Lease, Service And Affiliation Agreement

LEASE, SERVICE AND AFFILIATION AGREEMENT


The Ohio State University, on behalf of its Office of University Laboratory Animal Resources ("ULAR"), agrees to lease certain facilities and to provide certain services to Progenitor, Inc., and to enter into a cooperative affiliation with it, on the following terms and conditions:


1. BACKGROUND; PURPOSE. Progenitor is a corporation that is engaged in biomedical research. Its Vice President is a member of the faculty of Ohio State's College of Medicine, where he is engaged in unrelated research. He has disclosed his interest in Progenitor to Ohio State and has not participated in Ohio State's decision to enter into this agreement.


ULAR is responsible for conducting and operating Ohio State's animal care program and its animal facilities, for supporting the animal research efforts of Ohio State faculty, staff and students, and for providing them with professional development opportunities and training. At present, ULAR has certain animal facilities that are not currently being used by Ohio State researchers.


The parties are entering into this agreement to provide Progenitor with the use of those facilities and related services at ULAR's standard rates. It is also the parties' intent to use this relationship to enrich the research, professional development and training opportunities available to Ohio State faculty, staff and students.


2. FACILITIES. ULAR shall provide Progenitor with three rooms for the housing of mice, one room for the housing of rats and one office in Building 4 of Ohio State's Laboratory Animal Center, for Progenitor's exclusive use. Progenitor shall have nonexclusive access to the lockers, showers, feed room, bedding room, cage wash area, necropsy room, procedure/laboratory room and environmental and physical security system in Building 4 and to the surgery, radiology and classroom/conference rooms, fax machine and copy machine in Building 1. Subject to availability, and by mutual agreement of the parties, ULAR shall provide Progenitor with additional rooms for the housing of mice, rats and other species upon the same terms and conditions and at the same rates.


3. EQUIPMENT. All necessary start-up caging, including two complete sets of caging, waterbottles, SS lids, filtered tops and bottoms and one extra bottom cage for each animal or group of animals to be placed in sterile housing, shall be provided by Progenitor at its expense. All cage wash racks/dollies, refuse dump stations, dollies, and filtered/acid water set-ups shall be provided by ULAR on a cost-reimbursement basis. Progenitor may provide any other necessary caging and equipment itself or may obtain it through ULAR on a cost- reimbursement basis. Caging and equipment provided by Progenitor shall be installed, maintained and replaced by Progenitor, must be marked with a permanent means of identification and inventoried on a quarterly basis by Progenitor, and shall remain the property of Progenitor. Caging and equipment procured through ULAR shall be installed, maintained and replaced by ULAR and shall remain the property of ULAR.


4. ANIMAL PROCUREMENT AND OTHER SERVICES. All animals to be housed in ULAR facilities must be procured through ULAR's animal procurement program (except for initial start-up animals, which may be transferred from Progenitor's Athens Ohio facility, subject to any quarantine and disease surveillance requirements that ULAR deems


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appropriate). ULAR shall make such animals available to Progenitor at ULAR's standard rates, as set forth on the attached schedule. Progenitor may not order animals from ULAR or house them in ULAR facilities until ULAR has certified that the facilities and equipment are in compliance with all applicable requirements. ULAR shall provide Progenitor with other available services on an as-requested basis at ULAR's standard rates, as set forth on the attached schedule.


5. ANIMAL CARE PROGRAM. ULAR shall provide, and Progenitor must use, all of the services that comprise ULAR's animal care program, including, without limitation, animal husbandry, veterinary care support, animal disease and health surveillance and other such services designed to ensure the humane care and use of the animals in ULAR's facilities. All Progenitor personnel who are associated with research projects involving animals housed at ULAR facilities must participate in ULAR's standard training programs and must be covered by an occupational health program substantially equivalent to that provided by Ohio State, whether such personnel conduct their activities at ULAR facilities or elsewhere.


6. FEES. Progenitor shall pay ULAR the following fees in connection with this agreement:


(a) ULAR's standard animal procurement fee, as set forth on the
attached schedule, for each animal procured by ULAR;


(b) ULAR's standard per diem rate, as set forth on the attached
schedule, for each animal housed in ULAR facilities;


(c) ULAR's standard fee, as set forth on the attached schedule, for
any other available services requested by Progenitor;


(d) An overhead and ULAR support fee in an amount equal to 42% of the
total of the fees listed in sections 6(a), (b) and (c) above; and


(e) ULAR's cost for any equipment obtained through ULAR.


ULAR may, in its discretion, modify these fees as ULAR deems appropriate.


7. PAYMENT. ULAR shall invoice, and Progenitor shall pay, the fees listed in sections 6(a), (b), (c) and (d) on a monthly basis. At Progenitor's option, Progenitor may pay any equipment charges in full at the time of procurement or in 12 monthly installments of one-twelfth of the fees plus ten percent each.


8. PROGENITOR PERSONNEL. Progenitor shall provide at least one research assistant to work with the Progenitor animals in ULAR facilities. All such personnel shall be under the supervision and control of Dr. Diane McClure, Associate Director of ULAR, and the ULAR Laboratory Animal Center facility manager.


9. COMPLIANCE WITH LAWS, REGULATIONS AND POLICIES. Progenitor must conduct all of its activities in connection with this agreement in full compliance with the Animal Welfare Act, the ULAR animal care program, and all other applicable laws, regulations and Ohio State and ULAR policies. All research conducted on Progenitor animals housed in ULAR facilities must be approved by, and shall be subject to the


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supervision and control of, Ohio State's Institutional Laboratory Animal Care and Use Committee. Progenitor must appoint at least one Ohio State faculty member to serve as a co-principal investigator on all such research.


10. INVENTIONS AND INTELLECTUAL PROPERTY. Title to any invention or other intellectual property derived from any research that Progenitor conducts in connection with this agreement shall vest in Progenitor.


11. CONFIDENTIALITY. Ohio State shall, to the extent permitted by Ohio law, maintain the confidentiality of any information provided to Ohio State by Progenitor and reasonably designated by it to constitute a trade secret or other legally protectable form of information. Progenitor shall assist Ohio State as necessary to protect the confidentiality of any such information.


12. CONFLICTS OF INTEREST. Progenitor shall not use the facilities and services provided to it through this agreement in connection with research that is substantially similar to or potentially competitive with any research that its Vice President is conducting or may conduct in his capacity as a member of Ohio State's faculty or that would place him in a conflict of interest as defined by Ohio law or Ohio State policies.


13. COOPERATION. Ohio State and Progenitor shall cooperate in developing additional, mutually beneficial research, professional development and training opportunities for Ohio State's faculty, staff and students in connection with the activities contemplated under this agreement.


14. LIMITATION OF LIABILITY. Neither party shall be liable to the other party for any loss or damage that (a) arises out of any event that is not within the first party's sole control and/or (b) is not the result of the negligence or willful misconduct of the first party, its officers, its employees or its agents, including, without limitation, any loss or damage resulting from accidental disease outbreaks among Progenitor's animals. In no event shall either party be liable to the other party for any indirect, special, incidental, exemplary or consequential damages, including, without limitation, lost profits, whether based in contract, in tort or on any other legal theory, and whether or not the first party has been made aware of the possibility of such damages.


15. EXCLUSION OF WARRANTIES. In view of the experimental nature of Progenitor's research, Ohio State makes no warranty or guarantee of any kind in connection with the facilities and services to be provided by it under this agreement. OHIO STATE SPECIFICALLY DISCLAIMS ALL WARRANTIES, WHETHER EXPRESS OR IMPLIED, AND INCLUDING, WITHOUT LIMITATION, ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, IN CONNECTION WITH THIS AGREEMENT.


16. INDEMNIFICATION. Notwithstanding the provisions of section 14, Progenitor shall indemnify and hold harmless Ohio State and its Board of Trustees, officers, employees, students and agents against any and all claims, liabilities, damages and costs, including attorneys' fees, that result from any claims or actions that are asserted by third parties and that arise in any way out of Progenitor's activities in connection with this agreement. The provisions of this section shall survive any termination of this agreement.


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17. INSURANCE. Throughout the term of this agreement, Progenitor shall maintain an "occurrence" policy of general liability insurance providing coverage of at least $1,000,000 for personal injury or death per person, $1,000,000 for personal injury or death per occurrence, and $1,000,000 for property damage per occurrence resulting from the acts or omissions of Progenitor in connection with the activities to be conducted under this agreement. The policy must name Ohio State and its Board of Trustees, officers, employees, students and agents as additional insureds and must provide that no act or omission of Progenitor shall affect or limit the obligation of the insurer to pay on their behalf the amount of any loss sustained. The policy must also carry an endorsement providing that it may not be canceled unless the insurer gives Ohio State at least 30 days' prior written notice.


18. TERMINATION. Either party may terminate this agreement, upon 30 days' written notice, for any reason, including, without limitation, a need by Ohio State for the designated facilities for its own use. Ohio State may terminate this agreement immediately for any failure by Progenitor to correct any noncompliance with the provisions of section 9 as and within the time recommended by the University's ILACUC or for nonpayment of fees when due within three business days following written notice of delinquency. Following termination notice, all applicable fees, including, without limitation, the standard hourly fee for ULAR technician time, will continue to accrue until all Progenitor animals are depopulated, all animal housing rooms assigned to Progenitor are disinfected, and all Progenitor equipment is removed. Progenitor must pay all outstanding charges in full within 30 days after termination.


19. NONDISCRIMINATION. Progenitor shall not discriminate against any employee or applicant for employment with respect to hire; tenure; terms, conditions or privileges of employment; or any matter directly or indirectly related to employment, because of the employee's or applicant's race, color, religion, national origin, disability, sex, age or ancestry.


20. NOTICES. All notices from Progenitor to Ohio State pertaining to this agreement shall be sent to the following:


Dr. William P. Yonushonis
University Laboratory Animal Resources
313 Research Foundation
1960 Kenny Road
Columbus, Ohio 43210-1063


All notices from Ohio State to Progenitor pertaining to this agreement shall be sent to the following:


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