EXHIBIT 10.2
 
INTERNATIONAL STEM CELL CORPORATION
 
CERTIFICATE OF DESIGNATIONS OF PREFERENCES,
RIGHTS AND LIMITATIONS
OF
SERIES E PREFERRED STOCK
 
The undersigned, Kenneth C. Aldrich and William B. Adams, do hereby certify
that:
 
1.    They are the Chief Executive Officer and Secretary, respectively, of
International Stem Cell Corporation, a Delaware corporation (the “Corporation”).
 
2.           The Corporation is authorized to issue 20,000,000 shares of
preferred stock, 3,400,040 of which have been issued or are outstanding.
 
3.           The following resolutions were duly adopted by the Board of
Directors:
 
WHEREAS, the Certificate of Incorporation of the Corporation provides for a
class of its authorized stock known as preferred stock, comprised of 20,000,000
shares, $0.001 par value per share, issuable from time to time in one or more
series;
 
WHEREAS, the Board of Directors of the Corporation is authorized to fix the
dividend rights, dividend rate, voting rights, conversion rights, rights and
terms of redemption and liquidation preferences of any wholly unissued series of
preferred stock and the number of shares constituting any series and the
designation thereof, of any of them; and
 
WHEREAS, it is the desire of the Board of Directors of the Corporation, pursuant
to its authority as aforesaid, to fix the rights, preferences, restrictions and
other matters relating to a series of preferred stock, which shall consist of up
to 500 shares of the preferred stock which the Corporation has the authority to
issue, as follows:
 
NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors does hereby provide
for the issuance of a series of preferred stock for cash or exchange of other
securities, rights or property and does hereby fix and determine the rights,
preferences, restrictions and other matters relating to such series of preferred
stock as follows:
 
TERMS OF PREFERRED STOCK
 
1.    Designation, Amount and Par Value.  The series of preferred stock shall be
designated as the Corporation’s Series E Preferred Stock (the “Series E
Preferred Stock”) and the number of shares so designated shall be 500 (which
shall not be subject to increase without the consent of all of the holders of
the Series E Preferred Stock (each a “Holder” and collectively, the
“Holders”).  Each share of Series E Preferred Stock shall have a par value of
$0.001 per share.
 
 
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2.    Dividends and Other Distributions.  Commencing on the date of the issuance
of any such shares of Series E Preferred Stock (each respectively an “Issuance
Date”), Holders of Series E Preferred Stock shall be entitled to receive
dividends on each outstanding share of Series E Preferred Stock (“Dividends”),
which shall accrue in shares of Series E Preferred Stock on a daily basis at a
rate equal to 10.0% per annum.
 
a.    Any calculation of the amount of such Dividends payable pursuant to the
provisions of this Section 2 shall be made based on a 365-day year and on the
number of days actually elapsed during the applicable calendar quarter,
compounded annually.
 
b.    So long as any shares of Series E Preferred Stock are outstanding, no
dividends or other distributions will be paid, declared or set apart with
respect to any Junior Securities (as defined below).  As used herein, “Junior
Securities” means any series or class of the capital stock of the Corporation
now or hereafter authorized or issued by the Corporation ranking junior to the
Series E Preferred Stock with respect to dividends or distributions or upon the
liquidation, distribution of assets, dissolution or winding-up of the
Corporation, including, without limitation, the Corporation’s common stock, par
value $0.001 per share (“Common Stock”); provided that notwithstanding the
foregoing the Corporation may pay, declare or set apart any dividend or
distribution required to be paid on any shares of Series D Preferred Stock or
other preferred stock.  The Common Stock shall not be redeemed while the Series
E Preferred Stock is outstanding.
 
3.    Protective Provision.  So long as any shares of Series E Preferred Stock
are outstanding, the Corporation shall not, without the affirmative approval of
the Holders of a majority of the shares of the Series E Preferred Stock then
outstanding, (a) alter or change adversely the powers, preferences or rights
given to the Series E Preferred Stock or alter or amend this Certificate of
Designations, (b) authorize or create any class of stock ranking as to
distribution of assets upon a liquidation senior to the Series E Preferred
Stock, (c) amend its certificate or articles of incorporation or other charter
documents in breach of any of the provisions hereof, (d) increase the authorized
number of shares of Series E Preferred Stock, (e) liquidate, dissolve or wind-up
the business and affairs of the  Corporation, or effect any Deemed Liquidation
Event (as defined below), or (f) enter into any agreement with respect to the
foregoing.
 
a.    A “Deemed Liquidation Event” shall mean: (i) a merger or consolidation in
which the Corporation is a constituent party or a subsidiary of the Corporation
is a constituent party and the Corporation issues shares of its capital stock
pursuant to such merger or consolidation, except any such merger or
consolidation involving the Corporation or a subsidiary in which the shares of
capital stock of the Corporation outstanding immediately prior to such merger or
consolidation continue to represent, or are converted into or exchanged for
shares of capital stock that represent, immediately following such merger or
consolidation, at least a majority, by voting power, of the capital stock of the
surviving or resulting corporation or if the surviving or resulting corporation
is a wholly owned subsidiary of another corporation immediately following such
merger or consolidation, the parent corporation of such surviving or resulting
corporation; or (ii) the sale, lease, transfer, exclusive license or other
disposition, in a single transaction or series of related transactions, by the
Corporation or any subsidiary of the Corporation of all or substantially all the
assets of the Corporation and its subsidiaries taken as a whole,  or the sale or
disposition (whether by merger or otherwise) of one or more subsidiaries of the
Corporation if substantially all of the assets of the Corporation and its
subsidiaries taken as a whole are held by such subsidiary or subsidiaries,
except where such sale, lease, transfer, exclusive license or other disposition
is to a wholly owned subsidiary of the Corporation.
 
 
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b.    The Corporation shall not have the power to effect a Deemed Liquidation
Event referred to in Section 3.a unless the agreement or plan of merger or
consolidation for such transaction provides that the consideration payable to
the stockholders of the Corporation shall be allocated among the holders of
capital stock of the Corporation in accordance with Section 4
 
4.    Liquidation.
 
a.    Upon any liquidation, dissolution or winding up of the Corporation,
whether voluntary or involuntary, after payment or provision for payment of
debts and other liabilities of the Corporation, before any distribution or
payment shall be made to the holders of any other equity securities of the
Corporation by reason of their ownership thereof, the Holders of Series E
Preferred Stock shall first be entitled to be paid out of the assets of the
Corporation available for distribution to its stockholders an amount with
respect to each share of Series E Preferred Stock equal to $10,000.00 (the
“Original Series E Issue Price”), plus any accrued but unpaid Dividends thereon
(collectively, the “Series E Liquidation Value”).
 
b.    After payment has been made to the Holders of the Series E Preferred Stock
of the full amount of the Series E Liquidation Value, any remaining assets of
the Corporation shall be distributed among the holders of the Corporation's
Junior Securities in accordance with the Corporation’s  Certificates of
Designation and Certificate of Incorporation, as amended.
 
c.    If, upon any liquidation, dissolution or winding up of the Corporation,
the assets of the Corporation shall be insufficient to make payment in full to
all Holders, then such assets shall be distributed among the Holders at the time
outstanding, ratably in proportion to the full amounts to which they would
otherwise be respectively entitled.
 
5.    Redemption.
 
a.    Corporation's Redemption Option.  Upon or after the first anniversary of
the initial Issuance Date, the Corporation shall have the right, at the
Corporation's option, to redeem all or a portion of the shares of Series E
Preferred Stock, at a price per share of Series E Preferred Stock (the
“Corporation Redemption Price”) equal to the Series E Liquidation Value plus the
following percentages of the Original Series E Issue Price determined by
reference to the original Issuance Date of such shares of Series E Preferred
Stock:

 

  If the redemption occurs
Additional percentage
           
After first anniversary of issuance but prior to second anniversary of issuance
26%
           
After second anniversary of issuance but prior to third anniversary of issuance
17%
           
After third anniversary of issuance but prior to fourth anniversary of issuance
8%
           
After fourth anniversary of issuance
0%
 

 
 
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b.    Mechanics of Redemption.  If the Corporation elects to redeem any of the
Holders' Series E Preferred Stock then outstanding by delivering written notice
thereof via facsimile and overnight courier (“Notice of Redemption at Option of
Corporation”) to the Holder, which Notice of Redemption at Option of Corporation
shall indicate (A) the number of shares of Series E Preferred Stock that the
Corporation is electing to redeem and (B) the Corporation Redemption Price.
 
c.    Payment of Redemption Price.  Upon receipt of a Notice of Redemption at
Option of Corporation by any Holder, such Holder shall promptly submit to the
Corporation such Holder’s Series E Preferred Stock certificates.  Upon receipt
of such Holder’s Series E Preferred Stock certificates, the Corporation shall
pay the Corporation Redemption Price in cash to such Holder.
 
6.    Transferability. The Series E Preferred Stock may only be sold,
transferred, assigned, pledged or otherwise disposed of (“Transfer”) in
accordance with state and federal securities laws.  The Corporation shall keep
at its principal office, or at the offices of a transfer agent, a register of
the Series E Preferred Stock.  Upon the surrender of any certificate
representing Series E Preferred Stock at such place, the Corporation, at the
request of the record Holder of such certificate, shall execute and deliver (at
the Corporation's expense) a new certificate or certificates in exchange
therefor representing in the aggregate the number of shares represented by the
surrendered certificate.  Each such new certificate shall be registered in such
name and shall represent such number of shares as is requested by the Holder of
the surrendered certificate and shall be substantially identical in form to the
surrendered certificate.
 
7.    Miscellaneous.
 
a.    Notices.  Any and all notices to the Corporation shall be addressed to the
Corporation's President at the Corporation's principal place of business on file
with the Secretary of State of the State of Delaware.  Any and all notices or
other communications or deliveries to be provided by the Corporation to any
Holder hereunder shall be in writing and delivered personally, by facsimile,
sent by a nationally recognized overnight courier service addressed to each
Holder at the facsimile telephone number or address of such Holder appearing on
the books of the Corporation, or if no such facsimile telephone number or
address appears, at the principal place of business of the Holder. Any notice or
other communication or deliveries hereunder shall be deemed given and effective
on the earliest of (i) the date of transmission, if such notice or communication
is delivered via facsimile at the facsimile telephone number specified in this
Section 7.a prior to 5:30 p.m.  (New York City time), (ii) the date after the
date of transmission, if such notice or communication is delivered via facsimile
at the facsimile telephone number specified in this Section 7.a no later than
5:30 p.m.  (New York City time) on any date and earlier than 11:59
p.m.  (New York City time) on such date, (iii) the second business day following
the date of mailing, if sent by nationally recognized overnight courier service,
or (iv) upon actual receipt by the party to whom such notice is required to be
given.
 
 
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b.    Lost or Mutilated Preferred Stock Certificate.  Upon receipt of evidence
reasonably satisfactory to the Corporation (an affidavit of the registered
Holder shall be satisfactory) of the ownership and the loss, theft, destruction
or mutilation of any certificate evidencing shares of Series E Preferred Stock,
and in the case of any such loss, theft or destruction upon receipt of indemnity
reasonably satisfactory to the Corporation (provided that if the Holder is a
financial institution or other institutional investor its own agreement shall be
satisfactory) or in the case of any such mutilation upon surrender of such
certificate, the Corporation, shall execute and deliver in lieu of such
certificate a new certificate of like kind representing the number of shares of
such class represented by such lost, stolen, destroyed or mutilated certificate
and dated the date of such lost, stolen, destroyed or mutilated certificate.
 
c.    Headings.  The headings contained herein are for convenience only, do not
constitute a part of this Certificate of Designations and shall not be deemed to
limit or affect any of the provisions hereof.
 
RESOLVED, FURTHER, that the Chairman, the president or any vice-president, and
the secretary or any assistant secretary, of the Corporation be and they hereby
are authorized and directed to prepare and file a Designation of Preferences,
Rights and Limitations of Series E Preferred Stock in accordance with the
foregoing resolution and the provisions of Delaware law.
 
IN WITNESS WHEREOF, the undersigned have executed this Certificate this 30 of
June 2009.
 
 

/s/ Kenneth C. Aldrich        
Kenneth C. Aldrich
Chief Executive Officer
                            /s/ William B. Adams        
William B. Adams
Secretary
       

 
 
 
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