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Exhibit 10.6

June 6, 2016

Ian Massey

[***]

 

  Re: Cooperation and Consulting Agreement

Dear Ian:

As you know, StemCells, Inc. (the “Company” or “StemCells”) has terminated its
Phase II Pathway Study and has begun an orderly wind down of the Company’s
operations. As you also know, the Company has just entered into another letter
agreement with you, also dated June 6, 2016, defining the terms of your revised
severance benefits (your “Severance Buy-out Agreement”), which is incorporated
here by this reference. Capitalized terms used in this letter, but not otherwise
defined, have the meanings given to them in your Severance Buy-out Agreement,
including its Exhibit A. Nothing in this letter supersedes or amends the terms
of your Severance Buy-out Agreement.

The Company has determined that, in order to maximize the value of the Company’s
assets, it is important to ensure the continued cooperation and efforts of both
you and approximately fifteen other individuals with central roles within the
organization, both before and after August 1, 2016. In particular, the Company
has determined that your continued cooperation after your termination from the
Company may be necessary to enable the Company to sell all or substantially all
of its assets at the best price possible for the benefit of all of its
stakeholders; and the Company further believes that the compensation set forth
in this letter is appropriate and reasonable to provide you with incentive to
cooperate with the Company during this difficult time. In this letter, we refer
to both you and your colleagues who have entered into substantially identical
cooperation and consulting agreements with the Company, and who have not
terminated or breached these agreements, as the “Close-out Team.”

This letter therefore sets forth our agreement concerning the scope, terms and
conditions of the engagement of you by the Company as a consultant. You are
being engaged as an independent contractor, and nothing in this letter creates
an employer-employee relationship between the Company and you after your
Separation Date.

 

 

7707 Gateway Boulevard Newark, CA 94560 USA

T +1 (510) 456-4000 ● F +1 (510) 456-4001

www.stemcellsinc.com

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Ian Massey

June 6, 2016

Page 2

 

1. Scope of Engagement. By this letter, you are being retained by the Company
only for the purposes and to the extent set forth herein. If and to the extent
requested, you will use reasonable best efforts, subject to your availability,
to assist the Company on such tasks as the Company requests, such as tasks and
responsibilities relating to either: (i) the orderly wind down of the Company’s
operations, including a potential bankruptcy filing, and/or (ii) the divestiture
of Company assets. The scope of these tasks will not necessarily be within the
scope of work you’ve been performing as a Company employee even if reasonably
related to certain duties you’ve performed.

2. Status as an Independent Contractor.

You will provide services under this agreement as an independent contractor for
the Company. Neither of the parties, nor their respective agents, employees,
consultants, or representatives, shall be considered employees, joint venturers,
co-venturers, partners, or agents of the other party. Nothing contained in this
agreement shall be construed to create a relationship of employer and employee,
master and servant, principal and agent, or partners, joint venturers, or
co-venturers between you and the Company or between you and any employee or
agent of the Company. The relationship of the parties under this agreement is
strictly contractual and shall not give rise to any fiduciary relationship. Your
activities under this agreement will not be supervised and, other than project
delivery or completion dates there are no fixed or set hours for the performance
of work hereunder. As an independent contractor, you will determine the method,
details, and means of performing all services to be performed under this letter
agreement. Likewise, you are responsible for all costs and expenses incident to
the performance of services performed under this letter agreement, including but
not limited to all fees, licenses, bonds, and taxes required of, or imposed
against, you and all other costs of doing business by you. The Company shall not
be responsible for any expenses incurred by you in performing any of the
services under this letter agreement. You are responsible for furnishing all
labor and materials to perform all services hereunder. For example, you must
supply, at your own expense, all tools and instrumentalities required to
accomplish the work agreed to be performed in accordance with this letter
agreement. You are not required to purchase or rent any tools, equipment or
services from the Company. You will perform the services required by this letter
agreement at a place or location and at such times as you determine will
reasonably and efficiently fulfill your obligations under this
agreement. However, you acknowledge and agree that your physical presence at the
Company’s premises (or any other location as reasonably requested by the
Company) may be required as part of your duties under this agreement.

You may not represent to any third person or entity that you are authorized to
enter into any contract for, or on behalf of, the Company; and you may not enter
into any contract or other commitment for, or on behalf of, the Company or
otherwise attempt to bind the Company in any manner whatsoever, without the
Company’s prior written consent.

3. Compensation and Disbursements.

As exclusive compensation for your work under this engagement, you and the other
members of the Close-out Team, will be eligible to receive the following awards
payable upon the successful achievement of the following milestones, as
applicable, provided that you use reasonable best efforts to cooperate with the
Company and perform

 

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Ian Massey

June 6, 2016

Page 3

 

the tasks requested by the Company, and your reasonable best efforts continue
through the successful achievement of the following milestones, as applicable:

Fifteen percent (15%) of the proceeds of the sale of all or substantially all of
the Company’s assets, payable upon the successful closing of the sale or, if
there is more than one sale, the successful closing of the last sale that
results in the Company having sold all or substantially all of its assets.

Fifteen percent (15%) of any income received by the Company for the license or
assignment of intellectual property, including patents, patent applications and
trade secrets, payable when and as received by the Company.

Fifteen Percent (15%) of any up-front payment or fee received by the Company for
the divestiture of the Company’s GMP manufacturing facility located at 249
Humboldt Court, Sunnyvale, whether by sublease, assignment, sale of assets, or
otherwise, payable when and as received by the Company.

In the event of a Company merger in which the Company is the surviving legal
entity (i.e., a reverse merger), then the Close-out team will be entitled to a
cash payment equal to fifteen percent (15%) of the valuation ascribed to
StemCells, Inc. in the merger transaction for purposes of establishing the share
exchange ratio.

The Company will divide any success fees in good faith either ratably based upon
efforts made or in equal shares across all eligible members of the Close-out
Team. Unless otherwise agreed to in a signed writing by the Company (for
example, because either the nature or the magnitude of work requested of you is
extraordinary), after your Separation Date, you will not be compensated for any
work done during this engagement, except as described above.

All payments to you under this agreement will be made without deduction for
withholding taxes and contributions. You are responsible for paying all required
state and federal taxes on all amounts received by you under this letter
agreement for the performance of the services performed pursuant to this letter
agreement. Aggregate annual payments to you in excess of $600 shall be reported
by the Company to federal and state taxing authorities and to you annually on
IRS form 1099-MISC. You will complete and submit to the Company the Substitute
Form W-9 provided by the Company with your signed copy of this letter agreement.

After your separation date, you will not be entitled to any employment benefits
of any kind provided by the Company to the Company’s employees, including but
not limited to vacation pay, sick leave pay, any retirement plan (e.g., 401(k))
and related benefits, social security, workers’ compensation insurance, health
insurance, disability insurance, unemployment insurance benefits, public
liability and property damage insurance, travel insurance, legal counsel,
bonuses, and other benefits of any kind provided by the Company to its
employees. You expressly waive any and all rights to such benefits and agree
that you will not be eligible for such benefits even if a tribunal, governmental
agency, or other entity with appropriate authority determines that you are an
employee of the Company.

4. Equity Awards. Your existing Company-provided equity awards will continue to
vest after your Separation Date for so long as you remain a consultant to the
Company, as provided by this letter agreement. However, you will be responsible
for paying any taxes owed as a consequence of continued vesting.

 

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Ian Massey

June 6, 2016

Page 4

 

5. Continuing Obligations. To receive these awards, you will need to act in good
faith with respect to the Company’s wind-down and comply with the Company’s
policies and procedures during the period of your consultancy, including all
previously agreed-upon obligations with respect to the use or disclosure of
confidential information or trade secrets of the Company or any Company
subsidiary.

6. Termination Rights. This agreement is terminable by you at any time and for
any reason. This agreement is terminable by the Company at any time after
July 31, 2017, for any reason, and at any time in the event your breach of this
agreement or if you are dismissed for cause prior to your Separation Date.

7. Services to Third Parties. The parties recognize that you may provide
services to third parties during the term of this letter agreement. However, it
is understood and agreed that you shall be bound by all previously agreed-upon
obligations with respect to the use or disclosure of the Company’s confidential
information and trade secrets, and that you will not use any Confidential
Information, directly or indirectly, for the benefit of any third parties. In
addition, written notice must be provided to the Company before you provide
related services to any third party which is a competitor or competitive
business of the Company.

8. Assignment. This agreement is personal in nature. You may not subcontract any
work under this agreement. Moreover, neither this agreement nor any duties or
obligations under this letter agreement may be assigned by the Company or by you
without the other party’s prior written consent.

9. Resolution of Disputes / Choice of Law. This letter agreement shall be
interpreted in accordance with the plain meaning of its terms and not strictly
for or against any of the parties hereto. This letter agreement is made and
entered into in the State of California, and shall in all respects be
interpreted, enforced and governed by and under the laws of California without
regard to its choice of law provisions. The parties further consent to the
federal courts within the state of the defendant’s residence or principal place
of business as being the exclusive forums for bringing any action or claim
arising from, related to, or seeking to interpret, this letter agreement or any
provision of this letter agreement. If, at any time, a violation of any term of
this letter agreement is asserted by any party hereto, that party shall have the
right to seek specific performance of that term and/or any other necessary and
proper relief, including but not limited to damages, and the prevailing party
shall be entitled to recover its reasonable costs and attorneys’ fees.

10. Entire letter agreement / Modification. The parties hereto represent and
acknowledge that in executing this letter agreement they do not rely and have
not relied upon any representation or statement made by the other party or by
any of the other party’s employees, directors, agents, attorneys, or
representatives with regard to the subject matter, or effect of, this letter
agreement or otherwise, other than those specifically stated in this written
letter agreement. This letter agreement sets forth the entire agreement between
the parties hereto and fully supersedes any and all prior agreements and
understandings, written or oral, between the parties hereto pertaining to the
subject matter hereof, except this letter agreement shall not in any way affect,
modify, or nullify any prior agreement you entered into with the Company
regarding confidentiality, trade secrets, inventions, or unfair competition,
including your previous Employment Agreement.

 

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Ian Massey

June 6, 2016

Page 5

 

Neither this letter agreement, nor any of its terms, may be modified, amended or
waived except by a written agreement signed by both parties. Any waiver of any
provision of this letter agreement shall not constitute a waiver of any other
provision of this letter agreement unless expressly so indicated.

11. Severability. Should any provision of this letter agreement be declared or
be determined by any court of competent jurisdiction to be illegal, invalid, or
unenforceable, the legality, validity and enforceability of the remaining parts,
terms or provisions shall not be effected thereby and said illegal,
unenforceable, or invalid term, part or provision shall be deemed not to be a
part of this letter agreement.

12. Counterparts. This letter agreement may be executed in one or more
counterparts, with signatures delivered by facsimile or as a .pdf, each of which
shall have the efficacy of a second original as if delivered in person, but all
of which together will constitute one and the same instrument. Photographic or
facsimile copies of any such signed counterparts may be used in lieu of the
original for any purpose.

By your signature below, you agree to the terms of this engagement.

Sincerely,

StemCells, Inc.

 

/s/ Ken Stratton

By: Ken Stratton General Counsel and Corporate Secretary Acknowledged and
agreed:

/s/ Ian J. Massey

By: Ian Massey