Exhibit 10.1

iPSC Derivation Agreement

This iPSC Derivation Agreement (“Agreement”) is entered into on this 28th day of
October 2013 (the “Effective Date”) by and between the California Institute for
Regenerative Medicine (“CIRM”) having as its address 210 King Street 3rd Floor,
San Francisco, California and Cellular Dynamics International, Inc. (“CDI”)
having a primary place of business at 525 Science Drive, Madison, WI 53711
(singularly a “Party,” jointly the “Parties”).  

RECITALS

A.

Whereas CIRM awarded CDI a grant under RFA 12-03 “CIRM hiPSC Derivation Award.”
 The grant award is made under one of three RFAs released as part of the CIRM
human induced pluripotent stem cell (hiPSC) Initiative, which consists of RFAs
12-02, 12-03 and 12-04.

B.

Whereas The RFA 12-02 Awards will fund clinicians and other scientists to
identify, recruit, and obtain consent from sufficient numbers of affected and
unaffected individuals (controls) to represent effectively a given disease’s
manifestations. Such clinicians and scientists (“Tissue Collectors”) will then
collect tissue samples for hiPSC line generation, along with appropriate
demographic, medical, and/or diagnostic information (“Patient Samples”). Tissue
samples collected under RFA 12-02 will be provided to the recipient of CIRM RFA
12-03 hiPSC Derivation Award (“Deriver” or CDI) for the production of hiPSC
lines. The RFA 12-03 Award will support derivation of 3 hiPSC lines each from
3000 tissue donors, using CDI’s episomal reprogramming method for derivation
modified as appropriate for the sample tissue type. Once the Deriver has
generated, characterized, and released the hiPSC lines, the Deriver will ship
them to the CIRM human pluripotent stem cell (hPSC) Repository that will be
established under RFA 12-04.

C.

Whereas The overall goal of the CIRM hiPSC Initiative is to generate, for
world-wide use by non-profit and for-profit entities, high quality
disease-specific hiPSC resources for disease modeling and target discovery, as
well as drug discovery and development in prevalent, genetically complex
diseases.

D.

Whereas CDI submitted its application to RFA 12-03 contemplating that Coriell
Institute for Medical Research (“Coriell”) would be awarded RFA 12-04;

E.

Whereas CIRM awarded the hPSC Repository Award under RFA 12-04 to Coriell, and
CDI and Coriell expect to enter into a subcontract under which CDI will provide
certain services in support of that Repository Award for certain fees payable by
Coriell (the “Coriell Subcontract”);

F.

Whereas CDI has secured all requisite intellectual property rights to perform
the derivation services under RFA 12-03, and has arranged for sublicense rights
for the hiPSC lines derived by CDI, as more particularly set forth below.
 Furthermore CDI has agreed to sublicense such rights upon the terms and

(****) DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE U.S. SECURITIES AND
EXCHANGE COMMISSION.

conditions set forth in this Agreement in order to facilitate the greatest use
of the iPSC Lines derived by CDI.

NOW, THEREFORE, in reliance on the mutual representations, warranties and
agreements herein contained, the Parties agree as follows:  

1.

Definitions.  Capitalized terms not otherwise defined herein will have the
meaning set forth as follows:

a.

Application.  The application that CDI submitted with respect to RFA 12-03.

b.

Commercial Entity.  A (i) for-profit entity or a (ii) non-profit entity acting
in a capacity of providing a service for commercial gain.

c.

Derivation Activities. Derivation of iPSC lines in accordance with the
requirements of RFA 12-03, using the means and methods as described in CDI’s
Application.

d.

Derivation IP Rights.  The intellectual property rights required to perform the
Derivation Activities whether owned by CDI or licensed to CDI by iPS Academia
Japan and the Wisconsin Alumni Research Foundation.  The patents covered by the
Derivation IP Rights are listed in Exhibit A.

e.

Derivation Timeline.  CDI shall have (****) from the later of the Effective Date
or the commencement date of the NGA to complete the Derivation Activities. The
Derivation Timeline may be extended for (****) at no-cost to CIRM (a) upon
mutual written consent of the Parties, such consent not to be unreasonably
withheld by either Party or (b) automatically to the extent necessary to give
CIRM the benefit of Idle Capacity Credit (as defined in Section 12) if the
Progress Milestones are not completed and there is Idle Capacity Credit.

f.

Deriver.  The recipient of CIRM RFA12-03 hiPSC Derivation Award, which is CDI.

g.

Differentiated Cells. Cells made through a process of differentiating an iPSC
Line.  

h.

High Throughput Screening.  Screening more than 100 compounds using iPSC Lines
and/or Differentiated Cells.

i.

iPSC Line(s).  The cell line(s) derived pursuant to RFA 12-03.

j.

Notice of Grant Award and NGA. The Notice of Grant Award executed by CIRM and
CDI in connection with RFA 12-03.

 

k.

Patient Samples.  Tissue samples for hiPSC line generation collected under RFA
12-02 by the Tissue Collectors.

(****) DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE U.S. SECURITIES AND
EXCHANGE COMMISSION.

2

l.

Progress Milestones.  Certain activities designated as “Progress Milestones” in
Appendix A of the NGA.

m.

Repository.  The CIRM human pluripotent stem cell repository that will be
established under RFA 12-04.

n.

Tissue Collectors.  Clinicians and scientists who collect the Patient Samples
under RFA 12-02.

2.

Incorporation of Notice of Grant Award.  The Notice of Grant Award is hereby
incorporated into this Agreement by reference, including but not limited to
Progress Milestones set forth therein.  In the event of a conflict between this
Agreement and the NGA, this Agreement shall prevail except where the NGA
references the CIRM regulations in which case the CIRM regulations shall
prevail.

3.

Incorporation of Application for hiPSC Derivation Award.  CDI’s Application
filed in connection with CIRM’s RFA 12-03 is hereby incorporated into this
Agreement by reference through the NGA.  Specific note is hereby made that it is
the intent of the Parties that Section 13 of this Agreement is intended to
prevail over provisions in the NGA and Application which relate to royalty and
other charges that will apply to third parties who make, sell, offer for sale,
use, or import or otherwise use iPSC Lines derived by CDI under this Agreement.

4.

Timeline and Progress Milestones.  CDI shall adhere to the Derivation Timeline
and the Progress Milestones.  The Derivation Timeline and the Progress
Milestones were established based on certain assumptions as reflected in CDI’s
Application, as to the timing of the delivery and the nature of the Patient
Samples, including that Patient Samples will be available to CDI in the
quantities and at the times contemplated in the NGA and that they be of the
quality and be collected in accordance the applicable protocol specified in the
NGA (i.e., CBPiPS_021 Blood Collection and Shipping to CDI or CBPiPS_023 Skin
Collection and Shipping to CDI) (Patient Samples of such specified types and
combination thereof and quality are “Qualifying Patient Samples”) and are set
forth in Appendix A of the NGA.  (****).  For avoidance of doubt, in the event
that Progress Milestones are not met due to no fault of CDI including without
limitation by reason of its failure to have received the requisite number of
Qualifying Patient Samples as described above in this Section 4, then CDI shall
not be in breach or default of or liable under any provision with respect to its
performance of the Derivation Activities, and CIRM shall make the regularly
scheduled payment so long as CDI processes the Qualifying Patient Samples it has
received.  If a Progress Milestone is not met due to CDI’s failure in breach of
this Section 4 to perform the Derivation Activities when Qualifying Patient
Samples are available to CDI to permit it to do so, the Parties shall negotiate
in good faith regarding adjustment of the Progress Milestones and payments in
the Term with any payments suspended under the NGA resuming according to any
adjusted Progress Milestones and with the possibility that such Progress
Milestones and payments may take place during a (****) extension of the funded
portion of the Term.

(****) DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE U.S. SECURITIES AND
EXCHANGE COMMISSION.

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5.

Compliance with Laws.  CDI is in any and all respects that may affect its
performance under this Agreement in compliance with all federal, state,
municipal and local laws ordinances and regulations, and all actions by CDI
under this Agreement shall be in compliance with all federal, state, municipal
and local laws ordinances and regulations.

6.

Protection of Health Information.  In accordance with RFAs 12-02, 12-03 and
12-04 and as contemplated in CDI’s Application, the Patient Samples shall not
include, and CDI is not to otherwise to be provided with, whether by any of the
Tissue Collectors, Coriell, CIRM or another person, any personal identifying
information relating to the donors of the Patient Samples.  If, notwithstanding
the foregoing, any private tissue donor information associated with the Tissue
Samples should accidentally be received by CDI, it agrees to take appropriate
precautions to guard against unauthorized individuals gaining access, either
accidentally or deliberately, to any such private tissue donor information.  CDI
shall not attempt to learn the identity of any person whose samples and
associated information is included in the Patient Samples, or otherwise seek to
de-code de-identified samples and shall not present or publish data in which the
identity of an individual whose samples and associated information is included
in the Patient Samples is expressly disclosed.

7.

Ownership.

a.

CIRM shall acquire and have ownership of all iPSC Lines as provided herein.  The
Patient Samples shall be owned by the Tissue Collectors except as expressly
provided otherwise herein.  While the Patient Samples are in the possession of
CDI to permit it to perform the Derivation Activities, title to the Patient
Samples shall remain with the Tissue Collectors; provided, however, that primary
source cells in a Patient Sample shall cease to be part of and to comprise that
Patient Sample, and instead shall become and comprise an iPSC Line owned by CIRM
when CDI first begins Derivation Activities affecting those primary source
cells. For avoidance of doubt, by reason of this Agreement or the performance of
the Derivation Activities hereunder including the creation and transfer to the
Repository of the iPSC Lines, CIRM agrees that will not acquire any rights in,
to or under such intellectual property or any discovery, invention, enhancement,
improvement, or know how, whether or not patentable or copyrightable or
constituting a trade secret, conceived, created or made by CDI in the course of
performing the Derivation Activities (that do not cover any potential use(s) of
the iPSC Lines by CIRM, Coriell or any third parties), whether alone or jointly
with another and whether fully to completion or subject to any further such
activity, or assert any claim or challenge inconsistent with this sentence. Any
intellectual property or any discovery, invention, enhancement, improvement, or
know how, whether or not patentable or copyrightable or constituting a trade
secret, conceived, created or made by CDI in the course of performing the
Derivation Activities that covers any potential use of the iPSC Lines by CIRM,
Coriell or any third parties shall be owned by CIRM.

(****) DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE U.S. SECURITIES AND
EXCHANGE COMMISSION.

4

b.

In its respective agreements with the Tissue Collectors under RFA 12-02, CIRM
will require the Tissue Collectors to agree or consent to (a) transfer Patient
Samples that are skin samples to the Repository, and Patient Samples that are
blood samples to an independent laboratory designated by CDI for further
transfer by such laboratory to the Repository, (b) the withdrawal from the
Repository and use of such materials by CDI to perform the Derivation
Activities, to create the iPSC Lines or to perform the services and create the
distribution cell banks contemplated in the Coriell Subcontract, and (c) the
ownership of the iPSC Lines  as provided in this Agreement.  In its agreement
with Coriell under RFA 12-04, CIRM will require Coriell to agree make Patient
Samples available from the Repository to CDI in order to permit it to perform
the Derivation Activities and create the iPSC Lines and to the ownership of the
iPSC Lines as provided in this Agreement.  Upon request, CIRM will provide CDI
with a copy of the portions of such agreements containing such provisions.

8.

Transfer to Repository.  Upon CDI’s transfer to the Repository of the iPSC Lines
derived from a Patient Sample, CDI also shall transfer said Patient Sample to
the Repository whereupon risk of loss of the Patient Sample(s) shall transfer to
Coriell. Risk of loss of the iPSC Lines shall transfer from CDI to Coriell upon
delivery of each iPSC Line to Coriell.  Coriell shall bear costs of such
transfers.

9.

Patient Samples and Disclaimer of Warranties. The Patient Samples received by
CDI pursuant to RFA 12-02, RFA 12-03 and RFA 12-04 may have hazardous
properties. By accepting the Patient Samples, CDI assumes full responsibility
for their safety and appropriate handling while in CDI’s possession. CIRM MAKES
NO REPRESENTATIONS AND, EXTENDS NO WARRANTIES OF ANY KIND, EITHER EXPRESSED OR
IMPLIED, WITH RESPECT TO THE PATIENT SAMPLES AND TIMELINESS OF DELIVERY.  CIRM
MAKES NO EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR ANY
PARTICULAR PURPOSE WITH RESPECT TO THE PATIENT SAMPLES. CDI assumes all
liability for damages that may arise from CDI’s use, storage, or disposal of the
Patient Samples and all other research materials used by CDI in the course of
the Derivation Activities.

10.

CDI Non-Infringement Warranties.  Except as specifically set forth herein, CDI
expressly warrants that its conduct of the Derivation Activities will not
infringe any presently issued patent, copyright, trademark or other proprietary
rights of any third parties.  As used herein, “presently issued” means issued by
the U.S. Patent & Trademark Office or identified to CDI as rightfully owned or
controlled by a third party in written notice of such third party proprietary
rights received, as of the Effective Date, by CDI’s Chief Technology Officer.  

11.

 Representations and Warranties:  CDI represents and warrants that:

a.

Derivation IP Rights -  (i) It possesses or has licensed to it the intellectual
property rights necessary to perform the Derivation Activities; (ii) that as of
the Effective Date of the Agreement such rights are in good

(****) DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE U.S. SECURITIES AND
EXCHANGE COMMISSION.

5

standing; (iii) that it shall not abandon such rights and will undertake all
requisite actions to maintain such rights in good standing; (iv) that the
Derivation IP Rights are fully enforceable and will be licensable or
sub-licensable to any and all third parties under the provisions of Section 13
below; and (v) that, assuming only that the parties to a transfer are licensed
under Section 13 below, the iPSC Lines are freely licensable and are not
encumbered by any use restrictions pertaining to the Derivation IP Rights except
with respect to use of the iPSC Lines or Differentiated Cells in therapeutic
treatment of humans or in human diagnostics.  For the avoidance of doubt,
parties who gain access to iPSC Lines are responsible for obtaining any
necessary intellectual property rights required beyond the intellectual property
rights needed for the Derivation Activity, such as those pertaining to the use
and exploitation of iPSC Lines and Differentiated Cells, which may include
rights owned or licensed by CDI.

b.

Right to Sublicense and Compensation - CDI further represents that it will
license and sublicense to any entity which seeks to purchase a CIRM funded iPSC
Line from the Repository the Derivation IP Rights at the rates and under the
conditions set forth in Section 13 below; provided, however, that if CDI is able
to negotiate lower fees with the licensors of any Derivation IP Rights, the fees
in Section 13 will be reduced to reflect such savings. CDI’s sole compensation
for the Derivation Activities and sale of any iPSC Lines arises from the funds
provided in the RFA 12-03, together with any subsequent services CDI provides or
products it sells to third parties, and the royalties specified for CDI in
Section 13 below. Notwithstanding the foregoing, any intellectual property owned
or licensed by CDI beyond the Derivation IP Rights required by parties gaining
access to the iPSC Lines in order to make or exploit Differentiated Cells or
modified iPSC Lines will require subsequent licensing of rights from CDI.

c.

General – CDI represents and warrants that (i) it has the full power and
authority to enter into and perform the Agreement, (ii) it will perform the
Derivation Activities in a highly professional manner consistent with the
industry standard and in accordance with the Agreement, i.e., using the means
and methods described in the NGA, and (iii) performance of the Derivation
Activities hereunder will not result in any third party (other than CIRM)
acquiring any ownership rights or interest to any iPSC Lines generated pursuant
to this Agreement.  For avoidance of doubt and notwithstanding any term or
implication herein to the contrary, CDI shall not have responsibility under this
Agreement, including without limitation under the foregoing representations and
warranties, with respect to any rights or interest, or claims, of any third
party arising out or relating to any lack of an appropriate informed consent of
a donor of a Patient Sample and/or any failure of the agreements contemplated in
Section 7b to be in effect.

12.

Idle Capacity Usage.  The Parties recognize that CDI, pursuant to Section 17

(****) DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE U.S. SECURITIES AND
EXCHANGE COMMISSION.

6

below, may use the equipment and facilities purchased or rented with CIRM
funding for non CIRM funded purposes.  In the event that after the (****) such
equipment and facilities are not being used for the Derivation Activities or
other activities specified in the Coriell Subcontract (“Idle Capacity”), CDI may
use the Idle Capacity for non-CIRM funded purposes.  If CDI uses the Idle
Capacity so that it receives revenues from third parties, then such revenue
shall be credited to CIRM in the event that the Progress Milestones are delayed
due to no fault of CDI (“Idle Capacity Credit”).  For the avoidance of doubt,
this provision is (a) to prevent the potential double billing of time and
resources by CDI where CIRM makes the payments that it is require to make to CDI
for iPSC Lines that are to be created in a period within the Derivation Timeline
which are not created and (b) to possibly extend the period of time that CDI can
perform the Derivation Activities during the extension (****) if the Progress
Milestones are not met due to no fault of CDI. (****)

13.

Sublicense and Fees. CDI agrees that it will enable any party to gain access to
the iPSC Lines in the Repository using the procedure and for the fees as set
forth in this Section 13; and CIRM will require Coriell to notify CDI of each
party who would gain access to any iPSC Lines in the Repository and to prohibit
any party to gain access to the iPSC Lines in the Repository unless the party
has executed the Standard Form hiPSC License with CDI and paid such fees when
and as due thereunder (which shall not be payable by non-Commercial Entities as
contemplated in Section 13.b.).  CDI shall be responsible for obtaining an
executed Standard Form hiPSC License from each party to gain access to any of
the iPSC Lines and, if required, for collecting the fees payable to CDI in
connection therewith.  Except with respect to the CIRM grant award for RFA 12-03
and fees owed to CDI by Coriell pursuant to the Coriell Subcontract, and
assuming that an entity executes a license as contemplated herein prior to
obtaining an iPSC Line or Lines, the fees and royalties contemplated below in
this Section 13 are the sole compensation owed to CDI and its licensors with
respect to third parties’ use of the iPSC Lines.

a.

Standard Licenses.  CDI will develop, with the participation and consent of iPS
AJ and CIRM, a standard form of license agreement (“Standard Form hiPSC
License”).  That Standard Form hiPSC License will be publically available.
 Assuming only that a requester of an iPSC Line signs that form of license and
timely remits any and all compensation due to CDI (whether that compensation is
ultimately due to iPS AJ, WARF or CDI), and otherwise complies with the terms of
the license, then that requester shall be licensed to use the iPSC Lines derived
by CDI under the Derivation IP Rights.  The terms of the Standard Form hiPSC
License shall include the economic terms below and may include other
non-economic terms commonly used by iPS AJ in other licenses for its derivation
technology.  The Standard Form hiPSC License will not permit the in vivo use of
the iPSC Lines or Differentiated Cells in either the therapeutic treatment of
humans or in human diagnostics, although it will permit drugs or other
non-cellular treatment modalities to be developed under license.  The Standard
Form hiPSC license shall be in addition to

(****) DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE U.S. SECURITIES AND
EXCHANGE COMMISSION.

7

any material transfer agreement or end user agreement used by Coriell to
distribute the lines.

b.

Non-Commercial Entities.  Provided an entity that is not a Commercial Entity
does not transfer the iPSC Lines or any Differentiated Cells made from the iPSC
Lines to a Commercial Entity, no fees attributable to the Derivation IP Rights
will be further owed to CDI by entities that are not Commercial Entities that
use the iPSC Lines or any Differentiated Cells made by that entity from the iPSC
Lines, for internal research purposes including high throughput screening of any
nature.  For the avoidance of doubt, no royalty or other fee attributable to the
Derivation IP Rights shall be imposed by CDI for the use, sale, offer for sale,
manufacture or import of any discovery arising from an entity other than a
Commercial Entity’s use of the iPSC Lines and any Differentiated Cells made by
that entity unless the continued use of the iPSC Line is required to
commercially exploit that discovery.  

c.

Commercial Entities.

i.

(****) employees - The following fees apply in the event that a Commercial
Entity does not have a license agreement with one or more of the applicable
parties noted below and seeks a Standard Form hiPSC License from CDI in order to
use, and proliferate iPSC lines and to make, or have made, sell, or offer for
sale Differentiated Cells subject to what is provided in Section 13.c.iii:

(A)

Pass through fees owed to iPS AJ:  

(i)

Execution of an agreement with CDI which provides a sublicense to iPSC AJ’s
patents in Exhibit A: $(****) (a one-time payment).

(ii)

Commercialization of a product, including a drug, or service which is enabled by
use of the iPSC Lines and/or Differentiated Cells: $(****) (a one-time payment).

(iii)

Minimum Annual Royalty for all iPSC Lines:  $(****).   

(iv)

Additional Annual Payment for High Throughput Screening for all iPSC Lines:
 $(****).

(v)

Royalty Applicable to Non Drug-related Products and Services requiring continued
use of the iPSC Lines: a royalty of (****)% will apply to net revenues derived
from the use or sale of goods or services derived from or using the iPSC Lines
and/or the Differentiated Cells.  No royalty shall be due with respect to the
sale of (a) a therapeutic drug product not requiring continued use of the iPSC
Lines or Differentiated Cells or (b) other discoveries not requiring continued
use of the iPSC Lines or Differentiated Cells.  

(B)

Pass through fees owed to WARF:

(i)

Execution of an agreement with CDI which provides

(****) DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE U.S. SECURITIES AND
EXCHANGE COMMISSION.

8

a sublicense to WARF’s patents in Exhibit A: $(****) (a one-time payment).

(ii)

Commercialization of a product, including a drug, or service which is enabled by
use of the iPSC Lines and/or Differentiated Cells: $(****) (a one-time payment).

(iii)

Minimum Annual Royalty for all iPSC Lines:  $(****)

(iv)

Additional Annual Payment for High Throughput Screening for all iPSC Lines:
$(****).

(v)

Royalty Applicable to Non Drug related Products and Services requiring continued
use of the iPSC Line: a royalty of (****)% will apply to net revenues derived
from the use or sale of goods or services derived from or using the iPSC Lines
or the Differentiated Cells.  No royalty shall be due with respect to the sale
of (a) a therapeutic drug product not requiring continued use of the iPSC Lines
or Differentiated Cells or (b) other discoveries not requiring continued use of
the iPSC Lines or Differentiated Cells.

(C)

Fees owed to CDI:

(i)

Royalty Upon execution of an agreement with CDI which provides a license to
CDI’s patents in Exhibit A and applicable to Non Drug related Products and
Services requiring continued use of the iPSC Line: a royalty of (****)% will
apply to net revenues derived from the use or sale of goods or services derived
from or using the iPSC Lines or Differentiated Cells.  No royalty shall be due
with respect to the sale of (a) a therapeutic drug product not requiring
continued use of the iPSC Lines or Differentiated Cells or (b) other discoveries
not requiring continued use of the iPSC Lines or Differentiated Cells.

ii.

(****) employees - The following fees apply in the event that a Commercial
Entity does not have a license agreement with one for more of the applicable
parties noted below and seeks a Standard Form hiPSC License from CDI in order to
use, make, have made, sell, or offer for sale iPSC Lines and Differentiated
Cells, subject to what is provided in Section 13.c.iii:

(A)

Pass through fees owed to iPS AJ:  

(i)

Execution of an agreement with CDI which provides a sublicense to iPS AJ’s
patents in Exhibit A: $(****) (a one-time payment).

(ii)

Commercialization of a product, including a drug, or service which is enabled by
use of the iPSC Lines and/or Differentiated Cells: $(****) (a one-time payment).

(iii)

Minimum Annual Royalty: $(****) for all iPSC Lines.

(iv)

Additional Annual Payment for High Throughput

(****) DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE U.S. SECURITIES AND
EXCHANGE COMMISSION.

9

Screening for all iPSC Lines: $(****).

(v)

Royalty Applicable to Non Drug-related Products and Services requiring continued
use of the iPSC Line: a royalty of (****)% will apply to net revenues derived
from the use or sale of goods or services using or derived from the iPSC Lines
or Differentiated Cells.  No royalty shall be due with respect to the sale of
(a) a therapeutic drug product not requiring continued use of the iPSC Lines or
Differentiated Cells or (b) other discoveries not requiring continued use of the
iPSC Lines or Differentiated Cells.

(B)

Pass through fees owed to WARF:

(i)

Execution of an agreement with CDI which provides a sublicense to WARF’s patents
in Exhibit A: $(****) (a one-time payment).

(ii)

Commercialization of a product, including a drug, or service which is enabled by
use of the iPSC Lines and/or Differentiated Cells: $(****) (a one-time payment).

(iii)

Minimum Annual Royalty for all iPSC Lines:  $(****).   

(iv)

Additional Annual Payment for High Throughput Screening for all iPSC Lines:
$(****).

(v)

Royalty Applicable to Non Drug-related Products and Services requiring continued
use of an iPSC Line:  a royalty of (****)% will apply to net revenues derived
from the use or sale of goods or services using or derived from the iPSC Lines
or Differentiated Cells.  No royalty shall be due with respect to the sale of
(a) a therapeutic drug product not requiring continued use of the iPSC Lines or
Differentiated Cells or (b) other discoveries not requiring continued use of the
iPSC Lines or Differentiated Cells.

(C)

Fees owed to CDI:

(i)

Royalty Upon execution of an agreement with CDI which provides a license to
CDI’s patents in Exhibit A and applicable Products and Services requiring
continued use of the iPSC Line: a royalty of (****)% will apply to net revenues
derived from the use or sale of goods or services using or derived from the iPSC
Lines or the Differentiated Cells.  No royalty shall be due with respect to the
sale of (a) a therapeutic drug product not requiring continued use of the iPSC
Lines or Differentiated Cells or (b) other discoveries not requiring continued
use of the iPSC Lines or Differentiated Cells.

(****) DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE U.S. SECURITIES AND
EXCHANGE COMMISSION.

10

iii.

Pass through fees –Each reference in Sections 13.c.i. and 13.c.ii. to “(****)”
employees instead shall be to “(****)” employees from such time CDI gives
written notice to CIRM that iPS AJ has agreed in writing that “(****)” employees
instead shall apply for purposes hereof and of the Standard Form hiPSC License.
 CDI shall use its good faith commercially reasonable efforts to obtain such
agreement from iPS AJ and CDI shall give written notice to CIRM promptly after
CDI obtains such agreement from iPS AJ; it is understood and agreed, for
avoidance of doubt, that CDI shall not be required to suffer any detriment or
offer any other consideration to iPS AJ in addition to such pass through fees to
iPS AJ from the Standard Form hiPSC License in order to obtain such agreement
from iPS AJ.  

14.

Right to Negotiate Lower Fees.  The fees set forth in Section 13 represent the
maximum of such fees to be owed by third parties for iPSC Lines.  Any and all
third parties may seek to negotiate alternative terms with CDI, iPS AJ and WARF
in lieu of obtaining a sublicense pursuant to Section 13 herein from CDI. 

15.

Indemnification.  CDI shall indemnify, defend and hold harmless CIRM, the State
of California, and their respective agents, officers and employees (“CIRM
Indemnitees”) against any and all liabilities, losses, damages, claims,
penalties, costs or expenses, interest, awards, judgments and penalties brought
by or awarded to any third party (i.e., a person other than a CIRM Indemnitee)
which any of them may sustain, incur or be required to pay (howsoever, they may
occur), including, without limitation, reasonable attorneys’ and consultants’
fees (“Losses”), resulting from, arising out of, or in connect with: (i) CDI’s
execution, delivery and performance of CDI’s obligations under the Agreement
including the performance of the NGA by CDI; (ii) any material breach by CDI of
any representation, warranty or covenant under the Agreement; (iii) any
CIRM-Funded Invention as defined in Cal.Code Regs, tit. 17, Section 100601(c);
provided that CDI shall not be required to indemnify CDI to the extent such
Losses or caused by (a) any CIRM Indemnitee’s gross negligence of willful
misconduct, (b) a breach of CIRM’s obligations under this Agreement or (c) a
breach of any of CIRM’s representations and warranties made under this
Agreement.  CDI’s agreement to indemnify, defend and hold the Indemnitees
harmless as provided above is conditioned on the Indemnitee (i) providing prompt
written notice to CDI of such potential or actual Losses within thirty (30) days
after the Indemnitee has knowledge of such potential or actual Losses, provided
that failure to provide notice within thirty (30) days shall not excuse CDI’s
obligation under this Section 15 unless such delay actually prejudiced the
defense of the claim; (ii) permitting CDI to assume full responsibility to
investigate, prepare for and defend against any such Losses, provided that the
selection of counsel is reasonably satisfactory to CIRM; (iii) assisting CDI, at
CDI’s reasonable expense, in the investigation of, preparation for and defense
against any claim, demand or action relating to such Losses; and (iv) not
compromising or settling any claim, demand or action in respect of such Losses
without CDI’s written consent not to be unreasonably withheld, preconditioned or
delayed.  For the avoidance of doubt, CDI’s indemnity obligations under this

(****) DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE U.S. SECURITIES AND
EXCHANGE COMMISSION.

11

Section 15 are intended to satisfy CDI’s indemnity obligations under the Grant
Administration Policy, and in the event of any conflict between the Grant
Administration Policy and Section 15, the Grant Administration Policy shall
govern.

16.

Disclaimers and Limitation.  EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES
EXPRESSLY SET FORTH HEREIN AND THOSE (IF ANY) REQUIRED IN THE CIRM REGULATIONS,
CDI AND CIRM MAKE NO OTHER REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED.  ALL
OTHER REPRESENTATIONS AND WARRANTIES WHATSOEVER AND HOWEVER THEY MAY BE CLAIMED,
EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO ANY IMPLIED WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, AND ANY SPECIAL, PUNITIVE,
EXEMPLARY, INCIDENTAL OR CONSEQUENTIAL DAMAGES ARISING OUT OF THIS AGREEMENT ARE
HEREBY EXPRESSLY DISCLAIMED AND EXCLUDED.

17.

Coriell Subcontract; Use of Equipment and Facilities.  CIRM shall have the right
to approve the Coriell Subcontract and any form of agreement (e.g., material
transfer agreement) between the parties thereto required under the Coriell
Subcontract.  CIRM hereby consents to CDI’s use of equipment and facilities
purchased or rented with funds received hereunder or funds paid under RFA 12-04
for purposes other than CDI’s performance of the Derivation Activities hereunder
or the services under the Coriell Subcontract, provided that such other use does
not prevent, hinder or delay CDI’s performance of the Derivation Activities
hereunder or the services under the Coriell Subcontract.

18.

Insurance.  CDI agrees to obtain and maintain, at a minimum, (i) commercial
general liability insurance applicable to the Party’s activities hereunder and
providing, on an occurrence basis, a minimum combined single limit of $(****)
(umbrella or excess liability policies may be used to meet the required limit),
(ii) workers’ compensation insurance as required by applicable statute and
(iii) employers liability insurance with coverage of at least $(****) per
occurrence.  In addition, CDI’s insurance shall cover replacement cost of the
Patient Samples and iPSC Lines due to spoilage while in CDI’s possession.

19.

Confidentiality.  As a public entity, CIRM is subject to the California Public
Records Act and thus documents and other materials made or received by its
employees are subject to public disclosure, unless an exception applies.  If CDI
submits confidential or proprietary material to CIRM, including but not limited
to any trade secrets, it shall label the material “Confidential.”  CIRM agrees
to maintain the confidentiality of such material except in the event CIRM
receives a proper Public Records Act request for such material.  In the event
CIRM receives a proper Public Records Act request for material that CDI has
labeled “Confidential,” CIRM shall, as soon as practicable, provide notice to
CDI so it has an opportunity to object to such disclosure.

(****) DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE U.S. SECURITIES AND
EXCHANGE COMMISSION.

12

20.

Term and Termination.  

a.

Term.  The term of this Agreement (“Term”) shall commence on the Effective Date
and continue in full force and effect until the earlier of such date when the
Derivation Activities have been performed or its expiration on the (****)
anniversary of the date on which the NGA first becomes effective.

b.

Termination by CIRM.  CIRM may terminate this Agreement and its Term by giving
notice (which may be effective immediately) to CDI:

i.

in the event of a material breach by CDI of this Agreement which breach remains
uncured (****) after CDI’s receipt of notice from CIRM specifying the nature of
such breach unless by the (****) CDI has produced a plan to cure such breach
that is reasonably acceptable to CIRM;

ii.

in the event of the failure of CDI to comply with the accepted plan described in
the preceding clause (i) or, in the case of delayed Progress Milestones due to
CDI’s failure in breach of Section 4 to perform the Derivation Activities when
Qualifying Patient Samples are available to CDI to permit it to do so, if such
Progress Milestone is not fulfilled within (****) of the original target date;

iii.

in the event that a significant number of Tissue Collectors in RFA 12-02 or
Coriell in RFA 12-04 fail to achieve milestones in their respective grant
awards, provided that CIRM, promptly after a receipt of notice from CDI in
connection with such termination, pays or reimburses CDI for all documented
costs and expenses that it has reasonably incurred consistent with the approved
budget in the NGA (and for which it has not yet received payment hereunder prior
to termination); and

iv.

for termination pursuant to 20.b.i. and 20.b.ii, CIRM shall receive
reimbursement for those funds disbursed to CDI through this Agreement and via
the Coriell Subcontract (in which CIRM is a third party beneficiary of Coriell,
if the Coriell Subcontract also is terminated as a result of the same breach or
non-compliance by CDI that is the basis for the termination of this Agreement)
which funds represent payments for Derivation Activities hereunder or Services
under the Coriell Subcontract for activities or services that were to be, but
pursuant to such breach or non-compliance in fact were not, performed.  Such
reimbursement shall include reimbursement for any equipment purchased by CDI
with CIRM funding hereunder using a linear depreciation over (****); provided,
however, that in lieu of providing such reimbursement CDI may, at its cost and
expense, transfer to CIRM all right, title and interest of CDI in and to such
equipment, free and clear of liens and other encumbrances.

(****) DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE U.S. SECURITIES AND
EXCHANGE COMMISSION.

13

c.

Termination by CDI.  CDI may terminate this Agreement and its Term by giving
notice (which may be effective immediately) to CIRM in the event of the failure
of CIRM to make any payment when due or payable hereunder or under the NGA which
breach remains uncured (****) after CIRM’s receipt of written notice from CDI
specifying such failure to pay.

d.

Survival.  Sections 1 through 3, 6 through 16, and 18-21 shall survive the
termination of this Agreement (whether at the expiration of the Term or its
earlier termination).  For the avoidance of doubt, the pricing in Section 13
shall survive the termination or expiration of this Agreement.

21.

Miscellaneous.

a.

Force Majeure. Both Parties shall be excused of, and shall not be responsible
for or in breach by reason of, any delay or failure in the performance of its
obligations under this Agreement or the NGA that is due to any circumstance or
event that is not reasonably foreseeable or otherwise caused by or under the
control of the Party claiming Force Majeure, including but not limited to Acts
of God, earthquakes and other natural disasters, fire, explosion, riot and other
civil disturbances, sabotage, terrorism, war, government acts including a change
in law or regulation, embargos, labor strikes and lock-outs, transportation
delays and other like events that are beyond the reasonable anticipation or
control of the Party affected thereby and which events or the effects thereof
are not attributable to a Party’s failure to perform its obligations under this
Agreement.

b.

Severability.  If any provision of this Agreement is held to be invalid or
unenforceable and it cannot be amended to conform with applicable laws so as to
be valid and enforceable, then such provision shall be stricken and the
remainder of this Agreement shall remain in full force and effect to carry out
intentions of the parties as nearly as reasonably possible.

c.

Governing Law.  This Agreement shall be construed and enforced in accordance
with the laws of California without regard to any choice or conflict of laws
rule or principle that would result in the application of the laws of any other
jurisdiction. Each party irrevocably and unconditionally submits in any legal
action or proceeding relating to this Agreement to the exclusive general
jurisdiction of courts located within California and appellate courts thereof
and consents that any such action or proceeding may be brought in such courts
and waives any objection to personal jurisdiction or venue therein.

d.

Notices.  Any notice required or permitted to be given hereunder by either Party
shall be in writing and shall be deemed given on the date received, if delivered
personally or by fax, or five (5) days after the date postmarked, if sent by
registered or certified U.S. mail, return receipt requested, postage prepaid to
the following address:

(****) DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE U.S. SECURITIES AND
EXCHANGE COMMISSION.

14

If to CDI:

Cellular Dynamics International, Inc.

525 Science Dr.

Madison, WI  53711

Attn:  President

With a copy to:

Anna Geyso, Esq.

Godfrey & Kahn

780 N. Water St.

Milwaukee, WI  53202

If to CIRM:

Elona Baum

General Counsel

California Institute For Regenerative Medicine

210 King Street, 3rd Floor,

San Francisco, CA 94107

e.

Changes and Modifications.  No changes or modifications of this Agreement shall
be deemed effective unless in writing and executed by the Parties hereto.

f.

Assignment; Binding Effect.  Neither this Agreement nor the rights or
obligations hereunder of either Party may be assigned or delegated by the Party
without the prior written consent of the other Party except that, and for the
avoidance of doubt, such written consent shall not be required with respect to
any assignment, delegation or other transfer including without limitation by
operation of law of this Agreement and rights and obligations hereunder by a
Party to any person who acquires or succeeds  to substantially all of the
business and assets of such Party.  Any purported assignment or delegation
without any consent required hereunder shall be void and ineffective for all
purposes.  This Agreement is binding on, and inures to the benefit of, the
Parties and their respective successors and permitted assigns.  Except as is
expressly otherwise provided herein, this Agreement is not intended to confer
upon any person other than the Parties any rights or remedies,

g.

Entire Agreement.  This Agreement, together with the confidentiality agreement
entered into in connection with the provision to CIRM of information regarding
CDI’s license agreement(s) with iPS AJ and/or WARF as contemplated in CDI’s
Application, constitutes the entire agreement of the parties with regard to its
subject matter and supersedes all previous written or oral representations,
agreements and understandings between CIRM and CDI.

h.

Consent regarding Start Date.  By his execution and delivery of this Agreement,
CIRM’s President hereby waives CIRM’s requirement under

(****) DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE U.S. SECURITIES AND
EXCHANGE COMMISSION.

15

the Grant Administration Policy set forth in Sections 100500 and 100501 of the
CIRM regulations that the NGA have a start date that is no later than six months
after the date that the ICOC approved the Application for funding.

IN WITNESS WHEREOF, the parties of this Agreement, having read and understood
the foregoing, acknowledge their legally binding acceptance of this Agreement by
the signatures of their respective authorized representatives below as of the
Effective Date.

Cellular Dynamics

California Institute for

International, Inc.

Regenerative Medicine

 

 

 

 

By:  /s/ Thomas M. Palay                         

/s/ Dr. Patricia Olson                             

Thomas M Palay

Dr. Patricia Olson

President

Executive Director for Scientific

 

Activities

 

 

Date:  October 29, 2013

Date:  October 29, 2013

(****) DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE U.S. SECURITIES AND
EXCHANGE COMMISSION.

16

Exhibit A

Title

Patent or
Application
Number

Ownership

(****) (Table omitted)

(****) DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE U.S. SECURITIES AND
EXCHANGE COMMISSION.

17