**Exhibit 10.38**

 

**EMPLOYMENTAGREEMENT**

 

Advanced Cell Technology, Inc.(“ACT”) desires to retain the services of William M. Caldwell IV (“CALDWELL”)in the capacity of Chief Executive Officer, and CALDWELL desires to provide hisservices to ACT in that capacity.  Accordingly,for and in consideration of the commitments set forth herein, ACT and CALDWELLagree as follow:

 

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

 

ACT agrees to employ CALDWELL in the position of Chief ExecutiveOfficer (“CEO”), CALDWELL shall report to the Board of Directors of ACT, andshall perform any and all duties now or hereafter assigned to CALDWELL by theBoard of Directors of ACT, as well as any other duties consistent with theposition of CEO.  CALDWELL shall be a**member of the Board of Directors of the Company.  CALDWELL shall abide by ACT’s rules,regulations, and practices as they may from time-to-time be adopted or modified.

 

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

 

A.            **Annual Salary.**  ACTshall pay CALDWELL an annual salary of two hundred dollars ($200,000.00).  CALDWELL’s salary shall be paid in equalbi-monthly Installments,consistent with ACT’S regular pay practices. CALDWELL’s salary may be adjusted from time-to-time by ACT withoutaffecting this Agreement.  CALDWELL’sannual salary will increase to two hundred fifty thousand dollars ($250,000.00)if ACT closes an equity financing that provides at least ten million dollars($10,000,000) of new money to the Company.

 

B.            **Bonus:** Beginning in 2005, in addition to**his Annual Salary, CALDWELL shall beentitled to receive an annual bonus of fifty thousand dollars ($50,000.00)payable in the 4th Quarter, upon the successful completion ofhis job responsibilities.  If CALDWELL’sannual salary is increased to two hundred fifty thousand dollars ($250,000.00),then he shall no longer be entitled to any specific annual bonus; however hewill eligible to receive an annual bonus that will be determined by the Boardof Directors in its sole and absolute discretion.

 

C.            **Expenses:** ACT shall reimburse CALDWELL for**reasonable travel and other businessexpenses incurred by CALDWELL in the performance of his duties hereunder.  The parties understand and agree that duringthe period from inception of this Agreement through June 30, 2005.  CALDWELL will be commuting from Los Angelesto the Bay Area.  The Company willreimburse CALDWELL for reasonable commuting expenses incurred during thatperiod, and reasonable relocation expenses if he moves after June 2005.

 

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**3.****             Benefits**

 

CALDWELL shall be entitled to receive benefits under the followingbenefit plans: group life insurance; medical insurance; disability insurance,and 401K/retirement plan.  ACT maymodify, amend or terminate any or all such benefit plans at any time.  CALDWELL’s rights under any benefit plans nowin force or later adopted by ACT shall be governed safety by the terms of theparticular benefit plan.  In addition,CALDWELL, shall be entitled to the following:

 

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

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

 

**4**.             **Stock Options****. **Subject to the approval of the ACT Board of Directors.  ACT will grant CALDWELL an option to purchasethe Company’s Common Stock (the*“**Option**”*)**underthe Company’s employee Stock Option Plan (the *“**Plan**”*)**in an amount equal to 5.0% of theCompany’s outstanding shares (inclusive of option reserve and warrants) upon completionof the Series A financing.  TheOptions will vest over thirty (30) months as follows: 25%**of the shares will be vested as of theEmployment Date and thereafter 1/30th of theremaining number of shares will vest at the end of each full month ofemployment.  Vesting will depend onCALDWELL’s continued employment with the Company and will be subject to theteam and conditions of the Plan and a Stock Option Agreement.  Except us specifically set forth in this Section 4,CALDWELL’s rights under the Plan, or any other stock option plan later adoptedby ACT, shall be governed solely by the terms of the Plan, or the later adoptedstock option plan.

 

Notwithstanding the foregoing: (i) upon a Change in Control (as definedin the Plan), the vesting of fifty percent (50%) of the then un-vested portionof the Option and any other outstanding equity awards will be accelerated.

 

**5.****             CompetitiveActivities**

 

During the term of CALDWELL’s employment with ACT and for one (1) yearthereafter, you shall not, for himself or any third party, directly orindirectly (a) divert or attempt to divert from ACT any business of anykind, including, without limitation, the solicitation of or interference withany of its members, sponsors, employees, volunteers, officers or directors, (b) employ,solicit for employment or recommend for employment any person employed by ACT,or (c) engage in the formation or promotion of, or be employed by, anyentity that is competitive with ACT. CALDWELL acknowledges that there is asubstantial likelihood that the activities described in this Section 5would involve the unauthorized use or disclosure of the ACT’s ProprietaryInformation and that use or disclosure would be extremely difficult to detect.  CALDWELL has accepted the limitations of thisSection 5 as**a reasonablypracticable and unrestrictive means of preventing such use or disclosure.

 

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

 

Any and all inventions, discoveries, improvements or intellectual propertywhich CALDWELL has conceived or made or may conceive or make during the periodof employment relating to or

 

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In any way pertaining to or connected with the systems, products,apparatus, or methods employed, manufactured, constructed or researched by ACTshall be the sole and exclusive property of ACT.

 

The obligations provided for by this Agreement, except for therequirements as to disclosure in paragraph 7, do not apply to any rightsCALDWELL 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 CALDWELL’s own time and (a) which does notrelate directly 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 CALDWELL for ACT. The parties understand and agreethat this limitation is intended to be consistent with California Labor Code, Section 2870.

 

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

 

CALDWELL agrees to disclose promptly TO ACT all such improvements,discoveries, or inventions which CALDWELL has made or may make solely, jointly,or commonly with others, and to assign as appropriate such improvements,discoveries, inventions or intellectual property to ACT, where the rights arethe property of ACT, and agrees to execute and sign any and all applications,assignments, or other instruments which ACT may deem necessary in order toenable it, at its expense, to apply for, prosecute, and obtain Letters Patentof the United States or foreign countries for said improvements, discoveries,inventions or intellectual property, or in order to assign or convey to or vestin ACT the sole and exclusive right, title, and interest in and to saidimprovements, discoveries, inventions, or patents.

 

This paragraph is applicable whether or not the Invention, discovery,improvement or intellectual property was made under the circumstances describedin paragraph 6.  CALDWELL agrees to makesuch disclosures understanding that they will be received in confidence andthat, among other things, they are for the purpose of determining whether ornot rights to the related invention, discovery, improvement or intellectualproperty is the property of ACT.

 

**8.****            ****Confidential and Proprietary Information**

 

During his employment, CALDWELL may have access to confidentialinformation relating to such matters as ACT’s trade secrets, systems,procedures, manuals, products, and clients. For purposes of this Agreement, “confidential information” means all informationand ideas, in any form, resulting in any manner to the business of ACT or itsclients, unless: (i) the information is or becomes publicly known throughlawful means: (ii) the information was rightfully in CALDWELL’s possessionprior to his employment with ACT; or (iii) the information is disclosed toCALDWELL without a confidential restriction by a third party who rightfullypossesses the information and did not obtain it, either directly or indirectly,from ACT.

 

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CALDWELL understands and agrees that all confidential information willbe kept confidential by CALDWELL both during and after his employment underthis Agreement.  CALDWELL further agreesthat he will not, without the prior written approval by ACT, disclose suchconfidential information, or use such confidential information in any way,either during the term of this Agreement or at any time thereafter, except asrequired in the course of his employment.

 

**9.****             Terminationof Employment**

 

CALDWELL understands and agrees that his/her employment has no specificterm.  This Agreement, and the employmentrelationship, may be terminated by either party with or without cause uponthirty (30) days written notice to the other. Except as**otherwise agreed in writing or asotherwise provided in this Agreement, upon termination neither ACT nor CALDWELLshall have any further obligation to each other by way of compensation orotherwise.

 

**10.****         ****Separation Benefits****.**  Upontermination of CALDWELL’s employment with the Company for any reason.  CALDWELL will receive payment for all unpaidsalary and vacation accrued as of the date of his termination of employment,and his benefits will be continued under the ACT’s then existing benefit plansand policies for so long as provided under the terms of such plans and policiesand as required by applicable law.  Undercertain circumstances, and conditioned in each case upon CALDWELL’s executionof a release and waiver of claims against ACT, its officers and directors,CALDWELL will also be entitled to receive severance benefits as set forthbelow, but CALDWELL will not be entitled to any other compensation, award ordamages with respect to your employment or termination.

 

**(a)****          ****Definitions.**  Forpurposes of this Section 10, the following definitions shall apply: *“**Disability”***shall mean CALDWELL’s complete inability to perform his jobresponsibilities for a period of one hundred eighty (180) consecutive days orone hundred eighty (180) days in the aggregate in any twelve (12) month period.  “***Cause***”means: (i) the failure to property perform CALDWELL’s jobresponsibilities, as determined reasonably and in good faith by the Board; (ii) commissionof any act of fraud, gross misconduct or dishonesty with respect to theCompany; (iii) conviction of, or plea of guilty or “no contest” to, anyfelony, or a crime involving moral turpitude; (iv) breach of anyproprietary information and inventions agreement with the Company; or (v) failureto follow the lawful directions of the Board.

 

**(b)****          ****Termination for Cause, Death,Disability, or Resignation**.  In the event of CALDWELL’s termination for “Cause”,termination for death or “Disability.” or his Resignation CALDWELL will not beentitled to any cash severance benefits or additional vesting of any Companyequity awards, Including**Companystock options.

 

**(c)****          ****Termination Without Cause.**  In the event of CALDWELL’s terminationwithout “Cause,” he will be entitled to (i) a lump sum payment in anamount equal to six (6) months base salary, subject to such payrolldeductions and withholdings as are required by law; and (ii) acceleratedvesting of fifty percent (50%) of the then-unvested shares subject to theOption.

 

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**(d)****          ****Change of Control**.  Inthe event of CALDWELL’s termination without “Cause” within twelve (12) monthsfollowing a Change 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) months base salary, subjectto such payroll deductions and withholdings as are required by law; and (ii) acceleratedvesting of one-hundred percent (100%) of the then-unvested shares subject tothe Option.

 

**11.          Turnoveron Termination**

 

CALDWELL agrees that on or**beforetermination of employment, he will return to ACT all originals and copies ofall or any part of:

 

a.             Lists and sources of clients;

 

b.             Proposals to clients or drafts of proposals;

 

c*.**            *Reports, job notes, specifications, anddrawings pertaining to clients;

 

d.             Any and all**other things, equipment, and written materials obtained by CALDWELLduring the course of employment from ACT or any client of ACT.

 

e.             Any and all inventions or intellectualproperty developed by CALDWELL during the course of employment.

 

**12.          Arbitration**

 

Except for injunctive proceedings against unauthorized disclosure ofconfidential information, any and all claims or controversies between ACT andCALDWELL, including but not limited to (1) those involving theconstruction or application of any of the terms, provisions, or conditions ofthis 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**retiredjudge selected from a panel provided by the American Arbitration Association,or the Judicial Arbitration and Mediation Service (JAMS).

 

ACT shall pay the arbitrators fees and costs.  Each party shall pay for its own**costs and attorneys’ fees, if any.  However, if any party prevails on a statutoryclaim which affords the prevailing party attorneys’ fees, the arbitrator mayaward reasonable attorneys’ fees and costs to the prevailing party.

 

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CALDWELL UNDERSTANDS ANDAGREES THAT THIS AGREEMENT TO ARBITRATE CONSTITUTES A WAIVER OF HIS/HER RIGHTTO A TRIAL BY JURY OF ANY MATTERS COVERED BY THE ARBITRATION AGREEMENT.

 

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

 

In the event that any of theprovisions of this Agreement shall be held to be invalid or unenforceable inwhole or in part, those provisions to the extent enforceable and all otherprovisions shall nevertheless continue to be valid and enforceable as thoughthe invalid or unenforceable parts had not been included in this Agreement.  In the even that any provision relating tothe time period of restriction shall be**declaredby a court of competent jurisdiction to exceed the maximum time period suchcourt deems reasonable and enforceable, then the time period of restrictiondeemed reasonable and enforceable by the court shall become and shallthereafter be the maximum time period.

 

**14.****         ****Agreement Read and Understood**

 

CALDWELL acknowledges thathe has carefully read the terms of this Agreement, that he has had anopportunity to consult with a representative of his own choosing regarding thisAgreement, that he understands the terms of this Agreement, and that he isentering this agreement of his own free**will.

 

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

 

This Agreement is thecomplete agreement between the parties on the subjects contained herein andsupersedes all previous correspondence, promises, representations, andagreements, if any, either written or oral. No provision of this Agreement may be modified except by a**written document signed both by the ACTand CALDWELL.  CALDWELL understands andagrees that he will be required by the Company to execute a comprehensive ProprietaryInformation Agreement.

 

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**16.          Governing Law**

 

This Agreement shall be construed and enforced according to the laws ofthe State of California.

 

 
| Dated: | 12/31/2004                              |   | /s/ William M. Caldwell IV |   |
|--------|-----------------------------------------|--------|----------------------------|--------|
|   | **William M. Caldwell IV**              |
|   |                                    |
|   |                                    |
| Dated: | 12-31-04                                |   | /s/ Michael D. West        |   |
|   | **Advanced Cell Technology, Inc.** |
|   | By: Michael D. West                     |
|   | Title: Chief Executive Officer          |
|        |                                         |        |                            |        |  |  |

 

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