Document:

hancock8k111309ex41.htm

    Exhibit 4.1

      AMENDMENT
TO

      AMENDED
AND RESTATED RIGHTS AGREEMENT

       

      This
AMENDMENT TO AMENDED AND RESTATED RIGHTS AGREEMENT (this “Amendment”), is
entered into as of November 13, 2009, between Hancock Fabrics, Inc., a Delaware
Company (the “Company”), and
Continental Stock Transfer & Trust Company, as Rights Agent (the “Rights
Agent”).

       

      RECITALS

       

      A.           The
Board of Directors of the Company (the “Board”) authorized
and declared a dividend of one right (a “Right”) for each
share of Common Stock of the Company outstanding on May 4, 1987, and authorized
the issuance of one Right with respect to each share of Common Stock that has
become outstanding since May 4, 1987, each Right initially representing the
right to purchase one share of Common Stock.

       

      B.           The
Company and the Rights Agent are parties to that certain Rights Agreement dated
as of March 23, 1987, as amended and restated from time to time and currently in
the form of that certain Amended and Restated Rights Agreement dated as of March
20, 2006 (the “Rights
Agreement”).

       

      C.           The
Company has generated net operating loss carryforwards for United States federal
income tax purposes, and such net operating loss carryforwards may potentially
provide significant tax benefits to the Company.

       

      D.           The
Company desires to avoid an “ownership change” as contemplated by Section 382 of
the Internal Revenue Code of 1986, as amended, and the Treasury Regulations
promulgated thereunder, which could detrimentally impact the ability of the
Company to realize tax benefits associated with the net operating loss
carryforwards.

       

      E.           The
Company desires to amend the Rights Agreement pursuant to the terms of this
Amendment.

       

      NOW,
THEREFORE, in consideration of the premises and the mutual agreements herein set
forth, the parties hereto agree as follows:

       

       

       

       

       

       

       

       

       

       

       

      
        
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      Section
1. The
language contained in Section 1(a) of the Rights Agreement is deleted in its
entirety and restated as follows:

       

      “Acquiring
Person” shall mean any Person who or which, together with all Affiliates and
Associates of such Person, shall be the beneficial owner of 4.95% or more of the
then outstanding Common Stock (other than as a result of a Permitted Offer (as
hereinafter defined)), but shall not include (i) the Company, (ii) any
Subsidiary of the Company, (iii) any employee benefit plan of the Company or of
any Subsidiary of the Company, (iv) any entity holding shares of Common Stock
for or pursuant to the terms of any such plan in its capacity as an agent or
trustee for any such plan, or (v) an Exempt Person; provided, however, that not
Person shall become an “Acquiring Person” solely as a result of an Exempt
Transaction.  Notwithstanding the foregoing, no Person shall become an
“Acquiring Person” as a result of an acquisition of Common Stock by the Company
which, by reducing the number of shares outstanding, increases the proportionate
number of shares beneficially owned by such Person to 4.95% or more of the
Common Stock of the Company then outstanding; provided, however, that if a
Person shall become the beneficial owner of 4.95% or more of the then
outstanding Common Stock by reason of share purchases by the Company and shall,
after such share purchases by the Company, become the beneficial owner of any
additional shares of Common Stock, then such Person shall be deemed to be an
“Acquiring Person.” Notwithstanding the foregoing, if the Board determines in
good faith that a Person who would otherwise be an Acquiring Person, as defined
pursuant to the foregoing provisions of this paragraph (a), has become such
inadvertently, such inadvertent acquisition did not result in the loss or
impairment of Tax Benefits, and such Person divests as promptly as practicable a
sufficient number of shares of Common Stock so that such Person would no longer
be an Acquiring Person, then such Person shall not be deemed to be an “Acquiring
Person” for any purposes of this Agreement.

       

      Section
2. The
language contained in Section 1(b) of the Rights Agreement is deleted in its
entirety and restated as follows:

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      
        
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      “Affiliate”
and “Associate” shall have the respective meanings ascribed to such terms in
Rule 12b-2 of the General Rules and Regulations, as in effect on the date of
this Agreement, under the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), and to the extent not included within the foregoing, shall also
include with respect to any Person, any other Person whose Common Stock would be
deemed to be constructively owned by such first Person, owned by a single
“entity” as defined in Section 1.382-3(a)(1) of the Treasury Regulations, or
otherwise aggregated with Common Stock owned by such first Person, pursuant to
the provisions of the Code, or any successor or replacement provision, and the
Treasury Regulations thereunder.

       

      Section
3. The
language contained in Section 1(c) of the Rights Agreement is deleted in its
entirety and restated as follows:

       

      A Person
shall be deemed the “beneficial owner” of and shall be deemed to “beneficially
own” any securities:

       

      (i)           that
such Person or any Affiliate or Associate of such Person beneficially owns,
directly or indirectly;

       

      (ii)           that
such Person or any Affiliate or Associate of such Person has (A) the right to
acquire (whether such right is exercisable immediately or only after the passage
of time) pursuant to any agreement, arrangement or understanding (whether or not
in writing) (other than customary agreements with and between underwriters and
selling group members with respect to a bona fide public offering of
securities), or upon the exercise of conversion rights, exchange rights, rights
(other than the Rights), warrants or options, or otherwise; provided, however,
that a Person shall not be deemed the beneficial owner of securities tendered
pursuant to a tender or exchange offer made by or on behalf of such Person or
any Affiliate or Associate of such Person until such tendered securities are
accepted for purchase or exchange; or (B) the right to vote or to dispose of
securities pursuant to any agreement, arrangement or understanding (whether or
not in writing); provided, however, that a Person shall not be deemed the
beneficial owner of, or to beneficially own, any security if the agreement,
arrangement or understanding (whether or not in writing) to vote such security
(1) arises solely from a revocable proxy or consent given to such Person in
response to a public proxy or consent solicitation made pursuant to, and in
accordance with, the applicable rules and regulations promulgated under the
Exchange Act and (2) is not also then reportable on Schedule 13D under the
Exchange Act (or any comparable or successor report);

       

       

       

       

       

       

       

       

       

       

       

       

       

      
        
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      (iii)           that
are beneficially owned, directly or indirectly, by any other Person (or any
Affiliate or Associate thereof) with which such Person (or any of such Person’s
Affiliates or Associates) has any agreement, arrangement or understanding
(whether or not in writing, and other than customary agreements with and between
underwriters and selling group members with respect to a bona fide public
offering of securities) relating to the acquisition, holding, voting (except to
the extent contemplated by the proviso to clause (B) of subparagraph (ii) of
this paragraph) or disposing of any securities of the Company; or

       

      (iv)           if
such Person would be deemed to constructively own securities or such securities
otherwise would be aggregated with shares owned by such Person pursuant to
Section 382 of the Code or any successor or replacement provision, and the
Treasury Regulations thereunder.

       

      Section
4. The
language contained in Section 1(h) of the Rights Agreement is deleted in its
entirety and restated as follows:

       

      “Distribution
Date” shall mean the earlier of (i) the tenth Business Day after the Stock
Acquisition Date, or (ii) the tenth Business Day (or such later date as may be
determined by an action of the Board) after the date of the commencement of, or
first public announcement of the intention of any Person (other than the
Company, a Subsidiary of the Company, an employee benefit plan of the Company or
of a Subsidiary of the Company, or any entity holding shares of capital stock of
the Company for or pursuant to the terms of any such plan in its capacity as an
agent or trustee for any such plan) to commence, a tender or exchange offer
(other than a Permitted Offer) the consummation of which would result in
beneficial ownership by a Person of 30% or more of the outstanding Common
Stock.

       

       

       

       

       

       

       

       

       

       

       

       

       

      
        
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      Section
5. The
language contained in Section 1(i) of the Rights Agreement is deleted in its
entirety and restated as follows:

       

      “Expiration
Date” shall mean March 4, 2021.

       

      Section
6. The
language contained in Section 1(k) of the Rights Agreement is deleted in its
entirety and restated as follows:

       

      “Person”
means any individual, partnership, firm, Company, limited liability company,
limited liability partnership, company, association, trust, unincorporated
organization, joint venture, syndicate or group (the existence of a “group”
being determined in accordance with Rule 13d-5 under the Exchange Act, as the
Rule is in effect on the date of this Agreement including, but not limited to, a
Person having any agreement, arrangement or understanding, whether formal or
informal and whether or not in writing with any other Person to act together to
acquire, offer to acquire, hold, vote or dispose of any Common Stock of the
Company), or any group of Persons making a “coordinated acquisition” of Stock or
otherwise treated as an entity within the meaning of Section 1.382-3(a)(1) of
the Treasury Regulations or otherwise, and shall include any successor (by
merger or otherwise) of such entity.

       

      Section
7. The
language contained in Section 1(m) of the Rights Agreement is deleted in its
entirety and restated as follows:

       

      “Stock
Acquisition Date” shall mean the first date of public announcement by the
Company or any Acquiring Person that an Acquiring Person has become such or such
earlier date as the Board becomes aware of the existence of an Acquiring Person;
provided, however that, if such Person is determined by the Board not to have
become an Acquiring Person or that such Person is an Exempt Person, then no
Stock Acquisition Date shall be deemed to have occurred.

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      
        
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      Section
8. The
following new definitions are added to Section 1 of the Rights
Agreement:

       

      (u)           “Amendment
Date” means November 13, 2009.

       

      (v)           “Code”
means the Internal Revenue Code of 1986, as amended.

       

      (w)           “Exempt
Person” means any Person who, together with all Affiliates and Associates of
such Person,

       

      (i)           is
the beneficial owner of securities representing 4.95% or more of the shares of
Common Stock at the close of business on the Amendment Date; provided, however,
that any such Person described in this clause (i) shall no longer be deemed to
be an Exempt Person and shall be deemed an Acquiring Person if such Person,
together with all Affiliates and Associates of such Person, becomes the
beneficial owner of securities representing a percentage of Common Stock that
exceeds by one-half of one percent (0.5%) or more the lowest percentage of
beneficial ownership of Common Stock that such Person had at any time since the
Amendment Date, except solely (x) pursuant to equity compensation awards granted
to such Person by the Company or as a result of an adjustment to the number of
shares of Common Stock represented by such equity compensation award pursuant to
the terms thereof; (y) as a result of a redemption of shares of Common Stock by
the Company; or (z) pursuant to the exercise of warrants to purchase Common
Stock that are beneficially owned by such Person on the Amendment Date;
or

       

      (ii)           becomes
the beneficial owner of securities representing 4.95% or more of the shares of
Common Stock then outstanding because of a reduction in the number of
outstanding shares of Common Stock then outstanding as a result of the purchase
by the Company or a Subsidiary of the Company of shares of Common Stock,
provided, however, that any such Person described in this clause (ii) shall no
longer be deemed to be an Exempt Person and shall be deemed an Acquiring Person
if such Person, together with all Affiliates and Associates of such Person,
becomes the beneficial owner, at any time after the date such Person became the
beneficial owner of 4.95% or more of the then outstanding shares of Common
Stock, of securities representing a percentage of Common Stock that exceeds by
one-half of one percent (0.5%) or more the lowest percentage of beneficial
ownership of Common Stock that such Person had at any time since the date such
Person first became the beneficial owner of 4.95% or more of the then
outstanding shares of Common Stock, except solely (x) pursuant to equity
compensation awards granted to such Person by the Company or as a result of an
adjustment to the number of shares of Common Stock represented by such equity
compensation award pursuant to the terms thereof; (y) as a result of a
redemption of shares of Common Stock by the Company; or (z)  pursuant
to the exercise of warrants to purchase Common Stock that are beneficially owned
by such Person on the Amendment Date; or

       

       

       

       

       

       

       

       

       

      
        
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      (iii)           who
is a beneficial owner of 4.95% or more of the shares of Common Stock outstanding
and whose beneficial ownership, as determined by the Board in its sole
discretion, (x) would not jeopardize or endanger the availability to the Company
of Tax Benefits or (y) is otherwise in the best interests of the Company,
provided, however, that if a Person is an Exempt Person solely by reason of this
clause (iii), then such Person shall cease to be an Exempt Person if (A) such
Person ceases to beneficially own 4.95% or more of the shares of the then
outstanding Common Stock, (B) after the date of such determination by the Board,
such Person, together with all Affiliates and Associates of such Person, becomes
the beneficial owner of securities representing a percentage of Common Stock
that exceeds by one-half of one percent (0.5%) or more the lowest percentage of
beneficial ownership of Common Stock that such Person had at any time since the
date such Person first became the beneficial owner of 4.95% or more of the then
outstanding shares of Common Stock, except solely (I) pursuant to equity
compensation awards granted to such Person by the Company or as a result of an
adjustment to the number of shares of Common Stock represented by such equity
compensation award pursuant to the terms thereof; (II) as a result of a
redemption of shares of Common Stock by the Company; or (III) pursuant to the
exercise of warrants to purchase Common Stock that are beneficially owned by
such Person on the Amendment Date; or (C) the Board, in its sole discretion,
makes a contrary determination with respect to the effect of such Person’s
beneficial ownership (together with all Affiliates and Associates of such
Person) with respect to the availability to the Company of Tax
Benefits.

       

      A
purchaser, assignee or transferee of the shares of Common Stock (or warrants or
options exercisable for Common Stock) from an Exempt Person shall not thereby
become an Exempt Person, except that a transferee from the estate of an Exempt
Person who receives Common Stock as a bequest or inheritance from an Exempt
Person shall be an Exempt Person so long as such Person continues to be the
beneficial owner of 4.95% or more of the then outstanding shares of Common
Stock.

       

       

       

       

       

       

       

       

       

      
        
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      (x)           “Exempt
Transaction” means any transaction that the Board determines, in its sole
discretion, is exempt from this Agreement, which determination shall be made in
the sole and absolute discretion of the Board prior to the date of such
transaction or within ten Business Days after such transaction, including,
without limitation, if the Board determines that (i) neither the beneficial
ownership of shares of Common Stock by any Person, directly or indirectly, as a
result of such transaction nor any other aspect of such transaction would
jeopardize or endanger the availability to the Company of the Tax Benefits or
(ii) such transaction is otherwise in the best interests of the Company. In
granting an exemption under this definition, the Board may require any Person
who would otherwise be an Acquiring Person to make certain representations or
undertakings or to agree that any violation or attempted violation of such
representations or undertakings will result in such consequences and subject to
such conditions as the Board may determine in its sole discretion, including
that any such violation shall result in such Person becoming an Acquiring
Person.

       

      (y)           “Tax
Benefits” means the net operating loss carryforwards, capital loss
carryforwards, general business credit carryforwards, alternative minimum tax
credit carryforwards, foreign tax credit carryforwards, any loss or deduction
attributable to a “net unrealized built-in loss” within the meaning of Section
382 of the Code, and the Treasury Regulations, of the Company or any Subsidiary
of the Company.

       

      (z)           “Treasury
Regulations” means the final, temporary and proposed income tax regulations
promulgated under the Code, as amended.

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      
        
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      Section
9. The
address for the Company contained in Section 15 shall be deleted and replaced
with the following address:

       

      Hancock
Fabrics, Inc.

      One
Fashion Way

      Baldwyn,
Mississippi 38824

      Attention:  Secretary

       

      Section
10. The
following new subsection shall be added to Section 17 of the Rights
Agreement:

       

      (d)           In
addition to the review and evaluation otherwise required by this Agreement, from
and after the Amendment Date and for so long as the threshold for determining
whether a Person, together with all Affiliates and Associates of such Person, is
an Acquiring Person is 4.95%, the Board shall review the calculation for
determining whether an ownership change has occurred under Section 382 of the
Code once per year. The Board shall determine after such review whether the
ownership structure of the Company poses an undue risk of the loss of or
inability to use all or a substantial portion of the Tax Benefits. If the
ownership structure of the Company no longer poses an undue risk of the loss of
or the inability to use all or a substantial portion of the Tax Benefits, the
Board shall consider whether maintenance of the 4.95% threshold continues to be
in the best interests of the Company, its stockholders and other relevant
constituencies.

       

      Section
11. This
Amendment shall be deemed to be a contract made under the laws of the State of
Delaware and for all purposes shall be governed by and construed in accordance
with the laws of such State applicable to contracts to be made and performed
entirely within such State.

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      
        
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      Section
12. This
Amendment may be executed in any number of counterparts and each of such
counterparts shall for all purposes be deemed to be an original, and all such
counterparts shall together constitute but one and the same
instrument.

       

      Section
13. If any
term, provision, covenant or restriction of this Amendment is held by a court of
competent jurisdiction or other authority to be invalid, void or unenforceable,
the remainder of the terms, provisions, covenants and restrictions of this
Amendment shall remain in full force and effect and shall in no way be affected,
impaired or invalidated.

       

      Section
14. Capitalized
terms used herein but not defined shall have the meanings given to them in the
Rights Agreement.

       

      

       

      [signature
page(s) follow(s)]

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      
        
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      IN
WITNESS WHEREOF, the parties to this Amendment have caused this Amendment to be
duly executed as of the date first written above.

       

      HANCOCK
FABRICS, INC.

       

      By: /s/                                                
                                                              

       

      Name: 
_____________________                                                               

       

      Title: ______________________                                                               

       

       

       

      CONTINENTAL
STOCK TRANSFER & TRUST COMPANY

       

      By:   /s/                                                                                                              

       

      Name: _____________________                                                               

       

      Title:   _____________________                                                             

       

       

       

       

       

       

       

       

       

      
 

      
11ex101.htm

    EMPLOYMENT
AGREEMENT

     

    This
Agreement is made and effective as of October 1, 2009 ("Effective Date"), by and
between Robert P. Lanza, an individual and a resident of the Commonwealth of
Massachusetts (hereinafter referred to as the "Executive"), and Advanced Cell
Technology, Inc., a Delaware corporation, and having a place of business at
Worcester, MA (hereinafter referred to as the "Company") and its parent,
Advanced Cell Technology Holdings, Inc., a Nevada Corporation.

     

    RECITALS

     

    A. Prior to
the Effective Date of this Agreement, Executive has been employed as the Chief
Scientific Officer ("CSO") of Company.

     

    B. Company
desires to continue the employment of Executive as CSO of Company, and Executive
desires to continue to be employed as CSO of Company, all on the terms and
subject to the conditions provided for in this Agreement.

     

    NOW
THEREFORE, in consideration of the foregoing, for the mutual covenants contained
in this Agreement, and for other valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Company and Executive hereby agree
as follows:

     

    1. Engagement. Company hereby
agrees to continue the employment of Executive, and Executive hereby agrees to
continue to be employed by Company, during the Term (as
hereinafter defined), on the terms and subject to the conditions
expressly provided for in this Agreement.

     

    2. Duties.

     

    2.1
During the Term of this Agreement, Executive shall serve as CSO of Company and
shall perform the duties generally performed by chief scientific officers of
similarly situated companies. As CSO, Executive will be in charge of all
scientific matters and operations of Company, and will report to the Chief
Executive Officer of Company. Executive shall perform his duties at such places
and times as the Company may reasonably prescribe, it being understood that
these duties are initially intended to be performed primarily in Massachusetts,
but may require domestic and international travel during the Term.

     

    2.2
Executive shall devote his professional time (adjustable to accommodate an
appointment with Stem Cell & Regenerative Medicine International, which is a
joint venture between Company and CHA Biotech Co.) and best efforts to the
performance of his duties for the Company.

     

    3. Term and
Termination.

     

    3.1 Term:
The term of this Agreement and Executive's employment hereunder will be deemed
to have commenced on the Effective Date of this Agreement (October 1, 2009) (the
"Commencement Date") and will continue for two (2) years through October 1, 2011
(the "Employment Term") unless sooner terminated as set forth in Section 3.2 of
this Agreement. Upon expiration of the Employment Term, the parties may by
mutual agreement renew this Agit:m=1d. At any time either during the Term of
this Agreement, or upon expiration of the Employment Term, the parties may by
mutual agreement renew or extend the Term this Agreement and the Employment
Term; provided, however, that any such renewal must be in writing and signed by
both Company and Executive. Upon expiration of the Employment Term, should
Executive continue in the Company's employ and the parties do not execute a
written renewal or new employment agreement, Executive shall be deemed to be an
"at will" employee of Company at the same level of compensation and with the
same insurance and fringe benefits as set forth herein. With the exception of
Sections
6.1 and 7 below, no other terms of this Agreement shall be applicable subsequent
to the Employment Term.

     

    
      
         

      

      
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    3.2
Termination:

     

    (a) This
Agreement, the Employment Term and Executive's employment under this Agreement
shall be terminated upon the earliest to occur of any of the following during
the Term:

     

    (i) the death
of the Executive;

     

    (ii) the
Executive's mental or physical inability to perform his duties on account of
disability or incapacity that continues for a period of six (6) or more
consecutive months, as determined by a physician mutually agreed upon by Company
and Executive.

     

    (iii) written
notice to Executive that the Company (a) is terminating Executive's employment
hereunder without cause, in which case executive will
receive a severance payment of one year's Base salary; or (b) terminating the
Executive's employment hereunder "for cause" (as hereinafter
defined).

     

    (iv) the
termination of Executive's employment by Executive because of a material change
in the duties of Executive at the direction of the Company after written notice
from Executive to the Company of the specific duties and material changes in
Executive's duties to which he objects, the reasons for his objections, and his
intent to terminate his employment because of such material changes, said
written notice to be served on the Company by the Executive within 90 days of
the Executive's knowledge of such alleged material changes, and the Company's
failure to modify within thirty (30) days the duties of the Executive to conform
to those duties currently in existence for the previous 90 days. The sale of the
Company or any other change in control of the Company shall not, in and of
itself, constitute a material change in duties of the Executive. The relocation
by more than 50 miles of Executive will constitute constructive termination of
executive's employment without cause.

     

    (v) the
termination of Executive's employment by Executive atany time for any reason
including, without limitation, resignation or retirement.

     

    (vi) the
termination of Executive's employment by Executive at any time for a material
breach of this Agreement by the Company after written notice of such material
breach to the Company and the Company's failure to cure such breach within
thirty (30) days. In that event, the company should pay the executive one year
salary. If the Executive is terminated as a result of the company being sold,
merged or acquired by another company, the company should pay the executive one
year of salary.

     

    (vii) the
termination of Executive's employment by the Company at any time "for cause,"
such termination to take effect immediately upon written notice from the Company
to Executive. For the purposes of this provision, the term "for cause" shall be
deemed to mean: (i) Executive being convicted of or pleading guilty (or no
contest) to a felony, fraud or convicted of a violation of criminal or civil law
relating to or impacting the Executive's performance of his duties as determined
by the Board of Directors; (ii) the failure of Executive to properly perform
Executive's job responsibilities, as determined reasonably and in good faith by
the Board; "for cause" in this instance will mean that the executive did not
make a reasonable and good faith effort to correct such failure within 30 days
of notification;
(iii)
commission of any act of gross fraud or misconduct with respect to the Company.
Upon such termination for cause, the only obligation the Company will have under
this Agreement will be to pay Executive's unpaid Base Salary accrued through the
date of termination.

     

     

    
      
         

      

      
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    (b) Upon
the termination of this Agreement pursuant to clauses (ii), (iii) except if
terminated for cause, (iv) or (vi) only of Section 3.2 (a), Executive shall be
entitled to receive as a severance payment an amount equal to one (1) year of
his base salary or the salary, payable in regular semi­monthly installments
during the twelve (12) months immediately following the Company's termination of
his employment. During the Term of this Agreement, Company will pay for
disability insurance (at least 70% of Executive's Base Salary provided for in
this Agreement). Any severance payments payable to Executive will continue to be
paid in accordance with the provisions of Section 4 of this Agreement and
Company' s applicable payroll provisions, and shall be reduced by any applicable
withholding requirements.

     

    (c) A
breach by Executive of any undertaking set forth in Section (iii) as it relates
to "for cause" only, (v) or (vi) hereof shall result in an immediate termination
of this Agreement and the rights of Executive hereunder. Upon the termination of
Executive's employment for any reason, by either party, the Executive shall
immediately return to the Company any property of the Company in his possession;
return of this property shall be a precondition to the payment of any further
compensation owed by the Company to the Executive, if any, pursuant to this
Section 3.2 (b ).

     

    4. Compensation. For all
services rendered and to be rendered by Executive under and pursuant to this
Agreement, Company shall pay or provide to Executive:

     

    4.1 Base
Salary: Base salary at the rate of $375,000 per annum, payable in equal
semi-monthly installments in accordance with Company's normal payroll practices,
less any withholdings or deductions Company is required or authorized to make as
Executive's employer. The Base Salary shall be payable by the Company to
Executive in substantially equal installments not less frequently than
semi-monthly (two times per month). At the end of each full year of this
Agreement, the Base Salary shall be increased (but not decreased) by an amount
determined by the Board; provided, however, that each such annual increase will
be not less than the percentage increase in the Consumer Price Index during the
preceding year, provided further, however, that the increase set forth in this
sentence shall never be zero or less. For purposes of this Agreement, the
"Consumer Price Index" as of any particular date means the Consumer Price Index
for Urban Wage Earners and Clerical Workers for the area of the principal office
of Company where Executive performs a majority of his services to Company, all
items, in respect of the month immediately preceding such particular date,
published by the U.S. Department of Labor, Bureau of Labor Statistics, or if
such index is no longer published, the U.S. Department of Labor's most
comprehensive official index then in use that most nearly corresponds to the
index named above.

     

    4.2
Bonuses: The Company may, in its sole discretion, award additional bonuses or
increase Executive's base salary during the Employment Term based upon the
Executive's performance as determined unilaterally by the Company.

     

    4.3
Stock: Following the execution and delivery of this Agreement by Company and
Executive, subject to the approval of any applicable regulatory agencies,
Company will recommend to the Board that Company grant to Executive restricted
common stock of Company in an amount equal to the greater of (a) 20 Million
shares, or (b) three percent (3%) of any newly authorized employee stock pool,
all of which grants will be made by the Board by no later than the January 2010
meeting of the Board. All such stock granted to Executive will be restricted to
provide that Executive cannot sell such
stock; provided, however, that said restriction will be lifted at the rate of
lmillion shares/month. Executive may receive additional future grants of
restricted stock during the Term of this Agreement if determined by the Chief
Executive Officer and approved by the Board, each in their respective sole and
absolute discretion.

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

    All stock
options previously issued to Executive will be deemed to be fully vested (and
all restrictions associated with restricted stock to be issued to Executive
hereunder will be lifted) if Company is sold to, or merged with or acquired by
another company, and Executive is not retained by the acquiring or surviving
company. In addition, vesting of all previously issued stock options will
accelerate by a period of one (1) year from the date on which they would
normally have vested if the company is sold to, merged with or acquired by
another company, and Executive is retained by the acquiring or surviving
company.

     

    5. Executive Benefit Plans; Fringe
Benefits. Upon satisfaction of any applicable eligibility requirements,
Executive shall be entitled to participate in whatever other executive benefit
plans are maintained by Company, and will receive such other fringe benefits at
the same level and on the same terms Company may provide to other "C Level"
Executives of Company. Without limiting the foregoing, Company will purchase a
policy of disability insurance on behalf of Executive that would pay Executive a
minimum of 70% of Executive's Base Salary (adjustable for inflation) upon the
disability of Executive, subject to normal and customary exclusions and waiting
periods.

     

    6. Restrictive Covenants. As a
material part of the consideration to be received by Company under this
Agreement, Executive agrees to the following:

     

    6.1
Confidentiality: Executive agrees to maintain in strictest confidence, and not
to use for any purpose other than in connection with the provision of
Executive's services to Company pursuant to this Agreement, all proprietary data
and other confidential information (whether concerning or belonging to Company
or any of its customers or proposed customers) that is obtained or developed by
Executive in connection with or in the course of his employment with Company.
Such information and data shall include, but not be limited to, Company's trade
secrets, patents, inventions, systems, computer programs and software,
procedures, manuals, confidential reports and communications and lists of
customers and clients, as well as information that Company may obtain from third
parties in confidence or subject to non­disclosure or similar agreements.
All such information and data is and shall at all times during and following the
Term of this Agreement and the Employment Term remain the exclusive property of
Company (or, in certain circumstances, its particular customer) and shall be
used by Executive solely for the benefit of the Company. Any such information
and data in Executive's possession at the time of termination of Executive's
employment with Company, or sooner if requested by Company, shall be promptly
returned to the Company. Executive's obligations under this Section 6.1 shall
survive any termination of this Agreement, the Employment Term or Executive's
employment with Company for any reason.

     

    6.2
Non-Competition: Executive acknowledges that he is a key executive employee of
the Company and that his talents and services are of a special, unique, unusual
and extraordinary character and are of particular and peculiar benefit and
importance to Company. In order for Company to protect its interests against the
competitive use of any confidential information, knowledge or relationships
concerning the Company and its business to which Executive will have access by
virtue of the special nature of his relationship with the Company, and his
involvement in its affairs, and as a material part of the consideration to be
received by Company for entering into this Agreement, and in consideration of
the payments made and to be made to Executive hereunder and the agreements and
undertakings of the parties herein, Executive agrees that, for so long as this
Agreement is in effect or is otherwise employed by Company, and for a period of
one (1) year after this Agreement terminates or Executive leaves the employment
of Company, Executive will not own (by ownership of securities or otherwise),
manage, operate, control, engage in as an equity participant or be employed
by or act as
a consultant to,
or be connected in any manner with, the ownership, management or control
of any business which is competitive with the business presently conducted by
Company or any prospective business under active consideration by Company at the
time of termination. In recognition of the geographic extent of Company's
existing and anticipated operations and the nature of Company's business and
competitive circumstances, except where otherwise prohibited or restricted by
law, the restrictive covenant contained in this Section 6.2 shall apply in the
United States of America.

     

    
      
         

      

      
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    6.3
Solicitation: Executive agrees that, for so long as this Agreement is in effect
or Executive is employed by Company, and for a period of one (1) year after this
Agreement terminates and Executive ceases to be employed by Company, Executive
shall not solicit or induce any employee of Company to leave the employ of
Company, or to hire or attempt to hire any such employee on behalf of Executive
or on behalf of any other person or entity, and Executive further agrees not to
interfere with, disrupt or attempt to disrupt any past, present or prospective
contractual or other relationship between Company and any of its clients,
customers, contactors, suppliers or employees.

     

    6.4
Remedy for Breach: The parties recognize that the services to be rendered under
this Agreement by Executive are special, unique, and of an extraordinary
character, and that in the event of a breach of this Section 6 by Executive,
then Company shall be entitled to institute and prosecute proceedings in any
court of competent jurisdiction in equity, to enforce the specific performance
of any terms, conditions, obligations and requirements of this Section 6,
and/or to
enjoin the Executive from taking or continuing those actions which are or
would constitute a breach of this Agreement, or
to take any or
all of the foregoing actions. Nothing herein contained shall be construed
to prevent the pursuit of any other remedy, judicial or otherwise, in case of
any breach of this Section 6.

     

    7. Inventions/Intellectual
Property and Disclosure of Inventions: Any and all inventions,
discoveries, improvements or intellectual property which Executive has conceived
or made or
may conceive or make during the Term of this Agreement, the Employment
Term
or at any time while Executive is employed by Company relating to or in
any way pertaining to or connected with the systems, products, apparatus, or
methods employed, manufactured, constructed or researched by Company shall be
the sole and exclusive property of Company. The obligations provided for by this
Agreement do not apply to any rights Executive may have acquired in connection
with any rights Executive may have developed entirely on Executive's own time,
so long that it does not relate directly or indirectly to
the business of Company or Company's actual or demonstrable anticipated
research or which does not result from any work performed by Executive for
Company. Executive agrees to immediately disclose to Company all such
improvements, discoveries, or inventions which Executive has made or may make
solely, jointly, or commonly with others. Executive further agrees to assign, as
appropriate, such improvements, discoveries, inventions or intellectual property
to Company, where the rights are the property of Company and agrees to execute
and sign any and all documents, applications, assignments, or
other instruments, and to take all actions, which the Company may deem
necessary or appropriate in order to enable Company, at its
expense, to apply for, prosecute and
obtain Letters of Patent trademarks, copyrights or other applicable
rights, in the United States or any foreign countries for said improvements,
discoveries, inventions or intellectual property, or in order to assign or
convey to or vest in Company the sole and exclusive right, title, and interest
in and to said improvements, discoveries, inventions, or patents.

     

    8. Section
Headings. Section headings contained in this Agreement are for convenience only and shall in no
manner be construed as a part of this Agreement.

     

    9. Amendment.
This Agreement may be amended or modified only in writing signed by both
parties.

    
       

      10. Counterparts.
This Agreement may be executed in two or more counterparts, each of which
shall be deemed to be an original, but all of which together shall constitute
one
and the same instrument.

    

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

     

    11. Waiver.
The failure of either party hereto in any one or more incidences to
insist upon the performance of any of the terms or conditions of this Agreement,
or to exercise any rights or privileges conferred in this Agreement, or the
waiver of any breach of any of the terms of this Agreement, shall not be
construed as waiving any such terms and the same shall continue to remain in
full force and effect as if no such forbearance or waiver had
occurred.

     

    12. Applicable
Law. This Agreement shall be construed according to and governed by the
laws of the State of California, and Executive expressly consents to submit
himself to the jurisdiction of the federal and state courts of the State of
California.

     

    13. Reformation
and Severability. In the event any provision or portion of this Agreement
shall be held invalid or unenforceable by any court of competent jurisdiction,
any such provision or portion may be reformed by the Court so as to make it
valid or enforceable, whereupon the parties agree that said provision or portion
shall be valid and enforceable by or upon them. Any such holding shall not
invalidate or render unenforceable any other term contained in this
Agreement.

     

    14. Entire
Agreement. This Agreement embodies the entire understanding of the
parties with respect to Executive's employment with Company and incorporates any
previous or contemporaneous agreement, arrangements, understandings or
inducements, written or oral, relating to such employment. Executive agrees that
no other promises or representations of any kind were made to him by Company
prior to or coincident with his signing of this Agreement that are not fully
expressed and contained in this Agreement.

     

    15. Assignment
and Successors. This Agreement shall be binding upon Executive, and his
heirs and legal representatives. Executive's rights under this Agreement shall
not be assignable by the Executive, nor may any of Executive's duties hereunder
be delegated, without the prior written consent of Company, which consent may be
given or withheld in the sole and absolute discretion of Company. This Agreement
may be assigned by Company, and shall inure to the benefit of and be binding
upon Company, its successors and assigns.

     

    16. Notices.
Any notice to be given under this Agreement must be in writing and either
delivered in person or sent by first class certified or registered mail, return
receipt requested, postage prepaid, if to the Company, in care of its CEO,
William M. Caldwell, IV do Company at
381 Plantation Street, Worcester, MA 01605, and if to Executive, at his home
address as most recently provided by Executive to Company, or at such other
addresses as either party shall have designated in writing to the other party
hereto in accordance with the provisions of this Section. All notices and other
communication must be in writing and delivered either by personal delivery,
recognized overnight delivery services, via facsimile or electronic mail, or
registered or certified mail, postage prepaid, return receipt requested. Any
such notice will be deemed delivered when either received by the recipient if
personally delivered or if sent via facsimile or electronic mail, or the date
indicate on the delivery receipt if sent via recognized overnight delivery
service or registered or certified mail.

     

    

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

     

    IN
WITNESS WHEREOF, Company has caused its this Agreement to be executed by its
duly authorized corporate officer, and Executive has executed this Agreement,
and the parties have made this Agreement effective as of the Effective Date
first above written, all being done in duplicate originals, with one original
being delivered to each party.

     

    
      
        	
                EXECUTIVE:

                 

                 

              	 	 	      
                ADVANCED
      CELL TECHNOLOGY, INC.

              	 
	
                /s/
      Robert P. Lanza

              	 	 	
                /s/ William
      M. Caldwell, IV

              	 
	
                Robert P. Lanza

                Chief Science Officer 

              	 	 	
                      
                  William
      M. Caldwell, IV

                  Chief
      Executive Officer

                

              	 
	
              	 	 	
              	 

      

    

     

     

     

     

    7

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