**Exhibit 10.28**

 

**FORBEARANCE &STOCK PURCHASE AGREEMENT**

 

**THIS FORBEARANCE & STOCK PURCHASEAGREEMENT**(this “Agreement”) is dated as of July 16,1999, by and among **AVIAN FARMS, INC.**,a Delaware corporation with a principal place of business at 295 Kennedy MemorialDrive, Waterville, Maine 04903 (“Seller”), **A.C.T. Group Inc.**,a Delaware corporation with a principal place of business at One InnovationDrive, Worcester, Massachusetts 01605 (“Buyer”), **ADVANCEDCELL TECHNOLOGY, INC.**, a Delaware corporation with a principal placeof business at One Innovation Drive, Worcester, Massachusetts 01605 (“ACT”),and **CIMA BIOTECHNOLOGY, INC.**, a Delawarecorporation with a principal place of business at 495 Animal Science/VeterinaryBuilding, 1988 Fitch Ave, University of Minnesota, 55108 (“CIMA,” and togetherwith ACT, collectively referred to herein as the “Companies”).

 

W I T N E S S E T H  T H A T:

 

WHEREAS, Seller is the owner and holder ofrecord of (i) all of the issued and outstanding capital stock of ACT, and (ii) ninety-five(95%) percent of the issued and outstanding capital stock of CIMA; and

 

WHEREAS, Seller has been making inter-companyadvances to the Companies to fund their operations since they were formed, andthe Companies collectively owe Seller in excess of $2,000,000 as a result ofsuch inter-company advances; and

 

WHEREAS, upon and subject to the terms andconditions hereinafter set forth, Seller desires to sell to Buyer, and Buyerdesires to purchase from Seller eighty percent (80%) of all of Seller’s sharesof capital stock in each of the Companies;

 

NOW, THEREFORE, in consideration of themutual covenants and conditions set forth below, and other good and valuableconsideration, the receipt and adequacy of which is hereby acknowledged, theparties hereto agree as follows:

 

1.                                       Forbearance.  The parties hereto acknowledge and agree that(i) Seller has made advances to or on behalf of ACT and CIMA in excess of$2,000,000, (ii) Seller has committed to continue making inter-companyadvances to support ACT and CIMA through the close of business on July 16,1999 as hereinafter provided, and (iii) ACT and CIMA are obligated torepay the aggregate amount of such advances to Seller (collectively, the “Inter-CompanyAdvances”).  Seller hereby agrees toforbear from taking any actions to collect the Inter-Company Advances and fromexercising any remedies with respect to the Inter-Company Advances from andafter the date of the Closing until the earlier of (A) the secondanniversary date of the Closing, or (B) the date ACT secures an aggregateof at least two million seven hundred eightyseven thousand ($2,787,000) dollarsin Equity Funding (as hereinafter defined). In consideration for such forbearance, the Companies covenant and agreeas follows:

 

----

 

(a)                                  Atthe Closing, ACT shall execute and deliver a promissory note to Seller in theamount of one million seven hundred eighty-seven thousand ($1,787,000) dollars(“ACT’s Note”).  Seller agrees to acceptACT’s Note in full payment and satisfaction of the Inter-Company Advances andthe terms of ACT’s Note shall include the following: (i) interest shallaccrue at a rate of ten (10%) percent per annum, and (ii) all principaland accrued interest shall be due and payable upon the earlier of (A) thesecond anniversary date of the Closing, or (B) the date ACT receives anaggregate of at least two million seven hundred eighty-seven thousand($2,787,000) dollars in Equity Funding. For the purposes of this Agreement, theterm “Equity Funding” shall include any investment in and/or payment to ACT inexchange for common stock, preferred stock, convertible debt, subordinated debtwith attendant conversion options and/or warrants, or any other instrument orcertificate with characteristics substantially similar to any of the foregoing;provided, however, that Equity Funding shall not include any bankloan, capitalized lease, sale/leaseback or similar commercial financing.  For the purposes of illustration only, if ACTreceives $2,500,000 in Equity Funding six months after the Closing and anadditional $287,000 in Equity Funding nine months after the Closing, ACT shallbe deemed to have received an aggregate of $2,787,000 in Equity Funding as ofthe date nine months after the Closing and ACT’s Note will become automaticallydue and payable in full.  ACT’s Noteshall be in a form and substance reasonably acceptable to Buyer and Seller.

 

(b)                                 ACTagrees to pay Seller fifty percent (50%), up to an aggregate amount of eightmillion dollars ($8,000,000), of any and all license fees, license maintenancefees, up-front fees, success fees, royalties or milestone payments, minimumannual payments, or other revenues received in connection with sublicenses(however such sublicenses may be characterized) or other agreements relating tothe use of ACT’s Intellectual Property, after netting payments made to theUniversity of Massachusetts (“University”) as required under the ExclusiveLicense Agreement between ACT and the University dated April 16, 1996, asamended, such payments to be made when and as such funds are received. Forexample, if ACT receives a license fee of $100,000, it will be obligated to payto Seller $41,000 ($100,000 - $18,000 x 50%). ACT shall not be obligated to make any such payments to Seller inrespect of (1) payments made in consideration for the issuance of equityor debt securities of ACT at fair market value, and (2) paymentsspecifically committed to budgeted research or development of such products orservices (so-called “sponsored research”).

 

(c)                                  TheCompanies hereby grant to Seller a right of first negotiation to acquire anylicense or any other collaboration or partnering agreement that the Companies(or any one of them) propose to enter into in connection with the development,manufacture, use or sale of Agricultural Products or Services (as definedbelow) in the avian field (i.e., poultry and other bird species)utilizing the Companies’ Intellectual Property. ACT or CIMA, as the case may be, shall notify Seller of its intention toenter into such license,

 

2

----

 

collaboration or partnering agreement.  Seller shall then have a period of thirty(30) days to notify the Companies in writing of its willingness to enter intosuch transaction.  If Seller so notifiesthe Companies, then Seller and ACT or CIMA shall negotiate in good faith fornot more than thirty (30) days.  If, bythe end of such thirty (30) day period Seller and ACT or CIMA have not reachedagreement, ACT or CIMA, as the case may be, shall be free to enter into such transaction,but only on terms no more favorable to the other party as were offered toSeller.

 

(d)                                 Subjectto the rights previously granted to Cyagra, LLC, a Delaware limited liabilitycompany, as of the effective date of this Agreement, the Companies hereby grantto Seller a right of first negotiation to acquire from the Companies anexclusive license to develop, make, use and sell Agricultural Products orServices utilizing any of the Companies’ Intellectual Property.  ACT or CIMA, as the case may be, shall notifySeller of its intention to license such Agricultural Products or Servicesutilizing the Companies’ Intellectual Property (the “License Notice”).  Seller shall have thirty (30) days fromreceipt of the License Notice to exercise an option (the “Negotiation Right”)to negotiate with ACT or CIMA for an exclusive license to develop, make, useand sell such Agricultural Products or Services utilizing the Companies’Intellectual Property (the “Option License”). In the event that Seller exercises the Negotiation Right pursuant to thepreceding sentence, then Seller and ACT or CIMA shall negotiate in good faithfor a period of not re more than thirty (30) days the Option License.  If, at the end of such 30-day period, Sellerand ACT or CIMA, as the case may be, have not reached agreement on the terms ofsuch Option License, then ACT or CIMA, as the case may be, shall thereafter befree to enter into an agreement with any third party regarding suchAgricultural Products or Services utilizing the Companies’ IntellectualProperty on terms no more favorable to such third party as were offered toSeller.

 

(e)                                  TheCompanies hereby grant to Seller, for the later of 15 years or the date onwhich all of the Companies’ Patent Rights (as defined below) have expired, theexclusive, worldwide right to market and sell all Agricultural Products orServices in the avian field developed or manufactured by the Companies.  The Companies agree to pay Seller fees to beagreed upon by the parties, after good faith negotiation, for the sale of suchproducts or services; provided, however, that such fees shall be at least asfavorable to Seller as the fees provided for in other agreements relating tothe sale of other Agricultural Products or Services based on the CompaniesIntellectual Property.

 

For purposes of this Agreement “IntellectualProperty” means (1) any and all patents and patent applications which areuseful, necessary or required for the development, manufacture or production ofAgricultural Products or Services owned by or licensed to the Companies as ofthe date of the Closing, together with reissues, extensions (or othergovernmental acts which effectively extend the period of exclusivity by thepatent holder), substitutions, confirmations, registrations, revalidations,additions, continuations, continuations-in-part, divisions, or foreigncounterparts of or to the foregoing patent rights, and any patents infringingsuch patents or by

 

3

----

 

patents issued, if any, from such patent applications (the “PatentRights”), and (2) the following which are owned or controlled by theCompanies and which are useful, necessary or required for the development,manufacture or production of Agricultural Products or Services: confidential information,knowledge and data, included but not limited to inventions (whether patentableor not), trade secrets, ideas, designs, drawings, know-how, processes,techniques and like technical information, as well as any process describedwithin the Patent Rights described herein (all of which are referred to hereinas the “Technology”) as of the date of the Closing, together with suchTechnology that would infringe the Patent Rights.

 

For purposes of this Agreement “AgriculturalProducts or Services” means food (i.e., something of nutritional value)or fiber, or products that are intended to be used in, or are useful for, theproduction of food or fiber, produced or developed by or for animals or ofanimal origin and the rendering of services that relate to the production ordevelopment of such products.  Specificallyexcluded from the definition of Agricultural Products or Services are “nutraceuticals”(i.e., any food or other preparation intended for oral consumption by humanswhose primary function when taken into the human body, (a) services tonourish or build up tissues or supply energy and/or (b) maintains,restores or supports adequate nutritional status or nutritional metabolicfunction).

 

2.                                       Purchase ofShares.  Subject to the terms andconditions set forth in this Agreement, at the Closing, Seller agrees to sell,transfer and assign to Buyer, and Buyer agrees to purchase from Seller:

 

(a)                                  Twohundred forty thousand (240,000) shares of the Common Stock, .001 par value, ofACT (the “ACT Common Shares”);

 

(b)                                 Fourmillion (4,000,000) shares of Series A Preferred Stock, .001 par value, ofACT, together with Seller’s rights under that certain Investor’s RightsAgreement dated December 31, 1998, with respect to such shares(collectively, the “ACT Preferred Shares”); and

 

(c)                                  Sevenhundred sixty (760) shares of the Common Stock, $.01 par value, of CIMA (the “CIMAShares,” and together with the ACT Common Shares and the ACT Preferred Shares,collectively referred to herein as the “Shares”).

 

3.                                       PurchasePrice.  The consideration from Buyerto Seller for the Shares shall be as follows:

 

(a)                                  Atthe Closing, Buyer shall execute and deliver its promissory note to Seller inthe amount of one million ($1,000,000) dollars (“Buyer’s Note”), the terms ofwhich shall include the following: (i) interest shall accrue at a rate often (10%) percent per annum, and (ii) all principal and accrued interestshall be due and payable upon the earlier of (A) the second anniversarydate of the Closing, or (B) the date ACT secures an

 

4

----

 

aggregate of at least two million sevenhundred eighty-seven thousand ($2,787,000) dollars in Equity Funding; Buyer’sNote shall be in a form and substance reasonably acceptable to Buyer andSeller;

 

(b)                                 Fromand after the Closing, Buyer shall use its best efforts to obtain at least twomillion seven hundred eighty-seven thousand ($2,787,000) dollars of EquityFunding for the benefit of ACT.

 

UNTIL ACT’S NOTE AND BUYER’S NOTE HAVE BEENPAID IN FULL, BUYER COVENANTS AND AGREES NOT TO SELL, TRANSFER, PLEDGE,HYPOTHECATE, OR OTHERWISE ENCUMBER THE SHARES.

 

4.                                       Closing.  The closing of the transactions contemplatedby this Agreement (the “Closing”) shall take place at the offices of PierceAtwood, One Monument Square, Portland, Maine, at 10:00 a.m. local time on July 29,1999, or at such other time and place as the parties shall mutually agree (the “ClosingDate”).

 

5.                                       Representationsand Warranties of Seller.  Sellerrepresents and warrants the following to Buyer as of the date hereof and as ofthe Closing:

 

(a)                                  Ownershipof Shares.  Seller is the owner andholder of record of the Shares, free and clear of all liens, liabilities,limitations, restrictions, options, warrants, rights of purchase, securityinterests, mortgages, pledges and encumbrances of any kind or naturewhatsoever, except for a certain lien of Fleet Bank which shall be released ator prior to the Closing but in no event later than July 29, 1999.

 

(b)                                 Liabilities.  Seller represents and warrants that as of thetime of the Closing, neither ACT nor CIMA shall have any liabilities whichwould be required to be reflected on the balance sheets of ACT and CIMA,respectively, as of the time of the Closing under generally accepted accountingprinciples, with the exception of liabilities relating to Dr. Stice, Dr. Robl,Infigen Inc. and Trans-Ova, Inc. referred to in paragraph 10(a) below,  and liabilities of CIMA to Dr. Ponce deLeon and the University of Minnesota referred to in paragraph 10(b) below.

 

6.                                       Representationsand Warranties of Buyer.  Buyerrepresents and warrants the following to Seller as of the date hereof and as ofthe Closing:

 

(a)                                  Organization,Power.  Buyer is a corporation dulyorganized, validly existing and in good standing under the laws of the State ofDelaware and has the power and right to enter into and perform this Agreement.

 

(b)                                 Authority:No Violation.  The execution anddelivery of this Agreement by Buyer and the consummation by Buyer of thetransactions contemplated by this Agreement have been duly and validlyauthorized by all necessary corporate action on the part of

 

5

----

 

Buyer. This Agreement constitutes legal, valid, and binding obligations ofBuyer, enforceable against Buyer in accordance with its terms and conditions.  Neither the execution and delivery of thisAgreement, nor the consummation of the transactions contemplated by thisAgreement, nor compliance by Buyer with any of the provisions of thisAgreement, will:

 

(i)                                     Resultin the breach of any of the terms or conditions of, or constitute a defaultunder, Buyer’s current Articles of Incorporation or Bylaws, or any contract,agreement, lease, commitment, indenture, mortgage, pledge, note, bond, license,or other instrument or obligation to which Buyer is now a party or by whichBuyer may be bound or affected; or

 

(ii)                                  Resultin a violation by Buyer of any federal, state, or local law, rule, orregulation, or any order, writ, injunction or decree of any court,administrative agency, governmental body or arbitration tribunal.

 

(c)                                  AgreementNot in Breach of Other Instruments.  Theexecution and delivery of this Agreement and the consummation of thetransactions contemplated hereby will not result in the breach of any of the termsor conditions of, or constitute a default under, any contract, agreement,lease, commitment, indenture, mortgage, pledge, note, bond, license, or otherinstrument or obligation to which Buyer is now a party.

 

(d)                                 Brokersand Finders.  Neither Buyer nor anyof Buyer’s officers, directors or employees has employed any broker or finderor incurred any liability for any brokerage fees, commissions or finders’ feesin connection with the transactions contemplated hereby.

 

(e)                                  AccreditedInvestor Status.  BUYER UNDERSTANDSTHAT ITS INVESTMENT IN THE COMPANY IS ILLIQUID AND INVOLVES A HIGH DEGREE OFSPECULATIVE RISK.  Buyer is an “accreditedinvestor” (as that term is used in the Securities Act of 1933, as amended (the “SecuritiesAct”) and the Rules and Regulations thereunder).

 

(f)                                    IndependentInvestigation; Access.  Buyer, inmaking the decision to purchase the Shares, has relied upon independentinvestigations made by Buyer, and Buyer has, prior to any sale to it, beengiven access and the opportunity to examine all material books and records ofthe Companies, all material contracts and documents relating to this sale andan opportunity to ask questions of, and to receive answers from, Seller and theCompanies concerning the terms and conditions of this safe, and to obtain anyadditional information to the extent Seller or the Companies possess suchinformation or can acquire it without unreasonable effort or expense.

 

Buyer has beenfurnished with all materials relating to the business, finances and operationof the Companies and materials relating to the offer and sale of the Sharesthat has been requested.  Buyer hasreceived complete and satisfactory answers to any such inquiries.

 

6

----

 

Notwithstandingany thing to the contrary contained herein, the representations and warrantiesset forth in this paragraph 6(f) shall become effective at and as of theClosing.

 

(g)                                 Adequacyof Investigation.  Bayer acknowledgesthat it is purchasing the Shares after what Buyer deems to be adequate investigationof the business, finances and prospects of the Companies by Buyer.  Notwithstanding anything to the contrarycontained herein, the representations and warranties set forth in thisparagraph 6(g) shall become effective at and as of the Closing.

 

(h)                                 NoGovernmental Recommendation or Approval.  Buyer understands that no federal or stateagency has passed on or made any recommendation or endorsement of the Shares.

 

(i)                                     SharesNot Registered: Indefinite Holding.  Buyerhas been advised by Seller, and understands, that Buyer must bear the economicrisk of an investment in the Shares for an indefinite period of time becausethe Shares have not been registered under the Securities Act, and Seller andthe Companies are under no obligation to register the Shares.  Therefore, the Shares must be held by Buyerunless they are subsequently registered under the Securities Act or anexemption from such registration is available for the transfer of the Shares.

 

(j)                                     Purchasefor own Account.  Buyer representsthat the Shares are being acquired solely for Buyer’s own account forinvestment and not with a view toward, or for resale in connection with, any “distribution”(as that term is used in the Securities Act and the Rules and Regulationsthereunder) of all or any portion thereof.

 

(k)                                  NoDisposition of Shares Without Securities Law Compliance.  Buyer agrees not to subdivide the Shares orto offer, sell, pledge, hypothecate or otherwise transfer or dispose of any ofthe Shares in the absence of an effective registration statement under theSecurities Act covering such disposition, or an opinion of counsel,satisfactory to the Companies and their counsel, to the effect thatregistration under the Securities Act is not required in respect of suchtransfer or disposition.

 

(l)                                     Stop-Transferand Legends on Certificates.  Buyerfurther understands that a stop-transfer order will be placed on thestock-transfer books of the Company respecting the certificates evidencing theShares, and such certificates shall bear, until such time as the Shares, as thecase may be, shall have been registered under the Securities Act or shall havebeen transferred in accordance with such an opinion of counsel, the followinglegend or one substantially similar thereto:

 

THE SHARES REPRESENTED BY THIS CERTIFICATEHAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOTBE SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT

 

7

----

 

UNDER SAID ACT, OR AN AVAILABLE EXEMPTIONTHEREUNDER.

 

plus any legend that may be required underany applicable state law.

 

(m)                               Relianceon Representations.  Buyerunderstands that the offer and sale of the Shares are not being registeredunder any federal or state security laws in reliance on the so-called “privateoffering” exemption provided by the Securities Act and/or Regulation Dpromulgated pursuant to the Securities Act and the exemptions provided bySections 402(b)(l) and (b)(9) of Chapter 110A of the General Laws ofMassachusetts, and that Seller is basing its reliance on such exemptions inpart on the representations, warranties, statements and agreements containedherein.

 

7.                                       Conduct Priorto Closing.  Seller covenants andagrees that between the date of this Agreement and the Closing, except as otherwiseconsented to by Buyer:

 

(a)                                  Operationof**Businesses.  Seller shall not take any action to cause (i) ACT’sand/or CIMA’s businesses to be operated in any manner other than in theordinary course, consistent with past practices, (ii) any of the assets ofACT or CIMA to be encumbered, sold or otherwise disposed of, except in theordinary course, and (iii) any distribution of any kind or character forthe benefit of the holders of the capital stock of ACT or CIMA to be made ordeclared.  Furthermore, Seller will notin connection with the Companies, without the prior written consent of Buyer:

 

(i)                                     grantany increase in the rate of pay of any of the Companies’ employees, grant anyincrease in the salaries of any of the Companies’ officers, employees oragents, enter into or increase the benefits provided under any bonus,profit-sharing, incentive compensation, pension, retirement, medical,hospitalization, life insurance or other insurance plan or plans, or othercontracts or commitments, or in any other way increase in any amount thebenefits or compensation of any such officer, employee or agent except,however, ordinary merit increases not unusual in character or amount made inthe ordinary course of the business to employees who are not officers,directors or stockholders;

 

(ii)                                  enterinto any employment contract or collective bargaining agreement;

 

(iii)                               enterinto any contract or commitment or engage in any transaction which is not inthe ordinary course of the business or which is inconsistent with pastpractices;

 

(iv)                              make,or enter into any contract for, any material capital expenditure or enter intoany material lease of capital equipment or real estate;

 

8

----

 

(v)                                 create,assume, incur or guarantee any indebtedness other than (i) in the ordinarycourse of the business and with a maturity date of less than one year or (ii) thatwas incurred pursuant to existing contracts disclosed to Buyer;

 

(vi)                              exceptas may otherwise be provided by paragraph 9(b) hereof, make any amendmentsto or changes in its articles or certificate of incorporation or association orbylaws; or

 

(vii)                           performany act, or attempt to do any act, or permit any act or omission to act, whichwill cause a breach of any material contract, commitment or obligation to whichthe Companies are parties.

 

(b)                                 ACT’sOperating Liabilities.  Seller shallfund all operating liabilities of ACT incurred in the ordinary course of ACT’sbusiness consistent with past practices, including any costs of defending theInfigen Suit (but not funding any settlement or compromise thereof), which areincurred prior to the close of business on July 15, 1999.

 

(c)                                  Preservationof Business.  Seller shall carry on theCompanies’ business diligently and substantially in the same manner asheretofore conducted and shall keep the Companies’ business organizationsintact, including its present employees and present relationships with vendorsand customers and others having business relations with the Companies.

 

7-A.                         TransitionMatters.

 

(a) Employees:Benefits.  Buyer and Selleracknowledge that individuals performing work for CIMA and ACT have heretoforebeen employees of Seller.  Effective asof July 16, 1999, all said individuals performing work for ACT and/or CIMAwill be terminated as employees of Seller. ACT and CIMA, as the case may be, shall thereupon employ saidindividuals and shall provide all insurance and benefits, including healthinsurance, except as required by law with respect to so-called COBRA rights ofemployees.  As of July 16, 1999 saidindividuals shall be removed from coverages from insurance and other benefitplans heretofore made available as employees of Seller.

 

(b) Insurance.  ACT and CIMA have been listed as named oradditional insureds on insurance policies maintained by Seller.  As of the time of the Closing, ACT and CIMAwill be removed as named or additional insureds from insurance policiesmaintained by Seller, and ACT and CIMA shall be responsible for procuring andmaintaining their own insurance, including property, commercial generalliability, automobile, workers’ compensation, umbrella, commercial property,boiler & machinery, employer practices liability, director &officer liability, fiduciary, and other insurance, in the sole discretion ofACT and CIMA,

 

9

----

 

employer practices liability, director &**officer liability, fiduciary, and otherinsurance, in the sole discretion of ACT and CIMA.

 

(c) BankAccounts.  ACT currently has thefollowing three bank accounts:

 

(i)                                     KeyBankAccount 1903 1400 3012 (a zero-balance account tied into Seller’s other bankaccounts);

 

(ii)                                  KeyBankAccount 1903 1400 2030 (the “operating account”); and

 

(iii)                               FlagshipBank account.

 

Seller will fund and utilize the accountreferenced in clause (i) above for checks issued on or before the time ofthe Closing to pay ACT expenses, and ACT will not independently utilize thataccount.  After all outstanding checkshave cleared, that account will be closed. The bank accounts referred to in clauses (ii) and (iii) abovewill, as of the time of the Closing, be solely for use by ACT.

 

CIMA currentlyhas the following bank account: KeyBank Account 1903 1400 2048.  Seller will fund and utilize said account forchecks issued on or before the time of the Closing to pay CIMA expenses, andCIMA will not independently utilize that account.  After all outstanding checks have cleared,that account will be closed.

 

8.                                       Conditions toBuyer’s Obligation to Close.  Theobligation of Buyer to consummate the transaction contemplated hereby issubject to the fulfillment (or waiver by Buyer) prior to or at the Closing ofeach of the following conditions:

 

(a)                                  Representations,Warranties and Covenants of Seller.  Sellershall have complied in all material respects with all of its agreements andcovenants contained herein to be performed at or prior to the Closing, and allthe representations and warranties of Seller contained herein shall be true inall material respects on and as of the Closing Date with the same effect asthough made on and as of the Closing Date.

 

(b)                                 Deliveryof Stock Certificates.  Seller shallhave delivered to Buyer all stock certificates representing the Shares,accompanied by a stock power assigning and transferring the Shares inaccordance with the provisions of this Agreement.

 

(c)                                  Cyagra.  Seller’s interest in Cyagra, LLC, a Delawarelimited liability company, shall have been assigned to ACT in accordance withthe Operating Agreement of Cyagra, LLC and the Assignment and ReassignmentAgreement attached hereto as Exhibit A.

 

10

----

 

(d)                                 Cashin Rank Account.  As of the ClosingDate, ACT shall have two hundred and eighty-five thousand ($285,000) dollars inits KeyBank checking account (acct. no. 1903 1400 2030).

 

(e)                                  NoLegal Restraints, No statute, rule, regulation or order of any court oradministrative agency shall be in effect which restrains or prohibits Sellerfrom consummating the transactions contemplated hereby.

 

(f)                                    Capitalization.  Immediately prior to the Closing, (i) Sellershall be the owner and holder of record of all of the capital stock of ACT, and(ii) Seller shall be the owner and holder of record of ninety-five (95%)percent of the capital stock of CIMA.  Asof the date of execution of this Agreement, F. Abel Ponce de Leon shall be theowner and holder of record of the remaining five (5%) percent of the capitalstock of CIMA.  Except as otherwisedisclosed on Schedule 8(f) attached hereto, there shall be nooptions, warrants, or rights of purchase, conversion or exchange of any kind ornature whatsoever with respect to any of the Companies’ capital stock.

 

(g)                                 Insurance.  All insurance premiums payable as of the Closingwith respect to ACT’s, and CIMA's (if there is such a policy on the datehereof), directors and officers insurance shall have been paid and the Buyershall have received assurances to its satisfaction that appropriate directors’and officers’ insurance or other insurance is in place with respect to all or aportion of the liabilities set forth in paragraph 10(a)(iii) or thatappropriate claims have been filed with respect to such liabilities.

 

(h)                                 Taxes.  All tax returns (including informationreturns) and reports which ACT and CIMA are required to file prior to theClosing pursuant to federal, state, or local law shall have been filed, and allfederal, state and local taxes, assessments and other governmental charges owedby ACT or CIMA as of the Closing shall have been paid.

 

(i)                                     NoMaterial Adverse Change.  There shallhave been no material adverse change, actual or threatened, in the Companies’business (including relationships with customers or vendors for any reason),whether or not covered by insurance, as a result of any cause whatsoever.

 

(j)                                     Opinionof Counsel.  Buyer shall havereceived from Pierce Atwood, counsel to Seller, an opinion of such counsel,dated the Closing Date, solely to the effect that this Agreement has been dulyauthorized by Seller, ACT and CIMA.

 

(k)                                  NoLawsuits.  No suit, action or otherproceeding or investigation shall be threatened or pending before or by anyCourt or Government concerning this Agreement or the consummation of thetransactions contemplated hereby, or in connection with any claim againstSeller not disclosed herein.  NoGovernment shall have threatened or directed any request for informationconcerning this Agreement, the transaction contemplated

 

11

----

 

hereby or the consequences or implications ofsuch transaction to Buyer or Seller, or any officer, director, employee oragent of either of them.

 

(l)                                     Consents.  All consents and approvals necessary toenable Seller, ACT and CIMA to carry out the agreements of each containedherein shall have been obtained.

 

(m)                                Releases.  Prior to the Closing Date, Seller shall havedelivered to Buyer the written release of all Liens relating to the Shares,executed by the holder of or parties to each such Lien.  The releases shall be satisfactory insubstance and form to Buyer and its counsel.

 

(n)                                 DueDiligence.  Buyer shall be satisfiedin all respects with the results of its due diligence review of the Seller, theShares, the Companies and the Companies business condition, including withoutlimitation customer, vendor, and other third person relationships and tort,corporate, product liability, employee benefits, taxation and insurancematters.

 

9.                                       Condition toSeller’s Obligation to Close.  Theobligation of Seller to consummate the transactions contemplated hereby issubject to the fulfillment (or waiver by Seller) prior to or at the Closing ofeach of the following conditions:

 

(a)                                  Representations,Warranties and Covenants of Buyer.  Buyershall have complied in all material respects with all of its agreements andcovenants contained herein to be performed at or prior to the Closing, and allthe representations and warranties of Buyer contained herein shall be true inall material respects on and as of the Closing Date with the same effect asthough made on and as of the Closing Date.

 

(b)                                 BoardRepresentation and Pre-Emptive Rights. All actions shall have been taken which Seller reasonably determines isnecessary to guarantee that Seller will, for so long as Seller in the owner andholder of record of any of the Companies’ capital stock, have (i) at leastone seat on the board of directors of each of the Companies, and (ii) pre-emptiverights to acquire its pro rata share of any capital stock offered by either ofthe Companies after the Closing.  Notwithstandingthe foregoing, (A) Seller’s rights under the immediately precedingsentence shall terminate with respect to ACT upon the occurrence of either ofthe following: (I) an initial public offering of ACT’s common stock, or (II)any sale by Buyer of any of the Shares which results in more than fifty percentof ACT’s issued and outstanding capital stock being owned or controlled by athird party which is not an affiliate of Buyer, and (B) Seller’s rightsunder the immediately preceding sentence shall terminate with respect to CIMAupon the occurrence of either of the following: (I) an initial public offeringof CIMA’s common stock, or (II) any sale by Buyer of any of the Shares whichresults in more than fifty percent of CIMA’s issued and outstanding capitalstock being owned or controlled by a third party which is not an affiliate ofBuyer

 

12

----

 

shall have the option of requiring that allor a portion of its shares of the applicable Companies’ capital stock bepurchased as part of the same transaction, for the same consideration pershare, and otherwise on the same terms and conditions, upon which Buyer isselling its shares.

 

(c)                                  NoLegal Restraints.  No statute, rule orregulation or order of any court or administrative agency shall be in effectwhich restrains or prohibits Buyer from consummating the transactionscontemplated hereby.

 

10.                                 Liabilities.

 

(a)                                  Buyeracknowledges and agrees that immediately after the Closing, the liabilities ofACT shall include the following:

 

(i)                                     ACT’sNote;

 

(ii)                                  Anyand all liabilities of ACT to Steven L. Stice and James Robl arising before,after, or by reason of the Closing;

 

(iii)                               Anyliability of ACT arising out of Infigen, Inc. v. Advanced Cell Technology,Inc. and Steven L. Stice, No. 98 C 0431 C (W.D. Wisconsin June 19,1998), and Advanced Cell Technology, Inc. v. Paul Golueke and Infigen, Inc.,pending in Worcester, Massachusetts, or the subject matter of either of them(collectively, the “Infigen Suit”); and

 

(iv)                              Anyliability of ACT to Trans-Ova, Inc., up to $213,389 (but excluding regularmonthly payments by ACT to Trans-Ova, in the approximate amounts of $7,000-$10,000per month, accrued through the close of business on July 16, 1999, which willbe paid by Seller).

 

(b)                                 Buyeracknowledges and agrees that immediately after the Closing, the liabilities ofCIMA shall include the following:

 

(i)                                     Anyand all liabilities of CIMA to F. Abel Ponce de Leon arising before, after, orby reason of the Closing; and

 

(c)                                  Anyliability of CIMA to the University of Minnesota.

 

13

----

 

11.                                 Indemnification.

 

(a)                                  BySeller.  Seller agrees to defend, indemnify and hold Buyer, Buyer’sofficers, directors, agents, representatives, subsidiary and parent entitiesand affiliates and Buyer’s successors and assigns, harmless from and againstany claim, liability, expense, loss or other damage (including, withoutlimitation, reasonable attorneys’ fees and expenses) (“Claims”) in respect ofany and all Claims resulting from any misrepresentation or breach of warrantyor violation of any covenant or agreement made by Seller hereunder, or in anyagreement furnished or to be furnished by Seller hereunder.

 

(b)                                 ByBuyer.  Buyer agrees to defend, indemnify and hold Seller, Seller’sofficers, directors, agents, representatives, subsidiary and parent entitiesand affiliates and Seller’s successors and assigns, harmless from and againstany Claims in respect of any and all Claims resulting from anymisrepresentation or breach of warranty or violation of any covenant oragreement made by Buyer hereunder, or in any agreement furnished or to befurnished by Buyer hereunder.

 

(c)                                  IndemnificationProcedures.

 

(i)                                     Inthe event any third party makes a claim or commences any action or proceedingagainst the Buyer with respect to any matter as to which the Buyer intends toseek indemnification under paragraph 11 (a), or against the Seller with respectto any matter as to which the Seller intends to seek indemnification underparagraph 11(b), the party to be so indemnified (the “Indemnified Party”) shallpromptly notify the party from which such indemnification is to be sought (the “IndemnifyingParty”) of the existence of such claim or the commencement of such action orproceeding.

 

(ii)                                  TheIndemnifying Party shall be entitled at any time to participate in (but notdirect, except as otherwise provided in paragraph 11(c)(iii) below) thedefense of any such claim, action, or proceeding with counsel of its ownchoice, and the parties agree to cooperate fully with one another in connectionwith the defense and/or settlement thereof.

 

(iii)                               Subjectto the rights of any insurance company under any policy of insurance coveringBuyer or Seller with respect to the claim, action, or proceeding in question,Seller and Buyer shall each have the right, upon receipt of notice from theother party of the existence of such claim or the commencement of any suchthird-party action or proceeding, to undertake and direct the defense of suchclaim, action, or proceeding at any time by delivering to the other party awritten notice of such undertaking. In the event Seller or Buyer, as the casemay be, declines to undertake the defense of any such claim, action, orproceeding when first notified thereof, the defending party shall keep theother party advised as to the current

 

14

----

 

status and progress thereof.  The defending party agrees not to make anyoffer of settlement without first having provided five days’ advance writtennotice thereof to the other party and obtained the written approval of theother party.  The non-defending partyshall be entitled to participate in (but not direct) the defense of any suchclaim, action or proceeding with counsel of its own choice, and the partiesagree to cooperate fully with one another in connection with the defense and/orsettlement thereof.  From and afterdelivery of written notice to undertake the defense of any such claim, action,or proceeding as provided herein, the defending party shall be relieved of theobligation to reimburse the non-defending party for any other legal,accounting, or other out-of-pocket costs and expenses thereafter incurred bythe non-defending party with respect to the defense of such claim, action, orproceeding notwithstanding any participation by the non-defending partytherein.

 

12.                                 Survival ofRepresentations and Warranties.  Therepresentations and warranties of Seller and Buyer set forth in this Agreementshall survive the Closing.

 

13.                                 Termination Ifany condition specified in paragraph 8 of this Agreement is not satisfied andsuch condition is not waived by Buyer, Buyer may terminate this Agreement bygiving written notice to Seller at or prior to the Closing Date.  If any condition specified in paragraph 9 ofthis Agreement is not satisfied and such condition is not waived by Seller,Seller may terminate this Agreement by giving written notice to Buyer at orprior to the Closing Date.  If thisAgreement is terminated pursuant to this Section, all further obligations ofthe parties under this Agreement will terminate; provided, however, that ifthis Agreement is terminated by a party because of the willful breach of theAgreement by the other party or because one or more of the conditions to theterminating party’s obligations under this Agreement is not satisfied as aresult of the other party’s willful failure to comply with its obligationsunder this Agreement, the terminating party’s right to pursue all legalremedies will survive such termination unimpaired.

 

14.                                 Notices.  Any notice relating in any way to thisAgreement and of any of the transactions contemplated hereunder shall be inwriting and shall be delivered by hand or sent by facsimile transmission or bynational overnight delivery or by Registered or Certified mail addressed asfollows:

 

To Seller:                               AvianFarms, Inc.

285 Kennedy Memorial Drive

Waterville, Maine

Attn: Pichet Laokasem

(Fax: 207-861-3581)

 

15

----

 

With Copy to:                                                                    JamesB. Zimpritch, Esq.

Pierce Atwood

One Monument Square

Portland, Maine 04101

(Fax: 207-791-1350)

 

To Buyer:                                                                                           A.C.T.Group Inc.

One Innovation Drive

Worcester, Massachusetts 01605

Attn: Michael West

(Fax: 508-756-0931)

 

With Copy to:                                                                    Palmer &Dodge LLP

One Beacon Street

Boston, Massachusetts 02108

Attn: Michael Lytton

(Fax: 617-227-4420)

 

Any such notice shall be deemed received theday the delivery is made, if delivered by hand or by facsimile transmission,and the following business day, if delivered by national overnight deliveryservice or by Registered or Certified mail. Any party may, by such manner of notice, change the address orsubstitute persons for notice other than those listed above.

 

15.                                 Expenses.  Except as otherwise provided herein, eachparty shall pay its own expenses in connection with the performance of thisAgreement.

 

16.                                 Arbitration.  The parties agree that all controversies,disputes, and claims among the parties arising out of this Agreement, and allquestions concerning the validity, interpretation and enforcement of thisAgreement, shall be determined by arbitration conducted in accordance with thisSection.  Any arbitration initiated underthis Agreement shall be conducted before a single neutral arbitrator appointedby the parties.  For purposes of thisAgreement an arbitrator shall not be considered “neutral” if the arbitrator haspreviously served as an arbitrator for a dispute involving the parties or is apresent or former lawyer, employee or consultant of a party or any of itsaffiliates.  The arbitrator shall beknowledgeable in matters that are the subject of the dispute, and shall nothave any current or past substantial business or financial relationships withany party to the arbitration.  Anyarbitration under this Agreement shall be initiated by written request of aparty.  Copies of any such request shallbe served on the other party, and shall specify the issue or issues in disputeand summarize the party’s claim with respect thereto.  Within ten business days after receipt ofsuch a request, authorized representatives of the parties shall confer andattempt to agree upon appointment of a single neutral arbitrator.  If such agreement is not accomplished within15 business days after receipt of such a request, any party may request theAmerican Arbitration Association (“AAA”) to administer the arbitration and to

 

16

----

 

appoint an arbitrator in accordance with its Commercial ArbitrationRules, which rules shall govern the conduct of the arbitration in theabsence of contrary agreement by all parties. An arbitrator appointed by the AAA shall be a neutral arbitrator, shallbe knowledgeable in the matters that are the subject of the dispute, and shall nothave any current or past substantial business or financial relationship witheither party, all as more fully set forth above.  Any arbitration hereunder shall be conductedin Portland, Maine unless otherwise agreed to by both parties.  Unless otherwise agreed, the arbitrator shallrender a decision within ninety (90) days of appointment and shall notify theparties in writing of such decision and the reasons therefor.  Each party shall be responsible for its owncosts, including attorneys’ fees, incurred during the arbitration process andfor one-half of the cost of the arbitrator.

 

The arbitrator shall be authorized only tointerpret and apply the provisions of this Agreement or any related agreementsentered into under this Agreement and shall have no power to modify or changeany of the above in any manner.  Thedecision of the arbitrator shall be final and binding upon the parties, andjudgment on the award may be entered in any court having jurisdiction.  Nothing in this paragraph 16 shall preclude, orbe construed to preclude, the resort by either party to a court of competentjurisdiction solely for the purposes of securing a temporary or preliminaryinjunction to preserve the status quo or avoid irreparable harm pendingarbitration pursuant to this paragraph 16.

 

17.                                 Binding Effect.  This Agreement shall be binding upon andinure to the benefit of the parties and the successors and assigns of each ofthem.

 

18.                                 Waiver.  No waiver of any breach of any term hereofshall be effective unless made in writing signed by the party having the rightto enforce such breach, and no waiver shall be construed as a waiver of anysubsequent breach.  No course of dealingor delay or omission on the part of any party in exercising any right or remedyshall operate as a waiver thereof or otherwise be prejudicial thereto.

 

19.                                 Counterparts.  This Agreement may be signed in any number ofcounterparts with the same effect as if the signature on each such counterpartwere upon the same instrument.

 

20.                                 Severability.  No determination by any court, governmentalbody or otherwise that any provision of this Agreement or any amendment hereofis invalid or unenforceable in any instance shall affect the validity orenforceability of (a) any other provision hereof, or (b) such provisionin any circumstances not controlled by such determination.  Each such provision shall be valid andenforceable to the fullest extent allowed by, and shall be construed wheneverpossible as being consistent with, applicable law.

 

21.                                 Headings.  The headings to the various paragraphs ofthis Agreement have been inserted for convenient reference only, and shall notto any extent have the effect of modifying, amending or changing the expressterms and provisions of this Agreement.

 

22.                                 Construction.  Words of the masculine gender used in thisAgreement shall be construed as though they also are used in the femininegender, where applicable.  Similarly,words used in the singular form shall be construed as though they also are usedin the plural form, where applicable.

 

17

----

 

23.                                 Entire Agreement:Amendment.  This Agreement, and alldocuments, agreements, schedules, exhibits or certificates prepared inconnection herewith, represent the entire understanding and agreement betweenthe parties with respect to the subject matter hereof, supersede all prioragreements or negotiations between such parties, and may be amended,supplemented or modified only by an agreement in writing which makes specificreference to this Agreement or the agreement delivered pursuant hereto, as thecase may be, and which is signed by the party against whom enforcement of anysuch amendment, supplement or modification is sought.

 

24.                                 Governing Law.  This Agreement shall be construed in accordancewith the laws of the State of Maine.

 

18

----

 

IN WITNESS WHEREOF, the parties have executedand delivered this Agreement as of the date first set forth above.

 
|   | AVIAN FARMS, INC. |
|--------|-------------------|
|   |              |
|   |              |
|   | By:               | /s/ |
|   | Its               | C.O.O. |

 

 
|   | A.C.T. GROUP INC. |
|--------|-------------------|
|   |              |
|   |              |
|   | By:               | /s/ Michael D. West |
|   | Its               | President |

 

 
|   | ADVANCED CELL TECHNOLOGY, INC. |
|--------|--------------------------------|
|   |                           |
|   |                           |
|   | By:                            | /s/ Michael D. West |
|   | Its                            | President |

 

 
|   | CIMA BIOTECHNOLOGY, INC. |
|--------|--------------------------|
|   |                     |
|   |                     |
|   | By:                      | /s/ |
|   | Its                      | President |
|   |                     |   |
|   |                     |   |
|   | WITNESS:                 | /s/ |   |
|        |                          |  |  |  |

 

19

----

 

**EXHIBIT A**

**TO**

**FORBEARANCE &STOCK PURCHASE AGREEMENT**

 

**ASSIGNMENTAND RE-ASSIGNMENT**

 

THIS ASSIGNMENT AND RE-ASSIGNMENT is made asof                ,1999, by and among AVIAN FARMS, INC., a Delaware corporation (“Avian”), andROBERT H. SAGLIO, as trustee with respect to certain of the membership units ofCyagra, LLC, a Delaware limited liability company, held in trust for the solebenefit of Avian (“Saglio”),

 

RECITALS

 

WHEREAS, pursuant to a certain LimitedLiability Company Agreement of ACT Agriculture, LLC dated March 26, 1998(the “Operating Agreement”), 2,200 Class B Membership Units (as defined inthe Operating Agreement) were issued to Saglio in trust for the sole benefit ofAvian (the “Membership Units”); and

 

WHEREAS, Saglio wishes to transfer theMembership Units to Avian; and

 

WHEREAS, after giving effect to suchtransfer, Avian wishes to transfer the Membership Units to Advanced CellTechnology, a Delaware corporation (“ACT”), which is a wholly owned subsidiaryof Avian;

 

NOW,THEREFORE, the parties hereto agree as follows:

 

1.                                       Saglio, astrustee for the sole benefit of Avian, hereby transfers and assigns all right,title and interest in and to the Membership Units to Avian as a “PermittedTransferee” under the Operating Agreement.

 

2.                                       After givingeffect to paragraph 1 above, Avian hereby transfers and assigns all of right,title and interest in and to the Membership Units to ACT as a “PermittedTransferee” under the Operating Agreement.

 

This Assignment has been executed anddelivered as of the date first set forth above.

 
|   | AVIAN FARMS, INC.      |
|--------|------------------------|
|   |                   |
|   | By:                    | /s/ [ILLEGIBLE] |
|   | Its                    | C.O.O. |
|   |                   |
|   | /s/ Robert Saglio      |
|   | Robert Saglio, Trustee |
|   |                   |
|   | WITNESS:               | /s/ [ILLEGIBLE] |   |
|        |                        |  |  |  |

 

----

 

**SCHEDULE 8(f)**

**TO**

**FORBEARANCE &STOCK PURCHASE AGREEMENT**

 

**ACT StockOwnership Analysis**

**12/30/98**

 
| **Class of Stock**         | ** ** | **Investment** | ** ** | **Conv. Price** | ** ** |
|---------------------------------|------------|----------------|------------|-----------------|------------|
| Series A Prfd. Convertible |       | $              | 5,000,000  |            | $          | 1.00 |   |
|                                 |            |                |            |                 |            |  |  |

 
| ** **              | ** ** | ** **                 | ** ** | ** **                             | ** ** | **Debt Conversion and  Recapitalization as of 12/98** | ** **    | ** **                       | ** ** |
|-------------------------|------------|----------------------------|------------|----------------------------------------|------------|-------------------------------------------------------|---------------|----------------------------------|------------|
| **Shareholder**         | ** ** | **Initial Capitalization** | ** ** | **NonVoting  Common/Options (1)** | ** ** | **Series A  Fully  Converted**                   | ** **    | **Common  Stock  Fully Diluted** | ** ** | **%** | ** ** |
| **Common**              | ** ** | **%**                      |
| ** **              | ** ** | ** **                 | ** ** | ** **                             | ** ** | ** **                                            | ** **    | ** **                       | ** ** | ** ** | ** ** | ** ** | ** ** |
| **Outstanding:**        |       |                       |       |                                   |       |                                                  |          |                             |       |   |   |   |   |
|                    |       |                       |       |                                   |       |                                                  |          |                             |       |   |   |   |   |
| Avian Farms             |       | 3,000,00                   |       | 100.00                                 | %          | 300,000                                               |          | 5,000,000                        |       | 5,300,000 |   | 53.925 | % |
|                    |       |                       |       |                                   |       |                                                  |          |                             |       |   |   |   |   |
| **Options:**            |       |                       |       |                                   |       |                                                  |          |                             |       |   |   |   |   |
|                    |       |                       |       |                                   |       |                                                  |          |                             |       |   |   |   |   |
| Michael West            |       | 0                          |       | 0.00                                   | %          | 1,965,693                                             |  (2)     | 0                                |       | 1,965,693 |   | 20.000 | % |
|                    |       |                       |       |                                   |       |                                                  |          |                             |       |   |   |   |   |
| James Robl              |       | 0                          |       | 0.00                                   | %          | 491,423                                               |  (3)     | 0                                |       | 491,423 |   | 5.000 | % |
|                    |       |                       |       |                                   |       |                                                  |          |                             |       |   |   |   |   |
| Jose Cibelli            |       | 0                          |       | 0.00                                   | %          | 294,854                                               |  (2),(3) | 0                                |       | 294,854 |   | 3.000 | % |
|                    |       | 0                          |       | 0.00                                   | %          | 196,569                                               |          | 0                                |       | 196,569 |   | 2.000 | % |
|                    |       |                       |       |                                   |       |                                                  |          |                             |       |   |   |   |   |
| Others                  |       |                       |       |                                   |       |                                                  |          |                             |       |   |   |   |   |
|                    |       |                       |       |                                   |       |                                                  |          |                             |       |   |   |   |   |
| J. Cain                 | * *   | 0                          |       | 0.00                                   | %          | 22,114                                                |          | 0                                |       | 22,114 |   | 0.225 | % |
| C. Blackwell            | * *   | 0                          |       | 0.00                                   | %          | 22,114                                                |          | 0                                |       | 22,114 |   | 0.225 | % |
| N. Kieser               | * *   | 0                          |       | 0.00                                   | %          | 14,743                                                |          | 0                                |       | 14,473 |   | 0.150 | % |
| W. Ingels               | * *   | 0                          |       | 0.00                                   | %          | 2,457                                                 |          | 0                                |       | 2,457 |   | 0.025 | % |
| E. Malino               | * *   | 0                          |       | 0.00                                   | %          | 14,743                                                |          | 0                                |       | 14,743 |   | 0.150 | % |
| K. Cunniff              | * *   | 0                          |       | 0.00                                   | %          | 19,657                                                |          | 0                                |       | 19,657 |   | 0.200 | % |
| K. Delegge              | * *   | 0                          |       | 0.00                                   | %          | 9,828                                                 |          | 0                                |       | 9,828 |   | 0.100 | % |
| Total Others            | * *   | 0                          |       | 0.00                                   | %          | 105,656                                               |  (3)     | 0                                |       | 105,656 |   | 1.075 | % |
|                    | * *   | * *                   |       |                                   |       |                                                  |          |                             |       |   |   |   |   |
| Add’l ISO  Pool(4) |       | 0                          |       | 0.00                                   | %          | 1,474,270                                             |  (2)     | 0                                |       | 1,474,270 |   | 15.000 | % |
| Totals                  |       | 3,000,000                  |       | 100.00                                 | %          | 4,828,465                                             |          | 5,000,000                        |       | 9,828,465 |   | 100.000 | % |

 

----

NOTES

 

(1)            Upon recapitalization,all outstanding shares of common shall be converted to nonvoting common in areverse

stock split of 10 shares of outstandingcommon for each new share of nonvoting common. Upon conversion of all classes of preferred stock with voting rights,the nonvoting common shall obtain voting rights on a one share one vote basis.

 

(2)            Assumes full exerciseof 1998 grant of incentive stock options at $.25 strike price.

 

(3)            Assumes full exerciseof 1997 grants of nonqualified stock options at $.05 strike price.

 

(4)            Reserved; none grantedto date.

 

----

 

**ExecutionCopy**

 

AMENDMENT TOFORBEARANCE & STOCK PURCHASE AGREEMENT

 

This Amendment to the Forbearance &Stock Purchase Agreement (the “Amendment”) dated as of December 23, 1999,is entered into by and among **AVIAN FARMS, INC.**,a Delaware corporation with a principal place of business at 295 KennedyMemorial Drive, Waterville, Maine 04903 (“Seller”),**A.C.T.GROUP INC.,** a Delaware corporation with a principal place ofbusiness at One Innovation Drive, Worcester, Massachusetts 01605 (“Buyer”), **ADVANCED CELL TECHNOLOGY, INC**., a Delaware corporation witha principal place of business at One Innovation Drive, Worcester, Massachusetts01605 (“ACT”), and **CIMA BIOTECHNOLOGY, INC.**,a Delaware corporation with a principal place of business at 495 AnimalScience/Veterinary Building, 1988 Fitch Ave, University of Minnesota, 55108 (“CIMA,”and together with ACT, collectively referred to herein as the “Companies”).

 

**Whereas,** Seller,Buyer and the Companies have entered into that certain Forbearance &Stock Purchase Agreement dated July 16, 1999 (the “Agreement”), and desireto amend the Agreement as provided herein.

 

**Now, Therefore,** inconsideration of the foregoing premises and the mutual covenants and conditionsset forth below, and for other good and valuable consideration, the receipt ofwhich is hereby acknowledged, the parties to this Amendment hereby agree asfollows:

 

1.                                       **Right to Market and Sell Agricultural Products or Services**.  Section 1 of the Agreement is herebyamended by deleting existing paragraph (e) in its entirety.

 

2.                                       **Buyer’s Right of First Negotiation**.  Section 1 of the Agreement is herebyamended by inserting the following paragraph:

 

(e)                                  Seller hereby grantsto Buyer a right of first negotiation to acquire all or any portion of sharesof capital stock of the Companies (the “Interests”) owned by Seller that theSeller proposes to sell, convey, assign or otherwise transfer in any way(hereinafter referred to as a “Sale” or to “Sell”) to any third party.  Seller shall notify Buyer of its intention toSell its Interests.  Buyer shall thenhave a period of thirty (30) days to notify the Seller in writing of itswillingness to purchase such shares of capital stock upon terms and conditionsto be agreed.  If Buyer so notifiesSeller, then Buyer (or an affiliate or subsidiary of Buyer) and Seller shallnegotiate in good faith for not more than thirty (30) days for the Sale of theInterests to Buyer or its affiliate or subsidiary upon terms and conditions tobe agreed.  If, by the end of such thirty(30) day period Buyer (or its affiliate or subsidiary, as the case may be) andSeller have not reached agreement, Seller shall be free to sell such shares ofcapital stock to such third party, but only on terms no more favorable to suchthird party as were offered in good faith to Buyer.

 

3.                                       **Closing. **Section 4of the Agreement is hereby amended by deleting the date “July 29, 1999”and substituting therefor the date “December 23, 1999”.

 

4.                                       **Representations and Warranties of Seller.**

 

(a)                                  Section 5(a) ofthe Agreement is hereby amended by deleting the date

 

----

 

“July 29, 1999” and substitutingtherefor the date “December 23, 1999”.

 

(b)                                 Section 5(b) ofthe Agreement is hereby amended by inserting the phrase “arising prior to July 16,1999” following the words “neither ACT nor CIMA shall have any liabilities”.

 

5.**                                       Conditionsto Buyer’s Obligation to Close. **Section 8(d) ofthe Agreement is hereby deleted.

 

6.**                                       Indemnification,**Section 11 (a) of the Agreement is hereby amended by insertingthe following at the end of said section: “, or any assertion by Origenrelating to conflicts of interest, breaches of duties or dual roles of MichaelWest for Origen and ACT.”

 

**7.****                                      Attorney’sFees; American Motorists Recovery. **TheAgreement is hereby amended by adding the following new sections:

 

“23.                           Seller Counsel’s Attorney’sFees.  Seller and Buyer acknowledge thatACT and Seller have incurred obligations to Pierce Atwood for fees for legalservices rendered and expenses incurred in connection with defense of theInfigen Suit and other ACT matters.  Asof December 20, 1999, outstanding attorneys’ fees and expenses were$131,505.88.  On the Closing Date, Sellershall pay Pierce Atwood the sum of $56,741.95 and ACT shall pay Pierce Atwoodthe sum of $37,336.96, and, within thirty days after the Closing Date, ACTshall pay Pierce Atwood the sum of $37,336.97 in satisfaction of such fees andexpenses.  In addition, after the ClosingDate, ACT shall pay Pierce Atwood the full amount of any fees and expensesincurred on ACT’s matters from and after December 21, 1999.

 

24.                                 Buyer Counsel’sAttorney’s Fees, Buyer and ACT acknowledge that Buyer and ACT have incurredobligations to Palmer & Dodge LLP for fees for legal services renderedand expenses incurred in connection with representation of A.C.T. Group Inc. inits negotiations for the purchase of ACT from Avian and representation of ACTin other business matters.  As of November 30,1999, outstanding attorneys’ fees and expenses were $42,765.43.  On the Closing Date, Buyer and ACT shall payPalmer & Dodge LLP the sum of $42,765.43 in satisfaction of such feesand expenses.  In addition, after theClosing Date, ACT shall pay Palmer & Dodge LLP the full amount of anyfees and expenses incurred on ACT’s matters from and after November 30,1999.

 

25.                                 American MotoristsRecovery.  On September 2, 1999,American Motorists Ins. Co. (“American Motorists”) filed with United StatesDistrict Court for Western District of Wisconsin a civil action seeking adetermination that there was no insurance coverage for the settlement of orattorneys’ fees and expenses incurred in connection with the Infigen suit.  On September 14, 1999, ACT and Avianfiled with the United States District Court for the District of Maine a civilaction for recovery of fees and expenses incurred by Avian and ACT in defendingthe Infigen suit.  ACT shall beresponsible for payment of any and all legal fees and expenses incurred indefending and prosecuting said civil actions. Any recovery from American Motorists in such civil actions shall be usedfirst to pay any outstanding legal expenses incurred in connection with suchcivil actions, second to reimburse ACT for legal fees and expenses paid by ACTafter the Closing Date in connection with such civil actions, third toreimburse ACT the

 

2

----

 

sum of $20,962.00 for legal expenses paid by ACT to Pierce Atwood onthe Closing Date relating to the Infigen suit, and the balance shall be paid toSeller.

 

**8.****                                      Severability**.  If any provision of this Amendment is deemedto be or becomes invalid, illegal or unenforceable in any respect in anyjurisdiction, (a) such provision will be deemed amended to conform toapplicable laws of such jurisdiction so as to be valid and enforceable; (b) thevalidity, legality and enforceability of such provision will not in any way beaffected or impaired thereby in any other jurisdiction; and (c) theremaining provisions of this Amendment shall continue in force without beingimpaired or invalidated in any way.

 

**9.****                                      Full****Force and Effect**.  Except as specifically amended by thisAmendment, the Agreement shall remain in full force and effect.

 

**10.**                               **Section Headings**.  The descriptive section headings hereinhave been inserted for convenience of reference only and shall not be deemed tobe a part of this Amendment.

 

**11.**                               **Counterparts.**  This Amendment may be signed in any number ofcounterparts with the same effect as if the signature on each such counterpartwere upon the same instrument.

 

**12.**                               **GoverningLaw**.  This Amendment shall begoverned by and construed in accordance with the laws of the State of Maine.

 

 

(Remainder of page intentionally blank.]

 

3

----

 

IN WITNESS WHEREOF, Seller, Buyer and theCompanies have duly executed and delivered this Amendment to the Forbearance &Stock Purchase Agreement as an instrument under seal as of the date first abovewritten.

 

 
| **ADVANCED CELL TECHNOLOGY, INC.** | **AVIAN FARMS, INC.**            |
|------------------------------------|----------------------------------|
| ** **                         | ** **                       |
|                               |                             |
| By:                                |   /s/ Michael West     |   | By: |   /s/ Pichet Laokasem |   |
| Name: MICHAEL WEST                 | Name:                            | Pichet Laokasem |
| Title: PRES & CEO              | Title:                           | Chief Operating Officer |
|                               |                             |
|                               |                             |
| **CIMA BIOTECHNOLOGY, INC.**       | **A.C.T. GROUP INC.**            |
| ** **                         | ** **                       |
|                               |                             |
| BY:                                |   /s/ Robert H. Saglio |   | BY: |   /s/ Michael West |   |
| Name:                              | Robert H. Saglio                 | Name: MICHAEL WEST |
| Title:                             | President                        | Title: PRES. |
|                                    |                                  |  |  |  |  |  |  |  |  |  |

 

4

----

 

**ExecutionCopy**

 

AMENDMENT TOFORBEARANCE & STOCK PURCHASE AGREEMENT

 

This Amendment to the Forbearance &Stock Purchase Agreement (the “Amendment”) dated as of December 23,1999,is entered into by and among **AVIAN FARMS, INC.**,a Delaware corporation with a principal place of business at 295 KennedyMemorial Drive, Waterville, Maine 04903 (“Seller”), **A.C.T. GROUPINC.**, a Delaware corporation with a principal place of business atOne Innovation Drive, Worcester, Massachusetts 01605 (“Buyer”), **ADVANCED CELL TECHNOLOGY, INC.**, a Delaware corporation witha principal place of business at One Innovation Drive, Worcester, Massachusetts01605 (“ACT”), and **CIMA BIOTECHNOLOGY, INC.**,a Delaware corporation with a principal place of business at 495 AnimalScience/Veterinary Building, 1988 Fitch Ave, University of Minnesota, 55108 (“CIMA,”and together with ACT, collectively referred to herein as the “Companies”).

 

**Whereas,** Seller,Buyer and the Companies have entered into that certain Forbearance &Stock Purchase Agreement dated July 16,1999 (the “Agreement”), and desireto amend the Agreement as provided herein.

 

**Now, Therefore,**in consideration of the foregoing premises and the mutual covenants andconditions set forth below, and for other good and valuable consideration, thereceipt of which is hereby acknowledged, the parties to this Amendment herebyagree as follows:

 

1.                                       **Right to Market and Sell Agricultural Products or Services: **Section 1 of the Agreement ishereby amended by deleting existing paragraph (e) in its entirety.

 

2.                                       **Buyer’s Right of First Negotiation.**  Section 1 of the Agreement is herebyamended by inserting the following paragraph:

 

(e)                                  Seller hereby grantsto Buyer a right of first negotiation to acquire all or any portion of shares ofcapital stock of the Companies (the “Interests”) owned by Seller that theSeller proposes to sell, convey, assign or otherwise transfer in any way(hereinafter referred to as a “Sale” or to “Sell”) to any third party.  Seller shall notify Buyer of its intention toSell its Interests.  Buyer shall thenhave a period of thirty (30) days to notify the Seller in writing of itswillingness to purchase such shares of capital stock upon terms and conditionsto be agreed.  If Buyer so notifiesSeller, then Buyer (or an affiliate or subsidiary of Buyer) and Seller shallnegotiate in good faith for not more than thirty (30) days for the Sale of theInterests to Buyer or its affiliate or subsidiary upon terms and conditions tobe agreed.  If, by the end of such thirty(30) day period Buyer (or its affiliate or subsidiary, as the case may be) andSeller have not reached agreement, Seller shall be free to sell such shares ofcapital stock to such third party, but only on terms no more favorable to suchthird party as were offered in good faith to Buyer.

 

3.                                     **Closing.**  Section 4of the Agreement is hereby amended by deleting the date “July 29, 1999”and substituting therefor the date “December 23, 1999”.

 

4.                                     **Representations and Warranties of Seller.**

 

(a)                              Section 5(a) ofthe Agreement is hereby amended by deleting the date

 

----

 

“July 29, 1999” and substitutingtherefor the date “December 23,1999”.

 

(b)                                Section 5(b) ofthe Agreement is hereby amended by inserting the phrase “arising prior to July 16,1999”following the words “neither ACT nor CIMA shall have any liabilities”.

 

5.                                     **Conditions to Buyer’s Obligation to Close.**  Section 8(d) of the Agreement Ishereby deleted.

 

6.                                     **Indemnification.**  Section 11(a) of the Agreement is hereby amended by inserting the following at theend of said section: “, or any assertion by Origen relating to conflicts of interest,breaches of duties or dual roles of Michael West for Origen and ACT.”

 

7.                                     **Attorney’s Fees; American Motorists Recovery.**  The Agreement is hereby amended by adding thefollowing new sections:

 

“23.                           Seller Counsel’s Attorney’sFees.  Seller and Buyer acknowledge that ACTand Seller have incurred obligations to Pierce Atwood for fees for legalservices rendered and expenses incurred in connection with defense of theInfigen Suit and other ACT matters.  As ofDecember 20, 1999, outstanding attorneys’ fees and expenses were$131,505.88.  On the Closing Date, Sellershall pay Pierce Atwood the sum of 556,741.95 and ACT shall pay Pierce Atwoodthe sum of $37,336.96, and, within thirty days after the Closing Date, ACTshall pay Pierce Atwood the sum of $37,336.97 in satisfaction of such fees andexpenses.  In addition, after the ClosingDate, ACT shall pay Pierce Atwood the full amount of any fees and expensesincurred on ACT’s matters from and after December 21,1999.

 

24.                                 Buyer Counsel’sAttorney’s Fees.  Buyer and ACTacknowledge that Buyer and ACT have incurred obligations to Palmer &Dodge LLP for fees for legal services rendered and expenses incurred inconnection with representation of A.C.T. Group Inc. in its negotiations for thepurchase of ACT from Avian and representation of ACT in other business matters.  As of November 30, 1999, outstandingattorneys’ fees and expenses were $42,765.43. On the Closing Date, Buyer and ACT shall pay Palmer & Dodge LLPthe sum of $42,765.43 in satisfaction of such fees and expenses.  In addition, after the Closing Date, ACTshall pay Palmer & Dodge LLP the full amount of any fees and expensesincurred on ACT’s matters from and after November 30, 1999.

 

25,                                 American MotoristsRecovery.  On September 2,1999,American Motorists Ins. Co. (“American Motorists”) filed with United StatesDistrict Court for Western District of Wisconsin a civil action seeking adetermination that there was no insurance coverage for the settlement of orattorneys’ fees and expenses incurred in connection with the Infigen suit.  On September 14, 1999, ACT and Avianfiled with the United States District Court for the District of Maine a civilaction for recovery of fees and expenses incurred by Avian and ACT in defendingthe Infigen suit.  ACT shall beresponsible for payment of any and all legal fees and expenses incurred indefending and prosecuting said civil actions. Any recovery from American Motorists in such civil actions shall be usedfirst to pay any outstanding legal expenses incurred in connection with suchcivil actions, second to reimburse ACT for legal fees and expenses paid by ACTafter the Closing Date in connection with such civil actions, third toreimburse ACT the

 

2

----

 

sum of $20,962.00 for legal expenses paid by ACT to Pierce Atwood onthe Closing Date relating to the Infigen suit, and the balance shall be paid toSeller.

 

8.                                     **Severability.** If anyprovision of this Amendment is deemed to be or becomes invalid, illegal orunenforceable in any respect in any jurisdiction, (a) such provision willbe deemed amended to conform to applicable laws of such jurisdiction so as tobe valid and enforceable; (b) the validity, legality and enforceability ofsuch provision will not in any way be affected or impaired thereby in any otherjurisdiction; and (c) the remaining provisions of this Amendment shallcontinue in force without being impaired or invalidated in any way.

 

9.                                     **Full Force and Effect.**  Except as specifically amended by thisAmendment, the Agreement shall remain in full force and effect.

 

10.                               **Section Headings.**  The descriptive section headings hereinhave been inserted for convenience of reference only and shall not be deemed tobe a part of this Amendment.

 

11.                               **Counterparts.**  ThisAmendment may be signed in any number of counterparts with the same effect as ifthe signature on each such counterpart were upon the same instrument.

 

12.                               **Governing Law.**  ThisAmendment shall be governed by and construed in accordance with the laws of theStare of Maine.

 

 

(Remainder of page intentionallyblank,]

 

3

----

 

IN WITNESS WHEREOF, Seller, Buyer and theCompanies have duly executed and delivered this Amendment to the Forbearance &Stock Purchase Agreement as an instrument under seal as of the date first abovewritten.

 

 
| **ADVANCED CELL TECHNOLOGY, INC.** | **AVIAN FARMS, INC.**            |
|------------------------------------|----------------------------------|
| ** **                         | ** **                       |
|                               |                             |
| By:                                |   /s/ Michael West     |   | By: |   /s/ Pichet Laokasem |   |
| Name:  MICHAEL WEST           | Name:                            | Pichet Laokasem |
| Title:  PRES & CEO        | Title:                           | Chief Operating Officer |
|                               |                             |
|                               |                             |
| **CIMA BIOTECHNOLOGY, INC.**       | **A.C.T. GROUP INC.**            |
| ** **                         | ** **                       |
|                               |                             |
| BY:                                |   /s/ Robert H. Saglio |   | BY: |   /s/ MICHAEL WEST |   |
| Name:                              | Robert H. Saglio                 | Name:  MICHAEL WEST |
| Title:                             | President                        | Title:  PRES. |
|                                    |                                  |  |  |  |  |  |  |  |  |  |

 

4

----