Document:

KBS Legacy Q4 2013 Exhibit 10.41

Exhibit 10.41

LOFTS AT HIGHLANDS APARTMENTS 
ST. LOUIS, MISSOURI 

PROPERTY MANAGEMENT – 
ACCOUNTING SERVICES AGREEMENT
BETWEEN
LEGACY PARTNERS RESIDENTIAL L.P.
AND
KBS LEGACY PARTNERS LOFTS LLC

    

TABLE OF CONTENTS

	
						
	 
	 
	 
	 
	Page
	

	 
	 
	 
	 
	 

	Recitals
	1
	

	ARTICLE 1.
	DEFINITIONS
	1
	

	1.01.
	 
	Definitions
	1
	

	ARTICLE 2.
	APPOINTMENT AND SERVICES OF AGENT
	2
	

	2.01.
	 
	Term
	2
	

	ARTICLE 3.
	COMPENSATION AND EXPENSES OF AGENT
	3
	

	3.01.
	 
	Fees
	3
	

	3.02.
	 
	Expenses to be Borne by Agent
	4
	

	3.03.
	 
	Noncustomary Services
	4
	

	3.04.
	 
	Nonperformance
	4
	

	ARTICLE 4.
	PERSONNEL AND BONDING
	5
	

	4.01.
	 
	Stability of Management Team
	5
	

	4.02.
	 
	Fidelity Bond
	5
	

	4.03.
	 
	Affiliates
	5
	

	ARTICLE 5.
	COMPLIANCE WITH LAWS
	5
	

	5.01.
	 
	Compliance
	5
	

	5.02.
	 
	Notice
	6
	

	ARTICLE 6.
	FINANCIAL MATTERS
	6
	

	6.01.
	 
	Books and Records
	6
	

	6.02.
	 
	Reports
	6
	

	6.03.
	 
	Audit
	6
	

	6.04.
	 
	Other Reports and Statements
	7
	

	6.05.
	 
	Reserved
	7
	

	6.06.
	 
	Final Accounting
	7
	

	6.07.
	 
	Reserved
	7
	

	6.08.
	 
	Certification
	7
	

	ARTICLE 7.
	BANK ACCOUNTS
	7
	

	7.01.
	 
	Property Accounts
	7
	

	7.02.
	 
	Expenses Paid By Owner
	7
	

	ARTICLE 8.
	INSURANCE AND INDEMNITY
	8
	

	8.01.
	 
	INDEMNIFICATION
	8
	

	8.02.
	 
	Agent's Insurance Responsibility
	9
	

	8.03.
	 
	Contract Documents; Indemnity Provisions
	10
	

	8.04.
	 
	Ratings of Insurance Companies
	11
	

	8.05.
	 
	Owner's Insurance Responsibility
	11
	

	8.06.
	 
	Reserved
	11
	

	ARTICLE 9.
	RELATIONSHIP OF PARTIES and REPRESENTATIONS and
	 

	WARRANTIES.  11
	 

	9.01.
	 
	Nature of Relationship
	11
	

	9.02.
	 
	Comminications Between Parties
	11
	

	9.03.
	 
	Relationship of Owner and Agent with Respect to Leasing
	11
	

	9.04.
	 
	No Sales Brokerage Agreement
	12
	

	9.05.
	 
	Confidentiality
	12
	

    

	
						
	9.06.
	 
	Agent Not to Pledge Owner's Credit
	12
	

	9.07.
	 
	Representations and Warranties
	12
	

	ARTICLE 10.
	TERMINATION
	13
	

	10.01.
	 
	Termination by Owner Without Cause
	13
	

	10.02.
	 
	Termination by Owner for Cause
	13
	

	10.03.
	 
	Termination by Agent
	13
	

	10.04.
	 
	Orderly Transition
	13
	

	10.05.
	 
	Rights Which Survive Termination or Expiration
	14
	

	ARTICLE 11.
	MISCELLANEOUS
	14
	

	11.01.
	 
	Governing Law
	14
	

	11.02.
	 
	Table of Contents and Headings
	14
	

	11.03.
	 
	Entire Agreement
	14
	

	11.04.
	 
	Successors and Assigns
	14
	

	11.05.
	 
	Waiver
	15
	

	11.07.
	 
	Time
	15
	

	11.08.
	 
	Attorney's Fees
	15
	

	11.09.
	 
	Further Acts.
	15
	

	11.10.
	 
	No Advertising
	15
	

	11.11.
	 
	Signs
	15
	

	11.12.
	 
	Owner Exculpatory Clause; Waivers of Jury Trial and Punitive Damages
	15
	

	11.14.
	 
	Notices
	16
	

	11.15.
	 
	Counterparts
	16
	

EXHIBITS:

		
	A -
	LEGAL DESCRIPTION

    

PROPERTY MANAGEMENT - ACCOUNTING SERVICES AGREEMENT
This PROPERTY MANAGEMENT - ACCOUNTING SERVICES AGREEMENT (this "Agreement") is made as of February 25, 2014 (the "Effective Date") between LEGACY PARTNERS RESIDENTIAL L.P., a Delaware limited partnership ("Agent"), and KBS LEGACY PARTNERS LOFTS LLC, a Delaware limited liability company ("Owner").
RECITALS
A.    Owner is the record or beneficial owner of the Property (as defined below) and Agent is experienced in the management, operation and accounting of residential apartment projects similar to the Property.
B.    The parties desire to enter into this Agreement and set forth the terms and conditions under which Agent will provide certain services with regard to account maintenance and bookkeeping services.
NOW, THEREFORE, in consideration of the mutual covenants herein contained and other good and valuable consideration, Owner and Agent agree as follows:
AGREEMENT
ARTICLE 1.    DEFINITIONS.    
1.01.    Definitions.  As used in this Agreement, the following terms shall have the respective meanings set forth below:
"Affiliate" shall mean, when used with respect to any person (a) if such person is a corporation, any officer or director thereof and any person which is directly, or indirectly, the beneficial owner of more than 10% of any class of equity security (as defined in the Securities Exchange Act of 1934) thereof, or if any such beneficial owner is a partnership, any partner thereof, or if any such beneficial owner is a corporation, any person controlling, controlled by or under common control with such beneficial owner or of any officer or director of such beneficial owner or of any corporation occupying any such control relationship, (b) if such person is a partnership, any partner thereof, and (c) any other person which directly or indirectly controls or is controlled by or is under common control with such person.  For the purpose of this definition, "control" (including the correlative meanings of the term "controlling," "controlled by" and "under common control with"), with respect to any person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such person, whether through the ownership of voting securities or by contract or otherwise.  The term "Affiliate" shall also mean, when used with respect to any individual, the parents and grandparents of such individual, the parents and grandparents of any other individual who is an Affiliate of such individual by virtue of any one or more of the foregoing clauses (a), (b) and (c) of this definition, any descendant (whether natural or adopted) of any such parents or grandparents and any spouse of any such descendant.

1

"Approved Capital Budget" and “Approved Operating Budget” shall have the meanings set forth in the Property Management Agreement.
"Fiscal Year" shall mean the twelve (12) months commencing January 1 and ending December 31.
"Gross Monthly Collections" shall have the meaning set forth in the Property Management Agreement.
"Property" shall mean that certain real property consisting of 200-unit multifamily complex (commonly known as the Lofts at the Highlands Apartments) and zero (-0-) square feet of retail space located at 1031 Highlands Plaza Drive West, St. Louis, Missouri 63110, as more particularly described on Exhibit A attached hereto.
"Property Management Agreement” shall mean that certain Property Management Agreement dated as of even date herewith between Owner and Property Manager for the provision of property management services with respect to the Property.
"Property Manager” shall mean Mills Properties, Inc., a Missouri corporation.  
"Records Office" shall mean Agent's corporate office in Foster City, California. 
ARTICLE 2.    APPOINTMENT AND SERVICES OF AGENT.    
2.01.    Term.  Owner hereby hires Agent to provide account maintenance and bookkeeping services upon the terms and conditions herein stated, and Agent hereby accepts said engagement, for a term beginning on the date of this Agreement and ending at 12:00 midnight on the one-year anniversary of the beginning date, unless sooner terminated by Owner or Agent as provided in Article 10 of this Agreement.  At the expiration of said term, this Agreement, if not renewed in writing by Owner and Agent, shall then be deemed a month‐to-month agreement cancelable by either party on not less than thirty (30) days' advance written notice, which notice may be given at any time during a month, provided that in any event the cancellation shall be effective at the end of the calendar month in which the thirty (30) day notice period ends.
2.02.    Services of Agent.  Agent shall maintain the Accounts (as defined below) and provide bookkeeping services to facilitate the efficient operation of the Property in compliance with this Agreement.  Without limiting the generality of the foregoing and subject at all times to such procedures and directions that shall be set forth in this Agreement (as revised or amended from time to time), Agent shall do all of the following:
(a)    Employees.  Agent shall select, employ, pay, supervise and discharge all employees and personnel necessary to provide the services required under this Agreement (subject to the limitations set forth in Section 4.01 hereof).  All persons so employed by Agent shall be employees of Agent or independent contractors retained by Agent, and not by 

2

Owner.  All costs of gross salary and wages, payroll taxes, medical and dental insurance, worker's compensation insurance, incentive leasing bonuses and other costs and employee benefit expenses payable on account of such employees, shall be included in the Approved Operating Budget.  Agent shall fully comply with all applicable laws and regulations having to do with workers' compensation, social security, unemployment insurance, hours of labor, wages, working conditions and other employer/employee-related subjects.  
(b)    Records and Budgets.  Agent shall keep or cause to be kept at the Records Office suitable books of control as provided in this Agreement.  Agent shall assist Owner in reviewing monthly, quarterly, annual or other operating and capital budgets as shall be required by Owner.  
(c)    Operating Expenses.  Unless otherwise directed by Owner, at the written request and direction of Property Manager, Agent shall process payment of all operating and capital expenses in a manner commercially reasonable for the Property.
(d)    Business Plan and Property Review Program.  Agent shall assist Owner in reviewing business plans for the Property submitted by Property Manager.  In addition, Agent shall participate in Owner's property review programs to the extent requested by Owner and applicable to the services provided under this Agreement.  Such review shall include asset, investment, financial and strategy profiles in form and substance satisfactory to Owner and such assistance as Owner may request in connection with appraisals of the Property.  Agent shall respond, within 10 days, to Owner's management evaluation reports concerning actions to be taken by Agent to correct or modify its management standards for the operations or financial services provided for the Property.
ARTICLE 3.    COMPENSATION AND EXPENSES OF AGENT.    
3.01.    Fees.
(a)    Owner shall pay Agent, and Agent shall accept as full compensation for the services to be rendered to Owner hereunder during the term hereof, a sum equivalent to one percent (1%) of Gross Monthly Collections (the "Services Fee").  Such compensation shall be payable monthly on or before the 20th of the subsequent month.  
(b)    Except with respect to other services provided by Affiliates of Agent in accordance with Section 3.01(c), which shall be reimbursed by Owner pursuant to Section 3.01(c), Agent shall pay from the Services Fee all costs associated with or relating to its own office overhead and management personnel not located or employed at the Property, including without limitation, the salaries, wages and all other compensation, together with associated unemployment and social security taxes and contributions, as well as expenses specifically stated in this Agreement to be borne by Agent.  
(c)    If included in the Approved Operating Budget or with the prior approval and 

3

direction of Owner, Agent may obtain services and materials including, but not limited to, consulting, training, computer hardware and software, contract services and accounting and bookkeeping services through the organization, subsidiaries or Affiliates of Agent for the benefit of the Property, provided the quality of service and the price thereof is competitive with comparable prices and services offered by third parties, and the costs therefore shall be reimbursed by Owner.  All discounts, rebates and other savings realized thereon by Agent are to be passed on to Owner, in full.  
3.02.    Expenses to be Borne by Agent.  Unless otherwise provided in the Approved Operating Budget or Section 4.01(b) below, expenses incurred in rendering all overall supervisory, management and recordkeeping and other services to be rendered by Agent in connection with the operations of the Property shall be borne by Agent and not charged to Owner.  Without limiting the generality of the foregoing provisions of this section, the following expenses and costs incurred by and/or on behalf of Agent shall be at the sole cost and expense of Agent and shall not be reimbursed by Owner:
(a)    All costs of gross salary and wages, payroll taxes, insurance, workmen's compensation and other costs of Agent's corporate office and executive personnel (other than full time or part time personnel whose positions and salaries are specifically authorized in the Approved Operating Budget);
(b)    All costs incurred as a result of Agent's breach of this Agreement, and/or the negligence and/or willful misconduct of Agent and/or any one or more of its Affiliates, employees, independent contractors, agents and/or other representatives;
(c)    Unless otherwise provided in the Approved Operating Budget, all costs of forms, accounting materials, administrative materials, papers, ledgers and other supplies and equipment used in Agent's corporate office, all costs of Agent's data processing equipment located at Agent's corporate office and all costs of data processing provided by computer service companies to Agent's corporate office;
(d)    All costs of bonuses, incentive compensation, profit sharing or any pay advances to employees employed by Agent in connection with the operation and management of the Property, except for payments to individuals specifically set forth in the Approved Operating Budget or otherwise approved in writing by Owner in advance; and
(e)    All costs of automobile purchases and/or rentals, unless provided for in the Approved Operating Budget or Approved Capital Budget or the automobile is being provided by Owner.
3.03.    Noncustomary Services.  Notwithstanding anything provided in this Agreement to the contrary, Agent shall not furnish or render to the tenants of the Property services other than those services customarily furnished to tenants of properties similar to the Property.
3.04.    Nonperformance.  If Agent fails to perform any act required under this Agreement, then 

4

Owner, after ten (10) days' written notice to Agent (or, in the case of any emergency, without notice) and without waiving or releasing Agent from any of its obligations hereunder, may (but shall not be required to) perform such act.  Owner shall have (in addition to any other right or remedy) the right to offset all costs and expenses incurred in exercising its rights under this Section 3.04 against any sums due or to become due to Agent, including, without limitation, the Services Fee.
ARTICLE 4.    PERSONNEL AND BONDING.    
4.01.    Stability of Management Team.  Owner and Agent recognize the benefits inherent in promoting stability in the management team engaged in the operation of the Property.  Agent shall, in the hiring of all employees and in retaining independent contractors, use reasonable care to select qualified, competent and trustworthy employees and independent contractors.  Subject to the provisions of this Section 4.01, the selection, terms of employment (including rates of compensation) and termination thereof, and the supervision, training and assignment of duties of all employees of Agent engaged in the operation of the Property shall be the duty and responsibility of and shall be determined by Agent.   All personnel at the Property shall be employees of Agent and/or contractors of Agent.
4.02.    Fidelity Bond.  Agent, at Agent's cost, shall obtain a fidelity bond or bonds covering Agent, and all persons who handle, have access to, or are responsible for, Owner's monies in such amount and in such forms as are reasonably acceptable to Owner, at all times and to cover all periods, during the term of this Agreement.  Any changes in such bond(s) must be approved by Owner.  Agent hereby agrees to add Owner as a joint loss payee under its blanket crime policy as it pertains to the Property. Agent hereby assigns all proceeds of said bond(s) as they relate to the Property to Owner and agrees to execute such further assignments and notices thereof as shall be required by Owner.  Such bond(s) shall indemnify Owner against any loss of money or other property which Owner shall sustain through any criminal, fraudulent or dishonest act or acts committed by Agent or any of its employees or agents, during the performance of their obligations under this Agreement or their employment.  Alternatively, Agent may obtain a crime insurance policy covering the Agent, and all persons who handle, have access to, or are responsible for, Owner's monies which shall be obtained at Agent's sole expense and shall provide Owner coverage of Two Million Dollars ($2,000,000.00) per occurrence with a Fifty Thousand Dollar ($50,000.00) deductible which deductible shall be an expense of Agent.  Owner shall be furnished by Agent with a certificate or other satisfactory documentation relating to the bond(s) or alternative crime insurance policy immediately upon issuance thereof.
4.03.    Affiliates.  Agent shall not contract for outside services for the Property with any Affiliate of Agent without the prior written consent of Owner.
ARTICLE 5.    COMPLIANCE WITH LAWS.    
5.01.    Compliance.  Agent shall comply fully with and abide by all laws, rules, regulations, requirements, orders, notices, determinations and ordinances (collectively, "Requirements") of any federal, state or municipal authority to the extent applicable, including, but not limited to the 

5

covenants and agreements related to the HUD Section 221(d)(4) mortgage financing encumbering the property set forth in Exhibit B attached hereto. but Property Manager shall not be required to make any payment  on account thereof.  If the cost of compliance is (i) not included in the Approved Operating Budget or Approved Capital Budget or (ii) in excess of $10,000, Agent shall notify Owner promptly and obtain Owner's prior written approval prior to making the expenditure.
5.02.    Notice.  Agent shall promptly notify Owner of any non-compliance with, or alleged violation of, any Requirement after becoming aware of the same.
ARTICLE 6.    FINANCIAL MATTERS.    
6.01.    Books and Records.  Property Manager shall keep accounts and books and records of the Property in accordance with the terms of the Property Management Agreement and the methods and systems, and in form and substance, approved by Owner, showing all receipts, expenditures and all other records necessary or convenient for the recording of the results of operations of the Property.  Such books are to be maintained on both a cash and accrual accounting basis utilizing the Yardi accounting software hosted by Agent.  Agent shall cooperate and assist Property Manager in the production and retention of such books and records. To the extent held by Agent, any such original books and records shall be kept in a secure location at the Records Office and shall be open to inspection by Owner and their representatives during normal business hours and Agent agrees to cooperate in making such books and records available for inspection.  Upon the effective date of any termination of this Agreement, all of such books and records held by Agent shall be delivered forthwith to Owner so as to ensure the orderly continuance of the operation of the Property.  The property will report on a calendar month basis. 
6.02.    Reports.
(a)    On or before the date specified Owner, Agent shall provide such reports and data to Owner and Property Manager as shall be required from time to time by Owner.  Without limitation, Agent shall provide the following to Owner and Property Manager for the current calendar month:
(i)    a detailed report of all monies collected (identified by tenant or other source) which shall include, but not be limited to, rents collected (including laundry or other vending income, garage or parking income, percentage rent and other amounts payable under any retail leases, if any), rents prepaid beyond the current month, and security deposits collected, and of vacancies and delinquent rents;
(ii)    a detailed report of all expenses paid;
(iii)    all bank statements and reconciliations; and
(iv)    any other special information as required from time to time by Owner. 
6.03.    Audit.  Owner shall have the right to conduct an audit of the Property's accounts and records 

6

at any time.  Agent shall promptly correct all weaknesses and errors disclosed by Owner's audits, and shall timely inform Owner in writing of all corrective actions taken.  Owner's audit shall be at Owner's expense unless an error arising from Agent’s negligence or misconduct is discovered that is equal to or greater than two percent (2%) of annual gross receipts of the Property for the period audited, in which case Agent shall bear the full cost of the subject audit.  Any adjustments in amounts due and owing from Owner or Agent shall be paid within fifteen (15) calendar days following Owner's receipt of the audit.
6.04.    Other Reports and Statements.  Agent shall furnish to Owner, as promptly as practicable, such other reports, statements or other information with respect to the operations of the Property or the Accounts as Owner may from time to time reasonably request.
6.05.    Reserved.  
6.06.    Final Accounting.  Following termination of this Agreement, whether by expiration of the term hereof or sooner, Agent shall be responsible for preparing a final accounting within thirty (30) days after the effective date of said termination.  The final accounting shall include all items reasonably requested by Owner.  Agent shall be entitled to receive a prorated share of its Services Fee to the date of termination.
6.07.    Reserved.  
6.08.    Certification.  To the extent applicable, all financial statements shall be certified as true and correct in all material respects by Agent.
ARTICLE 7.    BANK ACCOUNTS.    
7.01.    Property Accounts.
(a)    All funds received by Agent derived from the operation of the Property, as well as working capital furnished by Owner, shall be deposited in an account (the "Property Bank Account") in Agent’s name, as agent for Owner, in an FDIC-insured bank designated or approved by Owner, which such account will be in compliance with applicable law.  Owner may direct Agent to change depository banks or the depository arrangements.  All funds so deposited shall be deemed to be trust funds held by Agent for the benefit of Owner and shall be held and disbursed as provided herein.  Agent shall establish another custodial and/or trust account as required by applicable law or the Owner for the deposit of tenant security deposits (the "TSD Account").   
(b)    No non-Property funds shall be commingled with the funds in the Property Bank Account or TSD Account (collectively, the "Accounts").  
7.02.    Expenses Paid by Owner.  Except as otherwise directed by Owner, the following costs are to be paid directly by Agent:

7

(a)    Any and all costs necessary for the management, operation and maintenance of the Property requested by Property Manager, provided such costs are provided for and are within the limits of the Approved Operating Budget or specifically approved in writing by Owner;
(b)    Capital expenditures provided for in the Approved Capital Budget and requested by Property Manager or authorized in writing by Owner and directed by Owner to be incurred by Property Manager; and
(c)    Any and all costs necessary for emergency expenses as provided in Section 2.02(f) of the Property Management Agreement and directed to be incurred by Property Manager.
Agent shall not be obligated to make any advance to or for the account of Owner.    
ARTICLE 8.    INSURANCE AND INDEMNITY.    
8.01.    INDEMNIFICATION.
(A)    AGENT AGREES TO AND SHALL, COMPLETELY AND TO THE MAXIMUM EXTENT PERMITTED BY LAW, INDEMNIFY, DEFEND (WITH COUNSEL REASONABLY ACCEPTABLE TO OWNER), PROTECT AND HOLD OWNER AND ITS RESPECTIVE PRINCIPALS, OFFICERS, DIRECTORS, SHAREHOLDERS, PARTNERS, MEMBERS, EMPLOYEES, AUTHORIZED SUCCESSORS, AUTHORIZED ASSIGNS AND AGENTS HARMLESS FROM AND AGAINST ANY AND ALL CLAIMS, DEMANDS, ACTIONS, FINES, PENALTIES, LIABILITIES, LOSSES, TAXES, DAMAGES, INJURIES AND EXPENSES (INCLUDING, WITHOUT LIMITATION, ACTUAL ATTORNEYS', CONSULTANTS' AND EXPERT WITNESS' FEES, AND DEFENSE COSTS AT BOTH THE TRIAL AND APPELLATE LEVELS) (COLLECTIVELY, "DAMAGES") IN ANY MANNER RELATED TO, ARISING OUT OF OR RESULTING FROM (I) ANY FAILURE OF AGENT TO PERFORM ITS OBLIGATIONS UNDER THIS AGREEMENT CAUSING DAMAGE TO OWNER, BUT ONLY TO THE EXTENT SUCH DAMAGES ARE NOT COVERED BY THE INSURANCE MAINTAINED BY OWNER UNDER SECTION 8.05 BELOW, (II) ANY ACTS OF AGENT BEYOND THE SCOPE OF ITS AUTHORITY UNDER THIS AGREEMENT, (III) ANY NEGLIGENCE, WILLFUL MISCONDUCT OR OTHER WRONGFUL OR INTENTIONAL ACTS OR OMISSIONS OF AGENT, BUT WITH REGARD TO NEGLIGENCE OF AGEN (AS OPPOSED TO GROSS NEGLIGENCE, WILLFUL MISCONDUCT OR OTHER WRONGFUL OR INTENTIONAL ACTS OR OMISSIONS) ONLY TO THE EXTENT SUCH DAMAGES ARE NOT COVERED BY THE INSURANCE MAINTAINED BY OWNER UNDER SECTION 8.05 BELOW, (IV) ANY INJURY, DAMAGE OR DEATH TO AGENT, ITS OFFICERS, DIRECTORS, PARTNERS, EMPLOYEES, AGENTS AND OTHER REPRESENTATIVES, AND (V) ANY INJURY, DAMAGE 

8

AND/OR DEATH TO ANY INDEPENDENT CONTRACTORS OF AGENT.  THE OBLIGATIONS OF AGENT UNDER THIS SUBSECTION (A) SHALL APPLY ONLY TO THE EXTENT DAMAGES OF AN INDEMNIFIED PARTY ARE NOT FULLY PAID BY OWNER’S COMMERCIAL GENERAL LIABILITY INSURANCE DESCRIBED BELOW IN SECTION 8.05(B).  NOTWITHSTANDING ANY OTHER PROVISIONS OF THIS AGREEMENT TO THE CONTRARY, AGENT'S OBLIGATIONS UNDER THIS SECTION 8.01 SHALL SURVIVE THE EXPIRATION, TERMINATION OR CANCELLATION OF THIS AGREEMENT, AND SHALL BIND ANY AND ALL OF THE HEIRS, SUCCESSORS, ASSIGNS, TRANSFEREES AND REPRESENTATIVES OF AGENT.  THE RIGHTS OF OWNER UNDER THIS SECTION 8.01 SHALL ALSO INURE TO THE BENEFIT OF ANY AND ALL OF THEIR PRINCIPALS, OFFICERS, DIRECTORS, SHAREHOLDERS, PARTNERS, MEMBERS, EMPLOYEES, AGENTS, TRUSTEES, HEIRS, BENEFICIARIES, TRUSTS, SUCCESSORS, ASSIGNS, TRANSFEREES AND REPRESENTATIVES, AND TO THE BENEFIT OF ANY AND ALL PERSONS AND LEGAL ENTITIES WHO ARE, COULD BE OR ARE ALLEGED TO BE, LIABLE FOR THE OBLIGATIONS OF OWNER OR SUCH PRINCIPALS, OFFICERS, DIRECTORS, SHAREHOLDERS, PARTNERS, MEMBERS, EMPLOYEES, AGENTS, TRUSTEES, HEIRS, BENEFICIARIES, TRUSTS, SUCCESSORS, ASSIGNS, TRANSFEREES AND REPRESENTATIVES.
(B)    OWNER AGREES TO AND SHALL, COMPLETELY AND TO THE MAXIMUM EXTENT PERMITTED BY LAW, INDEMNIFY, DEFEND (WITH COUNSEL REASONABLY ACCEPTABLE TO AGENT), PROTECT AND HOLD AGENT (AND ITS PARTNERS, EMPLOYEES, AGENTS, SUCCESSORS, ASSIGNS AND TRANSFEREES) HARMLESS FROM AND AGAINST ANY AND ALL DAMAGES IN ANY MANNER RELATED TO OR ARISING OUT OF AGENT'S PERFORMANCE OF ITS OBLIGATIONS UNDER THIS AGREEMENT WHICH ARE (A) WITHIN THE SCOPE OF ITS AUTHORITY UNDER THIS AGREEMENT, AND (B) NOT WITHIN THE SCOPE OF AGENT’S INDEMNITY SET FORTH IN SECTION 8.01(A) ABOVE.
(C)    THE RIGHTS AND OBLIGATIONS OF INDEMNITY PROVIDED IN THIS SECTION 8.01 SHALL NOT BE EXCLUSIVE AND SHALL BE IN ADDITION TO SUCH OTHER RIGHTS AND OBLIGATIONS AS OTHERWISE EXIST INDEPENDENT OF THE PROVISIONS OF THIS SECTION 8.01.
8.02.    Agent's Insurance Responsibility.
(a)    The Agent shall maintain during the term of this Agreement, and any extensions or renewals thereof, each of the following insurance coverages with deductibles, if applicable:
		
	(i)
	Workers’ Compensation Insurance at no less than statutory requirements including employer's liability with a limit of not less 

9

than $1,000,000 each accident for bodily injury accident and $1,000,000 each employee and policy limit for bodily injury by disease.
		
	(ii)
	Non-Occupational Disability Insurance when required by law, if applicable.

(iii)    Commercial General Liability Insurance with a minimum combined bodily injury and property damage per occurrence limit of liability of $5,000,000, a products-completed operations aggregate limit of $5,000,000 and a general aggregate limit of $10,000,000.  Limits of liability may be satisfied through the maintenance of a combination of primary and umbrella/excess liability policies.
(iv)    Automobile Liability Insurance covering owned, hired and nonowned vehicles, separate coverage in an amount not less than $1,000,000 combined single limit for bodily injury and property damage of $1,000,000 each accident.
(v)    Errors and Omissions Insurance coverage in an amount not less than $1,000,000 each claim and general aggregate.
(b)    Agent shall promptly provide Owner no later than three (3) days after the Effective Date with certificates of insurance or other satisfactory documentation which evidence that all required insurance is in full force and effect.  Upon request, Agent shall provide Owner with a copy of the foregoing insurance policies.  Agent shall provide shall provide to Owner thirty (30) days' advance notice of cancellation or material change of all insurance policies required of Agent herein.  The liability policies required by Subsections 8.02(a)(iii) and (iv) shall provide that the insurer shall name Owner and its principals, officers, directors, shareholders, partners, members, trustees, beneficiaries and employees as additional insureds.  All liability policies shall be written to apply to all bodily injury, property damage, personal injury and other covered loss, however occasioned, which occurred or arose (or the onset of which occurred or arose) in whole or in part during the policy period.  Such liability policies also shall contain endorsements including cross-liability and waiver of subrogation, and shall contain such other endorsements as may be reasonably required by Owner.  The liability policies required by Subsections 8.02(a)(iii) shall include broad form contractual liability insurance coverage.
8.03.    Contract Documents; Indemnity Provisions.  Agent shall use its best efforts to include in service and supply contracts prepared or executed by Agent respecting the Property provisions to the effect that the other contracting party shall, to maximum extent permitted by law, indemnify, defend (with counsel reasonably acceptable to Owner), protect and hold harmless Agent and Owner and their respective principals, officers, directors, shareholders, partners, members, managers, trustees, beneficiaries and employees from and against any and all Damages in any manner related to, arising out of and/or resulting from any damage to or injury to, or death of, persons or property caused or occasioned by or in connection with or arising out of any acts or omissions of said contracting party or its employees or agents or contractors and agree that no principal, officer, director, shareholder, 

10

partner, member, manager, investor, trustee, officer, employee or agent of Owner shall be personally liable for any of the obligations of Owner hereunder.
8.04.    Ratings of Insurance Companies.  All insurance required to be carried by Agent shall be written with companies having a policyholder and asset rate, as circulated by Best's Insurance Reports, of A‐:VIII or better unless an exception is approved by Owner.
8.05.    Owner's Insurance Responsibility.  Owner shall maintain during the term of this Agreement, and any extensions thereof, each of the following insurance coverages which shall be primary and noncontributory insurance:
(a)    All-Risk Property Damage Insurance and Loss of Rents Insurance coverage on the Property.
(b)    Commercial General Liability Insurance coverage with a minimum general aggregate limit of not less than $10,000,000.  Agent shall be designated an additional insured under Owner's commercial general liability insurance policy while acting within the scope of its authority as Owner's agent.  Any insurance carried by Agent is excess, secondary and non-contributing.  Owner will be responsible for the payment of all deductibles or retentions of Owners’ Commercial General Liability Insurance.  All other terms and conditions of this Agreement (including, without limitation, the indemnification provisions of Section 8.01 and Agent's obligation to maintain insurance described in Section 8.02) shall not be affected by this Section 8.05(b).
8.06.    Reserved.  
		
	ARTICLE 9.
	RELATIONSHIP OF PARTIES and REPRESENTATIONS and WARRANTIES.    

9.01.    Nature of Relationship.  In taking any action pursuant to this Agreement, Agent will be acting only as an independent contractor, and nothing in this Agreement, expressed or implied, shall be construed as creating a partnership or joint venture or an employment relationship or that of principal and agent between Agent (or any person employed by Agent) and Owner or any other relationship between the parties hereto except that of property owner and independent contractor.
9.02.    Communications Between Parties.  Owner shall rely on Agent to direct and control all operations at the Property; provided, however, Owner reserves the right to communicate directly with the manager specified in Subsection 4.01(b), Agent's accountant(s) working on Property matters, all tenants and tenants' representatives, all lease prospects, all advertising, management, cleaning and servicing firms doing work for the Property, and all parties contracting with Owner or Agent with respect to the Property.
9.03.    Relationship of Owner and Agent with Respect to Leasing.  Agent shall not be entitled to any commission or other fee in connection with the leasing of apartment units at the Property.  

11

9.04.    No Sales Brokerage Agreement.  There are no sales brokerage agreements between Owner and Agent; Agent has no brokerage agreement or understanding (exclusive or otherwise) with respect to the sale of all or part of the Property on behalf of Owner; and in the event that Owner effects a sale of the Property, whether on its own or through the use of others, brokers or otherwise, Agent shall be entitled to no compensation, fee or commission or other payment on account of such sale.  Unless specifically approved by Owner, Agent shall have no right to obligate Owner for the payment of any fees or commissions to any outside real estate agent or broker for tenant leases.  Except as expressly provided to the contrary elsewhere herein or as otherwise approved by Owner in writing, Agent shall be fully responsible for any compensation due employees of Agent and any real estate brokers cooperating with Agent.  Agent shall indemnify and hold Owner harmless with respect to any action, proceeding, claim, liability, loss, cost or expense (including reasonable attorneys' fees) arising in connection with any claim for brokerage or finder's fees or any other like payment payable as a result of a breach under this Section 9.04 by Agent. Agent’s obligations with respect to the foregoing indemnity shall survive the expiration or earlier termination of this Agreement.
9.05.    Confidentiality.  Except as may be otherwise required by law, Agent and Owner shall maintain the confidentiality of all matters pertaining to this Agreement and all operations and transactions relating to the Property.
9.06.    Agent Not to Pledge Owner's Credit.  Agent shall not, except in the purchase of goods, wares, merchandise, materials, supplies and services reasonably required in the performance of its obligations under this Agreement and approved by Owner, pledge the credit of Owner; nor shall Agent, in the name or on behalf of Owner, borrow any money or execute any promissory note, installment purchase agreement, bill of exchange or other obligation binding on Owner or the Property.
9.07    Representations and Warranties.
(a)    Agent represents and warrants that (i) Agent has full power, authority and legal right to execute, deliver and perform this Agreement and to perform all of its obligations hereunder and (ii) the execution, delivery and performance of all or any portion of this Agreement do not and will not (x) require any consent or approval from any governmental authority, (y) violate any provisions of law or any government order or (z) conflict with, result in a breach of, or constitute a default under, the charter or bylaws of Agent or any instrument to which Agent is a party or by which it or any of its property is bound.
(b)    Owner represents and warrants that it has full power, authority and legal right to execute, deliver and perform this Agreement.
(c)    Agent acknowledges and agrees that Owner is relying upon the representations and warranties set forth in Sections 9.07(a) in entering into this Agreement, and Owner acknowledges and agrees that Agent is relying upon the representations and warranties set forth in Section 9.07(b) in entering into this Agreement.

12

ARTICLE 10.    TERMINATION.    
10.01.    Termination by Owner Without Cause.  This Agreement may be terminated by Owner at any time without cause and upon written notice to Agent by Owner, effective thirty (30) days from the date of such notice, which shall be considered the effective date of termination.
10.02.    Termination by Owner for Cause.  This Agreement may be terminated by Owner (or the Agent may be required by Owner to change its personnel assigned as Agent for the Property) at any time during the term hereof upon written notice to Agent effective immediately for any of the following causes:
(a)    If Agent shall suspend or discontinue business;
(b)    If a court shall enter a decree or order for relief in respect of Agent in an involuntary case under the federal bankruptcy laws, as now or hereafter constituted, or any other applicable federal, state or foreign bankruptcy, insolvency or other similar law, or appoint a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar official) of Agent or for any substantial part of its property, or for the winding‐up, dissolution or liquidation of its affairs, and such decree or order shall continue unstayed and in effect for a period of sixty (60) consecutive days or if Agent shall consent to any of the foregoing;
(c)    If Agent shall commence a voluntary case or action under the federal bankruptcy laws, as now or hereafter constituted, or any other applicable federal or state bankruptcy insolvency or other similar law, or consent to the appointment of or taking possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator (or other similar official) of Agent or for any substantial part of its property, or make any assignment for the benefit of creditors, or admit in writing that it is unable, or fail generally to pay its debts as such debts become due, or take action in furtherance of any of the foregoing;
(d)    If Agent is grossly negligent or engages in willful misconduct with respect to its duties or obligations to Owner under this Agreement; or
(e)    If Agent commits any other material default in the performance of any of its obligations under this Agreement, unless such default is cured with thirty (30) days after written notice of such default is given to Agent, or, if not curable within thirty (30) days, commenced within such thirty (30) days and diligently prosecuted to completion. 
10.03.    Termination by Agent.  This Agreement may be terminated by Agent, without cause, upon ninety (90) days' written notice to Owner.  This Agreement may be terminated by Agent for cause if Owner commits any material default in the performance of any of its obligations under this Agreement, including, without limitation, its obligation to pay to Agent any fees due and payable under Section 3.01 above, and such default shall continue for a period of thirty (30) days after notice thereof by Agent to Owner.  
10.04.    Orderly Transition.  In the event of any termination or expiration of this Agreement, Agent 

13

shall use its best efforts to effect an orderly transition of the management and operation of the Property to an agent designated by Owner and to cooperate with such agent.  Upon termination or expiration of this Agreement, Agent’s rights, if any, to withdraw funds from any account which contains funds collected in connection with the Property shall terminate.  Agent shall remove all signs that it may have placed at the Property containing its name and repair any resulting damage.  In addition, Agent shall deliver the following to Owner on or before thirty (30) days following the termination or expiration date:
(a)    A final report, reflecting the balance of income and expenses for the Property as of the date of termination or expiration; and
(c)    All keys, property, supplies, records, contracts, drawings, leases and correspondence, in existence at the time of termination or expiration and all other papers or documents pertaining to the Property.  All data, information and documents shall at all times be the property of Owner.
10.05.    Rights Which Survive Termination or Expiration.  Termination and/or expiration of this Agreement shall in no event terminate or prejudice any right arising out of or accruing in connection with the terms of this Agreement attributable to events and circumstances occurring prior to termination or expiration of this Agreement, and/or all rights and obligations specified in this Agreement to survive such termination and/or expiration.
ARTICLE 11.    MISCELLANEOUS.    
11.01.    Governing Law.  This Agreement shall be construed and enforced in accordance with the laws of the State in which the property is located without going effect to the conflict of law principles of such State.
11.02.    Table of Contents and Headings.  The Table of Contents preceding this Agreement and the headings of the various articles and sections of this Agreement have been inserted for convenient reference only and shall not have the effect of modifying or amending the express terms and provisions of this Agreement.
11.03.    Entire Agreement.  This Agreement contains the entire agreement between the parties with regard to the subject matter hereof, and this Agreement shall not be amended, modified or cancelled except in writing signed by both parties or by their duly authorized agents.
11.04.    Successors and Assigns.  All terms, conditions and agreements herein set forth shall inure to the benefit of, and be binding upon the parties, and any and all of their respective permitted heirs, successors, representatives and assigns.  Notwithstanding the foregoing, this Agreement may not be assigned by Agent nor shall Agent delegate any of its duties hereunder without Owner's prior written consent, which consent may be granted or withheld in Owner’s sole and absolute discretion.  Any attempted assignment or delegation by Agent hereunder in violation of this Section 11.04 shall be null and void and of no force or effect.  

14

11.05.    Waiver.  The failure of either party to insist upon a strict performance of any of the terms or provisions of this Agreement or to exercise any option, right or remedy herein contained, shall not be construed as a waiver or as a relinquishment for the future of such terms, provisions, option, right or remedy, but the same shall continue and remain in full force and effect.  No waiver by either party of any terms or provisions hereof shall be deemed to have been made unless expressed in writing and signed by such party.  In the event of consent by Owner to an assignment of this Agreement, no further assignment shall be made without the express written consent of Owner.
11.06.    Severability.   Whenever possible each provision of this Agreement shall be interpreted in such manner as to be effective and valid under all applicable laws.  However, if any provision of this Agreement is invalid under any applicable law, such provision shall be ineffective only to the extent of such invalidity without invalidating the remaining provisions of this Agreement and, to the fullest extent possible, this Agreement shall be interpreted so as to give effect to the stated written intent of the parties.  
11.07.    Time.  Time is of the essence of this Agreement.
11.08.    Attorneys’ Fees.  In the event of any legal or equitable proceeding for enforcement of any of the terms or conditions of this Agreement, or any alleged disputes, breaches, defaults or misrepresentations in connection with any provision of this Agreement, the prevailing party in such proceeding, or the non-dismissing party where the dismissal occurs other than by reason of a settlement, shall be entitled to recover its reasonable costs and expenses, including without limitation reasonable attorneys’ fees and costs, paid or incurred in good faith at the pre-trial, trial and appellate levels, and in enforcing any award or judgment granted pursuant thereto.  Any award, judgment or order entered in any such proceeding shall contain a specific provision providing for the recovery of attorneys’ fees and costs incurred in enforcing such award or judgment, including without limitation (a) post-award or post-judgment motions, (b) contempt proceedings, (c) garnishment, levy, and debtor and third party examinations, (d) discovery and (e) bankruptcy litigation.  The "prevailing party", for purposes of this Agreement, shall be deemed to be that party that obtains substantially the result sought, whether by dismissal, award or judgment.
11.09.    Further Acts.  Owner and Agent shall execute such other documents and perform such other acts as may be reasonably necessary and/or helpful to carry out the purposes of this Agreement.
11.10.    No Advertising.  No publication, announcement or other public advertisement of the name of Owner in connection with the Property shall be made by Agent, except as may be required by applicable law or with the prior written consent of Owner.
11.11.    Signs.  Signs and building directories are prohibited unless specifically approved by Owner.  Agent may place reasonable leasing signs as required with the prior approval of Owner.  All signs must meet all requirements of local sign codes and ordinances.
11.12.    Owner Exculpatory Clause; Waivers of Jury Trial and Punitive Damages.      Agent agrees that no principal, officer, director, shareholder, partner, member, investor, manager, representative, trustee, officer, employee or agent of Owner or of its members or partners shall be personally liable 

15

for any of the obligations of Owner hereunder and that Agent must look solely to the assets of Owner for the enforcement of any claims against Owner arising hereunder.  In addition, Agent hereby waives in connection with any such claim any right it may have to a jury trial and any punitive or consequential damages.
11.14.    Notices.  Any notice required or desired to be given under this Agreement shall be given in writing and shall be deemed sufficiently given and served for all purposes when personally delivered or delivered by any generally recognized courier, or by certified or registered mail, addressed to the appropriate address shown below.  Any notice given by depositing it in the United States mail as certified or registered mail, postage prepaid, shall be deemed given five (5) business days after deposit.
	
		
	Owner:

With a copy to:

With a copy to:

	KBS Legacy Partners Lofts LLC
c/o KBS Capital Advisors, LLC
620 Newport Center Drive, Suite 1300
Newport Beach, California  92660
Attn:  David Snyder

KBS Legacy Partners Lofts LLC
c/o Legacy Partners Residential Realty LLC 
7525 SE 24th Street, Suite 180
Mercer Island, WA  98040
Attn:  Kerry L. Nicholson 

KBS Legacy Partners Lofts LLC 
c/o Legacy Partners Residential, Inc. 
4000 E. Third Avenue, Sixth Floor
Foster City, California  94404
Attn:  W. Dean Henry/Guy K. Hays 

	 
	 

	Agent:

With a copy to:
	c/o Legacy Partners Residential L.P.
4000 E. Third Avenue, Sixth Floor
Foster City, California  94404
Attn:  Carol Foster 

c/o Legacy Partners Residential, Inc. 
4000 E. Third Avenue, Sixth Floor
Foster City, California  94404
Attn:  W. Dean Henry/Guy K. Hays 

11.15.    Counterparts.  This Agreement may be executed in any number of counterparts and each such counterpart shall be deemed to be an original instrument, but all such executed counterparts together shall constitute one and the same instrument.

16

IN WITNESS WHEREOF, the parties hereto have caused this instrument to be executed as of the Effective Date.
		
	OWNER:
	KBS LEGACY PARTNERS LOFTS, LLC, a Delaware

limited liability company
		
	By:
	KBS LEGACY PARTNERS PROPERTIES

LLC, a Delaware limited liability company, its
sole member
		
	By:
	KBS LEGACY PARTNERS LIMITED

PARTNERSHIP, a Delaware limited 
partnership, its sole member
		
	By:
	KBS LEGACY PARTNERS

APARTMENT REIT, INC., a
Maryland corporation, its sole
general partner
		
	By:
	/s/ Guy K. Hays

		
	Name:
	Guy K. Hays

		
	Title:
	Executive Vice President

		
	AGENT:
	LEGACY PARTNERS RESIDENTIAL L.P., a 

Delaware limited partnership
		
	By:
	KBS Legacy Partners Residential, Inc. a 

Delaware corporation, its managing general
partner

		
	By:
	/s/ Michael J. King

		
	Name:
	Michael J. King

		
	Its:
	Vice President – Designated Real

Estate Broker

17

EXHIBIT A
LEGAL DESCRIPTION OF PROPERTY
The land referred to herein is situated in the City of St. Louis, State of Missouri, and is described as follows:
Tract 1:
A tract of land being Lot 2 of the Highlands At Forest Park, a subdivision in the City of St. Louis, Missouri, and being in City Block 4002, according to the plat thereof recorded in Plat Book 74, Page 15 of the St. Louis City Records, St. Louis City, Missouri, and being more particularly described as follows:
Beginning at the Southwest corner of above said Lot 2, thence along the boundary lines of said Lot 2, the following courses and distances: North 06 degrees 59 minutes 45 seconds East 268.15 feet; South 83 degrees 00 minutes 15 seconds East 233.09 feet; South 14 degrees 59 minutes 12 seconds West 267.39 feet to a curve to the right; said curve having a radius of 45.00 feet, an arc distance of 75.11 feet; thence continuing along said boundary line North 69 degrees 22 minutes 32 seconds West 144.83 feet to the Point of Beginning.
Tract 2:
A tract of land being Lot 5A of the Resubdivision of Lot 4 and Lot 5 of Highlands At Forest Park, a subdivision in the City of St. Louis, Missouri, and being in City Block 4002, according to the plat thereof recorded in Plat Book 82, Page 22 of the St. Louis City Records, St. Louis City, Missouri, and being more particularly described as follows:
Beginning at the Northwest corner of above said Lot 5A, thence along the boundary lines of said Lot 5A, the following courses and distances:  South 83 degrees 00 minutes 15 seconds East 233.06 feet; South 06 degrees 59 minutes 45 seconds West 268.14 feet; South 83 degrees 22 minutes 02 seconds West 144.19 feet to a curve to the right; said curve having a radius of 44.50 feet, an arc distance of 75.45 feet; thence continuing along said boundary line North 00 degrees 59 minutes 41 seconds West 267.94 feet to the Point of Beginning.
Tract 3:
Rights of Easements appurtenant to the above descriptions Parcel 1 and Parcel 2 pursuant to that certain Declaration of Covenants and Restrictions of the Highlands at Forest Park recorded in Book 1624M, Page 1970 as amended by the First Amendment to Indenture of Covenants and Restrictions for the Highlands at Forest Park, City of St. Louis, Missouri recorded in Book 10062004, Page 0232, and as amended by the Second Amendment to Indenture of Covenants and Restrictions for the Highlands at Forest Park, City of St Louis, Missouri recorded in Book 08292007, Page 0206.
Commonly referred to as:  1031 Highlands Plaza Drive W., St. Louis, MO 63110

A-1

EXHIBIT B
HUD ADDENDUM TO MANAGEMENT AGREEMENT
The Property was developed with  financing through HUD’s  new construction program pursuant to Section 221(d)(4) of the National Housing Act, as amended; 
As a condition of the financing HUD requires the following terms to be incorporated into the in the Agreement to which this Exhibit B is a part (the “Management Agreement”).
Owner and Agent hereby agree that notwithstanding anything to the contrary set forth in the Management Agreement, as long as the financing through HUD’s 221(d)(4) program remains outstanding:
		
	1.
	Management Fees will be computed and paid according to HUD requirements.

		
	2.
	HUD may require the Owner to terminate the agreement:

		
	a.
	Immediately, in the event a default under the Mortgage, Note, or Regulatory Agreement, attributable to the Agent occurs;

		
	b.
	Upon 30 days written notice, for failure to comply with the provisions of the Management Certification or other good cause; or

		
	c.
	When HUD takes over as Mortgagee in Possession (MIP).

		
	3.
	The Management Agreement may not be assigned without the prior written approval of HUD.

		
	4.
	If HUD terminates the Management Agreement, Owner will promptly make arrangements for providing management satisfactory to HUD.

		
	5.
	HUD’s rights and requirements will prevail in the event the Management Agreement conflicts with them.

		
	6.
	The Agent will turn over to the Owner all of the project’s cash trust accounts, investments, and records immediately, but in no event more than 30 days after the date the Management Agreement is terminated.

		
	7.
	Any indemnification by the Owner shall be paid solely from surplus cash proceeds as defined in the Regulatory Agreement or the proceeds of an insurance policy.

B-1Exhibit 10.59 Coriell

SERVICES AGREEMENT
THIS SERVICES AGREEMENT (“Agreement”), effective as of December 1, 2013 (the “Effective Date”), by and between CELLULAR DYNAMICS INTERNATIONAL, INC., a Wisconsin corporation having its address at 525 Science Drive, Madison, Wisconsin 53711 (“CDI” or a “Party”), and CORIELL INSTITUTE FOR MEDICAL RESEARCH, a New Jersey non‐profit corporation having its address at 403 Haddon Avenue, Camden, New Jersey 08103 (“Coriell” or a “Party” and, collectively, with CDI, the “Parties”).

RECITALS:

WHEREAS, Coriell submitted an application to RFA 12-04: CIRM hPSC Repository Award (“RFA 12-04”), issued by the California Institute for Regenerative Medicine (“CIRM”).

WHEREAS, Coriell was awarded the grant made by CIRM under its RFA 12‐04, pursuant to a Notice of Grant Award issued by CIRM to Coriell (the “NGA”).

WHEREAS, Coriell’s application under RFA 12-04 proposed that CDI perform certain services as a subcontractor to Coriell under Coriell’s Repository Agreement with CIRM (the “Repository Agreement”), as contemplated in such application in particular in CDI’s letter of support made a part of such application.

WHEREAS, the Parties desire to set forth the terms and conditions upon which CDI would provide services as a subcontractor to Coriell for the Repository Agreement.

NOW THEREFORE, in reliance on the mutual representations, warranties and agreements set forth herein, the Parties agree as follows:
		
	1.
	Definitions.  The following capitalized terms shall have the meanings assigned to them in this Section 1 when used in this Agreement. 

		
	a.
	Bankruptcy Event. The (i) making of a general assignment for the benefit of creditors by an entity; (ii) filing of any petition by an entity or the commencement of any proceeding voluntarily by an entity for any relief under any bankruptcy or insolvency laws or any law relating to the relief of debtors; (iii) consent by an entity to the entry of an order in an involuntary bankruptcy or insolvency case; (iv) entry of an order or decree for relief against an entity by a court of competent jurisdiction in an involuntary case under any bankruptcy or insolvency laws or any law relating to the relief of debtors, which order or decree is unstayed and in effect for a period of sixty (60) consecutive days; (v) appointment, with or without the consent of an entity, of any receiver, liquidator, custodian, assignee, trustee, sequestrator or other similar official of an entity or any substantial part of its property, which appointment is unstayed and in effect for a period of sixty (60) consecutive days; or (vi) admission by an entity in writing of its inability to pay its debts generally as they become due.

		
	b.
	Buck Institute.  The Buck Institute for Research on Aging.

		
	c.
	Buck Institute Premises.  The premises within the Buck Institute occupied by CDI under a License and Services Agreement with the Buck Institute, as amended.

		
	d.
	Confidential Information.  All information or materials of whatsoever type or kind provided (either directly or indirectly in writing or other tangible form or orally) by one Party (the "Disclosing Party") to another Party (the "Receiving Party") that: (i) in the case of written information or materials, is clearly marked and identified as "Confidential" by the Disclosing Party at the time of disclosure; (ii) in the case of information disclosed orally, is confirmed in writing to be Confidential Information within thirty (30) days following disclosure; (iii) is designated as Confidential Information under this Agreement including, without limitation, in the case of Coriell, the information and materials listed in Exhibit D attached hereto; or (iv) is by its nature and the circumstances surrounding its disclosure ought reasonably to be considered Confidential Information (information described in this clause (iv) shall include without limitation all information of a Party that becomes known to or received by the other Party by reason of the presence of or access by such Receiving Party to the premises occupied by or to the property used by such Disclosing Party in connection with this Agreement).  Specifically excepted from Confidential Information is all information that the Receiving Party can demonstrate by written records (1) to have been known by, or in the possession of, the Receiving Party prior to the Disclosing Party's disclosure of such Confidential Information to the Receiving Party; (2) has, after disclosure of such Confidential Information by the Disclosing Party to the Receiving Party, become known to the Receiving Party through a third party who is not known by the Receiving Party to be under any obligation of confidentiality to the Disclosing Party; (3) to have been part of the public domain or publicly known at the time of the Disclosing Party's disclosure of such Confidential Information to the Receiving Party; (4) has, after disclosure of such Confidential Information by the Disclosing Party to the Receiving Party, become part of the public domain or publicly known, by Publication or otherwise, not due to any unauthorized act or omission by the Receiving Party; or (5) to have been independently developed by the Receiving Party without use of, or reliance upon, such Confidential Information. 

		
	e.
	Coriell’s Application.  The application that Coriell submitted with respect to RFA 12-04 including CDI’s letter of support in connection therewith.

		
	f.
	Derivation Agreement.  The iPSC Derivation Agreement executed by CIRM and CDI in connection with CIRM’s RFA 12-03.

		
	g.
	Derived Line(s).  The induced pluripotent stem cell line(s) derived by CDI pursuant to the Derivation Agreement.

		
	h.
	DCB Acceptance Criteria.  The quality control criteria set forth in Schedule 2 to Exhibit A attached hereto applicable to each DCB created from a Derived Line or Third Party Line, as may be modified from time to time by Coriell, CDI and CIRM as set forth in a writing executed by both parties.  

		
	i.
	DCBs.  The distribution cell banks created from Third Party Lines and Derived Lines by CDI’s performance of the Services under this Agreement.  

		
	j.
	End User Agreement.  The materials transfer agreement entered into between Coriell and a third party receiving a DCB from the Repository as contemplated in Appendix B to RFAs 12-03.

		
	k.
	Non-Commercial Entity End User.  A non-profit entity that uses DCBs or Derived Lines for internal research purposes only and that does not transfer any of the cells comprising a DCB or a Derived Line to any for‐profit entity or any non‐profit entity acting in a capacity of providing a service for commercial gain.

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

		
	m.
	Term.  The stated term of this Agreement commencing on the Effective Date and continuing until its expiration on the [****] anniversary of the date on which the NGA first becomes effective, which stated term is subject to termination prior to its expiration in accordance with Section 14 and to extension for one or more successive one year periods as may be mutual agreed in writing by the Parties.

		
	n.
	Third Party Line(s).  The pluripotent stem cell lines provided by California researchers and delivered to CDI for expansion.

		
	o.
	Third Party Line Acceptance Criteria.  The specifications and requirements applicable to each Third Party Line as set forth in Schedule 1 to Exhibit A attached hereto, as may be modified from time to time by Coriell, CDI and CIRM as set forth in a writing executed by the parties.

		
	2.
	Incorporation by Reference.  Coriell’s Application including CDI’s letter of support in connection therewith and RFA 12-04 are incorporated herein by reference subject to the other provisions of this Section 2.  In the event of a conflict between this Agreement, CDI’s letter of support in connection with Coriell’s Application, the other provision of Coriell’s Application and RFA 12‐04, the order of precedence shall be this Agreement, CDI’s letter of support, the other provisions of Coriell’s Application and RFA 12-04.  CDI shall have an obligation and responsibility for any matter addressed in the provisions of Coriell’s Application or RFA 12‐04 only to the extent expressly provided in this Agreement or CDI’s letter of support.  

		
	3.
	Services.  

		
	a.
	During the Term and subject to and upon the conditions set forth in this Agreement, CDI will perform the Services as set forth in Exhibit A (the “Services”). 

		
	b.
	[****].  

		
	c.
	[****].  

		
	d.
	Coriell will hold, store and maintain the Third Party Lines in accordance with the Repository Agreement and shall make them available to CDI as necessary for CDI to perform the Services.  

		
	e.
	CDI shall deliver all Acceptable DCBs (defined below) created in performance of the Services to Coriell at the Repository for storage and distribution exclusively by Coriell as contemplated by this Agreement (giving effect to what is provided in Section 2) including without limitation Section 9.d.  

		
	f.
	CDI represents and warrants by delivering DCBs, at the time of such delivery, that such DCBs meet their applicable DCB Acceptance Criteria, and CDI shall deliver to Coriell with each such DCB a Certificate of Analysis (CofA) as described in Exhibit A the delivery of which CofA shall have the effect of confirming such representation and warranty.  A DCB meeting the DCB Acceptance Criteria shall be referred to herein as an “Acceptable DCB.”  “Acceptable DCBs” shall be included in the definition of “DCBs” under this Agreement. [****][1 page redacted]

		
	g.
	The Parties hereby acknowledge and agree that the Third Party Lines provided to CDI under this Agreement (A) may have hazardous properties and the collecting, processing, storing, handling, distribution and disposition of such Third Party Lines may involve risks or dangers that are not known or fully appreciated and (B) must be collected, processed, handled, distributed and disposed of with prudence and appropriate caution.  THE PARTIES FURTHER ACKNOWLEDGE AND AGREE THAT (A) EACH THIRD PARTY LINE IS PROVIDED "AS-IS" AND THAT NEITHER PARTY MAKES ANY REPRESENTATIONS AND EXTENDS NO WARRANTIES OF ANY KIND, EITHER EXPRESSED OR IMPLIED, WITH RESPECT TO ANY THIRD PARTY LINES (EXCEPT AS EXPRESSLY SET FORTH HEREIN IN THE CASE OF THE THIRD PARTY LINES THAT CDI ACCEPTS AND WITH RESPECT TO WHICH IT DELIVERS DCBS CREATED THEREFROM TO CORIELL) OR CORIELL’S DELIVERY THEREOF; AND (B) THERE ARE NO EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE WITH RESPECT TO ANY THIRD PARTY LINES OR CORIELL’S DELIVERY THEREOF.

		
	h.
	CDI agrees that the Third Party Lines, Derived Lines and DCBs (A) shall be used by CDI for the sole purpose of performing the Services under this Agreement and for no other purpose and (B) except as expressly required or permitted under this Agreement, shall not be disposed of or transferred by CDI to any third party without the prior, written consent of Coriell.  Except to the extent required to enable CDI to perform the Services, CDI hereby further agrees that it will not, directly or indirectly, reverse engineer, deconstruct, or in any way, analyze or determine the identity, structure or composition of any of the Third Party Lines, Derived Lines or DCBs or the properties thereof (chemical, biochemical, physical, biological or other). 

		
	i.
	CDI hereby assumes all risk of loss associated with: (A) any Third Party Line delivered to it by Coriell under this Agreement, and (B) any Derived Lines, or (C) any DCBs created from Third Party Lines or Derived Lines, prior to Coriell’s receipt from CDI thereof (except any loss caused by Coriell).  Notwithstanding the foregoing, Coriell hereby assumes all risk of loss associated with any Acceptable DCBs at the time of its acceptance of physical delivery of such Acceptable DCBs from CDI as provided in Section 3.f.

		
	j.
	In the event that either Party becomes aware of a loss of temperature control or other conditions in respect of any of the Third Party Lines, Derived Lines or DCBs that could adversely affect same, such Party shall immediately provide an electronic notice to the other Party setting forth (A) the applicable Third Party Lines, Derived Lines and DCBs and (B) the facts, circumstances and details of such issue.

		
	k.
	CDI shall within a commercially reasonable period of time notify Coriell if CDI determines that CDI will not be able to conduct and complete any of the Services required under this Agreement in a timely manner.  CDI will notify Coriell within [****] of occurrence any disruptions in CDI’s laboratory processes including but not limited to changes in personnel or equipment failure that would reasonably be expected to significantly delay delivery of DCBs as contemplated herein.  

		
	l.
	CDI shall, within [****] business days following the end of each quarter during the Term of this Agreement (i.e., each three-month period in the Term commencing with the month that includes the Effective Date rather than a calendar year quarter, a “Quarter”), deliver, via an electronic notice to Coriell in accordance with the terms of this Agreement, a report (each, a "Quarterly Services Report") in respect of the Services performed by CDI in accordance with this Agreement during such Quarter.  Each Quarterly Services Report (i) shall be submitted in the format requested by Coriell and (ii) shall contain (A) a cumulative list of the Third Party Lines, Derived Lines, and DCBs processed (identified by the unique identifier assigned to same), (B) a list of each defective Third Party Line (i.e., that CDI determined in the course of performing Services does not meet the Third Party Line Acceptance Criteria or that CDI determined in the course of performing the Services does not (or will not) meet the DCB Acceptance Criteria),  defective Derived Line (i.e., that CDI determined in the course of performing Services does not (or will not) meet the DCB Acceptance Criteria) (each identified by the unique identifier assigned to same), and DCB that does not meet its applicable Acceptance Criteria, (C) material developments and issues relating to the conduct of the Services, and (D) such other information (if any) as the Parties from time to time agree in writing should be included therein.  For avoidance of doubt, in no event shall CDI be required to give access to or disclose to Coriell or any of its Representatives any of CDI’s trade secrets.  

		
	m.
	If either Party becomes aware of any safety hazard that relates to any performance of the Services, such Party shall within a commercially reasonable period of time notify the other Party of such safety hazard by providing all information in its possession or control concerning such safety hazard to the other Party.  

		
	n.
	CDI shall keep complete and accurate records of all Services performed by it under this Agreement.  Such records (including all applicable laboratory notebooks containing data, information or notations relating to the Services) shall be available for inspection, examining or copying by or on behalf of Coriell or at Coriell’s expense, solely to the extent such records are:  (A) necessary for Coriell to comply with any compulsory request of, or audit by, CIRM or any governmental entity with jurisdiction, or (B) reasonably required for Coriell (subject to Section 12.c.) to defend against any complaint, claim or other action or proceeding of which Coriell is a party and which includes or constitutes any claim regarding the Services that is the basis for any alleged liability of Coriell pursuant to such complaint, claim or other action or proceeding, subject to what is provided below in this Section 3.n.  Such records and information therein shall be treated as Confidential Information that may be used solely for the purposes set forth above in this Section 3.n and that shall be disclosed only to those Coriell Representatives (as defined in Section 10) with a need to know such information for such purposes.  Such records and information therein shall be governed by Section 10 and may not be disclosed by Coriell and its Representatives except for the purposes set forth above.  CDI hereby agrees to retain all such records for a period of not less than seven (7) years from the date of termination of this Agreement.  Notwithstanding anything contained herein to the contrary, in no event shall CDI be required to give access to or disclose to Coriell or any of its Representatives any of CDI’s trade secrets absent a court order compelling such disclosure, and without limiting what is provided above regarding Section 10 but for avoidance of doubt may be disclosed only after compliance with the provision of Section 10 regarding legally compelled disclosures.  

		
	4.
	Title; Transfer to the Repository.  

		
	a.
	CDI acknowledges and agrees that CDI does not claim title to [****].

		
	b.
	CDI’s obligation to perform the Services with respect to an Acceptable DCB will be completed upon delivery by CDI to Coriell at the Repository of the frozen aliquots comprising such Acceptable DCB as provided in Exhibit A (i.e., initially [****] aliquots with subsequent delivery of remaining Retained Vials as contemplated in such exhibit), accompanied by a Certificate of Analysis.  [****].  [****] shall bear the cost of delivery of the Acceptable DCBs to Coriell at the Repository.  Notwithstanding any contrary provisions contained herein, [****].

		
	5.
	Service Fees.  

		
	a.
	During the Term, Coriell shall pay to CDI fees as compensation for the Services in the amounts set forth in Exhibit B (collectively, the “Service Fees”).  The Service Fees shall be payable following the end of each Quarter as set forth in this Section 5 and the attached Exhibit B.  As shown on Exhibit B, during the [****] Quarters, Coriell shall pay to CDI [****].

		
	b.
	Within a commercially reasonable period of time following the end of each Quarter following the [****] Quarters, CDI shall calculate the Service Fee payment as set forth herein (each, a "Quarterly Services Payment") to be made by Coriell in respect of the Services performed and completed by CDI in the conduct of this Agreement during such Quarter.  Each such Quarterly Services Payment shall be calculated [****] as of the date on which such Quarterly Services Payment is to be made as set forth in Exhibit B.  [****], Coriell shall pay to CDI the unit price calculated pursuant to the formula set forth in Exhibit B.  [****].  Coriell shall also pay to CDI within [****] following the end of each Quarter any agreed upon consideration for additional services hereunder as specified in, and except as may be expressly otherwise provided in, any written agreement regarding the same signed by both parties. 

		
	c.
	Each invoice delivered by CDI under this Agreement in respect of any Service Fees under this Agreement shall (A) be issued in U.S. Dollars, and (B) be accompanied by the applicable Quarterly Services Report.  [****].  

		
	d.
	Subject to the second sentence of Section 5.c. and Section 5.f, each payment required to be made by Coriell under this Agreement shall be due and payable by Coriell within [****] of the date Coriell receives payment from CIRM for: (i) the Quarter invoiced by CDI in the case of the fixed amount Service Fees contemplated in Section 5.a. and (ii) the Services provided and invoiced by CDI in the case of Service Fees contemplated in Section 5.b.  In the event of a bona fide, good faith dispute regarding the appropriateness of one or more items set forth in an invoice submitted by CDI in accordance with this Agreement, Coriell shall [****].  All payments made by Coriell under this Agreement and be paid by check in U.S. Dollars and remitted to CDI at the address so identified in this Agreement except that payment may be made by wire transfer upon request by CDI.  Any payments that are made more than [****] after the date when due, [****], shall bear an additional charge at the rate of [****] per month until paid, of the maximum rate allowed by applicable law, whichever is less. 

		
	e.
	Not more than [****], CDI will, at the request of Coriell, permit a single external accounting firm selected by Coriell and reasonably acceptable to CDI (the “Accountant”) to have access to CDI’s financial records and books of account related to the Services, during ordinary working hours and without unreasonable disruption to CDI’s business operations, only to the extent necessary in order to audit, with respect to any Quarter during the Term ending prior to such request, the correctness of any Quarterly Services Report or invoice delivered under this Agreement.  Should the Accountant reasonably believe there is an inaccuracy in any of CDI’s Quarterly Services Reports or invoices, the Accountant will have the right to make and retain copies (including photocopies) of any portions of the financial records and books of account pertinent to the determination of the accuracy of CDI’s Quarterly Services Reports and invoices.  In the event that an inaccurate invoice from CDI resulted in Coriell overpaying CDI for Services, CDI shall immediately refund the difference between the amount actually paid and the amount payable pursuant to this Agreement.  For avoidance of doubt, nothing in this Section 5.e. shall be construed to modify any of the amounts set forth herein as payable as Service Fees payable or the basis upon which such amounts are payable hereunder.  All information reviewed and or copied by the Accountant under this Section 5.e. shall be treated as Confidential Information that may be used solely for the purpose of verifying the correctness of CDI’s Quarterly Services Reports and invoices, and the disclosures of information under this Section 5.e. and the information so disclosed shall be governed by, and may not be disclosed by the Accountant except to the extent and as expressly permitted under, the obligations of confidentiality herein including Section 10, except to Coriell as may be necessary to enforce Coriell’s rights under the Agreement or at law in the event an incorrect invoice is identified.

		
	f.
	Notwithstanding any contrary provisions contained herein, [****].  

		
	6.
	Project Directors.  Each Party will designate a primary contact person with respect to the obligations to be performed by such Party provided under this Agreement (a “Project Director”).  The Parties’ respective initial Project Directors are stated in Exhibit A.  Unless the Parties otherwise agree, communications relating to this Agreement must be directed in the first instance by a Party to the other Party’s Project Director.  

		
	7.
	Access; Insurance.

		
	a.
	CDI will give Coriell reasonable access, during normal business hours, upon reasonable prior notice and so long as CDI’s business operations are not unreasonably disrupted, to the portion of the Buck Institute Premises from which CDI provides the Services and to the information, personnel, equipment and systems including, without limitation, the Subcontract-funded Equipment, used to provide the Services as necessary to permit Coriell to confirm that the Services are being performed as contemplated herein and that CDI is otherwise complying with the provisions of this Agreement.  

		
	b.
	Coriell will give CDI reasonable access, during normal business hours, so long as Coriell’s business operations are not unreasonably disrupted, to those portions of the premises at which the Repository is maintained or from which Coriell provides services to CIRM as necessary to permit CDI to perform the Services or services under the Derivation Agreement.

		
	c.
	Each Party agrees to obtain and maintain (i) commercial general liability insurance applicable to the Party’s activities and property at the Buck Institute 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 in such amounts as is required by applicable statute and (iii) employers liability insurance with coverage of at least $[****] per occurrence.  In addition, CDI will obtain and maintain during the Term, at CDI’s sole expense (subject to what is provided in Section 8.c), property damage and insurance against loss or damage to the Subcontract‐funded Equipment due to fire, explosion, theft, vandalism, terrorism and such other risks of loss as are customarily maintained on equipment such as the Subcontract-funded Equipment intended for the uses contemplated hereby, in such amounts as shall be reasonably satisfactory to Coriell.  Any company writing a Party’s insurance shall have an A.M. Best or Standard and Poor’s rating of not less than A-VIII/A-.  The commercial general liability insurance policy shall cover the other Party as an additional insured.  The workers compensation insurance policy shall contain a waiver of subrogation in favor of the other Party. Each Party shall give the other Party at least [****] days’ advance written notice of any cancellation, termination, material change or lapse of insurance, which does not include routine annual renewals of policies without any changes or modifications thereto.  Each Party shall provide the other Party with a certificate of insurance or other commercially acceptable evidence of insurance evidencing such Party’s insurance required hereunder.  Each Party hereby waives and shall cause their respective insurance carriers to waive any and all rights of recovery, claims, actions or causes of action against the other for any loss or damage with respect to the Parties’ respective activities and properties, including rights, claims, actions and causes of action based on negligence, which loss or damage is (or would have been, had the insurance required by this Agreement been carried) covered by insurance, but only to the extent of any amount recovered by reason of such insurance, provided that such waiver of the right of subrogation shall not be operative in any case where the effect thereof is to invalidate such insurance coverage under applicable law.  

		
	8.
	Equipment.  This Section 8 is subject to [****].

		
	a.
	Coriell shall issue a purchase order for the purchase, at Coriell’s cost and expense for an aggregate price not to exceed $[****], for initial installation at the Buck Institute Premises not later than the [****], the items of equipment identified in Exhibit C [****] (the “[****]”) as well as all of the other the items of equipment identified in Exhibit C and listed under the subheading entitled [****](together with the [****], the “Subcontract‐funded Equipment”).  The foregoing purchase shall be made in accordance with the specifications therefor delivered by CDI to Coriell in accordance with this Agreement (and subject to the condition that CDI makes such delivery) and any applicable CIRM requirements.  Coriell shall pay the purchase price for the Subcontract‐funded Equipment according to the terms and conditions of purchase.  Coriell shall not accept from any manufacturer or supplier, or allow to lapse or waive any acceptance or inspection period or right with respect to, any Subcontract‐funded Equipment, without first notifying CDI and allowing it to exercise its rights under Section 8.e.

		
	b.
	Coriell shall hold title to the Subcontract‐funded Equipment.  Coriell shall maintain, and shall obtain and maintain, at its cost and expense, agreement(s) for third party maintenance of the Subcontract‐funded Equipment to provide the applicable manufacturers’ recommended preventive or periodic maintenance.  Any maintenance required beyond manufacturer recommended preventive or periodic maintenance, in order to maintain the Subcontract‐funded Equipment in good working order in the condition it was in when delivered to CDI, ordinary wear and tear excepted, shall be the sole obligation of CDI as and to the extent provided in Section 8.g.  In the event that Coriell fails to obtain or maintain any insurance or maintenance agreement(s) covering the Subcontract‐funded Equipment as contemplated herein, following [****] days’ advance written notice (or such shorter notice as is required under the terms upon which any such agreement(s) may be obtained or maintained) by CDI to Coriell, provided such agreement(s) are not entered into by Coriell during such [****] day period (or shorter period as contemplated above), CDI may obtain and enter into such agreement(s) at reasonable market rates and terms, and/or pay the amounts payable by Coriell thereunder at Coriell’s cost and expense and may forward or issue (for reimbursement to CDI) to Coriell an invoice for such cost and expense, which invoice Coriell shall pay promptly following its receipt thereof.

		
	c.
	CDI will be provided exclusive physical possession and use of the Subcontract‐funded Equipment during the Term for CDI’s use in providing the Services hereunder, and Coriell agrees that during the Term it shall not have or seek to have any possession, control or use of any of the Subcontract‐funded Equipment.  The Subcontract‐funded Equipment shall be located in the Buck Institute Premises or, if the Services are no longer being performed at the Buck Institute Premises, such other California location agreed to in advance in writing by Coriell (such consent to not be unreasonably conditioned, delayed or withheld), at which CDI then performs the Services hereunder  As additional consideration for its performance of the Services hereunder, CDI may use the Subcontract-funded Equipment for other purposes, provided that such use:  (x) does not prevent, hinder, or interfere with CDI’s performance of the Services hereunder or materially diminish (ordinary wear and tear excepted) the value of the Subcontract-funded Equipment; (y) is consistent with all manufacturer user guides, manuals and other requirements; and (z) is in compliance with any agreement between the Buck Institute, on the one hand, and CDI  (provided that in the case of (y) copies of any such requirements have been provided to CDI), as well as all laws, rules and regulations of every governmental authority applicable to CDI and the provisions of all policies of insurance carried by CDI as required by this Agreement.

		
	d.
	At the expiration or termination of the Term, and as additional consideration for CDI’s performance of the Services hereunder, CDI shall have the right and option, exercisable by notice to Coriell given not later than on the [****] day prior the expiration or termination of the Term, to purchase the [****] and any or all of the other Subcontract‐funded Equipment at a purchase price equal to the fair market value of such Equipment as reasonably determined by the Parties, less any and all costs and expenses of insurance or maintenance for or of the Subcontract‐funded Equipment owing to CDI but unpaid by Coriell in accordance with Section 8.b., as of the expiration or termination of the Term; provided, however, in the absence of a determination by the Parties of the fair market value of the [****] or any other item of Subcontract‐funded Equipment by the [****] day after CDI has given notice of its exercise of its option hereunder, then the purchase price of such item shall be [****].  Coriell shall, at its expense, keep the Subcontract-funded Equipment free and clear from any and all liens, pledges, security interests, encumbrances and other charges (collectively, “Encumbrances”).  If CDI exercises its option to purchase any of the Subcontract‐funded Equipment, then upon CDI’s payment in cash in full of the purchase price for such Subcontract‐funded Equipment, Coriell shall transfer to CDI all right, title and interest to the Subcontract‐funded Equipment, free and clear of all Encumbrances created by Coriell, and shall execute all such documentation to effectuate and evidence such transfer as CDI reasonably may request.  Coriell shall be responsible for all costs relating to obtaining and delivering such title to CDI.  The sale shall be on an “as is, where is, without warranty” basis (except as to title as set forth in the next preceding provision), and the parties shall execute such documentation as is reasonable and customary in connection with such sale including without limitation to transfer all manufacturer and supplier warranty rights (then not yet transferred to CDI) with respect to the Subcontract‐funded Equipment being purchased subject to any necessary manufacturer’s or supplier’s consent, which at the request of CDI the Parties shall cooperate to obtain.  

		
	e.
	CDI represents and acknowledges that the Subcontract-funded Equipment is of a size, design, capacity and manufacture selected by it, and that it is satisfied that the Subcontract‐funded Equipment is in those respects and of the type suitable for its purposes.  THE SUBCONTRACT-FUNDED EQUIPMENT IS PROVIDED AS IS, AND, NOT BEING THE MANUFACTURER OF THE EQUIPMENT OR THE MANUFACTURER’S AGENT, CORIELL MAKES NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, AS TO THE MERCHANTABILITY, FITNESS FOR ANY PARTICULAR PURPOSE, DESIGN OR CONDITION OF THE SUBCONTRACT-FUNDED EQUIPMENT.  CORIELL SHALL NOT BE RESPONSIBLE FOR ANY LOSS OR DAMAGE RESULTING FROM THE INSTALLATION, OPERATION OR OTHER USE, OR DEINSTALLATION OF THE SUBCONTRACT-FUNDED EQUIPMENT, INCLUDING ANY DIRECT, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES OR LOSS EXCEPT WITH RESPECT TO THE WILLFUL MISCONDUCT OF CORIELL.  Subject to Coriell’s obligations expressly set forth in this Agreement, CDI shall look solely to the manufacturer or the supplier of the Subcontract-Funded Equipment for correction of any problems that may arise with respect thereto, and all transferable manufacturer and supplier warranty rights are, to the extent such rights have been acquired by Coriell, hereby assigned, free and clear of all Encumbrances that would in any way interfere with or limit the exercise by or benefit to CDI of any such warranty rights and otherwise without representation or warranty by Coriell to CDI for the Term, which warranties CDI is authorized to enforce at CDI’s sole cost and expense.  Any non‐transferable warranty rights (including those for the transfer of which the manufacturer’s or supplier’s consent is required and has not been obtained for CDI’s benefit) shall be held, free and clear of Encumbrances that would in any way interfere with or limit the exercise by or benefit to CDI of any such warranty rights, and enforced, at CDI’s cost and expense, by Coriell for the benefit of and as requested by CDI during the Term.

		
	f.
	Except as permitted by Section 8.c., above, CDI shall use the Subcontract-funded Equipment solely in the conduct of its business in accordance with the provisions of this Agreement, in a manner and for the use contemplated by the manufacturer thereof, and in compliance with all laws, rules and regulations of every governmental authority having jurisdiction over the Subcontract-funded Equipment or CDI and with the provisions of all policies of insurance carried by CDI as required by this Agreement.

		
	g.
	CDI shall, at its expense, keep the Subcontract-funded Equipment free and clear from any and all Encumbrances and in good repair, condition and working order in order that such equipment is usable for CDI’s performance of the Services and as to each item of Unpurchased Equipment in the same condition and working order as when delivered to CDI as contemplated in Section 8.b., excepting (i) ordinary wear and tear and (ii) any failure of such equipment to be in such condition or working order attributable to [1] any failure of Coriell to secure a maintenance agreement for the as contemplated in Section 8.b., [2] any failure of Coriell to hold and enforce any non‐transferable warranty rights as contemplated in Section 8.e., [3] any failure of any manufacturer or third party to perform any warranty obligation sought to be enforced by Coriell or CDI, [4] any interference by Coriell with CDI’s exclusive physical possession and use of the Subcontract‐funded Equipment, or [5] any event of loss or damage to the extent covered by the property casualty insurance contemplated in Section 7.c. (the “Return Condition for Unpurchased Equipment”).

		
	h.
	CDI shall be solely responsible, at its own expense, for the de-installation, packing, rigging and delivery of the Subcontract‐funded Equipment to CDI in the event of its purchase thereof pursuant to the exercise of its option in Section 8.d.  Coriell shall be solely responsible, at its own expense, for the de-installation, packing, rigging and delivery to Coriell of each item of the Subcontract-funded Equipment with respect to which CDI declined to exercise its option (“Unpurchased Equipment”).  In the case of any item of Unpurchased Equipment having a fair market value  (as determined in accordance with Section 8.d) in excess of [****] Dollars ($[****]) at the expiration or termination of the Term, Coriell shall have such Unpurchased Equipment inspected and certified acceptable for maintenance service by the manufacturer or an authorized inspector of the manufacturer (to the extent such service is reasonably available for equipment of such type and age). [****].  

		
	i.
	Except with respect to the gross negligence or willful misconduct of Coriell, or Coriell’s failure to comply with an applicable provision of this Agreement, CDI hereby indemnifies, protects, defends and holds harmless Coriell from and against any and all claims and liabilities, demands, actions, suits, and proceedings, losses, costs, expenses, damages and fees, including reasonable attorneys’ fees and costs (including those arising from negligence, tort, strict liability or other legal theory) (collectively “Claims”), to the extent arising out of, or resulting from, CDI’s selection to perform the Services, operation or use of any of the Subcontract-funded Equipment, whether such Claims are brought or claimed before, during or after the Term.  Each of the Parties shall give the other prompt written notice of any Claim of which it becomes aware.  The last sentence of Section 12.a and the provisions of Section 12.c shall apply with respect to with any Claims as if such Claims were described in Section 12.a.

		
	j.
	CDI shall promptly notify Coriell in writing if, prior to CDI’s exercise of its option pursuant to Section 8.d above, or its return to Coriell of any Subcontract-funded Equipment not purchased by CDI, any item of Subcontract-funded Equipment becomes lost, stolen, damaged, destroyed or otherwise unfit or unavailable for use from any cause whatsoever (other than Coriell’s breach of this Agreement or its willful misconduct).

		
	k.
	Except in the case of Coriell and after the Term with respect to any Subcontract-funded Equipment not purchased by CDI as permitted by Section 8.d, without the prior written consent of the other Party, neither Party shall: (a) assign, transfer, or otherwise dispose of any Subcontract-funded Equipment, or any rights or obligations related thereto; (b) sublease any of the Subcontract-funded Equipment or permit the Subcontract-funded Equipment to be controlled by any other person; (c) create or incur, or permit to exist, any Encumbrance with respect to any of the Subcontract-funded Equipment and, in the case of Coriell, any Encumbrance with respect to any non‐transferable warranty rights with respect to any such equipment if such Encumbrance would in any way interfere with or limit the exercise by or benefit to CDI of any such warranty rights; or (d) cause or permit any of the Subcontract-funded Equipment to be moved from the Buck Institute Premises.

		
	l.
	CDI shall not make any additions, attachments, alterations or improvements to the Subcontract‐funded Equipment without the prior written consent of Coriell, which consent shall not to be unreasonably conditioned, delayed or withheld.  Any addition, attachment, alteration or improvement to any item of Subcontract‐funded Equipment shall belong to and be the property of CDI and CDI shall remove any addition, attachment, alteration or improvement to any item of Unpurchased Equipment prior to such required delivery of such item of Unpurchased Equipment by CDI.  CDI shall be responsible for all costs relating to such removal and shall restore such item of Unpurchased Equipment to the condition otherwise required hereunder.

		
	m.
	CDI acknowledges and represents that the Subcontract-funded Equipment shall be and remain personal property, notwithstanding the manner by which it may be attached or affixed to realty, and CDI shall do all acts and enter into all agreements necessary to ensure that the Subcontract-funded Equipment remains personal property.  If requested by Coriell with respect to any item of Subcontract-funded Equipment, CDI shall obtain and deliver to Coriell equipment access agreements, satisfactory to Coriell in its sole discretion, from all persons claiming any interest in the real property on which such item of Subcontract‐funded Equipment is installed or located.

		
	n.
	Each Party hereby represents to the other Party that, with respect to each item of Subcontract‐funded Equipment and any schedule, certificate evidencing acceptance of Subcontract-funded Equipment, assignment of purchase order, insurance letter, proposal letter, UCC financing statement, or other document now or hereafter executed by such Party in connection with this Agreement:  (a) the execution, delivery and performance thereof by such Party or its attorney-in-fact have been duly authorized by all necessary corporate action; (b) the person executing such documents is duly authorized to do so; and (c) such documents constitute legal, valid and binding obligations of such Party, enforceable in accordance with their terms.

		
	9.
	Ownership of Inventions; Licensing; Distribution from the Repository.  

		
	a.
	CDI represents and warrants that:  [****].

		
	b.
	CDI acknowledges that Coriell owns certain intellectual property covering the services Coriell will provide under Coriell’s Application and the NGA.  CDI agrees that it does not and will not acquire any rights in, to or under such intellectual property or any discovery, invention, enhancement, improvement, know-how or work of authorship, whether or not patentable or copyrightable or constituting a trade secret, conceived, created or made by Coriell in the course of performing such services, whether alone or jointly with a third party.

		
	c.
	In the event that, during the Term and in connection with this Agreement, Coriell and CDI jointly conceive, create or make any discovery, invention, enhancement, improvement, know how or work of authorship, whether or not patentable or copyrightable or constituting a trade secret, Coriell and CDI shall jointly own all intellectual property rights therein.  

		
	d.
	Coriell agrees that it will not allow any third party to gain access to any of the Acceptable DCBs in the Repository created from Derived Lines unless the party shall have executed the Standard Form hiPSC License from CDI and paid any required fees when and as due thereunder (which shall not be payable by non‐Commercial Entity End Users) and, following confirmation thereof, the party shall have executed an End User Agreement with Coriell and paid such fees when and as due thereunder.  During and after the Term, CDI shall be responsible for: (i) obtaining an executed Standard Form hiPSC License from each End User seeking to gain access to an Acceptable DCB, (ii) within [****] days of CDI’s receipt of an End User’s signed Standard Form hiPSC License, executing such license and delivering a copy to Coriell, and (iii) collecting the fee payable to CDI in connection therewith (which CDI shall determine subject to the approval of CIRM.  Coriell shall be responsible for (x) directing any proposed End Users to CDI so that they can execute the Standard Form hiPSC License and pay any required fees, (y) obtaining an executed End User Agreement from each such party, and  (z) collecting the fee payable to Coriell in connection therewith (which Coriell shall determine subject to the approval of CIRM).  

		
	e.
	CDI grants to Coriell [****] license to [****] intellectual property and proprietary rights that CDI has or may have in or in connection with [****]. 

		
	f.
	Neither Party shall issue any press release or other public statement regarding this Agreement including, but not limited to, the financial terms hereof, nor shall either party use the name, trademarks, logos, physical likeness or other symbol of the other Party (or their employees) for any marketing, advertising, public relations or other purposes without the prior written authorization of the other Party.  

		
	10.
	Confidentiality.  During the Term and thereafter for a period of [****] (except as to information qualifying as a trade secret, in which event the period shall be perpetual), each Party will (and will ensure that its accountants (including the Accountant), counsel, and employees; collectively, as to each Party, a “Representative”) keep confidential the Confidential Information it possesses relating to the other Party that it obtains in connection with this Agreement, and not use that information except as needed to perform its obligations hereunder or to receive and enjoy the benefits conferred upon it hereunder.  Each Party shall treat the Confidential Information of the Disclosing Party in the same manner, and with the same level of care (but, in no event, less than a reasonable level of care), as the Receiving Party would treat its own confidential or proprietary information.  Without limiting the generality of the foregoing, and except to the extent expressly permitted by the terms and conditions of this Agreement, no Receiving Party shall, without the prior written consent of the Disclosing Party, (A) disclose, reveal, report, publish or give the Confidential Information of the Disclosing Party to any third party except as required by law or regulation or legal process applicable to the Receiving Party subject to what is provided below in this Section 10 or (B) use the Confidential Information of the Disclosing Party for any purpose except as permitted hereby.  Except as expressly permitted by the terms and conditions of this Agreement, each Party hereby agrees to limit disclosure of the Disclosing Party's Confidential Information to those of its Representatives who (A) have a need to know such Confidential Information to enable such Receiving Party to perform its obligations, or exercise its rights, under this Agreement, (B) have entered into a written agreement which requires such Representatives to maintain similar, but no less burdensome, obligations of confidentiality and non-use to those contained in this Agreement and (C) have been advised of the confidential and proprietary nature of such Confidential Information and of their obligations with respect to such Confidential Information.  In the event that a Receiving Party is requested by any legal process to disclose any Confidential Information, the Receiving Party will promptly after such request notify the Disclosing Party to permit the Disclosing Party, at its expense, to seek to avoid or narrow any disclosure of Confidential Information that may be legally compelled to be disclosed and/or to seek a protective order or other reasonable assurance, satisfactory to the Disclosing Party, that confidential treatment will be accorded any Confidential Information that is legally compelled to be disclosed and will cooperate as reasonably requested by the Disclosing Party in such efforts by the Disclosing Party.  Each Receiving Party hereby further agrees (1) to direct its Representatives not to disclose the Confidential Information of the Disclosing Party to any person or entity except as expressly permitted under this Agreement and (2) that it shall be responsible for any breach by its Representatives of the obligations under this Agreement relating to Confidential Information of the Disclosing Party.

		
	11.
	Representations and Warranties.  

		
	a.
	CDI represents and warrants to Coriell that (i) CDI has the requisite corporate power and authority under all applicable laws including the laws of Wisconsin to enter into this Agreement and to consummate the transactions contemplated hereby; (ii) the execution and delivery by CDI of this Agreement has been duly and validly authorized by all necessary corporate action on the part of CDI; (iii) the person signing this Agreement on behalf of CDI is a duly appointed and incumbent officer of CDI and has the authority to execute and deliver this Agreement on behalf of CDI; (iv) this Agreement is binding on CDI and enforceable against it in accordance with this Agreement’s terms; (v) the Services will be performed in a professional manner and in compliance with all federal, state, local, international, health authority and institutional laws, rules, regulations, orders and guidelines applicable to CDI in doing so; (vi) the Services will be performed in accordance with the provisions of this Agreement (giving effect to what is provided in Section 2); (vii) the DCBs when delivered by CDI will meet the DCB Acceptance Criteria as applicable and any other deliverables hereunder will meet the applicable requirements expressly set forth herein or any other applicable agreement that may be agreed to by the Parties in writing; (viii) CDI has obtained all, and will obtain all, licenses, permits, consents and other approvals necessary for CDI to perform its obligations under this Agreement; (ix) CDI has not granted any right or entered into any agreement or understanding that conflicts with CDI's obligations, or Coriell's rights, under this Agreement; (x) CDI will not grant any right and will not enter into any agreement or understanding that conflicts with CDI's obligations or Coriell's rights under this Agreement; (xi) CDI owns or has the right to use pursuant to a valid and enforceable, written license, sublicense, agreement, or other permission, all presently issued and valid intellectual property and proprietary rights necessary and sufficient to perform the Services and the other obligations of CDI under this Agreement; and (xii) neither CDI’s performance of the Services or this Agreement or any DCBs will infringe upon, violate or misappropriate any presently issued and valid intellectual property or proprietary right of any third party.  

		
	b.
	Coriell represents and warrants to CDI that (i) Coriell has the requisite corporate power and authority under the laws of New Jersey to enter into this Agreement and to consummate the transactions contemplated hereby; (ii) the execution and delivery by Coriell of this Agreement has been duly and validly authorized by all necessary corporate action on the part of Coriell; (iii) the person signing this Agreement on behalf of Coriell is a duly appointed and incumbent officer of Coriell and has the authority to execute and deliver this Agreement on behalf of Coriell; and (iv) this Agreement is binding on Coriell and enforceable against it in accordance with this Agreement’s terms; (v) Coriell has obtained all, and will obtain all, licenses, permits, consents and other approvals necessary for Coriell to qualify to receive funding from CIRM and to perform its obligations under this Agreement; (vi) Coriell has not granted any right or entered into any agreement or understanding that conflicts with Coriell's obligations, or CDI's rights, under this Agreement; and (vii) Coriell will not grant any right and will not enter into any agreement or understanding that conflicts with Coriell's obligations or CDI's rights under this Agreement.

		
	12.
	Indemnification. 

		
	a.
	CDI shall defend, indemnify and hold harmless Coriell and CIRM and their respective directors, officers, employees, agents, advisers, representatives, successors and assigns (collectively, Coriell’s/CIRM’s “Related Persons”) against and from, and shall pay or reimburse them for, any third party claim, lawsuit, or demand (a “Third Party Claim”) and any loss, damage, liabilities, costs and/or expense (including reasonable attorney’s fees subject to Section 12.c) (“Losses”) to the extent such Third Party Claim alleges, and any other such Losses result from or arise out of any such Third Party Claim that alleges, any of the following (or, in the case of the following clause (i) and (ii), facts that constitute): [****].  

		
	b.
	Coriell shall defend, indemnify and hold harmless CDI and CIRM and their respective directors, officers, employees, agents, advisers, representatives, successors and assigns (collectively, CDI’s “Related Persons”) against and from, and shall pay or reimburse them for, any and all Third Party Claims and Losses to the extent any such Third Party Claim alleges, and any other such Losses result from or arise out of any such Third Party Claim that alleges, [****].

		
	c.
	As a condition of the indemnification set forth in this Section 12, (i) the party entitled to indemnification hereunder (the "Indemnified Party”) for itself and on behalf of any of its Related Persons who may seek indemnification from the party required to provide indemnification hereunder (the “Indemnifying Party”) hereunder shall promptly notify the Indemnifying Party of any Losses for which such Party or its Related Person seeks indemnification hereunder; (ii) the Indemnifying Party shall have the exclusive right to conduct and control the defense, with counsel selected by the Indemnifying Party in its reasonable discretion, of and to settle any third party claim, lawsuit or demand with respect to which the Indemnified Party or one of its Related Persons seeks indemnification hereunder unless the Indemnifying Party gives written notice to the Indemnified Party or Related Person expressly declining to undertake such defense in which event the Indemnified Party’s or Related Person’s reasonable attorney’s fees shall (and absent such notice shall not) constitute Losses, and (iii) the Indemnified Party or such of its Related Persons seeking indemnification hereunder shall cooperate with the Indemnifying Party and its counsel in investigating and/or defending against third party such claim, including by providing such documents and other information and permitting the Indemnifying Party’s employees to participate in discovery and court proceedings as witnesses or otherwise, as the Indemnifying Party or its counsel may from time to time request to assist it in investigating and/or defending against any such claim.  Notwithstanding what is provided above in this Section 12.c, no Indemnifying Party providing an indemnity hereunder shall enter into any settlement which requires the Indemnified Party to admit liability or pay any amounts (for which insurance proceeds or indemnification hereunder is not available), without the Indemnified Party’s prior written consent, not to be unreasonably conditioned, delayed, or withheld.

		
	13.
	Disclaimers; Limitation of Liability.  EXCEPT AS EXPRESSLY SET FORTH HEREIN, NEITHER PARTY MAKES ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, OR PROVIDES ANY REMEDY TO THE OTHER PARTY, AND ALL OTHER REPRESENTATIONS, WARRANTIES AND REMEDIES 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.  EXCEPT FOR A PARTY’S INDEMNITY OBLIGATIONS, OR BREACH OF CONFIDENTIALITY OBLIGATIONS, HEREUNDER, ANY SPECIAL, PUNITIVE, EXEMPLARY, INCIDENTAL OR CONSEQUENTIAL DAMAGES ARISING OUT OF THIS AGREEMENT, ARE HEREBY EXPRESSLY DISCLAIMED AND EXCLUDED.  NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN, WITH THE EXCEPTION OF A PARTY’S INDEMNITY OBLIGATIONS, OR BREACH OF CONFIDENTIALITY OBLIGATIONS HEREUNDER, IN NO EVENT WILL LIABILITY OF CORIELL EXCEED THE AGGREGATE AMOUNT OF THE SERVICE FEES OR REIMBURSEMENTS PAYABLE BY IT TO CDI HEREUNDER OR WILL LIABILITY OF CDI WITH RESPECT HERETO EXCEED THE AGGREGATE AMOUNT OF THE SERVICE FEES RECEIVED BY OR PAYABLE TO CDI HEREUNDER.

		
	14.
	Termination.  This Agreement shall terminate at the expiration of the Term stated in Section 1 or its termination prior to such expiration in accordance with this Section 14.

		
	a.
	Termination by Coriell.  Coriell may terminate this Agreement and its Term prior to its expiration 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 on the [****] day after CDI’s receipt of notice from Coriell specifying the nature of such breach unless as of such [****]  day CDI has cured such breach; or

		
	ii.
	in the event that CDI’s performance of its obligations is delayed or prevented by circumstance(s) or event(s) constituting force majeure as contemplated herein (other than Coriell’s failure to pay the Service Fees when due and payable), unless as of as of the [****] day after such circumstance or event first affects CDI it has resumed performance; or

		
	iii.
	in the event CDI becomes subject to a Bankruptcy Event; or

		
	iv.
	in the event Coriell’s agreement with CIRM with respect to the Repository is terminated, or CIRM ceases to provide funding to Coriell as required by such agreement or as necessary to fund the CDI Services contemplated by this Agreement.

		
	b.
	Termination by CDI.  Notwithstanding the Term stated in Section 1, CDI may terminate this Agreement and its Term prior to its expiration by giving notice (which may be effective immediately) to Coriell:

		
	i.
	in the event of the failure of Coriell to make any payment of Service Fees when due and payable hereunder which breach remains uncured on the [****] day after Coriell’s receipt of notice from CDI specifying such breach, it being understood that no payment of Service Fees shall be payable by Coriell to CDI unless or until payment for same has been made by CIRM to Coriell;

		
	ii.
	in the event that Coriell’s performance is or would be delayed or prevented by a circumstance or event constituting force majeure as contemplated herein, unless as of the [****] day after such circumstance or event first affects Coriell it has resumed performance;  

		
	iii.
	In the event Coriell becomes subject to a Bankruptcy Event; or

		
	iv.
	In the event Coriell’s agreement with CIRM with respect to the Repository is terminated, or CIRM ceases to provide funding to Coriell as required by such agreement or as necessary to fund the CDI Services contemplated by this Agreement.

		
	c.
	Certain Consequences.  Upon the termination of this Agreement including its termination prior to its stated Term and prior to the completion of the performance of the Services, neither Party shall have any liability or obligation to the other Party except as provided in this Section 14.c and except under the provisions hereof that as provided in Section 14.d. expressly survive termination.  The termination of this Agreement shall not extinguish or otherwise diminish or modify the rights of either Party to any Service Fees or payments which accrued hereunder prior to such termination or under this Section 14.c with respect to DCBs in process as of, or DCBs delivered following, termination as provided in the following provision.  Without limiting the preceding provision, following the termination of this Agreement, CDI shall deliver to Coriell all Acceptable DCBs existing (and not yet so delivered) as of termination [****].  CDI shall deliver an invoice to Coriell for all Services Fees and other amounts payable to it hereunder but not yet invoiced as of termination for Acceptable DCBs delivered or existing as of the termination of the Agreement and or otherwise which except in the case of termination pursuant to Section 14a.i. or 14a.v. shall include an amount for the costs and expenses of CDI incurred performing Services with respect to Third Party Lines and Derived Lines for which DCBs were in the process of being but had not yet been created as of termination; and promptly following its receipt of such invoice, Coriell shall pay CDI the invoiced amounts.

		
	d.
	Survival.  All representation and warranties contained in this Agreement, as well as Sections 2, 3.f (as to the representations and warranties for the period stated therein), 3.g, 3.h, 3.i, 3.n, 4, 5 (to the extent contemplated by Section 14.c), 7, 8.d, 8.e, 8.h, 8.i, 8.j, 8.k, 8.l, 8.m, 8.n, 9 through 13, 14.c, 14.d, and 15 shall survive the termination of this Agreement (whether at the expiration of the Term or its earlier termination) subject to any limitation on the period of such survival provided herein.

		
	15.
	Miscellaneous.

		
	a.
	Relationship of Parties.  CDI, in performing the Services, shall act as an independent contractor.  Nothing in this Agreement shall constitute either Party the legal representative, employee, agent or joint venturer, co‐partner, or the like of the other, of the other Party.  Each Party shall have no right or authority to, and shall not take any action purporting to, bind or represent in any respect the other Party.

		
	b.
	Force Majeure.  Each Party shall be excused of, and shall not be responsible for or in breach by reason of, any delay or failure in the performance of such Party’s obligations under this Agreement that is due to any circumstance or event beyond such Party’s control including but not limited for purposes hereof to Acts of God, earthquakes and other natural disasters, fire, explosion, riot and other civil disturbances, sabotage, terrorism, war, government acts, embargos, labor strikes and lock-outs, transportation delays, or the failure of performance of the other Party or any third parties or under any other agreements necessary for such Party’s performance under this Agreement including, without limitation, in the case of Coriell, any failure of CIRM to provide any funding contemplated by the NGA.  

		
	c.
	Equitable Relief.  The Parties acknowledge that damages would be an inadequate remedy for any breach of Section 3.n, 5.e (as to the use and disclosure of Confidential Information) 8, 9.d, or 10.  Therefore, each Party agrees that the respective obligations of the Parties under each of Section 8, 9.d., or 10 are specifically enforceable and that each Party shall be entitled, without the requirement of actual proof of damages and the requirement of posting a bond or other security, to an injunction, restraining order or other equitable relief from any court of competent jurisdiction, restraining the other Party from committing any breach of any such provision of this Agreement.

		
	d.
	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 including so long as the economic or legal substance of the transactions contemplated hereby is not affected fundamentally and adversely to either Party.

		
	e.
	Governing Law.  This Agreement, and all questions arising in connection herewith, shall be construed, interpreted, determined and enforced in accordance with the internal laws of the State of California, U.S.A. without regard to the laws of any other jurisdiction that otherwise might govern under any applicable principle or rule of conflicts of law and without regard to rules of construction concerning the drafter hereof.

		
	f.
	Notices.  Each and every notice, agreement or other communication under this Agreement, even if not so expressly stated above, must be in writing in order to be effective and shall be considered to be given and received, in all respects (i) when personally delivered, (ii) when sent by facsimile transmission actually received by the receiving equipment (provided, that any such facsimile received on or after 5:00 p.m. local time of the receiving Party shall be considered received on the next business day), or (iii) on the second (2nd) business day after being sent by reputable, internationally recognized express or courier delivery service, delivery fees prepaid, addressed as follows, or to such other address as may be designated by notice duly given in accordance with this Section 15.f.):

		
	i.
	If to CDI:

Cellular Dynamics International, Inc.
525 Science Drive
Madison, Wisconsin 53711
Attn:  President
If via facsimile, to:  608-310-5101

with a copy to:

Cellular Dynamics International, Inc.
525 Science Drive
Madison, Wisconsin 53711
Attn:  General Counsel
If via facsimile, to:  608-310-5125
		
	ii.
	If to Coriell:

Coriell Institute for Medical Research
403 Haddon Avenue
Camden, NJ  08103
Attn:  Michael Christman, Ph.D.
If via facsimile, to: 856-964-0254

with a copy to:

Mark J. Sever, Jr.
Archer & Greiner, P.C.
One Centennial Square
Haddonfield, NJ  08033
If via facsimile, to:  856-795-0574
		
	g.
	Amendments; Waiver.  No amendment, waiver or other modification to or under this Agreement shall be valid unless set forth in a writing that makes specific reference to this Agreement and that is signed by the Party against whom enforcement of the amendment, waiver or other modification is being sought.

		
	h.
	Assignment; Binding Effect.  Neither this Agreement nor the rights or obligations hereunder of either Party may be assigned or delegated by a Party without the prior written consent of the other Party, not to be unreasonably conditioned, delayed or withheld.  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.

		
	i.
	Entire Agreement.  This Agreement, including the exhibits and schedules attached hereto, 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 Coriell and CDI.  

		
	j.
	Counterparts.  This Agreement may be executed in counterparts, each of which will be treated as an original and all of which taken together constitute one instrument.

IN WITNESS WHEREOF, the Parties, having read and understood the foregoing and by their duly authorized representatives, have executed this Agreement intending to be bound hereby as of the Effective Date.

CELLULAR DYNAMICS INTERNATIONAL, INC.

By:  /s/ Thomas M. Palay 
Thomas M. Palay, President
Date: December 20, 2013

CORIELL INSTITUTE FOR MEDICAL RESEARCH

By /s/ Michael F. Christman
Print Name: Michael F. Christman
Print Title: President & CEO
Date: December 20, 2013

Exhibit A

Services; Project Directors

The “Services” shall consist of the following services to grow and expand Derived Lines and Third Party Lines:  (i) perform quality control and (ii) create DCBs from the Third Party Lines that meet the Third Party Line Acceptance Criteria and  from Derived Lines, which services are to be provided during the Term, as described in this Exhibit A:

		
	1.
	Services, generally.

		
	a.
	CDI will maintain the personnel, equipment and facilities to be capable to, and as described below will perform, the Services except for the manufacturer recommended preventive and periodic maintenance of the Coriell Equipment, which Coriell is responsible to maintain.  In performing the Services, CDI will use the same diligence and care as it uses in the performance of services for its own account.

		
	b.
	The Services will be performed by CDI primarily at the Buck Institute Premises, or if the License and Services Agreement between the Buck Institute and CDI under which it occupies the Buck Institute Premises terminates during the Term, such other location in California as Coriell approves in its sole discretion.

		
	2.
	Creation of DCBs; Services to grow and expand Derived Lines and Third Party Lines.

		
	a.
	DCBs.  CDI will create DCBs from the Derived Line(s) and from the Third Party Lines selected by CIRM and that CDI determines meet the Third Party Line Acceptance Criteria.  [****] individual frozen aliquots of each Derived Line and Third Party Line will be prepared in cryotubes vialed with approximately [****] cells per aliquot or tube and will comprise a DCB of such cell line.  Delivery by CDI of [****] individual frozen aliquots from each DCB created from Derived Lines will constitute delivery of such DCB, with CDI being entitled to retain [****] individual frozen aliquots of each DCB (the “Retained Vials”), provided that upon Coriell’s request as contemplated in Section 3.f., CDI shall deliver to Coriell whatever Retained Vials then are remaining after any work to provide any replacement DCBs to Coriell hereunder.  Provided that Derived Lines and Third Party Lines are available to permit CDI to do so, CDI will create a total DCB capacity of [****] expanded cell lines (this includes [****] from each of the [****] Derived Lines and up to [****] Third Party Lines).  

To be deemed to be available to CDI for expansion and creation of DCBs as contemplated in the preceding sentence, Derived Lines and Third Party Lines must be available, on average, in consistent quantities, at regular frequencies and sufficiently in advance; by way of example only and without limiting the foregoing, the Derived Lines and the Third Party Lines must be available to CDI no later than [****].  Each Third Party Line must meet the Third Party Line Acceptance Criteria and any additional requirements applicable thereto as agreed to by Coriell, CDI and CIRM.  
In addition, for a Third Party Line to be to be deemed to be available to CDI for expansion and creation of DCBs as contemplated above, the California researcher who provided such Third Party Line to the Repository also must have provided the agreement or consent of the legal and beneficial owner of such Third Party Line, expressly for the benefit of CDI and reasonably acceptable to CDI, to the transfer of such Third Party Line to the Repository, to the withdrawal from the Repository and use of such materials by CDI to perform the Services and create the DCBs, and to confirm ownership of the DCBs as provided in this Agreement.  
		
	b.
	Creation of DCBs.  All cell lines will be grown and expanded, as applicable, using the method established by CDI described in CDI SOP LG‐04.01 which is Addendum D to Part D of Coriell’s Application, or an equivalent CDI SOP as deemed suitable by CDI; the following description of Services is subject to and qualified in its entirety by such SOP).  [****].

		
	3.
	Quality Control Services.  Derived Lines and Third Party lines expanded by CDI and released by it as a DCB when delivered by CDI to Coriell must meet the DCB Acceptance Criteria, which are the quality control criteria set forth in Schedule 2 to this Exhibit A, or such other criteria as is mutually determined by CIRM and Coriell, as well as be delivered to Coriell with a CofA as provided in item 4 of this Exhibit A.  

		
	4.
	Certificate of Analysis.  An electronic version of each a Certificate of Analysis (“CofA”) will be made available to Coriell.

		
	5.
	Initial Project Directors.

		
	a.
	Coriell’s initial Project Director is Steven J. Madore, Ph.D.

		
	b.
	CDI’s initial Project Director is Thomas J. Novak, Ph.D.

Schedule 1 to Exhibit A

Third Party Line Acceptance Criteria

	
					
	Tissue/Cell Type
	Passage
	No. of Vials
	No. of Viable Cells per Vial
	Acceptance Criteria/Notes

	[****]
	[****]
	[****]
	[****]
	[****]

Schedule 2 to Exhibit A

QC Criteria

The following table describes the acceptance criteria for DCBs prepared from Derived Lines and Third Party Lines.  
	
				
	Test criteria
	Method
	DCB Acceptance Criteria
Derived Lines
	DCB Acceptance Criteria
Third Party Lines

	[****]
	[****]
	[****] 
	[****]

	[****]
	[****]
	[****] 
	[****]

	[****]
	[****]
	[****] 
	[****]

	[****]
	[****]
	[****] 
	[****]

	[****]
	[****]
	[****] 
	[****]

	[****]
	[****]
	[****] 
	[****]

Exhibit B

Service Fees

Fixed Payment for first [****] Quarters:  $[****] per Quarter

Fixed Payment for [****] Quarters:  $[****].

Quarterly Services Payment for each subsequent Quarter:

The product obtained by multiplying [****].

For such purposes, the “Unit Price” equals the quotient obtained by dividing $[****] by the net number equal to (i) [****] less (ii)(A) [****].  

Third Party Line Amount:  $[****] per Third Party Line

Exhibit C

Equipment

See attached.
	
			
	Quote #
	Catalog #
	Equipment

	Y-[****]
	[****]
	Vortex Genie 2

	 
	[****]
	Multichannel Pipette

	Y-[****]
	[****]
	[****] CO2 Analyzer

	Y-[****]
	see CDI quote
	[****] (2X, 10X, and 20X obj)

	Y-[****]
	 
	Metro Shelving

	 
	[****]
	(-) 20 Freezer

	Y-[****]
	[****]
	Water Bath

	Y-[****]
	[****]
	Centrifuge: ST8 benchtop

	Y-[****]
	[****]
	Roller Base for 3110 series

	 
	 
	Refrigerator

	Y-[****]
	[****]
	Water Bath Weights

	Y-[****]
	[****]
	Water Bath Weights

	Y-[****]
	[****]
	Water Bath Weights 500-2000mL

	Y-[****]
	[****]
	Timers

	Y-[****]
	[****]
	Repeater Xstream

	Y-[****]
	[****]
	Cordless Pipet

	Y-[****]
	[****]
	Starter Kit: 2 LTS

	Y-[****]
	[****]
	Starter Kit: 20, 200, 1000 LTS

	Y-[****]
	[****]
	Hepa Filter (free)

	Y-[****]
	[****]
	RS-485 Output FI Hazardous material

	Y-[****]
	[****]
	Copper Interior Ductwork

	Y-[****]
	[****]
	Biofit Chairs for lab

	Total Equipment under $[****]
	 
	 

	 
	 
	 

	 
	[****]
	[****] (rotor, etc. included)

	Y-[****]
	[****]
	(-) 80 Freezer

	 
	[****]
	Culture Hood (4 ft)

	Y-[****]
	[****]
	[****]refrigerated centrifuge & rotor

	Y-[****]
	[****]
	[****]

	Y-[****]
	 
	[****]

	Y-[****]
	[****]
	[****] (2 w/ controller)

	Y-[****]
	[****]
	[****]

	 
	 
	Vial labeling

	Y-[****]
	[****]
	Culture Hood (6 ft)

	Y-[****]
	[****]
	[****] Incubator

	Y-[****]
	see CDI quote
	[****] (with plate labeler)

	Total Equipment over $[****]
	 
	 

	
							
	Supplier
	Unit Price
	Banking Quantity
	Cost for Banking
	 
	 
	 

	[****]
	[****]
	[****]
	 $[****] 
	 
	 
	 

	[****]
	[****]
	[****]
	 $[****] 
	 
	 
	 

	[****]
	[****]
	[****]
	 $[****] 
	 
	 
	 

	[****]
	[****]
	[****]
	 $[****] 
	 
	 
	 

	[****]
	[****]
	[****]
	 $[****] 
	 
	 
	 

	[****]
	[****]
	[****]
	 $[****] 
	 
	 
	 

	[****]
	[****]
	[****]
	 $[****] 
	 
	 
	 

	[****]
	[****]
	[****]
	 $[****] 
	 
	 
	 

	[****]
	[****]
	[****]
	 $[****] 
	 
	 
	 

	[****]
	[****]
	[****]
	 $[****] 
	 
	 
	 

	[****]
	[****]
	[****]
	 $[****] 
	 
	 
	 

	[****]
	[****]
	[****]
	 $[****] 
	 
	 
	 

	[****]
	[****]
	[****]
	 $[****] 
	 
	 
	 

	[****]
	[****]
	[****]
	 $[****] 
	 
	 
	 

	[****]
	[****]
	[****]
	 $[****] 
	 
	 
	 

	[****]
	[****]
	[****]
	 $[****] 
	 
	 
	 

	[****]
	[****]
	[****]
	 $[****] 
	 
	 
	 

	[****]
	[****]
	[****]
	 $[****] 
	 
	 
	 

	[****]
	[****]
	[****]
	 $[****] 
	 
	 
	 

	[****]
	[****]
	[****]
	 $[****] 
	*change to 4-20mA monitor

	[****]
	[****]
	[****]
	 $[****] 
	 
	 
	 

	[****]
	[****]
	[****]
	 $[****] 
	 
	 
	 

	[****]
	 
	 
	 $[****] 
	 
	 
	 

	[****]
	[****]
	[****]
	 $[****] 
	 
	 
	 

	[****]
	[****]
	[****]
	 $[****] 
	 
	 
	 

	[****]
	[****]
	[****]
	 $[****] 
	 
	 
	 

	[****]
	[****]
	[****]
	 $[****] 
	 
	 
	 

	[****]
	[****]
	[****]
	 $[****] 
	 
	 
	 

	[****]
	[****]
	[****]
	 $[****] 
	 
	 
	 

	[****]
	[****]
	[****]
	 $[****] 
	 
	 
	 

	[****]
	[****]
	[****]
	 $[****] 
	 
	 
	 

	[****]
	[****]
	[****]
	 $[****] 
	 
	 
	 

	[****]
	[****]
	[****]
	 $[****] 
	 
	 
	 

	[****]
	[****]
	[****]
	 $[****] 
	 
	 
	 

	[****]
	[****]
	[****]
	 $[****] 
	 
	 
	 

	 
	 
	 
	$[****]
	 
	 
	 

Exhibit D

Coriell Confidential Information

[none]

10633437.6

[****] 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.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00227-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00227-of-00352.parquet"}]]