Document:

<PAGE>

                                                                    EXHIBIT 10.5

                               AGREEMENT OF LEASE

      AGREEMENT OF LEASE made as of May 10th, 2005 between MARLMAR ASSOCIATES,
LLC, a limited liability company, having its principal office at 80 Davids
Drive, Hauppauge, NY 11788 (hereinafter referred to as "Landlord") and NASTECH
PHARMACEUTICAL CO., INC. a corporation having its principal office at 3450 Monte
Villa Parkway, Bothell, WA 98021 (hereinafter referred to as "Tenant").

                                     RECITAL

      Landlord has agreed to demise and lease unto Tenant and Tenant has agreed
to hire and take from Landlord the premises (the Premises), which Premises are
located in the building and improvements erected (the Building) designated as
Building 80 Davids Drive, Suite #2, Hauppauge, York 11788. Now, therefore, in
consideration of the terms, conditions and covenants of this Lease, it is hereby
agreed as follows:

                                      TERM

      1. Landlord hereby leases to Tenant and Tenant hereby hires from Landlord,
the Premises for a term of five (5) years (or until such term shall sooner cease
and expire as hereinafter provided) to commence July 1, 2005 (the "Commencement
Date") and to terminate on June 30, 2010 (the "Expiration Date).

                                      TITLE

      2. The Premises are let subject to covenants, restrictions and easements
of record, governmental laws, rules, regulations and order, and the reservation
by Landlord of all air rights above, around and about the Premises and all
rights to increase the size of the Building or the sizes of surrounding
buildings based on the air rights appurtenant to the Premises, as, if and when
permitted by any present or future zoning laws, ordinances, orders or
regulations.

                                      RENT

      3. (a) Tenant covenants to pay to Landlord at its principal office, or at
such place as Landlord shall from time to time direct in writing, the minimum
annual rent set forth below, and the additional rent required to be paid
pursuant to the terms of this Lease. Minimum annual rent and such

<PAGE>

other additional rent and charges which Tenant shall be required to pay are
hereinafter sometimes referred to as "Rent". Minimum annual rent shall be as
follows:

      During the first year of this Lease, the Rent shall be $43,722.00 per
      annum, payable in equal monthly installments of $3,643.50.

      During the second year of this Lease, the Rent shall be $45,470.88 per
      annum, payable in equal monthly installments of $3,789.24.

      During the third year of this Lease, the Rent shall be $47,289.72 per
      annum, payable in equal monthly installments of $3,940.81.

      During the fourth year of this Lease, the Rent shall be $49,181.28 per
      annum, payable in equal monthly installments of $4,098.44.

      During the fifth year of this Lease, the Rent shall be $51,148.56 per
      annum, payable in equal monthly installments of $4,262.38.

            (b) Tenant shall pay the minimum annual rent in equal monthly
installments in advance on the first day of each calendar month included in the
Term except for the first month's rent which shall be paid on the signing of
this lease.

            (c) All Rent shall be paid in lawful money of the United States
which shall be legal tender in payment of all debts and dues, public and
private, at the time of payment, at the address of Landlord set forth in this
Lease or at such other place as Landlord in writing may designate without
(except as may be otherwise herein expressly provided) any set-off or deduction
whatsoever and without any prior demand therefore.

            (d) Unless another time shall be herein expressly provided, any
additional rent shall be due and payable on demand or together with the next
succeeding installment of minimum annual rent, whichever shall first occur; and
Landlord shall have the same remedies for failure to pay the additional rent as
for a non-payment of minimum annual rent.

            (e) For any portion of a calendar month included at the beginning or
end of the term, Tenant shall pay 1/30th of each monthly installment of Rent for
each day of such portion, payable in advance at the beginning of such portion.

            (f) In any case in which the base rent is not paid within ten (10)
days or additional rent is not paid within twenty (20) days of the day when same
is due, Tenant shall pay a late charge equal to 8 1/2 cents for each dollar so
due; and in addition thereto, the sum of $100.00 for the purpose of defraying
expenses incident to the handling of such delinquent account. Tenant further
agrees that the late charge imposed is fair and reasonable, complies with all
laws, regulations and statutes, and constitutes an agreement between Landlord
and Tenant as to the estimated compensation for costs and administrative
expenses incurred by Landlord due to the late payment of rent to Landlord by
Tenant.

                                     - 2 -

<PAGE>

Tenant further agrees that the late charge assessed pursuant to this lease is
not interest, and the late charge assessed does not constitute a lender or
borrower/creditor relationship between Landlord and Tenant.

            (g) If Tenant shall default in making any payment required to be
made by Tenant or in performing any obligation of Tenant under this Lease which
shall require the expenditure of money, Landlord may, but shall not be obligated
to make such payment on behalf of Tenant or expend such sum as may be necessary
to perform or fulfill such obligation. Any sums so paid by Landlord shall be
deemed Rent and shall be due and payable to Landlord at the time of payment of
the next installment of minimum annual rent.

                                 USE OF PREMISES

      4. Tenant shall use and occupy the Premises solely for: warehousing and
light manufacturing with offices appurtenant thereto, and for no other purpose.
Tenant shall not use or permit the use of the Premises contrary to any
applicable statute, ordinance or regulation or in violation of the Certificate
of Occupancy as provided by the Landlord prior to the execution of this Lease,
or in a manner which would cause structural injury to the Building.

                                      TAXES

      5.    (a) Tenant shall pay its proportionate share of the real estate
taxes during the lease term. For the purpose of this Article, "real estate
taxes" includes all real estate taxes, assessments, and all other kinds of
governmental impositions and charges, whether ordinary or extraordinary, general
or special, foreseen or unforeseen, and every installment thereof which are,
during the term hereof, levied, assessed, or imposed, become due and payable, or
liens upon, or arise in connection with the use, occupancy, or possession of, or
become due and payable out of or for the Building or any part thereof.

            (b) Tenant's proportionate share shall be 12.33%, as mutually
verified by a building plan provided by Landlord.

            (c) Nothing contained herein shall be construed to include as a tax
which shall be the basis of real estate taxes, any inheritance, estate,
succession, transfer gift, franchise, corporation, income or profit tax or
capital levy that is or may be imposed upon Tenant. However, if at any later
time the methods of taxation are altered so that in lieu of or as a substitute
for the whole or any part of the taxes now levied, assessed or imposed (i) a tax
on the rents received by Landlord from the Building or any portion thereof or
(ii) a license fee measured by rents received by Landlord from the Building or
any portion thereof, the same shall be included in the computation of real
estate taxes hereunder, computed as if the amount of tax or fee were that due if
the Building were the only property of Landlord subject to tax.

            (d) All taxes assessed prior to but payable in whole or in
installments during the lease terms and all taxes assessed during the term but
payable in whole or in installments after the lease term, shall be adjusted and
prorated, so that the Landlord shall pay its pro-rated share for the period
preceding

                                     - 3 -

<PAGE>

and following the lease term and the Tenant shall pay its pro-rated share for
the lease term.

            (e) Landlord shall render to Tenant a statement containing a
computation of additional rent due under this Article ("Landlord's Statement")
for the preceding year. Within twenty (20) days after the rendition of the
Landlord's Statement which shows additional rent to be payable, Tenant shall pay
to Landlord the amount of such additional rent. On the first day of each month
following the rendition of each Landlord's Statement, Tenant shall pay to
Landlord, on account of the potential additional rent, a sum equal to
one-twelfth (1/12th) of the additional rent paid by Tenant, which sum shall be
subject to increase in Taxes effective prior thereto.

            (f) Landlord's failure to render a Landlord's Statement with respect
to any Escalation Year shall not prejudice Landlord's right to render a
Landlord's Statement with respect to any Escalation Year. The obligation of
Landlord and Tenant under the provisions of this Article with respect to any
additional rent for any Escalation Year shall survive the expiration or any
sooner termination of the Demised Term.

                            CONSTRUCTION IN PREMISES

      6.    (a) Landlord shall perform the following work in the Premises at its
sole cost and expense, prior to the Commencement Date to provide warehouse space
exposed to underside of roof structure and mechanical systems.

      1. Replace two (2) HVAC units, including installation.

      2. Remove drop ceiling, raise sprinkler heads/existing ductwork and raise,
         if necessary, existing wiring and conduits to the underside of existing
         steel, and extending the firewalls accordingly, and any other
         associated demolition in the warehouse area to achieve the foregoing.

      3. Remove existing tile floor in the warehouse area, seal concrete floor
         in the warehouse area with a clear seal patch, repair existing
         warehouse walls, where necessary, paint warehouse walls, install high
         bay lighting in warehouse, enlarge opening to the loading dock
         air-lock.

      4. Office area to be renovated as per plan, including paint and carpet,
         including other cosmetic preparation necessary to render space in "move
         in" condition.

            (b). Tenant shall, at its own cost and expense, install loading lock
leveler and all work associated with the installation of its refrigeration unit
and warehouse racking.

            (c). In all other respects, the Tenant accepts the Premises in "as
is" condition.

                   TENANT'S INSTALLATION PRIOR TO COMMENCEMENT

      7. Tenant may, prior to the Commencement Date, with Landlord's consent,
which consent shall not be unreasonably withheld, enter upon the Premises, at
its own risk, to build, construct and

                                     - 4 -

<PAGE>

install its equipment, signs and fixtures for the operation of its business;
however, the indemnity contained in Article 15 shall apply to any claims arising
out of the performance of said work. Tenant shall supply Landlord with worker's
compensation certificates for all persons and/or contractors performing work for
Tenant at the Premises during the course of construction, a public liability
insurance policy in the sum of One Million ($1,000,000.00)/Three Million
($3,000,000.00) Dollars for personal injuries and death claims and Two Hundred
Fifty Thousand ($250,000.00) Dollars for property damage. In the event any
mechanics liens shall be filed against the Premises or the Building by any of
Tenant's contractors, subcontractors or materialmen, Tenant shall discharge the
lien by bond, payment or otherwise within ten (10) days of filing thereof and
upon Tenant's failure to so discharge any such liens, Landlord may, at its
option, remove the lien by payment or bonding and charge the Tenant with the
cost thereof together with reasonable counsel fees. Landlord shall have the
option of paying out the monies for said liens from any funds of Tenant in
Landlord's possession. Nothing in this Lease contained shall be construed in any
way as constituting the consent or request of the Landlord, expressed or
implied, to any contractor, subcontractor, laborer or materialmen for the
performance of any labor or the furnishing of any material for any improvement,
alteration or repair of the Premises, nor as giving any right or authority to
contract for the rendering of any services or the furnishing of any materials
that would give rise to the filing of any mechanic's liens against the Premises.

               REPAIRS, MAINTENANCE, FLOOR LOADS AND RESTRICTIONS

      8. (a) During the term of this Lease Landlord shall make all structural
repairs to the roof, exterior walls and foundation of the Premises, except
structural repairs required as a result of the acts or negligence of Tenant, its
agents, officers, employees, patrons or licensees. Tenant shall at all times
keep and maintain the Premises leased to Tenant in good order, condition and
repair, shall make all other repairs required to the Premises leased to Tenant
not required to be made by Landlord, including without limiting the generality
of the foregoing, (i) maintenance and repair of the electrical, heating,
plumbing, and air-conditioning facilities in the Premises leased to Tenant; (ii)
generally keeping and maintaining the interior of the Premises leased to Tenant
, in good repair and condition; (iii) keeping the Premises leased to Tenant
clean and free of debris, and sidewalks directly accessing the Premises leased
to Tenant free of snow and ice; and (iv) repair and maintenance of all plate
glass. Tenant shall at all times obtain and keep in full force and effect for
the benefit of Landlord and Tenant, with a responsible company doing business in
Suffolk County, a service, repair and maintenance contract with respect to the
heating, ventilating and air-conditioning systems of the Premises leased to
Tenant. A copy of such contract and all renewals thereof shall upon issuance and
thereafter not later than ten (10) days prior to expiration, be furnished to
Landlord together with evidence of payment. If Tenant fails to make any repairs
or replacements required to be made by Tenant, Landlord may perform same for the
account of Tenant at Tenant's expense and the cost thereof shall be due and
payable by Tenant to Landlord as Rent.

      (b) Landlord shall maintain the exterior, the parking lot, sidewalk,
driveways and landscaping on, about or serving the Premises in good order and
repair, including snow removal and sweeping of the parking lot (excluding
sidewalks). Tenant shall, as Tenant's contribution with

                                     - 5 -

<PAGE>

respect to such maintenance, pay to Landlord as additional rent, within twenty
(20) days after billing thereof by Landlord, which billing shall not be more
often than every three months, Tenant's pro rata share (as such term is defined
in Article 36) of the actual cost of such maintenance. Landlord's bills shall be
accompanied by a statement showing in a reasonable detail Landlord's actual
costs for the period in questions. Tenant's failure to object to any such
statement within twenty (20) days after the service thereof shall be deemed an
acceptance by tenant of the accuracy thereof. As used herein, the term "actual
costs shall be deemed to include, without limiting the generality of the
foregoing, gardening, landscaping, planting, replanting and replacement of
flowers, shrubbery and grass, public liability, worker's compensation insurance
with respect to the work to be performed by Landlord, striping, lighting, if
lights are nor or at any time hereafter placed within said parking areas
(including cost of electricity and maintenance and replacement of fixtures and
bulbs), repair of paving, curbs and walkways, repair and cleaning of drainage
facilities, rental of machinery and equipment, cost of personnel to implement
all of the foregoing (including worker's compensation insurance covering such
personnel), other similar direct costs of the type incurred in the operation of
comparable properties plus 15% of all of the foregoing costs to cover Landlord's
administrative overhead costs.

            (c) Landlord shall not be required to commence any repairs required
to be performed by it until after notice from Tenant that same are necessary,
which notice, except in the case of an emergency, shall be in writing and shall
permit Landlord ten (10) days in which to commence such repair, unless the
nature of the repair requires immediate response, and in such case Tenant shall
include such request in the notice. When necessary by reason of accident or
other casualty occurring in the Building or at the Premises or elsewhere on
Landlord's surrounding property, or in order to make any necessary repairs,
alterations or improvements in or relating to the Building or the Premises or
other portions of Landlord's property, Landlord reserves the right to interrupt,
temporarily, and on written notice to Tenant, the supply of utility services
until said repairs or improvements shall have been completed. There shall be no
abatement in rent because of any such interruption if Landlord shall pursue such
work with reasonable diligence and dispatch.

            (d) Tenant shall not place a load upon any floor of the Premises
which exceeds the floor load per square foot area which such floor was designed
to carry. If Tenant shall desire a floor load in excess of that for which the
floor of any portion of the Premises is designed, upon submission to Landlord of
plans showing the location of and the desired floor live load for the area in
question, Landlord may strengthen and reinforce the same, at Tenant's sole
expense, so as to carry the live load desired. Business machines and mechanical
equipment used by Tenant which cause vibration or noise that may be transmitted
to the Building or to any occupiable space to such a degree as to be reasonably
objectionable to Landlord or to any tenants in the Building shall be placed and
maintained by Tenant, at its expense, in settings of cork, rubber or spring-type
vibration eliminators sufficient to minimize such vibration or noise.

            (e) Tenant shall comply with the following restrictions with respect
to the Premises:

                                     - 6 -

<PAGE>

                  (i) Tenant shall store all trash and refuse in appropriate
sealed and covered containers provided by Landlord's contractor either within
the Premises or in a concealed location at the rear of the Building and shall
attend to the regular disposal and removal thereof.

                  (ii) Tenant shall receive all deliveries, load and unload
goods, merchandise, supplies, fixtures, equipment, furniture and rubbish only
through proper service doors and loading docks serving the Building.

                  (iii) Tenant shall not change the exterior colors or
architectural treatment of the Premises or make any alterations or changes to
the exterior of the Building or to the grading, planting or landscaping of the
exterior of the Building.

                  (iv) Tenant shall not place or install or suffer to be placed
or installed any sign upon the Building or the Premises unless such sign shall
be approved by Landlord and shall be harmonious with the signs of adjoining
properties. In any event, Tenant shall not place or cause to be placed upon the
Building any awning, canopy, banner, flag, pennant, aerial, antenna or the like.
All signs or lettering on or about the Premises or the Building shall be neat
and of reasonable size. The following are strictly prohibited:

                        (x) Paper signs and stickers;

                        (y) Moving, flickering or flashing lights;

                        (z) Exposed neon or fluorescent tubes or other exposed
                        light sources.

                  (v) Tenant shall not permit the parking of any vehicle on the
streets and roadways adjoining or surrounding the Building and Tenant shall
require its employees, customers, invitees, licensees and visitors to park only
in the parking areas serving the Premises. Tenant shall at all times be
permitted its pro rata share of parking spaces in the parking lot of the
Building, however, Landlord may, at any time, designate, at Landlord's
discretion, the exact location and identify Tenant's pro rata share of parking
spaces and thereafter Tenant shall cause its employees, customers, invitees,
licensees and visitors to park only in the designated parking spaces. Tenant
agrees that any violators of this parking restriction may be towed away by
Landlord at Tenant's sole cost and expense and Tenant shall indemnify, defend
and hold Landlord harmless against any claims or liabilities (including
Landlord's attorneys' fees) arising by reason of such towing by Landlord.

                  (vi) Tenant shall not manufacture or store any item which, in
the opinion of Landlord, causes offensive odors, irritations, or any discomfort
to occupants of the Building of which the Demised Premises form a part.

            (f) Tenant shall pay to Landlord, its pro-rata share (as such term
is defined in Article 36) of all sewer line charges, within twenty (20) days
after billing by Landlord, which is ten (10 cents) cents per square foot, based
upon 4,164 square feet

                              TENANT'S ALTERATIONS

                                     - 7 -

<PAGE>

      9.    (a) Tenant shall not make (i) any structural alterations in or to
the Premises or the Building without Landlord's prior written consent, or (ii)
make any additions to the Building.

            (b) Tenant may, without Landlord's consent, make non-structural
alterations or improvements to the Premises, the cost of which does not exceed
$10,000.00. No other alterations, improvements or changes shall be made without
Landlord's consent, which consent shall not be unreasonably withheld. All
buildings, improvements, alterations and replacements, and all building service
equipment made or installed by or on behalf of Tenant shall immediately upon
completion or installation thereof be and become the property of Landlord. All
trade fixtures, moveable partitions, furniture and furnishings installed at the
expense of Tenant shall remain the property of Tenant and Tenant may remove the
same or any part thereof during the term of this Lease, or if the term shall end
prior to the date herein specifically fixed for such termination, then within a
reasonable time thereafter, but Tenant shall at its expense, repair any and all
damage to the Premises resulting from or caused by such removal. Title to any
property which Tenant elects not to remove or which is abandoned by Tenant
shall, at the end of the term, vest in Landlord. Tenant shall not make any
non-structural alterations or improvements, the cost of which exceeds $10,000.00
until it shall have first submitted to Landlord plans and specifications for
such work and Landlord shall have approved same. All such work to be performed
by Tenant shall be in accordance with the approved plans and specifications and
Landlord shall have the right at any time during the pendency of such work to
inspect the Premises and the manner of construction. In the event of any such
repairs, alterations or improvements, Landlord shall have the option to require
Tenant to deliver to Landlord at Tenant's cost and expense a bond satisfactory
to Landlord in the sum equal to the cost of the work issued by a surety company
authorized to do business in the State of New York, which bond shall guaranty
completion of the repairs, alterations and improvements and payment of the cost
of the work. Any mechanics liens filed at any time against the Premises, for
work claimed to have been performed or for materials claimed to have been
furnished to Tenant or Tenant's contractors or subcontractors, shall be
discharged by Tenant within twenty days after filing by bonding, payment or
otherwise.

                                    UTILITIES

      10. Tenant shall provide, at its own expense, fuel, heat, electricity and
other utilities. Water shall be supplied by Landlord through a common water
meter. Tenant shall pay to Landlord, as Tenant's contribution with respect to
Water, as additional rent, Tenant's pro-rata share (as such term is defined in
Article 36), of the actual cost of such Water, provided all tenants in the
Building use the water for domestic water purposes only. In the event any other
tenant uses water for other than domestic water purposes, the amount of water
bill will be adjusted accordingly. Tenant shall pay to Landlord, its
proportionate share (as such term is defined in Article "36") of the cost of
sewer charges.

                         REQUIREMENTS OF LAW, SPRINKLERS

                                     - 8 -

<PAGE>

      11.   (a) Tenant shall promptly execute, obtain all permits, and comply
with all statutes, ordinances, rules, orders, regulations and requirements
(including those which require structural alterations) of the Federal, State,
County and Local Government and of any and all their Departments and Bureaus
applicable to the Premises, for the correction, in, upon, or connected with the
Tenant's specific use of the Premises during the term; and shall also promptly
comply with and execute all rules, orders and regulations of the New York Board
of Fire Underwriters for the prevention of fires at the Tenant's own cost and
expense. In the event Tenant is required by the provisions of this paragraph to
make a structural alteration, then, prior to the commencement of such
alteration, Tenant shall secure the payment of the costs of such alteration with
a surety bond or other means satisfactory to Landlord.

            (b) Tenant shall keep and maintain any sprinkler system now or
hereafter installed in the Premises leased to Tenant in good repair and working
condition, and if the New York Board of Fire Underwriters of the New York Fire
Insurance Exchange or any Bureau, Department or official of any Federal, State
or local governmental or quasi-governmental authority shall require or recommend
any changes, modifications or alterations, including, without limitation,
additional sprinkler heads or other equipment, to be made or supplied by reason
of Tenant's business or the location of partitions, trade fixtures or other
contents of the Premises leased to Tenant, or if such changes, modifications,
alterations, additional sprinkler heads or other equipment in the Premises
leased to Tenant are necessary to prevent the imposition of a penalty or charge
against the full allowance for a sprinkler system in the fire insurance rate as
fixed by said Exchange, or by any Fire Insurance Company with respect to the
Building, the Premises leased to Tenant or any adjoining or nearby buildings or
improvements, Tenant shall at Tenant's sole cost and expense, promptly make and
supply such changes, modifications, alterations, additional sprinkler heads or
other equipment. Landlord shall throughout the Term maintain for the benefit of
Landlord and Tenant, a contract for Sprinkler Supervisory Service. Tenant shall
pay to Landlord its proportionate share of the cost, (as defined in Article 36)
hereof.

            (c) Tenant shall not cause Hazardous Materials (hereinafter defined)
to be brought upon or kept or used on the Premises in violation of any Hazardous
Materials Law. Without limiting the foregoing, Tenant shall not cause or permit
the Premises to be used to generate, manufacture, refine, transport, treat,
store, handle, dispose, transfer, produce or process Hazardous Materials, except
in compliance with al applicable Federal, State and Local laws or regulations,
nor shall Tenant cause or permit, as a result of any intentional or
unintentional act or omission on the part of Tenant or any person or entity
claiming through or under Tenant or any of their employees, contractors, agents,
visitors or licensees (collectively "Related Parties"), a release of Hazardous
Materials onto the Premises. Tenant shall comply with and ensure compliance by
all Related Parties with all applicable Federal State and Local laws,
ordinances, rules and regulations, whenever and by whomever triggered, and shall
obtain and comply with, and ensure that all Related Parties obtain and comply
with, any and all approvals, registrations or permits required thereunder. With
respect to Hazardous Materials for which Tenant is responsible hereunder and
only with regard to its own activities or the activities of its agents or
invitees shall, as reasonably necessary, (a) conduct and complete all
investigations, studies, samplings, and testing, and all remedial removal, and
other actions necessary to clean up and remove all Hazardous

                                     - 9 -

<PAGE>

materials, on, from, or affecting the Premises (i) in accordance with all
applicable Federal, state and local laws, ordinances, rules, regulations, and
policies, (ii) to the satisfaction of Landlord, and (iii) in accordance with the
orders and directives of all Federal, state, and local governmental authorities,
and (b) defend, indemnify, and hold harmless Landlord, its employees, agents,
officers, and directors, from and against any claims, demands, penalties, fines,
liabilities, settlements, damages, costs, or expenses of whatever kind or
nature, known or unknown, contingent or otherwise, arising out of, or in any way
related to, (i) the presence, disposal, release, or threatened release of any
Hazardous Materials which are on, from, or affecting the soil, water,
vegetation, buildings, personal property, persons, animals, or otherwise; (ii)
any personal injury (including wrongful death) or property damage (real or
personal) arising out of or related to such Hazardous Materials; (iii) any
lawsuit brought or threatened, settlement reached, or government order relating
to such Hazardous Materials, and/or (iv) any violation of laws, orders,
regulations, requirements, or demands of government authorities, or any policies
or requirements of Landlord which are based upon or in any way related to such
Hazardous Materials, including, without limitation, attorney and consultant
fees, investigation and laboratory fees, court costs, and litigation expenses.
In the event this Lease is terminated, or Tenant is dispossessed, Tenant shall
deliver the Premises to Landlord free of any and all Hazardous Materials so that
the conditions of the Premises shall conform with all applicable Federal, state
and local laws, ordinances, rules or regulations affecting the Premises. For
purposes of this paragraph, "Hazardous Materials" includes, without limit, any
flammable explosives, radioactive materials, hazardous materials, hazardous
wastes, hazardous or toxic substances, or related materials defined in the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
as amended (42 U.S.C. Sections 9601, et seq.), the Hazardous Materials
Transportation Act, as amended (49 U.S.C. Sections 1801 et seq.), the Resource
Conservations and Recovery Act, as amended (42 U.S.C. Sections 9601, et seq.),
and in the regulations adopted and publications promulgated pursuant thereto, or
any other Federal, state or local environmental law, ordinance, rule, or
regulation.

            (d) If by reason of Tenant's use and occupancy or abandonment of the
Premises, or if by reason of the improper or careless conduct of any business
upon or use of the Premises, the fire insurance rates for the Building, or any
other tenants or occupants of the Building of any adjoining or nearby buildings
or improvements or any tenants or occupants thereof (including contents and
equipment coverage) shall at any time be higher than it otherwise would be,
Tenant shall reimburse Landlord as additional rent hereunder, for that part of
all fire insurance premiums charged to such other owners, tenants or occupants
because of the conduct of such business not so permitted, or because of the
improper or careless conduct of any business upon or use of the Premises, and
shall make such reimbursement upon the first day of the month following billing
thereof by Landlord; but this covenant shall not apply to a premium for any
period beyond the expiration date of this Lease, first above specified. In any
action or proceeding based upon or arising out of this provision, a schedule or
"make up" of rate for the Building or any other affected insurance coverage
purporting to have been issued by New York Fire Insurance Exchange, or other
body making fire insurance rate, shall be prima facie evidence of the facts
therein stated.

                                    INSURANCE

                                     - 10 -

<PAGE>

      12.   (a) Tenant shall, during the term of this Lease, maintain insurance
against loss by fire with extended coverage, malicious mischief, storm and
sprinkler damage, covering all fixtures, equipment, improvements or betterments
installed or made by Tenant in or about the Premises leased to the Tenant in
such amounts as Tenant in its reasonable discretion deems appropriate and
necessary.

            (b) If there is a steam boiler or pressure vessel or other similar
equipment in the Premises leased to the Tenant for their exclusive use, a steam
boiler and machinery insurance policy written on a broad form basis to the limit
of $300,000.00 with a waiver of right in all such insurance policies to recover
by way of subrogation against Landlord or Tenant, with insurance companies of
recognized responsibility authorized and licensed to issue such policies in the
State of New York reasonably acceptable to Landlord, and to maintain such
insurance at all times during the term of this Lease. Such policies shall be
obtained by Tenant and the policies shall be issued in the name of Landlord and,
at the direction of Landlord, loss to be payable to Landlord and mortgagee as
their interests shall appear. The policies shall remain at all times in the
possession of Landlord or Landlord's mortgagees. Tenant shall pay the premiums
on said policies and furnish proof of payment to Landlord as they accrue, and if
not so paid, Landlord may, at its option, pay such premiums. All premiums,
whether or not paid by Landlord shall be deemed additional rent and due and
payable on the next rent day or any subsequent rent day and payments of such
premiums by Landlord shall not be deemed a waiver of the default in payment by
Tenant. In lieu of delivering insurance policies, Tenant may furnish a
Certificate of Insurance under a blanket insurance policy covering other
premises of Tenant, provided that an endorsement is contained thereon naming
Landlord as the insured and owner of the Premises and fixing a separate value
for the coverage allocable to the Premises.

            (c) Tenant shall, during the term of this Lease, at Tenant's sole
cost and expense, provide and keep in force for the benefit of Landlord and
Tenant as their interests may appear, public liability insurance policy or
policies of standard form in the State of New York, with single limits of One
Million ($1,000,000.00)/ Three Million ($3,000,000.00) Dollars bodily injury
including death, and Two Hundred Fifty Thousand ($250,000.00) Dollar limits for
property damage, such policy or policies to cover the Premises, inclusive of
sidewalks and parking facilities. The policies shall be obtained by Tenant and
certificates thereof delivered to Landlord upon the commencement of the term
thereof, with evidence of payment of the premiums thereon and shall be taken in
well rated insurance companies authorized to do business in the State of New
York.

            (d) Landlord shall keep the Building insured against loss by fire
with extended coverage, rent insurance covering rent and any additional rent for
the entire term of this lease, malicious mischief, storm damage, if available,
and against such other risks and such amounts as Landlord in its reasonable
discretion deems appropriate and necessary. Landlord agrees that all such
policies shall carry a waiver of subrogation. Tenant shall pay its pro rata
share (as such term is designated in Article 36) of all such insurance premiums
thereof within twenty (20) days after billing by Landlord. With respect to any
premium for any policies commencing or expiring before or after the Expiration
Date, as the case may be, such premium shall be pro rated based upon the number
of months included in the Term of this Lease during which policy was in effect.

                                     - 11 -

<PAGE>

                              DAMAGE OR DESTRUCTION

      13.   (a) If the Building or the Premises shall be damaged or destroyed
during the term by fire or other casualty covered by insurance then carried by
Landlord, to the extent permitted by the insurance proceeds collected by
Landlord, Landlord shall, with due diligence, repair and/or rebuild the same to
substantially the condition it was in immediately prior to such damage or
destruction. Tenant shall receive and hold the insurance proceeds from the
insurance carried by Tenant pursuant to Section 12(a) in trust for the purposes
of preparing the Premises for occupancy by Tenant in the condition obtaining
immediately prior to the casualty.

            (b) To the extent of payments received by Landlord with respect to
Rent insurance proceeds, Rent shall be abated proportionately during the period
in which, by reason of any such damage or destruction, there is a substantial
interference with the operation of the business of Tenant in the Premises,
having regard to the extent to which Tenant may be required to discontinue its
business in the Premises, and such abatement shall continue for the period
commencing with such destruction or damage and ending with the substantial
completion (as such term is hereinafter defined) by Landlord of such work or
repair and/or construction as Landlord is obligated to perform.

            (c) If the Building shall be damaged or destroyed to the extent of
fifty (50%) percent or more of the then replacement value thereof, exclusive of
foundations, by any cause, or should the damage be occasioned by a casualty for
which there was no insurance, either party shall have the right to terminate
this Lease on written notice to the other party served within thirty (30) days
after such damage or destruction.

            (d) If this Lease shall not be terminated as in this Article 13
provided, Landlord shall restore the Building and the Premises and subparagraphs
(a) and (b) of this Article 13 shall be applicable.

            (e) If at the time of the fire loss or destruction, Landlord is
unable to rebuild because of (i) any governmental bureau, department or
subdivision thereof shall impose restrictions on the manufacture, sale,
distribution and/or use of materials necessary in the construction of the
building, or (ii) Landlord is unable to obtain materials from its usual sources
due to strikes, lockouts, war, military operations and requirements, National
emergencies, etc., and such disability shall continue for four (4) months,
either party may cancel this Lease upon giving written notice to the other.

            (f) Tenant hereby waives any and all rights granted by Section 227
of the Real Property Law of the State of New York or any other law of like
import now or hereafter enacted.

            (g) As used herein the term "substantially completed" shall mean the
date when the Premises are suitable for occupancy by Tenant in accordance with
the plans and specifications with the exception of punch list items and
insubstantial details of construction, mechanical adjustment or decoration the
noncompletion of which does not materially interfere with Tenant's

                                     - 12 -

<PAGE>

use of the Premises; but if Landlord shall be delayed in such "substantial
completion" as a result of (i) Tenant's failure to furnish plans and
specifications; (ii) Tenant's request for materials, finishes or installations
other than Landlord's standard; (iii) Tenant's changes in said plans; (iv) the
performance or completion of any work, labor or services by a party employed by
Tenant; or (v) Tenant's failure to approve final plans, working drawings or
reflective ceiling plans, the commencement of the term of said lease and the
payment of rent thereunder shall be accelerated by the number of days of such
delay. The terms "term" and "term of this Lease" or words of similar import
shall be deemed to mean the entire period demised hereby including all renewals
or extensions.

                                  SUBORDINATION

      14.   (a) This Lease shall be subject and subordinate at all times to the
lien of any mortgages (i) now encumbering the Premises or the Building and land
of which the Premises are a part and to all advances made or hereafter to be
made upon the security thereof, and (ii) hereafter made provided same are made
to a lending institution. Tenant shall execute and deliver such further
instrument or instruments subordinating this Lease to the lien of any such
mortgage or mortgages as shall be desired by any mortgagee or proposed mortgagee
.. As used in this Lease, the term "lending institution" shall mean savings bank,
savings and loan association, bank or trust company, real estate investment
trust, insurance company organized under the laws of the United States or any
state thereof, university or Federal, State, Municipal or public, or private,
employee, welfare, pension or retirement fund or system.

            (b) If requested, Tenant shall within ten (10) days furnish to
Landlord balance sheets and operating statements or other financial reports
containing the same information for the past five (5) years and such other
information, financial or otherwise, concerning Tenant which may reasonably be
required by any prospective mortgagee.

            (c) Tenant shall, upon not less than ten (10) days' prior request by
Landlord, execute, acknowledge and deliver to Landlord a statement in writing
certifying (i) that this Lease is unmodified and in full force and effect (or if
there have been modifications that the same are in full force and effect as
modified and identifying the modifications), (ii) the dates to which the Rent
and other charges have been paid, and (iii) that so far as the person making the
certificate knows, Landlord is not in default under any provisions of this
Lease. It is intended that any such statement may be relied upon by any person
proposing to acquire Landlord's interest in this Lease, and prospective
purchaser of the Premises, or any prospective mortgagee, or assignee of any
mortgage upon the Premises.

            (d) So long as there is a first mortgage lien encumbering the
Premises, Landlord and Tenant shall not, without first obtaining the written
consent of such mortgagee, enter into any agreement, the effect of which would
be to (i) modify, cancel, terminate or surrender this Lease; (ii) grant any
concession in respect thereof; (iii) reduce the Rent or require the prepayment
of any rent in advance of the due date thereof; (iv) create any offsets or
claims against Rent; (v) assign in whole or in

                                     - 13 -

<PAGE>

part any of the rents therefrom of Tenant's interest in the Lease or sublet the
whole or any portion of the Premises except as provided in this Lease.

            (e) In the event of any act or omission by Landlord which would give
Tenant the right to terminate this Lease or to claim a partial or total
eviction, Tenant shall not exercise any such right until (i) it shall have
served written notice, by registered mail, of such act or omission, to Landlord
and to the holder of any mortgage whose name and address shall have been
furnished to Tenant in writing, at the last address so furnished, and (ii) a
reasonable period of time for remedying such act or omission shall have elapsed
following the serving of such notice; provided, however, that following the
serving of such notice, Landlord or said holder shall, with reasonable
diligence, have commenced and continued to remedy such act or omission or to
cause the same to be remedied.

                                 INDEMNIFICATION

      15. Tenant shall indemnify, defend, save and hold Landlord harmless from
and against any and all liability and damages and any and all injury, loss,
claim, damage or suit of every kind and nature including Landlord's reasonable
counsel fees, to any person, firm, association or corporation or to any property
arising out of or based upon related to or in any way connected with the use or
occupancy of the Premises or the conduct or operation of Tenant's business or in
violation of any environmental law, unless such injury, loss, claim or damage is
attributable to the negligence of Landlord or its agents, servants or employees.

                                 EMINENT DOMAIN

      16.   (a) If the whole of the Premises be taken under the power of eminent
domain for any public or quasi-public improvement or use, the term of this Lease
shall expire as of the date of vesting of title in the condemning authority.

            (b) If 50% or more of the Premises or Building is taken under the
power of eminent domain or for any public or quasi-public purpose, Landlord
shall have the option of canceling and terminating this Lease by written notice
served within sixty (60) days after the taking, and this Lease shall thereupon
expire on the 90th day after the serving by Landlord of said notice.

            (c) If less than 50% of the Premises or Building is taken, this
Lease shall remain in full force and effect, however, minimum annual rent and
Tenant's pro rata share for the purposes of payment of real estate taxes and
insurance premiums and any other additional rent required under this Lease which
is based upon the square foot area of the Premises in relation to the Building
shall be apportioned, pro rata with the number of square feet of the Building so
taken. If Tenant's parking area only is taken, then (i) if 25% or less is taken,
this Lease shall not terminate but minimum annual rent only shall, unless
Landlord provides substitute parking, substantially equal in size to that which
was taken, within sixty (60) days after the taking, for Tenant within reasonable
walking distance of the

                                     - 14 -

<PAGE>

Premises, be apportioned pro rata in accordance with the size and usefulness of
the portion taken; (ii) if more than 25% is taken, then, unless Landlord
provides substitute parking, substantially equal in size to that which was taken
and within reasonable walking distance of the Premises, within sixty (60) days
after the taking, this Lease shall at the option of either Landlord or Tenant,
by written notice served between the 61st and 90th days after the taking, be
cancelled and terminated effective sixty (60) days from the date of said taking
and if such notice is not served, this Lease shall not terminate but minimum
rent only shall be apportioned pro rata in accordance with the size and
usefulness of the portion taken

            (d) If this Lease is not terminated or terminable under the
provisions of this Article 16, Landlord shall, with reasonable dispatch and at
Landlord's sole cost and expense, restore, reconstruct and rebuild the remaining
portion of the Premises and the Building and all the appurtenances, equipment,
utilities, facilities and installations to their condition prior to such taking,
in such manner that the resulting building and parking area and driveways shall
be a complete and integrated structural, architectural and functional unit
similar to and of equal material and workmanship to the Building and parking
area and driveways prior to such taking, with all the appurtenances, equipment,
utilities, facilities and installations throughout in good working order so as
to put both the parking area and driveways and the Premises in proper condition
to be used by Tenant for the same purposes as the time of such taking, all in
accordance with plans and specifications to be prepared by Landlord, at the sole
cost and expense of Landlord.

            (e) If the nature of the work to be performed as a result of the
taking is such as to prevent the operation of the business then being conducted
thereon, or to make it impractical so to do, then the Rent and other charges to
be paid by Tenant under this Lease shall abate until substantial completion, as
such term is defined in Article 13 (g), of such work by Landlord.

            (f) In the event of any taking under the power of eminent domain,
Landlord shall be entitled to and shall receive the entire award provided that
Tenant shall be entitled to and shall receive any part of any award made for
Tenant's cost of moving Tenant's trade fixtures.

            (g) In the event of any dispute under the provisions of this Article
16, it shall be resolved by arbitration in Suffolk County, New York before three
disinterested and impartial arbitrators, in accordance with the rules of the
American Arbitration Association. Each arbitrator shall have a minimum of ten
(10) years experience in dealing with, renting or appraising industrial real
estate. All fees and expenses of the arbitrators and the American Arbitration
Association shall be borne equally by the parties.

                            RIGHT TO SUBLET OR ASSIGN

      17. The Tenant covenants that it shall not assign this Lease nor sublet
the Demised Premises or any part thereof without the prior written consent of
Landlord in each instance, which consent shall not be unreasonably withheld,
except on the conditions hereinafter stated. The Tenant may assign this Lease or
sublet the Demised Premises with Landlord's written consent,

                                     - 15 -

<PAGE>

providing:

      (a) That such assignment or sublease is for a use which is in compliance
with the then existing zoning regulations and the Certificate of occupancy;

      (b) That at the time of such assignment or subletting, there is no default
under the terms of this Lease on the Tenant's part;

      (c) That in the event of an assignment the assignee assume in writing the
performance of all of the terms and obligations of the within Lease;

      (d) That a duplicate original of said assignment or sublease be delivered
by registered mail to the Landlord at the address herein set forth within ten
(10) days from the said assignment or sublease;

      (e) Such assignment or subletting shall not, however, release the within
Tenant from its liability for the full and faithful performance of all of the
terms and conditions of this Lease;

      (f) If this Lease be assigned, or if the Premises or any part thereof be
under let or occupied by anybody other than Tenant, Landlord may after default
by Tenant collect rent from the assignee, undertenant or occupant, and apply the
net amount collected to the Rent herein reserved;

      (g) Notwithstanding anything contained in this paragraph 17 to the
contrary, no assignment or underletting shall be made by Tenant in any event
until Tenant has offered to terminate this Lease as of the last day of any
calendar month during the term hereof and to vacate and surrender the Demised
Premises to Landlord on the date fixed in the notice served by Tenant upon
Landlord (which date shall be prior to the date of such proposed assignment or
the commencement date of such proposed lease), and Landlord within ninety (90)
days after receipt thereof has not accepted in writing the offer by Tenant to
cancel and terminate said Lease and to vacate and surrender the Demised
Premises. Simultaneously with said offer to terminate this Lease, Tenant shall
advise the Landlord, in writing, of the name and address of the proposed
assignee or subtenant, and all the terms, covenants, and conditions of the
proposed sublease or assignment including the exchange of all goods and
services. Landlord shall have no obligation to consent or recapture, unless and
until Tenant has a bona fide offer to assign or sublet this Lease.

      (h) Tenant may, without the consent of Landlord, and without offering the
Landlord the option to terminate this Lease, assign this Lease to an affiliated
(i.e. a corporation 20% or more of whose capital stock is owned by the same
stockholders owning 20% of Tenant's capital stock or more), parent or subsidiary
corporation of Tenant or to a corporation to which it sells or assigns all or
substantially all of its assets or with which it may be consolidated or merged,
provided such purchasing consolidated, merged or affiliated or subsidiary
corporation shall, in writing assume and agree to perform all of the obligations
of Tenant under this Lease and it shall deliver such assumption with a copy of
such assignment to Landlord within ten (10) days thereafter, and provided
further that Tenant

                                     - 16 -

<PAGE>

shall not be released or discharged from any liability under this Lease by
reason of such assignment.

      (i) Whenever Tenant shall claim under this Article or any other part of
this Lease that Landlord has unreasonably withheld or delayed its consent to
some request of Tenant, Tenant shall have no claim for damages by reason of such
alleged withholding or delay, and Tenant's sole remedy thereof shall be a right
to obtain specific performance or injunction, but in no event with recovery of
damages.

                                RIGHT TO INSPECT:
                                  POSTING SIGNS

      18.   (a) Tenant shall permit Landlord or Landlord's agents to enter the
Premises at all reasonable hours on reasonable notice, with a representative of
Tenant present except in an emergency for the purpose of (i) inspecting the
same; (ii) making repairs required by the terms of this Lease to be made by
Tenant and which Tenant neglects or refuses to make; (iii) exhibiting the
Premises to prospective purchasers and mortgagees; (iv) during the twelve (12)
months preceding the expiration of this Lease, exhibiting the Premises to
brokers and prospective tenants; (v) for the purpose of making any additions or
alterations to the Building or to any surrounding building; and (vi) to inspect
the Premises and Tenant's operation for the purpose of determining the existence
of any release of hazardous substance and Tenant's compliance with environmental
laws, provided, in each and every case, Landlord shall use its best efforts not
to unreasonably interfere with the conduct of Tenant's business at the Premises.
The Tenant reserves the right to limit inspections or access to areas within the
Premises leased to the Tenant to protect proprietary or confidential information
of Tenant's business. In that regard, Tenant shall have one day to cover or
conceal proprietary or confidential material. If at any time entry shall be
deemed necessary for the statutory inspection or protection of the Premises or
for making any emergency repairs, whether for the benefit of Tenant or not,
Landlord or Landlord's agents may enter the Premises upon notification of the
Tenant without rendering Landlord or its agents liable to Tenant for damages by
reason thereof.

            (b) During the nine (9) months preceding the end of the term,
Landlord may post and maintain, without hindrance or molestation, signs or
notices indicating that the Premises are for sale and/or for rent; however, no
such sign shall be affixed to a door or window of the Premises.

                                   BANKRUPTCY

      19.   (a) If, at any time prior to the Commencement Date, or at any time
during the Term there shall be filed by or against Tenant in any court, pursuant
to any statute, either of the United States or of any State, a petition in
bankruptcy or insolvency or for reorganization or for the appointment of a
receiver or trustee of all or a portion of Tenant's property, and within thirty
(30) days thereof Tenant fails to secure a discharge thereof or if Tenant makes
an assignment for the benefit of creditors or petition for or enters into an
arrangement, this Lease, at the option of Landlord exercised

                                     - 17 -

<PAGE>

within a reasonable time after notice of the happening of any one or more of
such events, may be cancelled and terminated, in which event neither Tenant nor
any person claiming through or under Tenant by virtue of any statute or of an
order of any court shall be entitled to possession or to remain in possession of
the premises but shall forthwith quit and surrender the Premises, and Landlord,
in addition to any other rights may retain any rent, security, deposit or monies
received by it from Tenant or others in behalf of Tenant as partial liquidated
damages.

            (b) In the event of the termination of this Lease pursuant to
paragraph (a) of this Article 19, Landlord shall forthwith, notwithstanding any
other provision of this Lease to the contrary, be entitled to recover from
Tenant as and for liquidated damages an amount equal to the difference between
the Rent reserved hereunder for the unexpired portion of the term and the then
fair and reasonable rental value of the Premises for the same period. In the
computation of such damages the difference between any installment of Rent
becoming due hereunder after the date of termination and the fair and reasonable
rental value of the Premises for the period for which such installment was
payable shall be discounted to the date of termination at the rate of 4% per
annum. If the premises, or any part thereof, be relet by Landlord for the
unexpired term of said Lease, the amount of rent reserved upon such reletting
shall prima facie be the fair and reasonable rental value for the part or the
whole of the Premises so relet during the term of the reletting. Nothing herein
contained shall limit or prejudice the right of Landlord to prove for and obtain
as liquidated damages by reason of such termination an amount equal to the
maximum allowed by any statute or rule of law, in effect at the time when, and
governing the proceeding in which, such damages are to be proved, whether or not
such amount be greater, equal to, or less than the amount of the difference
referred to above.

                                     DEFAULT

      20.   (a) If Tenant shall fail to pay any installment of Rent, or any
additional rent or 1. other charges as and when the same are required to be paid
hereunder, and such default shall continue for a period of ten (10) days after
notice, or if Tenant defaults in fulfilling any of the other covenants of this
Lease and such default shall continue for a period of twenty (20) days after
notice, or if Tenant shall dissolve or liquidate or commence to dissolve or
liquidate, or if the Premises become vacant or deserted, or if the said default
or omission complained of shall be of such a nature that the same cannot be
completely cured or remedied within said twenty (20) day period, and if Tenant
shall not have diligently commenced curing such default within such twenty (20)
day period, and shall not thereafter with reasonable diligence and in good faith
proceed to remedy or cure such default, then, in any one or more of such events,
Landlord may serve a written three (3) day notice of cancellation of this Lease
upon Tenant, and upon the expiration of said three (3) days, this Lease and the
term thereunder shall end and expire as fully and completely as if the date of
expiration of such three (3) day period were the day hereon definitely fixed for
the end and expiration of this Lease, and the term thereof, and Tenant shall
then quit and surrender the Premises to Landlord but Tenant shall remain liable
as hereinafter provided. If Tenant shall default (i) in the timely payment of
any item of Rent, and such default shall continue or be repeated for two
consecutive months or for a total of four months in any period of twelve months,
or (ii) in the performance of any particular term, condition or covenant of this
Lease more than six times in any period of six months, then, notwithstanding
that such defaults shall have

                                     - 18 -

<PAGE>

each been cured within the period after notice, if any, as provided in this
Lease, any further similar default shall be deemed to be deliberate and Landlord
thereafter may serve a written ten (10) day notice of termination of this Lease
to tenant without affording to Tenant an opportunity to cure such further
default.

            (b) If (i) the notice provided for in paragraph (a) above shall have
been given, and the term shall expire as aforesaid; or (ii) if any execution or
attachment shall be issued against Tenant or any of Tenant's property whereupon
the Premises shall be taken or occupied or attempted to be taken or occupied by
someone other than Tenant, or (iii) if Tenant shall fail to move into or take
possession of the Premises within fifteen (15) days after the Commencement Date,
then, and in any of such events Landlord may re-enter the Premises and
dispossess Tenant by summary proceedings and the legal representative of Tenant
or other occupant of the Premises and remove their effects and hold the Premises
as if this Lease had not been made. If Tenant shall make default hereunder prior
to the date fixed as the commencement of any renewal or extension of this Lease,
Landlord may cancel and terminate such renewal or extension agreement by written
notice.

                              REMEDIES OF LANDLORD

      21. In case of any such default, re-entry, expiration and/or dispossess by
summary proceedings or otherwise, (i) Rent shall become due thereupon and be
paid up to the time of such re-entry, dispossess and/or expiration, together
with such expenses as Landlord may incur for legal expenses, attorneys' fees,
brokerage, and/or putting the Premises in good order or for preparing the same
for re-rental; (ii) Landlord may relet the Premises or any part or parts
thereof, either in the name of Landlord or otherwise, for a term or terms, which
may at Landlord's option be less than or exceed the period which would otherwise
have constituted the balance of the term of this Lease and may grant concessions
or free rent; and/or (iii) Tenant or the legal representatives of Tenant shall
also pay Landlord as liquidated damages for the failure of Tenant to observe and
perform said Tenant's covenants herein contained, any deficiency between the
Rent herein reserved and/or covenanted to be paid and the net amount, if any, of
the rents collected on account of the lease or leases of the Premises for each
month of the period which would otherwise have constituted the balance of the
term of this Lease. The failure or refusal of Landlord to relet the Premises or
any part or parts thereof shall not release or affect Tenant's liability for
damages. In computing such liquidated damages there shall be added to the said
deficiency such expenses as Landlord may incur in connection with reletting such
as legal expenses reasonable attorneys' fees, brokerage and for keeping the
Premises in good order or preparing the same for reletting. Any such liquidated
damages shall be paid in monthly installments by Tenant on the rent day
specified in this Lease and any suit brought to collect the amount of the
deficiency for any month shall not prejudice in any way the rights of Landlord
to collect the deficiency for any subsequent month by a similar proceeding.
Landlord, at Landlord's option may make such alterations, repairs, replacements
and/or decorations in the Premises as Landlord, in Landlord's sole judgment,
considers advisable and necessary for the purpose of reletting the Premises; and
the making of such alterations and/or decorations shall not operate or be
construed to release Tenant from liability hereunder as aforesaid. Landlord
shall in no event be liable for the failure to relet the Premises, or in the
event that the Premises are relet, for failure to collect the rent under such
reletting. In the event of a

                                     - 19 -

<PAGE>

breach or threatened breach by Tenant of any of the covenants or provisions
hereof, Landlord shall have the right of injunction and the right to invoke any
remedy allowed at law or in equity as if re-entry, summary proceedings and other
remedies were not herein provided for. Mention in this Lease of any particular
remedy, shall not preclude Landlord from any other remedy, in law or in equity.
In all cases hereunder, and in any suit, action or proceeding of any kind
between the parties, it shall be presumptive evidence of the fact of the
existence of a charge being due, if Landlord shall produce a bill, notice or
certificate of any public official entitled to give such bill, notice or
certificate to the effect that such charge appears of record on the books in his
office and has not been paid.

                                 ATTORNEY'S FEES

      22. If Tenant shall at any time be in default hereunder, and if Landlord
shall institute an action or summary proceeding against Tenant based upon such
default and Landlord shall be successful, then Tenant shall reimburse Landlord
for the expenses of reasonable attorney's fees and disbursements incurred by
Landlord. The amount of such expenses shall be deemed to be "additional rent"
hereunder and shall be due from Tenant to Landlord on the first day of the month
following the incurring of such expenses.

                WAIVER OF REDEMPTION, COUNTERCLAIM, TRIAL BY JURY

      23. Tenant hereby expressly (i) waives any and all rights of redemption
granted by or under any present or future laws in the event of Tenant being
evicted or dispossessed for any cause, or in the event of Landlord obtaining
possession of the Premises, by reason of the violation by Tenant or any of the
covenants and conditions of this Lease or otherwise; (ii) waives all rights to
stay summary proceedings; and (iii) agrees that it shall not interpose any
counterclaim in any summary proceeding or any action based on non-payment of
Rent or any other payments or charges required to be made by Tenant to Landlord.
Landlord and Tenant hereby waive trial by jury in any action, proceeding or
counterclaim brought by either of them against the other with respect to any
matters arising out of or connected with this Lease, the relationship of
Landlord and Tenant, Tenant's use or occupancy of the Premises, and/or any claim
of injury or damage and any emergency statutory or any other statutory remedy.

                                    NO WAIVER

      24. No act or thing done by Landlord or Landlord's agents during the Term
hereby demised shall be deemed an acceptance of a surrender of the Premises, and
no agreement to accept such surrender shall be valid unless in writing signed by
Landlord. No employee of Landlord or of Landlord's agents shall have any power
to accept the keys of the Premises prior to the termination of the Lease. The
delivery of keys to any employee of Landlord or of Landlord's agents shall not
operate as a termination of the Lease or a surrender of the Premises. The
failure of Landlord to seek redress for violation of, or to insist upon the
strict performance of, any covenant, or condition of this Lease

                                     - 20 -

<PAGE>

shall not prevent a subsequent act, which would have originally constituted a
violation from having all the force and effect of an original violation. The
receipt by Landlord of Rent with knowledge of the breach of any covenant of this
Lease shall not be deemed a waiver of such breach. No provision of this Lease
shall be deemed to have been waived by Landlord unless such waiver be in writing
signed by Landlord. The words "re-enter" and "re-entry" as used herein are not
restricted to their technical legal meaning.

                                   END OF TERM

      25. On the last day of the term hereof or on the earlier termination
thereof, Tenant shall peaceably and quietly, leave, surrender and deliver the
premises up to Landlord, broom clean, together with any and all alterations,
changes, additions and improvements which may have been made upon the Premises
(except movable furniture or movable trade fixtures installed at the expense of
Tenant) in good repair and good order and safe condition except for reasonable
wear and tear and damage by fire, other insured casualty or the elements
excepted, and Tenant shall remove all of its personal property from the Premises
and any property not so removed shall be deemed to have been abandoned and may
be appropriated, sold, stored, destroyed or otherwise disposed of by Landlord
without notice to Tenant and without obligation to account therefore. Tenant's
obligations under this Article 25 shall survive the expiration or other
termination of this Lease.

                                     BROKER

      26. Tenant and Landlord mutually represent that this Lease was brought
about by Metro Realty Services, LLC, as broker, and all negotiations with
respect to this Lease were conducted exclusively with said broker. Tenant agrees
that if any claim is made for commissions by any broker, other than said broker,
through or on account of any acts of Tenant, Tenant will hold Landlord free and
harmless from any and all liabilities and expenses in connection therewith,
including Landlord's reasonable attorney's fees. Landlord shall pay said broker
a commission pursuant to a separate agreement.

                                 QUIET ENJOYMENT

      27. Landlord covenants that if and so long as Tenant pays the Rent, and
additional rent, and other charges reserved by this Lease, and performs all the
terms, covenants and conditions of this Lease on the part of Tenant to be
performed, Tenant shall quietly enjoy the premises subject, however, to the
terms of this Lease and of any mortgage or mortgages to which this Lease by its
terms is subject.

                            NONLIABILITY OF LANDLORD

                                     - 21 -

<PAGE>

      28.   (a) Landlord and Landlord's agents and employees shall not be liable
for, and Tenant waives all claims for, loss or damage to Tenant's business or
damage to person or property sustained by Tenant resulting from any accident or
occurrence ( except to the extent caused by or resulting from the negligence of
Landlord, its agents, servants or employees other than accidents or occurrences
against which Tenant is insured) in or upon the Premises or the Building,
including, but not limited to, claims for damage resulting from: (i) any
equipment or appurtenances becoming out of repair; (ii) injury done or
occasioned by wind; (iii) any defect in or failure of plumbing, heating or air
conditioning equipment, electric wiring or installation thereof, gas, water, and
steam pipes, stairs, porches, railings or walks;(iv)broken glass; (v) the
backing up of any sewer pipe or downspout; (vi) the bursting, leaking or running
of any tank, tub, washstand, water closet, waste pipe, drain or other pipe or
tank in, upon or about the Building or the Premises; (vii) the escape of steam
or hot water; (viii) water, snow or ice being upon or coming through the roof,
skylight, trapdoor, stairs, doorways, show windows, walks or any other place
upon or near the Building or the Premises or otherwise; (ix) the falling of any
interior fixture, plaster, tile or stucco; and (x) any act, omission or
negligence of other tenants, licensees or of any other persons or occupants of
the Building or of adjoining or contiguous buildings or of owners of adjacent or
contiguous property.

            (b) If Landlord or a successor in interest is an individual (which
term as used herein includes aggregates of individuals such as joint ventures,
general or limited partnerships or associates) such individual shall be under no
personal liability with respect to any of the provisions of this Lease, and if
such individual hereto is in breach or default with respect to its obligations
under this Lease, Tenant shall look solely to the equity of such individual in
the land and building of which the Premises form a part for the satisfaction of
Tenant's remedies and in no event shall Tenant attempt to secure any personal
judgment against any partner, employee or agent of Landlord by reason of such
default by Landlord.

            (c) The word "Landlord" as used herein means only the owner in fee
for the time being of the Premises, and in the event of any sale of the
Premises, Landlord shall be and hereby is entirely freed and relieved of all
covenants and obligations of Landlord hereunder and it shall be deemed and
construed without further agreement between the parties or between the parties
and the purchaser of the Premises, that such purchaser has assumed and agreed to
carry out any and all covenants and obligations of Landlord hereunder.

                                  NO ABATEMENT

      29. No diminution or abatement of Rent or other compensation shall be
claimed or allowed for inconvenience or discomfort arising from the making of
additions, repairs or improvements to the Building or to its equipment and
fixtures, nor for any space taken to comply with any law, ordinance or order of
a governmental authority except as specifically provided in this Lease.

                                     - 22 -

<PAGE>

                         APPLICABLE LAW AND CONSTRUCTION

      30. The laws of the State of New York shall govern the validity,
performance and enforcement of this Lease. The invalidity or unenforceability of
any provision of this Lease shall not affect or impair any other provision. The
submission of this document to Tenant for examination does not constitute an
offer to lease, or a reservation of or option to lease, and becomes effective
only upon execution and delivery thereof by Landlord and Tenant. All
negotiations, considerations, representations and understandings between the
parties are incorporated in this Lease. Landlord or Landlord's agents have made
no representations or promises with respect to the Building or the Premises
except as herein expressly set forth. The headings of the several articles and
sections contained herein are for convenience only and do not define, limit or
construe the contents of such articles or sections. Whenever herein the singular
number is used, the same shall include the plural, and the neuter gender shall
include the masculine and feminine genders. Neither this Lease nor any provision
hereof may be changed, waived, discharged or terminated orally, but only by an
instrument in writing signed by the party against whom enforcement of the
change, waiver, discharge or termination is sought.

                 CONSTRUCTION ON ADJACENT PREMISES OR BUILDINGS

      31. If any construction is in progress at, on or about the Building of any
excavation or other building operation shall be about to be made or shall be
made on any premises adjoining or above or below the Premises or on any portion
of the Building, Tenant shall permit Landlord or the adjoining owner or tenant
and their respective agents, employees, licensees and contractors, to enter the
Premises and to shore the foundations and/or walls thereof, and to erect
scaffolding and/or protective barricades around and about the Premises (but not
so as to preclude entry thereto) and to do any act or thing necessary for the
safety or preservation of the Premises. Tenant's obligations under this Lease
shall not be affected by any such construction or excavation work, shoring-up,
scaffolding or barricading. Landlord shall not be liable in any such case for
any inconvenience, disturbance, loss of business or any other annoyance arising
from such construction, excavation, shoring-up, scaffolding or barricades, but
Landlord shall use its best efforts so that such work will cause as little
inconvenience, annoyance and disturbance to Tenant as possible consistent with
accepted construction practice in the vicinity and so that such work shall be
expeditiously completed.

                                UTILITY EASEMENT

      32. This Lease is subject and subordinate to any utility, gas, water and
electric light or telephone line easements now or hereafter granted, affecting
the Premises, the Building or the land upon which they are located, provided
that the same do not unreasonably interfere with the Building nor unreasonably
interfere with the use of the Premises by Tenant.

                                     NOTICES

                                     - 23 -

<PAGE>

      33. All notices to be given hereunder shall be in writing by certified or
registered mail addressed to either of the parties at the address hereinabove
given or at any other subsequent mailing address they may indicate by notice.
Any notice given hereunder by mail shall be deemed delivered when deposited in a
United States general or branch post office, addressed as above provided. Tenant
hereby authorizes and designates the manager of the Premises as an officer
authorized to accept and receive service of process.

                             BINDING EFFECT OF LEASE

      34. The covenants, agreements and obligations contained in this Lease
shall, except as herein otherwise provided, extend to, bind and inure to the
benefit of the parties hereto and their respective personal representatives,
heirs, successors and permitted assigns. Each covenant, agreement, obligation or
other provision herein contained shall be deemed and construed as a separate and
independent covenant of the party bound by, undertaking or making the same, not
dependent on any other provision of this Lease unless otherwise expressly
provided.

                               UNAVOIDABLE DELAYS

      35. Whenever Landlord shall be required by the terms of this Lease or
otherwise to make any improvements or repairs, to furnish any service, to
perform any construction or reconstruction or to fulfill any other obligation
hereunder, and Landlord shall be delayed in, or prevented from, so doing,
Landlord shall not be deemed to be in default and this Lease and the obligation
of Tenant to pay Rent hereunder and to perform all of the other covenants and
agreements hereunder on the part of Tenant to be performed shall not be
affected, impaired, or excused, and any time limit herein fixed for Landlord's
performance thereof shall be extended if and so long as Landlord's
non-performance, delay or default shall be caused by reason of strike or labor
troubles, accidents, any rule, order or regulation of any department, or
subdivision thereof of any governmental agency, governmental preemption in
connection with any national emergency or war, the conditions of supply and
demand which have been or are affected by war or other emergency or any other
cause beyond Landlord's reasonable control.

                                  APPORTIONMENT

      36. As used in this Lease, the term "Tenant's pro rata share" shall mean
12.33 % of the charge or item in question. In the event Landlord shall increase
the size of the Building or in the event Tenant shall lease additional space in
the Building, Tenant's pro rata share shall be adjusted to reflect the new ratio
which the size of the Premises bears to the size of the Building. In the event
Landlord and Tenant are unable to enter into an agreement in writing setting
forth Tenant's new pro rata share within thirty (30) days after submittal of
such an agreement by Landlord to Tenant or Tenant to Landlord, the dispute shall
be resolved by arbitration in accordance with the provisions of paragraph 16(g).

                                     - 24 -

<PAGE>

                                    SECURITY

      37. Tenant has deposited with Landlord the sum of $7,287.00 as security
for the faithful performance and observance by Tenant of the terms, provisions
and conditions of this Lease; it is agreed that in the event Tenant defaults in
respect of any of the terms, provisions and conditions of this lease, including,
but not limited to, the payment of rent and additional rent, Landlord may use,
apply or retain the whole or any part of the security so deposited to the extent
required for the payment of any rent or additional rent or any other sum as to
which Tenant is in default or for any sum which Landlord may expend or may be
required to expend by reason of Tenant's default in respect of any of the terms,
covenants and conditions of this lease, including but not limited to, any
damages or deficiency in the re-letting of the premises, whether such damages,
or deficiency accrued before or after summary proceedings or other re-entry by
Landlord. In the event that Tenant shall fully and faithfully comply with all of
the terms, covenants and conditions of this Lease, the security shall be
returned to Tenant after the date fixed as the end of the Lease and after
delivery of entire possession of the Demised Premises to Landlord. In the event
of a sale of the land and building or leasing of the building, of which the
demised premises form a part, Landlord shall have the right to transfer the
security to the vendee of lessee and Landlord shall have the right to transfer
the security to the vendee or lessee and Landlord shall thereupon be release by
Tenant from all liability for the return of such security; and Tenant agrees to
look to the new Landlord solely for the return of said security; and it is
agreed that the provisions hereof shall apply to every transfer or assignment
made of the security to a new Landlord. Tenant further covenants that it will
not assign or encumber or attempt to assign or encumber the monies deposited
herein as security and that neither Landlord not its successors or assigns shall
be bound by any such assignment, encumbrance, attempted assignment or attempted
encumbrances.

      IN WITNESS WHEREOF, the parties have executed this agreement as of the day
and year first above written.

                                                MARLMAR ASSOCIATES, LLC

                                            By:  /s/ Craig Padover
                                                --------------------------------

                                                NASTECH PHARMACEUTICAL CO., INC.

                                            By:  /s/ Gregory Weaver
                                                --------------------------------

                                     - 25 -exv10w71

 

1

Exhibit 10.71

LICENSE AGREEMENT BETWEEN STEMCELLS, INC. AND RENEURON LIMITED

[***] = Information
redacted pursuant to a confidential treatment request. An unredacted
version of this exhibit has been filed separately with the Securities
and Exchange Commission.

LICENSE AGREEMENT

THIS LICENSE AGREEMENT (the “Agreement”), effective as of the 1st day of July, 2005 (the “Effective
Date”), is between STEMCELLS, INC., a Delaware corporation having its principal place of business
at 3155 Porter Drive Palo Alto CA, USA 94304 (“SCI”) and RENEURON LIMITED (company no. 03375897) a
corporation organized under the laws of the United Kingdom and having its principal place of
business at 10 Nugent Road, Surrey Research Park, Guilford, Surrey GU27AF, UK (“ReN”). SCI and ReN
are each individually referred to herein as a “Party” and are collectively referred to herein as
the “Parties.”

WHEREAS:

	A.	 	SCI owns or controls (with the right to sub-license) the SCI Patent Rights and ReN owns or
controls (with the right to sub-license) the ReN Patent Rights, each as hereinafter defined;
	 
	B.	 	SCI wishes to grant to ReN, and ReN wishes to secure from SCI, certain rights under the SCI
Patent Rights within the ReN Field, as set forth herein;
	 
	C.	 	ReN wishes to grant to SCI, and SCI wishes to secure from ReN, certain rights under ReN
Patent Rights as well as certain rights with respect to the c-MycER Cells, as set forth
herein.
	 
	D.	 	Simultaneously with the execution of this Agreement the Parties, together with ReNeuron Group
PLC, ReNeuron (UK) Limited and certain Existing Shareholders (as defined therein) have entered
into the Subscription Agreement (as hereafter defined) in consideration of the entering into
of this Agreement pursuant to which SCI is granted certain rights to be issued shares in
ReNeuron Group PLC.

NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:

	1.	 	DEFINITIONS

The following capitalized terms used in this Agreement shall have the meanings given below unless
the context clearly requires otherwise.

	1.01	 	“Affiliate” shall mean any corporation, company, partnership, joint venture and/or firm that
controls, is controlled by, or is under common control with a party. For purposes of this
definition, “control” shall mean (a) in the case of a corporate entity, possession, directly
or indirectly, of the power to direct the management and policies of such corporate entity,
whether through ownership of securities, by contract or agency or otherwise; and (b) in the
case of non-corporate entities, direct or indirect ownership of

 

2

	 	 	more than 50% of the equity interest with the power to direct the management and policies of
such non-corporate entities.
	 
	1.02	 	“Cell Line” shall mean c-MycER Cells of clonal origin, differentiated by the integration site
of the c-MycER Cell insert.
	 
	1.03	 	“Cells” shall mean cultures of neural Stem Cells to the full extent described or claimed in
the SCI Patent Rights and shall include all progeny and derivatives of such stem cells
(including Progenitor Cells and their progeny and Stem Cells and their progeny) and “Cell”
shall mean one of such cells.
	 
	1.04	 	“c-MycER Cells” shall mean human neural Stem Cells and Progenitor Cells conditionally
immortalized with the c-Myc oncogene with an estrogen response element under tamoxifen
control. c-MycER Cells shall not include human neural Stem Cells or Progenitor Cells or their
progeny or derivatives that are not conditionally immortalized with c-myc under the control of
the estrogen response element.
	 
	1.05	 	A “Change of Control” of a Party (or an the Affiliate of a Party to which assignment has
occurred pursuant to Section 8.01, below), shall be deemed to have occurred at such time as
any “person” or “group” (as such terms are used for purposes of Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934) that, on the Effective Date, is not the “beneficial
owner” (as such term is used in Rule 13d-3 under the Securities Exchange Act of 1934) directly
or indirectly, of more than fifty percent (50%) of the total securities of such Party
entitled to vote for directors of such Party, becomes (except as the result of a Qualified
Investment in such Party), directly or indirectly, in one or more transactions, the beneficial
owner (as so defined), directly or indirectly, of more than fifty percent (50%) of the total
securities of such Party entitled to vote for directors of such Party. For purposes of this
definition a “Qualified Investment” shall mean a bona fide cash investment in the applicable
Party by a financial institution, venture capitalist or similar entity (excluding a venture
capital affiliate or similar financing arm of a collaborator or commercial partner of such
Party).
	 
	1.06	 	“Confidential Information” shall mean any and all information disclosed by a Party (the
“Discloser”) to the other Party (the “Recipient”) hereunder that is clearly marked or
identified as “confidential” including all information relating to any technology, product,
process, business information or other intellectual property of such Person (including, but
not limited to, owned or license intellectual property rights, data, know-how, samples,
technical and non-technical materials and specifications, as well as any business plan or
other confidential commercial information of or about such Person). “Confidential
Information” shall further include the terms and conditions of this Agreement not otherwise
made public by agreement of the Parties or as required by law as well as information arising
or disclosed pursuant to Section 2.03(c), 3.03 or 3.06 or Article 6 of this Agreement.
Notwithstanding the foregoing, information shall not be considered “Confidential Information”
to the extent that the Recipient can demonstrate by written record or other suitable physical
evidence that:

	 	(a)	 	such specific information was lawfully in the Recipient’s possession or control
prior to the time such information was disclosed to the Recipient by the Discloser;

 

3

	 	(b)	 	such specific information was independently developed by one or more employees
of the Recipient without the use of such Confidential Information;
	 
	 	(c)	 	such specific information was lawfully obtained by the Recipient from a third
party under no obligation of confidentiality to the Discloser; or
	 
	 	(d)	 	such specific information was at the time it was disclosed or obtained by the
Recipient, or thereafter became, publicly known otherwise than through a breach of the
Recipient’s obligations hereunder.

	1.07	 	“Control” shall mean the possession by a Party of a license and the right to grant a
sub-license thereunder to the other Party in accordance with this Agreement.
	 
	1.08	 	“Dollar(s)” (including the symbol “$”) shall mean United States dollar(s).
	 
	1.09	 	“Field” shall mean the ReN Field or the SCI Field, as applicable.
	 
	1.10	 	“First Commercial Sale” shall mean, with respect to a Product and country, the first sale of
such Product in such country after receipt of all applicable marketing and pricing approvals
(if any) have been granted by the applicable governing health authority.
	 
	1.11	 	“Fully Diluted Share Capital” shall have the meaning set forth for such term in the
Subscription Agreement.
	 
	1.12	 	“Gross Revenues” shall mean the gross revenues received by a Party, any Affiliate of a Party
and any sub-licensee hereunder of a Party from the sale of any Product to, or the commercial
use of any Product by, any Person other than that Party, its Affiliate or sub-licensee
hereunder. Gross Revenues shall not include any revenues resulting from the use of Product by
a Party or its Affiliates or sub-licensee hereunder solely for research and development (not
done for third party compensation (which does not include expense reimbursement)), regulatory
clearance, non-commercial product testing or quality control purposes.
	 
	1.13	 	“IND” shall mean an Investigational New Drug application filed with the United States Food
and Drug Administration or equivalent application to the applicable governmental authority of
another country, required to commence human clinical testing of a Product.
	 
	1.14	 	“Indication” shall mean a manifestation of a recognized disease or condition, one or more
symptoms of a recognized disease or condition, or adjunctive therapy for a disease or
condition.
	 
	1.15	 	“License,” in the case of a license hereunder from one Party to the other Party shall include
a sub-license to such of a Party’s Patent Rights as have been in-licensed by from a third
party. A Party may be referred to as “owner” of its Patent Rights even though some of such
rights may have been in-licensed by from a third party.
	 
	1.16	 	“Net Sales” shall mean, with respect to any Product and any Party (including such Party’s
Affiliates and sub-licensees hereunder), the aggregate Dollar equivalent of such Party’s Gross
Revenues (including Gross Revenues of such Party’s Affiliates and sub-licensees hereunder)
with respect to such Product, less:

(a) credits, allowances or charge-backs, if any, granted on account of price adjustments,
recalls, rejection, return or spoilage of such Product previously sold,

 

4

(b) excise, import and export taxes, sales, use, value added and other direct taxes incurred
on the sale of such Product, customs duties, surcharges or other taxes imposed upon or paid
with respect to any sale or use generating such Gross Revenues (excluding income or
franchise taxes of any kind),

(c) the cost of insurance, packing and shipping Product in connection with such sale or use;
and

(d) cash, quantity or other discounts, and credits, rebates or price reductions for such
Product, given under price reduction programs that are consistent with industry practices.

	1.17	 	“Ordinary Shares” shall mean “TopCo Shares” as such term is defined in the Subscription
Agreement.
	 
	1.18	 	“Patent Rights” shall mean the SCI Patent Rights and/or the ReN Patent Rights, as the case
may be.
	 
	1.19	 	“Person” shall mean any individual, corporation, governmental body or other legal entity.
	 
	1.20	 	“Phase I Clinical Trial” shall mean a human clinical trial in any country that is intended to
evaluate the safety and/or pharmacological effect of a product in subjects, or that would
otherwise satisfy the requirements of 21 CFR 312.21(a), or its foreign equivalent.
	 
	1.21	 	“Phase II Clinical Trial” shall mean a human clinical trial in any country that is intended
to evaluate the safety and effectiveness of a product for a particular Indication or
Indications in patients with the disease or Indication under study, or that would otherwise
satisfy the requirements of 21 CFR 312.21(b), or its foreign equivalent.
	 
	1.22	 	“Product” shall mean an SCI Product, an ReN Product, an ReN NCT or an Unregulated Cells, as
the case may be.
	 
	1.23	 	“Progenitor Cell” shall mean an undifferentiated Cell capable of limited proliferation and
the production of differentiated functional progeny.
	 
	1.24	 	“ReN c-MycER Cell Technology” shall mean all know-how, data, biological materials, inventions
and other proprietary information and technology owned or Controlled by ReN and relating to
the manufacture, sale, use or manipulation of c-MycER Cells.
	 
	1.25	 	“ReN Discovery Field” shall mean use of c-MycER Cells for the research, discovery, screening
and development of new non-cellular therapeutics for use in the treatment of any disease state
or condition in humans.
	 
	1.26	 	“ReN Field” shall mean the ReN Transplantation Field, the ReN Discovery Field, and the ReN
Reagents Field.
	 
	1.27	 	“ReN NCT” shall mean a non-cellular therapeutic molecule, i.e., a new chemical or
biological molecule, identified or developed by ReN through the practice of inventions claimed
in or covered by one or more of the SCI Patents or molecules derived therefrom, which
identification or development occurred during the term of a Valid Claim of any such SCI
Patent.
	 
	1.28	 	“ReN Patent Rights” shall mean:

(a) the patents and patent applications listed on Schedule 1.28 attached hereto (the “ReN
Patents”),

 

5

(b) any and all United States or foreign patents and patent applications corresponding to
any of the foregoing patents and patent applications, whether now existing of hereafter
filed,

(c) any provisionals, substitutions, divisionals, reissues, renewals, continuations,
continuations-in-part (but only to the extent not directed to new matter), extensions
(including patent term extensions), substitute applications and inventors’ certificates
arising from, or based upon, any of the foregoing patents or patent applications, in respect
of the foregoing;

(d) any patents issuing from any of the foregoing patent applications, and

(e) any issued patents now or hereafter owned or Controlled by ReN or an Affiliate of ReN to
the extent necessary or useful for the manufacture, use or sale of any product or method
utilizing c-MycER Cells or ReN c-MycER Cell Technology in the SCI Field.

	1.29	 	“ReN Product” shall mean a c-MycER Cell or a product utilizing a c-MycER Cell identified or
developed, in whole or in part, through the practice by ReN or a sub-licensee of ReN of
inventions claimed in or covered by one or more of the SCI Patents, which practice occurred
during the term of a Valid Claim of any such SCI Patent.
	 
	1.30	 	“ReN Reagents Field” shall mean use of Unregulated Cells for research and other non-clinical
and non-therapeutic purposes (not including administration to humans).
	 
	1.31	 	“ReN Transplantation Field” shall mean Transplantation of c-MycER Cells for the diagnosis,
prevention and treatment of human diseases other than those in the SCI Field.
	 
	1.32	 	“Royalty Term” shall mean, with respect to an SCI Product or an Unregulated Cell, in each
country of sale, the period ***. The Royalty Term for each Product shall be determined on a
country-by-country basis. “Royalty Term” shall mean, with respect to an ReN Product or an ReN
NCT, a period ***.
	 
	1.33	 	“SCI Field” shall mean the diagnosis, prevention and treatment of: (i) lysosomal storage
diseases, (ii) spinal cord injury, or (iii) myelin-affected disorders including, without
limitation, cerebral palsy and multiple sclerosis.
	 
	1.34	 	“SCI Patent Rights” shall mean:

(a) the patents and patent applications listed on Schedule 1.34 attached hereto (the “SCI
Patents”),

(b) any and all United States or foreign patents and patent applications corresponding to
any of the foregoing patents and patent applications, whether now existing of hereafter
filed,

(c) any provisionals, substitutions, divisionals, reissues, renewals, continuations,
continuations-in-part (but only to the extent not directed to new matter), extensions
(including patent term extensions), substitute applications and inventors’ certificates
arising from, or based upon, any of the foregoing patents or patent applications, in respect
of the foregoing;

(d) any patents issuing from any of the foregoing patent applications; and

 

6

(e) any issued patents now or hereafter owned or Controlled by SCI or an Affiliate of SCI to
the extent necessary or useful for the manufacture, use or sale of:

(i) a c-MycER Cell (including without limitation a product utilizing a c-Myc-ER
Cell) identified or developed, in whole or in part, through the practice by ReN or a
sub-licensee of ReN of inventions claimed in or covered by one or more of the SCI
Patents, or

(ii) a ReN NCT.

	1.35	 	“SCI Product” shall mean any product or method utilizing c-MycER Cells, the manufacture, use,
or sale of which, but for the license granted to SCI hereunder, would infringe any Valid Claim
of the ReN Patent Rights.
	 
	1.36	 	“Stem Cell” shall mean an undifferentiated Cell capable of proliferation, self maintenance
and the production of a large number of differentiated functional progeny.
	 
	1.37	 	“Sub-license Revenue” shall mean ***
	 
	1.38	 	“Subscription Agreement” shall mean an agreement entitled “Subscription and Share Exchange
Agreement” of even date herewith among ReN, SCI and others.
	 
	1.39	 	“Third Party” shall mean any Person other than a Party or an Affiliate of a Party.
	 
	1.40	 	“Transplantation” shall mean the implantation of Cells, into a patient..
	 
	1.41	 	“Unregulated Cells” shall mean the ReN cell lines known as ReNcell CX and ReNcell VM and more
particularly described on Schedule 1.41 hereto and, on notice from ReN to SCI, any alternative
ReN cell line identified by ReN and substituted for either ReNcell CX or ReNcell VM as
provided in Section 2.05, below.
	 
	1.42	 	“Valid Claim” shall mean a claim of an issued and unexpired patent included within the
Patents Rights that has not been held permanently revoked, unenforceable or invalid by a
decision of a court or other government agency of competent jurisdiction, unappealable or
unappealed within the time allowed for appeal, and that has not been admitted to be invalid or
unenforceable through release or disclaimer or otherwise.

	2.	 	LICENSES AND SUPPLY OF MATERIALS

	2.01	 	Licenses from SCI to ReN

	 	(a)	 	SCI hereby grants to ReN a sole and exclusive (even as to SCI),
royalty-bearing, worldwide license under the SCI Patent Rights to research, develop,
make, have made, use, have used, sell, have sold, offer for sale and import ReN
Products in the ReN Transplantation Field.
	 
	 	(b)	 	SCI hereby grants to ReN a sole and exclusive (even as to SCI),
royalty-bearing, worldwide license under the SCI Patent Rights to make and use c-MycER
Cells to research, develop, make, have made, use, have used, sell, have sold, offer for
sale and import ReN NCTs in the ReN Discovery Field.

 

7

	 	(c)	 	SCI hereby grants to ReN a non-exclusive, royalty-bearing, worldwide license,
under the SCI Patent Rights to research, develop, make, have made, use, have used,
sell, have sold, offer for sale and import, Unregulated Cells in the ReN Reagent Field.

Any sub-licenses included in any of the foregoing licenses under SCI Patent Rights are
granted subject to the applicable terms and conditions of the agreement, if any, by which
SCI is licensed under such SCI Patent Rights; provided, however, that SCI shall be
responsible for the payment of royalties and other economic obligations to Third Parties
under any such agreement that is in effect as of the Effective Date and ReN shall be
responsible for the reimbursement to SCI of royalties calculated and due to Third Parties as
the result of sale of a Product by ReN or an Affiliate or sub-licensee hereunder (but not
any other economic obligations) under any such agreement that first comes into effect
following the Effective Date. With respect to SCI Patent Rights derived as a result of a
license to SCI from a Third Party that first comes into effect following the Effective Date,
SCI shall first notify ReN as to the nature (including term and scope) of the Patent Rights
in question and the royalty burden associated with the exercise of such rights by ReN
pursuant to this Agreement. ReN shall have the right, at any time by notice to SCI, to
decline (or, having first accepted thereafter to relinquish) its rights hereunder with
respect to such Patent Rights, in whole or part, whereupon such Patent Rights, to the extent
of such decline or relinquishment, shall be deleted from the grant of rights to ReN
hereunder. The licenses granted in this Section 2.01 are subject to the terms and
conditions of this Agreement.

	2.02	 	License from ReN to SCI

ReN hereby grants to SCI a sole and exclusive (even as to ReN), royalty-bearing, worldwide
license under the ReN Patent Rights and ReN c-MycER Cell Technology, to research, develop,
make, have made, use, have used, sell, have sold, and offer for sale SCI Products in the SCI
Field and to use the c-MycER Cells in order to make, use or sell an SCI Product in the SCI
Field.

Any sub-licenses included in any of the foregoing licenses under ReN Patent Rights are
granted subject to the applicable terms and conditions of the agreement by which ReN is
licensed under such ReN Patent Rights; provided, however, that ReN shall be responsible for
the payment of royalties and other economic obligations to Third Parties under any such
agreement that is in effect as of the Effective Date and SCI shall be responsible for the
reimbursement to ReN of royalties calculated and due to Third Parties as the result of sale
of a Product by SCI or any Affiliate or sub-licensee hereunder (but not any other economic
obligations) under any such agreement that first comes into effect following the Effective
Date. With respect to ReN Patent Rights derived as a result of a license to ReN from a
Third Party that first comes into effect following the Effective Date, ReN shall first
notify SCI as to the nature (including term and scope) of the Patent Rights in question and
the royalty burden associated with the exercise of such rights by SCI within the SCI Field.
SCI shall have the right, at any time by notice to ReN, to decline (or, having first
accepted thereafter to relinquish) its rights hereunder with respect to such

 

8

Patent Rights, in whole or part, whereupon such Patent Rights, to the extent of such decline
or relinquishment, shall be deleted from the grant of rights to SCI hereunder. The license
granted in this Section 2.02 is subject to the terms and conditions of this Agreement.

	2.03	 	Sub-licensing

(a) ReN shall have the right to sub-license its rights under Sections 2.01(a), (b) or (c),
above, to an Affiliate of ReN on prior notice to SCI. Any such sub-license shall remain in
effect only for so long as such Affiliate remains as Affiliate of ReN. ReN shall have the
right to sub-license its rights under Sections 2.01(a) and (b), above, to a Third Party only
with the prior consent of SCI, which consent shall not be unreasonably withheld or delayed.
ReN shall have no right to sub-license its rights under Section 2.01 (c), above, to a Third
Party; provided, however, that ReN shall have: (i) the right to contract with one or more
distributors (including catalog reagent companies) with respect to the manufacture and/or
sale of Unregulated Cells in the ReN Reagent Field, (ii) the right to contract with a Third
Party to manufacture Products for sale in the ReN Reagent Field, and (iii) the right to pass
through implied sub-licenses (without the right further to sub-license or assign) to end
users of Unregulated Cells.

(b) SCI shall have the right to sub-license its rights under Section 2.02, above, to an
Affiliate of SCI on prior notice to ReN. Any such sub-license shall remain in effect only
for so long as such Affiliate remains an Affiliate of SCI. SCI shall have the right to
sub-license its rights under Section 2.02, above, to a Third Party only with the prior
consent of ReN, which consent shall not be unreasonably withheld or delayed.

(c) At least thirty (30) business prior to the proposed grant by a Party to a sub-licensee
of any of its rights hereunder, the granting Party shall provide to the other Party a
summary of the material terms and conditions (including the identity of the prospective
sub-licensee) of such proposed sub-license. In the event that a Party (the “Controlling
Party”) objects to the proposed sub-licensing of its Patent Rights by the other Party (the
“Licensing Party”) to a Third Party, the Controlling Party shall so notify the Licensing
Party within ten (10) days following its receipt of the proposed sub-license terms and
conditions stating, with reasonable specificity, the reasons for such objection. If no such
notice of objection is provided within such ten (10) day period, a sub-license consistent
with such proposed terms and conditions to the prospective sub-licensee previously
identified shall be deemed to have been approved by the Controlling Party, provide that such
sub-license enters into effect during the following one hundred and eighty (180) days. If
notice of objection is provided, at the request of the Licensing Party, the Parties shall
promptly meet to discuss in good faith the objections raised by the Controlling Party. If
the Controlling Party does not give its approval to the proposed sub-license terms and
conditions within five (5) business days following the date of the Licensing Party’s initial
receipt of the Controlling Party’s objection to the proposed sublicense, the reasonableness
of such objection shall, at the request of the Licensing Party, be resolvable by binding
arbitration as provided in Section 2.03(d), below.

 

9

(d) ***

	2.04	 	Supply of Materials

(a) From time to time during the period commencing on the Effective Date and ending upon the
expiration of the Royalty Term SCI shall have the right to nominate one or more Cell Lines
either from among Cell Lines already in ReN’s possession as of the Effective Date or for
creation by ReN according to reasonable specifications provided by SCI. ***

Following the nomination of an Approved Cell Line, the Parties shall establish a time-line
on which ReN, using reasonable diligence, shall establish the capacity (or have a
sub-contractor establish such capacity) to supply SCI pursuant to this Section 2.04. In
accordance with the agreed-upon time table, SCI shall notify ReN in advance of its projected
requirements of such Approved Cell Line and shall place firm orders for such Approved Cell
Line sufficiently in advance of the date proposed for delivery (as determined in the agreed
time line). SCI shall reimburse ReN for the *** of Approved Cell Lines nominated and
ordered by SCI, determined in accordance with United Kingdom GAAP.

With respect to Approved Cell Lines isolated, produced and supplied by ReN pursuant to this
Section 2.04, SCI shall have the right, no more than once in any 12 month period, during
ordinary working hours and with no fewer that 10 days’ prior written notice to ReN, to
conduct reasonable quality assurance audits of ReN’s production and testing facilities.

(b) During the ninety (90) day period following the Effective Date the Parties shall,
diligently and in good faith, endeavor to reach agreement on a “Supply Agreement” pursuant
to which ReN shall supply (directly and/or through sub-contractors) to SCI Approved Cell
Lines for which SCI has reached the Trigger Point prior to ReN pursuant to subsection (a),
above, in cGMP and GMP form, for clinical and commercial use by SCI within the SCI Field.
The Supply Agreement shall provide, inter alia, for:

          (i) reasonable and customary representations and warranties with respect to the
specifications of the materials delivered, with commercially reasonable rights to inspect
and reject non-conforming goods (subject to reasonable and customary limitations on remedies
and liability with respect thereto);

          (ii) the establishment of a Quality Agreement covering such Approved Cell Line, the
assurance that SCI and all responsible governmental bodies have the right to inspect and
conduct audits (including quality assurance audits) of the ReN facilities used in the
testing and production of such Approved Cell Line and ReN records related thereto including,
without limitation, batch records, stability reports, and the results of internal and
regulatory audits and inspections;

 

10

          (iii) the right to audit such ReN facilities under special circumstances (e.g. in
response to a serious adverse event or in connection with a governmental inspection);

          (iv) the right for SCI to reference ReN’s drug master file and the acquisition of
appropriate manufacturing permits and licensure from regulatory authorities with respect to
such Approved Cell Line and the facilities used for the testing or manufacture of such
Approved Cell Line;

          (v) procedures applicable in the event of complaints, adverse events or recalls with
respect to materials supplied by ReN;

          (vi) the forecasting of supply of materials and the timing of firm orders to be placed
by SCI with respect to materials to be produced and supplied by ReN;

          (vii) a purchase price for such materials equal to ***;

          (viii) quality control and terms and conditions for changes in manufacturing or testing
specifications;

          (ix) reasonable advance notice and lead time to be given prior to initial production of
any Cell Lines under the Supply Agreement to allow for ReN to establish the capacity,
process and scale-up to manufacture and supply thereunder; and

          (x) such other terms and conditions as are typical and reasonable for an agreement
providing for the supply of FDA regulated pharmaceutical products and the use of such
products for human clinical trials and commercial sale.

To the extent that the Parties are unable to reach agreement on all of the terms and
conditions of the Supply Agreement within such ninety (90) day period, either Party shall
have the right submit any open questions to binding arbitration using the procedure
specified in Section 2.03(d), above.

	2.05	 	Substitution of Unregulated Cells.

At any time during the term of this Agreement ReN shall have the right, by notice to SCI, to
nominate an ReN cell line identified on Schedule 1.41 other than those identified as ReNcell
CX or ReNcell VM as a substitute for ReNcell CX or ReNcell VM such that ReN will, at all
times have rights to two Unregulated Cells. SCI shall not enter into any license or other
agreement with a Third Party inconsistent with the foregoing.

	2.06	 	Rights Limited to Those Expressed

The rights granted to SCI and ReN hereunder shall be limited to the rights expressly stated
to be granted hereunder and no additional rights or licenses are implied.

 

11

	3.	 	PAYMENTS AND REPORTS

	3.01	 	ReN shall make the following payments to SCI:

	 	(a)	 	Milestone payments

Within 30 days following the achievement by ReN or by an Affiliate or sub-licensee
hereunder of ReN of each of the following events, on a Product by Product basis, ReN
shall give written notice thereof to SCI and shall pay to SCI the corresponding
payments described below.

	 	***	 	upon initiation of the first human Phase I Clinical Trial of
each ReN Product *** in the ReN Transplantation Field;
	 
	 	***	 	upon completion of the first human Phase II Clinical Trial of
each ReN Product *** in the ReN Transplantation Field;
	 
	 	***	 	upon submission of the first BLA or its foreign counterpart for
each ReN Product *** in the ReN Transplantation Field;
	 
	 	***	 	upon approval of a BLA or its foreign counterpart for each ReN
Product *** in the ReN Transplantation Field in the first of the United States,
the European Union or Japan;
	 
	 	***	 	upon initiation of the first human Phase II Clinical Trial of a
ReN NCT; and
	 
	 	***	 	upon the First Commercial Sale of a ReN NCT.

For purposes of determining whether a milestone payment is due pursuant to this subsection
(a) with respect to a given label Indication, a Product (the “Follow-on Product”) shall not
be considered as distinct from a Product as to which a milestone payment was previously made
for the same label Indication (the “Initial Product”) if the clinical development of the
Follow-on Product was lawfully conducted without the requirement that a new (as
distinguished from an amended) IND be filed with respect to the clinical testing of such
Follow-on Product, i.e. that clinical development of the Follow-on Product occurred
pursuant to the same IND (whether or not amended) as that applicable to the Initial Product.
Accordingly, a Follow-on-Product developed pursuant to the same IND as the Initial Product
shall not trigger (or accrue a payment obligation for) the milestone payments already paid
for such Initial Product with respect to a given label Indication.

In addition, the Parties acknowledge that a single development program intended to yield a
single commercial Product for a specific Indication or set of Indications may involve the
simultaneous development of multiple Product for that Indication or set of Indications, each
based on a different Cell Line or combination of Cell Lines, and that the

 

12

Product as to which one milestone event occurs (e.g. that due on the completion of a Phase
II Clinical Trial) may subsequently be abandoned and replaced by a back-up Product developed
in the course of such development plan, for the same Indication or set of Indications, as to
which the same milestone event occurs. In such event, the Parties intend that each
milestone payment shall be paid only one time for each Indication regardless of whether such
milestone payment is achieved by more than one Product developed for such Indication or set
of Indications in the course of the same development program.

Subject to the clarifications in the preceding two paragraphs, the Parties intend that
achievement of each “Milestone Event” (defined as the initiation of a given Phase I Clinical
Trial, completion of a given Phase II Clinical Trial, submission of a given BLA or approval
of a BLA, to the extent triggering a milestone payment above) shall result in an obligation
to make the corresponding payment obligation every time such Milestone Event occurs unless
the subsequent occurrence of the Milestone Event involves both the same Product *** as a
previous Milestone Event for which milestones were already paid. *** Furthermore, it is
understood and agreed that no more than one milestone payment (in the applicable amount
specified above, and not multiples thereof) shall be made with respect to a given Milestone
Event, without limiting any milestones due for a subsequent occurrence of the same Milestone
Event for a different Indication or Product. Thus, for example completion of a given Phase
II Clinical Trial for a given Product within the applicable Field will trigger only one
payment of ***, regardless of whether the Product in such trial was a combination product
containing two biological compounds from two different Cell Lines and regardless of whether
the Indication targeted in such trial could potentially cover different patient populations
or be subdivided into subtypes or subgroups.

	 	(b)	 	Royalties

During the applicable Royalty Term for each ReN Product or ReN NCT Product, on a
country-by-country basis, ReN shall pay to SCI a *** royalty on any and all Net Sales of
each ReN Product in the ReN Transplantation Field in such country and a *** royalty on any
and all Net Sales of each ReN NCT in the ReN Discovery Field in such country, regardless of
the number of Valid Claims of the SCI Patent Rights that are applicable. During the
applicable Royalty Term for each Unregulated Cell, ReN shall also pay to SCI a *** royalty
on any and all Net Sales of Unregulated Cells by ReN or any Affiliate of ReN (but not for
sales by permitted sublicensees (as per Section 2.03(a)(i)) or distributors of ReN with
respect to such Unregulated Cells).

	 	(c)	 	Sub-license Revenues

ReN shall pay to SCI *** of all ReN Sub-license Revenue with respect to ReN Products and ReN
NCTs. In addition, ReN shall pay to SCI ten (10) percent of all revenues ReN receives
(whether in the form of license fees, milestones payments or royalties calculated as a
function of the sale or use of Unregulated Cells) from its sub-licensees and distributors of
Unregulated Cells within the ReN Reagent Field for the sale of (and/or the

 

13

right to make, use, or sell) Unregulated Cells (excluding any such revenues that fall within
the categories of (a), (b) and/or (c) of the “Sub-license Revenue” definition in Section
1.37).

	 	(d)	 	In addition to the payments provided in subsections (a), (b) and (c), above, as
provided in the Subscription Agreement, ReN shall secure the delivery to SCI of
Ordinary Shares constituting seven and one-half percent (7.5%) of the Fully Diluted
Share Capital of ReNeuron Group PLC as of the date on which such shares are issued. As
provided in the Subscription Agreement, SCI shall also benefit from certain
anti-dilution protection in respect of such share holding. The further rights of SCI as
a result of its ownership of such Ordinary Share are as specified in the Subscription
Agreement and in the articles of association of ReNeuron Group PLC.

	3.02	 	SCI shall make the following payments to ReN:

	 	(a)	 	Milestone payments

Within 30 days following the achievement by SCI or by an Affiliate or sub-licensee
of SCI of each of the following events, on a Product by Product basis, SCI shall
give written notice thereof to ReN and shall pay to ReN the corresponding payments
described below.

	 	***	 	upon initiation of the first human Phase I Clinical Trial of
each SCI Product *** in the SCI Field.
	 
	 	***	 	upon completion of the first human Phase II Clinical Trial of
each SCI Product *** in the SCI Field.
	 
	 	***	 	upon submission of the first BLA or its foreign counterpart for
each SCI Product *** in the SCI Field.
	 
	 	***	 	upon approval of a BLA or its foreign counterpart for each SCI
Product *** in the SCI Field in the first of the United States, the European
Union or Japan.

For purposes of determining whether a milestone payment is due pursuant to this subsection
(a) with respect to a given label Indication, a Product (the “Follow-on Product”) shall not
be considered as distinct from a Product as to which a milestone payment was previously made
for the same label Indication (the “Initial Product”) if the clinical development of the
Follow-on Product was lawfully conducted with the requirement that a new (as distinguished
from an amended) IND be filed with respect to the clinical testing of such Follow-on
Product, i.e. that clinical development of the Follow-on Product occurred pursuant
to the same IND (whether or not amended) as that applicable to the Initial Product.
Accordingly, a Follow-on-Product developed pursuant to the same IND as the Initial Product
shall not trigger (or accrue a payment obligation

 

14

for) the milestone payments already paid for such Initial Product with respect to a given
label Indication.

In addition, the Parties acknowledge that a single development program intended to yield a
single commercial Product for a specific Indication or set of Indications may involve the
simultaneous development of multiple Product for that Indication or set of Indications, each
based on a different Cell Line or combination of Cell Lines, and that the Product as to
which one milestone event occurs (e.g. that due on the completion of a Phase II Clinical
Trial) may subsequently be abandoned and replaced by a back-up Product developed in the
course of such development plan, for the same Indication or set of Indications, as to which
the same milestone event occurs. In such event, the Parties intend that each milestone
payment shall be paid only one time for each Indication regardless of whether such milestone
payment is achieved by more than one Product developed for such Indication or set of
Indications in the course of the same development program.

Subject to the clarifications in the preceding two paragraphs, the Parties intend that
achievement of each “Milestone Event” (defined as the initiation of a given Phase I Clinical
Trial, completion of a given Phase II Clinical Trial, submission of a given BLA or approval
of a BLA, to the extent triggering a milestone payment above) shall result in an obligation
to make the corresponding payment obligation every time such Milestone Event occurs unless
the subsequent occurrence of the Milestone Event involves both the same Product *** as a
previous Milestone Event for which milestones were already paid. *** Furthermore, it is
understood and agreed that no more than one milestone payment (in the applicable amount
specified above, and not multiples thereof) shall be made with respect to a given Milestone
Event, without limiting any milestones due for a subsequent occurrence of the same Milestone
Event for a different Indication or Product. Thus, for example completion of a given Phase
II Clinical Trial for a given Product within the applicable Field will trigger only one
payment of ***, regardless of whether the Product in such trial was a combination product
containing two biological compounds from two different Cell Lines and regardless of whether
the Indication targeted in such trial could potentially cover different patient populations
or be subdivided into subtypes or subgroups.

	 	(b)	 	Royalties

During the Royalty Term for each SCI Product, on a country-by-country basis, SCI
shall pay to ReN a *** royalty on any and all Net Sales of such Products in such
country regardless of the number of Valid Claims within the ReN Patent Rights that
are applicable.

	 	(c)	 	Sub-license Revenues

SCI shall pay to ReN *** of all SCI Sub-license Revenue.

 

15

	3.03	 	Reports and Payments

Within sixty (60) days after the end of each calendar quarter each Party shall deliver to
the other Party a written report showing all royalties and payments due on account of Net
Sales and Sublicense Revenues due under this Agreement, on a Product-by-Product and
country-by-country basis. With respect to sales made or Sub-license Revenues received in
currencies other than Dollars, conversion to Dollars shall be made using the closing buying
price quoted by Bank of America N.T.S.A. (in the case of SCI) and Barclay’s Bank (in the
case of ReN) for the last business day of the calendar quarter in which such sale was made
or Sub-license Revenue received. All amounts shown to have accrued by each such report
shall be payable on the date such report is due.

	3.04	 	Payments Subject to Embargo

Where royalties and payments are due hereunder on account of Net Sales completed in a
country where, by reason of currency regulations or taxes of any kind, it is illegal for the
paying Party to transfer such payments out of such country for Net Sales in that country,
such payments shall be deposited in the other Party’s account in a bank or other depository
in such country in a currency that is permitted for the paying Party to make the transfer
for the benefit or credit of the other Party entitled to receive such payments.

	3.05	 	Withholding Taxes

If a Party is required to withhold tax on royalties or payments on account of sublicense
revenues payable to the other Party hereunder, such taxes shall be deducted, provided that
the receiving Party shall be furnished at the time of deduction with suitable documentation
for obtaining credits to which the receiving Party may be entitled as a result of such
withholding on the income taxes of the receiving Party.

	3.06	 	Records

Each Party shall keep, and shall require all Affiliates and its sub-licensee(s) to keep,
full, true and accurate books of accounts and other records containing all information and
data which may be necessary to ascertain and verify all royalties and payments on account of
sublicense revenues payable hereunder. During the term of this Agreement and for a period of
two years following its termination, the receiving Party shall have the right from time to
time (not to exceed once during each calendar year), to have an accounting firm of
nationally recognized standing in the relevant jurisdiction inspect, at the receiving
Party’s expense, on a confidential basis, the books, records and supporting data of the
paying Party. If such inspection shall reveal that the Paying party has not accurately
reported and paid royalties and payments on account of Sub-license Revenues due to the
receiving Party, then the paying Party shall pay to the receiving Party any shortfall in
royalties payable plus interest thereon at a rate equal to the lesser of (a) eight percent
per annum and (b) the highest lawful rate of interest in the receiving Party’s jurisdiction
at the time; or, if the paying Party has overpaid royalties, the receiving Party shall
promptly refund the excess. If a shortfall greater than 10 percent of the royalties and
payments on

 

16

account of sublicense revenues payable in any year should be found to be due, the Party that
has underpaid shall pay the reasonable costs of the audit or inspection. Unless challenged
within three years after a statement is rendered, royalties and payments on account of
sublicense revenues calculated for the calendar quarter covered by such statement shall be
conclusively presumed to be correct. Upon request by the receiving Party no more than once
each calendar year, the paying party shall cause to be performed an audit of the books,
records and supporting data of each Affiliate or its sub-licensee(s), unless the paying
Party shall have had an audit of such Affiliate or its sub-licensee(s) performed within the
preceding three month period, in which case the paying Party shall share the relevant
results of such audit with the receiving Party without charge to the receiving Party. The
reasonable costs of such requested audit shall be borne by the receiving Party unless such
audit reveals that the paying Party, its Affiliate or its sub-licensee(s) has under reported
Net Sales or Sub-License Revenues by more than 10 percent.

	3.07	 	No Multiple Royalties

No multiple Royalties shall be payable because any Product or its manufacture, use or sale
are or shall be covered by more than one patent or invention or otherwise licensed
hereunder.

	4.	 	CONFIDENTIAL INFORMATION

	4.01	 	Treatment of Confidential Information

Each Party hereto shall maintain the Confidential Information of the other Party in
confidence, and shall not disclose, divulge or otherwise communicate such Confidential
Information to any third party, or use it for any purpose, except pursuant to, and in order
to carry out, the terms and objectives of this Agreement, and hereby agrees to exercise
every reasonable precaution to prevent and restrain the unauthorized disclosure of such
Confidential Information by any of its directors, officers, employees, consultants,
subcontractors, sub-licensees or agents. In the event either Party becomes aware of the
unauthorized disclosure (including publication) of the other Party’s Confidential
Information, or a material threat thereof, it shall promptly notify such other Party
describing in reasonable detail the nature of the disclosure (or threat thereof) and the
Confidential Information involved.

	4.02	 	Release from Restrictions

The provisions of Section 4.01, above, shall not apply to any Confidential Information
disclosed hereunder that is: required to be disclosed by the receiving Party to comply with
applicable laws, court orders, or to comply with applicable governmental regulations
(including without limitation to drug testing, marketing regulations and rules of NASD), in
each case only to the extent required to carry out the work contemplated by this Agreement
provided that the receiving Party provides prior written notice of such

 

17

disclosure to the other Party and takes reasonable and lawful actions to avoid and/or
minimize the degree of such disclosure.

	4.03	 	Confidential Agreements

Each Party has employment agreements with its respective employees and representatives
having confidentiality and nonuse commitments consistent with their obligations hereunder
and will require all of their sub-licensees hereunder, consultants, agents or others who
have access to any of such information to execute similar confidentiality agreements
covering all Confidential Information subject to Article 4 and will exercise its reasonable
best efforts to obtain compliance therewith.

	5.	 	PRODUCT DEVELOPMENT EFFORTS

	5.01	 	Diligence Development and Commercialization.

Each Party shall use reasonable efforts consistent with prudent business judgment in the
development and commercialization of Products in any of its exclusive Fields.

	5.02	 	Cooperation.

The Parties shall reasonably cooperate with each other with respect to safety reporting that
is required by law or by ICH guideline, regulation or policy. If reporting to a regulatory
or other governmental body is required, the Parties shall put in place a separate
pharmaco-vigilance agreement with appropriate provisions to assure timely compliance. Any
information shared between the Parties as a result of such safety reporting shall be used by
the Party receiving such information solely for safety reporting and not as data to support
a claim as to the efficacy or safety of any Product. Each Party shall share with the other
Party any creditable information as to off-label or out-of-Field use of the former Party’s
Product and, upon the written request of either Party, the Parties shall meet and in good
faith endeavor to reach agreement on means of correcting or abating such off-label or
out-of-Field uses.

	6.	 	FILING OF PATENTS: PROSECUTION OF INFRINGERS

	6.01	 	Filing, Prosecution, and Maintenance of Patents.

Each Party shall be solely responsible for filing, prosecution, maintenance and enforcement,
in its sole discretion, of all patents or patent applications which are part of its Patent
Rights, and shall be and remain the owner of all of its Patent Rights. Each Party shall
engage its own patent counsel and in all respects control the prosecution of its Patent
Rights, at its own cost.

 

18

	6.02	 	Infringement of Patents by Third Parties.

	 	(a)	 	Notice of Infringement.

Each Party shall notify the other of any infringement of Patent Rights of either Party by
Third Parties of which it becomes aware.

	 	(b)	 	Prosecution of Infringers.

Subject to subsection (c), below, each Party shall have the sole right, in its absolute

discretion, to pursue actions against infringers of its Patent Rights, or not to pursue such
actions, or to abandon or settle any such action (except to the extent that any settlement
would involve the grant of a license inconsistent with a grant of rights pursuant to this
Agreement). Should a Party (the “Owning Party”) pursue such an action in the Field of the
other Party (the “Licensed Party”), the Licensed Party will co-operate and allow the Owning
Party to use its name in any such suit, to sue in its name or join it as a party to such
suit if legally required provided that the Owning Party will indemnify and hold harmless the
Licensed Party from any costs, damage or expenses incurred by the latter in respect of any
such acts or co-operation. If the Owning Party recovers damages, by settlement or judgment
or otherwise, then the amount recovered shall be divided as follows: (i) the reasonable and
documented litigation expenses of the Owning Party shall be reimbursed, and (ii) the
remainder shall be ***.

	 	(c)	 	Discussion

Following notice pursuant to subsection (a), above, at the request of the Party in whose
Field the infringement is alleged to have occurred, the Parties shall promptly meet to
discuss in good faith appropriate action, if any, to abate the alleged infringement.

	 	(d)	 	Unlicensed Competition.

The Parties acknowledge that the sale of a Product by or for a Party during the Royalty Term
may be affected by competition from Third Parties that, for whatever reason, have chosen to
compete in the Field of such Party with respect to a product incorporating a biologically
active component the manufacture, use or sale of which such Party has been advised by
competent counsel infringes one or more of the Patent Rights licensed to such Party
hereunder (a “Competing Product”). With respect to sales of a Competing Product, when such
Competing Product takes a Market Share in excess of *** for any calendar quarter in any
country, the royalty rate applicable to Net Sales made in such country in such quarter shall
be reduced by *** For purposes of this Section 6.02(c), “Market Share” shall be determined
by the formula A divided by A + B (expressed as a percentage) in which A is the amount
(determined by weight or otherwise) of that biologically active component of the Competing
Product which is asserted to be infringing sold in such country during such calendar quarter
and B is the amount (determined in the same manner) of Product with which such Competing
Product competes that was sold by such Party in the subject country in such calendar
quarter.

 

19

Unit sales of Competing Product shall be determined by the sales reported by IMS America
Ltd. of Plymouth Meeting, Pennsylvania (“IMS”) or its equivalent in other countries of the
world or, if such sources are not available, such other source as the Parties shall
mutually agree.

	7.	 	REPRESENTATIONS AND WARRANTIES

	7.01	 	Corporate Representations.

Each Party represents and warrants to the other that:

	 	(a)	 	it has and has obtained all corporate authorizations and all other applicable
consents, licenses, waivers or exemptions required to empower it to enter into this
Agreement and to consummate the transactions contemplated hereby; and
	 
	 	(b)	 	the execution and delivery of, and the performance by such Party of its
obligations under, this Agreement will not:

(i) result in a breach of any provision of the memorandum or articles of
incorporation or association of such Party;

(ii) result in a breach of any provision of, or constitute a default under, any
instrument to which it is a party or by which it is bound; or

(iii) result in a breach of any order, judgment or decree of any court or
governmental agency to which it is a party or by which it is bound.

	 	(c)	 	the obligations of such Party under this Agreement will constitute the legal,
valid and binding obligation of it; and
	 
	 	(d)	 	such Party is duly incorporated and validly existing under the laws of the
jurisdiction in which it is incorporated.

	7.02	 	Intellectual Property Representations.

	 	(a)	 	ReN represents and warrants as follows:

	 	(i)	 	to ReN’s knowledge as of the Effective Date, the patents/patent
applications listed in Schedule 1.28 are subsisting and no challenge has been
taken to them by any Third Party;
	 
	 	(ii)	 	ReN owns or Controls the ReN Patents;
	 
	 	(iii)	 	Schedule 1.28 is, as of the Effective Date, a complete and
accurate list of all patents and patent applications that ReN owns or Controls
which

 

20

	 	 	 	cover or claim the right to manufacture, use or sell an SCI Product within
the SCI Field;
	 
	 	(iv)	 	to ReN’s knowledge as of the Effective Date, there are no Third
Party patents or patent applications that present a freedom to operate barrier
to compositions of c-MycER Cells or nucleic acid components used to generate
compositions of c-MycER Cells, or to the use of C-MycER Cells in the SCI Field;
and
	 
	 	(v)	 	no in-license from a Third Party in existence as of the
Effective Date under which Patent Rights are sub-licensed by ReN to SCI
hereunder contains a restriction or limitation on SCI’s ability to exercise the
full scope of the rights granted to it hereunder.

	 	(b)	 	SCI represents and warrants as follows:

	 	(i)	 	to SCI’s knowledge as of the Effective Date, the patents/patent
applications listed in Schedule 1.34 are subsisting and no challenge has been
taken to them by a Third Party;
	 
	 	(ii)	 	SCI owns or Controls the SCI Patents;
	 
	 	(iii)	 	Schedule 1.34 is, as of the Effective Date, a complete and
accurate list of all patents and patent applications that SCI owns or Controls
which cover or claim the right to manufacture, use or sell a product or
compound of any sort within the ReN Transplantation Field or the ReN Discovery
Field;
	 
	 	(iv)	 	to SCI’s knowledge as of the Effective Date, there are no Third
Party patents or patent applications that that present a freedom to operate
barrier to compositions of neural stem cells; and
	 
	 	(v)	 	no in-licenses from a Third Party in existence as of the
Effective Date under which Patent Rights are sub-licensed by SCI to ReN
hereunder contains a restriction or limitation on ReN’s ability to exercise the
full scope of its rights hereunder.

Except as otherwise expressly set forth in Sections 7.01 through 7.02, above, or as otherwise
stated in this Agreement, ReN and SCI make no representations and extend no warranties of any kind
in relation to the matters addressed under this Agreement. ReN and SCI expressly disclaim any
representations and extend no warranties of any kind in relation to whether or not the practice, as
licensed under this Agreement, of the ReN Licensed Technology, will violate the rights of any third
party. Neither ReN nor SCI has conducted any infringement analysis on potential Products that may
be developed under the Parties’ respective Patent Rights or the ReN c-MycER Cell Technology. THE
REPRESENTATIONS AND WARRANTIES IN SECTIONS 7.01 THROUGH 7.02 ARE IN LIEU OF ALL OTHER
REPRESENTATIONS, WARRANTIES AND CONDITIONS, EXPRESS OR IMPLIED OR ARISING UNDER ANY LEGAL

 

21

THEORY, CONCERNING THE ReN LICENSED TECHNOLOGY, PATENT RIGHTS OR CELL TECHNOLOGY, OR ANY OF IT,
INCLUDING BUT NOT LIMITED TO THOSE OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.

	8.	 	ASSIGNMENT

	8.01	 	No Right to Assign.

Neither Party shall have the right, whether in connection with a merger or consolidation or
with the sale of substantially all of its assets or otherwise, to assign this Agreement or
any of the rights and licenses herein granted without the consent of the other Party, which
consent may be granted or withheld in the latter Party’s sole discretion. Notwithstanding
the foregoing, ***; provided, however, that the assigning Party shall remain primarily
liable to the other Party for the performance by the assigning Party’s Affiliates of the
assigning Party’s obligations hereunder.

	8.02	 	Performance by Subcontractors

Either Party may perform its obligations hereunder through its Affiliates, consultants or
subcontractors, but shall be responsible to the other Party for the performance of any such
third party.

	9.	 	TERM AND TERMINATION

	9.01	 	Term.

Unless sooner terminated as provided herein, the licenses granted to ReN under Sections 2.01
(a), (b) and (c) shall expire on a country-by-country basis upon the later of (i) the
expiration of the last to expire of the SCI Patent Rights in such country, or (ii) the
expiration of the last to expire of the Royalty Terms for all ReN Products, ReN NCTs and
Unregulated Cells in such country. The license granted to SCI under Section 2.02 shall
expire on a country-by-country basis upon the later of (i) the expiration of the last to
expire of the ReN Patent Rights in such country, or (ii) the expiration of the last to
expire of the Royalty Terms for all SCI Products in such country. Upon the expiration of
the last remaining license as provided above, this Agreement shall terminate; provided,
however, that with respect to any ReN Products or ReN NCTs for which human clinical trials
have been initiated (or which are in a later stage of development or commercialization at
the time of such termination), the applicable terms of this Agreement (i.e., Sections 2.01,
2.03 and 9.01 and Articles 3 (other than 3.02), 5 and 8) shall remain in effect with respect
to such ReN Products and ReN NCTs (on a Product-by-Product basis) until the Royalty Term for
each such Product expires or, if earlier, when development of such Product ceases (provided,
further that, if no First Commercial Sale of a given Product has occurred prior to seven (7)
years after the date of Agreement termination, the aforementioned surviving terms shall also
terminate with respect to such Product). Notwithstanding the foregoing, if ReN has not
raised at least *** in the

 

22

aggregate through the issuance of equity securities within 15 months after the Effective
Date, this Agreement shall immediately terminate.

	9.02	 	Defaults.

If either Party shall fail to perform any of its material obligations hereunder, the other
Party may notify the defaulting Party of such default, stating in such notice the obligation
which the defaulting Party shall have failed to perform, and, if the defaulting party shall
not have cured such default within 60 days after the giving of such notice (the “Cure
Period) then the Party not in default may, at its option and in addition to its other
remedies under law, terminate this Agreement by giving the defaulting Party notice of such
termination within fifteen (15) days after the end of the Cure Period.

	9.03	 	Bankruptcy.

To the extent allowed under applicable law, either Party may terminate this Agreement if, at
any time, the other Party shall file in any court or agency pursuant to any statute or
regulation of any state or country, a petition in bankruptcy or insolvency or for
reorganization or for an arrangement or for the appointment of a receiver or trustee of the
Party or of its assets, or if the other Party proposes a written agreement of composition or
extension of its debts, or if the other party shall be served with an involuntary petition
against it, filed in any insolvency proceeding, and such petition shall not be dismissed or
stayed within 60 days after the filing thereof, or if the other Party shall propose or be a
party to any dissolution or liquidation, or if the other Party shall make an assignment for
the benefit of creditors.

	9.04	 	***.

***

	9.05	 	Effect of Termination: Survival

Termination of this Agreement for any reason shall not release either Party from any
liability or obligation to the other Party that matured prior to the effective date of such
termination. Either Party may, however, after the effective date of such termination, sell
Products then on hand or in the process of manufacture at the time of such termination,
provided that each Party shall pay to the other Party the royalties thereon as required of
this Agreement and shall submit the reports required by Article 3 hereof on the sales of
such Products. The provisions of Articles 1, 4, 10, 11, 12 (except for Section 12.04) and
13 and Sections 3.01(c), 3.02(c) and 9.05 of this Agreement shall survive termination or
expiration of this Agreement for any reason. Except as otherwise provided in this Section
9.05, all rights and obligations of the parties under this Agreement shall terminate upon
the expiration or termination of this Agreement.

 

23

	10.	 	RESOLUTION OF DISPUTES

All disputes arising between the Parties with respect to or as a result of this Agreement
shall be resolved by arbitration before a three member panel pursuant to the rules of the
International Chamber of Commerce. Such proceedings shall be brought and maintained in
London, England if initiated by SCI and in San Francisco, California, USA, if initiated by
ReN.

The arbitrators’ ruling shall be, in the absence of fraud or manifest error, binding and
conclusive upon both Parties and may be enforced in a court of competent jurisdiction. The
arbitrators may not award punitive or exemplary damages but may, in their discretion, award
costs and attorneys’ fees to the prevailing Party.

Notwithstanding the foregoing, either Party shall have the right, without waiving any right
or remedy available to such Party under this Agreement or otherwise, to seek and obtain from
any court of competent jurisdiction any interim or provisional relief that is necessary or
desirable to protect the rights or property of such Party, pending the selection of the
arbitrators hereunder or pending the arbitrator’s determination of any dispute hereunder.

	11.	 	SETTLEMENT OF CLAIMS

11.01 No Admission of Liability. By entering into this Agreement, ReN admits to no
liability or wrong-doing with respect to infringement of the SCI Patent Rights.

11.02 Past Claims. In consideration of the covenants and agreements contained herein, SCI,
on behalf of itself and on behalf of its predecessors, successors, assigns, and Affiliates
(collectively, the “Releasors”), hereby releases and forever discharges ReN, its predecessors,
successors, assigns, Affiliates, employees, officers, and directors from any all claims, actions,
suits or demands (and any resulting liabilities, costs, expense and losses of any type), whether
known or unknown, fixed or contingent, that the Releasors had or now have: (a) for past
infringement of the SCI Patent Rights, or (b) which were asserted in the action brought by SCI
against ReN in the United States District Court for the District of Maryland prior to the Effective
Date. SCI represents and warrants that there has been no assignment, transfer or other disposition
of any interest in any of the subject matter released in the preceding sentence.

11.03 Waiver. All rights under Section 1542 of the Civil Code of the State of California,
and under any and all similar laws of any governmental entity, are hereby expressly waived. Each
party is aware that said Section 1542 of the Civil Code provides as follows:

               “A general release does not extend to claims which the creditor does not know or
suspect to exist in his favor at the time of executing the release, which if known by him
must have materially affected his settlement with the debtor.”

11.04 Full Settlement. The Parties agree that this Agreement (together with the
Subscription Agreement) is in full and complete settlement of any rights that either Party (or any
of its successors, licensees or assigns) may have against the other Party in connection with

 

24

infringement of the Patent Rights of the other Party prior to the Effective Date. This Agreement
may be pleaded as full and complete defense to any action, suit or claim and may be used as an
injunction against any such action, suit, claim, or other proceeding of any type which may be
prosecuted, initiated or attempted in violation of the terms hereof. The prevailing Party shall be
entitled to receive from the other Party the Prevailing Party’s reasonable attorneys’ fees and
other related legal expenses incurred in defending against any suit, action or claim brought to
enforce the terms and conditions of this Agreement.

	12.	 	INDEMNIFICATION AND INSURANCE

12.01 Indemnification by ReN. ReN hereby agrees to defend, hold harmless and indemnify
(collectively “Indemnify”) SCI and its Affiliates, and its and their agents, directors, officers
and employees (the “SCI Indemnitees”) from and against any and all liabilities, expenses, damages
and/or losses (including without limitation reasonable legal expenses and attorneys’ fees)
(collectively “Losses”) resulting from suits, claims, actions and demands, in each case brought by
a Third Party (each, a “Third-Party Claim”), arising directly or indirectly out of: (i) a breach of
any of ReN’s representations and warranties pursuant to this Agreement; or (ii) the research,
development, manufacture, storage, handling, use, sale, offer for sale, distribution or importation
of Products by ReN and/or its Affiliates and/or its sublicensees hereunder. ReN’s obligation to
Indemnify the SCI Indemnitees pursuant to this Section 12.01 shall not apply to the extent that any
such Losses (A) arise from the negligence or intentional misconduct of any SCI Indemnitee; (B)
arise from any breach by SCI of this Agreement; or (C) are Losses for which SCI is obligated to
Indemnify ReN Indemnitees pursuant to Section 12.02, below.

12.02 Indemnification by SCI. SCI hereby agrees to Indemnify ReN and its Affiliates, and
its and their agents, directors, officers and employees (the “ReN Indemnitees”) from and against
any and all Losses resulting from Third-Party Claims arising directly or indirectly out of:(i) a
breach of any of SCI’s representations and warranties pursuant to this Agreement; or (ii) the
research, development, manufacture, storage, handling, use, sale, offer for sale, distribution or
importation of Products by SCI and/or its Affiliates and/or its sublicensees hereunder. SCI’s
obligation to Indemnify ReN Indemnitees pursuant to the foregoing sentence shall not apply to the
extent that any such Losses (A) arise from the negligence or intentional misconduct of any ReN
Indemnitee; (B) arise from any breach by ReN of this Agreement; or (C) are Losses for which ReN is
obligated to Indemnify the ReN Indemnitees pursuant to Section 12.01, above.

12.03 Procedure. To be eligible to be indemnified hereunder, the indemnified Party shall
provide the indemnifying Party with prompt notice of the Third-Party Claim giving rise to the
indemnification obligation pursuant to this Article 12 and the exclusive ability to defend (with
the reasonable cooperation of the indemnified Party) or settle any such claim; provided, however,
that the indemnifying Party shall not enter into any acknowledgement of liability nor settlement
for damages other than monetary damages without the indemnified Party’s written consent, such
consent not to be unreasonably withheld or delayed. The indemnified Party shall have the right to
participate, at its own expense and with counsel of its choice, in the defense of any claim or suit
that has been assumed by the indemnifying Party. If the Parties cannot agree as to the application
of Section 12.01 or 12.02 to any particular Third Party Claim, the Parties may conduct separate
defenses of such Third Party Claim. Each Party reserves the right to claim indemnity from the
other in accordance with Sections 12.01 and 12.02, above, upon resolution of

 

25

the underlying claim, notwithstanding the provisions of this Section 12.03 requiring the
indemnified Party to tender to the indemnifying Party the exclusive ability to defend such claim or
suit.

12.04 Insurance. Each Party shall procure and maintain levels of product liability and
general liability insurance which are consistent with normal business practices of prudent
companies similarly situated, at all times during which any Product is being clinically tested in
human subjects or commercially distributed or sold by or on behalf of such Party. It is understood
that such insurance or self-insurance shall not be construed to create a limit of either Party’s
liability with respect to its indemnification obligations under this Article 12. Each Party shall
provide the other with written evidence of such insurance upon request.

12.05 Limitation of Liability. WITHOUT LIMITING EITHER PARTY’S INDEMNIFICATION OBLIGATIONS
UNDER ARTICLE 12, NEITHER PARTY NOR ITS RESPECTIVE AFFILIATES AND LICENSEES SHALL BE LIABLE FOR
SPECIAL, EXEMPLARY, CONSEQUENTIAL OR PUNITIVE DAMAGES, WHETHER IN CONTRACT, WARRANTY, TORT, STRICT
LIABILITY OR OTHERWISE.

	13.	 	MISCELLANEOUS

13.01 Publicity.

Neither party will use the name of the other Party in any advertising or promotions,
communicate, comment or originate any publicity, news release or other public announcement,
written or oral, without the prior written approval of the other party except as otherwise
required by applicable law, regulation, court order or the rules of stock exchanges and any
other applicable regulatory authorities.

13.02 Governing Law.

This Agreement shall be governed by and interpreted in accordance with the laws of the State
of California, without regard to conflicts of laws principles.

13.03 Force Majeure.

In the event that either Party is prevented from performing or is unable to perform any of
its obligations under this Agreement due to any act of God; fire; casualty; flood; war; act
of terrorism; strike; lockout; failure of public utilities; injunction or any act, exercise,
assertion or requirement of governmental authority, including any governmental law, order or
regulation permanently or temporarily prohibiting or reducing the level of research
development or production work hereunder or the manufacture, use or sale of Products;
epidemic; destruction or production facilities; riots; insurrection; inability to procure or
use materials, labor, equipment, transportation or energy sufficient to meet experimentation
or manufacturing needs; or any other cause beyond the reasonable control of the Party
invoking this Section 13.03 if such Party shall have used its reasonable best efforts to
avoid such occurrence, such Party shall give notice to the other party in writing promptly,
and thereupon the affected Party’s performance shall be

 

26

excused, and the time for performance shall be extended for the period of delay or inability
to perform due to such occurrence. At the end of such period, the Party whose performance
is excused shall give prompt notice to the other Party.

13.04 Waiver.

The waiver by either Party of a breach or a default of any provision of this Agreement by
the other Party shall not be construed as a waiver of any succeeding breach of the same or
any other provision, nor shall any delay or omission on the part of either Party to exercise
or avail itself of any right, power or privilege that it has or may have hereunder operate
as a waiver of any right, power or privilege by such Party.

13.05 Notices.

Any notice or other communication in connection with this Agreement must be in writing and
delivered either personally by facsimile or by certified mail, return receipt requested, and
shall be effective when delivered to the addressee at the address specified above or such
other address as the addressee shall have specified in a notice actually received by the
addressor.

13.06 No Agency.

Nothing herein shall be deemed to constitute either Party as the agent or representative of
the other Party, or both Parties as joint venturers or partners for any purpose. Each Party
shall be an independent contractor, not an employee or partner of the other. Neither Party
shall be responsible for the acts or omission authority to speak for, represent or obligate
the other Party in any way without prior written authority from the other Party.

13.07 Entire Agreement.

This Agreement contains the full understanding of the parties with respect to the subject
matter hereof. No waiver, alteration or modification of any of the provisions hereof shall
be binding unless made in writing and signed by the Parties by their respective officers
thereunto duly authorized.

13.08 Headings.

The headings contained in this Agreement are for convenience of reference only and shall not
be considered in construing this Agreement.

13.09 Severability.

In the event that any provision of this Agreement is to be unenforceable because it is
invalid or any relevant jurisdiction, the validity of the remaining provision obligations of
the Parties shall, in the jurisdictions to be unenforceable, be construed and enforced
particular provisions held to be unenforceable.

 

27

13.10 Patent Marking.

All packaging containing individual Products, and/or documentation therefor, and/or to the
extent possible any Products sold by or by authorization of any Party, shall be marked
permanently and legibly with the number of each applicable patent(s) licensed hereunder in
accordance with each country’s patent laws, including Title 35, United States Code.

13.11 Successors and Assigns.

This Agreement shall be binding upon and inure to the benefit of the Parties hereto and
their successors and permitted assigns.

13.12 Counterparts.

This Agreement may be executed in any number of counterparts (which shall include facsimile
counterparts), each of which shall be deemed an original but all of which taken together
shall constitute one and the same instrument.

13.13 Recordation.

Each Party shall have the right, at its cost, at any time, to record or register an
acknowledgement of the licenses granted under this Agreement in any applicable patent office
or other appropriate facility, and the other Party shall provide reasonable assistance in
effecting such recording.

13.14 Joint Drafting.

This Agreement was jointly drafted and prepared by both Parties hereto and no presumption in
favor of or against any Party hereto shall be made with respect to the interpretation of any
provision of this Agreement.

 

28

IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed in their names by
their properly and duly authorized officers or representatives as of the date first above written.

	 	 	 	 	 	 	 
	 	 	RENEURON LIMITED	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Michael Hunt	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Title:
	 	Chief Executive Officer	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	STEMCELLS, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Martin McGlynn	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Title:
	 	President and Chief Executive Officer

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00088-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00088-of-00352.parquet"}]]