ex10129.htm


    Exhibit 10.129


    SUBSCRIPTION
AGREEMENT

     

     

    THIS SUBSCRIPTION AGREEMENT
(this “Agreement”), is
dated as of November 12, 2009, by and among Advanced Cell Technology, Inc., a
Delaware corporation (the “Company”), and the subscribers
identified on the signature page hereto (each a “Subscriber” and collectively
“Subscribers”).

    


    WHEREAS, the Company and the
Subscribers are executing and delivering this Agreement in reliance upon an
exemption from securities registration afforded by the provisions of Section
4(2), Section 4(6) and/or Regulation D (“Regulation D”) as promulgated
by the United States Securities and Exchange Commission (the “Commission”) under the
Securities Act of 1933, as amended (the “1933 Act”).

     

    WHEREAS, the parties desire
that, upon the terms and subject to the conditions contained herein, the Company
shall issue and sell to the Subscribers, as provided herein, and the
Subscribers, in the aggregate, shall purchase minimum of $2,000,000 (the "Purchase Price") and a minimum
of $2,400,000 (the “Principal
Amount”) of:

     

    (i)           Promissory
notes of the Company (“Note” or “Notes”), a form of which is
annexed hereto as Exhibit
A, convertible into shares of the Company's Common Stock, $0.001 par
value (the "Common
Stock") at a per share conversion price set forth in the Note (“Conversion
Price”);

     

    (ii)           Share
purchase warrants (the “Warrants”), in the form
annexed hereto as Exhibit
B, to purchase shares of the Company’s Common Stock (the “Warrant Shares”);
and

     

    (iii)           “Additional Investment Rights”
granting the Subscriber the right to purchase (y) Secured Convertible Promissory
Notes (“AIR Notes”) in
the form annexed hereto as Exhibit C, convertible into
Common Stock on the terms and conditions set forth in the Additional Investment
Rights Certificate annexed hereto as Exhibit D, such Common Stock
issuable upon conversion of the AIR Notes being the “AIR Notes Conversion Shares”,
and (z) “Class B
Warrants”, in the form annexed hereto as Exhibit E, representing the
right to purchase Common Stock, with such Common Stock being the “Class B Warrant
Shares”.

     

    The Notes
and the  AIR Notes are collectively referred to as “Notes”.  Shares of
Common Stock issuable upon conversion of the Notes and AIR Notes are
collectively referred to herein as “Conversion Shares” or the
“Shares”.

     

    The Class
A Warrants and Class B Warrants are collectively referred to herein as the
“Warrants.”

     

    The Class
A Warrant Shares and Class B Warrant Shares are collectively referred to herein
as the “Warrant
Shares.”

     

    The
Conversion Shares or Shares, Warrants and the Warrant Shares are collectively
referred to herein as the "Securities"; and

     

    WHEREAS, the aggregate
proceeds of the sale of the Notes and the Warrants contemplated hereby shall be
held in escrow pursuant to the terms of a Funds Escrow Agreement to be executed
by the parties substantially in the form attached hereto as Exhibit F (the “Escrow
Agreement”).

     

    NOW, THEREFORE, in
consideration of the mutual covenants and other agreements contained in this
Agreement the Company and the Subscribers hereby agree as follows:

     

    
      
         

      

      
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    1.           (a)           Closing
Dates.  The “Initial Closing Date” shall be
the date that the Initial Closing Principal Amount is transmitted by wire
transfer or otherwise credited to or for the benefit of the
Company.  The consummation of the transactions contemplated herein
shall take place at the offices of Grushko & Mittman, P.C., 551 Fifth
Avenue, Suite 1601, New York, New York 10176, upon the satisfaction or waiver of
all conditions to closing set forth in this Agreement.  Each of the
Initial Closing Date and Second Closing Date (as defined in Section 1(c) below)
is referred to herein as a “Closing Date.” The foregoing
notwithstanding, the Company shall have until Friday, November 13, 2009 to close
on additional Initial Closing Notes (as defined below) in one or more
closings.  The Notes and Warrants to be issued on the additional closing
dates will have Maturity Dates and exercise periods, respectively, dated as of
each of the additional Initial Closing Dates.  The first such Initial
Closing Date shall be the Initial Closing Date for all time sensitive periods
(excluding Maturity Dates and Issue Dates) calculated as of the Closing
Date.

     

    (b)           Initial
Closing.  Subject to the satisfaction or waiver of the terms
and conditions of this Agreement, on the Initial Closing Date, each Subscriber
shall purchase and the Company shall sell to each Subscriber a Note in the
principal amount set forth on the signature page hereto (“Initial Closing Notes”), and
Warrants as described in Section 2 of this Agreement (“Initial Closing
Warrants”).  The principal amount of the Notes to be purchased
by the Subscribers on the Initial Closing Date shall be at least One Million Two
Hundred Thousand Dollars ($1,200,000) (the “Initial Closing Principal
Amount”).

    


    (c)           Second
Closing.  The “Second Closing Date” shall be
within ninety (90) days of the Initial Closing Date after the compliance with
the Second Closing Condition as defined in Section 1(d) of this Agreement (the
“Second Closing
Date”).  Subject to the satisfaction or waiver of the
conditions to Closing, on the Second Closing Date, each Subscriber shall
purchase and the Company shall sell to each Subscriber a Note in the Principal
Amount set forth on the signature page hereto (“Second Closing Notes”) and
Warrants as described in Section 2 of this Agreement (“Second Closing
Warrants”).  The Second Closing Notes shall be of the same
tenor as the Notes issuable on the Initial Closing Date and have the same
maturity date as the Initial Closing Notes.  The principal amount of
the Notes to be purchased by the Subscribers on the Second Closing Date shall be
at least One Million Two Hundred Thousand Dollars ($1,200,000) (the “Second Closing Principal
Amount”).

    


    (d)           Conditions to Second
Closing.  The occurrence of the Second Closing is expressly
contingent on (i) the truth and accuracy, on the Second Closing Date of the
representations and warranties of the Company and Subscriber contained in this
Agreement except for changes that do not constitute a Material Adverse Effect
(as defined in Section 5(a)), (ii) continued compliance with the covenants of
the Company set forth in this Agreement, and (iii) the non-occurrence of any
Event of Default (as defined in the Note and this Agreement) or an event that
with the passage of time or the giving of notice could become an Event of
Default.

     

    (e)           Second Closing
Deliveries.  On the Second Closing Date, the Company will
deliver a certificate (“Second
Closing Certificate”) signed by its chief executive officer and chief
financial officer (i) representing the truth and accuracy of all the
representations and warranties made by the Company contained in this Agreement,
as of the Initial Closing Date, and the Second Closing Date as if such
representations and warranties were made and given on all such dates, except for
changes that do not constitute a Material Adverse Effect, (ii) certifying that
the information contained in the schedules and exhibits hereto is substantially
accurate as of the Second Closing Date, except for changes that do not
constitute a Material Adverse Effect, (iii) adopting and renewing the covenants
and representations set forth in Sections 5, 8, 9, 10, 11, and 12 of this
Agreement in relation to the Second Closing Date, Second Closing Notes, and
Second Closing Warrants, and (iv) certifying that an Event of Default or an
event that with the passage of time or the giving of notice could become an
Event of Default except as described in Section 1(c) above, has not
occurred.  A legal opinion nearly identical to the legal opinion
referred to in Section 6 of this Agreement shall be delivered to each Subscriber
at the Second Closing in relation to the Company, Second Closing Notes and
Second Closing Warrants (“Second Closing Legal
Opinion”).

     

    
      
         

      

      
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    2.           Note, Warrants and
Additional Investment Rights.

    


    (a)           Notes.   Subject
to the satisfaction or waiver of the terms and conditions of this Agreement, on
the Closing Date, each Subscriber shall purchase and the Company shall sell to
the Subscriber a Note in the Principal Amount designated on the signature page
hereto for such Subscriber’s Purchase Price indicated thereon.

    


    (b)           Class A
Warrants.  On each Closing Date, the Company will issue and
deliver Class A Warrants to the Subscriber.  One and one-third Class A
Warrants will be issued for each two Shares which would be issued on the Closing
Date assuming the complete conversion of the Note on the Closing Date at the
Conversion Price.  The exercise price to acquire a Warrant Share upon
exercise of a Class A Warrant shall be equal to shall be 110% of the closing
price of the Company’s Common Stock as reported by Bloomberg L.P. for the
trading day preceding the Initial Closing Date, provided however, such exercise
price shall not be less than $.10 per share, subject to reduction as described
in the Class A Warrant.  The Class A Warrants shall be exercisable
until five years after the issue date of the Class A Warrants.

    


    (c)           Additional Investment
Rights.  On the Closing Date, the Company will issue Additional
Investment Rights to the Subscribers.  One Additional Investment Right
will be issued for each $1.00 of Purchase Price paid on the Closing
Date.  Each Additional Investment Right will represent the right to
purchase $1.20 of Purchase Price of Secured Convertible Notes and a
corresponding amount of Warrants as described in the Additional Investment
Rights Certificate.  The Additional Investment Right will be
exercisable until nine months after the Initial Closing Date.

    


    (d)           Allocation of Purchase
Price.   The Purchase Price will be allocated among the
components of the Securities so that each component of the Securities will be
fully paid and non-assessable.

     

    3.           RESERVED.

     

    4.           Subscriber Representations
and Warranties.  Subscriber hereby represents and warrants to
and agrees with the Company that:

    


    (a)           Organization and Standing of
the Subscriber.  Subscriber is a
corporation duly incorporated, validly existing and in good standing under the
laws of the jurisdiction of its incorporation.

    


    (b)           Authorization and
Power.  Subscriber has the
requisite power and authority to enter into and perform this Agreement and the
other Transaction Documents and to purchase the Note being sold to it
hereunder.  The execution, delivery and performance of this Agreement
and the other Transaction Documents by Subscriber and the consummation by it of
the transactions contemplated hereby and thereby have been duly authorized by
all necessary corporate action, and no further consent or authorization of
Subscriber or its Board of Directors or stockholders is
required.  This Agreement and the other Transaction Documents have
been duly authorized, executed and when delivered by Subscriber and constitute,
or shall constitute when executed and delivered, a valid and binding obligation
of Subscriber enforceable against Subscriber in accordance with the terms
thereof.

    


    (c)           No Conflicts.  The execution, delivery and performance of
this Agreement and the other Transaction Documents and the consummation by
Subscriber of the transactions contemplated hereby and thereby or relating
hereto do not and will not (i) result in a violation of Subscriber’s charter
documents, bylaws or other organizational documents, (ii) conflict with nor
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, nor (iii) result in a violation of any law, rule,
or regulation, or any order, judgment or decree of any court or governmental
agency applicable to Subscriber or its properties (except for such conflicts,
defaults and violations as would not, individually or in the aggregate, have a
material adverse effect on Subscriber).  Subscriber is not required to
obtain any consent, authorization or order of, or make any filing or
registration with, any court or governmental agency in order for it to execute,
deliver or perform any of its obligations under this Agreement and the other
Transaction Documents  nor to purchase the Securities in accordance
with the terms hereof, provided that for purposes of the representation made in
this sentence, Subscriber is assuming and relying upon the accuracy of the
relevant representations and agreements of the Company
herein.

     

    
      
         

      

      
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    (d)           Information on
Company.   Subscriber has been furnished with or has had
access at the EDGAR Website of the Commission to the Company's Form 10K filed on
July 7, 2009 and the 10-K/A filed on August 5, 2009 for the fiscal year ended
December 31, 2008, and the financial statements included therein for the year
ended December 31, 2008, together with all subsequent filings made with the
Commission available at the EDGAR website until five days before the Closing
Date (hereinafter referred to collectively as the "Reports").  In
addition, Subscriber may have received in writing from the Company such other
information concerning its operations, financial condition and other matters as
Subscriber has requested in writing, identified thereon as OTHER WRITTEN
INFORMATION (such other information is collectively, the "Other Written Information"),
and considered all factors Subscriber deems
material in deciding on the advisability of investing in the
Securities.

    


    (e)           Information on
Subscriber.   Subscriber is, and will be at the time of
the conversion of the Notes and exercise of the Warrants, an "accredited investor", as such
term is defined in Regulation D promulgated by the Commission under the 1933
Act, is experienced in investments and business matters, has made investments of
a speculative nature and has purchased securities of United States
publicly-owned companies in private placements in the past and, with its
representatives, has such knowledge and experience in financial, tax and other
business matters as to enable Subscriber to utilize the information made
available by the Company to evaluate the merits and risks of and to make an
informed investment decision with respect to the proposed purchase, which
represents a speculative investment.  Subscriber has the authority and
is duly and legally qualified to purchase and own the
Securities.  Subscriber is able to bear the risk of such investment
for an indefinite period and to afford a complete loss thereof.  The
information set forth on the signature page hereto regarding Subscriber is accurate.

    


    (f)           Purchase of Note, Warrants
and Additional Investment Rights.  On the Closing Date, such
Subscriber will purchase the Note, Warrant
and Additional Investment Rights as principal for its own account for investment
only and not with a view toward, or for resale in connection with, the public
sale or any distribution thereof.

    


    (g)           Compliance with Securities
Act.   Subscriber understands and agrees that the
Securities have not been registered under the 1933 Act or any applicable state
securities laws, by reason of their issuance in a transaction that does not
require registration under the 1933 Act (based in part on the accuracy of the
representations and warranties of the Subscriber contained herein), and that
such Securities must be held indefinitely unless a subsequent disposition is
registered under the 1933 Act or any applicable state securities laws or is
exempt from such registration.  In any event, and subject to
compliance with applicable securities laws, the Subscriber may enter into lawful
hedging transactions in the course of hedging the position they assume and the
Subscriber may also enter into lawful short positions or other derivative
transactions relating to the Securities, or interests in the Securities, and
deliver the Securities, or interests in the Securities, to close out their short
or other positions or otherwise settle other transactions, or loan or pledge the
Securities, or interests in the Securities, to third parties who in turn may
dispose of these Securities.

    


    (h)           Conversion Shares, Class A
and Class B Warrant Shares and AIR Legend.  The Conversion
Shares, Class A and Class B Warrant Shares and AIR shall bear the following or
similar legend:

     

    
      
         

      

      
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    "THE ISSUANCE AND SALE OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, NOR APPLICABLE STATE SECURITIES
LAWS.  THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED
OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR
THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION
OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY
ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS
SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID
ACT.  NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN
CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING
ARRANGEMENT SECURED BY THE SECURITIES."

    


    (i)           Note, Warrant and Additional
Investment Rights Legend.  The Note, Warrant and certificate
representing the Additional Investment Rights shall bear the following
legend:

     

    "NEITHER THE ISSUANCE AND SALE OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE
SECURITIES ARE [CONVERTIBLE –OR-EXERCISABLE] HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS.  THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED
OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR
THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION
OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY
ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS
SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID
ACT.  NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN
CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING
ARRANGEMENT SECURED BY THE SECURITIES."

     

    (j)           Communication of
Offer.  The offer to sell the Securities was directly
communicated to Subscriber by the Company.  At no time was Subscriber
presented with or solicited by any leaflet, newspaper or magazine article, radio
or television advertisement, or any other form of general advertising or
solicited or invited to attend a promotional meeting otherwise than in
connection and concurrently with such communicated offer.

    


    (k)           Restricted
Securities.   Subscriber understands that the Securities
have not been registered under the 1933 Act and Subscriber will not sell, offer
to sell, assign, pledge, hypothecate or otherwise transfer any of the Securities
unless pursuant to an effective registration statement under the 1933 Act, or
unless an exemption from registration is available.  Notwithstanding
anything to the contrary contained in this Agreement, Subscriber may transfer
(without restriction and without the need for an opinion of counsel) the
Securities to its Affiliates (as defined below) provided that each such
Affiliate is an “accredited investor” under Regulation D and such Affiliate
agrees to be bound by the terms and conditions of this Agreement. For the
purposes of this Agreement, an “Affiliate” of any person or
entity means any other person or entity directly or indirectly controlling,
controlled by or under direct or indirect common control with such person or
entity.  Affiliate includes each Subsidiary of the
Company.  For purposes of this definition, “control” means the power to
direct the management and policies of such person or firm, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise.

     

    
      
         

      

      
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    (l)           No Governmental
Review.  Subscriber understands that no United States federal
or state agency or any other governmental or state agency has passed on or made
recommendations or endorsement of the Securities or the suitability of the
investment in the Securities nor have such authorities passed upon or endorsed
the merits of the offering of the Securities.

    


    (m)           Correctness of
Representations.  Each Subscriber represents that the foregoing
representations and warranties are true and correct as of the date hereof and,
unless Subscriber otherwise notifies the Company prior to the Closing Date shall
be true and correct as of the Closing Date.

    


    (n)           Survival.  The
foregoing representations and warranties shall survive the Closing
Date.

     

    5.           Company Representations and
Warranties.  The Company represents and warrants to and agrees
with each Subscriber that:

     

    (a)           Due
Incorporation.  The Company is a corporation or other entity
duly incorporated or organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation or organization and has the
requisite corporate power to own its properties and to carry on its business as
presently conducted.  The Company is duly qualified as a foreign
corporation to do business and is in good standing in each jurisdiction where
the nature of the business conducted or property owned by it makes such
qualification necessary, other than those jurisdictions in which the failure to
so qualify would not have a Material Adverse Effect.  For purposes of
this Agreement, a “Material
Adverse Effect” shall mean a material adverse effect on the financial
condition, results of operations, prospects, properties or business of the
Company and its Subsidiaries taken as a whole.  For purposes of this
Agreement, “Subsidiary”
means, with respect to any entity at any date, any corporation, limited or
general partnership, limited liability company, trust, estate, association,
joint venture or other business entity of which more than 30% of
(i) the outstanding capital stock having (in the absence of contingencies)
ordinary voting power to elect a majority of the board of directors or other
managing body of such entity, (ii) in the case of a partnership or limited
liability company, the interest in the capital or profits of such partnership or
limited liability company or (iii) in the case of a trust, estate,
association, joint venture or other entity, the beneficial interest in such
trust, estate, association or other entity business is, at the time of
determination, owned or controlled directly or indirectly through one or more
intermediaries, by such entity.  As of the Closing Date, all of the
Company’s Subsidiaries and the Company’s ownership interest therein is set forth
on Schedule
5(a).

     

    (b)           Outstanding
Stock.  All issued and outstanding shares of capital stock and
equity interests in the Company have been duly authorized and validly issued and
are fully paid and non-assessable.

     

    (c)           Authority;
Enforceability.  This Agreement, the Note, Shares, Warrants,
Additional Investment Rights, the Escrow Agreement, and any other agreements
delivered together with this Agreement or in connection herewith (collectively
“Transaction Documents”)
have been duly authorized, executed and delivered by the Company and/or
Subsidiaries and are valid and binding agreements of the Company enforceable in
accordance with their terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights generally and to general principles
of equity.  The Company has full corporate power and authority
necessary to enter into and deliver the Transaction Documents and to perform its
obligations thereunder.

     

    
      
         

      

      
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    (d)           Capitalization and
Additional Issuances.   The authorized and outstanding
capital stock of the Company and Subsidiaries on a fully diluted basis as of the
date of this Agreement and the Closing Date (not including the Securities) are
set forth on Schedule
5(d).  Except as set forth on Schedule 5(d), there are no
options, warrants, or rights to subscribe to, securities, rights, understandings
or obligations convertible into or exchangeable for or giving any right to
subscribe for any shares of capital stock or other equity interest of the
Company or any of the Subsidiaries.  The only officer, director,
employee and consultant stock option or stock incentive plan or similar plan
currently in effect or contemplated by the Company is described on Schedule
5(d).  There are no outstanding agreements or preemptive or
similar rights affecting the Company's Common Stock.

     

    (e)           Consents.  Other
than the declaration of  the effectiveness of any registration
statement, no consent, approval, authorization or order of any court,
governmental agency or body or arbitrator having jurisdiction over the Company,
or any of its Affiliates, the OTC Bulletin Board (the “Bulletin Board”) or the
Company's shareholders is required for the execution by the Company of the
Transaction Documents and compliance and performance by the Company of its
obligations under the Transaction Documents, including, without limitation, the
issuance and sale of the Securities.  The Transaction Documents and
the Company’s performance of its obligations thereunder has been unanimously
approved by the Company’s Board of Directors.  Other than with respect
to the filing of a Form D, any required blue sky filing and the declaration of
effectiveness by the Commission of any registration statement required by this
Agreement, no consent, approval, order or authorization of, or registration,
qualification, designation, declaration or filing with, any governmental
authority in the world, including without limitation, the United States, or
elsewhere is required by the Company or any Affiliate of the Company in
connection with the consummation of the transactions contemplated by this
Agreement, except as would not otherwise have a Material Adverse Effect or the
consummation of any of the other agreements, covenants or commitments of the
Company or any Subsidiary contemplated by the other Transaction Documents. Any
such qualifications and filings will, in the case of qualifications, be
effective on the Closing and will, in the case of filings, be made within the
time prescribed by law.

     

    (f)           No Violation or
Conflict.  Assuming the representations and warranties of the
Subscriber in Section 4 are true and correct, neither the issuance and sale of
the Securities nor the performance of the Company’s obligations under this
Agreement and all other agreements entered into by the Company relating thereto
by the Company will:

     

    (i)           violate,
conflict with, result in a breach of, or constitute a default (or an event which
with the giving of notice or the lapse of time or both would be reasonably
likely to constitute a default) under (A) the articles or certificate of
incorporation, charter or bylaws of the Company, (B) to the Company's knowledge,
any decree, judgment, order, law, treaty, rule, regulation or determination
applicable to the Company of any court, governmental agency or body, or
arbitrator having jurisdiction over the Company or over the properties or assets
of the Company or any of its Affiliates, (C) the terms of any bond, debenture,
note or any other evidence of indebtedness, or any agreement, stock option or
other similar plan, indenture, lease, mortgage, deed of trust or other
instrument to which the Company or any of its Affiliates is a party, by which
the Company or any of its Affiliates is bound, or to which any of the properties
of the Company or any of its Affiliates is subject, or (D) the terms of any
"lock-up" or similar provision of any underwriting or similar agreement to which
the Company, or any of its Affiliates is a party except the violation, conflict,
breach, or default of which would not have a Material Adverse Effect;
or

     

    
      
         

      

      
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    (ii)           result
in the creation or imposition of any lien, charge or encumbrance upon the
Securities or any of the assets of the Company or any of its Affiliates except
in favor of Subscriber as described herein; or

     

    (iii)           except
as described on Schedule
5(f)(iii), result in the activation of any anti-dilution rights or a
reset or repricing of any debt, equity or security instrument of any creditor or
equity holder of the Company, or the holder of the right to receive any debt,
equity or security instrument of the Company nor result in the acceleration of
the due date of any obligation of the Company; or

     

    (iv)           except
as described on Schedule
5(f)(iii), result in the triggering of any piggy-back or other
registration rights of any person or entity holding securities of the Company or
having the right to receive securities of the Company.

     

    (g)           The
Securities.  The Securities upon issuance:

     

    (i)           are,
or will be, free and clear of any security interests, liens, claims or other
encumbrances, subject only to restrictions upon transfer under the 1933 Act and
any applicable state securities laws;

    


    (ii)           have
been, or will be, duly and validly authorized and on the dates of issuance of
the Conversion Shares upon conversion of the Note, and the Warrant Shares upon
exercise of the Warrants, such Shares and Warrant Shares will be duly and
validly issued, fully paid and non-assessable and if registered pursuant to the
1933 Act and resold pursuant to an effective registration statement or exempt
from registration will be free trading, unrestricted and
unlegended;

     

    (iii)           will
not have been issued or sold in violation of any preemptive or other similar
rights of the holders of any securities of the Company or rights to acquire
securities of the Company;

     

    (iv)           will
not subject the holders thereof to personal liability by reason of being such
holders; and

     

    (v)           assuming
the representations warranties of the Subscribers as set forth in Section 4
hereof are true and correct, will not result in a violation of Section 5 under
the 1933 Act.

     

    (h)           Litigation.  There
is no pending or, to the best knowledge of the Company, threatened action, suit,
proceeding or investigation before any court, governmental agency or body, or
arbitrator having jurisdiction over the Company, or any of its Affiliates that
would affect the execution by the Company or the complete and timely performance
by the Company of its obligations under the Transaction
Documents.  Except as disclosed in the Reports, there is no pending
or, to the best knowledge of the Company, basis for or threatened action, suit,
proceeding or investigation before any court, governmental agency or body, or
arbitrator having jurisdiction over the Company, or any of its Affiliates which
litigation if adversely determined would have a Material Adverse
Effect.

     

    (i)           No Market
Manipulation.  The Company and its Affiliates have not taken,
and will not take, directly or indirectly, any action designed to, or that might
reasonably be expected to, cause or result in stabilization or manipulation of
the price of the Common Stock to facilitate the sale or resale of the Securities
or affect the price at which the Securities may be issued or
resold.

     

    (j)           Information Concerning
Company.  The Reports and Other Written Information contain all
material information relating to the Company and its operations and financial
condition as of their respective dates which information is required to be
disclosed therein.   Since December 31, 2008 and except as
modified in the Reports and Other Written Information or in the Schedules
hereto, there has been no Material Adverse Event relating to the Company's
business, financial condition or affairs. The Reports and Other Written
Information including the financial statements included therein do not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, taken
as a whole, not misleading in light of the circumstances and when
made.

     

    
      
         

      

      
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    (k)           Solvency.  Based
on the financial condition of the Company as of the Closing Date, (i) the
Company’s fair saleable value of its assets exceeds the amount that will be
required to be paid on or in respect of the Company’s existing debts and other
liabilities (including known contingent liabilities) as they mature; (ii) the
Company’s assets do not constitute unreasonably small capital to carry on its
business for the current fiscal year as now conducted and as proposed to be
conducted including its capital needs taking into account the particular capital
requirements of the business conducted by the Company, and projected capital
requirements and capital availability thereof; and (iii) the current cash flow
of the Company, together with the proceeds the Company would receive, were it to
liquidate all of its assets, after taking into account all anticipated uses of
the cash, would be sufficient to pay all amounts on or in respect of its debt
when such amounts are required to be paid.  The Company does not
intend to incur debts beyond its ability to pay such debts as they mature
(taking into account the timing and amounts of cash to be payable on or in
respect of its debt).

     

    (l)           Defaults.  The
Company is not in violation of its articles of incorporation or
bylaws.   The Company is (i) not in default under or in violation
of any other material agreement or instrument to which it is a party or by which
it or any of its properties are bound or affected, which default or violation
would have a Material Adverse Effect, (ii) not in default with respect to any
order of any court, arbitrator or governmental body or subject to or party to
any order of any court or governmental authority arising out of any action, suit
or proceeding under any statute or other law respecting antitrust, monopoly,
restraint of trade, unfair competition or similar matters, or (iii) not in
violation of any statute, rule or regulation of any governmental authority which
violation would have a Material Adverse Effect.

     

    (m)           No Integrated
Offering.   Neither the Company, nor any of its
Affiliates, nor any person acting on its or their behalf, has directly or
indirectly made any offers or sales of any security of the Company nor solicited
any offers to buy any security of the Company under circumstances that would
cause the offer of the Securities pursuant to this Agreement to be integrated
with prior offerings by the Company for purposes of the 1933 Act or any
applicable stockholder approval provisions, including, without limitation, under
the rules and regulations of the Bulletin Board, which would impair the
exemptions relied upon in this Offering or the Company’s ability to timely
comply with its obligations hereunder.  No prior offering will impair
the exemptions relied upon in this Offering or the Company’s ability to timely
comply with its obligations hereunder.  Neither the Company nor any of
its Affiliates will take any action or steps that would cause the offer or
issuance of the Securities to be integrated with other offerings which would
impair the exemptions relied upon in this Offering or the Company’s ability to
timely comply with its obligations hereunder.  The Company will not
conduct any offering other than the transactions contemplated hereby that may be
integrated with the offer or issuance of the Securities that would impair the
exemptions relied upon in this Offering or the Company’s ability to timely
comply with its obligations hereunder.

     

    (n)           No General
Solicitation.  Neither the Company, nor any of its Affiliates,
nor to its knowledge, any person acting on its or their behalf, has engaged in
any form of general solicitation or general advertising (within the meaning of
Regulation D under the 1933 Act) in connection with the offer or sale of the
Securities.

     

    (o)           No Undisclosed
Liabilities.  The Company has no liabilities or obligations
which are material, individually or in the aggregate, other than those incurred
in the ordinary course of the Company businesses since December 31, 2008 and
which, individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect, except as disclosed in the Reports or on Schedule 5(o).

     

    
      
         

      

      
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    (p)           No Undisclosed Events or
Circumstances.  Since December 31, 2008, except as disclosed on
Schedule 5(p) or in the
Reports, no event or circumstance has occurred or exists with respect to the
Company or its businesses, properties, operations or financial condition, that,
under applicable law, rule or regulation, requires public disclosure or
announcement prior to the date hereof by the Company but which has not been so
publicly announced or disclosed on Schedule 5(p) or in the
Reports.

     

    (q)           RESERVED.

     

    (r)           Dilution.   The
Company's executive officers and directors understand the nature of the
Securities being sold hereby and recognize that the issuance of the Securities
will have a potential dilutive effect on the equity holdings of other holders of
the Company’s equity or rights to receive equity of the Company.  The
board of directors of the Company has concluded, in its good faith business
judgment that the issuance of the Securities is in the best interests of the
Company.  The Company specifically acknowledges that its obligation to
issue the Conversion Shares upon conversion of the Note and the Warrant Shares
upon exercise of the Warrants is binding upon the Company and enforceable
regardless of the dilution such issuance may have on the ownership interests of
other shareholders of the Company or parties entitled to receive equity of the
Company.

     

    (s)           No Disagreements with
Accountants and Lawyers.  There are no material disagreements
of any kind presently existing, or reasonably anticipated by the Company to
arise between the Company and the accountants and lawyers previously and
presently employed by the Company, including but not limited to disputes or
conflicts over payment owed to such accountants and lawyers, nor have there been
any such disagreements during the two years prior to the Closing
Date.

    


    (t)           Investment
Company.   Neither the Company nor any Affiliate of the
Company is an “investment company” within the meaning of the Investment Company
Act of 1940, as amended.

    


    (u)           Foreign Corrupt
Practices.  Neither the Company, nor to the knowledge of the
Company, any agent or other person acting on behalf of the Company, has (i)
directly or indirectly, used any funds for unlawful contributions, gifts,
entertainment or other unlawful expenses related to foreign or domestic
political activity, (ii) made any unlawful payment to foreign or domestic
government officials or employees or to any foreign or domestic political
parties or campaigns from corporate funds, (iii) failed to disclose fully any
contribution made by the Company (or made by any person acting on its behalf of
which the Company is aware) which is  in violation of law, or (iv)
violated in any material respect any provision of the Foreign Corrupt Practices
Act of 1977, as amended.

    


    (v)           Reporting Company/Shell
Company.  The Company is a publicly-held company subject to
reporting obligations pursuant to Section 13 of the Securities Exchange Act of
1934, as amended (the "1934
Act") and has a class of Common Stock registered pursuant to Section
12(g) of the 1934 Act.  Pursuant to the provisions of the 1934 Act,
the Company has filed all reports and other materials required to be filed
thereunder with the Commission during the preceding twelve months.  As
of the Closing Date, the Company is not a “shell company”; or a “former shell
company” as those terms are employed in Rule 144 under the 1933
Act.

    


    (w)           Listing.  The
Company's Common Stock is quoted on the Bulletin Board under the symbol
ACTC.  The Company has not received any oral or written notice that
its Common Stock is not eligible nor will become ineligible for quotation on the
Bulletin Board nor that its Common Stock does not meet all requirements for the
continuation of such quotation.  The Company satisfies all the
requirements for the continued quotation of its Common Stock on the Bulletin
Board.

    


    (x)           DTC
Status.   The Company’s transfer agent is a participant
in, and the Common Stock is eligible for transfer pursuant to, the Depository
Trust Company Automated Securities Transfer Program. The name, address,
telephone number, fax number, contact person and email address of the Company
transfer agent is set forth on Schedule 5(x)
hereto.

     

    
      
         

      

      
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    (y)           Company Predecessor and
Subsidiaries.  The Company makes each of the representations
contained in Sections 5(a), (b), (c), (d), (e), (f), (h), (j), (l), (o), (p),
(q), (s), (t) and (u) of this Agreement, as same relate or could be applicable
to each Subsidiary other than Mytogen, Inc., which not in good standing, is void
and which the Company does not make any representations
about.    All representations made by or relating to the
Company of a historical or prospective nature and all undertakings described in
Sections 9(g) through 9(l) shall relate, apply and refer to the Company and its
predecessors and successors.  The Company represents that it owns all
of the equity of the Subsidiaries and rights to receive equity of the
Subsidiaries identified on Schedule 5(a), free and clear
of all liens, encumbrances and claims, except as set forth on Schedule 5(a).  No
person or entity other than the Company has the right to receive any equity
interest in the Subsidiaries.  The Company further represents that the
Subsidiaries have not been known by any other name for the prior five
years.

    


    (z)           Correctness of
Representations.  The Company represents that the foregoing
representations and warranties are true and correct as of the date hereof in all
material respects, and, unless the Company otherwise notifies the Subscribers
prior to the Closing Date, shall be true and correct in all material respects as
of the Closing Date; provided, that, if such representation or warranty is made
as of a different date, in which case such representation or warranty shall be
true as of such date.

     

    (AA)           Survival.  The
foregoing representations and warranties shall survive the Closing
Date.

     

    6.           Regulation D Offering/Legal
Opinion.  The offer and issuance of the Securities to the
Subscribers is being made pursuant to the exemption from the registration
provisions of the 1933 Act afforded by Section 4(2) or Section 4(6) of the 1933
Act and/or Rule 506 of Regulation D promulgated thereunder.  On the
Closing Date, the Company will provide an opinion reasonably acceptable to the
Subscribers from the Company's legal counsel opining on the availability of an
exemption from registration under the 1933 Act as it relates to the offer and
issuance of the Securities and other matters reasonably requested by
Subscribers.  A form of the legal opinion is annexed hereto as Exhibit G.  The
Company will provide, at the Company's expense, such other legal opinions, if
any, as are reasonably necessary in each Subscriber’s opinion for the issuance
and resale of the Common Stock issuable upon conversion of the Notes and
exercise of the Warrants pursuant to an effective registration statement, Rule
144 under the 1933 Act or an exemption from registration.

    


                          7.1.           Conversion of
Note.

    


    (a)           Upon
the conversion of a Note or part thereof, the Company shall, at its own cost and
expense, take all necessary action, including obtaining and delivering, an
opinion of counsel to assure that the Company's transfer agent shall issue stock
certificates in the name of Subscriber (or its permitted nominee) or such other
persons as designated by Subscriber and in such denominations to be specified at
conversion representing the number of shares of Common Stock issuable upon such
conversion.  The Company warrants that no instructions other than
these instructions have been or will be given to the transfer agent of the
Company's Common Stock and that the certificates representing such shares shall
contain no legend other than the legend set forth in Section 4(h).  If
and when Subscriber sells the Shares, assuming (i) a registration statement
including such Shares for registration, filed with the Commission is effective
and the prospectus, as supplemented or amended, contained therein is current and
(ii) Subscriber or its agent confirms in writing to the transfer agent that
Subscriber has complied with the prospectus delivery requirements, the Company
will reissue the Shares without restrictive legend and the Shares will be
free-trading, and freely transferable.  In the event that the Shares
are sold in a manner that complies with an exemption from registration, the
Company will promptly instruct its counsel to issue to the transfer agent an
opinion permitting removal of the legend indefinitely, if pursuant to Rule
144(b)(1)(i) of the 1933 Act, or for 90 days if pursuant to the other provisions
of Rule 144 of the 1933 Act, provided that Subscriber delivers all reasonably
requested representations in support of such opinion.

     

    
      
         

      

      
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    (b)           Subscriber
will give notice of its decision to exercise its right to convert the Note,
interest, or part thereof by telecopying, or otherwise delivering a completed
Notice of Conversion (a form of which is annexed as Exhibit A to the Note) to the
Company via confirmed telecopier transmission or otherwise pursuant to Section
13(a) of this Agreement.  Subscriber will not be required to surrender
the Note until the Note has been fully converted or satisfied.  Each
date on which a Notice of Conversion is telecopied to the Company in accordance
with the provisions hereof by 6 PM Eastern Time (“ET”) (or if received by the
Company after 6 PM ET, then the next business day) shall be deemed a “Conversion
Date.”  The Company will itself or cause the Company’s transfer
agent to transmit the Company's Common Stock certificates representing the
Conversion Shares issuable upon conversion of the Note to Subscriber via express
courier for receipt by Subscriber within three (3) business days after the
Conversion Date (such third day being the "Delivery Date").  In
the event the Conversion Shares are electronically transferable, then delivery
of the Shares must be made by
electronic transfer provided request for such electronic transfer has been made
by the Subscriber.   A Note representing the balance of the Note
not so converted will be provided by the Company to Subscriber if requested by
Subscriber, provided Subscriber delivers the original Note to the
Company.

    


    (c)           The
Company understands that a delay in the delivery of the Conversion Shares in the
form required pursuant to Section 7.1 hereof, or the Mandatory Redemption Amount
described in Section 7.2 hereof, respectively, later than the Delivery Date or
the Mandatory Redemption Payment Date (as hereinafter defined) could result in
economic loss to the Subscriber.  As compensation to Subscriber for
such loss, the Company agrees to pay (as liquidated damages and not as a
penalty) to Subscriber for late issuance of Conversion Shares in the form
required pursuant to Section 7.1 hereof upon Conversion of the Note, the amount
of $100 per business day after the Delivery Date for each $10,000 of Note
principal amount and interest (and proportionately for other amounts) being
converted of the corresponding Conversion Shares which are not timely
delivered.  The Company shall pay any payments incurred under this
Section upon demand.  Furthermore, in addition to any other remedies
which may be available to the Subscriber, in the event that the Company fails
for any reason to effect delivery of the Conversion Shares within seven (7)
business days after the Delivery Date or make payment within seven (7) business
days after the Mandatory Redemption Payment Date (as defined in Section 7.2
below), Subscriber will be entitled to revoke all or part of the relevant Notice
of Conversion or rescind all or part of the notice of Mandatory Redemption by
delivery of a notice to such effect to the Company whereupon the Company and
Subscriber shall each be restored to their respective positions immediately
prior to the delivery of such notice, except that the damages payable in
connection with the Company’s default shall be payable through the date notice
of revocation or rescission is given to the Company.

    


    7.2.           Mandatory Redemption at
Subscriber’s Election.  In the event (i) the Company is
prohibited from issuing Conversion Shares or Warrant Shares, (ii) upon the
occurrence of any other Event of Default (as defined in the Note or in this
Agreement), that continues for more than ten (10) business days, (iii) a Change
in Control (as defined below), or (iv) of the liquidation, dissolution or
winding up of the Company, then at the Subscriber's election, the Company must
pay to the Subscriber ten (10) business days after request by Subscriber (“Calculation Period”), a sum of
money determined by multiplying up to the outstanding principal amount of the
Note designated by Subscriber by 120%, plus accrued but unpaid interest and any
other amounts due under the Transaction Documents ("Mandatory Redemption
Payment"). The Mandatory Redemption Payment must be received by
Subscriber not later than ten (10) business days after request ("Mandatory Redemption Payment
Date"). Upon receipt of the Mandatory Redemption Payment, the
corresponding Note principal, interest and other amounts will be deemed paid and
no longer outstanding.  The Subscriber may rescind the election to
receive a Mandatory Redemption Payment at any time until such payment is
actually received.  Liquidated damages calculated pursuant to Section
7.1(c) hereof, that have been paid or accrued for the ten day period prior to
the actual receipt of the Mandatory Redemption Payment by Subscriber shall be
credited against the Mandatory Redemption Payment.  For purposes of
this Section 7.2, “Change in
Control” shall mean (i) the Company no longer having a class of shares
publicly traded or listed on a Principal Market (as defined in Section 9(b)
hereto), (ii) the Company  becoming a Subsidiary of another entity
(other than a corporation formed by the Company for purposes of reincorporation
in another U.S. jurisdiction), (iii) a majority of the board of directors of the
Company as of the Closing Date no longer serving as directors of the Company
except due to natural causes, and (iv) the sale, lease or transfer of
substantially all the assets of the Company or its Subsidiaries.

     

    
      
         

      

      
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               7.3.           Maximum
Conversion.  Subscriber shall not be entitled to convert on a
Conversion Date that amount of the Note nor may the Company make any payment
including principal, interest, or liquidated or other damages by delivery of
Conversion Shares in connection with that number of Conversion Shares which
would be in excess of the sum of (i) the number of shares of Common Stock
beneficially owned by Subscriber and its Affiliates on a Conversion Date or
payment date, and (ii) the number of Conversion Shares issuable upon the
conversion of the Note with respect to which the determination of this provision
is being made on a calculation date, which would result in beneficial ownership
by Subscriber and its Affiliates of more than 4.99% of the outstanding shares of
Common Stock of the Company on such Conversion Date.  For the purposes
of the immediately preceding sentence, beneficial ownership shall be determined
in accordance with Section 13(d) of the Securities Exchange Act of 1934, as
amended, and Rule 13d-3 thereunder.  Subject to the foregoing, the
Subscriber shall not be limited to aggregate conversions of only 4.99% and
aggregate conversions by the Subscriber may exceed 4.99%.  The
Subscriber may increase the permitted beneficial ownership amount up to 9.99%
upon and effective after 61 days prior written notice to the
Company.  Subscriber may allocate which of the equity of the Company
deemed beneficially owned by Subscriber shall be included in the 4.99% amount
described above and which shall be allocated to the excess above
4.99%.

    


    7.4.           Injunction Posting of
Bond.  In the event Subscriber shall elect to convert a Note or
part thereof, the Company may not refuse conversion based on any claim that
Subscriber or any one associated or affiliated with Subscriber has been engaged
in any violation of law, or for any other reason, unless, a final non-appealable
injunction from a court made on notice to Subscriber, restraining and or
enjoining conversion of all or part of such Note shall have been sought and
obtained by the Company and the Company has posted a surety bond for the benefit
of Subscriber in the amount of 120% of the outstanding principal and accrued but
unpaid interest of the Note, or aggregate purchase price of the Shares which are
sought to be subject to the injunction, which bond shall remain in effect until
the completion of arbitration/litigation of the dispute and the proceeds of
which shall be payable to Subscriber to the extent the judgment or decision is
in Subscriber’s favor.

    


               7.5.           Buy-In.   In
addition to any other rights available to Subscriber, if the Company fails to
deliver to Subscriber Conversion Shares by the Delivery Date and if after the
Delivery Date Subscriber or a broker on Subscriber’s behalf purchases (in an
open market transaction or otherwise) shares of Common Stock to deliver in
satisfaction of a sale by Subscriber of the Common Stock which Subscriber was
entitled to receive upon such conversion (a "Buy-In"), then the Company
shall pay to Subscriber (in addition to any remedies available to or elected by
the Subscriber) the amount by which (A) Subscriber's total purchase price
(including brokerage commissions, if any) for the shares of Common Stock so
purchased exceeds (B) the aggregate principal and/or interest amount of the Note
for which such conversion request was not timely honored together with interest
thereon at a rate of 15% per annum, accruing until such amount and any accrued
interest thereon is paid in full (which amount shall be paid as liquidated
damages and not as a penalty).  For example, if a Subscriber purchases
shares of Common Stock having a total purchase price of $11,000 to cover a
Buy-In with respect to an attempted conversion of $10,000 of Note principal
and/or interest, the Company shall be required to pay Subscriber $1,000 plus
interest. Subscriber shall provide the Company written notice and evidence
indicating the amounts payable to Subscriber in respect of the
Buy-In.

     

    
      
         

      

      
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    7.6           Adjustments.   The
Conversion Price, Warrant exercise price and amount of Shares issuable upon
conversion of the Notes and Warrant Shares issuable upon exercise of the
Warrants shall be equitably adjusted and as otherwise described in this
Agreement, the Notes and Warrants.

     

    7.7.           Redemption.    The
Note shall not be redeemable or callable by the Company, except as described in
the Note.

    


    8.           Due Diligence/Legal
Fees.

     

    (a)           Due Diligence
Fee.   The Company and Subscriber agree to indemnify the
other against and hold the other harmless from any and all liabilities to any
persons other than those listed on Schedule 8(a) claiming
brokerage commissions, finder’s fees, credit enhancement fees or due diligence
fees on account of services purported to have been rendered on behalf of the
indemnifying party in connection with this Agreement or the transactions
contemplated hereby or in connection with any investment in the Company at any
time, whether or not such investment was consummated and arising out of such
party’s actions.  The Company represents that there are no parties
entitled to receive fees, commissions, credit enhancement fees, due diligence
fees, lead investor fees, or similar payments in connection with the Offering
except as described on Schedule
8(a).  The Company is solely responsible for payment of the
fees described on Schedule
8(a) and agrees to pay all such fees at the times stated on Schedule 8(a).

     

               (b)           Subscriber’s Legal
Fees.   The Company shall pay to Grushko & Mittman,
P.C., a fee of $20,000 (“Subscriber’s Legal Fees”) as
reimbursement for services rendered in connection with the transactions
described in the Transaction Documents (the “Offering”).   The
Subscriber’s Legal Fees and expenses (to the extent known as of the Closing)
will be payable out of funds held pursuant to the Escrow
Agreement.  Grushko & Mittman, P.C. will be reimbursed at Closing
for all lien searches, filing fees, and printing and shipping costs for the
closing statements to be delivered to Subscribers.

     

    9.           Covenants of the
Company.  The Company covenants and agrees with the Subscribers
as follows:

     

    (a)           Stop
Orders.  Subject to the prior notice requirement described in
Section 9(n), the Company will advise the Subscriber, within twenty-four hours
after it receives notice of issuance by the Commission, any state securities
commission or any other regulatory authority of any stop order or of any order
preventing or suspending any offering of any securities of the Company, or of
the suspension of the qualification of the Common Stock of the Company for
offering or sale in any jurisdiction, or the initiation of any proceeding for
any such purpose.  The Company will not issue any stop transfer order
or other order impeding the sale, resale or delivery of any of the Securities,
except as may be required by any applicable federal or state securities laws and
unless contemporaneous notice of such instruction is given to the
Subscriber.

     

    (b)           Listing/Quotation.  The
Company shall promptly secure the quotation or listing of the Conversion Shares
and Warrant Shares upon each national securities exchange, or automated
quotation system upon the Company’s Common Stock is quoted or listed and upon
which such Conversion Shares and Warrant Shares are or become eligible for
quotation or listing (subject to official notice of issuance) and shall maintain
same so long as any Notes and Warrants are outstanding.  The Company
will maintain the quotation or listing of its Common Stock on the NYSE Amex,
Nasdaq Capital Market, Nasdaq Global Market, Nasdaq Global Select Market,
Bulletin Board, or New York Stock Exchange (whichever of the foregoing is at the
time the principal trading exchange or market for the Common Stock (the “Principal Market”), and will
comply in all respects with the Company's reporting, filing and other
obligations under the bylaws or rules of the Principal Market, as applicable.
The Company will provide Subscribers with copies of all notices it receives
notifying the Company of the threatened and actual delisting of the Common Stock
from any Principal Market.  As of the date of this Agreement and the
Closing Date, the Bulletin Board is and will be the Principal
Market.

     

    
      
         

      

      
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    (c)           Market
Regulations.  If required, the Company shall notify the
Commission, the Principal Market and applicable state authorities, in accordance
with their requirements, of the transactions contemplated by this Agreement, and
shall take all other necessary action and proceedings as may be required and
permitted by applicable law, rule and regulation, for the legal and valid
issuance of the Securities to the Subscriber and promptly provide copies thereof
to the Subscriber.

     

    (d)           Filing
Requirements.  From the date of this Agreement and until the
last to occur of (i) two (2) years after the Second Closing Date, (ii) until all
the Shares have been resold or transferred by the Subscriber pursuant to a
registration statement or pursuant to Rule 144(b)(1)(i), or (iii) the Note,
Warrants and Additional Investment Rights are no longer outstanding (the date of
such latest occurrence being the “End Date”), the Company will
(A) cause its Common Stock to continue to be registered under Section 12(b) or
12(g) of the 1934 Act, (B) comply in all respects with its reporting and filing
obligations under the 1934 Act, (C) voluntarily comply with all reporting
requirements that are applicable to an issuer with a class of shares registered
pursuant to Section 12(g) of the 1934 Act, if the Company is not subject to such
reporting requirements, and (D) comply with all requirements related to any
registration statement filed pursuant to this Agreement.  The Company
will use its best efforts not to take any action or file any document (whether
or not permitted by the 1933 Act or the 1934 Act or the rules thereunder) to
terminate or suspend such registration or to terminate or suspend its reporting
and filing obligations under said acts until the End Date.  Until the
End Date, the Company will continue the listing or quotation of the Common Stock
on a Principal Market and will comply in all respects with the Company’s
reporting, filing and other obligations under the bylaws or rules of the
Principal Market.  The Company agrees to timely file a Form D with
respect to the Securities if required under Regulation D and to provide a copy
thereof to Subscriber promptly after such filing.

     

    (e)           Use of
Proceeds.   The proceeds of the Offering will be employed
by the Company for expenses of the Offering and general working
capital.  Except as described on Schedule 9(e), the Purchase
Price may not and will not be used for accrued and unpaid officer and director
salaries, payment of financing related debt, redemption of outstanding notes or
equity instruments of the Company nor non-trade obligations outstanding on a
Closing Date.  For so long as any Note is outstanding, the Company
will not prepay any financing related debt obligations, except equipment
payments, nor redeem any equity instruments of the Company without the prior
consent of the Subscriber.

     

    (f)           Reservation.   Prior
to the Initial Closing Date, the Company undertakes to reserve on behalf of
Subscriber from its authorized but unissued Common Stock, a number of shares of
Common Stock equal to 175% of the amount of Common Stock necessary to allow
Subscriber to be able to convert the entire Note and 100% of the amount of
Warrant Shares issuable upon exercise of the Warrants (“Required
Reservation”).  Failure to have sufficient shares reserved
pursuant to this Section 9(f) at any time shall be a material default of the
Company’s obligations under this Agreement and an Event of Default under the
Note.  If at any time Notes and Warrants are outstanding the Company
has insufficient Common Stock reserved on behalf of the Subscriber in an amount
less than 140% of the amount necessary for full conversion of the outstanding
Note principal and interest at the conversion price that would be in effect on
every such date and 100% of the Warrant Shares (“Minimum Required
Reservation”), the Company will promptly reserve the Minimum Required
Reservation, or if there are insufficient authorized and available shares of
Common Stock to do so, the Company will take all action necessary to increase
its authorized capital to be able to fully satisfy its reservation requirements
hereunder, including the filing of a preliminary proxy with the Commission not
later than fifteen days after the first day the Company has less than the
Minimum Required Reservation.  The Company agrees to provide notice to
the Subscriber not later than three days after the date the Company has less
than the Minimum Required Reservation reserved on behalf of the
Subscriber.

     

    
      
         

      

      
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    (g)           DTC
Program.  At all times that Notes, Warrants and Additional
Investment Rights are outstanding, the Company will employ as the transfer agent
for the Common Stock, Shares and Warrant Shares a participant in the Depository
Trust Company Automated Securities Transfer Program.

     

    (h)           Taxes.  From
the date of this Agreement and until the End Date, the Company will promptly pay
and discharge, or cause to be paid and discharged, when due and payable, all
lawful taxes, assessments and governmental charges or levies imposed upon the
income, profits, property or business of the Company; provided, however, that
any such tax, assessment, charge or levy need not be paid if the validity
thereof shall currently be contested in good faith by appropriate proceedings
and if the Company shall have set aside on its books adequate reserves with
respect thereto, and provided, further, that the Company will pay all such
taxes, assessments, charges or levies forthwith upon the commencement of
proceedings to foreclose any lien which may have attached as security
therefore.

     

    (i)           Insurance.  From
the date of this Agreement and until the End Date, the Company will keep its
assets which are of an insurable character insured by financially sound and
reputable insurers against loss or damage by fire, explosion and other risks
customarily insured against by companies in the Company’s line of business and
location, in amounts and to the extent and in the manner customary for companies
in similar businesses similarly situated and located and to the extent available
on commercially reasonable terms.

     

    (j)           Books and
Records.  From the date of this Agreement and until the End
Date, the Company will keep true records and books of account in which full,
true and correct entries will be made of all dealings or transactions in
relation to its business and affairs in accordance with generally accepted
accounting principles applied on a consistent basis.

     

    (k)           Governmental
Authorities.   From the date of this Agreement and until
the End Date, the Company shall duly observe and conform in all material
respects to all valid requirements of governmental authorities relating to the
conduct of its business or to its properties or assets.

     

    (l)           Intellectual
Property.  From the date of this Agreement and until the End
Date, the Company shall maintain in full force and effect its corporate
existence, rights and franchises and all licenses and other rights to use
intellectual property owned or possessed by it and reasonably deemed to be
necessary to the conduct of its business, unless it is sold for
value.  Schedule
9(l) hereto identifies all of the intellectual property owned by the
Company and Subsidiaries.

     

    (m)           Properties.  From
the date of this Agreement and until the End Date, the Company will keep its
properties in good repair, working order and condition, reasonable wear and tear
excepted, and from time to time make all necessary and proper repairs, renewals,
replacements, additions and improvements thereto; and the Company will at all
times comply with each provision of all leases and claims to which it is a party
or under which it occupies or has rights to property if the breach of such
provision could reasonably be expected to have a Material Adverse
Effect.  The Company will not abandon any of its assets except for
those assets which have negligible or marginal value or for which it is prudent
to do so under the circumstances.

     

    
      
         

      

      
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    (n)           Confidentiality/Public
Announcement.   From the date of this Agreement and until
the End Date, the Company agrees that except in connection with a Form 8-K and
the registration statement or statements regarding the Subscriber’s Securities
or in correspondence with the SEC regarding same, it will not disclose publicly
or privately the identity of the Subscriber unless expressly agreed to in
writing by a Subscriber or only to the extent required by law and then only upon
not less than three days prior notice to Subscriber.  In any event and
subject to the foregoing, the Company undertakes to file a Form 8-K describing
the Offering not later than the fourth (4th)
business day after the Initial Closing Date.  Prior to the filing date
of such Form 8-K, a draft in the final form will be provided to Subscriber for
Subscriber’s review and approval.  In the Form 8-K, the Company will
specifically disclose the amount of Common Stock outstanding immediately after
the Closing.  Upon  delivery by the Company to the
Subscriber after the Closing Date of any notice or information, in writing,
electronically or otherwise, and while a Note, Conversion Shares or Warrants are
held by Subscriber, unless the  Company has in good faith determined
that the matters relating to such notice do not
constitute material, nonpublic information relating to
the Company or Subsidiaries, the Company  shall within one
business day after any such delivery publicly disclose such 
material,  nonpublic  information on a
Report on Form 8-K.  In the event that
the Company believes that a notice or communication to
Subscriber contains material, nonpublic information relating to the Company or
Subsidiaries, the Company shall so indicate to Subscriber prior to delivery of
such notice or information.  Subscriber will be granted sufficient
time to notify the Company that Subscriber elects not to receive such
information.   In such case, the Company will not deliver such
information to Subscriber.  In the absence of any such
indication, Subscriber shall be allowed to presume that all matters
relating to such notice and information do not constitute material,
nonpublic information relating to the Company or
Subsidiaries.

     

               (o)           Non-Public
Information.  The Company covenants
and agrees that except for the Reports, Other Written Information and schedules
and exhibits to this Agreement and the Transaction Documents, which information
the Company undertakes to publicly disclose on the Form 8-K described in Section
9(n) above, neither it nor any other person acting on its behalf will at any
time provide Subscriber or its agents or counsel with any information that the
Company believes constitutes material non-public information, unless prior
thereto Subscriber shall have agreed in writing to accept such
information.  The Company understands and confirms that Subscriber
shall be relying on the foregoing representations in effecting transactions in
securities of the Company.

    


    (p)           Negative
Covenants.   So long as a Note or the Additional
Investment Rights are outstanding, without the consent of the Subscriber, the
Company will not and will not permit any of its Subsidiaries to directly or
indirectly:

    


    (i)           RESERVED.

     

                                                (ii)           amend
its certificate of incorporation, bylaws or its charter documents so as to
materially and adversely affect any rights of the Subscriber (an increase in the
amount of authorized shares and an increase in the number of directors will not
be deemed adverse to the rights of the Subscriber);

    


    (iii)           repay,
repurchase or offer to repay, repurchase or otherwise acquire or make any
dividend or distribution in respect of any of its Common Stock, preferred stock,
or other equity securities other than to the extent permitted or required under
the Transaction Documents;

    


    (iv)           engage
in any transactions with any officer, director, employee or any Affiliate of the
Company, including any contract, agreement or other arrangement providing for
the furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any officer,
director or such employee or, to the knowledge of the Company, any entity in
which any officer, director, or any such employee has a substantial interest or
is an officer, director, trustee or partner, in each case in excess of $100,000
other than (i) for payment of salary, or fees for services rendered, (ii)
reimbursement for expenses incurred on behalf of the Company, and (iii) for
other employee benefits, including stock option agreements under any stock
option plan of the Company; or

    


    (v)           RESERVED.

     

     

    
      
         

      

      
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    (q)           RESERVED.

     

    (r)           RESERVED.

     

    (s)           Seniority.   Except
for Permitted Liens and/or Permitted Debt, for so long as the Note and
Additional Investment Rights are outstanding, the Company shall not grant nor
allow any security interest to be taken in the assets of the Company or any
Subsidiary or any Subsidiary’s assets; nor issue any debt, equity or other
instrument which would give the holder thereof directly or indirectly, a right
in any assets of the Company, which is equal to or superior (senior) to that of
the Subscribers’ interest or any Subsidiary or any right to payment equal to or
superior to any right of the Subscriber as a holder of the Note in or to such
assets or payment. For avoidance of doubt this Section shall not prevent the
Company from issuing debt or granting a security interest if such debt and/or
security interest is junior to the Notes.. As used herein, Permitted Liens shall
mean:  (A) Liens issued in connection with Excepted Issuances (as
defined in Section 12 hereof), and (B) (a) Liens imposed by law for taxes that
are not yet due or are being contested in good faith and for which adequate
reserves have been established in accordance with generally accepted accounting
principles; (b) carriers’, warehousemen’s, mechanics’, material men’s,
repairmen’s and other like Liens imposed by law, arising in the ordinary course
of business and securing obligations that are not overdue by more than 30 days
or that are being contested in good faith and by appropriate proceedings; (c)
pledges and deposits made in the ordinary course of business in compliance with
workers’ compensation, unemployment insurance and other social security laws or
regulations; (d) deposits to secure the performance of bids, trade contracts,
leases, statutory obligations, surety and appeal bonds, performance bonds and
other obligations of a like nature, in each case in the ordinary course of
business; (e) Liens created with respect to the financing of the purchase of new
property in the ordinary course of the Company’s business up to the amount of
the purchase price of such property; (f) easements, zoning restrictions,
rights-of-way and similar encumbrances on real property imposed by law or
arising in the ordinary course of business that do not secure any monetary
obligations and do not materially detract from the value of the affected
property; (g) liens which exist as of the date hereof and (h) liens set forth on
Schedule 9(s) (each of
(a) through (h), a “Permitted
Lien”). Permitted Debt shall mean any debt of the Company that exists as
of the date hereof and as set forth on Schedule 9(s) herein, and debt
incurred in the ordinary course of the Company’s business.

     

    (t)           Notices.   For
so long as the Subscribers hold any Securities, the Company will maintain a
United States address and United States fax number for notice purposes under the
Transaction Documents.

     

    (u)       Transactions With
Insiders.  So long as the Note, Warrants and Additional
Investment Rights are outstanding, the Company shall not, and shall cause each
of its subsidiaries not to, enter into, amend, modify or supplement, or permit
any subsidiary to enter into, amend, modify or supplement any agreement,
transaction, commitment, or arrangement relating to the sale, transfer or
assignment of any of the Company’s tangible or intangible assets with any of its
Insiders (as defined below)(or any persons who were Insiders at any time during
the previous two (2) years), or any Affiliates (as defined below) thereof, or
with any individual related by blood, marriage, or adoption to any such
individual.  Affiliate for purposes of this Section 9(v) means, with
respect to any person or entity, another person or entity that, directly or
indirectly, (i) has a ten percent (10%) or more equity interest in that person
or entity, (ii) has ten percent (10%) or more common ownership with that person
or entity, (iii) controls that person or entity, or (iv) shares common control
with that person or entity.  “Control” or “Controls” for purposes
hereof means that a person or entity has the power, direct or indirect, to
conduct or govern the policies of another person or entity.  For
purposes hereof, “Insiders” shall mean any officer, director or manager of the
Company, including but not limited to the Company’s president, chief executive
officer, chief financial officer and chief operations officer, and any of their
affiliates or family members.

     

    (v)           Blackout.    The
Company undertakes and covenants that without the consent of the Subscriber,
until the end of the “Exclusion
Period”, which shall be defined as the sooner of (i) the date all of the
Conversion Shares and Additional Investment Rights have been registered in an
effective registration statement, or (ii) until all the Notes are no longer
outstanding, the Company will not enter into any acquisition, merger, exchange
or sale or other transaction or fail to take any action that could have the
effect of delaying the effectiveness of any pending registration statement
beyond the effective date, or causing an already effective registration
statement to no longer be effective or current for a period of forty-five or
more days in the aggregate during any three hundred and sixty-five day
period.

     

    
      
         

      

      
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    10.           Covenants of the Company
Regarding
Indemnification.                                                                                                           The
Company agrees to indemnify, hold harmless, reimburse and defend the Subscriber,
the Subscriber’s officers, directors, agents, Affiliates, members, managers,
control persons, and principal shareholders, against any claim, cost, expense,
liability, obligation, loss or damage (including reasonable legal fees) of any
nature, incurred by or imposed upon the Subscriber or any such person which
results, arises out of or is based upon (i) any material misrepresentation by
Company or breach of any representation or warranty by Company in this Agreement
or in any Exhibits or Schedules attached hereto in any Transaction Document, or
other agreement delivered pursuant hereto or in connection herewith, now or
after the date hereof; or (ii) after any applicable notice and/or cure periods,
any breach or default in performance by the Company of any covenant or
undertaking to be performed by the Company hereunder, or any other agreement
entered into by the Company and Subscriber relating hereto.

    


    11.           Additional Post-Closing
Obligations.

     

    11.1.           Piggy-Back
Registrations.   If at any time until the
Notes  are no longer outstanding there is not an effective
registration statement covering all of the Securities (“Registrable Securities”) and
the Company shall determine to prepare and file with the Commission a
registration statement relating to an offering for its own account or the
account of others under the 1933 Act of any of its equity securities, excluding
on Form S-4 (as promulgated under the 1933 Act) or its then equivalent form
and/or Form(s) S-8, then the Company shall send to each holder of any of the
Securities written notice of such determination and, if within fifteen calendar
days after receipt of such notice, any such holder shall so request in writing,
the Company shall include in such registration statement all or any part of the
Shares such holder requests to be registered subject to applicable SEC rules and
regulations, subject to customary underwriter cutbacks applicable to all holders
of registration rights.  The obligations of the Company under this
Section may be waived by any holder of any of the Securities entitled to
registration rights under this Section 11.1. The holders whose Shares are
included or required to be included in such registration statement are granted
the same rights, benefits, liquidated or other damages and indemnification
granted to other holders of Securities included in such registration
statement.  Notwithstanding anything to the contrary herein, the
registration rights granted hereunder to the holders of Securities shall not be
applicable for such times as such Shares may be sold by the holder thereof
without restriction pursuant to Section 144(b)(1) of the 1933 Act.  In
no event shall the liability of any holder of Securities or permitted successor
in connection with any Shares included in any such registration statement be
greater in amount than the dollar amount of the net proceeds actually received
by such Subscriber upon the sale of the Shares sold pursuant to such
registration or such lesser amount applicable to other holders of Securities
included in such registration statement. All expenses incurred by the Company in
complying with Section 11, including, without limitation, all registration and
filing fees, printing expenses (if required), fees and disbursements of counsel
and independent public accountants for the Company, fees and expenses (including
reasonable counsel fees) incurred in connection with complying with state
securities or “blue sky” laws, fees of the NASD, transfer taxes, and fees of
transfer agents and registrars, are called “Registration Expenses.” All
underwriting discounts and selling commissions applicable to the sale of
Registrable Securities are called "Selling
Expenses."  The Company will pay all Registration Expenses in
connection with the registration statement under Section 11.  Selling
Expenses in connection with each registration statement under Section 11 shall
be borne by the holder and will be apportioned among such holders in proportion
to the number of Shares included therein for a holder relative to all the
Securities included therein for all selling holders, or as all holders may
agree.

     

    
      
         

      

      
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    11.2.           Delivery of Unlegended
Shares.

     

    (a)           Within
three (3) business days (such third business day being the “Unlegended Shares Delivery
Date”) after the business day on which the Company has received (i) a
notice that Shares or any other Common Stock held by a Subscriber have been sold
pursuant to the Registration Statement or Rule 144 under the 1933 Act, (ii) a
representation that the prospectus delivery requirements, or the requirements of
Rule 144, as applicable and if required, have been satisfied, and (iii) the
original share certificates representing the shares of Common Stock that have
been sold, and (iv) in the case of sales under Rule 144, customary
representation letters of the Subscriber and, if required, Subscriber’s broker
regarding compliance with the requirements of Rule 144, the Company at its
expense, (y) shall deliver, and shall cause legal counsel selected by the
Company to deliver to its transfer agent (with copies to Subscriber) an
appropriate instruction and opinion of such counsel, directing the delivery of
shares of Common Stock without any legends including the legend set forth in
Section 4(i) above (the “Unlegended Shares”); and (z)
cause the transmission of the certificates representing the Unlegended Shares
together with a legended certificate representing the balance of the submitted
Shares certificate, if any, to the Subscriber at the address specified in the
notice of sale, via express courier, by electronic transfer or otherwise on or
before the Unlegended Shares Delivery Date.

     

    (b)           In
lieu of delivering physical certificates representing the Unlegended Shares,
upon request of a Subscriber, so long as the certificates therefor do not bear a
legend and the Subscriber is not obligated to return such certificate for the
placement of a legend thereon, the Company shall cause its transfer agent to
electronically transmit the Unlegended Shares by crediting the account of
Subscriber’s prime broker with the Depository Trust Company through its Deposit
Withdrawal Agent Commission system, if such transfer agent participates in such
DWAC system.  Such delivery must be made on or before the Unlegended
Shares Delivery Date.

    


    (c)           The
Company understands that a delay in the delivery of the Unlegended Shares
pursuant to Section 11 hereof later than two business days after the Unlegended
Shares Delivery Date could result in economic loss to a
Subscriber.  As compensation to a Subscriber for such loss, the
Company agrees to pay late payment fees (as liquidated damages and not as a
penalty) to the Subscriber for late delivery of Unlegended Shares in the amount
of $100 per business day after the Delivery Date for each $10,000 of purchase
price of the Unlegended Shares subject to the delivery default.  If
during any 360 day period, the Company fails to deliver Unlegended Shares as
required by this Section 11.2 for an aggregate of thirty (30) days, then each
Subscriber or assignee holding Securities subject to such default may, at its
option, require the Company to redeem all or any portion of the Shares subject
to such default at a price per share equal to the greater of (i) 120%, or (ii) a
fraction in which the numerator is the highest closing price of the Common Stock
during the aforedescribed thirty day period and the denominator of which is the
lowest conversion price during such thirty day period, multiplied by the price
paid by Subscriber for such Common Stock (“Unlegended Redemption
Amount”).  The Company shall pay any payments incurred under
this Section in immediately available funds upon demand.

     

    
      
         

      

      
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    (d)           
In addition to any other rights available to a Subscriber, if the Company fails
to deliver to a Subscriber Unlegended Shares as required pursuant to this
Agreement, within seven (7) business days after the Unlegended Shares Delivery
Date and the Subscriber or a broker on the Subscriber’s behalf, purchases (in an
open market transaction or otherwise) shares of common stock to deliver in
satisfaction of a sale by such Subscriber of the shares of Common Stock which
the Subscriber was entitled to receive from the Company (a "Buy-In"), then the Company
shall pay in cash to the Subscriber (in addition to any remedies available to or
elected by the Subscriber) the amount by which (A) the Subscriber's total
purchase price (including brokerage commissions, if any) for the shares of
common stock so purchased exceeds (B) the aggregate purchase price of the shares
of Common Stock delivered to the Company for reissuance as Unlegended
Shares together with interest thereon at a rate of 15% per annum accruing
until such amount and any accrued interest thereon is paid in full (which amount
shall be paid as liquidated damages and not as a penalty).  For
example, if a Subscriber purchases shares of Common Stock having a total
purchase price of $11,000 to cover a Buy-In with respect to $10,000 of purchase
price of shares of Common Stock delivered to the Company for reissuance as
Unlegended Shares, the Company shall be required to pay the Subscriber $1,000,
plus interest. The Subscriber shall provide the Company written notice
indicating the amounts payable to the Subscriber in respect of the
Buy-In.

    


    (e)           In
the event a Subscriber shall request delivery of Unlegended Shares as described
in Section 11.2 and the Company is required to deliver such Unlegended Shares
pursuant to Section 11.2, the Company may not refuse to deliver Unlegended
Shares based on any claim that such Subscriber or any one associated or
affiliated with such Subscriber has been engaged in any violation of law, or for
any other reason, unless, an injunction or temporary restraining order from a
court, on notice, restraining and or enjoining delivery of such Unlegended
Shares shall have been sought and obtained by the Company or at the Company’s
request or with the Company’s assistance, and the Company has posted a surety
bond for the benefit of such Subscriber in the amount of 120% of the amount of
the aggregate purchase price of the Common Stock which are subject to the
injunction or temporary restraining order, which bond shall remain in effect
until the completion of arbitration/litigation of the dispute and the proceeds
of which shall be payable to such Subscriber to the extent Subscriber obtains
judgment in Subscriber’s favor.

    


    11.3.           In
the event commencing six months after the Closing Date and ending twenty-four
months thereafter, the Subscriber is not permitted to resell any of the Shares,
without any restrictive legend or if such sales are permitted but subject to
volume limitations or further restrictions on resale as a result of the
unavailability to non-affiliate Subscribers of Rule 144(b)(1)(i) under the 1933
Act or any successor rule (a “144 Default”), for any reason
related to the Company except for Subscriber’s status as an Affiliate or
“control person” of the Company or change in current applicable securities laws,
then the Company shall pay such Subscriber as liquidated damages and not as a
penalty an amount equal to 2% for each thirty days (or such lesser pro-rata
amount for any period less than thirty days) thereafter of the purchase price of
the Shares by the Subscriber during the pendency of the 144
Default.  Liquidated Damages shall not be payable pursuant to this
Section 11.3 in connection with Shares for such times as such Shares may be sold
by the holder thereof without volume or other restrictions  pursuant
to Section 144(b)(1)(i) of the 1933 Act.

    


    12.           (a)           Right of
Participation.  Until the Notes are no longer outstanding, the
Subscribers shall be given not less than ten business days prior written notice
of any proposed sale by the Company of its Common Stock or other securities or
equity linked debt obligations, except in connection with (i) full or partial
consideration in connection with a strategic merger, acquisition, consolidation
or purchase of substantially all of the securities or assets of corporation or
other entity which holders of such securities or debt are not at any time
granted registration rights, (ii) the Company’s issuance of securities in
connection with strategic license agreements and other partnering arrangements
so long as such issuances are not for the purpose of raising capital and which
holders of such securities or debt are not at any time granted registration
rights, (iii) the Company’s issuance of Common Stock or the issuances or grants
of options to purchase Common Stock to employees, directors, and consultants,
pursuant to plans described on Schedule 12(a), (iv)
securities upon the exercise or exchange of or conversion of any securities
exercisable or exchangeable for or convertible into shares of Common Stock
issued and outstanding on the date of this Agreement and/or securities issuable
and/or issued pursuant to agreements executed as of the date hereof, including
pursuant to this Agreement as described on Schedule 12(a), and (v) as a
result of the conversion of Notes which are granted or issued pursuant to this
Agreement (collectively the foregoing (i) through (v) are “Excepted
Issuances”).  The Subscribers who exercise their rights
pursuant to this Section 12(a) shall have the right during the ten business days
following receipt of the notice to purchase for cash or by using the outstanding
balance including principal, interest, liquidated damages and any other amount
then owing to such Subscriber by the Company, such offered Common Stock, debt or
other securities in accordance with the terms and conditions set forth in the
notice of sale, and if the aggregate other offering is for less than the amounts
owned to the Subscribers, collectively; in the same proportion to each other as
their purchase of Notes in the Offering.  In the event such terms and
conditions are modified during the notice period, the Subscribers shall be given
prompt notice of such modification and shall have the right during the ten
business days following the notice of modification to exercise the right to
participate in such offering.

     

    
      
         

      

      
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    (b)           Favored Nations
Provision.   Other than in connection with the Excepted
Issuances, if at any time the Notes and Warrants are outstanding, the Company
shall agree to or issue (the “Lower Price Issuance”) any
Common Stock or securities convertible into or exercisable for shares of Common
Stock (or modify any of the foregoing which may be outstanding) to any person or
entity at a price per share or conversion or exercise price per share which
shall be less than the Conversion Price in effect at such time, or if less than
the Warrant exercise price in effect at such time, without the consent of the
Subscriber, then the Company shall issue, for each such occasion, additional
shares of Common Stock to the Subscriber respecting those Conversion Shares and
Warrants Shares that are then still owned by the Subscriber at the time of the
Lower Price Issuance so that the average per share purchase price of the Shares
or Warrant Shares purchased and owned by the Subscriber on the date of the Lower
Price Issuance is equal to such other lower price per share and the Conversion
Price and Warrant exercise price shall automatically be reduced to such other
lower price.  The average Purchase Price of the Conversion Shares and
average exercise price in relation to the Warrant Shares shall be calculated
separately for the Shares and Warrant Shares.  The delivery to
Subscriber of the additional shares of Common Stock shall be not later than the
closing date of the transaction giving rise to the requirement to issue
additional shares of Common Stock.  Subscriber is granted the
registration rights described in Section 11 hereof in connection with such
additional shares of Common Stock.  For purposes of the issuance and
adjustment described in this paragraph, the issuance of any security of the
Company carrying the right to convert such security into shares of Common Stock
or of any warrant, right or option to purchase Common Stock shall result in the
issuance of the additional shares of Common Stock upon the sooner of the
agreement to or actual issuance of such convertible security, warrant, right or
option and again at any time upon any subsequent issuances of shares of Common
Stock upon exercise of such conversion or purchase rights if such issuance is at
a price lower than the Conversion Price or Warrant exercise price in effect upon
such issuance.  Common Stock issued or issuable by the Company for no
consideration or for consideration that cannot be determined at the time of
issue will be deemed issuable or to have been issued for $0.001 per share of
Common Stock.  The rights of Subscriber set forth in this Section 12
are in addition to any other rights the Subscriber has pursuant to this
Agreement, the Note, any Transaction Document, and any other agreement referred
to or entered into in connection herewith or to which Subscriber and Company are
parties.

     

    (c)           Maximum Exercise of
Rights.   In the event the exercise of the rights
described in Sections 12(a) and 12(b) would or could result in the issuance of
an amount of Common Stock of the Company that would exceed the maximum amount
that may be issued to Subscriber calculated in the manner described in Section
7.3 of this Agreement, then the issuance of such additional shares of Common
Stock of the Company to Subscriber will be deferred in whole or in part until
such time as Subscriber is able to beneficially own such Common Stock without
exceeding the applicable maximum amount set forth calculated in the manner
described in Section 7.3 of this Agreement and notifies the Company
accordingly.

     

    13.           Miscellaneous.

     

    (a)           Notices.  All
notices, demands, requests, consents, approvals, and other communications
required or permitted hereunder shall be in writing and, unless otherwise
specified herein, shall be (i) personally served, (ii) deposited in the mail,
registered or certified, return receipt requested, postage prepaid, (iii)
delivered by reputable air courier service with charges prepaid, or (iv)
transmitted by hand delivery, telegram, or facsimile, addressed as set forth
below or to such other address as such party shall have specified most recently
by written notice.  Any notice or other communication required or
permitted to be given hereunder shall be deemed effective (a) upon hand delivery
or delivery by facsimile, with accurate confirmation generated by the
transmitting facsimile machine, at the address or number designated below (if
delivered on a business day during normal business hours where such notice is to
be received), or the first business day following such delivery (if delivered
other than on a business day during normal business hours where such notice is
to be received) or (b) on the second business day following the date of mailing
by express courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur. The addresses for
such communications shall be: (i) if to the Company, to: Advanced Cell
Technology, Inc., 381 Plantation Street, Worcester, MA 01605, Attn: William M.
Caldwell, IV, CEO, facsimile: (510) 202-255-8410, with a copy by fax only
to:  Sichenzia, Ross, Friedman & Ference LLP, 61 Broadway, 32nd
Floor, New York, NY 10006, Attn: Thomas A. Rose, Esq., facsimile: (212)
930-9725, and (ii) if to the Subscriber, to: the address and fax number
indicated on the signature page hereto, with an additional copy by fax only to:
Grushko & Mittman, P.C., 551 Fifth Avenue, Suite 1601, New York, New York
10176, facsimile: (212) 697-3575.

     

    
      
         

      

      
        22

        
          

        

      

      
         

      

    

     

     (b)           Entire Agreement;
Assignment.    Neither the Company nor the Subscriber
has relied on any representations not contained or referred to in this Agreement
and the documents delivered herewith.   No right or obligation of
the Company shall be assigned without prior notice to and the written consent of
the Subscriber.

     

    (c)           Counterparts/Execution.  This
Agreement may be executed in any number of counterparts and by the different
signatories hereto on separate counterparts, each of which, when so executed,
shall be deemed an original, but all such counterparts shall constitute but one
and the same instrument.  This Agreement may be executed by facsimile
signature and delivered by electronic transmission.

     

    (d)           Law Governing this
Agreement.  This Agreement shall be governed by and construed
in accordance with the laws of the State of New York without regard to
principles of conflicts of laws. Any action brought by either party against the
other concerning the transactions contemplated by this Agreement shall be
brought only in the state courts of New York or in the federal courts located in
the state and county of New York.  The parties to this Agreement
hereby irrevocably waive any objection to jurisdiction and venue of any action
instituted hereunder and shall not assert any defense based on lack of
jurisdiction or venue or based upon forum non
conveniens.  The parties executing this Agreement
and other agreements referred to herein or delivered in connection herewith on
behalf of the Company agree to submit to the in personam jurisdiction of such
courts and hereby irrevocably waive trial by jury.  The
prevailing party shall be entitled to recover from the other party its
reasonable attorney's fees and costs.  In the event that any provision
of this Agreement or any other agreement delivered in connection herewith is
invalid or unenforceable under any applicable statute or rule of law, then such
provision shall be deemed inoperative to the extent that it may conflict
therewith and shall be deemed modified to conform with such statute or rule of
law.  Any such provision which may prove invalid or unenforceable
under any law shall not affect the validity or enforceability of any other
provision of any agreement.  Each party hereby irrevocably waives
personal service of process and consents to process being served in any suit,
action or proceeding in connection with this Agreement or any other Transaction
Document by mailing a copy thereof via registered or certified mail or overnight
delivery (with evidence of delivery) to such party at the address in effect for
notices to it under this Agreement and agrees that such service shall constitute
good and sufficient service of process and notice thereof.  Nothing
contained herein shall be deemed to limit in any way any right to serve process
in any other manner permitted by law.

     

    (e)           Specific Enforcement,
Consent to Jurisdiction.  The Company and Subscriber
acknowledge and agree that irreparable damage would occur in the event that any
of the provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached.  It is accordingly agreed
that the parties shall be entitled to seek an injunction or injunctions to
prevent or cure breaches of the provisions of this Agreement and to enforce
specifically the terms and provisions hereof, this being in addition to any
other remedy to which any of them may be entitled by law or
equity.  Subject to Section 13(d) hereof, the Company hereby
irrevocably waives, and agrees not to assert in any such suit, action or
proceeding, any claim that it is not personally subject to the jurisdiction in
New York of such court, that the suit, action or proceeding is brought in an
inconvenient forum or that the venue of the suit, action or proceeding is
improper.  Nothing in this Section shall affect or limit any right to
serve process in any other manner permitted by law.

     

    
      
         

      

      
        23

        
          

        

      

      
         

      

    

     

    (f)           Damages.   In
the event the Subscriber is entitled to receive any liquidated damages pursuant
to the Transactions Documents, the Subscriber may elect to receive the greater
of actual damages or such liquidated damages.

     

    (g)           Maximum
Payments.   Nothing contained herein or in any document
referred to herein or delivered in connection herewith shall be deemed to
establish or require the payment of a rate of interest or other charges in
excess of the maximum permitted by applicable law.  In the event that
the rate of interest or dividends required to be paid or other charges hereunder
exceed the maximum permitted by such law, any payments in excess of such maximum
shall be credited against amounts owed by the Company to the Subscriber and thus
refunded to the Company.

     

    (h)           Calendar
Days.   All references to “days” in the Transaction
Documents shall mean calendar days unless otherwise stated.  The terms
“business days” and “trading days” shall mean days that the New York Stock
Exchange is open for trading for three or more hours.  Time periods
shall be determined as if the relevant action, calculation or time period were
occurring in New York City.  Any deadline that falls on a non-business
day in any of the Transaction Documents shall be automatically extended to the
next business day and interest, if any, shall be calculated and payable through
such extended period.

     

    (i)           Captions: Certain
Definitions.  The captions of the various sections and
paragraphs of this Agreement have been inserted only for the purposes of
convenience; such captions are not a part of this Agreement and shall not be
deemed in any manner to modify, explain, enlarge or restrict any of the
provisions of this Agreement.  As used in this Agreement the term
“person” shall
mean and include an individual, a partnership, a joint venture, a corporation, a
limited liability company, a trust, an unincorporated organization and a
government or any department or agency thereof.

     

    (j)           Consent.   The
provisions of this Agreement and the Transaction Documents, including but not
limited to the Warrants, and any other agreement delivered in connection
herewith, may be waived or amended in a written agreement executed by the
Company and Subscribers representing not less than 67% of the outstanding
principal amount of the Notes on the date consent is requested which 67% must
include Alpha Capital Anstalt for so long as Alpha Capital Anstalt holds not
less than $200,000 of outstanding Notes (such amount being a “Majority in
Interest”).  Once the Notes are no longer outstanding, a
Majority in Interest will mean Holders of not less than 67% of the
Warrants.  A Majority in Interest may consent to take or forebear from
any action permitted under or in connection with the Transaction Documents,
modify any Transaction Documents or waive any default or requirement applicable
to the Company, Subsidiaries or Subscribers under the Transaction Documents
provided the effect of such action does not waive any accrued interest or
damages and further provided that the relative rights of the Subscribers to each
other remains unchanged.

     

    (k)           Severability.  In
the event that any term or provision of this Agreement shall be finally
determined to be superseded, invalid, illegal or otherwise unenforceable
pursuant to applicable law by an authority having jurisdiction and venue, that
determination shall not impair or otherwise affect the validity, legality or
enforceability: (i) by or before that authority of the remaining terms and
provisions of this Agreement, which shall be enforced as if the unenforceable
term or provision were deleted, or (ii) by or before any other authority of any
of the terms and provisions of this Agreement.

     

     

     

    
      
         

      

      
        24

        
          

        

      

      
         

      

    

     

     

    (l)           Successor
Laws.  References in the Transaction Documents to laws, rules,
regulations and forms shall also include successors to and functionally
equivalent replacements of such laws, rules, regulations and forms.  A
successor rule to Rule 144(b)(1)(i) shall include any rule that would be
available to a non-Affiliate of the Company for the sale of Common Stock not
subject to volume restrictions and after a six month holding period.


     

    [THIS
SPACE INTENTIONALLY LEFT BLANK]

     

    


    
      
         

      

      
        25

        
          

        

      

      
         

      

    

     

    SIGNATURE PAGE TO
SUBSCRIPTION AGREEMENT

     

    


    Please
acknowledge your acceptance of the foregoing Subscription Agreement by signing
and returning a copy to the undersigned whereupon it shall become a binding
agreement between us.

     

    
      
        	 	      
                ADVANCED
      CELL TECHNOLOGY, INC.

                a
      Delaware corporation

              	 
	 	 	 	 
	
                Dated:
      November ___, 2009

              	
                By:
      

              	/s/ 	 
	 	 	Name 	 
	 	 	Title 	 
	 	 	 	 


      

    

    


    


    
      	
              SUBSCRIBER

            	
              INITIAL
      CLOSING PURCHASE PRICE (CASH)

            	
              INITIAL
      CLOSING PRINCIPAL AMOUNT OF NOTE

            	
              SECOND
      CLOSING PURCHASE PRICE (CASH)

            	
              SECOND
      CLOSING PRINCIPAL AMOUNT OF NOTE

            
	
              Name
      of Subscriber:

               

              __________________________________________________________

               

              Address:
      ___________________________________________________

               

              __________________________________________________________

               

              Fax
      No.: ___________________________________________________

               

              Taxpayer
      ID# (if applicable): ____________________________________

               

               

              __________________________________________________________

              (Signature)

              By:

               

            	 
      	 
      	 
      	 
      


    

     

     

    
 

    
      
         

      

      
        26

        
          

        

      

      
         

      

    

    LIST OF EXHIBITS AND
SCHEDULES

     

     

     

     

    
      
        	 
      	
                Exhibit
      A

              	
                Form
      of Note

              
	 
      	
                Exhibit
      B

              	
                Form
      of Class A Warrant

              
	 
      	
                Exhibit
      C

              	
                Form
      of AIR Note

              
	 
      	
                Exhibit
      D

              	
                Additional
      Investment Rights Certificate

              
	 
      	
                Exhibit
      E

              	
                Form
      of Class B Warrant

              
	 
      	
                Exhibit
      F

              	
                Escrow
      Agreement

              
	
              	
                      
                  Exhibit
      G

                

              	Form
      of Legal Opinion
	
                 

              	
                      
                  Schedule
      5(a)

                

              	Subsidiaries
	 
      	
                Schedule
      5(d)

              	
                Additional
      Issuances / Capitalization

              
	 
      	
                Schedule
      5(l)

              	
                Defaults

              
	 
      	
                Schedule
      5(o)

              	
                Undisclosed
      Liabilities

              
	 
      	
                Schedule
      5(p)

              	
                Undisclosed
      Events or Circumstances

              
	 
      	
                Schedule
      5(q)

              	
                Financial
      Institutions

              
	 
      	
                Schedule
      5(x)

              	
                Transfer
      Agent

              
	 
      	
                Schedule
      8(a)

              	
                Due
      Diligence Fees

              
	 
      	
                Schedule
      9(e)

              	
                Use
      of Proceeds

              
	 
      	
                Schedule
      9(l)

              	
                Intellectual
      Property

              
	 
      	
                Schedule
      9(s)

              	
                Liens

              
	 
      	
                Schedule
      12(a)

              	
                Excepted
      Issuances / Permitted Debt

              


      

    

    


     

    
 

    
      
         

      

      
        27

        
          

        

      

      
         

      

    

     

    


    SCHEDULE
8(a)

    


    DUE DILIGENCE
FEE

    


    


    DUE DILIGENCE FEE
RECIPIENT:

    


    MOMONA
CAPITAL LLC

    150
Central Park South, 2nd
Floor

    New York,
NY 10019

    Fax:
(212) 586-8244

    


    


    250,000
restricted Shares of the Company’s $.001 par value Common Stock.

     

     

     

     

    28