isco_8kex1001.htm


    EXHIBIT
10.1

    


    EXTENSION
AGREEMENT

    


    This
Extension  Agreement (this “Agreement”), dated as of
January 30, 2009, is entered into by and among International Stem Cell
Corporation, a Delaware corporation (the “Company”), International
Stem Cell Corporation, a California corporation and wholly owned Subsidiary of
the Company (“ISC
California”), Lifeline Cell Technology, LLC, a California limited
liability company and wholly owned Subsidiary of the ISC California (“Lifeline”, and together with the Company and ISC California, the “Debtors”), and Gemini Master
Fund, Ltd. (“Holder”).

    


    R E C I T A L S:

    


    WHEREAS,
on May 14, 2008 the Company issued to the Holder that certain OID Senior Secured
Convertible Note in the original principal amount of $1,000,000 with a maturity
date of January 31, 2009 (the “Note”) pursuant to that
certain Securities Purchase Agreement (“Purchase Agreement”) dated as
of May 14, 2008; initially capitalized terms used herein but not otherwise
defined shall have the meanings set forth in the Note or Purchase Agreement, as
the case may be;

    


    WHEREAS, the Company’s obligations
under the Note are secured by the Security Agreement and IP Security
Agreement;

    


    WHEREAS,
the Note and Purchase Agreement were amended pursuant to that certain
Modification of Note and Security Agreement entered into as of July 22, 2008
(“Modification”) to
modify the repayment obligations of the Note under Section 4.12 of the Purchase
Agreement;

    


    WHEREAS,
pursuant the Purchase Agreement (as amended) the Company repaid $500,000 of the
principal amount of the Note in January 2009, and on January 29, 2009 the Holder
converted $100,000 in principal amount of the Note, such that as of the date
hereof the remaining outstanding principal amount of the Note is $400,000;
and

    


    WHEREAS,
the parties hereto wish to extend the maturity date of the Note and amend the
Transaction Documents in accordance with the terms hereof;

    


    A G R E E M E N
T:

    


    NOW
THEREFORE, in consideration of the foregoing premises and the mutual covenants
set forth in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:

    


    1. Amendments to
Note.

     

    (a) Extension of Maturity
Date.  The Maturity Date under the Note is hereby extended from
January 31, 2009 until the date (the “Extended Maturity Date”) which
is two (2) months following the date on which the Company deposits the Escrow
Amount into the Escrow Account (as such terms are defined below) (“Deposit Date”).

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    (b) Repayment/Prepayment.  The
Company is no longer required to pay any principal amount of the Note pursuant
to Section 4.12 of the Purchase Agreement (as modified by the Modification), and
in addition the Company retains its right to prepay the Note at any time
pursuant to Section 6 of the Note.

     

    2. Termination
of Security.  Effective on the
Deposit Date, the Security Agreement and IP Security Agreement, and all the
security interests granted thereby, shall automatically terminate and the
Holder’s security interest in and lien on all the Collateral and Intellectual
Property Collateral shall be released.

     

    3. Escrow.  Promptly
following the execution hereof, the Company and the Holder hereby agree to enter
into an escrow agreement (“Escrow Agreement”) with Torrey
Pines Bank, a California banking association, as escrow agent (“Escrow Agent”), in the form of
Exhibit I attached hereto.   Promptly following execution of this
Agreement and such Escrow Agreement, the Company shall deposit with Escrow Agent
an amount equal to Four Hundred Thousand Dollars ($400,000) (“Escrow Amount”) in immediately
available funds to be held in escrow pursuant to the terms of the Escrow
Agreement.  The Escrow Amount shall be held in escrow by the Escrow
Agent pursuant to the Escrow Agreement to satisfy the repayment of the principal
due under the Note on the Extended Maturity Date (to the extent such principal
amount has not been converted).

     

    4. Expenses.  The Company and
the Holder shall each pay for its own expenses incurred in connection herewith,
and the Company and the Holder shall split equally the fees and expenses of the
Escrow Agent.

     

    5. Execution
of Agreement.  This Agreement
may be executed in one or more counterparts, each of which will be deemed to be
an original copy of this Agreement and all of which, when taken together, will
be deemed to constitute one and the same agreement.  The exchange of
copies of this Agreement and of signature pages by facsimile transmission or PDF
shall constitute effective execution and delivery of this Agreement as to the
parties and may be used in lieu of the original Agreement for all
purposes.  Signatures of the parties transmitted by facsimile or PDF
shall be deemed to be their original signatures for any purposes
whatsoever.

     

    6. Section
Headings, Construction.  The headings of
sections in this Agreement are provided for convenience only and will not affect
its construction or interpretation.

     

    7. Waiver.  The rights and
remedies of the parties to this Agreement are cumulative and not
alternative.  Neither the failure nor any delay by any party in
exercising any right, power or privilege under this Agreement or the documents
referred to in this Agreement will operate as a waiver of such right, power or
privilege, and no single or partial exercise of any such right, power or
privilege will preclude any other or further exercise of such right, power or
privilege or the exercise of any other right, power or privilege.  To
the maximum extent permitted by applicable law:  (a) no claim or right
arising out of this Agreement or the documents referred to in this Agreement can
be discharged by one party, in whole or in part, by a waiver or renunciation of
the claim or right unless in writing signed by the other party; (b) no waiver
that may be given by a party will be applicable except in the specific instance
for which it is given; and (c) no notice to or demand on one party will be
deemed to be a waiver of any obligation of such party or of the right of the
party giving such notice or demand to take further action without notice or
demand as provided in this Agreement or the documents referred to in this
Agreement.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    8. Miscellaneous.

     

    (a) Full Force and
Effect.  Except as otherwise expressly provided herein, each of
the Purchase Agreement, the Note and the other agreements and transactions
contemplated thereby (“Transaction Documents”) shall
remain in full force and effect.  Except for any waivers and
modifications contained herein, if any, this Agreement shall not in any way
waive or prejudice any of the rights or obligations of the Holder or the Company
under the Transaction Documents, under any law, in equity or otherwise, and such
waivers and modifications shall not constitute a waiver or modification of any
other provision of the Transaction Documents nor a waiver or modification of any
subsequent default or breach of any obligation of the Company or of any
subsequent right of the Holder.

     

    (b) Authority.  Each
party hereto hereby represents and warrants to the other party that the
execution and delivery by such party of this Agreement, and the performance by
such party of its obligations hereunder, have been duly and validly authorized
by such party, with no other action on the part of such party being
necessary.  This Agreement has been duly and validly executed and
delivered by such party and constitutes a legal, valid and binding obligation of
such party enforceable against such party in accordance with its
terms.

     

    (c) Further
Assurances.  Each party shall do and perform, or cause to be
done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.

     

    (d) Assignment;
Successors.  The Holder may assign this Agreement or its
respective rights or obligations hereunder in connection with any transfer of
the Note.  This Agreement shall be binding upon each party’s
respective successors.

     

    [Signature
Page Follows]

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    IN
WITNESS WHEREOF, the parties have executed and delivered this Agreement as of
the date first written above.

     

    


    DEBTORS:

    


    
      	
              INTERNATIONAL STEM CELL
      CORPORATION, a Delaware corporation

               

              By:
        /s/ Kenneth
      Aldrich      

              Name:
      Kenneth Aldrich

              Title:   CEO

               

            
	
              INTERNATIONAL STEM CELL
      CORPORATION, a California corporation

               

              By:  
      /s/ Kenneth
      Aldrich      

              Name:
      Kenneth Aldrich

              Title:   CEO

            
	 
      
	
              LIFELINE CELL TECHNOLOGY, LLC a
      California limited liability company

               

              By:  
      /s/ Kenneth
      Aldrich      

              Name:
      Kenneth Aldrich

              Title:   CEO

               

            
	 
      


    

    HOLDER:

    


    GEMINI
MASTER FUND, LTD.

    By:           GEMINI
STRATEGIES, LLC, as investment manager

     

    By:   /s/ Steven
Winters   

    Name:   Steven
Winters

    Title:   Managing
Member

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
I

    


    Form of Escrow
Agreement

    


    (attached)

     

     

     

     

    5