Document:

Placement Agent Agreement with Shoreline Pacific

 Exhibit 10.20 
 March 18, 2010 
 International Stem Cell Corporation 
 2595 Jason Court 
 Oceanside, CA 92056 

Attn: Kenneth C. Aldrich. Chairman 
 Dear Ken:

 This letter (the “Agreement”) constitutes the agreement between Shoreline Pacific, LLC
(“Shoreline” or the “Placement Agent”) and International Stem Cell Corporation (the “Company”), that Shoreline shall serve as the exclusive placement agent for the Company, on a “reasonable
best efforts” basis, in connection with the proposed placement (the “Placement”) of registered securities (the “Securities”) of the Company, including shares (the “Shares”) of the
Company’s common stock (the “Common Stock”) and warrants to purchase shares of Common Stock. The terms of such Placement and the Securities shall be mutually agreed upon by the Company and the purchasers (each, a
“Purchaser” and collectively, the “Purchasers”) and nothing herein constitutes that Shoreline would have the power or authority to bind the Company or any Purchaser or an obligation for the Company to issue any
Securities or complete the Placement. This Agreement and the documents executed and delivered by the Company and the Purchasers in connection with the Placement shall be collectively referred to herein as the “Transaction
Documents.” The date of the closing of the Placement shall be referred to herein as the “Closing Date.” The Company expressly acknowledges and agrees that Shoreline’s obligations hereunder are on a reasonable best
efforts basis only and that the execution of this Agreement does not constitute a commitment by Shoreline to purchase the Securities and does not ensure the successful placement of the Securities or any portion thereof or the success of Shoreline
with respect to securing any other financing on behalf of the Company. Shoreline may engage subagents or selected dealers which are FINRA member firms to assist it with the Placement. The costs of any such subagents or selected dealers shall be
borne solely by Shoreline and not by the Company. 
 SECTION 1. COMPENSATION AND OTHER FEES. 
 As compensation for the services provided by Shoreline hereunder, the Company agrees to pay to Shoreline: 
 (A) Fees. The fees set forth below with respect to the Placement: 
  

	 	1.	A cash fee payable immediately upon the closing of the Placement and equal to 6% of the aggregate gross proceeds raised in the Placement. In the event the Company
receives a request from an existing shareholder to participate in the offering. Shoreline agrees that unless the offering is otherwise fully subscribed or participation would not be acceptable to any significant institutional participant in the
offering, such shareholder may participate and no fees will be charged on such participation. 

  

	 	2.	 Such number of warrants (the “Shoreline Warrants”) to Shoreline or its designees at the Closing to purchase shares of Common Stock
equal to 4% of the aggregate number of Shares sold in the Placement (excluding Shares sold to existing shareholders, as to which no fees are payable pursuant to Section 1 (A) 1 above). The Shoreline Warrants shall have the same terms as
the warrants issued to the Purchasers in the Placement except that the exercise price

	 	 
shall be 125% of the public offering price per share and shall have an expiration date of 5 years from the effective date of the Registration Statement. The Shoreline Warrants shall not have
anti-dilution protections or be transferable for six months from the date of the Offering except as permitted by Financial Industry Regulatory Authority (“FINRA”) Rule 5110, and further, the number of Shares underlying the Shoreline
Warrants shall be reduced if necessary to comply with FINRA rules or regulations. 

  

	 	3.	The Company reserves the right to discuss this placement directly with any parties who have approached the Company prior to the execution of this agreement and
Shoreline agrees that it will assist the Company in closing a transaction with such a party or parties if the Company deems that appropriate, in which event the fees payable to Shoreline shall be reduced by 50% as to that portion of the offering
subscribed by such parties. Company will not, however, directly solicit or discuss this offering directly with any party that has not prior to the date hereof approached the Company in response to the filing of the Registration Statement.

 (B) Expenses. The Company also agrees to reimburse Shoreline’s expenses (with supporting
invoices/receipts) up to a maximum of 0.5% of the aggregate gross proceeds raised in the placement, but in no event more than $50,000. Such reimbursement shall be payable immediately upon (but only in the event of) the closing of the Placement.

 (C) Blue Sky. The Company shall pay for all fees and expenses of its Blue Sky counsel in connection with the clearance
of the Offering in all states where Shoreline (with the Company’s prior concurrence) proposes to make offers of the Securities. 
 SECTION 2. REGISTRATION STATEMENT. 
 The Company represents and warrants to, and agrees with, the Placement Agent that:

 (A) The Company has filed with the Securities and Exchange Commission (the “Commission”) a registration
statement on Form S-1 (Registration File No.333-164540) under the Securities Act of 1933, as amended (the “Securities Act”), which was filed on January 27, 2010 for the registration under the Securities Act of the Securities.
Following the effectiveness of the Registration Statement and the determination of pricing among the Company and the prospective Purchasers introduced to the Company by Shoreline, the Company will file with the Commission pursuant to Rules 430A and
424(b) under the Securities Act, and the rules and regulations (the “Rules and Regulations”) of the Commission promulgated thereunder, a final prospectus relating to the placement of the Securities, their respective pricings and the
plan of distribution thereof and will advise the Placement Agent of all further information (financial and other) with respect to the Company required to be set forth therein. Such registration statement, at any given time, including the exhibits
thereto filed at such time, as amended at such time, is hereinafter called the “Registration Statement”; such prospectus in the form in which it appears in the Registration Statement is hereinafter called the “Base
Prospectus”; and the amended or supplemented form of prospectus, in the form in which it will be filed with the Commission pursuant to Rules 430A and/or 424(b) (including the Base Prospectus as so amended or supplemented) is hereinafter
called the “Prospectus Supplement.” The Registration Statement at the time it originally becomes effective is hereinafter called the “Original Registration Statement.” Any reference in this Agreement to the
Registration Statement, the Original Registration Statement, the Base Prospectus or the Prospectus Supplement shall be deemed to refer to and include the documents incorporated by reference therein (the “Incorporated Documents”), if
any, which were or are filed under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), at any given time, as the case may be; and any reference

 
in this Agreement to the terms “amend,” “amendment” or “supplement” with respect to the Registration Statement, the Original Registration Statement, the Base
Prospectus or the Prospectus Supplement shall be deemed to refer to and include the filing of any document under the Exchange Act after the date of this Agreement, or the issue date of the Base Prospectus or the Prospectus Supplement, as the case
may be, deemed to be incorporated therein by reference. All references in this Agreement to financial statements and schedules and other information which is “contained,” “included,” “described,” “referenced,”
“set forth” or “stated” in the Registration Statement, the Base Prospectus or the Prospectus Supplement (and all other references of like import) shall be deemed to mean and include all such financial statements and schedules and
other information which is or is deemed to be incorporated by reference in the Registration Statement, the Base Prospectus or the Prospectus Supplement, as the case may be. The Company has not received any notice that the Commission has issued or
intends to issue a stop order suspending the effectiveness of the Registration Statement or the use of the Base Prospectus or the Prospectus Supplement or intends to commence a proceeding for any such purpose. 
 (B) The Original Registration Statement, as amended, (and any further documents to be filed with the Commission) contains all exhibits and
schedules as required by the Securities Act. Each of the Registration Statement and any post-effective amendment thereto, at the time it became effective, complied in all material respects with the Securities Act and the applicable Rules and
Regulations and did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading. The Base Prospectus, and the Prospectus Supplement,
each as of its respective date, comply or will comply in all material respects with the Securities Act and the applicable Rules and Regulations. Each of the Base Prospectus and the Prospectus Supplement, as amended or supplemented, did not and will
not contain as of the date thereof any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The Incorporated
Documents, when they were filed with the Commission, conformed in all material respects to the requirements of the Exchange Act and the applicable rules and regulations promulgated thereunder, and none of such documents, when they were filed with
the Commission, contained any untrue statement of a material fact or omitted to state a material fact necessary to make the statements therein (with respect to Incorporated Documents incorporated by reference in the Base Prospectus or Prospectus
Supplement), in light of the circumstances under which they were made not misleading. No post-effective amendment to the Registration Statement reflecting any facts or events arising after the date thereof which represent, individually or in the
aggregate, a fundamental change in the information set forth therein is required to be filed with the Commission. Except for this Agreement, there are no documents required to he filed with the Commission in connection with the transaction
contemplated hereby that (x) have not been filed as required pursuant to the Securities Act or (y) will not be filed within the requisite time period. Except for this Agreement, there are no contracts or other documents required to be
described in the Base Prospectus or Prospectus Supplement, or to be filed as exhibits or schedules to the Registration Statement, which have not been described or filed as required. 
 (C) Neither the Company nor any of its directors and officers has distributed and none of them will distribute, prior to the Closing Date,
any offering material in connection with the offering and sale of the Securities other than the Base Prospectus, the Prospectus Supplement, the Registration Statement, copies of the documents incorporated by reference therein and any other materials
permitted by the Securities Act. 
 (D) Without the prior written consent of the Company, the Placement Agent hereby confirms
that it has not given and will not give to any prospective purchaser of the Securities any free writing prospectuses. 

 SECTION 3. REPRESENTATIONS AND WARRANTIES. The Company hereby makes to the Placement Agent all
of the representations and warranties which the Company makes to the Purchasers in any of the Transaction Documents. In addition, the Company represents and warrants to the Placement Agent that there are no affiliations with any FINRA member firm
among the Company’s officers, directors or, to the knowledge of the Company, any five percent (5%) or greater stockholder of the Company, except as set forth in the Base Prospectus. 
 SECTION 4. INDEMNIFICATION. The Company and Shoreline agree to the indemnification and other agreements set forth in the Indemnification
Provisions (the “Indemnification”) attached as Addendum A to the Engagement Agreement between us dated March 16, 2010, the provisions of which are incorporated herein by reference and shall survive the termination or expiration
of this Agreement. 
 SECTION 5. ENGAGEMENT TERM. The term of Shoreline Pacific’s engagement (the “Engagement
Period”) will expire 60 days from the effective date of the Registration Statement, or, at the option of the Company, 30 days after such effective date if no acceptable term sheet has been received within such 30 day period. Following
expiration of the initial Engagement Period, the Engagement Period will be automatically extended for additional 30-day periods or may be terminated upon 10 days’ written notice to the other party. The Engagement Period will automatically
terminate on the Closing. Notwithstanding anything to the contrary contained herein, the provisions concerning confidentiality, indemnification and contribution contained herein and the Company’s obligations contained in the Indemnification
Provisions will survive any expiration or termination of this Agreement, and the Company’s obligation to pay fees actually earned and payable and to reimburse expenses actually incurred and reimbursable pursuant to Section 1 hereof, will
survive any expiration or termination of this Agreement. 
 SECTION 6. SHORELINE INFORMATION. Shoreline agrees not to use any
confidential information concerning the Company provided to them by the Company for any purposes other than those contemplated under this Agreement. The Company agrees that any information or advice rendered by Shoreline in connection with this
engagement is for the confidential use of the Company only in their evaluation of the Placement and, except as otherwise required by law, the Company will not disclose or otherwise refer to the advice or information in any manner without
Shoreline’s prior written consent. 
 SECTION 7. NO FIDUCIARY RELATIONSHIP. This Agreement does not create, and shall not be
construed as creating rights enforceable by any person or entity not a party hereto, except those entitled hereto by virtue of the Indemnification Provisions hereof. The Company acknowledges and agrees that Shoreline is not and shall not be
construed as a fiduciary of the Company and shall have no duties or liabilities to the equity holders or the creditors of the Company or any other person by virtue of this Agreement or the retention of Shoreline hereunder, all of which are hereby
expressly waived. 
 SECTION 8. CLOSING. The obligations of the Placement Agent and the Purchasers, and the closing of the sale of
the Securities hereunder are subject to the accuracy, when made and on the Closing Date, of the representations and warranties on the part of the Company and its Subsidiaries contained or incorporated by reference herein, to the accuracy of the
statements of the Company and its Subsidiaries made in any certificates pursuant to the provisions hereof, to the performance by the Company and its Subsidiaries of their obligations hereunder, and to each of the following additional terms and
conditions: 
 (A) No stop order suspending the effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall have been initiated or threatened by the Commission, and any request for additional information on the part of the Commission (to be included in the Registration Statement, the Base Prospectus or the Prospectus
Supplement or otherwise) shall have been complied with to the reasonable satisfaction of the Placement Agent. 

 (B) The Placement Agent shall not have concluded and disclosed to the Company on or prior to
the Closing Date that the Registration Statement, the Base Prospectus or the Prospectus Supplement or any amendment or supplement thereto contains an untrue statement of a fact which, in the opinion of counsel for the Placement Agent, is material or
omits to state any fact which, in the opinion of such counsel, is material and is required to be stated therein or is necessary to make the statements therein not misleading. 
 (C) All corporate proceedings and other legal matters incident to the authorization, form, execution, delivery and validity of each of this
Agreement, the Securities, the Registration Statement, the Base Prospectus and the Prospectus Supplement and all other legal matters relating to this Agreement and the transactions contemplated hereby shall be reasonably satisfactory in all material
respects to counsel for the Placement Agent, and the Company shall have furnished to such counsel all documents and information that they may reasonably request to enable them to pass upon such matters. 
 (D) The Placement Agent shall have received from outside counsel to the Company such counsel’s written opinion, addressed to the
Placement Agent and the Purchasers dated as of the Closing Date, in form and substance reasonably satisfactory to the Placement Agent, and a Blue Sky memorandum from the Placement Agent’s blue sky counsel in customary form. 
 (E) Neither the Company nor any of its Subsidiaries shall have sustained since the date of the latest audited financial statements included
or incorporated by reference in the Base Prospectus, any loss or interference with its business from fire, explosion, flood, terrorist act or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental
action, order or decree, otherwise than as set forth in or contemplated by the Prospectus Supplement or the Base Prospectus and (ii) since such date there shall not have been any change in the capital stock or long-term debt of the Company or
any of its Subsidiaries or any change, or any development involving a prospective change, in or affecting the business, general affairs, management, financial position, stockholders’ equity, results of operations or prospects of the Company and
its Subsidiaries, otherwise than as set firth in or contemplated by the Prospectus Supplement or the Base Prospectus the effect of which, in any such case described in clause (i) or (ii), is, in the judgment of the Placement Agent, so material
and adverse as to make it impracticable or inadvisable to proceed with the sale or delivery of the Securities on the terms and in the manner contemplated by the Base Prospectus and the Prospectus Supplement. 
 (F) The Common Stock is registered under the Exchange Act and, as of the Closing Date; the Shares shall be authorized for trading on the
Over the Counter Bulletin Board (“OTCBB”). The Company shall have taken no action designed to, or likely to have the effect of terminating the registration of the Common Stock under the Exchange Act or suspending from trading the Common
Stock from the OTCBB, nor has the Company received any information suggesting that the Commission or OTCBB is contemplating terminating such registration or listing. 
 (G) Subsequent to the execution and delivery of this Agreement, there shall not have occurred any of the following: (i) trading in securities generally on the New York Stock Exchange, the Nasdaq
Global Market or the NYSE Amex or in the OTCBB, or trading in any securities of the Company on the OTCBB, shall have been suspended or minimum or maximum prices or maximum ranges for prices shall have been established on any such exchange or such
market by the Commission, by such exchange or by any other regulatory body or governmental authority having jurisdiction, (ii) a banking moratorium shall have been declared by federal or state authorities or a material disruption has occurred
in commercial banking or securities settlement or clearance services in the United States, (iii) the United

 
States shall have become engaged in hostilities in which it is not currently engaged, the subject of an act of terrorism, there shall have been an escalation in hostilities involving the United
States, or there shall have been a declaration of a national emergency or war by the United States, or (iv) there shall have occurred any other calamity or crisis or any change in general economic, political or financial conditions in the
United States or elsewhere, if the effect of any such event in clause (iii) or (iv) makes it, in the sole judgment of the Placement Agent, impracticable or inadvisable to proceed with the sale or delivery of the Securities on the terms and
in the manner contemplated by the Base Prospectus and the Prospectus Supplement. 
 (H) No action shall have been taken and no
statute, rule, regulation or order shall have been enacted, adopted or issued by any governmental agency or body which would, as of the Closing Date, prevent the issuance or sale of the Securities or materially and adversely affect or potentially
and adversely affect the business or operations of the Company; and no injunction, restraining order or order of any other nature by any federal or state court of competent jurisdiction shall have been issued as of the Closing Date which would
prevent the issuance or sale of the Securities or materially and adversely affect or potentially and adversely affect the business or operations of the Company. 
 (I) The Company shall have entered into subscription agreements with each of the Purchasers and such agreements shall be in full force and effect and shall contain representations and warranties of the
Company as agreed between the Company and the Purchasers. 
 (J) FINRA shall have raised no objection to the fairness and
reasonableness of the terms and arrangements of this Agreement. In addition, the Company shall, if requested by the Placement Agent, make or authorize Placement Agent’s counsel to make on the Company’s behalf, an Issuer Filing with FINRA
pursuant to FINRA Rule 5110 with respect to the Registration Statement and pay all filing fees required in connection therewith, with payment of such fees subject to the aggregate maximum of expenses paid pursuant to Section 1 (B). 
 (K) Prior to the Closing Date, the Company shall have furnished to the Placement Agent such further information, certificates and documents
as the Placement Agent may reasonably request. 
 All opinions, letters, evidence and certificates mentioned above or elsewhere
in this Agreement shall be deemed to be in compliance with the provisions hereof only if they are in form and substance reasonably satisfactory to counsel for the Placement Agent. 
 SECTION 9. GOVERNING LAW. This Agreement will be governed by, and construed in accordance with, the laws of the State of California applicable to agreements made and to be performed entirely
in such State. This Agreement may not be assigned by either party without the prior written consent of the other party. This Agreement shall be binding upon and inure to the benefit of the parties hereto, and their respective successors and
permitted assigns. Any right to trial by jury with respect to any dispute arising under this Agreement or any transaction or conduct in connection herewith is waived. Any controversy, dispute or claim between the parties relating to this Agreement
shall be resolved by binding arbitration in San Diego, California in accordance with the rules of the American Arbitration Association. The parties agree that in the event that any controversy, dispute or claim between the parties relating to this
Agreement is resolved by binding arbitration, the prevailing party, if any, as determined by the arbitrators award, shall be entitled to reimbursement of all expenses incurred in the arbitration including reasonable attorneys’ fees; provided,
that in no event shall the arbitrator have the authority to award punitive damages. Judgment on the award may be entered in any court having jurisdiction over the award. 

 SECTION 10. ENTIRE AGREEMENT AND MISCELLANEOUS. This Agreement (including the incorporated
Indemnification Provisions) embodies the entire agreement and understanding between the parties hereto, and supersedes all prior agreements and understandings, relating to the subject matter hereof other than the Engagement Letter between us dated
March 16, 2010, which shall remain in full force and effect to the extent not directly superseded by this Agreement. If any provision of this Agreement is determined to be invalid or unenforceable in any respect, such determination will not
affect such provision in any other respect or any other provision of this Agreement, which will remain in full force and effect. This Agreement may not be amended or otherwise modified or waived except by an instrument in writing signed by both
Shoreline and the Company. The representations, warranties, agreements and covenants contained herein shall survive the closing of the Placement and delivery and/or exercise of the Securities, as applicable. This Agreement may be executed in two or
more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties
need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission or a .pdf format file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is
executed) with the same force and effect as if such facsimile or .pdf signature page were an original thereof. 
 SECTION 11.
NOTICES. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of (a) the date of transmission, if such notice
or communication is delivered via facsimile at the facsimile number specified on the signature pages attached hereto prior to 6:30 p.m. (Pacific time) on a business day, (b) the next business day after the date of transmission, if such notice
or communication is delivered via facsimile at the facsimile number on the signature pages attached hereto on a day that is not a business day or later than 6:30 p.m. (Pacific time) on any business day, (c) the business day following the date
of mailing, if sent by U.S. nationally recognized overnight courier service, or (d) upon actual receipt by the party to whom such notice is required to be given. The address for such notices and communications shall be as set forth on the
signature pages hereto. 
 Please confirm that the foregoing correctly sets forth our agreement by signing and returning to
Shoreline the enclosed copy of this Agreement. 
  

			
	Very truly yours,
	
	SHORELINE PACIFIC, LLC
		
	By:	 	 /s/ Harlan Kleiman

	Name:	 	Harlan Kleiman
	Title:	 	Chief Executive Officer
	
	Address for notice:
	
	655 Montgomery Street, Suite 1000
	San Francisco, CA 94111
	Fax:
	Attention: General Counsel

 Accepted and
Agreed to as of 
 The date first written above: 

			
	INTERNATIONAL STEM CELL CORPORATION
		
	By:	 	 /s/ Andrey Semechkin

	Name:	 	Andrey Semechkin
	Title:	 	Chief Executive Officer:

 Address for notice:

 2595 Jason Court 
 Oceanside, CA
92056 
 Fax: 
 Attention:Exhibit 10.26

 Exhibit 10.26 
 CONFIDENTIAL SETTLEMENT AGREEMENT 
 This
Confidential Settlement Agreement (“Agreement”) is entered into as of December 11, 2009, by and between Luna Innovations, Inc. (“Luna”) and Luna Technologies, Inc. (“Luna Technologies”)
(collectively, the “Debtors”), and Hansen Medical, Inc. (“Hansen”) (together with the Debtors, the “Parties”). 
 This Agreement is made with respect to the following recitals: 
 A. Hansen and Luna
are parties to the California Action, and Hansen and the Debtors are parties to the Bankruptcy Case, as respectively defined below. 
 B. The Parties deem it to be in their best interests and to their mutual advantage to settle their disputes on the terms and conditions set forth in this Agreement, and nothing in this Agreement shall be construed as an admission of fault
or liability by either such Party. 
 C. This Agreement is one of the “Settlement Documents” for purposes of the
Amended Joint Plan of Reorganization (the “Amended Plan”), a substantially complete form of which is attached hereto, as described in the Amended Disclosure Statement in Support of Amended Joint Plan of Reorganization of Luna
Innovations Incorporated, et al. under Chapter 11 of the Bankruptcy Code (the “Disclosure Statement”) and the Confirmation Order entered by the U.S. Bankruptcy Court for the Western District of Virginia (the “Bankruptcy
Court”) in the Bankruptcy Case. 
 NOW, THEREFORE, in consideration of all of the terms and conditions of this
Agreement, the Parties agree as follows: 
 1. Definitions. The following words and phrases shall have the meanings
set forth below for purposes of this Agreement. 
 1.1 “Affiliates” shall mean any corporation or other entity
that is directly or indirectly controlling, controlled by, or under common control with a party. For purposes of this definition, “control” of an entity means the direct or indirect ownership of securities representing fifty percent
(50%) or more of the total voting power entitled to vote in elections of such entity’s board of directors or other governing authority, or equivalent interests conferring the power to direct or cause the direction of the governance or
policies of such entity. 
 1.2 “Bankruptcy Case” means the Chapter 11 case titled In re Luna Innovations,
et al., Case No. 09-71811 (WFS), United States Bankruptcy Court for the Western District of Virginia, Roanoke Division. 
 1.3 “California Action” means the civil action entitled Hansen Medical Inc. v. Luna Innovations Inc., Case No. 07-088551, Superior Court of the State of California, County of Santa Clara. 
 1.4 “Claims” means any and all claims, actions, causes of action, demands, costs, and charges of whatever nature. This
definition of “claims” applies only to this Agreement and is not intended to the change the definition of “claims” as used in the Amended Plan for bankruptcy purposes. 

 1.5 “Defendant Released Parties” means Luna and Luna Technologies and each
of its Affiliates, and each of their respective current and former officers, directors, employees, agents, attorneys, and representatives in their capacity as such. “Defendant Released Parties” does not include third parties such as
business partners and parties with contractual relationships with Luna other than those listed in the preceding sentence. 
 1.6
“Effective Date” means the Effective Date of the Amended Plan after entry of the Confirmation Order by the Bankruptcy Court; subject, however, to the conditions precedent set forth in Section 2. 
 1.7 “Legal Proceeding” means any lawsuit or any other civil or administrative proceeding of any kind in any court,
tribunal, agency or governmental entity. 
 1.8 “License Agreement” means that certain license agreement between
the Parties entered into as of the Effective Date. 
 1.9 “Party” means Luna, Luna Technologies or Hansen, and
when used in the plural shall mean all of them. 
 1.10 “Person” means an individual, trust, corporation,
partnership, joint venture, limited liability company, association, unincorporated organization or other legal or governmental entity, including those defined as “persons” in 11 U.S.C. § 101. 
 1.11 “Plaintiff Released Parties” means Hansen and its Affiliates, and each of their respective current and former
officers, directors, employees, agents, attorneys, and representatives in their capacity as such. “Plaintiff Released Parties” does not include third parties such as business partners and parties with contractual relationships with Hansen
other than those listed in the preceding sentence. 
 1.12 “Release” means the Confidential Mutual Release
Agreement attached as Exhibit C-6 of the Amended Plan. 
 1.13 “Settlement Documents” means each of
(i) this Agreement; (ii) the Cross License Agreement Between Intuitive and Hansen; (iii) the License Agreement Between Intuitive and Luna; (iv) the License Agreement Between Hansen and Luna; (v) the Development and Supply
Agreement; (vi) the Confidential Mutual Release Agreement; (vii) the Hansen Secured Promissory Note; (viii) the Patent and Trademark Security Agreement; (ix) the Security Agreement; and (x) the Warrant to Purchase Common
Stock of Luna Innovations Incorporated, as attached as Exhibits C-1 through C-10 of the Amended Plan, respectively. 
 1.14
“Third Party” means a Person, other than a Party to this Agreement or any of such Parties’ Affiliates. 
  

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 2. Execution of Settlement Documents Upon Approval of Amended Plan. Subject to
entry of the Confirmation Order by the Bankruptcy Court and subject to the conditions precedent set forth in sub-sections (a) through (g) below, and effective upon the Effective Date, the Parties shall execute each of the other Settlement
Document contracts, namely Exhibits C-2 through C-10 to the Amended Plan. Subject to Section 1125 of the Bankruptcy Code, Hansen hereby agrees to support the Amended Plan and efforts by the Debtors to obtain a Confirmation Order of the Amended
Plan. Notwithstanding anything else herein to the contrary, the Parties’ obligations under this Agreement are conditioned upon, and this Agreement will terminate upon the occurrence of any of the following prior to the Effective Date, unless
waived: 
 (a) the Bankruptcy Court’s denial of the Debtors’ request for approval of the Disclosure Statement or, in
the alternative, any modification(s) to the Disclosure Statement that would adversely affect, in any material way, (i) any of the terms and conditions contained in the Agreement, any Settlement Document, the Amended Plan, or the Confirmation
Order; or (ii) the ability of any Party to perform or comply with the Agreement, any other Settlement Document, the Amended Plan, or the Confirmation Order; 
 (b) the Bankruptcy Court’s denial of the Debtors’ request for confirmation of the Amended Plan or for entry of the Confirmation Order, or, in the alternative, the requirement or approval by the
Bankruptcy Court of any material modification(s) to the Amended Plan or Confirmation Order that would adversely affect, in any material way, (i) any of the terms and conditions contained in or benefits of the Agreement, any other Settlement
Document, the Amended Plan, or the Confirmation Order; or (ii) the ability of any Party to perform or comply with the Agreement, any other Settlement Document, the Amended Plan, or the Confirmation Order; 
 (c) the Debtors notify Hansen that they intend to cease prosecution of the Amended Plan or, in the absence of such notice, take affirmative
action to abandon or cease prosecution of such Amended Plan (provided that such actions shall not include amendments to the Amended Plan that do not adversely affect Hansen’s material rights under the Agreement, the other Settlement Documents
or the Amended Plan); 
 (d) the Bankruptcy Court or any appellate court of competent jurisdiction shall enter a judgment or
order declaring this Agreement or any material portion hereof to be unenforceable; 
 (e) if the Debtors shall take any action
or fail to take any action or there shall exist any facts or circumstances that result in a material breach of any of the other Settlement Documents, provided that for the purposes of this section (e) each Settlement Document shall be treated
as if it had been executed as of the date hereof and if Luna were not subject to the provisions of the Bankruptcy Code; 
  

 - 3 - 

 (f) if Intuitive Surgical, Inc. (“Intuitive”), shall not have executed the License
Agreement Between Intuitive and Luna and the Cross License Agreement Between Intuitive and Hansen and shall not have executed an amendment to the Development and Supply Agreement between Debtor and Intuitive dated June 11, 2007, so as to enable
the grant of licenses by Luna to Hansen pursuant to the License Agreement Between Hansen and Luna, each before the Effective Date; and 
 (g) the Effective Date has not occurred by March 31, 2010. 
 Upon termination of this Agreement in accordance
with the foregoing, each Party shall be released from its commitments, undertakings and agreement under or related to this Agreement, and shall have the rights and remedies that it would have had, and shall be entitled to take all actions that it
would have been entitled to take, had it not entered into this Agreement, including all rights and remedies available to it under applicable law. 
 3. Stock Issuance. On the Effective Date, Luna shall deliver to Hansen a certificate representing a number of shares of Common Stock, which, as of the Effective Date, shall represent 9.9% of
the outstanding capital stock of Luna (the “Shares”), after giving full effect to the issuance of all shares required hereunder. The Shares shall have the following legend; provided that such legend will be removed from such issued Shares
when such Shares may be sold without applicable volume limits under Rule 144: 
 “THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF.” 
 4. Confidentiality. 
 4.1 Limitations on Disclosure. The Parties and their counsel shall take all commercially diligent efforts to ensure that the terms of this Agreement remain strictly confidential and are not
disclosed to any Third Party, except as will be necessarily disclosed and made public pursuant to filing with the Bankruptcy Court as a part of the Amended Plan and set forth below. 
 4.1.1 Pursuant to Order. The terms of this Agreement may be disclosed pursuant to any order or subpoena requiring disclosure
in any Legal Proceeding, so long as the Party that has the disclosure requirement provides the other Party with written notice of such requirement not later than ten business days after first learning of such order or subpoena. 
 4.1.2 As Necessary to Lenders and Certain Third Parties. The terms of this Agreement may be disclosed to actual or potential
lenders and other third parties, including government agencies such as the United States Securities and Exchange Commission, listing agencies such as the NASDAQ, and similar entities, and any entities whose consent is required for the transactions
contemplated herein, as the relevant Party reasonably determines to be required. 
  

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 4.1.3 Professional Advisors. The terms of this Agreement may be disclosed to
any Party’s attorney, accountant, auditor, or insurer, but only under a professional duty of confidentiality. 
 4.1.4
Required by Law. The terms of this Agreement may be disclosed as required by law, including but not limited to any disclosure required to be made pursuant to the reporting obligations required by the United States Securities Exchange
Commission or any other United States or foreign regulatory authorities. 
 4.1.5 Media Matters. Notwithstanding
the generality of the restrictions imposed by Section 4.1, the Parties acknowledge that as public companies they are required to file publicly any material agreements and disclose publicly the material terms of the settlement. If a Party
intends to file a Confidential Treatment Request in order to redact any portion of the Settlement Documents, or otherwise to omit any exhibits to any of the Settlement Documents for filing with the SEC, the other Party shall cooperate with any
reasonable request for it to do likewise. The Parties further acknowledge that they may generally discuss and communicate any of this publicly available information. If the Parties agree, the Parties may issue a joint press release, the language of
which shall be approved by the Parties. Neither party is required to agree to a joint press release. Without limiting the foregoing, any Party may make additional public disclosures regarding this Agreement as required by the rules and regulations
promulgated by the Securities and Exchange Commission, the NASDAQ, or a similar entity, subject to reasonable prior notice to the other Party. 
 5. Final and Binding Agreement. Each Party agrees that it has made such investigation of all matters pertaining to this Agreement that such Party deems necessary. Each Party agrees that it
is not relying in any manner on any statement, promise, representation or omission, whether oral or written, express or implied, made by any Person, not specifically set forth in this Agreement, the Settlement Documents, the Disclosure Statement,
the Amended Plan, or the Confirmation Order. Each Party acknowledges that, after execution of this Agreement, such Party may discover facts different from or in addition to those which it now knows or believes to be true. Nevertheless, each Party
agrees that this Agreement shall be and remain in full force and effect in all respects, notwithstanding such different or additional facts. This Agreement is intended to be, and is, final and binding on all Parties, regardless of any allegation of
misrepresentation, fraud, mistake of law or fact, or any other circumstances whatsoever. 
 6. No Assignment of
Agreement. Unless expressly stated herein, including the exhibits hereto, neither Plaintiff nor Defendant (nor any Affiliate) may assign any rights conferred by or obligations imposed under this Agreement, in whole or in part, outright or by
way of collateral assignment, without the written consent of the other Party (which consent may be withheld for any reason or no reason). 
 7. Status Quo. If at any time either Debtor has any reason to know or expect that it will be unable or unwilling to continue to support, or to be able to perform or comply with, any
provision of any Settlement Document or any provision of the Amended Plan or Confirmation Order, then the Debtors shall promptly notify Hansen thereof in writing. The Parties shall use their best efforts to preserve the status quo as to their
respective pending disputes pending the 
  

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 Effective Date or the termination of this Agreement and to facilitate the reservation of their respective
rights, defenses, claims, titles and interests, pending that Effective Date or termination, without prejudice in the event of a termination, other than as expressly set forth herein. Without limiting the foregoing, Debtors shall forbear from
objecting to the Hansen claim or proof of claim until the first to occur of the termination of this agreement or the Effective Date, and the Debtors shall forbear from recommencing or advancing its estimation motion until the first to occur of the
termination of this Agreement or the Effective Date. 
 8. Warranties and Representations. The Parties hereby make
the following representations and warranties as of the date hereof and of the Effective Date. 
 8.1 No Assignment of
Claims. Each Party warrants and represents that such Party has not sold, assigned, conveyed, pledged, encumbered, or otherwise in any way transferred to any Person any Claim released by such Party pursuant to this Agreement or the Release.

 8.2 Independent Advice. Each Party warrants and represents that it has received or had the opportunity to
obtain independent legal advice from such Party’s attorney with respect to the rights and obligations arising from, and the advisability of executing, this Agreement. 
 8.3 Valid Issuance. The Shares to be issued by Luna to Hansen will, upon the Effective Date, be duly authorized and, when
issued and delivered in accordance with the terms of this Agreement, will be validly issued, fully paid and non-assessable, and the issuance of such Shares will not be subject to any preemptive or similar rights. 
 8.4 Corporate Power. Hansen warrants and represents that it is a corporation duly organized and validly existing under the
laws of the state of Delaware. Luna warrants and represents that Luna is a corporation duly organized and validly existing under the laws of Delaware. Upon the Effective Date of the Amended Plan subject to entry of the Confirmation Order by the
Bankruptcy Court, the Parties further warrant and represent that they have full corporate power and authority to enter into this Agreement and carry out the provisions hereof. 
 8.5 Survival of Warranties. All warranties and representations set forth in this Agreement shall survive the execution and
delivery of this Agreement. 
 9. General Provisions. 
 9.1 Benefit. This Agreement and the Release shall inure to the benefit of and be binding upon the Parties’ respective
agents, employees, officers, directors, shareholders, parents, subsidiaries, related entities, Affiliates, attorneys, successors and assigns. 
 9.2 Severability. All provisions contained herein are severable and in the event that any of them shall be held to be to any extent invalid or otherwise unenforceable by any court of
competent jurisdiction, such provision shall be construed as if it were written so as to effectuate to the greatest possible extent the Parties’ expressed intent; and in every case the remainder of this Agreement shall not be affected thereby
and shall remain valid and enforceable, as if such affected provision were not contained herein. If, and to the extent that,

  

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the Bankruptcy Court fails to approve in the Confirmation Order any or all of the agreements of the Parties concerning (i) the treatment of the Settlement Documents under Section 365(n)
of the Bankruptcy Code, contained in Section 9.11 hereof, in Section 10.6 of the Development and Supply Agreement, or in Section 6.6 of the License Agreement (or in the corresponding provisions of the Amended Plan incorporating such
specified provisions), or (ii) the exoneration provisions that benefit Hansen in Section 8.5 of the Plan, then such non-approval shall not result in a termination or a failure of condition precedent under Section 2 of this Agreement
or under the Amended Plan or the Confirmation Order. 
 9.3 Choice of Law. This Agreement shall be governed by and
construed in accordance with the United States Bankruptcy Code. Matters not covered by the Bankruptcy Code shall be construed in accordance with the internal substantive laws of the state of Delaware as applied to contracts made and wholly performed
within the state of Delaware without regard to its principles of choice of law. 
 9.4 Selection of Forum. The
exclusive venue for any action arising out of, related to, or connected with this Agreement shall be the United States Bankruptcy Court for the Western District of Virginia, Roanoke Division, but for any other disputes, the federal or state courts
in the State of Delaware. 
 9.5 No Oral Modification. No provision of this Agreement can be waived, modified,
amended, or supplemented except in a writing that expressly references this Agreement and is signed by an authorized representative of each Party to be bound. 
 9.6 No Construction Against Drafter. Because all Parties have participated in drafting, reviewing, and editing the language of this Agreement, no presumption for or against any Party arising
out of drafting all or any part of this contract shall be applied in any action whatsoever. 
 9.7 No Third-Party
Beneficiaries. Except as expressly set forth herein, the Parties agree that there are no third-party beneficiaries of any kind to this Confidential Settlement Agreement or the Release other than those listed as Defendant Released Parties and
Plaintiff Released Parties. 
 9.8 Integrated Agreement. Subject to Section 9.11, this Agreement, the
Settlement Documents (including the Exhibits hereto), the Disclosure Statement, the Amended Plan, and the Confirmation Order collectively constitute the entire understanding and contract between the Parties with respect to the subject matter
referred to herein. Any and all other representations, understandings, or agreements, whether oral, written, or implied, are merged into and superseded by the terms of this Agreement. 
 9.9 Headings. The subject headings used in this Agreement are included for purposes of convenience only, and shall not affect
the construction or interpretation of any provisions of this document. 
 9.10 Notice. Any notice required or
desired to be given hereunder shall be in writing and shall be served as provided herein either by an air courier service (such as FedEx, 
  

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 DHL or UPS) or by personal delivery. Notice may be served by email, if a confirming copy of the notice is
also served by air courier service or hand-served. Service of any notice shall be deemed complete (i) in the case of notice via personal delivery, actual receipt before 5:00 p.m. at the location of delivery (and shall be deemed complete on the
following day if actually received after 5:00 p.m. at the location of delivery); or (ii) in the case of notice via air courier, the third day following delivery of the notice to an air courier service with all costs fully prepaid. In order to
be effective, any notice must be served upon and received by both the Party and the persons designated to receive a copy thereof at the addresses set forth below: 
  

	
	 If to Hansen:

	
	 Hansen Medical, Inc.

	 800 East Middlefield Road

	 Mountain View, CA 94043

	 Attention: Arthur Hsieh and Fred Moll

	
	 With a copy to:

	
	 Morrison & Foerster LLP

	 755 Page Mill Road

	 Palo Alto, CA 94304

	 Attention: Bryan Wilson

	
	 If to Defendant:

	
	 Luna Innovations, Inc.

	 1 Riverside Circle, Suite 400

	 Roanoke, VA 24016

	 Attention: Chief Executive Officer

	
	 With a copy to:

	
	 Pachulski Stang Ziehl & Jones LLP

	 919 North Market Street, 17th Floor

	 Wilmington, DE 19899-8705

	 Attention: Laura Davis Jones

	
	 Munger, Tolles & Olson LLP

	 560 Mission Street

	 San Francisco, CA 94105

	 Attention: Kristin Linsley Myles

 9.11 Special Provision Regarding Licenses. The License Agreement and any licenses contained in the Development and Supply Agreement shall not be deemed to be integrated with the other
Settlement Documents in any way that would (i) prevent, prejudice or otherwise adversely affect any setoff or recoupment or other rights or security under such Settlement Document in the event that the License Agreement or such other licenses
should be

  

 - 8 - 

 
rejected in the future pursuant to § 365 and Hansen or Luna, as applicable, makes any election to retain rights and licenses under § 365(n)(1)(B); and (ii) require payment of
any royalties by Hansen or Luna, as applicable, under § 365(n)(2)(B). For avoidance of any doubt, notwithstanding any other provision of any Settlement Document, the result of the exception to integration of such contracts is that Hansen or
Luna, as applicable, shall be entitled to make its § 365(n)(1)(B) election to retain rights under a rejected License Agreement or with respect to licenses in the Development and Supply Agreement without impairing, affecting or prejudicing any
of Hansen’s or Luna’s, as applicable, rights, defenses, claims or interests of any kind, including setoff or recoupment, under or with respect to any other Settlement Document and without Hansen or Luna, as applicable, being required to
pay any amount as deemed “royalties” under such retained rights (since there shall be none). 
 9.12 Execution
in Counterparts. This Agreement may be executed and delivered in any number of counterparts. When each Party has signed and delivered at least one counterpart to all other Parties, each counterpart shall be deemed an original and all
counterparts, taken together, shall constitute one and the same agreement, which shall be binding and effective on the Parties hereto. This Agreement shall not become binding on the Parties hereto unless it has been executed by authorized
representatives of all Parties. 
 [Remainder of page intentionally left blank—signature page follows] 
  

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 IN WITNESS WHEREOF, the Parties have approved and executed this Confidential Settlement
Agreement as of the Effective Date. 
  

			
	 HANSEN MEDICAL, INC.

		
	 By:
	 	 /s/ Fred Moll

	 Name:
	 	Fred Moll
	 Its:
	 	CEO
	
	 LUNA INNOVATIONS, INC.

		
	 By:
	 	 /s/ Kent A. Murphy

	 Name:
	 	Kent A. Murphy
	 Its:
	 	Chairman & CEO
	
	 LUNA TECHNOLOGIES, INC.

		
	 By:
	 	 /s/ Scott A. Graeff

	 Name:
	 	Scott A. Graeff
	 Its:
	 	President

  

 - 10 -

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