**Exhibit 10.3**

[Confidential treatment has been requested withrespect to the omitted portions of this exhibit. This copy omits informationsubject to a confidentiality request filed with the Securities and ExchangeCommission. Omissions are designated with the characters [***]. A completeversion of this exhibit has been filed separately with the Securities andExchange Commission along with the request for confidential treatment.]

**PURCHASE AGREEMENTby and amongKIRIN SD, INC. andADVANCED CELL TECHNOLOGY, INC. As of May 9, 2006**

 

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**Table of Contents**
|                | ** ** | ** **                                                   | ** ** | **Page** | ** ** |
|----------------|------------|--------------------------------------------------------------|------------|----------|------------|
| ARTICLE 1 |       | PURCHASE AND PAYMENT                               | ** ** | 1        | ** ** |
| 1.1            |       | Purchase                                                     |       | 1        |       |
| 1.2            |       | Purchase Price                                               |       | 1        |       |
| ARTICLE 2      |       | REPRESENTATIONS AND WARRANTIES OF ACT                        |       | 2        |       |
| 2.1            |       | Organization and Standing                                    |       | 2        |       |
| 2.2            |       | Power and Authority                                          |       | 2        |       |
| 2.3            |       | Conflicts; Consents and Approvals                            |       | 2        |       |
| 2.4            |       | Litigation                                                   |       | 3        |       |
| 2.5            |       | Brokers                                                      |       | 3        |       |
| 2.6            |       | Ownership                                                    |       | 3        |       |
| ARTICLE 3      |       | REPRESENTATIONS AND WARRANTIES OF PURCHASER                  |       | 3        |       |
| 3.1            |       | Organization and Standing                                    |       | 3        |       |
| 3.2            |       | Authority                                                    |       | 4        |       |
| 3.3            |       | Conflicts; Consents and Approvals                            |       | 4        |       |
| 3.4            |       | Litigation                                                   |       | 5        |       |
| 3.5            |       | Brokers                                                      |       | 5        |       |
| ARTICLE 4      |       | CONDITIONS TO CLOSING                                        |       | 5        |       |
| 4.1            |       | Mutual Conditions                                            |       | 5        |       |
| 4.2            |       | Conditions to Purchaser’s Obligations                   |       | 5        |       |
| 4.3            |       | Conditions to ACT’s Obligations                         |       | 6        |       |
| ARTICLE 5      |       | SURVIVAL OF REPRESENTATIONS AND WARRANTIES;  INDEMNIFICATION |       | 6        |       |
| 5.1            |       | Survival of Representations and Warranties                   |       | 6        |       |
| 5.2            |       | Indemnification by ACT                                       |       | 7        |       |
| 5.3            |       | Indemnification by Purchaser                                 |       | 7        |       |
| 5.4            |       | Definition of Damages                                        |       | 7        |       |
| 5.5            |       | Procedures for Indemnification                               |       | 7        |       |
| ARTICLE 6      |       | POST-CLOSING COVENANTS                                       |       | 8        |       |
| 6.1            |       | [Reserved]                                                   |       | 8        |       |
| ARTICLE 7      |       | MISCELLANEOUS                                                |       | 8        |       |
| 7.1            |       | Notices                                                      |       | 8        |       |

 

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**Table of Contents**(continued)
|      | ** ** | ** **                                                 | ** ** | **Page** |   |
|------|------------|------------------------------------------------------------|------------|----------|--------|
| 7.2  |       | Expenses                                                   |       | 9        |   |
| 7.3  |       | Governing Law                                              |       | 9        |   |
| 7.4  |       | Dispute Resolution                                         |       | 9        |   |
| 7.5  |       | Assignment; Successors and Assigns; No Third Party  Rights |       | 11       |   |
| 7.6  |       | Counterparts                                               |       | 11       |   |
| 7.7  |       | Titles and Headings                                        |       | 11       |   |
| 7.8  |       | Entire Agreement                                           |       | 11       |   |
| 7.9  |       | Amendment and Modification                                 |       | 11       |   |
| 7.10 |       | Publicity; Public Announcements                            |       | 11       |   |
| 7.11 |       | Waiver                                                     |       | 12       |   |
| 7.12 |       | Severability                                               |       | 12       |   |
| 7.13 |       | No Strict Construction                                     |       | 12       |   |
| 7.14 |       | Specific Performance                                       |       | 12       |   |
| 7.15 |       | Further  Assurances                                        |       | 12       |   |

 

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**PURCHASE AGREEMENT**

This PURCHASE AGREEMENT, dated as of May 9, 2006(together with the exhibits attached hereto, this “**Agreement**”),is entered into by and between Kirin SD, Inc., a Delaware corporation (the“**Purchaser**”), and  Advanced Cell Technology, Inc., aDelaware corporation (“**ACT**”). Certaincapitalized terms used in this Agreement are defined on Exhibit Aattached hereto.

**RECITALS**

WHEREAS, on July 18, 2005, the Purchaserpurchased all of the issued and outstanding limited liability company interestsor units of Aurox, LLC, a Delaware limited liability company (“**Aurox**”), and substantially all of the limited liabilitycompany interests or units of Hematech, LLC, a Delaware limited liabilitycompany (“**Hematech**”); and

WHEREAS, ACT owns the remaining limited liabilitycompany interests or units of Hematech (the **“ACTInterests”**); and

WHEREAS, the Purchaser wishes to purchase, and ACTwishes to sell, the ACT Interests in accordance with the terms and subject tothe conditions of this Agreement; and

WHEREAS, Kirin Beer Kabushiki Kaisha (“**Kirin**”) and ACT desire to enter into thatcertain Exclusive License Agreement and certain Non-Exclusive License Agreementsubstantially in the forms attached hereto as Exhibit D and Exhibit E(the “**License Agreements**”) concurrent withand as a condition to the closing of the transactions contemplated by thisAgreement.

NOW, THEREFORE, in consideration of the foregoing andthe mutual covenants, agreements, representations and warranties contained inthis Agreement, the parties agree as follows:

**ARTICLE 1**

**PURCHASE ANDPAYMENT**

1.1           Purchase. Upon the terms andsubject to the conditions of this Agreement, ACT hereby sells, conveys,assigns, transfers and delivers to the Purchaser, and the Purchaser herebypurchases, acquires and accepts from ACT, all of ACT’s right, title andinterest in and to the ACT Interests free and clear of all Encumbrances.

1.2           Purchase Price. Inconsideration for the purchase by the Purchaser of the ACT Interests, thePurchaser hereby pays to ACT [***] U.S. Dollars ($[***]) (the **“Purchase Price”**) by wire transfer to the account designatedby ACT.

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**ARTICLE2**

**REPRESENTATIONSAND WARRANTIES OF ACT**

ACT hereby represents and warrants to the Purchaser asof the date hereof (or, if made as of a specified date, as of such specifieddated) as follows:

2.1           Organization and Standing. ACTis a corporation, duly organized, validly existing and in good standing underthe Laws of the state or jurisdiction of its organization and has all requisitepower and authority (corporate, partnership or otherwise) to own, lease, useand operate its properties and to conduct its business.

2.2           Power and Authority.

(a)           ACT has all requisite power andauthority to execute and deliver this Agreement and to consummate thetransactions contemplated hereby. ACT has all power and authority to executeand deliver the other agreements, documents and instruments to be executed anddelivered by it in connection with this Agreement and to consummate the transactionscontemplated thereby.

(b)           The execution, delivery andperformance of this Agreement by ACT and the consummation by ACT of thetransactions to be consummated by ACT hereby, and the execution, delivery andperformance of the other agreements, documents and instruments to be executedand delivered in connection with this Agreement by ACT and the consummation ofthe transactions contemplated thereby, have been duly authorized by allnecessary action or proceeding on the part of ACT.

(c)           This Agreement and the otheragreements, documents and instruments executed and delivered in connection withthis Agreement, have been duly executed and delivered by ACT and constitute thelegal, valid and binding obligation of ACT enforceable against ACT inaccordance with their respective terms, except as may be limited by applicablebankruptcy, insolvency, reorganization, moratorium or other similar Laws now orhereafter in effect relating to or affecting creditors’ rights generally,including the effect of statutory and other Laws regarding fraudulentconveyances and preferential transfers and subject to the limitations imposedby general equitable principles (regardless of whether such enforceability isconsidered in a proceeding at law or in equity).

2.3           Conflicts; Consents and Approvals.Neither the execution and delivery by ACT of this Agreement and the otheragreements, documents and instruments to be executed and delivered by ACT inconnection with this Agreement nor the consummation of the transactionscontemplated hereby or thereby, does:

(a)           conflict with, or result in a breachof any provision of, the organizational documents of ACT, if applicable;

(b)           violate, or conflict with, or resultin a breach of any provision of, or constitute a default (or an event that,with the giving of notice, the passage of time or otherwise, would constitute adefault) under, or entitle any Person (with the giving of notice, the passageof 

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time or otherwise) to terminate, accelerate, modify orcall a default under, or give rise to any obligation to make a payment under,or to any increased, additional or guaranteed rights of any Person under, orresult in the creation of any Encumbrance upon any of the properties or assetsof ACT under any of the terms, conditions or provisions of (i) anymaterial Contract to which ACT is a party or to which any of their propertiesor assets are bound or (ii) any permit, registration, approval, license orother authorization or filing to which ACT is subject or to which any of itsproperties or assets is subject, that would, individually or in the aggregate,be reasonably likely to prevent or materially impede or delay the consummationby ACT, of the transactions contemplated by this Agreement;

(c)           require any action, consent orapproval of any non-governmental third party other than any such action,consent or approval the failure to obtain which would not, individually or inthe aggregate, be reasonably likely to prevent or materially impede or delaythe consummation by ACT of the transactions contemplated by this Agreement;

(d)           violate any material order, writ, orinjunction, decree or Law applicable to ACT; or

(e)           require any material action, consentor approval of, or review by, or registration or filing by ACT with, anyGovernmental Authority.

2.4           Litigation. There is no Actionpending or threatened in writing, or, to ACT’s knowledge, otherwise threatened,against ACT that seeks, or would be reasonably likely, to prohibit ormaterially restrain the ability of ACT to enter into this Agreement or preventor materially impede or delay the consummation by ACT of any of thetransactions contemplated hereby.

2.5           Brokers. No Person has acteddirectly or indirectly as a broker, finder or financial advisor for ACT inconnection with the negotiations relating to or the transactions contemplatedby this Agreement, and no Person is entitled to any fee or commission or likepayment in respect thereof based in any way on any agreement, arrangement orunderstanding made by or on behalf of ACT.

2.6           Ownership. ACT is the lawfulowner beneficially and of record of the ACT Interests, free and clear of allEncumbrances. As of the date hereof, Purchaser shall acquire good andmarketable title to the ACT Interests, free and clear of all Encumbrances.

**ARTICLE 3**

**REPRESENTATIONSAND WARRANTIES OF PURCHASER**

Purchaser hereby represents and warrants to ACT, as ofthe date hereof (or, if made as of a specified date, as of such specifieddate), as follows:

3.1           Organization and Standing. ThePurchaser is a corporation duly organized, validly existing and in goodstanding under the Laws of the jurisdiction of its organization.

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3.2           Authority.

(a)           The Purchaser has all requisitecorporate power and authority to execute and deliver this Agreement and toconsummate the transactions contemplated hereby. Purchaser has all requisitecorporate power and authority to execute and deliver the other agreements,documents and instruments to be executed and delivered by it in connection withthis Agreement and to consummate the transactions contemplated thereby.

(b)           The execution, delivery andperformance of this Agreement by the Purchaser and the consummation by thePurchaser of the transactions contemplated to be consummated by the Purchaserhereby, and the execution, delivery and performance of the other agreements,documents and instruments to be executed and delivered in connection with thisAgreement by the Purchaser and the consummation of the transactionscontemplated thereby, have been duly authorized by all necessary action orproceeding on the part of the Purchaser.

(c)           This Agreement and the otheragreements, documents and instruments executed and delivered in connection withthis Agreement have been duly executed and delivered by the Purchaser andconstitute the legal, valid and binding obligation of the Purchaser,enforceable against the Purchaser in accordance with its respective terms,except as may be limited by applicable bankruptcy, insolvency, reorganization,moratorium or other similar Laws now or hereafter in effect relating to oraffecting creditors’ rights generally, including the effect of statutory andother Laws regarding fraudulent conveyances and preferential transfers andsubject to the limitations imposed by general equitable principles (regardlessof whether such enforceability is considered in a proceeding at law or inequity).

3.3           Conflicts; Consents and Approvals.Neither the execution and delivery by the Purchaser of this Agreement and theother agreements, documents and instruments to be executed and delivered by eitherof them in connection with this Agreement, nor the consummation of thetransactions contemplated hereby or thereby, does:

(a)           conflict with, or result in a breachof any provision of, the organizational documents of the Purchaser;

(b)           violate, or conflict with, or resultin a breach of any provision of, or constitute a default (or an event that,with the giving of notice, the passage of time or otherwise, would constitute adefault) under, or entitle any Person (with the giving of notice, the passage oftime or otherwise) to terminate, accelerate, modify or call a default under, orgive rise to any obligation to make a payment under, or to any increased,additional or guaranteed rights of any Person under, or result in the creationof any Encumbrance upon any of the properties or assets of the Purchaser underany of the terms, conditions or provisions of (i) any Contract to whichthe Purchaser is a party or to which any of its properties or assets are boundor (ii) any permit, registration, approval, license or other authorizationor filing to which the Purchaser is subject or to which any of its propertiesor assets is subject, that would, individually or in the aggregate, bereasonably likely to prevent or materially impede or delay the consummation by thePurchaser, of the transactions contemplated by this Agreement;

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(c)           require any action, consent orapproval of any non-governmental third party other than any such action,consent or approval the failure to obtain which would not, individually or inthe aggregate, be reasonably likely to prevent or materially impede or delaythe consummation by the Purchaser of the transactions contemplated by thisAgreement;

(d)           violate any material order, writ, orinjunction, decree or Law applicable to the Purchaser; or

(e)           require any material action, consentor approval of, or review by, or registration or filing by the Purchaser with,any Governmental Authority, except possible actions in connection with U.S.export control laws.

3.4           Litigation. There is no Actionpending or threatened in writing, or, to Purchaser’s knowledge, otherwisethreatened, against the Purchaser that seeks, or would be reasonably likely, toprohibit or materially restrain the ability of the Purchaser to enter into thisAgreement or prevent or materially impede or delay the consummation by thePurchaser of any of the transactions contemplated hereby.

3.5           Brokers. No Person has acteddirectly or indirectly as a broker, finder or financial advisor for thePurchaser in connection with the negotiations relating to or the transactionscontemplated by this Agreement, and no Person is entitled to any fee orcommission or like payment in respect thereof based in any way on anyagreement, arrangement or understanding made by or on behalf of the Purchaser.

**ARTICLE 4**

**CONDITIONS TOCLOSING**

4.1           Mutual Conditions. Therespective obligations of each party hereto to consummate the transactionscontemplated by this Agreement shall be subject to the fulfillment or, iflegally permitted, waiver by all parties hereto at or prior to the execution ofthis Agreement of the following conditions:

(a)           There shall not be in effect anyOrder issued by any Governmental Authority preventing the consummation of thetransactions contemplated herein, seeking any material damages as a result ofthe transactions contemplated herein, or otherwise materially affecting theright or ability of the Purchaser to own the ACT Interests, nor shall anyAction be pending that seeks any of the foregoing.

(b)           There shall not be any Law prohibitingACT from selling the ACT Interests or the Purchaser from owning the ACTInterests or that makes this Agreement or the consummation of the transactionscontemplated herein illegal.

4.2           Conditions to Purchaser’sObligations. The obligations of the Purchaser to consummate thetransactions contemplated by this Agreement shall be subject to the fulfillmentor waiver by the Purchaser prior to or at the Closing of each of the followingconditions:

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(a)           ACT shall have executed and deliveredto the Purchaser an Instrument of Transfer and Receipt.

(b)           ACT shall have executed and deliveredto the Purchaser a covenant not to sue substantially in the form of Exhibit Battached hereto.

(c)           ACT shall have executed and deliveredto the Purchaser a release, substantially in the form of Exhibit Cattached hereto.

(d)           ACT shall have executed and deliveredto Kirin the Exclusive License Agreement and Non-Exclusive License Agreementsubstantially in the form of Exhibit D and Exhibit Eattached hereto.

(e)           ACT shall have delivered to thePurchaser certified copies of the resolutions, duly adopted by the Board ofDirectors of ACT, which shall be in full force and effect on the date hereof,authorizing the execution and delivery and performance by ACT of this Agreementand the consummation of the transactions contemplated hereby.

(f)            No Action shall have been commencedor threatened against the Purchaser or against any Representative (ashereinafter defined) of Purchaser (i) involving any challenge to, orseeking Damages (as hereinafter defined) or other relief in connection with,the transactions contemplated herein; or (ii) that may have the effect ofpreventing, delaying, making illegal, imposing limitations or conditions on orotherwise interfering with the transactions contemplated herein.

4.3           Conditions to ACT’s Obligations.The obligations of ACT to consummate the transactions contemplated by thisAgreement shall be subject to the fulfillment or waiver by ACT at or prior tothe Closing of each of the following conditions:

(a)           Kirin shall have executed anddelivered to ACT the Exclusive License Agreement and Non-Exclusive LicenseAgreement substantially in the form of Exhibit D and Exhibit Eattached hereto.

(b)           No Action shall have been commencedor threatened against ACT (i) involving any challenge to, or seekingDamages or other relief in connection with, the transactions contemplatedherein; or (ii) that may have the effect of preventing, delaying, makingillegal, imposing limitations or conditions on or otherwise interfering withthe transactions contemplated herein.

(c)           Purchaser shall deliver or cause tobe delivered to ACT the Purchase Price.

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**ARTICLE5**

**SURVIVALOF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION**

5.1           Survival of Representations andWarranties. All of the representations and warranties provided for in thisAgreement shall survive the closing of the transactions contemplated hereinuntil December 31, 2006; provided that the representations and warrantiesset forth in Sections 2.1, 2.2, 2.6, 3.1 and 3.2 shall survive indefinitely;provided further that any representations and warranties shall survive withrespect to, and to the extent of, any claim for indemnification in accordancewith this Article V prior to the applicable termination date until finalresolution of such claim. The representations and warranties contained in thisAgreement (and any right to indemnification for breach thereof) shall not beaffected by any investigation, verification or examination by any party heretoor by any Representative (as defined below) of any such party or by any suchparty’s knowledge of any facts with respect to the accuracy of any suchrepresentation or warranty.

5.2           Indemnification by ACT. ACT,jointly and severally, shall indemnify, defend and hold harmless the Purchaserand its Affiliates, and their respective officers, directors, employees, agentsand representatives, and each of their heirs, executors, successors and assigns(collectively, the **“Representatives”**),against and in respect of any and all Damages to the extent arising out of orresulting from any breach of a representation or warranty made by ACT in thisAgreement.

5.3           Indemnification by Purchaser. Purchasershall indemnify, defend and hold harmless ACT and its Representatives, againstand in respect of any and all Damages to the extent arising out of or resultingfrom any breach of a representation or warranty made by the Purchaser in thisAgreement.

5.4           Definition of Damages. **“Damages”** shall mean and include, collectively, any and alldamages, injuries, claims, demands, settlements, judgments, awards, fines,penalties, Taxes, losses, Liabilities, together with all out-of-pocket costsand expenses, including reasonable fees and disbursements of counsel,accountants, consultants or experts and expenses of investigation incurred by aparty entitled to indemnification hereunder as a result of a matter giving riseto a claim for indemnification hereunder.

5.5           Procedures for Indemnification.

(a)           A party entitled to be indemnifiedpursuant to Section 5.2 or 5.3 (the “**Indemnified Party**”)shall promptly notify the party liable for such indemnification (the “**Indemnifying Party**”) in writing, of any claim or demand withreasonable specificity, under which the Indemnified Party has determined hasgiven or is reasonably likely to give rise to a right of indemnification underthis Agreement within 45 days of such determination; provided, however,that a failure to provide such notice shall not relieve any Indemnifying Partyof its obligations hereunder except to the extent that it has been materiallyprejudiced by such failure.

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(b)           If the Indemnified Party shall notifythe Indemnifying Party of any claim or demand pursuant to Section 5.5(a),and if such claim or demand relates to a claim or demand asserted by a thirdparty against the Indemnified Party that the Indemnifying Party acknowledges isa claim or demand for which it must indemnify or hold harmless the IndemnifiedParty under Section 5.2 or 5.3, the Indemnifying Party shall have theright to employ counsel of its choice to defend any such claim or demandasserted against the Indemnified Party. The Indemnified Party shall have theright to participate in the defense of any such claim or demand at its ownexpense. The Indemnifying Party shall notify the Indemnified Party in writing,as promptly as possible (but in any case before the due date for the answer orresponse to a claim) after the date of the notice of claim given by theIndemnified Party to the Indemnifying Party under Section 5.5(a), of itselection to defend in good faith any such third party claim or demand. So longas the Indemnifying Party is defending in good faith any such claim or demandasserted by a third party against the Indemnified Party, the Indemnified Partyshall not settle or compromise such claim or demand. The Indemnified Partyshall make available to the Indemnifying Party or its agents, at theIndemnifying Party’s cost, all records and other material in the IndemnifiedParty’s possession reasonably required by it for its use in contesting anythird party claim or demand. Neither the Indemnifying Party nor the IndemnifiedParty shall settle or compromise any such claim or demand unless theIndemnifying Party or the Indemnified Party, as the case may be, is given afull and complete release of any and all liability by all relevant partiesrelating thereto. If notice is given to an Indemnifying Party of thecommencement of any action and it does not, within 15 days after theIndemnified Party’s notice is given, give notice to the Indemnified Party ofits election to assume the defense thereof, the Indemnifying Party shall bebound by any determination made in such action or any compromise or settlementthereof effected by the Indemnified Party. Notwithstanding the foregoing, if anIndemnified Party determines in good faith that there is a reasonableprobability that an action may adversely affect it or its Affiliates other thana result of monetary damages, such Indemnified Party may, by notice to theIndemnifying Party, assume the exclusive right to defend, compromise or settlesuch action, but the Indemnifying Party shall not be bound any determination ofan action so defended or any compromise or settlement thereof effected withoutits consent (which shall not be unreasonably withheld, conditioned or delayed).

**ARTICLE 6**

**POST-CLOSINGCOVENANTS**

6.1           **[Reserved]**

**ARTICLE 7**

**MISCELLANEOUS**

7.1           Notices. All notices or othercommunications required or permitted hereunder shall be in writing and shall bedelivered personally, by facsimile or electronic mail (with confirming copysent by one of the other delivery methods specified herein) or by overnightcourier or sent by certified, registered or express air mail, postage prepaid,and shall be deemed given when so delivered personally, or when so received byfacsimile or electronic mail or courier, or, if mailed, five calendar daysafter the date of mailing, as follows:

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If to ACT:

Advanced Cell Technology, Inc.11100 Santa Monica Blvd.Suite 850Los Angeles, CA  90025Facsimile:  310.481.0833Attention:        Jon Atzen, Senior VicePresident and General Counsel**                          **jatzen@advancedcell.com

If to Purchaser:

Kirin SD, Inc.Hamlet Professional Building4001 Valhalla BoulevardSuite 103Sioux Falls, SD  57106Facsimile: 605.361.9702Attention:        Dr. ToshifumiMikayama                           Chief ExecutiveOfficer

and with a copy to:

Morrison &Foerster LLP1290 Avenue of the AmericasNew York, NY  10104Facsimile:         (212) 468-7900Attention:        Rory J. Radding, Esq.                           rradding@mofo.com

or to suchother address and with such other copies as any party hereto shall notify theother parties hereto (as provided above) from time to time.

7.2           Expenses. Regardless ofwhether the transactions provided for in this Agreement are consummated, ACT onthe one hand and the Purchaser on the other hereto shall pay its own expensesincident to this Agreement and the transactions contemplated hereby and thereby(including legal fees, accounting fees, investment banking fees and filingfees).

7.3           Governing Law. This Agreementshall be governed by, and construed in accordance with, the internal Laws ofthe State of New York, without reference to the choice of law principlesthereof.

7.4           Dispute Resolution.

(a)           The parties hereto intend that alldisputes between the parties, directly or indirectly, arising out of, under or inconnection with or relating to, this Agreement or the consummation of thetransactions contemplated hereby shall be settled by the parties amicablythrough good faith discussions upon the written request of any party.

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(b)           Prior to filing suit, instituting anaction or seeking arbitration pursuant to Section 7.4(d) inconnection with any dispute between the Purchaser on the one hand and ACT onthe other (each, for purposes of this Section 7.4, a **“DisputeParty”** and, collectively, the **“Dispute Parties”**)or any of their respective Affiliates or Subsidiaries, directly or indirectly,arising out of, under or in connection with or relating to, this Agreement orany of the transactions contemplated hereby, the Dispute Parties will attemptto resolve such dispute by good faith negotiations. Such negotiations shallproceed as follows:

(i)            Either Dispute Party may send awritten notice to the other Dispute Party requesting such negotiations. Promptlyfollowing receipt of such notice by the other Dispute Party, each Dispute Partyshall cause the individual designated by it as having general responsibilityfor the affected Agreement or transaction to meet with the individual sodesignated by the other Dispute Party to discuss the dispute.

(ii)           If the dispute is not resolved within30 days after the first meeting between the individuals designated in clause (i) (orif earlier, within 45 days of the notice referred to in clause (i) above),then, upon the written request of either Dispute Party, each Dispute Partyshall cause the individual designated by it as having general responsibilityfor the overall relationship defined by this Agreement to meet with theindividual so designated by the other Dispute Party to discuss the dispute.

(iii)          If the dispute is not resolved within15 days after the first meeting between the individuals designated in clause (ii) (orif earlier within 30 days of the notice referred to in clause (ii) above),then, upon the written request of either Dispute Party, Dr. Michael Westor William Caldwell, IV on behalf of ACT, on the one hand, and Dr. ToshifumiMikayama on behalf of the Purchaser, on the other hand, shall meet and attemptin good faith to negotiate a resolution to the dispute.

Except andonly to the limited extent provided in Section 7.4(c), neither DisputeParty shall, and shall cause their respective Affiliates not to, file suit,institute an action or seek arbitration pursuant to Section 7.4(d) withrespect to the dispute until at least 30 days after the first meeting betweenthe corporate officers described in clause (iii) above (or, if earlier, 45days after the notice referred to in such clause (iii)).

(c)           Notwithstanding the provisions of Section 7.4(b),either Dispute Party may institute an action seeking a preliminary injunction,temporary restraining order, or other equitable relief, if necessary in thereasonable opinion of that Dispute Party to avoid material harm to itsproperty, rights or other interests, before commencing, or at any time duringthe course of, the dispute procedure described in Section 7.4(b). Inaddition, either Dispute Party may file an action prior to the commencement ofor at any time during or after the dispute resolution procedures in Section 7.4(b) ifin the sole opinion of that Dispute Party it is necessary to prevent theexpiration of a statute of limitations or filing period or the loss of anyother substantive or procedural right.

(d)           In the event of any dispute,controversy, or claim arising out of or relating to any provision of thisAgreement or the interpretation, enforceability, performance, breach,termination, or validity hereof (including, without limitation, this Section 7.4)which cannot be 

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resolved pursuant to Sections 7.4(a) and (b),such matter shall be solely and finally settled pursuant to arbitrationconducted in accordance with the Rules ofArbitration of the International Chamber of Commerce (the **“Rules”**). Such arbitration shall beconducted by three arbitrators to be appointed in accordance with the thenexisting Rules as modified by this Section 7.4. Of the threearbitrators, ACT shall nominate one arbitrator, the Purchaser shall nominateone arbitrator, and the third arbitrator, who will act as chairman, will benominated by the other two appointed arbitrators or, failing agreement betweenthem within 30 days of their appointment, by the International Court ofArbitration of the International Chamber of Commerce, pursuant to the Rules. Ifthe chairman nominated by the other two appointed arbitrators does not agree toact, or is unable to act, as chairman, the chairman shall be appointed pursuantto the Rules. The place of arbitration shall be in New York, New York, U.S.A.,and the arbitration shall be conducted in English. The arbitration panel shalldecide the dispute applying the substantive laws of the State of New York. Judgmentof the arbitration panel shall be final and binding and may be entered in, andshall be fully enforceable by, a court of competent jurisdiction. The partieshereby agree that the state and federal courts located in New York, New Yorkare courts of competent jurisdiction and the parties hereby submit to thejurisdiction of such courts waiving any objection each may now have orhereafter have to jurisdiction, venue or convenience of forum. The partiesagree that any party may file a copy of this provision with any court aswritten evidence of the parties’ voluntary agreement to waive any objections tojurisdiction.

7.5           Assignment; Successors andAssigns; No Third Party Rights. This Agreement may not be assigned by anyparty hereto or thereto without the prior written consent of the other partieshereto or thereto, and any attempted assignment shall be null and void;provided, however, this Agreement may be assigned or transferred by thePurchaser upon notice but without the prior written consent of the otherparties hereto to an Affiliate of the Purchaser and nothing in this Agreementshall prevent the consolidation, merger or sale of the Purchaser to anAffiliate of the Purchaser. This Agreement shall be binding upon and inure tothe benefit of the parties hereto and their respective successors and permittedassigns. Except as provided in Sections 5.2 and 5.3, this Agreement shall befor the sole benefit of the parties hereto, and their respective successors andpermitted assigns and is not intended, nor shall be construed, to give anyPerson, other than the parties hereto and their respective successors andpermitted assigns any legal or equitable right, benefit, remedy or claimhereunder.

7.6           Counterparts. This Agreementmay be executed in counterparts, each of which shall be deemed an originalagreement, but all of which together shall constitute one and the sameinstrument.

7.7           Titles and Headings. Theheadings and table of contents in this Agreement are for reference purposesonly, and shall not in any way affect the meaning or interpretation of thisAgreement.

7.8           Entire Agreement. ThisAgreement constitutes the entire agreement among the parties hereto withrespect to the matters covered hereby and thereby, and supersede all previouswritten, oral or implied understandings among them with respect to suchmatters.

7.9           Amendment and Modification. ThisAgreement may not be amended except by an instrument in writing signed onbehalf of each of the parties hereto.

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7.10         Publicity; Public Announcements.Unless otherwise required by applicable Laws or the requirements of anynational securities exchange (and, in that event, only if time does notpermit), ACT and the Purchaser shall consult with each other before issuing,and give each other a reasonable opportunity to review and comment upon, anypress release with respect to the transactions contemplated hereby and shallnot issue any such press release without each other’s consent, which consentshall not be unreasonably withheld or delayed. The parties agree that theinitial press release to be issued with respect to this Agreement and thetransactions contemplated by this Agreement shall be in the form heretoforeagreed to by the parties. The parties agree that this Agreement and the otheragreements related to this Agreement may be disclosed pursuant to allapplicable Laws including, without limitation, state and federal securitieslaws and regulations.

7.11         Waiver. Any of the terms orconditions of this Agreement may be waived at any time by the party or partieshereto entitled to the benefit thereof, but only by a writing signed by theparty or parties waiving such terms or conditions.

7.12         Severability. If any term,provisions, covenant or restriction of this Agreement is held by a court ofcompetent jurisdiction or other authority to be invalid, void or unenforceable,the remainder of the terms, provisions, covenants and restrictions of thisAgreement shall remain in full force and effect and shall in no way be affected,impaired or invalidated so long as the economic or legal substance of thetransactions contemplated hereby is not affected in any manner materiallyadverse to any party. Upon such determination, the parties shall negotiate ingood faith to modify this Agreement so as to affect the original intent of theparties as closely as possible in an acceptable manner in order that thetransactions contemplated hereby are consummated as originally contemplated tothe fullest extent possible.

7.13         No Strict Construction. Each ofthe parties hereto acknowledges that this Agreement has been prepared jointlyby the parties hereto and shall not be strictly construed against any partyhereto.

7.14         Specific Performance. Theparties agree that if any of the provisions of this Agreement were notperformed in accordance with its specific terms or were otherwise breached,irreparable damage would occur, no adequate remedy at law would exist anddamages would be difficult to determine; accordingly, the parties shall be entitledto specific performance of the terms hereof or injunctive relief, in additionto any other remedy at law or in equity.

7.15         Further Assurances. Each partyagrees to (a) furnish upon request to each other party such furtherinformation, (b) to execute and deliver to each other party such otherdocuments and (c) to do such other acts and things, all as another partymay reasonably request for the purpose of carrying out the intent of thisAgreement and the transactions contemplated herein.

**[signaturepages follow]**

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**INWITNESS WHEREOF, the parties hereto have caused this Agreement to be dulyexecuted as of the day and year first above written.**
|   | ** ** | ** **                         |
|--------|------------|------------------------------------|
|        | ** ** | **KIRIN SD, INC.******             |
|   | ** ** | ** **                         |
|   | ** ** | ** **                         |
|   |       | By:                                |   | /s/ TOSHIFUMI  MIKAYAMA |
|   |       |                               |   | Name: Toshifumi Mikayama |
|   |       |                               |   | Title: President |
|   |       |                               |
|   |       |                               |
|   |       | **ADVANCED CELL TECHNOLOGY, INC.** |
|   |       | ** **                         |
|   |       | ** **                         |
|   |       | By:                                | ** ** | **/s/**William Caldwell, IV |
|   |       |                               | ** ** | Name: William Caldwell, IV |
|   |       |                               | ** ** | Title: Chief Executive Officer |

 

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**Exhibit A**

**Definitions**

**“Action”** means anyadministrative, regulatory, judicial or other proceeding, inquiry orinvestigation by or before any Governmental Authority or arbitrator.

**“Affiliate”** means, with respectto any Person, any other Person that, directly or indirectly, through one ormore intermediaries, controls, is controlled by, or is under common controlwith, such Person. The term **“control”** meansthe possession, directly or indirectly, of the power to direct or cause thedirection of the management and policies of a Person, whether through theownership of voting securities, by contract or otherwise, including the abilityto elect the majority of members of the board of directors or other governingbody of a Person, and the terms **“controlled”**and **“controlling”** have correlativemeanings.

**“Claims”** means any and all (i) claims,(ii) demands, (iii) disputes, or (iv) causes of action, relatingto or resulting from an Action.

**“Contract”**means any legallybinding contract, agreement, indenture, deed of trust, license, note, bond,loan instrument, mortgage, lease, purchase or sales order, guarantee and anysimilar undertaking, commitment, understanding or arrangement, whether writtenor oral.

**“Encumbrances”** means securityinterests, liens (statutory or otherwise), Claims, charges, title defects,mortgages, pledges, easements, encroachments, restrictions on use,rights-of-way, rights of first refusal, conditional sales or other titleretention agreements, covenants, conditions or other similar restrictions (includingrestrictions on transfer) or other encumbrances of any nature whatsoever.

**“GAAP”** means United Statesgenerally accepted accounting principles.

**“Governmental Authority”** meansany supranational, national, federal, state or local government, foreign or domestic,or the government of any political subdivision of any of the foregoing, or anyentity, authority, agency, commission, court, ministry or other similar bodyexercising executive, legislative, judicial, regulatory or administrativeauthority or functions of or pertaining to government, including any authorityor other quasi-Governmental Authority or self-regulatory body or stock exchangeestablished by a Governmental Authority to perform any of such functions.

**“Laws”** means all national,federal, state or local laws (including common law), constitutions, statutes,codes, rules, regulations, ordinances, directives, concessions, executiveOrders or decrees of a Governmental Authority.

**“Liabilities”** means any and alldebts, liabilities, commitments and obligations, whether or not fixed,contingent or absolute, matured or unmatured, direct or indirect, liquidated orunliquidated, accrued or unaccrued, known or unknown, whether or not requiredby GAAP to be reflected in financial statements or disclosed in the notesthereto.

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**“Orders”** means any order,judgment, injunction, decree or award or writ of any court, tribunal,arbitrator, Governmental Authority or other Person having jurisdiction.

**“Person”** means an individual,general or limited partnership, corporation, limited liability company, jointstock company, unincorporated organization or association, trust, estate, jointventure, firm, branch, registered office, Governmental Authority or any otherentity.

**“Subsidiary”** of any entitymeans, at any date, any Person of which securities or other ownership interestsrepresenting more than 50% of the equity or more than 50% of the ordinaryvoting power or, in the case of a partnership, more than 50% of the generalpartnership interests or more than 50% of the profits or losses of which are,as of such date, owned, controlled or held by the applicable entity or one ormore subsidiaries of such entity.

**“Tax”** or **“Taxes”**means any national, federal, state or local taxes, including but not limited toany income, gross receipts, payroll, employment, excise, customs duties,severance, stamp, business, premium, windfall profits, environmental,franchise, profits, withholding, social security (or similar), unemployment,disability, real property, personal property, sales, use, service, service use,occupation, lease, lease use, transfer, registration, value added, workers’compensation, employee withholding tax, or similar tax, any alternative oradd-on minimum tax, and any estimated tax, in each case, including any interest,penalty, or addition thereto, whether disputed or not.

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**Exhibit B**

**Covenant Not To Sue**

As a material consideration and inducement to Kirin SD, Inc.(“Purchaser”) to execute the Purchase Agreement dated as of May      ,2006 (the “Purchase Agreement”) by and between Advanced Cell Technology, Inc.(“ACT”) and Purchaser, ACT and all of its respective past, present and futureparents, subsidiaries, and affiliates, and each of their past, present andfuture constituent members, partners, officers, shareholders, directors,agents, employees, contractors or consultants and each of their respectivesuccessors and assigns, and any other person or entity now, previously orhereafter affiliated in any manner with any of them (collectively with ACT, the“Seller Parties”) hereby unconditionally covenant and agree that each of themshall, except as otherwise expressly provided herein, forever refrain from (i) initiating,filing, instituting, maintaining, or proceeding upon, or encouraging, advising,or voluntarily assisting any other person or entity to initiate, institute,maintain, or proceed upon any claim, demand, cause of action or right of anynature whatsoever, against any of Purchaser and its past, present and futureparents, subsidiaries, and affiliates, and each of their past, present andfuture constituent members, partners, officers, shareholders, directors, agentsand employees, and each of their respective successors and assigns, and anyother person or entity now, previously or hereafter affiliated in any mannerwith any of them (collectively with Purchaser, the “Purchaser Parties”),arising from or related to, whether directly or indirectly, the infringement orviolation of any patent, or other intellectual property rights, arising out ofor related to the subject matter of the UMASS Litigation (as defined below), ofany Seller Parties, or (ii) assigning or otherwise transferring any suchclaim, demand, cause of action or right against any Purchaser Parties to anyperson or entity. The Seller Parties, collectively and each of themindividually, represent and warrant that as of this date there are no claims,demands, or causes of action against any Purchaser Parties of any nature knownto any of the Seller Parties. The Seller Parties, collectively and each of themindividually, acknowledge and agree that the covenants and obligations setforth in this Covenant may be pleaded as a full and complete defense to, andmay be used as the basis for an injunction against, any claim, demand, action,suit or other proceeding which may be instituted, prosecuted or attempted in breachof this Covenant. Notwithstanding the foregoing, the aforementioned covenantand agreement by the Seller Parties shall not apply to any claims or causes ofaction that the Seller Parties may have against any of the Purchaser Partiesarising out of or relating to (1) a breach by any of the Purchaser Partiesof the Exclusive License Agreement or Non-Exclusive License Agreement betweencertain of the Purchaser Parties and ACT (the “License Agreements”) or theinaccuracy of any of the representations and warranties made by any of thePurchaser Parties in the Purchase Agreement or the License Agreements, or (2) theinfringement or violation by any of the Purchaser Parties of any ACT Owning andControlling Technologies (as defined below). For purposes of this Covenant NotTo Sue, the term “UMASS Litigation” means the lawsuit filed by the Universityof Massachusetts against Drs. Philippe Collas and James Robl (styled as *University of Massachusetts v. Robl & Collas*,No. 03-0445 BLS2 (Mass. Super. Ct., Suffolk County)) with respect tocertain intellectual property that Drs. Collas and Robl have assigned toAurox, LLC; and the term “ACT Owning and Controlling Technologies” means anytechnology, including patent rights or other intellectual property rights,owned by or licensed to the Seller Parties 

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that the Seller Parties have not authorized thePurchaser Parties to use, either pursuant to a license agreement or otherwise.

IN WITNESS WHEREOF, the parties hereto have causedthis Covenant-Not-to-Sue to be duly executed as of the day and year first abovewritten.

ADVANCED CELL TECHNOLOGY,INC.
|   |   |
|--------|--------|
|   |   |
| By     |   |   |   |
|   |

 

 

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**Exhibit C**

**Release**

FOR AND IN CONSIDERATION of the purchase by Kirin SD, Inc.,a Delaware corporation (“**Buyer**”),of all the issued and outstanding limited liability company interests(collectively, the “**Interests**”) ofHematech, LLC, a Delaware limited liability company (“**Hematech**”), held by Advanced CellTechnology, Inc., a Delaware corporation (the “**Member**”), pursuant to a Purchase Agreement (as definedherein), the undersigned, hereby, unconditionally and irrevocably releases andforever discharges, Hematech, Hematech-GAC Venture, LLC, a Delaware limitedliability company, Buyer, and Kirin Brewery Company, Limited, a Japanesecorporation, and their respective Affiliates, officers, directors, employees,stockholders, members, agents, legal representatives and other advisers,successors and assigns and the respective officers, directors, employees,stockholders, members, agents, legal representatives and other advisers,successors and assigns of such Affiliates (hereinafter collectively referred toas the “**Released Parties**”),absolutely and forever, of and from any and all direct or indirect liabilities,claims, losses, damages, costs, expenses, deficiencies, obligations,commitments, disputes, responsibilities, demands, benefits, accounts, liens,rights of action, claims for relief and causes of action, of every nature andkind whatsoever, in law or in equity, known or unknown, fixed or unfixed,choate or inchoate, liquidated or unliquidated, secured or unsecured, accrued,absolute, contingent or otherwise, including without limitation, any rights toreimbursement or indemnification from the Hematech under the Hematech’sorganizational documents, their operating agreements or otherwise (“**Claims**”), which the undersigned and itsrespective affiliates, representatives, agents, attorneys, heirs, executors,administrators, successors and assigns had, have or may have against anyReleased Party for, upon or by reason of any matter, cause or thing whatsoeverfrom the beginning of the world to the Closing Date, except for any Claimsarising out of or related to the Agreement

Capitalized terms used in this Release withoutdefinition have the respective meanings given to them in the Purchase Agreementdated as of May     , 2006, by and among Buyerand Advanced Cell Technology, Inc. (the “**Agreement**”).

The foregoing Release includes all claims, actions,and demands that now exist or may hereafter accrue based on matters now unknownas well as known and matters unanticipated as well as anticipated, resulting orto result from the status of the undersigned as a Member or otherwise.

The undersigned hereby represents that it has notheretofore transferred, conveyed, or assigned any Claim or any portion thereofor interest therein. The undersigned further represents that in executing thisRelease it has not relied upon any representation or statement made by anyReleased Party or any of the representatives with regard to the subject matter,basis, or effect of this Release, except such representations as are set forthin the Agreement.

This Release may not be changed except in a writingsigned by each of the undersigned and Buyer (or any of their respectivesuccessors). This Release shall be binding upon the undersigned and itsrespective heirs, executors, administrators, successors and assigns and shall 

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inure to the benefit of the Released Parties and theirrespective heirs, executors, administrators, successors and assigns. ThisRelease is made and entered into in the State of New York and shall be in allrespects interpreted, enforced and governed under the laws of said State. Theprovisions of this Release shall be construed broadly so as to effectuate theintent of the parties, but not so broadly as to require that any provision mustbe declared or be determined by any court to be illegal or invalid. If anyprovision is declared or determined to be illegal or invalid, the validity ofthe remaining provisions shall not be affected hereby and said illegal orinvalid provision shall not be deemed to be a part of this Release.

IN WITNESS WHEREOF, the undersigned has caused thisRelease to be executed as of the        day of May, 2006.
|        |   | ADVANCED CELL TECHNOLOGY, INC. |   |   |
|--------|--------|--------------------------------|--------|--------|
|   |   |                           |   |   |
|   |   |                           |   |   |
|   |   | By:                            |   |   |   |
|   |   |                           | Name:  |   |   |
|   |   |                           | Title: |   |   |

 

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**Exhibit D**

**ExclusiveLicense Agreement**

See Exhibit 10.2to this Quarterly Report on Form 10-QSB

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**Exhibit E**

**Non-ExclusiveLicense Agreement**

See Exhibit 10.1to this Quarterly Report on Form 10-QSB

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