, PCT shall permit CBAI or its representative to assist in the preparation for and be present at inspections relating to the Services or the Product.  Within five (5) days of receipt by PCT, PCT shall provide CBAI with copies of any written inspection reports issued by the Regulatory Agency and all correspondence between PCT and the Regulatory Agency which relate to the Services or the Product, including FDA Form 483, “Notice of Observation,” and all related correspondence, in each case relating to the Services or the Product; provided, however, PCT may exclude from such copies any references to the name and any identifying information specific to other non-CBAI products.  Similarly, PCT agrees to promptly (i.e., within five (5) days of receipt by PCT) notify and provide CBAI copies of any request, directive or other communication of the FDA or other Regulatory Agency relating to the Services or the Product and to cooperate with CBAI in responding to such requests, directives and communications.  PCT may exclude from any notifications or communication, any references to or information not pertaining to CBAI Products or Services and pertaining to matters related to other clients of PCT.

(b)

Information

..  In accordance with the terms of the Proposal, PCT shall as soon as it reasonably can, but in any event within fifteen (15) days of receipt by PCT, provide CBAI with the development reports, qualification reports and testing data related to the Services or the Product, for use by CBAI in compiling regulatory submissions.  Upon reasonable request by CBAI, PCT shall also provide summary reports and information regarding facility, systems, utilities and equipment construction, commissioning and qualification.

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(c)

Regulatory support

..  In addition to the documentation requirements under section 2.8(b), and if requested by CBAI, regulatory support (i.e., writing of regulatory submissions, annual or periodic reports, adverse drug reporting, product recalls, correspondence and responses to requests, directives and agency communications etc.) will be provided by PCT at the rate detailed in section 3.3(d).

2.8 

Audits and on site visits to PCT’s Facilities.

(a)

Audits. CBAI may conduct a cGMP compliance audit at any of the Facilities once every calendar year upon providing PCT with a minimum of thirty (30) calendar days’ prior written notice.  

     

(b)

On site meetings.  Project team and technical meetings may be held on site at the PCT headquarter offices as required by the project progression. Such meetings will review the Program, including issues arising out of, and the follow-up with regard to, actions, investigations and deviations.

 

3

Program Charges.

3.1

Payment for the Program.  CBAI shall pay PCT the fees outlined in this section (the “Program Charges”) for the Services as specified in Stages 1 through 5 set forth in Schedule A. The Program Charges do not include the charges for any additional services that PCT may provide to CBAI, including those described as “Additional Steps” in the Excluded Items described below in this section, all of which shall be billed separately in accordance with the terms of this Agreement.  Payment of the Program Charges shall be made in installments and shall become due and owing, as follows:

3.2

The Parties agree that, except as otherwise stated in this Agreement, as of August 1, 2007 CBAI agrees to pay PCT:

A.

A fee of $5,000 for Technology Transfer Services as defined in Schedule A payable July 1, 2007;

B.

Fees for Program Management Services (as defined in Schedule A) at a rate of $2,500 per month for the first year of this Agreement; and after 

 

one (1) year (on or after August 1, 2008), at CBAI discretion, the Parties agree to discuss the applicability and appropriateness of the Program Management Services fee to determine if a reduction in the amount is warranted at that time; 

C. 

Subject to revisions made by a Program Amendment Order and/or the provisions of Section 3.4, and otherwise in accordance with the provisions of this section, fees for Product Processing Services (as defined in Schedule A) (without regard to the actual number of Products processed below 100 Products per month) at a minimum monthly rate of $55,000 (the “Monthly Minimum Fee”); and  

D.

Subject to revisions made by a Program Amendment Order and pursuant to the provisions of this section, fees for Product Processing Services (as defined in Schedule A) at a rate of $525 per Product for any Product over 100 per month up to but not to exceed 200 Products per month (the “Discounted Product Rate”). 

7

For reference purposes, a summary of the fees CBAI agrees to pay PCT is set 

forth in the chart below:

						
	 
	Description

	 
	 Payment Due Date

	 
	Amount

	A

	Technology Transfer Services

	 
	August 1, 2007

	 
	$ 5,000

	B

	Program Management Services

	 
	Monthly, starting August 1

	 
	$ 2,500

	C

	Product Processing Services Monthly Minimum Fee

	 
	Monthly, starting upon the commencement of processing.____

	 
	$55,000

	D

	Product Processing Services Discounted Product Rate

	 
	Monthly, starting Aug 1

	 
	$525 per Product for each Product over 100, but not to exceed 200 Products total per month

3.3

The Parties agree that, subject to a Program Amendment Order in which the Parties agree otherwise, PCT shall not be required to process more than a total of 200 Products per month.

3.4

The Parties agree that if, through the term of the Agreement, the Parties agree to a Program Amendment Order increasing the monthly minimum number of Products PCT will process, then the Discounted Product Rate will become the basis for calculating the revised Minimum Monthly Fee, and the revised lower Discounted Product Rate will be negotiated and agreed upon by the Parties and

 

the Parties hereby agree that:

(a)

the Monthly Minimum of 100 Products per month at $550 per Product, for a payment of $55,000, plus applicable taxes, may be raised at any time, at the discretion of CBAI, to 200 and 300 Products-per-month minimums;

  

(b)

When and if the minimum is raised by CBAI to 200 Products per month, then the fixed, per-Product fee will be the Discounted Product Rate  of $525 per Product for the minimum 200 units and a revised Monthly Minimum Fee  payment of $105,000, plus applicable taxes (the “200 Revised Monthly Minimum”). Each additional unit above the 200 unit minimum in a calendar month would then be billed at a revised discounted Product rate of  $500 (the “First Revised Discounted Product Rate”);

(c)

When and if the minimum is raised by CBAI to 300 Products per month, then the fixed, per-Product fee will be the First Revised Discounted Product Rate of $500 per Product for the minimum 300 units and a revised monthly minimum payment of $150,000, plus applicable taxes (“300 Revised Monthly Minimum”). Each additional unit above the 300 unit minimum in a calendar month would be also be billed at the First Revised Discounted Product Rate of $500.

3.5

The Parties agree that the per-Product rate will not fall below $500 during the Term of this Agreement.

3.6

Fees payable hereof are subject to a cost of living adjustment (COLA) effective January 1st of each successive year, starting on January 1, 2009. the COLA calculation will be  equal to the increase or decrease in the cost of living over the prior 12 month period in New Jersey, as measured by the applicable consumer price index (All Urban Consumers) published from time to time by the U.S. Department of Labor, Bureau of Labor Statistics (“CPI”). 

3.7

Date of Payments.  All payments of the Program Charges are due on the dates and schedule as set forth above.  Any payment that remains unpaid thirty (30) calendar days after the date when due shall then begin to accrue interest at the annual rate of twelve percent (12%) until paid in full (the “Default Rate”), or otherwise at a rate not to exceed the limits of the applicable state usury law. 

8

3.8

Excluded Items.  The Program Charges set forth in this section 3 do not include the following additional charges, all of which shall be charged to, and payable by CBAI, as follows:

(a)

direct, out-of-pocket costs actually incurred by PCT for consumable items not associated with the Services, including Product shipping containers and packing materials, ordering of manufacturing process reagents and disposables and any personnel monitoring supplies and testing and/or additional environmental monitoring supplies and testing requested by CBAI that is beyond that normally performed by PCT; 

(b)

direct, out-of-pocket costs reasonably and actually incurred by PCT associated with written, pre-approved travel expenses arising from visits of PCT technical staff to CBAI facilities, testing site or material supply vendors; 

(c)

costs associated with the packaging and shipment of the Product as detailed in section 4 and Schedule A;   

(d)

fees for Technical Writing Services  at $90.00 per man-hour of time spent by PCT employees performing work related to these Technical Writing Services, such fees subject to written estimate defining project scope with written approval from CBAI ; 

(e)

direct, out-of-pocket costs actually incurred by PCT for  Electronic Data Management and fees for Electronic Data Management Services provided by PCT employees at $90 per man-hour of time spent employees performing work related to Electronic Data Management, such fees subject to written estimate defining project scope with written approval from CBAI; 

(f)

annual Electronic Data Management license fee not to exceed $5,000 per annum; 

(g)

regulatory support beyond that set forth in section 2.8 that can be provided at PCT’s standard rate of $2,600 per person per calendar day, or for a negotiated price reflecting the total scope of work;

(h)

additional qualification/validation, process, product and assay development, consulting or support, including that required to address specific requests received from regulatory agencies can be provided at PCT’s standard rate of $2,600 per person per calendar day, or for a negotiated total scope of additional work under a Program Amendment Order of section 2; 

(i)

for each PCT-owned freezer holding any CBAI Product which is part of the Product Transfer (as defined in Stage IV of Schedule A), CBAI shall pay to PCT $3,000 per month for 60 months from the date of installation  on the understanding that if the Agreement terminates before the 60 months expire CBAI shall, or if Agreement has not expired before the 60 month expiry CBAI may, at any time before the 60 months expires, pay PCT a sum equal to 60 months x $3,000 per month – months already paid + $25,000 and then going forward $600 per month for the duration of the Agreement.  If CBAI is not required or does not elect to purchase the freezer prior to the expiry of the 60-month period, CBAI may, at any time after the 60-month period, elect to (1) continue paying $3,000 per month or (2) purchase the freezer from PCT for $25,000 and pay $600 per month thereafter;

9

(j)

for each PCT-owned freezer holding any CBAI product which was purchased after September 2007 and not part of the Product Transfer, CBAI shall pay to PCT $3,000 per month for a minimum of three (3) months until sixty (60) months from the date of installation on the understanding that if the Agreement terminates before the sixty (60) months expires CBAI may elect to pay to PCT a buy out rate for the freezer.  The buy out rate shall be equal to paying $90,000 (the “Full Buy Back Rate”) on the first day of the fourth month from the date of installation should CBAI have elected to purchase the freezer at that time.  Should the termination date of the contract fall at anytime after the fourth month, and CBAI elects to purchase the freezer from PCT at that time or any time thereafter, the buy out rate shall be equal to the Full Buy Back Rate minus $1,140 for each month including and after the fourth month to the time of election.  For example, should the contract end during month six (6) of installation, and CBAI elects to purchase the freezer from PCT, CBAI agrees to pay to PCT $86,580 on the first day of month seven (7), in addition to the $3,000 monthly payments previously made for the first six (6) months of storage at PCT.  If CBAI is not required or does not elect to purchase the freezer prior to the expiry of the 60-month period, CBAI may, at any time after the 60-month period, elect to (1) continue paying $3,000 per month or (2) purchase the freezer from PCT for $25,000 and pay $600 per month thereafter; 

(k)

for each CBAI-owned freezer transferred as part of the Freezer-Product Transfer (as defined in Stage IV of Schedule A), CBAI shall pay to PCT  $400 per month per freezer; 

(l)

for all Future Freezer-Product Transfers (as defined in Stage IV of   Schedule A) CBAI shall pay $600/month; 

(m)

all costs associated with the Freezer-Product Transfer will be the responsibility of CBAI and CBAI shall pay for PCT time expended and invoiced related to the transfer at a rate of $90 per man-hour of time spent to effect the transfer, subject to receipt of approval of written estimate;

(n)

all costs associated with the Product Transfer (as defined in Stage IV of  Schedule A) will be the responsibility of CBAI and CBAI shall pay for PCT time expended and invoiced related to the transfer at a rate of $90 per man-hour of time spent to effect the transfer;

(o)

all costs associated with the Future Freezer-Product Transfers (as defined in Schedule A) will be the responsibility of CBAI and CBAI shall pay for PCT time expended and invoiced related to the transfer at a rate of $90 per man-hour of time spent to effect the transfer; 

(p)

all costs associated with Equipment Validations (as defined in Stage IV of  Schedule A) will be the responsibility of CBAI and CBAI shall pay for PCT time expended and invoiced related to the validations at a rate of $90 per man-hour of time spent to effect the validations; 

(q)

Product Shipment (as defined in Stage V of Schedule A) fees at a rate of $250 per Product plus applicable shipping and out-of-pocket expenses as further described in section 3.8(a); and

(r)

all out-of-pocket expenses associated with Product HLA Testing (as defined in Schedule A).

3.9

PCT shall obtain CBAI’s approval, not to be unreasonably withheld, prior to incurring any additional costs described in section 3.8.  In any case, such additional costs are subject to written estimates and  project scope with written approval from CBAI.  

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3.10

Fees for Excluded Items.  For costs associated with items described in section 3.8, an added amount equivalent to 10% of the cost of such items will be invoiced to represent handling and administration charges.

3.11

Issue of Invoices.  PCT shall invoice CBAI for any additional costs and charges PCT incurs under this Agreement other than the Program Charges, including, but not necessarily limited to, those items set forth in section 3.8.  PCT shall issue invoices described in this section as sums for such costs incurred become due and CBAI shall pay such sums within thirty (30) calendar days after the date CBAI receives the relevant invoice.  Any amount not paid by CBAI to PCT when due shall accrue interest at the Default Rate until paid in full.

4

Delivery of Product.

4.1

Packing and Shipping of Product. Upon request by CBAI, PCT shall pack the Product and arrange for its shipment in accordance with the details and specifications of the request and in compliance with specifications detailed in Schedule A.

4.2

Storage of the Product.  All Product will be stored in compliance with specifications detailed in Schedule A.

4.3

Import and Export Compliance.  PCT will, at CBAI’s expense and request, obtain any export license or other official authorization and carry out customs formalities necessary for the exportation of the Product’s outside the United States. 

5

Representations and Warranties.  

5.1 

General Representations and Warranties.  Each Party represents and warrants to the other that it has the necessary right and authority to enter into this Agreement and that to the best of its knowledge as of the Effective Date it is the rightful owner of all Background Intellectual Property it purports to own.  Neither Party makes any representation or warranty to the other except as specified in this Agreement.

5.2

Representations and Warranties of PCT.  

(a)

Compliance with Obligations.  PCT hereby represents and warrants to CBAI that it shall perform its obligations under this Agreement in a professional manner with due care, and in accordance with the Quality Agreement and Applicable Laws.

(b)

Compliance of the Facilities.  The Facilities shall operate in compliance with Applicable Laws and the Quality Agreement. 

(c)

Permits.  PCT shall use best efforts to obtain and maintain all necessary 

permits

, licenses and authorizations as required under this Agreement and Applicable Laws with respect to the Services.

(d)

Personnel.  N

either PCT, its subcontractors, agents, nor any

members of their respective staffs involved in providing the Services shall be, at the time of performance of any Services: (i) disqualified or debarred by the FDA or any other Regulatory Agency for any purpose pursuant to 21 U.S.C. § 335a or any foreign counterpart thereof; or (ii) convicted under United States federal law or foreign counterpart thereof, for conduct relating to the development or approval, or otherwise relating to the regulation of, any drug under the Generic Drug Enforcement Act of 1992 or any other relevant statute, law or regulation.  

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5.3

Representations and Warranties of CBAI.   CBAI hereby represents and warrants to PCT that: 

(a)

Compliance with Obligations - CBAI shall perform its obligations under this Agreement in a professional manner with due care, and in accordance with the Quality Agreement and Applicable Laws; 

(b)

Compliance - CBAI shall obtain and maintain all necessary permits

,

licenses and authorizations as required as required under this Agreement and Applicable Laws;

(c)

Patents - In carrying out its obligations under this Agreement, CBAI shall not infringe upon any United States or foreign copyright, patent, trademark, trade secret or other proprietary right, or misappropriate any trade secret, of any third Party

 in any manner that would cause any liability, loss or damage to PCT

, and CBAI represents and warrants that it has neither assigned nor otherwise entered into any agreement by which it purports to assign or transfer any right, title or interest to any technology or intellectual property right that would conflict with its obligations under this Agreement; 

(d)

Confidential Information - That neither CBAI, nor any of its employees, agents, contractors, or any other person or entity affiliated with CBAI, has, prior to the Effective Date of this Agreement, disclosed any Confidential Information in a manner other than as described in section 9; and 

(e)

Product and Freezer Transfers -  prior to transferring any Product or freezer to PCT, CBAI has obtained any and all consents, authorizations and waivers that may be required from any third party, including, but not limited to, CBAI’s current service provider (i.e., Bergen), any financial institutions, and all customers, to transfer all Product and freezers to PCT under this Agreement; and

(f)

Freezers – that CBAI owns title, free and clear of any encumbrance, to 

each freezer transferred to PCT under this Agreement.

5.4

Disclaimer of Warranties.  EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, NEITHER PARTY MAKES ANY WARRANTY WITH RESPECT TO THE PRODUCT, SERVICES AND PROGRAM TO BE SUPPLIED BY SUCH PARTY HEREUNDER AND BOTH PARTIES SPECIFICALLY DISCLAIM ALL EXPRESS OR IMPLIED REPRESENTATIONS OR WARRANTIES WITH RESPECT TO THE PRODUCT, SERVICES AND/OR PROGRAM, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR ANY PARTICULAR PURPOSE OR NONINFRINGEMENT, OR ANY IMPLIED WARRANTY ARISING FROM COURSE OF PERFORMANCE, COURSE OF DEALING OR USAGE OF TRADE.  

6

Insurance.

6.1

Each Party shall, at all times during the period of this Agreement, obtain and maintain insurance coverage with limits no less than:

(a)

Comprehensive General Liability (including coverage for bodily injury an property damage) - Two Million ($2,000,000) Dollars aggregate, per occurrence;

(b)

Workers Compensation – the minimum statutory amounts under applicable laws; 

(c)

Professional Liability Coverage – Two Million ($2,000,000) Dollars aggregate, per occurrence  

   

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6.2

Certificates and Changes.  Each Party shall furnish to the other a certificate of such insurance evidencing the required policies of insurance set forth above, which certificate shall provide that no such policy shall be altered, amended or cancelled without providing the other Party with at least thirty (30) calendar days prior written notice of such change.  

  

6.3

Waivers of Subrogation.  Each Party hereby waives any and all rights it may have against the other and its respective subcontractors, agents and employees for damages caused by fire or other causes of loss to the extent covered by insurance required to be provided under this Agreement (the “Amount of Coverage”) except such rights it may have to proceeds of such insurance held by it as a fiduciary. Each Party shall require of its sub-subcontractors, agents and employees, by appropriate agreements, written where legally required for validity, similar waivers in favor of the other Party and its respective subcontractors, agents and employees.  The insurance policies shall provide such waivers of subrogation by endorsement or otherwise. A waiver of subrogation shall be effective up to the Amount of Coverage as to a person or entity even though that person or entity would otherwise have a duty of indemnification, contractual or otherwise, did not pay the insurance premium directly or indirectly, and whether or not the person or entity had an insurable interest in the property damaged.

7

Indemnity.

7.1

Indemnification by PCT.  

Except as otherwise stated to the contrary or limited herein, 

PCT shall defend, indemnify and hold CBAI and CBAI’s members, officers, directors, agents, employees, professionals or contractors (collectively, its “Agents”) harmless from and against any and all claims, losses, costs, damages, and liabilities of any nature whatsoever, including reasonable attorney’s fees and disbursements (collectively, “Claims”), incurred, caused or occasioned by, in connection with or arising out of the 

negligent 

acts or omissions of PCT and/or PCT’s Agents including PCT’s violation or failure to perform, or misrepresentation with respect to, any of the terms, covenants or conditions of this Agreement, except to the extent incurred, caused or occasioned by, in connection with or arising out of the acts or omissions of CBAI and/or CBAI’s Agents including CBAI’s violation or failure to perform, or misrepresentation with respect to, any of the terms, covenants or conditions of this Agreement.  

PCT’s foregoing agreement to indemnify CBAI does not apply to any Claim that is incurred, caused or occasioned by, in connection with or arising out of any defects or other deficiencies that existed in any Product (each, a “Defective Product”) upon transfer to PCT, and CBAI hereby releases and agrees to hold PCT and PCT’s Agents harmless from any and all Claims that relate to any Defective Product transferred to PCT.

Nothing in this Agreement shall be deemed to require PCT to indemnify CBAI for or with respect to any bodily or property damage caused by use of any Product unless and solely to the extent any such bodily injury or property damage is caused directly by PCT’s 

negligent 

act or omission.  CBAI hereby acknowledges that it has exclusive control and final decision making authority and approval with respect to (i) the specifications that govern the Services to be provided by PCT under this Agreement, and (ii) the specifications that govern the storage, handling and distribution of the Product by PCT

collectively, the “Specifications”) and CBAI hereby releases and agrees to hold PCT and PCT’s Agents harmless for any Claims incurred, caused or occasioned by, in connection with or arising out of

actions in compliance with the Specifications

.  CBAI further acknowledges that PCT has no control over the “use” of the Product by any third party after being shipped by PCT in accordance with this Agreement.  

7.2

Indemnification by CBAI.  CBAI shall defend, indemnify and hold PCT and PCT’s Agents harmless from and against any and all Claims incurred, caused or occasioned by, in connection with or arising out of (i) the Products; and (ii) any acts or omissions of CBAI and/or CBAI’s Agents, including CBAI’s violation or failure to perform, or misrepresentation with respect to, any of the terms, covenants or conditions of this Agreement, except to the extent incurred, caused or occasioned by, in connection with or arising out of the acts or omissions of PCT and/or PCT’s Agents including PCT’s violation or failure to perform, or misrepresentation with respect to, any of the terms, covenants or conditions of this Agreement.

7.3

Survival of Indemnification Obligations.  Each Party’s indemnification obligations to the other Party shall survive the expiration or earlier termination of this Agreement.

13

8  

Limitations on Liability and Damages.  

8.1

Limitations on Liability.

(a)

Between the Parties.  Neither Party’s liability to the other shall exceed an amount equal to the total Program Charges actually paid to PCT under this Agreement during the twelve (12) months preceding the date from which the Claim arose

 

(b)  

Clients.   CBAI agrees to provide PCT a copy of proposed revisions to the Informed Consent and Release to be executed by its clients and to negotiate in good faith language which reasonably specifies that CBAI’s processing and storage facility is one of the subcontractors released and discharged therein.  Such revision shall be made in conjunction with other revisions planned to be made by CBAI to the Informed Consent and Release.

(c)

Marketing Material.  CBAI agrees to negotiate in good faith with PCT regarding any language in its marketing materials which may consititute a representation with respect to Product handling, processing, storage and use.  CBAI agrees not to make any changes to its present marketing materials which would materially alter PCT’s potential liability with respect to CBAI’s clients.

8.2

Limitation on Damages.  IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER FOR ANY SPECIAL DAMAGES OF ANY NATURE WHATSOEVER, INCLUDING, BUT NOT LIMITED TO, NO LIABILITY FOR SPECIAL, INDIRECT, PUNITIVE, EXEMPLARY OR  CONSEQUENTIAL DAMAGES (INCLUDING DAMAGES RELATING TO LOST PROFITS, LOST BUSINESS OR LOST SAVINGS), EVEN IF A PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.

9

Confidentiality.

9.1

Maintenance of Confidentiality.  In consideration of each Party disclosing Confidential Information to the other Party, the Receiving Party hereby agrees to maintain confidential all of the Disclosing Party’s Confidential Information and not directly or indirectly use any of such Confidential Information, in whole or in part, except as required to carry out the Program and its obligations under this Agreement.  The Receiving Party further agrees not to disclose any of the Disclosing Party’s Confidential Information to any Third Party other than under and in accordance with the terms of sections 9.3, 9.4 or 9.5.

9.2

Exceptions.  The foregoing restrictions on the Receiving Party shall not apply to any Confidential Information which:

(a)

the Receiving Party can prove was already in its possession and at its free disposal before the disclosure hereunder to it;

(b)

is hereafter disclosed to, purchased or otherwise legally acquired by the Receiving Party by or from a Third Party who has not derived it directly or indirectly from the Disclosing Party under an obligation of confidentiality;

(c)

is or becomes generally available to the public whether in printed publications or otherwise through no act or default on the part of the Receiving Party; or

(d)

the Receiving Party can prove to the reasonable satisfaction of the Disclosing Party has been developed independently of the Program by the Receiving Party without reference to any of the Confidential Information disclosed by the Disclosing Party.

14

9.3

Exercise of Reasonable Precautions.  In order to comply with its obligations set out in this section 9, the Receiving Party agrees to exercise every reasonable precaution to prevent and restrain the unauthorized disclosure and use of the Disclosing Party’s Confidential Information, including restricting access to such information to such of its employees and agents as are bound to keep such information confidential and need to have such access for the purposes of the transactions contemplated under this Agreement.

9.4

Disclosure to Affiliates.  A Receiving Party may disclose to an Affiliate with a reasonable need to know the Disclosing Party’s Confidential Information to the extent required by the Affiliate, provided that the Disclosing Party shall, prior to such disclosure, ensure each Affiliate to which the Disclosing Party’s Confidential Information is to be disclosed is made aware of the obligations contained in this Agreement and agrees to be subject to confidentiality obligations no less onerous than those contained in this Agreement.  Any breaches of the obligations of confidentiality contained in this Agreement by such Affiliate shall be treated as a breach of such obligations by the Party making the disclosure to the Affiliate.

9.5

Disclosure to Courts or by Law or Other Rules.  Nothing in this section 9 shall preclude disclosure by either Party of any Confidential Information required by any court entitled by law to disclosure of the same, or which is required by law to be disclosed, provided that the Receiving Party promptly notifies the Disclosing Party when such requirement to disclose has arisen in order to enable the Disclosing Party to seek an appropriate protective order and to make known to the court the proprietary nature of the Confidential Information and to make any applicable claim of confidentiality in respect thereof.  The Receiving Party agrees to co-operate in any appropriate action which the Disclosing Party may decide to take.  If the Receiving Party is advised to make a disclosure in accordance with this section 9.5 it shall only make a disclosure to the extent to which it is obliged.

9.6

Survival of Obligations.  Each Party ‘s obligations with respect to the other Party’s Confidential Information under the provisions of this section 9 shall survive the expiration or earlier termination of this Agreement.

9.7

Certain Remedies.  The Parties acknowledge and agree that, due to the unique nature of the Confidential Information, there may be no adequate remedy at law for any breach of the obligations hereunder and that any such breach may allow the Receiving Party or third parties to unfairly compete with the Disclosing Party resulting in irreparable harm and significant injury to the Disclosing Party that may be difficult to estimate and ascertain.  Therefore, upon any such actual or threatened breach, the Disclosing Party shall be entitled to seek an immediate injunction, temporary restraining order and/or other appropriate equitable relief, in addition to whatever remedies are available at law.  The Receiving Party shall notify the Disclosing Party in writing immediately upon becoming aware of the occurrence of any such unauthorized release or other breach.

9.8

Return of Confidential Information.  Upon the termination or earlier expiration of this Agreement, each Receiving Party shall return or certify the destruction of all documents received in confidence from the Disclosing Party, except that each Receiving Party will be allowed to maintain one copy for their records solely for purposes of demonstrating compliance with obligations under this section 9.

10

Duration and Termination.

10.1

Duration.  This Agreement shall be deemed to have commenced on the Effective Date and shall continue until the Termination Date of June 30, 2012 or such other date if this Agreement is earlier terminated in accordance with the provisions of section 10, or extended through the submission of a Program Amendment Order per section 2.

15

10.2

Termination.  Subject to section 11, this Agreement may be terminated, and the effective Termination Date shall be the date after which any required notice or cure period has been exhausted, as follows:

(a)

by CBAI giving PCT a notice of termination invoking a Cancellation Period of no less than ninety (90) calendar days between the written notice and the Termination Date, provided, however, that if CBAI cancels the Agreement pursuant to this 10.2(a), the provisions of Clause 11.1(a)-(c) shall apply; or

(b)

by PCT, upon the failure of CBAI to pay to PCT any amounts owed to PCT under this Agreement, including any payments of the Program Charges,

 if such breach remains uncured thirty (30) days after the date when due; or

 

(c)

by either Party, immediately upon the non-monetary material breach by the other Party of its obligations under this Agreement that remains uncured sixty (60) calendar days after delivery to the breaching Party of written notice reasonably describing the material breach and stating its intention to terminate the Agreement.  It is understood that the Parties intend to discuss

,

pursuant to section 22.2 hereof

,

 any alleged breach and its remediation as soon as it is known, and that such discussion shall not be a waiver of the right to terminate pursuant to this clause 10.2(c); or 

(d)

by either Party, immediately upon providing written notice to the other Party, if the other Party has a liquidator, receiver, manager receiver or administrator appointed, or ceases to continue trading or is unable to pay debts; or  

(e)

In the event that PCT fails to achieve its AABB accreditation as a direct result of PCT’s failure to comply with the standards set forth by the AABB, CBAI has the right to terminate the contract without notice or penalty. In the event that PCT fails to achieve  AABB Accreditation in the time outlined in Schedule A,  because of scheduling conflicts, PCT agrees to continue to make best efforts to achieve such accreditation in a timely manner; or

(f)

Upon mutual written agreement by the Parties.

11

Consequences of Termination.

11.1

  Consequences.  In the event of termination under section 10.2 above:

(a)     

None of the amounts already paid by CBAI to PCT shall be refundable, and

(b)    

CBAI shall pay to PCT all sums, including all Program Charges at the rates paid in the month previous to notice of termination, “Excluded Items” (i.e., out-of-pocket expenses and other costs) described in section 3,  and any other unpaid costs incurred and payable by CBAI under this Agreement up to and through the Termination Date, including any delinquent payments and accrued interest, and 

(c)

If PCT terminates under sections 10.2(b), (c) or (d), or if CBAI terminates on notice under section 10.2(a), CBAI shall pay to PCT, in lieu of all other remedies, except as otherwise set forth above in sections 11.1(a) and 11.1(b), the monthly Program Charges during the Cancellation Period  calculated using the same Program Charges paid in the previous full month prior to the date notice of termination was affected; and

(d)

During any applicable Cancellation Period, PCT shall continue to provide the Program Services to the extent reasonable in the circumstances; and

16

(e)

PCT will provide the Cancellation Services to CBAI at a rate of $90 per hour for each PCT employee providing Cancellation Services up to an amount not to exceed the Program Charges for the month prior to notice of termination but without limiting the completion of the Cancellation Services PCT to CBAI; and

(f)

Upon termination and after any required Cancellation Period has ended, PCT shall have no further obligations to CBAI or any of CBAI’s customers with regard to any Products that may remain in PCT’s possession after termination.  Notwithstanding the foregoing, PCT shall cooperate with CBAI by providing Cancellation Services as described under this Agreement in order to assist CBAI with making reasonable arrangements upon termination of this Agreement. 

11.2

Reports, Data and Documents.  PCT shall promptly, but in no event more than thirty (90) calendar days after Termination Date, provide to CBAI (if not already

provided),

a copy of any reports, data or other documents defined in  

Schedule A.

11.3

Survival.  The provisions of sections 5, 6.3, 7, 8, 9, 10, 11, 13, 14, 22.1 and 22.3 shall survive the termination or earlier expiration of this Agreement.

12

Independent Contractor.

Nothing in this Agreement shall create, or be deemed to create, a partnership or the relationship of principal and agent or employer and employee between the Parties.  Each Party agrees to perform under this Agreement solely as an independent contractor of the other Party.

13

Entire Agreement.

This Agreement (including all Schedules) together with the Confidentiality Agreement contains the entire Agreement between the Parties and supersedes any previous agreements relating to the Program and any understandings between the Parties with respect thereto.

14

Announcements and Publicity.

Neither of the Parties shall make an official press release, announcement or other formal publicity relating to the transactions which are the subject of this Agreement, or any ancillary matter, unless the other Party agrees to the making of such publication.

15

Assignment.

This Agreement shall be binding upon and inure to the benefit of the Parties hereto and their respective legal successors but shall not otherwise be assignable by either Party without the prior written consent of the other Party, which it may give or withhold in its sole discretion and any attempt to do so shall be null and void as of the inception and of no force or effect.  Notwithstanding the foregoing, either Party may, without consent and upon written notice to the other Party, assign its rights and obligations under this Agreement to a purchaser of all or substantially all of the business of such Party to which this Agreement relates.

16

Variation.

No variation or amendment of this Agreement shall bind either Party unless made in writing in the English language and agreed to in writing by duly authorized officers of both Parties.

17

17

Illegality.

If any provision of this Agreement is agreed by the Parties to be illegal, void or unenforceable under any of the Applicable Laws or if any court of competent jurisdiction in a final decision so determines, this Agreement shall continue in force save that such provision shall be deemed to be excised herefrom with effect from the date of such agreement or decision or such earlier date as the Parties may agree,

provided that in the event any provision so excised gives rise to a loss by either Party of any material right under this Agreement, such affected Party shall be entitled to immediately terminate this Agreement, which termination shall be deemed a termination by mutual agreement under section 10.2(f) above.  

18

Waiver.

A failure by either Party to exercise or enforce any rights conferred upon it by this Agreement shall not be deemed to be a waiver of any such rights or operate so as to bar the exercise or enforcement thereof at any subsequent time or times.

19

Notices and Communications.

19.1

Formal Notices.  Any formal notice required or permitted under this Agreement shall be in writing which may take the form of a letter or facsimile and shall be sent by prepaid post, facsimile, or hand delivery (including messenger service).  The addresses for any such notice or other communication shall be those stated on the first page of this Agreement.

19.2

Other Communications.  In addition to the methods set out in section 19.1, any other communications between the Parties may be made by telephone or by email.

19.3

Change of Address.  Either Party may, at any time by written notice to the other Party, change the address or the facsimile numbers to which notices or other communications shall be sent.  All notices and other communications shall have been duly given or made (i) when delivered by hand (including by messenger service) upon delivery or (ii) when delivered by post upon delivery or (iii) when faxed upon receipt of a legible copy by recipient and production of a satisfactory transmission report by sender confirming transmission of the fax in full to the appropriate number by the fax machine which sent the fax.

20

Force Majeure.

Neither Party shall be liable to the other Party in any manner whatsoever for any failure or delay in performing its obligations under this Agreement if and to the extent, and for the duration, that such is due to Force Majeure.  Without prejudice to section 8, any said failure or delay shall not give either Party the right to terminate this Agreement except, and to the extent that such Force Majeure continues for a period exceeding three (3) months.  The consequences of termination as a result of Force Majeure shall be limited to those set forth in sections 11.1(a) and 11.1(b).

21

Management Committee.  

21.1

Formation.  The Parties shall form a “Management Committee” promptly after the Effective Date of this Agreement.  The Management Committee shall consist of four (4) individuals, two of whom shall be appointed by PCT and two of whom shall be appointed by CBAI.  One representative of each Party shall be a senior member of its staff.  

18

21.2

Purpose and Duties.  The purpose and duties of the Management Committee are to:  (i) discuss and address, in good faith, any issues concerning either Party’s performance of its obligations under this Agreement, (ii) provide a forum for the early identification of problems related to the Services and/or the Program, (iii) discuss and address the terms of or any changes to the Agreement, Quality Agreement and/or schedules or amendments to this Agreement, (iv) discuss day-to-day operations in performing the Services, and (v) attempt to, in good faith, resolve any dispute, difference or disagreement concerning this Agreement that is referred to it pursuant to section 22.2 within thirty (30) calendar days of receiving a written notice of such dispute, difference or disagreement.

21.3

Meetings.  The Management Committee shall meet in person or by telephone quarterly at PCT headquarter offices, and shall meet at by telephone conference call or as often as is necessary.  One representative of PCT shall serve as the “Chair” of the Management Committee and, in consultation with CBAI, shall determine and manage the agenda for each meeting.  Other representatives of either party may attend Management Committee meetings as the committee deems appropriate.

21.4

Subcommittees.  The Management Committee may form such subcommittees, such as an operations committee, as it shall deem appropriate.  The responsibilities of any such committee and its membership and charter shall be determined by the Management Committee in its discretion.

22

Law and Jurisdiction.

22.1

Governing Law.  This Agreement is governed by and shall be construed and interpreted in accordance with the laws of

Delaware

..  Any proceedings between the Parties shall be conducted in the English language.  Any suit, action or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the transactions contemplated hereunder (other than those that are subject to arbitration as provided in section 22.3, below) shall be brought in the courts of the State of Delaware or the federal District Court of Delaware.  Each Party: (a) consents to the exclusive jurisdiction of such courts (and of the appropriate appellate courts therefrom) in any such suit, action or proceeding;  (b) irrevocably waives, to the fullest extent permitted by law, any objection which it may now or hereafter have to the laying of the venue of any such suit, action or proceeding in any such court or that any such suit, action or proceeding which is brought in any such court has been brought in an inconvenient forum; (c) shall not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court; and (d) will not bring any action relating to this Agreement or any of the transactions contemplated hereunder in any other court.  Process in any such suit, action or proceeding may be served on either Party anywhere in the world, whether within or without the jurisdiction of any such court.  Without limiting the foregoing, each Party agrees that service of process on such party as provided in section 19 shall be deemed effective service of process on such party.

22.2

Referral to the Management Committee.  Prior to any dispute, difference or disagreement concerning this Agreement proceeding to litigation to arbitration or through the courts, the Parties shall seek to resolve the matter within thirty (30) calendar days by referring it to the Management Committee.

19

22.3 

Arbitration.  Any matter or dispute arising out of, or in connection with this Agreement which is not able to be resolved pursuant to section 22.2 shall be

submitted to final and binding arbitration under the then current Commercial Arbitration Rules of the American Arbitration Association (“AAA”) by one arbitrator in Delaware.  Such arbitrator shall be selected by the mutual agreement of the Parties or, failing such agreement, shall be selected according to the aforesaid AAA rules, provided that any such arbitrator shall be familiar with and

 capable of making decisions on the technical aspects of the Program.

  The arbitrator will be instructed to prepare and deliver a written, reasoned opinion stating its decision within thirty (30) calendar days of the completion of the arbitration.  The decision of the arbitrator shall be final and non-appealable and may be enforced in any court of competent jurisdiction.  Such arbitration shall be concluded within nine (9) months following the filing of the initial request for arbitration.  The Parties shall bear the costs of arbitration equally and shall bear their own expenses; provided, however, that the prevailing Party shall be entitled to receive its attorneys’ fees and costs in addition to any other relief it may receive.  The Parties agree that, any applicable provision of law notwithstanding, neither Party shall request, and the arbitrator shall have no authority to award any damages against a Party that are prohibited under section 8.  Notwithstanding the foregoing, neither Party shall be deemed in breach of this Clause and either Party shall, subject to section 22.2 above, be entitled to bring a claim (including for declaratory or injunctive relief) against the other Party in any court of competent jurisdiction to the extent the relevant claim or dispute concerns the infringement, misappropriation or misuse of a Party’s Intellectual Property or Confidential Information.  

22.4 

Interim Steps.  Neither of the Parties shall be deemed to be precluded from taking such interim formal steps as may be considered necessary to protect such Party’s position while the procedures referred to in sections 22.2 and 22.3 are pursued.

23

Facsimile Signatures; Counterparts.  This Agreement may be executed by facsimile signature and/or in counterparts, with each such facsimile signature being deemed an original and both counterparts, when taken together, constituting one instrument.

24

Meaning of Including.  Whenever the term “includes” or “including” is used in this Agreement it shall be deemed to be followed by the words “without limitation”.

[signatures on next page]

20

IN WITNESS WHEREOF, the authorized representatives of the Parties have executed this Agreement on the date written at the top of this Agreement.

							
	ATTEST:

	 
	PROGENITOR CELL THERAPY, LLC

	 
	 
	 

	By:

	 
	 
	By:

	 

	 
	Name:

	 
	 
	Name/Title:

	 
	 
	 

	 
	 
	 

	 
	 
	CORD BLOOD AMERICA, INC.

	 
	 
	 

	 
	 
	 

	By:

	 
	 
	By:

	 

	 
	Name

	 
	 
	Name/Title:

21

Schedule A

Scope of Program Services

I.  The parties agree that the Program Services related to the processing of each Product are defined as follows for each Product:

A.

Receipt of each Product and associated maternal blood samples 

B.

Accession and inspection of the incoming units and samples and associated documentation 

C.

Preparation of maternal samples for screening and confirmatory (where required) Infectious Disease/Virology testing and shipping of samples to the testing laboratory.  Testing to include: 

·

RPR (Treponema pallidum) 

·

HbsAg 

·

HbcAb 

·

HCV 3.0 (NAT testing) 

·

HTLV 1 / 2 

·

HIV  1 / 2 (Ab and NAT testing) 

·

HIV p24Ag 

·

WNV 

·

CMV 

·

Maternal ABO/Rh antibody screening 

D.

Storage at -80oC of two (2) samples of maternal plasma, two (2) samples of baby’s cord blood and two (2) samples from the final product

E.

Controlled-rate cryopreservation of the cord blood units following volume reduction and red blood cell removal, according to PCT’s Standard Operating Procedures (SOPs)

F.

Long term storage of all units in vapor phase

G.

Reporting of positive virology testing to the CBAI customer responsible for the Product and CordPartners within seven (7) calendar days of confirmatory testing

H.

Cataloguing of specimens for retrieval and quality control

I.

Completion of all appropriate forms and documents, review of records, appropriate filing and reporting as required by CBAI

J.

Infectious disease counseling of mothers for positive confirmatory virology testing

K.

Immediate notification to CBAI of any abnormality or potential health-related issue which may require immediate medical attention 

(collectively referred to as the “Product Processing Services”)

II.  PCT will:

A.

Perform three (3) training runs prior to formally commencing Product Processing Services to ensure operational compliance with CBAI system and requirements within the terms of this Agreement.

22

B.

use best business efforts to receive its AABB Accreditation for its New Jersey Facility prior to the end of September 2007 but as scheduling of the inspection and response to the audit are out of PCTs direct control, PCT will deavor to dispatch our obligations pursuant to receiving this accreditation as expeditiously as possible and without delay. 

C.

provide availability for receiving, processing and storage services twenty four (24) hours per day,  seven (7) days per week

D.

assist CBAI in development of marketing material targeted to educate CBAI’s customer base as to the value-added of the application of current Good Manufacturing Practices (cGMPs) to the processing of cord blood cells. 

E.

execute an evaluation of the BioSafe Sepax system with the intention of validating its use for cord blood processing and, if considered appropriate in PCT’s discretion, to incorporate the Sepax technology at PCT’s New Jersey Facility and, as needed, into other PCT’s Facilities.  This evaluation is currently in progress a decision regarding the use of this device in production will be rendered by December 30, 2007.

F.

directly report or take reasonable measures to ensure that the Third Party testing laboratory reports to the New Jersey State Department of Health and Human Services reports of viral positive Product in compliance with New Jersey state regulations and that similar reporting is affected when the Services are performed in Facilities in other States.

G.

work cooperatively with and assist CBAI personnel to review,  prepare, and finalize, to the acceptance of both parties,  the documentation, including SOPs, required to: 

·

reasonably maximize operational effectiveness, and 

·

obtain the required licenses from the relevant State authorities, including New York, New Jersey and California, and other States as from time to time regulations or changes in either party’s may require

H.

report to CBAI a list of its sub-contracts relevant to the Program and notification of any changes to those sub-contractors

I.

Establish and maintain the Electronic Data Management system (defined below) 

II.  CBAI agrees that:

A.

The Program Services will be provided from the Effective Date of the agreement at PCT’s New Jersey Facility and at a later time, to be agreed upon by the parties,  at PCT’s California Facility. 

B.

PCT will use best business efforts to receive AABB accreditation of New Jersey Facility prior to the end of September 2007 but understands that as scheduling of the inspection and response to the audit are out of PCTs direct control, if this deadline is not met PCT will  use best efforts to receive this accreditation as expeditiously as possible and without delay.

C.

Future Freezer-Product Transfers (as defined below) will be limited to ten (10) freezers per year.

Stage I – Technology Transfer, Documentation Preparation, and Licensure

In Stage 1 Program Services, within 3 months from the agreement’s Effective Date PCT will:

·

Prepare a document matrix, with disclosure and assistance from CBAI, which outlines all the existing, available documentation (including SOPs) from each party which relate to the processes encompassed in the Services including collection, processing, storage, distribution, and transport of the Product (“Document Matrix”)

23

·

Upon review of the Document Matrix, conduct a gap analysis and submit to CBAI a detailing the document revisions and creation required to fulfill the obligations of both parties and this Agreement (“Gap Documentation”).

(collectively defined as “Technology Transfer Services”) 

·

In collaboration with CBAI, revise and create the Gap Documentation necessary to ensure:

·

a complete set of documents is available to obtain and maintain operational efficiencies related to the PCT Services and the interactions with CBAI, and 

·

that the appropriate and required licenses, as described elsewhere in this Agreement, from the relevant State authorities and as from time to time regulations may require, are obtained and maintained.

(collectively defined as “Technical Writing Services”) 

·

PCT will provide  summarized versions of relevant PCT SOP’s to CBAI

In Stage 1 Program Services, within 4 months from the agreement’s Effective Date, PCT will:

·

In collaboration with CBAI, transfer existing CBAI documentation, data, batch records and/or other processes to electronic systems as these systems become available from PCT; and

·

Provide data mapping and linkage support to facilitate ongoing data transfer between PCT and CBAI, facilitate CBAI online access to its data in PCT’s electronic systems, and permit  CBAI to generate reports relating to its Product data.

(the above shall be referred to collectively as “Electronic Data Management”)

The fees for Electronic Data Management fees will be agreed upon between the parties.  The parties understand that fees will include initial set up costs  and an annual license fee (not expected to exceed $5,000).  

Stage II – Ongoing Project Management

For the duration of the Agreement, PCT will provide the following Services:

·

Infection disease counseling of mothers, or their Physicians, with positive results for infectious disease tests,

·

reporting of viral positive test results to mother and/or doctor within 7 calendar days of receipt,

·

reporting of viral negative test results to mother and/or doctor,

·

reporting data on all Product to CBAI , and 

·

full-service project management under the supervision of a primary PCT point-of-contact account manager.

Stage III - Processing

For the duration of the Agreement, PCT will the Product Processing Services for up to two hundred (200) Products per month.  

Stage IV – Storage

For the duration of the Agreement, PCT will:

·

store each Product in accordance with the specifications outlined as part of the Product Processing Services.  

·

perform or have performed under its care and control the purchase, installation, operation and performance qualification (IOP/Q) and calibration/maintenance/repair of all equipment used exclusively for this project (“Equipment Validations”).  

24

·

transfer all CBAI Product inventory currently stored at Bergen County Community Blood Services into liquid nitrogen freezers at PCT’s New Jersey Facility (“Product Transfer”) as soon as is reasonably possible but to make best efforts to complete this transfer earlier than September 1, 2007.

·

transfer CBAI’s existing freezers (not numbering more than four (4)) and their contents (“Freezer-Product Transfer”), to PCT’s New Jersey Facility as soon as is reasonably possible for PCT.

·

transfer freezers and Product acquired, in the future by CBAI, to PCT (“Future Freezer-Product Transfers”) upon request by CBAI as soon as is reasonably practical for PCT.

If at any time during the Term of Agreement, CBAI ceases to operate as a business, PCT will assume storage of CBAI Products subject to the CBAI’s fulfillment of the following conditions per Product:

·

the contract CBAI holds with the CBAI customer for each Product is legally assigned to PCT without any amendment, and 

·

all storage fees received by CBAI paid for years of storage not yet fulfilled will be paid to PCT without holdback. 

PCT’s obligation to assume storage of each CBAI Product will be limited to fulfillment of the above conditions for that Product such that PCT may assume some but not all CBAI Products to the extent CBAI only complies with the above conditions for some but not all its Products.

Stage V - Distribution

For the duration of the Agreement, PCT will:

·

At request by CBAI, release and arrange for shipment of a Product from the PCT Facility at which the Product to be shipped is stored to an address designated by CBAI.  Packaging and arranging for shipping will be done pursuant to the details and instructions of that request, the applicable SOPs, and will include provision of qualified liquid nitrogen shippers, proper identification of the Product and complete documentation for the shipment (“Product Shipment”)

·

When requested to release and arrange for shipment of a Product, arrange for performance of HLA testing of the Product (“Product HLA Testing”). 

25

Schedule B

Quality Agreement

This agreement defines the responsibilities of Progenitor Cell Therapy LLC (PCT) and CBAI, Inc. (CBAI) for compliance to current good manufacturing practices (CGMP) and applicable current Good Tissue Practices (CGTP) for manufacturing support, storage and shipping services for the production of the Product. PCT is responsible for compliance to all applicable requirements while the Products are under the direct control of PCT.  CBAI is responsible for compliance to all applicable requirements while the Product is under the care or control of the CBAI.  

Definitions:

Product Specifications – The assay methods and specifications upon which the Product will be tested and released

Terms:

1.

PCT shall provide manufacturing including storage, packing and shipping of Product as well as some Quality Control (QC) testing as defined in Schedule A.

2.

PCT will process and store Product at PCT’s Facilities.

3.

CBAI will be responsible for ensuring that the methods and materials prescribed in the process will support the use of the Product for the proposed clinical use. 

4.

If necessary, applicable process and/or test methods must be successfully transferred from CBAI to PCT and appropriate training documented per PCT procedures before implementation. 

5.

Per Schedule A, PCT will provide some QC testing for services for Product, the results of which will promptly be communicated to CBAI following review by PCT QA.

6.

PCT and CBAI will agree on those reagents and materials to be provided directly by CBAI and those, if any, to be purchased by PCT, and on a schedule for purchase and for the activities described below:

·

Materials provided by CBAI directly to PCT will be identified as approved and accompanied by a Certificate of Compliance (CoC) or Certificate of Analysis (CoA) or other document as appropriate. PCT will receive such materials according to agreed procedures with CBAI and will confirm that the material received has a CoC or CoA or appropriate documentation.  

·

Materials purchased by CBAI and shipped to a PCT Facility will be held in quarantine until CBAI has approved them for release and provides PCT with documentation as above.

·

Materials purchased by PCT will be sampled and/or tested and/or inspected according to PCT procedures.

·

PCT will test and inspect according to PCT procedures unless use of CBAI specified procedures are mutually agreed upon and provision is made for assay transfer and implementation under a Program Amendment Order.

·

PCT will notify CBAI as soon as practical, but no later than five (5) days after such test and inspection, if any materials, product or packaging do not meet requirements.

7.

Any materials purchased by PCT will be from PCT approved manufacturers. If the materials are provided by CBAI, it is CBAI’s responsibility to assure that the materials are from approved/qualified manufacturers. 

8.

Information as to labelling and other packaging will be provided by CBAI.

9.

PCT will notify CBAI and gain written agreement for any planned deviations from the agreed upon procedures prior to implementation if determined by PCT QA that such changes may affect the Product.

10.

PCT will notify CBAI of any unplanned deviations that affect the Product as soon as possible.  Unplanned deviations will be investigated according to PCT procedures.

11.

PCT will notify CBAI of any proposed major changes to equipment, location and/or changes in material suppliers that affect CBAI as soon as possible in order for CBAI to review, assess impact and comment on changes and to be able to implement changes in a timely manner. 

12.

CBAI will notify PCT of any planned changes to equipment, materials, process, testing (to the extent performed or to be performed by PCT) or shipping requirements as soon as possible in order for PCT to review, assess impact and comment on changes and to be able to implement agreed upon changes in a timely manner.

13.

PCT will capture any agreed upon changes to the Quality Agreement and documents related to PCT’s provision of services through a Program Amendment Order of Clause 2 and where applicable PCT’s change control system.

14.

PCT is responsible for ensuring that equipment is properly cleaned/sanitized and documented in compliance with PCT’s cleaning/sanitizing procedures.

15.

PCT will conduct testing for release of product according to Schedule A.

16.

CBAI is responsible for stability testing, CBAI will advise PCT regarding the storage and shipment of stability samples.

17.

Written authorization to ship the Product to CBAI or another CBAI designated location will be provided by CBAI to PCT.

18.

A copy of the packaging record will be provided to CBAI as soon as practical after shipment.

19.

CBAI will inform PCT of any customer complaints or adverse events as soon as possible.  PCT will perform any internal investigations as appropriate and assist 

CBAI with a response to the customer or appropriate agency unless otherwise requested.

20.

Annual product review will be the responsibility of CBAI unless otherwise requested. 

21.

CBAI may conduct a compliance audit of PCT related to CGMP/GTP systems and those areas impacting on Product for CBAI once a year and with a minimum thirty (30) calendar day written notification period. 

22.

PCT will accommodate any Regulatory Agency inspection required or specified by CBAI and shall notify CBAI of such inspection so that a representative of CBAI may be present at such inspection if so desired.

23.

Any changes to the Quality Agreement, and to product specifications or product testing (to the extent performed or to be performed by PCT) must be mutually agreed in the form of a Program Amendment that is approved by appropriate management including QA from PCT and CBAI.

24.

 Day-to-day QA activities and communications between PCT and CBAI shall be handled by their respective personnel on-site at the MV Facility.  PCT and CBAI shall direct all other communications to the Senior Quality Assurance Communication Contacts identified below:

				
	Area

	PCT

	CBAI

	 
	

Quality Assurance 

 (Senior Contact)

Quality Assurance

(Alternate Senior            

Contact)

	

Marie A. DeVito

Sr. Director QA/QC

Tel: (201) 883-5311

mdevito@progenitorcell.net

Robert Preti

President & CSO

Tel:  (201) 883-5316

rpreti@progenitorcell.net

	 

  

Both Parties are in agreement with this Quality Agreement between PCT and CBAI.

IN WITNESS WHEREOF, the authorized representatives of the Parties have executed this Agreement on the date written at the top of this Agreement.

				
	 
	 
	Date:

	 

	(Name) 

	 
	 
	 

	PCT 

	 
	 
	 

	Management Title

	 
	 
	 

				
	 
	 
	Date:

	 

	(Name) 

	 
	 
	 

	PCT 

	 
	 
	 

	Management Title

	 
	 
	 

				
	 
	 
	Date:

	 

	(Name) 

	 
	 
	 

	PCT 

	 
	 
	 

	Management Title

	 
	 
	 

				
	 
	 
	Date:

	 

	(Name) 

	 
	 
	 

	PCT 

	 
	 
	 

	Management Title

	 
	 
	 

Schedule C

Program Amendment Order

				
	 
	(1)

Project Title & Number

	(2)

Date Project Started

	(3)

P.A.O. Number

	 
	(4)

Reason for P.A.O.

	  (5)

Amendment required and new milestones

	  (6)

Impact on price, time frame, resources

	  (7)

Amended payment schedule (if required)

	 
	Authorization

______________________

____________________________________________

for PCT

for customerExhibit 10.95 - Sublease

EXHIBIT 10.95

SUBLEASE

THIS SUBLEASE (“Sublease”) dated as of October 1, 2006 is made by and between CorCell, Inc., a Delaware corporation with an address at 1717 Arch Street, Suite 1410, Philadelphia, Pennsylvania 19103 (“Sublandlord”) and Cord Blood America, Inc., a _______________________________ with an address at ______________________________ (“Subtenant”).

BACKGROUND

WHEREAS, by a Agreement of sublease dated as of _______, 2005, a copy of which is attached hereto and incorporated herein as Exhibit “A” (as the same may be amended, restated or supplemented from time to time, the “Primary Sublease”), Sublandlord leased from Verizon Communications Inc., a Delaware corporation, and Verizon Services Corp., a Delaware corporation (“Primary Sublandlord”), 14,968 rentable square feet on the fourteenth floor (the “Primary Subleased Premises”) in the building located at 1717 Arch Street, Philadelphia, Pennsylvania (the “Building”);

WHEREAS, the Primary Sublease is subject and subordinate to that certain lease under which Primary Sublandlord occupied all or a portion of the Building (“Master Lease” attached hereto as Exhibit “B”), and lessor referred to in the Master Lease and its successors in interest thereunder being herein called the “Landlord”; and

WHEREAS, Subtenant intends to sublease from Sublandlord a portion of the Primary Subleased Premises consisting of a minimum of 4,000 rentable square feet and a maximum of 6,000 rentable square feet in the Building, as more particularly described and shown on Exhibit “C” attached hereto and made a part hereof (the “Subleased Premises”), upon the terms and conditions set forth in this Sublease.

WHEREAS, this Sublease is to be delivered in connection with the execution of an Asset Purchase Agreement (“APA”) between Sublandlord and Subtenant dated as of September 22, 2006.

WHEREAS, pursuant to the APA, Sublandlord and Subtenant shall execute and deliver an Existing Sample Agreement (“ESA”).

NOW, THEREFORE, for good and valuable consideration, and in consideration of the mutual agreements hereinafter set forth, and intending to be legally bound, Sublandlord and Subtenant agree as follows:

1.

Definitions/Background

Capitalized terms not otherwise defined herein shall have the meanings ascribed to such terms in the Primary Sublease. The Background of this Sublease is incorporated herein as if set forth in full.

2.

Subleased Premises

a.

Sublandlord hereby subleases to Subtenant, on the terms and conditions set forth in this Sublease, the Subleased Premises.  Sublandlord shall deliver the Subleased Premises to Subtenant on the Sublease Commencement Date (as hereinafter defined) in broom clean condition but otherwise in such “AS IS” condition as exists as of the date of this Sublease, free of all occupants other than Subtenant.  Subtenant acknowledges that Sublandlord has made no representations or warranties concerning the Subleased Premises or the Building or their fitness for Subtenant’s purposes, except as otherwise expressly set forth in this Sublease.  The taking of possession of the Subleased Premises shall be deemed Subtenant’s acknowledgement that the same have been delivered in the condition required hereunder.

b.

For purposes of this Sublease, the rentable square footage of the Subleased Premises is deemed to be a 5,000 square feet.  Subtenant acknowledges that the sole purpose of any plan(s) attached to the Sublease is to identify the location of the area shown on such plan(s) in the Building.  Sublandlord makes no representation and warranty as to the usable or rentable square footage of the Subleased Premises or any other area of the Building.

1

3.

Sublease Term

a.

This Sublease shall commence on the later of (i) October 1, 2006; or (ii) Sublandlord’s receipt of the Prime Landlord’s consent to this Sublease  (the “Sublease Commencement Date”).

b.

This Sublease shall continue until the earlier of (i) Sublandlord and Subtenant fail to close on the ESA; or (ii) September 30, 2007 (the “Sublease Term”).

c.

Unless terminated pursuant to any provision in this Sublease, the Sublease shall be renewable annually, unless Sublandlord or Subtenant provides written notice of termination no later than sixty (60) days prior to the expiration of this Sublease Term (as the same may be extended), unless terminated prior to such date pursuant to the terms hereof or pursuant to law.  Under no condition may the renewals under this Sublease extend beyond July 31, 2012.

d.

Notwithstanding subsections 3(b-c), at anytime on at least one-hundred and twenty (120) days prior written notice, the Sublease may be terminated by the Sublandlord, and Subtenant shall vacate such office space.

e.

The Sublease shall automatically terminate at any time that the Primary Sublease terminates for any reason.  The Sublandlord shall have no obligation to maintain the Primary Sublease for any specific period of time.

f.

Upon any termination pursuant to Sections 3(d) or (e) above, Sublandlord shall refund to Subtenant any amounts paid in advance by Subtenant in respect of any period after the date of termination. 

g.

Within thirty (30) days after the Sublease Commencement Date and upon request of Sublandlord, Sublandlord and Subtenant shall jointly execute a written declaration specifying the actual Sublease Commencement Date.

4.

Rent  

a.

No Rent, Monthly Base Rent, Additional Rent or otherwise, shall be paid under this Sublease until the earlier of six moths from the date hereof or the date that Sublandlord and Subtenant close on the ESA (“ESA Closing Date”).

b.

Notwithstanding the foregoing, Sublandlord and Subtenant agree that in the event that Sublandlord and Subtenant close on the ESA, Subtenant shall pay to Sublandlord a percentage, as calculated in subsection 4(c) below, of the Monthly Rent set forth in Schedule “1” of this Sublease (the “Monthly Base Rent”), and beginning on the ESA Closing Date.  Within thirty (30) days after the Sublease Commencement Date the exact amount of Monthly Base Rent shall be confirmed in writing by Sublandlord and Subtenant.

c.

The Monthly Base Rent to be paid by Subtenant is equal to the applicable Monthly Rent set forth on Schedule “1” multiplied by the number of agreed upon rentable square feet in Section 2(b) and divided by 14,968 square feet.

d.

The Monthly Base Rent without deduction, offset, notice, or demand, shall be paid at Sublandlord’s office address above, or at such other place as Sublandlord shall designate from time to time by notice to Subtenant.  Monthly Base Rent shall be paid for each calendar month occurring during the Sublease Term in advance five (5) days prior to the first day of the calendar month to which such Monthly Base Rent is attributable. Subtenant shall pay Monthly Base Rent for the first month of the Sublease Term upon closing of the ESA.  In the event that the ESA Closing Date is not the first day of a calendar month, then the Monthly Base Rent shall be pro rated at the beginning or end of the Sublease Term, based upon the actual number of days in the month.

e.

Rent pursuant to all renewals under this Sublease are calculated in accordance with subsections 4(a-c).

2

f.

All charges, costs, expenses and sums required to be paid or borne by Subtenant under this Sublease in addition to Monthly Base Rent shall be deemed “Additional Rent”, and Monthly Base Rent and Additional Rent shall hereinafter collectively be referred to as “Rent”.  At any time under this Sublease when Subtenant is required to pay Monthly Base Rent, Subtenant shall also pay Additional Rent.  Subtenant’s covenant to pay Rent shall be independent of every other covenant in this Sublease.

g.

Such items of Additional Rent include, but are not limited to, the following:

i.

Subtenant’s Proportionate Share (as hereinafter defined) of the Operating Expenses payable in accordance with Exhibit B of the Primary Sublease, subject, however, to the conditions of subsection 4(f) of this Sublease.

ii.

Subtenant’s Proportionate Share of the Real Estate Taxes payable in accordance with Section 6 of the Primary Sublease.

iii.

The cost of all utilities, including, without limitation, electricity consumed by Subtenant in the Subleased Premises will be paid, at Sublandlord’s discretion, either: (a) by separate metered use, if Sublandlord elects to implement such meters; or (b) by Proportionate Share of the utilities cost.

iv.

Any costs or expenses for goods, services or utilities in excess of those to which Sublandlord is entitled to require from Primary Sublandlord pursuant to the Primary Sublease.

v.

Any sums which Subtenant becomes obligated to pay as a result of Subtenant’s failure to comply with any of the terms and provisions of this Sublease.

vi.

Taxes, if any, imposed upon or attributable to Subtenant’s personal property located in or about the Subleased Premises or any leasehold improvements installed in the Subleased Premises.

vii.

Any and all Use and Occupancy Taxes applicable to Subtenant.

h.

If any portion of the Monthly Base Rent, Additional Rent or any other sum payable to Sublandlord hereunder shall be past due and unpaid for more than ten (10) days, it shall thereafter bear interest at a rate equal to three percent (3%) per annum greater than the prevailing prime rate of interest as published in The Wall Street Journal (Eastern Edition) from time to time (“Default Rate”), as the same may change from time to time, from the due date until the date of payment thereof by Subtenant, provided, however, that nothing herein contained shall be construed or implemented in such a manner as to allow Sublandlord to charge or receive interest in excess of the maximum legal rate then allowed by law.

i.

For the purposes of this Sublease, “Subtenant’s Proportionate Share” shall be, a percentage equal to the number of agreed upon rentable square feet in Section 2 divided by 14,968 square feet and multiplied by one-hundred (100).  The Subtenant’s Proportionate Share shall be confirmed in writing by Sublandlord and Subtenant within thirty (30) days after the Sublease Commencement Date.

5.

Permitted Use

Subtenant may use the Subleased Premises only for general office purposes and for no other purpose, without the prior written consent of the Primary Sublandlord and Sublandlord (whose consents shall be granted, withheld or conditioned in their sole and absolute discretion), and only to the extent permitted by all laws governing or affecting the use of the Subleased Premises.  Subtenant shall not use or permit any use of the Subleased Premises which creates any safety or environmental hazard, or which would: (i) be dangerous to the Subleased Premises, the Building or other subtenants or tenants, or (ii) be reasonably disturbing to other subtenants or tenants of the Building, or (iii) cause any increase in the premium cost for any insurance which Sublandlord may then have in effect with respect to the Building generally.

3

6.

Insurance

a.

At all times during the Sublease Term, Subtenant shall maintain insurance of such types, in such policies, with such endorsements and coverages, in such amounts as are set forth in the Primary Sublease Section 21.  All insurance policies shall name Primary Sublandlord, Primary Sublandlord’s managing agent, Primary Sublandlord’s property manager, if any, Sublandlord and Sublandlord’s managing agent as additional insured and loss payees and shall contain an endorsement that such policies may not be modified or cancelled without at least thirty (30) days prior written notice to Primary Sublandlord, Primary Sublandlord’s property manager, if any, and Sublandlord.  Any increase in insurance costs incurred by Primary Sublandlord or Sublandlord as a result of Subtenant’s use of the Subleased Premises shall be paid by Subtenant.  Subtenant shall promptly pay all insurance premiums and shall provide Sublandlord with policies or certificates acceptable to Sublandlord and Primary Sublandlord evidencing such insurance upon Subtenant’s execution of this Sublease.

b.

In the event that Subtenant sustains a loss by reason of fire or other casualty which is covered by its property insurance policy (or would have been covered had Subtenant carried the insurance required hereunder), and regardless of whether such fire or other casualty is caused in whole or in part by the acts or omissions of Sublandlord or Primary Sublandlord or their respective agents, servants, employees or invitees, then Subtenant shall look first to the coverage provided by Subtenant’s insurance proceeds, and Subtenant shall have no right of action against Sublandlord, Primary Sublandlord, or their respective agents, servants, employees or invitees, and no third party shall have any right by way of assignment, subrogation or otherwise against the party causing such loss; provided, however the foregoing release of claims shall only apply to the extent of insurance proceeds actually collected by such party (unless such party failed to maintain the coverage required hereunder in which event it shall be deemed to have recovered the entire policy amount required hereunder).  In the event that Sublandlord sustains a loss by reason of fire or other casualty which is covered by its property insurance policy and regardless of whether such fire or other casualty is caused in whole or in part by the acts or omissions of Subtenant or its agents, servants, employees or invitees, then Sublandlord agrees to look first to the coverage provided by Sublandlord’s insurance proceeds, and Sublandlord shall have no right of actions against Subtenant or its agents, servants, employees or invitees, and no third party shall have any right by way of assignment, subrogation or otherwise against Subtenant; provided, however the foregoing release of claims shall only apply to the extent of insurance proceeds actually collected by Sublandlord.  The parties hereto agree that each of its policies of property insurance shall include a waiver of subrogation to effectuate the provisions of this provision.  In the event of Casualty Damage not covered by this Section 6, the Sublease will be governed by Section 20 of the Primary Sublease.

7.

Security Deposit

a.

Subtenant shall deliver to Sublandlord concurrent with Subtenant’s execution of this Sublease, the sum of ____________________ (the “Security Deposit”).  The Security Deposit shall secure Subtenant's obligations hereunder to pay Base Monthly Rent, Additional Rent and other sums due hereunder, to maintain the Subleased Premises and repair damages thereto, to surrender the Subleased Premises to Sublandlord in clean condition and good repair upon termination of this Sublease and to timely discharge Tenant's other obligations hereunder.

b.

Sublandlord may use and commingle the Security Deposit with other funds of Sublandlord and notwithstanding any law or ordinance in effect in the Commonwealth of Pennsylvania, Sublandlord shall not be deemed to hold the Security Deposit in trust for Subtenant.  If Subtenant fails to perform its obligations hereunder, including, but not limited to, the payment of Rent, then Sublandlord may, but without any obligation so to do, apply all or any portion of the Security Deposit for payment of any Rent or any other sum in default, or for the payment of any amount that Sublandlord may spend or may become obligated to spend by reason of Subtenant’s default; or to compensate Sublandlord for any other loss, cost or damage that Sublandlord may suffer by reason of Subtenant’s default. The use, application or retention of the Security Deposit, or any portion thereof, by Sublandlord shall not prevent Sublandlord from exercising any other right or remedy provided by this Sublease or by law, it being intended that Sublandlord shall not first be required to proceed against the Security Deposit and shall not operate as a limitation on any recovery to which Sublandlord may otherwise be entitled.  If Sublandlord does so apply any portion of the Security Deposit, Subtenant, within five (5) days after demand by Sublandlord, shall immediately pay Sublandlord a sufficient amount in cash to restore the Security Deposit to its full original amount, and Subtenant’s failure to do so shall be a default under this Sublease.

4

c.

If Subtenant shall fully and faithfully perform every provision of this Sublease to be performed by it, then the Security Deposit, or any balance thereof, shall be returned to Subtenant within sixty (60) days following the later of the expiration of the Sublease Term or the vacating of the Subleased Premises by Subtenant; provided, however, that if Sublandlord earlier sells or otherwise transfers Sublandlord's rights or interest under this Sublease, Sublandlord may deliver the Security Deposit to the transferee and upon such transfer, Sublandlord shall have no further liability to Subtenant concerning the Security Deposit.

8.

Assignment And Subletting

a.

Subtenant shall not assign this Sublease or otherwise sublet all or any part of the Subleased Premises or transfer Subtenant’s interest in this Sublease without the prior written consents of Sublandlord and Primary Sublandlord, whose consents shall be granted, withheld or conditioned in their sole and absolute discretion.  Any assignment or sublet must additionally comply with the requirements of Section 23 of the Primary Sublease.

b.

The following actions shall constitute an assignment or sublease contemplated by Section 8(a) of this section (each, a “Transfer”):  (i) any assignment, mortgage, pledge, hypothecation or other transfer of this Sublease; (ii) any sublease, concessions, license or occupancy agreement with respect to all or any portion of the Subleased Premises; (iii) if Subtenant or any of its successors or assigns is a corporation, limited liability company or partnership, any sale, pledge or other transfer of all or a majority of the capital stock, membership interests or partnership interests, as applicable, of Subtenant or any such successor or assign (unless such stock is publicly traded on a recognized security exchange or over the counter market), any merger, consolidation or reorganization of or into Subtenant or any such successor or assign, and any sale of all or substantially all of the assets of Subtenant or such successor or assign.

c.

Any attempt by Subtenant to assign, sublet or transfer its rights in the Subleased Premises without the prior written consent of Sublandlord and Primary Sublandlord shall be void, and at Sublandlord’s option, shall constitute a default by Subtenant entitling Sublandlord to exercise all rights and remedies permitted hereunder without need for any notice and cure period.  No permitted assignment, transfer, encumbrance or subletting shall relieve Subtenant from Subtenant’s obligations and agreements hereunder and Subtenant shall continue to be liable as a principal and not as a guarantor or surety to the same extent as though no assignment, transfer, encumbrance or subletting had been made.

d.

Notwithstanding any assignment of this Sublease or any sublet of all or a portion of the Subleased Premises by the Subtenant, the Subtenant and any guarantor of Subtenant’s obligations shall remain liable for all obligations under this Sublease.

e.

If, for any Transfer, the monthly base rent and additional rent to be paid by the transferee under such Transfer exceeds the Monthly Base Rent payable to the Sublandlord hereunder, then the amount of such excess (“Sublease Profit”) shall be paid by the Subtenant to the Sublandlord and Primary Sublandlord, as they shall so determine, within ten (10) business days following receipt thereof by Subtenant, as and when collected.  In addition, if the Subtenant receives from any transferee, either directly or indirectly, any consideration other than base rent or additional rent for such Transfer, whether in the form of cash, goods, services or otherwise, the Subtenant shall forthwith pay to the Sublandlord and Primary Sublandlord, as they shall so determine, an amount equivalent to such consideration.

f.

Subtenant shall not encumber or mortgage its interest under this Sublease or its interest in the Subleased Premises.

9.

Provision Of Services

a.

No services are currently included in Monthly Base Rent or Operating Expenses except for any provided by Primary Sublandlord to Sublandlord under the Primary Sublease.  If Sublandlord furnishes the Subleased Premises or Subtenant with any additional services upon written request of Subtenant, then Sublandlord shall have the right to charge Subtenant a reasonable charge therefore, and Subtenant shall pay the additional charge within ten (10) days of billing by Sublandlord.

5

b.

Sublandlord shall cause Primary Sublandlord to furnish the services set forth in Section 10 of the Primary Sublease, subject to reasonable rules and regulations from time to time. Subtenant understands that Primary Sublandlord may impose a reasonable direct charge and establish reasonable rules and regulations for such services. Such charges shall be payable by Subtenant directly to Primary Sublandlord on the next rent payment date after submission of an invoice therefore. Failure to make such payment to Primary Sublandlord when due shall be a default under this Sublease and Primary Sublandlord shall have the right to refuse to provide further services to the Subleased Premises, in addition to the right to litigate directly with Subtenant to recover such unpaid amounts.

c.

Neither Sublandlord nor Primary Sublandlord shall be liable for damages or otherwise for failure, stoppage or interruption of any services or utilities or unavailability of access to the Subleased Premises, nor shall the same be construed either as an eviction of Subtenant, or result in an abatement of Rent when such failure is caused by accidents, emergencies, strikes or the making of repairs or changes which Sublandlord is required by this Sublease, by law, or in good faith deems advisable to make or by reason of difficulty in securing proper supplies of fuel, steam, water electricity, labor or supplies, or by reason of any cause beyond Sublandlord’s and Primary Sublandlord’s reasonable control, including, without limitation, mechanical failure and governmental restrictions on the use of materials or the use of any of the Building’s systems.  All repairs necessary to maintain the plumbing, heating, ventilation, air-conditioning, electric systems, external windows and floors (excluding carpeting and floor coverings) will be performed in accordance with Section 12 of the Primary Sublease. 

d.

Notwithstanding anything contained in this Sublease to the contrary, if (i) an interruption or curtailment, suspension or stoppage of an Essential Service (as said term is hereinafter defined) shall occur not as a result of Subtenant’s negligence or willful misconduct (any such interruption of an Essential Service being hereinafter referred to as a “Service Interruption”), an (ii) such service interruption continues for more than ten (10) business days, and (iii) as a result of such service interruption, the conduct of Subtenant’s normal operations in the Subleased Premises are materially and adversely affected, then there shall be an abatement of one day’s Fixed Rent and Subtenant’s Proportionate Share of operating Expenses for each day during which such Service interruption continues after such ten (10) business day period; provided, however, that if any part of the Subleased Premises is reasonably useable for Subtenant’s normal business operations or if Subtenant conducts all or any part of it's operations in any potion of the Subleased Premises notwithstanding such Service interruption, then the amount of each daily abatement of Fixed Rent and Subtenant’s proportionate share of operating Expenses shall only be proportionate to the nature and extent of the interruption of Subtenant’s normal operations or ability to use the Subleased Premises.

e.

For purposes hereof, the term “Essential Services” shall mean the following services:  elevator service, access to the Subleased Premises, HVAC services, water and sewer/septic service and electricity.

10.

Rules and Regulations

Subtenant covenants and agrees that Subtenant, its servants, employees, agents, invitees, licensees and other visitors shall observe faithfully, and comply strictly with, the Rules and Regulations contained in Section 17 and Exhibit D of the Primary Sublease.

11.

Condition Of Premises; Trade Fixtures

a.

Subtenant, at Subtenant’s sole cost and expense, shall keep the Subleased Premises in good operating order and condition and make such repairs, replacements or maintenance during the Sublease Term so that the Subleased Premises shall be kept in good operating order and condition.  Subtenant shall otherwise comply with the requirements of the Primary Sublease. Sublandlord, Primary Sublandlord and Landlord shall have the right to enter the Subleased Premises in accordance with Section 14 of the Primary Sublease.

b.

Sublandlord and Primary Landlord shall not be responsible for the loss of or damage to property, or injury to persons, occurring in or about the Subleased Premises, by reason of any existing or future condition, defect, matter or thing in the Subleased Premises or the Building or the property of which the Building is a part, or for the acts, omissions or negligence of other persons or tenant, in and about the Building or the property of which the Building is a part.

6

c.

Subtenant shall have the right to furnish and install any trade fixtures that are necessary for the conduct of its business; provided, however, that at the termination of this Sublease, Subtenant shall remove such trade fixtures and restore the Subleased Premises at Subtenant's sole cost to the state and condition in which they existed on the Sublease Commencement Date, ordinary wear and tear excepted.  If Subtenant fails to comply with the provisions of this section, Sublandlord may, but shall not be obligated to, make such repairs or restoration, and the reasonable cost thereof shall be Additional Rent payable by Subtenant on demand.  All trade fixtures shall be and remain the property of Subtenant, provided that any such trade fixtures remaining on the Subleased Premises after the expiration or termination of the Sublease Term shall be deemed abandoned by Subtenant and shall, at Sublandlord's option, become the property of Sublandlord without payment therefore.

12.

Alterations And Improvements

a.

Sublandlord shall have no obligation to make any alterations or improvements to the Subleased Premises for Subtenant's use or occupancy thereof. Notwithstanding any provisions of the Primary Sublease to the contrary, Subtenant shall not make any alterations, additions or improvements (collectively, “Subtenant Improvements”) in the Subleased Premises without in each instance obtaining the prior written consent of both Primary Sublandlord and Sublandlord, which consent such parties may grant, withhold or condition in their respective sole and absolute discretion.  Any approved Subtenant Improvements must be completed in accordance with plans and specifications previously approved by Sublandlord and Primary Sublandlord.

b.

If Subtenant performs Subtenant Improvements without obtaining the prior written consent of both Primary Sublandlord and Sublandlord, Sublandlord (or Primary Sublandlord) may remove the Subtenant Improvements, restore the Subleased Premises and repair any damage arising from such removal or restoration, and Subtenant shall be liable for all costs and expenses incurred in the performance of such removal, repairs or restoration.   If Sublandlord and Primary Sublandlord consent to any Subtenant Improvements, Subtenant shall perform and complete Subtenant Improvements at its expense, in compliance with applicable laws and the Primary Sublease, and, upon installation, the Subtenant Improvements shall be the property of the Sublandlord.

c.

At Sublandlord's option, Subtenant shall remove the Subtenant Improvements prior to the end of the Sublease Term and shall restore the Subleased Premises to their condition as of the Sublease Commencement Date.  If Sublandlord requires such removal and restoration and Subtenant fails to comply with such requirement, Sublandlord may, but shall not be obligated to, undertake such removal and restoration and Subtenant shall be liable to Sublandlord for all costs and expenses incurred by the Sublandlord in connection therewith.

d.

If the Sublandlord is required by the Prime Landlord to carry out any restorations or other work on the Subleased Premises pursuant to the Sublandlord’s obligations to the Primary Sublandlord under the Primary Sublease, the Subtenant shall permit same to be performed without being entitled to any reduction in rental or other compensation. Sublandlord shall complete all such work in a manner so as to not unreasonably interfere with the use and occupancy of the Subleased Premises by Subtenant.

13.

Quiet Enjoyment  

Subtenant, upon paying the Rent and upon observing, keeping and performing all covenants, agreements and conditions of this Sublease on Subtenant’s part to be observed, kept and performed, shall quietly have and enjoy the Subleased Premises throughout the Sublease Term without hindrance or molestation by Sublandlord or by anyone claiming by, through or under Sublandlord, subject to the provisions of Section 15 below.

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14.

Indemnity

Subtenant on behalf of itself and its permitted assigns and successors (collectively, the “Indemnifying Parties”) shall defend, indemnify, save and hold harmless Sublandlord, Primary Sublandlord, Landlord and their respective mortgagees, agents, employees, officers, directors, shareholders, partners, personal representatives, executors, administrators, successors and assigns (collectively, the “Indemnified Parties”) from and against all liabilities, obligations, damages, penalties, claims, causes of action, costs, charges and expenses, including attorneys’ fees, court costs, administrative costs, and costs of appeals which may be imposed upon or incurred by or asserted by reason of any of the following which shall occur during the Sublease Term, or during any period of time prior to the Sublease Commencement Date when Subtenant may have been given access to or possession of all or any portion of the Subleased Premises: (a) any work or act done in, on or about the Subleased Premises or the Building or any part thereof at the direction of Subtenant, its agents, contractors, employees, licensees or invitees; (b) any negligence or other wrongful act or omission on the part of Subtenant or any of its agents, contractors, employees, licensees or invitees; (c) any accident, injury or damage to any persons or property occurring in or about the Subleased Premises or any part thereof or any accident, injury or damage to Subtenant, its agents, contractors, employees, invitees or licensees, unless caused by the gross negligence or willful misconduct of Sublandlord, Primary Sublandlord, Landlord, or their respective employees, contractors agents, invitees or licensees; and (d) any failure on the part of Subtenant to perform or comply with any of the covenants, agreements, terms, provisions, conditions representations, warranties or limitations contained in this Sublease on its part to be performed or complied with; or (e) a default under the Primary Sublease caused by Subtenant, its agents, contractors, employees, subtenants, licensees.

15.

Primary Sublease and Master Lease

a.

Subtenant acknowledges that the Sublandlord does not own fee title to the Subleased Premises, but is a tenant under the Primary Sublease. Accordingly, this Sublease constitutes a sublease.  Subtenant agrees to be bound by all of the provisions of the Primary Sublease and the Master Lease in accordance with the provisions set forth in Section 22 of the Primary Sublease.  Whenever under the Primary Sublease or Master Lease the consent of the Primary Sublandlord or Landlord is required, as to Subtenant the prior written consent of Sublandlord also shall be required.  Wherever in the Primary Sublease, Primary Sublandlord or Landlord has rights enforceable against Sublandlord, Sublandlord shall have the same rights enforceable against Subtenant, independent of Primary Sublandlord's or Landlord’s rights and enforceable whether or not Primary Sublandlord or Landlord is asserting the same.  Sublandlord shall remain bound by all of the provisions of the Primary Sublease and Master Lease notwithstanding the subleasing of the Subleased Premises.  Subtenant acknowledges receipt of a true, correct and complete copy of the Primary Sublease and Master Lease attached hereto as Exhibits “A” and “B”.

b.

Notwithstanding any other provision of this Sublease, Sublandlord, as sublandlord under this Sublease, shall have the benefit of all rights, waivers, remedies and limitations of liability enjoyed by Primary Sublandlord, as the landlord under the Primary Sublease, but (i) Sublandlord shall have no obligation under this Sublease to perform the obligations of Primary Sublandlord, as landlord under the Primary Sublease, including without limitation any obligation to provide services or maintain insurance; (ii) Sublandlord shall not be bound by any representations or warranties of the Primary Sublandlord under the Primary Sublease; (iii) in any instance where the consent of Primary Sublandlord is required under the terms of the Primary Sublease, the consent of Sublandlord and Primary Sublandlord shall be required; and (iv) Sublandlord shall not be liable to Subtenant for any failure or delay in Primary Sublandlord’s performance of its obligations, as landlord under the Primary Sublease.  Upon request of Subtenant, Sublandlord shall, at Subtenant’s expense, use reasonable efforts to cause Primary Sublandlord to perform its obligations under the Primary Sublease.

c.

Upon the default by Subtenant in the full and timely payment and performance of its obligations under the Sublease, Sublandlord may exercise any and all rights and remedies granted to Primary Sublandlord by the Primary Sublease with respect to default by the Tenant or Lessee under the Primary Sublease. In the event that Subtenant breaches any of the terms, conditions or covenants of this Sublease or of the Primary Sublease and fails to remedy such breach within ten (10) days after written notice, Sublandlord shall have the right, but not the obligation, to cure such breach and charge Subtenant for the costs incurred thereby, which costs Subtenant shall pay to Sublandlord upon demand.  Subtenant shall not commit or suffer any act or omission that will violate any of the provisions of the Primary Sublease or cause a default under the Primary Sublease.  If the Primary Sublease terminates for any reason, this Sublease shall terminate and the parties shall be relieved of any further 

8

liability or obligation under this Sublease; provided, however, that Subtenant shall pay to Sublandlord all sums due and accrued under this Sublease as of the date of termination.

d.

Notwithstanding any contrary provision of this Sublease, (i) in any instances where Landlord, as landlord under the Master Lease, has a certain period of time in which to notify Primary Sublandlord, as tenant under the Master Lease, whether Landlord will or will not take any particular action, Sublandlord, as landlord under this Sublease, shall have an additional ten (10) day period after receiving such notice in which to notify Subtenant, (ii) in any instance where Sublandlord, as tenant under the Primary Sublease, has a certain period of time in which to notify Primary Sublandlord as landlord under the Master Lease, whether Sublandlord will or will not take any particular action, Subtenant, as tenant under this Sublease, must notify Sublandlord, as landlord under this Sublease, at least five (5) days before the end of such period, but in no event shall Subtenant have a period of less than five (5) days in which so to notify Sublandlord unless the relevant period under the Primary Sublease is five (5) days or less, in which case the period under this Sublease shall be two (2) days less than the period provided to Sublandlord under the Primary Sublease, and (iii) in any instance where a specific grace period is granted to Sublandlord, as tenant under the Primary Sublease, before Sublandlord is considered in default under the Primary Sublease, Subtenant, as tenant under this Sublease, shall be deemed to have a grace period which is ten (10) days less than Sublandlord before Subtenant is considered in default under this Sublease, but in no event shall any grace period be reduced to less than five (5) days unless the relevant period under the Primary Sublease is six (6) days or less, in which case the period under this Sublease shall be two (2) days less than the period provided to Sublandlord under the Primary Sublease.  In no event shall Landlord, Primary Sublandlord, or Sublandlord be liable for any consequential damages suffered by Subtenant in connection with any breach of this Sublease or otherwise.

16.

Subordination

This Sublease is subject and is hereby subordinated to the Primary Sublease, all present and future mortgages of the Subleased Premises, and all other encumbrances affecting the Subleased Premises or the property or Building of which the Subleased Premises are a part. Subtenant agrees to execute, at no expense to either Sublandlord or Primary Sublandlord, any instrument which may be deemed necessary or desirable by Sublandlord or Primary Sublandlord to further effect the subordination of this Sublease to any such mortgage or encumbrance.

17.

Casualty and Condemnation

In the event of any damage or destruction of the Subleased Premises or the Building, or the taking of all or any portion thereof by eminent domain, the Subtenant shall be bound by the decisions of Sublandlord, Primary Sublandlord and Landlord made pursuant to the Master Lease and Primary Sublease.

18.

Holding Over

In the event that Subtenant shall remain in the Subleased Premises after the expiration of the Sublease Term, such holding over shall not constitute a renewal or extension of this Sublease. Sublandlord may, at its option, elect to treat Subtenant as one who has not removed at the end of its term, and thereupon be entitled to all the remedies against the Subtenant provided by law or in equity in that situation, and shall be entitled to receive and collect from the Subtenant as liquidated damages a sum equal to one and one half times (150%) the amount of rent (the “Increased Rate”) which would have been payable for the period of such holding over at the rate herein provided if this Sublease had been extended for such period, or Sublandlord may elect, at its option, to construe such holding over as a tenancy from month-to-month, subject to all the terms and conditions of this Sublease, except as to duration thereof, and in that event Subtenant shall pay monthly rent in advance at the Increased Rate.

19.

Brokers

Subtenant represents and warrants to Sublandlord that Subtenant has had no dealings, negotiations or consultations with respect to the Subleased Premises or this transaction with any broker or finder and that no broker or finder called the Subleased Premises to Subtenant, to have induced Subtenant to lease the Subleased Premises or to have taken part in any dealings, negotiations or consultations with respect to Subleased Premises or this Sublease, Subtenant will be responsible for and shall indemnify and hold Sublandlord harmless from and against all costs, fees (including, without limitation, attorney's fees), expenses, liabilities and claims incurred or suffered by Sublandlord as a result thereof.

9

20.

Sublandlord Liability

Notwithstanding anything set forth herein to the contrary, neither Sublandlord nor any shareholder, member, officer, director or partner of Sublandlord shall have any personal liability in connection with its obligations under this Sublease, and Subtenant agrees to look solely to Sublandlord’s interest in the Subleased Premises to enforce any claim it may have against Sublandlord.

21.

Default by Subtenant

The occurrence of any of the following shall be considered a Event of Default hereunder (“Event of Default”):

a.

Subtenant does not pay in full any installment of Rent or any other charge or payment whether or not herein included as Rent when due;

b.

Subtenant uses or occupies the Subleased Premises otherwise than as permitted by Section 5 of this Sublease;

c.

Subtenant violates or fails to perform or otherwise breaks any covenant, agreement or condition herein contained or any other obligation of Subtenant to Sublandlord and Subtenant fails to cure such default within twenty (20) days after written notice from Sublandlord (or such lesser cure period as may be applicable with respect to such violation pursuant to the Primary Sublease or Master Lease);

d.

Tenant vacates or abandons the Subleased Premises,

e.

Subtenant removes or attempts to remove Subtenant’s property from the Subleased Premises other than in the ordinary course of business without first having sought and received Sublandlord’s permission whose permission shall not be unreasonably withheld, conditioned or delayed and having first paid to Sublandlord in full all Rent and any other charges that may have become due; provided however, that so long as Subtenant is current in its current and future obligations to pay Rent and other charges that may be due, such removal or attempt to remove shall not constitute a default;

f.

Subtenant enters into any assignment or sub-sublease transaction with respect to the Subleased Premises or this Sublease,

g.

Subtenant commits an act of bankruptcy or files a petition or commences any proceeding under any bankruptcy or insolvency law;

h.

A petition is filed or any proceeding is commenced against Subtenant under any bankruptcy or insolvency law and such petition or proceeding is not dismissed within sixty (60) days;

i.

Subtenant is adjudicated a bankrupt;

j.

Subtenant by any act indicates its consent to, approval of or acquiescence in, or a court approves, a petition filed or proceeding commenced against Subtenant under any bankruptcy or insolvency law;

k.

A receiver or other official is appointed for Subtenant or for a substantial part of Subtenant’s assets or for Subtenant’s interests in this Sublease;

l.

Any attachment or execution against a substantial part of Subtenant’s assets or of Subtenant’s interest in this Sublease remains unstayed or undismissed for a period of more than thirty (30) days;

m.

A substantial part of Subtenant’s assets or of Subtenant’s interest in this Sublease is taken by legal process in any action against Subtenant; or

n.

Any of the foregoing occur as to any guarantor or surety of Subtenant’s performance under this Sublease, or such guarantor or surety defaults on any provision under its guaranty or suretyship agreement.

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22.

Remedies

If an Event of Default has occurred and is continuing, then Sublandlord shall be entitled to exercise any and/or all remedies against Subtenant as are described in this Sublease or in Section 25 of the Primary Sublease and/or any other remedies at law or in equity, and as between Sublandlord and Subtenant the provisions of Section 25 of the Primary Sublease shall apply to this Sublease and the Subleased Premises.

23.

Eminent Domain

In the event of exercise of the power of eminent domain this Sublease will be governed by Section 19 of the Primary Sublease.

24.

Miscellaneous Covenants

Subtenant shall faithfully perform all of the covenants and conditions to be performed and observed by Subtenant hereunder, and in addition to those covenants and conditions which are set forth elsewhere herein, Subtenant shall comply with the covenants set forth in Section 16 of the Primary Sublease.

25.

CONFESSION OF JUDGMENT - RENT

SUBTENANT COVENANTS AND AGREES THAT IF THERE IS AN EVENT OF DEFAULT, THEN SUBLANDLORD MAY, WITHOUT LIMITATION, CAUSE JUDGMENTS FOR MONEY TO BE ENTERED AGAINST SUBTENANT AND, FOR THOSE PURPOSES, SUBTENANT HEREBY GRANTS THE FOLLOWING WARRANT OF ATTORNEY: (I) SUBTENANT HEREBY IRREVOCABLY AUTHORIZES AND EMPOWERS ANY PROTHONOTARY, CLERK OF COURT, ATTORNEY OF ANY COURT OF RECORD AND/OR SUBLANDLORD (AS WELL AS SOMEONE ACTING FOR SUBLANDLORD) IN ANY AND ALL ACTIONS COMMENCED AGAINST SUBTENANT FOR RECOVERY OF THE RENT AND/OR OTHER AMOUNTS TO BE PAID TO SUBLANDLORD BY SUBTENANT AND TO APPEAR FOR SUBTENANT, AND ASSESS DAMAGES AND CONFESS OR OTHERWISE ENTER JUDGMENT AGAINST SUBTENANT, FOR ALL OR ANY PART OF THE RENT AND/OR OTHER AMOUNTS TO BE PAID TO SUBLANDLORD BY SUBTENANT, TOGETHER WITH INTEREST, COSTS AND AN ATTORNEYS’ COMMISSION, AND THEREUPON WRITS OF EXECUTION AS WELL AS ATTACHMENT MAY FORTHWITH ISSUE AND BE SERVED, WITHOUT ANY PRIOR NOTICE, WRIT OR PROCEEDING WHATSOEVER; (II) THE WARRANT OF ATTORNEY HEREIN GRANTED SHALL NOT BE EXHAUSTED BY ONE OR MORE EXERCISES THEREOF BUT SUCCESSIVE ACTIONS MAY BE COMMENCED AND SUCCESSIVE JUDGMENTS MAY BE CONFESSED OR OTHERWISE ENTERED AGAINST SUBTENANT FROM TIME TO TIME AS OFTEN AS ANY OF THE RENT AND/OR OTHER AMOUNTS AND SUMS SHALL FALL OR BE DUE OR BE IN ARREARS, AND THIS WARRANT OF ATTORNEY MAY BE EXERCISED AFTER THE TERMINATION OR EXPIRATION OF THE SUBLEASE TERM AND/OR DURING OR AFTER ANY EXTENSIONS OF THE TERM OR RENEWALS OF THIS SUBLEASE.

THE UNDERSIGNED TENANT ACKNOWLEDGES THAT IT FULLY UNDERSTANDS THE CONFESSION OF JUDGMENT CONTAINED IN THE PRECEDING PARAGRAPH HEREOF AND THAT THE LANDLORD TENANT RELATIONSHIP CREATED HEREBY IS COMMERCIAL IN NATURE AND THAT THE UNDERSIGNED WAIVES ANY RIGHT TO A HEARING WHICH WOULD OTHERWISE BE A CONDITION TO LANDLORD’S OBTAINING THE JUDGMENTS AUTHORIZED BY THE PREVIOUS PARAGRAPH.

Please Initial

______

_______

26.

CONFESSION OF JUDGMENT – POSSESSION

SUBTENANT COVENANTS AND AGREES THAT IF THERE IS AN EVENT OF DEFAULT OR THIS SUBLEASE IS TERMINATED OR THE SUBLEASE TERM OR ANY EXTENSIONS OR RENEWALS THEREOF IS TERMINATED OR THE SUBLEASE TERM OR ANY EXTENSIONS OR RENEWALS THEREOF IS TERMINATED OR EXPIRES, THEN, AND IN ADDITION TO THE RIGHTS AND REMEDIES SET FORTH IN THE IMMEDIATELY PRECEDING SECTION 25, SUBLANDLORD 

11

MAY, WITHOUT LIMITATION, CAUSE JUDGMENTS IN EJECTMENT FOR POSSESSION OF THE SUBLEASED PREMISES TO BE ENTERED AGAINST SUBTENANT AND, FOR THOSE PURPOSES, SUBTENANT HEREBY GRANTS THE FOLLOWING WARRANT OF ATTORNEY: (I) SUBTENANT HEREBY IRREVOCABLY AUTHORIZES AND EMPOWERS ANY PROTHONOTARY, CLERK OF COURT, ATTORNEY OF ANY COURT OF RECORD AND/OR SUBLANDLORD (AS WELL AS SOME ONE ACTING FOR SUBLANDLORD) IN ANY AND ALL ACTIONS COMMENCED FOR RECOVERY OF POSSESSION OF THE SUBLEASED PREMISES TO APPEAR FOR SUBTENANT AND CONFESS OR OTHERWISE ENTER JUDGMENT IN EJECTMENT FOR POSSESSION OF THE SUBLEASED PREMISES AGAINST SUBTENANT AND ALL PERSONS CLAIMING DIRECTLY OR INDIRECTLY BY, THROUGH OR UNDER SUBTENANT, AND THEREUPON A WRIT OF POSSESSION MAY FORTHWITH ISSUE AND BE SERVED, WITHOUT ANY PRIOR NOTICE, WRIT OR PROCEEDING WHATSOEVER; (II) IF, FOR ANY REASON AFTER THE FOREGOING ACTION OR ACTIONS SHALL HAVE BEEN COMMENCED, IT SHALL BE DETERMINED THAT POSSESSION OF THE SUBLEASED PREMISES SHOULD REMAIN IN OR BE RESTORED TO SUBTENANT, SUBLANDLORD SHALL HAVE THE RIGHT TO COMMENCE ONE OR MORE FURTHER ACTIONS AS HEREINBEFORE SET FORTH TO RECOVER POSSESSION OF THE SUBLEASED PREMISES INCLUDING, WITHOUT LIMITATION, APPEARING FOR SUBTENANT AND CONFESSING OR OTHERWISE ENTERING JUDGMENT FOR POSSESSION OF THE SUBLEASED PREMISES AS HEREINBEFORE SET FORTH.

THE UNDERSIGNED SUBTENANT ACKNOWLEDGES THAT IT FULLY UNDERSTANDS THE CONFESSION OF JUDGMENT CONTAINED IN THE PRECEDING PARAGRAPH HEREOF AND THAT THE LANDLORD-TENANT RELATIONSHIP CREATED HEREBY IS COMMERCIAL IN NATURE AND THAT THE UNDERSIGNED WAIVES ANY RIGHT TO A HEARING WHICH WOULD OTHERWISE BE A CONDITION TO SUBLANDLORD’S OBTAINING THE JUDGMENTS AUTHORIZED BY THE PREVIOUS PARAGRAPH.

Please Initial

______

_______

27.

WAIVER OF JULY TRIAL

IT IS MUTUALLY AGREED BY AND BETWEEN SUBLANDLORD AND SUBTENANT THAT THEY HEREBY WAIVE TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER OF THE PARTIES HERETO AGAINST THE OTHER ON ANY MATTER WHATSOEVER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS SUBLEASE, THE RELATIONSHIP OF SUBLANDLORD AND SUBTENANT, TENANT’S USE OR OCCUPANCY OF THE SUBLEASED PREMISES OR CLAIM OF INJURY OR DAMAGE.

28.

Counterparts; Facsimile Signatures

This Sublease may be executed by the parties hereto in any number of separate counterparts, all of which, when delivered, shall together constitute one and the same agreement.  This Sublease may be executed by facsimile signature, and a facsimile transmission of an executed counterpart of this Sublease shall have the same binding effect upon the signatory as an executed and delivered original.

29.

Time

Time is of the essence of this Sublease and all of its provisions.

30.

Representations And Warranties; Authority

a.

Sublandlord and Subtenant each represent and warrant to the other that the individual(s) executing and delivering this Sublease on its behalf is/are duly authorized to do so and that this Sublease is binding on Subtenant and Sublandlord in accordance with its terms.  Simultaneous with the execution of this Sublease, Subtenant shall deliver evidence of such authority to Sublandlord in a form reasonably satisfactory to Sublandlord.

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b.

Except as expressly set forth in this Sublease, no representation or warranty has been given by either party, its agents and representatives, with respect to the subject matter of this Sublease, and neither party has relied upon any representations or warranty not expressly set forth herein.

31.

Notices

All notices and demands under this Sublease shall be in writing and shall be effective (except for notices to Primary Sublandlord, which shall be given in accordance with the provisions of the Primary Sublease and for notices to Landlord which shall be given in accordance with the provisions of the Master Lease) upon the earlier of receipt or upon delivery being refused.  All such notices or demands shall be sent by registered mail, return receipt requested, postage prepaid, or by a nationally recognized overnight delivery service that provides tracking and proof of delivery.  Either party may change its address for notices and demands under this Sublease by ten (10) days’ notice to the other party.  The notices shall be provided to the following addresses:

		
	If to Subtenant:

	Cord Blood America, Inc.

_______________________

	With a copy to:

	_______________________

_______________________

	If to Sublandlord:

	CorCell, Inc.

1717 Arch Street

Suit 1410

Philadelphia, PA 19103

Attention:  Marcia Laleman

	With a copy to:

	Dilworth Paxson LLP

3200 Mellon Bank Center

1735 Market Street

Philadelphia, Pennsylvania 19103

Attention: Paul W. Baskowsky

	If to Primary Sublandlord:

	Verizon Communications Inc. and Verizon Services Corp.

c/o Cushman & Wakefield of Pennsylvania, Inc.

1717 Arch Street, 33rd Floor

Philadelphia, Pennsylvania 19103

Attn: Robert G. Martin, General Manager

13

32.

Governing Law

This Sublease shall be governed by the laws of the Commonwealth of Pennsylvania.

33.

Entire Agreement

This Sublease, together with any exhibits and attachments hereto and the Primary Sublease and Master Lease, constitutes the entire agreement between Sublandlord and Subtenant relative to the Subleased Premises, and this Sublease and the exhibits and attachments may be altered, amended or revoked only by an instrument in writing signed by both Sublandlord and Subtenant.  Sublandlord and Subtenant agree hereby that all prior or contemporaneous oral discussions, letters or written documents between and among themselves and their agents and representatives relative to the subleasing of the Subleased Premises are merged in or revoked by this Sublease.

34.

Successors

This Sublease shall inure to the benefit of and be binding upon the respective heirs, administrators, executors, successors and assigns of the parties hereto; provided, however, that this provision shall not be construed to allow an assignment or subletting which is otherwise specifically prohibited hereby.

35.

Headings

The section and paragraph headings are included only for the convenience of the parties and are not part of this Sublease and shall not be used to interpret the meaning of provisions contained herein or the intent of the parties hereto.

36.

Primary Sublandlord’s Consent

This Sublease is expressly conditioned upon the receipt of Primary Sublandlord's written consent hereto.  Subtenant agrees to cooperate with Sublandlord in providing such information as is necessary to satisfy such condition and to execute all agreements reasonably requested by Primary Sublandlord in connection therewith.

37.

No Offer

The submission of this Sublease or some or all of its provisions for examination does not constitute an option or an offer to enter into this Sublease, it being understood and agreed that neither Sublandlord or Subtenant shall be legally bound hereunder unless and until this Sublease has been executed and delivered by both Sublandlord and Subtenant, and then subject to the conditions hereof.

14

IN WITNESS WHEREOF, the parties have caused this Sublease to be signed by their duly authorized representatives to be effective on the date first set out above.

						
	 
	SUBLANDLORD:

	 
	 

	[Corporate Seal]

	CorCell, Inc.

	Attest:

	 
	By:

	 

	Name:

	 
	Name:

	 

	Title:

	 
	Title:

	 

	 
	

	 
	SUBTENANT:

	 
	 

	[Corporate Seal]

	Cord Blood America, Inc.

	Attest:

	 
	By:

	 

	Name:

	 
	Name:

	 

	Title:

	 
	Title:

	 

15

EXHIBIT “A”

PRIMARY SUBLEASE

16

EXHIBIT “B”

MASTER LEASE

17

EXHIBIT “C”

DESCRIPTION OF SUBLEASED PREMISES

18

SCHEDULE “1”

SCHEDULE OF MONTHLY RENT

			
	Period

	Annual Rent

	Monthly Rent

	December 1, 2005 – November 30, 2006

	$284,392.00

	$23,699.33

	December 1, 2006 – November 30, 2007

	$291,876.00

	$24,323.00

	December 1, 2007 – November 30, 2008

	$299,360.00

	$24,946.67

	December 1, 2008 – November 30, 2009

	$306,844.00

	$25,570.33

	December 1, 2009 – November 30, 2010

	$314,328.00

	$26,194.00

	December 1, 2010 – November 30, 2011

	$321,812.00

	$26,817.67

	December 1, 2011 – July 31, 2012

	$219,530.64

(prorated)

	$27,441.33

19

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