Document:

Unassociated Document

Exhibit 10.36

 

LA 08-08

 

EXCLUSIVE LICENSE AGREEMENT

 

between

 

Cell Targeting, Inc.

 

and

 

Burnham Institute for Medical Research

 

          This Exclusive License Agreement (“Agreement”), is entered into as of the 20th day of November, 2007 (hereinafter called “Effective Date”), by and between the Burnham Institute for Medical Research (the “Institute”), a California 501(c)(3) corporation, having its principal place of business at 10901 North Torrey Pines Road, La Jolla, CA 92037, and Cell Targeting, Inc. (“Licensee”), a Delaware corporation, having its principal place of business at 11000 Cedar Avenue, Suite 100, Cleveland, OH, 44106.

 

RECITALS

 

          WHEREAS, the Institute, is the owner of the Licensed Patents (as defined below) and Licensed Know-How (as defined below);

 

          WHEREAS, Licensee desires to obtain a royalty bearing exclusive license under the Licensed Patents and the Licensed Know-How to incorporate homing peptides into cell coatings capable of directing cells to specific organs or tissues, and to test, manufacture and sell these products on an exclusive or non-exclusive basis to researchers or companies working in the field of cell therapy, and to assist such researchers or companies to gain regulatory approval for products incorporating such cell coatings; and

 

          WHEREAS, the Institute is willing to grant a royalty bearing, exclusive license to the Licensed Patents and the Licensed Know-How to Licensee on the terms and subject to the conditions set forth herein.

 

          NOW, THEREFORE, for and in consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties (as defined below) hereto hereby expressly agree as set forth below.

 

AGREEMENT

 

1.        DEFINITIONS

 

           “Affiliates” means with respect to Licensee, any corporation, partnership, trust or other entity that directly, or indirectly through one or more intermediaries, is controlled by or is under common control with Licensee. For such purposes, “control”, “controlled by” and “under common control with” shall mean the possession of the power to direct or cause the direction of the management and/or policies of an entity in general and/or in regard to specific matters relevant to this Agreement, whether through the ownership of voting stock or partnership interest, by contract or otherwise, and regardless of the particular percentage of equity ownership.

 

  

  

  

 

          1.1        “Commercially Reasonable Efforts” means efforts and resources consistent with prevailing cell therapy industry standards for companies of a similar size as Licensee for a product or compound owned by it or to which it has rights, which is of similar market potential at a similar stage in its development or product life, taking into account issues of safety or efficacy, product profile, the competitiveness of the marketplace, the proprietary position of the compound or product, the regulatory structure involved, the profitability of the applicable products, and other relevant factors.

 

          1.2        “Confidential Information” means, without limitation, any confidential information of a Party relating to any use, process, method, compound, research project, work in process, future development, scientific, engineering, manufacturing, marketing, business plan, financial or personnel matter relating to the disclosing Party, its present or future products, sales, suppliers, customers, employees, investors or business, whether in oral, written, graphic, electronic, or any other form, which is marked confidential or designated by the disclosing party as being confidential prior to disclosure or which is marked confidential and provided to the other Party within thirty (30) days of such disclosure.

 

          1.3        “FDA” means the United States Food and Drug Administration and any equivalent agency thereto.

 

          1.4        “Field” means the use of homing peptides in Licensed Products for (1) research use only reagents in preclinical investigations of cell therapy treatments and (2) to enhance cell therapy products for the treatment and/or prevention of disease or injury, in both cases only to the extent that such reagents or therapeutic products incorporate proprietary technology belonging to Licensee or licensed from a third party by Licensee.

 

          1.5        “First Commercial Sale” means with respect to any Licensed Product and any country of the world, the first sale of such Licensed Product under this Agreement, for use in the Field, to a third party in such country, after such Licensed Product has been granted regulatory approval for use in the Field by the competent regulatory authorities in such country. Licensed Products used in testing, clinical trials, pre-clinical investigations, for compassionate use, or as marketing samples to develop or promote Licensed Products shall be excluded from commercial sales.

 

          1.6        “Licensed Know-How” means all tangible or intangible data pertaining to the Licensed Patents, that to the best of Institute’s knowledge are owned or under the control of Institute, and which are not described in the Licensed Patents, but which are necessary or useful for the commercial exploitation of the Licensed Patents, and which are not generally publicly known, and which were prior to the Effective Date, fixed in a tangible medium of expression by Institute.

 

          1.7        “Licensed Patents” means the United States patent application(s) listed on Appendix A, the inventions described and claimed therein, and all patents anywhere in the world that issue from these, or any predecessor application, including without limitation, any provisional application, and any application anywhere in the world that claims or is entitled to claim, priority to such applications, or claims such inventions, including but not limited to any divisional, continuations, continuations-in-part, extensions (including supplemental protection certificates), substitutions, registrations, use cases, utility models, confirmations, re-examinations, renewals and any patents issuing on any of the foregoing, as well as extensions and reissues thereof.

 

  

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          1.8        “Licensed Product(s)” shall mean any product that the manufacture, use or sale of which would infringe any Valid Claim of the Licensed Patents.

 

          1.9        “Licensed Technology” means the Licensed Patents and Licensed Know-How.

 

          1.10      “Net Commercial Sales” means the gross amount invoiced and received by Licensee or any Affiliate or Sublicensee as a result of commercial sales of the Licensed Product(s) to any person, entity or party that is not an Affiliate or Sublicensee or Affiliate of Sublicensee, after deduction of all the following to the extent applicable to such sales:

 

      (i)       all customary trade, case and quantity credits, discounts, refunds or rebates reflected in written documentation, including without limitation rebates accrued, incurred or paid to Federal Medicare and State Medicaid and any other price reductions required by a United States or foreign governmental agency;

 

     (ii)       actual allowances or credits for returns, including without limitation amounts received for sales which become the subject of a subsequent temporary or partial recall by a regulatory agency for safety or efficacy reasons outside the control of Licensee, and retroactive price reductions (including Medicaid, managed care and similar types of rebates) to the extent that each is included in Licensee’s, an Affiliate’s and/or a Sublicensee’s billings, provided, however, that amounts set aside for temporary recalls are added back to Net Commercial Sales should the temporary recall be cancelled;

 

    (iii)       cost of freight, postage, and freight insurance, (if paid by seller) to the extent that each is included in Licensee’s, an Affiliate’s and/or a Sublicensee’s billings;

 

    (iv)       sales taxes, value added taxes, excise taxes, and customs duties directly imposed and with reference to particular sales;

 

    (v)        reasonable and customary sales commissions to non-employees of Licensee reflected in written documentation; and

 

    (vi)       cost of export and/or import licenses and any taxes, fees or other charges associated with the exportation or importation of Licensed Products.

 

A sale or transfer to an Affiliate or a Sublicensee for re-sale by such Affiliate or Sublicensee shall not be considered a sale of Licensed Products for the purpose of this provision but the resale by such Affiliate or Sublicensee shall be a sale for such purposes. Any amounts received by Licensee, its Affiliates and/or Sublicensees in exchange for Licensed Products transferred or provided to any person or entity solely for use in pre-clinical investigations, testing, clinical trials, compassionate use, and/or as marketing samples to develop or promote the Licensed Products (but not for use as a reagent in research unrelated to development or FDA approval of Licensed Products), and income or other amounts received from Sublicensees for research and/or development or obtaining FDA approval of Licensed Products, including grants, gifts, awards, subsides and the like, shall not be included in the definition of Net Commercial Sales.

 

 

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          1.11        “Net Sublicensing Revenue” means consideration of any kind and in any form received by Licensee from a Sublicensee pursuant to and in consideration of sublicenses granted pursuant to this Agreement from Net Commercial Sales of Licensed Products by such Sublicensees. Net Sublicensing Revenue shall not include any income to Licensee for research and development or obtaining FDA approval or other financial encumbrances not derived directly from Net Commercial Sales of Licensed Products.

 

          1.12        “Parties” means Licensee and the Institute, each of which, individually, is a “Party”.

 

          1.13        “Sublicensee” shall mean, with respect to any Licensed Product, a non-Affiliate third party that licenses the rights to practice such Licensed Technology from Licensee or its Affiliates.

 

          1.14        “Territory” means all countries of the world.

 

          1.15        “Valid Claim” means a claim of (i) a pending patent application included within the Licensed Patents, which claim is pending in good faith; or (ii) an issued patent included within the Licensed Patents, which claim has not lapsed, been canceled or become abandoned and has not been declared invalid or unenforceable by an unreversed and unappealable decision or judgment of a court or other appropriate body of competent jurisdiction, and which has not been admitted to be invalid or unenforceable through reissue, disclaimer or otherwise, provided that, with respect to claims of a pending patent application, if any such pending claim has not issued as a claim of an issued patent within four (4) years after the filing date from which such patent application takes priority, such pending claim shall not be a Valid Claim for purposes of this Agreement, unless and until, subsequent to such four (4) year period, such pending claim is issued as a claim of an issued and unexpired patent.

 

2.       GRANT OF LICENSE

 

          2.1         License Grant. Subject to the terms and conditions of this Agreement, the Institute hereby grants to Licensee and its Affiliates an exclusive, royalty-bearing license to practice Licensed Technology in the Territory and in the Field. The rights to practice Licensed Technology include the rights to make, have made, use, offer to sell, sell, import, export, or supply the Licensed Technology and to engage in any activity or conduct reasonably related to efforts to obtain any approval from the FDA.

 

          2.2         Sublicensing. Notwithstanding the foregoing, Licensee and/or its Affiliates shall have the right to license the rights to any Licensed Product to any third party.

 

                      2.2.1     For so long as Licensee is in full compliance with all of its obligations under this Agreement, Licensee may grant sublicenses under the Licensed Patents. Prior to the granting of any sublicense, Licensee will provide Institute with written notification of the name of the intended sublicensee, a brief description of the company, as well as a detailed term sheet containing the financial terms, the territory and all the relevant legal terms of the sublicense to the Institute. Licensee agrees to forward to Institute a copy of each fully executed sublicense postmarked within sixty (60) days of execution of such agreement.

 

  

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                     2.2.2     Sublicensee may also grant sublicenses under the Licensed Patents. Prior to the granting of any sublicense, Sublicensee will provide Institute with written notification of the name of the intended sublicensee, a brief description of the company, and a copy of the proposed sublicense to the Institute.

 

                      2.2.3     Licensee will be responsible for its Sublicensees’ compliance with the terms of this Agreement, and Licensee will not grant any rights which are inconsistent with the rights granted to and obligations imposed on Licensee hereunder. Any act or omission of a Sublicensee, which would be a breach of this Agreement if undertaken or omitted by the Licensee, will be deemed to be a breach by Licensee of this Agreement. In the event of a breach by a Sublicensee of this Agreement, Licensee shall have ninety (90) days to remedy such breach before it is considered a breach of this Agreement by Licensee. Each sublicense granted by Licensee shall include an audit right by Institute of the same scope as provided in Section 5. No sublicense agreement will contain any provision that would cause Institute or Licensee to extend the term of this Agreement.

 

                     2.2.4     Termination of the license granted to Licensee under any of the provisions of Section 11 of this Agreement will terminate all sublicenses that may have been granted by Licensee, unless any sublicensee elects to continue its sublicense by advising Institute in writing, within thirty (30) days of the sublicensee’s receipt of written notice of such termination, of its election, and of its agreement to assume with respect to Institute all of the obligations (including obligations for payment) of Licensee contained in this Agreement. Any sublicense granted by Licensee will contain provisions corresponding to those of this paragraph respecting termination and the conditions of continuance of sublicenses.

 

          2.3        Reserved Rights. The Institute and permitted third party academic institutions may use inventions described or claimed in the Licensed Patents by the Institute, academic institutions or other third parties for non-commercial, non-clinical research. Such non-commercial research use of the Licensed Patents by permitted third party academic institutions shall be subject to the terms of the Material Transfer Agreement attached here as Appendix B. Institute shall inform Licensee of any executed Material Transfer Agreement in the Field.

 

The license grant set forth in Section 2.1 will be further subject to any license of inventions described or claimed in the Licensed Patents that the Institute is required by law or regulation to grant to the United States of America or to a foreign country or agency thereof, pursuant to an existing or future treaty between the United States of America and any foreign country.

 

         2.4        U.S. Manufacture. Licensee agrees that Licensed Products sold in the United States shall be manufactured substantially in the United States to the extent required by 35 U.S.C.§ 204 unless Licensee shall obtain, at its sole expense and effort, written permission from the United States Government to manufacture Licensed Products outside the United States.

 

         2.5        No Other Rights. The license granted hereunder shall not be construed to confer any rights, other than those affirmatively granted as set forth in Section 2.1, to Licensee by implication, estoppel or otherwise as to any technology not specifically set forth in this Agreement.

 

 

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3.         DEVELOPMENT EFFORTS

 

           3.1        Commercially Reasonable Efforts. Licensee shall use its Commercially Reasonable Efforts to develop and commercialize Licensed Products on a schedule that is consistent with sound and reasonable business practices and judgment. The efforts of Affiliates shall be deemed efforts of Licensee for the purpose of determining Licensee’s compliance with this Section 3.1. Such efforts include, but are not limited to:

 

        (i)       the development, manufacture and sale of Licensed Products;

 

       (ii)       market a Licensed Product in the United States (or foreign territory) within twelve (12) months after FDA (or foreign equivalent) approval has been obtained (the “Milestone Event”);

 

       (iii)       reasonably fill the market demand for Licensed Products following commencement of marketing at any time during the term of this Agreement; and

 

      (iv)       obtain all necessary governmental approvals for the manufacture, use and sale of Licensed Products.

 

           3.2        Failure to Achieve Milestones. Licensee may request Institute approval to modify the Milestone Event described in Section 3.1(ii) above, which approval shall not be unreasonably withheld. If Licensee is unable to meet the Milestone Event set forth in Section 3.2(ii) above, Licensee shall be entitled to a twelve (12) month extension of the delayed Milestone Event upon payment to Institute of twenty thousand dollars ($20,000). If Licensee does not make such payment or, if after the extension, Licensee fails to achieve the Milestone Event, Institute shall have the option, in its sole discretion, to modify the Milestone Event or to terminate this Agreement.

 

            3.3       Reporting.

 

                      3.4.1     Within sixty (60) days of the Effective Date, Licensee shall provide to Institute a written research and development plan under which Licensee intends to research and develop the subject matter of the License granted hereunder. It is understood and agreed that such plan is amendable by Licensee in view of the results of its research and development activities. Such plan and all amendments thereto shall be Licensee’s Confidential Information, and Institute agrees to hold same in confidence in accordance with Article 16 below.

 

                      3.4.2     No later than sixty (60) days after June 30 of each calendar year, Licensee shall provide to Institute a written annual progress report describing progress on research and development, regulatory approvals, manufacturing, marketing and sales during the preceding twelve (12) month period and plans for the forthcoming year (“Progress Reports”). Licensee shall also provide any reasonable additional data Institute requires to evaluate Licensee’s performance. All such Progress Reports and additional data shall be Licensee’s Confidential Information and held by Institute in confidence in accordance with Article 16.

 

 

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                      3.4.3     If Licensee at any time defaults in providing the written research and development plan or Progress Report when due hereunder and fails to provide the written research and development plan or Progress Report within sixty (60) days after Licensee’s receipt of written request there for from Institute, Institute may, at its option, terminate this Agreement and all licenses granted herein upon written notice.

 

4.         PAYMENTS AND REPORTS

 

            4.1        License Fee. As partial consideration for the rights conveyed by the Institute under this Agreement, Licensee shall, within thirty (30) days after the Effective Date of this Agreement, pay to the Institute a one-time, non-creditable, non-refundable license fee in the amount of Ten Thousand Dollars ($10,000), and Twenty Thousand Dollars ($20,000) within Thirty (30) days from completion of cumulative equity financing equal to or exceeding two million dollars ($2,000,000). Licensee shall, within thirty (30) days after the Effective Date of this Agreement issue to Institute a number of shares of Licensee’s Common Stock to constitute Three Percent (3%) of Licensee’s fully-diluted stock.

 

            4.2        Royalties. In addition to the consideration described in Section 4.1, Licensee shall pay the Institute a royalty based on Net Commercial Sales of Licensed Products on a Licensed Product-by-Licensed Product, country-by-country basis during the term of this Agreement of:

	  	  	  
	  	
4%

	
for such Net Commercial Sales of pharmaceutical intermediate products, such as cell coating formulations (described by Licensee as “cell paints”) for which Licensee has generated a drug master file including such Net Commercial Sales of Licensed Products by all Sublicensees who have been granted sublicensing rights under this License Agreement;

	  	  	  
	  	
10%

	
for such Net Commercial Sales of research use only Licensed Products developed by Licensee and sold by a third party; and

	  	  	  
	  	
20%

	
of all Net Sublicensing Revenue.

 

If a royalty, upfront payment, milestone payment, or sublicense payment must be paid to a third party by Licensee or its Affiliates or Sublicensee based upon patents or other intellectual property rights in connection with an Licensed Product, then the royalty payable to Institute pursuant to this Section 4.2 shall be reduced by fifty percent (50%) of the applicable third party royalty; provided that, in no instance shall the royalty payable to Institute by Licensee or its Affiliates ever be reduced to less than Fifty Percent (50%) of that due in the absence of the third party obligation.

 

            4.3        Combination Products. If Licensee or its Affiliates or Sublicensee sell any Licensed Product that includes components other than those covered by the Licensed Patents that contribute significant and material value to said Licensed Product (“Combination Licensed Product”), then in lieu of the royalty rate specified in Section 4.2, inclusive of any reductions for third party royalties, the applicable royalty rate on the Net Commercial Sales of such Combination Licensed Product shall be calculated as the product obtained by multiplying the royalty rate specified in Section 4.2 by the fraction A/(A+B), in which A is the value of the technology licensed under this Agreement and B is the value of the other components; provided, however, that in no event shall the royalty rate payable to Institute for Net Commercial Sales of Combination Licensed Products ever be reduced to less than Two-and-One-Half Percent (2.5%) of Net Commercial Sales of the Combination Licensed Product. For purposes of this Section 4.3 the “value” of each component contributing value to the Licensed Product shall mean that component’s contribution to the combined value of the Combination Licensed Product. Furthermore, carriers, diluents, solvents and other such constituents of a potential Licensed Product shall be deemed not to contribute significant and material value to said Licensed Product.

 

 

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          4.4        License Maintenance Fee. Licensee agrees to pay to Institute an annual License Maintenance Fee of Ten Thousand Dollars ($10,000) beginning on the first anniversary of the Effective Date and continuing annually for each subsequent year. The License Maintenance Fee shall be payable within thirty (30) days of such anniversary. The License Maintenance Fee is non-refundable and is not an advance or credit against royalties or any other payments. Following the First Commercial Sale of a royalty-bearing Licensed Product made by Licensee, its Affiliates or a Sublicensee, the License Maintenance Fee shall be creditable on an annual basis against earned royalties actually paid by Licensee.

 

          4.5        Payments. Payment of the royalties specified in Section 4.2 and Section 4.3 shall be made by Licensee to the Institute within thirty (30) days after March 31, June 30, September 30 and December 31 of each year during the term of this Agreement covering the quantity of Licensed Products sold by Licensee and/or its Affiliates or Sublicensee, as appropriate, during the preceding calendar quarter. After termination or expiration of this Agreement, a final payment shall be made by Licensee covering the whole or partial calendar quarter. Commencing with the First Commercial Sale, each quarterly payment shall be accompanied by a written statement of Net Commercial Sales of Licensed Products by Licensee and/or its Affiliates or Sublicensee, as appropriate, during such calendar quarter. Such written statements shall be duly signed by the Comptroller, Treasurer or Chief Financial Officer of Licensee on behalf of Licensee and shall show the Net Commercial Sales of Licensed Products by Licensee and/or its Affiliates or Sublicensee, as appropriate, during such calendar quarter and the amount of royalties payable under this Agreement based thereon.

 

          4.6        Failure to Make Payments. In the event Licensee fails to make any payment due and payable to the Institute hereunder, the Institute may, at its sole option, terminate this Agreement, in accordance with the procedures and cure provisions of Section 11.2.

 

          4.7        Form of Payment. All payments due hereunder are expressed in and shall be paid by wire transfer or check payable in United States Dollars, without deduction of exchange, collection or other charges, to the Institute, or to the account of the Institute at such other bank as the Institute may from time to time designate by written notice to Licensee.

 

          4.8        Interest. In the event that any payment due hereunder is not made when due, the payment shall accrue interest beginning on the tenth day following the due date thereof, calculated at the annual rate of the sum of (i) two percent (2%) plus (ii) the prime interest rate quoted by The Wall Street Journal on the date said payment is due, the interest being compounded on the last day of each calendar quarter; provided, however, that in no event shall said annual interest rate exceed the maximum legal interest rate for corporations. Each such royalty payment when made shall be accompanied by all interest so accrued. Said interest and the payment and acceptance thereof shall not negate or waive the right of the Institute to seek any other remedy, legal or equitable, to which it may be entitled because of the delinquency of any payment.

 

 

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           4.9         Exchange Rate. With respect to each quarter, for countries other than the United States, whenever conversion of payments from any foreign currency is required, and such conversion shall be made at the rate of exchange reported in The Wall Street Journal on the last business day of the applicable calendar quarter.

 

           4.10       Taxes.

 

                      4.10.1 The payments required to be paid by Licensee to Institute pursuant to this agreement may be paid with deduction for taxes withheld under United States domestic law. The Licensee will reasonably assist Institute to obtain full benefit of any applicable tax treaty to reduce the amount of such withheld taxes.

 

                      4.10.2 In the event that the Licensee sublicenses the Licensed Technology to a third party that qualifies as a Untied States taxpayer, then all royalties payable to Institute on Net Commercial Sales of Licensed Product shall be paid directly to Institute by Sublicensee, to avoid payment of withholding taxes imposed by Licensee’s country.

 

                      4.10.3 In the event that the Licensee sublicenses the Licensed Technology to a third party that does not qualify as a Untied States taxpayer, then Licensee will ensure that the terms of the sublicense agreement are such that the royalties payable to Institute on Net Commercial Sales of Licensed Product will not be reduced by the amount of any withholding tax imposed by Sublicensee on Licensee’s royalty payment.

 

5.        RECORDS AND INSPECTION

 

          Licensee shall maintain or cause to be maintained a true and correct set of records pertaining to the Net Commercial Sales of Licensed Products by Licensee and/or its Affiliates or Sublicensee under this Agreement. Such records shall be kept at Licensee’s principal place of business or the appropriate principal place of business of the appropriate Affiliate or Sublicensee to which this Agreement relates. During the term of this Agreement and for a period of three (3) years thereafter, Licensee agrees to permit an independent certified public accountant or other independent agent selected and paid by the Institute, and reasonably acceptable to Licensee, to have access during ordinary business hours to such records as are maintained by Licensee, or its Affiliates or Sublicensee, as may be necessary, in the opinion of such party, to determine the correctness of any report and/or payment made under this Agreement. Such party shall not report to Institute any information other than as to the correctness of any such report or payment. Such audits may be exercised no more than once in any twelve (12) month period upon at least thirty (30) days prior written notice to Licensee. Any and all information learned or acquired by Institute’s agent or accountant pursuant to any such inspection shall be treated the same as Confidential Information of Licensee, in accordance with the provisions of Section 16 below. Before undertaking any such inspection, Institute’s agent or accountant shall agree in writing to be bound by the terms of this Section 5 and Section 16. The Institute shall bear the full cost of such audit unless the audit reveals an underpayment of royalty by more than five percent (5%). The cost of the audit shall be paid by Licensee if the discrepancy is an underpayment of royalty by more than five percent (5%); if the discrepancy is an overpayment, Institute shall refund to Licensee the amount of such overpayment within fifteen (15) days after the audit. Licensee shall pay the Institute all amounts the Institute is entitled to as determined by the audit, plus a one-and-a-half percent (1.5%) late fee on the amount due to the Institute, compounded monthly for each month that the payment is late from the date originally due.

 

 

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6.        PATENTS

 

           6.1        Patent Prosecution and Maintenance. During the term of this Agreement, Institute shall diligently prosecute and maintain Licensed Patents using counsel to be chosen by Institute and to which Licensee has no reasonable objection. Licensee shall be provided with copies of all documents relating to the filing, prosecution, and maintenance of Licensed Patents in sufficient time to review such documents and comment thereon, if desired by Licensee, prior to filing, provided, however, that if Licensee has not commented on such documents prior to the deadline for filing a response with the relevant government patent office, Institute shall be free to respond without consideration of Licensee’s comments. Licensee shall keep this documentation confidential in accordance with Section 16 (Confidentiality) herein.

 

If Institute declines to prosecute or continue to prosecute any patent application or declines to maintain any patent included in the Licensed Patents, Institute shall give Licensee reasonable notice to this effect. From and after the date of such notice, Licensee will have the right, but not the obligation, to pay for the prosecution and/or maintenance of such patent application or patent, and such patent application or patent shall no longer be included in the Licensed Patents.

 

           6.2        Patent Costs. Licensee shall reimburse Institute Twenty Five Percent (25%) of all Licensed Patent expenses incurred incident to the filing, prosecution and maintenance of the Licensed Patents incurred and paid by Institute prior to the Effective Date $71,661.91. Payments shall be made in Four (4) equal installments: First (1st) payment shall be made within Thirty (30) days from completion of pre-seed round of financing and the Second (2nd), Third (3rd) and Fourth (4th) payments are due at Ninety (90) day intervals. Licensee shall reimburse Institute Twenty Five Percent (25%) of all ongoing patent related costs incurred during the term of the License payable on a quarterly basis; provided all such ongoing costs must be first approved by Licensee in writing.

 

           6.3        Effect of Licensee’s Discontinuing Payments. In the event that Licensee decides not to continue to support the prosecution of any patent or patent application in the United States or in the territories agreed in writing in Section 6.2, or the maintenance of a patent within the Licensed Patents, Licensee will give Institute at least sixty (60) days prior written notice of such election, except in the case in which the decision not to support continued prosecution is in response to a communication from the Institute, the Institute’s patent attorney, a patent office, or a foreign associate, relating to a deadline for taking action, in which case Licensee’s notice will be timely if given within half the time remaining between receipt by Licensee of the communication and the deadline for taking action. No such notice will have any effect on Licensee’s obligations to pay expenses incurred up to the effective date of such election. From and after the effective date of such election, Institute will have the right, but not the obligation, to pay for the prosecution and/or maintenance of the patent application or patent which Licensee is discontinuing and Licensee shall have no further rights thereto. Licensee may freely discontinue payment of expenses for cause (i.e., official actions, prior art, legal decisions, or statutes or other expressions of local law, which reasonably indicate that the material claims in the application or patent are or are likely to be unpatentable, unenforceable, or invalid). Where discontinuance of payments is not for cause (i.e., Licensee is unwilling to support and reimburse Institute for all reasonable and necessary patent expense related to the filing, prosecution and maintenance of the Licensed Patents, which are likely to be patentable, enforceable, or valid), from and after the effective date of such election, any such patent application or patent in any country as to which Licensee have elected to discontinue payment shall have the effect of excluding all patent applications or patents directed to the same subject matter in all relevant countries thereof from Licensed Patents, and from the scope of the license granted under this Agreement. All rights relating to such patent applications or patents shall revert to Institute and may be freely licensed by Institute to any other person or entity.

 

 

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           6.4        Cooperation. Institute and Licensee shall cooperate fully in the preparation, filing, prosecution and maintenance of Licensed Patents and of all patents and patent applications licensed to Licensee. Each Party shall provide to the other timely notice as to all matters which come to its attention and which may affect the preparation, filing, prosecution or maintenance of any such patent applications or patents.

 

           6.5        Patent Marking. Licensee shall mark all Licensed Products made, used or sold under the terms of this Agreement, or their containers, in accordance with the applicable patent marking laws.

 

7.         INDEMNITY AND INSURANCE

 

           7.1        Indemnity - Licensee. Licensee hereby agrees to indemnify and hold harmless Institute and its directors, officers, researchers, scientists, employees and agents (collectively, the “Institute Indemnitees”) from and against any losses, claims, damages, costs, and expenses (including attorneys’ fees) (collectively, “Losses”) incurred in connection with or arising from (i) any third party claims arising from Licensee’s use of any Licensed Technology; and (ii) any claims for death, personal injury or related property damage arising from Licensee’s development, manufacture, sale, marketing, distribution or use of any Licensed Products, but excluding Losses arising from or relating to the breach of this Agreement by Institute or the gross negligence or willful misconduct of any Institute Indemnitees. Without limiting the generality of the foregoing, such indemnity obligation shall apply to any product liability or other claims, including without limitation, personal injury, death or property damage, made by employees, subcontractors, or agents of Licensee, as well as by any customer, patient, hospital, doctor, or member of the general public who buys or uses an Licensed Product. Licensee shall monitor customer complaints and shall be responsible for corrections, withdrawal or alert notices.

 

           7.2        Insurance. Licensee shall for so long as Licensee manufactures, uses or sells any Licensed Product, maintain in full force and effect policies of (i) worker’s compensation and/or employers’ liability insurance within statutory limits and (ii) general liability insurance (with broad form general liability endorsement) with limits of not less than one million dollars ($1,000,000) per occurrence and a ten million dollar ($10,000,000) annual aggregate. From and after the time that Licensee or any of its Affiliates begin human clinical trials on any Licensed Product, Licensee shall use reasonable commercial efforts to obtain and maintain comprehensive general liability insurance, including products liability insurance, with reputable and financially secure insurance carriers in an amount which is customarily carried by companies at a comparable stage of development of new pharmaceutical products. Such coverage(s) shall be purchased from a carrier or carriers deemed reasonably acceptable to the Institute and shall name the Institute as additional insured. Upon request by the Institute, Licensee shall provide to the Institute copies of said policies of insurance.

 

 

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8.         ACKNOWLEDGMENTS

 

            8.1       Licensee’s Acknowledgement. Licensee represents, acknowledges and agrees that the Licensed Technology involves technologies which have not been approved by any regulatory agency, and that Institute cannot guarantee the safety or usefulness of any Licensed Products.

 

            8.2        Corporate Power. Each Party hereby represents and warrants that such Party is duly organized and validly existing under the laws of the state of its incorporation or organization, as the case may be, and has full corporate power and authority to enter into this Agreement and to carry out the provisions hereof.

 

            8.3        Due Authorization. Each Party hereby represents and warrants that such Party is duly authorized to execute and deliver this Agreement and to perform its obligations hereunder.

 

            8.4        Binding Obligation. Each Party hereby represents and warrants that this Agreement is a legal and valid obligation binding upon it and is enforceable in accordance with its terms. The execution, delivery and performance of this Agreement by such Party does not conflict with any agreement, instrument, or understanding, oral or written, to which it is a party or by which it may be bound, nor violate any law or regulation or any court, government body or administrative or other agency having authority over it.

 

            8.5        Institute Acknowledgments. To the knowledge of Institute as of the Effective Date, none of the Licensed Patents is unenforceable or invalid or would be unenforceable or invalid if issued as patents.

 

9.        DISCLAIMER OF WARRANTIES

 

            EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, THE Institute MAKES NO WARRANTIES OR REPRESENTATIONS OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, WARRANTIES OF FITNESS FOR A PARTICULAR PURPOSE OR MERCHANTABILITY, REGARDING OR WITH RESPECT TO THE LICENSED TECHNOLOGY OR LICENSED PRODUCTS. IN ADDITION, EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, THE Institute MAKES NO WARRANTIES OR REPRESENTATIONS, EXPRESSED OR IMPLIED, OF THE PATENTABILITY OF THE LICENSED PATENTS OR OF THE ENFORCEABILITY OF ANY PATENTS ISSUING THEREUPON, IF ANY, OR THAT THE LICENSED TECHNOLOGY OR LICENSED PRODUCTS ARE OR WILL BE FREE FROM INFRINGEMENT OF ANY PATENT OR OTHER INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES.

 

 

12

 

 

10.       LIMITATION OF LIABILITY

 

            NEITHER PARTY NOR SHALL BE ENTITLED TO RECOVER FROM THE OTHER PARTY ANY SPECIAL, INCIDENTAL, EXEMPLARY, CONSEQUENTIAL OR PUNITIVE DAMAGES IN CONNECTION WITH THIS AGREEMENT OR ANY LICENSE GRANTED HEREUNDER.

 

11.       TERM AND TERMINATION

 

            11.1        Term.

	  	  
	  	
The rights and licenses granted to Licensee and its Affiliates pursuant to Section 2.1 hereof, and the obligation to pay royalties on the Net Commercial Sales of Licensed Products pursuant to Sections 4.2 and 4.3, and the maintenance fee in Section 4.3, shall continue in full force and effect, on an Licensed Product-by-Licensed Product and country-by-country basis, until the expiration of the last to expire patent within the Licensed Patents containing a Valid Claim covering such product in the country of sale, whereupon Licensee shall have the royalty-free right to practice the Licensed Technology.

	  	  
	  	
This Agreement shall become effective on the Effective Date and shall continue in full force and effect until the expiration of Licensee’s rights and licenses under Section 2.1 hereof, as set forth in Section 11.1, unless earlier terminated pursuant to this Article 11.

 

            11.2        Termination by Notice. Notwithstanding any provision herein, Licensee may terminate this Agreement in its entirety, at any time by giving Institute at least sixty (60) days’ prior written notice. All rights and obligations of Licensee with respect to such patent(s) and patent application(s) shall terminate on the date specified in the written notification.

 

            11.3        Default Remedies.

 

                        11.3.1        If Licensee at any time defaults in the payment of any sum when due hereunder and fails to make such payment within sixty (60) days after receipt of written notice thereof by Institute, Institute may, at its option, terminate this Agreement and all licenses granted herein upon written notice.

 

                        11.3.2        If either party at any time defaults in the making of any report hereunder, or commits any material breach of any of the terms, covenant or provisions of this Agreement, or makes any false report and fails to remedy any such default, material breach or report within sixty (60) days after receipt of written notice thereof by the non-breaching party, the non-breaching party may, at its option, terminate this Agreement and all licenses granted herein upon written notice.

 

            11.4        Default for Bankruptcy. Each Party shall have the right, at its option, to terminate this Agreement in the event that the other Party shall:

 

       (i)     file in court or agency pursuant to any applicable state or federal petition in bankruptcy (other than dissolution or winding up for the purposes of reconstruction or amalgamation) or if such party is served with an involuntary petition in bankruptcy, or

 

 

13

 

 

      (ii)     make an assignment of all or substantially all of its assets for the benefit of creditors, or

 

     (iii)     in the event that a receiver or trustee is appointed for the other Party and such Party shall, after the expiration of thirty (30) days following any of the events enumerated above, be unable to secure a dismissal, stay or other suspension of such proceedings.

 

In the event of termination of this Agreement all rights to the Licensed Patents shall revert to the Institute.

 

            11.5        Rights after Termination. At the date of any termination of this Agreement by Licensee pursuant to Section 11.2 hereof or by Institute pursuant to Section 11.3 hereof for material breach by Licensee or Section 11.4 hereof in the event of bankruptcy insolvency, dissolution, or receivership proceedings by Licensee, as of the date of termination set forth in Licensee’s termination notice (in the case of termination under Section 11.2) or receipt by Licensee of notice of such termination (in the case of a termination under Section 11.3 or 11.4), Licensee and its Affiliates shall immediately cease exploiting any of the Licensed Patents and return all copies of the same to the Institute and cease production of all Licensed Products; provided, however, that Licensee, its Affiliates and each Sublicensee may dispose of any Licensed Products manufactured as of the date of termination, and may complete manufacture of Licensed Products then in the process of manufacture, and sell them, provided that Licensee shall pay to the Institute running royalties in accordance with Sections 4.2 and 4.3 with respect thereto and otherwise complies with the terms of this Agreement.

 

            11.6        No Waiver; Survival. No termination of this Agreement shall constitute a termination or a waiver of any rights of either Party against the other Party accruing at or prior to the time of such termination. The obligations and rights of the Parties under Sections 1, 7.1, 7.2, 9, 10, 11, 14, 15, 16, 17 and the confidentiality-related provisions of Sections 3.4.1 and 3.4.2 shall survive termination of this Agreement for as long as necessary to permit their full discharge.

 

12.       ASSIGNABILITY

 

Licensee shall not assign the license granted hereunder or this Agreement without the prior written consent of Institute.

 

13.       GOVERNMENTAL COMPLIANCE

 

            13.1        Compliance with Laws. Licensee shall at all times during the term of this Agreement and for so long as it sells imports, exports, manufactures, uses, develops, distributes, markets or otherwise commercially exploits Licensed Products and/or Licensed Technology comply and require its Affiliates and Sublicensees to comply with all laws that control the import, export, manufacture, use, development, sale, marketing, distribution and other commercial exploitation of Licensed Products and/or Licensed Technology or any other activity undertaken pursuant to this Agreement.

 

            13.2        Governmental Approval or Registration. If this Agreement or any associated transaction is required by the law of any nation to be either approved or registered with any governmental agency, Licensee shall assume all legal obligations to do so. Licensee shall notify Institute if it becomes aware that this Agreement is subject to a United States or foreign government reporting or approval requirement. Licensee shall make all necessary filings and pay all costs including fees, penalties, and all other out-of-pocket costs associated with such reporting or approval process.

 

 

14

 

 

14.         GOVERNING LAW

 

            This Agreement shall be governed by, and shall be construed and enforced in accordance with, the laws of the State of California without regard to its conflict of laws rules. This Agreement is expressly acknowledged to be subject to all federal laws, including, but not limited to, the Export Administration Act of the United States of America. No conflict-of-laws rule or law that might refer such construction and interpretation to the laws of another state, republic or country shall be considered.

 

15.         NOTICES

 

            Any payment, notice or other communication pursuant to this Agreement shall be mailed by first class, certified or registered mail, postage prepaid, or delivered by overnight delivery service addressed as follows or to such other address designated by written notice given to the other Party or faxed to the other party if the sender has evidence of successful transmission:

	  	  
	
In the case of the Institute:

	  	
The Burnham Institute

	  	
10901 North Torrey Pines Road

	  	
La Jolla, CA 92037

	  	
ATTN: Chief Operating Officer

	  	  
	
In the case of Licensee:

	  	
Arnold I. Caplan, PhD

	  	
Acting Chairman & Acting CEO

	  	
Cell Targeting, Inc.

	  	
11000 Cedar Avenue, Suite 100

	  	
Cleveland, OH, 44106

 

Any such payment, notice or other communication shall be effective upon receipt.

 

16.         CONFIDENTIALITY

 

             16.1        Treatment of Confidential Information. During the term of this Agreement, and for a period of five (5) years after this Agreement expires or terminates, a Party receiving Confidential Information of the other Party shall (a) maintain in confidence such Confidential Information to the same extent such receiving Party maintains its own proprietary information (but at a minimum each Party shall use reasonable efforts); (b) not disclose such Confidential Information to any third party without prior written consent of the other Party to this Agreement; and (c) not use such Confidential Information for any purpose except those permitted by this Agreement. A Party shall have no such obligation with respect to any portion of such Confidential Information which:

 

 

15

 

 

       (i)     is publicly disclosed by the disclosing Party, or is otherwise publicly disclosed without the fault of the receiving Party, either before or after it becomes known to the receiving Party; or

 

      (ii)     was known to the receiving Party prior to when it was received from the disclosing Party, as evidenced by contemporaneous written records; or

 

     (iii)     is subsequently disclosed to the receiving Party in good faith by a third party who has a right to make such a disclosure; or

 

     (iv)     has been published by a third party which had a right to do so; or

 

      (v)     has been independently developed by the receiving Party without the aid, application or use of Confidential Information from the disclosing Party, such independent development being performed solely by persons not having access whatsoever to the disclosing Party’s Confidential Information, as evidenced by contemporaneous written evidence of same; or

 

     (vi)     is required by law to be disclosed, but then only to the limited extent of such legally required disclosure; provided, however, that the other Party shall be given prompt notice of any such legally required disclosure.

 

             Notwithstanding the foregoing, Licensee may disclose Institute’s Confidential Information to the extent that such disclosure is reasonably necessary, in accordance with the term and conditions of this Agreement, (a) to file or prosecute patent applications within the Licensed Patents, (b) pursue or defend litigation relating to the Licensed Patents, (c) seek or maintain regulatory approval for Licensed Products and/or Licensed Methods, or (d) for compliance with applicable governmental regulations; provided that, if Licensee intends to make any such disclosure, it shall give reasonable advance written notice to Institute of such intention. Furthermore, nothing in this Section 16.1 shall be construed to preclude Licensee from disclosing Institute’s Confidential Information to third parties in connection with the development and commercialization of Licensed Products and/or Licensed Methods including, without limitation, co-development, co-marketing and co-promotion in connection therewith, or in the process of obtaining private or public financing, as long as such third party(ies) agrees in writing to be bound by confidentiality provisions no less strict than those set forth in this Section 16.1.

 

              16.2        Publicity. Any publication, news release or other public announcement relating to this Agreement, including without limitation, entering to into this Agreement, or to the performance hereunder, shall first be reviewed and approved by both Parties, which approval shall not be unreasonably withheld. Either Party shall be entitled to disclose the substance of this Agreement to its shareholders (and to prospective shareholders to whom its stock is offered for purchase) under a confidentiality agreement consistent with this Agreement. Each Party shall also be entitled to provide a copy of this Agreement to the Securities and Exchange Commission (if required).

 

17.         GENERAL PROVISIONS

 

              17.1        Use of the Names. Licensee agrees that it shall not use in any way the name “The Burnham Institute” or any logotypes or symbols associated with the Institute or the names of any of the scientists or other researchers at the Institute without the prior written consent of the Institute. Institute agrees that it shall not use the name Cell Targeting or any logotypes or symbols associated therewith or the names of any scientists or other researchers of any of the foregoing, without the prior written consent of Licensee.

 

 

16

 

 

          17.2        Independent Contractors. The Parties hereby acknowledge and agree that each is an independent contractor and that neither Party shall be considered to be the agent, representative, master or servant of the other Party for any purpose whatsoever, and that neither Party has any authority to enter into a contract, to assume any obligation or to give warranties or representations on behalf of the other Party without the prior written consent of the other Party. Nothing in this relationship shall be construed to create a joint venture, agency, partnership, fiduciary or other similar relationship between the Parties.

 

          17.3        Non-Waiver. The Parties covenant and agree that if a Party fails or neglects for any reason to take advantage of any of the terms provided for the termination of this Agreement or if a Party, having the right to declare this Agreement terminated, shall fail to do so, any such failure or neglect by such Party shall not be a waiver or be deemed or be construed to be a waiver of any cause for the termination of this Agreement subsequently arising, or as a waiver of any of the terms, covenants or conditions of this Agreement or of the performance thereof. None of the terms, covenants and conditions of this Agreement may be waived by a Party except by its written consent.

 

          17.4        Reformation. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability shall not invalidate or render unenforceable such provision in any other jurisdiction. Should any provision of this Agreement be so held to be unenforceable, such provision, if permitted by law, shall be considered to have been superseded by a legally permissible and enforceable clause which corresponds most closely to the intent of the Parties as evidenced by the provision held to be unenforceable.

 

          17.5        Modification. No amendment or modification of this Agreement shall be effective unless in writing signed by the Parties hereto No provision of this Agreement shall be varied, contradicted or explained by any oral agreement, course of dealing or performance or any other matter not set forth in an agreement in writing and signed by the Parties.

 

          17.6        Force Majeure. No liability hereunder shall result to a Party by reason of delay in performance to the extent caused by circumstances beyond the reasonable control of the Party, including, without limitation, acts of God, fire, flood, war, civil unrest, labor unrest, or terrorism.

 

          17.7        Entire Agreement. The terms and conditions herein constitute the entire agreement between the Parties and shall supersede all previous agreements, either oral or written, between the Parties hereto with respect to the subject matter hereof. No agreement or understanding bearing on this Agreement shall be binding upon either Party hereto unless it is in writing and signed by the duly authorized officer or representative of each of the Parties and it expressly refers to this Agreement.

 

 

17

 

 

          17.8         Headings. The headings for each Section in this Agreement have been inserted for convenience of reference only and are not intended to limit or expand on the meaning of the language contained in the particular Section.

 

          17.9         Counterparts. This Agreement may be signed in two counterparts, each of which shall be deemed an original, but both of which together shall constitute one and the same instrument. Signatures may be transmitted by facsimile, thereby constituting the valid signature and delivery of this Agreement.

 

          17.10       No Strict Construction. This Agreement has been prepared jointly and shall not be strictly construed against either Party.

 

          17.11       No Third Party Beneficiaries. No person or entity other than Institute, Licensee and their respective Affiliates and permitted assignees hereunder shall be deemed an intended beneficiary hereunder or have any right to enforce any obligation of this Agreement.

 

          17.12       Dispute Resolution. The Parties shall make diligent and reasonable efforts to amicably settle all disputes, controversies, or differences which may arise between the Parties hereto, out of, or in relation to or in connection with this Agreement. If a Party shall reasonably determine that it must seek a preliminary injunction, temporary restraining order or other provisional relief, upon the occurrence of a dispute between the Parties, including, without limitation, any breach of this Agreement or any obligation relating thereto, the matter shall be referred first to the President of Licensee and the COO of Institute, or their designees, who shall negotiate in good faith to resolve such dispute in a mutually satisfactory manner if circumstances permit, recognizing that an aggrieved party that wishes to seek a preliminary injunction or temporary restraining order may need to resort immediately to legal recourse. If such efforts do not result in a mutually satisfactory resolution, the dispute shall be finally settled by arbitration, by which each Party hereto is bound. Such arbitration shall be held in San Diego, California in accordance with the rules of the American Arbitration Association. Any such arbitration shall be conducted in the English language. There shall be three (3) arbitrators, including one nominee of Licensee, one nominee of Institute, and a third person selected by said nominees. Judgment upon the award rendered may be entered in the highest court or forum, state, or federal, having jurisdiction; provided, however, that the provisions of this Section 17.12 shall not apply to any dispute or controversy as to which any treaty or law prohibits such arbitration. The prevailing party shall be entitled to reasonable attorneys’ fees and costs to be fixed by the arbitrators.

 

 

18

 

 

IN WITNESS WHEREOF, the Parties hereto have executed and delivered this Agreement by their duly authorized officers and representatives effective as of the Effective Date.

	  	 	  	  	  
	
Institute:

	
LICENSEE:

	  	  	  	  
	
Burnham Institute for Medical Research

	
Cell Targeting, Inc.

	 	 
	  	  	  	/s/ Arnold I. Caplan
	
By:

	/s/ Robert Zaugg	  	
By:

	 	
Robert Zaugg, Ph.D.

	 	 	
Arnold I. Caplan, Ph.D.

	  	
Vice President Business Development

	  	
Acting Chairman & Acting CEO

 

 

19

 

 

Appendix A

 

Licensed Patents

 

	
TECH ID

	  	
PEPTIDE

	  	
TITLE

	  	
STATUS

	
04-055

	  	
CRPPR

	  	
Novel Heart Homing Peptides and Methods of Using Same

	  	
Prior to examination

	
04-055

	  	
CRPPR

	  	
Peptides that Selectively Home to Heart Vasculature and Related Conjugates and Methods

	  	
USApp 2006-0160743

	
06-043

	  	
CGLIIQKNEC

(CLT1 peptide)

	  	
Methods and Compositions Related to Targeting Tumors and Wounds

	  	
Prior to examination

	
06-043

	  	
CNAGESSKNC

(CLT2 peptide)

	  	
Methods and Compositions Related to Targeting Tumors and Wounds

	  	
Prior to examination

	
07-001

	  	
CAR

	  	
Wound Healing Peptides

	  	
Prior to examination

	
07-001

	  	
CRK

	  	
Wound Healing Peptides

	  	
Prior to examination

	
02-036

	  	
KDEPQRRSARLSA

KPAPPKPEPKPKK

APAKK (F3 peptide)

	  	
HMGN2 Peptides and Related Molecules that Selectively Home to Tumor Blood Vessels and Tumor Cells

	  	
USApp 2004-0186056

	
03-001

	  	
CREKA

	  	
Collagen-binding Molecules that Selectively Home to Tumor Vasculature and Methods of Using Same

	  	
USApp 2005-0048063

	
99-083

	  	
CRSWNKADNRSC

	  	
Heart Homing Peptides and Methods of Using Same

	  	
USP 6,303,573

 

 

  

20

  

 

Appendix B

 

Standard Material Transfer Agreement

 

Biological Material Transfer Agreement

(“Agreement”)

 

            Effective _______ (“Effective Date”) the Burnham Institute for Medical Research, a California non-profit public benefit corporation, located at 10901 North Torrey Pines Road, La Jolla, CA 92037 USA (“Institute”) and _______, a non-profit organization located at _______ (“Recipient”) agree as follows:

 

1.        Recipient has requested that Institute transfer the following research material: ____________ (“Material”) to Recipient for use by _____________________ (hereinafter, “Investigator”).

 

2.        Institute agrees to transfer Material to Recipient for use by the Investigator in his/her non-commercial research project, where such research project is not funded by and/or conducted for the benefit of any for-profit organization. Research project is described as follows: ______________________________________

_____________________________________________________________________________________________________________________________

_____________________________________________________________________________________________________________________________

_____________________________________________________________________________________________________________________________

_____________(hereinafter, “Research Project”) subject to Recipient’s agreement with all of the following terms and conditions:

 

	  	
a.        Material, including any and all unmodified descendents and derivatives of Material, is the property of Institute.

	  	  
	  	
b.        Material represents a significant investment on the part of, and is proprietary to, Institute. Recipient will not attempt to obtain a patent claiming Material.

	  	  
	  	
c.        Recipient agrees not to transfer Material to any person who is not under Investigator’s direct supervision at Recipient’s organization without advance written approval of Institute. Recipient will ensure that all persons authorized to use Material pursuant to this Agreement are aware of and agree to abide by all of the terms and conditions of this Agreement.

	  	  
	  	
d.        Any uses of Material other than in connection with the Research Project are expressly prohibited. Recipient expressly agrees that the provision of Materials by Institute will not be construed as a grant of any right or license with respect to Materials except as set forth herein or in a duly executed license agreement.

	  	  
	  	
e.        No rights are granted to Recipient under any patents, patent applications, trade secrets or other proprietary rights of Institute other than the right to use Material in the Research Project, subject to the terms of this Agreement.

 

  

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f.        Recipient agrees to use its reasonable efforts (no less than the protection given its own confidential information) to maintain in confidence, for a period of five (5) years from the date of its disclosure, any of Institute’s information about Material that is disclosed by Institute to Recipient and that, by appropriate marking, is identified as “Confidential” and proprietary at the time of disclosure (“Confidential Information”). Confidential Information will not include information that:

 

	  	
(i)

	
is publicly available prior to the date of this Agreement or becomes publicly available thereafter through no wrongful act of Recipient;

	  	
(ii)

	
was known to Recipient prior to the date of disclosure or becomes known to Recipient thereafter from a third party having an apparent bona fide right to disclose the information;

	  	
(iii)

	
is disclosed by Recipient with Institute’s prior written approval;

	  	
(iv)

	
is disclosed by Institute without restriction on further disclosure;

	  	
(v)

	
is independently developed by Recipient;

	  	
(vi)

	
Recipient is obligated to produce pursuant to an order of a court of competent jurisdiction or a valid administrative or Congressional subpoena, provided that Recipient (a) promptly notifies Institute and (b) cooperates reasonably with Institute’s efforts to contest or limit the scope of such order and (c) takes all necessary steps to protect the confidentiality of the Confidential Information including without limitation filing any documents with the court under seal.

 

	  	
g.       Recipient may publish, or otherwise publicly disclose the results of the Research Project, provided however that in all oral presentations or written publications concerning the Research Project, no such publication or disclosure may include any of Institute’s Confidential Information without Institute’s prior written approval. In accordance with scientific custom, Institute’s provision of Material will be noted in all written or oral public disclosures concerning the Research Project, as is appropriate.

	  	  
	  	
h.       Recipient agrees that it will share the results of its research utilizing Material with Dr. __________________________of Institute under the terms of confidentiality and non-disclosure set forth in this Agreement.

	  	  
	  	
i.        If Recipient desires to use Material or any part thereof for commercial, for-profit making purposes, Recipient agrees, in advance of such use, to negotiate in good faith with Institute to establish terms of a commercial license. It is understood by Recipient that Institute shall have no obligation to grant such license to Recipient, and may grant licenses to others, or sell or assign all or part of its rights in Materials to any third party, subject to any preexisting rights held by others and obligations to the Federal Government.

	  	  
	  	
j.        Material is provided as a service to the research community. IT IS PROVIDED TO RECIPIENT “AS IS” WITH NO WARRANTIES, EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. Institute makes no representations that the use of Material will not infringe any patent or proprietary rights of third parties.Unassociated Document

Exhibit 10.37

 

STOCK PURCHASE AGREEMENT

 

EMBRYOME SCIENCES, INC.

 

973,709 Common Shares

 

Price: $ 2.054 per Share

 

READ THIS AGREEMENT CAREFULLY BEFORE YOU INVEST

 

The common shares, no par value (“Shares”) have not been registered under the Securities Act of 1933, as amended, or applicable state securities laws and may not be offered for sale, sold, transferred, pledged or hypothecated to any person in the absence of an effective registration statement covering such Shares (or an exemption from such registration) and an opinion of counsel satisfactory to Embryome Sciences, Inc. to the effect that such transfer or exercise complies with applicable securities laws.

 

  

  

  

PURCHASE AGREEMENT

 

This Agreement is entered into by Life Extension Foundation (“Purchaser”) and Embryome Sciences, Inc., a California corporation (the “Company).

 

1.   Purchase and Sale of Shares.

 

(a)    Purchaser hereby irrevocably agrees to purchase, and the Company agrees to sell to Purchaser, nine hundred seventy three thousand seven hundred nine point eighty three (973,709.83) common shares, no par value (the “Shares”) at the price of $ 2.054 per Share.

 

(b)    This Agreement will become an irrevocable obligation of Purchaser to purchase the number of Shares specified in paragraph (a) of this Section 1, at the price of $ 2.054 per Share, when a copy of this Agreement, signed by Purchaser, is countersigned by the Company.  Purchaser shall pay the purchase price of the Shares by wire transfer to such account of the Company as the Company may specify.  If this Agreement is rejected or not accepted for any reason by the Company, all sums paid by the Purchaser will be promptly returned, without interest or deduction.

 

2.    Corporate Restructuring.

 

(a)    Purchaser acknowledges and agrees that in conjunction with Purchaser’s investment in the Company through the purchase of the Shares, the Company is restructuring its operations such that it will be entering a new field of business focused on the use of induced pluripotent stem cell (“iPS”) technology and other technology for the research and development of stem cell products to treat human vascular and blood diseases and disorders (the “New Field”).

 

(b)    In entering the New Field, the Company will dispose of its current tangible and intangible assets, contracts, agreements, licenses, patents, patent applications, know-how, and other intellectual property not related to or necessary for the Company’s operation in the New Field (collectively, the “Old Assets”).  The Old Assets include those listed on Schedule A attached to this Agreement.  Purchaser acknowledges and agrees that the Company will distribute, transfer, and assign the Old Assets to its parent company BioTime, Inc. (“BioTime”) without the receipt of consideration, except that BioTime will assume and indemnify the Company from any and all liabilities arising prior to the date of this Agreement from the operation of the Company’s business using the Old Assets (the “Old Business”).

 

(c)    The Company will retain certain licenses and sublicenses from ACT, described on Schedule B, to use certain patents, patent rights, and know-how; provided, however, that in conjunction with the Company’s disposal of the Old Assets, the Company will sublicense to BioTime all of the Company’s right and obligations under the licenses and sublicenses listed on Schedule B for use outside of the New Field.  Purchaser acknowledges and agrees that the Company will receive no license fees or royalties from BioTime for such sublicenses.  BioTime will pay any and all royalties and other fees as may become payable to ACT under the terms of such licenses and sublicenses with respect to the use of the sublicensed patents and know-how by BioTime and its sublicensees or assignees.

 

  

1

  

 

(d)    Purchaser acknowledges and agrees that price that Purchaser is paying for the Shares under this Agreement does not include the value of the Old Assets or the Old Business.

 

3.    Change of Corporate Name.  Purchaser acknowledges and agrees that in connection with the Company’s disposal of the Old Business and entry into the New Field, the Company will amend its Articles of Incorporation to change its name to ReCyte Therapeutics, Inc.

 

4.    Certain Agreements and Relationship with BioTime.  The Company and BioTime will enter into a Shared Facilities and Services Agreement substantially on the terms of the form attached as Exhibit 1 (the “Facilities and Services Agreement”) pursuant to which BioTime will provide or permit the Company to use certain laboratory and office space leased by BioTime, and certain equipment and supplies belonging to or leased by BioTime, and BioTime employees, consultants, and contractors for the purpose of conducting the Company’s business in the New Field.  The Company will pay BioTime certain fees and the amount of certain costs incurred for the benefit of and allocated by BioTime to the Company under the Facilities and Services Agreement.  The Company may also hire its own employees and engage its own consultants and contractors for its business.  By entering into this Agreement, Purchaser approves the Facilities and Services Agreement and the Company’s performance of its obligations thereunder.

 

5.    Capitalization.  As of the date of this Agreement, the Company’s authorized capital consists of 5,000,000 Preferred Shares, none of which are issued or outstanding and 50,000,000 Common Shares, of which 24,000,000 are issued and outstanding and owned by BioTime.

 

6.    Stock Option Plan.  Purchaser acknowledges that the Company has adopted a stock option plan (the “Plan”), a copy of which has been provided to Purchaser, under which the Company may grant options to purchase Company Common Shares, or sell Common Shares, to officers, directors, and key employees of the Company or BioTime, and to consultants of the Company, as determined by the Company’s Board of Directors (the “Board”) or a committee designated by the Board.  Purchaser acknowledges that the Board has granted stock options under the Plan as reflected on Schedule C (the “Option Grants”).  Purchaser approves the Plan and the Option Grants and acknowledges that the Board or a committee of the Board may grant additional options or sell restricted shares under the Plan from time to time in its discretion.

 

  

2

  

 

7.    Investment Representations.  Purchaser represents and warrants to the Company that:

 

(a)    Purchaser has made such investigation of the Company as Purchaser deemed appropriate for determining to acquire (and thereby make an investment in) the Shares.  In making such investigation, Purchaser has had access to such financial and other information concerning the Company as Purchaser requested.  Purchaser acknowledges and understands that the Company is commencing a start-up venture in which the Company has no history of operations, and has received only limited capital from its controlling shareholder BioTime, Inc.  Purchaser acknowledges receipt of the Articles of Incorporation and Bylaws of the Company, and copies of the minutes of the proceedings of the Board of Directors of the Company.  Purchaser has had a reasonable opportunity to ask questions of and receive answers from the executive officers of the Company concerning the Company, and to obtain such additional information concerning the Company as may have been possessed or obtainable by the Company without unreasonable effort or expense. All such questions have been answered to Purchaser’s satisfaction.

 

(b)    In determining to enter into this Agreement and purchase the Shares, Purchaser has considered the Risk Factors shown on Schedule D.

 

(c)    Purchaser understands that the Shares are being offered and sold without registration under the Act, or qualification under the California Corporate Securities Law of 1968, or under the laws of any other states, in reliance upon the exemptions from such registration and qualification requirements for non-public offerings.  Purchaser acknowledges and understands that the availability of the aforesaid exemptions depends in part upon the accuracy of certain of the representations, declarations and warranties made by Purchaser, and the information provided by Purchaser, in this Agreement,  Purchaser is making such representations, declarations and warranties, and is providing such information, with the intent that the same may be relied upon by the Company and its officers and directors in determining Purchaser’s suitability to acquire the Shares.  Purchaser understands and acknowledges that no federal, state or other agency has reviewed or endorsed the offering of the Shares or made any finding or determination as to the fairness of the offering or completeness of the information provided to Purchaser by the Company.

 

(d)    Purchaser understands that the Shares may not be offered, sold, or transferred in any manner unless subsequently registered under the Act, or unless there is an exemption from such registration available for such offer, sale or transfer.

 

(e)    Purchaser has such knowledge and experience in financial and business matters to enable Purchaser to utilize the information provided or otherwise made available to Purchaser by the Company to evaluate the merits and risks of an investment in the Shares and to make an informed investment decision.

 

(f)    Purchaser is acquiring the Shares solely for Purchaser’s own account and for investment purposes, and not with a view to, or for sale in connection with, any distribution of the Shares other than pursuant to an effective registration statement under the Act or unless there is an exemption from such registration available for such offer, sale or transfer, such as SEC Rule 144.

 

  

3

  

 

(g)    Purchaser is an “accredited investor,” as such term is defined in Regulation D promulgated under the Act.

 

(h)    Information provided to Purchaser by the Company include matters that may be considered “forward looking” statements within the meaning of Section 27(a) of the Act and Section 21(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which statements Purchaser acknowledges and agrees are not guarantees of future performance and involve a number of risks and uncertainties, and with respect to which the Company makes no representations or warranties.  Purchaser understands that the level of disclosure provided by the Company is less than that which would be provided in securities offering registered under the Act in reliance on the sophistication and investment experience of Purchaser.

 

(i)     Purchaser understands that this Agreement and other information provided to Purchaser by the Company contains confidential financial information about the Company and BioTime, Inc. that has not yet been publicly disclosed by the Company or BioTime, and therefore may be deemed material non-public information, (2) the Company is providing Purchaser the confidential information solely to satisfy its disclosure obligations under the Act in connection with the offer and sale of the Shares to Purchaser pursuant to this Agreement, and (3) until such time as BioTime files a Form 8-K or other report under the Exchange Act with the Securities and Exchange Commission, Purchaser shall not (A) disclose to any other person any of the information contained in this Agreement or otherwise provided to Purchaser concerning the Company that has not previously been disclosed in a report filed by BioTime under the Exchange Act, or (B) purchase or sell any common shares of BioTime.

 

8.    Accredited Investor Qualification.  Purchaser qualifies as an “accredited investor” under Regulation D in the following manner.  (Please check or initial all that apply to verify that you qualify as an “accredited investor.”)

 

	
    _____ (a)

	
Purchaser is a natural person whose net worth, or joint net worth with spouse, at the date of purchase exceeds $1,000,000 (excluding the value of home, home furnishings, and automobiles).

 

	
    _____ (b)

	
Purchaser is a natural person whose individual gross income (excluding that of spouse) exceeded $200,000 in each of the past two calendar years, and who reasonably expects individual gross income exceeding $200,000 in the current calendar year.

 

	
    _____ (c)

	
Purchaser is a natural person whose joint gross income with spouse exceeded $300,000 in each of the past two calendar years, and who reasonably expects joint gross income with spouse exceeding $300,000 in the current calendar year.

 

  

4

  

 

	
    _____ (d)

	
Purchaser is a bank, savings and loan association, broker/dealer, insurance company, investment company, pension plan or other entity defined in Rule 501(a)(1) of Regulation D as promulgated under the Securities Act of 1933 by the Securities and Exchange Commission.

 

	
    _____ (e)

	
Purchaser is a trust, and the trustee is a bank, savings and loan association, or other institutional investor as defined in Rule 501(a)(1) of Regulation D as promulgated under the Securities Act of 1933 by the Securities and Exchange Commission.

 

	
    _____ (f)

	
Purchaser is a private business development company as defined in section 202(a)(22) of the Investment Advisers Act of 1940.

 

	
    _____ (g)

	
Purchaser is a trust, and the grantor (i) has the power to revoke the trust at any time and regain title to the trust assets; and (ii) meets the requirements of items (a) (b), or (c) above.

 

	
        X     (h)

	
Purchaser is a tax-exempt organization described in Section 501(c) (3) of the Internal Revenue Code, or a corporation, Massachusetts or similar business trust, or partnership, not formed for the specific purpose of acquiring Shares with total assets in excess of $5,000,000.

 

	
    _____ (i)

	
The Purchaser is a trust with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring Shares, whose purchase is directed by a person who has such knowledge and experience in financial and business matters that he is capable of evaluating the merits and risks of an investment in the Shares.

 

	
    _____ (j)

	
The Purchaser is an entity in which all of the equity owners meet the requirements of at least one of items (a) through (i) above.

 

  

5

  

 

9.    Miscellaneous.

 

(a)    This Agreement shall be governed by, interpreted, construed and enforced in accordance with the laws of the State of California; as such laws are applied to contracts by and among residents of California, and which are to be performed wholly within California.

 

(b)    The representations and warranties set forth herein shall survive the sale of Shares to Purchaser.

 

(c)    Neither this Agreement nor any provisions hereof shall be modified, discharged or terminated except by an instrument in writing signed by the party against whom any waiver, change, discharge or termination is sought.

 

(d)    Any notice, demand or other communication that any party hereto may be required, or may elect, to give shall be sufficiently given if (i) deposited, postage prepaid, in the United States mail addressed to such address as may be specified under this Agreement, (ii) delivered personally at such address, (iii) delivered to such address by air courier delivery service, or (iv) delivered by electronic mail (email) to such electronic mail address as may be specified under this Agreement.  The address for notice to the Company is: Embryome Sciences, Inc., 1301 Harbor Bay Parkway, Suite 100, Alameda, California 94502; Attention: Robert W. Peabody, Chief Financial Officer; email; rpeabody@biotimemail.com.  The address for notice of Purchaser is shown in Section 10.  Either party may change its address for notice by giving the other party notice of a new address in the manner provided in this Agreement.  Any notice sent by mail shall be deemed given three days after being deposited in the United States mail, postage paid, and addressed as provided in this Agreement.

 

(e)    This Agreement may be executed through the use of separate signature pages or in any number of counterparts, and each of such counterparts shall, for all purposes, constitute one agreement binding on all the parties, notwithstanding that all parties are not signatories to the same counterpart.

 

(f)    Except as otherwise provided herein, the Agreement shall be binding upon and inure to the benefit of the parties and their heirs, executors, administrators, successors, legal representatives and assigns.  If the undersigned is more than one person, the obligation of the undersigned shall be joint and several and the agreements, representations, warranties and acknowledgments herein contained shall be deemed to be made by and be binding upon each such person and his heirs, executors, administrators and successors.

 

(g)    This instrument contains the entire agreement of the parties, and there are no representations, covenants or other agreements except for those stated or referred to herein.

 

(h)    This Agreement is not transferable or assignable by the undersigned except as may be provided herein.

 

  

6

  

 

10.    Investor Information.

 

  (a)    Name:  Life Extension Foundation

 

  (b)    Address: 1100 West Commercial Boulevard

 

  (c)    email:  legal@lef.org

 

  (d)    Telephone:  (954) 202-7715

 

  (e)    Taxpayer Identification Number: 

 

  (f)    State of Residence or Principal Place of

  Business: Florida

 

11.    Right of First Refusal Agreement.  Concurrently with the execution and delivery of this Agreement, Purchaser shall execute and deliver a counterpart of a Right of First Refusal Agreement, in the form provided by the Company, between the Purchaser, the Company, and other shareholders of the Company.

 

IN WITNESS WHEREOF, the undersigned has entered into this Agreement and hereby agrees to purchase Shares for the price stated above and upon the terms and conditions set forth herein.

 

Dated December 29, 2010

	 	 /s/ William Faloon
	 	 
	 	Name: William Faloon
	 	Title: Director

 

  

7

  

 

ACCEPTANCE BY COMPANY

 

 

The Company hereby agrees to sell to the Purchaser the Shares referenced above in reliance upon all the representations, warranties, terms and conditions contained in this Agreement.

 

IN WITNESS WHEREOF, the undersigned, on behalf of the Company, has executed this acceptance as of the date set forth below.

 

	
Dated:  December 30, 2010  

	EMBRYOME SCIENCES, INC.
	 	 	 
	
 

	
By: 

	 /s/ Robert W Peabody

	 	Title: 	 Senior V.P. and Chief
	 	 	 Operating Officer

 

  

8

  

 

SCHEDULE A

 

OLD ASSETS

 

License Agreement dated July 10, 2008, between Advance Cell Technology, Inc. and the Company to use certain patents and know-how referred to as ACTCellerateTM technology;

 

Inventory of human embryonic progenitor cell lines produced using ACTCellerate technology;

 

Know-how developed by the Company to produce hEPCs;

 

Growth media for the expansion of hEPCs and embryonic stem cells;

 

Reagents to induce cell differentiation in embryonic stem cells or hEPCs;

 

Embryome.com data stem cell base;

 

Any and all rights of the Company with respect to that certain Software License Agreement between Targeted Therapeutics Consulting, Inc. and BioTime, Inc.

 

Any and all rights of the Company with respect to that certain Software Development and Maintenance Agreement between Targeted Therapeutics Consulting, Inc. and BioTime, Inc.

 

Internet domain www.embryome.com

 

All content on website at www.embryome.com

 

License, Product Production, and Distribution Agreement, dated June 19, 2008, among LifeLine Cell Technology, LLC, the Company and BioTime, Inc.

 

Any and all rights of the Company under or with respect to that certain Exclusive Supply Agreement, dated December 8, 2010, between Shanghai Genext Medical Technology Co. Ltd and BioTime Asia, Limited.

 

  

  

  

 

SCHEDULE B

 

GRANT OF SUBLICENSES UNDER ACT LICENSES AND SUBLICENSES

 

 

Exclusive License Agreement, dated August 15, 2008, by and between Advanced Cell Technology, Inc., and the Company.

 

Exclusive Sublicense Agreement, dated August 15, 2008, by and between Advanced Cell Technology, Inc., and the Company.

 

  

  

  

SCHEDULE C

 

Stock Options

 

Initial Grants of Stock Options:

 

	
Grantee:

	  	
Number of Shares

	  	
Exercise Price Per Share

	  	  	  	  	  
	
Michael D. West

	  	
500,000

	  	
FMV*

	
Alfred D. Kingsley

	  	
250,000

	  	
FMV*

	
Robert W. Peabody

	  	
250,000

	  	
FMV*

	  	  	  	  	  
	

Other BioTime or Company

employees:

	  	
Up to 250,000 options in total 

(individual grants from 5,000 to 

50,000 shares each)

	  	
FMV*

	  	  	  	  	  
	
Chief Scientific Officer**

	  	
100,000 to 500,000

	  	
FMV*

	
 

	  	  	  	  
	

Scientific Advisory Board

Members**

	  	
Up to 200,000

	  	
FMV*

 

*FMV means the fair market value per share as of the date of grant, as determined by the Board of Directors.  The Board of Directors may rely upon a third party valuation in determining the fair market value.  The Board of Directors may also chose to set the exercise price of stock options at a price higher than the fair market value.

 

**Person(s) to be hired or appointed in the future

 

The remaining shares under the Plan are reserved to future grants

 

  

  

  

 

SCHEDULE D

 

RISK FACTORS

 

An investment in the common shares of Embryome Sciences, Inc. (the “Company”) involves a high degree of risk and should only be purchased by investors who can afford to lose their entire investment.  T he following factors, among others, could materially adversely affect the Company’s proposed operations, business prospects, and the value of an investment in the Company’s shares.  There may be other factors that are not mentioned here or of which the Company is not presently aware that could also adversely affect the Company’s operations.

 

Risks Related to the Company’s Business Operations

 

 

The Company will spend a substantial amount of the Company’s capital on research and development but the Company might not succeed in developing products and technologies that are useful in medicine

 

	
●

	
The Company is attempting to develop new medical products and technologies.

 

	
●

	
Many of the Company’s experimental products and technologies have not been applied in human medicine and have only been used in laboratory studies on animals.  These new products and technologies might not prove to be safe and efficacious in the human medical applications for which they were developed.

 

	
●

	
If the Company is successful in developing a new technology or product, refinement of the new technology or product and definition of the practical applications and limitations of the technology or product may take years and require the expenditure of large sums of money.

 

The Company will need to issue additional equity or debt securities in order to raise additional capital needed to pay the Company’s operating expenses

 

	
●

	
The amount and pace of research and development work that the Company can do or sponsor, and the Company’s ability to commence and complete clinical trials required to obtain FDA and foreign regulatory approval of the Company’s pharmaceutical products, depends upon the amount of money the Company has.  The Company expects to incur substantial research and product development expenses, and the Company will need to raise additional capital to pay operating expenses until the Company is able to generate sufficient revenues from product sales, royalties, and license fees.

 

	
●

	
It is likely that additional sales of equity or debt securities will be required to meet the Company’s short-term capital needs, unless the Company receive substantial revenues from the sale of the Company’s new products, or the Company is successful in licensing or sublicensing the technology that the Company develop or acquire from others and the Company receive substantial licensing fees and royalties.

 

  

  

  

 

	
●

	
Sales of additional equity securities could result in the dilution of the interests of present shareholders.

 

	
●

	
There can be no assurance that the Company will be able to raise additional funds on favorable terms or at all, or that any funds raised will be sufficient to permit the Company to develop and market the Company’s products and technology.  Unless the Company is able to generate sufficient revenue or raise additional funds when needed, it is likely that the Company will be unable to continue the Company’s planned activities, even if the Company make progress in the Company’s research and development projects.

 

The Company’s business could be adversely affected if the Company loses the services of the key personnel upon whom the Company depend

 

  The Company’s stem cell research program is directed primarily by the Company’s Chief Executive Officer, Dr. Michael West.  The loss of Dr. West’s services could have a material adverse effect on us.

 

Risks Related to The Company’s Industry

 

  The Company will face certain risks arising from regulatory, legal, and economic factors that affect the Company’s business and the business of other pharmaceutical development companies.  Because the Company is a small company with limited revenues and limited capital resources, the Company may be less able to bear the financial impact of these risks than larger companies that have substantial income and available capital.

 

If the Company does not receive FDA and other regulatory approvals the Company will not be permitted to sell the Company’s pharmaceutical products

 

  Any pharmaceutical products that the Company develops cannot be sold until the FDA and corresponding foreign regulatory authorities approve the products for medical use. The need to obtain regulatory approval to market a new product means that:

 

	
●

	
The Company will have to conduct expensive and time consuming clinical trials of new products. The full cost of completing clinical trials of a product to obtain FDA approval cannot be presently determined but exceeds the Company’s current financial resources.

 

	
●

	
The Company will incur the expense and delay inherent in seeking FDA and foreign regulatory approval of new products.  It often takes a year or longer from the date an application for approval to market a new product is filed with the FDA until the date that the product receives FDA approval.

 

	
●

	
A product that is approved by the FDA may be subject to restrictions on use.

 

  

2

  

 

	
●

	
The FDA can recall or withdraw approval of a product if problems arise.

 

	
●

	
The Company will face similar regulatory issues in foreign countries.

 

Government imposed restrictions and religious, moral, and ethical concerns on the use of hES cells could prevent us from developing and successfully marketing stem cell products

 

	
●

	
Government-imposed restrictions with respect to the use of embryos or human embryonic stem cells in research and development could limit the Company’s ability to conduct research and develop new products.

 

	
●

	
Government-imposed restrictions on the use of embryos or hES cells in the United States and abroad could generally constrain stem cell research, thereby limiting the market and demand for the Company’s products.  Although the Company plans to use iPS cells developed without the use of hES cells or the destruction of embryos, the Company might determine to also use hES cells in its research and development program. During March 2009, President Obama lifted certain restrictions on federal funding of research involving the use of hES cells, and in accordance with President Obama’s executive order, the National Institutes of Health has adopted new guidelines for determining the eligibility of hES cell lines for use in federally funded research.  The central focus of the proposed guidelines is to assure that hES cells used in federally funded research were derived from human embryos that were created for reproductive purposes, were no longer needed for this purpose, and were voluntarily donated for research purposes with the informed written consent of the donors.  The hES cells that were derived from embryos created for research purposes rather than reproductive purposes, and other hES cells that were not derived in compliance with the guidelines, are not eligible for use in federally funded research.  A lawsuit, Sherley v. Sebelius, is now pending challenging the legality of the new NIH guidelines.  In that litigation, a United States District Court issued a temporary injunction against the implementation of the new NIH guidelines, but the District Court’s ruling has been stayed during the pendency of an appeal.  The ultimate resolution of that lawsuit could determine whether the federal government may fund research using hES cells, unless new legislation is passed expressly permitting or prohibiting such funding.

 

	
●

	
California law requires that stem cell research be conducted under the oversight of a stem cell research oversight (“SCRO”) committee.  Many kinds of stem cell research, including the derivation of new hES cell lines, may only be conducted in California with the prior written approval of the SCRO.  A SCRO could prohibit or impose restrictions on the Company’s research if the Company determines to use hES cells.

 

	
●

	
The use of hES cells gives rise to religious, moral, and ethical issues regarding the appropriate means of obtaining the cells and the appropriate use and disposal of the cells. These considerations could lead to more restrictive government regulations or could generally constrain stem cell research, thereby limiting the market and demand for the Company’s products.  Although the Company believes that its use of iPS cells should not give rise to these issues, there is no assurance that other ethical issues will not be raised with regard to the use of iPS cells.

 

  

3

  

 

If the Company is unable to obtain and enforce patents and to protect the Company’s trade secrets, others could use the Company’s technology to compete with us, which could limit opportunities for us to generate revenues by licensing the Company’s technology and selling products

 

	
●

	
The Company’s success will depend in part on the Company’s ability to obtain and enforce patents and maintain trade secrets in the United States and in other countries.  If the Company is unsuccessful in obtaining and enforcing patents, the Company’s competitors could use the Company’s technology and create products that compete with the Company’s products, without paying license fees or royalties to us.

 

	
●

	
The preparation, filing, and prosecution of patent applications can be costly and time consuming.  The Company’s limited financial resources may not permit us to pursue patent protection of all of the Company’s technology and products throughout the world.

 

	
●

	
Even if the Company is able to obtain issued patents covering the Company’s technology or products, the Company may have to incur substantial legal fees and other expenses to enforce the Company’s patent rights in order to protect the Company’s technology and products from infringing uses.  The Company may not have the financial resources to finance the litigation required to preserve the Company’s patent and trade secret rights.

 

There is no certainty that any future patent applications will result in the issuance of patents

 

	
●

	
The Company has obtained licenses for a number of patent applications covering technology developed by others, that the Company believe will be useful in producing new products, and which the Company believe may be of commercial interest to other companies that may be willing to sublicense the technology for fees or royalty payments.  The Company may also file additional new patent applications in the future seeking patent protection for new technology or products that the Company develops alone or jointly with others.  However, there is no assurance that any of the Company’s licensed patent applications, or any patent applications that the Company may file in the future covering the Company’s own technology, in the United States or abroad will result in the issuance of patents.

 

	
●

	
In Europe, the European Patent Convention prohibits the granting of European patents for inventions that concern “uses of human embryos for industrial or commercial purposes.”  The European Patent Office is presently interpreting this prohibition broadly, and is applying it to reject patent claims that pertain to human embryonic stem cells.  However, this broad interpretation is being challenged through the European Patent Office appeals system.  As a result, the Company does not yet know whether or to what extent the Company will be able to obtain patent protection for the Company’s technologies in Europe.

 

  

4

  

 

The process of applying for and obtaining patents can be expensive and slow

 

	
●

	
The preparation and filing of patent applications, and the maintenance of patents that are issued, may require substantial time and money.

 

	
●

	
A patent interference proceeding may be instituted with the U.S. Patent and Trademark Office (the “PTO”) when more than one person files a patent application covering the same technology, or if someone wishes to challenge the validity of an issued patent.  At the completion of the interference proceeding, the PTO will determine which competing applicant is entitled to the patent, or whether an issued patent is valid.  Patent interference proceedings are complex, highly contested legal proceedings, and the PTO’s decision is subject to appeal.  This means that if an interference proceeding arises with respect to any of the Company’s patent applications, the Company may experience significant expenses and delay in obtaining a patent, and if the outcome of the proceeding is unfavorable to the Company, the patent could be issued to a competitor rather than to the Company.

 

	
●

	
Oppositions to the issuance of patents may be filed under European patent law and the patent laws of certain other countries.  Like US PTO interference proceedings, these foreign proceedings can be very expensive to contest and can result in significant delays in obtaining a patent or can result in a denial of a patent application.

 

The Company’s patents may not protect the Company’s products from competition

 

	
●

	
Any patents that the Company has licensed or that it license or obtains on its own in the future might not be comprehensive enough to provide meaningful patent protection.

 

	
●

	
There will always be a risk that the Company’s competitors might be able to successfully challenge the validity or enforceability of any patent licensed by or issued to the Company.

 

	
●

	
In addition to interference proceedings, the U.S. PTO can reexamine issued patents at the request of a third party seeking to have the patent invalidated.  This means that patents owned or licensed by the Company may be subject to reexamination and may be lost if the outcome of the reexamination is unfavorable to the Company.

 

If the Company fails to meet the Company’s obligations under license agreements, the Company may lose the Company’s rights to key technologies on which the Company’s business depends

 

  The Company’s business depends on several critical technologies that are based in part on technology licensed from third parties.  Those third-party license agreements impose obligations on the Company, including payment obligations and obligations to pursue development of commercial products under the licensed patents or technology.  If a licensor believes that the Company has failed to meet the Company’s obligations under a license agreement, the licensor could seek to limit or terminate the Company’s license rights, which could lead to costly and time-consuming litigation and, potentially, a loss of the licensed rights.  During the period of any such litigation the Company’s ability to carry out the development and commercialization of potential products could be significantly and negatively affected.  If the Company’s license rights were restricted or ultimately lost, the Company would not be able to continue to use the licensed technology in the Company’s business.

 

  

5

  

 

The price and sale of the Company’s products may be limited by health insurance coverage and government regulation

 

Success in selling the Company’s pharmaceutical products may depend in part on the extent to which health insurance companies, HMOs, and government health administration authorities such as Medicare and Medicaid will pay for the cost of the products and related treatment.  Until the Company actually introduce a new product into the medical market place the Company will not know with certainty whether adequate health insurance, HMO, and government coverage will be available to permit the product to be sold at a price high enough for us to generate a profit.  In some foreign countries, pricing or profitability of health care products is subject to government control which may result in low prices for the Company’s products.  In the United States, there have been a number of federal and state proposals to implement similar government controls, and new proposals are likely to be made in the future.

 

Risks Pertaining to an Investment in the Common Shares

 

There is no public market for the Company’s Common Shares

 

There is no public market for the Company’s Common Shares or any other Company securities and a public market for the Common Shares is not expected to develop in the near future.  Therefore, any investor who purchases Company Common Shares may not be able to find a buyer for their shares if the investor later desires to sell their shares.

 

The Company’s common shares cannot be sold unless a registration statement is in effect under federal securities laws or an exemption from registration is available.

 

A registration statement as defined under the Securities Act of 1933, as amended (the “Securities Act”), must be in effect in order for Company shareholders to sell their shares.  The Company has no obligation or present plan to file such a registration statement.

 

Shareholders may experience dilution of their ownership interests because of the future issuance of additional Company common shares and our preferred shares.

 

In the future, the Company may issue its authorized but previously unissued equity securities, resulting in the dilution of the ownership interests of our present shareholders.  The Company may issue additional common shares or other securities that are convertible into or exercisable for common shares in order to raise additional capital, or in connection with hiring or retaining employees or consultants, or in connection with future acquisitions of licenses to technology or rights to acquire products in connection with future business acquisitions, or for other business purposes.  The future issuance of any such additional common shares or other securities may be at price lower than the price paid by Company shareholders, and may dilute the percentage ownership interests of the Company’s shareholders.

 

  

6

  

 

The Company may also issue preferred shares having rights, preferences, and privileges senior to the rights of the Company’s common shares with respect to dividends, rights to share in distributions of Company assets if the Company is liquidated, or voting rights.  Any preferred shares may also be convertible into common shares on terms that would be dilutive to holders of common shares.

 

Because the Company does not pay dividends, its shares may not be a suitable investment for anyone who needs to earn dividend income

 

The Company does not pay cash dividends on its common shares.  For the foreseeable future the Company anticipates that any earnings generated in its business will be used to finance the growth of its business and will not be paid out as dividends to the Company’s shareholders.  This means that the Company’s stock may not be a suitable investment for anyone who needs to earn income from their investments.

 

The Company is controlled by BioTime, Inc. and minority shareholders will have no power to elect directors or to participate in the management of the Company.

 

So long as BioTime holds a majority of the Company’s shares it will be able to control the Company’s business and affairs through its power to elect at least a majority of the members of the Company’s Board of Directors.  This means that the Company’s minority shareholders will have little or no influence on the management of the Company and the operation of its business and financial affairs.

 

BioTime’s control of the Company could result in conflicts of interest.

 

Although the Company’s Board of Directors will have a fiduciary duty to manage the Company in a manner that they, in good faith, believe to be in the best interest of the Company and its shareholders, conflicts of interest could arise from BioTime’s control relationship with the Company.  For example, a conflict could arise in determining whether BioTime or the Company or another subsidiary of BioTime should pursue a particular business opportunity or research project, or a license to use patents or other technology that may become available to be licensed or otherwise acquired from third parties where the patent or technology might be useful in the business of the Company and the businesses of BioTime or its other subsidiaries.

 

  

7

  

 

The Company will depend upon BioTime for the use of laboratory and office facilities, equipment and supplies, and personnel.

 

The Company will initially not have its own laboratory and office facilities and equipment, but rather will share such facilities, equipment, and supplies with BioTime under a Shared Facilities and Services Agreement (the “Shared Facilities Agreement”).  BioTime will also provide the Company with the services of scientific, administrative and management personnel under the Shared Facilities Agreement.  The Company will pay BioTime fees and costs allocated to the Company by BioTime under the Shared Facilities Agreement.

 

The Company’s dependence upon BioTime means that the Company’s business and financial affairs could materially adversely affected by any adverse change in BioTime’s financial condition or operations or BioTime’s loss of key scientific or management personnel.

 

  

8

  

 

SHARED FACILITIES AND SERVICES AGREEMENT

 

This Agreement is made as of December ___, 2010 (the Effective Date) by and between BioTime, Inc. (BioTime) and Embryome Sciences, Inc. (ES).

 

Recitals

 

	
  

	
A.

	
ES is a subsidiary of BioTime and needs office and laboratory space and equipment, and the services of research, financial, management, and administrative personnel support;

 

	
  

	
B.

	
BioTime leases certain laboratory, office, and related work space at 1301 Harbor Bay Parkway, Suite 100, Alameda, California (the Premises) and has surplus capacity at the Premises;

 

	
  

	
C.

	
BioTime has employees and contractors who provide research, financial, management, and administrative services and is willing to make a portion of their services available to ES.

 

1.             Office, Laboratory and Work Space.

 

(a)           BioTime agrees to permit ES to use the Premises concurrently with BioTime for the conduct of ES’s business operations, including but not limited to office use, laboratory research, product production, inventory storage and control, and product shipping and distribution uses, but only to the extent that (a) the use is a business operation permitted to be conducted by BioTime under the lease of the Premises, (b) ES uses the Premises in compliance with all applicable laws, ordinances, and regulations, (c) ES uses the Premises in compliance with the provisions of the Lease and lease governing the manner in which the Premises may be used and maintained, and in compliance with any and all rules and regulations of the landlord under the lease, (d) ES’s use of the Premises does not interfere with BioTime’s use of the Premises.

 

(b)           BioTime and ES agree that the permission to use the Premises granted under this Agreement is in the nature of a license only and is not a sublease or assignment of the lease under which BioTime occupies the Premises (the Lease), and that ES shall not obtain any rights, and is not assuming any obligations, under the Lease.  However, if required by BioTime or the owner of the Premises under the Lease (the Landlord), ES will enter into a sublease of the Premises acceptable to BioTime and the Landlord.

 

(c)           The use of the Premises by ES shall be in a lawful, careful, safe, and proper manner, and ES shall not do or permit anything to be done in or about the Premises that would increase the rate or affect any fire or other insurance covering the Premises.  ES shall not commit nor suffer any waste on the Premises.

 

  

  

  

 

(d)           BioTime does not represent or warrant that the Premises may be used for any particular use or purpose, and ES has made ES’s own determination that the Premises may be lawfully used for ES’s purposes.

 

(e)           ES shall, at its sole cost and expense, comply with all laws, statutes, ordinances, and governmental rules, regulations, or requirements now in force or that may hereafter be in force, and with the requirements of any board of fire insurance underwriters or other similar bodies now or hereafter constituted, relating to, or affecting ES’s use of the Premises.

 

(f)           ES shall, at its sole cost and expense,  promptly repair any damage to the Premises caused by any act or omission of ES or its employees, agents, invitees, licenses, or contractors, including any acts or omissions of BioTime employees, contractors, and agents arising in the course of performing services for or conducting the business of ES.  Any and all repairs effected by ES shall be performed in a professional workmanlike manner, by licensed contractors, in compliance with all applicable statutes, codes, rules and regulations, and ES or ES’s contractors shall obtain all permits and approvals of government agencies required by applicable laws in connection therewith.

 

(g)           If BioTime deems any repairs required to be made by ES necessary, it may demand that ES make them, and if ES refuses or neglects to commence such repairs and to complete them with reasonable dispatch, BioTime may make or cause such repairs to be made.  If BioTime makes or causes repairs to be made, BioTime shall not be responsible to ES for any loss or damage that may accrue to ES’s business by reason of the repair work, and ES shall, on demand, immediately pay to BioTime the cost of the repairs.  ES waives the provisions of Sections 1941 and 1942 of the Civil Code of the State of California and all other statutes or laws permitting repairs by a lessee at the expense of a lessor or to terminate a lease by reason of the condition of the Premises.  ES shall keep the Premises free from any liens arising out of any work performed, materials furnished, or obligations incurred by ES

 

(h)           ES shall not make or install any alterations, improvements, additions, or fixtures that affect the exterior or interior of the Premises or any structural, mechanical, or electrical component of the Premises, or mark, paint, drill, or in any way deface any floors, walls, ceilings, partitions, or any wood, stone, or iron work without the consent of BioTime and the Landlord.

 

(i)           Under no circumstances shall ES bring onto the Premises any substances or materials that are characterized or defined as “hazardous substances” or “hazardous materials” under any federal or state law or regulation pertaining to the release of substances into the environment, except for cleaning materials, paints, and solvents, and such other materials as may be permitted by the Lease, provided that such substances are used, stored, and disposed of by ES in full compliance with applicable laws.

 

  

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2.             Equipment and Supplies.  BioTime agrees to permit ES to use BioTime’s office equipment, laboratory equipment (owned or leased), furniture, laboratory supplies, and general office supplies to the extent that such use does not interfere with the use by the employees, contractors, and agents of BioTime and other BioTime subsidiaries in the course of their business.  BioTime shall have no obligation to obtain or to provide ES with any additional equipment, furniture, or supplies.  If BioTime obtains laboratory supplies and materials for use by ES, ES shall reimburse BioTime for the cost of such supplies.  ES shall be responsible for the repair or replacement any equipment damaged or destroyed while in its use.  If ES requires and obtains equipment, furniture, and supplies for its own use it may locate the same at the Premises subject to the conditions and limitations stated in Section 1 of this Agreement, and subject to the additional condition that BioTime shall have the right and sole discretion to (a) determine where in the Premises ES may locate ES’s furniture, equipment, and supplies, and (b) preclude ES from bringing onto or locating any furniture, supplies, or equipment in the Premises if  BioTime determines that it would in any way interfere with BioTime’s use of the Premises, violate any applicable laws, ordinances, and regulations, violate or conflict with any provision of the Lease or any rules and regulations of the Landlord under the Lease, conflict with any term or condition of any policy of casualty or liability insurance held by BioTime, or pose a hazard or other risk to persons or property.

 

3.             Utilities.  ES shall be responsible to determine that there is sufficient Utilities capacity in the Premises for purposes of conducting ES’s use.  Utilities includes electricity, gas, heat, air conditioning, hot and cold domestic water, telephone, scavenger service, garbage removal, sewerage, and other similar services used on, in, or in connection with the Premises.  BioTime does not represent the availability or quantity of any Utilities in the Premises, and is not responsible for any interruption of any Utility service.

 

4.             Services.

 

(a)           BioTime shall provide basic accounting, billing, bookkeeping, payroll, treasury, collection of accounts receivable (excluding the institution of legal proceedings or taking of any other action to collect accounts receivable), payment of accounts payable, and other similar administrative services (the Administrative Services) to ES.  Such Administrative Services shall be provided by BioTime employees or contractors engaged by BioTime to provide such Administrative Services for the operation of BioTime’s own business.  BioTime shall not be obligated to hire any additional employees or engage the services of any additional contractors to provide Administrative Services to ES, but BioTime may do so at the request of ES.  BioTime may also provide the services of attorneys, accountants, and other professionals who may also provide professional services to BioTime and its other subsidiaries.

 

  

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(b)           BioTime shall also provide ES with the services of its laboratory and research personnel, including BioTime employees and contractors, for the performance of research and development work for ES at the Premises (the Laboratory Services).  BioTime employees and contractors who perform Laboratory Services for ES shall enter into agreements containing customary provisions requiring the employees and contractors to (a) maintain the confidentiality and not to disclose ES trade secrets and other confidential information, and (b) assign to ES all rights to any inventions and discoveries made by such employees and contractors in the course of performing Laboratory Services for ES.

 

(c)           BioTime may, at the request of ES, provide ES the services of BioTime employees and contractors, including but not limited to executive officers, for matters other than Administrative Services and Laboratory Services (Other Services), but BioTime shall not be obligated to do so.

 

(d)           Administrative Services, Laboratory Services, and Other Services (collectively, Services) shall be provided by BioTime employees or contractors engaged by BioTime to provide such Services for the operation of BioTime’s own business.  BioTime shall not be obligated to hire any additional employees or engage the services of any additional contractors to provide Services to ES.  Nothing in this Agreement shall preclude ES from hiring employees and engaging contractors directly for its own account and at its own cost and expense.

 

(e)           ES shall be responsible for cooperating with BioTime’s employees and contractors in such a manner as may be reasonably required in order for the Services to be performed.

 

(f)           The Services shall be provided at the direction of ES; provided, that ES shall not request or direct any BioTime employee or contractor to provide any Services or to take any other act that would violate any federal, state, or municipal law, statute, ordinance, rule or regulation.

 

(g)           BioTime shall not be liable to ES for any loss or damages of any kind caused by, arising from, or in connection with (i) the performance of Services performed by BioTime personnel, or the failure of any BioTime employee, contractor, or agent to perform any Services, or (ii) any delay, error, or omission by any BioTime employee, contractor, or agent in the performance of Services performed by BioTime personnel, except to the extent such loss or damage is the result of fraud, gross negligence or willful misconduct by an BioTime employee, contractor, or agent.

 

  

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5.             Use Fees.

 

(a)           ES shall pay BioTime the fees provided in this Section for the use of the Premises, equipment, supplies, professional services (such as the services of attorneys, accountants, and consultants), and for the Services provided or agreed to be provided by BioTime under this Agreement.  For each billing period, BioTime shall equitably prorate and allocate its Employee Costs, Equipment Costs, Insurance Costs, Lease Costs, Professional Costs, Software Costs, Supply Costs, and Utilities Costs, between BioTime and ES based upon actual documented use and cost by or for ES or upon proportionate usage by BioTime and ES, as reasonably estimated by BioTime.  ES shall pay 105% of the allocated costs (the Use Fee).  The allocated cost of BioTime employees and contractors who provide Services shall be based upon records maintained of the number of hours of such personnel devoted to the performance of Services.

 

(b)           The Use Fee shall be determined and invoiced to ES on a quarterly basis for each calendar quarter of each calendar year (such quarterly periods are sometimes referred to in this Agreement as “billing periods”).  If this Agreement terminates prior to the last day of a billing period, the Use Fee shall be determined for the number of days in the billing period elapsed prior to the termination of this Agreement.  Each invoice shall be payable in full by ES with in 30 days after receipt.  Any invoice or portion thereof not paid in full when due shall bear interest at the rate of 15% per annum until paid, unless the failure to make a payment is due to any inaction or delay in making a payment by BioTime employees from ES funds available for such purpose, rather than from the unavailability of sufficient funds legally available for payment or from an act, omission, or delay by any ES employee or agent.

 

(c)           In addition to the Use Fees, ES shall reimburse BioTime for any out of pocket costs incurred by BioTime for the purchase of office supplies, laboratory supplies, and other goods and materials and services for the account or use of ES, provided that invoices documenting such costs are delivered to ES with each invoice for the Use Fee.  Notwithstanding this paragraph, BioTime shall have no obligation to purchase or acquire any office supplies or other goods and materials or any services for ES, and if any such supplies, goods, materials or services are obtained for ES, BioTime may arrange for the suppliers thereof to invoice ES directly

 

  

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(d)           Employee Costs means the salaries, wages, health insurance benefits, FICA, payroll taxes, workers compensation insurance premiums, and similar costs payable by BioTime to or on account of its employees and contractors who perform Services for ES under this Agreement during an applicable billing period, but excluding stock option, stock purchase, and similar equity participation plans.  Equipment Costs means all costs and expenses incurred by BioTime in acquiring, leasing, installing, maintaining, insuring, repairing, and disposing of any laboratory, production, and office equipment, fixtures, and furnishings used by ES or used by BioTime in the performance of Services.  Insurance Costs means all insurance premiums of any kind incurred or paid by BioTime for casualty insurance policies that insure BioTime and its subsidiaries, including ES, from the loss of or damage to the Premises, equipment, fixtures goods, supplies, and other personal property of BioTime (except to the extent such premiums are included in Lease Costs) that may be used by ES or by BioTime in the performance of Services, and liability coverage policies that insure BioTime and its subsidiaries, including ES, from liability of any kind to third parties (except to the extent such premiums are included in Lease Costs).  Lease Costs means all of BioTime’s costs and expenses of leasing the Premises, including all base rent, taxes, common area or other expenses, insurance and other costs payable by BioTime to the Landlord under the Lease, but excluding (a) any repairs not required to be effected or paid for by ES under any other provision of this Agreement, and (b) any alterations or improvements effected by BioTime for the exclusive use of BioTime and its subsidiaries other than ES.  Professional Costs means all costs and expenses incurred by BioTime for the services of independent accountants, attorneys, and other consultants who provide professional or consulting services for the benefit of ES.  Software Costs means all costs and expenses, including but not limited to license fees, incurred by BioTime to acquire and use any computer software or program of any kind that is used by ES or by BioTime in the performance of Services.  Supply Costs means all costs and expenses incurred by BioTime for the purchase and disposal of goods and materials of any kind, to the extent used in the performance of Services or used by ES employees or contractors.  Utilities Costs means all costs and expenses incurred by BioTime for the use or availability of Utilities during an applicable billing period.

 

6.             Indemnification.

 

(a)           ES shall defend, indemnify, and hold harmless BioTime, BioTime’s shareholders, directors, officers, employees, and agents (collectively, the Indemnified Parties) against and from any and all claims arising from ES’s use of the Premises, or from any activity, work, or other thing done or permitted by ES on the Premises, including all activities, work, and services performed by BioTime employees, contractors, and agents for ES.  ES shall further defend, indemnify, and hold harmless the Indemnified Parties against and from any and all claims arising from any breach or default in the performance of any obligation on ES’s part to be performed under the terms of this Agreement, or arising from any act or omission (including, but not limited to negligent acts or omissions) of ES, or of any officer, agent, employee, contractor, guest, or invitee of ES acting in such capacity.  The indemnity provided by this section shall include indemnification from and against all costs, attorneys’ fees, expenses, and liabilities incurred in connection with or arising from any such claim or any action or proceeding brought thereon; and in any suit, action, or proceeding brought against any of the Indemnified Parties by reason of any such claim, ES, upon notice from any of the Indemnified Parties, shall defend the same at ES’s expense by counsel satisfactory to the Indemnified Parties.  ES, as a material part of the consideration to BioTime, hereby assumes all risk of damage to property or injury to persons in, upon, or about the Premises, from any cause other than BioTime’s wilful malfeasance or sole gross negligence.

 

  

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(b)           BioTime shall not be liable for any injury to or damage to persons or property resulting from fire, explosion, falling plaster, steam, gas, electricity, water, or rain that may leak from any part of the Premises or from the pipes, appliances, or plumbing works therein or from the roof, street, or subsurface, or from any other place unless solely caused by or solely due to the gross negligence of BioTime.  BioTime and its agents and the other Indemnified Parties shall not be liable for interference with the light or other incorporeal hereditament, loss of business by ES, or any latent defect in the Premises, any equipment, furnishings, materials, or supplies.  ES shall give prompt notice to BioTime in case of fire or accidents in the Premises or of defects therein or in the fixtures, equipment, furniture, materials or supplies belonging to BioTime and used by ES.

 

(c)           ES shall be solely responsible for and shall indemnify, defend, and hold the Indemnified Parties and the owner of the Premises and each partner, shareholder, member, trustee, employee and agent of the owner or the Premises (collectively, the Owner Indemnified Parties) harmless from any against any claim, loss, damage, cost, expense, liability, or cause of action directly or indirectly arising out of the use, generation, manufacture, storage, treatment, release, threatened release, discharge, disposal, transportation, or presence of any oil, gasoline, petroleum products, flammable explosives, asbestos, urea formaldehyde insulation, radioactive materials, hazardous wastes, toxic or contaminated substances, or similar materials, including, without limitation, any substances which are hazardous substances, hazardous wastes, hazardous materials, or toxic substances under applicable environmental laws, ordinances, or regulations (collectively, Hazardous Materials) caused directly or indirectly by ES, its employees, agents, contractors, invitees, or assigns (other than any BioTime employees or agents performing BioTime rather than ES business) in, on, or under any of the Premises, including, without limitation: (i) all consequential damages; (ii) the costs of any required or necessary repair, cleanup, or detoxification of the Premises and the building and surrounding land in which the Premises are located,  and the preparation and implementation of any closure, remedial, or other required plans whether required under any Hazardous Materials Laws or otherwise; and (iii) all court costs, including reasonable attorneys’ fees, paid or incurred by BioTime, any other Indemnified Party, or any Owner Indemnified Party in connection with such claim.

 

7.             Term; Termination.

 

(a)           This Agreement shall commence on the Effective Date and shall terminate on December 31, 2015, provided that, unless otherwise terminated under another provision of this Agreement, the term of this Agreement shall automatically be renewed and the termination date shall be extended for an additional year each year after December 31, 2015, unless either party gives the other party written notice stating that this Agreement shall terminate on December 31 of that year.

 

  

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(b)           Notwithstanding paragraph (a) of this Section 7, either party may terminate this Agreement immediately upon the occurrence of a Default by the other party.  A party shall be in  Default if that party (i) fails to pay when due the Use Fee or any other sum due under this Agreement, or fails to perform any other obligation under this Agreement, and such failure continues for a period of 5 days after written notice from the party seeking to terminate this Agreement; (ii) becomes the subject of any order for relief in a proceeding under any Debtor Relief Law (as defined below); (iii) becomes unable to pay, or admits in writing the party’s inability to pay, its debts as they mature; (iv) makes an assignment for the benefit of creditors; (v) applies for or consents to the appointment of any receiver, trustee, custodian, conservator, liquidator, rehabilitation, or similar officer for the party or for all or any part of the party’s property or assets, or any such officer is appointed for such party or any part of its assets without the party’s consent and such appointment is not dismissed or discharged within 60 calendar days; (vi) institutes or consents to any proceeding under any Debtor Relief Law with respect to the party or all or any part of the party’s property or assets, (vii) becomes subject to any proceeding under any Debtor Relief Law without the consent of the party if such case or proceeding continues undismissed or unstayed for 60 calendar days; or (viii) dissolves or liquidates or takes any action to dissolve or liquidate.  As used in this Agreement, the term Debtor Relief Law shall mean the Bankruptcy Code of the United States of America, as amended, or any other similar debtor relief law affecting the rights of creditors generally.

 

(c)           The obligations of ES under Sections 5 and 6 and to pay for any repairs of the Premises required to be paid by ES under this Agreement shall survive termination of this Agreement.

 

8.             No Third Party Beneficiaries.  The parties to this Agreement are BioTime and ES, and no other person or entity, whether a partner, member, shareholder, officer, director, employee, contractor, agent, or business invitee of ES or otherwise, shall have any rights or be entitled to any benefits under this Agreement, except for the rights of Indemnified Parties and Owner Indemnified Parties under Section 6.

 

9.             Characterization of Relationship.  It is the intent of the parties that the business relationship created by this Agreement, and any related documents is solely that of a commercial agreement between BioTime and ES and has been entered into by both parties in reliance upon the economic and legal bargains contained in this Agreement.  None of the covenants contained in this Agreement is intended to create a partnership between BioTime and ES, to make them joint venturers, to make either party an agent, legal representative, partner, subsidiary, or employee of the other party or to make either party in any way responsible for the debts, obligations, or losses of the other party.

 

10.           Binding on Successors and Assigns.  This Agreement shall be binding on each party and the party’s successors and assigns.

 

11.           Integration.  This Agreement constitutes all of the understandings and agreements existing between the parties concerning the subject of this Agreement and the rights and obligations created under it.  Neither party has made or relied upon any agreement, warranty, representation, promise, or statement, whether oral or written, not expressly included in this Agreement.

 

  

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12.           Waivers, Delays, and Omissions.  One or more waivers, consents, or approvals by any party of any covenant, condition, act, or breach under this Agreement shall not be construed as a waiver, consent, or approval of any subsequent condition, covenant, act, or breach or as a consent or approval to the same or any other covenant or condition.  This Agreement and any term of this Agreement may be amended, discharged, or terminated only by a written instrument signed by the parties against whom enforcement of such amendment, discharge, or termination is sought.  No delay or omission to exercise any right, power, or remedy accruing to any party upon any breach or default of the other party under this Agreement shall impair any such right, power, or remedy of the party not in breach or default.

 

13.           References.  References in this Agreement to sections, paragraphs, subparagraphs, and exhibits are references to sections, paragraphs, and subparagraphs in this Agreement and exhibits attached to this Agreement unless specified otherwise.

 

14.           Section Headings.  Section headings are for the convenience of the parties and do not form a part of this Agreement.

 

15.           Construction.  The parties agree that this Agreement is a negotiated agreement, with each party free to review and negotiate each section of the Agreement and otherwise clarify all sections of the Agreement that appear to the party (at the time of signing) to be ambiguous or unclear.  Both parties shall be deemed to be the drafting parties, and the rules of construction to the effect that any ambiguities are to be resolved against the drafting party or parties shall not be employed in the interpretation of this Agreement.

 

16.           Unenforceable Provisions.  If all or part of any one or more of the provisions contained in this Agreement is for any reason held to be invalid, illegal, or unenforceable in any respect, the invalidity, illegality, or unenforceability shall not affect any other provisions, and this Agreement shall be equitably construed as if it did not contain the invalid, illegal, or unenforceable provision.

 

17.           Attorneys’ Fees.  It is expressly agreed that if this Agreement is referred to an attorney to collect any amount due under this Agreement, or to enforce or protect any rights conferred upon BioTime by this Agreement ES promises and agrees to pay on demand all costs, including without limitation, reasonable attorneys’ fees, incurred by BioTime in the enforcement of BioTime’s rights and remedies under this Agreement.  In the event an action is brought to enforce or interpret the provisions of this Agreement, the prevailing party in such action shall be entitled to an award of its attorneys’ fees and costs incurred in such action, including any fees and costs incurred in any appeal and in any collection effort.

 

  

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IN WITNESS WHEREOF the parties have executed this Agreement as of the Effective Date.

 

BioTime, Inc.

 

	By: 	 	 
	 	Robert Peabody,	 
	 	Senior Vice President and	 
	 	Chief Operating Officer	 
	 	 	 
	Embryome Sciences, Inc.	 
	 	 	 
	By:	 	 
	 	Michael D West,	 
	 	Chief Executive Officer	 

 

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