**Exhibit10.29**

 

**SECURITYHOLDERS’AGREEMENT**

 

**among**

 

**CYAGRA,INC.,**

 

**ADVANCEDCELL TECHNOLOGY, INC.,**

 

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

 

**GOYAIKES.A.**

 

**and**

 

**THESECURITYHOLDERS HEREAFTER SIGNATORY HERETO**

 

**dated asof November 20, 2001**

 

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**TABLE OFCONTENTS**

 
| **Section**                                                                    |               |
|--------------------------------------------------------------------------------|--------------------|
|                                                                           |               |
| ARTICLE I  DEFINITIONS                                                    |               |
|                                                                           |               |
|                                                                           | SECTION 1.01. | Certain Defined  Terms |   |
|                                                                           |               |
| ARTICLE II  REPRESENTATIONS AND WARRANTIES OF THE COMPANY, PARENT AND ACT |               |
|                                                                           |               |
|                                                                           |               |
| ARTICLE III  REPRESENTATIONS 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. | Audit  Committee |   |
|                                                                           | SECTION 4.06. | 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 |   |
|                                                                           | SECTION 5.06. | Transferees  to Execute Agreement |   |
|                                                                           | SECTION 5.07. | Improper  Sale |   |
|                                                                           |               |
| ARTICLE VI  [INTENTIONALLY DELETED]                                       |               |

 

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| 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                 |   |
|                                         |                                 |  |  |  |

 

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**SECURITYHOLDERS’AGREEMENT**

 

This SECURITYHOLDERS’AGREEMENT (this “Agreement”), dated as of November 20, 2001, amongCYAGRA, INC., a Delaware corporation (the “Company”), ADVANCED CELLTECHNOLOGY, INC., a Delaware corporation and a wholly owned subsidiary of ACT(“Parent”), A.C.T. GROUP, INC., a Delaware corporation (“ACT”),and GOYAIKE S.A., a company incorporated under the laws of Argentina (“Goyaike”),and each Person hereafter signatory to this Agreement.

 

**W1T**N**ESSETH:**

 

WHEREAS, the Company isengaged in the business of researching and developing technology, manufacturingand selling products and providing services related thereto, in each case, inthe field of agriculture, including researching and developing technology andmanufacturing and selling products that are composed of, made in or derived,extracted or isolated from cloned non-human domesticated animals (includingcattle, goats, sheep, pigs, and other domesticated animals, but excludinganimals of the avian or equine species) or the cells or tissues, includinggenes, of such animals for the production of food or fiber and the rendering ofservices or uses that relate to the production of such products, and theproduction of transgenic animals for the purposes described above (the “Business”);

 

WHEREAS, pursuant to aSecurities Purchase Agreement, dated November 20, 2001, among the Company,Parent, ACT and Goyaike (the “Securities Purchase Agreement”), Goyaikehas agreed to (i) purchase 2,750,000 newly issued shares of the Company’scommon stock, par value $0.001 per share (“Common Stock”), from theCompany, (ii) purchase 544,481 shares of Common Stock from Parent, and(iii) purchase 1,455,519 shares of Common Stock from ACT;

 

WHEREAS, after givingeffect to the transactions contemplated by the Securities Purchase Agreement, Goyaikewill own approximately 29% of the outstanding shares of Common Stock of theCompany on a fully diluted basis, and ACT and Parent will collectively ownapproximately 64.6% of the outstanding shares of Common Stock of the Company ona fully diluted basis;

 

WHEREAS, Goyaike is alsoacquiring a license of certain intellectual property pursuant to a sublicenseamong Parent, ACT, the Company and Goyaike dated as of the date hereof;

 

WHEREAS, in connectionwith the development of the Company, Parent and ACT are agreeing to providecertain management, research and development, and operational services to theCompany in exchange for arm’s-Length consideration; and

 

WHEREAS, the partieshereto believe it is in their respective best interests to enter into certainagreements concerning the composition of the Company’s Board (as definedbelow), corporate governance, transfer restrictions on the Common Stock andconsent/supermajority rights, all as set forth herein.

 

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NOW, THEREFORE, inconsideration of the premises and of the mutual covenants and agreementshereinafter set forth, the parties hereby agree as follows:

 

**ARTICLE I****DEFINITIONS**

 

SECTION 1.01.                                         CertainDefined Terms.  As used in thisAgreement, the following terms shall have the following meanings:

 

“ACT” hasthe meaning specified in the Preamble.

 

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

 

“Agreement”has the meaning specified in the Preamble.

 

“BeneficialOwner” or “Beneficially Own” has the meaning given such term inRule 13d-3 under the Exchange Act; provided, however, thatBeneficial Ownership under Rule 13d-3(1)(i) shall be determined basedon whether a Person has a right to acquire Beneficial Ownership irrespective ofwhether such right is exercisable within sixty (60) days of the time ofdetermination.

 

“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 or other day on which banks arerequired or authorized by Law to be closed in The City of New York, U.S.A. orThe City of Buenos Aires, Argentina.

 

“Capital Stock”means, with respect to any Person at any time, any and all shares, interests,participations or other equivalents (however designated, whether voting ornon-voting) of capital stock, partnership interests (whether general orlimited), limited liability company interests or equivalent ownership interestsin such Person.

 

“Common Stock”has the meaning specified in the Recitals.

 

“Company”has the meaning specified in the Preamble.

 

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

 

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

 

“Control”(including the terms “controlled by” and “under common control with”)means the possession, directly or indirectly, or as trustee or executor, of thepower to

 

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direct or cause thedirection of the management and policies of a Person, whether through theownership of voting securities, as trustee or executor, by contract or creditarrangement or otherwise.

 

“EBITDA” meansearnings 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, as amended, and the rules andregulations promulgated thereunder.

 

“Goyaike”has the meaning specified in the Preamble. 

 

“GoyaikeDirectors” has the meaning specified in Section 4.02.

 

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

 

“ManagementServices and Intellectual Property Agreement” means the management servicesand intellectual property agreement between Parent, ACT and the Company to beentered into simultaneously upon consummation of the transactions contemplatedby the Securities Purchase Agreement.

 

“MaterialAdverse Effect” means any circumstance, change in or effect on the Companythat, individually or in the aggregate with all other circumstances, changes inor effects on the Company, is or could reasonably be expected to be materiallyadverse to the business, operations, properties, results of operations orcondition (financial or otherwise) of the Company, except for any changes in oreffects on the Company principally arising from or principally relating to(i) the U.S. or the global economy or the securities markets generally or(ii) the biomedical industry in general; provided, however,that in the case of each of clause (i) and (ii) the Company is notdisproportionately affected by such changes or effects compared to otherPersons engaged in similarly situated businesses within the biomedicalindustry.

 

“Net Income”means net income as reflected on the Company’s internal quarterly financialstatements as prepared in accordance with US generally accepted accountingprinciples.

 

“New Securities”means any Capital Stock of the Company, whether now authorized or not, andrights, options or warrants to purchase such Capital Stock, and securities ofany type whatsoever that are, or may become, convertible into or exchangeableor exercisable for Capital Stock of the Company; provided, however,that the term “New Securities” does not include (i) shares of Common Stockof the Company which have been reserved for issuance to employees, officers anddirectors of the Company pursuant to an incentive stock option pool administeredby the Board consisting of ten (10%) percent of the outstanding shares ofCommon

 

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Stock of the Company on afully diluted basis as of the Closing Date, (ii) securities of the Companyissued in connection with any stock split, stock dividend or recapitalizationof the Company, (iii) securities of the Company issued in a QualifiedInitial Public Offering, or (iv) securities issued in connection with(a) any acquisition of assets or capital stock or other equity interest ofany other business enterprise (whether such acquisition is structured as apurchase and sale, merger, consolidation or other amalgamation) if the issuanceof such securities has been approved by the Board pursuant to Article IVand pursuant to Schedule IV hereof, as applicable, or (b) thelicensing or acquisition of intellectual property for use in the Business ifthe issuance of such securities has been approved by the Board pursuant to Article IVand/or pursuant to Schedule IV hereof, as applicable.

 

“Notice ofIssuance” has the meaning specified in Section 7.02(b).

 

“Offer Price”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).

 

“Parent”has the meaning specified in the Preamble.

 

“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 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 orsister.

 

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

 

“ProspectiveTransferee” has the meaning specified in Section 5.06.

 

“QualifiedInitial Public Offering” means a public offering of shares of Common Stockof the Company that (i) yields actual cash proceeds to the Company inexcess of US$25 million and at an effective per share offering price that isnot less than fifty (50%) percent greater than the effective per share price ofthe shares of Common Stock issued to Goyaike hereunder, (ii) isunderwritten by a reputable underwriter reasonably acceptable to both Goyaikeand the Company and (iii) is effected in conjunction with such sharesbeing listed for trading on a national securities exchange.

 

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

 

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

 

“Sale”means any sale, assignment, transfer, distribution or other disposition ofShares or of a participation therein, whether voluntarily or by operation ofLaw.

 

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

 

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

 

“Securityholder”means each holder or Beneficial Owner of Common Stock or any securityconvertible into, or exchangeable for, Common Stock who is or hereafter becomesa party to this Agreement or the rightful and permitted assignee or successorof such a party.

 

“StockholderDirectors” 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” meansany share of Common Stock.

 

“Subsidiary”means any and all corporations, partnerships, joint ventures, associations andother entities Controlled by the Company directly or indirectly through one ormore intermediaries.

 

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

 

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

 

“Third Party”means, with respect to any Securityholder, any other Person (other than aPermitted Transferee of such Securityholder).

 

“Voting Interest”means one Share of Common Stock of the Company and any other share of CapitalStock issued by the Company, the holders of which are ordinarily, in theabsence of contingencies, entitled to vote in the election of the Company’sdirectors (or Persons performing similar functions), or the approval of itsmanagement and policies, even if the right to vote has been suspended by theoccurrence of a contingency.

 

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**ARTICLE II****REPRESENTATIONS AND WARRANTIES OF THE COMPANY, PARENT AND ACT**

 

Each of theCompany, Parent and ACT jointly and severally represents and warrants toGoyaike as follows:

 

SECTION 2.01                                            DueOrganization and Authority of the Company, Parent and ACT.  Each of the Company, Parent 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, Parent 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, Parent andACT, the performance by each of the Company, Parent and ACT of its obligationshereunder and the performance by each of the Company, Parent and ACT of theactions contemplated hereby have been duly authorized by all requisite actionon the part of the Company, Parent and ACT, as applicable.  This Agreement has been duly executed anddelivered by each of the Company, Parent 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, Parent and ACT, enforceable against each of the Company, Parent andACT in accordance with its terms.

 

SECTION 2.02                                            NoConflict.  The execution, deliveryand performance of this Agreement by each of the Company, Parent 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, Parentor ACT, (b) conflict with or violate any Law applicable to the Company, Parentor ACT or any of their respective assets, properties or businesses or (c)conflict with, result in any breach of, constitute a default (or event whichwith the giving 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, Parent’s or ACT’sassets or properties pursuant to, any note, bond, mortgage or indenture,contract, agreement, lease, sublease, license, permit, franchise or otherinstrument or arrangement to which the Company, Parent or ACT is a party or bywhich any of their respective assets or properties is bound or affected.

 

SECTION 2.03                                            GovernmentalConsents and Approvals.  Theexecution, delivery and performance ofthis Agreement by each of the Company, Parent and ACT do not and willnot require any consent, approval, authorization or other order of, action by,filing with or notification to, any governmental authority.

 

**ARTICLE III****REPRESENTATIONS AND WARRANTIES OF GOYAIKE**

 

Goyaike representsand warrants to the Company, Parent 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

 

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of Argentina and has allnecessary power and authority to enter into this Agreement, to carry out itsobligations hereunder 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 Agreementby Goyaike, the performance by it of its obligations hereunder and theperformance by it of the actions contemplated hereby have been duly authorizedby all requisite action on its part.  ThisAgreement has been duly executed and delivered by Goyaike, and (assuming dueauthorization, execution and delivery by the other Persons signatory thereto)this Agreement constitutes a legal, valid and binding obligation of Goyaikeenforceable against it in accordance with its terms.

 

SECTION 3.02.                                         NoConflict.  Assuming that allconsents, approvals, authorizations and other actions described in Section 3.03have been obtained, the execution, delivery and performance of this Agreementby Goyaike 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.                                         GovernmentalConsents and Approvals.  Theexecution, delivery and performance of this Agreement by Goyaike do not andwill not require any consent, approval, authorization or other order of, actionby, filing with or notification to, any governmental authority, except to theextent that obtaining any such consent, approval, authorization or other order,or making such filing or notification would not prevent or materially hinderthe performance of the actions contemplated by this Agreement.

 

**ARTICLE IV****CORPORATE GOVERNANCE**

 

SECTION 4.01.                                         Agreementto Vote.  The Securityholders agreeto vote all of their shares of Capital Stock, and the Company agrees to takeall necessary measures, in order to carry out the agreements set forth in this Article IV,and to prevent any action by the Company or the Securityholders that isinconsistent with such agreements.

 

SECTION 4.02.                                         Electionof Directors; Voting.  The number ofdirectors constituting the Board of the Company, as fixed from time to time bythe Board in accordance with the Company’s By-laws, shall initially be five (5).  Notwithstanding any provision to the

 

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contrary in the Company’sCertificate of Incorporation or By-laws, for so long as Goyaike holds orBeneficially Owns at least ten (10%) percent of the outstanding Common Stock ofthe Company on a fully diluted basis, the number of directors constituting theBoard shall not be changed without the consent of Goyaike.  With respect to each election of directors ofthe Company, whether at a special or annual meeting and whether by vote or byconsent (in each case, in accordance with the provisions for electing directorsset forth in the Company’s Certificate of Incorporation and By-laws), theSecurityholders shall vote all of the shares of Capital Stock of the Companyheld and/or Beneficially Owned by them or consent in writing with respect tosuch shares as follows: (i) two (2) directors shall be designated by Goyaikeand approved by the holders and/or Beneficial Owners of at least a majority ofthe then outstanding shares of Common Stock (the “Goyaike Directors”),provided that Goyaike owns at least twenty (20%) percent of the outstandingshares of Common Stock of the Company on a fully diluted basis; (ii) one (1)director shall be designated by Goyaike and approved by the holders and/orBeneficial Owners of at least a majority of the then outstanding shares ofCommon Stock, provided that Goyaike owns less than twenty (20%) percent, but atleast ten (10%) percent, of the outstanding shares of Common Stock of theCompany on a fully diluted basis; and (iii) three (3) directors (the “SecurityholderDirectors”) shall be designated and approved by the holders and/orBeneficial Owners of a majority of the then outstanding Common Stock, otherthan Goyaike, for so long as there are two (2) Goyaike Directors, and four (4)directors shall be designated and approved by the holders and/or BeneficialOwners of a majority of the then outstanding Common Stock, other than Goyaike,for so long as there is one (1) Goyaike Director.

 

SECTION 4.03.                                         Nominationand Election of Directors.  Goyaike’sinitial nominees for the Board shall be as set forth in Schedule IIIhereto.  Notwithstanding any provision tothe contrary in the Company’s Certificate of Incorporation orBy-laws, if not already named by the Company’s existing Board, theSecurityholders shall act to elect such nominees as directors as soon aspracticable by written consent or at a securityholders’ meeting to he held aspromptly as practicable hereafter.  Hereafter,notwithstanding any provision to the contrary in the Company’s Certificate ofIncorporation or By-laws, Goyaike shall make the nominations to which they areentitled hereunder not later than thirty (30) days prior to each annual meetingof the Company’s securityholders, and the Board shall be elected at suchmeeting or by written consent in accordance herewith.

 

SECTION 4.04.                                         Removal;Vacancies.  Notwithstanding anyprovision to the contrary in the Company’s Certificate of Incorporation orBy-laws, a director shall be removed only by the party with the power todesignate such director and the Securityholders shall vote all of their sharesof Capital Stock of the Company to remove any director whose removal isrequired by the party with the power to designate such director.  Notwithstanding any provision to the contraryin the Company’s Certificate of Incorporation or By-laws, if, as a result ofdeath, disability, retirement, resignation, removal (with or without cause) orotherwise, there shall exist or occur any vacancy in the Board, then, if thedeparted director was designated by Goyaike, Goyaike shall be entitled todesignate in writing one nominee for election to fill such vacancy and if thedeparted director was designated by the holders of at least a majority of thethen outstanding Common Stock, then such holders of Common Stock shall beentitled to designate in writing one nominee for election to fill such vacancy. The Securityholders shall as soon aspracticable after such nomination is made act to elect such nominee to theBoard.  Any director elected pursuant tothis Section 4.04 shall serve until the next annual election of directors.

 

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SECTION 4.05                                            Quorum;Certain Actions.  Notwithstanding anyprovision to the contrary in the Company’s Certificate of Incorporation orBy-laws, subject to the immediately following sentence, at least four (4)Directors shall be present in person 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, subject to the following sentence, in the event a meeting of the Boardhas been duly noticed and a quorum is not present on two (2) consecutivemeeting dates, then only three (3) directors present in person at the nextimmediately scheduled meeting shall constitute a quorum for the transaction ofbusiness at such meeting.  Notwithstandingany other provision of this Agreement or the Company’s Certificate ofIncorporation or By-laws, for so long as Goyaike holds or Beneficially Owns atleast ten (10%) of the outstanding shares of Common Stock on a fully dilutedbasis, any Consent Event shall be taken by the Company only upon (and theCompany, and the Board on behalf of the Company, shall not take such actionwithout) the prior affirmative vote or written consent of at least one (1)Goyaike Director.  For purposes of thisAgreement, a “Consent Event” shall mean any of the matters set forth on Schedule IVattached hereto.

 

SECTION 4.05.                                         AuditCommittee.  The Company shallestablish and maintain an Audit Committee, which shall consist of three (3)members of the Board, including one (1) director nominated by Goyaike for solong as Goyaike holds or Beneficially Owns at least ten (10%) percent of theoutstanding shares of Common Stock on a fully diluted basis.

 

SECTION 4.06.                                         CompensationCommittee.  The Company shallestablish and maintain a Compensation Committee of the Board.  The Compensation Committee shall consist ofthree (3) members of the Board, including one (1) director nominated by Goyaikefor so long as Goyaike holds or Beneficially Owns at least ten (10%) percent ofthe outstanding shares of Common Stock on a fully diluted basis.

 

**ARTICLE V****TRANSFER OF SHARES**

 

SECTION 5.01.                                         GeneralRestriction.  No Securityholdershall, directly or indirectly, make or solicit any Sale of any Share except incompliance with the Securities Act and this Agreement.

 

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

 

“THE SHARESREPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIESACT OF 1933 AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT INACCORDANCE WITH THE REGISTRATION REQUIREMENTS OF THE

 

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SECURITIESACT OF 1933 OR AN EXEMPTION THEREFROM AND, IN EACH CASE, IN COMPLIANCE WITHAPPLICABLE STATE SECURITIES LAWS.

 

THESHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS ONTRANSFER AS SET FORTH IN A SECURITYHOLDERS’ AGREEMENT DATED AS OF NOVEMBER 20,2001, AS IT MAY BE AMENDED FROM TIME TO TIME, A COPY OF WHICH IS ON FILE AT THEPRINCIPAL 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.                                         CertainRestrictions on Transfer of Shares.  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)                                     anySale to a Permitted Transferee,

 

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

 

(iii)                               any Sale in connectionwith a merger of the Company or a sale of all or substantially all of itsassets or other similar business combination that has been approved by theBoard in accordance with the provisions of Section 4.05 and Schedule IVhereof,

 

(iv)                              anySale in connection with the merger of Goyaike or a sale of all or substantiallyall of its assets or other similar business combination that has been approvedby Goyaike’s Board of Directors (except that no Sale of Shares shall bepermitted under this Section 5.03(a)(iv) to any of the competitors of theBusiness identified on Schedule V attached hereto), and

 

(v)                                 anySale in connection with the merger of Parent or ACT or a sale of all orsubstantially all of Parent’s or ACT’s assets or other similar businesscombination that has been approved by Parent’s or ACT’s Board of Directors, asapplicable, except that no Sale of Shares shall be permitted under this Section 5.03(a)(v)to any of the competitors of the Business identified on Schedule Vattached hereto.

 

Notwithstandingthe foregoing, except as otherwise expressly provided in this Agreement, allSales permitted by the foregoing clauses (i) through (v) shall be subject to,and shall not be made other 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

 

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Agreement by eachPermitted Transferee of such Securityholder to which Shares are transferred,except if such Permitted Transferee received such Shares by will or the laws ofdescent and distribution.  If anyPermitted Transferee to which Shares are transferred pursuant to clause (i) of Section 5.03(a)is not a natural Person and ceases to be a Permitted Transferee of theSecurityholder from which or whom it acquired such Shares pursuant to suchprovision, such Person shall reconvey such Shares to such transferringSecurityholder immediately before such Person ceases to be a PermittedTransferee of such transferring Securityholder so long as such Person knows ofits upcoming change of status immediately prior thereto.  If such change of status is not known untilafter its occurrence, the former Permitted Transferee shall make such transferto such transferring Securityholder as soon as practicable after the formerPermitted Transferee receives notice thereof.

 

SECTION 5.04.                                         Rightof First Offer.  If anySecurityholder (the “Offering Securityholder”) proposes to make a Saleof 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 Parent, if Parent is not the OfferingSecurityholder, and a copy to Goyaike, if Goyaike is not the Offering Securityholder,which Offering Notice shall state (i) the number of Shares proposed to be sold (the“Offered Securities”), (ii) the proposed purchase price per Share of theOffered Securities (the “Offer Price”), (iii) the proposed terms andconditions of such Sale and (iv) the proposed purchaser of the Shares.  Upon delivery of the Offering Notice, suchoffer shall be irrevocable unless and until the rights of first offer providedfor herein shall have been waived or shall have expired.

 

(c)  For a period of fifteen (15) days afterdelivery of the Offering Notice pursuant to Section 5.04(b) (the “CompanyOption Period”), subject to Section 5.04(g) hereof, the Company shallhave the right (the “Company Option”) to purchase any or all of theOffered Securities at a purchase price equal to the Offer Price and otherwiseupon 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 Parent 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 Parent and Goyaike, providedthey 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 Period pursuant tothis Section 5.04 and (ii) the date upon which the Company deliverswritten notice of its partial

 

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exercise of the CompanyOption pursuant to this Section 5.04 or its waiver thereof and subject to Section 5.04(g):

 

(i)                                     Providedthat it is not the Offering Securityholder, Parent shall have the right to purchasethat percentage of the Offered Securities not offered to be purchased by theCompany (the “Remaining Offered Securities”) determined by dividing (A)the number of Shares owned by Parent at the time the Offering Notice isdelivered pursuant to this Section 5.04 by (B) the number of Shares ownedby Parent and Goyaike (provided that if Goyaike is the Offering Securityholder,those Shares owned by Goyaike shall not be included in this calculation) at thetime the Offering Notice is delivered pursuant to this Section 5.04, plusany of the Remaining Offered Securities that Goyaike does not elect to purchasepursuant to Section 5.04(d)(ii), at a purchase price equal to the OfferPrice and otherwise upon the terms and conditions set forth in the OfferingNotice; and

 

(ii)                                  Providedthat it is not the Offering Securityholder, Goyaike shall have the right topurchase that percentage of the Remaining Offered Securities determined bydividing (A) the number of Shares owned by Goyaike at the time the OfferingNotice is delivered pursuant to this Section 5.04 by (B) the number ofShares owned by Parent and Goyaike (provided that if Parent is the OfferingSecurityholder, those Shares owned by Parent shall not be included in thiscalculation) at the time the Offering Notice is delivered pursuant to this Section 5.04,plus any of the Remaining Offered Securities that Parent does not electto purchase pursuant to Section 5.04(d)(i), at a purchase price equal tothe Offer Price and otherwise upon the terms and conditions set forth in theOffering Notice.

 

(e)  The rights of Parent and Goyaike to purchaseany or all of the Remaining Offered Securities under this Section 5.04shall be exercisable by delivering written notice of the exercise thereof,prior to the expiration of the Securityholder Option Period, to the OfferingSecurityholder.  Such notice shall statethe number of Offered Securities proposed to be purchased from the OfferingSecurityholder.  The failure of Parent orGoyaike to respond within the Securityholder Option Period to the OfferingSecurityholder shall be deemed to be a waiver by such Person of its respectiverights under this Section 5.04; provided that either Parent or Goyaike maywaive its rights under this Section 5.04 prior to the expiration of theSecurityholder Option Period by giving written notice to the OfferingSecurityholder with a copy to each of the Company and Parent or Goyaike, asapplicable.

 

(f)  The closing of the purchases of the OfferedSecurities by the Company, Parent and/or Goyaike under Section 5.04 shallbe held 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 certificatesrepresenting the Offered Securities, duly endorsed for transfer or accompaniedby stock powers duly executed in blank, and accompanied by all requisitetransfer taxes (or evidence of payment thereof), if any, and such OfferedSecurities shall be free and clear of any Encumbrance, and the Offering Securityholdershall so represent and warrant, and shall further represent and warrant that itis the sole Beneficial Owner of such Offered Securities.  The Company and/or Parent and/or Goyaike, asthe case may be, shall deliver at the closing payment in full in immediatelyavailable

 

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funds of the Offer Pricefor the Offered Securities purchased by it.  At such closing, all of the parties to thetransaction shall execute such additional documents as are otherwise reasonablynecessary or appropriate in connection with the purchase and sale of theOffered Securities.

 

(g)Notwithstanding anything to the contrary contained in this Section 5.04,unless the Company and/or Parent and/or Goyaike, individually or in theaggregate, elect to purchase all, but not less than all, of the OfferedSecurities, (i) such parties shall not have the right to purchase any OfferedSecurities pursuant to this Section 5.04 and (ii) the OfferingSecurityholder 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 Parentand Goyaike (provided they are not the Offering Securityholder) that suchPerson is aware of the rights contained in this Section 5.04. If any saleto a Person 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 becomeeffective, and no Sale of such Offered Securities may be made thereafter by theOffering Securityholder without complying with the terms of this Section 5.04.

 

(h)Anything in this Section 5.04 or in Section 5.03 to the contrarynotwithstanding, the provisions of this Section 5.04 shall not beapplicable to any Sale or Encumbrance described in clause (i), (iii), (iv) or(v) of Section 5.03(a).

 

SECTION 5.05.                                         Tag-AlongRights.  Subject to the Right ofFirst Offer set forth in Section 5.04, if, at any time during the term ofthis Agreement, any Securityholder (the “Selling Securityholder”)proposes to directly or indirectly make a Sale of any of its Shares to aPerson, other than to a Permitted Transferee, the Selling Securityholder shallprovide Parent and/or Goyaike, as applicable (the “Other Securityholders”),and the Company with not less than fifteen (15) days’ prior written notice ofsuch proposed Sale (the “Tag-Along Notice”), which Tag-Along Noticeshall state (i) the number of Shares proposed to be sold, (ii) the proposedpurchase price per Share, (iii) the proposed terms and conditions of such Saleand (iv) the proposed purchaser of the Shares, provided that any OfferingNotice delivered pursuant to Section 5.04(b) shall be deemed to be thedelivery of the Tag-Along Notice if such Offering Notice was delivered at leastfifteen (15) days prior to the date of the proposed Sale.

 

(b) Eachof 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

 

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purchase shall be made atthe same time, and upon the same terms and conditions (including all direct orindirect consideration or compensation), as the Sale by the SellingSecurityholder of its Shares; provided, however, that such OtherSecurityholder shall not be required to agree to indemnity or contributionprovisions in excess of such Other Securityholder’s proceeds from such Sale.

 

(c)  Upon the exercise of the Tag-Along Option,the Selling Securityholder agrees that it shall either (a) arrange for theproposed purchaser or purchasers to purchase all or a portion (as each of theOther Securityholders shall specify) of the same Percentage of the Shares thenBeneficially Owned by each Other Securityholder electing to participate in theproposed Sale at the same time as and upon the same terms and conditions onwhich the Selling Securityholder sells its Shares; provided, however,that if such purchaser or purchasers shall elect to purchase only suchaggregate number of Shares as originally agreed with the Selling Securityholder,then the number of Shares to be sold by the Selling Securityholder and each of theOther Securityholders electing to participate in the proposed sale shall bereduced pro rata to such aggregate number or (b) not effect the proposed Saleto such purchaser or purchasers.

 

(d)  In the event that the Other Securityholdersdo not exercise their right to participate in such sale or decline to soparticipate, the Selling Securityholder shall have ninety (90) days from thedate the Tag-Along Notice was delivered pursuant to this Section 5.05 to consummatethe Sale to the same purchaser and upon the same terms set forth thereinwithout being required to provide an additional Tag-Along Notice to the OtherSecurityholders.

 

(e)  Anything in this Section 5.05 or in Section 5.03to the contrary notwithstanding, the provisions of this Section 5.05 shallnot be applicable to any Sale described in clause (i), (iii), (iv) or (v) of Section 5.03(a).  Nothing in this Section 5.05 shallaffect any of the rights or obligations of any of the Securityholders under anyother provision of this Agreement.

 

SECTION 5.06.                                         Transfereesto Execute Agreement.  EachSecurityholder agrees that it will not, directly or indirectly, make any Saleof any Shares Beneficially Owned by such Securityholder unless, prior to theconsummation of any such Sale, the Person to whom such Sale is proposed to bemade (the “Prospective Transferee”) (i) executes and delivers thisAgreement to the Company and each of Parent and Goyaike, and (ii) delivers tothe 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 theexecution and delivery by such Prospective Transferee of this Agreement and, ifrequired, the delivery of the opinion of counsel referred to in clause (ii) ofthe preceding sentence, such Prospective Transferee shall be deemed a “Securityholder”for purposes of this Agreement and shall have the rights and be subject to theobligations of a Securityholder under this Agreement, in each case with respectto the Shares Beneficially 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

 

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purported transfereeshall have no rights or privileges in or with respect to the Company, and theCompany shall not give any effect in the Company’s stock records to suchattempted Sale.

 

**ARTICLE VI****[INTENTIONALLY DELETED]**

 

**ARTICLE VII****ADDITIONAL AGREEMENTS**

 

SECTION 7.01.                                         NewSecurityholders to Execute Agreement.  The Company shall not, at any time prior toits initial public offering, issue any Shares of Common Stock, or resell anyShares of Common Stock held in its treasury, or issue or resell any securityconvertible or exchangeable into Common Stock, unless prior to the consummationof any such issuance or Sale, each Person to whom such security is proposed tobe issued or sold executes and delivers this Agreement to the Company and eachof Parent and Goyaike.  Upon theexecution and delivery by any Person of this Agreement, Schedule I heretoshall be revised to include the name of such Person and such Person shall bedeemed a “Securityholder” for purposes of this Agreement and shall have therights and be subject to the obligations of a Securityholder as such under thisAgreement.

 

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 Parent,ACT and Goyaike shall have the right to purchase in lieu of the Person to whomthe Company proposed to issue such New Securities, in accordance with paragraph(b) below, a number of Shares or other New Securities which the Companyproposes to issue equal to the product of (i) the total number or amount ofShares or other New Securities which the Company proposes to issue at such timeand (ii) a fraction, the numerator of which shall be the total number of VotingInterests which Parent, ACT or Goyaike, as applicable, holds or BeneficiallyOwns at such time, and the denominator of which shall be the total number ofVoting Interests then outstanding.  Therights given by the Company under this Section 7.02 shall terminate ifunexercised within thirty (30) days after receipt of the Notice of Issuancereferred to in paragraph (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 Parent, ACT and Goyaike,describing all material terms of the New Securities and the price and allmaterial terms upon which the Company proposes to issue such New Securities.  Each of Goyaike, Parent 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 the

 

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consideration payable bythe Person to whom the Company proposes to issue such New Securities at thetime of payment, and otherwise upon the terms specified in the Notice ofIssuance by giving written notice to the Company, and stating therein thequantity of New Securities to be purchased by such Securityholder.

 

SECTION 7.03.                                         FurtherAssurances.  Each party to thisAgreement shall use reasonable efforts to take, or cause to be taken, allappropriate action, and to do, or cause to be done, all things necessary,proper or advisable under applicable Laws to consummate and make effective thetransactions contemplated hereunder, including, without limitation, usingreasonable efforts to obtain all licenses, permits, consents, approvals,authorizations, qualifications and orders of any applicable governmentalentities.  Each of the parties shallcooperate with the other when required in order to effect the transactionscontemplated hereunder.  In case at anytime after the date hereof, any further action is necessary or desirable tocarry out the purposes of this Agreement, the proper officers and directors ofeach of the parties shall use all reasonable efforts to take all such action.

 

SECTION 7.04.                                         Restrictionon Transactions with Affiliates.  Except for transactions expressly contemplatedby this Agreement or as otherwise approved by the Goyaike Directors pursuant toArticle IV hereof, the Company shall not enter into any transaction,arrangement, agreement or understanding with any director, officer, employee,or holder of more than five (5%) percent of the outstanding shares of any classor series of Capital Stock of the Company, any member of the family of suchPerson, or any corporation, partnership, trust, or other entity in which anysuch Person, or member of the family of such Person, is a director, officer,trustee, partner, or holder of more than five (5%) percent of the outstandingcapital stock thereof, except for transactions on customary terms related tosuch Person’s employment.

 

SECTION 7.05.                                         InformationRights.  The Company shall deliverthe following reports to Goyaike:

 

(i)                                     Assoon as practicable after the end of each fiscal year of the Company, and inany event within ninety (90) days thereafter, the balance sheet of the Company,as of the end of such fiscal year, and a statement of income and statement ofcash flow of the Company for such fiscal year, in each case, in accordance withU.S. generally accepted accounting principals and as audited by the Company’saccountants.

 

(ii)                                  Assoon as practicable after the end of each quarter and in any event withinforty-five (45) days thereafter, an unaudited balance sheet and statements ofincome and cash flow of the Company for such quarter and for the year to date,in each case prepared in accordance with U.S. generally accepted accountingprincipals,

 

(b)  Goyaike shall also have the right to visit andinspect any of the properties, books or records of the Company and to discussits affairs, finances and accounts with officers, all at such reasonable timesduring normal business hours and as often as may be reasonably requested.

 

SECTION 7.06.                                         DividendRights.  For so long as Goyaike holdsor Beneficially Owns at least ten (10%) of the outstanding shares of CommonStock on a fully diluted basis, the

 

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Company shall be requiredto, and Parent, ACT and the Board shall cause the Company to, declare and payin cash to each holder or Beneficial Owner of shares of Common Stock on aquarterly basis its pro rata share of the Dividend Amount (as defined below);provided, however, that the Company shall have no obligation to declare or payto such Persons the Dividend Amount until such time as the Company has achievedeight (8) separate quarters of positive EBITDA, as determined by the Board (itbeing understood that this provision does not require the Company to achieve eight(8) consecutive quarters of positive EBITDA before it is required to declareand pay the Dividend Amount). For purposes of this Agreement, the DividendAmount shall be equal to thirty (30%) percent of Net Income (as defined herein)for the applicable quarterly period.  Mandatorydividends under this Section 7.06 shall not be declared and paid inviolation of applicable Law, and shall in no event be paid in violation of anyof the Company’s contractual commitments to third parties prohibiting suchpayments as such commitments may exist from time to time; provided, however,that the Company shall not enter into any such contractual commitmentsprohibiting the payment of such dividends without the prior written consent ofGoyaike.

 

**ARTICLE VIII****MISCELLANEOUS**

 

SECTION 8.01.                                         Termination. This Agreement shall terminate:

 

(a)  upon themutual written agreement of the Company, Parent and/or ACT, on the one hand,and Goyaike, on the other hand;

 

(b)  upon theexpiration of all rights created hereunder; or

 

(c)  immediatelyprior to a Qualified Initial Public Offering of Shares of the Company.

 

SECTION 8.02.                                         Expenses. Except as otherwise specified in thisAgreement, all costs and expenses, including, without limitation, fees anddisbursements 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, demandsand other communications hereunder shall be in writing and shall be given ormade (and shall be deemed to have been duly given or made upon receipt) bydelivery 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):

 

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a)  if to Parentor ACT:

 

Advanced Cell Technology, Inc.

One Innovation Drive

Worcester, Massachusetts 01605

 

Telecopy:(508) 756-0931

Attention:Dr. Michael D. West, President

 

witha copy to:

 

PierceAtwood

OneMonument Square

Portland,Maine 04101

 

Telecopy:(207) 791-1350

Attention:William L. Worden, Esq.

ChristopherE. Howard, Esq.

 

b)  if to the Company:

 

Cyagra,Inc.

OneInnovation Drive

Worcester,Massachusetts 01605

 

Telecopy:(508) 756-0931

Attention:Dr. Michael D. West, President

 

witha copy to:

 

PierceAtwood

OneMonument Square

Portland,Maine 04101

 

Telecopy:(207) 791-1350

Attention:William L. Worden, Esq.

 

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c) ifto Goyaike:

 

GoyaikeS.A.

Av,do Mayo 701, Piso 16

BuenosAires, Argentina

 

Telecopy:(54) 3488-436300

Attention:Mr. Ricardo Hosel

 

witha copy to:

 

Shearman& Sterling

599Lexington Avenue

NewYork, NY 10022

 

Telecopy:(212) 848-7179

Attention:Alfred J. Ross, Esq.

 

(a)  if to anyother Securityholder, then to the address or telecopy number set forth oppositesuch Person’s name on Schedule I or II attached hereto.

 

SECTION 8.04.                                         PublicAnnouncements.  Except as required byLaw, no party to this Agreement shall make, or cause to be made, any pressrelease or public announcement in respect of this Agreement without the priorwritten consent of the other party, and the parties shall cooperate as to the timingand contents of any such press release or public announcement.

 

SECTION 8.05.                                         Headings. The descriptive headings contained inthis Agreement are for convenience of reference only and shall not affect inany way the meaning or interpretation of this Agreement.

 

SECTION 8.06.                                         Severability. If any term or other provision of thisAgreement is invalid, illegal or incapable of being enforced by any Law, all otherterms and provisions of this Agreement shall nevertheless remain in full forceand effect so long as the economic or legal substance of the transactionscontemplated hereby is not affected in any manner materially adverse to anyparty.  Upon such determination that anyterm or other provision is invalid, illegal or incapable of being enforced, theparties hereto shall negotiate in good faith to modify this Agreement so as toeffect the original intent of the parties as closely as possible in an acceptablemanner in order that the transactions contemplated hereby be consummated asoriginally contemplated to the greatest possible extent.

 

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SECTION 8.07.                                         EntireAgreement.  This Agreement, theSecurities Purchase Agreement and the Management Services and IntellectualProperty Agreement constitute the entire agreement of the parties hereto withrespect to the subject matter hereof and supersede all prior agreements andundertakings of the parties, both written and oral, with respect to the subjectmatter hereof.

 

SECTION 8.08.                                         Assignment. This Agreement shall not be assigned byany party without the express written consent of the other parties, except inconnection with any Sale of Shares permitted by, and effected in accordancewith, Article V hereof.

 

SECTION 8.09.                                         NoThird-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 be amended ormodified except by an instrument in writing signed by, or on behalf of, each ofthe Company, Parent and ACT, on the one hand, and Goyaike, on the other hand.

 

SECTION 8.11.                                         GoverningLaw.  This Agreement shall begoverned 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. This Agreement may be executed in one ormore counterparts, and by the different parties hereto in separatecounterparts, each of which when executed shall be deemed to be an original butall of which taken together shall constitute one and the same agreement.  Copies of executed counterparts transmitted bytelecopy or other electronic transmission service shall be considered originalexecuted counterparts for purposes of this Section 8.12, provided thatreceipt of copies of such counterparts is confirmed.

 

SECTION 8.13.                                         SpecificPerformance.  The parties heretoagree that irreparable damage would occur in the event any provision of thisAgreement were not performed in accordance with the terms hereof and that theparties shall be entitled to specific performance of the terms hereof, inaddition to any other remedy at Law or equity.

 

SECTION 8.14.                                         Waiverof Jury Trial.  Each of the partieshereto irrevocably and unconditionally waives trial by jury in any legal actionor proceeding relating to this Agreement or the transactions contemplatedhereby 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 HERETOSUBSEQUENT TO THEDATE HEREOF

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

 

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SCHEDULE II

ADDRESSES OF CERTAINSECURITYHOLDERS

 

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SCHEDULE III

 

GOYAIKE’S INITIALNOMINEES TO THE BOARD OF DIRECTORS

 
| **Securityholder** | ** ** | **Nominee**          |
|--------------------|------------|----------------------|
|               |       |                 |
| Goyaike            |       | Ricardo Hosel        |
| Goyaike            |       | Alejandro Cantarelli |

 

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SCHEDULE IV

 

CONSENT EVENTS

 

Eachof the following matters shall be a Consent Event:

 

(a)  altering, amending or repealing the Certificateof 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 as contemplatedby clause (ii) below) in which the effective per share price of the CommonStock is fifty (50%) percent greater than the effective per share price of theshares of Common Stock issued to Goyaike hereunder, (ii) the issuance toemployees, officers and directors of options convertible or exercisable intoshares of Common Stock pursuant to an incentive stock option plan that is to beadministered by the Board and which shall consist often (10%) percent of the outstandingshares of Common Stock of the Company on a fully diluted basis as of theClosing Date (the “Stock Option Plan”); (iii) the issuance of shares ofCommon Stock in a Qualified Initial Public Offering and (iv) the issuance ofshares of Common Stock of the Company to a non-affiliated third party inconsideration of or exchange for intellectual property rights or other assetsthat 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 five (5%)percent of the outstanding shares of Common Stock of the Company on afully diluted basis as of the Closing 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 Goyaike’s Common Stock on the sameterms and conditions as the proposed redemption, re-purchase or re-acquisition;

 

(e)  other than as set forth in the ManagementServices and Intellectual Property Agreement, entering into any transaction orseries of transactions with “affiliates” of the Company, as that term isdefined in the Securities Exchange Act of 1934, as amended;

 

(f)  effecting any change in the nature of theCompany’s business away from the Business;

 

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(g)  amalgamating, consolidating, merging orentering into any business combination with another company, business, concern,firm or Person;

 

(h)  entering into or forming any partnership orjoint venture, except in the ordinary course of business;

 

(i)  selling, transferring or otherwise disposingof any of the Company’s assets, subsidiaries or securities outside the ordinarycourse of business;

 

(j)  materially modifying or amending any strategyfor the commercialization of any Intellectual Property that is owned orlicensed by the Company;

 

(k)  acquiring any assets or securities (in onetransaction or in a series of related transactions) which, at the time of suchacquisition, have a fair market value in excess of US$250,000;

 

(1)  entering into any settlement the value ofwhich exceeds $250,000 or the terms of which materially impact the Company’sbusiness;

 

(m)  appointing the Company’s President and ChiefExecutive Officer, Chief Operating Officer, Chief Financial Officer and/orChief Technology Officer or any other officer providing similar functions, andapproving the terms of employment of such person;

 

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

 

(o)  declaring, paying or making any cash ornon-cash dividends or distributions of any nature on any Capital Stock of theCompany, except that the Board shall be required to declare and pay to holdersor Beneficial Owners of Common Stock a cash dividend as per Section 7.06of this Agreement;

 

(p)  commencing litigation other than litigation(i) commenced in the ordinary course of the Company’s business for amountsinvolving less than US$100,000 or (ii) involving trade debt for amountsinvolving less than US$100,000;

 

(q)  changing the Company’s outside independentauditor or accountants, or materially changing its accounting polices, practicesor principles;

 

(r)  approving the Company’s annual operatingbudget (it being understood that the annual operating budget for the 2002fiscal year shall be the operating budget which is included in the BusinessPlan attached hereto as Exhibit IV); provided, however, that ifsuch approval is not obtained or the parties otherwise fail to agree on anannual operating budget, then the Company shall revert to using the operatingbudget from the prior year, except that each budgeted item reflected on theprevious year’s operating budget may be increased or decreased by up to twenty(20%) percent at the discretion of the Company (the “Default Budget”)(anysuch agreed upon or Default Budget being, the “Operating Budget”); and

 

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(s)  taking any action or otherwise engaging in anyconduct, including without limitation increasing indebtedness, increasingcapital expenditures or increasing operating expenses, that would result in anincrease, decrease or deviation to any budgeted item/category reflected in theOperating Budget, except that, with respect to each of the following items, theCompany may exceed or otherwise deviate by up to twenty (20%) percent annuallyfrom the budgeted target for such item (as set forth in the applicableOperating Budget) without obtaining the prior consent of Goyaike:

 

BalanceSheet Items – current assets; property, plant and equipment; other non-currentassets; current liabilities; intercompany balances; long term liabilities; andother non-current liabilities, excluding any balance sheet items relating torecipient herds

 

IncomeStatement Items – in-process research and development; research anddevelopment; sponsored research and development; sales, general &administrative expenses; management contract expenses; and intercompanyexpenses and interest expenses

 
|   | /s/ [ILLEGIBLE] |   |
|--------|-----------------|--------|
|   | /s/ [ILLEGIBLE] |   |
|   | /s/ [ILLEGIBLE] |   |

 

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**SCHEDULE V**

 

COMPETITORS OF THEBUSINESS

 
| Infigen Inc.               | Prolinea        |
|----------------------------|-----------------|
| Genetic Savings and  Clone | XY Cloning      |
| XY Genetics                | Clone Australia |
| XY, Inc.                   | Semex           |
| Evergreen Biotechnologies  |            |
| PPL Theraputics            | /s/ [ILLEGIBLE] |   |
| Imclone                    | /s/ [ILLEGIBLE] |   |
| Genzyme Transgenics        |            |
| Geron Corporation          |            |
| Bresagen                   |            |

 
| /s/ [ILLEGIBLE] |   |
|-----------------|--------|
| /s/ [ILLEGIBLE] |   |
| /s/ [ILLEGIBLE] |   |

 

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