**Exhibit10.30.1**

 

**EXECUTION COPY**

 

 

**SECURITYHOLDERS’ AGREEMENT**

 

**among**

 

**CYAGRA, INC.,**

 

**ADVANCED CELL TECHNOLOGY, INC.,**

 

**A.C.T. GROUP, INC.,**

 

**GOYAIKE S.A.**

 

**and**

 

**THE SECURITYHOLDERS HEREAFTER SIGNATORY HERETO**

 

**dated as of July 1, 2002**

 

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**TABLE OFCONTENTS**

 
|   | ARTICLE I  DEFINITIONS                                                   |                                                          |
|--------|-------------------------------------------------------------------------------|---------------------------------------------------------------|
|   |                                                                          |                                                          |   |
|   | SECTION 1.01.                                                            | Certain  Defined Terms                                        |   |
|   |                                                                          |                                                          |   |
|   | ARTICLE II  REPRESENTATIONS AND WARRANTIES OF THE COMPANY, GROUP AND ACT |                                                          |
|   |                                                                          |                                                          |   |
|   | SECTION 2.01.                                                            | Due Organization and Authority of the  Company, Group and ACT |   |
|   | SECTION 2.02.                                                            | No Conflict                                                   |   |
|   | SECTION 2.03.                                                            | Governmental Consents and Approvals                           |   |
|   |                                                                          |                                                          |   |
|   | ARTICLE IIIREPRESENTATIONS AND WARRANTIES OF GOYAIKE                     |                                                          |
|   |                                                                          |                                                          |   |
|   | SECTION 3.01.                                                            | Organization  and Authority                                   |   |
|   | SECTION 3.02.                                                            | No Conflict                                                   |   |
|   | SECTION 3.03.                                                            | Governmental Consents and Approvals.                          |   |
|   |                                                                          |                                                          |   |
|   | ARTICLE IV  CORPORATE GOVERNANCE                                         |                                                          |
|   |                                                                          |                                                          |   |
|   | SECTION 4.01.                                                            | Agreement to Vote                                             |   |
|   | SECTION 4.02.                                                            | Election of Directors; Voting                                 |   |
|   | SECTION 4.03.                                                            | Nomination and Election of Directors                          |   |
|   | SECTION 4.04.                                                            | Removal; Vacancies                                            |   |
|   | SECTION 4.05.                                                            | Quorum; Certain Actions                                       |   |
|   | SECTION 4.06.                                                            | Audit Committee                                               |   |
|   | SECTION 4.07.                                                            | Compensation Committee                                        |   |
|   |                                                                          |                                                          |   |
|   | ARTICLE V  TRANSFER OF SHARES                                            |                                                          |
|   |                                                                          |                                                          |   |
|   | SECTION 5.01.                                                            | General  Restriction                                          |   |
|   | SECTION 5.02.                                                            | Legends                                                       |   |
|   | SECTION 5.03.                                                            | Certain Restrictions on Transfer of Shares                    |   |
|   | SECTION 5.04.                                                            | Right of First Offer                                          |   |
|   | SECTION 5.05.                                                            | Tag-Along Rights                                              |   |

 

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|              | SECTION 5.06.                       | Transferees to Execute Agreement            |   |
|-------------------|------------------------------------------|---------------------------------------------|--------|
|              | SECTION 5.07.                       | Improper Sale                               |   |
|              |                                     |                                        |   |
|              | ARTICLE VI  [INTENTIONALLY DELETED] |                                        |
|              |                                     |                                        |   |
|              | ARTICLE VII  ADDITIONAL AGREEMENTS  |                                        |
|              |                                     |                                        |   |
|              | SECTION 7.01.                       | New Securityholders to Execute Agreement    |   |
|              | SECTION 7.02.                       | Rights to Purchase New Securities           |   |
|              | SECTION 7.03.                       | Further Assurances                          |   |
|              | SECTION 7.04.                       | Restriction on Transactions with Affiliates |   |
|              | SECTION 7.05.                       | Information Rights                          |   |
|              | SECTION 7.06.                       | Dividend Rights                             |   |
|              |                                     |                                        |   |
|              | ARTICLE VIII  MISCELLANEOUS         |                                        |
|              |                                     |                                        |   |
|              | SECTION 8.01.                       | Termination                                 |   |
|              | SECTION 8.02.                       | Expenses                                    |   |
|              | SECTION 8.03.                       | Notices                                     |   |
|              | SECTION 8.04.                       | Public Announcements                        |   |
|              | SECTION 8.05.                       | Headings                                    |   |
|              | SECTION 8.06.                       | Severability                                |   |
|              | SECTION 8.07.                       | Entire Agreement                            |   |
|              | SECTION 8.08.                       | Assignment                                  |   |
|              | SECTION 8.09.                       | No Third-Party Beneficiaries                |   |
|              | SECTION 8.10.                       | Amendment                                   |   |
|              | SECTION 8.11.                       | Governing Law                               |   |
|              | SECTION 8.12.                       | Counterparts                                |   |
|              | SECTION 8.13.                       | Specific Performance                        |   |
|              | SECTION 8.14.                       | Waiver of Jury Trial                        |   |
|              |                                     |
| Schedule I   | Subsequent Securityholders               |                                        |
| Schedule II  | Addresses of Securityholders             |                                        |
| Schedule III | Nominees to Board of Directors           |                                        |
| Schedule IV  | Consent Events                           |                                        |
| Schedule V   | Competitors of the Business              |                                        |
|                   |                                          |                                             |        |  |

 

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**SECURITYHOLDERS’ AGREEMENT**

 

This SECURITYHOLDERS’ AGREEMENT (this “Agreement”), dated as of July 1,2002, among CYAGRA, INC., a Delaware corporation (the “Company”),ADVANCED CELL TECHNOLOGY, INC., a Delaware corporation (“ACT”), A.C.T.GROUP, INC., a Delaware corporation (“GROUP”), and GOYAIKE S.A., acompany incorporated under the laws of Argentina (“Goyaike”), and eachPerson hereafter signatory to this Agreement.

 

**W****ITNESSETH:**

 

WHEREAS, the Company is engaged in the business of researching anddeveloping technology, manufacturing and selling products and providingservices related thereto, in each case, in the field of agriculture, includingresearching and developing technology and manufacturing and selling productsthat are composed of, made in or derived, extracted or isolated from clonednon-human domesticated animals (including cattle, goats, sheep, pigs, and otherdomesticated animals, but excluding animals of the avian or equine species) orthe cells or tissues, including genes, of such animals for the production offood or fiber and the rendering of services or uses that relate to theproduction of such products, and the production of transgenic animals for thepurposes described above (the “Business”);

 

WHEREAS, pursuant to a Securities PurchaseAgreement, dated July 1, 2002, among the Company, ACT and Goyaike (the “SecuritiesPurchase Agreement”), Goyaike has agreed to purchase 8,171,000 shares ofthe Company’s common stock, par value $0.001 per share (“Common Stock”)from ACT;

 

WHEREAS, after giving effect to the transactions contemplated by theSecurities Purchase Agreement, Goyaike will own approximately 79% of theoutstanding shares of Common Stock of the Company on a fully diluted basis, andACT and Group will collectively own approximately 14.7% of the outstandingshares of Common Stock of the Company on a fully diluted basis;

 

WHEREAS, the Company is also acquiring a license of certainintellectual property pursuant to a sublicense agreement, dated July 1,2002, among Group, ACT, the Company, the University of Massachusetts, TuftsUniversity and Dr. Chengyu Liu (the “Sublicense Agreement”);

 

WHEREAS, pursuant to a Separation Agreement, dated July 1, 2002,between the Group, ACT and the Company (the “Separation Agreement”),Group, ACT and the Company have agreed to take actions necessary to establishseparate business operations for ACT and the Company.

 

WHEREAS,as a condition to closing the transactions contemplated by this Agreement, on orprior to the Closing, ACT and the Fleni Foundation (“Fleni”), anaffiliate of the Purchaser, shall agree to the material terms (the “CollaborationAgreementTerm Sheet”) for a collaboration agreement pursuant towhich ACT shall grant Fleni a license to use ACT Technology (as defined in theCollaboration Agreement) related to human therapeutic cloning within theterritory of Argentina and the parties shall develop a collaboration program.

 

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WHEREAS, the parties hereto believe it is in theirrespective best interests to terminate the Securityholders’ Agreement, dated asof November 20, 2001, among the Company, Act, Group and Goyaike and enterinto certain agreements concerning the composition of the Company’s Board (asdefined below), corporate governance, transfer restrictions on the Common Stockand consent/supermajority rights, all as set forth herein.

 

NOW, THEREFORE, in consideration of the premises and of the mutualcovenants and agreements hereinafter set forth, the parties hereby agree asfollows:

 

**ARTICLE I**

 

**DEFINITIO****NS**

 

SECTION 1.01.     CertainDefined Terms.  As used in this Agreement, the followingterms shall have the following meanings:

 

“ACT”has the meaning specified in the Preamble.

 

“Affiliate” means, with respect to any specified Person, any otherPerson that directly, or indirectly through one or more intermediaries,Controls, is Controlled by, or is under common Control with, such specifiedPerson.

 

“Agreement” has the meaning specified in the Preamble.

 

“Beneficial Owner” or “Beneficially Own”has the meaning given such term in Rule 13d-3 under the Exchange Act; provided,however, that Beneficial Ownership under Rule 13d-3(1)(i) shallbe determined based on whether a Person has a right to acquire BeneficialOwnership irrespective of whether such right is exercisable within sixty (60)days of the time of determination.

 

“Board”means the board of directors of the Company.

 

“Business”has the meaning specified in the Recitals.

 

“Business Day” means any day that is not a Saturday, a Sunday orother day on which banks are required or authorized by Law to be closed in TheCity of New York, U.S.A. or The City of Buenos Aires, Argentina.

 

“Capital Stock” means, with respect to anyPerson at any time, any and all shares, interests, participations or otherequivalents (however designated, whether voting or non-voting) of capitalstock, partnership interests (whether general or limited), limited liabilitycompany interests or equivalent ownership interests in such Person.

 

“CommonStock” has the meaning specified in the Recitals.

 

“Company”has the meaning specified in the Preamble.

 

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“CompanyOption” has the meaning specified in Section 5.04(c).

 

“CompanyOption Period” has the meaning specified in Section 5.04(c).

 

“Control” (including the terms “controlled by” and “undercommon control with”) means the possession, directly or indirectly, or astrustee or executor, of the power to direct or cause the direction of themanagement and policies of a Person, whether through the ownership of votingsecurities, as trustee or executor, by contract or credit arrangement orotherwise.

 

“EBITDA”means earnings before interest, taxes, depreciation and amortization.

 

“Encumbrance”means any security interest, pledge, bailment (in the nature of a pledge or forpurposes of security), mortgage, deed of trust, the grant of a power to confessjudgment, conditional sale or title retention agreement (including any lease inthe nature thereof), lien (including, without limitation, environmental and taxliens), charge, encumbrance, easement, reservation, restriction, cloud, adverseclaim, right of first refusal or first offer, option or other similararrangement or interest in real or personal property.

 

“Exchange Act” means the Securities Exchange Act of 1934, asamended, and the rules and regulations promulgated thereunder.

 

“Goyaike”has the meaning specified in the Preamble.

 

“GoyaikeDirectors” has the meaning specified in Section 4.02.

 

“Group”has the meaning specified in the preamble.

 

“Indebtedness” means, with respect to anyPerson, (a) all indebtedness of such Person, whether or not contingent,for borrowed money, (b) all obligations of such Person for the deferredpurchase price of property or services, other than accounts payable incurred inthe ordinary course of business, (c) all indebtedness created or arisingunder any conditional sale or other title retention agreement with respect toproperty acquired by such Person (even though the rights and remedies of such Personor lender under such agreement in the event of default are limited torepossession or sale of such property), (d) all obligations of such Personas lessee under leases that have been or should be, in accordance with US GAAP,recorded as capital leases, (e) all obligations, contingent or otherwise,of such Person under acceptance, letter of credit or similar facilities, (f) allIndebtedness of others referred to in clauses (a) through (e) aboveguaranteed directly or indirectly in any manner by such Person, or in effectguaranteed directly or indirectly by such Person, and (g) all Indebtednessreferred to in clauses (a) through (e) above secured by (or for whichthe holder of such Indebtedness has an existing right, contingent or otherwise,to be secured by) any Encumbrance on property (including, without limitation,accounts and contract rights) owned by such Person, even though such Person hasnot assumed or become liable for the payment of such Indebtedness.

 

“Law” means any U.S. or non-U.S. constitution, law, statute,treaty, rule, directive, requirement or regulation or governmental order.

 

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“Material Adverse Effect” means any circumstance, change in oreffect on the Company that, individually or in the aggregate with all othercircumstances, changes in or effects on the Company, is or could reasonably beexpected to be materially adverse to the business, operations, properties,results of operations or condition (financial or otherwise) of the Company,except for any changes in or effects on the Company principally arising from orprincipally relating to (i) the United States or the global economy or thesecurities markets generally or (ii) the biomedical industry in general; provided,however, that in the case of each of clause (i) and (ii) theCompany is not disproportionately affected by such changes or effects comparedto other Persons engaged in similarly situated businesses within the biomedicalindustry.

 

“Net Income” means net income as reflected onthe Company’s internal quarterly financial statements as prepared in accordancewith US GAAP.

 

“New Securities” means any Capital Stock of the Company, whethernow authorized or not, and rights, options or warrants to purchase such CapitalStock, and securities of any type whatsoever that are, or may become,convertible into or exchangeable or exercisable for Capital Stock of theCompany; provided, however, that the term “New Securities” doesnot include (i) shares of Common Stock of the Company which have beenreserved for issuance to employees, officers and directors of the Companypursuant to an incentive stock option pool administered by the Board consistingof ten (10%) percent of the outstanding shares of Common Stock of the Companyon a fully diluted basis as of the Closing Date, (ii) securities of theCompany issued in connection with any stock split, stock dividend orrecapitalization of the Company, (iii) securities of the Company issued ina Qualified Initial Public Offering, or (iv) securities issued inconnection with (a) any acquisition of assets or capital stock or otherequity interest of any other business enterprise (whether such acquisition isstructured as a purchase and sale, merger, consolidation or other amalgamation)if the issuance of such securities has been approved by the Board pursuant to Article IVor (b) the licensing or acquisition of intellectual property for use inthe Business if the issuance of such securities has been approved by the Boardpursuant to Article IV.

 

“Noticeof Issuance” has the meaning specified in Section 7.02(b).

 

“OfferPrice” has the meaning specified in Section 5.04(b).

 

“OfferingNotice” has the meaning specified in Section 5.04(b).

 

“OfferedSecurities” has the meaning specified in Section 5.04(b).

 

“OfferingSecurityholder” has the meaning specified in Section 5.04(a).

 

“OtherSecurityholders” has the meaning specified in Section 5.05(a).

 

“Percentage”has the meaning specified in Section 5.05(b).

 

“PermittedTransferee” means, with respect to a specified Person, (i) anyAffiliate of such Person, provided such Person is not a competitor of theCompany, as unanimously determined by the Board, (ii) a donee of Shareswho is a member of the family of such Person or any trust for the benefit ofany such family member and (iii) a transferee of Shares who receives

 

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suchShares by will or the laws of descent and distribution.  For purposes of this definition, the word “family”shall include any spouse, lineal ancestor or descendant, brother or sister.

 

“Person” means any individual, partnership, firm, corporation,association, trust, unincorporated organization or other entity, as well as anysyndicate or group that would be deemed to be a person under Section 13(d)(3) ofthe Securities Exchange Act of 1934, as amended.

 

“Prospective Transferee” has the meaning specified in Section 5.06.

 

“Qualified Initial Public Offering” means a public offering ofshares of Common Stock of the Company that (i) yields actual cash proceedsto the Company in excess of US$25 million and at an effective per shareoffering price that is not less than fifty (50%) percent greater than theeffective per share price of the shares of Common Stock issued to Goyaikehereunder, (ii) is underwritten by a reputable underwriter reasonablyacceptable to both Goyaike and the Company, and (iii) is effected inconjunction with such shares being listed for trading on a national securitiesexchange.

 

“RemainingOffered Securities” has the meaning specified in Section 5.04(d)(i).

 

“RequiredNumber of Directors” has the meaning specified in Section 4.05.

 

“Sale” means any sale, assignment, transfer, distribution orother disposition of Shares or of a participation therein, whether voluntarilyor by operation of Law.

 

“Securities Act” means the Securities Act of 1933, as amended,and the rules and regulations promulgated thereunder.

 

“SecuritiesPurchase Agreement” has the meaning specified in the Recitals.

 

“Securityholder” means each holder or Beneficial Owner of CommonStock or any security convertible into, or exchangeable for, Common Stock whois or hereafter becomes a party to this Agreement or the rightful and permittedassignee or successor of such a party.

 

“SecurityholderDirectors” has the meaning specified in Section 4.02.

 

“SecurityholderOption Period” has the meaning specified in Section 5.04(d).

 

“SellingSecurityholder” has the meaning specified in Section 5.05(a).

 

“Share”means any share of Common Stock.

 

“Subsidiary” means any and all corporations, partnerships, jointventures, associations and other entities Controlled by the Company directly orindirectly through one or more intermediaries.

 

“Tag-AlongNotice” has the meaning specified in Section 5.05(a).

 

“Tag-AlongOption” has the meaning specified in Section 5.05(b).

 

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“Third Party” means, with respect to anySecurityholder, any other Person (other than a Permitted Transferee of suchSecurityholder).

 

“USGAAP” means United States generally accepted accounting principles.

 

“Voting Interest” means one Share of Common Stock of the Companyand any other share of Capital Stock issued by the Company, the holders ofwhich are ordinarily, in the absence of contingencies, entitled to vote in theelection of the Company’s directors (or Persons performing similar functions),or the approval of its management and policies, even if the right to vote hasbeen suspended by the occurrence of a contingency.

 

**ARTICLE II**

 

**REPRESENTATIONS AN****D WARRANTIES OF THE COMPANY, GROUP AND ACT**

 

Each of the Company, Group and ACT jointly and severally represents andwarrants to Goyaike as follows:

 

SECTION 2.01.      DueOrganization and Authority of the Company, Group and ACT.  Each of the Company, Group and ACT is a corporationduly organized, validly existing and in good standing under the laws of theState of Delaware and has all necessary power and authority to enter into thisAgreement, to carry out its obligations hereunder and to perform the actionscontemplated hereby.  Each of theCompany, Group and ACT is duly licensed or qualified to do business and is ingood standing in each jurisdiction in which the properties owned or leased byit or the operation of its business makes such licensing or qualificationnecessary, except to the extent that the failure to be so licensed or qualifiedwould not prevent or materially hinder the performance of the actionscontemplated by this Agreement.  Theexecution and delivery of this Agreement by each of the Company, Group and ACT,the performance by each of the Company, Group and ACT of its obligationshereunder and the performance by each of the Company, Group and ACT of theactions contemplated hereby have been duly authorized by all requisite actionon the part of the Company, Group and ACT, as applicable.  This Agreement has been duly executed anddelivered by each of the Company, Group and ACT, and (assuming dueauthorization, execution and delivery by the other Persons signatory hereto)this Agreement constitutes a legal, valid and binding obligation of each of theCompany, Group and ACT, enforceable against each of the Company, Group and ACTin accordance with its terms.

 

SECTION 2.02.      NoConflict.  The execution, deliveryand performance of this Agreement by each of the Company, Group and ACT do notand will not (a) violate, conflict with or result in the breach of anyprovision of the Certificate of Incorporation or By-laws of the Company, Groupor ACT, (b) conflict with or violate any Law applicable to the Company,Group or ACT or any of their respective assets, properties or businesses or (c) conflictwith, result in any breach of, constitute a default (or event which with thegiving of notice or lapse of time, or both, would become a default) under,require any consent under, or give to others any rights of termination,amendment, acceleration, suspension, revocation or cancellation of, or resultin the creation of any Encumbrance on any of the Company’s, Group’s or ACT’sassets or properties pursuant to, any note, bond, mortgage or indenture,contract, agreement, lease,

 

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sublease,license, permit, franchise or other instrument or arrangement to which theCompany, Group or ACT is a party or by which any of their respective assets orproperties is bound or affected.

 

SECTION 2.03.      GovernmentalConsents and Approvals.  Theexecution, delivery and performance of this Agreement by each of the Company,Group and ACT do not and will not require any consent, approval, authorizationor other order of, action by, filing with or notification to, any governmentalauthority.

 

**ARTICL****E III**

 

**REPRESENT****ATIONS AND WARRANTIES OF GOYAIKE**

 

Goyaikerepresents and warrants to the Company, Group and ACT as follows:

 

SECTION 3.01       Organizationand Authority.  Goyaike is acorporation duly incorporated or organized, validly existing and in goodstanding under the laws of the Republic of Argentina and has all necessarypower and authority to enter into this Agreement, to carry out its obligationshereunder and to perform the actions contemplated hereby.  Goyaike is duly licensed or qualified to dobusiness and is in good standing in each jurisdiction in which the propertiesowned or leased by it or the operation of its business makes such licensing orqualification necessary, except to the extent that the failure to be solicensed or qualified would not prevent or materially hinder the performance ofthe actions contemplated by this Agreement. The execution and delivery of this Agreement by Goyaike, the performanceby it of its obligations hereunder and the performance by it of the actionscontemplated hereby have been duly authorized by all requisite action on itspart.  This Agreement has been dulyexecuted and delivered by Goyaike, and (assuming due authorization, executionand delivery by the other Persons signatory thereto) this Agreement constitutesa legal, valid and binding obligation of Goyaike enforceable against it inaccordance with its terms.

 

SECTION 3.02.      No Conflict.  Assuming that all consents,approvals, authorizations and other actions described in Section 3.03 havebeen obtained, the execution, delivery and performance of this Agreement byGoyaike do not and will not (a) violate, conflict with or result in thebreach of any provision of its Certificate of Incorporation or By-laws (orsimilar organizational documents), (b) conflict with or violate any Lawapplicable to it or any of its assets, properties or businesses or (c) conflictwith, result in any breach of, constitute a default (or event which with thegiving of notice or lapse of time, or both, would become a default) under,require any consent under, or give to others any rights of termination,amendment, acceleration, suspension, revocation or cancellation of, or resultin the creation of any Encumbrance on any of Goyaike’s assets or propertiespursuant to, any note, bond, mortgage or indenture, contract, agreement, lease,sublease, license, permit, franchise or other instrument or arrangement towhich Goyaike is a party or by which any of its assets or properties is boundor affected.

 

SECTION 3.03.      Governmental Consents and Approvals.  Theexecution, delivery and performance of this Agreement by Goyaike do not andwill not require any consent,

 

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approval,authorization or other order of, action by, filing with or notification to, anygovernmental authority, except to the extent that obtaining any such consent,approval, authorization or other order, or making such filing or notificationwould not prevent or materially hinder the performance of the actionscontemplated by this Agreement.

 

**ARTICLE**** IV**

 

**CORPORAT****E GOVERNANCE**

 

SECTION 4.01.      Agreement to Vote.  TheSecurityholders agree to vote all of their shares of Capital Stock, and the Companyagrees to take all necessary measures, in order to carry out the agreements setforth in this Article IV, and to prevent any action by the Company or theSecurityholders that is inconsistent with such agreements.

 

SECTION 4.02.      Election of Directors; Voting.  (a) Thenumber of directors constituting the Board of the Company, as fixed from timeto time by the Board in accordance with the Company’s By-laws, shall initiallybe five (5).  Notwithstanding anyprovision to the contrary in the Company’s Certificate of Incorporation orBy-laws, for so long as ACT holds or Beneficially Owns at least ten (10%)percent of the outstanding Common Stock of the Company on a fully dilutedbasis, the number of directors constituting the Board shall not be changed withoutthe consent of ACT.  With respect to eachelection of directors of the Company, whether at a special or annual meetingand whether by vote or by consent (in each case, in accordance with theprovisions for electing directors set forth in the Company’s Certificate ofIncorporation and By-laws), the Securityholders shall vote all of the shares ofCapital Stock of the Company held and/or Beneficially Owned by them or consentin writing with respect to such shares as follows: (i) one (1) director(the “ACT Director”) shall be designated by ACT and approved by theholders and/or Beneficial Owners of at least a majority of the then outstandingshares of Common Stock, provided that ACT owns at least ten (10%) percent, ofthe outstanding shares of Common Stock of the Company on a fully diluted basis;and (ii) four (4) directors (the “Goyaike Directors”) shall bedesignated and approved by the holders and/or Beneficial Owners of a majorityof the then outstanding Common Stock, other than ACT, for so long as there isone (1) ACT Director, and five (5) directors shall be designated andapproved by the holders and/or Beneficial Owners of a majority of the thenoutstanding Common Stock, other than ACT, if ACT is no longer qualified todesignate an ACT Director for the Company’s Board.

 

SECTION 4.03.      Nomination and Election of Directors.  ACT’sand Goyaike’s initial nominees for the Board shall be as set forth in Schedule IIIhereto.  On or before the Closing Date(as defined in the Securities Purchase Agreement) each of the Company’sDirectors, other than those Directors listed in Schedule III hereto, shallhave resigned from the Company’s Board of Directors, effective as of theClosing Date (as defined in the Securities Purchase Agreement) and deliveredsuch signed resignations to the Company. Notwithstanding any provision to the contrary in the Company’sCertificate of Incorporation or By-laws, if not already named by the Company’sexisting Board, the Securityholders shall act to elect such nominees asdirectors as soon as practicable by written consent or at a securityholders’meeting to be held as promptly as practicable hereafter.  Hereafter, notwithstanding any provision tothe contrary in the Company’s Certificate of Incorporation or By-laws, ACT andGoyaike shall make

 

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thenominations to which they are entitled hereunder not later than thirty (30)days prior to each annual meeting of the Company’s securityholders, and theBoard shall be elected at such meeting or by written consent in accordanceherewith.

 

SECTION 4.04.      Removal; Vacancies.  Notwithstanding any provision to the contraryin the Company’s Certificate of Incorporation or By-laws, a director shall beremoved only by the party with the power to designate such director and theSecurityholders shall vote all of their shares of Capital Stock of the Companyto remove any director whose removal is required by the party with the power todesignate such director.  Notwithstandingany provision to the contrary in the Company’s Certificate of Incorporation orBy-laws, if, as a result of death, disability, retirement, resignation, removal(with or without cause) or otherwise, there shall exist or occur any vacancy inthe Board, then, if the departed director was designated by ACT, ACT shall beentitled to designate in writing one nominee for election to fill such vacancyand if the departed director was designated by the holders of at least amajority of the then outstanding Common Stock, then such holders of CommonStock shall be entitled to designate in writing one nominee for election tofill such vacancy. The Securityholders shall as soon as practicable after suchnomination is made act to elect such nominee to the Board.  Any director elected pursuant to this Section 4.04shall serve until the next annual election of directors.

 

SECTION 4.05.      Quorum; Certain Actions.  Notwithstanding any provisionto the contrary in the Company’s Certificate of Incorporation or By-laws,subject to the immediately following sentence, at least four (4) Directorsshall be present in person or by phone at any meeting of the Board in order toconstitute a quorum for the transaction of business at such meeting, and,except with respect to Consent Events or as otherwise set forth in thisAgreement or as required by Law or by the Company’s Certificate ofIncorporation and By-laws, the vote of a majority of those directors present atany such meeting at which a quorum is present shall be necessary for thepassage of any resolution or act of the Board; provided, however, that, subjectto the following sentence, in the event a meeting of the Board has been dulynoticed and a quorum is not present on two (2) consecutive meeting dates,then only three (3) directors present in person at the next immediatelyscheduled meeting shall constitute a quorum for the transaction of business atsuch meeting. Notwithstanding any other provision of this Agreement or theCompany’s Certificate of Incorporation or By-laws, for so long as ACT holds orBeneficially Owns at least ten (10%) of the outstanding shares of Common Stockon a fully diluted basis, any Consent Event shall be taken by the Company onlyupon (and the Company, and the Board on behalf of the Company, shall not takesuch action without) the prior affirmative vote or written consent of the ACTDirector.  For purposes of thisAgreement, a “Consent Event” shall mean any of the matters set forth on Schedule IVattached hereto.

 

SECTION 4.06.      Audit Committee.  The Company shall establish and maintain an Audit Committee, which shallconsist of three (3) members of the Board, including one (1) directornominated by ACT for so long as ACT holds or Beneficially Owns at least ten(10%) percent of the outstanding shares of Common Stock on a fully dilutedbasis.

 

SECTION4.07.      Compensation Committee.  The Company shall establish and maintain aCompensation Committee of the Board.  TheCompensation Committee shall consist of three (3) members of the Board,including one (1) director nominated by ACT for so

 

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longas ACT holds or Beneficially Owns at least ten (10%) percent of the outstandingshares of Common Stock on a fully diluted basis.

 

**ARTICLE ****V**

 

**TRANSFER O****F SHARES**

 

SECTION 5.01.      General Restriction.  NeitherGroup nor ACT shall, directly or indirectly, make or solicit any Sale of anyShare except in compliance with the Securities Act and this Agreement.

 

SECTION 5.02.      Legends.  The Company shall affix toeach certificate evidencing Shares issued to Securityholders a legend insubstantially the following form:

 

“THESHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THESECURITIES ACT OF 1933 AND MAY NOT BE SOLD, PLEDGED OR OTHERWISETRANSFERRED EXCEPT IN ACCORDANCE WITH THE REGISTRATION REQUIREMENTS OF THESECURITIES ACT OF 1933 OR AN EXEMPTION THEREFROM AND, IN EACH CASE, INCOMPLIANCE WITH APPLICABLE STATE SECURITIES LAWS.

 

THESHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS ONTRANSFER AS SET FORTH IN A SECURITYHOLDERS’ AGREEMENT DATED AS OF JULY 1,2002, AS IT MAY BE AMENDED FROM TIME TO TIME, A COPY OF WHICH IS ON FILEAT THE PRINCIPAL EXECUTIVE OFFICES OF THE COMPANY.  NO REGISTRATION OF TRANSFER OF THESE SHARESWILL BE MADE ON THE BOOKS OF THE COMPANY UNLESS AND UNTIL SUCH RESTRICTIONSSHALL HAVE BEEN COMPLIED WITH.”

 

SECTION 5.03.      Certain Restrictions on Transfer of Shares*.*  (a) NoSecurityholder shall, directly or indirectly (through the transfer of capitalstock of any Person that holds, or controls any Person that holds, suchShares), make or solicit any Sale of any Share of Common Stock BeneficiallyOwned by such Securityholder, other than

 

(i)             any Sale to a Permitted Transferee,

 

(ii)           any Sale of Shares of Common Stock that is made in compliance with theprocedures, and subject to the limitations, set forth in Sections 5.04 and 5.05hereof,

 

(iii)           any Sale in connection with a merger of the Company or a sale of all orsubstantially all of its assets or other similar business combination that hasbeen approved

 

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bythe Board in accordance with the provisions of Section 4.05 and Schedule IVhereof, if applicable,

 

(iv)         any Sale in connection with the merger ofGroup or ACT or a sale of all or substantially all of Group’s or ACT’s assetsor other similar business combination that has been approved by Group’s or ACT’sBoard of Directors, as applicable, except that no Sale of Shares shall bepermitted under this Section 5.03(a)(iv) to any of the competitors ofthe Business identified on Schedule V attached hereto, and

 

(v)          any Sale in connection with the merger ofGoyaike or a sale of all or substantially all of its assets or other similarbusiness combination that has been approved by Goyaike’s Board of Directors, exceptthat no Sale of Shares shall be permitted under this Section 5.03(a)(v) toany of the competitors of the Business identified on Schedule V attachedhereto.

 

Notwithstanding the foregoing, except as otherwiseexpressly provided in this Agreement, all Sales permitted by the foregoingclauses (i) through (v) shall be subject to, and shall not be madeother than in compliance with, the provisions of this Article V.

 

(b)           No Sale of Shares to a Permitted Transfereeshall be effective if a purpose or effect of such transfer shall have been tocircumvent the provisions of this Section 5.03, Section 5.04 or Section 5.05.  Each Securityholder shall remain responsiblefor the performance of this Agreement by each Permitted Transferee of suchSecurityholder to which Shares are transferred, except if such PermittedTransferee received such Shares by will or the laws of descent and distribution.  If any Permitted Transferee to which Sharesare transferred pursuant to clause (i) of Section 5.03(a) is nota natural Person and ceases to be a Permitted Transferee of the Securityholderfrom which or whom it acquired such Shares pursuant to such provision, suchPerson shall reconvey such Shares to such transferring Securityholderimmediately before such Person ceases to be a Permitted Transferee of suchtransferring Securityholder so long as such Person knows of its upcoming changeof status immediately prior thereto. If such change of status is not knownuntil after its occurrence, the former Permitted Transferee shall make suchtransfer to such transferring Securityholder as soon as practicable after theformer Permitted Transferee receives notice thereof.

 

SECTION 5.04.      Right of First Offer.  Ifany Securityholder (the “Offering Securityholder”) proposes to make aSale of all or any portion of its Shares to a Person other than to a PermittedTransferee of the Offering Securityholder or other than as permitted under Section 5.03hereof:

 

(b)           The Offering Securityholder shall offer suchShares first to the Company, by sending written notice (an “Offering Notice”)to the Company, with a copy to ACT, if ACT is not the Offering Securityholder,and a copy to Goyaike, if Goyaike is not the Offering Securityholder, whichOffering Notice shall state (i) the number of Shares proposed to be sold(the “Offered Securities”), (ii) the proposed purchase price perShare of the Offered Securities (the “Offer Price”), (iii) theproposed terms and conditions of such Sale and (iv) the proposed purchaserof the Shares. Upon delivery of the Offering Notice, such offer shall beirrevocable

 

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unlessand until the rights of first offer provided for herein shall have been waivedor shall have expired.

 

(c)           For a period of fifteen (15) days after deliveryof the Offering Notice pursuant to Section 5.04(b) (the “CompanyOption Period”), subject to Section 5.04(g) hereof, the Companyshall have the right (the “Company Option”) to purchase any or all ofthe Offered Securities at a purchase price equal to the Offer Price andotherwise upon the terms and conditions set forth in the Offering Notice.  The right of the Company to purchase any orall of the Offered Securities under this Section 5.04 shall be exercisableby delivering written notice of the exercise thereof, prior to the expirationof the Company Option Period, to the Offering Securityholder, with a copy toeach of ACT and Goyaike, provided they are not the Offering Securityholder,which notice shall state the number of Offered Securities proposed to be purchasedby the Company.  The failure of theCompany to respond within such 15 day period shall be deemed to be a waiver ofthe Company Option, provided that the Company may waive its rights under this Section 5.04prior to the expiration of the Company Option Period by giving written noticeto the Offering Securityholder, with a copy to each of ACT and Goyaike,provided they are not the Offering Securityholder.

 

(d)           If the Company does not elect to purchase allof the Offered Securities pursuant to this Section 5.04, then for a periodof fifteen (15) days (the “Securityholder Option Period”) after theearlier to occur of (i) the expiration of the Company Option Periodpursuant to this Section 5.04 and (ii) the date upon which theCompany delivers written notice of its partial exercise of the Company Optionpursuant to this Section 5.04 or its waiver thereof and subject to Section 5.04(g):

 

(i)             Provided that it is not the OfferingSecurityholder, ACT shall have the right to purchase that percentage of theOffered Securities not offered to be purchased by the Company (the “RemainingOffered Securities”) determined by dividing (A) the number of Sharesowned by ACT at the time the Offering Notice is delivered pursuant to this Section 5.04by (B) the number of Shares owned by ACT and Goyaike (provided that ifGoyaike is the Offering Securityholder, those Shares owned by Goyaike shall notbe included in this calculation) at the time the Offering Notice is deliveredpursuant to this Section 5.04, plus any of the Remaining OfferedSecurities that Goyaike does not elect to purchase pursuant to Section 5.04(d)(ii),at a purchase price equal to the Offer Price and otherwise upon the terms andconditions set forth in the Offering Notice; and

 

(ii)            Provided that it is not the OfferingSecurityholder, Goyaike shall have the right to purchase that percentage of theRemaining Offered Securities determined by dividing (A) the number ofShares owned by Goyaike at the time the Offering Notice is delivered pursuantto this Section 5.04 by (B) the number of Shares owned by ACT andGoyaike (provided that if ACT is the Offering Securityholder, those Sharesowned by ACT shall not be included in this calculation) at the time theOffering Notice is delivered pursuant to this Section 5.04, plusany of the Remaining Offered Securities that ACT does not elect to purchasepursuant to Section 5.04(d)(i), at a purchase price equal to the OfferPrice and otherwise upon the terms and conditions set forth in the OfferingNotice.

 

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(e)           The rights of ACT and Goyaike to purchase anyor all of the Remaining Offered Securities under this Section 5.04 shallbe exercisable by delivering written notice of the exercise thereof, prior tothe expiration of the Securityholder Option Period, to the Offering Securityholder.  Such notice shall state the number of OfferedSecurities proposed to be purchased from the Offering Securityholder.  The failure of ACT or Goyaike to respondwithin the Securityholder Option Period to the Offering Securityholder shall bedeemed to be a waiver by such Person of its respective rights under this Section 5.04;provided that either ACT or Goyaike may waive its rights under this Section 5.04prior to the expiration of the Securityholder Option Period by giving writtennotice to the Offering Securityholder with a copy to each of the Company andACT or Goyaike, as applicable.

 

(f)            The closing of the purchases of the OfferedSecurities by the Company, ACT and/or Goyaike under Section 5.04 shall beheld at the executive offices of the Company at 11:00 a.m., local time, onthe thirtieth (30th) day after delivery of the Offering Noticepursuant to this Section 5.04 or at such other time and place as theparties to the transaction may agree.  Atsuch closing, the Offering Securityholder shall deliver certificates representingthe Offered Securities, duly endorsed for transfer or accompanied by stockpowers duly executed in blank, and accompanied by all requisite transfer taxes(or evidence of payment thereof), if any, and such Offered Securities shall befree and clear of any Encumbrance, and the Offering Securityholder shall sorepresent and warrant, and shall further represent and warrant that it is thesole Beneficial Owner of such Offered Securities. The Company and/or ACT and/orGoyaike, as the case may be, shall deliver at the closing payment in full inimmediately available funds of the Offer Price for the Offered Securitiespurchased by it.  At such closing, all ofthe parties to the transaction shall execute such additional documents as areotherwise reasonably necessary or appropriate in connection with the purchaseand sale of the Offered Securities.

 

(g)           Notwithstanding anything to the contrarycontained in this Section 5.04, unless the Company and/or ACT and/orGoyaike, individually or in the aggregate, elect to purchase all, but not lessthan all, of the Offered Securities, (i) such parties shall not have the rightto purchase any Offered Securities pursuant to this Section 5.04 and (ii) theOffering Securityholder may, subject to the other provisions of this Agreement(including, without limitation, the Tag-Along Right set forth in Section 5.05),sell all the Offered Securities to the Person identified in, and otherwise onthe terms and conditions set forth in the Offering Notice (including that theentire purchase price of such sale must paid in cash); provided, however,such Sale must be consummated within ninety (90) days after delivery of theOffering Notice pursuant to this Section 5.04; providedfurther,however, that such Sale shall not be consummated unless and until theOffering Securityholder shall represent in writing to the Company and to ACTand Goyaike (provided they are not the Offering Securityholder) that such Personis aware of the rights contained in this Section 5.04. If any sale to aPerson pursuant to this Section 5.04 is not consummated within ninety (90)days after delivery of the Offering Notice pursuant to this Section 5.04for any reason, then the restrictions provided for herein shall again become effective,and no Sale of such Offered Securities may be made thereafter by the Offering Securityholderwithout complying with the terms of this Section 5.04.

 

(h)           Anything in this Section 5.04 or in Section 5.03to the contrary notwithstanding, the provisions of this Section 5.04 shallnot be applicable to any Sale or Encumbrance described in clause (i), (iii), (iv) or(v) of Section 5.03(a).

 

13

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SECTION 5.05.      Tag-Along Rights.  Subjectto the Right of First Offer set forth in Section 5.04, if, at any timeduring the term of this Agreement, any Securityholder (the “SellingSecurityholder”) proposes to directly or indirectly make a Sale of any ofits Shares to a Person, other than to a Permitted Transferee, the SellingSecurityholder shall provide Group and/or Goyaike, as applicable (the “OtherSecurityholders”), and the Company with not less than fifteen (15) days’prior written notice of such proposed Sale (the “Tag-Along Notice”),which Tag-Along Notice shall state (i) the number of Shares proposed to besold, (ii) the proposed purchase price per Share, (iii) the proposed termsand conditions of such Sale and (iv) the proposed purchaser of the Shares,provided that any Offering Notice delivered pursuant to Section 5.04(b) shallbe deemed to be the delivery of the Tag-Along Notice if such Offering Noticewas delivered at least fifteen (15) days prior to the date of the proposedSale.

 

(b)Each of the Other Securityholders shall have the option (“Tag-Along Option”),exercisable by written notice to the Selling Securityholder prior to theearlier of (x) fifteen (15) days after delivery of the Tag-Along Noticepursuant to this Section 5.05 and (y) the expiration of the SecurityholderOption Period, to require the Selling Securityholder to arrange for suchpurchaser or purchasers to purchase the same percentage (the “Percentage”)of the Shares then Beneficially Owned by such Other Securityholder as the ratioof (i) the total number of Shares which are to be sold by the SellingSecurityholder pursuant to the proposed Sale to (ii) the total number of SharesBeneficially Owned by the Selling Securityholder immediately prior to suchSale, or any lesser amount of Shares as such Other Securityholder shall desire.Any such purchase shall be made at the same time, and upon the same terms andconditions (including all direct or indirect consideration or compensation), asthe Sale by the Selling Securityholder of its Shares; provided, however,that such Other Securityholder shall not be required to agree to indemnity orcontribution provisions in excess of such Other Securityholder’s proceeds from suchSale.

 

(c)Upon the exercise of the Tag-Along Option, the Selling Securityholder agrees thatit shall either (a) arrange for the proposed purchaser or purchasers topurchase all or a portion (as each of the Other Securityholders shall specify)of the same Percentage of the Shares then Beneficially Owned by each OtherSecurityholder electing to participate in the proposed Sale at the same time asand upon the same terms and conditions on which the Selling Securityholdersells its Shares; provided, however, that if such purchaser orpurchasers shall elect to purchase only such aggregate number of Shares asoriginally agreed with the Selling Securityholder, then the number of Shares tobe sold by the Selling Securityholder and each of the Other Securityholderselecting to participate in the proposed sale shall be reduced pro rata to suchaggregate number or (b) not effect the proposed Sale to such purchaser orpurchasers.

 

(d)In the event that the Other Securityholders do not exercise their right to participatein such sale or decline to so participate, the Selling Securityholder shallhave ninety (90) days from the date the Tag-Along Notice was delivered pursuantto this Section 5.05 to consummate the Sale to the same purchaser and uponthe same terms set forth therein without being required to provide anadditional Tag-Along Notice to the Other Securityholders.

 

(e)Anything in this Section 5.05 or in Section 5.03 to the contrary notwithstanding,the provisions of this Section 5.05 shall not be applicable to any Saledescribed in clause (i), (iii), (iv) or (v) of Section 5.03(a).  Nothing in this Section 5.05 shallaffect any of

 

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therights or obligations of any of the Securityholders under any other provisionof this Agreement.

 

SECTION 5.06.  Transfereesto Execute Agreement Each Securityholder agrees that it will not, directlyor indirectly, make any Sale of any Shares Beneficially Owned by suchSecurityholder unless, prior to the consummation of any such Sale, the Personto whom such Sale is proposed to be made (the “Prospective Transferee”) (i) executesand delivers this Agreement to the Company and each of ACT and Goyaike, and (ii) deliversto the Company an opinion of counsel, satisfactory in form and substance to theCompany, to the effect that the execution of this Agreement by such ProspectiveTransferee makes this Agreement a legal, valid and binding obligation of suchProspective Transferee enforceable against such Prospective Transferee inaccordance with its terms. Upon the execution and delivery by such ProspectiveTransferee of this Agreement and, if required, the delivery of the opinion ofcounsel referred to in clause (ii) of the preceding sentence, suchProspective Transferee shall be deemed a “Securityholder” for purposes of thisAgreement and shall have the rights and be subject to the obligations of aSecurityholder under this Agreement, in each case with respect to the SharesBeneficially Owned by such Prospective Transferee.

 

SECTION 5.07.  ImproperSale.  Any attempt not in compliancewith this Agreement to make any Sale of any Shares shall be null and void andof no force and effect, the purported transferee shall have no rights orprivileges in or with respect to the Company, and the Company shall not giveany effect in the Company’s stock records to such attempted Sale.

 

**ARTICL****E VI**

** **

**[INTENTIONALLY DELETED]**

 

**ARTICL****E VII**

 

**ADDITIO****NAL AGREEMENTS**

 

SECTION 7.01.      NewSecurityholders to Execute Agreement. The Company shall not, at any time prior to its initial public offering,issue any Shares of Common Stock, or resell any Shares of Common Stock held inits treasury, or issue or resell any security convertible or exchangeable intoCommon Stock, unless prior to the consummation of any such issuance or Sale,each Person to whom such security is proposed to be issued or sold executes anddelivers this Agreement to the Company and each of ACT and Goyaike.  Upon the execution and delivery by any Personof this Agreement, Schedule I hereto shall be revised to include the nameof such Person and such Person shall be deemed a “Securityholder” for purposesof this Agreement and shall have the rights and be subject to the obligationsof a Securityholder as such under this Agreement.

 

SECTION 7.02.     Rightsto Purchase New Securities.  In theevent that the Company proposes to issue New Securities (prior to, and otherthan in connection with, a Qualified Initial Public Offering), each of Group,ACT and Goyaike shall have the right to

 

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purchase in lieu of thePerson to whom the Company proposed to issue such New Securities, in accordancewith paragraph (b) below, a number of Shares or other New Securities whichthe Company proposes to issue equal to the product of (i) the total numberor amount of Shares or other New Securities which the Company proposes to issueat such time and (ii) a fraction, the numerator of which shall be thetotal number of Voting Interests which Group, ACT or Goyaike, as applicable,holds or Beneficially Owns at such time, and the denominator of which shall bethe total number of Voting Interests then outstanding. The rights given by theCompany under this Section 7.02 shall terminate if unexercised withinthirty (30) days after receipt of the Notice of Issuance referred to inparagraph (b) below.

 

(b)           In the event that the Company proposes toundertake an issuance of New Securities (prior to, and other than in connectionwith, a Qualified Initial Public Offering), it shall give written notice (a “Noticeof Issuance”) of its intention to each of Group, ACT and Goyaike, describingall material terms of the New Securities and the price and all material termsupon which the Company proposes to issue such New Securities.  Each of Goyaike, Group and ACT, asapplicable, shall have thirty (30) days from the date of the Notice of Issuanceto agree to purchase all or any portion of its pro rata share of such NewSecurities (as determined pursuant to paragraph (a) above) for the sameconsideration, if such consideration shall consist solely of cash, or for cash,cash equivalents or marketable securities having an equivalent value to theconsideration payable by the Person to whom the Company proposes to issue suchNew Securities at the time of payment, and otherwise upon the terms specifiedin the Notice of Issuance by giving written notice to the Company, and statingtherein the quantity of New Securities to be purchased by such Securityholder.

 

SECTION 7.03.      Further Assurances.  Eachparty to this Agreement shall use reasonable efforts to take, or cause to betaken, all appropriate action, and to do, or cause to be done, all thingsnecessary, proper or advisable under applicable Laws to consummate and makeeffective the transactions contemplated hereunder, including, withoutlimitation, using reasonable efforts to obtain all licenses, permits, consents,approvals, authorizations, qualifications and orders of any applicablegovernmental entities.  Each of theparties shall cooperate with the other when required in order to effect thetransactions contemplated hereunder.  Incase at any time after the date hereof, any further action is necessary ordesirable to carry out the purposes of this Agreement, the proper officers anddirectors of each of the parties shall use all reasonable efforts to take allsuch action.

 

SECTION 7.04.      Restriction on Transactions with Affiliates.  Forso long as Group and ACT collectively hold or Beneficially Own at least ten(10%) percent of the outstanding shares of Common Stock on a fully dilutedbasis, the Company shall not enter into any transaction, arrangement, agreementor understanding with any director, officer, employee, or holder of more thanfive (5%) percent of the outstanding shares of any class or series of CapitalStock of the Company, any member of the family of such Person, or anycorporation, partnership, trust, or other entity in which any such Person, ormember of the family of such Person, is a director, officer, trustee, partner,or holder of more than five (5%) percent of the outstanding capital stockthereof, except for (i) transactions on customary terms related to suchPerson’s employment, (ii) transactions in the ordinary course of businessand on market terms, (iii) transactions contemplated by this Agreement,and (iv) transactions otherwise approved by the ACT Director pursuant to Article IVhereof.

 

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SECTION 7.05.      Information Rights.  TheCompany shall deliver the following reports to Group:

 

(i)            As soon as practicable after the end of eachfiscal year of the Company, and in any event within ninety (90) daysthereafter, the balance sheet of the Company, as of the end of such fiscalyear, and a statement of income and statement of cash flow of the Company forsuch fiscal year, in each case, in accordance with US GAAP and as audited by theCompany’s accountants.

 

(ii)           As soon as practicable after the end of each quarter and in any eventwithin forty-five (45) days thereafter, an unaudited balance sheet andstatements of income and cash flow of the Company for such quarter and for theyear to date, in each case prepared in accordance with US GAAP.

 

(b)           Group and ACT shall also have the right tovisit and inspect any of the properties, books or records of the Company and todiscuss its affairs, finances and accounts with officers, all at such reasonabletimes during normal business hours and as often as may be reasonably requested.

 

SECTION 7.06.      Dividend Rights.  Forso long as Group and ACT collectively hold or Beneficially Own at least ten(10%) of the outstanding shares of Common Stock on a fully diluted basis, theCompany shall be required to, and Goyaike and the Board shall cause the Companyto, declare and pay in cash to each holder or Beneficial Owner of shares ofCommon Stock on a quarterly basis its pro rata share of the Dividend Amount (asdefined below); provided, however, that the Company shall have no obligation todeclare or pay to such Persons the Dividend Amount until such time as theCompany has achieved eight (8) separate quarters of positive EBITDA, asdetermined by the Board (it being understood that this provision does notrequire the Company to achieve eight (8) consecutive quarters of positiveEBITDA before it is required to declare and pay the Dividend Amount). Forpurposes of this Agreement, the Dividend Amount shall be equal to thirty (30%)percent of Net Income (as defined herein) for the applicable quarterly period.  Mandatory dividends under this Section 7.06shall not be declared and paid in violation of applicable Law, and shall in noevent be paid in violation of any of the Company’s contractual commitments tothird parties prohibiting such payments as such commitments may exist from timeto time; provided, however, that the Company shall not enter into any suchcontractual commitments prohibiting the payment of such dividends without theprior written consent of ACT.

 

**ARTICL****E VIII**

**MISCE****LLANEOUS**

 

SECTION 8.01.      Termination.  This Agreement shallterminate:

 

(a)           upon the mutual written agreement of the Company and/or Goyaike, on theone hand, and Group and/or ACT, on the other hand;

 

(b)           upon the expiration of all rights created hereunder; or

 

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(c)           immediately prior to a Qualified Initial Public Offering of Shares ofthe Company.

 

SECTION 8.02.      Expenses.  Except as otherwise specifiedin this Agreement, all costs and expenses, including, without limitation, feesand disbursements of counsel, financial advisors and accountants, incurred inconnection with this Agreement and the transactions contemplated hereby shallbe paid by the party incurring such costs and expenses.

 

SECTION 8.03.      Notices.  All notices, requests, claims,demands and other communications hereunder shall be in writing and shall begiven or made (and shall be deemed to have been duly given or made upon receipt)by delivery in Person, by courier service, by telecopy or by registered orcertified mail (postage prepaid, return receipt requested) to the respectiveparties at the following addresses (or at such other address for a party asshall be specified in a notice given in accordance with this Section 8.03):

 
| a) if to Group or ACT:               |
|--------------------------------------|
|                                 |
| Advanced Cell  Technology, Inc. |
| One Innovation Drive                 |
| Worcester, Massachusetts  01605      |
|                                 |
| Telecopy:                            | (508) 756-0931 |
| Attention:                           | Dr. Michael D. West,  President |
|                                 |
| with a copy to:                      |
|                                 |
| Pierce Atwood                        |
| One Monument Square                  |
| Portland, Maine 04101                |
|                                 |
| Telecopy: (207) 791-1350             |
| Attention:                           | William L.  Worden, Esq. |
|                                 | Christopher E.  Howard, Esq. |
|                                 |
|                                 |
| b) if to the Company:                |
|                                 |
| Cyagra, Inc.                    |
| One Innovation Drive                 |
| Worcester, Massachusetts  01605      |
|                                 |
| Telecopy:                            | (508) 756-0931 |
| Attention:                           | Dr. Michael D. West,  President |

 

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| with a copy to:                          |
|------------------------------------------|
|                                     |
| Pierce Atwood                            |
| One Monument Square                      |
| Portland, Maine 04101                    |
|                                     |
| Telecopy: (207) 791-1350                 |
| Attention: William L.  Worden, Esq. |
|                                     |
| c) if to Goyaike:                        |
|                                     |
| Goyaike S.A.                             |
| Av, do Mayo 701, Piso 16                 |
| Buenos Aires, Argentina                  |
|                                     |
| Telecopy: (54) 3488-436300               |
| Attention:  Mr. Ricardo Hosel       |
|                                     |
| with a copy to:                          |
|                                     |
| Shearman &  Sterling            |
| 599 Lexington Avenue                     |
| New York, NY 10022                       |
|                                     |
| Telecopy: (212) 848-7179                 |
| Attention: Alfred J.  Ross, Esq.    |

 

(a) if to any other Securityholder, then to the address ortelecopy number set forth opposite such Person’s name on Schedule I or IIattached hereto.

 

SECTION 8.04.      Public Announcements.  Exceptas required by Law, no party to this Agreement shall make, or cause to be made,any press release or public announcement in respect of this Agreement withoutthe prior written consent of the other party, and the parties shall cooperateas to the timing and contents of any such press release or public announcement.

 

SECTION 8.05.      Headings.  The descriptive headingscontained in this Agreement are for convenience of reference only and shall notaffect in any way the meaning or interpretation of this Agreement.

 

SECTION 8.06.      Severability.  Ifany term or other provision of this Agreement is invalid, illegal or incapableof being enforced by any Law, all other terms and provisions of this Agreementshall nevertheless remain in full force and effect so long as the economic orlegal substance of the transactions contemplated hereby is not affected in anymanner materially adverse to any party.  Uponsuch determination that any term or other provision is invalid, illegal orincapable of being enforced, the parties hereto shall negotiate in good faithto modify this Agreement so as to effect the original intent of the parties asclosely as possible in an acceptable manner in order that the transactionscontemplated hereby be consummated as originally contemplated to the greatest possibleextent.

 

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SECTION 8.07.      Entire Agreement.  ThisAgreement, the Securities Purchase Agreement, the Separation Agreement, theSublicense Agreement and the Collaboration Agreement Term Sheet constitute theentire agreement of the parties hereto with respect to the subject matterhereof and supersede all prior agreements and undertakings of the parties, bothwritten and oral, with respect to the subject matter hereof.

 

SECTION 8.08.      Assignment.  This Agreement shall not beassigned by any party without the express written consent of the other parties,except in connection with any Sale of Shares permitted by, and effected inaccordance with, Article V hereof.

 

SECTION 8.09.      No Third-Party Beneficiaries.  ThisAgreement shall be binding upon and inure solely to the benefit of the partieshereto and their permitted assigns and successors and nothing herein, expressor implied, is intended to or shall confer upon any other Person or entity, anylegal or equitable right, benefit or remedy of any nature whatsoever under orby reason of this Agreement.

 

SECTION 8.10.      Amendment.  This Agreement may not beamended or modified except by an instrument in writing signed by, or on behalfof, each of Group and ACT, on the one hand, and the Company and Goyaike, on theother hand.

 

SECTION 8.11.      Governing Law.  ThisAgreement shall be governed by the laws of the State of New York.  All actions and proceedings arising out of orrelating to this Agreement may be heard and determined in any New York State orfederal court sitting in the City of New York, County of Manhattan, and theparties hereto hereby irrevocably submit to the nonexclusive jurisdiction ofsuch courts in any such action or proceeding and irrevocably waive any defenseof an inconvenient forum to the maintenance of any such action or proceeding.

 

SECTION 8.12.      Counterparts.  ThisAgreement may be executed in one or more counterparts, and by the differentparties hereto in separate counterparts, each of which when executed shall bedeemed to be an original but all of which taken together shall constitute oneand the same agreement.  Copies ofexecuted counterparts transmitted by telecopy or other electronic transmissionservice shall be considered original executed counterparts for purposes of thisSection 8.12, provided that receipt of copies of such counterparts isconfirmed.

 

SECTION 8.13.      Specific Performance.  Theparties hereto agree that irreparable damage would occur in the event anyprovision of this Agreement were not performed in accordance with the termshereof and that the parties shall be entitled to specific performance of theterms hereof, in addition to any other remedy at Law or equity.

 

SECTION 8.14.      Waiver of Jury Trial.  Eachof the parties hereto irrevocably and unconditionally waives trial by jury inany legal action or proceeding relating to this Agreement or the transactionscontemplated hereby and thereby and for any counterclaim therein.

 

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INWITNESS WHEREOF, the parties hereto have caused this Agreement to be dulyexecuted by their respective authorized signatories hereunto duly authorized asof the date first above written.

 
|   | CYAGRA, INC.                    |
|--------|---------------------------------|
|   |                            |
|   |                            |
|   | By:                             | /s/ Michael West |
|   |                            | Name: | Michael West |
|   |                            | Title: | President |
|   |                            |
|   |                            |
|   | ADVANCED CELL TECHNOLOGY,  INC. |
|   |                            |
|   |                            |
|   | By:                             | /s/ Michael West |
|   |                            | Name: | Michael West |
|   |                            | Title: | President |
|   |                            |
|   |                            |
|   | A.C.T. GROUP, INC.              |
|   |                            |
|   |                            |
|   | By:                             | /s/ Michael West |
|   |                            | Name: | Michael West |
|   |                            | Title: | President |
|   |                            |
|   |                            |
|   | GOYAIKE S.A.                    |
|   |                            |
|   |                            |
|   | By:                             | /s/ Ricardo Hosel |
|   |                            | Name: | Ricardo Hosel |
|   |                            | Title: | Attorney-in-fact |
|   |                            |
|   |                            |
|   | By:                             | /s/ Alejandro Cantarelli |
|   |                            | Name: | Alejandro Cantarelli |
|   |                            | Title: | Attorney-in-fact |

 

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SCHEDULE I

 

LIST OF PERSONS WHO BECOME SIGNATORIES HERETO SUBSEQUENT TO THEDATE HEREOF

 

 
| **Securityholders** | ** ** | **Address** | ** ** | **Date** | ** ** | **Signature** |
|---------------------|------------|-------------|------------|----------|------------|---------------|
|                |       |        |       |     |       |          |
|                |       |        |       |     |       |          |

 

Sch.-1

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SCHEDULE IIADDRESSES OF CERTAIN SECURITYHOLDERS

 

Sch. 2-1

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SCHEDULE III

GOYAIKE’S INITIAL NOMINEES TO THE BOARD OF DIRECTORS

 
| **Securityholder** | ** ** | **Nominee**          |
|--------------------|------------|----------------------|
|               |       |                 |
| ACT                |       | Michael D. West      |
|               |       |                 |
| Goyaike            |       | Ricardo Hosel        |
| Goyaike            |       | Alejandro Cantarelli |
| Goyaike            |       | Hernán Mondejar |
| Goyaike            |       | Mariano Medina       |

 

Sch. 3-1

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SCHEDULE IV

CONSENT EVENTS

 

Eachof the following matters shall be a Consent Event:

 

(a)           altering, amending or repealing theCertificate of Incorporation or By-laws of the Company;

 

(b)           authorizing or issuing any shares of CapitalStock of the Company (excluding any debt securities), or any option, warrant,purchase or subscription right or any other security convertible, exchangeableor exercisable into shares of Capital Stock of the Company (excluding any debtsecurities), except in conjunction with any of the following: (i) except withrespect to a public offering of shares, the issuance of shares of Common Stock(other than in connection with the issuance of shares of Common Stock orsecurities convertible or exchangeable into shares of Common Stock (a “CommonStock Equivalent”) in connection with any exchange of options ascontemplated by clause (ii) below) in which the effective per share priceof the Common Stock is fifty (50%) percent greater than the effective per shareprice of the shares of Common Stock issued to Goyaike hereunder, (ii) theissuance to employees, officers and directors of options convertible orexercisable into shares of Common Stock pursuant to an incentive stock optionplan that is to be administered by the Board and which shall consist of ten (10%)percent of the outstanding shares of Common Stock of the Company on a fullydiluted basis as of the Closing Date (the “Stock Option Plan”); (iii)the issuance of shares of Common Stock in an initial public offering and (iv) theissuance of shares of Common Stock of the Company to a non-affiliated thirdparty in consideration of or exchange for intellectual property rights or otherassets that are to be used in the operation of the Business; provided, however,that the maximum number of shares of Common Stock that may be issued pursuantto this clause (iii), individually or in the aggregate, shall not exceed thatnumber of shares which is equal to twenty (20%) percent of the outstandingshares of Common Stock of the Company on a fully diluted basis as of theClosing Date.

 

(c)           commencing any proceeding for the voluntarywinding up, dissolution, liquidation or similar event of the Company;

 

(d)           redeeming, re-purchasing or otherwisere-acquiring any Common Stock of the Company without first offering pro-rataredemption, re-purchase or re-acquisition of Group’s and ACT’sCommon Stock on the same terms and conditions as the proposed redemption, re-purchaseor re-acquisition;

 

(e)           authorizing or implementing any stock optionor other equity incentive plan, other than the Stock Option Plan;

 

(f)            amalgamating, consolidating, merger orentering into any business combination with another company, business, concern,firm or Person if, as a result of such transaction, ACT’s ownership of CommonStock will fall below ten (10%) percent of the

 

Sch. 4-1

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outstandingshares of Common Stock on a fully diluted basis; providedhowever,that no consent shall be required and such a transaction shall not be deemed tobe a Consent Event so long as ACT is provided with an option (the “PutOption”) to require the Company to purchase all, but not less than all, ofthe Common Stock owned by ACT as a condition precedent to closing suchtransaction, with the following terms of purchase:

 

(i)          Thepurchase price for the Common Stock owned by ACT shall be the per share valueof the Common Stock outstanding based upon the implied valuation of the Companyin the proposed transaction;

 

(ii)         Thepurchase shall close simultaneously with, and as a condition precedent to,closing the proposed transaction;

 

(iii)        Thepurchase price shall be paid in cash by wire transfer, certified check or othermeans acceptable to ACT; and

 

(iv)        ACTshall deliver the Common Stock owned by ACT at the closing with all necessarystock powers and other customary documentation required to convey good title tothe shares to the Company, free and clear of all liens and Encumbrances.

 

(g)           declaring, paying or making any cashdividends on a non-pro rata basis;

 

(h)           declaring, paying or making any non-cashdividends or distributions of any nature on any Capital Stock of the Company;and

 

(i)            creating, incurring, issuing, assuming,guaranteeing or otherwise becoming directly or indirectly, throughsubsidiaries, Affiliates or otherwise, liable, contingently or otherwise,(collectively, “incur”) with respect to any Indebtedness; providedhowever, that so long as no default hereunder has occurred and iscontinuing, the Company may incur Indebtedness in an aggregate amount not inexcess of the greater of:

 

(i)            65% of the amount of Total Assets reported in theCompany’s most recently independently audited financial statements prepared inaccordance with US GAAP, consistently applied; or

 

(ii)           an amount equal to three times (3X) the Company’s EBITDA determinedbased upon the Company’s most recently independently audited financialstatements prepared in accordance with US GAAP, consistently applied.

 

Sch. 4-2

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SCHEDULE V

 

COMPETITORS OF THE BUSINESS

 
| Infigen Inc.              | Prolinea        |
|---------------------------|-----------------|
| Genetic Savings and Clone | NY Cloning LLC  |
| XY Genetics               | Clone Australia |
| XY, Inc.             | Semex           |
| Evergreen Biotechnologies |            |
| PPL Theraputics           |            |
| Imclone                   |            |
| Genzyme Transgenics       |            |
| Geron Corporation         |            |
| Bresagen                  |            |

 

Sch. 5-1

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