Exhibit
10.9


 


CONVERTIBLE
PROMISSORY NOTE


$600,000
PLUS INTEREST DUE & PAYABLE


DOCUMENT
A-02152008


 


THIS NOTE AND THE SHARES
ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED.  THIS
NOTE AND THE SHARES ISSUABLE UPON CONVERSION OF THIS NOTE MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT OR APPLICABLE EXEMPTION OR SAFE HARBOR PROVISION.


 


FOR VALUE RECEIVED, on
the Effective Date, as defined below, Advanced Cell Technology
Inc. as Obligor (“Borrower,” or “Obligor”), hereby promises to pay
to the Lender (“Lender” or “ Holder”), as defined below, the Principal Sum, as
defined below, along with the Interest Rate, as defined below, according to the
terms herein.


 


	
  The “Effective Date”
  shall be:

  	
   

  	
  February 15, 2008

  
	
   

  	
   

  	
   

  
	
  The “Lender” shall be:

  	
   

  	
  JMJ Financial / Its
  Principal, or Its Assignees

  
	
   

  	
   

  	
   

  
	
  The “Principal Sum”
  shall be:

  	
   

  	
  $600,000 (six hundred
  thousand US Dollars); Subject to the following: accrued, unpaid interest
  shall be added to the Principal Sum.

  
	
   

  	
   

  	
   

  
	
  The “Consideration”
  shall be:

  	
   

  	
  $500,000 (five hundred
  thousand) dollars in the form of cashier’s check.

  
	
   

  	
   

  	
   

  
	
  The “Interest Rate”
  shall be:

  	
   

  	
  12% one-time interest
  charge on the Principal Sum. No interest or principal payments are required
  until the Maturity Date, but both principal and interest may be included in
  conversion prior to maturity date.

  
	
   

  	
   

  	
   

  
	
  The “Conversion Price”
  shall be the following price:

  	
   

  	
  As applied to the
  Conversion Formula set forth in 2.2, the lesser of (a) $0.38 or
  (b) 80% (eighty percent) of the average of the 3 (three) lowest trade
  prices in the 20 trading days previous to the conversion; as applies to
  Advanced Cell Technology Inc. voting common stock.

  
	
   

  	
   

  	
   

  
	
  The “Prepayment Terms”
  shall be:

  	
   

  	
  Prepayment is not
  permitted, unless approved by Holder in writing.

  



 

















 


	
  The “Maturity Date” is
  the date upon which the Principal Sum of this Note, as well as any unpaid
  interest shall be due and payable, and that date shall be:

  	
   

  	
  February 15, 2010

  



 


ARTICLE 1 PAYMENT-RELATED
PROVISIONS


 


1.1  Demand. 
Upon notice by holder, this Note is payable on Demand at any time from
and after 180 days from the Effective Date.


 


1.2  Interest Rate. 
Subject to the Holder’s right to convert, interest payable on this Note
will accrue interest at the Interest Rate and shall be applied to the Principal
Sum.


 


ARTICLE 2 CONVERSION RIGHTS


 


The Holder will have the
right to convert the Principal Sum and accrued interest under this Note into
Shares of the Borrower’s Common Stock as set forth below.


 


2.1  Conversion Rights and Cashless Exercise.  The Holder will have the right at its
election from and after 180 days from the Effective Date, and then at any time,
to convert all or part of the outstanding and unpaid Principal Sum and accrued
interest into shares of fully paid and nonassessable shares of common stock of
Advanced Cell Technology Inc. (as such stock exists on the date of issuance of
this Note, or any shares of capital stock of Advanced Cell Technology Inc. into
which such stock is hereafter changed or reclassified, the “Common Stock”) as
per the Conversion Formula set forth in Section 2.2.  Any such conversion shall be cashless, and
shall not require further payment from Holder. 
Unless otherwise agreed in writing by both the Borrower and the Holder,
at no time will the Holder convert any amount of the Note into common stock
that would result in the Holder owning more than 4.99% of the common stock
outstanding of Advanced Cell Technology Inc.  Shares from any such conversion will be
delivered to Holder within 2 (two) business days of conversion notice delivery
(see 3.1) via 10:30 am priority overnight delivery service (see Section 2.6).


 


2.2  Conversion Formula.  The number of shares issued through conversion
is the conversion amount divided by the conversion price.


 


	
  # Shares = 

  	
  Conversion Amount

  
	
   

  	
  Conversion Price

  



 


2.3  This section 2.3 intentionally left blank.


 


2.4  Adjustment Upon Dilutive Offers, Agreements,
or Sales.  If the Borrower, at any time
while this Note is outstanding, enters into an agreement under which it issues
or agrees to issue either its common stock, options, or warrants to purchase or
convert to its common stock at a price or exercise price or conversion price (a
“Subsequent Share Price”), as the case may be, 


 

















 


that is less than the
conversion price or subsequent conversion formula result set forth in Section 2.2,
then the conversion price set forth in Section 2.2. shall be automatically
adjusted to equal the Subsequent Share Price.  Circumstances that are exempt from adjustment
as set forth in this Section 2.4 include:


 


(a) options to
employees, officers, directors or consultants pursuant to any stock or option
plan currently in effect or hereafter duly adopted by a majority of the non-
employee members of the board of directors of the Borrower or a majority of the
members of a committee of non-employee directors established for such purpose,
provided that the exercise price of such options shall not be less than the
Conversion Price on the trading day immediately prior to the grant of such
option,


 


(b) securities
issued upon the exercise or conversion of any securities, convertible
securities, options or warrants issued and outstanding on the date of this
Note, or any agreements to issue the same in existence as of the date of this
Note, and


 


(c) securities
issued pursuant to acquisitions or strategic transactions, provided any such
issuance shall only be made in connection with a transaction involving a person
or entity which is, itself or through its subsidiaries, an operating company in
a business synergistic with the business of the Borrower and in which the
Borrower receives benefits in addition to the investment of funds, but shall
not include a transaction in which the Borrower is issuing securities primarily
for the purpose of raising capital or to an entity whose primary business is
investing in securities.


 


2.5  Reservation of Shares.  As of the issuance date of this Note and for
the remaining period during which the conversion right exists, the Borrower
will reserve from its authorized and unissued Common Stock a sufficient number
of shares to provide for the issuance of Common Stock upon the full conversion
of this Note.  The Borrower represents
that upon issuance, such shares will be duly and validly issued, fully paid and
non-assessable.  The Borrower agrees that
its issuance of this Note constitutes full authority to its officers, agents
and transfer agents who are charged with the duty of executing and issuing
stock certificates to execute and issue the necessary certificates for shares
of Common Stock upon the conversion of this Note.


 


2.6  Delivery of Conversion Shares.  Shares from any such conversion will be
delivered to Holder within 2 (two) business days of conversion notice delivery
(see 3.1) via 10:30 am priority overnight delivery service (see “Share Delivery”
attachment).  If those shares are not
delivered in accordance with this timeframe stated in this Section 2.6, at
any time for any reason prior to offering those shares for sale in a private
transaction or in the public market through its broker, Holder may rescind that
particular conversion to have the conversion amount returned to the note
balance with the conversion shares returned to the Borrower.


 

















 


ARTICLE 3 MISCELLANEOUS


 


3.1  Notices. 
Any notice required or permitted hereunder must be in writing and either
personally served, sent by facsimile or email transmission, or sent by
overnight courier.  Notices will be
deemed effectively delivered at the time of transmission if by facsimile or
email, and if by overnight courier the business day after such notice is
deposited with the courier service for delivery.


 


3.2  Amendment Provision.  The term “Note” and all reference thereto, as
used throughout this instrument, means this instrument as originally executed,
or if later amended or supplemented, then as so amended or supplemented.


 


3.3  Assignability.  This Note will be binding upon the Borrower
and its successors and permitted assigns, and will inure to the benefit of the
Holder and its successors and permitted assigns, and may be assigned by the
Holder.


 


3.4  Governing Law.  This Note will be governed by, and construed
and enforced in accordance, with the laws of the State of Florida, without
regard to the conflict of laws principles thereof.


 


3.5  Maximum Payments.  Nothing contained herein may 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
required to be paid or other charges hereunder exceed the maximum permitted by
such law, any payments in excess of such maximum will be credited against
amounts owed by the Borrower to the Holder and thus refunded to the Borrower.


 


3.6  Attorney Fees.  In the event any attorney is employed by
either party to this Note with regard to any legal or equitable action,
arbitration or other proceeding brought by such party for the enforcement of
this Note or because of an alleged dispute, breach, default or
misrepresentation in connection with any of the provisions of this Note, the
prevailing party in such proceeding will be entitled to recover from the other
party reasonable attorneys’ fees and other costs and expenses incurred, in
addition to any other relief to which the prevailing party may be entitled.


 


3.7  Change of Officer, Change of Control.  In the event that William Caldwell is
replaced as Chairman & CEO of Advanced Cell Technology Inc., or in the
event that Advanced Cell Technology Inc. undergoes a change in majority
control, the Holder has the right to make this Note payable on demand as set
forth in Section 1 .l.


 


3.8  No Public Announcement.  Except as required by applicable securities
laws, no public announcement may be made regarding this Note, payments, or
conversions without written permission by both Borrower and Holder.


 


3.9  Opinion of Counsel.  In the event that an opinion of counsel is
needed for any matter related to this Note, Holder has the right to have any
such opinion provided by its counsel.  Holder
also has the right to have any such opinion provided by Borrower’s counsel.


 

















 


3.10  Additional Financing.  The Holder, at its option, may invest up to
an additional $500,000 (five hundred thousand dollars), in part, whole, and/or
multiple transactions, in Advanced Cell Technology Inc. on the same or better
terms as set forth in this agreement for a period of 150 days from the
Effective Date.  The 150 day window may
be extended at the option of the Borrower. 
In the event that Holder wishes to exercise this right, the Borrower
will be notified by the Notice of Additional Financing Form, and any additional
financing will be memorialized by an additional Convertible Promissory Note(s).


 


3.11  Effective Date.  This Note will become effective only upon
occurrence of the three following events: the Effective Date of February 15,
2008 has been reached, execution by both parties, and delivery of valid payment
by the Lender.


 


3.12  Director’s Resolution.  Once effective, Borrower will execute and
deliver to Holder a copy of a Board of Director’s resolution resolving that
this note is validly issued, paid, and effective.


 


3.13  Use of Proceeds.  As further described, promised, and agreed in
the attached Use of Proceeds Agreement, Borrower promises that use of the funds
will not go towards stem cell research or development related to embryonic stem
cells in any manner, and that 100% of the use of proceeds is to go the company’s
adult stem cell research and development of the Mytogen program.  Borrower understands that Holder has entered
into this transaction in reliance upon that promise, understanding, and use of
proceeds as memorialized in the attached Use of Proceeds Agreement.


 


3.14  Adjustment of Conversion Price.  In the event that Borrower enters into an
additional financing agreement with another investor subsequent to the closing
of this transaction, Borrower may adjust the Conversion Price percentage set
forth herein as to satisfy the terms of any future financing transaction.  In the event of such adjustment, as shown in
the Adjustment of Conversion Price Example attachment, Borrower will make a
one-time cash payment to Holder at the time of adjustment for the dollar
difference that would result in the Conversion Price percentage adjustment.  In the event that Holder invests additional
funds as set forth in Section 3.10, this Section 3.14 will apply to
future financing whether the additional funds are invested before or after any
such adjustment.


 


	
  BORROWER[S]:

  	
   

  	
  LENDER/HOLDER:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ William M.
  Caldwell, IV

  	
   

  	
  /s/ Justin Keener

  
	
  William Caldwell

  	
   

  	
  JMJ Financial / Its
  Principal

  
	
  President &
  CEO

  	
   

  	
   

  
	
  Advanced Cell
  Technology, Inc.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  	
  Dated:

  	
  2/14/08

  
					



 

















 


USE OF PROCEEDS AGREEMENT


 


Mr. Bill
Caldwell, President & CEO


Mr. Ivan
Wolkind, SVP of Finance & CAO


 


Dear
Bill and Ivan,


 


Through
the course of our discussions leading up to this financing, you have been very
helpful for my understanding of stem cell research and development,
particularly with the differences between embryonic stem cell research and
adult stem cell research.


 


Because
embryonic stem cell research has underlying ethical issues that I would need
months to research and consider before drawing a conclusion as to whether I
support it or discourage it, we felt it was best to fund the company solely for
adult stem cell research.  This is a
critical ethical concern to me of highest importance, and you have agreed,
pledged, and promised to segregate the funds as follows.


 


As
summarized in Section 3.13 above, you hereby represent, for me to rely on
as an investor and also as a party to this agreement, that you agree, pledge,
and promise that these funds will not be used in any way, shape, form,
spillover, or connection to embryonic stem cell research.  You have represented to me that Mytogen
research and development is dedicated solely to adult stem cell research and
that Mytogen has no connection to embryonic stem cell research whatsoever.  The funds will be used solely in this manner
as provided by you:


 


·                  Mytogen facilities costs that are not and
will never be connected to, related to, or shared with embryonic stem cell
research during the use of proceeds.


 


·                  Mytogen salaries that are not and wilt never
be connected to, related to, or shared with embryonic stem cell research during
the use of proceeds.


 


·                  Mytogen fixed assets that are not and will
never be connected to, related to, or shared with embryonic stem cell research.


 


·                  Mytogen accounts payable that are not and
will never be connected to, related to, or shared with embryonic stem cell
research.


 


You
also agree that upon my request, at any time upon reasonable notice, you will
provide me with the actual use of proceeds of these funds.  Further, you promise and agree that these
funds will not be loaned, pledged, used as collateral, or otherwise
hypothecated in any way, shape, form, spillover, or connection to embryonic
stem cell research.


 


If
we are all in understanding, and if you agree to uphold these promises and
agree to these representations for me to rely upon as an investor and as a
party to this agreement, please indicate by signing below.


 


	
  /s/ Justin Keener

  	
   

  	
  /s/
  William M. Caldwell, IV

  
	
  JMJ
  Financial / Its Principal

  	
   

  	
  William
  Caldwell

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Ivan
  Wolkind

  



 
















 


NOTICE OF ADDITIONAL FINANCING FORM


 


(To
be executed by Holder when intending to invest additional funds)


 


This
Form is notification that I intend to invest additional funds into
Advanced Cell Technology Inc. as set forth in Section 3.10 of the
Convertible Promissory Note dated February 15, 2008,


 


Intended
Amount: $


 


Intended
Execution Date of Documentation:


 


Intended
Delivery Date of Payment:


 


 


	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  



 

















 


SAMPLE


 


NOTICE OF CONVERSION


 


(To
be executed by the Holder in order to convert the Note)


 


The
undersigned hereby elects to convert a portion of the Note issued by Advanced
Cell Technology Inc. on February 15, 2008 into Shares of Common Stock of
Advanced Cell Technology Inc. according to the conditions set forth in such
Note, as of the date written below.


 


	
  Date
  of Conversion:

  	
   

  	
   

  
	
   

  	
   

  
	
  Conversion
  Amount:

  	
   

  	
   

  
	
   

  	
   

  
	
  Conversion
  Price:

  	
   

  	
   

  
	
   

  	
   

  
	
  Shares
  To Be Delivered:

  	
   

  	
   

  
	
   

  	
   

  
	
  Signature:

  	
   

  	
   

  
	
   

  	
   

  
	
  Print
  Name:

  	
   

  	
   

  
	
   

  	
   

  
	
  Address:

  	
   

  	
   

  
									



 


 


 


Shares must be delivered to Holder within 2 (two) business
days of conversion notice via 10:30am priority overnight delivery service in
accordance with Section 2.6.


 

















 


OTHER NOTE/DEBENTURE HOLDERS’ RACHET PROVISIONS


 


Borrower
is aware that as set forth in the Conversion Price and Section 2, that the
market price of the stock may be at a level such that the Holder’s conversion
takes place at a price per share that is lower than $0.38.


 


In
the event that any or all conversions take place under $0.38, Borrower will
bear any consequences from any past or future financing agreements; and that
under no circumstances will any past or future financing agreements prevent
Borrower from honoring the conversion terms and all other terms as set forth in
this agreement.


 


 


	
   

  	
   

  
	
  William
  Caldwell

  
	
  President &
  CEO

  
	
  Advanced
  Cell Technology Inc.

  



 


 


	
  Dated:

  	
   

  	
   

  



 

















 


SHARE DELIVERY ATTACHMENT


 


EXAMPLE


 


2.6.
Delivery of Conversion Shares. Shares from any such conversion will be
delivered to Holder within 2 (two) business days of conversion notice delivery
(see 3.1) via 10:30am priority overnight delivery service. If those shares are
not delivered in accordance with this timeframe stated in this Section 2.6,
at any time for any reason prior to offering those shares for sale in a private
transaction or in the public market through its broker, Holder may rescind that
particular conversion to have the conversion amount returned to the note
balance with the conversion shares returned to the Borrower.


 


Example:


 


Holder
delivers conversion notice to Borrower at 4:45pm eastern time on Monday January 1st.


 


Borrower’s
transfer agent must send shares to Holder via 10:30am overnight delivery no
later than Tuesday January 2nd.


 


Holder
must have received the shares or received delivery attempt no later than
10:30am eastern time on Wednesday January 3rd.


 

















 


ADJUSTMENT OF CONVERSION PRICE EXAMPLE


 


3.14.
Adjustment of Conversion Price.  In the
event that Borrower enters into an additional financing agreement with another
investor subsequent to the closing of this transaction, Borrower may adjust the
Conversion Price percentage set forth herein as to satisfy the terms of any
future financing transaction. In the event of such adjustment, as shown in the
Adjustment of Conversion Price Example attachment, Borrower will make a
one-time cash payment to Holder at the time of adjustment for the dollar
difference that would result in the Conversion Price percentage adjustment. In
the event that Holder invests additional funds as set forth in Section 3.10,
this Section 3.14 will apply to future financing whether the additional
funds are invested before or after any such adjustment.


 


Example:


 


Current 80%


 


$600,000
principal amount x 1.12 one-time interest charge = $672,000 total principal
balance


 


$672,000
/ .80 conversion price percentage = $840,000 total paper value


 


For
this example, assume the Borrower adjusted the conversion price percentage
upwards to 90%


 


Adjusted 90%


 


$600,000
principal amount x 1.12 one-time interest charge = $672,000 total principal
balance


 


$672,000
/ .90 conversion price percentage = $746,666 total paper value


 


Cash
Payment Required by Borrower to Holder equals $93,333


 


Original
paper value at 80% = $840,000


-
Adjusted paper value at 90% = $746,666


Cash
payment required for adjustment $93,333