EMPLOYMENT AGREEMENT

(b)Executive's employment with Company is on an "at will" basis. This means that the Company may terminate Executive's employment at any time for any reason or no reason, with or without notice, and with or without "Cause" (defined below). Similarly, Executive is free to resign at any time or decline to commence work, for any reason or for no reason, and with or without "Good Reason" (defined below). Notwithstanding the foregoing, the parties acknowledge that, despite Executive's "at will" employment status, the termination of Executive's employment for various reasons shall entitle Executive to receive certain benefits as set forth in Section 10 below in greater detail.

2.   Employment. Executive shall be employed as and hold the title of Chief Executive Officer, Chief Financial Officer and Chairman of the Board from the Effective Date until the date on which a new Chief Executive Officer commences full-time employment with the Company (the "New CEO Start Date") or, if sooner, the date on which Executive's employment is otherwise terminated in accordance with this Agreement. Executive, in his capacity as Chief Executive Officer, wi ll have the full range of executive duties and responsibilities that are customary for public company CEO positions. All Company officers shall report to and take direction from Executive, provided however, that nothing herein shall restrict the Board from conferring directly with Company officers and the Company shall have the right to enter into agreements with Company officers for the Board to determine specific employment-related issues such as compensation and termination. Executive shall have day-to-day responsibility for the affairs of the Company and shall have such other powers and duties as may be from time to time assigned to him by the Board. Executive shall report directly to the Board. All other employees of Company will report, either directly or through other officers of Company, to Executive. Execut ive shall devote substantially all of Executive's time, attention and energies to the business and affairs of the Company; provided, however, the Company acknowledges that Executive is an executive and/or director in the entities listed on Schedule "A" attached hereto, as described therein and may continue in such capacities only so long as such activities do not present any conflicts of interest with the Company.

3.   Base Salary. The Company shall pay Executive an annual salary at the rate of four hundred eighty thousand ($480,000) per year (the "Base Salary"), less applicable deductions. The Base Salary shall be payable by the Company to Executive in substantially equal installments not less frequently than bi-weekly, provided that the first payment hereunder shall include Base Salary retroactive to the Effective Date. The Company's awards of deferred compensation, discretionary bonus, retirement, stock option and other Executive benefit plans and in fringe benefits shall not reduce the Base Salary; provided, however, that voluntary deferrals or contributions by the Executive to such plans agreed to by Executive, if any, shall reduce the current cash compensation paid to Executive.

4.   Performance Bonus; Stock Awards.

(b) The Company shall pay Executive a performance bonus (the "Performance Bonus") in accordance with the terms of this Section 4(b). The target amount of the Performance Bonus shall be $480,000 (i.e., 100% of Base Salary) per year. However, the Performance Bonus shall be no less than $144,000 (i.e., 30% of Base Salary) per year (the "Guaranteed Minimum Bonus") and no more than $720,000 (i.e., 150% of Base Salary) per year.

The actual amount of the Performance Bonus shall be determined by the Compensation Committee of the Board during each calendar year quarter based on the performance of the Company and Executive, with reference to the performance goals and/or metrics established by the Compensation Committee in consultation with Executive with respect to such Performance Bonus period. The Performance Bonus shall be payable to the Executive on a calendar year quarterly basis (with the annual amounts noted above being pro-rated accordingly), commencing with the quarter ending on March 31, 2011, and continuing through the date on which this Agreement is terminated. The Performance Bonus shall be determined by the Compensation Committee and payable to Executive in cash within ten (10) business days after the end of each calendar year quarter. Upon the te rmination of this Agreement for any reason, the Performance Bonus shall be pro-rated on a daily basis based on the number of days during the calendar year quarter in which such termination occurs prior to the date of such termination, over a presumed 91-day quarter.

Notwithstanding the foregoing, if and to the extent that the Performance Bonus exceeds 75% of Base Salary with respect to any period, the Company may satisfy its payment obligations with respect to such excess by granting unrestricted and registered common stock of the Company to Executive with a fair market value (as determined by the Board in good faith) on the date of grant (which grant date shall be no later than ten [10] business days after the end of the quarter) equal to the amount of such excess.

 

(c)On January 3, 2011, the Company shall grant Executive Five Million (5,000,000) shares of restricted common stock of the Company (the "Restricted Shares"). On the date of execution of this Agreement, the Company shall grant Executive a non-qualified option to purchase Five Million (5,000,000) shares of common stock of the Company with an exercise price equal to the per share price of the Company's common stock as of the close of trading on the trading day that the Compensat ion Committee approves the award (the "Stock Option," and together with the Restricted Shares, the "Incentive Awards"). The Incentive Awards shall vest fully, become fully exercisable and not be subject to any further restrictions, on the earliest to occur if: (1) January 1, 2012, provided that Executive is employed by the Company on such date; (2) the New CEO Start Date, provided that Executive is employed by the Company on such date; (3) the occurrence of a "Change of Control" (as defined in the Company's 2005 Stock Option Plan), provided that Executive is employed by the Company on such date; (4) the termination of this Agreement by the Company without Cause, or (5) the termination of this Agreement by Executive for Good Reason. For the avoidance of doubt, and notwithstanding anything to the contrary herein, (x) the Incentive Awards shall not vest if Executive's employment is terminated for Cause or as a result of Executive's death or "Disability" (defined below) pursuant to the terms of this Agreement or Executive resigns without Good Reason, in each case prior to the date on which the Incentive Awards otherwise vest pursuant to clause (1) through clause (3) of the immediately preceding sentence; and (y) in the event that Executive's employment is terminated for Cause or as a result of Execu tive's death or Disability pursuant to the terms of this Agreement or Executive resigns without Good Reason, in each case after the date on which the Incentive Awards otherwise vest pursuant to clause (1) through clause (3) of

The Restricted Shares and the common stock underlying the Stock Option shall be registered by the Company pursuant to the Securities Act of 1933 (on SEC Form S-8) and shall not be subject to any restrictions whatsoever (other than the Company's insider trading and blackout policies, in the event Executive is then deemed to be an "insider") once the Incentive Awards have vested. Without limiting the foregoing, the Stock Option, once vested, shall remain exercisable by Executive for the entire ten-year term of the Stock Option, even if Executive is no longer performing services to the Company prior to the expiration of such ten-year term.

 

The format by which the Restricted Shares shall vest is as follows. The Restricted Shares shall be owned by Executive on the date of grant, subject to the right of the Company to repurchase (the "Repurchase Right") the Restricted Shares for the aggregate consideration of One Dollar ($1.00) in the event that the Restricted Shares do not vest on or before January 1, 2012, in accordance with the first paragraph of this Section 4(c). The Restricted Shares shall become fully vested once the Repurchase Right has lapsed. In all events the Repurchase Right shall lapse, and may not be exercised by the Company, at any time after January 2, 2012.

The parties understand that the Incentive Awards may be documented pursuant to separate award/grant agreements or notices. In such event, the Company agrees to prepare any separate agreements or notices consistent with the provisions of this Agreement.

(a) Executive and his spouse and dependents shall be entitled to participate in the Company's health insurance program and the Company shall pay all premiums for said insurance for Executive and his spouse and dependents under the applicable plans. However, as of the Effective Date, the Executive does not plan to participate in this program as he is covered by another health insurance program. However, Executive may opt to join this program at any time.

(b) In addition to the foregoing, Executive shall be entitled to participate with other key executive officers of the Company based on position, tenure and salary in any plan of the Company relating to stock purchases, pension, thrift, profit sharing, life insurance, disability insurance, education, or other retirement or Executive benefits that the Company has adopted or may hereafter adopt for the benefit of its executive officers.

(c) Executive shall be reimbursed for his legal fees incurred in connection with negotiating and drafting this Agreement up to a maximum of $10,000.

 

7.           Business Expenses. During such time as Executive is rendering services hereunder, Executive shall be entitled to incur and be reimbursed by the Company for all reasonable business expenses, including but not limited to, at least business class airfare while traveling at least 1,000 miles from Executive's home city (at least coach class for travel under 1,000 miles), first class hotel accommodations, ground transportation while traveling, reasonable meals or an agreed upon per diem while traveling, mobile telephone and text messaging charges. The Company agrees that it will reimburse Executive for all such expenses upon the presentation by Executive, on a monthly basis, of an itemized statement of such expenditures setting forth the date, the purposes for which incurred, and the amounts thereof, together with such receipts showing payments in conformity with the Company's established policies. Reimbursement for approved expenses shall be made within a reasonable period not to exceed 30 days after the receipt of foregoing statements and supporting documentation.

8.           Indemnity. Company shall to the extent permitted and required by law, indemnify and hold Executive harmless from costs, expense or liability arising out of or relating to any acts or decisions made by Executive in the course of his employment to the same extent Company indemnifies and holds harmless other officers and directors of Compa ny in accordance with Company's established policies. This indemnity shall include, without limitation, advancing Executive attorneys fees to the fullest extent permitted by applicable law. Company agrees to continuously maintain Directors and Officers Liability Insurance with limits of coverage the same as currently in effect, unless a change is mutually agreed upon by Executive and the Board of Directors of Company, and to include Executive within said coverage while Executive is employed by Company and for at least thirty-six (36) months after the termination of Executive's employment by Company.

(ii)a lump-sum payment equal to the positive difference (if any) between (A) $480,000 (i.e., Base Salary for six months plus a deemed Performance Bonus for six months at "target"), minus (B) the total amount of Base Salary and Performance Bonus paid to Executive under this Agreement prior to the date of termination, including the amounts paid to Executive under Section 10.4(a) above but specifically not including any amounts paid to Executive for transition services under Section 10.7 below; and

a. (I) any reduction in Executive's then-current Base Salary or any material reduction in Executive's comprehensive benefit package (other than changes, if any, required by group insurance carriers applicable to all persons covered under such plans or changes required under applicable law), without Executive's prior written consent, or (2) the assignment to Executive of duties that represent or constitute a material adverse change in Executive's position, duties, responsibilities and status with Company immediately prior to a Change in Control, without Executive's prior written consent, or (3) a material adverse change in Executive's reporting responsibilities, titles, offices, or any removal of Executive from, or any failure to re-elect Executive to, any of such positions; except in connection with the termination of Executive's employment for Cause, upon the disability or death of Executive, or upon the voluntary termination by Executive;

b. the relocation of Executive's place of employment from the location at which Executive was principally employed immediately prior to the date of the Change in Control to a location more than 50 miles from such location, without Executive's prior written consent; or c.the failure of any successor to Company to assume and agree to perform Company's o bligations under this Agreement; or

11.4 Non-solicitation. Executive understands and agrees that in the course of employment with Company, Executive will obtain access to and/or acquire Company trade secrets, including Confidential Information, which are solely the property of Company. Therefore, to protect such trade secrets, Executive promises and agrees that during the term of this Agreement, and for a period of six (6) months thereafter, he will not solicit or assist or instruct others in soliciting any employees of Company or any of its present or future subsidiaries or affiliates, to divert their employment or business to or with any individual, partnership, firm, corporation or other entity then in competition with the business of Company, or any subs idiary or affiliate of Company.

Company:           Executive:

Advanced Cell Technology, Inc. 381 Plantation Street Biotech V. Worcester, Massachusetts 09605 Attention: Rita Parker   Gary H. Rabin 330 N. Carmelina Ave. Los Angeles, California 90049   With a copy (which shall not constitute notice) to:   Jackoway Tyerman Wertheimer Austen Mandelbaum Morris & Klein, P.C. 1925 Century Park East, 22nd Floor Los Angeles, California 90067 Attention: Alan J. Epstein, Esq.

13.           Amendments or Additions. No amendment or additions to this Agreement shall be binding unless in writing and signed by both parties hereto.

 

14.           Section Headings. The section headings used in this Agreement are included solely for convenience and shall not affect, or be used in connection with, the interpretation of this Agreement.

 

15.           Severability. The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions hereof.

 

16.           Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed to be an original, but both of which together will constitute one and the same instrument.

 

17.           Arbitration. Except as provided herein, any controversy or claim arising out of or relating in any way to this Agreement or the breach thereof, or Executive's employment and any statutory claims including all claims of employment discrimination shall be subject to private and confidential arbitration in Los Angeles County, California in accordance wit h the laws of the State of California. The arbitration shall be conducted in a procedurally fair manner by a mutually agreed upon neutral arbitrator selected in accordance with the National Rules for the Resolution of Employment Disputes ("Rules") of the American Arbitration Association or if none can be mutually agreed upon, then by one arbitrator appointed pursuant to the Rules. The arbitration shall be conducted confidentially in accordance with the Rules. The arbitration fees shall be paid by the Company. Each party shall have the right to conduct discovery including depositions, requests for production of documents and such other discovery as permitted under the Rules or ordered by the arbitrator. The statute of limitations or any cause of action shall be that prescribed by law. The arbitrator shall have the authority to award any damages authorized by law for the claims presented including punitive damages and sh all have the authority to award reasonable attorneys fees to the prevailing party in accordance with applicable law. The decision of the arbitrator shall be final and binding on all parties and shall be the exclusive remedy of the parties. The award shall be in writing in accordance with the Rules, and shall be subject to judicial enforcement in accordance with California law. Notwithstanding anything to the contrary contained in this Section, nothing herein shall prevent or restrict the Company or Executive from seeking provisional injunctive relief from any forum having competent jurisdiction over the parties.

 

18.   Section 409A. This Agreement is intended to comply with Code Section 409A and will be interpreted in a manner intended to comply with Code Section 409A. To the extent any reimbursements or in-kind benefits due to Executive under this Agreement constitute "deferred compen sation" under Section 409A of the Code, any such reimbursements or in-kind benefits shall be paid to Executive in a manner consistent with Treas. Reg. Section 1.409A-3(i)(1)(iv). Each payment made under this Agreement shall be designated as a "separate payment" within the meaning of Section 409A of the Code. Notwithstanding anything herein to the contrary, if any payment of money or other benefits due to Executive hereunder could cause the application of an accelerated or additional tax under Section 409A of the Code, Company, in its reasonable discretion, may decide such payments or other benefits shall be deferred if deferral will make such payment or other benefits compliant under Section 409A of the Code ("a 409A Tax"), or otherwise such payment or other benefits shall be restructured, to the exten t possible, in a manner, determined by Company that does not cause such accelerated or additional tax. In addition, to the extent Executive is a "specified employee" as defined in Section 409A of the Code as of the earlier of a "separation from service" (as defined in Code Section 409A and the regulations promulgated thereunder) or the date of termination of Executive's employment, and the deferral of the commencement of any compensation or benefits otherwise payable under this Agreement, or any other applicable separation program or plan, as a result of such "separation from service" or termination of employment is necessary in order to prevent a 409A Tax, then Company will postpone the commencement of such payment of any such compensations or benefits until the first business day of the seventh month following Executive's termination date (the "Delayed Payment Date"). Payment of the withheld and accumulated payments (with interest as calculated below) shall be treated as made on the Delayed Payment Date if the payment is made on such date or on a later date within the same calendar year as the Delayed Payment Date, or, if later, by the 15th day of the third month following the Delayed Payment Date, provided that Executive may not, directly or indirectly, designate the year of payment. In the event that this Paragraph 14(d) requires a delay of any payment or benefit, such payment shal l be accumulated and paid in a single lump sum on the Delayed Payment Date, with interest for the period of delay, compounded monthly, equal to the prime or base lending rate then in effect as of the date the payment would have otherwise been made. Company shall consult with Executive in good faith regarding the implementation of the provisions of this Paragraph, but Company shall determine the terms of any such implementation. Executive acknowledges that Executive has been advised to obtain independent legal, tax or other counsel in connection with 409A, and that Executive has done so to the extent that you deemed necessary or appropriate.

19.   Miscellaneous. No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by Executive and such officer as may be specifically designated by the Board. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. No agreements or rep resentations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not expressly set forth in this Agreement. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of California without regard to its conflicts of law principles. All references to sections of the Exchange Act shall be deemed also to refer to any successor provisions to such sections. This Agreement may be executed in counterparts, each of which shall constitute an original but all of which, taken together, shall constitute one document.