**Exhibit10.9**

 

**CONVERTIBLEPROMISSORY NOTE**

**$600,000PLUS INTEREST DUE & PAYABLE**

**DOCUMENTA-02152008**

 

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

 

FOR VALUE RECEIVED, onthe Effective Date, as defined below, **Advanced Cell TechnologyInc.** as Obligor (“Borrower,” or “Obligor”), hereby promises to payto the Lender (“Lender” or “ Holder”), as defined below, the Principal Sum, asdefined below, along with the Interest Rate, as defined below, according to theterms 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.                                                                                                                                                                                                                              |

 

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| 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-RELATEDPROVISIONS**

 

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

 

1.2  Interest Rate. Subject to the Holder’s right to convert, interest payable on this Notewill accrue interest at the Interest Rate and shall be applied to the PrincipalSum.

 

**ARTICLE 2 CONVERSION RIGHTS**

 

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

 

2.1  Conversion Rights and Cashless Exercise.  The Holder will have the right at itselection 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 accruedinterest into shares of fully paid and nonassessable shares of common stock ofAdvanced Cell Technology Inc. (as such stock exists on the date of issuance ofthis Note, or any shares of capital stock of Advanced Cell Technology Inc. intowhich such stock is hereafter changed or reclassified, the “Common Stock”) asper the Conversion Formula set forth in Section 2.2.  Any such conversion shall be cashless, andshall 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 stockthat would result in the Holder owning more than 4.99% of the common stockoutstanding of Advanced Cell Technology Inc.  Shares from any such conversion will bedelivered 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 conversionis 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 timewhile this Note is outstanding, enters into an agreement under which it issuesor agrees to issue either its common stock, options, or warrants to purchase orconvert to its common stock at a price or exercise price or conversion price (a“Subsequent Share Price”), as the case may be, 

 

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

 

(a) options toemployees, officers, directors or consultants pursuant to any stock or optionplan 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 themembers of a committee of non-employee directors established for such purpose,provided that the exercise price of such options shall not be less than theConversion Price on the trading day immediately prior to the grant of suchoption,

 

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

 

(c) securitiesissued pursuant to acquisitions or strategic transactions, provided any suchissuance shall only be made in connection with a transaction involving a personor entity which is, itself or through its subsidiaries, an operating company ina business synergistic with the business of the Borrower and in which theBorrower receives benefits in addition to the investment of funds, but shallnot include a transaction in which the Borrower is issuing securities primarilyfor the purpose of raising capital or to an entity whose primary business isinvesting in securities.

 

2.5  Reservation of Shares.  As of the issuance date of this Note and forthe remaining period during which the conversion right exists, the Borrowerwill reserve from its authorized and unissued Common Stock a sufficient numberof shares to provide for the issuance of Common Stock upon the full conversionof this Note.  The Borrower representsthat upon issuance, such shares will be duly and validly issued, fully paid andnon-assessable.  The Borrower agrees thatits issuance of this Note constitutes full authority to its officers, agentsand transfer agents who are charged with the duty of executing and issuingstock certificates to execute and issue the necessary certificates for sharesof Common Stock upon the conversion of this Note.

 

2.6  Delivery of Conversion Shares.  Shares from any such conversion will bedelivered 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 notdelivered in accordance with this timeframe stated in this Section 2.6, atany time for any reason prior to offering those shares for sale in a privatetransaction or in the public market through its broker, Holder may rescind thatparticular conversion to have the conversion amount returned to the notebalance with the conversion shares returned to the Borrower.

 

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**ARTICLE 3 MISCELLANEOUS**

 

3.1  Notices. Any notice required or permitted hereunder must be in writing and eitherpersonally served, sent by facsimile or email transmission, or sent byovernight courier.  Notices will bedeemed effectively delivered at the time of transmission if by facsimile oremail, and if by overnight courier the business day after such notice isdeposited with the courier service for delivery.

 

3.2  Amendment Provision.  The term “Note” and all reference thereto, asused 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 Borrowerand its successors and permitted assigns, and will inure to the benefit of theHolder and its successors and permitted assigns, and may be assigned by theHolder.

 

3.4  Governing Law.  This Note will be governed by, and construedand enforced in accordance, with the laws of the State of Florida, withoutregard to the conflict of laws principles thereof.

 

3.5  Maximum Payments.  Nothing contained herein may be deemed toestablish or require the payment of a rate of interest or other charges inexcess of the maximum permitted by applicable law.  In the event that the rate of interestrequired to be paid or other charges hereunder exceed the maximum permitted bysuch law, any payments in excess of such maximum will be credited againstamounts owed by the Borrower to the Holder and thus refunded to the Borrower.

 

3.6  Attorney Fees.  In the event any attorney is employed byeither party to this Note with regard to any legal or equitable action,arbitration or other proceeding brought by such party for the enforcement ofthis Note or because of an alleged dispute, breach, default ormisrepresentation in connection with any of the provisions of this Note, theprevailing party in such proceeding will be entitled to recover from the otherparty reasonable attorneys’ fees and other costs and expenses incurred, inaddition 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 isreplaced as Chairman & CEO of Advanced Cell Technology Inc., or in theevent that Advanced Cell Technology Inc. undergoes a change in majoritycontrol, the Holder has the right to make this Note payable on demand as setforth in Section 1 .l.

 

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

 

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

 

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

 

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

 

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

 

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

 

3.14  Adjustment of Conversion Price.  In the event that Borrower enters into anadditional financing agreement with another investor subsequent to the closingof this transaction, Borrower may adjust the Conversion Price percentage setforth herein as to satisfy the terms of any future financing transaction.  In the event of such adjustment, as shown inthe Adjustment of Conversion Price Example attachment, Borrower will make aone-time cash payment to Holder at the time of adjustment for the dollardifference that would result in the Conversion Price percentage adjustment.  In the event that Holder invests additionalfunds as set forth in Section 3.10, this Section 3.14 will apply tofuture financing whether the additional funds are invested before or after anysuch 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 |
|                                      |        |                                |  |  |

 

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USE OF PROCEEDS AGREEMENT

 

Mr. BillCaldwell, President & CEO

Mr. IvanWolkind, SVP of Finance & CAO

 

DearBill and Ivan,

 

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

 

Becauseembryonic stem cell research has underlying ethical issues that I would needmonths to research and consider before drawing a conclusion as to whether Isupport it or discourage it, we felt it was best to fund the company solely foradult stem cell research.  This is acritical ethical concern to me of highest importance, and you have agreed,pledged, and promised to segregate the funds as follows.

 

Assummarized in Section 3.13 above, you hereby represent, for me to rely onas 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 Mytogenresearch and development is dedicated solely to adult stem cell research andthat Mytogen has no connection to embryonic stem cell research whatsoever.  The funds will be used solely in this manneras provided by you:

 

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

 

·                  Mytogen salaries that are not and wilt neverbe connected to, related to, or shared with embryonic stem cell research duringthe use of proceeds.

 

·                  Mytogen fixed assets that are not and willnever be connected to, related to, or shared with embryonic stem cell research.

 

·                  Mytogen accounts payable that are not andwill never be connected to, related to, or shared with embryonic stem cellresearch.

 

Youalso agree that upon my request, at any time upon reasonable notice, you willprovide me with the actual use of proceeds of these funds.  Further, you promise and agree that thesefunds will not be loaned, pledged, used as collateral, or otherwisehypothecated in any way, shape, form, spillover, or connection to embryonicstem cell research.

 

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

 
| /s/ Justin Keener              |   | /s/  William M. Caldwell, IV |
|--------------------------------|--------|------------------------------|
| JMJ  Financial / Its Principal |   | William  Caldwell            |
|                           |   |                         |
|                           |   |                         |
|                           |   |                         |
|                           |   | Ivan  Wolkind                |

 

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NOTICE OF ADDITIONAL FINANCING FORM

 

(Tobe executed by Holder when intending to invest additional funds)

 

ThisForm is notification that I intend to invest additional funds intoAdvanced Cell Technology Inc. as set forth in Section 3.10 of theConvertible Promissory Note dated February 15, 2008,

 

IntendedAmount: $

 

IntendedExecution Date of Documentation:

 

IntendedDelivery Date of Payment:

 

 
|   |   |
|--------|--------|
|   |   |   |
| Dated: |   |   |

 

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**SAMPLE**

 

NOTICE OF CONVERSION

 

(Tobe executed by the Holder in order to convert the Note)

 

Theundersigned hereby elects to convert a portion of the Note issued by AdvancedCell Technology Inc. on February 15, 2008 into Shares of Common Stock ofAdvanced Cell Technology Inc. according to the conditions set forth in suchNote, 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) businessdays of conversion notice via 10:30am priority overnight delivery service inaccordance with Section 2.6.**

 

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OTHER NOTE/DEBENTURE HOLDERS’ RACHET PROVISIONS

 

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

 

Inthe event that any or all conversions take place under $0.38, Borrower willbear any consequences from any past or future financing agreements; and thatunder no circumstances will any past or future financing agreements preventBorrower from honoring the conversion terms and all other terms as set forth inthis agreement.

 

 
|                           |   |
|--------------------------------|--------|
| William  Caldwell              |
| President &  CEO      |
| Advanced  Cell Technology Inc. |

 

 
| Dated: |   |   |
|--------|--------|--------|

 

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SHARE DELIVERY ATTACHMENT

 

EXAMPLE

 

2.6.Delivery of Conversion Shares. Shares from any such conversion will bedelivered to Holder within 2 (two) business days of conversion notice delivery(see 3.1) via 10:30am priority overnight delivery service. If those shares arenot 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 privatetransaction or in the public market through its broker, Holder may rescind thatparticular conversion to have the conversion amount returned to the notebalance with the conversion shares returned to the Borrower.

 

Example:

 

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

 

Borrower’stransfer agent must send shares to Holder via 10:30am overnight delivery nolater than Tuesday January 2nd.

 

Holdermust have received the shares or received delivery attempt no later than10:30am eastern time on Wednesday January 3rd.

 

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ADJUSTMENT OF CONVERSION PRICE EXAMPLE

 

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

 

Example:

 

**Current 80%**

** **

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

 

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

 

Forthis example, assume the Borrower adjusted the conversion price percentageupwards to 90%

 

**Adjusted 90%**

** **

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

 

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

 

CashPayment Required by Borrower to Holder equals $93,333

 

Originalpaper value at 80% = $840,000

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

Cashpayment required for adjustment $93,333

 

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