Exhibit 10.5

FINANCIAL ADVISORY AGREEMENT
THIS FINANCIAL ADVISORY AGREEMENT (“Agreement” or “FAA”) is made and entered
into on this the 18th day of October, 2006, by and between Halter Financial
Group, L.P., a Texas limited partnership (“HFG”), and International Stem Cell
Corporation, a California corporation (the “Company”).
W I T N E S S E T H:
WHEREAS, the Company desires to engage HFG to provide certain financial advisory
and consulting services as specifically enumerated below commencing as of the
date hereof related to the Going Public Transaction and the Post-Transaction
Period (each as hereinafter defined), and HFG is willing to be so engaged.
NOW, THEREFORE, for and in consideration of the covenants set forth herein and
the mutual benefits to be gained by the parties hereto, and other good and
valuable consideration, the receipt and adequacy of which are now and forever
acknowledged and confessed, the parties hereto hereby agree and intend to be
legally bound as follows:
1. Retention. As of the date hereof, the Company hereby retains and HFG hereby
agrees to be retained as the Company’s financial advisor during the term of this
Agreement. The Company acknowledges that HFG shall have the right to engage
third parties to assist it in its efforts to satisfy its obligations hereunder.
In its capacity as a financial advisor to the Company, HFG will:
A. Going Public Transaction.
Assist the Company in evaluating the manner of effecting a going public
transaction with a public shell corporation (“Pubco”) domiciled in the United
States of America and quoted on the “OTC BB” (a “Going Public Transaction”). It
is anticipated that (a) upon consummation of the Going Public Transaction,
(b) the closing of the Company’s current private placement of securities (the
“Company Offering”) and (c) the closing of the private placement of Pubco (the
“Pubco Offering”) contemplated to be undertaken immediately upon the closing of
the Going Public Transaction, which together with the Company Offering will
generate estimated gross offering proceeds of $10,000,000, the Company’s current
stockholders, investors in the Company Offering and the Pubco Offering,
respectively, will hold 93.5% of all the issued and outstanding shares of
Pubco’s common capital stock.
Specifically, ownership by the former shareholders of Pubco following the Going
Public Transaction and the Pubco offering shall therefore consist of 2,210,000
shares of common stock. Ownership of the balance of Pubco common stock shall be
held as follows: approximately 21,790,000 shares of common stock will be held by
the Company’s shareholders immediately prior to such transactions, and an
estimated 10,000,000 shares will be issued to investors in the Pubco Offering, a
total of approximately 34,000,000 shares. In order to permit the completion of
share splits or

 

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other capital structure adjustments to Pubco that may be required prior to
closing, no adjustment in the shares to be held by the initial Pubco
shareholders shall be made for the possible oversubscription or
undersubscription of the Pubco Offering by Brookstreet Securities, the Company’s
placement agent.
B. Post Transaction Period
Upon consummation of the Going Public Transaction, HFG agrees to:
(i) assist Pubco in obtaining a new CUSIP number and a new stock symbol upon the
changing of its name;
(ii) if necessary, coordinate with the Company’s legal counsel the preparation
and assembly of application materials for the listing of Pubco’s common stock on
a national stock exchange; and
(iii) provide Pubco with such additional financial advisory services as may be
reasonably requested, to the extent HFG has the expertise or legal right to
render such services.
C. Tax Considerations
The Going Public Transaction shall be accomplished in a manner determined to the
satisfaction of the Company to be a tax deferred transaction under the Internal
Revenue Code, it being anticipated that the form of transaction shall consist of
an exchange of the outstanding shares of the Company for newly issued shares of
Pubco.
2. Authorization. Subject to the terms and conditions of this Agreement, the
Company hereby appoints HFG to act on a best efforts basis as its consultant
during the Authorization Period (as hereinafter defined). HFG hereby accepts
such appoint, with it being expressly acknowledged that HFG is acting in the
capacity of independent contractor and not as agent of either the Company,
affiliates of the Company or Pubco.
3. Authorization Period. HFG’s engagement hereunder shall become effective on
the date hereof (the “Effective Date”) and will automatically terminate (the
“Termination Date”) on the first to occur of the following: (a) 60 days from the
Effective Date in the event the Going Public Transaction has not been completed,
(b) the mutual decision of the parties not to move forward with the Going Public
Transaction or (c) 12 months from the Effective Date.
4. Fees and Expenses. In consideration for the services to be provided for
hereunder the Company shall pay to HFG the amount of $450,000 (the “Fee”) to be
paid on the closing date of the Going Public Transaction. The Company shall be
under no obligation to pay any part of the Fee to HFG in the event this
Agreement is terminated as a result of the failure of the Company and Pubco to
effect the Going Public Transaction.
5. Due Diligence . The Company shall have the right to perform a due diligence
investigation of Pubco and shall be under no obligation to effect the Going
Public Transaction unless it is satisfied, in its sole discretion, with the
results of its diligence investigation.
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6. Indemnification. The parties hereto shall indemnify each other to the extent
provided for in this paragraph. Except as a result of an act of gross negligence
or willful misconduct on the part of a party hereto, no party shall be liable to
another party, or its officers, directors, employees, shareholders or
affiliates, for any damages sustained as a result of an act or omission taken or
made under this Agreement. In those cases where gross negligence or willful
misconduct of a party is alleged and proven, the non-damaged party agrees to
defend, indemnify and hold the damaged party harmless from and against any and
all reasonable costs, expenses and liabilities suffered or sustained as a result
of the act of gross negligence or willful misconduct.
7. Lock Up. HFG agrees that, without the prior written consent of the Company,
it will not sell, transfer or otherwise dispose of greater than 1/12th of its
holdings in Pubco every 30 days commencing on the closing date of the Going
Public Transaction. However, in the event HFG does not sell or otherwise dispose
of all of the allotted number of Pubco shares that may be sold in a given 30 day
period, HFG may sell such unsold shares at any time thereafter.
8. Governing Law. This Agreement shall be governed by the laws of the State of
Texas.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first above written.

     
 
  HFG:
 
   
 
  Halter Financial Group, L.P.
 
   
 
  By: [TIMOTHY P. HALTER]
 
       Timothy P. Halter, Chairman, Halter
 
  Financial Group GP, LLC, its General Partner
 
   
 
  The Company:
 
  International Stem Cell Corporation
 
   
 
  By: [KENNETH C. ALDRICH]
 
  Name: Kenneth C. Aldrich
 
  Its: Chairman

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