Cellular Dynamics International, Inc.
University Research Park
525 Science Drive, Suite 200
Madison, WI 53711

January 9, 2015

Mr. Timothy D. Daley
4126 Meyer Avenue
Madison, WI 53711

Dear Mr. Daley:

This letter (when executed and delivered by you as contemplated below, “this
Agreement”) will amend and restate terms and conditions of your employment by
Cellular Dynamics International, Inc. (the “Company”) as set forth in the
agreement dated July 10, 2014 between us (the “Interim CFO Agreement”) for the
period commencing upon your Change in Status Date (as defined below). They are
as follows:

1.    Term of Employment and Duties
(a)    Term. You are employed by the Company as Vice President, Chief Financial
Officer, and Treasurer of the Company. Your employment in such capacity begins
on January 9, 2015 (your “Change in Status Date”) and shall continue until
terminated pursuant to Paragraph 4.
(b)    Employment Duties. During the term of your employment commencing upon
your Change in Status Date, you agree to devote your best efforts and skill and
all of your business time and attention to the business and affairs of the
Company as required by its business needs. You will report to the Chief
Executive Officer (“CEO”) and/or the President of the Company and, as
appropriate, Board of Directors of the Company (the “Board of Directors”). You
will be the chief financial officer of the Company. You will have the duties and
responsibilities typically associated with such position and accordingly will be
generally responsible for the Company’s financial reporting, internal controls,
corporate treasury, tax, budgeting and other accounting and finance matters. You
also will have responsibility for other employees who are performing such
services for the Company. You shall perform such other duties as may be assigned
to you from time to time by or under authority of the Board of Directors and/or
to the Chief Executive Officer and/or the President of the Company, consistent
with the foregoing. You will be designated an executive officer of CDI for
purposes of the federal securities laws.

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2.    Compensation
(a)    Base Salary. During the term of your employment, the Company will pay you
a salary at the rate of $390,000 per year.
(b)    Incentive Bonus. During the term of your employment and commencing for
the calendar year 2015, in addition to the base salary as provided in Paragraph
2(a), you will be entitled to an annual bonus or annual incentive for each year
based on goals and objectives established at the beginning of the year in the
good faith discretion of the President, the Board of Directors or its
Compensation Committee, with target bonus equal to 35% of base salary. For
avoidance of doubt, for 2014, the Company may pay a fixed bonus to you as
contemplated in the Interim CFO Agreement.
(c)    Payments; Withholding and Other Taxes. Except as may be expressly
otherwise provided herein or in any plan, program or agreement pursuant to which
any such other compensation is payable, your salary and any and all bonus or
other compensation due hereunder shall be payable according to the regular
payroll practices of the Company. The Company will deduct from the payments to
be made to you under this Agreement any Federal, State or local withholding or
other taxes or charges which the Company is from time to time required to deduct
under applicable law, and all amounts payable to you under this Agreement are
stated before any such deduction.
(d)    Stock Options. You shall participate in the Company’s 2013 Equity
Incentive Plan (the “Plan”) as determined by the Board of Directors or its
Compensation Committee in its sole discretion except as expressly set forth
below in this paragraph. The Company has granted you an option to purchase
23,000 shares of the Company’s Common Stock on the terms set out in the Stock
Option Agreement between you and the Company that is being executed and
delivered contemporaneously with this Agreement. You will be eligible to receive
an additional option grant in 2015 generally on the same terms and conditions as
any option grants would be made to the Company’s other senior executive officers
(other than its CEO and President).
3.    Expenses and Benefits
(a)    Employee Expenses. The Company will pay or reimburse you for all
reasonable expenses, e.g., automobile, travel, entertainment, continuing
professional education and like expenses, ordinarily and necessarily incurred by
you in furtherance of the Company’s business upon submission of such
substantiation as may be required under, and otherwise in accordance with, the
Company’s expense reimbursement policy in effect from time to time with respect
to the Company’s senior executive officers.
(b)    Fringe Benefits. During the term of your employment, you will be entitled
to participate in any health insurance, disability insurance, retirement, and
other similar fringe benefit plans of the kinds and in the amounts now or at any
time during such term provided generally to senior executive officers of the
Company in accordance with the respective terms and conditions thereof on which
such officers participate in such plans. You acknowledge that you have no rights
in any such plans except as expressly provided under the terms of such plans and
that such plans may be terminated, modified or supplemented at any time. You
also will be entitled to paid time off and vacations during the term of your
employment in accordance with

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the Company’s policies as in effect from time to time for senior executive
officers of the Company, but in any event no less than four weeks of such
vacation per year. Copies of any plans or other documents describing these
benefits will be provided to you upon request.
(c)    Effect of Benefits; Timing of Payment. In no event will the
reimbursements or in-kind benefits to be provided by the Company pursuant to
this Agreement in one taxable year affect the amount of reimbursements or
in-kind benefits to be provided in any other taxable year, nor will your right
to reimbursement or in-kind benefits be subject to liquidation or exchange for
another benefit. Further, any reimbursements to be provided by the Company
pursuant to this Agreement shall be paid to you no later than the calendar year
following the calendar year in which you incur the expenses.
4.    Employment at Will; Termination.
(a)    At Will Relationship. Your employment by the Company is at will and may
be terminated at any time, upon thirty (30) days prior written notice, by you or
by the Company for any reason or no reason. Nothing contained in this Agreement,
the Interim CFO Agreement or the Employment, Confidential Information, Invention
Assignment and Arbitration Agreement entered into under the Interim CFO
Agreement (the “Restrictive Agreement”) will be construed as conferring upon you
any right to remain employed by the Company or affect the right of the Company
to terminate your employment at any time.
(b)    Notice of Termination. Any termination of your employment by the Company
and/or its subsidiaries, or termination by you for Good Reason will be
communicated by Notice of Termination to the other party hereto. A “Notice of
Termination” means a written notice which specifies a Date of Termination (which
date shall be on or after the date of the Notice of Termination) and, if
applicable, indicates the provision in this Agreement applying to the
termination and sets forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of your employment under the
provision so indicated.
5.    Compensation and Benefits upon Termination.
(a)    Payments and Benefits. Upon your termination of employment, the Company
will pay to you (i) your salary through your Date of Termination, (ii) your
unpaid annual incentive compensation or annual bonus, if any, attributable to
any fiscal year of the Company ended before the Date of Termination (unless
termination was for Cause in which case no annual incentive compensation or
annual bonus will be paid), (iii) such other benefits in which you are vested or
are otherwise entitled under the terms of the applicable plans and arrangements
through the Date of Termination including without limitation reimbursement of
your business expenses that are reimbursable pursuant to Paragraph 3(a) but have
not been reimbursed by the Company as of the date of termination (the foregoing
being collectively the “Accrued Benefits”), and (iv) if such termination is
(A) by the Company other than in the event of Cause, (B) by you for Good Reason,
or (C) by reason of your Disability (as defined in the Plan) and such
termination occurs during the two-year period commencing on your Change in
Status Date, two years of your salary. If your employment with the Company is
terminated within the one year period commencing on a Change of Control (as
defined in the Plan), and such termination is (i) by the Company other than in
the event of Cause, (ii) by you for Good Reason, or (iii) by reason of your
Disability, then upon such termination you shall become entitled to receive, (A)
in addition to the Accrued

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Benefits, (B) an amount equal to one year of your salary paid in a lump sum
(provided, however, that if such termination occurs during the two-year period
commencing on your Change in Status Date, such lump sum payment instead shall be
equal to two years of your salary). Each of the amount described in clause (iv)
of the first sentence of this Paragraph 5(a) and the amount described in clause
(B) of the preceding sentence (each being a “Severance Amount”) shall be paid to
you in a lump sum not later than thirty (30) days after the Date of Termination.
However, if the payment of the Severance Amount at such time would subject you
to a penalty under Section 409A of the Internal Revenue Code of 1986, as amended
(the “Code”), because you are a “specified employee” within the meaning of
Section 409A(a)(2)(B)(i) and no other exceptions to the penalty are available,
such payment will be delayed until the earliest date permissible following the
Date of Termination. Except as expressly provided above in this Paragraph 5, any
Award Agreement under the Plan including the Stock Option Agreement, or by law,
the Company will have no further obligations to you following your termination
of employment.
(b)    Release of Claims. Notwithstanding the foregoing, you will have no right
to receive the Severance Amount unless and until you execute, and there shall be
effective following any statutory period for revocation, a release in a form
reasonably acceptable to the Company that irrevocably and unconditionally
releases, waives, and fully and forever discharges the Company and its
subsidiaries and its and their past and current directors, officers, employees,
and agents from and against any and all claims, liabilities, obligations,
covenants, rights, demands and damages of any nature whatsoever, whether known
or unknown, anticipated or unanticipated, relating to or arising out of your
employment with the Company or its subsidiaries, including without limitation
claims arising under the Age Discrimination and Employment Act of 1967, as
amended, Title VII of the Civil Rights Act of 1964, as amended, or the Civil
Rights Act of 1991, but excluding any claims covered any applicable worker’s
compensation act. Furthermore, your right to receive the Severance Amount is
conditioned upon your performance of the obligations stated in the Restrictive
Agreement. In the event of any material breach of any such obligations after
payment of the Severance Amount, you will become obligated to return such amount
to the Company.
6.    Certain Definitions. The following terms as used herein shall have the
following respective meanings:
(a)    “Date of Termination” means the date specified in the Notice of
Termination where required (which date shall be on or after the date of the
Notice of Termination) or in any other case upon your ceasing to perform
services for the Company and/or its subsidiaries.
(b)    “Termination” of employment for purposes of Paragraph 5(a) of this
Agreement shall only occur to the extent you have a “separation from service”
from Company in accordance with Section 409A of the Code. Under Section 409A, a
“separation from service” occurs when you and the Company reasonably anticipate
that no further services will be performed by you after a certain date or that
the level of bona fide services you would perform after such date (whether as an
employee or as a consultant) would permanently decrease to no more than 20
percent of the average level of bona fide services performed by the employee
over the immediately preceding 36-month period.
(c)    “Cause” means any of the following:

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(i)    your repeated failure to perform your employment duties and/or assigned
work in a competent, diligent and satisfactory manner as determined by the Board
of Directors in its reasonable judgment, including, without limitation, any act
of insubordination or dereliction of duty in the course of your employment with
the Company and/or any of its subsidiaries by you;
(ii)    your commission of any material act of dishonesty or disloyalty
involving the Company or any of its subsidiaries, including, without limitation,
your commission of an act of fraud, embezzlement or theft or your breach of
trust in connection with your duties or in the course of your employment with
the Company and/or any of its subsidiaries;
(iii)    your chronic absence from work other than by reason of a serious health
condition;
(iv)    your commission of a crime which, in the reasonable judgment of the
Board of Directors, is substantially related to the circumstances of your
position with the Company or any of its subsidiaries or which has a material
adverse effect on the business of the Company or any of its subsidiaries; or
(v)    the willful engaging by you in conduct which is demonstrably and
materially injurious to the Company or any of its subsidiaries.
For purposes of this Agreement, no act, or failure to act, on your part will be
deemed “willful” unless done, or omitted to be done, by you not in good faith.
(d)    “Good Reason” means, without your consent, the occurrence of any of the
following conditions, provided that you shall provide notice to the Company of
the existence of the condition within 90 days of the initial existence of such
condition and the Company shall have 30 days from the date it receives the
notice (the “Cure Period”) within which to cure such condition, and you must
terminate your employment within no more than 30 days after the expiration of
the Cure Period if the Company does not cure the condition within the Cure
Period: (i) any reduction by the Company of your duties or responsibilities
which reduction is material based on your overall duties and responsibilities
(ignoring incidental duties and responsibilities) prior to and after such
reduction which remains uncured, if cure thereof is necessary, after the
expiration of the Cure Period; (ii) any job requirement imposed by the Company
that you change your principal office to a location more than seventy five (75)
miles from Dane County, Wisconsin; or (iii) any material breach of any
obligation in this Agreement of the Company for the payment or provision of
compensation or other benefits to you uncured, if cure thereof is necessary,
after the expiration of the Cure Period.
(e)    “Change of Control” shall mean the first to occur of the following:
(1)    The acquisition by any individual, entity or “group” (within the meaning
of Section 13(d)(3) or 14(d)(2) of the Exchange Act) of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange Act) of
thirty-three percent (33%) or more of either (A) the then outstanding shares of
common stock of the Company (the “Outstanding Company Common Stock”) or (B) the
combined voting power of the then outstanding voting securities of the Company
entitled to vote generally in the election of directors

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(the “Outstanding Company Voting Securities”); provided, however, that the
following acquisitions of Outstanding Company Common Stock and/or Outstanding
Company Voting Securities shall not constitute a Change of Control: (A) any
acquisition directly from the Company (excluding an acquisition by virtue of the
exercise of a conversion privilege), (B) any acquisition by the Company, (C) any
acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by the Company, or (D)
any acquisition by any corporation pursuant to a reorganization, merger,
statutory share exchange or consolidation which would not be a Change of Control
under Subparagraph (e)(3) hereof; or
(2)    Individuals who, as of the date hereof, constitute the Board of Directors
(the “Incumbent Board”) cease for any reason to constitute at least a majority
of the Board of Directors; provided, however, that any individual becoming a
director subsequent to the date hereof whose election, or nomination for
election by the Company’s shareholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial assumption of
office occurs as a result of either an actual or threatened “election contest”
or other actual or threatened “solicitation” (as such terms are used in Rule
14a-12(c) of Regulation 14A promulgated under the Exchange Act) of proxies or
consents by or on behalf of a person other than the Incumbent Board; or
(3)    Consummation of a reorganization, merger, statutory share exchange or
consolidation, unless, following such reorganization, merger, statutory share
exchange or consolidation, (A) more than fifty percent (50%) of, respectively,
the then outstanding shares of common stock of the corporation resulting from
such reorganization, merger, statutory share exchange or consolidation and the
combined voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or substantially all of the
individuals and entities who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and Outstanding Company Voting Securities
immediately prior to such reorganization, merger, statutory share exchange or
consolidation in substantially the same proportions as their ownership,
immediately prior to such reorganization, merger, statutory share exchange or
consolidation, (B) no person (excluding the Company, any employee benefit plan
(or related trust) of the Company or such corporation resulting from such
reorganization, merger, statutory share exchange or consolidation and any person
beneficially owning, immediately prior to such reorganization, merger, statutory
share exchange or consolidation, directly or indirectly, fifty percent (50%) or
more of the Outstanding Company Common Stock or Outstanding Voting Securities,
as the case may be) beneficially owns, directly or indirectly, fifty percent
(50%) or more of, respectively, the then outstanding shares of common stock of
the corporation resulting from such reorganization, merger,

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statutory share exchange or consolidation or the combined voting power of the
then outstanding voting securities of such corporation, entitled to vote
generally in the election of directors, and (C) at least a majority of the
members of the board of directors of the corporation resulting from such
reorganization, merger, statutory share exchange or consolidation were members
of the Incumbent Board at the time of the execution of the initial agreement
providing for such reorganization, merger, statutory share exchange or
consolidation; or
(4)    Consummation of (A) a complete liquidation or dissolution of the Company
or (B) the sale or other disposition of all or substantially all of the assets
of the Company, other than to a corporation, with respect to which following
such sale or other disposition, (i) more than fifty percent (50%) of,
respectively, the then outstanding shares of common stock of such corporation
and the combined voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or substantially all of the
individuals and entities who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and Outstanding Company Voting Securities
immediately prior to such sale or other disposition in substantially the same
proportion as their ownership, immediately prior to such sale or other
disposition, of the Outstanding Company Common Stock and Outstanding Company
Voting Securities, as the case may be, (ii) no person (excluding the Company and
any employee benefit plan (or related trust) of the Company or such corporation
and any person beneficially owning, immediately prior to such sale or other
disposition, directly or indirectly, fifty percent (50%) or more of the
Outstanding Company Common Stock or Outstanding Company Voting Securities, as
the case may be) beneficially owns, directly or indirectly, fifty percent (50%)
or more of, respectively, the then outstanding shares of common stock of such
corporation or the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in the election of
directors, and (iii) at least a majority of the members of the board of
directors of such corporation were members of the Incumbent Board at the time of
the execution of the initial agreement or action of the Board of Directors
providing for such sale or other disposition of assets of the Company.
7.    Miscellaneous
(a)    Section 409A Compliance. The Company and you intend that any amounts or
benefits payable or provided under this Agreement comply with the provisions of
Section 409A of the Code and the treasury regulations relating thereto so as not
to subject you to the payment of the tax, interest and any tax penalty which may
be imposed under Section 409A of the Code. The provisions of this Agreement
shall be interpreted in a manner consistent with such intent. In furtherance
thereof, to the extent that any provision hereof would otherwise result in your
being subject to payment of tax, interest and tax penalty under Section 409A of
the Code, the Company and you agree to amend this Agreement in a manner that
brings this Agreement into compliance with Section 409A of the Code and
preserves to the maximum extent possible the economic value of the relevant
payment or benefit under this Agreement to you.

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(b)    Binding Effect. This Agreement will be binding on the Company and its
successors and will inure to the benefit of and be enforceable by your personal
or legal representatives, heirs and successors.
(c)    Governing Law. This Agreement and all questions of its interpretation,
performance and enforcement and the rights and remedies of parties will be
determined in accordance with the laws of the State of Wisconsin without regard
to the laws of any other jurisdiction that otherwise would govern under conflict
of law principles.
(d)    Integration. This Agreement supersedes any and all prior agreements,
whether written or oral, between the Company or any representative thereof and
you relating to the services performed by you as an employee upon and after your
Change in Status Date (i.e., the Company’s Vice President and Chief Financial
Officer) for the Company or your compensation for such services, and all such
prior agreements are null and void. For clarity, except as expressly set forth
herein, nothing herein shall be construed to supersede the Interim CFO Agreement
with respect to your employment during the period commencing on the Start Date
(as defined therein) and ending on the Change in Status Date, the Restrictive
Agreement, the Independent Contractor Agreement between the Company and you
dated January 1, 2014 under which you have provided and may provide, other than
during the term of your employment hereunder, services to the Company, the
confidentiality agreement contemplated in the Independent Contractor Agreement,
any Stock Option Agreement between the Company and you under the Company’s 2008
Equity Incentive Plan, as amended, or the Option Agreement between the Company
and you under the Plan. In lieu of what is provided in Section 1.2 of the Option
Agreement between the Company and you under the Plan as contemplated in the
Interim CFO Agreement, which section upon the Change in Status Date shall be
superseded by this provision, the Option evidenced by such Option Agreement and
the Shares governed by such Option shall be vested, and accordingly such Option
shall first become exercisable as to, 12,000 of such Shares upon the Change in
Status Date and upon the Change in Status Date the Option as to the other 6,000
Shares then subject thereto shall be cancelled.
(e)    Notices. Any notice required or permitted to be given under this
Agreement will be in writing and will be deemed given: (i) upon personal
delivery to the party to be notified, (ii) when sent by confirmed facsimile if
sent during normal business hours of the recipient, if not, then on the next
business day, (iii) five (5) days after having been sent by registered or
certified mail, return receipt requested, postage prepaid, or (iv) one (1) day
after deposit with a nationally recognized overnight courier, specifying next
day delivery, with written verification of receipt at the following addresses or
to such other addresses either party shall specify by like notice:
if to the Company:
Cellular Dynamics International, Inc.
Attn: President or Chairman of the Board
University Research Park
525 Science Drive, Suite 200
Madison, WI 53711
and if to you:

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Mr. Timothy D. Daley
4126 Meyer Avenue
Madison, WI 53711
(f)    Amendment. The Agreement may be amended or modified only upon the written
consent of the Company and you.
(g)    No Conflicting Obligations or Third Party Consents. You hereby represent
and warrant to the Company that (i) neither the execution of this Agreement by
you nor the performance of any of your obligations or duties hereunder will
conflict with or violate or constitute a breach of the terms of any contractual,
statutory or other obligation; and (ii) you are not required to obtain the
consent of any firm, corporation or other entity or person in order to enter
into this Agreement or to perform any of your obligations or duties hereunder.
If this letter correctly sets forth your understanding of our agreement, please
sign a copy in the space provided below and return it to the Company.
 
 
 
 
Very truly yours,
 
 
 
Cellular Dynamics International, Inc.
 
 
 
 
 
/s/ Thomas M. Palay
 
Thomas M. Palay
 
Vice Chairman of the Board of Directors and President

I confirm my agreement with the
terms and conditions of this letter
as of the date first set forth above.

/s/ Timothy D. Daley
Timothy D. Daley

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