Document:

Exchange Agreement

 Exhibit 10.4 

EXCHANGE AGREEMENT 

THIS EXCHANGE AGREEMENT (this “Agreement”) is made effective as of this 11th day of June, 2010, by
and between Socius CG II, Ltd., a Bermuda exempted company (“Socius”), and International Stem Cell Corporation, a Delaware corporation (the “Company”). 

WHEREAS, on May 4, 2010 the parties entered into a Preferred Stock Purchase Agreement (the “Purchase
Agreement”) pursuant to which Socius agreed to purchase One Thousand (1,000) shares of the Company’s Series F Preferred Stock (the “Preferred Stock”) and received a warrant to purchase up to 7,000,000
shares of the Company’s common stock (the “Warrant”); 
 WHEREAS, the Preferred Stock
accrues a dividend in shares of Series F Preferred Stock on a daily basis at a rate equal to 10% per annum from the date of issuance with the dividend being payable on the date the Preferred Stock is redeemed (the
“Dividend”); 
 WHEREAS, the Preferred Stock is redeemable commencing one year after its
issuance, subject to payment of redemption premiums that start at 26% and decline to 0% after the Preferred Stock has been outstanding for four years (the “Redemption Premiums”); 

WHEREAS, on May 5, 2010, Socius exercised the Warrant for 7,000,000 shares of Company common stock at an exercise price of
$1.92857150 per share and a total purchase price of $13,500,000, all of which was paid by delivery to the Company of a secured note accruing interest at 2% per annum (the “Warrant Note”); 

WHEREAS, on June 4, 2010, the Company issued Socius 1,000 shares of the Preferred Stock for a total purchase price of
$10,000,000, $7,500,000 of which was paid in cash and $2,500,000 of which was paid in a secured note accruing interest at 2% per annum (the “Preferred Note”); 

WHEREAS, Socius has offered to exchange the Preferred Stock and to waive all Dividends (collectively, the “Preferred
Stock Exchange”) in return for the cancellation of the Warrant Note and the Preferred Note and the waiver of all interest on the Warrant Note and the Preferred Note (collectively, the “Debt Exchange”), and the
other terms set forth in this Agreement, and the Company desires to accept such offer; and 
 WHEREAS, Socius and the
Company, each being a willing party to this transaction and neither being under any compulsion to exchange the instruments, rights and benefits being exchanged pursuant to this Agreement, acknowledge that they are each aware of the relevant facts
relating to the exchange (including, without limitation, (i) the differences between the interest rates on the Warrant Note and the Preferred Note and the dividend rates on the Preferred Stock, (ii) the Redemption Premiums payable once the
Preferred Stock is redeemable, (iii) the fact that the Preferred Stock is not yet redeemable, and (iv) the various benefits to each party under the contemplated exchange, which the parties have agreed offset the difference between the
principal amount of the Warrant Note and the Preferred Note and the liquidation preference of the Preferred Stock), and further acknowledge and agree that, in total, the instruments, rights and benefits being exchanged by each side are of equivalent
value. 
  

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

ARTICLE I 

TRANSACTIONS 

Section 1.1 Sale. The Company and the Socius hereby agree to consummate the Preferred Stock Exchange and the Debt
Exchange. In furtherance of the foregoing, effective as of the Closing: 
 (a) Socius hereby waives the requirement that
the Preferred Stock be held by Socius for one year prior to redemption by the Company; 
 (b) Socius hereby waives the
Redemption Premiums owing to it pursuant to the Preferred Stock Agreement and/or the Certificate of Designation of Preferences, Rights and Limitations of Series F Preferred Stock (the “Certificate of Designation”);

 (c) Socius hereby waives the Dividend owed to it through the Closing pursuant to the Preferred Stock Agreement and/or
the Certificate of Designation; 
 (d) The Company hereby waives any interest owed to it through the Closing under both
the Warrant Note and the Preferred Note; 
 (e) The Company hereby cancels the Warrant Note and the Preferred Note;

 (f) Socius hereby agrees to return all of the shares of Preferred Stock to the Company for cancellation; and

 (g) The Company and Socius acknowledge that the Preferred Stock Exchange and Debt Exchange shall affect a release by
the Company and Socius of all continuing rights each party holds, and all obligations owed to the other, under the Purchase Agreement; provided, however, that such release shall not apply to any rights or obligations arising from or
related to any securities of the Company that Socius continues to own as of and/or after the date hereof. 
 Section 1.2
Closing. The closing of the transactions contemplated by this Agreement (the “Closing”) shall be held at the offices of DLA Piper LLP (US), counsel to the Company, at 4365 Executive Drive, Suite 1100, San Diego,
California 92121 on the date hereof (the “Closing Date”), or at such other time and place as the Company and Socius may agree either in writing or orally. At the Closing: 

(a) Socius will deliver the Certificate representing the shares of Preferred Stock to the Company evidencing the Preferred Stock
Exchange. 
 (b) The Company will cancel the Preferred Stock, will cancel the Warrant Note and the Preferred Note
evidencing the Debt Exchange, and will deliver the cancelled Warrant Note and Preferred Note to Socius; and 
  

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 (c) The other waivers, cancellations and releases set forth in Section 1.1 shall
be effective. 
 ARTICLE II  

REPRESENTATIONS AND WARRANTIES 

Section 2.1 Representations and Warranties of the Company. The Company hereby represents and warrants to Socius as of
the date hereof as follows: 
 (a) The Company has the requisite corporate power and authority to enter into this
Agreement and to consummate the transactions contemplated by the Agreement and otherwise to carry out its obligations hereunder. The execution and delivery of the Agreement by the Company and the consummation by it of the transactions contemplated
hereby have been duly authorized by all necessary action on the part of the Company and no further consent or action is required by the Company. The Agreement has been (or upon delivery will be) duly executed by the Company and, when delivered in
accordance with the terms hereof, will constitute the valid and binding obligation of the Company enforceable against the Company in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws affecting creditors’ rights and remedies generally and general principles of equity. 
 (b)
The execution, delivery and performance of the Agreement by the Company and the consummation by the Company of the transactions contemplated hereby do not and will not (i) conflict with or violate any provision of the Company’s
certificate of incorporation, as amended, or bylaws, or (ii) conflict with or violate the terms of any material agreement by which the Company is bound or to which any property or asset of the Company is bound or affected. 

(c) The Company has full title to and ownership of the Warrant Note, the Preferred Note and all rights being waived, cancelled or
released hereunder. 
 Section 2.2 Representations, Warranties and Covenants of Socius. Socius hereby
represents and warrants to the Company as of the date hereof as follows: 
 (a) Socius has the requisite power and
authority to enter into this Agreement, to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations hereunder. The execution and delivery of the Agreement by Socius and the consummation by it of the
transactions contemplated hereby have been duly authorized by all necessary action on the part of Socius and no further consent or action is required by Socius. The Agreement has been (or upon delivery will be) duly executed by Socius and, when
delivered in accordance with the terms hereof, will constitute the valid and binding obligation of Socius enforceable against Socius in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws affecting creditors’ rights and remedies generally and general principles of equity. 
 (b)
The execution, delivery and performance of the Agreement by Socius and the consummation by Socius of the transactions contemplated hereby do not and will not (i) conflict with or violate any provision of Socius’s organizational
documents, or (ii) conflict with or violate the terms of any material agreement by which Socius is bound or to which any property or asset of Socius is bound or affected. 

 

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 (c) Socius has full title to and ownership of the Preferred Stock and all rights
being waived, cancelled or released hereunder. 
 ARTICLE III  

MISCELLANEOUS 

Section 3.1 Entire Agreement. This Agreement constitutes the entire agreement of the parties hereto with respect to
the subject matter hereof and thereof and supersedes all prior agreements and undertakings, both written and oral, between or among the parties hereto with respect to the subject matter hereof and thereof. 

Section 3.2 Amendment. This Agreement may not be amended or modified except by an instrument in writing signed by, or
on behalf of, each party hereto. 
 Section 3.3 No Third Party Beneficiaries. This Agreement shall be binding
upon and inure solely to the benefit of the parties hereto and their respective successors and permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other person any legal or equitable right, benefit or
remedy of any nature whatsoever under or by reason of this Agreement. 
 Section 3.4 Governing Law. This
Agreement shall be governed by, and construed in accordance with, the laws of the State of New York. 
 Section 3.5
Counterparts. This Agreement may be executed and delivered (including by facsimile or other electronic transmission) in one or more counterparts, and by the parties hereto in separate counterparts, each of which when executed shall be
deemed to be an original, but all of which taken together shall constitute one and the same agreement. This Agreement may be executed by facsimile or other electronic transmission. 

[Signatures on following page] 
  

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

			
	COMPANY:
	
	INTERNATIONAL STEM CELL CORPORATION
		
	By:	 	 /s/ Ray Wood

	Name:	 	Ray Wood
	Title:	 	Chief Financial Officer

  

			
	SOCIUS CG II, LTD.:
		
	By:	 	 /s/ Terren Peizer

	Name:	 	Terren Peizer
	Title:	 	Managing Director

  

 5Exchange Agreement

 Exhibit 10.5 

EXCHANGE AGREEMENT 

THIS EXCHANGE AGREEMENT (this “Agreement”) is made effective as of this 11th day of June, 2010, by
and between Optimus Capital Partners, LLC, a Delaware limited liability company (“Optimus Capital”, and its affiliate Optimus CG II, Ltd., a Cayman Islands exempted company (“Optimus CG” and, together with Optimus Capital,
“Optimus”), and International Stem Cell Corporation, a Delaware corporation (the “Company”). 

WHEREAS, on June 30, 2009, Optimus Capital and the Company entered into a Preferred Stock Purchase Agreement (the
“Purchase Agreement”) pursuant to which Optimus Capital agreed to purchase, or cause its designee to purchase, from time to time, up to Five Hundred (500) shares of the Company’s Series E Preferred Stock (the
“Preferred Stock”), and Optimus CG received a warrant to purchase up to 7,848,837 shares of the Company’s common stock, with the number of shares of common stock and the exercise price being subject to adjustment from
time to time based on the market price for the shares of common stock at the time the Company sold shares of Preferred Stock (the “Warrant”); 

WHEREAS, the Preferred Stock accrues a dividend in shares of Series E Preferred Stock on a daily basis at a rate equal to
10% per annum from the date of issuance with the dividend being payable on the date the Preferred Stock is redeemed (the “Dividend”); 

WHEREAS, the Preferred Stock is redeemable commencing one year after its issuance, subject to payment of redemption premiums that
start at 26% and decline to 0% after the Preferred Stock has been outstanding for four years (the “Redemption Premiums”); 

WHEREAS, from October 2009 through March 2010 the Company sold an aggregate of 441 shares of Preferred Stock to Optimus CG in
11 tranches and on 11 occasions Optimus CG exercised portions of the Warrant for a total purchase price of $4,410,750, all of which was paid by delivery to the Company of a series of secured notes accruing interest at 2% per annum
(collectively, the “Warrant Notes”); 
 WHEREAS, Optimus has offered to exchange the Preferred
Stock and to waive all Dividends (collectively, the “Preferred Stock Exchange”) in return for the cancellation of the Warrant Notes and the waiver of all interest on the Warrant Notes (collectively, the “Debt
Exchange”), and the other terms set forth in this Agreement, and the Company desires to accept such offer; and 

WHEREAS, Optimus and the Company, each being a willing party to this transaction and neither being under any compulsion to
exchange the instruments, rights and benefits being exchanged pursuant to this Agreement, acknowledge that they are each aware of the relevant facts relating to the exchange (including, without limitation, (i) the differences between the
interest rates on the Warrant Notes and the dividend rates on the Preferred Stock, (ii) the Redemption Premiums payable once the Preferred Stock is redeemable, (iii) the fact that the Preferred Stock is not yet redeemable, and
(iv) the various benefits to each party under the contemplated exchange, which the parties have agreed offset the difference between the principal amount of the Warrant Notes and the liquidation preference of the Preferred Stock), and further
acknowledge and agree that, in total, the instruments, rights and benefits being exchanged by each side are of equivalent value. 
  

 1 

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

ARTICLE I  

TRANSACTIONS 

Section 1.1 Sale. The Company and the Optimus hereby agree to consummate the Preferred Stock Exchange and the Debt
Exchange. In furtherance of the foregoing, effective as of the Closing: 
 (a) Optimus hereby waives the requirement that
the Preferred Stock be held by Optimus for one year prior to redemption by the Company; 
 (b) Optimus hereby waives the
Redemption Premiums owing to it pursuant to the Preferred Stock Agreement and/or the Certificate of Designation of Preferences, Rights and Limitations of Series E Preferred Stock (the “Certificate of Designation”);

 (c) Optimus hereby waives the Dividend owed to it through the Closing pursuant to the Preferred Stock Agreement and/or
the Certificate of Designation; 
 (d) The Company hereby waives any interest owed to it through the Closing under all of
the Warrant Notes; 
 (e) The Company hereby cancels each of the Warrant Notes; 

(f) Optimus hereby agrees to return all of the shares of Preferred Stock to the Company for cancellation; and 

(g) The Company and Optimus acknowledge that the Preferred Stock Exchange and Debt Exchange shall affect a release by the Company
and Optimus of all continuing rights each party holds, and all obligations owed to the other, under the Purchase Agreement; provided, however, that such release shall not apply to any rights or obligations arising from or related to
any securities of the Company that Optimus continues to own as of and/or after the date hereof. 
 Section 1.2
Closing. The closing of the transactions contemplated by this Agreement (the “Closing”) shall be held at the offices of DLA Piper LLP (US), counsel to the Company, at 4365 Executive Drive, Suite 1100, San Diego,
California 92121 on the date hereof (the “Closing Date”), or at such other time and place as the Company and Optimus may agree either in writing or orally. At the Closing: 

(a) Optimus will deliver the Certificates representing the shares of Preferred Stock to the Company evidencing the Preferred Stock
Exchange. 
  

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 (b) The Company will cancel the Preferred Stock, will cancel the Warrant Notes
evidencing the Debt Exchange, and will deliver the cancelled Warrant Notes to Optimus; and 
 (c) The other waivers,
cancellations and releases set forth in Section 1.1 shall be effective. 
 ARTICLE II  

REPRESENTATIONS AND WARRANTIES 

Section 2.1 Representations and Warranties of the Company. The Company hereby represents and warrants to Optimus as of
the date hereof as follows: 
 (a) The Company has the requisite corporate power and authority to enter into this
Agreement and to consummate the transactions contemplated by the Agreement and otherwise to carry out its obligations hereunder. The execution and delivery of the Agreement by the Company and the consummation by it of the transactions contemplated
hereby have been duly authorized by all necessary action on the part of the Company and no further consent or action is required by the Company. The Agreement has been (or upon delivery will be) duly executed by the Company and, when delivered in
accordance with the terms hereof, will constitute the valid and binding obligation of the Company enforceable against the Company in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws affecting creditors’ rights and remedies generally and general principles of equity. 
 (b)
The execution, delivery and performance of the Agreement by the Company and the consummation by the Company of the transactions contemplated hereby do not and will not (i) conflict with or violate any provision of the Company’s
certificate of incorporation, as amended, or bylaws, or (ii) conflict with or violate the terms of any material agreement by which the Company is bound or to which any property or asset of the Company is bound or affected. 

(c) The Company has full title to and ownership of the Warrant Notes and all rights being waived, cancelled or released hereunder.

 Section 2.2 Representations, Warranties and Covenants of Optimus. Optimus hereby represents and warrants
to the Company as of the date hereof as follows: 
 (a) Optimus has the requisite power and authority to enter into this
Agreement, to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations hereunder. The execution and delivery of the Agreement by Optimus and the consummation by it of the transactions contemplated hereby
have been duly authorized by all necessary action on the part of Optimus and no further consent or action is required by Optimus. The Agreement has been (or upon delivery will be) duly executed by Optimus and, when delivered in accordance with the
terms hereof, will constitute the valid and binding obligation of Optimus enforceable against Optimus in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws
affecting creditors’ rights and remedies generally and general principles of equity. 
  

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 (b) The execution, delivery and performance of the Agreement by Optimus and the
consummation by Optimus of the transactions contemplated hereby do not and will not (i) conflict with or violate any provision of Optimus’s organizational documents, or (ii) conflict with or violate the terms of any material agreement
by which Optimus is bound or to which any property or asset of Optimus is bound or affected. 
 (c) Optimus has full
title to and ownership of the Preferred Stock and all rights being waived, cancelled or released hereunder. 
 ARTICLE III 

 MISCELLANEOUS 

Section 3.1 Entire Agreement. This Agreement constitutes the entire agreement of the parties hereto with respect to
the subject matter hereof and thereof and supersedes all prior agreements and undertakings, both written and oral, between or among the parties hereto with respect to the subject matter hereof and thereof. 

Section 3.2 Amendment. This Agreement may not be amended or modified except by an instrument in writing signed by, or
on behalf of, each party hereto. 
 Section 3.3 No Third Party Beneficiaries. This Agreement shall be binding
upon and inure solely to the benefit of the parties hereto and their respective successors and permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other person any legal or equitable right, benefit or
remedy of any nature whatsoever under or by reason of this Agreement. 
 Section 3.4 Governing Law. This
Agreement shall be governed by, and construed in accordance with, the laws of the State of New York. 
 Section 3.5
Counterparts. This Agreement may be executed and delivered (including by facsimile or other electronic transmission) in one or more counterparts, and by the parties hereto in separate counterparts, each of which when executed shall be
deemed to be an original, but all of which taken together shall constitute one and the same agreement. This Agreement may be executed by facsimile or other electronic transmission. 

[Signatures on following page] 
  

 4 

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

			
	COMPANY:
	
	INTERNATIONAL STEM CELL CORPORATION
		
	By:	 	 /s/ Ray Wood

	Name:	 	Ray Wood
	Title:	 	Chief Financial Officer
	
	OPTIMUS CAPITAL PARTNERS, LLC:
		
	By:	 	 /s/ Terren Peizer

	Name:	 	Terren Peizer
	Title:	 	Managing Director
	
	OPTIMUS CG II, LTD.:
		
	By:	 	 /s/ Terren Peizer

	Name:	 	Terren Peizer
	Title:	 	Managing Director

  

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