Scimitar Equity Blog

     Pursuant to the Settlement Agreement,

upon tender by Midsummer to ACTC of warrants held by Midsummer to purchase a total of 20,319,731 shares of the common stock and duly executed notices of exercise ACTC.OB, to settle errors involving warrant issuances to Midsummer agreed to:

• Deliver to Midsummer an aggregate of 36,000,000 shares as an exercise of the warrants in respect of a partial exercise of warrants,
• Undertake to issue 30,585,774 additional shares of ACT’s common stock as an exercise of the remainder of the warrants within 10 days of the date that ACT shall have sufficient authorized and unissued shares of common tock which are not otherwise reserved for issuance for other purposes to enable ACT to issue all of the future shares and
• Issue 3,058,577 shares of common stock for every calendar month elapsed between the date of delivery of the current shares and the date following delivery of the future shares.
• On 8/8/11, ACT issued a press release announced its financial results for the quarter ended 6/30/11 and certain other information. In accordance with General Instruction B.2 of Form 8-K, the information in this Item 2.02 of Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed to be “filed”.

ACT 7/1/11 further entered into an amended and restated employment agreement with Gary H. Rabin, a director of ACT since 12/07 and interim CEO since 12/10. Mr. Rabin will serve as ACT’S CEO and CFO until 12/31/13. ACT will pay Mr. Rabin a base salary of $500,000 per year, through 12/31/11, which amount shall increase at the end of each year by an amount determined by the board, but by not less than 5% per year; agreed to pay Mr. Rabin a retention bonus of $41,667; shall also pay Mr. Rabin an annual incentive bonus, which will be calculated by reference to the 10-day volume weighted average price of common stock; shall also pay Mr. Rabin a performance bonus in amount (not less than $100,000 per year) to be determined by the Compensation Committee of the Board of Directors; agreed to issue to Mr. Rabin: 10,000,000 shares of common stock, an option to purchase 10,000,000 shares of common stock with an exercise price equal to fair market value on the date of grant, an option to purchase 5,000,000 shares of common stock with an exercise price of $0.30, and an option to purchase 5,000,000 shares of common stock with an exercise price of $0.45. The options will vest, and the shares will no longer be subject to the right to repurchase for aggregate consideration of $1.00, in equal installments on the last day of each calendar quarter commencing on 7/1/11 and ending on 12/31/13. Furthermore, if Mr. Rabin’s employment were to be terminated without cause (as defined therein), ACT will pay Mr. Rabin (in addition to unpaid base salary, performance bonus and incentive bonus to the date of termination), a lump sum equal to the aggregate installments of base salary in effect on the date of termination and otherwise payable in respect of the period commencing on the date immediately subsequent to the date of termination and ending on the earlier to occur of the first anniversary of such date and 12/31/13.

ACT 7/1/11 also entered into an amended and restated employment agreement with Robert Lanza, CSO since 10/07. Dr. Lanza will continue serve until 9/30/13 (subject to earlier termination as provided therein, and extension by mutual written agreement). ACT will pay Dr. Lanza a base salary of $440,000 per year, which amount shall increase at the end of each year by an amount determined by the board, but by not less than 5% per year. ACT may also pay Dr. Lanza annual bonuses by sole discretion.  ACT agreed to issue to Dr. Lanza: 15,000,000 shares of common stock (of which 6,000,000 shares will vest on the date of grant, with the balance of 9,000,000 shares vesting in equal installments on the last day of each month commencing on 1/31/12 and ending on 9/30/13): an option to purchase 15,000,000 shares of common stock with an exercise price equal to the closing price on the date of execution (of which 6,000,000 options will vest on the date of grant, with the balance of 9,000,000 options vesting in equal installments on the last day of each month commencing on 1/31/12 and ending on 9/30/13).

The Bottom Line: WOW, I am at a loss for words …