Exhibit 10.1
INDEMNIFICATION AGREEMENT
     This is an Indemnification Agreement, dated as of July 9, 2008, entered
into by and among StemCells, Inc., a Delaware corporation, and StemCells
California, Inc., a California corporation, on the one hand (collectively,
“SCI”), and NeuroSpheres Holdings, LTD, an Alberta corporation, on the other
hand (“NHL”).
     WHEREAS, SCI and NHL entered into the 1997 License Agreement, 2000 License
Agreement and various amendments thereto (collectively, the “License
Agreements”);
     WHEREAS, on July 24, 2006, SCI filed suit against Neuralstem, Inc. (“NRLS”)
in the District of Maryland in StemCells, Inc. et al v. Neuralstem, Inc., Civil
Action No. 06-CV-1877 (D. Md.);
     WHEREAS, on May 7, 2008, NRLS filed suit against both SCI and NHL in the
District of Maryland in Neuralstem, Inc. v. StemCells, Inc. et al, Civil Action
No. 08-CV-1173 (D. Md.);
     WHEREAS, on May 7, 2008, SCI filed suit in the Northern District of
California against NLRS, Dr. Garr and Dr. Johe in StemCells, Inc. et al v.
Neuralstem, Inc. et al, Civil Action No. C-08-2364 CW (N.D. Cal.)(together with
the earlier actions identified above, and any appeals or related actions
thereto, collectively, the “Neuralstem Litigation”); and
     WHEREAS, SCI and NHL desire to enter into this Agreement to provide for the
indemnification and representation of NHL in the 08-CV-1173 action;
     NOW, THEREFORE, IT IS AGREED:
     1. SCI agrees to pay for the retention of McDermott, Will & Emery, LLP, for
the defense of NHL in the 08-CV-1173 action. For the avoidance of doubt, this
means that SCI will either reimburse or pay directly all reasonable litigation
costs, expenses, attorney’s fees and related disbursements (but not judgments)
(“Litigation Costs”) incurred by NHL in the 08-CV-1173 action (or any successor
thereof, whether by transfer, consolidation or otherwise). In return for these
commitments, NHL agrees that any and all Litigation Costs paid by SCI in the
08-CV-1173 action (or any successor thereof, whether by transfer, consolidation
or otherwise), including but not limited to amounts paid on behalf of NHL, will
be fully creditable against annual payments, fees, milestones, and royalties
otherwise owed to NHL by SCI, or either of them, under either of the License
Agreements. Any monetary judgments against SCI, or either of them, in the
08-CV-1173 action (or any successor thereof, whether by transfer, consolidation
or otherwise) will likewise be creditable against annual payments, fees,
milestones, and royalties otherwise owed to NHL by SCI. Any damages or
settlement amounts recovered from NRLS in any of the Neuralstem Litigation cases
will be considered Net Sales for the purposes of royalty calculations under the
License Agreements, entitling NHL to 2% thereof; provided, however, that SCI
will be permitted to first deduct from any such amounts the Litigation Costs,
including any payments made to NRLS, incurred in bringing and/or defending the
Neuralstem Litigation, as applicable, but only to the extent that such
Litigation Costs, including any payments made to NRLS, have not already been
credited against annual payments, fees, milestone, and royalties otherwise owed
to NHL by SCI in accordance with this Section 1.

 

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     2. SCI reserves the right to control each of the Neuralstem Litigation
cases, including settlement thereof, and make all decisions effecting this
litigation, with the exception of any issues that may arise which are unique to
NHL and which do not impact on SCI. SCI agrees to keep NHL reasonably apprised
of the status of each of the Neuralstem Litigation cases. In the event a
conflict of interest arises which necessitates NHL ceasing to use the designated
law firm of McDermott, Will & Emery, NHL agrees that SCI may continue to be
represented by the designated law firm. NHL agrees to execute any necessary
waivers needed for the retention of the designated law firm and/or the continued
representation of SCI by the designated law firm in the event of a conflict of
interest.
     3. SCI and NHL agree to execute an engagement letter with the designated
law firm incorporating the terms of this Agreement.
     4. This Indemnification Agreement amends the License Agreements, and is
therefore deemed to be a part thereof. Accordingly, any disputes relating to
this Indemnification Agreement will be resolved in accordance with Section 11 of
the 2000 License Agreement and the provisions of Section 12 of the 2000 License
Agreement are deemed incorporated herein by this reference.
     5. Except as provided herein, all other terms and conditions of the License
Agreements continue in full force and effect as modified hereby.
     6. This agreement may be executed in one or more counterparts, with
signature pages delivered by facsimile or by scanned .pdf, each of which will be
deemed an original as if delivered in person, but all of which together will
constitute one and the same instrument. The persons executing this agreement
represent and warrant that they have the full power and authority to enter into
this agreement on behalf of their respective party.
     IN WITNESS WHEREOF, this Indemnification Agreement has been executed by the
parties on the date first above written.

            StemCells, Inc. and StemCells California Inc.
      By   /s/ Ken Stratton         Name:   Ken Stratton        Title:   General
Counsel        NeuroSpheres Holdings, Ltd.
      By   /s/ Cheryl Whyte         Name:   Cheryl Whyte        Title:   VP
Finance & Administration     

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