Exhibit 10.1

 

EMPLOYMENT AGREEMENT

 

This Employment Agreement (“Agreement”) is made as of the 18th day of June,
2014, between Advanced Cell Technology, Inc., a Delaware corporation (the
“Company”), and Paul K. Wotton, Ph.D. (the “Executive”) and shall become
effective on the first day of Executive’s employment with the Company (the
“Effective Date”).

 

WHEREAS, the Company and the Executive desire that the Executive be employed by
the Company on the terms and conditions set forth herein commencing on the
Effective Date;

 

WHEREAS, the Board of Directors of the Company (the “Board”) has approved and
authorized the entry into this Agreement with Executive.

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements herein
contained and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties agree as follows:

 

1.               Position and Duties. The Executive shall serve as the President
and Chief Executive Officer of the Company (“CEO”), and shall have such powers
and duties as may from time to time be prescribed by the Board of Directors of
the Company (the “Board”). As long as the Executive is CEO, he will serve as a
member of the Board. The Executive shall devote his full working time and
efforts to the business and affairs of the Company. Notwithstanding the
foregoing, the Executive may serve on up to two other boards of directors, with
the prior approval of the Board, or engage in religious, charitable or other
community activities as long as such services and activities are disclosed to
the Board and do not interfere with the Executive’s performance of his duties to
the Company as provided in this Agreement.

 

2.               Compensation and Related Matters.

 

(a)             Base Salary. The Executive’s base salary shall be paid at the
rate of $575,000 per year. The Executive’s base salary may be redetermined
annually by the Board or the Compensation Committee. The annual base salary in
effect at any given time is referred to herein as “Base Salary.” The Base Salary
shall be payable in a manner that is consistent with the Company’s usual payroll
practices for senior executives.

 

(b)            Incentive Compensation. The Executive shall be eligible to
receive cash incentive compensation as determined by the Board or the
Compensation Committee from time to time. The Executive’s target annual
incentive compensation shall be 55% percent of his Base Salary, prorated based
on the Effective Date. To earn incentive compensation, the Executive must be
employed by the Company on the day such incentive compensation is paid.

 

(c)             Expenses/Legal Fees. The Executive shall be entitled to receive
prompt reimbursement for all reasonable expenses incurred by the Executive in
performing services hereunder, in accordance with the policies and procedures
then in effect and established by the Company for its senior executive officers.
The Company will reimburse the Executive up to $5,000 for legal fees he incurs
in connection this Agreement and related documents.

 

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(d)            Other Benefits. The Executive shall be eligible to participate in
or receive benefits under the Company’s employee benefit plans, including any
executive equity compensation plans, in effect from time to time, subject to the
terms of such plans.

 

(e)             Vacations. The Executive shall be entitled to accrue up to
twenty-five (25) paid vacation days in each year, which shall be accrued
ratably, subject to an accrual cap of five (5) weeks. The Executive shall also
be entitled to all paid holidays given by the Company to its executives.

 

(f)             Relocation Reimbursement. The Company will reimburse Executive
up to fifty thousand dollars ($50,000) for expenses in connection with
Executive’s relocation of Executive’s principal residence to the Boston area
(“Relocation Amount”). Executive must relocate to the Boston area by a date to
be determined by the Board after consultation with Executive. Acceptable uses of
the Relocation Amount include temporary housing, moving expenses, visits to the
Boston area, the closing costs associated with selling Executive’s current home
and purchasing a new residence in the Boston area and other reasonable
move-related items (collectively “Relocation Expenses”). Appropriate supporting
documentation (i.e., itemized receipts) of the Relocation Expenses must be
submitted within 45 days after the Relocation Expenses were incurred and prior
to reimbursement. The Company will determine in its reasonable, good faith
judgment what, if any, of Executive’s reimbursed Relocation Expenses are for
nondeductible expenses in accordance with applicable law and will comply with
associated withholding and tax reporting obligations. If Executive resigns other
than for Good Reason (defined below) or is terminated by the Company for Cause
(defined below) at any time prior to the one year anniversary of the Effective
Date, Executive must repay all Relocation Expenses to the Company within ten
(10) days of the Date of Termination (defined below) (the "Relocation
Reimbursement”).

 

(g)            Equity.

 

(i)              Stock Options. The Executive shall be granted options under the
Company’s 2005 Stock Incentive Plan to purchase 30,000,000 shares of the
Company’s common stock at the fair market value on the date of the option grant
(the “Award Date”). Provided the Executive is a Company employee on the
applicable vesting date and subject to the acceleration provisions in Sections 4
and 5 of this Agreement, Executive’s right to exercise the options will vest as
follows: 25% on the first anniversary of the Award Date; and the remaining 75%
in equal monthly installments over the following 36 months on the first day of
each such month.

 

(ii)            Stock Unit Awards. The Executive shall be granted stock unit
awards under the Company’s 2005 Stock Incentive Plan equaling 30,000,000 shares
of the Company’s common stock (the “SUAs”). Provided the Executive is a Company
employee on the applicable vesting date and subject to the acceleration
provisions in Sections 4 and 5 of this Agreement, the SUAs will vest as follows:
one-third on the first anniversary of the Award Date; an additional one-third on
the second anniversary of the Award date; and the remaining one-third on the
third anniversary of the Award Date.

 

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(iii)          Other Equity Awards. Executive shall be eligible for annual
equity awards at the discretion of the Board of Directors, including any such
awards issuable under an equity plan applicable to all other executive officers
of the Company.

 

(iv)          This Section 2(g) is only a summary of the Executive’s equity
awards; the Company’s 2005 Stock Incentive Plan and associated agreements,
including any form of agreement approved by the Board of Directors effecting the
grant of the SUAs (the “Equity Documents”) shall govern the terms and conditions
of Executive’s equity awards.

 

3.               Termination. The Executive’s employment hereunder may be
terminated without any breach of this Agreement under the following
circumstances:

 

(a)             Death. The Executive’s employment hereunder shall terminate upon
his death.

 

(b)            Disability. The Company may terminate the Executive’s employment
if he is disabled and unable to perform the essential functions of the
Executive’s then existing position or positions under this Agreement with or
without reasonable accommodation for a period of 180 days (which need not be
consecutive) in any 12-month period. If any question shall arise as to whether
during any period the Executive is disabled so as to be unable to perform the
essential functions of the Executive’s then existing position or positions with
or without reasonable accommodation, the Executive may, and at the request of
the Company shall, submit to the Company a certification in reasonable detail by
a physician selected by the Company to whom the Executive or the Executive’s
guardian has no reasonable objection as to whether the Executive is so disabled
or how long such disability is expected to continue, and such certification
shall for the purposes of this Agreement be conclusive of the issue. The
Executive shall cooperate with any reasonable request of the physician in
connection with such certification. If such question shall arise and the
Executive shall fail to submit such certification, the Company’s determination
of such issue shall be binding on the Executive. Nothing in this Section 3(b)
shall be construed to waive the Executive’s rights, if any, under existing law
including, without limitation, the Family and Medical Leave Act of 1993, 29
U.S.C. §2601 et seq. and the Americans with Disabilities Act, 42 U.S.C. §12101
et seq.

 

(c)             Termination by Company for Cause. The Company may terminate the
Executive’s employment hereunder for Cause. For purposes of this Agreement,
“Cause” shall mean: (i) conduct by the Executive constituting a material act of
misconduct in connection with the performance of his duties, including, without
limitation, misappropriation of funds or property of the Company or any of its
subsidiaries or affiliates other than the occasional, customary and de minimis
use of Company property for personal purposes; (ii) the indictment, formal
charge, or conviction of the Executive of any felony or a misdemeanor involving
moral turpitude, deceit, dishonesty or fraud, or any conduct by the Executive
that would reasonably be expected to result in material injury or material
reputational harm to the Company or any of its subsidiaries and affiliates if he
were retained in his position; (iii) continued non-performance by the Executive
of his duties hereunder (other than by reason of the Executive’s physical or
mental illness, incapacity or disability) which has continued for more than 30
days following written notice of such non-performance from the Board of
Directors; (iv) a material breach by the Executive of any of the provisions
contained in Section 8 of this Agreement; (v) a material violation by the
Executive of the Company’s written employment policies, including, without
limitation, any insider trading policies (or related procedures) in effect from
time to time; or (vi) failure to cooperate with a bona fide internal
investigation or an investigation by regulatory or law enforcement authorities,
after being instructed by the Company to cooperate, or the willful destruction
or failure to preserve documents or other materials known to be relevant to such
investigation or the inducement of others to fail to cooperate or to produce
documents or other materials in connection with such investigation.

 

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(d)            Termination Without Cause. The Company may terminate the
Executive’s employment hereunder at any time without Cause. Any termination by
the Company of the Executive’s employment under this Agreement which does not
constitute a termination for Cause under Section 3(c) and does not result from
the death or disability of the Executive under Section 3(a) or (b) shall be
deemed a termination without Cause.

 

(e)             Termination by the Executive. The Executive may terminate his
employment hereunder at any time for any reason, including but not limited to
Good Reason. For purposes of this Agreement, “Good Reason” shall mean that the
Executive has complied with the “Good Reason Process” (hereinafter defined)
following the occurrence of any of the following events: (i) a material
diminution in the Executive’s responsibilities, authority or duties; (ii) a
material diminution in the Executive’s Base Salary except for across-the-board
salary reductions based on the Company’s financial performance similarly
affecting all or substantially all senior management employees of the Company;
(iii) a change in the principal location at which the Executive provides
services to the Company of 50 miles or more; or (iv) the material breach of this
Agreement by the Company (each a “Good Reason Condition”). Notwithstanding the
foregoing, a suspension of the Executive’s responsibilities, authority and/or
duties for the Company during any portion of a bona fide internal investigation
or an investigation by regulatory or law enforcement authorities shall not be a
Good Reason Condition. “Good Reason Process” shall mean that (I) the Executive
reasonably determines in good faith that a Good Reason Condition has occurred;
(II) the Executive notifies the Company in writing of the first occurrence of
the Good Reason Condition within 60 days of the first occurrence of such
condition; (III) the Executive cooperates in good faith with the Company’s
efforts, for a period not less than 30 days following such notice (the “Cure
Period”), to remedy the Good Reason Condition; (IV) notwithstanding such
efforts, the Good Reason Condition continues to exist; and (V) the Executive
terminates his employment within 60 days after the end of the Cure Period. If
the Company cures the Good Reason Condition during the Cure Period, Good Reason
shall be deemed not to have occurred.

 

(f)             Notice of Termination. Except for termination as specified in
Section 3(a), any termination of the Executive’s employment by the Company or
any such termination by the Executive shall be communicated by written Notice of
Termination to the other party hereto. For purposes of this Agreement, a “Notice
of Termination” shall mean a notice which shall indicate the specific
termination provision in this Agreement relied upon.

 

(g)            Date of Termination. “Date of Termination” shall mean: (i) if the
Executive’s employment is terminated by his death, the date of his death; (ii)
if the Executive’s employment is terminated on account of disability under
Section 3(b) or by the Company with or without Cause under Sections 3(c) or
3(d), the date on which Notice of Termination is given; (iii) if the Executive’s
employment is terminated by the Executive under Section 3(e) without Good
Reason, 30 days after the date on which a Notice of Termination is given, and
(iv) if the Executive’s employment is terminated by the Executive under Section
3(e) with Good Reason, the date on which a Notice of Termination is given after
the end of the Cure Period. Notwithstanding the foregoing in the event that the
Executive gives a Notice of Termination to the Company, the Company may
unilaterally accelerate the Date of Termination and such acceleration shall not
result in a termination by the Company for purposes of this Agreement.

 

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4.               Compensation Upon Termination.

 

(a)             Termination Generally. If the Executive’s employment with the
Company is terminated for any reason, the Company shall pay or provide to the
Executive (or to the Executive’s authorized representative or estate): (i) any
Base Salary earned through the Date of Termination, unpaid expense
reimbursements (subject to, and in accordance with, Section 2(c) of this
Agreement) and unused vacation that accrued through the Date of Termination
(collectively, the “Accrued Benefit”); and (ii) any vested benefits the
Executive may have under any employee benefit plan of the Company through the
Date of Termination, which vested benefits shall be paid and/or provided in
accordance with the terms of such employee benefit plans. The Accrued Benefit
shall be paid on or before the time required by law but in no event more than 30
days after the Executive’s Date of Termination.

 

(b)            Termination by the Company Without Cause or by the Executive with
Good Reason. If the Executive’s employment is terminated by the Company without
Cause as provided in Section 3(d), or the Executive terminates his employment
for Good Reason as provided in Section 3(e), then the Company shall pay the
Executive his Accrued Benefit. In addition, subject to the Executive signing a
separation agreement containing, among other provisions, a general release of
claims in favor of the Company and related persons and entities,
confidentiality, return of property and non-disparagement and a reaffirmation of
the Executive’s existing restrictive covenants, in a form and manner
satisfactory to the Company (the “Separation Agreement and Release”) and the
Separation Agreement and Release becoming irrevocable within the time period set
forth in the Separation Agreement and Release, and in no event longer than 60
days after the Date of Termination:

 

(i)              the Company shall pay the Executive an amount equal to the
Executive’s Base Salary plus his earned but unpaid incentive compensation as of
the Date of Termination, if any (the “Severance Amount”). The Severance Amount
shall be payable in substantially equal installments in accordance with the
Company’s payroll practice over 12 months commencing within 60 days after the
Date of Termination (such 12-month period, the “Severance Period”); provided,
however, that if the 60-day period begins in one calendar year and ends in a
second calendar year, such payments shall begin to be paid in the second
calendar year by the last day of such 60-day period; provided, further, that the
initial payment shall include a catch-up payment to cover amounts retroactive to
the day immediately following the Date of Termination.

 

(ii)            if the Executive was participating in the Company’s group health
plan immediately prior to the Date of Termination and elects COBRA health
continuation, then, subject to the Executive’s copayment of premium amounts at
the active employees’ rate, the Company shall pay the remainder of the premiums
for the Executive’s participation in the Company’s group health plan: (I) for 12
months; (II) until the Executive becomes eligible for group medical care
coverage through other employment; or (III) for the Executive’s COBRA health
continuation period, whichever ends earliest; provided that Executive notifies
the Company promptly when Executive becomes eligible for group medical care
coverage through another employer, and responds promptly to any reasonable
inquires related to COBRA eligibility;

 

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(iii)          any time-based stock options or other time-based stock-based
awards held by the Executive as of the Date of Termination that otherwise would
have vested during the twelve (12)-month period immediately following the Date
of Termination had Executive’s employment not been terminated shall become
vested and exercisable on the Date of Termination, and the exercise of any such
stock options or awards shall be subject to the terms of all relevant equity
plans and agreements;

 

(iv)          any performance based stock options or other stock based awards
will not terminate until three months after the Date of Termination (the “Post
Employment Period”). If a performance based-milestone is achieved during the
Post-Employment Period, you shall be entitled to the same vesting with respect
to the applicable performance based equity award that you would have vested in
if you had been employed on the date of the achievement of the performance
milestone.

 

(v)            Notwithstanding the foregoing, if the Executive materially
breaches any of the provisions contained in Section 8 of this Agreement, all
payments and the vesting opportunities under this Section 4(b) shall immediately
cease.

 

5.               Change in Control Payment. The provisions of this Section 5 set
forth certain terms of an agreement reached between the Executive and the
Company regarding the Executive’s rights and obligations upon the occurrence of
a Change in Control of the Company. These provisions are intended to assure and
encourage in advance the Executive’s continued attention and dedication to his
assigned duties and his objectivity during the pendency and after the occurrence
of any such event. These provisions shall apply in lieu of, and expressly
supersede, the provisions of Section 4(b) regarding severance pay and benefits
upon a termination of employment, if such termination of employment occurs
within 12 months after the occurrence of the first event constituting a Change
in Control. These provisions shall terminate and be of no further force or
effect beginning 12 months after the occurrence of a Change in Control.

 

(a)             Change in Control. Notwithstanding anything to the contrary in
any applicable option agreement or stock-based award agreement, all time-based
stock options and other time based stock-based awards held by the Executive
shall immediately accelerate and become fully exercisable or nonforfeitable as
of the Date of the Change of Control. The exercise of any such stock options or
awards shall be subject to the terms of all relevant equity plans and
agreements. In addition, if, within 12 months after a Change in Control, the
Executive’s employment is terminated by the Company without Cause as provided in
Section 3(d) or the Executive terminates his employment for Good Reason as
provided in Section 3(e), then, subject to the signing of the Separation
Agreement and Release by the Executive and the Separation Agreement and Release
becoming irrevocable, all within 60 days after the Date of Termination,

 

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(i)              the Company shall pay the Executive a lump sum payment equal to
two years of the Executive’s Base Salary in effect as of the Date of the Change
of Control (or the Executive’s Base Salary in effect immediately prior to the
Change in Control, if higher) plus his earned but unpaid incentive compensation
as of the Date of Termination, if any;

 

(ii)            if the Executive was participating in the Company’s group health
plan immediately prior to the Date of Termination and elects COBRA health
continuation, then, subject to the Executive’s copayment of premium amounts at
the active employees’ rate, the Company shall pay the remainder of the premiums
for the Executive’s participation in the Company’s group health plan: (I) for 12
months; (II) until the Executive becomes eligible for group medical care
coverage through other employment; or (III) for the Executive’s COBRA health
continuation period, whichever ends earliest; provided that Executive notifies
the Company promptly when Executive becomes eligible for group medical care
coverage through another employer, and responds promptly to any reasonable
inquires related to COBRA eligibility; and

 

(iii)          the amounts payable under this Section 5(a) shall be paid or
commence to be paid within 60 days after the Date of Termination, provided,
however that if the 60 day period begins in one calendar year and ends in a
second calendar year, such payment shall be paid or commence to be paid in the
second calendar year by the last day of such 60 day period.

 

(b)            Additional Limitation.

 

(i)              Anything in this Agreement to the contrary notwithstanding, in
the event that the amount of any compensation, payment or distribution by the
Company to or for the benefit of the Executive, whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise, calculated in a manner consistent with Section 280G of the Internal
Revenue Code of 1986, as amended (the “Code”) and the applicable regulations
thereunder (the “Severance Payments”), would be subject to the excise tax
imposed by Section 4999 of the Code, the following provisions shall apply:

 

(A)           If the Severance Payments, reduced by the sum of (1) the Excise
Tax and (2) the total of the Federal, state, and local income and employment
taxes payable by the Executive on the amount of the Severance Payments which are
in excess of the Threshold Amount, are greater than or equal to the Threshold
Amount, the Executive shall be entitled to the full benefits payable under this
Agreement.

 

(B)           If the Threshold Amount is less than (x) the Severance Payments,
but greater than (y) the Severance Payments reduced by the sum of (1) the Excise
Tax and (2) the total of the Federal, state, and local income and employment
taxes on the amount of the Severance Payments which are in excess of the
Threshold Amount, then the Severance Payments shall be reduced (but not below
zero) to the extent necessary so that the sum of all Severance Payments shall
not exceed the Threshold Amount. In such event, the Severance Payments shall be
reduced in the following order: (1) cash payments not subject to Section 409A of
the Code; (2) cash payments subject to Section 409A of the Code; (3)
equity-based payments and acceleration; and (4) non-cash forms of benefits. To
the extent any payment is to be made over time (e.g., in installments, etc.),
then the payments shall be reduced in reverse chronological order.

 

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(ii)            For the purposes of this Section 5(b), “Threshold Amount” shall
mean three times the Executive’s “base amount” within the meaning of Section
280G(b)(3) of the Code and the regulations promulgated thereunder less one
dollar ($1.00); and “Excise Tax” shall mean the excise tax imposed by Section
4999 of the Code, and any interest or penalties incurred by the Executive with
respect to such excise tax.

 

(iii)          The determination as to which of the alternative provisions of
Section 5(b)(i) shall apply to the Executive shall be made by a nationally
recognized accounting firm selected by the Company (the “Accounting Firm”),
which shall provide detailed supporting calculations both to the Company and the
Executive within 15 business days of the Date of Termination, if applicable, or
at such earlier time as is reasonably requested by the Company or the Executive.
For purposes of determining which of the alternative provisions of Section
5(b)(i) shall apply, the Executive shall be deemed to pay federal income taxes
at the highest marginal rate of federal income taxation applicable to
individuals for the calendar year in which the determination is to be made, and
state and local income taxes at the highest marginal rates of individual
taxation in the state and locality of the Executive’s residence on the Date of
Termination, net of the maximum reduction in federal income taxes which could be
obtained from deduction of such state and local taxes. Any determination by the
Accounting Firm shall be binding upon the Company and the Executive.

 

(c)             Definitions. For purposes of this Section 5, the following terms
shall have the following meanings:

“Change in Control” shall mean any of the following:

 

(i)              any “person,” as such term is used in Sections 13(d) and 14(d)
of the Securities Exchange Act of 1934, as amended (the “Act”) (other than the
Company, any of its subsidiaries, or any trustee, fiduciary or other person or
entity holding securities under any employee benefit plan or trust of the
Company or any of its subsidiaries), together with all “affiliates” and
“associates” (as such terms are defined in Rule 12b-2 under the Act) of such
person, shall become the “beneficial owner” (as such term is defined in Rule
13d-3 under the Act), directly or indirectly, of securities of the Company
representing 50 percent or more of the combined voting power of the Company’s
then outstanding securities having the right to vote in an election of the Board
(“Voting Securities”) (in such case other than as a result of an acquisition of
securities directly from the Company); or

 

(ii)            the date a majority of the members of the Board is replaced
during any 12-month period by directors whose appointment or election is not
endorsed by a majority of the members of the Board before the date of the
appointment or election; or

 

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(iii)          the consummation of (A) any consolidation or merger of the
Company where the stockholders of the Company, immediately prior to the
consolidation or merger, would not, immediately after the consolidation or
merger, beneficially own (as such term is defined in Rule 13d-3 under the Act),
directly or indirectly, shares representing in the aggregate more than 50
percent of the voting shares of the Company issuing cash or securities in the
consolidation or merger (or of its ultimate parent corporation, if any), or (B)
any sale or other transfer (in one transaction or a series of transactions
contemplated or arranged by any party as a single plan) of all or substantially
all of the assets of the Company.

 

Notwithstanding the foregoing, a “Change in Control” shall not be deemed to have
occurred for purposes of the foregoing clause (i) solely as the result of an
acquisition of securities by the Company which, by reducing the number of shares
of Voting Securities outstanding, increases the proportionate number of Voting
Securities beneficially owned by any person to 50 percent or more of the
combined voting power of all of the then outstanding Voting Securities;
provided, however, that if any person referred to in this sentence shall
thereafter become the beneficial owner of any additional shares of Voting
Securities (other than pursuant to a stock split, stock dividend, or similar
transaction or as a result of an acquisition of securities directly from the
Company) and immediately thereafter beneficially owns 50 percent or more of the
combined voting power of all of the then outstanding Voting Securities, then a
“Change in Control” shall be deemed to have occurred for purposes of the
foregoing clause (i).

 

6.               Section 409A.

 

(a)             Anything in this Agreement to the contrary notwithstanding, if
at the time of the Executive’s separation from service within the meaning of
Section 409A of the Code, the Company determines that the Executive is a
“specified employee” within the meaning of Section 409A(a)(2)(B)(i) of the Code,
then to the extent any payment or benefit that the Executive becomes entitled to
under this Agreement on account of the Executive’s separation from service would
be considered deferred compensation otherwise subject to the 20 percent
additional tax imposed pursuant to Section 409A(a) of the Code as a result of
the application of Section 409A(a)(2)(B)(i) of the Code, such payment shall not
be payable and such benefit shall not be provided until the date that is the
earlier of (A) six months and one day after the Executive’s separation from
service, or (B) the Executive’s death. If any such delayed cash payment is
otherwise payable on an installment basis, the first payment shall include a
catch-up payment covering amounts that would otherwise have been paid during the
six-month period but for the application of this provision, and the balance of
the installments shall be payable in accordance with their original schedule.

 

(b)            All in-kind benefits provided and expenses eligible for
reimbursement under this Agreement shall be provided by the Company or incurred
by the Executive during the time periods set forth in this Agreement. All
reimbursements shall be paid as soon as administratively practicable, but in no
event shall any reimbursement be paid after the last day of the taxable year
following the taxable year in which the expense was incurred. The amount of
in-kind benefits provided or reimbursable expenses incurred in one taxable year
shall not affect the in-kind benefits to be provided or the expenses eligible
for reimbursement in any other taxable year (except for any lifetime or other
aggregate limitation applicable to medical expenses). Such right to
reimbursement or in-kind benefits is not subject to liquidation or exchange for
another benefit.

 

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(c)             To the extent that any payment or benefit described in this
Agreement constitutes “non-qualified deferred compensation” under Section 409A
of the Code, and to the extent that such payment or benefit is payable upon the
Executive’s termination of employment, then such payments or benefits shall be
payable only upon the Executive’s “separation from service.” The determination
of whether and when a separation from service has occurred shall be made in
accordance with the presumptions set forth in Treasury Regulation Section
1.409A-1(h).

 

(d)            The parties intend that this Agreement will be administered in
accordance with Section 409A of the Code. To the extent that any provision of
this Agreement is ambiguous as to its compliance with Section 409A of the Code,
the provision shall be read in such a manner so that all payments hereunder
comply with Section 409A of the Code. Each payment pursuant to this Agreement is
intended to constitute a separate payment for purposes of Treasury Regulation
Section 1.409A-2(b)(2). The parties agree that this Agreement may be amended, as
reasonably requested by either party, and as may be necessary to fully comply
with Section 409A of the Code and all related rules and regulations in order to
preserve the payments and benefits provided hereunder without additional cost to
either party.

 

(e)             The Company makes no representation or warranty and shall have
no liability to the Executive or any other person if any provisions of this
Agreement are determined to constitute deferred compensation subject to Section
409A of the Code but do not satisfy an exemption from, or the conditions of,
such Section.

 

7.               Indemnity. The Company shall to the extent permitted by law,
indemnify and hold Executive harmless from costs, expense or liability arising
out of or relating to any acts or decisions made by Executive in the course of
his employment to the same extent Company indemnifies and holds harmless other
officers and directors of Company in accordance with Company’s established
policies. This indemnity shall include, without limitation, advancing Executive
attorney’s fees to the fullest extent permitted by applicable law. Company
agrees to continuously maintain Directors and Officers Liability Insurance with
limits of coverage the same as currently in effect, unless a change is mutually
agreed upon by Executive and the Board of Directors of Company, and to include
Executive within said coverage while Executive is employed by Company and for at
least thirty-six (36) months after the termination of Executive's employment by
Company.

 

8.               Confidential Information, Noncompetition and Cooperation.

 

(a)             Restrictive Covenant. The Executive agrees to comply with the
Employee Non-Competition, Non-Solicitation, Confidentiality and Assignment
Agreement attached hereto as Exhibit 1 (the “Employee Agreement”), the terms of
which are hereby incorporated by reference into Section 8 of this Agreement.

 

10

 

 

 

(b)            Third-Party Agreements and Rights. The Executive hereby confirms
that the Executive is not bound by the terms of any agreement with any previous
employer or other party which restricts in any way the Executive’s use or
disclosure of information or the Executive’s engagement in any business. The
Executive represents to the Company that the Executive’s execution of this
Agreement, the Executive’s employment with the Company and the performance of
the Executive’s proposed duties for the Company will not violate any obligations
the Executive may have to any such previous employer or other party. In the
Executive’s work for the Company, the Executive will not disclose or make use of
any information in violation of any agreements with or rights of any such
previous employer or other party, and the Executive will not bring to the
premises of the Company any copies or other tangible embodiments of non-public
information belonging to or obtained from any such previous employment or other
party.

 

(c)             Litigation and Regulatory Cooperation. During and after the
Executive’s employment, the Executive shall cooperate fully with the Company in
the defense or prosecution of any claims or actions now in existence or which
may be brought in the future against or on behalf of the Company which relate to
events or occurrences that transpired while the Executive was employed by the
Company. The Executive’s full cooperation in connection with such claims or
actions shall include, but not be limited to, being available to meet with
counsel to prepare for discovery or trial and to act as a witness on behalf of
the Company at mutually convenient times. During and after the Executive’s
employment, the Executive also shall cooperate fully with the Company in
connection with any investigation or review of any federal, state or local
regulatory authority as any such investigation or review relates to events or
occurrences that transpired while the Executive was employed by the Company. The
Company shall reimburse the Executive for any reasonable out-of-pocket expenses
incurred in connection with the Executive’s performance of obligations pursuant
to this Section 8(c). In addition, the Executive’s cooperation hereunder shall
not unreasonably interfere with his business or personal commitments.

 

(d)            Injunction. The Executive agrees that it would be difficult to
measure any damages caused to the Company which might result from any breach by
the Executive of the promises set forth in this Section 8, and that in any event
money damages would be an inadequate remedy for any such breach. Accordingly,
the Executive agrees that if the Executive breaches, or proposes to breach, any
portion of this Agreement, the Company shall be entitled, in addition to all
other remedies that it may have, to seek an injunction or other appropriate
equitable relief to restrain any such breach without showing or proving any
actual damage to the Company.

 

9.               Consent to Jurisdiction. The parties hereby consent to the
jurisdiction of the Superior Court of the Commonwealth of Massachusetts and the
United States District Court for the District of Massachusetts. Accordingly,
with respect to any such court action, the Executive (a) submits to the personal
jurisdiction of such courts; (b) consents to service of process; and (c) waives
any other requirement (whether imposed by statute, rule of court, or otherwise)
with respect to personal jurisdiction or service of process.

 

10.            Integration. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof and supersedes all
prior agreements between the parties concerning such subject matter, provided
the Employee Agreement and the Equity Documents shall remain in full force and
effect.

 

11.            Withholding. All payments made by the Company to the Executive
under this Agreement shall be net of any tax or other amounts required to be
withheld by the Company under applicable law.

 

11

 

 

12.            Successor to the Executive. This Agreement shall inure to the
benefit of and be enforceable by the Executive’s personal representatives,
executors, administrators, heirs, distributees, devisees and legatees. In the
event of the Executive’s death after his termination of employment but prior to
the completion by the Company of all payments due him under this Agreement, the
Company shall continue such payments to the Executive’s beneficiary designated
in writing to the Company prior to his death (or to his estate, if the Executive
fails to make such designation).

 

13.            Enforceability. If any portion or provision of this Agreement
(including, without limitation, any portion or provision of any section of this
Agreement) shall to any extent be declared illegal or unenforceable by a court
of competent jurisdiction, then the remainder of this Agreement, or the
application of such portion or provision in circumstances other than those as to
which it is so declared illegal or unenforceable, shall not be affected thereby,
and each portion and provision of this Agreement shall be valid and enforceable
to the fullest extent permitted by law.

 

14.            Survival. The provisions of this Agreement shall survive the
termination of this Agreement and/or the termination of the Executive’s
employment to the extent necessary to effectuate the terms contained herein.

 

15.            Waiver. No waiver of any provision hereof shall be effective
unless made in writing and signed by the waiving party. The failure of any party
to require the performance of any term or obligation of this Agreement, or the
waiver by any party of any breach of this Agreement, shall not prevent any
subsequent enforcement of such term or obligation or be deemed a waiver of any
subsequent breach.

 

16.            Notices. Any notices, requests, demands and other communications
provided for by this Agreement shall be sufficient if in writing and delivered
in person or sent by a nationally recognized overnight courier service or by
registered or certified mail, postage prepaid, return receipt requested, to the
Executive at the last address the Executive has filed in writing with the
Company or, in the case of the Company, at its main offices, attention of the
Board.

 

17.            Amendment. This Agreement may be amended or modified only by a
written instrument signed by the Executive and by a duly authorized
representative of the Company.

 

18.            Governing Law. This is a Massachusetts contract and shall be
construed under and be governed in all respects by the laws of the Commonwealth
of Massachusetts, without giving effect to the conflict of laws principles of
such Commonwealth. With respect to any disputes concerning federal law, such
disputes shall be determined in accordance with the law as it would be
interpreted and applied by the United States Court of Appeals for the First
Circuit.

 

19.            Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be taken to be
an original; but such counterparts shall together constitute one and the same
document.

 

20.            Successor to Company. The Company shall require any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business or assets of the Company expressly to
assume and agree to perform this Agreement to the same extent that the Company
would be required to perform it if no succession had taken place. Failure of the
Company to obtain an assumption of this Agreement at or prior to the
effectiveness of any succession shall be a material breach of this Agreement.

 

12

 

 

21.            Gender Neutral. Wherever used herein, a pronoun in the masculine
gender shall be considered as including the feminine gender unless the context
clearly indicates otherwise.

 

IN WITNESS WHEREOF, the parties have executed this Agreement effective on the
date and year first above written.

 

 

ADVANCED CELL TECHNOLOGY, INC.

 

 

By: /s/ Michael Heffernan

Its: Chairman and Board Member

 

 

EXECUTIVE

 

 

/s/ Paul K. Wotton

Paul K. Wotton, Ph.D

 

 

 

 

 

13

 

 

ADVANCED CELL TECHNOLOGY, INC.

 

Employee Non-Competition, Non-Solicitation, Confidentiality and Assignment
Agreement

 

In consideration and as a condition of my employment or continued employment by
Advanced Cell Technology, Inc. (together with its subsidiaries and affiliates,
the “Company”), I agree as follows:

 

1.               Proprietary Information. I agree that all information, whether
or not in writing, concerning the Company’s business, technology, business
relationships or financial affairs which the Company has not released to the
general public (collectively, “Proprietary Information”) is and will be the
exclusive property of the Company. By way of illustration, Proprietary
Information may include information or material which has not been made
generally available to the public, such as: (a) corporate information, including
plans, strategies, methods, policies, resolutions, negotiations or litigation;
(b) marketing information, including strategies, methods, customer identities or
other information about customers, prospect identities or other information
about prospects, or market analyses or projections; (c) financial information,
including cost and performance data, debt arrangements, equity structure,
investors and holdings, purchasing and sales data and price lists; and (d)
operational and technological information, including plans, specifications,
manuals, forms, templates, software, designs, methods, procedures, formulas,
discoveries, inventions, improvements, concepts and ideas; and (e) personnel
information, including personnel lists, reporting or organizational structure,
resumes, personnel data, compensation structure, performance evaluations and
termination arrangements or documents. Proprietary Information also includes
information received in confidence by the Company from its customers or
suppliers or other third parties.

 

2.               Recognition of Company’s Rights. I will not, at any time,
without the Company’s prior written permission, either during or after my
employment, disclose any Proprietary Information to anyone outside of the
Company, or use or permit to be used any Proprietary Information for any purpose
other than the performance of my duties as an employee of the Company. I will
cooperate with the Company and use my best efforts to prevent the unauthorized
disclosure of all Proprietary Information. I will deliver to the Company all
copies of Proprietary Information in my possession or control upon the earlier
of a request by the Company or termination of my employment.

 

3.               Rights of Others. I understand that the Company is now and may
hereafter be subject to non-disclosure or confidentiality agreements with third
persons which require the Company to protect or refrain from use of proprietary
information. I agree to be bound by the terms of such agreements in the event I
have access to such proprietary information.

 

4.               Commitment to Company; Avoidance of Conflict of Interest. While
an employee of the Company, I will devote my full-time efforts to the Company’s
business and I will not engage in any other business activity without out prior
approval by the Company’s Board of Directors. I will advise the Board any time
any activity of either the Company or another business presents me with a
conflict of interest or the appearance of a conflict of interest as an employee
of the Company. I will take whatever action is requested of me by the Company to
resolve any conflict or appearance of conflict which it finds to exist.

 

5.               Developments. I will make full and prompt disclosure to the
Company of all inventions, discoveries, designs, developments, methods,
modifications, improvements, processes, algorithms, databases, computer
programs, formulae, techniques, trade secrets, graphics or images, audio or
visual works, and other works of authorship (collectively “Developments”),
whether or not patentable or copyrightable, that are created, made, conceived or
reduced to practice by me (alone or jointly with others) or under my direction
during the period of my employment. I acknowledge that all work performed by me
is on a “work for hire” basis, and I hereby do assign and transfer and, to the
extent any such assignment cannot be made at present, will assign and transfer,
to the Company and its successors and assigns all my right, title and interest
in all Developments that (a) relate to the business of the Company or any
customer of or supplier to the Company or any of the products or services being
researched, developed, manufactured or sold by the Company or which may be used
with such products or services; or (b) result from tasks assigned to me by the
Company; or (c) result from the use of premises or personal property (whether
tangible or intangible) owned, leased or contracted for by the Company
(“Company-Related Developments”), and all related patents, patent applications,
trademarks and trademark applications, copyrights and copyright applications,
and other intellectual property rights in all countries and territories
worldwide and under any international conventions (“Intellectual Property
Rights”).

 

14

 

 

To preclude any possible uncertainty, I have set forth on Exhibit A attached
hereto a complete list of Developments that I have, alone or jointly with
others, conceived, developed or reduced to practice prior to the commencement of
my employment with the Company that I consider to be my property or the property
of third parties and that I wish to have excluded from the scope of this
Agreement (“Prior Inventions”). If disclosure of any such Prior Invention would
cause me to violate any prior confidentiality agreement, I understand that I am
not to list such Prior Inventions in Exhibit A but am only to disclose a cursory
name for each such invention, a listing of the party(ies) to whom it belongs and
the fact that full disclosure as to such inventions has not been made for that
reason. I have also listed on Exhibit A all patents and patent applications in
which I am named as an inventor, other than those which have been assigned to
the Company (“Other Patent Rights”). If no such disclosure is attached, I
represent that there are no Prior Inventions or Other Patent Rights. If, in the
course of my employment with the Company, I incorporate a Prior Invention into a
Company product, process or machine or other work done for the Company, I hereby
grant to the Company a nonexclusive, royalty-free, paid-up, irrevocable,
worldwide license (with the full right to sublicense) to make, have made,
modify, use, sell, offer for sale and import such Prior Invention.
Notwithstanding the foregoing, I will not incorporate, or permit to be
incorporated, Prior Inventions in any Company-Related Development without the
Company’s prior written consent.

 

This Agreement does not obligate me to assign to the Company any Development
which, in the sole judgment of the Company, reasonably exercised, is developed
entirely on my own time and does not relate to the business efforts or research
and development efforts in which, during the period of my employment, the
Company actually is engaged or reasonably would be engaged, and does not result
from the use of premises or equipment owned or leased by the Company. However, I
will also promptly disclose to the Company any such Developments for the purpose
of determining whether they qualify for such exclusion. I understand that to the
extent this Agreement is required to be construed in accordance with the laws of
any state which precludes a requirement in an employee agreement to assign
certain classes of inventions made by an employee, this paragraph 5 will be
interpreted not to apply to any invention which a court rules and/or the Company
agrees falls within such classes. I also hereby waive all claims to any moral
rights or other special rights which I may have or accrue in any Company-Related
Developments.

 

6.               Documents and Other Materials. I will keep and maintain
adequate and current records of all Proprietary Information and Company-Related
Developments developed by me during my employment, which records will be
available to and remain the sole property of the Company at all times.

 

All files, letters, notes, memoranda, reports, records, data, sketches,
drawings, notebooks, layouts, charts, quotations and proposals, specification
sheets, models, prototypes, or other written, photographic or other tangible
material containing Proprietary Information, whether created by me or others,
which come into my custody or possession, are the exclusive property of the
Company to be used by me only in the performance of my duties for the Company.
Any property situated on the Company’s premises and owned by the Company,
including without limitation computers, disks and other storage media, filing
cabinets or other work areas, is subject to inspection by the Company at any
time with or without notice. In the event of the termination of my employment
for any reason, I will deliver to the Company all files, letters, notes,
memoranda, reports, records, data, sketches, drawings, notebooks, layouts,
charts, quotations and proposals, specification sheets, models, prototypes, or
other written, photographic or other tangible material containing Proprietary
Information, and other materials of any nature pertaining to the Proprietary
Information of the Company and to my work, and will not take or keep in my
possession any of the foregoing or any copies.

 

7.               Enforcement of Intellectual Property Rights. I will cooperate
fully with the Company, both during and after my employment with the Company,
with respect to the procurement, maintenance and enforcement of Intellectual
Property Rights in Company-Related Developments. I will sign, both during and
after the term of this Agreement, all papers, including without limitation
copyright applications, patent applications, declarations, oaths, assignments of
priority rights, and powers of attorney, which the Company may deem necessary or
desirable in order to protect its rights and interests in any Company-Related
Development. If the Company is unable, after reasonable effort, to secure my
signature on any such papers, I hereby irrevocably designate and appoint each
officer of the Company as my agent and attorney-in-fact to execute any such
papers on my behalf, and to take any and all actions as the Company may deem
necessary or desirable in order to protect its rights and interests in any
Company-Related Development.

 

15

 

 

8.               Non-Competition and Non-Solicitation. In order to protect the
Company’s Proprietary Information and good will, during my employment and for a
period of twelve (12) months following the termination of my employment for any
reason (the “Restricted Period”), I will not directly or indirectly, whether as
owner, partner, shareholder, director, manager, consultant, agent, employee,
co-venturer or otherwise, engage, participate or invest in any business activity
anywhere in the United States that is competitive with the Company’s “Business”;
provided that this shall not prohibit any possible investment in publicly traded
stock of a company representing less than one percent of the stock of such
company. The Company’s “Business” is defined as the development of stem cell
derived therapeutics for ocular disorders. In addition, during the Restricted
Period, I will not, directly or indirectly, in any manner, other than for the
benefit of the Company, (a) call upon, solicit, divert, take away, accept or
conduct any business from or with any of the customers or prospective customers
of the Company or any of its suppliers, and/or (b) solicit, entice, attempt to
persuade any other employee or consultant of the Company to leave the Company
for any reason or otherwise participate in or facilitate the hire, directly or
through another entity, of any person who is employed or engaged by the Company
or who was employed or engaged by the Company within six (6) months of any
attempt to hire such person. I acknowledge and agree that if I violate any of
the provisions of this paragraph 8, the running of the Restricted Period will be
extended by the time during which I engage in such violation(s).

 

9.               Government Contracts. I acknowledge that the Company may have
from time to time agreements with other persons or with the United States
Government or its agencies which impose obligations or restrictions on the
Company regarding inventions made during the course of work under such
agreements or regarding the confidential nature of such work. I agree to comply
with any such obligations or restrictions upon the direction of the Company. In
addition to the rights assigned under paragraph 5, I also assign to the Company
(or any of its nominees) all rights which I have or acquired in any
Developments, full title to which is required to be in the United States under
any contract between the Company and the United States or any of its agencies.

 

10.            Prior Agreements. I hereby represent that, except as I have fully
disclosed previously in writing to the Company, I am not bound by the terms of
any agreement with any previous employer or other party to refrain from using or
disclosing any trade secret or confidential or proprietary information in the
course of my employment with the Company or to refrain from competing, directly
or indirectly, with the business of such previous employer or any other party. I
further represent that my performance of all the terms of this Agreement as an
employee of the Company does not and will not breach any agreement to keep in
confidence proprietary information, knowledge or data acquired by me in
confidence or in trust prior to my employment with the Company. I will not
disclose to the Company or induce the Company to use any confidential or
proprietary information or material belonging to any previous employer or
others.

 

11.            Remedies Upon Breach. I understand that the restrictions
contained in this Agreement are necessary for the protection of the business and
goodwill of the Company and I consider them to be reasonable for such purpose.
Any breach of this Agreement is likely to cause the Company substantial and
irrevocable damage and therefore, in the event of such breach, the Company, in
addition to such other remedies which may be available, will be entitled to
specific performance and other injunctive relief, without the posting of a bond.

 

12.            Use of Voice, Image and Likeness. I give the Company permission
to use any and all of my voice, image and likeness, with or without using my
name, in connection with the products and/or services of the Company, for the
purposes of advertising and promoting such products and/or services and/or the
Company, and/or for other purposes deemed appropriate by the Company in its
reasonable discretion, except to the extent expressly prohibited by law.

 

13.            Publications and Public Statements. I will obtain the Company’s
written approval before publishing or submitting for publication any material
that relates to my work at the Company and/or incorporates any Proprietary
Information. To ensure that the Company delivers a consistent message about its
products, services and operations to the public, and further in recognition that
even positive statements may have a detrimental effect on the Company in certain
securities transactions and other contexts, any statement about the Company
which I create, publish or post during my period of employment and for six (6)
months thereafter, on any media accessible by the public, including but not
limited to electronic bulletin boards and Internet-based chat rooms, must first
be reviewed and approved by an officer of the Company before it is released in
the public domain.

 

16

 

 

14.            No Employment Obligation. I understand that this Agreement does
not create an obligation on the Company or any other person to continue my
employment. I acknowledge that, unless otherwise agreed in a formal written
employment agreement signed on behalf of the Company by an authorized officer,
my employment with the Company is at will and therefore may be terminated by the
Company or me at any time and for any reason, with or without cause.

 

15.            Survival and Assignment by the Company. I understand that my
obligations under this Agreement will continue in accordance with its express
terms regardless of any changes in my title, position, duties, salary,
compensation or benefits or other terms and conditions of employment. I further
understand that my obligations under this Agreement will continue following the
termination of my employment regardless of the manner of such termination and
will be binding upon my heirs, executors and administrators. The Company will
have the right to assign this Agreement to its affiliates, successors and
assigns. I expressly consent to be bound by the provisions of this Agreement for
the benefit of the Company or any parent, subsidiary or affiliate to whose
employ I may be transferred without the necessity that this Agreement be
resigned at the time of such transfer.

 

16.            Post-Employment Notification. For twelve (12) months following
termination of my employment, I will notify the Company of any change in my
address and of each subsequent employment or business activity, including the
name and address of my employer or other post-Company employment plans and the
nature of my activities.

 

17.            Disclosure to Future Employers. I will provide a copy of this
Agreement to any prospective employer, partner or co-venturer prior to entering
into an employment, partnership or other business relationship with such person
or entity.

 

18.            Severability. In case any provisions (or portions thereof)
contained in this Agreement shall, for any reason, be held invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect the other provisions of this Agreement, and this Agreement
shall be construed as if such invalid, illegal or unenforceable provision had
never been contained herein. If, moreover, any one or more of the provisions
contained in this Agreement shall for any reason be held to be excessively broad
as to duration, geographical scope, activity or subject, it shall be construed
by limiting and reducing it, so as to be enforceable to the extent compatible
with the applicable law as it shall then appear.

 

19.            Interpretation. This Agreement will be deemed to be made and
entered into in the Commonwealth of Massachusetts, and will in all respects be
interpreted, enforced and governed under the laws of the Commonwealth of
Massachusetts. I hereby agree to consent to personal jurisdiction of the state
and federal courts in the Commonwealth of Massachusetts for purposes of
enforcing this Agreement, and waive any objection that I might have to personal
jurisdiction or venue in those courts.

 

 

[End of Text]

 

 

17

 

 

I UNDERSTAND THAT THIS AGREEMENT AFFECTS IMPORTANT RIGHTS. BY SIGNING BELOW, I
CERTIFY THAT I HAVE READ IT CAREFULLY AND AM SATISFIED THAT I UNDERSTAND IT
COMPLETELY.

 

IN WITNESS WHEREOF, the undersigned has executed this agreement as a sealed
instrument as of the date set forth below.

 

Signed: __________________________________________________________

Paul K. Wotton, Ph.D

 

Type or print name: _____________________

 

 

 

18

 

 

EXHIBIT A

 

To: ADVANCED CELL TECHNOLOGY, INC.

 

From: Paul K. Wotton, Ph.D

 

Date: _____________________

 

SUBJECT: Prior Inventions

 

The following is a complete list of all inventions or improvements relevant to
the subject matter of my employment by the Company that have been made or
conceived or first reduced to practice by me alone or jointly with others prior
to my engagement by the Company:

 

o No inventions or improvements

 

o See below:

_______________________________________________________________

_______________________________________________________________

_______________________________________________________________

 

o Additional sheets attached

 

The following is a list of all patents and patent applications in which I have
been named as an inventor:

 

o None

 

o See below:

_______________________________________________________________

_______________________________________________________________

_______________________________________________________________

 

 

19