Document:

Employment Agreement

 Exhibit 10.18 

 

 

 November 5, 2009 
 To: Brian Lundstrom 
 From: International Stem Cell Corporation 
 Dear Brian: 
 The following sets for the terms of your proposed employment with International Stem
Cell Corporation (“ISCO”). ISCO hereby offers you employment with ISCO on the terms and conditions set forth below, such employment to commence November 5, 2009. 
  

	 	1.	You will be President and Assistant Secretary of ISCO and report directly to the CEO of ISCO. Your duties and responsibilities will include management of ISCO’s
day to day operations, including activities related to the company’s public listing and external presence; in particular, definition and monetization of ISCO’s development programs through outlicensing, R&D collaborations, and other
financial structures; and such other functions as the Board or the CEO may delegate to you. You may be asked to be an officer or otherwise involved in the capital fundraising and other activities of subsidiaries of ISCO. 

  

	 	2.	You will receive an annual base salary of $250,000, payable semi-monthly. Your status will be salary exempt. You will be entitled to 15 days paid vacation each year,
accruing on a monthly basis. You will be eligible for coverage under such group health plan and other benefits as the Company provides to comparable employees. 

  

	 	3.	Bonuses, if any, will be at the discretion of the Board; provided however, that you shall be entitled to an automatic bonus of up to a maximum of $100,000 in any one
calendar year calculated as 1% of any new capital (whether from investment, licensing, corporate ventures, or other sources, and no matter what form such capital takes, e.g. upfront fee, milestone, research funding, royalty, equity etc.) that you
are primarily responsible for bringing to the Company. If the 1% formula would generate more than $100,000 in any year, it can be carried over to future years for up to two additional years so long as you remain employed by the Company.

  

	 	4.	In the event of the termination of your services by the company other than “for Cause”, you will be entitled to severance pay on a monthly basis determined as
follows: 3 months of severance pay if terminated during the first 6 months commencing November 1, 2009; then increasing to 6 months for the next 6 months and 12 months thereafter. In all cases, severance pay will terminate as soon as you obtain
a replacement job. Cobra payments would be included in severance pay. 

  

	 	5.	Upon approval by the Board, you will be granted employee stock options to purchase three million (3,000,000) shares of Common Stock on the following basis:

  

	 	a.	Exercise Price: fair market value as of close of business on November 5 2009. 

  

	
	  
 2595 Jason
Court, Oceanside, CA 92056  —  Tel: (760) 940-6383  —  Fax: (760) 940-6387  —  internationalstemcell.com

 

 

  

	 	b.	On May 1, 2010 180,000 shares will vest, representing 2% per month on 1,500,000 shares (1/2 of the total grant). 

  

	 	c.	From June 1, 2010 and monthly thereafter until October 31, 2010 an additional 30,000 shares per month (2% of 1,500,000) will vest. 

 

	 	d.	On November 1, 2010, an additional 360,000 will vest, representing 12 months vesting on the remaining 1,500,000 shares of the grant. 

  

	 	e.	Thereafter all previously unvested shares will continue to vest at the rate of 60,000 shares (2% of total grant) per month until fully vested. 

 

	 	f.	All shares shall otherwise contain the standard provisions of the Company’s Stock Option Plan, but that portion which will not qualify for ISO treatment may be
granted outside the Plan and registered for sale separately on SEC form S-8 or through some other applicable registration method. 

  

	 	6.	Employment with ISCO is at the mutual consent of the employee and the company. Accordingly, while the company has every hope that employment relationships will be
mutually beneficial and rewarding, employees and the company retain the right to terminate the employment relationship at will, at any time, with or without cause. Please note that no individual has the authority to make any contrary agreement or
representation. Accordingly, this constitutes a final and fully binding integrated agreement with respect to the at-will nature of the employment relationship. 

  

	 	7.	You agree to abide by the Company’s policies and procedures, including those set forth in a Company Employee Handbook when such document is drafted. You will be
required to sign the signature page of this Employee Handbook when it is completed. 

  

	 	8.	For a period of one year after your termination of employment for any reason, you agree not to, directly or indirectly, hire, attempt to hire, induce or entice the hire
of or interview for hire any employee of ISCO or any of its subsidiaries, or any former employee who had been an employee at any time during the one year period prior to your termination. 

  

	 	9.	You further agree that you will upon termination of employment, return to ISCO all books, records, computer files, manuals, customer lists and other written, typed,
printed, or electronic materials, whether furnished by ISCO or any subsidiary or prepared by you, which contain any information relating to ISCO or any subsidiary, and you further agree that you will neither make nor retain copies of such materials
after termination of employment. 

  

	
	  
 2595 Jason
Court, Oceanside, CA 92056  —  Tel: (760) 940-6383  —  Fax: (760) 940-6387  —  internationalstemcell.com

 

 

  

	 	10.	If you voluntary terminate your employment under this Agreement, you will not, for a period of one year after you are no longer employed by ISCO or any subsidiary,
solicit customers of ISCO or any subsidiary directly or indirectly, either as a proprietor, stockholder, partner, officer, employee, or otherwise of any other entity engaged in the stem cell business in the United States, producing and/or selling
same or substantially similar products and services as ISCO or any subsidiary produces and/or sells at such time your employment with ISCO and/or any subsidiary may terminate. 

  

	 	11.	In the event of any lawsuit or charge filed with an administrative agency, or other form of litigation brought against or involving you as a result of alleged activity,
negligence, or any other conduct by you in connection with your duties and responsibilities on behalf of ISCO or any subsidiary, ISCO shall provide and pay for legal defense on your behalf, as well as indemnify you against any judgment or other
liability that may result from such proceedings unless such activity or conduct represented willful misconduct on your part. 

  

	 	12.	You will be required to sign an Employee Proprietary Information Agreement as well as the necessary tax and benefit enrollment forms before starting full time
employment. You will also be required to provide proof of your identity and authorization to work in the United States as required by Federal immigration laws. 

  

	 	13.	We look forward to you joining our effort and hope the opportunity will be mutually rewarding. To confirm that you agree to the terms stated in this letter, please
sign, date and return the enclosed copy of this letter. 

  

	
	Sincerely,
	
	International Stem Cell Corporation
	
	 /s/ Kenneth C. Aldrich

	Kenneth C. Aldrich CEO

 This will acknowledge my acceptance
of this offer of employment. 
  

					
	 /s/ Brian Lundstrom
	  		  	Date: November 5, 2009
	Brian Lundstrom	  		  	

  

	
	  
 2595 Jason
Court, Oceanside, CA 92056  —  Tel: (760) 940-6383  —  Fax: (760) 940-6387  —  internationalstemcell.comForm of Stock Option Agreement

 Exhibit 10.19 
 INTERNATIONAL STEM CELL CORPORATION 
 NON-QUALIFIED
STOCK OPTION AGREEMENT 
 (Time-Based Vesting) 
 THIS NON-QUALIFIED STOCK OPTION AGREEMENT (this “Agreement”) dated as of,
                    (“Grant Date”), is between International Stem Cell Corporation, a Delaware Corporation (the
“Company”), and                     (the “Recipient”). The stock option granted by this Agreement has not been
granted under the International Stem Cell Corporation 2006 Equity Participation Plan (the “Plan”). However, for administrative convenience and simplicity, the parties refer to the Plan for certain defined terms and standard provisions.
Capitalized terms used in this Agreement without definition shall have the meaning ascribed to such terms in the Plan. 
  

	1.	Grant of Stock Option, Option Price and Term. 

 (a) The Company grants to the Recipient a Non-Qualified Stock Option to purchase              shares of Common Stock of the Company
(“Option Shares”) at a price of $0.         per share (“Option Price”) subject to the provisions of the Plan and the terms and conditions herein. 
 (b) The term of this Stock Option shall be a period of ten years from the Grant Date (the “Option Period”). During the Option
Period, the Stock Option shall be vested and exercisable as of the dates set forth below according to the percentage set forth opposite such date: 
  

			
	 Date
	 	 Vesting Schedule

 Notwithstanding the foregoing, in the event the Recipient ceases to provide services to the Corporation or an Affiliate, whether as an
employee, Director or Consultant for any reason whatsoever (i) any Stock Option held by the Recipient may thereafter be exercised by the Recipient, to the extent it was exercisable at the time of such cessation, for a period of
             years from the date of such cessation or until the expiration of the stated term of the option, whichever period is shorter, and (ii) each Stock Option that remains
unexercisable as of the date of cessation shall be terminated at the time of such cessation. 
 (c) The Stock Option granted
hereunder is designated as a Non-Qualified Stock Option which is not transferable by the Recipient except by will or in accordance with the laws of descent and distribution. The Stock Option granted hereunder is not intended to constitute an
“incentive stock option” as that term is used in Section 422 of the Code. 
 (d) The Company shall not be
required to issue any fractional shares of Common Stock. Any fractional shares of Common Stock shall be paid in cash. 

	2.	Exercise. 

 The
Stock Option shall be exercisable during the Recipient’s lifetime only by the Recipient (or his or her guardian or legal representative (each, a “Representative”)), and after the Recipient’s death only by a Representative. The
Stock Option may only be exercised by the delivery to the Company of a properly completed written notice, which notice shall specify the number of Option Shares to be purchased and the aggregate Option Price for such shares, together with payment in
full of such aggregate Option Price. Payment shall only be made as specified in the Plan. If any part of the payment of the Option Price is made in shares of Common Stock, such shares shall be valued by using their Fair Market Value as of the date
of exercise of the Stock Option. 
 The Stock Option may not be exercised unless there has been compliance with the Plan and all
of the preceding provisions of this Section 2, and, for all purposes of this Agreement, the date of the exercise of the Stock Option shall be the date upon which there is compliance with all such requirements. 
  

	3.	Payment of Withholding Taxes. 

 If the Company is obligated to withhold an amount on account of any tax imposed as a result of the exercise of the Stock Option, the Recipient shall be required to pay such amount to the Company, as
provided in the Plan. The Recipient acknowledges and agrees that he or she is responsible for the tax consequences associated with the grant of the Stock Option and its exercise. 
  

	4.	Changes in Company’s Capital Structure. 

 The existence of this Stock Option will not affect in any way the right or authority of the Company or its stockholders to make or authorize (a) any or all adjustments, recapitalizations,
reorganizations or other changes in the Company’s capital structure or its business; (b) any merger or consolidation of the Company’s capital structure or its business; (c) any merger or consolidation of the Company; (d) any
issue of bonds, debentures, preferred or prior preference stock ahead of or affecting the Common Stock or the rights thereof; (e) the dissolution or liquidation of the Company; (f) any sale or transfer of all or any part of its assets or
business; or (g) any other corporate act or proceeding, whether of a similar character or otherwise. 
 In the event of a
Change in Control or other corporate restructuring provided for in the Plan, the Recipient shall have such rights, and the Board shall or may, as the case may be, take such actions, as are provided for in the Plan. 
  

	5.	Plan. 

 The Stock
Option is not granted pursuant to the Plan. However, except as set forth in this Agreement, the Stock Option and this Agreement are governed by the terms of the Plan and subject to all of the terms and provisions thereof, whether such terms
and provisions are incorporated in this Agreement by reference or are expressly cited. Company has provided Recipient with a copy of the Plan. 
  

	6.	Employment, Directorship or Other Service. 

 No provision of this Agreement or of the Stock Option granted hereunder shall give the Recipient any right to continued employment, directorship or other service with respect to the Company or any
Affiliates, create any inference as to the length of employment, directorship or other service of the Recipient, affect the right of the Company or Affiliates to terminate the employment, directorship or other service of the Recipient, with or
without Cause, or give the Recipient any right to participate in any employee welfare or benefit plan or other program (other than the Plan) of the Company or any of the Affiliates. 
  

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	7.	Governing Law. 

 This Agreement and the Stock Option granted hereunder shall be governed by, and construed and enforced in accordance with, the laws of the State of California (other than its laws respecting choice of law). 
  

	8.	Waiver; Cumulative Rights. 

 The failure or delay of either party to require performance by the other party of any provision hereof shall not affect its right to require performance of such provision unless and until such performance has been waived in writing. Each
and every right hereunder is cumulative and may be exercised in part or in whole from time to time. 
  

	9.	Notices. 

 Any
notices, consents, or other communication to be sent or given hereunder by any of the parties shall in every case be in writing and shall be deemed properly served if (a) delivered personally, (b) sent by registered or certified mail, in
all such cases with first class postage prepaid, return receipt requested, or (c) delivered to a nationally recognized overnight courier service, to the parties at the addresses set forth below: 
  

			
	If to the Company:	  	International Stem Cell Corporation
		  	2595 Jason Court
		  	Oceanside, CA 92056
		  	Attention: Stock Plan Administrator
		  	Facsimile: (760) 940-6387
		
	If to the Recipient:	  	

 or such other address or to the attention of such other person as the recipient party shall have specified by
prior written notice to the sending party. Date of service of such notice shall be (w) the date such notice is personally delivered, (x) three (3) days after the date of mailing if sent by certified or registered mail, or (y) one
(1) day after date of delivery to the overnight courier if sent by overnight courier. 
  

	10.	Conditional Grant. 

 This Stock Option is granted upon the condition that the Option Shares shall be forfeited unless each and any person who is a spouse of the Recipient at any time on or after the Grant Date (including any person who becomes a spouse after
the Grant Date) executes a Consent of Spouse form provided by the Committee, unless the Committee shall waive such condition. 
  

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	11.	Entire Agreement. 

 This Agreement and the Plan embody the complete agreement and understanding among the parties, and supersede and preempt any prior understandings, agreements or representations by or among the parties, written or oral, with respect to the
subject matter hereof. 
  

	12.	Counterparts. 

 This Agreement may be executed in separate counterparts, each of which is deemed to be an original and all of which taken together constitute one and the same instrument. 
  

	13.	Successors and Assigns. 

 This Agreement is intended to bind and inure to the benefit of, and be enforceable by, the Recipient and the Company and their respective successors and assigns (including subsequent holders of this Stock Option). 
  

	14.	No Strict Construction. 

 The language used in this Agreement will be deemed to be the language chosen by the parties hereto to express their mutual intent, and no rule of strict construction will be applied against any party hereto. 
  

	15.	Remedies. 

 Each of
the parties to this Agreement will be entitled to enforce its rights under this Agreement specifically, to recover damages by reason of any breach of any provision of this Agreement and to exercise all other rights existing in its favor. The
Recipient agrees and acknowledges that money damages will not be an adequate remedy for any breach of the provisions of this Agreement and that the Company shall be entitled to specific performance and injunctive relief in order to enforce, or
prevent any violations of, the provisions of this Agreement. 
  

	16.	Amendments and Waivers. 

 The Board may amend or waive any of the terms of the Award heretofore granted, prospectively or retroactively, but no such amendment shall adversely affect the rights of the Recipient without the Recipient’s consent. 
  

	17.	Headings. 

 The
captions set forth in this Agreement are for convenience only and shall not be considered as part of this Agreement or as in any way limiting the terms and provisions hereof. 
 [Remainder of page intentionally left blank. 
 Signature page follows.] 
  

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 IN WITNESS WHEREOF, the Company has caused this Agreement to be duly executed by an
officer thereunto duly authorized, and the Recipient has hereunto set his hand, all as of the day and year first above written. 
  

			
	INTERNATIONAL STEM CELL CORPORATION
		
	By:	 	  

	Name:	 	Ray Wood
	Title:	 	Vice President, Finance, Principal
		 	Financial Officer

  

			
	Recipient:	 	
	
	  

	 Name:

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