**Exhibit 10.42**

 

**EMPLOYMENTAGREEMENT**

 

Advanced Cell Technology, Inc. (“ACT”)desires to retain the services of Robert W. Peabody (“PEABODY”) in the capacityof Vice President -Grant Administration; and PEABODY desires to provide hisservices to ACT in that capacity.  Accordingly,for and in consideration of the commitments set forth herein, ACT and PEABODYagree as follows:

 

**1.****                                     ****Position and Duties**

 

ACT agrees to employ PEABODY in the position ofVice President- Grant Administration (“VP-A”). PEABODY shall report to the CEO of ACT, and shall perform any and allduties now or hereafter assigned to PEABODY by the CEO of ACT, as well as anyother duties consistent with the position of VP-A.  These include, but are not limited to: (a) assistingin securing grants; (b) administering the non-scientific issuessurrounding accomplishing the task outlined in the awarded grants; (c) settingup policies, procedures and controls to comply with our internal financialrequirements, the collaborator of each grant, and the reporting requirements ofthe grant issuer; (d) establishing a progress tracking system and beingresponsible for insuring that projects are on budget and on a timeline toachieve the grant requirements; (e) make sure that all external reportingis timely, proper, and accurate to the various constituencies (both externaland internal to the company); (f) other administrative duties as assignedby the CEO which could be altered or changed from time to time. PEABODY shallabide by ACT’s rules, regulations, and practices as they may from time-to-timebe adopted or modified.

 

**2.****                                     ****Compensation**

 

A.**                                  ****Annual Salary.**  ACT shall pay PEABODY an annual salary of onehundred fifty thousand dollars ($150,000.00). PEABODY’s salary shall be paid in equal bi-monthly installments,consistent with ACT’S regular pay practices. PEABODY’s salary may be adjusted from time-to-time by ACT withoutaffecting this Agreement.  PEABODY’sannual salary will increase to one hundred ninety five thousand ($195,000) oncethe company has raised $10 million of additional equity financing or beenawarded $5 million in grants, whichever is achieved first.

 

B.**                                    ****Bonus:**  Uponthe successful completion of his job responsibilities, in addition to his AnnualSalary, PEABODY shall be eligible to receive an annual bonus that will be recommendedby the CEO and approved by the Board of Director’s of ACT in their sole and absolutediscretion.  Not withstanding the above,Peabody will receive an annualized pro-rata portion of $45,000, as a bonus, ifeither financing milestone in (2A) above is achieved.

 

C.**                                    ****Expenses:**  ACT shallreimburse PEABODY for reasonable travel and other business expenses incurred byPEABODY in the performance of his duties hereunder.  He will be expected to relocate to Californiaby September of 2005 assuming the company establishes a corporateheadquarters in the State and an additional $10 million in financing isreceived.  The

 

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company will pay for his reasonable moving andrelocation expenses subject to review and pre-approval by the CEO in accordancewith company policy.

 

**3.****                                     ****Benefits**

 

PEABODY shall be entitled to receive benefitsunder the following benefit plans: group life insurance; medical insurance;disability insurance, and 401K/retirement plan. ACT may modify, amend or terminate any or all such benefit plans at anytime.  PEABODY’s rights under any benefitplans now in force or later adopted by ACT shall be governed solely by theterms of the particular benefit plan.  Inaddition, PEABODY shall be entitled to the following:

 

A.**                                  ****Vacation:**  Three (3) weeksper year.

B.**                                    ****Sick Days:**  Ten (10) days per year.

 

**4.****                                     ****Stock Options**.  Subject tothe approval of the ACT Board of Directors, ACT will grant PEABODY an option to**purchase the Company’s Common Stock (the *“**Option**”*)**underthe Company’s employee Stock Option Plan (the *“**Plan**”*)**in an amount equal to 400,000shares.  The Options will vest asfollows:  l/48th of the numberof shares will vest at the end of each full month of employment.  Vesting will depend on PEABODY’s continuedemployment with the Company and will be subject to the terms and conditions ofthe Plan and a Stock Option Agreement.  Exceptas specifically set forth in this Section 4, PEABODY’s rights under the Plan,or any other stock option plan later adopted by ACT, shall be governed solelyby the terms of the Plan, or the later adopted stock option plan.

 

Notwithstanding the foregoing: (i) upon aChange in Control (as defined in the Plan), the vesting of fifty percent (50%)of the then un-vested portion of the Option and any other outstanding equityawards will be accelerated.

 

**5.****                                     ****Competitive Activities****.**

 

During the term of PEABODY’s employment with ACTand for one (1) year thereafter, you shall not, for himself or any thirdparty, directly or indirectly (a) divert or attempt to divert from ACT anybusiness of any kind, including, without limitation, the solicitation of orinterference with any of its members, sponsors, employees, volunteers, officersor directors, (b) employ, solicit for employment or recommend foremployment any person employed by ACT, or (c) engage in the formation orpromotion of, or be employed by, any entity that is competitive with ACT, PEABODYacknowledges that there is a substantial likelihood that the activitiesdescribed in this Section 5 would involve the unauthorized use ordisclosure of the ACT’s Proprietary Information and that use or disclosurewould be extremely difficult to detect. PEABODY has accepted the limitations ofthis Section 5 as a reasonably practicable and unrestrictive means ofpreventing such use or disclosure.

 

**6.****                                     ****Inventions/IntellectualProperty Belong to ACT**

 

Any and all inventions, discoveries, improvementsor intellectual property which PEABODY has conceived or made or may conceive ormake during the period of employment relating to or in

 

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any way pertaining to or connected with thesystems, products, apparatus, or methods employed, manufactured, constructed orresearched by ACT shall be the sole and exclusive property of ACT.

 

The obligations provided for by this Agreement,except for the requirements as to disclosure in paragraph 7, do not apply toany rights PEABODY may have acquired in connection with an invention,discovery, improvement or intellectual property for which no equipment, supplies,facility, or trade secret information of the ACT was used and which wasdeveloped entirely on the PEABODY’s own time and (a) which does not relatedirectly or indirectly to the business of ACT or to ACT’s actual ordemonstrable anticipated research or development, or (b) which does notresult from any work performed by PEABODY for ACT.

 

**7.****                                     ****Disclosure of Inventions**

 

PEABODY agrees to disclose promptly to ACT allsuch improvements, discoveries, or inventions which PEABODY has made or maymake solely, jointly, or commonly with others, and to assign as appropriatesuch improvements, discoveries, inventions or intellectual property to ACT,where the rights are the property of ACT, and agrees to execute and sign anyand all applications, assignments, or other instruments which ACT may deemnecessary in order to enable it, at its expense, to apply for, prosecute, andobtain Letters Patent of the United States or foreign countries for saidimprovements, discoveries, inventions or intellectual property, or in order toassign or convey to or vest in ACT the sole and exclusive right, title, andinterest in and to said improvements, discoveries, inventions, or patents.

 

This paragraph is applicable whether or not theinvention, discovery, improvement or intellectual property was made under thecircumstances described in paragraph 6.  PEABODYagrees to make such disclosures understanding that they will be received inconfidence and that, among other things, they are for the purpose ofdetermining whether or not rights to the related invention, discovery,improvement or intellectual property is the property of ACT.

 

**8.****                                     ****Confidential and ProprietaryInformation**

 

During his employment, PEABODY may have access toconfidential information relating to such matters as ACT’s trade secrets,systems, procedures, manuals, products, and clients.  For purposes of this Agreement, “confidentialinformation” means all information and ideas, in any form, relating in anymanner to the business of ACT or its clients, unless: (i) the informationis or becomes publicly known through lawful means; (ii) the informationwas rightfully in PEABODY’s possession prior to his employment with ACT; or (iii)the information is disclosed to PEABODY without a confidential restriction by athird party who rightfully possesses the information and did not obtain it,either directly or indirectly, from ACT.

 

PEABODY understands and agrees that allconfidential information will be kept confidential by PEABODY both during andafter his employment under this Agreement. PEABODY further

 

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agrees that he will not, without the prior writtenapproval by ACT, disclose such confidential information, or use suchconfidential information in any way, either during the term of this Agreementor at any time thereafter, except as required in the course of his employment.

 

**9.****                                     ****Termination of Employment**

 

PEABODY understands and agrees that his/heremployment has no specific term.  ThisAgreement, and the employment relationship, may be terminated by either partywith or without cause upon thirty (30) days written notice to the other.  Except as**otherwiseagreed in writing or as otherwise provided in this Agreement, upon terminationneither ACT nor PEABODY shall have any further obligation to each other by wayof compensation or otherwise.

 

**10.****                              ****Separation Benefits****.**  Upon termination of PEABODY’s employment withthe Company for any reason, PEABODY will receive payment for all unpaid salaryand vacation accrued as of the date of his termination of employment, and hisbenefits will be continued under the ACT’s then existing benefit plans andpolicies for so long as provided under the terms of such plans and policies andas required by applicable law.  Undercertain circumstances, and conditioned in each case upon PEABODY’s execution ofa release and waiver of claims against ACT, its officers and directors, PEABODYwill also be entitled to receive severance benefits as set forth below, butPEABODY will not be entitled to any other compensation, award or damages withrespect to your employment or termination.

 

**(a)****                                 ****Definitions.**  For purposes of this Section 10, thefollowing definitions shall apply: ***“Disability”*****shall mean PEABODY’s complete inabilityto perform his job responsibilities for a period of one hundred eighty (180)consecutive days or one hundred eighty (180) days in the aggregate in anytwelve (12) month period.  ***“Cause”*****means: (i) the failure to properlyperform PEABODY’s job responsibilities, as determined reasonably and in goodfaith by the Board; (ii) commission of any act of fraud, gross misconductor dishonesty with respect to the Company; (iii) conviction of, or plea ofguilty or “no contest” to, any felony, or a crime involving moral turpitude; (iv) breachof any proprietary information and inventions agreement with the Company; or (v) failureto follow the lawful directions of the Board. The elimination of Peabody’s position or a material reduction in hisassigned duties and / or related salary (exclusive of across the boardexecutive salary cuts for budgetary considerations) is considered for purposesof this agreement as “termination without cause.”

 

**(b)****                                 ****Termination for Cause,Death, Disability, or Resignation.**  Inthe event of PEABODY’s termination for “Cause”, termination for death or “Disability,”or his Resignation PEABODY will not be entitled to any cash severance benefitsor additional vesting of any Company equity awards, including Company stockoptions.

 

**(c)****                                 ****Termination Without Cause.**  In the event of PEABODY’s termination without “Cause,”he will be entitled to (i) a lump sum payment in an amount equal to six (6) monthsbase salary, subject to such payroll deductions and withholdings as arerequired by law; and (ii) accelerated vesting of fifty percent (50%) ofthe then-unvested shares subject to the Option.

 

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**(d)****                                 ****Change of Control.**  In the event ofPEABODY’s termination without “Cause” within twelve (12) months following aChange in Control, in lieu of the benefits set forth in subsection (c) above,you will be entitled to (i) a lump sum payment in an amount equal to six (6) monthsbase salary, subject to such payroll deductions and withholdings as arerequired by law; and (ii) accelerated vesting of one-hundred percent(100%) of the then-unvested shares subject to the Option.

 

**11.****                              ****Turnover on Termination**

 

PEABODY agrees that on or before termination ofemployment, he will return to ACT all originals and copies of all or any partof:

 

a.                                       Lists and sourcesof clients;

 

b.                                      Proposals toclients or drafts of proposals;

 

c.                                       Reports, jobnotes, specifications, and drawings pertaining to clients;

 

d.                                      Any and all otherthings, equipment, and written materials obtained by PEABODY during the courseof employment from ACT or any client of ACT.

 

e.                                       Any and allinventions or intellectual property developed by PEABODY during the course ofemployment.

 

**12.****                              ****Arbitration**

 

Except for injunctive proceedings againstunauthorized disclosure of confidential information, any and all claims orcontroversies between ACT and PEABODY, including but not limited to (1) thoseinvolving the construction or application of any of the terms, provisions, or conditionsof this Agreement; (2) all contract or tort claims of any kind; and (3) anyclaim based on any federal, state or local law, statute, regulation orordinance, including claims for unlawful discrimination or harassment, shall besettled by arbitration in accordance with the then current Employment DisputeResolution Rules of the American Arbitration Association. Judgment on theaward rendered by the arbitrator(s) may be entered by any court havingjurisdiction thereof.  The location ofthe arbitration shall be San Francisco, California.  Unless the parties mutually agree otherwise,the arbitrator shall be a retired judge selected from a panel provided by theAmerican Arbitration Association, or the Judicial Arbitration and MediationService (JAMS).

 

ACT shall pay the arbitrators fees and costs.  Each party shall pay for its own costs andattorneys’ fees, if any.  However, if anyparty prevails on a statutory claim which affords the prevailing partyattorneys’ fees, the arbitrator may award reasonable attorneys’ fees and coststo the prevailing party.

 

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PEABODY UNDERSTANDS AND AGREES THAT THIS AGREEMENTTO ARBITRATE CONSTITUTES A WAIVER OF HIS/HER RIGHT TO A TRIAL BY JURY OF ANYMATTERS COVERED BY THE ARBITRATION AGREEMENT. 

 

**13.****                              ****Severability**

 

In the event that any of the provisions of thisAgreement shall be held to be invalid or unenforceable in whole or in part,those provisions to the extent enforceable and all other provisions shallnevertheless continue to be valid and enforceable as though the invalid orunenforceable parts had not been included in this Agreement.  In the event that any provision relating tothe time period of restriction shall be declared by a court of competentjurisdiction to exceed the maximum time period such court deems reasonable andenforceable, then the time period of restriction deemed reasonable andenforceable by the court shall become and shall thereafter be the maximum timeperiod.

 

**14.****                              ****Agreement Read andUnderstood**

 

PEABODY acknowledges that he has carefullyread the terms of this Agreement, that he has had an opportunity to consultwith a representative of his own choosing regarding this Agreement, that heunderstands the terms of this Agreement, and that he is entering this agreementof his own free will.

 

**15.****                              ****Complete Agreement,Modification**

 

This Agreement is the complete agreement betweenthe parties on the subjects contained herein and supersedes all previouscorrespondence, promises, representations, and agreements, if any, eitherwritten or oral.  No provision of thisAgreement may be modified except by a written document signed both by the ACTand PEABODY.  PEABODY understands andagrees that he will be required by the Company to execute a comprehensiveProprietary Information Agreement.

 

**16.****                              ****Governing Law**

 

This Agreement shall be construed and enforcedaccording to the laws of the State of California.

 

 
| Dated: | 2/9/05 |   | /s/ Robert W. Peabody                   |   |
|--------|--------|--------|-----------------------------------------|--------|
|   |   |   | **Robert W. Peabody**                   |   |
|   |   |   |                                    |   |
|   |   |   |                                    |   |
|   |   |   |                                    |   |
| Dated: |   |   |                                    |   |
|   |   |   | **Advanced Cell Technology, Inc.** |   |
|   |   |   | By: William M. Caldwell                 |   |
|   |   |   | Title: Chief Executive Officer          |   |

 

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