**Exhibit10.6**

 

THESE SECURITIES HAVE NOTBEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANYSTATE, AND ARE BEING OFFERED AND SOLD IN RELIANCE ON REGISTRATION EXEMPTIONSAVAILABLE THEREUNDER. AS SUCH THE HOLDER MAY NOT BE ABLE TO RESELL THESECURITIES UNLESS PURSUANT TO REGISTRATION UNDER FEDERAL AND STATE SECURITIESLAWS OR UNLESS A RESALE EXEMPTION UNDER SUCH LAWS EXISTS.

 

**ADVANCEDCELL TECHNOLOGY, INC.**

 

**CONVERTIBLENOTE**

 
| Up to $60,000.00 |   | Alameda,  California   |
|------------------|--------|------------------------|
|             |   | March 17th,  2008 |

 

1.                                       ***Promise to Pay*.**  FOR VALUE RECEIVED, the undersigned, **ADVANCED CELL TECHNOLOGY, INC.**, a Delaware corporation(referred to alternatively as the “**Maker**” orthe “**Company**”), promises to pay to thePDPI, LLC, a Delaware limited liability company, or its assigns (the “**Noteholder**”), at such place as theNoteholder hereof shall notify the Maker in writing the principal amount of upto

 

**SixtyThousand Dollars ($60,000)**

 

or so much of that sum asmay be advanced and outstanding under this Convertible Promissory Note (this “**Note**”). This Note evidences a loan(the “**Loan**”) from the Noteholder to theMaker. Advances under this Note shall be added to the principal amount of theLoan, as and when made, as reflected in the Advance Schedule attached hereto asExhibit A. Each payment under this Note shall first be credited againstaccrued and unpaid interest, and the remainder shall be credited againstprincipal. All amounts payable under this Note shall be paid in lawful money ofthe United States of America during normal business hours on a business day, inimmediately available funds. A Member of the Noteholder on behalf of theNoteholder shall advance the Maker the sum of Sixty Thousand Dollars($60,000.00) upon execution of this Note.

 

2.                                       ***Principal*.**  All outstanding principal and all accrued andunpaid interest and all other amounts owed hereunder (the “**OutstandingBalance**”), unless earlier converted pursuant to the termsdescribed herein, shall be due and payable in one lump sum on April 30th,2008 (the “**Maturity Date**”) unless theNote has earlier been converted.

 

3.                                       ***Permitted Uses*.**.  The proceeds of the Loan may be used only forpayment of Permitted Expenses, as defined herein. As used herein, the termPermitted Expenses means reasonable and customary operating expenses andcapital expenditures related to the ongoing operation of the Maker.

 

4.                                       ***Interest*.** (a) The principal sum outstanding fromtime to time under this Note shall bear interest at a rate equal to NINEpercent (9%) per annum. If default is made in any payment due under this Note,interest shall thereafter accrue on the entire unpaid principal 

 

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balance hereunder at a per annum rate equal to EIGHTEEN percent (18%)(the “**Default Rate**”), from the date suchpayment became due until the Maker pays in full all amounts due and payablehereunder. From and after the maturity of this Note, whether by acceleration orotherwise, all sums then due and payable under this Note, including allprincipal and all accrued and unpaid interest, shall bear interest until paid infull at the Default Rate. Interest shall be payable in arrears on the last dayof each month. Interest shall be calculated on the basis of a 360-day year andactual days elapsed, which results in more interest than if a 365-day year wereused.

 

(b)                                 Notwithstandinganything to the contrary contained in this Note, in no event shall the Maker berequired to pay interest on the principal amount outstanding under this Note ata rate in excess of the maximum nonusurious interest rate, if any, that at anytime or from time to time may be contracted for, taken, reserved, charged orreceived on the outstanding principal balance under this Note under the laws ofthe State of California (the “**Maximum Lawful Rate**”),and if the effective rate of interest which would otherwise be payable underthis Note - would exceed the Maximum Lawful Rate, or if the Noteholder shallreceive monies that are deemed to constitute interest which would increase theeffective rate of interest payable under this Note to a rate in excess of theMaximum Lawful Rate, then: (i) the amount of interest which wouldotherwise be payable under this Note shall be reduced to the Maximum LawfulRate, and (ii) any interest paid by the Maker in excess of the MaximumLawful Rate shall, at the option of the Noteholder, be either refunded to theMaker or credited against the principal of this Note. It is further agreedthat, without limitation of the foregoing, all calculations of the rate ofinterest contracted for, charged or received by the Noteholder that are madefor the purpose of determining whether such rate exceeds the Maximum LawfulRate shall be made, to the extent permitted by the applicable law (now orhereafter enacted), by amortizing, prorating and spreading in equal partsduring the period of the full stated term of the Loan all interest at any timecontracted for, charged or received by the Noteholder. If at any time and fromtime to time: (x) the amount of the interest payable to the Noteholder onany date shall be limited to the Maximum Lawful Rate pursuant to the provisionshereof, and (y) in respect of any subsequent interest computation periodthe amount of any interest otherwise payable to the Noteholder would be lessthan the amount of interest payable to the Noteholder computed at the MaximumLawful Rate, then the amount of interest payable to the Noteholder in respectof such subsequent interest computation period shall continue to be computed atthe Maximum Lawful Rate until the total amount of interest payable to theNoteholder shall equal the total amount of interest which would have beenpayable to the Noteholder if the total amount of interest had been computedwithout giving effect to the limitations set forth in this Section 4.

 

5.                                       ***Conversion*.**

 

(a)                                  **Definitions**.                                The following definitionsshall apply for all purposes of this Note:

 

***“Changeof Control”*** means (a) any sale or exchange of thecommon stock of the Maker in one transaction or series of related transactionswhere more than 50% of the outstanding voting power of the Maker is acquired bya person or entity or group of related persons or entities; (b) areorganization or merger of the Maker with or into any other corporation orentity, in which transaction the holders of Maker’s outstanding common stock 

 

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immediately prior to suchtransaction own immediately after such transaction less than 50% of the equitysecurities of the surviving corporation (or its parent); or (c) theconsummation of any transaction or series of related transactions that resultsin the sale of all or substantially all of the assets of the Maker.

 

***“CommonStock”*** means the Common Stock, par value $0.001 pershare, of the Company and stock of any other class of securities into whichsuch securities may hereafter be reclassified or otherwise changed orconverted.

 

***“CommonStock Equivalents”*** means any debentures, preferred stock,options, warrants or other securities that are convertible or exchangeable intoCommon Stock.

 

***“ConversionPrice”*** means an amount equal to the average per unitselling price of investment units (whether debt, preferred stock, common stock,warrants, or any combination thereof, or other forms of securities) issued inthe Next Financing. The Conversion Price is subject to adjustment as providedherein.

 

***“ConversionSecurities”*** means the investment units (whether debt,preferred stock, common stock, warrants, or any combination thereof, or otherforms of securities) sold by the Company in the Next Financing. The number andcharacter of units of Conversion Securities are subject to adjustment asprovided herein and the term “Conversion Securities” shall include investmentunits and other securities and property at any time receivable or issuable uponconversion of this Note in accordance with its terms.

 

***“NextFinancing”*** means the Maker’s next sale of any investmentunits (whether debt, preferred stock, common stock, warrants, or anycombination thereof, or other forms of securities) in one transaction or aseries of related transactions occurring on or before the Maturity Date for anaggregate purchase price paid to the Maker of at least $5 million, includingthe principal amount of and accrued interest or any other amounts owing on thisNote converted into Conversion Securities and issued therein.

 

**(b)****                                  Conversion.**

 

(1)                                  **Conversion in Next Financing**. Priorto the Maturity Date and prior to a Change of Control, in the event the Makerdoes not pay the full principal amount of and accrued interest on this Notebefore the Next Financing, then at the closing of the Next Financing (or thefirst closing in a series of closings) (the “**Closing**”,all principal and accrued interest on this Note shall automatically beconverted into units of Conversion Securities at the Conversion Price on adollar for dollar basis. The Noteholder whose Note is so converted will deliverthe original Note to the Maker and will execute and deliver to the Maker at theClosing such purchase agreement and/or other agreements as are entered into bythe investors in the Next Financing generally. *UponConversion of the Note, the Noteholder will become a Purchaser of the NextFinancing and will have fulfilled any obligation however defined of purchasingthe Purchaser’s Pro Rata Share in the Next Financing. The Noteholder will beentitled to all rights and privileges given to any other Purchaser in the NextFinancing including the exercise of anti-dilution protection and*

 

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*reset of any conversion price ofany existing debentures and warrants owned by the Noteholder at the date of theclosing of the Next Financing*

 

(2)                                  **Conversion Upon Change of Control**.  If there occurs a Change of Control prior tothe Maturity Date, the Noteholder may, in its sole discretion, either (i) irrevocablyelect by written notice to the Maker to receive from the Maker prepayment ofthe then outstanding accrued interest and principal under the Notecontemporaneously with the closing of the Change of Control; provided, however,that such written notice must be provided to the Maker at least ten (10) daysprior to the closing of the Change of Control or (ii) prior to therepayment of the outstanding balance under the Note by the Maker, irrevocablyelect by written notice to the Maker to convert such outstanding balance ofthis Note into Common Stock at a price per share equal to the average closingprice on the OTC Bulletin Board for the five days immediately preceding thepublic announcement of the Change in Control. Conversion under this Section 5shall occur upon surrender of this Note for conversion at the principal officesof the Maker, accompanied by irrevocable written notice of election to convertdelivered to the Maker at least ten (10) days prior to the closing of theChange of Control and execution and delivery of such investment representationletter and related documents as are generally entered into by investors in theMaker.

 

**(c)**                                  **Issuance of Conversion Securities**.As soon as practicable after conversion of this Note, but no later than 15 daysfollowing conversion of this Note, the Maker at its expense will cause to beissued in the name of and delivered to the Noteholder, a certificate orcertificates, or other instruments, for the number or amount, as applicable, ofConversion Securities to which the Noteholder shall be entitled upon suchconversion (bearing such legends as may be required by applicable state andfederal securities laws in the opinion of legal counsel of the Maker, by theMaker’s Certificate of Incorporation or Bylaws, or by any agreement between theMaker and the Noteholder), together with any other securities and property towhich the Noteholder is entitled upon such conversion under the terms of thisNote. Such conversion shall be deemed to have been made, (a) if made underSection 5 (b)(l) above, on the date of the Closing of the NextFinancing, and (b) if made under Section 5 (b)(2) above,immediately prior to the close of business on the date that this Note shallhave been surrendered for conversion, accompanied by written notice of electionto convert. No fractional units will be issued upon conversion of this Note. Ifupon any conversion of this Note (and all other Notes held by the sameNoteholder, after aggregating all such conversions), a fraction of a unit wouldotherwise result, then in lieu of such fractional unit the Maker will pay thecash value of that fractional unit, calculated on the basis of the applicableConversion Price.

 

**(d)****                                  AdjustmentProvisions.** The number and character of shares of Conversion Securitiesissuable upon conversion of this Note (or any shares of stock or othersecurities or property at the time receivable or issuable upon conversion ofthis Note) and the Conversion Price therefor, are subject to adjustment uponoccurrence of the following events between the date this Note is issued and thedate it is converted:

 

(1)                                  **Adjustment for Stock Splits, Stock Dividends,Recapitalizations, etc.** The number or amount, as applicable, ofConversion Securities issuable upon conversion of this 

 

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Note (or any shares ofstock or other securities at the time issuable upon conversion of this Note)shall each be proportionally adjusted to reflect any stock dividend, stocksplit, reverse stock split, reclassification, recapitalization or other similarevent affecting the number or amount of outstanding shares of Common Stock, orCommon Stock Equivalents unless the conversion ratio of such ConversionSecurities already reflects such event.

 

(2)                                  **Adjustment for Other Dividends and Distributions**.In case the Maker shall make or issue, or shall fix a record date for thedetermination of eligible Noteholders entitled to receive, a dividend or otherdistribution payable with respect to the capital stock that is payable in (a) securitiesof the Maker (other than issuances with respect to which adjustment is madeunder Section 5 (d)(l)), or (b) assets (other than cash dividendspaid or payable solely out of retained earnings), then, and in each such case,the Noteholder, upon conversion of this Note at any time after theconsummation, effective date or record date of such event, shall receive, inaddition to the shares of Conversion Securities issuable upon such exerciseprior to such date, the securities or such other assets of the Maker to whichthe Noteholder would have been entitled upon such date if the Noteholder hadconverted this Note immediately prior thereto (all subject to furtheradjustment as provided in this Note).

 

(3)                                  **Conversion of Stock**. In case allthe authorized Conversion Securities of the Maker is converted, pursuant to theMaker’s Certificate of Incorporation, into Common Stock or other securities orproperty, or the Conversion Securities otherwise ceases to exist, then, in suchcase, the Noteholder, upon conversion of this Note at any time after the dateon which the Conversion Securities is so converted or ceases to exist (the “***Termination Date***”), shall receive,in lieu of the number of shares of Conversion Securities that would have beenissuable upon such exercise immediately prior to the Termination Date (the “***Former Number of Shares of Conversion Securities***”),the stock and other securities and property which the Noteholder would havebeen entitled to receive upon the Termination Date if the Noteholder hadconverted this Note with respect to the Former Number of Shares of ConversionSecurities immediately prior to the Termination Date (all subject to furtheradjustment as provided in this Note).

 

(4)                                  **Notice of Adjustments**. The Makershall promptly give written notice of each adjustment or readjustment of theConversion Price or the number of shares of Conversion Securities or othersecurities issuable upon conversion of this Note. The notice shall describe theadjustment or readjustment and show in reasonable detail the facts on which theadjustment or readjustment is based.

 

(5)                                  **No Change Necessary**. The form ofthis Note need not be changed because of any adjustment in the Conversion Priceor in the number of shares of Conversion Securities issuable upon itsconversion.

 

6.                                       ***Representations and Warranties***. Asan inducement to the Noteholder to make the Loan, the Maker represents andwarrants to the Noteholder that:

 

(a)                                  TheMaker is duly organized, validly existing and in good standing as a corporationunder the laws of the State of Delaware. The Maker (i) has the corporatepower and 

 

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authority and the legalright to own and operate its property and to conduct business in the manner inwhich it does and proposes so to do, and (ii) is in compliance in allmaterial respects with all requirements of law and contractual obligations.

 

(b)                                 TheMaker has the corporate power and authority and the legal right to execute,deliver and perform this Note and has taken all necessary corporate action toauthorize the execution, delivery and performance of this Note. This Note hasbeen duly executed and delivered on behalf of the Maker and constitutes thelegal, valid and binding obligation of the Maker enforceable against the Makerin accordance with its terms, subject to the effect of applicable bankruptcyand other similar laws affecting the rights of creditors generally and theeffect of equitable principles whether applied in an action at law or a suit inequity.

 

(c)                                  Theexecution, delivery and performance of this Note, the borrowing hereunder andthe use of the proceeds hereof, will not violate any provision of Maker’sCertificate of Incorporation, Bylaws or requirement of law or any contractualobligations of the Maker or create or result in the creation of any lien on anyassets of the Maker.

 

7.                                       ***Affirmative Covenants; Noteholder Acknowledgement;Noteholder Representation***. The Maker agrees to provide theNoteholder with prompt notice of any written commitments entered into which, ifclosed, would constitute the Next Financing, and to provide the Noteholder withat least ten days’ prior notice of the closing of the Next Financing. TheNoteholder (and each of its respective members), hereby acknowledge andunderstand that the Loan transaction requires the unanimous consent of theholders of certain senior convertible debenture previously issued by the Maker.In the event Noteholder does not receive unanimous consent, the Maker will besubject to a default under the senior debenture facility unless cured withinthe applicable period. The Noteholder hereby represents and warrants to theMaker that the Noteholder, is an ‘accredited investor’ as that term is definedin Rule 501 (a) of Regulation D promulgated under the Securities Act.

 

8.                                       ***Negative Covenants***. The Maker agreesthat, as long as any obligations under this Note remain unpaid, it shall not,directly or indirectly without the prior written consent of Noteholder:

 

(a)                                  liquidateor dissolve or enter into any sale, consolidation, merger, partnership, jointventure, syndicate or other combination, unless the Maker is the survivingentity;

 

(b)                                 sell,lease, assign, transfer or otherwise dispose of all or substantially all ofMaker’s assets; provided that the Maker may sell, lease, assign or transfer anyportion of its real or personal property; and

 

(c)                                  engagein any business activities substantially different from the Maker’s business asdescribed in its current business plan delivered to Noteholdercontemporaneously herewith.

 

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9.                                       ***Events of Default***. Upon theoccurrence of any of the following events (each, an “**Event ofDefault**”):

 

(a)                                  TheMaker shall fail to pay any amount due under this Note within five (5) daysof the due date; or

 

(b)                                 Anyrepresentation or warranty made by the Maker in this Note shall be materiallyinaccurate or incomplete; provided, that any such inaccurate or incompleterepresentation or warranty shall not constitute an Event of Default if it iscorrected within thirty (30) days after any officer or employee of the Makerobtains knowledge of such inaccuracy or incompleteness, and the corrected orrevised representation or warranty made by the Maker is acceptable to theNoteholder; or

 

(c)                                  TheMaker shall fail to observe or perform in any material respect any of the otherterms or provisions of this Note and such failure shall continue for thirty(30) days; or

 

(d)                                 Anydefault in any payment of principal of or interest on any other indebtedness ofthe Maker if such default could materially impair the ability of the Maker topay its obligations under this Note in accordance with the terms hereof; or

 

(e)                                  (i) TheMaker shall (A) commence any case, proceeding or other action under anyexisting or future law of any jurisdiction, domestic or foreign, relating tobankruptcy, insolvency, reorganization or relief of debtors, seeking to have anorder for relief entered with respect to it, or seeking to adjudicate it abankrupt or insolvent, or seeking reorganization, arrangement, adjustment,winding-up, liquidation, dissolution, composition or other relief with respectto it or its debts, or (B) commence any case, proceeding or other actionseeking appointment of a receiver, trustee, custodian or other similar officialfor it or for all or any substantial part of its assets, or (C) make ageneral assignment for the benefit of its creditors; or (ii) there shallbe commenced against the Maker any case, proceeding or other action of a naturereferred to in clause (i) above which (A) results in the entry of anorder for relief or any such adjudication or appointment, or (B) remainsundismissed, undischarged or unbonded for a period of sixty (60) days; or (iii) thereshall be commenced against the Maker any case, proceeding or other action seekingissuance of a warrant of attachment, execution, distraint or similar processagainst all or any substantial part of its assets which results in the entry ofan order for any such relief which shall not have been vacated, discharged, orstayed or bonded pending appeal within sixty (60) days from the entry thereof;or (iv) the Maker shall take any action in furtherance of, or indicatingits consent to, approval of, or acquiescence in, any of the acts set forth inclauses (i), (ii) or (iii) above; or (v) the Maker shallgenerally not, or shall be unable to, or shall admit in writing its inabilityto, pay its debts as they become due;

 

THEN, automatically uponthe occurrence of an Event of Default under clause (e) of this Section 9and, in all other cases, at the option of the Noteholder, in each case withoutnotice to or demand upon the Maker or any other party, the entire principalbalance hereof together with all accrued and unpaid interest thereon shallbecome immediately due and payable.

 

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10.                                 ***Capitalized Interest***. On eachanniversary of the date of any default hereunder and while such default iscontinuing, all interest which has become payable and is then delinquent shall,without curing the default hereunder by reason of such delinquency, be added tothe principal amount due under this Note, and shall thereafter bear interest atthe same rate as is applicable to principal.

 

11.                                 ***Costs and Expenses***. If anydefault occurs in any payment due under this Note, the Maker and all guarantorsand endorsers hereof, and their successors and assigns, promise to pay allcosts and expenses, including attorneys’ fees, incurred by the Noteholderhereof in collecting or attempting to collect the indebtedness under this Note,whether or not any action or proceeding is commenced, and hereby waive theright to plead any and all statutes of limitation as a defense to a demandhereunder to the full extent permitted by law.

 

12.                                 ***Acceptance of Past Due Payments and Indulgences NotWaivers***. None of the provisions hereof and none of theNoteholder’s rights or remedies hereunder on account of any past or futuredefaults shall be deemed to have been waived by the Noteholder’s acceptance ofany past due installments or by any indulgence granted by the Noteholder to theMaker.

 

13.                                 ***Waivers by the Maker; No Setoffs or Counterclaims***.The Maker and all guarantors and endorsers hereof, and their successors andassigns, hereby waive presentment, demand, protest and notice thereof or ofdishonor, and agree that they shall remain liable for all amounts due hereundernotwithstanding any extension of time or change in the terms of payment of thisNote granted by the Noteholder, any change, alteration or release of anyproperty now or hereafter securing the payment hereof or any delay or failureby the Noteholder to exercise any rights under this Note. All payments requiredby this Note shall be made without setoff or counterclaim.

 

14.                                 ***Assignment***. The Maker may notassign its rights or obligations under this Note without the prior writtenconsent of the Noteholder and any such purported assignment by the Makerwithout obtaining the prior written consent of the Noteholder shall be void abinitio. This Note shall inure to the heirs, legal representatives, successorsand assigns of the Noteholder.

 

15.                                 ***Notices***. All notices given bythe Maker or the Noteholder hereunder to the other shall be in writing,delivered by facsimile transmission (confirmed in writing) or deliveredpersonally or by depositing the same in the United States mail, registered,with postage prepaid, addressed as follows:

 
| Noteholder: |   | PDPI, LLC                            |
|-------------|--------|--------------------------------------|
|        |   | 252 Seventh Avenue, #  14A           |
|        |   | NY, NY 10001                         |
|        |   |                                 |
| Maker:      |   | Advanced Cell  Technology, Inc. |
|        |   | 1201 Harbor Bay  Parkway, Ste. 120   |
|        |   | Alameda, CA 94502                    |

 

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Either the Noteholder orthe Maker may change the address to which notices are to be sent by notice ofsuch change to the other given as provided herein. Such notices shall beeffective on the date received or, if mailed, on the third business dayfollowing the date mailed.

 

16.                                 ***Governing Law***.  This Note is governed by the laws of theState of California, without regard to the choice of law rules of thatState.

 

17.                                 ***Waiver of Jury Trial***.  THE MAKER HEREBY WAIVES ANY RIGHT TO HAVE AJURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORTOR OTHERWISE ARISING OUT OF, CONNECTED WITH, RELATED TO OR INCIDENTAL TO THISNOTE. INSTEAD, ANY DISPUTES RESOLVED IN COURT WILL BE RESOLVED IN A BENCH TRIALWITHOUT A JURY.

 

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IN WITNESS WHEREOF, theMaker has caused this Convertible Note to be duly executed the day and yearfirst above written.

 
|   | ADVANCED CELL  TECHNOLOGY,     |
|--------|--------------------------------|
|   | INC., a Delaware  corporation  |
|   |                           |
|   |                           |
|   | By:                            | /s/ William M.  Caldwell, IV |
|   | Name: William M.  Caldwell, IV |
|   | Title: Chairman and CEO        |

 

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