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Exhibit 10.1
Date: February 21, 2007
To: STEM CELL INNOVATIONS, INC.
1812 FRONT STREET
SCOTCH PLAINS NJ 07076
908-663-2150
By fax and email
Attention: Mark Germain
Re: Equity investment and license agreement
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This letter will confirm our understanding concerning (a) the
proposed exchange
of shares of common stock of Stem Cell Innovations, Inc. ("Stem
Cell") for
shares of common stock and warrants to purchase common stock of
PluriStem Life
Systems, Inc. ("PluriStem") and (b) the license by Stem Cell of
certain rights
of PluriStem Ltd. ("PluriStem Ltd.") in exchange for shares of
common stock of
Stem Cell (collectively, the "Transaction"). It is contemplated
that more
complete terms of the Transaction shall be set forth in certain
definitive
agreements (the "Definitive Agreements"), including without
limitation a stock
purchase agreement, a license agreement, and a warrant certificate,
each
containing terms customary for transactions of this type, with a
target date for
execution of the Definitive Agreements and closing of the
Transaction (the
"Closing Date") No later then April 10, 2007. It is understood
that, although
this letter does not contain all of the terms to be set forth in
the Definitive
Agreements, this letter is intended to be binding on the parties
hereto, and
that the parties shall negotiate in good faith the terms of and
otherwise use
reasonable efforts to execute and deliver such Definitive
Agreements. The terms
of our understanding are as follows:
1. PluriStem shall issue to Stem Cell 66,000,000 shares of
PluriStem common
stock (the "PluriStem Shares") and a five year non-callable warrant
(the
"PluriStem Warrant") to buy 66,000,000 shares of PluriStem common
stock (the
"Underlying PluriStem Shares") at an exercise price of $.03 per
share. In
exchange, Stem Cell shall issue to PluriStem 27,000,000 shares of
Stem Cell
common stock (the "Stem Cell Exchange Shares"). Such exchange will
be solely an
exchange of securities and no cash will transfer.
2. Stem Cell will license from PluriStem Ltd. certain rights (the
"Licensed
Rights"), in exchange for an upfront license fee of 23,000,000
shares of Stem
Cell common stock (the "Stem Cell License Shares" and together with
the Stem
Cell Exchange Shares, the "Stem Cell Shares") and the milestone
payments,
royalties and other payments listed below.
If needed Stem Cell will reimburse PluriStem Ltd. for its
reasonable out of
pocket expenses related to the training of Stem Cell personnel in
the use of PLX
I product to be used in the Territory (as defined below). Such
expenses will
include the cost of equipment (i.e. bioreactors), the salaries of
employees for
their time expended based on an annual FTE rate of $100,000, travel
expenses,
and other costs if any.
3. The Licensed Rights are as follows:
(a) Exclusive Marketing rights to the PLX I technology for
therapeutic
applications in Asia (the final list of countries will be set forth
in the
Definitive Agreements but shall not include Japan) (the
"Territory") . For
clarity, the PLX I technology as used in this paragraph means the
use of
mesenchymal cells derived from placenta ("MSCs") and grown in
PluriStem Ltd's
3-D microenvironment (including improvements to the
microenvironment) for
therapeutic indications including bone marrow transplant, stroke
and others, but
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not any applications where the cells grown in the 3-D environment
are derivative
of or downstream of the MSCs. In addition, if Stem Cell, in its
sole judgement,
determines that it is necessary to manufacture the product in the
Territory,
Pluristem shall use its best efforts to obtain approval of the
Chief Scientist
of Israel to transfer such rights. If the Company desires to have
the product
manufactured outside the Territory for sale in the Territory,
Pluristem shall
manufacture the product for the Company at a price to be determined
in good
faith in the definitive agreement.
(b) Rights to use the PLX I technology in Stem Cell's in-vitro
screening
applications, if any, worldwide. For clarity, the PLXI technology
as used in
this subparagraph means the use of both MSCs and cells that are
derivative of or
downstream of MSCs grown in PluriStem Ltd.'s 3-D microenvironment
(including
improvements); and
(c) Rights to use the 3-D microenvironment technology (including
improvements)
in conjunction with Stem Cell's PluriCells and cells derived by
Stem Cell from
its PluriCell technology, including downstream cells, worldwide for
in vitro and
in vivo uses. For clarity, any cells derived by Stem Cell utilizing
the 3-D
microenvironment technology (including improvements) will not be
used for any
hematopoietic applications.
4. With respect to the rights granted in 3(a) above, Stem Cell
(directly or
through an affiliate or sublicense) will have diligence obligations
to move at
least one therapeutic application forward to the extent to be
agreed in the
license agreement and not later than 18 months after comparable
steps are taken
by PluriStem outside of the Territory and will discuss with
PluriStem commencing
at least one additional clinical trial for another indication not
later than 24
months after a similar is taken by PluriStem outside of Asia.
PluriStem Ltd. and
Stem Cell will each make available to the other all relevant
pre-clinical and
clinical data, and otherwise cooperate in the clinical and
regulatory process.
Pluristem Ltd. will have the free exclusive right to use the data
and results of
Stem Cell's therapeutic applications in Asia using PLX I technology
in the rest
of the world, and likewise Stem Cell will have the free exclusive
right to use
the data and results of PluriStem Ltd's therapeutic applications
granted in 3(a)
outside of Asia for use in Asia. In the event Stem Cell does not
timely meet its
diligence obligations as a result of inaction (rather than
scientific, clinical,
regulatory or similar issues), PluriStem Ltd may elect to reclaim
the rights to
those applications with respect to which the diligence requirements
have not
been met.
5. With respect to the rights granted in 3(a) above, PluriStem Ltd
will be
entitled to receive the following milestone payments and royalties
per IND:
(a) Upon the first treatment of a subject in a Phase I trial in the
Territory: $
50,000
(b) Upon the first treatment of a subject in a Phase II trial in
the Territory:
$ 150,000
(c) Upon the first treatment of a subject in a Phase III trial in
the Territory:
$ 500,000
(d) Upon the first filing of a New Drug Application (NDA) (or
equivalent): $
1,000,000
(e) Upon the first approval for an NDA indication in the Territory:
$ 3,000,000
(f ) Upon each additional approval for a new NDA indication in the
Territory $
1,500,000 Each of the clinical milestones set forth above will be
payable only
once per product upon the initial achievement of such milestone
(i.e. if a
clinical trial is repeated the milestone would be due only with
respect to the
first time the trial is conducted). In the event a development
milestone is
skipped due to more rapid advancement than anticipated by the above
schedule,
the skipped milestone payment will be due in conjunction with the
payment that
is due at the next applicable milestone event.
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(g) With respect to net sales by Stem Cell or an affiliate in the
territory
royalties of:
4% with respect to annual net sales of between $1 and $250 MM;
5% with respect to annual net sales of between $250 MM and $500
MM;
6% with respect to annual net sales of between $500 MM and $1B;
and
8% with respect to annual sales in excess of $1B.
6. With respect to the rights granted in 3(b) above, PluriStem Ltd.
will be
entitled to receive royalties on sales by Stem Cell or its
affiliates of 4%, and
with respect to the rights granted in 3(c) above royalties on
sales
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