Exhibit 10.1

 

 

 

SETTLEMENT AGREEMENT

 

This Settlement Agreement (the “Agreement”) is made this 3rd day of June, 2014,
by and between Gary D. Aronson (“Aronson”), John S. Gorton, individually and as
trustee of the John S. Gorton Separate Property Trust dated March 3, 1993
(“Gorton”) (Aronson and Gorton are each a “Plaintiff”; together, the
“Plaintiffs”), herronlaw apc, attorneys for Aronson (“Herron”), Miller and
Steele LLP, attorneys for Gorton (“Miller/Steele”), Michael A. Bourke, attorney
for both Aronson and Gorton (“Bourke”), and Advanced Cell Technology, Inc.
(“ACT”), each a “Party” (and collectively, “Parties”) to this Agreement.

 

WHEREAS, ACT issued to Aronson a warrant dated September 14, 2005 for 375,756
shares of common stock of ACT (“Aronson Warrant”) and Aronson exercised the
Aronson Warrant by letter to ACT dated August 25, 2006 (the “Aronson Exercise”);

 

WHEREAS, ACT issued to Gorton a warrant dated September 14, 2005 for 46,970
shares of common stock of ACT (“Gorton Warrant”) and Gorton exercised the Gorton
Warrant by letter to ACT dated August 25, 2006 (the “Gorton Exercise”);

 

WHEREAS, the Aronson Warrant and the Gorton Warrant (each, a “Warrant”;
together, the “Warrants”) each contain a provision that required ACT to issue
additional securities to each of Aronson and Gorton after the Warrants were
exercised upon the occurrence of certain events (the “Post-Exercise Adjustment
Provision”);

 

WHEREAS, a dispute arose between Aronson and Gorton, on the one hand, and ACT,
on the other, regarding the number of shares of ACT common stock to which
Aronson and Gorton were entitled pursuant to the Post-Exercise Adjustment
Provision of the Warrants;

 

WHEREAS, on or about August 23, 2011, Aronson filed suit against ACT, now
pending in the United States District Court for the District of Massachusetts as
Aronson v. Advanced Cell Technology, Case Number: 1:11-cv-11492-NMG (the
“Aronson Action”) seeking, among other things, to enforce the Post-Exercise
Adjustment Provision;

 

WHEREAS, on or about August 25, 2011, Gorton filed suit against ACT, now pending
in the United States District Court for the District of Massachusetts as Gorton,
as Trustee of the John S. Gorton Separate Property Trust Dated March 3, 1993 v.
Advanced Cell Technology, Case Number: 1:11-cv-11515-NMG (the “Gorton Action”)
seeking, among other things, to enforce the Post-Exercise Adjustment Provision;

 

WHEREAS, the Court consolidated the Aronson Action and Gorton Action in April
2012 (collectively, the Aronson Action and the Gorton Action are the
“Consolidated Actions”)

 

WHEREAS, Aronson and Gorton filed Third Amended Complaints in September 2013,
asserting substantively identical claims against ACT for alleged breaches of the
Post-Exercise Adjustment Provision of the Warrants based on ACT’s alleged
issuance of: a stock warrant to William Woodward (the “Woodward Warrant”) (First
Claim for Relief); a stock warrant to Deron Colby (the “Colby Warrant”) (Second
Claim for Relief); extensions of stock warrants to Andwell, LLC and Nancy
Burrows (the “Andwell/Burrows Warrants”) (Third Claim for Relief); and stock to
Outboard Investments, Ltd., Ice Capital Holdings, Ltd., and Tuxedo Holdings,
Ltd. under Section 3(a)(10) of the Securities Act of 1933 (the “Section 3(a)(10)
Transactions”) (Fourth Claim for Relief);

 

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WHEREAS, ACT filed an Answer to the Aronson Third Amended Complaint and a Motion
to Dismiss the Gorton Third Amended Complaint for lack of subject matter
jurisdiction, which motion is still pending; and

 

WHEREAS, without admitting any fault or liability, the Parties have agreed that
it is in their mutual best interest to settle their disputes, and, therefore,
now fully and finally settle and compromise all claims, matters, disputes, and
causes of action between them, and enter into certain promises and agreements
between them as set forth below,

 

NOW, THEREFORE, for and in consideration of the recitals set forth above, which
are incorporated by reference and deemed to be substantive parts of this
Agreement, the mutual promises contained herein, the consideration set forth
below, and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, and intending to be legally bound, the Parties
agree as follows:

 

1.Issuance of Shares.

 

(a) Within five (5) business days of the Effective Date, ACT shall issue and
deliver to Aronson 269,766,667 shares (the “Aronson Shares”) of common stock of
ACT, par value $0.001 per share (“Common Stock”), and to Gorton 33,133,333
shares of Common Stock of ACT (the “Gorton Shares” and together with the Aronson
Shares, the “Shares”). Aronson and Gorton, each for himself, and ACT each hereby
agrees and acknowledges that the issuance of the Shares satisfies in full each
Plaintiff’s respective claimed entitlement to securities of ACT pursuant to the
application of the Post-Exercise Adjustment Provision of his Warrant, and
represents full and complete satisfaction of all alleged obligations of ACT to
Aronson and Gorton under each Plaintiff’s Warrant. ACT, Aronson and Gorton each
acknowledges and agrees (and ACT shall take no contrary position) that all
Shares are being issued pursuant to the terms of the Warrants and that
Plaintiffs have paid no additional consideration to ACT for the shares. ACT
represents and warrants that, upon the execution and delivery of this Agreement
by the Parties, and the issuance and delivery of the Shares pursuant hereto, the
Shares shall be duly and validly issued, fully paid and non-assessable shares of
Common Stock of ACT. The Parties shall cooperate in good faith to effect the
issuance of such Shares.

 

(b) Separately, within five (5) business days of the Effective Date, ACT shall
issue and deliver 68,266,667 shares of Common Stock to Herron, 8,533,333 shares
of Common Stock to Miller/Steele, and 4,300,000 shares of Common Stock to
Bourke, in each case as payment in full satisfaction of any alleged obligation
on the part of ACT to pay any legal fees incurred by each of Aronson and Gorton
in connection with their respective enforcement of the terms of the Warrants.
The Parties shall cooperate in good faith to effect the issuance of such ACT
Common Stock.

 

(c) Each of Aronson, Gorton, Herron, Miller/Steele, and Bourke, on behalf of
himself/itself only, hereby represents and warrants to ACT that:

 

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(i) He/it is an “accredited investor” as defined in Rule 501 of Regulation D
under the Securities Act of 1933, as amended (the “Securities Act”).

 

(ii) He/it is receiving his/its respective shares of ACT Common Stock for
his/its own account, for investment only and not with a view to, or with any
present intention of, effecting a distribution of such ACT Common Stock or any
portion thereof except pursuant to a registration or an available exemption
under Federal or applicable state securities laws.

 

(iii) He/it has such knowledge and experience in financial, tax and business
matters as to enable him/it to evaluate the merits and risks of an investment in
ACT and to make an informed investment decision with respect thereto.

 

iv) He/it is able to bear the economic risk of an investment in such ACT Common
Stock.

 

2.General Release of Claims.

 

(a) Plaintiffs’ Release. Upon the Effective Date, and to the fullest extent
permitted by law, each of Aronson, Gorton, Herron, Miller/Steele, and Bourke,
for themselves individually and on behalf of their respective predecessors,
successors, assigns, attorneys, heirs, estates, co-trustees, and beneficiaries
(collectively hereinafter, the “Plaintiff Releasing Parties”), do hereby
release, remise, exonerate, and forever discharge ACT, its past, current, and
future predecessors, successors, parents, holding companies, subsidiaries,
affiliates, divisions, officers, directors, employees, attorneys, owners,
agents, representatives, and assigns (collectively hereinafter, the “ACT
Released Parties”) of and from any and all claims, debts, demands, rights and
causes of action, liabilities, suits, dues, duties, sums of money, accounts,
reckonings, covenants, contracts, agreements, promises, damages, interest,
attorneys’ fees, judgments, executions, liabilities, and obligations of every
and all kind, name, and nature whatsoever, whether in contract, tort, or equity,
by statute, or otherwise, under local, state, federal, or foreign law, whether
known or unknown, suspected or unsuspected, accrued or unaccrued, contingent or
fixed, which the Plaintiff Releasing Parties ever had, now have, or may claim to
later have, for, upon, or by reason of any matter, cause, or thing whatsoever,
from the beginning of the world up to and including 11:59:59 p.m. on the
Effective Date of this Agreement, including but not limited to all claims and
allegations that were, have been, or could have been asserted by Aronson or
Gorton in the Consolidated Actions, including all claims and allegations related
to the Woodward Warrant, the Colby Warrant, the Andwell/Burrows Warrants, and
the Section 3(a)(10) Transactions, but excluding all claims and rights relating
to enforcement of ACT’s obligations under this Agreement (collectively, the “
Plaintiff Claims”).

 

Plaintiff Releasing Parties acknowledge that they may later discover facts
different from or in addition to those now known or believed by them to be true
with respect to the Plaintiff Claims. The Plaintiff Releasing Parties expressly
agree to assume the risk of the possible discovery of additional or different
facts, and agree that this Agreement shall be and remain effective in all
respects regardless of the later discovery of additional or different facts.

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(b) ACT Release. Upon the Effective Date, and to the fullest extent permitted by
law, ACT, for itself and on behalf of the ACT Released Parties (collectively,
the “ACT Releasing Parties”), does hereby release, remise, exonerate, and
forever discharge the Plaintiff Releasing Parties of and from any and all
claims, debts, demands, rights and causes of action, liabilities, suits, dues,
duties, sums of money, accounts, reckonings, covenants, contracts, agreements,
promises, damages, interest, attorneys’ fees, judgments, executions,
liabilities, and obligations of every and all kind, name, and nature whatsoever,
whether in contract, tort, or equity, by statute, or otherwise, under local,
state, federal, or foreign law, whether known or unknown, suspected or
unsuspected, accrued or unaccrued, contingent or fixed, which the ACT Releasing
Parties ever had, now have, or may claim to later have, for, upon, or by reason
of any matter, cause, or thing whatsoever, from the beginning of the world up to
and including 11:59:59 p.m. on the Effective Date of this Agreement, but
excluding all claims and rights relating to enforcement of Plaintiffs’
obligations under this Agreement (collectively, the “ACT Claims”). (The
Plaintiff Claims and ACT Claims are, collectively, “Claims.”)

 

The ACT Releasing Parties acknowledge that they may later discover facts
different from or in addition to those now known or believed by them to be true
with respect to the ACT Claims. The ACT Releasing Parties expressly agree to
assume the risk of the possible discovery of additional or different facts, and
agree that this Agreement shall be and remain effective in all respects
regardless of the later discovery of additional or different facts.

 

3.Dismissal of Consolidated Actions.

 

Within five (5) business days of the Effective Date, Plaintiffs shall file a
“Stipulation of Dismissal with Prejudice” in the form attached as Exhibit 1 to
this Agreement.

 

4.Stand-still Agreement.

 

Unless approved in advance in writing by the Board of Directors of ACT, each
Plaintiff agrees that neither he nor any person, entity, or agent acting on his
behalf or in concert with him will, for a period of twelve (12) months after the
Effective Date of this Agreement, directly or indirectly:

 

(a) acquire or agree, offer, seek, or propose to acquire, or cause to be
acquired, ownership (including, but not limited to, beneficial ownership as
defined in Rule 13d-1 under the Securities Exchange Act of 1934, as amended (the
“Exchange Act”)) of any of the material assets or businesses of ACT or any of
its subsidiaries or affiliates or of any securities of ACT or any of its
subsidiaries or affiliates (except as set forth in Section 1 of this Agreement),
or any rights or options to acquire any such ownership (including from a third
party); provided, however, that each Plaintiff shall have the right to
participate, on the same terms and conditions applicable to other stockholders
of ACT, in any rights or similar offering or stock dividend that is available
generally to all stockholders of ACT; provided, that for the avoidance of doubt,
neither the issuance of the securities provided for herein nor a sale by
Plaintiffs of any Common Stock of ACT shall be in contravention of this Section
4; provided, further, that notwithstanding anything else contained herein to the
contrary, on and after the Effective Date, (i) Aronson may acquire such number
of (A) shares of ACT Common Stock and/or stock purchase rights or similar rights
(collectively, “Rights”) that may be issued by ACT to all holders of its Common
Stock from time to time in the future and/or (B) other shares of ACT Common
Stock and/or Rights from third parties, that would result in Aronson, together
with his Affiliates, beneficially owning in the aggregate not more than 8.34% of
the then- outstanding Common Stock of the Company on a fully-diluted basis; (ii)
Gorton may acquire such number of (A) shares of ACT Common Stock and/or Rights
that may be issued by ACT to all holders of its Common Stock from time to time
in the future and/or (B) other shares of ACT Common Stock and/or Rights from
third parties that would result in Gorton, together with his Affiliates,
beneficially owning in the aggregate not more than 1.03% of the then-outstanding
Common Stock of the Company on a fully-diluted basis; and (iii) nothing herein
shall be deemed to grant either Plaintiff or any Affiliate of a Plaintiff any
preemptive right related to, or right to participate in, any financing
transaction of ACT that does not involve the issuance of ACT Common Stock and/or
Rights by ACT to all holders of its Common Stock; or

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(b) make, or in any way participate in, any “solicitation” of “proxies” (as such
terms are used in the Exchange Act) to vote or seek to advise or influence in
any manner whatsoever any person or entity with respect to the voting of any
securities of ACT or any of its subsidiaries or affiliates, except to the extent
that either Plaintiff is deemed to be part of a “group” with the other Plaintiff
under Rule 13d-3 of the Exchange Act; or

 

(c) form, join, or in any way participate in a “group” other than with the other
Plaintiff (within the meaning of Rule 13d-3under the Exchange Act) with respect
to any voting securities of ACT or any of its subsidiaries; or

 

(d) arrange, or in any way participate in, any financing for the purchase of any
debt securities, voting securities, or securities convertible or exchangeable
into or exercisable for any voting securities or assets of ACT or any of its
subsidiaries or affiliates; or

 

(e) otherwise act, whether alone or in concert with others, to seek to propose
any merger, business combination, tender or exchange offer, restructuring,
recapitalization, liquidation of, or similar transaction with or involving ACT
or any of its subsidiaries or affiliates or otherwise act, whether alone or in
concert with others, to seek to control, change, or influence the management,
Board of Directors, or policies of ACT, or to nominate any person as a Director
of ACT, or to propose any matter to be voted upon by the stockholders of ACT; or

 

(f) solicit, negotiate with, or provide any information to, any person with
respect to a merger, business combination, tender or exchange offer,
restructuring, recapitalization, liquidation of, or similar transaction with or
involving ACT or any of its subsidiaries or affiliates, or any other acquisition
of ACT or any of its subsidiaries or affiliates, any acquisition of voting
securities of all or any portion of the assets of ACT or any of its subsidiaries
or affiliates, or any other similar transaction; or

 

(g) announce an intention to undertake, or enter into any discussions,
negotiations, arrangements, or understandings with any third party with respect
to any of the foregoing; or

 

(h) disclose any intention, plan, or arrangement in connection with any of the
foregoing; or

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(i) advise, assist, or encourage any other person in connection with any of the
foregoing; provided, however, that the foregoing shall not prohibit Plaintiffs
from asserting or protecting their rights as stockholders of ACT in the event of
the commencement of any bankruptcy proceeding or assignment for the benefit of
creditors involving ACT.

 

5.Securities Laws Matters.

 

(a) Each of the Plaintiffs, Herron, Miller/Steele, and Bourke acknowledges for
himself/itself that the ACT Common Stock issued to him/it hereunder has not been
registered under the Securities Act or any state securities law; that any
disposition of such ACT Common Stock is subject to restrictions imposed by
federal and state law; and that the certificates representing such ACT Common
Stock will bear a restrictive legend to such effect.

 

(b) ACT represents and warrants to Plaintiffs that it is compliant and current
with the reporting requirements of Rule 144(c) under the Exchange Act as of the
Effective Date.

 

(c) ACT agrees that, upon each occasion of a delivery of an opinion of counsel
for one or more Plaintiffs, substantially in the form attached hereto as Exhibit
2, or in a form reasonably satisfactory to ACT, which form shall comply with
industry standards for an opinion of this type, that Plaintiffs’ or their
affiliates’ sale or transfer of ACT Common Stock issued under Section (1)(a)
above is exempt from the registration requirements of the Securities Act, ACT
shall promptly, but in no event later than two (2) trading days after the
delivery of such opinion, issue a blanket letter of instruction to its transfer
agent (the “Blanket Letter”), substantially in the form attached hereto as
Exhibit 3, instructing it to remove any restrictive legend or other transfer
restrictions or stop order denoted on ACT’s stock ledger applicable to such ACT
Common Stock.

 

6.No Assignment.

 

Each of the Plaintiffs and ACT hereby represents and warrants to the others that
they are the only lawful owners of all their respective Claims and that no
portion of any of their respective Claims or Shares to be issued pursuant to
Section 1(a) hereunder has been assigned or conveyed to any other person, party,
or entity. The Parties agree that the obligations imposed by this Agreement are
not assignable.

 

7.Confidentiality.

 

The Parties agree that this Agreement, the terms hereof, and the circumstances
and facts related to the allegations and Claims made in the Consolidated Actions
shall remain strictly confidential. The Parties hereby represent, warrant, and
agree that they shall not disclose this Agreement, or the terms hereof, or the
circumstances and facts related to the allegations and Claims made in the
Consolidated Actions to anyone not a party to this Agreement, whether orally or
in writing; provided, however, that the above- referenced restrictions shall not
apply to: (1) the Parties’ confidential disclosures to their attorneys,
accountants, insurers, or other professionals to the extent necessary for tax or
accounting purposes; (2) the Parties’ confidential disclosures to the extent
required by tax reporting laws; (3) the Parties’ disclosures to the extent
necessary to enforce this Agreement; (4) the Parties’ disclosures to the extent
required by an order or subpoena issued by a court, agency, or other body of
competent jurisdiction (provided, however, that all other Parties are given
prompt notice of any such order or subpoena, except as prohibited by law); (5)
the extent disclosures are otherwise required by law, including federal or state
securities laws and the requirement to file this Agreement as an exhibit to a
periodic or current report under the Exchange Act; or (6) the extent such
information is generally publicly known through no fault of the disclosing
Party. In response to any inquiries, except by the SEC, a grand jury or law
enforcement agencies, the Parties may only report that this matter was
“resolved” or “settled.” Anything to the contrary notwithstanding, ACT shall
promptly file a Form 8-K to disclose the material terms of this Agreement and
ACT acknowledges and agrees (and shall take no contrary position) that neither
Plaintiff is in a fiduciary relationship with ACT or owes a duty to ACT not to
trade in ACT securities on the basis of his knowledge of this Agreement and the
facts and circumstances related thereto , and any other information provided to
Plaintiffs by ACT or any of its affiliates during the course of settlement
negotiations and/or mediation.

 

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8.Non-Disparagement.

 

The Parties agree that they will not, either by conversation or any other oral
expression, by letter or any other written expression, or by any other deed or
act of communication, privately or publicly, disparage, criticize, condemn, or
impugn the reputation or character of any other Party to this Agreement
(including his or its predecessors, successors, parents, holding companies,
subsidiaries, affiliates, divisions, officers, directors, employees, attorneys,
owners, agents, representatives, assigns, heirs, legatees, personal
representatives, executors, trustees, beneficiaries, or receivers) or any of
his/its actions, inactions, or writings related in any way to the Claims, the
Consolidated

Actions or the allegations made therein, or the subject matter thereof.

 

9.Miscellaneous Provisions.

 

(a) This Agreement shall not be construed against any Party on the basis that
such Party was responsible for the drafting of any section alleged to be
ambiguous or uncertain.

 

(b) This Agreement represents and contains the entire and exclusive agreement
and understanding with respect to the subject matter of this Agreement and
supersedes any and all prior and contemporaneous oral and written agreements,
statements, releases, understandings, representations, inducements, promises,
warranties, and conditions between the Parties or their counsel. The Parties’
rights and obligations shall be governed solely and exclusively by this
Agreement.

 

(c) This Agreement can be amended, altered, or modified only by a written
agreement executed by all of the Parties.

 

(d) The Parties expressly acknowledge that the terms stated in this Agreement
are the only consideration for signing said Agreement, and that no additional
promise, inducement, or representation of any kind with respect thereto has been
or will be made by or between the Parties or their counsel, except as provided
in Subsection 9(c) above.

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(e) This Agreement shall be governed by the internal laws of the Commonwealth of
Massachusetts, without reference to its conflict-of-law principles.

 

(f) This Agreement may be executed in duplicate originals, each of which shall
constitute an original and all of which taken together shall constitute a single
Agreement. Facsimile and PDF copies of signatures shall be considered and given
the effect of original signatures.

 

(g) The headings of this Agreement are for purposes of reference only and shall
not limit or otherwise affect the meaning hereof.

 

(h) Each Party hereto has been represented by independent counsel of that
Party’s own choosing in connection with the negotiation and execution of this
Agreement. Each Party expressly represents and warrants to the others that he/it
is entering into this Agreement based upon his/its own investigation and
evaluation and after consultation with counsel of his/its own choosing. Each
Party acknowledges and agrees that he/it is not entering into this Agreement in
reliance upon any statement or representation made by any other Party, or the
lack of any statement or representation made by any other Party, other than the
statements or representations expressly made in this Agreement.

 

(i) Except as provided in Section 1(b), all Parties shall be responsible for
their own costs and attorneys’ fees incurred in connection with Claims, the
Consolidated Actions, and this Agreement.

 

(j) This Agreement shall bind and inure to the benefit of the Parties and their
successors, assigns, heirs, legatees, personal representatives, executors,
trustees, beneficiaries, and receivers.

 

(k) The Effective Date shall be the latest date on which a Party has executed
this Agreement.

 

(l) The Parties hereby represent and warrant that they have all requisite power
and authority to execute and deliver this Agreement and to perform the
obligations hereunder. ACT represents and warrants to Plaintiffs that its
execution and performance of this Agreement does not, with the passage of time
or otherwise, violate or cause a breach of any material agreement to which ACT
or its properties is subject, or require the consent of any third party.

 

(m) Each Party acknowledges and represents that he/it has read this Agreement
carefully and in its entirety and that he/it has knowingly and voluntarily,
without duress or undue influence and after consulting with his/its independent
legal counsel, executed this Agreement.

 

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10.No Waiver.

 

The failure of any of the Parties to enforce at any time any provision of this
Agreement is not a waiver of that provision, nor does it affect the validity of
this Agreement or any part thereof or any right thereafter to enforce each and
every provision. No waiver of any breach of this Agreement shall be held to be a
waiver of any other breach.

 

11.Severability.

 

If any clause or provision of this Agreement is found by a court of competent
jurisdiction to be void, voidable, or unenforceable, such finding shall not
affect the enforceability of the remainder of this Agreement.

 

IN WITNESS WHEREOF, the Parties hereto set their hands on the dates indicated:

 

 

    /s/ illegible /s/ Gary D. Aronson Witness GARY D. ARONSON     Date:
06/02/2014           /s/ illegible /s/ John S. Gorton Witness JOHN S. GORTON, AS
TRUSTEE OF THE JOHN S. GORTON SEPARATE Date: 06/02/2014 PROPERTY TRUST DATED
MARCH 3, 1993           ADVANCED CELL TECHNOLOGY, INC.         /s/ illegible By:
/s/ Edward Myles Witness         Title: CFO and COO Date: 06/04/2014            
herronlaw apc         /s/ illegible By: /s/ Matthew Herron Witness Matthew
Herron     Date: 06/03/2014  

 

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  MILLER AND STEELE LLP         /s/ illegible By: /s/ Robert Steele Witness
Robert Steele     Date: 06/02/2014           /s/ illegible /s/ Michael A. Bourke
Witness MICHAEL A. BOURKE     Date: 06/03/2014  

 

 

 

 

 

 

 

 

 

 

 

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