Addendum to MSA Center of Excellence EXECUTION COPY 6/21/2012

This Addendum is subject to the Master Laboratory Services Agreement effective as November 29, 2010 (“MSA”) between Eli Lilly and Company, an Indiana corporation (“Lilly”), and Cellular Dynamics International Inc., having its principal place of business at University Research Park, 525 Science Drive, Suite 200, Madison, WI 53711 ("CDI") and is made as of the date signed below, and shall be deemed a “Work Order” under the MSA.

Pursuant to the terms herein, CDI will provide certain services and products to Lilly on an annual basis through December 31, 2014, and Lilly will pay certain fees according to the Fee Schedule, attached hereto as Exhibit A (the “CoE Program”), and all subject to this Addendum, the Addendum’s Exhibits and Schedules and the MSA.    

1.     Center of Excellence Program. The CoE Program will be governed by a Joint Steering Committee (“JSC”). On or before July 1, 2012, CDI will appoint three (3) members and Lilly will point three (3) members to the JSC. The JSC will oversee the work performed under this Addendum.

(a)    For each calendar year during the CoE Term (as defined below), the JSC will oversee the work performed pursuant to the CoE Work Plan. The CoE Work Plan is attached hereto as Exhibit B.

(b)    The JSC shall be responsible for (i) overseeing the conduct of the CoE Program, (ii) modifying the Addendum in light of new data or research difficulties, (iii) addressing any issues that arise from the conduct of the research that are not expressly addressed in the Addendum or any Work Plan, and (iv) making any necessary modifications to the CoE Work Plan and its schedules. Any and all actions of the JSC shall be taken or approved by majority consent.

(c)    The JSC shall meet initially in person at CDI’s headquarters, or by teleconference, on or before July 1, 2012. Each party shall be responsible for the expenses incurred by its appointed members of the JSC.

(d)     The JSC will meet monthly by telephone/video conference.

This Addendum, and its Exhibits and Schedules attached hereto, shall become binding pursuant to the Master Laboratory Services Agreement upon the execution hereof. This Addendum shall become effective as of the later of the dates listed below and shall expire upon the completion of the above Addendum unless otherwise terminated pursuant to the above the terms.

The below chart shows the approximate payment schedule of the following payments to be made by Lilly to CDI. Notwithstanding Section 7.1, CDI shall invoice Lilly as detailed below for the following services and goods. The following payments shall be deemed fixed fees for purposes of the MSA.

1) JSC Fees:

(a) Upon appointment of the JSC pursuant to Section 1 of the Addendum, CDI shall invoice Lilly for $(****) and Lilly shall pay the same in accordance with Section 11 of the MSA.

(b) Within thirty (30) days of the end of each calendar quarter, CDI shall invoice Lilly for $(****) and Lilly shall pay the same to CDI in accordance with Section 11 of the MSA; provided that either (i) the quarterly JSC meeting has occurred for such quarter, or (ii) if for any reason no JSC quarterly meeting has occurred, the Development Team has submitted a quarterly progress report to the JSC and the JSC has accepted the report, which acceptance will not be unreasonably withheld or delayed.

2) iCell Differentiated Cells Purchases.

(a) From the execution of the Addendum through (****), Lilly shall order up to (****) 1X units of any commercial iCell cells for a total of $(****), or $(****)per unit. Of such (****) units, Lilly shall order at least (****) Units quarterly during (****). If for any reason, Lilly does not order at least (****) 1X units by the end of each calendar quarter, CDI may choose a commercial iCell cell type for such shortfall, shall ship any such shortfall within thirty (30) days of the end of the quarter and invoice Lilly for the same; except that for the fourth calendar quarter of (****), CDI shall ship any quarterly shortfall on or prior to (****) and invoice Lilly for the same.

(b) From (****) through (****), Lilly shall order up to (****) 1X units of any commercial iCell cells for a total of $(****), or $(****) per unit. Of such (****) units, Lilly shall order at least (****) Units quarterly during (****). If for any reason, Lilly does not order at least (****) 1X units by the end of each calendar quarter, CDI may choose a commercial iCell cell type for such shortfall, shall ship any such shortfall within thirty (30) days of the end of the quarter and invoice Lilly for the same; except that for the fourth calendar quarter of (****), CDI shall ship any quarterly shortfall on or prior to (****) and invoice Lilly for the same.

(c) From (****) through (****), Lilly shall order up to (****) 1X units of any commercial iCell cells for a total of $(****), or (****) per unit. Of such (****) Units, Lilly shall order at least (****) Units quarterly during (****). If for any reason, Lilly does not order at least (****) 1X units by the end of each calendar quarter, CDI may choose a commercial iCell cell type for such shortfall, shall ship any such shortfall within thirty (30) days of the end of the quarter and invoice Lilly for the same; except that for the fourth calendar quarter of (****), CDI shall ship any quarterly shortfall on or prior to (****) and invoice Lilly for the same.

(d) Notwithstanding the per unit prices listed above, Lilly acknowledges that these per unit prices are related solely to the schedule of the payment of the CoE Fees and are divided up pursuant to and reflected in this Fee Schedule because Lilly has agreed to enter into this Addendum and to the payment of the CoE Program Fees, in the aggregate. Lilly acknowledges that these per unit prices are not the commercial prices available for the commercial iCell cells, but are only offered to Lilly in connection with the CoE Program as a whole, and the commitment of Lilly to the payment of the CoE Program Fees, in the aggregate.

3) My Cell Services. Through (****), CDI shall reprogram (****) donor samples pursuant to the schedule below.

(a) Lilly shall send (****) donor samples prior to December 31, 2012. CDI shall generate and ship the iPS Cells pursuant to the Work Plan within 6 months of its receipt of each donor sample. On December 1, 2012, CDI will invoice Lilly for $(****) for the reprogramming of those (****) samples; and Lilly will pay such invoice in accordance with Section 11. CDI shall invoice for the MyCell services for 2012 even if Lilly does not send the (****) donor samples as provided for in this Section 3(a). However, prior to CDI sending the invoice on December 1, 2012, the JSC shall affirm that CDI has begun the work and made appropriate progress on any donor samples that CDI may have received from Lilly prior to December 1^st.

(b) CDI agrees to reprogram (****) donor samples in 2013. For all samples delivered prior to June 1, 2013, CDI shall reprogram them into iPS Cells and deliver the same to Lilly prior to December 31, 2013. CDI shall invoice CDI $(****) per donor sample upon shipment of the iPS Cells. For any of the remaining (****) samples for 2013 that may be delivered after June 1, 2013, CDI shall generate and ship the iPS Cells pursuant to the Work Plan within 6 months of its receipt of each donor sample. On December 1, 2013, CDI will invoice Lilly for $(****) per donor sample received by CDI after June 1, 2013 and Lilly will pay such invoice in accordance with Section 11. CDI shall invoice for the MyCell services for 2013 even if Lilly does not send the (****) donor samples as provided for in this Section 3(b). However, prior to CDI sending the invoice on December 1, 2013, the JSC shall affirm that CDI has begun the work and made appropriate progress on any donor samples that CDI may have received from Lilly prior to December 1^st.

(c) CDI agrees to reprogram (****) donor samples in 2014. For all samples delivered prior to June 1, 2014, CDI shall reprogram them into iPS Cells and deliver the same to Lilly prior to December 31, 2014. CDI shall invoice CDI $(****) per donor sample upon shipment of the iPS Cells. For any of the remaining (****) samples for 2013 that may be delivered after June 1, 2014, CDI shall generate and ship the iPS Cells pursuant to the Work Plan within 6 months of its receipt of each donor sample. On December 1, 2014, CDI will invoice Lilly for $(****) per sample received by CDI after June 1, 2014 and Lilly will pay such invoice in accordance with Section 11. CDI shall invoice for the MyCell services for 2014 even if Lilly does not send the (****) donor samples as provided for in this Section 3(c). However, prior to CDI sending the invoice on December 1, 2014, the JSC shall affirm that CDI has begun the work and made appropriate progress on any donor samples that CDI may have received from Lilly prior to December 1^st.

(d) Notwithstanding the timing of any payments by Lilly made pursuant to the above, Lilly acknowledges and agrees that CDI shall only perform the MyCell Services for all donor samples (up to (****)) received by CDI from Lilly on or before December 1, 2014.

(e) Notwithstanding the per donor samples price listed above for the MyCell deliverables of iPS Cells and differentiated cells from the same, Lilly acknowledges that these MyCell services fees are related solely to the schedule of the payment of the CoE Fees and are divided up pursuant to and reflected in this Fee Schedule because Lilly has agreed to enter into this Addendum and to the payment of the CoE Program Fees, in the aggregate. Lilly acknowledges that these fees are not the commercial prices available for the deliverables related to each donor sample provided by Lilly, but are only offered to Lilly in connection with the CoE Program as a whole, and the commitment of Lilly to the payment of the CoE Program Fees, in the aggregate.

(a)    (****). The following payments shall be made upon the achievement of milestones as determined by the JSC. CDI shall invoice Lilly for a milestone payment within 30 days of the JSC’s confirmation that a milestone has been achieved. The JSC has the ability to amend or modify any of the milestones and affirm its completion of such modified milestone so that a payment can be made pursuant to the below schedule. If CDI achieves a milestone in advance of any calendar year specified below, then the fee for that milestone will be payable in January of the following calendar year. Alternatively, any milestone not approved by the JSC in the calendar year specified below will not be paid in a subsequent year by Lilly.

Milestones are determined pursuant the (****) Work Plan as follows:

Milestone 1            $(****)

Milestone 2            $(****)

Milestone 3            $(****)

Milestone 4            $(****)

Milestone 5            $(****)

Milestone 6            $(****)

(b)    (****) Cells. The following payments shall be made upon the achievement of milestones as determined by the JSC. CDI shall invoice Lilly within 30 days of the JSC’s confirmation that a milestone has been achieved. The JSC has the ability to amend or modify any of the milestones and affirm its completion of such modified milestone so that a payment can be made pursuant to the below schedule. If CDI achieves a milestone in advance of the calendar years specified below, then the fee for that milestone will be payable in January of the following calendar year. Alternatively, any milestone not approved by the JSC in the calendar year specified below will not be paid in a subsequent year by Lilly.

Milestones are determined pursuant the (****) Work Plan as follows:

Milestone 1            $(****)

Milestone 2            $(****)

Milestone 3            $(****)

Milestone 4            $(****)

Milestone 5            $(****)

Milestone 6            $(****)

ESTIMATED TIMING OF PAYMENTS BASED ON THE ABOVE DESCRIBED FEE SCHEDULE AND TERMS:

(****)(1)

1)     Custom MyCell iPS Services. CDI shall perform the MyCell iPS Services to reprogram up to (****) donor samples during the CoE Term (subject to the MyCell Work Plan included as Schedule 1 to this Exhibit B and the additional terms and conditions included as Schedule 2 to this Exhibit B). Lilly is limited to sending CDI up to (****),(****), and (****) donor samples for MyCell reprogramming during 2012, 2013, and 2014, respectively. Deliverables for each donor sample are outlined on Schedule 1.

(a)    Lilly will receive preferential pricing for additional MyCell iPS Services during the CoE Term, at $(****) per donor sample and $(****) for (****) additional units of differentiated cells from any given donor sample.

(b)    Lilly may opt to order more than (****)units of differentiated cells from a given donor sample. Any such additional orders shall be at (****)% of the list price of the then commercial list price for the standard cell type.

2)    Commercial iCell Products. CDI shall provide to Lilly a total of (****) 1X Units during the CoE Term, ordered and shipped according to the Fee Schedule, of any commercially available CDI iCell Products or any pre-commercial release of iCell Products that are assigned a catalog number by CDI and available for order by CDI’s customers generally, subject to CDI’s standard terms listed on Schedule 3 to this Exhibit B.

(a)    In addition, CDI will provide preferential pricing of (****)% of the then commercial list price for any additional Units of any commercially available iCell Products ordered by Lilly during the CoE Term.

(b)    The JSC may consider and agree upon additional price reductions in addition to 2(a) above for shared-risk screening projects, but such projects will provide a bonus payment to CDI if the screen is successful.

3)    Custom Cell Development. During the CoE Term, CDI will attempt to develop, manufacture and commercially release up to two human iPS derived cell types: (****) and (****).

(a)     CDI will begin development of the (****) in 2012, and (****) in 2013, in accordance with the respective work plans and associated milestones, attached hereto as Schedule 4 and Schedule 5, respectively. During the CoE Term, the JSC may modify these work plans in accordance with the progress for each cell type development.

(b)    For each such cell type CDI will commit the resources of at least (****) FTE employees (the “Development Team”). Notwithstanding Section 13.2.1 of the MSA, CDI will own all intellectual property rights to any cell type developed by the Development Team and to any other intellectual property developed by the Development Team.

(c)    The work plan for each cell type will be deemed CDI Confidential Information and such information shall be controlled by Section 17.

(d)    The Development Team will generate monthly reports to the JSC and meet with the JSC at least quarterly. The monthly reports will be deemed CDI Confidential Information.

(e)    With JSC approval, one of Lilly’s researchers may have on-site access to the Development Team solely for the purpose of observing and learning. Any Lilly employee who may be permitted on-site access to the Development Team must execute a confidentiality agreement, in a form satisfactory to CDI. Lilly will be responsible for all actions of its employee on CDI premises.

(f)     During the development of a cell type, and as the JSC may agree, in accordance with Section 13.2.2 and 13.2.3, CDI will make available limited quantities of the cells under development to Lilly for testing and provide Lilly with non-exclusive early access to such cells, upon terms agreed upon by the JSC. Notwithstanding such access, pursuant to Section 3(b) above, all intellectual property related to any cell type including without limitation, intellectual property related to cell reanimation or thawing, cell plating, cell maintenance, cell differentiation, cell functionality, cell maturation, cell improvement assays; or protocols relating to the same shall be owned by CDI.

(g)    If the (****) or (****) are successfully developed and commercially launched by CDI during or prior to the expiration of the CoE Term and if Lilly does not terminate this Addendum prior to the expiration of the CoE Term, then Lilly can purchase such new commercial iCell (****) or (****) cells at a price equal to (****) for a period of (a) (****) from the commercial launch of such cell type, or (b) through (****), whichever is earlier.

(h)    Subject to Section 19 of the MSA, CDI reserves all rights to publish any scientific data regarding any new cell type in development by the Development Team. Lilly understands and agrees that CDI intends to commercialize any successful cell development by the Development Team, and that Lilly shall have non-exclusive early access to such cells and the non-exclusive right to purchase such cells upon commercial launch.

(i) CDI makes no representation or warranties that it will be able to successfully develop, make available, commercially launch, or commercially make available the (****) or (****) cells pursuant to the work plans for the same.

1.    Patents related to iPS Cells and Differentiated Cells.

U.S. Patent Nos. 5,527,701; 5,733,727; 6,399,300; 7,510,876; 7,541,185; and 7,625,753, and 7,989,204, 8,008,075, 8,183,038 and corresponding foreign patent claims. Other patents are pending.

CDI is also a licensee of certain intellectual property listed below relating to the iPS Cells and Differentiated Cells from iPS Academia Japan Inc.:

(****):

____________________________________________(“Researcher”) and employee of _________________________ (“Institution”) (collectively the Researcher and Institution, shall be referred to as the “Recipient”) has been provided with iPS cells (iPS Cells) and differentiated terminal cell types created from the iPS Cells (Differentiated Cells) from Eli Lilly and Company. These iPS Cells and Differentiated Cells (collectively, the “Cells”) were derived and created by Cellular Dynamics International Inc. (“CDI”) from samples provided by Researcher to Lilly (the “Samples”). The Cells are subject to the following restrictions:

I.    USE RESTRICTIONS. Recipient acknowledges that the Cells and the methods used to created them embody intellectual property deemed to be of significant value to CDI and its licensors, and that such intellectual property is protected by the law of patents, copyrights, trade secrets, and other laws. Recipient acknowledges and agrees that neither these terms nor the receipt of the Cells by Recipient shall be construed as a transfer of any title or the grant of any rights in and to the intellectual property embodied in the Cells owned or licensed by CDI. The Cells are covered by pending patents and/or one or more of the following patents: U.S. Patent Nos. U.S. Patent Nos. 8,058,065, 8,048,999, 7,892,830, and corresponding foreign patent claims. The Cells are also covered by a number of patents and pending patents licensed to CDI from iPS Academia Japan Inc., including Japanese Patent Nos. (****), (****), (****). Neither CDI not its licensor, iPS Academia Japan Inc. makes any warranty or representation as to the validity, scope, or enforceability of the patents owned by or licensed to CDI.

Recipient has a limited license to use the Cells and differentiated cells for which Recipient may derive for academic research purposes, subject to these Use Restrictions.

Recipient hereby grants to CDI a perpetual, royalty-free, fully paid up, non-exclusive, worldwide, license to use for any purpose any and all improvements made by Recipient to the Cells. Such improvements may include, without limitation, improvements related to cell reanimation or thawing, cell plating, cell maintenance, cell differentiation, cell functionality, cell maturation, cell improvement assays; or protocols relating to the same. For clarity and for purposes of the license above, if iPS Cells are differentiated by Recipient they are no longer Cells. Recipient is not granting any rights to and retains all rights to any and all findings and data or intellectual property relating to the performance of the Recipient’s materials, platforms, compounds or molecules used or tested with the Cells.

Recipient and any permitted academic transferee may use the Cells solely for academic research purposes and may not use the Cells for commercial purposes of any kind. Recipient and any permitted academic transferee may propagate no more than 120,000,000 live iPS Cells of any one line at any one time (approximately the number of cells in 10 conventional culture plates) at the Institution. Subject to these Use Restrictions, Researcher may transfer the Cells to other academic researchers at the Institution. Researcher may transfer the Cells to any third party academic collaborators who agree in writing to use the Cells solely for academic research and subject to these Use Restrictions. Any differentiated cells that Recipient derives from the Cells may be transferred by Recipient to any third party academic collaborator who agrees to use such differentiated cells solely for academic research. Recipient may not transfer the Cells nor any differentiated cells that Recipient derives from the Cells to (i) any commercial entity or business, or (ii) any not-for-profit entity for a commercial purpose. The Cells must be used in accordance with any applicable CDI user’s guides. Recipient may differentiate the Cells using publicly available or its own differentiation methods. Recipient shall not use CDI’s patented and/or proprietary methods for differentiation of the Cells, and no license to use such methods is conveyed herein. No other right, express or implied, is conveyed by the provision of the Cells. In particular, no right to make, have made, offer to sell, or sell the Cells is implied by the provision of the Cells. The license granted herein does not imply or convey the right to use the Cells in combination with any other product(s) whose manufacture, sale, or use is covered by any patent owned by any third party. Recipient shall not reverse engineer the Cells in any way. Recipient shall not use the Cells or any components or any derivations of the Cells (including differentiated cells) thereof in humans, in clinical trials or for diagnostic purposes involving human subjects, for any therapeutic use or investigational use, nor for any purpose in contravention of any applicable law, regulation, ordinance, institutional review board approved protocol, or privacy office approval.

II.    NO WARRANTIES.

THE CELLS ARE PROVIDED TO RECIPIENT “AS IS”. TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, CDI DISCLAIMS ALL REPRESENTATIONS, AND WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO THE CELLS, INCLUDING BUT NOT LIMITED TO, ANY IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR THAT THE CELLS DO NOT INFRINGE THE INTELLECTUAL PROPERTY RIGHTS OF ANY THIRD PARTY.

III. LIABILITY LIMITATION.Recipient shall be solely responsible for any loss, damages, claims or expenses arising from or related to Recipient’s receipt, use, storage, transfer or disposal of the Cells and hereby agrees to indemnify and hold harmless CDI, its agents, and its licensor, iPS Academia Japan Inc. from the same.

IV.    PATENT CLAIMS. If Recipient challenges the validity of any of the CDI-owned or licensed patents relating to the Cells, then Recipient agrees that it shall pay a reasonable royalty to CDI to continue to use the Cells. If Recipient fails to pay the reasonable royalty, CDI may terminate the license granted to Recipient herein and Recipient shall cease to have the rights to use the Cells. If CDI elects to terminate the license hereunder, Recipient agrees to return to CDI any Cells in its possession.

V. THIRD PARTY LICENSES. The Differentiated Cells provided by CDI may contain a blasticidin resistance (BSD) gene sold under licensing arrangements between Cellular Dynamics International and Life Technologies Corporation. The transfer of the Differentiated Cells conveys to the

Recipient the limited, non-transferable right under U.S. Patent No.5,527,701 to use the Differentiated Cells and components of the Differentiated Cells in internal research conducted by the transferee. Recipient cannot sell or otherwise transfer (a) the Differentiated Cells (b) its components, or (c) materials made by the employment of this Product or its components to a third party or otherwise use Differentiated Cells or their components or materials made by the employment of this Product or its components for Commercial Purposes. Commercial Purposes means any activity other than internal research, including but not limited to: (i) use of Differentiated Cells or its components in manufacturing or in quality assurance/quality control; (ii) use of the Differentiated Cells or its components to provide a service, information, or data for a fee or other consideration if such service, information or data uses or is generated using detection or selection with the BSD gene; (iii) use of Differentiated Cells or its components for therapeutic, diagnostic or prophylactic purposes; or (iv) resale of Differentiated Cells or their components, whether or not the Differentiated Cells or their components are resold for use in research. Further information on purchasing licenses under the above patent may be obtained by contacting the Business Development Department, Life Technologies Corporation, 5791 Van Allen Way, Carlsbad, CA 92008. Phone ###-###-####. Email: ***@***.

INSTITUTION

________________________________________

By:

Its

Date:

RESEARCHER

_______________________________________    

Name: _________________________________

Date:____________________________    

I.     SHIPMENT. iCell Commercial Products (the “Products”) shall be shipped to Lilly FCA CDI, Madison, Wisconsin, USA Incoterms 2010.

II.    INTELLECTUAL PROPERTY RIGHTS / USE RESTRICTIONS / LIMITED LICENSE.

A.    OWNERSHIP. Lilly acknowledges that the Products provided to Lilly embody intellectual property deemed to be of significant value to Cellular Dynamics and its licensors, and that such intellectual property is protected by the law of patents, copyrights, trade secrets, and other laws. Lilly acknowledges and agrees that neither these terms nor the purchase of the Products by Lilly shall be construed as a transfer of any title or the grant of any rights in and to the intellectual property embodied in the Products owned or licensed by Cellular Dynamics. The Products are covered by pending patents and/or one or more of the following patents: U.S. Patent Nos. 5,527,701; 5,733,727; 6,399,300; 7,510,876; 7,541,185; 7,625,753 and 7,989,204, 8,008,075, 8,183,038,and corresponding foreign patent claims. Lilly has a limited license to use the Products for internal research purposes, subject to the use restrictions and third party licenses in subsections B and C of this Section IV. Lilly hereby grants to Cellular Dynamics a perpetual, royalty-free, fully paid up, non-exclusive, worldwide, license to use for any purpose any and all improvements made by Lilly to the Products. Such improvements may include, without limitation, improvements related to cell reanimation or thawing, cell plating, cell maintenance, cell differentiation, cell functionality, cell maturation, cell improvement assays; or protocols relating to the same. Lilly is not granting any rights to and retains all rights to any and all existing intellectual property of Lilly, findings and data relating to the performance of Lilly’s products, platforms, compounds or molecules used or tested with the Products.

B.    USE RESTRICTIONS. Lilly may use the Products solely for internal research purposes for the sole benefit of Lilly, and may not use the Products for commercial purposes of any kind. For information on obtaining a license for commercial use purposes, please contact ***@***. The Products must be used in accordance with any applicable CDI’ Product user’s guides. No other right, express or implied, is conveyed by the sale of the Products. In particular, no right to make, have made, offer to sell, or sell the Products is implied by the sale or purchase of the Products. The license granted herein does not imply or convey the right to use the Products in combination with any other product(s) whose manufacture, sale, or use is covered by any patent. Lilly may not transfer the Products (or any modifications Lilly makes to the Products) to any third party without CDI’ prior written consent. Lilly shall not reverse engineer the Products. Lilly shall not use the Products or any components or modifications thereof in humans, in clinical trials or for diagnostic purposes involving human subjects, for any therapeutic use or investigational use, nor for any purpose in contravention of any applicable law, regulation, ordinance, institutional review board approved protocol, or privacy office approval.

C.    THIRD PARTY LICENSES.

(i) (i) The Products may contain a blasticidin resistance (BSD) gene sold under licensing arrangements between Cellular Dynamics International and Life Technologies Corporation. The purchase of this Product conveys to Lilly the limited, non-transferable right under U.S. Patent No.5,527,701 to use the purchased amount of the Product and components of the Product in internal research conducted by Lilly. Lilly cannot sell or otherwise transfer (a) this Product, (b) its components, or (c) materials made by the employment of this Product or its components to a third party or otherwise use this Product or its components or materials made by the employment of this Product or its components for Commercial Purposes. Commercial Purposes means any activity other than internal research, including but not limited to: (i) use of this Product or its components in manufacturing or in quality assurance/quality control; (ii) use of this Product or its components to provide a service, information, or data for a fee or other consideration if such service, information or data uses or is generated using detection or selection with the BSD gene; (iii) use of this Product or its components for therapeutic, diagnostic or prophylactic purposes; or (iv) resale of this Product or its components, whether or not this Product or its components are resold for use in research. Further information on purchasing licenses under the above patent may be obtained by contacting the Business Development Department, Life Technologies Corporation, 5791 Van Allen Way, Carlsbad, CA 92008. Phone ###-###-####. Email: ***@***.

II.    LIMITED WARRANTY BY CELLULAR DYNAMICS.

A.    Cellular Dynamics warrants that its Products conform to the specifications contained in the Certificate of Analysis for the Product shipped to Lilly. Lilly’s sole and exclusive remedy (and Cellular Dynamics’ sole and exclusive liability) under this limited warranty shall be replacement of the defective Products by Cellular Dynamics.

B.     Cellular Dynamics reserves the right to make changes in design, production, manufacture, or characteristics of the Products or to improve on the Product at any time and in any way, without incurring any obligations to replace or modify any Products previously sold.

C.    Under no circumstances shall Cellular Dynamics’ liability to Lilly exceed the amount paid by Lilly for the Products to Cellular Dynamics. Cellular Dynamics will bear all reasonable shipping costs if the Products are replaced pursuant to this warranty. This warranty does not apply to any defect or nonconformance caused by (i) Lilly’s use of the Products for a purpose or in a manner other than that for which they were designed or that is permitted or in breach of these terms, (ii) the failure by Lilly to follow Cellular Dynamics’ User’s Guide for use, storage, and handling of the Products; or (iii) as a result of any other abuse, misuse or neglect of the Products by Lilly. This warranty applies only to Lilly and not to third parties. This warranty is not assignable.

D.    TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, CELLULAR DYNAMICS DISCLAIMS ALL OTHER REPRESENTATIONS, AND WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO THE PRODUCTS, INCLUDING BUT NOT LIMITED TO, ANY IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR NON-INFRINGEMENT. LILLY’S SOLE REMEDY FOR BREACH OF WARRANTY ARE STATED ABOVE.

E.     Within five (5) business days of thawing the Product but prior to the expiration date of the Product as listed on the Certificate of Analysis and/or label, Lilly must notify CDI in writing of any nonconformity of the Products, describing the nonconformity in detail; otherwise all Products shall be conclusively deemed accepted by Lilly. Lilly’s failure to notify CDI in such time period voids the limited warranty described above. If Lilly believes it has a warranty claim should call CDI’ technical support line at ###-###-#### or email at ***@*** to request replacement Product based on a breach of the above limited warranty. Any action by Lilly for CDI’ breach of this limited warranty must be commenced within 18 months following the date of such breach.

F.    Lilly acknowledges that the Products are subject to US export control laws and regulations. Lilly represents and warrants that it is the ultimate end-user of the Products, and further represents and warrants that it will not knowingly sell, export, re-export, transfer, divert, or otherwise dispose of the Products (including other materials or goods derived from or based on the Products) to any other destination, entity, or person without the prior authorization of any relevant U.S. federal government agency and CDI. Lilly represents and warrants that it will not use the Products for any purpose prohibited by the laws or regulations of the united states and/or other government authorities to which Lilly is subject without the prior authorization from any government entity whose laws and regulations may apply to the use of the Products.

G.     Cellular Dynamics makes no warranty of any kind or nature, neither express nor implied, for any Products or part of the Products that is not manufactured by CDI. Any Products, or other such part or accessories to the Products shall have the warranty, if any, that is offered and granted by the manufacturer of such other products and accessories.

H.    Lilly acknowledges and agrees that CDI may fill Lilly’s order with any number of units of Products. Such units may be more units than Lilly ordered. Lilly will not be charged extra for any adjustments made by CDI. The number of cells in a unit is determined by the Product’s certificate of analysis. The number of cells that are contained in a unit accounts for both viability and plating efficiency percentages. Because this may vary from lot to lot, CDI reserves the right to fill the order with that number of units which is sufficient to fill Lilly’s order and such adjustments shall not constitute a breach of the warranty herein.

VI.    FURTHER LIABILITY LIMITATION. TO THE FULLEST EXTENT PERMITTED UNDER APPLICABLE LAW, CELLULAR DYNAMICS SHALL NOT HAVE ANY LIABILITY FOR INCIDENTAL, COMPENSATORY, PUNITIVE, CONSEQUENTIAL, INDIRECT, SPECIAL OR OTHER SIMILAR DAMAGES, HOWEVER CAUSED AND REGARDLESS OF FORM OF ACTION WHETHER IN CONTRACT, TORT (INCLUDING NEGLIGENCE), STRICT PRODUCT LIABILITY OR OTHERWISE, EVEN IF CELLULAR DYNAMICS HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. LILLY UNDERSTANDS THAT ANY RISKS OF LOSS HEREUNDER ARE REFLECTED IN THE PRICE OF THE PRODUCTS AND THAT THESE TERMS WOULD HAVE BEEN DIFFERENT IF THERE HAD BEEN A DIFFERENT ALLOCATION OF RISK.

V.    FORCE MAJEURE.

CDI shall not be responsible for delays in the shipment of any Products, or failure to ship such Products, if such delay or failure is due to causes beyond its reasonable control, including without limitation, shortages of supplies due to unforeseen conditions, orders or actions of government agencies, acts of nature, acts by Lilly, fires, strikes, or other labor difficulties, wars, hostilities or terrorist acts, embargoes, equipment breakdown, inability to obtain necessary labor, material or manufacturing facilities due to causes beyond its reasonable control or any other cause beyond its reasonable control. In the event of such delay, and assuming that CDI chooses not to cancel due to such cause, the date of delivery shall be extended for a period equal to the time lost by reason of the delay.

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