**Exhibit 10.3**

 

NEITHER THIS SECURITY NOR THE SECURITIES FOR WHICHTHIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES ANDEXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPONAN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED(THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLDEXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACTOR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO,THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITHAPPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TOTHE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLYACCEPTABLE TO THE COMPANY.  THIS SECURITYAND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGEDIN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCHSECURITIES.

 

**COMMON STOCK PURCHASE WARRANT**

 

**ADVANCED CELL TECHNOLOGY, INC.**

 
| Warrant Shares: |   | Initial Exercise Date:  March       , 2008 |
|-----------------|--------|-------------------------------------------------------------------------------|

 

THIS COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifiesthat, for value received,                          (the “Holder”) is entitled, upon the terms and subject to thelimitations on exercise and the conditions hereinafter set forth, at any timeon or after the date hereof (the “Initial Exercise Date”) and on orprior to the close of business on the five year anniversary of the InitialExercise Date (the “Termination Date”) but not thereafter, to subscribefor and purchase from Advanced Cell Technology, Inc., a Delawarecorporation (the “Company”), up to             shares(the “Warrant Shares”) of Common Stock. The purchase price of one share of Common Stock under this Warrant shallbe equal to the Exercise Price, as defined in Section 2(b).

 

Section 1.                                            Definitions.  Capitalizedterms used and not otherwise defined herein shall have the meanings set forthin that certain Securities Purchase Agreement (the “Purchase Agreement”),dated March       , 2008, among the Companyand the purchasers signatory thereto.

 

Section 2.                                            Exercise.

 

a)                                      Exerciseof Warrant.  Exercise of the purchaserights represented by this Warrant may be made, in whole or in part, at anytime or times on or after the Initial Exercise Date and on or before theTermination Date by delivery to the Company (or such other office or agency ofthe Company as it may designate by notice in writing to the registered Holderat the address of the Holder appearing on the books of the

 

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Company) of a dulyexecuted facsimile copy of the Notice of Exercise Form annexed hereto;and, within 3 Trading Days of the date said Notice of Exercise is delivered tothe Company, the Company shall have received payment of the aggregate Exercise Price of the shares thereby purchasedby wire transfer or cashier’s check drawn on a United States bank.  Notwithstanding anything herein to thecontrary, the Holder shall not be required to physically surrender this Warrantto the Company until the Holder has purchased all of the Warrant Sharesavailable hereunder and the Warrant has been exercised in full, in which case,the Holder shall surrender this Warrant to the Company for cancellation within3 Trading Days of the date the final Notice of Exercise is delivered to theCompany.  Partial exercises of thisWarrant resulting in purchases of a portion of the total number of WarrantShares available hereunder shall have the effect of lowering the outstandingnumber of Warrant Shares purchasable hereunder in an amount equal to theapplicable number of Warrant Shares purchased. The Holder and the Company shall maintain records showing the number ofWarrant Shares purchased and the date of such purchases.  The Company shall deliver any objection toany Notice of Exercise Form within 1 Business Day of receipt of suchnotice.  In the event of any dispute ordiscrepancy, the records of the Holder shall be controlling and determinativein the absence of manifest error. **The Holder and anyassignee, by acceptance of this Warrant, acknowledge and agree that, by reasonof the provisions of this paragraph, following the purchase of a portion of theWarrant Shares hereunder, the number of Warrant Shares available for purchasehereunder at any given time may be less than the amount stated on the facehereof.**

 

b)                                     Exercise Price.  The exercise price per share of the CommonStock under this Warrant shall be **$0.165**, subjectto adjustment hereunder (the “Exercise Price”).

 

c)                                      CashlessExercise.  If at any time after theearlier of (i) the six month anniversary of the date of the PurchaseAgreement and (ii) the completion of the then-applicable holding periodrequired by Rule 144, or any successor provision then in effect, there isno effective registration statement registering, or no current prospectusavailable for, the resale of the Warrant Shares by the Holder, then thisWarrant may also be exercised at such time by means of a “cashless exercise” inwhich the Holder shall be entitled to receive a certificate for the number ofWarrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A),where:

 

(A) = the VWAP on the Trading Day immediatelypreceding the date of such election;

 

(B) =  theExercise Price of this Warrant, as adjusted; and

 

(X) = the number of Warrant Shares issuable uponexercise of this Warrant in accordance with the terms of this Warrant by meansof a cash exercise rather than a cashless exercise.

 

Notwithstanding anything herein to the contrary, onthe Termination Date, this Warrant shall be automatically exercised viacashless exercise pursuant to this Section 2(c).

 

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d)                                     ExerciseLimitations. The Company shall not effect any exercise of this Warrant, anda Holder shall not have the right to exercise any portion of this Warrant,pursuant to Section 2 or otherwise, to the extent that after giving effectto such issuance after exercise as set forth on the applicable Notice ofExercise, the Holder (together with the Holder’s Affiliates, and any otherperson or entity acting as a group together with the Holder or any of theHolder’s Affiliates), would beneficially own in excess of the BeneficialOwnership Limitation (as defined below).  For purposes of the foregoing sentence,the number of shares of Common Stock beneficially owned by the Holder and itsAffiliates shall include the number of shares of Common Stock issuable uponexercise of this Warrant with respect to which such determination is beingmade, but shall exclude the number of shares of Common Stock which would beissuable upon (A) exercise of the remaining, nonexercised portion of thisWarrant beneficially owned by the Holder or any of its Affiliates and (B) exerciseor conversion of the unexercised or nonconverted portion of any othersecurities of the Company (including, without limitation, any other  Common Stock Equivalents) subject to alimitation on conversion or exercise analogous to the limitation contained hereinbeneficially owned by the Holder or any of its affiliates.  Except as setforth in the preceding sentence, for purposes of this Section 2(d),beneficial ownership shall be calculated in accordance with Section 13(d) ofthe Exchange Act and the rules and regulations promulgated thereunder, itbeing acknowledged by the Holder that the Company is not representing to theHolder that such calculation is in compliance with Section 13(d) ofthe Exchange Act and the Holder is solely responsible for any schedulesrequired to be filed in accordance therewith.  To the extent that the limitation contained in this Section 2(d) applies,the determination of whether this Warrant is exercisable (in relation to othersecurities owned by the Holder together with any Affiliates) and of whichportion of this Warrant is exercisable shall be in the sole discretion of theHolder, and the submission of a Notice of Exercise shall be deemed to be theHolder’s determination of whether this Warrant is exercisable (in relation toother securities owned by the Holder together with any Affiliates) and of whichportion of this Warrant is exercisable, in each case subject to the BeneficialOwnership Limitation, and the Company shall have no obligation to verify orconfirm the accuracy of such determination.  In addition, a determination as to any group status as contemplatedabove shall be determined in accordance with Section 13(d) of theExchange Act and the rules and regulations promulgated thereunder.  For purposes of this Section 2(d), indetermining the number of outstanding shares of Common Stock, a Holder may relyon the number of outstanding shares of Common Stock as reflected in (A) theCompany’s most recent periodic or annual report, as the case may be, (B) amore recent public announcement by the Company or (C) any other notice bythe Company or the Transfer Agent setting forth the number of shares of CommonStock outstanding.  Upon the written or oral request of a Holder, theCompany shall within two Trading Days confirm orally and in writing to theHolder the number of shares of Common Stock then outstanding.  In anycase, the number of outstanding shares of Common Stock shall be determinedafter giving effect to the conversion or exercise of securities of the Company,including this Warrant, by the Holder or its Affiliates since the date as ofwhich such number of outstanding shares of Common Stock was reported.  The “Beneficial Ownership Limitation”shall be 4.99% of the number of shares of the Common Stock

 

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outstanding immediatelyafter giving effect to the issuance of shares of Common Stock issuable uponexercise of this Warrant.  The Holder,upon not less than 61 days’ prior notice to the Company, may increase ordecrease the Beneficial Ownership Limitation provisions of this Section 2(d),provided that the Beneficial Ownership Limitation in no event exceeds 9.99% ofthe number of shares of the Common Stock outstanding immediately after givingeffect to the issuance of shares of Common Stock upon exercise of this Warrantheld by the Holder and the provisions of this Section 2(d) shallcontinue to apply.  Any such increase or decrease will not be effective until the 61st day after such notice isdelivered to the Company.  Theprovisions of this paragraph shall be construed and implemented in a mannerotherwise than in strict conformity with the terms of this Section 2(d) tocorrect this paragraph (or any portion hereof) which may be defective orinconsistent with the intended Beneficial Ownership Limitation herein containedor to make changes or supplements necessary or desirable to properly giveeffect to such limitation. The limitations contained in this paragraph shallapply to a successor holder of this Warrant.

 

e)                                      Mechanicsof Exercise.

 

i.                  Delivery ofCertificates Upon Exercise. Certificates for shares purchased hereunder shall be transmitted by theTransfer Agent to the Holder by crediting the account of the Holder’s primebroker with the Depository Trust Company through its Deposit Withdrawal AgentCommission (“DWAC”) system if the Company is then a participant in suchsystem and the shares are eligible for resale without volume or manner-of-salelimitations pursuant to Rule 144, and otherwise by physical delivery tothe address specified by the Holder in the Notice of Exercise within 3 TradingDays from the delivery to the Company of the Notice of Exercise Form, surrenderof this Warrant (if required) and payment of the aggregate Exercise Price asset forth above (the “Warrant Share Delivery Date”).  This Warrant shall be deemed to have beenexercised on the date the Exercise Price is received by the Company.  The Warrant Shares shall be deemed to havebeen issued, and Holder or any other person so designated to be named thereinshall be deemed to have become a holder of record of such shares for allpurposes, as of the date the Warrant has been exercised by payment to theCompany of the Exercise Price (or by cashless exercise, if permitted) and alltaxes required to be paid by the Holder, if any, pursuant to Section 2(e)(vi) priorto the issuance of such shares, have been paid. If the Company fails for anyreason to deliver to the Holder certificates evidencing the Warrant Sharessubject to a Notice of Exercise by the Warrant Share Delivery Date, the Companyshall pay to the Holder, in cash, as liquidated damages and not as a penalty,for each $1,000 of Warrant Shares subject to such exercise (based on the VWAPof the Common Stock on the date of the applicable Notice of Exercise), $10 perTrading Day (increasing to $20 per Trading Day on the fifth Trading Day aftersuch liquidated damages begin to accrue) for each Trading Day after suchWarrant Share Delivery Date until such certificates are delivered.

 

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ii.               Delivery of NewWarrants Upon Exercise.  If thisWarrant shall have been exercised in part, the Company shall, at the request ofa Holder and upon surrender of this Warrant certificate, at the time ofdelivery of the certificate or certificates representing Warrant Shares,deliver to Holder a new Warrant evidencing the rights of Holder to purchase theunpurchased Warrant Shares called for by this Warrant, which new Warrant shallin all other respects be identical with this Warrant.

 

iii.            Rescission Rights.  If the Company fails to cause the TransferAgent to transmit to the Holder a certificate or the certificates representingthe Warrant Shares pursuant to Section 2(e)(i) by the Warrant ShareDelivery Date, then, the Holder will have the right to rescind such exercise.

 

iv.           Compensation forBuy-In on Failure to Timely Deliver Certificates Upon Exercise.  In addition to any other rights available tothe Holder, if the Company fails to cause the Transfer Agent to transmit to theHolder a certificate or the certificates representing the Warrant Sharespursuant to an exercise on or before the Warrant Share Delivery Date, and ifafter such date the Holder is required by its broker to purchase (in an openmarket transaction or otherwise) or the Holder’s brokerage firm otherwisepurchases, shares of Common Stock to deliver in satisfaction of a sale by theHolder of the Warrant Shares which the Holder anticipated receiving upon suchexercise (a “Buy-In”), then the Company shall (A) pay in cash tothe Holder the amount by which (x) the Holder’s total purchase price(including brokerage commissions, if any) for the shares of Common Stock sopurchased exceeds (y) the amount obtained by multiplying (1) thenumber of Warrant Shares that the Company was required to deliver to the Holderin connection with the exercise at issue times (2) the price at which thesell order giving rise to such purchase obligation was executed, and (B) atthe option of the Holder, either reinstate the portion of the Warrant andequivalent number of Warrant Shares for which such exercise was not honored ordeliver to the Holder the number of shares of Common Stock that would have beenissued had the Company timely complied with its exercise and deliveryobligations hereunder.  For example, ifthe Holder purchases Common Stock having a total purchase price of $11,000 tocover a Buy-In with respect to an attempted exercise of shares of Common Stockwith an aggregate sale price giving rise to such purchase obligation of$10,000, under clause (A) of the immediately preceding sentence theCompany shall be required to pay the Holder $1,000. The Holder shall providethe Company written notice indicating the amounts payable to the Holder inrespect of the Buy-In and, upon request of the Company, evidence of the amountof such loss.  Nothing herein shall limita Holder’s right to pursue any other remedies available to it hereunder, at lawor in equity including, without limitation, a decree of specific performanceand/or injunctive relief with respect to 

 

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the Company’s failure totimely deliver certificates representing shares of Common Stock upon exerciseof the Warrant as required pursuant to the terms hereof.

 

v.              No FractionalShares or Scrip.  No fractional sharesor scrip representing fractional shares shall be issued upon the exercise ofthis Warrant.  As to any fraction of ashare which Holder would otherwise be entitled to purchase upon such exercise,the Company shall, at its election, either pay a cash adjustment in respect ofsuch final fraction in an amount equal to such fraction multiplied by theExercise Price or round up to the next whole share.

 

vi.           Charges, Taxes andExpenses.  Issuance of certificatesfor Warrant Shares shall be made without charge to the Holder for any issue ortransfer tax or other incidental expense in respect of the issuance of suchcertificate, all of which taxes and expenses shall be paid by the Company, andsuch certificates shall be issued in the name of the Holder or in such name ornames as may be directed by the Holder; provided, however, thatin the event certificates for Warrant Shares are to be issued in a name otherthan the name of the Holder, this Warrant when surrendered for exercise shallbe accompanied by the Assignment Form attached hereto duly executed by theHolder and the Company may require, as a condition thereto, the payment of asum sufficient to reimburse it for any transfer tax incidental thereto.

 

vii.        Closing of Books.  The Company will not close its stockholderbooks or records in any manner which prevents the timely exercise of thisWarrant, pursuant to the terms hereof.

 

Section 3.                                            Certain Adjustments.

 

a)                                      StockDividends and Splits. If the Company, at any time while this Warrant isoutstanding: (i) pays a stock dividend or otherwise make a distribution ordistributions on shares of its Common Stock or any other equity or equityequivalent securities payable in shares of Common Stock (which, for avoidanceof doubt, shall not include any shares of Common Stock issued by the Companyupon exercise of this Warrant), (ii) subdivides outstanding shares ofCommon Stock into a larger number of shares, (iii) combines (including byway of reverse stock split) outstanding shares of Common Stock into a smallernumber of shares or (iv) issues by reclassification of shares of theCommon Stock any shares of capital stock of the Company, then in each case theExercise Price shall be multiplied by a fraction of which the numerator shallbe the number of shares of Common Stock (excluding treasury shares, if any)outstanding immediately before such event and of which the denominator shall bethe number of shares of Common Stock outstanding immediately after such eventand the number of shares issuable upon exercise of this Warrant shall beproportionately adjusted such that the aggregate Exercise Price of this Warrantshall remain unchanged.  Any adjustmentmade pursuant to this Section 3(a) shall become effective immediatelyafter the record 

 

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date for thedetermination of stockholders entitled to receive such dividend or distributionand shall become effective immediately after the effective date in the case ofa subdivision, combination or re-classification.

 

b)                                     SubsequentEquity Sales. If the Company or any Subsidiary thereof, as applicable, atany time while this Warrant is outstanding, shall sell or grant any option topurchase, or sell or grant any right to reprice, or otherwise dispose of orissue (or announce any offer, sale, grant or any option to purchase or otherdisposition) any Common Stock or Common Stock Equivalents entitling any Personto acquire shares of Common Stock, at an effective price per share less thanthe then Exercise Price (such lower price, the “Base Share Price” andsuch issuances collectively, a “Dilutive Issuance”) (if the holder ofthe Common Stock or Common Stock Equivalents so issued shall at any time,whether by operation of purchase price adjustments, reset provisions, floatingconversion, exercise or exchange prices or otherwise, or due to warrants,options or rights per share which are issued in connection with such issuance,be entitled to receive shares of Common Stock at an effective price per sharewhich is less than the Exercise Price, such issuance shall be deemed to haveoccurred for less than the Exercise Price on such date of the DilutiveIssuance), then, the Exercise Price shall be reduced and only reduced to equalthe Base Share Price and the number of Warrant Shares issuable hereunder shallbe increased such that the aggregate Exercise Price payable hereunder, aftertaking into account the decrease in the Exercise Price, shall be equal to theaggregate Exercise Price prior to such adjustment.  Such adjustment shall be made whenever suchCommon Stock or Common Stock Equivalents are issued.  Notwithstanding the foregoing, no adjustmentsshall be made, paid or issued under this Section 3(b) in respect ofan Exempt Issuance (as defined below). The Company shall notify the Holder, in writing, no later than theTrading Day following the issuance of any Common Stock or Common StockEquivalents subject to this Section 3(b), indicating therein theapplicable issuance price, or applicable reset price, exchange price,conversion price and other pricing terms (such notice, the “DilutiveIssuance Notice”).  For purposes ofclarification, whether or not the Company provides a Dilutive Issuance Noticepursuant to this Section 3(b), upon the occurrence of any DilutiveIssuance, after the date of such Dilutive Issuance the Holder is entitled toreceive a number of Warrant Shares based upon the Base Share Price regardlessof whether the Holder accurately refers to the Base Share Price in the Noticeof Exercise.

 

“Exempt Issuance” means the issuance of (a) optionsto employees, officers, directors or consultants (provided, however, thatissuances to consultants shall not exceed 500,000 shares in any 12 monthperiod, subject to adjustment for reverse and forward stock splits, stockinterests, stock combinations and other similar transactions that occur afterthe date of the Purchase Agreement; provided, further, that the issuance priceof such shares shall be equal to or greater than the VWAP on the Trading Dayimmediately prior to the date of such issuance) of the Company pursuant to anystock or option plan currently in effect or hereafter duly adopted by amajority of the non-employee members of the Board of Directors or a majority ofthe members of a committee of non-employee directors established for suchpurpose, provided that the exercise price of such options shall not be lessthan the VWAP on the Trading Day immediately prior to the grant of such 

 

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option), (b) securities upon the exercise,conversion or redemption (amortization) of any securities issued pursuant tothe Purchase Agreement, convertible securities, options or warrants issued andoutstanding on the date of the Purchase Agreement (including the issuance ofDebentures to service providers of the Company in lieu of cash payments due asof the date of the Purchase Agreement, including the payment of placement agentfees hereunder and accrued but unpaid legal and consulting fees and expenses),provided that such securities have not been amended since the date of thePurchase Agreement to increase the number of such securities or to decrease theexercise, exchange or conversion price of any such securities except inaccordance with their terms as in effect as of the date hereof or (c) securitiesissued pursuant to acquisitions or strategic transactions, provided any suchissuance shall only be made in connection with a transaction involving a Personwhich is, itself or through its subsidiaries, an operating company in abusiness synergistic with the business of the Company and in which the Companyreceives benefits in addition to the investment of funds, but shall not includea transaction in which the Company is issuing securities primarily for thepurpose of raising capital or to an entity whose primary business is investingin securities.  Notwithstanding anythingherein to the contrary, additional issuances of securities by the Company notreferenced above shall be deemed “Exempt Issuances” upon receipt by the Companyof the consent of each holder (including holdings by affiliates) of theDebentures with an original Subscription Amount of at least $300,000 under thePurchase Agreement on the Closing Date, and if no such holders hold anyDebentures or Warrants at such time, upon receipt by the Company of the consentof 51% of the holders of Warrants then outstanding.

 

c)                                      SubsequentRights Offerings.  If the Company, atany time while the Warrant is outstanding, shall issue rights, options orwarrants to all holders of Common Stock (and not to Holders) entitling them tosubscribe for or purchase shares of Common Stock at a price per share less thanthe VWAP at the record date mentioned below, then, the Exercise Price shall bemultiplied by a fraction, of which the denominator shall be the number of sharesof the Common Stock outstanding on the date of issuance of such rights orwarrants plus the number of additional shares of Common Stock offered forsubscription or purchase, and of which the numerator shall be the number ofshares of the Common Stock outstanding on the date of issuance of such rightsor warrants plus the number of shares which the aggregate offering price of thetotal number of shares so offered (assuming receipt by the Company in full ofall consideration payable upon exercise of such rights, options or warrants)would purchase at such VWAP.  Suchadjustment shall be made whenever such rights or warrants are issued, and shallbecome effective immediately after the record date for the determination ofstockholders entitled to receive such rights, options or warrants.

 

d)                                     ProRata Distributions.  If the Company,at any time while this Warrant is outstanding, shall distribute to all holdersof Common Stock (and not to Holders of the Warrants) evidences of itsindebtedness or assets (including cash and cash dividends) or rights orwarrants to subscribe for or purchase any security other than the Common Stock(which shall be subject to Section 3(b)), then in each such case theExercise Price shall be adjusted by multiplying the Exercise Price in effectimmediately prior to the record date 

 

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fixed for determinationof stockholders entitled to receive such distribution by a fraction of whichthe denominator shall be the VWAP determined as of the record date mentionedabove, and of which the numerator shall be such VWAP on such record date lessthe then per share fair market value at such record date of the portion of suchassets or evidence of indebtedness so distributed applicable to one outstandingshare of the Common Stock as determined by the Board of Directors in goodfaith.  In either case the adjustmentsshall be described in a statement provided to the Holder of the portion ofassets or evidences of indebtedness so distributed or such subscription rightsapplicable to one share of Common Stock. Such adjustment shall be made whenever any such distribution is made andshall become effective immediately after the record date mentioned above.

 

e)                                      FundamentalTransaction. If, at any time while this Warrant is outstanding, (i) theCompany effects any merger or consolidation of the Company with or into anotherPerson, (ii) the Company effects any sale of all or substantially all ofits assets in one or a series of related transactions, (iii) any tenderoffer or exchange offer (whether by the Company or another Person) is completedpursuant to which holders of Common Stock are permitted to tender or exchangetheir shares for other securities, cash or property or (iv) the Companyeffects any reclassification of the Common Stock or any compulsory shareexchange pursuant to which the Common Stock is effectively converted into orexchanged for other securities, cash or property (each “FundamentalTransaction”), then, upon anysubsequent exercise of this Warrant, the Holdershall have the right to receive, for each Warrant Share that would havebeen issuable upon such exercise immediately prior to the occurrence of suchFundamental Transaction, the number of shares ofCommon Stock of the successor or acquiring corporation or of the Company, if itis the surviving corporation, and any additional consideration (the “AlternateConsideration”) receivable as a result ofsuch merger, consolidation or disposition of assets by a holder of the numberof shares of Common Stock for which this Warrant is exercisable immediatelyprior to such event. For purposes of any such exercise, thedetermination of the Exercise Price shall be appropriately adjusted to apply tosuch Alternate Consideration based on the amount of Alternate Considerationissuable in respect of one share of Common Stock in such FundamentalTransaction, and the Company shall apportion the Exercise Price among theAlternate Consideration in a reasonable manner reflecting the relative value ofany different components of the Alternate Consideration.  If holders of Common Stock are given anychoice as to the securities, cash or property to be received in a FundamentalTransaction, then the Holder shall be given the same choice as to the AlternateConsideration it receives upon any exercise of this Warrant following suchFundamental Transaction.  To the extentnecessary to effectuate the foregoing provisions, any successor to the Companyor surviving entity in such Fundamental Transaction shall issue to the Holder anew warrant consistent with the foregoing provisions and evidencing the Holder’sright to exercise such warrant into Alternate Consideration. The terms of anyagreement pursuant to which a Fundamental Transaction is effected shall includeterms requiring any such successor or surviving entity to comply with theprovisions of this Section 3(e) and insuring that this Warrant (orany such replacement security) will be similarly adjusted upon any subsequenttransaction analogous to a Fundamental Transaction. Notwithstanding anything to the contrary, in the event of aFundamental Transaction that is (1) an all cash transaction, (2) a “Rule 13e-3transaction” as defined in Rule 13e-3 under the Exchange 

 

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Act, or (3) aFundamental Transaction involving a person or entity not traded on a nationalsecurities exchange, the Nasdaq Global Select Market, the Nasdaq Global Market,or the Nasdaq Capital Market, the Company or any successor entity shall pay atthe Holder’s option, exercisable at any time concurrently with or within 30days after the consummation of the Fundamental Transaction, an amount of cashequal to the value of this Warrant as determined in accordance with the BlackScholes Option Pricing Model obtained from the “OV” function on Bloomberg L.P.using (A) a price per share of Common Stock equal to the VWAP of theCommon Stock for the Trading Day immediately preceding the date of consummationof the applicable  FundamentalTransaction, (B) therisk-free interest rate corresponding to the U.S. Treasury rate for a periodequal to the remaining term of this Warrant as of the date of consummation ofthe applicable Fundamental Transaction, (C) an expected volatilityequal to the 100 day volatility obtained from the “HVT” function on BloombergL.P. determined as of the Trading Day immediately following the publicannouncement of the applicable Fundamental Transaction and (D) a remainingoption time equal to the time between the date of the public announcement ofsuch transaction and the Termination Date.

 

f)                                        Calculations.All calculations under this Section 3 shall be made to the nearest cent orthe nearest 1/100th of a share, as the case may be. For purposes of this Section 3,the number of shares of Common Stock deemed to be issued and outstanding as ofa given date shall be the sum of the number of shares of Common Stock(excluding treasury shares, if any) issued and outstanding.

 

g)                                     Noticeto Holder.

 

i.                  Adjustment toExercise Price. Whenever the Exercise Price is adjusted pursuant to anyprovision of this Section 3, the Company shall promptly mail to the Holdera notice setting forth the Exercise Price after such adjustment and settingforth a brief statement of the facts requiring such adjustment. If the Companyenters into a Variable Rate Transaction, despite the prohibition thereon in thePurchase Agreement, the Company shall be deemed to have issued Common Stock orCommon Stock Equivalents at the lowest possible conversion or exercise price atwhich such securities may be converted or exercised.

 

ii.               Notice to AllowExercise by Holder. If (A) the Company shall declare a dividend (orany other distribution in whatever form) on the Common Stock, (B) theCompany shall declare a special nonrecurring cash dividend on or a redemptionof the Common Stock, (C) the Company shall authorize the granting to allholders of the Common Stock rights or warrants to subscribe for or purchase anyshares of capital stock of any class or of any rights, (D) the approval ofany stockholders of the Company shall be required in connection with anyreclassification of the Common Stock, any consolidation or merger to which theCompany is a party, any sale or transfer of all or substantially all of theassets of the Company, of any compulsory share exchange whereby the CommonStock is converted into other securities, cash or property, or (E) theCompany 

 

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shall authorize thevoluntary or involuntary dissolution, liquidation or winding up of the affairsof the Company, then, in each case, the Company shall cause to be mailed to theHolder at its last address as it shall appear upon the Warrant Register of theCompany, at least 20 calendar days prior to the applicable record or effectivedate hereinafter specified, a notice stating (x) the date on which arecord is to be taken for the purpose of such dividend, distribution,redemption, rights or warrants, or if a record is not to be taken, the date asof which the holders of the Common Stock of record to be entitled to suchdividend, distributions, redemption, rights or warrants are to be determined or(y) the date on which such reclassification, consolidation, merger, sale,transfer or share exchange is expected to become effective or close, and thedate as of which it is expected that holders of the Common Stock of recordshall be entitled to exchange their shares of the Common Stock for securities,cash or other property deliverable upon such reclassification, consolidation,merger, sale, transfer or share exchange; provided that the failure to mailsuch notice or any defect therein or in the mailing thereof shall not affectthe validity of the corporate action required to be specified in suchnotice.  The Holder is entitled toexercise this Warrant during the period commencing on the date of such noticeto the effective date of the event triggering such notice.

 

Section 4.                                            Transfer of Warrant.

 

a)                                      Transferability.  Subject to compliance with any applicablesecurities laws and the conditions set forth in Section 4(d) hereofand to the provisions of Section 4.1 of the Purchase Agreement, thisWarrant and all rights hereunder (including, without limitation, anyregistration rights) are transferable, in whole or in part, upon surrender ofthis Warrant at the principal office of the Company or its designated agent,together with a written assignment of this Warrant substantially in the formattached hereto duly executed by the Holder or its agent or attorney and fundssufficient to pay any transfer taxes payable upon the making of suchtransfer.  Upon such surrender and, ifrequired, such payment, the Company shall execute and deliver a new Warrant orWarrants in the name of the assignee or assignees, as applicable, and in thedenomination or denominations specified in such instrument of assignment, andshall issue to the assignor a new Warrant evidencing the portion of thisWarrant not so assigned, and this Warrant shall promptly be cancelled.  The Warrant, if properly assigned, may beexercised by a new holder for the purchase of Warrant Shares without having anew Warrant issued.

 

b)                                     NewWarrants. This Warrant may be divided or combined with other Warrants uponpresentation hereof at the aforesaid office of the Company, together with awritten notice specifying the names and denominations in which new Warrants areto be issued, signed by the Holder or its agent or attorney.  Subject to compliance with Section 4(a),as to any transfer which may be involved in such division or combination, theCompany shall execute and deliver a new Warrant or Warrants in exchange for theWarrant or Warrants to be divided or combined in accordance with such notice.All Warrants issued on transfers or exchanges shall be dated the original IssueDate and shall 

 

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be identical with thisWarrant except as to the number of Warrant Shares issuable pursuant thereto.

 

c)                                      WarrantRegister. The Company shall register this Warrant, upon records to bemaintained by the Company for that purpose (the “Warrant Register”), inthe name of the record Holder hereof from time to time.  The Company may deem and treat the registeredHolder of this Warrant as the absolute owner hereof for the purpose of anyexercise hereof or any distribution to the Holder, and for all other purposes,absent actual notice to the contrary.

 

d)                                     TransferRestrictions. If, at the time of the surrender of this Warrant inconnection with any transfer of this Warrant, the transfer of this Warrantshall not be either (i) registered pursuant to an effective registrationstatement under the Securities Act and under applicable state securities orblue sky laws or (ii) eligible for resale without volume or manner-of-salerestrictions pursuant to Rule 144, the Company may require, as a conditionof allowing such transfer, that the Holder or transferee of this Warrant, asthe case may be, comply with the provisions of Section 5.7 of the PurchaseAgreement.

 

Section 5.                                            Miscellaneous.

 

a)                                      NoRights as Stockholder Until Exercise. This Warrant does not entitle the Holder to any voting rights or otherrights as a stockholder of the Company prior to the exercise hereof as setforth in Section 2(e)(i).

 

b)                                     Loss,Theft, Destruction or Mutilation of Warrant. The Company covenants thatupon receipt by the Company of evidence reasonably satisfactory to it of theloss, theft, destruction or mutilation of this Warrant or any stock certificaterelating to the Warrant Shares, and in case of loss, theft or destruction, ofindemnity or security reasonably satisfactory to it (which, in the case of theWarrant, shall not include the posting of any bond), and upon surrender andcancellation of such Warrant or stock certificate, if mutilated, the Companywill make and deliver a new Warrant or stock certificate of like tenor anddated as of such cancellation, in lieu of such Warrant or stock certificate.

 

c)                                      Saturdays,Sundays, Holidays, etc.  If the lastor appointed day for the taking of any action or the expiration of any rightrequired or granted herein shall not be a Business Day, then, such action maybe taken or such right may be exercised on the next succeeding Business Day.

 

d)                                     AuthorizedShares.

 

The Company covenants that, during the period the Warrant isoutstanding, it will reserve from its authorized and unissued Common Stock asufficient number of shares to provide for the issuance of the Warrant Sharesupon the exercise of any purchase rights under this Warrant.  The Company further covenants that itsissuance of this Warrant shall constitute full authority to its officers whoare charged with the duty of executing stock certificates to 

 

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execute and issue the necessary certificates for theWarrant Shares upon the exercise of the purchase rights under thisWarrant.  The Company will take all suchreasonable action as may be necessary to assure that such Warrant Shares may beissued as provided herein without violation of any applicable law or regulation,or of any requirements of the Trading Market upon which the Common Stock may belisted.  The Company covenants that allWarrant Shares which may be issued upon the exercise of the purchase rightsrepresented by this Warrant will, upon exercise of the purchase rightsrepresented by this Warrant, be duly authorized, validly issued, fully paid andnonassessable and free from all taxes, liens and charges created by the Companyin respect of the issue thereof (other than taxes in respect of any transferoccurring contemporaneously with such issue).

 

Except and to the extent as waived or consented to bythe Holder, the Company shall not by any action, including, without limitation,amending its certificate of incorporation or through any reorganization,transfer of assets, consolidation, merger, dissolution, issue or sale ofsecurities or any other voluntary action, avoid or seek to avoid the observanceor performance of any of the terms of this Warrant, but will at all times ingood faith assist in the carrying out of all such terms and in the taking ofall such actions as may be necessary or appropriate to protect the rights ofHolder as set forth in this Warrant against impairment.  Without limiting the generality of theforegoing, the Company will (i) not increase the par value of any WarrantShares above the amount payable therefor upon such exercise immediately priorto such increase in par value, (ii) take all such action as may benecessary or appropriate in order that the Company may validly and legallyissue fully paid and nonassessable Warrant Shares upon the exercise of thisWarrant and (iii) use commercially reasonable efforts to obtain all suchauthorizations, exemptions or consents from any public regulatory body havingjurisdiction thereof, as may be, necessary to enable the Company to perform itsobligations under this Warrant.

 

Before taking any action which would result in anadjustment in the number of Warrant Shares for which this Warrant isexercisable or in the Exercise Price, the Company shall obtain all suchauthorizations or exemptions thereof, or consents thereto, as may be necessaryfrom any public regulatory body or bodies having jurisdiction thereof.

 

e)                                      Jurisdiction.All questions concerning the construction, validity, enforcement andinterpretation of this Warrant shall be determined in accordance with theprovisions of the Purchase Agreement.

 

f)                                        Restrictions.  The Holder acknowledges that the WarrantShares acquired upon the exercise of this Warrant, if not registered, will haverestrictions upon resale imposed by state and federal securities laws.

 

g)                                     Nonwaiverand Expenses.  No course of dealingor any delay or failure to exercise any right hereunder on the part of Holdershall operate as a waiver of such right 

 

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or otherwise prejudiceHolder’s rights, powers or remedies, notwithstanding the fact that all rightshereunder terminate on the Termination Date. If the Company willfully and knowingly fails to comply with anyprovision of this Warrant, which results in any material damages to the Holder,the Company shall pay to Holder such amounts as shall be sufficient to coverany costs and expenses including, but not limited to, reasonable attorneys’fees, including those of appellate proceedings, incurred by Holder incollecting any amounts due pursuant hereto or in otherwise enforcing any of itsrights, powers or remedies hereunder.

 

h)                                     Notices.  Any notice, request or other documentrequired or permitted to be given or delivered to the Holder by the Companyshall be delivered in accordance with the notice provisions of the PurchaseAgreement.

 

i)                                         Limitationof Liability.  No provision hereof,in the absence of any affirmative action by Holder to exercise this Warrant topurchase Warrant Shares, and no enumeration herein of the rights or privilegesof Holder, shall give rise to any liability of Holder for the purchase price ofany Common Stock or as a stockholder of the Company, whether such liability isasserted by the Company or by creditors of the Company.

 

j)                                         Remedies.  The Holder, in addition to being entitled toexercise all rights granted by law, including recovery of damages, will beentitled to specific performance of its rights under this Warrant.  The Company agrees that monetary damageswould not be adequate compensation for any loss incurred by reason of a breachby it of the provisions of this Warrant and hereby agrees to waive and not toassert the defense in any action for specific performance that a remedy at lawwould be adequate.

 

k)                                      Successorsand Assigns.  Subject to applicablesecurities laws, this Warrant and the rights and obligations evidenced herebyshall inure to the benefit of and be binding upon the successors of the Companyand the successors and permitted assigns of Holder.  The provisions of this Warrant are intendedto be for the benefit of all Holders from time to time of this Warrant andshall be enforceable by the Holder or holder of Warrant Shares.

 

l)                                         Amendment.  This Warrant may be modified or amended orthe provisions hereof waived with the written consent of the Company and theHolder.

 

m)                                   Severability.  Wherever possible, each provision of thisWarrant shall be interpreted in such manner as to be effective and valid underapplicable law, but if any provision of this Warrant shall be prohibited by orinvalid under applicable law, such provision shall be ineffective to the extentof such prohibition or invalidity, without invalidating the remainder of suchprovisions or the remaining provisions of this Warrant.

 

n)                                     Headings.  The headings used in this Warrant are for theconvenience of reference only and shall not, for any purpose, be deemed a partof this Warrant.

 

********************

 

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##  

## *(Signature Pages Follow)*

 

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INWITNESS WHEREOF, the Company has caused this Warrant to be executed by itsofficer thereunto duly authorized as of the date first above indicated.

 

 
|       | **ADVANCED CELL TECHNOLOGY, INC.** |
|------------|------------------------------------|
|       |                               |
|       |                               |
|       | By:                                |   |
| ** ** |                               | Name: |
| ** ** |                               | Title: |

 

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**NOTICE OF EXERCISE**

 

TO:                            ADVANCED CELL TECHNOLOGY INC.

 

(1)          The undersigned herebyelects to purchase                Warrant Shares of the Company pursuant to the terms of the attached Warrant(only if exercised in full), and tenders herewith payment of the exercise pricein full, together with all applicable transfer taxes, if any.

 

(2)          Payment shall take theform of (check applicable box):

 

oin lawful money of the United States; or

 

o[if permitted] the cancellation of such number of Warrant Shares as isnecessary, in accordance with the formula set forth in subsection 2(c), toexercise this Warrant with respect to the maximum number of Warrant Sharespurchasable pursuant to the cashless exercise procedure set forth in subsection2(c).

 

(3)          Please issue acertificate or certificates representing said Warrant Shares in the name of theundersigned or in such other name as is specified below:

 

 

The Warrant Shares shall be delivered to the following DWAC AccountNumber or by physical delivery of a certificate to:

 

 

(4)          Accredited Investor.  The undersigned is an “accredited investor”as defined in Regulation D promulgated under the Securities Act of 1933, asamended.

 

[SIGNATURE OFHOLDER]

 
| Name of Investing Entity:                                 |   |
|-----------------------------------------------------------|--------|
| *Signature of Authorized Signatory of Investing  Entity*: |   |
| Name of Authorized Signatory:                             |   |
| Title of Authorized Signatory:                            |   |
| Date:                                                     |   |
|                                                           |        |  |  |  |  |

 

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**ASSIGNMENT FORM**

 

(To assign the foregoing warrant, executethis form and supply required information. Do not use this form to exercise the warrant.)

 

FORVALUE RECEIVED, [        ] all of or[              ]shares of the foregoing Warrant and all rights evidenced thereby are herebyassigned to

 

                                                                                              whose address is

 

                                                                                                                              .

 

                                                                                                                                                                                                                                                                                                                                                Dated:                             ,

 
|                   | Holder’s  Signature: |   |   |
|------------------------|---------------------------|--------|--------|
|                   |                      |   |   |
|                   | Holder’s  Address:   |   |   |
|                   |                      |   |   |
|                   |                      |   |   |
| Signature  Guaranteed: |                      |   |   |
|                        |                           |        |        |  |  |

 

 

NOTE:  The signature to thisAssignment Form must correspond with the name as it appears on the face ofthe Warrant, without alteration or enlargement or any change whatsoever, andmust be guaranteed by a bank or trust company. Officers of corporations and those acting in a fiduciary or otherrepresentative capacity should file proper evidence of authority to assign theforegoing Warrant.

 

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