Document:

Exhibit 10.1

 

EXCLUSIVE
DEVELOPMENT AND LICENSE AGREEMENT

 

between

 

GENZYME
TRANSGENICS CORPORATION

 

and

 

ADVANCED CELL TECHNOLOGY

 

This Exclusive
Development and License Agreement [ILLEGIBLE] entered into as of June 8,
1999 (the “Effective Date”) by and between Genzyme Transgenics Corporation, a
Massachusetts corporation with its principal place of business at Five Mountain
Road, Framingham, Massachusetts 01701 (“GTC”) and Advanced Cell Technology, Inc.,
a Delaware corporation with its principal place of business at One Innovation
Drive, Worcester, Massachusetts 01605 (“ACT,” and together with GTC, the “parties”).  As set forth below, the University of
Massachusetts (the “University”) has agreed to be bound by certain provisions
of this Agreement.

 

RECITALS

 

A.                                   ACT
owns or has licensed with a sublicensable interest the ACT Patent Rights and
the ACT Technology (as defined below).

 

B.                                     Pursuant
to an existing Development Agreement (as defined below) between GTC and ACT,
ACT has been engaged in certain animal cloning activities on behalf of GTC.

 

C.                                     GTC
and ACT now desire to supersede the Development Agreement and replace it with
this Agreement under which (i) certain cloning work begun under or
contemplated by the Development Agreement will be completed, (ii) ACT will
grant an exclusive license to GTC to use the ACT Patent Rights and ACT
Technology in the GTC Field (as such terms are defined below), and (iii) GTC
will grant an exclusive license to ACT to use the GTC Patent Rights and GTC
Technology in the ACT Field (as such terms are defined below).

 

D.                                    The
sublicense of ACT’s rights under the UMASS Patent Rights (as defined below) to
GTC under this Agreement shall be subject to the relevant terms of the UMASS
License (as defined below).

 

THEREFORE, the
parties agree as follows:

 

1.                                      DEFINITIONS.     As
used in this Agreement, the following terms shall have the meanings set forth
below.

 

1.1                                 “ACT Developments” means Developments that
are conceived, discovered, invented, developed, created, made or reduced to
practice solely by ACT.

 

1.2                                 “ACT Field” means (i) human somatic
cell nuclear transfer applications for therapeutic purposes and (ii) the
cloning of animals for agricultural purposes, for the production

 

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of recombinant proteins,
peptides and polypeptides for human transplantation, cells for human
transplantation and tissues for human transplantation, but excluding the GTC
Field.

 

1.3                                 “ACT Licensed Property” means the ACT Patent Rights and the ACT
Technology provided, however, that
ACT Licensed Property shall not include ACT Patent Rights or ACT Technology (i) acquired
after the Effective Date as a result of or in connection with a merger or
acquisition with or by another entity, or (ii) obtained on terms which
prohibit the license contemplated by Section 3.1.

 

1.4                                 “ACT Patent Rights” means any and all patents and patent
applications in the GTC Field, including methods of doing business with respect
to the GTC Field, owned or licensed by ACT in which ACT has a licensable
interest and which exist as of the Effective Date or which come into existence
during the term of this Agreement, together with reissues, extensions (or other
governmental acts which effectively extend the period of exclusivity by the
patent holder), substitutions, confirmations, registrations, revalidations,
additions, continuations, continuations-in-part, divisions, or foreign
counterparts of or to the foregoing patent rights. ACT Patent Rights include,
without limitation, the patents and patent applications listed on Schedule A-1
attached to this Agreement, which schedule will be revised from time to
time after the Effective Date to reflect changes thereto.

 

1.5                                 “ACT Product” means any product that cannot be developed,
manufactured, used, or sold without (i) infringing one or more claims
under the ACT Patent Rights, or (ii) using or incorporating some portion
of the ACT Licensed Property.

 

1.6                                 “ACT Service” means any service that cannot be developed or
performed without using at least one process that (i) infringes one or
more claims under the ACT Patent Rights, or (ii) uses some portion of the
ACT Licensed Property.

 

1.7                                 “ACT Team” means a team of at least two individuals
supplied by ACT to supply expertise in the areas of oocyte recovery, activation
and enucleation; embryo cloning; fetal fibroblast cell line derivation,
maintenance and transfection; culture of bovine fetal fibroblasts; bovine
embryo transfer and recipient management; and the calving, screening and
rearing of transgenic founder animals.

 

l.8                                    “ACT Technology” means the following which are owned or
controlled by ACT during the term of this Agreement which are useful, necessary
or required to clone animals for the production of biopharmaceutical agents in
milk: confidential information, knowledge and data, including but not limited
to, inventions (whether patentable or not), trade secrets, ideas, designs,
drawings, know-how, processes, techniques and like technological information in
the GTC Field, Additionally, ACT Technology shall include any process described
within the ACT Patent Rights.

 

1.9                                 “Affiliate” means any corporation, company, partnership,
joint venture and/or firm which controls, is controlled by or is under common
control with a party. For purposes of this definition, “control” means (a) in
the case of corporate entities, direct or indirect ownership of more than fifty
percent (50%) of the stock or shares entitled to vote for the election of
directors; and (b) in the case of non-corporate entities, direct or
indirect ownership of more than

 

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fifty percent (50%) of the equity interest
with the power to direct the management and policies of such noncorporate
entities.

 

1.10                           “Confidential Information” includes,
without limitation, any scientific, technical, trade or business information
disclosed by one party to the other, or by GTC to the University, whether
directly or through ACT, which is specifically designated by the disclosing
party as confidential or proprietary, “Confidential Information” does not
include information which (a) was known to the receiving party at the time
it was disclosed, other than by previous disclosure by the disclosing party, as
evidenced by written records at the time of disclosure; (b) is at the time
of disclosure or later becomes publicly known other than through a breach of
this Agreement; (c) is lawfully and in good faith made available to the
receiving party by a third party who, to the receiving party’s knowledge after
inquiry, did not derive it from the disclosing party and who imposed no
obligation of confidence on the receiving party; or (d) is developed by
the receiving party independent of any disclosure by the disclosing party.

 

1.11                           “Development Agreement” means the
Development and Commercialization Agreement between GTC and ACT dated September 25,
1997, together with any amendments thereto as of the Effective Date.

 

1.12                           “Developments” include, without
limitation, discoveries, business methods, inventions, developments, patents
and patent rights, know-how, trade secrets, techniques, methodologies,
modifications, innovations, improvements, writings, documentation, data and
rights (whether or not protectible under state, federal, or foreign patent,
trademark, copyright or similar laws) that were or are conceived, discovered,
invented, developed, created, made or reduced to practice by ACT or GTC, as
applicable, in the performance of the Development Agreement or during the term
of this Agreement.

 

1.13                           “FDA” means the United States Food and
Drug Administration.

 

1.14                           “GTC Developments” means Developments that
are conceived, discovered, invented, developed, created, made or reduced to
practice solely by GTC.

 

1.15                           “GTC Field” means the cloning of animals
for all purposes related to the production of biopharmaceutical agents in milk,
including, but not limited to, proteins, peptides and polypeptides for
pharmaceutical, nutraceutical or other use.

 

1.16                           “GTC Licensed Property” means all GTC
Patent Rights and GTC Technology, provided,
however, that GTC Licensed Property shall not include GTC Patent
Rights or GTC Technology (i) acquired as a result of or in connection with
a merger or acquisition with or by another entity, or (ii) obtained on
terms which prohibit the license contemplated by Section 3.2.

 

1.17                           “GTC Patent Rights” means any and all
patents and patent applications in the field of cloning technology, including
methods of doing business with respect to cloning technology, owned or licensed
by GTC in which GTC has a licensable interest and which exist as of the
Effective Date or which come into existence during the term of this Agreement,
together with reissues, extensions (or other governmental acts which
effectively extend the period of exclusivity by the patent holder),
substitutions, confirmations, registrations, revalidations, additions,
continuations, continuations-in-part, divisions, or foreign counterparts of

 

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or to the foregoing patent rights. GTC Patent
Rights include, without limitation, the patents and patent applications to be
listed on Schedule A-2 to be attached to this Agreement,
which schedule will thereafter be revised from time to time to reflect
changes thereto.

 

1.18                           “GTC Product” means any product that
cannot be developed, manufactured, used, or sold without (i) infringing
one or more claims under the GTC Patent Rights, or (ii) using or
incorporating some portion of the GTC Licensed Property.

 

1.19                           “GTC Service” means any service that cannot
be developed or performed without using at least one process that (i) infringes
one or more claims under the GTC Patent Rights, or (ii) uses some portion
of the GTC Licensed Property.

 

1.20                           “GTC Team” means a team of two individuals supplied by
GTC to supply expertise in transgenic expression of hSA in the milk of cattle.

 

1.21                           “GTC Technology” means the following which
are owned or controlled by GTC during the term of this Agreement in the field
of cloning technology: confidential information, knowledge and data, including
but not limited to, inventions (whether patentable or not), trade secrets,
ideas, designs, drawings, know-how, processes, techniques and like
technological information. Additionally, GTC Technology shall include any
process described within the GTC Patent Rights.

 

1.22                           “hSA Cows” means
cows (including, without limitation, transgenic eggs, semen, and embryos and
progeny thereof) that are produced under the hSA Program (a) with or by
use of the ACT Patent Rights or ACT Technology, (b) are transfected with
GTC’s recombinant DNA constructs, (c) contain the hSA transgene and
express hSA in their milk as set forth in the hSA Program Summary attached as Schedule B,
and (d) are used for the sole purpose of transgenic production of the Milk
Products.

 

1.23                           “hSA Program” means the production,
through application of the ACT Technology, of hSA Cows which contain the hSA
transgene and express hSA in their milk, as set forth in the hSA Program
Summary attached as Schedule B.

 

1.24                           “hSA Program Summary” means the program
summary attached to this Agreement as Schedule B.

 

1.25                           “Joint Developments” means all
Developments conceived, discovered, invented, developed, created, made or
reduced to practice jointly by both parties in the ACT Field or GTC Field.

 

1.26                           “Joint Patent Rights” means any and all
patents and patent applications covering Joint Developments which exist as of
the Effective Date or which come into existence during the term of this
Agreement, together with reissues, extensions (or other governmental acts which
effectively extend the period of exclusivity by the patent holder),
substitutions, confirmations, registrations, revalidations, additions,
continuations, continuations-in-part, divisions, or foreign counterparts of or
to the foregoing patent rights. Joint Patent Rights include, without
limitation, the patents and patent applications to be listed on Schedule A-3
to be attached to this Agreement, which schedule will thereafter be
revised from time to time to reflect changes thereto.

 

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1.27                           “Milk Products” means the milk of the hSA
Cows and the hSA expressed in such milk.

 

1.28                           “Named Competitors” means Pharming, B.V.,
PPL Therapeutics, Inc., Roslin Bio-Med, Infigen, Inc., and Nexia
Biotechnologies, Inc., and their respective successors, assigns,
subsidiaries and affiliates.

 

1.29                           “Net Sales” means the total invoice price
charged on all sales (i) by ACT of GTC Products and/or Services, or (ii) by
GTC of ACT Products and/or Services, as applicable, in any country after
deducting, to the extent not already deducted, normal and customary trade,
dealer, quantity, and cash discounts actually allowed; allowances for credits
granted on account of rejections, returns, or price reductions; governmental
sales taxes and other charges imposed on such sales; and freight, insurance,
customs, duties, and other landing charges. In the event any product is sold as
a component of a combination of functional elements, net sales price for
purposes of determining royalty payments on such combination shall be
calculated by multiplying the average per unit net sales price of the product
portion of the combination when sold separately in the applicable country
during the accounting period in which the sale was made by the number of units
of product sold as part of such combination product. In addition, Net Sales of
a party shall include the amount of any milestone payment received based on the
performance of such party in connection with the development (i) of GTC
Products and/or Services by ACT or (ii) of ACT Products and/or Services by
GTC, as applicable.

 

1.30                           “Nutraceutical” means any food or other
preparation intended for oral consumption by humans whose primary function,
when taken into the human body, (a) serves to nourish or build up tissues
or supply energy and/or (b) maintains, restores or supports adequate
nutritional status or nutritional metabolic function.

 

1.31                           “UMASS License” means the Exclusive
License Agreement between ACT and the University dated April 16, 1996,
together with any amendments thereto.

 

1.32                           “UMASS Patent Rights” means ACT Patent
Rights licensed by ACT from the University under the UMASS License.

 

2.                                      THE
DEVELOPMENT AGREEMENT.

 

2.1                                 Supersession.    The Development Agreement is hereby
terminated by mutual agreement and all of its provisions are superseded in
their entirety.

 

2.2                                 Mutual
Release.  GTC and ACT each release
each other and all of each other’s officers, directors, agents and employees
from any and all claims, demands, actions, causes of action, suits, covenants,
contracts or agreements, including without limitation GTC’s claim(s) of
Performance Failures by ACT under the Development Agreement, and any and all
expenses, costs, losses or damages which either GTC or ACT now has or at any
time has had against the other based on or arising out of any provisions of the
Development Agreement that are terminated hereby.

 

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3.                 GRANT OF RIGHTS.

 

3.1                                 Grants from ACT to GTC.

 

(a)                                  License
Grant. Subject to the terms of this Agreement, ACT hereby grants to GTC an
exclusive, royalty-bearing, worldwide license, with the limited right to
sublicense, under its commercial rights in the ACT Licensed Property and in the
Joint Patent Rights to develop, make, have made, import, use, and sell ACT Products
in the GTC Field and to develop and perform ACT Services in the GTC Field. To
the extent this grant includes a sublicense of any UMASS Patent Rights, such
sublicense is subject to the relevant terms of the UMASS License as it may be
amended from time to time, provided that in the event of any inconsistency
between the UMASS License and Section 3.1(e) hereof, Section 3.1(e) hereof
shall govern.

 

(b)                                 Sublicenses.
The parties acknowledge that it may be mutually advantageous for GTC to
sublicense the ACT Licensed Property to third parties, including without
limitation the Named Competitors. GTC shall have the right to grant sublicenses
of its rights-under Section 3.1(a) subject to the limitations set
forth in this Section 3.1(b).

 

i.                                          Any
sublicenses by GTC of the UMASS Patent Rights may not transfer the right to
grant farther sublicenses and shall be subject to the consent of the
University, which consent will be granted at the sole discretion of the
University, provided that such consent shall not be unreasonably withheld or
delayed in the following circumstances:

 

(1)                                  Consent
to sublicense will not be unreasonably withheld or delayed by the University
where GTC has determined that defending its right to practice under the UMASS
Patent Rights is not commercially prudent, and it is therefore commercially
necessary for GTC to grant a sublicense in exchange for rights to third party
technology to enable GTC to practice the UMASS Patent Rights.

 

(2)                                  Consent
to sublicense will not be unreasonably withheld or delayed by the University
where it is commercially necessary for GTC to grant a sublicense to enable GTC’s
customers to maintain adequate production of products within the GTC Field;
provided that reasonable efforts are first used to avoid sublicensing the right
to practice the UMASS Patent Rights. If it has been determined that
sublicensing is commercially necessary, GTC shall limit the scope of any such
sublicensing to the delivery to such customers of transgenic animals for use in
the production of GTC Products and any sublicensing of the right to practice
nuclear transfer technology would occur only after all other reasonable
alternatives have been exhausted, e.g., supplying transgenic animals, embryos,
or cell lines.

 

(3)                                  Consent
to sublicense will not be unreasonably withheld or delayed by the University
where GTC proposes to grant a sublicense for research purposes only.

 

ii.                                       Any
sublicenses by GTC to third parties who will have the right to grant further
sublicenses, any sublicenses by GTC of ACT Technology, and any sublicenses by
GTC to the Named Competitors shall also be subject to ACT’s consent, which
consent shall not be unreasonably withheld or delayed, provided that if GTC
engages in sublicense discussions with the Named Competitors, GTC agrees to
consult with ACT, to permit ACT to participate in such discussions, and to
permit ACT to review copies of the proposed sublicense agreements.

 

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For purposes
of the preceding sentence, ACT’s consent may be reasonably withheld only if it
can show that the proposed sublicense would be materially adverse to its
business interests.

 

iii.                                    Any
sublicenses by GTC of ACT Patent Rights only to third parties other than the
Named Competitors whose rights under the ACT Licensed Property are limited to
their own research and commercial activities and who will have no right to
grant further sublicenses (“End Users”) are expressly permitted hereunder and
shall not require the consent of ACT.

 

iv.                                   GTC
shall promptly furnish ACT with a fully executed copy of all sublicense
agreements of GTC (other than sublicense agreements to End Users) and shall
promptly furnish the University with a fully executed copy of all sublicense
agreements of GTC involving the UMASS Patent Rights, all of which shall be
deemed Confidential Information subject to the provisions of Section 10.

 

v.                                      All
sublicense agreements executed by GTC pursuant to this Section 3.1(b) shall
expressly bind the sublicensee to Sections 3.l(c), 9 (to the extent
applicable), 10, 12, and 14 of this Agreement and shall provide for the
automatic assignment of the relevant provisions of such agreements to ACT if
this Agreement is terminated as described in Section 7.2 below.

 

(c)                                  Retained
Rights. To the extent the University, the federal government or any other
parties have rights in the ACT Licensed Property pursuant to Article 2 of
the UMASS License, the license granted hereunder is subject to such rights.

 

(d)                                 Nutraceuticals.
The licenses granted in Section 3.1(a) shall be co-exclusive with ACT
for ACT Products consisting of or incorporating Nutraceuticals, provided, however, that GTC shall have a
right of first refusal with respect to any license or any other collaboration
or partnering agreement that ACT intends to enter into with any other party in
the GTC Field for products consisting of or incorporating Nutraceuticals. ACT
shall give GTC prior written notice providing full particulars of any such
proposed transaction, and GTC shall have a period of thirty (30) days to notify
ACT in writing of its willingness to enter into such transaction on
substantially the terms proposed. If, by the end of such thirty (30)-day period
GTC has not so notified ACT, ACT shall be free to enter into such transaction,
but only on substantially the same terms offered to GTC in writing.

 

(e)                                  The
UMASS License. GTC acknowledges that a portion of the ACT Patent Rights
licensed to GTC hereunder are owned by the University and are licensed to ACT
under the UMASS License. ACT and the University represent and warrant to GTC
and GTC agrees that, in the event the UMASS License is terminated for any
reason pursuant to the provisions of the UMASS License, (i) any
sublicenses granted by GTC hereunder with respect to any UMASS Patent Rights
shall remain in effect in accordance
with their terms, (ii) GTC will thereafter make any payments due to ACT
with respect to such sublicenses directly to the University, and (iii) promptly
following such termination, GTC and the University will enter into a direct
license agreement reflecting the applicable terms of this Agreement and the
UMASS License. ACT acknowledges that any payments so made by GTC to the
University shall be credited against any payments due and payable to ACT
hereundcr. For the avoidance of doubt,

 

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ACT and the University agree that the references to “Sublicensees”
in Section 8.5 of the UMASS License shall not apply to GTC and shall not
be construed as vitiating clause (i) of this Section 3.1(e). ACT and
the University agree that the provisions of Section 2.2 of the UMASS
Agreement providing for the automatic assignment to the University of
sublicenses granted by ACT under said Section 2.2 shall not apply to the
sublicense by ACT to GTC under this Agreement, and that the provisions of this Section 3.1(e) shall
govern in the event that the UMASS License is terminated. ACT and the
University agree that GTC will not be bound by any amendment to the UMASS
License that affects GTC’s rights under this Agreement in any material respect,
unless GTC agrees in writing to such amendment.

 

3.2                                 Grants from GTC to ACT.

 

(a)                                  License Grant. Subject to the terms of this Agreement, GTC
hereby grants to ACT an exclusive, royalty-bearing, worldwide license in the
ACT Field, with the limited right to sublicense, under its commercial rights in
the GTC Licensed Property and in the Joint Patent Rights, to develop, make,
have made, import, use, and sell GTC Products in the ACT Field and to develop
and perform GTC Services in the ACT Field.

 

(b)                                 Sublicenses.      The parties acknowledge
that it may be mutually advantageous for ACT to sublicense the GTC Licensed
Property to the Named Competitors. ACT shall have the right to grant
sublicenses of its rights under Section 3.2(a) subject to the limitations
set forth in this Section 3.2(b).

 

i.                                          Any sublicenses by ACT to third parties who
will have the right to grant further sublicenses, any sublicenses by ACT of GTC
Technology, and any sublicenses by ACT to the Named Competitors shall be
subject to GTC’s consent, which consent shall not be unreasonably withheld or
delayed, provided that if ACT
engages in sublicense discussions with the Named Competitors, ACT agrees to
consult with GTC and permit GTC to participate in such discussions.

 

ii.                                       Any sublicenses by ACT of GTC Patent Rights
only to third parties other than the Named Competitors whose rights under the
GTC Licensed Property are limited to their own research and commercial
activities and who will have no right to grant further sublicenses (“End Users”)
are expressly permitted hereunder and shall not require the consent of GTC.

 

iii.                                    ACT shall promptly furnish GTC with a fully
executed copy of all sublicense agreements of ACT (other than sublicense
agreements to End Users), which shall be deemed Confidential Information
subject to the provisions of Section 10.

 

iv.                                   All sublicense agreements executed by ACT
pursuant to this Section 3.2(b) shall expressly bind the sublicensee
to Sections 9 (to the extent applicable), 10, 12, and 14 of this Agreement and
shall provide for the automatic assignment of the relevant provisions of such
agreements to GTC if this Agreement is terminated as described in Section 7.2
below.

 

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4.                 OBLIGATIONS
RELATING TO COMMERCIALIZATION.

 

4.1                                 GTC
Diligence Requirements. GTC shall use diligent efforts, or shall cause its
sublicensees to use diligent efforts, to develop ACT Products or ACT Services
and to introduce ACT Products or ACT Services into the commercial market;
thereafter, GTC or its sublicensees shall make ACT Products or ACT Services
reasonably available to the public.

 

4.2                                 ACT
Diligence Requirements. ACT shall use diligent efforts, or shall cause its
sublicensees to use diligent efforts, to develop GTC Products or GTC Services
and to introduce GTC Products or GTC Services into the commercial market;
thereafter, ACT or its sublicensees shall make GTC Products or GTC Services
reasonably available to the public.

 

4.3                                 Summary Reports.

 

(a)                                  Reports
by GTC.  GTC shall maintain complete
and accurate records of ACT Products and ACT Services that are made, used, sold
or performed by GTC under this Agreement. Not later than May lst of each year following the
Effective Date, GTC shall furnish ACT and the University with an executive
summary report on the progress of its efforts during the prior year to develop
and commercialize ACT Products or ACT Services, including without limitation
research and development efforts, efforts to obtain regulatory approval,
marketing efforts (including ACT Products and ACT Services made, used, sold or
performed) and sales figures, provided that such reports shall be deemed
Confidential Information subject to the provisions of Section 10 of this
Agreement.

 

(b)                                 Reports
by ACT.  ACT shall maintain complete
and accurate records of GTC Products and GTC Services that are made, used, sold
or performed by ACT under this Agreement. Not later than May lst of each year following the
Effective Date, ACT shall furnish GTC with an executive summary report on the
progress of its efforts during the prior year to develop and commercialize GTC
Products or GTC Services, including without limitation research and development
efforts, efforts to obtain regulatory approval, marketing efforts (including
GTC Products and GTC Services made, used, sold or performed) and sales figures,
provided that such reports shall be deemed Confidential Information subject to
the provisions of Section 10 of this Agreement.

 

5.                 DEVELOPMENTS.

 

5.1                                 GTC
Developments.             GTC agrees,
on a periodic basis (not less than semiannually), to provide to ACT and the
University a written report of all GTC Developments provided that such reports
shall be deemed Confidential Information subject to the provisions of Section 10
of this Agreement, and all such Developments, whether or not patentable,
relevant to the ACT Field, are and shall be considered GTC Licensed Property
and automatically licensed to ACT pursuant to Section 3.2.

 

5.2                                 ACT
Developments.           ACT agrees,
on a periodic basis (not less than semiannually), to provide to GTC a written
report of all ACT Developments, provided that such reports shall be deemed
Confidential Information subject to the provisions of Section 10 of this
Agreement, and all such Developments, whether or not patentable, relevant to
the GTC Field, are

 

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and shall be considered ACT Licensed Property
and automatically licensed to GTC pursuant to Section 3.1.

 

5.3                                 Technical
Assistance. Each party shall make reasonably available to the other party,
upon request, qualified technical personnel of such party for the purpose of
providing technical assistance to facilitate the transfer to the other party of
technology licensed to the other party hereunder, the reasonable per  diem
charges and expenses of which shall be borne by the party requiring
such assistance.

 

6.               CLONING PROGRAMS.

 

6.1                                 hSA
Program. ACT agrees to use commercially reasonable efforts to produce, on
or before September 1, 2000, at least twenty (20) cloned hSA Cows.

 

6.2                                 New
Cloning Programs or Other Services.  
In the event GTC wishes ACT to engage in a new cloning program or to
perform other services for GTC, the parties will negotiate a written, mutually
agreed upon budgeted level of effort, including any compensation to be paid by
GTC to ACT, and any other relevant terms and conditions for any such cloning
program or other services.

 

6.3                                 Responsibilities of ACT for the hSA Program.

 

(a)                                  Conduct
of the hSA Program. The ACT Team (and any other necessary and qualified
technical and managerial staff) and the GTC Team shall collaborate as set forth
in Schedule B to ensure the transfection of hSA constructs into bovine
fetal fibroblast cell lines and the selection of recombinant fetal fibroblast
cell lines.

 

(b)                                 Provision
of Facilities. ACT shall, through its subcontractor Trans Ova or such other
subcontractor as is mutually agreed upon by the parties, provide all facilities
and equipment acceptable to GTC which are necessary for the conduct of the hSA
Program, including space, housing and utilities services necessary to maintain
bovine fetal fibroblast cell lines and livestock. All bovine stock for the hSA
Program will be housed at a facility controlled by ACT’s subcontractor, Trans
Ova or such other subcontractor as is mutually agreed upon by the parties until
such stock is determined to have the capability to express the hSA protein in
milk or such stock reaches the age of six (6) months, whichever is
earlier. Upon determination that such stock has expressed the hSA protein in
milk pursuant to Schedule B or such stock reaches the age of six (6) months,
whichever is earlier, all such bovine stock for the hSA Program will be housed
at a facility identified by GTC, and GTC shall then be responsible for the
conduct of the hSA Program with respect to such stock, including space, housing
and utilities services necessary to maintain bovine fetal fibroblast cell lines
and livestock.   The foregoing
notwithstanding, in the case of stock which has not expressed the hSA protein
at the age of six (6) months, GTC may instruct ACT to destroy the stock in
lieu of assuming responsibility for such stock.

 

(c)                                  Sources
of Cattle. ACT shall provide heifers selected in accordance with good
agricultural practice (“GAP”) criteria mutually agreed upon by ACT and GTC as
necessary to conduct the hSA Program. All hSA Cows used and/or produced by ACT
under this Agreement shall be free from bovine spongiform encephalopathy and/or
other infectious agents reasonably

 

10

 

identified as detrimental to the
commercialization of Milk Products. If, at any time during the term of this
Agreement, ACT and/or GTC have any reason to believe (or have any reason to
conclude that a governmental regulatory authority believes) that bovine spongiform
encephalopathy and/or such other infectious agents have or may be detected in
cattle in the United States, ACT will promptly institute procedures mutually
agreed upon by the parties to ensure the health of the hSA Cows used and/or
produced by ACT under this Agreement.

 

(d)                                 Bovine
Fetal Fibroblast Cell Lines. ACT shall provide all necessary bovine fetal
fibroblast cell lines to conduct the hSA Program.

 

(e)                                  Care
of Animals. ACT, through its subcontractor Trans Ova or such other
subcontractor as is mutually agreed upon by the parties, shall have sole
responsibility for the care and maintenance (including all required feed and
veterinary care) of all bovine stock used and generated during the hSA Program,
as defined in the hSA Program Summary, provided,
however, that upon determination that such stock has expressed the
hSA protein in milk pursuant to Schedule B or such stock reaches
the age of six (6) months, whichever is earlier, all such bovine stock for
the hSA Program will be housed at a facility identified by GTC and GTC shall
then be responsible for the conduct of the hSA Program with respect to such
stock, including space, housing and utilities services necessary to maintain
bovine fetal fibroblast cell lines and livestock. The foregoing notwithstanding,
in the case of stock which has not expressed the hSA protein at the age of six (6) months,
GTC may instruct ACT to destroy the stock in lieu of assuming responsibility
for such stock.

 

(f)                                    Animal
Welfare Regulations. The hSA Program shall undergo applicable animal
welfare and animal research committee review and approval by GTC and ACT in
accordance with applicable legal and regulatory standards.

 

(g)                                 Compliance
with Other Regulations.    ACT and
GTC shall mutually conduct and manage all aspects of the hSA Project in full
compliance with USDA, FDA and other regulatory requirements for the production
of clinical-grade proteins/products in the milk of transgenic animals.    Each party shall have the ongoing right to
audit the other party’s compliance with this Section and other Sections of
the Agreement to ensure such compliance.

 

6.4                                 Responsibilities
of GTC for the hSA Program.

 

(a)                                  The
hSA Program.   The GTC Team shall
consult with the ACT Team regarding the transfection of hSA constructs into
bovine fetal fibroblast cell lines and the selection of recombinant bovine
fetal fibroblast cell lines.

 

(b)                                 DNA
Construct. The GTC Team shall assist the ACT Team by providing all
necessary DNA constructs jointly deemed necessary by the parties for use in the
hSA Program, including, without limitation, the beasein-hSA-Neo
Construct and/or other suitable selectable markers.

 

(c)                                  Identification
of Transgenic Lines and Animals.  
GTC shall provide all materials and resources necessary for the
identification and evaluation of transgenic bovine fetal

 

11

 

fibroblast cell lines, embryos, fetuses and
calves.  Such materials shall include,
without limitation, DNA probes and polymerase chain reaction (“PCR”) primers.

 

(d)                                 Other Expertise.   The
GTC Team shall provide additional expertise, as reasonably necessary, during
the course of the hSA Program, including, without limitation, lactation
induction and pharmaceutical protein purification, characterization and
regulatory advice.

 

(e)                                  Characterization of hSA Cows.  
Following the birth of cows generated during the hSA Program, GTC shall
characterize individual animals derived from specific recombinant cell lines
and elect whether to expand the hSA Cows from select cell lines. Characterization
shall be comprised of genotyping, animal health and measurement of the levels
of hSA in the induced and/or natural lactation of such hSA Cows.

 

7.                                   TERM AND TERMINATION.

 

7.1                                 General.    The licenses granted by ACT to GTC under Section 3.l(a) will
commence on the Effective Date and, unless sooner terminated as provided
herein, continue until the expiration of all ACT Patent Rights, whereupon the
license hereunder to GTC shall become paid-up and royalty free.   The licenses granted by GTC to ACT under Section 3.2(a) will
commence on the Effective Date and, unless sooner terminated as provided
herein, continue until the expiration of all GTC Patent Rights, whereupon the
license hereunder to ACT shall become paid-up and royalty free.   This Agreement will commence on the
Effective Date and, unless sooner terminated as provided herein, continue until
the expiration of all ACT Patent Rights and GTC Patent Rights.

 

7.2                                 Termination for Cause. This Agreement may be terminated by either
party for breach by the other party of any material obligation arising
hereunder, by giving thirty (30) days prior written notice to the other party
specifying the cause of the termination; provided, however, that if the breach
is cured within the thirty (30) day period, the notice shall be withdrawn and
shall be of no effect.

 

7.3                                 Survival of Obligations; Return of
Confidential Information.   Notwithstanding any termination of this
Agreement, the obligations of the parties under Section 10, as well as
under any other provisions which by their nature are intended to survive any
such termination, shall survive and continue in force. Upon any termination of
this Agreement, each party shall promptly return to the other party all written
Confidential Information, and all copies thereof, to the other party.

 

7.4                                 Sublicenses.

 

(a)                                  GTC’s Sublicenses. Upon termination of this Agreement, the
relevant provisions of any existing sublicenses of GTC shall be automatically assigned to ACT, and ACT shall be bound by
the terms of such sublicenses, provided that the sublicensees continue to
perform in accordance with their respective sublicense agreements.
Notwithstanding the foregoing, ACT’s obligations to any such sublicensee shall
not be interpreted to extend beyond any of its obligations to GTC hereunder
with respect to the subject matter of the sublicense.

 

12

 

(b)                                 ACT’s Sublicenses.   Upon termination of this
Agreement, the relevant provisions of any existing sublicenses of ACT shall be
automatically assigned to GTC, and GTC shall be bound by the terms of such
sublicenses, provided that the sublicensees continue to perform in accordance
with their respective sublicense agreements. Notwithstanding the foregoing, GTC’s
obligations to any such sublicensee
shall not be interpreted to extend beyond any of its obligations to ACT
hereunder with respect to the subject matter of the sublicense.

 

8.            PAYMENTS.

 

8.1                                 Initial Payment.    On
the Effective Date, GTC will pay ACT the sum of $1,000,000, $750,000 of which
shall be in consideration of the license granted to GTC from ACT in Section 3.1
(a) of this Agreement, and $250,000 of which shall be an advance payment
which shall be fully creditable against ACT services for which the parties have
separately contracted, milestone payments (including those listed in Section 8.3
below), royalties, sublicense revenues or other payments payable or to become
payable to ACT from GTC under this Agreement or under any other agreement
between the parties.

 

8.2                                 Shares of GTC.

 

(a)                                  Authorization of Issuance of the Shares.  As
additional consideration for the license granted to GTC from ACT in Section 3.1(a) of
this Agreement, GTC will issue to (x) ACT that number of shares of the Common
Stock of GTC, par value $0.01 per share (“ACT’s Shares”), equal to the quotient
obtained by dividing (i) $900,000 by (ii) the average of the closing
price of the Common Stock of GTC on the NASDAQ National Market (or on a
principal national securities exchange on which the Common Stock is listed or
admitted to trading) for the five (5) trading days ending on the day prior
to the Effective Date of this Agreement and (y) the University that number of
shares of the Common Stock of GTC, par value $0.01 per share (the “University’s
Shares,” and together with ACT’s Shares, the “Shares”), equal to the quotient
obtained by dividing (i) $100,000 by (ii) the average of the closing
price of the Common Stock of GTC on the NASDAQ National Market (or on a
principal national securities exchange on which the Common Stock is listed or
admitted to trading) for the five (5) trading days ending on the day prior
to the Effective Date of this Agreement.

 

(b)                                 Issuance of the Shares and Delivery of
Certificates. Within five (5) days
after the Effective Date, GTC shall (i) issue the Shares in consideration
of the agreements of ACT and the University contained herein and for no further
consideration, (ii) deliver to ACT one or more stock certificates representing ACT’s Shares, such
stock certificates to be registered in the name of ACT or in such nominee
name(s) as designated by ACT, and (iii) deliver to the University one or
more stock certificates representing the University’s Shares, such stock
certificates to be registered in the name of the University or in such nominee
name(s) as designated by the University.

 

(c)                                  Investment Representations.   
ACT and the University represent and warrant to, and covenant with, GTC
that:

 

i.                                          ACT and the University are knowledgeable,
sophisticated and experienced in making, and are qualified to make, decisions
with respect to investments in shares

 

13

 

presenting an investment decision like that
involved in the acquisition of the Shares, including investments in securities
issued by companies comparable to GTC, and have requested, received, reviewed
and considered all information they deem relevant in making an informed
decision to acquire the applicable Shares.

 

ii.                                       ACT
and the University are acquiring the applicable Shares in the ordinary course
of their businesses and for their own account for investment only and with no
present intention of distributing any of such Shares or any arrangement or
understanding with any other persons regarding the distribution of such Shares.

 

iii.                                    ACT
and the University understand that the Shares are “restricted securities” under
the federal securities laws inasmuch as they are being acquired from GTC in a
transaction not involving a public offering and that under such laws and
applicable regulations such securities may be resold without registration under
the Securities Act only in certain limited circumstances. In this connection,
ACT and the University represent that they are familiar with SEC Rule 144,
as presently in effect, and understand the resale limitations imposed thereby
and by the Securities Act.

 

iv.                                   ACT
and the University will not, directly or indirectly, offer, sell, pledge,
transfer or otherwise dispose of (or solicit any offers to buy, purchase or
otherwise acquire or take a pledge of) any of the Shares except in compliance
with the Securities Act, and the rules and regulations promulgated
thereunder.

 

v.                                      ACT
and the University each qualifies as an “accredited investor” within the
meaning of Rule 501(a)(3) of Regulation D promulgated under the Securities Act and is a resident of the
United States of America.

 

vi.                                   It
is understood that the certificates evidencing the Shares shall bear the
following legend unless and until the resale of the Shares pursuant to an
effective Registration Statement or until the Shares may be sold under Rule 144
without restrictions:

 

THESE
SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. THEY MAY NOT
BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A
REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT
OR, IF REQUESTED BY GTC, AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO GTC
AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED UNDER SUCH ACT.

 

(d)                                 Restriction
on Sale of Shares. The Shares shall be “restricted securities” and not
eligible for resale under Rule 144 or otherwise until twelve (12) months
from the date of issuance, provided that thereafter one-twelfth (1/12) of the
Shares shall become saleable each month, and further provided that ACT and the
University agree to sell no more than 5,000 Shares in the aggregate in any day.

 

8.3                                 hSA
Milestone Payments. GTC will pay to ACT the sum of $12,500 for each cloned
hSA Cow (up to a maximum of twenty (20) cows) made by or for ACT using the ACT
Patent Rights or ACT Technology on or before March 21, 2000. Each such
$12,500 payment

 

14

 

will be made by GTC within thirty (30) days
after written notice from ACT that a cloned cow has achieved the hSA expression
level set forth in Schedule B over a thirty (30)-day period. The
payments made under this Section 8.3 will represent full compensation for
activities conducted by ACT on the hSA Program through the date of completion
of the milestone.

 

8.4                                 Royalties,
Reports and Records.

 

(a)                                  GTC
Royalty Obligations.

 

i.                                          Net
Sales of hSA. GTC agrees to pay ACT, on a calendar quarterly basis, a
royalty of two percent (2%) of Net Sales by GTC of ACT Products consisting of
hSA produced in the milk of hSA Cows, provided,
however, that in the event Net Sales of ACT Products consisting of
hSA produced in the milk of hSA Cows exceed $12,500,000 per calendar quarter
for two consecutive calendar quarters, the royalty will thereafter be 1% of
such Net Sales.

 

ii.                                       Net
Sates of Other Products. GTC agrees to pay ACT, on a calendar quarterly
basis, a royalty of three percent (3%) of the Net Sales by GTC of ACT Products
consisting of proteins (other than hSA) produced in the milk of transgenic
animals and ACT Services relating to such ACT Products, provided, however, that in the event Net
Sales of ACT Products consisting of proteins (other than hSA) produced in the
milk of transgenic animals and ACT Services relating to such Products exceed $25,000,000
per calendar quarter for two consecutive calendar quarters, the royalty will
thereafter be 2% of such Net Sales.

 

(b)                                 ACT
Royalty Obligations. ACT will pay to GTC a royalty in the amount of three
percent (3%) of Net Sales by ACT of any GTC Products or Services, provided, however, that in the event Net
Sales of any GTC Products or Services exceed $25,000,000 per calendar quarter
for two consecutive calendar quarters, the royalty will thereafter be 2% of
such Net Sales.

 

8.5                                 Sublicense Revenues.

 

(a)                                  GTC
agrees to pay ACT twenty-five percent (25%) of any and all license fees and
up-front fees, (whether paid in cash, equity of the sublicensee or other
consideration), royalties, milestone payments based on the sublicensee’s
performance, and premiums over market value paid to GTC for equity investments
in GTC by the sublicensee, received in consideration of the grant of
sublicenses of the ACT Patent Rights or ACT Technology, however such
sublicenses may be characterized, but excluding payments for services of GTC,
milestone payments based on performance by GTC, or equity investments in GTC at
market value (“GTC Sublicense Revenues”).  
For the avoidance of doubt, no GTC Sublicense Revenues shall be deemed
received by GTC in connection with the sublicensing of the ACT Patent Rights or
ACT Technology to a third party in exchange for a license under such third
party’s technology which is necessary for the manufacture or sale of ACT
Products or ACT Services, provided that no additional consideration (other than
the license under such third party’s technology) is paid by such third party
for such sublicense.

 

(b)                                 ACT
agrees to pay GTC twenty-five percent (25%) of any and all license fees or
up-front fees (whether paid in cash, equity of the sublicensee or other
consideration).

 

15

 

milestone payments based on the sublicensee’s
performance, royalties or premiums over market value paid to ACT for equity
investments in ACT by the sublicensee, received in consideration of the grant
of sublicenses of GTC Patent Rights or GTC Technology, however such sublicenses
may be characterized, but excluding payments for services of ACT, milestone
payments based on performance by ACT, or equity investments in ACT at market
value (“ACT Sublicense Revenues”). For the avoidance of doubt, no ACT
Sublicense Revenues shall be deemed received by ACT in connection with the
sublicensing of the GTC Patent Rights or GTC Technology to a third party in
exchange for a license under such third party’s technology which is necessary
for the manufacture or sale of GTC Products or GTC Services, provided that no
additional consideration (other than the license under such third party’s
technology) is paid by such third party for such sublicense.

 

8.6                                 Minimum Annual Payments.

 

(a)                                  Effective January 5, 2000, GTC shall pay
to ACT an annual fee of $100,000 to maintain exclusivity of the license granted
under Section 3.1(a) (the “Exclusivity Fee”). Except as provided
below, the Exclusivity Fee shall be payable in advance on January 5th of each year.

 

(b)                                 If, by June 30, 2001, GTC enters into
agreements with third-party(s) to develop two (2) products covered by the
ACT Patent Rights and/or using the ACT Technology intended for use as
therapeutics, the Exclusivity Fee shall remain at $100,000 per year; otherwise
the Exclusivity Fee shall increase to $1 million per year thereafter. In the
event of unanticipated technical difficulties, which technical difficulties are
confirmed by ACT, the parties may extend the above deadline of June 30,
2001 to a date mutually agreed on.

 

(c)                                  Provided that the Exclusivity Fee was not
already raised to $1 million pursuant to Section 8.6(b), then if, by June 30th
of every second year following June 30, 2001 (i.e., June 30, 2003; June 30,
2005; etc.), GTC enters into agreements with third party(s) to develop two (2) additional
products covered by the ACT Patent Rights and/or using the ACT Technology
intended for use as therapeutics, the Exclusivity Fee shall remain at $100,000
per year; otherwise the Exclusivity Fee shall increase to $1 million per year
thereafter.

 

(d)                                 If the Exclusivity Fee increases to $1
million in any year pursuant to Section 8.6(b) or (c) above,
such increase shall be applied pro rata only
for the remainder of such year (i.e., the Exclusivity Fee due for the remainder
of such year shall be $450,000, payable on or about July 1st of such year, and thereafter the Exclusivity Fee shall be $1 million
per year, payable on or about January 5th of each
subsequent year).

 

(e)                                  The above fees will be creditable by GTC
against amounts due or to become due to ACT thereafter under this Agreement or
under any other agreement between the parties including, but not limited to,
fees for ACT services, sublicense revenue, and royalties.

 

(f)                                    GTC may elect to allow the license granted
under Section 3.1(a) to become non-exclusive at any time by electing
not to pay the applicable Exclusivity Fee.

 

(g)                                 If at any time the license granted under Section 3.1(a) to
GTC hereunder becomes non-exclusive, (i) the royalties and other fees
payable by GTC to ACT hereunder shall

 

16

 

be automatically reduced to the most
favorable rates charged by ACT to its other licensees of such rights, and (ii) the
license granted by GTC to ACT with respect to the GTC Licensed Property under Section 3.2(a) shall
be restricted such that ACT shall not be permitted to use or sublicense the use
of the GTC Licensed Property in programs with GTC’s competitors, as determined
in GTC’s reasonable discretion.

 

8.7                                 Payments
in U.S. Dollars.   All payments due
under this Agreement shall be payable in United States dollars. Conversion of
foreign currency to U.S. dollars shall be made at the conversion rate reported
in The Wall Street Journal on the last working day of the calendar quarter to
which the payment relates.  Such payments
shall be without deduction of exchange, collection, or other charges.

 

8.8                                 Blocked
Payments. If by law, regulation, or fiscal policy of a particular country,
conversion into United States dollars or transfer of funds of a convertible
currency to the United States is restricted or forbidden, the party having the
payment obligation (the “Payor”) shall give the other party (the “Payee”)
prompt notice in writing and shall pay the royalty and other amounts due through
such means or methods as are lawful in such country as Payee may reasonably
designate. Failing the designation by Payee of such lawful means or methods
within thirty (30) days after such notice is given to Payee, Payor shall
deposit such royalty payment in local currency to the credit of Payee in a
recognized banking institution selected by Payor and identified in a written
notice to Payee by Payor, and such deposit shall fulfill all obligations of
Payor to Payee with respect to such royalties.

 

8.9                                 Audit
Rights

 

(a)                                  Each
party shall submit a report to the other party quarterly within 45 days after
the end of each calendar quarter during the term of this Agreement stating in
each such report the aggregate sales and payments with respect to ACT Products
and Services, or GTC Products and Services, as applicable, during the preceding
calendar quarter and the royalty and sublicense revenue as provided herein.
Such reports shall also include a statement of any credits claimed (including
without limitation any credits under Sections 3.1(e), 8.1, 8.4(a)(ii) and
8.6(e) hereunder) during the preceding calendar quarter. The payment of
royalty and sublicense revenue amounts shall be made concurrently with such
reports.

 

(b)                                 Each
party shall keep full, complete, true and accurate books of account containing
all particulars relating to the manufacture and sales with respect to ACT
Products and Services, or GTC Products and Services, as applicable, and any
allowed credits, which may be necessary to ascertain and verify the royalties
and sublicense revenue payable to the other party. Said books and accounts
shall be kept at the respective party’s principal place of business.

 

(c)                                  At
the request of a party or the University, but not more than once in each
calendar year, the other party shall permit an independent certified public
accountant selected by the requesting party (or the University’s internal
accountants) to have access, during regular business hours of the audited
party, to such records to determine, for any calendar quarter commencing not
more than three years prior to the date of such request, the completeness and
accuracy of such books and records, and the accuracy of reports submitted to
the other party and/or payments made to the other party. If any such inspection
discloses an error in any royalty

 

17

 

or sublicense revenue payment, the audited party
shall pay to the other party, within, thirty (30) days of the discovery of the
error, (a) all deficiencies in royalty or sublicense revenue payments, (b) interest
on such deficiencies from the date such royalty or sublicense revenue payment
was due until the date paid at the rate equal to one and one-half percent (11/2%)
per month, and (c) if such error is in excess of ten percent (10%) of any
royalty or sublicense revenue payment, the cost of the audit. In all other
cases, the costs of the audit shall be paid for by the party conducting the
audit. All information disclosed pursuant to an audit shall be deemed Confidential
Information subject to the provisions of Section 10 hereof.

 

9.                                      PROPRIETARY RIGHTS.

 

9.1                                 Ownership.

 

(a)                                  GTC.   GTC
shall own all hSA Cows, GTC Patent Rights, GTC Technology, GTC Developments,
all proprietary DNA constructs, and all recombinant cell lines generated with
GTC’s DNA constructs.

 

(b)                                 ACT.   ACT
or its licensor(s) shall own the ACT Patent Rights, ACT Technology, and ACT
Developments.

 

(c)                                  Joint
Developments. The parties shall jointly own all Joint Developments.

 

9.2                                 ACT
Patent Rights.

 

(a)                                  Responsibility; Costs.   ACT
will retain primary responsibility for filing, prosecution and maintenance of
the ACT Patent Rights in all countries and for all ACT Technology where GTC
requests patent protection, using patent counsel approved by GTC, which
approval shall not be unreasonably withheld or delayed.   The costs of such filing, prosecution and
maintenance shall be borne by ACT, except that GTC will reimburse ACT for such
costs for any countries where GTC requests patent protection, but where ACT did
not otherwise intend to seek protection. Except as provided above, ACT and GTC
will pay the fees and expenses of their respective outside patent counsel for
the activities described in this Section 9.2.

 

(b)                                 Consultation; Abandonment.   
GTC’s patent counsel shall be given a reasonable opportunity to comment
on all proposed patent filings (“Filings”) and responses (“Responses”) to
patent office actions or other patent office communications (collectively, “Office
Communications”) with respect to
ACT Patent Rights. In the case of Filings, and in the case of Office
Communications to which ACT must respond in a period of time equal to or
exceeding sixty (60) days (including extensions), ACT shall deliver its
proposed Filing or Response to GTC for comment not later than sixty (60) days
prior to the final patent office deadline for such Filing or Response, and ACT
will not unreasonably refuse to accept, any suggestions of GTC’s patent counsel
regarding such Filing or Response, provided that GTC’s patent counsel provides
such comments to ACT’s patent counsel not less than thirty (30) days prior to
the final patent office deadline for such Filing or Response.   In the case of Office Communications to
which ACT must respond in less than sixty (60) days, which deadline may not be
extended, ACT shall deliver its proposed Response to GTC for comment not later
than ten (10) days after ACT’s receipt of such Office Communication, and
ACT will not unreasonably

 

18

 

refuse to accept any suggestions of GTC’s
patent counsel regarding such Response, provided that GTC’s patent counsel
provides such comments to ACT’s patent counsel not less than ten (10) days
prior to the final patent office deadline for such Response. To the extent that
any such patent matter relates solely to the GTC Field and not to the ACT
Field, GTC’s patent counsel will have the final right to determine the
resolution of the matter, subject to the right of the University to
consultation as provided in the UMASS License. ACT will not allow any patent or
patent application within the ACT Patent Rights to become expired or abandoned
without giving GTC the right to assume responsibility for such patent or patent
application, and if GTC so elects, ACT will assign such patent or patent
application to GTC, and GTC will thereafter assume control thereof and all
expenses related thereto. With respect to the UMASS Patent Rights, GTC’s rights
under this subsection 9.2(b) shall be subject to the rights of the
University under Section 6 of the UMASS License.

 

(c)                                  Defense
of ACT Patent Rights.    ACT and GTC
will consult with one another in the event of a third party claim that a patent
within the ACT Patent Rights in the GTC Field is invalid, unenforceable, or
non-infringing. ACT will have the first right to control the defense of such
claim at its expense, but GTC will have the right to share in the control of
the defense by sharing 50% of the costs thereof, but ACT shall have the final
decision in the event of a disagreement regarding the conduct of the defense.
If ACT elects not to defend, GTC may do so at its expense and under its
control, but shall have the right to offset such expenses against royalties
otherwise due to ACT (other than royalties attributable to the UMASS Patent
Rights) until such time as the ACT Patent Rights have been upheld, provided
that such offset shall not exceed 50% of such royalties.   Notwithstanding the foregoing, neither party
will enter into a settlement that admits the invalidity, unenforceability, or
non-infringement of any ACT Patent Rights without consent of the other
party.  With respect to the UMASS Patent
Rights, GTC’s rights under this subsection 9.2(c) shall be subject to
the rights of the University under Section 6 of the UMASS License.

 

(d)                                 Prosecution
of Infringers of ACT Patent Rights. GTC shall have the first right to
prosecute infringers of the ACT Patent Rights in the GTC Field at its expense,
and shall retain all recoveries arising out of such prosecutions by GTC.   ACT shall have the right to prosecute such
infringers if GTC elects not to do so, at its expense, and shall retain all
recoveries arising out of such prosecutions by ACT. Neither party will enter
into a settlement that admits the invalidity, unenforceability, or non-infringement
of any ACT Patent Rights without consent of the other party. With respect to
the UMASS Patent Rights, GTC’s rights under this subsection 9.2(d) shall
be subject to the rights of the University under Section 6 of the UMASS
License.

 

9.3                                 GTC Patent Rights.

 

(a)                                  Responsibility;
Costs. GTC will retain primary responsibility for filing, prosecution and
maintenance of the GTC Patent Rights in all countries and for all GTC
Technology where ACT requests patent protection, using patent counsel approved
by ACT, which approval shall not be unreasonably withheld or delayed. The costs
of such filing, prosecution and maintenance shall be borne by GTC, except that
ACT will reimburse GTC for such costs for any countries where ACT requests
patent protection, but where GTC did not otherwise intend to seek protection.
Except as provided above, GTC and ACT will pay the fees

 

19

 

and expenses of their respective outside patent
counsel for the activities described in this Section 9.3.

 

(b)                                 Consultation; Abandonment.   
ACT’s patent counsel shall be given a reasonable opportunity to comment
on all proposed patent filings (“Filings”) and responses (“Responses”) to
patent office actions or other patent office communications (collectively, “Office
Communications”) with respect to GTC Patent Rights. In the case of Filings, and
in the case of Office Communications to which GTC must respond in a period of
time equal to or exceeding sixty (60) days (including extensions), GTC shall deliver
its proposed Filing or Response to ACT for comment not later than sixty (60)
days prior to the final patent office deadline for such Filing or Response, and
GTC will not unreasonably refuse to accept any suggestions of ACT’s patent
counsel regarding such Filing or Response, provided that ACT’s patent counsel
provides such comments to GTC’s patent counsel not less than thirty (30) days
prior to the final patent office deadline for such Filing or Response.   In the case of Office Communications to which
GTC must respond in less than sixty (60) days, which deadline may not be
extended, GTC shall deliver its proposed Response to ACT for comment not later
than ten (10) days after GTC’s receipt of such Office Communication, and
GTC will not unreasonably refuse to accept any suggestions of ACT’s patent
counsel regarding such Response, provided that ACT’s patent counsel provides
such comments to GTC’s patent counsel not less than ten (10) days prior to
the final patent office deadline for such Response.   To the extent that any such patent matter
relates solely to the ACT Field and not to the GTC Field, ACT’s patent counsel
will have the final right to determine the resolution of the matter. GTC will
not allow any patent or patent application within the GTC Patent Rights to
become expired or abandoned without giving ACT the right to assume
responsibility for such patent or patent application, and if ACT so elects, GTC
will assign such patent or patent application to ACT, and ACT will thereafter
assume control thereof and all expenses related thereto.

 

(c)                                  Defense of GTC Patent Rights.   GTC
and ACT will consult with one another in the event of a third party claim that
a patent within the GTC Patent Rights in the ACT Field is invalid,
unenforceable, or non-infringing.   GTC
will have the first right to control the defense of such claim at its expense,
but ACT will have the right to share in the control of the defense by sharing
50% of the costs thereof, but GTC shall have the final decision in the event of
a disagreement regarding the conduct of the defense. If GTC elects not to
defend, ACT may do so at its expense and under its control, but shall have the
right to offset such expenses against royalties otherwise due to GTC until such
time as the GTC Patent Rights have been upheld, provided that such offset shall
not exceed 50% of such royalties. Notwithstanding the foregoing, neither party
will enter into a settlement that admits the invalidity, unenforceability, or
non-infringement of any GTC Patent Rights without consent of the other party.

 

(d)                                 Prosecution of Infringers of GTC Patent
Rights. ACT shall have the
first right to prosecute infringers of the GTC Patent Rights in the ACT Field
at its expense, and shall retain all recoveries arising out of such prosecutions
by ACT. GTC shall have the right to prosecute such infringers if ACT elects not
to do so, at its expense, and shall retain all recoveries arising out of such
prosecutions by GTC. Neither party will enter into a settlement that admits the
invalidity, unenforceability, or non-infringement of any GTC Patent Rights
without consent of the other party.

 

20

 

9.4                                 Joint
Patent Rights.

 

(a)                                  Responsibility;
Costs.   GTC will retain primary
responsibility for filing, prosecution and maintenance of the Joint Patent
Rights in all countries, using patent counsel approved by ACT, which approval
shall not be unreasonably withheld or delayed.
The costs of such filing, prosecution and maintenance shall be borne equally by
GTC and ACT, except that ACT will bear all of such costs in any countries where
ACT requests patent protection, but where GTC did not otherwise intend to seek
protection. If either party fails to pay its share of such costs with respect
to any Joint Patent Rights, its exclusive license from the other party under Article 3
with respect to such Joint Patent Rights shall be automatically revoked, but
the exclusive license from such party to the other party with respect to such
Joint Patent Rights shall remain effective.

 

(b)                                 Consultation;
Abandonment.    ACT’s patent counsel
shall be given a reasonable opportunity to comment on all proposed patent
filings (“Filings”) and responses (“Responses”) to patent office actions or
other patent office communications (collectively, “Office Communications”) with
respect to Joint Patent Rights. In the case of Filings, and in the case of
Office Communications to which GTC must respond in a period of time equal to or
exceeding sixty (60) days (including extensions), GTC shall deliver its
proposed Filing or Response to ACT for comment not later than sixty (60) days
prior to the final patent office deadline for such Filing or Response, and GTC
will not unreasonably refuse to accept any suggestions of ACT’s patent counsel
regarding such Filing or Response, provided that ACT’s patent counsel provides
such comments to GTC’s patent counsel not less than thirty (30) days prior to
the final patent office deadline for such Filing or Response.   In the case of Office Communications to
which GTC must respond in less than sixty (60) days, which deadline may not be
extended, GTC shall deliver its proposed Response to ACT for comment not later
than ten (10) days after GTC’s receipt of such Office Communication, and
GTC will not unreasonably refuse to accept any suggestions of ACT’s patent
counsel regarding such Response, provided that ACT’s patent counsel provides
such comments to GTC’s patent counsel not less than ten (10) days prior to
the final patent office deadline for such Response.   To the extent that any such patent matter
relates solely to the ACT Field and not to the GTC Field, ACT’s patent counsel
will have the final right to determine the resolution of the matter. GTC will
not allow any patent or patent application within the Joint Patent Rights to
become expired or abandoned without giving ACT the right to assume
responsibility for such patent or patent application, and if ACT so elects, GTC
will assign such patent or patent application to ACT, and ACT will thereafter
assume control thereof and all expenses related thereto.

 

(c)                                  Defense
of Joint Patent Rights. GTC and ACT will consult with one another in the
event of a third party claim that a patent within the Joint Patent Rights is
invalid, unenforceable, or non-infringing. GTC will have the first right to
control the defense of such claim at its expense, but ACT will have the right
to share in the control of the defense by sharing 50% of the costs thereof, but
GTC shall have the final decision in the event of a disagreement regarding the
conduct of the defense. If GTC elects not to defend, ACT may do so at its
expense and under its control, but shall have the right to offset such expenses
against royalties otherwise due to GTC. Notwithstanding the foregoing, neither
party will enter into a settlement that admits the invalidity,
unenforceability, or non-infringement of any Joint Patent Rights without
consent of the other party.

 

21

 

(d)                                 Prosecution
of Infringers of Joint Patent Rights. ACT shall have the first right to
prosecute infringers of the Joint Patent Rights in the ACT Field at its
expense, and shall retain all recoveries arising out of such prosecutions by
ACT. GTC shall have the right to prosecute such infringers if ACT elects not to
do so, at its expense, and shall retain all recoveries arising out of such
prosecutions by GTC. GTC shall have the first right to prosecute infringers of
the Joint Patent Rights in the GTC Field at its expense, and shall retain all
recoveries arising out of such prosecutions by GTC. ACT shall have the right to
prosecute such infringers if GTC elects not to do so, at its expense, and shall
retain all recoveries arising out of such prosecutions by ACT. Neither party
will enter into a settlement that admits the invalidity, unenforceability, or
non-infringement of any Joint Patent Rights without consent of the other party.

 

9.5                                 Cooperation.
GTC and ACT shall cooperate fully in the preparation, filing, prosecution, and
maintenance of all ACT Patent Rights, GTC Patent Rights, and Joint Patent
Rights. Such cooperation includes, without limitation, (i) promptly
executing all papers and instruments or requiring employees of GTC or ACT to
execute such papers and instruments as reasonable and appropriate so as to enable
GTC or ACT to file, prosecute, and maintain such Patent Rights in any country;
and (ii) promptly informing the other party of matters that may affect the
preparation, filing, prosecution, or maintenance of any such Patent Rights
(such as becoming aware of an additional inventor who is not listed as an
inventor in a patent application).

 

10.                               CONFIDENTIAL
INFORMATION.

 

10.1                           Nondisclosure
of Confidential Information.   During
the term of this Agreement and for five (5) years thereafter, neither
party nor the University will disclose or make available to any person outside
its organization the disclosing party’s Confidential Information, except that
each party will have the right to disclose such of the other party’s
Confidential Information consisting of ACT Technology or GTC Technology, as
applicable, to third parties to which sublicensing is permitted under Section 3.1(b) or
3.2(b), provided that such third parties are bound to protect the
confidentiality of such Confidential Information. Each party may disclose the
other party’s Confidential Information to persons within its organization and
that of its Affiliates to the extent necessary to further the purposes of this
Agreement, provided that all such persons are bound to protect the
confidentiality of such Confidential Information.  Each party may disclose the other party’s
Confidential Information if required by law or governmental authority, provided
that prior notice of any such disclosure is given to the other party and that
the disclosing party cooperates with the other party in seeking protective
orders or other restrictions on disclosure.

 

10.2                           Use
of Confidential Information. Each party will use the Confidential
Information of the other party only for the purposes contemplated by this
Agreement.

 

22

 

11.                               REPRESENTATIONS
AND WARRANTIES.

 

11.1                           Representations
and Warranties by ACT.  ACT
represents and warrants to GTC that:

 

(a)                                  ACT owns or has a licensable interest in the
ACT Licensed Property and has the right to grant to GTC the licenses set forth
above. As of the Effective Date, GTC is in receipt of proposed claims to an ACT
patent concerning cloning a non-human mammal by nuclear transfer which ACT
represents it believes will issue in the U.S. in the near term.

 

(b)                                 ACT has provided GTC with a copy of the UMASS
License, as amended, with certain terms redacted, and ACT represents and warrants that the said copy is a true and
complete (except as redacted) copy of the UMASS License as of the Effective
Date.

 

(c)                                  ACT shall have the unrestricted right to
transfer good and marketable title to the Milk Products and the hSA Cows to GTC
pursuant to this Agreement, free
and clear of any lien, charge or encumbrance created or permitted by ACT;

 

(d)                                 the Milk Products and hSA Cows will conform
to the applicable specifications set forth in Schedule B. The parties
agree that any hSA Cows that do not conform to the specifications set forth in Schedule
B shall be destroyed.

 

(e)                                  the Milk Products shall not be (i) adulterated
or misbranded within the meaning of the Federal Food, Drug and Cosmetic Act, as
amended, or within the meaning of any applicable state or municipal law in
which the definitions of adulteration and misbranding are substantially the
same as those contained in the Federal Food, Drug and Cosmetic Act, as such Act
and laws are constituted and effective at the time of delivery of the Milk
Products, or (ii) an article which may not be introduced into
interstate commerce under the provisions of Sections 404, 505 or 512 of such
Act, as amended;

 

(f)                                    as of the date of delivery of each hSA Cow,
each hSA Cow and the Milk Products of such hSA Cow have been manufactured in accordance with all current material
applicable federal, state and local laws and regulations relating to ACT’s
activities under this Agreement, including without limitation applicable GMPs
and GAPs;

 

(g)                                 with respect to the ACT Patent Rights and ACT
Technology only, to the knowledge of ACT, the commercialization of the Milk Products will not infringe the
patent or other intellectual property rights of any third party; and

 

(h)                                 the execution of this Agreement and
performance of the transactions contemplated by such agreements have been
approved by the ACT Board Of Directors and will not conflict with or result in
any breach of any of the terms, conditions or provisions of or constitute a
default under, any agreement to which ACT is a party or by which ACT is bound.

 

11.2                           Representation
Warranty by GTC. GTC represents and warrants to ACT that:

 

(a)                                  it owns the GTC Licensed Property and has the
right to grant to ACT the licenses set forth above;

 

23

 

(b)                                 it
shall have the unrestricted right to transfer good and marketable title to all
DNA constructs and/or other suitable selectable markers used in the hSA Program
and all materials and resources necessary for the identification and evaluation
of transgenic bovine fetal fibroblast cell lines, embryos, fetuses and calves
including, without limitation, DNA probes and polymerase chain reaction (“PCR”)
primers;

 

(c)                                  the
execution of this Agreement and performance of the transactions contemplated by
such agreements have been approved by all necessary corporate action and will
not conflict with or result in any breach of any of the terms, conditions or
provisions of, or constitute a
default under, any agreement to which GTC is a party or by which GTC is bound;
and

 

(d)                                 to
the knowledge of GTC, the transgenic activities described in Schedule B
performed or to be performed by ACT
will not infringe the patent or other intellectual property rights of any third
party.

 

11.3                           Disclaimer.
Except as expressly set forth in Section 11.1(g) and 11.2(d), neither
party makes any representation or warranty as to the validity or scope of the
ACT Licensed Property or the GTC Licensed Property, nor does either party make
any representation or warranty that the exercise of the rights granted to
either party with respect to the ACT Licensed Property or the GTC Licensed
Property will not infringe the patent or other intellectual property rights of
any third party.

 

12.                               INDEMNIFICATION.

 

12.1                           Indemnification
by ACT.   ACT agrees to defend,
indemnify and hold harmless GTC, the University, and their Affiliates, agents,
directors, officers and employees, at ACT’s cost and expense, from and against
any and all losses, costs, liabilities, damages, fees and expenses, including
reasonable attorneys’ fees and expenses with respect to claims by third
parties:

 

(a)                                  arising
out of any breach by ACT of any representation or warranty contained in Section 11.1;
and

 

(b)                                 in
the nature of product liability or otherwise attributable to the making, using,
development, testing, registration, distribution and/or sale by or through ACT
of any GTC Products or GTC Services under this Agreement.

 

12.2                           Indemnification
by GTC.   GTC agrees to defend,
indemnify and hold harmless ACT, the University, and their Affiliates, agents,
directors, officers and employees, at GTC’s cost and expense, from and against
any and all losses, costs, liabilities, damages, fees and expenses, including
reasonable attorneys’ fees and expenses with respect to claims by third parties:

 

(a)                                  arising
out of any breach by GTC of any representation or warranty contained in Section 11.2;
and

 

24

 

(b)                                 in
the nature of product liability or otherwise attributable to the making, using,
development, testing, registration, distribution and/or sale by or through GTC
of any ACT Products or ACT Services under this Agreement; and

 

(c)                                  that
the transgenic activities of ACT under the hSA Program described in Schedule B
infringe the patent or other intellectual property rights of such third
parties.

 

12.3                           Indemnification
Claims.    Each party shall give the
other party prompt notice of any claim for which indemnification under this Section 12
is or may be applicable and will cooperate with the indemnifying party in the
defense or settlement of such claim at the indemnifying party’s expense. The
indemnifying party shall be required to provide and be entitled to control the
defense of any claim covered hereunder (including the right to settle it at the
sole discretion of the indemnifying party) with counsel reasonably satisfactory
to the other party which may, at its own expense, participate in the defense of
any claim after the indemnifying party assumes control of the defense thereof.
The indemnification obligations in this Section 12 shall not apply to amounts paid in
settlement of such claim if such settlement is effected without the consent of
the indemnifying party, which consent shall not be unreasonably withheld or
delayed. The failure of the indemnified party to deliver notice to the
indemnifying party promptly after the commencement of any such action, if
prejudicial to the indemnifying party’s ability to defend such action, shall
relieve the indemnifying party of any liability to the indemnified party under
this Section 12, but the failure to promptly deliver notice to the
indemnifying party will not relieve it of any liability that it may have to the
indemnified party other than under this Section 12.

 

13.                               LIMITATION
OF LIABILITY.  IN NO EVENT SHALL
EITHER PARTY (OR ITS AFFILIATES, SHAREHOLDERS, DIRECTORS, OFFICERS, EMPLOYEES,
OR AGENTS) BE LIABLE FOR ANY SPECIAL, INDIRECT, RELIANCE, INCIDENTAL,
EXEMPLARY, COVER, OR CONSEQUENTIAL DAMAGES, INCLUDING LOSS OF PROFITS AND
GOODWILL, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH
DAMAGES, REGARDLESS OF THE THEORY OF LIABILITY.

 

14.                               INSURANCE.  
Prior to the commencement of the first Phase I clinical trial of any
proteins/products produced in hSA Cows developed by ACT under this Agreement,
each party shall obtain and maintain, at all times during the term of this
Agreement, general liability insurance with appropriate bodily injury, death
and property damage limits. Upon request, a party shall furnish a certificate
of insurance signed by an authorized representative of its insurance
underwriter evidencing such coverage and providing for at least thirty (30) days’
prior written notice of any cancellation, termination or reduction of coverage.

 

15.                               MISCELLANEOUS.

 

15.1                           Assignment.
 This Agreement, and the rights and
obligations thereunder, may not be assigned or transferred, in whole or in
part, by either party without the prior written consent of the other party,
except that (a) either party may assign this Agreement to an Affiliate,
provided that such party remains primarily liable and/or responsible for the
performance of such obligations, and provided further that such Affiliate
agrees to be bound to the terms and conditions of this Agreement, and (b) either
party may assign this agreement in connection with

 

25

 

the merger, consolidation or sale of all or substantially
all of the assets of such party which pertain to the subject matter of this
Agreement.

 

15.2                           Notices. Notices shall be in writing and delivered by hand or sent by
nationally recognized overnight delivery service, prepaid registered or
certified air mail, or by facsimile confirmed by prepaid first class,
registered or certified mail letter, and shall be deemed to have been properly
served to the addressee upon receipt of such written communication.

 

Addresses: In the case of
GTC, the proper address for communications shall be:

 

Genzyme Transgenics
Corporation

Five Mountain Road

Framingham, Massachusetts
01701-9322

Attn:   President

Fax: (508) 370-3797

 

with
a copy to:                                         Palmer & Dodge

One Beacon Street

Boston, MA 02108

Fax: (617) 227-4420

 

and in the case of ACT, the
proper address for communications and all payments shall be:

 

Advanced Cell Technology, Inc.

One Innovation Drive

Worcester, Massachusetts
01605

Attn:   President 

Fax: (508) 756-0931

 

with
a copy to:                                         Pierce Atwood

One Monument Square

Portland, ME

Fax: (207) 791-1350

 

15.3                           Choice of Law. This Agreement is subject to and governed
by the laws of the Commonwealth of Massachusetts, without regard to principles
of conflicts of law thereof.

 

15.4                           Dispute Resolution.   Any
dispute arising under this Agreement which is not promptly settled by the
parties shall be referred to the Chief Executive Officers of the parties. The
Chief Executive Officers will meet for negotiations within fifteen (15) days of
such referral. If the dispute has not been resolved within thirty (30) days
(which period may be extended by mutual agreement), subject to any rights to
injunctive relief and unless otherwise specifically provided for herein, any
dispute will be submitted to binding arbitration. The arbitration shall be conducted
before a single arbitrator in accordance with the Commercial Arbitration Rules of
the American Arbitration Association (AAA), which shall administer the
arbitration and act as appointing authority. The arbitration shall take place
in Boston, Massachusetts, and shall be the exclusive forum for resolving such
dispute, controversy or claim. The decision of the arbitrator

 

26

 

shall be final and binding upon the parties.
Notwithstanding anything contained above to the contrary, each party shall have
the right to institute judicial proceedings against the other party in order to
enforce the instituting party’s rights hereunder through specific performance,
injunction or similar equitable relief.

 

15.5                           Compliance
with Law by GTC. GTC shall comply with, and shall ensure that its
sublicensees comply with, all local, state, federal and international laws and
regulations relating to the development, manufacture, use, and sale of ACT
Products and ACT Services. GTC shall, and shall cause its sublicensees to,
comply with the following:

 

(a)                                  GTC
and its sublicensees shall obtain all necessary approvals from the FDA and any
similar governmental authorities of any foreign jurisdiction in which GTC or a
permitted sublicensee intends to make, use, or sell ACT Products or to perform
ACT Services.

 

(b)                                 GTC
and its sublicensees shall comply with all United States laws and regulations
controlling the export of certain commodities and technical data, including
without limitation all Export Administration Regulations of the United States
Department of Commerce. Among other things, these laws and regulations
prohibit, or require a license for, the export of certain types of commodities
and technical data to specified countries. 
GTC hereby gives written assurance that it will comply with, and will
cause its sublicensees to comply with, all United States export control laws
and regulations, that it bears sole responsibility for any violation of such
laws and regulations by itself or its sublicensees, and that it will indemnify,
defend, and hold ACT harmless (in accordance with Section 12.1) for the
consequences of any such violation.

 

(c)                                  To
the extent that any invention claimed in the ACT Licensed Property has been
partially funded by the United States government, and only to the extent
required by applicable laws and regulations, GTC agrees that any ACT Products
used or sold in the United States will be manufactured substantially in the
United States or its territories.  
Current law provides that if domestic manufacture is not commercially
feasible under the circumstances, ACT and/or the University may seek a waiver
of this requirement from the relevant federal agency on behalf of GTC and, upon
GTC’s request, shall cooperate with GTC in seeking such a waiver.

 

15.6                           Compliance
with Law by ACT. ACT shall comply with, and shall ensure that its
sublicensees comply with, all local, state, federal and international laws and
regulations relating to the development, manufacture, use, and sale of GTC
Products and GTC Services. ACT shall, and shall cause its sublicensees to,
comply with the following;

 

(a)                                  ACT
and its sublicensees shall obtain all necessary approvals from the FDA and any
similar governmental authorities of any foreign jurisdiction in which ACT or a
permitted sublicensee intends to make, use, or sell GTC Products or to perform
GTC Services.

 

(b)                                 ACT
and its sublicensees shall comply with all United States laws and regulations
controlling the export of certain commodities and technical data, including
without limitation all Export Administration Regulations of the United States
Department of Commerce. Among other things, these laws and regulations
prohibit, or require a license for, the export of

 

27

 

certain types
of commodities and technical data to specified countries. ACT hereby gives
written assurance that it will comply with, and will cause its sublicensees to
comply with, all United States export control laws and regulations, that it
bears sole responsibility for any violation of such laws and regulations by
itself or its sublicensees, and that it will indemnify, defend, and hold GTC
harmless (in accordance with Section 12.1) for the consequences of any
such violation.

 

15.7                           No
Encumbrances.   GTC will not create
or incur or cause to be incurred or to exist any lien, encumbrance, mortgage,
pledge, charge, restriction or other security interest of any kind upon the ACT
Licensed Property without the prior written consent of the University and ACT.
ACT will not create or incur or cause to be incurred or to exist any lien,
encumbrance, mortgage, pledge, charge, restriction or other security interest
of any kind upon the GTC Licensed Property without the prior written consent of
GTC.

 

15.8                           Counterparts.
This Agreement may be executed in any number of counterparts, each of which
shall be deemed an original but all of which together shall constitute one and
the same instrument.

 

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

 

15.10                     Binding
Effect. This Agreement shall be binding upon and inure to the benefit of
the parties and their respective permitted successors and assigns. The parties
acknowledge that the University is a third party beneficiary of the applicable
provisions of Sections 3.1, 4.3(a), 5.1, 8.2, 8.9(c), 9.2, 12.1, 12.2, 15.5(c),
15.7, 15.10, and 15.14 hereof, with the right to enforce such provisions
against the applicable party.

 

15.11                     Amendment
and Waiver.   This Agreement may be
amended, supplemented, or otherwise modified only by means of a written
instrument signed by both parties. Any waiver of any rights or failure to act
in a specific instance shall relate only to such instance and shall not be
construed as an agreement to waive any rights or fail to act in any other
instance, whether or not similar.

 

15.12                     Severability.
In the event that any one or more of the provisions contained in this Agreement
shall, for any reason, be held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect any
other provision of this Agreement, and all other provisions shall remain in
full force and effect. If any of the provisions of this Agreement is held to be
excessively broad or invalid, illegal or unenforceable in any jurisdiction, it
shall be reformed and construed by limiting and reducing it so as to be
enforceable to the maximum extent permitted by law in conformance with its
original intent.

 

15.13                     Entire
Agreement. This Agreement, together with the UMASS License, constitute the
entire agreement of the parties with regard to its subject matter, and
supersedes all previous written or oral representations, agreements and
understandings between the parties. The parties acknowledge and agree that
there are no representations, warranties, arrangements, promises or agreements
outstanding between them, whether oral or in writing, other than those
contained or referred to in this Agreement or the UMASS License.

 

28

 

15.l4                        Publicity.
Neither party, nor any of its Affiliates, shall originate any publicity, news
release or other public announcement (“Announcements”), written or oral,
relating to this Agreement or the existence of an arrangement between the
parties, without the prior written approval of the other party, which approval
shall not be unreasonably withheld, except as otherwise required by law. Any
references to the University in such Announcements shall be subject to the
approval of the University. The foregoing notwithstanding, ACT and GTC shall
have the right to make such Announcements without the consent of the other
party or the University, as applicable, in any prospectus, offering memorandum,
or other document or filing required by applicable securities laws or other
applicable law or regulation, provided that such party shall have given the
other party or the University, as applicable, at least ten (10) days’
prior written notice of the proposed text for the purpose of giving the other
party or the University, as applicable, the opportunity to comment on such
text.

 

15.15                     No Implied
Licenses.  No implied licenses are granted pursuant to the terms of this
Agreement. No license rights shall be created by implication or estoppel.

 

15.16                     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 party, and the
manner in which each party renders its services under this Agreement shall be
within its sole discretion. Neither party shall be responsible for the acts or
omissions of the other party, and neither party will have authority to speak
for, represent or obligate the other party in any way without prior written
authority from the other party.

 

15.17                     Non-Solicitation.
During the term of the hSA Program and for a period of one (1) year
thereafter, neither party may solicit any person who is employed by or a
consultant to the other party or any Affiliate of such party and who has worked
on the hSA Program under this Agreement to terminate such person’s employment
by or consultancy to such party or such Affiliate. As used herein, the term “solicit”
shall include, without limitation, requesting, encouraging, assisting or
causing, directly or indirectly, any such employee or consultant to terminate
such person’s employment with or consultancy to such party or Affiliate.

 

15.18                     Product
Marking.   To the extent commercially
feasible, and consistent with prevailing business practices, all products
manufactured or sold by either party under this Agreement will be marked with
the number of each issued patent of the other party that applies to such
product.

 

29

 

IN WITNESS WHEREOF, the parties hereto and the University have
caused this Exclusive Development and License Agreement to be executed the day
and year first written above. The persons signing below warrant their authority
to sign the Agreement.

 

	
  GENZYME TRANSGENICS CORPORATION 

  	
  ADVANCED CELL TECHNOLOGY, INC. 

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ John B. Green

  	
   

  	
  By:

  	
  /s/ Michael West

  	
   

  
	
   

  	
  Signature

  	
   

  	
  Signature 
  Michael West

  	
   

  
	
   

  	
  John
  B. Green

  	
   

  	
   

  	
  PRES &
  CEO

  	
   

  
	
   

  	
  Printed Name

  	
   

  	
  Printed Name

  	
   

  
	
   

  	
  Vice President and Chief Financial Officer

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title

  	
   

  	
  Title

  	
   

  
								

 

CONSENT AND
AGREEMENT

 

For value received, the
University hereby (a) consents to the sublicense by ACT to GTC of the
UMASS Patent Rights under this Agreement, (b) agrees to be bound by the
applicable provisions of Sections 3.1, 4.3(a), 5.1, 8.9(c), 10.1, and 15.5
hereof, and (c) affirms its representations, warranties, and covenants set
forth in Section 8.2(c) hereof.

 

 

	
  THE UNIVERSlTY OF MASSACHUSETTS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Joseph F.X. McGuirl

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Signature

  	
   

  	
   

  	
   

  
	
   

  	
  Joseph F.X.
  McGuirl

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Printed Name

  	
   

  	
   

  	
   

  
	
   

  	
  Executive Director

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title

  	
   

  	
   

  	
   

  
	
   

  	
  Commercial Ventures and
  Intellectual Property

  	
   

  	
   

  	
   

  
								

 

30Exhibit
10.2

 

EXCLUSIVE LICENSE AGREEMENT

 

This Agreement, effective as of
April 16, 1996 (the “Effective Date”), is between the University of Massachusetts (“University”), a public
institution of higher education of the Commonwealth of Massachusetts, as represented
by its Amherst campus, and Advanced Cell Technology, Inc. (“Company”), a
Delaware corporation.

 

R E C I T A L S

 

WHEREAS, University and Company
previously entered into a Research Agreement dated April 15, 1994 (the “Prior
Agreement”), which has been superseded by a Research Collaboration Agreement
dated as of April 16, 1996
between the parties (the “Research Agreement”);

 

WHEREAS, in Article 8 of the
Prior Agreement, University granted Company a right to acquire an exclusive
license under University’s rights in any inventions resulting from research
performed under the Prior Agreement (“Subject Inventions”);

 

WHEREAS, University and Company
acknowledge and agree that three Subject Inventions were developed prior to the
Effective Date, which Subject Inventions are described on Exhibit A, and
that Company desires to exercise its right to acquire an exclusive license
under the Subject Inventions;

 

WHEREAS, University and Company
have determined that the financial terms and other provisions set forth in
Article 8 of the Prior Agreement are unclear, and that many essential terms and
conditions of an exclusive license agreement, (e.g., diligence requirements,
sublicense rights, and payment procedures) remain to be negotiated by the
parties;

 

WHEREAS, in addition to licensing
the Subject Invention, Company also desires to acquire from University an
exclusive license (with the right to sublicense) under University’s commercial
rights in certain biological materials, such as transgenic animals, and any new
inventions that may be developed under the Research Agreement;

 

WHEREAS, University and Company
agree that the ambiguities and omissions in Article 8 of the Prior Agreement,
together with the need to license biological materials and new inventions
developed under the Research Agreement, justify and necessitate substitution of
a new and complete agreement, as negotiated between parties in good faith, and
cancellation of the financial terms and other provisions specified in Article 8
of the Prior Agreement; and

 

WHEREAS, this Agreement
represents the new and complete agreement of the parties with respect to the
license of the Subject Invention, related biological materials, and new inventions
that are developed under the Research Agreement.

 

 

NOW, THEREFORE, University and
Company hereby agree as follows:

 

1. Definitions.

 

1.1.  “Affiliate” means any legal entity
(such as a corporation, partnership, or limited liability company) that is
controlled by Company. For the purposes of this definition, the term “control”
means (i) beneficial ownership of at least fifty percent (50%) of the voting
securities of a corporation or other business organization with voting
securities or (ii) a fifty percent (50%) or greater interest in the net assets
or profits of a partnership or other business organization without voting
securities.

 

1.2.  “Biological Materials” means (i)
certain transgenic animals, (ii) Project Materials (as defined in the Research
Agreement), and (iii) certain other tangible biological materials that are necessary
for the effective exercise of the Patent Rights, which materials are described
on Exhibit A, as well as tangible materials that are produced through
use of the original materials, including, for example, any progeny derived from
a cell line, monoclonal antibodies produced by hybridoma cells, DNA or RNA
replicated from isolated DNA or RNA, recombinant proteins produced through use
of isolated DNA or RNA, and substances routinely purified from a source
material included in the original materials (such as recombinant proteins
isolated from a cell extract or supernatant by non-proprietary affinity
purification methods). These Biological Materials shall be listed on Exhibit
A, which will be periodically amended to include any additional Biological
Materials that University may furnish to Company, including without limitation
any Project Materials (as defined in the Research Agreement) developed under
the Research Agreement.

 

1.3.  “Confidential Information” means any
confidential or proprietary information furnished by one party (the “Disclosing
Party”) to the other party (the “Receiving Party”) in connection with this
Agreement, provided that such information is specifically designated as
confidential.  Such Confidential
Information shall include, without limitation, any diligence reports furnished
to University under Section 3.1. and royalty reports furnished to University
under Section 5.2.

 

1.4.  “Licensed Product” means any product
that cannot be developed, manufactured, used, or sold without (i) infringing
one or more claims under the Patent Rights, (ii) using or incorporating some
portion of one or more Biological Materials, or (iii) using some portion of the
Related Technology.

 

1.5.  “Licensed Service” means any service
that cannot be developed or performed without using at least one process that
(i) infringes one or more claims under the Patent Rights, (ii) uses some
portion of one or more Biological Materials, or (iii) using some portion of the
Related Technology.

 

1.6.  “Net Sales” means the gross amount
billed or invoiced on sales by Company and its Affiliates of Licensed Products
and Licensed Services, less the following: (i) customary trade, quantity, or
cash discounts and commissions to non-affiliated brokers or agents to the
extent actually allowed and taken; (ii) amounts repaid or credited by reason of
rejection or return; (iii) to the extent separately stated on purchase orders,
invoices, or other documents of sale, any taxes or other governmental charges
levied on the production, sale, transportation, delivery, or use of a Licensed
Product or Licensed Service which is paid by or on behalf of

 

2

 

Company; and (iv) outbound transportation
costs prepaid or allowed and costs of insurance in transit.

 

In any transfers of Licensed
Products between Company and an Affiliate, Net Sales shall be calculated based
on the final sale of the Licensed Product to an independent third party. In the
event that Company or an Affiliate receives non-monetary consideration for any
Licensed Products or Licensed Services, Net Sales shall be calculated based on
the fair market value of such consideration. In the event that Company or its
Affiliates consume a Licensed Product in the performance of a commercial
service (other than a Licensed Service), the Licensed Product shall be
considered sold and the Net Sales shall be calculated based on the sales price
of the Licensed Product to an independent third party during the same Royalty
Period or, in the absence of such sales, on the fair market value of the
Licensed Product as determined by the parties in good faith.

 

In any sale or transfer of
Licensed Products between Company and a Sublicensee, Net Sales shall be
calculated based on the final sale of the Licensed Product to an independent
third party, such that University shall be entitled to receive a portion of
Sublicense Income based on the sale by Sublicensee of Licensed Product to an
independent third party rather than on any sale or transfer of Licensed Product
by Company to the Sublicensee.  In the
event that a Sublicensee receives non-monetary consideration for any Licensed
Products or Licensed Services.  Net Sales
shall be calculated based on the fair market value of such consideration. In
the event that a Sublicensee consumes a Licensed Product in the performance of
a commercial service (other than a Licensed Service), the Licensed Product
shall be considered sold and the Net Sales shall be calculated based on the
sales price of the Licensed Product to an independent third party during the
same Royalty Period or, in the absence of such sales, on the fair market value
of the Licensed Product as determined by the parties in good faith.

 

1.7.  “Patent Rights” means the U.S. patent
applications listed on Exhibit A, and any divisional, continuation, or
continuation-in-part of such patent applications to the extent the claims are
directed to subject matter specifically described therein, as well as any
patent issued thereon and any reissue or reexamination of such patent, and any
foreign counterparts to such patents and patent applications,  Exhibit A shall be periodically
amended to include any additional Patent Rights that may arise, such as from
continuations-in-part and inventions for which Company exercised its option right
under the Research Agreement.

 

1.8.  “Related Technology” means any
know-how, technical information, research and development information, test
results, and data that (i) is not available to the general public, (ii) is
necessary for the effective exercise of the Patent Rights, (iii) has been
developed in the laboratory of Dr. James Robl as of the Effective Date or is
developed in the laboratory of Dr. Ponce de Leon (or any other Principal
Investigator under the Research Agreement) during the term of the Research
Agreement, and (iv) is owned by University.

 

1.9.  “Royally Period” means the partial
calendar quarter commencing on the date on which the first Licensed Product is
sold or used or the first Licensed Service is performed and every complete or partial
calendar quarter thereafter during which either (i) this Agreement

 

3

 

remains in effect or (ii) Company has the
right to complete and sell work-in-progress and inventory of Licensed Products
pursuant to Section 8.5.

 

1.10.  “Sublicense Income” means any payments
that Company receives from a Sublicensee in consideration of the sublicense of
the rights granted Company under Section 2.1., including without limitation
license fees, royalties, milestone payments, equity payments, and license
maintenance fees, but excluding payments specifically committed to the
development of Licensed Products or Licensed Services.

 

1.11.  “Sublicensee” means any permitted
sublicensee of the rights granted Company under this Agreement, as further
described in Section 2.2.

 

2. Grant of Rights.

 

2.1.  License Grants.

 

(a)  Patent Rights and Biological Materials.  Subject to the terms of this Agreement,
University hereby grants to Company and its Affiliates an exclusive, worldwide,
royalty-bearing license (with the right to sublicense) under its commercial
rights in the Patent Rights and Biological Materials to develop, make, have
made, use, and sell Licensed Products in any field and to develop and perform
Licensed Services in any field.

 

(b)  Related Technology. Subject to the
terms of this Agreement, University hereby grants to Company and its Affiliates
a non-exclusive, royalty-bearing license (with the right to sublicense) under
its commercial rights in the Related Technology to develop, make, have made,
use, and sell Licensed Products in any field and to develop and perform
Licensed Services in any field.

 

2.2.  Sublicenses. Company shall have the
right to grant sublicenses of its rights under Section 2.1. with the consent of
University, which consent shall not be unreasonably withheld or delayed.  All sublicense agreements executed by Company
pursuant to this Article 2 shall expressly bind the Sublicensee to the terms of
this Agreement and shall provide for the automatic assignment of such agreement
to University if this Agreement is terminated as described in Article 8 below.
Company shall promptly furnish University with a fully executed copy of any
such sublicense agreement.

 

2.3.  Retained Rights.

 

(a)  University.  University retains the right to make and use
Licensed Products and to perform Licensed Services for academic research,
teaching, and non-commercial patient care, without payment of compensation to
Company. University may license its retained rights under this Section to
research collaborators of University faculty members, post-doctoral fellows,
and students.

 

(b)  Federal Government.  To the extent that any invention claimed in
the Patent Rights has been partially funded by the federal government, this
Agreement and the grant of any rights in such Patent Rights are subject to and
governed by federal law as set forth in 35

 

4

 

U.S.C. § 201-211, and the regulations
promulgated thereunder, as amended, or any successor statutes or
regulations.  Company acknowledges that
these statutes and regulations reserve to the federal government a
royalty-free, non-exclusive, non-transferrable license to practice any
government-funded invention claimed in any Patent Rights.  If any term of this Agreement fails to
conform with such laws and regulations, the relevant term shall be deemed an
invalid provision and modified in accordance with Section 10.11.

 

(c)  Other Organizations.  To the extent that any invention claimed in
the Patent Rights has been partially funded by a non-profit organization or
state or local agency, this Agreement and the grant of any rights in such
Patent Rights are subject to and governed by the terms and conditions of the
applicable research grant.  If any term
of this Agreement fails to conform with such terms and conditions, the relevant
term shall be deemed an invalid provision and modified by the parties pursuant
to Section 10.11.

 

3.  Company
Obligations Relating to Commercialization.

 

3.1.  Diligence Requirements. Company shall
use diligent efforts, or shall cause its Affiliates and Sublicensees to use
diligent efforts, to develop Licensed Products or Licensed Services and to
introduce Licensed Products or Licensed Services into the commercial market; thereafter,
Company or its Affiliates or Sublicensees shall make Licensed Products or
Licensed Services reasonably available to the public.  Specifically, Company or Affiliate or
Sublicensee shall fulfill the following obligations:

 

(1)  Within sixty (60) days after
each anniversary of the Effective Date, Company shall furnish University with a
written report on the progress of its efforts during the prior year to develop
and commercialize Licensed Products or Licensed Services, including without
limitation research and development efforts, efforts to obtain regulatory
approval, marketing efforts, and sales figures. 
The report shall also contain a discussion of intended efforts and sales
projections for the current year.

 

(2)  Until such time as Licensed
Products or Licensed Services are introduced into the commercial market,
Company will spend at least $300,000 per year (not including Company overhead)
on research and development of Licensed Products and Licensed Services,
including sponsored research at University.

 

(3)  Company will file,
prosecute, and maintain the Patent Rights in the U.S., Japan, Canada, Europe,
Australia, and New Zealand; provided, however, that University will consider in
good faith whether to waive this requirement with respect to one or more Patent
Rights in one or more countries if ACT shows that there is inadequate economic
justification for fulfilling the requirement.

 

In the event that University determines that
Company (or an Affiliate or Sublicensee) has not fulfilled its obligations
under this Section 3.1., University shall furnish Company with written notice
of such determination.  Within sixty (60) days after receipt of such notice,
Company shall either (i) fulfill the relevant obligation or (ii) negotiate with
University a mutually acceptable schedule of revised diligence obligations,
failing which University shall have the right, immediately upon written notice
to Company, to terminate this Agreement or to grant

 

5

 

additional licenses to third parties to the
Patent Rights and Biological Materials, 
In the event that University terminates this Agreement, University shall
pay Company a total of fifty percent (50%) of all revenue that University receives
from such additional licenses, less reasonable out-of-pocket expenses incurred
by University.

 

3.2.  Indemnification.

 

(a)  Indemnity. Company shall indemnify,
defend, and hold harmless University and its trustees, officers, faculty,
students, employees, and agents and their respective successors, heirs and
assigns (the “Indemnitees”), against any liability, damage, loss, or expense
(including reasonable attorneys fees and expenses of litigation) incurred by or
imposed upon any of the Indemnitees in connection with any claims, suits, actions,
demands or judgments arising out of any theory of liability (including without
limitation actions in the form of tort, warranty, or strict liability and
regardless of whether such action has any factual basis) concerning any
Licensed Product or Licensed Service that is made, used, or sold pursuant to
any right or license granted under this Agreement; provided, however, that such
indemnification shall not apply to any liability, damage, loss, or expense to
the extent directly attributable to (i) the negligent activities or intentional
misconduct of the Indemnitees or (ii) the settlement of a claim, suit, action,
or demand by Indemnitees without the prior written approval of Company.

 

(b)  Procedures. The Indemnitees agree to
provide Company with prompt written notice of any claim, suit, action, demand,
or judgment for which indemnification is sought under this Agreement. Company
agrees, at its own expense, to provide attorneys reasonably acceptable to
University to defend against any such claim. The Indemnitees shall cooperate
fully with Company in such defense and will permit Company to conduct and
control such defense and the disposition of such claim, suit, or action
(including all decisions relative to litigation, appeal, and settlement);
provided, however, that any Indemnitee shall have the right to retain its own
counsel, at the expense of Company, if representation of such Indemnitee by the
counsel retained by Company would be inappropriate because of actual or
potential differences in the interests of such Indemnitee and any other party
represented by such counsel. Company agrees to keep University informed of the
progress in the defense and disposition of such claim and to consult with
University with regard to any proposed settlement.

 

(c)  Insurance. Company shall maintain
insurance or self-insurance that is reasonably adequate to fulfill any
potential obligation to the Indemnitees, but in any event not less than one
million dollars ($1,000,000) for injuries to any one person arising out of a
single occurrence and five million dollars ($5,000,000) for injuries to all
persons arising out of a single occurrence. Company shall provide University,
upon request, with written evidence of such insurance or self-insurance.
Company shall continue to maintain such insurance or self-insurance after the
expiration or termination of this Agreement during any period in which Company
or any Affiliate or Sublicensee continues (i) to make, use, or sell a product
that was a Licensed Product under this Agreement or (ii) to perform a service
that was a Licensed Service under this Agreement, and thereafter for a period
of five (5) years.

 

6

 

3.3.  Use of University Name.  In accordance with Section 7.3., Company and
its Affiliates and Sublicensees shall not use the name “University of
Massachusetts” or any variation of that name in connection with the marketing
or sale of any Licensed Products or Licensed Services.

 

3.4.  Marking of Licensed Products. To the
extent commercially feasible and consistent with prevailing business practices,
Company shall mark, and shall cause its Affiliates and Sublicensees to mark,
all Licensed Products that are manufactured or sold under this Agreement with
the number of each issued patent under the Patent Rights that applies to such
Licensed Product.

 

3.5.  Compliance with Law. Company shall
comply with, and shall ensure that its Affiliates and Sublicensees comply with,
all local, state, federal, and international laws and regulations relating to
the development, manufacture, use, and sale of Licensed Products and Licensed
Services.  Company expressly agrees to
comply with the following:

 

(i) Company or its Affiliates or Sublicensees shall obtain all
necessary approvals from the United States Food & Drug Administration and any similar governmental
authorities of any foreign jurisdiction in which Company or an Affiliate or
Sublicensee intends to make, use, or sell Licensed Products or to perform
Licensed Services.

 

(ii) Company and its Affiliates and Sublicensees shall comply with all
United States laws and regulations controlling the export of certain
commodities and technical data including without limitation all Export
Administration Regulations of the United States Department of Commerce.  Among other things, these laws and
regulations prohibit, or require a license for, the export of certain types of
commodities and technical data to specified countries.  Company hereby gives written assurance that
it will comply with, and will cause its Affiliates and Sublicensees to comply
with, all United States export control laws and regulations, that it bears sole
responsibility for any violation of such laws and regulations by itself or its
Affiliates or Sublicensees, and that it will indemnify, defend, and hold
University harmless (in accordance with Section 3.2.) for the consequences of
any such violation.

 

(iii) To the extent that any invention claimed in the Patent Rights has
been partially funded by the United States government, and only to the extent
required by applicable laws and regulations, Company agrees that any Licensed
Products used or sold in the United Stales will be manufactured substantially
in the United States or its territories. Current law provides that if domestic
manufacture is not commercially feasible under the circumstances, University
may seek a waiver of this requirement from the relevant federal agency on
behalf of Company.

 

7

 

4.  Consideration
for Grant of Rights.

 

4.1.  Royalties.

 

(a)  Base Royalty.  In partial consideration of the rights
granted Company under this Agreement, Company shall pay to University the
following royalty on Net Sales of, Licensed Products and Licensed Services by
Company and its Affiliates (but not by Sublicensees):

 

2.5%                      on Licensed Products and Licensed Services
far use primarily in agriculture (e.g., pigs, poultry, cattle)

 

3.0%                      on Licensed Products and Licensed Services
for use primarily in companion animals (e.g., dogs, cats, horses)

 

3.5%                      on Licensed Products and Licensed Services
for use primarily in research and diagnostic products

 

4.5%                      on Licensed Products and Licensed Services
for use primarily in human
therapeutics

 

2.5%                      on Licensed Products and Licensed Services
for use primarily in fields not specified above

 

If a particular Licensed Product or Licensed
Service is within the definition of “Licensed Product” or “Licensed Service”
solely because it uses or incorporates Related Technology, the royalty rate
applicable to such Licensed Product or Licensed Service shall be reduced by
fifty percent (50%).

 

(b)  Royalty Reduction. If University
grants additional licenses to third parties pursuant to Section 3.1., the royalty
rates set forth in Subsection 4.1.(a) and the minimum royalty set forth in Section
4.2. shall be adjusted, if necessary, so as not to exceed the royalty rates
charged any other licensee of the Patent Rights during the term of the
non-exclusive license.

 

(c)  No Multiple Royalty. Company must pay
only one royalty with respect to a Licensed Product or Licensed Service
regardless of the number of patents or patent applications included within the
Patent Rights whose claims cover that Licensed Product or Licensed Service.

 

4.2.  Minimum Royalty. In each calendar year
during the term of this Agreement, University shall receive the following
minimum royalty payments:

 

(i)  commencing after the third
year following the Effective Date, $30,000 per year for all uses other than in
human therapeutics (“Category I”); and

 

8

 

(ii) commencing after the later of the fourth year following the
Effective Date or completion of Phase II clinical trials for a human
therapeutic product, $15,000 per year for use in human therapeutics (“Category
II”).

 

These minimum royalty payments shall be
pro-rated during any partial calendar year.

 

If the actual royalty payments to
University in any calendar year are less than the minimum royalty payment
required for that year in either Category I or Category II, Company shall have
the right to pay University the difference between the actual royalty payment
in that Category and the minimum royalty payment due for that Category in full
satisfaction of its obligations under this Section with respect to that
Category, provided such minimum payments are made to University within sixty
(60) days after the conclusion of the calendar year. Waiver of any minimum
royalty payment by University shall not be construed as a waiver of any
subsequent minimum royalty payment.  If
Company fails to make any minimum royalty payment within the sixty-day period
for a given Category, the rights granted Company under Section 2.1. shall no
longer include uses within that Category but shall continue to include uses in
the other Category. If Company fails to make the required minimum royalty
payment within the sixty-day period for both Categories, such failure shall
constitute a material breach of its obligations under this Agreement, and
University shall have the right to terminate this Agreement in accordance with
Section 8.3.

 

University agrees to waive the
minimum royalty payments set forth above during any calendar year in which
Company (or another corporation on its behalf) funds research at the University
in the aggregate amount of three hundred thousand dollars ($300,000).  Company may meet this aggregate research
funding threshold through sponsored research at multiple University campuses
and with multiple principal investigators. 
If Company funds research at the University in an aggregate amount less
than three hundred thousand dollars ($300,000) but at least one hundred and
fifty thousand dollars ($150,000), University will pro-rate the minimum royalty
payments for that calendar year (e.g., the minimum royalty payments would be $15,000
for Category I and $7,500 for Category II if Company funded $150,000 of
research rather than $300.000).

 

4.3.  Sublicense Income.  Company shall pay University a total of
twenty-five percent (25%) of all Sublicense Income; provided that, in the case
of royalty-based payments, University shall receive not less than two percent (2%) of
the “net sales” of Licensed Products and Licensed Services by any Sublicensee
(with “net sales” calculated in accordance with the terms of the relevant
sublicense agreement). Except for royalty-based payments, such amounts shall be
due and payable within sixty (60) days after Company receives the relevant
payment from the Sublicensee; royalty-based payments of Sublicense Income shall
be due and payable as provided in Article 5 below.

 

4.4.  Third-Party Royalties. So long as
Company remains the only licensee of the Patent Rights and Biological
Materials, in the event that Company is legally required to make royally
payments to one or more third parties in order to make, use, or sell Licensed
Products or to perform Licensed Services, Company may offset a total of fifty
percent (50%) of such third-party payments against any royalty payments that
are due to University in the same Royalty Period, provided that in no event
shall the royalty payments under Section 4.1., when

 

9

 

aggregated with any other offsets and credits
allowed under this Agreement, be reduced below the greater of (i) fifty percent
(50%) of the royalty rate set forth in Section 4.1.(a) or (ii) a royalty rate
of two percent (2%) of Net Sales. Company may carry forward any unused credits
or offsets for use in subsequent Royalty Periods during the term of this
Agreement.

 

4.5.  License Option.
As set forth in Section 5.5. of the Research Agreement, Company has the right
to include within the Patent Rights under this Agreement any patent or patent
application claiming an Invention (as defined in the Research Agreement) upon
written notice to University and payment of a ten thousand dollar ($10,000)
license fee within the Option Period (as defined in the Research Agreement).
The parties have determined that this license fee, together with the other
financial terms set forth in this Agreement, will constitute fair market value
for the license grant.  This license fee
will be creditable against royalties, payable under Section 4.1. of this
Agreement provided that Company pays all expenses associated with the
preparation, filing, and prosecution of patent applications claiming the
relevant Invention in the U.S., Japan, Canada, Europe, Australia, and New
Zealand until such time as a patent issues in each jurisdiction or the patent
application is finally rejected with no further right of appeal in any
jurisdiction in which a patent does not issue.

 

5.  Royalty
Reports; Payments; Records.

 

5.1.  First Sale.  Company shall report to University the date
of first commercial sale of each Licensed Product and the date of first
commercial performance of each Licensed Service within thirty (30) days of occurrence
in each country.

 

5.2.  Reports and Payments. Within sixty
(60) days after the conclusion of each Royalty Period, Company shall deliver to
University a report containing the following information:

 

(i) the, number of Licensed Products sold to independent third parties
in each country, and the number of Licensed Products used by Company and its Affiliates
in the provision of Licensed Services and other services in each country;

 

(ii) the number of Licensed Services provided by Company and its Affiliates
in each country;

 

(iii) the gross sales price for each Licensed Product and the gross
charge for each Licensed Service by Company and its Affiliates during the
applicable Royalty Period in each country;

 

(iv) calculation of Net Sales for the applicable Royalty Period in each
country, including a listing of applicable deductions;

 

(v) total royalty payable on Net Sales in U.S. dollars, together with
the exchange rates used for conversion; and

 

(vii) the amount of royalty-based Sublicense Income due to University
for the applicable Royalty Period from each Sublicensee.

 

10

 

All such reports shall be considered Company
Confidential Information. If no royalties are due to University for any Royally
Period, the report shall so state. 
Concurrent with this report, Company shall remit to University any
payment due for the applicable Royalty Period.

 

5.3.  Payments in U.S. Dollars.  All payments due under this Agreement shall
be payable in United States dollars. Conversion of foreign currency to U.S.
dollars shall be made at the conversion rate existing in the United States (as
reported in the Wall Street Journal) on the last working day of the
calendar quarter preceding the applicable Royalty Period.  Such payments shall be without deduction of
exchange, collection, or other charges.

 

5.4.  Payments in Other Currencies. If by
law, regulation, or fiscal policy of a particular country, conversion into
United States dollars or transfer of funds of a convertible currency to the
United States is restricted or forbidden, Company shall give University prompt
written notice of such restriction, which notice shall satisfy the sixty-day
payment deadline described in

Section 5.2. Company shall pay any amounts due University through whatever
lawful methods University reasonably designates; provided, however, that if
University fails to designate such payment method within thirty (30) days after
University is notified of the restriction. Company may deposit such payment in
local currency to the credit of University in a recognized banking institution
selected by Company and identified by written notice to University, and such
deposit shall fulfill all obligations of Company to University with respect to
such payment.

 

5.5.  Records.  Company shall maintain, and shall cause its
Affiliates and Sublicensees to maintain, complete and accurate records of
Licensed Products and Licensed Services that are made, used, sold, or performed
under this Agreement and any amounts payable to University in relation to such
Licensed Products and Licensed Services, which records shall contain sufficient
information to permit University to confirm the accuracy of any reports
delivered to University under Section 5.2. The relevant party shall retain such
records relating to a given
Royalty Period for at least three (3) years after the conclusion of that
Royalty Period, during which time University shall have the right, at its
expense, to cause its internal accountants or an independent, certified public accountant
to inspect such records during normal business hours for the sole purpose of
verifying any reports and payments delivered under this Agreement.  Such accountant shall not disclose to
University any information other than information relating to accuracy of
reports and payments delivered under this Agreement. The parties shall
reconcile any underpayment or overpayment within thirty (30) days after the
accountant delivers the results of the audit. In the event that any audit
performed under this Section reveals an underpayment in excess of ten percent
(10%) in any Royalty Period, Company shall bear the full cost of such
audit.  University may exercise its
rights under this Section only once every year and only with reasonable prior
notice to Company.

 

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

 

11

 

5.7.  Method of Payment.  All payments under this Agreement should be
made in the name of the “University of Massachusetts” and sent to the address
identified below. Each payment should reference this Agreement and identify the
obligation under this Agreement that the payment satisfies.

 

5.8.  Withholding and Similar Taxes.  Royalty payments and other payments due to
University under this Agreement shall not be reduced by reason of any
withholding or similar taxes applicable to such payments to University.

 

6.  Patents
and Infringement.

 

6.1.  Responsibility for Patent Rights.  Company shall have primary responsibility, at
its expense, for the preparation, filing, prosecution, and maintenance of all
Patent Rights, using patent counsel reasonably acceptable to University.
Company shall consult with University as to the preparation, filing,
prosecution, and maintenance of all such Patent Rights reasonably prior to any
deadline or action with the U.S. Patent & Trademark Office or any foreign
patent office and shall furnish University with copies of all relevant
documents reasonably in advance of such consultation. University shall furnish
Company with its comments regarding any such patent-related document within
sixty (60) days after receipt of the document from Company.

 

6.2.  Abandonment.  In the event that Company desires to abandon
any patent or patent application within the Patent Rights, or if Company
declines to assume the responsibility for obtaining patent protection for any
Invention. Company shall provide University with reasonable prior written
notice of such intended abandonment or decline of responsibility, and
University shall have the right, at its expense, to prepare, file, prosecute,
and maintain the relevant Patent Rights. 
In such event, Company shall lose all rights under this Agreement with
respect to such Patent Rights in such countries.

 

6.3.  Cooperation.  University and Company shall cooperate fully
in the preparation, filing, prosecution, and maintenance of all Patent
Rights.  Such cooperation includes,
without limitation, (i) promptly executing all papers and instruments or
requiring employees of University or Company to execute such papers and
instruments as reasonable and appropriate so as to enable University or Company
to file, prosecute, and maintain such Patent Rights in any country; and (ii)
promptly informing the other party of matters that may affect the preparation,
filing, prosecution, or maintenance of any such Patent Rights (such as becoming
aware of an additional inventor who is not listed as an inventor in a patent
application).

 

6.4.  Infringement.

 

(a)  Notification of Infringement. Each
party agrees to provide written notice to the other party promptly after
becoming aware of any infringement of the Patent Rights.

 

(b)  Company Right to Prosecute.  So long as Company remains the only licensee
of the Patent Rights and Biological Materials for a given use, Company shall
have the right, under its own control and at its own expense, to prosecute any
third party infringement of the Patent Rights with respect to that use or,
together with licensees of the

 

12

 

Patent Rights for other uses (if any), to
defend the Patent Rights in any declaratory judgment action brought by a third
party which alleges invalidity, unenforceability, or non-infringement of the
Patent Rights.  Prior to commencing any
such action, Company shall consult with University and shall consider the views
of University regarding the advisability of the proposed action and its effect
on the public interest.  Company shall
not enter into any settlement, consent judgment, or other voluntary final
disposition of any infringement action under this Subsection without the prior
written consent of University, which consent shall not be unreasonably withheld
or delayed. Any recovery obtained in an action under this Subsection shall be
distributed as follows: (i) each party shall be reimbursed for any expenses
incurred in the action, (ii) as to ordinary damages, Company shall receive an
amount equal to its lost profits or a reasonable royalty on the infringing
sales (whichever measure of damages the court shall have applied), less a
reasonable approximation of the royalties that Company would have paid to
University if Company had sold the infringing products and services rather than
the infringer, and (iii) as to special or punitive damages, the parties shall
share equally in any award.

 

(c)  University as Indispensable Party.
University shall permit any action under this Section to be brought in its name
if required by law, provided that Company shall hold University harmless from,
and if necessary indemnify University against, any costs, expenses, or
liability that University may incur in connection with such action.

 

(d)  University Right to Prosecute.  In the event that Company fails to initiate
an infringement action within a reasonable time after it first becomes aware of
the basis for such action, or to answer a declaratory judgment action within a
reasonable time after such action is filed, University shall have the right to
prosecute such infringement or answer such declaratory judgment action, under
its sole control and at its sole expense, and any recovery obtained shall be
given to University.

 

(e)  Cooperation.  Each party agrees to cooperate fully in any
action under this Section 6.6. which is controlled by the other party, provided
that the controlling party reimburses the cooperating party promptly for any
costs and expenses incurred by the cooperating party in connection with
providing such assistance.

 

7.  Confidential
Information; Publications; Publicity. 

 

7.1.  Confidential Information.

 

(a)  Designation.  Confidential Information that is disclosed in
writing shall be marked with a legend indicating its confidential status (such
as “Confidential” or “Proprietary”). 
Confidential Information that is disclosed orally or visually shall be
documented in a written notice prepared by the Disclosing Party and delivered
to the Receiving Party within thirty (30) days of the date of disclosure; such
notice shall summarize the Confidential Information disclosed to the Receiving
Party and reference the time and place of disclosure.

 

(b)  Obligations.  For a period of five (5) years after
disclosure of any portion of Confidential Information, the Receiving Party
shall (i) maintain such Confidential

 

13

 

Information in strict confidence, except that
the Receiving Party may disclose or permit the disclosure of any Confidential
Information to its directors, officers, employees, consultants, and advisors
who are obligated to maintain the confidential nature of such Confidential
Information and who need to know such Confidential Information for the purposes
of this Agreement; (ii) use such Confidential Information solely for the
purposes of this Agreement; and (iii) allow its trustees or directors,
officers, employees, consultants, and advisors to reproduce the Confidential
Information only to the extent necessary for the purposes of this Agreement,
with all such reproductions being considered Confidential Information.

 

(c)  Exceptions.  The obligations of the Receiving Party under
Subsection 7.1.(b) above shall not apply to the extent that the Receiving Party
can demonstrate that certain Confidential Information (i) was in the public
domain prior to the time of its disclosure under this Agreement; (ii) entered
the public domain after the time of its disclosure under this Agreement through
means other than an unauthorized disclosure resulting from an act or omission
by the Receiving Party: (iii) was independently developed or discovered by the
Receiving Party without use of the Confidential Information; (iv) is or was
disclosed to the Receiving Party at any time, whether prior to or after the
time of its disclosure under this Agreement, by a third party having no
fiduciary relationship with the Disclosing Party and having no obligation of
confidentiality with respect to such Confidential Information; or (v) is
required to be disclosed to comply with applicable laws or regulations, or with
a court or administrative order, provided that the Disclosing Party receives
reasonable prior written notice of such disclosure.

 

(d)  Ownership and Return.  The Receiving Party acknowledges that the
Disclosing Party (or any third party entrusting its own information to the Disclosing
Party) claims ownership of its Confidential Information in the possession of
the Receiving Party. Upon the expiration or termination of this Agreement, and
at the request of the Disclosing Party, the Receiving Party shall return to the
Disclosing Party all originals, copies, and summaries of documents, materials,
and other tangible manifestations of Confidential Information in the possession
or control of the Receiving Party, except that the Receiving Party may retain
one copy of the Confidential Information in the possession of its legal counsel
solely for the purpose of monitoring its obligations under this Agreement.

 

7.2.  Publications.  University and its employees will be free to
publicly disclose (through journals, lectures, or otherwise) the results of any
research relating to the subject matter of the Patent Rights, except as
otherwise provided by written agreement between University and Company (e.g., a
sponsored research agreement).

 

7.3.  Publicity Restrictions.  Company shall not use the name of University
or any of its trustees, officers, faculty, students, employees, or agents, or
any adaptation of such names, or any terms of this Agreement in any promotional
material or other public announcement or disclosure without the prior written consent
of University. The foregoing notwithstanding, Company shall have the right to
disclose such information without the consent of University in any prospectus,
offering memorandum, or other document or filing required by applicable
securities laws or other applicable law or regulation, provided that Company
shall have given University at least ten (10) days prior written notice of the
proposed text for the purpose of giving University the opportunity to comment
on such text.

 

14

 

8. Term and Termination.

 

8.1.  Term. This Agreement shall commence on
the Effective Date and shall remain in effect until (i) the expiration of all
issued patents within the Patent Rights or (ii) for a period of ten (10) years
after the Effective Date if no such patents have issued within that ten-year
period, unless earlier terminated in accordance with the provisions of this
Agreement.

 

8.2.  Voluntary Termination by Company.  Company shall have the right to terminate
this Agreement, for any reason, upon ninety (90) days prior written notice to
University.

 

8.3.  Termination for Default.  In the event that either party commits a
material breach of its obligations under this Agreement and fails to cure that
breach within sixty (60) days after receiving written notice thereof, the other
party may terminate this Agreement immediately upon written notice to the party
in breach.  If the alleged breach
involves nonpayment of any amounts due University under this Agreement, Company
shall have only one opportunity to cure a material breach for which it receives
notice as described above; any subsequent material breach by Company will
entitle University to terminate this Agreement immediately upon written notice
to Company, without the sixty-day cure period.

 

8.4.  Force Majeure.  Neither party will be responsible for delays
resulting from causes beyond the reasonable control of such party, including
without limitation fire, explosion, flood, war, strike, or riot, provided that
the nonperforming party uses commercially reasonable efforts to avoid or remove
such causes of nonperformance and continues performance under this Agreement
with reasonable dispatch whenever such causes are removed.

 

8.5.  Effect of Termination.  The following provisions shall survive the
expiration or termination of this Agreement; Articles 1 and 9; Sections 3.2.,
3.5., 5.2. (obligation to provide final report and payment), 5.5.,
6.4., 7.1.,
7.3., 8.5., and 10.9.  Upon the early
termination of this Agreement. Company and its Affiliates and Sublicensees may
complete and sell any work-in-progress and inventory of Licensed Products that
exist as of the effective date of termination, provided that (i) Company is
current in payment of all amounts due University under this Agreement, (ii)
Company pays University the applicable royalty on such sales of Licensed
Products in accordance with the terms and conditions of this Agreement, and
(iii) Company and its Affiliates and Sublicensees shall complete and sell all
work-in-progress and inventory of Licensed Products within six (6) months after
the effective date of termination.

 

9. Dispute Resolution.

 

9.1. Procedures Mandatory.
 The parties agree that any dispute
arising out of or relating to this Agreement shall be resolved solely by means
of the procedures set forth in this Article, and that such procedures
constitute legally binding obligations that are an essential provision of this
Agreement; provided, however, that all procedures and deadlines specified in
this Article may be modified by written agreement of the parties. If either
party fails to observe the procedures of this Article, as modified by their
written agreement, the other party may bring an action for specific performance
in any court of competent jurisdiction.

 

15

 

9.2. Dispute Resolution
Procedures.

 

(a)  Negotiation.  In the event of any dispute arising out of or
relating to this Agreement, the affected party shall notify the other party,
and the parties shall attempt in good faith to resolve the matter within ten (10) days after the date of
such notice (the “Notice Date”). Any disputes not resolved by good faith
discussions shall be referred to senior executives of each party, who shall
meet at a mutually acceptable time and location within thirty (30) days after
the Notice Date and attempt to negotiate a settlement.

 

(b)  Mediation.  If the matter remains unresolved within sixty
(60) days after the Notice Date, or if the senior executives fail to meet
within thirty (30) days after the Notice Date, either party may initiate
mediation upon written notice to the other party, whereupon both parties shall
be obligated to engage in a mediation proceeding under the then current Center
for Public Resources (“CPR”) Model Procedure for Mediation of Business
Disputes, except that specific provisions of this Section shall override
inconsistent provisions of the CPR Model Procedure. The mediator will be
selected from the CPR Panels of Neutrals. If the parties cannot agree upon the selection
of a mediator within ninety (90) days after the Notice Date, then upon the
request of either party, the CPR shall appoint the mediator. The parties shall
attempt to resolve the dispute through mediation until one of the following
occurs: (i) the parties reach a written settlement; (ii) the mediator notifies
the parties in writing that they have reached an impasse; (iii) the parties
agree in writing that they have reached an impasse; or (iv) the parties have not
reached a settlement within one hundred and twenty (120) days after the Notice
Date.

 

(c)  Trial Without Jury.  If the parties fail to resolve the dispute
through mediation, or if neither party elects to initiate mediation, each party
shall have the right to pursue any other remedies legally available to resolve
the dispute. provided, however, that the parties expressly waive any right to a
jury trial in any legal proceeding under this Section.

 

9.3.  Preservation of Rights Pending Resolution.

 

(a)  Performance to Continue.  Each party shall continue to perform its
obligations under this Agreement pending final resolution of any dispute
arising out or relating to this Agreement; provided, however, that a party may
suspend performance of its obligations during any period in which the other party
fails or refuses to perform its obligations.

 

(b)  Provisional Remedies.  Although the procedures specified in this
Article are the sole and exclusive procedures for the resolution of disputes
arising out of relating to this Agreement, either party may seek a preliminary
injunction or other provisional equitable relief if, in its reasonable
judgment, such action is necessary to avoid irreparable harm to itself or to
preserve its rights under this Agreement.

 

(c)  Statute of Limitations.  The parties agree that all applicable statutes
of limitation and time-based defenses (such as estoppel and laches) shall be tolled
while the procedures set forth in Subsections 9.2.(a) and 9.2.(b) are pending.
The parties shall take any actions necessary to effectuate this result.

 

16

 

10. Miscellaneous.

 

10.l.  Representations and Warranties.  University represents and warrants that its
employees have assigned to University their entire right, title, and interest
in the Patent Rights and that it has authority to grant the rights and licenses
set forth in this Agreement. UNIVERSITY MAKES NO OTHER WARRANTIES CONCERNING
THE PATENT RIGHTS, RELATED TECHNOLOGY, AND BIOLOGICAL MATERIALS, INCLUDING
WITHOUT LIMITATION ANY EXPRESS OR IMPLIED WARRANTY OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE. Specifically, University makes no warranty or
representation (i) regarding the validity or scope of the Patent Rights, (ii)
that the exploitation the Patent Rights or any Licensed Product or Licensed
Service will not infringe any patents or other intellectual property rights of
a third party, and (iii) that any third party is not currently infringing or
will not infringe the Patent Rights.

 

10.2.  Compliance with Law and Policies.  Company agrees to comply with applicable law
and the policies of University in the area of technology transfer, including
Mass. Gen. Laws Chap. 268A (state conflict of interest statute), the Patent
Policy, and the Policy on Compensation for Certain Additional Professional
Services, and shall promptly notify University of any violation that Company
knows or has reason to believe has occurred or is likely to occur.

 

10.3.  Tax-Exempt Status.  Company acknowledges that University, as a
public institution of the Commonwealth of Massachusetts, holds the status of an
exempt organization under the United States Internal Revenue Code.  Company also acknowledges that certain
facilities in which the licensed inventions were developed may have been
financed through offerings of tax-exempt bonds. 
If the Internal Revenue Service determines, or if counsel to University
reasonably determines, that any term of this Agreement jeopardizes the tax-exempt
status of University or the bonds used to finance University facilities, the relevant
term shall be deemed an invalid provision and modified in accordance with
Section 10.11.

 

10.4.  Counterparts.  This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, and all of which
together shall be deemed to be one and the same instrument.

 

10.5.  Headings.  All headings are for convenience only and
shall not affect the meaning of any provision of this Agreement.

 

10.6.  Binding Effect.  This Agreement shall be binding upon and
inure to the benefit of the parties and their respective permitted successors
and assigns.

 

10.7.  Assignment.  This Agreement may not be assigned by either
party without the prior written consent of the other party, except that Company
may assign this Agreement to an Affiliate or to a successor in connection with
the merger, consolidation, or sale of all or substantially all of its assets or
that portion of its business to which this Agreement relates.

 

10.8.  Amendment and Waiver.  This Agreement may be amended, supplemented,
or otherwise modified only by means of a written instrument signed by both
parties. Any

 

17

 

waiver of any rights or failure to act in a
specific instance shall relate only to such instance and shall not be construed
as an agreement to waive any rights or fail to act in any other instance,
whether or not similar.

 

10.9.  Governing Law and Forum.  This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Massachusetts
irrespective of any conflicts of law principles. Each party agrees that any
legal action arising out of or in connection with this Agreement shall be
brought in, as appropriate, the Massachusetts Superior Court in Suffolk County
or the United States District Court for the Eastern District of Massachusetts.

 

10.10.  Notice. 
Any notices required or permitted under this Agreement shall be in
writing, shall specifically refer to this Agreement, and shall be sent by hand,
recognized national overnight courier, confirmed facsimile transmission,
confirmed electronic mail, or registered or certified mail, postage prepaid,
return receipt requested, to the following addresses or facsimile numbers of
the parties:

 

If to University:

 

Office of Commercial Ventures and
Intellectual Property

University of Massachusetts

55 Lake Avenue North

Worcester, MA 01655

Attention:                 Joseph F.X. McGuirl

Executive Director

 

Tel: (508) 856-1626

Fax: (508) 856-5004

 

If to Company:

 

Advanced Cell Technology, Inc.

295 Kennedy Memorial Drive

Waterville, ME 04901

Attention:                 Thomas A. Powell

President and Chief Operating Officer

 

Tel: (207) 873-0007

Fax: (207) 873-1823

 

All notices under this Agreement shall be
deemed effective upon receipt. A party may change its contact information
immediately upon written notice to the other party in the manner provided in
this Section.

 

10.11. Severability.  In the event that any provision of this
Agreement shall be held invalid or unenforceable for any reason, such
invalidity or unenforceability shall not affect

 

18

 

any other provision of this Agreement, and
the parties shall negotiate in good faith to modify the Agreement to preserve
(to the extent possible) their original intent. 
If the parties fail to reach a modified agreement within sixty (60) days
after the relevant provision is held invalid or unenforceable, then the dispute
shall be resolved in accordance with the procedures set forth in Article 9.
While the dispute is pending resolution, this Agreement shall be construed as
if such provision were deleted by agreement of the parties.

 

10.12. Entire Agreement.  Except for the Research Agreement, this
Agreement constitutes the entire agreement between the parties with respect to
its subject matter and supersedes all prior agreements or understandings
between the parties relating to its subject matter.  Specifically, the parties agree that the terms
of this Agreement supersede any inconsistent terms of the Prior Agreement,
which are hereby cancelled and extinguished.

 

IN WITNESS WHEREOF, the parties
have caused this Agreement to be executed by their duly authorized
representatives as of the date first written above.

 

 

	
  UNIVERSITY OF MASSACHUSETTS

  AT AMHERST

  	
  ADVANCED CELL TECHNOLOGY, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Frederick W. Byron

  	
   

  	
  By:

  	
  /s/ Thomas A. Powell

  	
   

  
	
   

  	
  Frederick W. Byron, Jr., Ph.D. 

  	
   

  	
  Thomas A. Powell

  
	
   

  	
  Vice Chancellor for Research

  	
   

  	
  President and Chief Operating Officer

  
						

 

19

 

EXHIBIT A

List of Patent Rights and Biological Materials

 

Patent Rights

 

Patent applications filed in US:

 

“Cultured Inner Cell Mass Cell Lines Derived From Ungulate Embryos” US
patent office filing number 08/626-054 filed on 4/1/96, Burns Doane and Mathis
file #000270-02

 

“Embryonic or Stem-Like Cell Lines Produced by Cross Species Nuclear
Transplantation” US patent office filing number 08/699-040 filed on 8/19/96,
Burns Doane and Mathis file #000270-08

 

Patent applications being prepared:

 

“Cloning Ungulates Using Donor Nuclei From Fetal and Adult Cells”, Burns
Doane and Mathis file #000270-07

 

Biological Materials as of the Execution Date

 

1.             swine and cattle embryonic stem cell lines

2.             transgenic (beta geo construct) swine and
cattle embryonic stem cell lines

3.             culture chicken primordial germ cells

4.             transgenic (beta geo construct) swine and
cattle fibroblast cell lines

5.             transgenic mice with the PEPCK promoter
growth hormone gene under the tel regulatory system and the DNA constructs to
make them.

6.             transgenic fetuses derived from #2

7.             chickens produced from #3

 

The list of Biological Materials may be amended by addition or deletion
during the term of the Agreement based upon research performed in accordance
with the Research Agreement.

 

 

EXCLUSIVE LICENSE AGREEMENT
AMENDMENT

 

This Agreement, effective as of
September 1, 1997 (the “Effective Date”), is between the University of
Massachusetts (“University”), a public institution of higher education of the
Commonwealth of Massachusetts, as represented by its Amberst campus, and
Advanced Cell Technology, Inc. (“Company”), a Delaware corporation.

 

WHEREAS, University and Company previously entered
into a Research Agreement dated April 15, 1994 (the “Prior Agreement”), which
has been superseded by a Research Collaboration Agreement dated as of April 16,
1996 (the “Research Agreement”);

 

WHEREAS, University and Company
previously entered into an Exclusive License Agreement, effective April 16, 1996,
granting Company rights to inventions that resulted from the Prior Agreement
and options to inventions resulting from the Research Agreement;

 

WHEREAS, the parties agree that
modification of the Exclusive License Agreement is necessary to clarify its
application to transactions of Company to promote development of the
inventions;

 

WHEREAS, Company is required to
obtain consent from the University for all sublicenses of the rights granted by
the Exclusive License Agreement before they are executed;

 

WHEREAS, Company has entered into
an agreement with Genzyme Transgenics Corporation dated as of September 25, 1997
(the “Genzyme Agreement”) to develop and commercialize the inventions for
pharmaceutical, nutriceutical, and other therapeutic uses;

 

WHEREAS, income from the Genzyme
Agreement is subject to the terms of this Agreement;

 

WHEREAS, Company has entered into
an agreement with Cima Biotechnology, Inc., (the “Cima Agreement”) to develop
and commercialize the inventions for the production of transgenic chickens;

 

WHEREAS, income from the Cima
Agreement is subject to the terms of this Agreement;

 

WHEREAS, Company has formed ACT
Agriculture, L.L.C. (“ACTAG”) for sublicensing and not direct manufacture and
sale of the inventions in the agricultural field, excluding chickens;

 

WHEREAS, Company has entered into
an agreement with ACTAG, dated as of April 1, 1998 (the “ACTAG Agreement”) to
develop and commercialize the inventions in the agricultural field, excluding
chickens;

 

WHEREAS, income from the ACTAG
Agreement is subject to the terms of this Agreement;

 

WHEREAS, ACTAG has entered into a
joint venture agreement, with Ultimate Genetics, L.L.C.. and Camp Cooley, Ltd.,
to form Ultimate BioServices, L.L.C., effective as of May 20, 1998, to use the
inventions for certain agricultural applications; and

 

 

WHEREAS, Ultimate BioServices is
fifty percent (50%) owned by ACTAG.

 

THEREFORE, in consideration for
the premises and terms of this agreement. University and Company agree that
Sections 1.10 and 4.3 are modified and Section 3.6 is added as follows:

 

1.10. “Sublicense Income”  means consideration that Company receives for
the transfer or use of rights that are granted Company under Article 2, whether
through sublicense, cooperative development agreement, intermediate sales
arrangement, or other agreement or mechanism, including without limitation
license fees, royalties, milestone payments, equity payments, up front fees,
success fees, and license maintenance fees, but excluding payments (1) made in
consideration for the issuance of equity or debt securities of Company at fair
market value and (2) specifically committed to budgeted research or development
of Licensed Products or Licensed Services. Sublicense Income does not include
(a) ordinary pro rata dividends or distributions from an Affiliate that Company
may receive in its capacity as an
owner of the Affiliate, or (b) proceeds from a transaction of the type
contemplated by Section 10.7 of the Exclusive License Agreement.

 

3.6. March-In Rights.  If
Company fails to achieve income-generating activity for the University for
Licensed Products or Licensed Services in any of the licensed fields listed in
Section 4.1(a) before April 16, 2001. the University may terminate the
agreement as to that particular field upon written notice to Company.

 

4.3. Sublicense Income.  Company
shall pay University a total of Eighteen Percent (18%) of all Sublicense
Income, except for equity. University shall receive Ten Percent (10%) of the
total equity received by Company for any transfer of the rights granted by this
Agreement. Except for royalty-based payments, such amounts shall be due and
payable within sixty (60) days after Company receives the relevant payment from
the Sublicensee; royalty-based payments of Sublicense Income shall be due and
payable as provided in Article 5 below. Company shall direct Ultimate
BioServices to pay royalties directly to the University according to the rates
set forth in Section 4.1(a) of this Agreement.

 

The parties have caused this
Agreement to be executed by their duly authorized representatives as of the
date first written above.

 

	
  UNIVERSITY OF MASSACHUSETTS

  	
  ADVANCED CELL TECHNOLOGY, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   /s/ Joseph F.X. McGuirl

  	
   

  	
  By:

  	
   /s/ Robert H. Saglio

  	
   

  
	
   

  	
  Joseph F.X.
  McGuirl

  	
  Printed Name:

  	
  Robert H. Saglio

  
	
   

  	
   

  	
   

  	
   

  
	
  Its:

  	
  Executive
  Director, Commercial

  Ventures and Intellectual Property

  	
  Its:

  	
  President and Chief Operating Officer

  
	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
  9 July 98

  	
   

  	
  Date:

  	
  July 2, 1998

  	
   

  
											

 

2

Exhibit 10.2.2

 

SECOND AMENDMENT TO EXCLUSIVE
LICENSE AGREEMENT

 

This Second Amendment to
Exclusive License Agreement, effective as of May 31, 2000, is between the
University of Massachusetts (“University”), a public institution of higher
education of the Commonwealth of Massachusetts, as represented by its Amherst
campus, and Advanced Cell Technology, Inc. (“Company”), a Delaware corporation.

 

WHEREAS, University and Company
previously entered into an Exclusive License Agreement, effective April 16,
1996, which was modified by an Exclusive License Agreement Amendment, effective
as of September 1, 1997 (together, the “License Agreement”) granting Company
rights to certain inventions;

 

WHEREAS, Company requested that
University agree to rescind a portion of the field of the License Agreement
relating to the production of immunoglobulin in Bos taurus, Bos indicus, and Leporidae in favor of a direct license from the University
to Hematech, L.L.C. for that field; and

 

WHEREAS, the University and
Hematech, L.L.C., have agreed on terms for the license in the field of
production of immunoglobulin in Bos taurus,
Bos indicus, and Leporidae.

 

THEREFORE, in consideration for
the premises and terms of this Second Amendment, University and Company agree
as follows:

 

1.             Additions
to the License Agreement.  Section
2.1(c) is added to the License Agreement to read -

 

Partial
Rescission.  Notwithstanding any provisions in this
Agreement to the contrary, the parties agree that (i) the right to use the
Patent Rights for production of immunoglobulin in the blood of Bos taurus and Bos indicus is rescinded from this Agreement, and (ii) the
right to use the Patent Rights for production of immunoglobulin in the blood of
Leporidae is converted to
nonexclusive. The exclusive right to use the Patent Rights for production of
immunoglobulin in the blood of Bos taurus and
Bos indicus and the non-exclusive
right to use the Patent Rights for production of immunoglobulin in the blood of
Leporidae have been granted to
Hematech, L.L.C. through a direct license with the University.

 

2.             Amendments
to the License Agreement. Section 2.1(a) is deleted from the License
Agreement and replaced with the following –

 

Patent
Rights and Biological Materials.  Subject to the terms of this
Agreement, University hereby grants to Company and its Affiliates (i) an
exclusive, worldwide, royalty-bearing license (with the right to

 

 

sublicense)
under its commercial rights in the Patent Rights and Biological Materials to
develop, make, have made, use, and sell Licensed Products in any field and to
develop and perform Licensed Services in any field, except as provided in
Section 2.1(c) of this Agreement and (ii) a non-exclusive, worldwide,
royalty-bearing license (with the right to sublicense) under its commercial
rights in the Patent Rights and Biological Materials to develop, make, have
made, use, and sell Licensed Products consisting of immunoglobulin produced in
the blood of Leporidae and to
develop and perform Licensed Services relating to immunoglobulin produced in
the blood of Leporidae.

 

3.                                       Governing Law.  This
Second Amendment is governed by and construed in accordance with the laws of
the Commonwealth of Massachusetts and is binding upon and inures to the benefit
of the parties and their respective successors and assigns.

 

4.                                       Entire Agreement; Amendment.  The
License Agreement, as amended by this Second Amendment, contains the entire
agreement between the parties with respect to the matters discussed in this
Second Amendment. This Second Amendment may not be modified except in writing
signed by both parties.

 

5.                                       Ratification of License Agreement.  Except
to the extent amended by this Second Amendment, the terms of the License
Agreement are affirmed in all respects and continue in full force.

 

The parties have caused this
Agreement to be executed by their duly authorized representatives as of the
date first written above.

 

	
  UNIVERSITY OF MASSACHUSETTS

  	
  ADVANCED CELL TECHNOLOGY, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Joseph F.X. McGuirl

  	
   

  	
  By:

  	
  /s/ Michael D.West

  	
   

  
	
   

  	
  Joseph F.X.
  McGuirl

  	
  Michael D.West

  
	
   

  	
  Executive
  Director of Commercial

  Ventures and Intellectual Property

  	
  President and CEO

  
	
   

  	
   

  	
   

  
	
  Date:

  	
  14 Jun 2000

  	
   

  	
  Date:

  	
  6-14-00

  	
   

  
										

 

2

Exhibit 10.2.3

 

THIRD AMENDMENT TO EXCLUSIVE
LICENSE AGREEMENT

 

This Agreement, effective as of
September 19, 2002 (the “Effective Date”), is among the University of
Massachusetts (“University”), a public institution of higher education of the
Commonwealth of Massachusetts, as represented by its Amherst campus and
Advanced Cell Technology, Inc (“Company”), a Delaware corporation.

 

WHEREAS, University and Company
previously entered into an Exclusive License Agreement, effective April 16,
1996, which was modified by an Exclusive License Agreement Amendment, effective
as of September 1, 1997, and further amended by the Second Amendment to
Exclusive License Agreement, effective as of May 31, 2000 (together, the “License
Agreement”) granting Company rights to certain inventions;

 

WHEREAS, under the License
Agreement, Company is required to obtain consent from the University for all
sublicenses of the rights granted by the Exclusive License Agreement before
they are executed;

 

WHEREAS, Company desires to
remove the requirement of University consent for sublicenses; and

 

WHEREAS, University is willing to
remove the requirement of University consent for sublicenses under certain
conditions in consideration for an equity stake in Company.

 

THEREFORE, in consideration for
the premises and terms of this Third Amendment, University and Company agree
that Section 2.2 is modified and Section 4.5 is replaced as follows:

 

2.2. Sublicenses.  Company
may grant sublicenses of its rights under Section 2.1 only in accordance with
the following requirements:

 

(a)  Company shall provide a
draft copy of any sublicense agreement to the University at least thirty (30)
days before execution to allow the University to comment on the terms of the
sublicense.

 

(b)  Company shall provide a
fully executed copy of all sublicense agreements within thirty (30) days after
execution.

 

(c)  Company shall report to
University annually regarding the progress of Sublicensees in developing Licensed
Products.

 

(d)  Company shall manage
Sublicensees’ development efforts under the sublicenses to ensure reasonable
and continuous progress in developing Licensed Products to commercial
application.

 

(e)  All sublicense agreements
shall expressly bind Sublicensees to the terms of the License Agreement.

 

 

(f)  Company remains primarily
accountable for performance of all sublicense agreements and for termination of
Sublicensees that fail to make diligent progress in achieving commercial
application of Licensed Products.

 

(g)  Company may not transfer the
right to grant further sublicenses in sublicense agreements, unless the
sublicense agreement grants the exclusive right to practice the Patent Rights
in a limited field. Company may not grant Sublicensees the right to transfer
sublicensing rights to their Sublicensees. By way of illustration, Company may
transfer the right to grant sublicenses to X Corporation in a limited field of
use.  X Corporation may grant a
sublicense to Y Corporation, but Y Corporation may not under any circumstances
without the consent of Company and the University grant sublicenses to any
other entity which consent will be granted or denied in the Company’s and the University’s
discretion.

 

(h)  Company shall require in
every sublicense agreement the express, written and discretionary consent of
Company for any assignment of the sublicense to a different entity.

 

(i) Company shall require in every sublicense agreement the receipt of
fair consideration (which may be in the form of royalties, lump sum payments,
or equity) in exchange for the sublicense

 

4.5. Equity.  In partial
consideration for the removal of the requirement for consent by the University
for sublicenses as provided in Section 2.2 above, Company shall issue to
University Two Hundred Eighty-Four Thousand (284,000) shares of common stock of
Company, which represents five percent (5%) of the issued and outstanding
common stock (the “Shares”) of Company. Within thirty (30) days after the
Effective Date of this Third Amendment, Company shall deliver to the University
one or more stock certificates representing the Shares, such stock
certificate(s) to be issued in the name of the University. Exhibit A to this
Third Amendment sets forth the capitalization of Company. In connection with
the equity consideration described above, the University represents, warrants,
and covenants as set forth in Exhibit B attached hereto.

 

The parties have caused this
Agreement to be executed by their duly authorized representatives as of the
Effective Date.

 

	
  UNIVERSITY OF MASSACHUSETTS

  	
  ADVANCED CELL TECHNOLOGY, INC.

  
	
   

  	
   

  
	
  By:

  	
  /s/ William S. Rosenberg

  	
   

  	
  By:

  	
   /s/ Michael D.West

  	
   

  
	
   

  	
  William S.
  Rosenberg

  	
  Michael D.West

  
	
   

  	
   

  	
   

  
	
  Its: Executive
  Director, Office of
Commercial Ventures and Intellectual

  Property

  	
  Its: President and CEO

  
	
   

  	
   

  	
   

  
	
  Date:

  	
  9/19/2002

  	
   

  	
  Date:

  	
  9/23/2002

  	
   

  
										

 

2

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