Exhibit 10.2

NOTE CONVERSION AGREEMENT

THIS NOTE CONVERSION AGREEMENT (this “Agreement”) is made as of January 8, 2016,
by and among International Stem Cell Corporation, a Delaware corporation (the
“Company”), and Andrey Semechkin (the “Holder”).

RECITALS

A. Holder is the Co-Chairman and Chief Executive Officer of the Company, and
fully understands the present condition, opportunities and risks of the Company,
as well as the terms of the contemplated Offering (as defined below).

B. The Company previously issued that certain promissory note to the Holder on
January 8, 2016 and in the principal amount set forth opposite the Holder’s name
on Exhibit A (the “Note”).

C. The Company has proposed and the Holder has agreed to convert the outstanding
principal amount of, and all accrued and unpaid interest under (collectively,
the “Outstanding Amount”), the Note into shares of the Company’s common stock
(the “Common Stock”), Series A warrants to purchase shares of Common Stock and
Series B warrants to purchase shares of Common Stock (collectively, the
“Warrants”) on the terms and conditions equivalent to those offered to
purchasers under the Company’s proposed offering set forth on the Registration
Statement on Form S-1 (No. 333-205193) (the “Offering”).

D. The Company and the Holder desire to enter into this Agreement to confirm
their agreement to convert all outstanding principal and interest payable under
the Note into shares of the Common Stock and Warrants (the “Conversion”), with
such conversion to be effective at the closing of the Offering.

AGREEMENT

In consideration of the foregoing and the mutual covenants contained herein, the
parties hereto agree as follows:

1. Effective at the time of the closing of the Offering, (i) the outstanding
principal amount and all accrued and unpaid interest on the Note shall be
converted into that number of shares of Common Stock and Warrants which would be
issued if Holder paid such Outstanding Amount in connection with the Offering.
Any portion of the Outstanding Amount that would otherwise result in the
issuance of a fractional share or fractional warrants shall be repaid in cash.
Upon issuance of the shares of Common Stock and Warrants to the Holder pursuant
to this Agreement and payment of the remaining Outstanding Amount (in lieu of
fractional shares or warrants), all obligations of the Company to the Holder
pursuant to the Note shall immediately terminate and the Note shall be canceled
and have no further force and effect.

2. Immediately following the Conversion, the Holder shall deliver Holder’s Note
to the Company for cancellation and the Company shall issue and deliver to the
Holder the shares of Common Stock and Warrants (and cash in lieu of fractional
shares or warrants) that such Holder is entitled to receive pursuant to the
terms of this Agreement. Notwithstanding the

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foregoing or anything to the contrary contained herein, the full amount of the
Note shall automatically convert as described herein at the closing of the
Offering, without any further action required by the Holder of the Note, with
the delivery of the Note for cancellation being only a matter of administrative
maintenance.

3. Holder understands that the securities received upon conversion of the Note
have not been registered under federal or state securities laws and, as such,
cannot be sold unless so registered or an exemption from such registration
becomes available in the future. In recognition of the fact that the shares and
warrants received upon conversion of the Note will be “restricted securities,”
concurrent with the execution of this Agreement the Company and the Holder will
enter into a registration rights agreement (the “Registration Rights Agreement”)
in the form attached hereto as Exhibit B.

4. This Agreement (including the Registration Rights Agreement) sets forth the
entire agreement of the parties hereto with respect to the subject matter
hereof.

5. This Agreement shall be governed by, and construed and enforced in accordance
with, the laws of the State of California.

6. This Agreement may be executed electronically and in counterparts by the
parties hereto, all of which together shall constitute one instrument.

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IN WITNESS WHEREOF, the undersigned have executed this Note Conversion Agreement
as of the date first written above.

 

COMPANY:

INTERNATIONAL STEM CELL CORPORATION

By:

 

/s/ Mahnaz Ebrahimi

Name:

 

Mahnaz Ebrahimi

Title:

 

CFO

HOLDER:

/s/ Andrey Semechkin

Andrey Semechkin

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EXHIBIT A

 

Holder

   Principal Amount      Accrued Interest*  

Andrey Semechkin

   $ 3,810,000.00       $ 8,824       $ 3,810,000.00       $ 8,824   

 

*

through the date of this Note Conversion Agreement

 

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