Document:

exv10w4

 

Exhibit 10.4

October 31, 2006

To:    Jeffrey Janus

From:    International Stem Cell Corporation

Dear Jeff:

The following sets for the terms of your proposed employment with International Stem Cell
Corporation (“ISCC”). ISCC hereby offers you employment with ISCC on the terms and conditions set
forth below, such employment to commence October 31, 2006. As referred to herein, “ISCC” shall
include the public entity of which ISCC expects to become a wholly owned subsidiary (the “Parent”)
through a pending “reverse merger takeover (the “RTO”) and Lifeline Cell Technology, LLC, as the
context requires.

	 	1.	 	You will be President of ISCC and Lifeline and report directly to the Boards of
Directors of those entities. Your duties and responsibilities will include leadership and
management of the ISCC’s and Lifeline’s research and product development, marketing,
product production, and sales. Responsibilities may be added, removed or otherwise
modified, as the Board deems necessary. It is expected that Jeff Krstich will continue to
be the CEO of ISCC and that you and he will function in collaboration rather than in a
senior/subordinate role. At such time as Lifeline ceases to be a wholly owned subsidiary,
these roles may be modified as needed.

	 
	 	2.	 	You will serve on the Boards of both ISCC and Lifeline.

	 	3.	 	You will receive a base salary of $220,000, payable semi-monthly. Your status will
be salary exempt. In anticipation of your collaborative relationship to the CEO, your
base salary shall at all times during the 24 months hereafter be not less than that paid
to the CEO of ISCC, but bonuses may be based on different standards reflecting your
differing areas of primary responsibility. 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, as they
are established. (A group health plan is now being established and is expected to be in
place prior to your commencement date. You will be paid a bonus of $50,000 on or before
December 31, 2007 if milestones mutually agreed between you and Board of ISCC are met.
Because you are already a significant shareholder, you will not receive any additional
stock options at commencement of employment, but will be eligible for future stock option
awards based on performance and results as President of ISCC and Lifeline
without regard or deduction for your existing stock ownership. Options will vest monthly
over a 4-year term.

 

 

 

	 	4.	 	If you are requested to relocate to San Diego County, California. Your actual moving
expenses will be reimbursed up to a maximum of $25,000. Additional reasonable relocation
expenses incurred by you may be reimbursed to you upon consideration and approval by the
Board of Directors of Lifeline. In the event that you are required to move a second time,
ISCC will pay all reasonable moving costs associated with such move and, if such move is
required within 2 years of your move to San Diego County, ISCC will reimburse you for your
moving costs and any actual loss in value upon the sale of your home in San Diego County
in an amount not to exceed $200,000, provided such home is placed on the market at or near
the time of such relocation.

	 	5.	 	Employment with ISCC or Parent 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.
However, termination pay equal to 12 months of the initial base salary shall be paid in
the event of termination by the company for any reason other than “for cause”, as
customarily defined. 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.
How will the termination pay be paid? Over time, lump sum?

	 	6.	 	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.

	 	7.	 	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 ISCC or Lifeline or any former employee who had been
an employee at any time during the one year period prior to your termination.

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

 

 

 

	 	9.	 	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 ISCC or Lifeline, solicit customers
of ISCC or Lifeline 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 ISCC or Lifeline produces and/or sells at such time your employment with ISCC
and/or Lifeline may terminate.

	 	10.	 	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 ISCC or Lifeline, ISCC 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.

	 	11.	 	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.

	 	12.	 	Jeffrey, 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

By:      /S/ KENNETH C. ADLRICH     

Kenneth C. Aldrich

Chairman of the Board

This will acknowledge my acceptance of this offer of employment.

	 	 	 
	/S/ JEFFREY JANUS
	 	 
	Jeffrey Janus

	 	Date:      October 31, 2006exv10w5

 

Exhibit 10.5

FINANCIAL ADVISORY AGREEMENT

THIS FINANCIAL ADVISORY AGREEMENT (“Agreement” or “FAA”) is made and entered into on this the
18th day of October, 2006, by and between Halter Financial Group, L.P., a Texas limited
partnership (“HFG”), and International Stem Cell Corporation, a California corporation (the
“Company”).

W I T N E S S E T H:

WHEREAS, the Company desires to engage HFG to provide certain financial advisory and
consulting services as specifically enumerated below commencing as of the date hereof related to
the Going Public Transaction and the Post-Transaction Period (each as hereinafter defined), and HFG
is willing to be so engaged.

NOW, THEREFORE, for and in consideration of the covenants set forth herein and the mutual
benefits to be gained by the parties hereto, and other good and valuable consideration, the receipt
and adequacy of which are now and forever acknowledged and confessed, the parties hereto hereby
agree and intend to be legally bound as follows:

1. Retention. As of the date hereof, the Company hereby retains and HFG hereby agrees
to be retained as the Company’s financial advisor during the term of this Agreement. The Company
acknowledges that HFG shall have the right to engage third parties to assist it in its efforts to
satisfy its obligations hereunder. In its capacity as a financial advisor to the Company, HFG
will:

A.  Going Public Transaction.

Assist the Company in evaluating the manner of effecting a going public transaction
with a public shell corporation (“Pubco”) domiciled in the United States of America and
quoted on the “OTC BB” (a “Going Public Transaction”). It is anticipated that (a) upon
consummation of the Going Public Transaction, (b) the closing of the Company’s current
private placement of securities (the “Company Offering”) and (c) the closing of the private
placement of Pubco (the “Pubco Offering”) contemplated to be undertaken immediately upon the
closing of the Going Public Transaction, which together with the Company Offering will
generate estimated gross offering proceeds of $10,000,000, the Company’s current
stockholders, investors in the Company Offering and the Pubco Offering, respectively, will
hold 93.5% of all the issued and outstanding shares of Pubco’s common capital stock.

Specifically, ownership by the former shareholders of Pubco following the Going Public
Transaction and the Pubco offering shall therefore consist of 2,210,000 shares of common
stock. Ownership of the balance of Pubco common stock shall be held as follows:
approximately 21,790,000 shares of common stock will be held by the Company’s shareholders
immediately prior to such transactions, and an estimated 10,000,000 shares will be issued to
investors in the Pubco Offering, a total of approximately 34,000,000 shares. In order to
permit the completion of share splits or

 

FINANCIAL ADVISORY AGREEMENT - Page 1

 

 

 

other capital structure adjustments to Pubco that may be required prior to closing, no
adjustment in the shares to be held by the initial Pubco shareholders shall be made for the
possible oversubscription or undersubscription of the Pubco Offering by Brookstreet
Securities, the Company’s placement agent.

B. Post Transaction Period

Upon consummation of the Going Public Transaction, HFG agrees to:

(i) assist Pubco in obtaining a new CUSIP number and a new stock symbol upon the
changing of its name;

(ii) if necessary, coordinate with the Company’s legal counsel the preparation and
assembly of application materials for the listing of Pubco’s common stock on a national
stock exchange; and

(iii) provide Pubco with such additional financial advisory services as may be
reasonably requested, to the extent HFG has the expertise or legal right to render such
services.

C. Tax Considerations

The Going Public Transaction shall be accomplished in a manner determined to the
satisfaction of the Company to be a tax deferred transaction under the Internal Revenue
Code, it being anticipated that the form of transaction shall consist of an exchange of the
outstanding shares of the Company for newly issued shares of Pubco.

2. Authorization. Subject to the terms and conditions of this Agreement, the Company
hereby appoints HFG to act on a best efforts basis as its consultant during the Authorization
Period (as hereinafter defined). HFG hereby accepts such appoint, with it being expressly
acknowledged that HFG is acting in the capacity of independent contractor and not as agent of
either the Company, affiliates of the Company or Pubco.

3. Authorization Period. HFG’s engagement hereunder shall become effective on the
date hereof (the “Effective Date”) and will automatically terminate (the “Termination Date”) on the
first to occur of the following: (a) 60 days from the Effective Date in the event the Going Public
Transaction has not been completed, (b) the mutual decision of the parties not to move forward with
the Going Public Transaction or (c) 12 months from the Effective Date.

4. Fees and Expenses. In consideration for the services to be provided for hereunder
the Company shall pay to HFG the amount of $450,000 (the “Fee”) to be paid on the closing date of
the Going Public Transaction. The Company shall be under no obligation to pay any part of the Fee
to HFG in the event this Agreement is terminated as a result of the failure of the Company and
Pubco to effect the Going Public Transaction.

5. Due Diligence . The Company shall have the right to perform a due diligence
investigation of Pubco and shall be under no obligation to effect the Going Public Transaction
unless it is satisfied, in its sole discretion, with the results of its diligence investigation.

FINANCIAL ADVISORY AGREEMENT - Page 2

 

 

 

6. Indemnification. The parties hereto shall indemnify each other to the extent
provided for in this paragraph. Except as a result of an act of gross negligence or willful
misconduct on the part of a party hereto, no party shall be liable to another party, or its
officers, directors, employees, shareholders or affiliates, for any damages sustained as a result
of an act or omission taken or made under this Agreement. In those cases where gross negligence or
willful misconduct of a party is alleged and proven, the non-damaged party agrees to defend,
indemnify and hold the damaged party harmless from and against any and all reasonable costs,
expenses and liabilities suffered or sustained as a result of the act of gross negligence or
willful misconduct.

7. Lock Up. HFG agrees that, without the prior written consent of the Company, it will
not sell, transfer or otherwise dispose of greater than 1/12th of its holdings in Pubco
every 30 days commencing on the closing date of the Going Public Transaction. However, in the event
HFG does not sell or otherwise dispose of all of the allotted number of Pubco shares that may be
sold in a given 30 day period, HFG may sell such unsold shares at any time thereafter.

8. Governing Law. This Agreement shall be governed by the laws of the State of Texas.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first
above written.

	 	 	 
	 

	 	HFG:
	 
	 	 
	 

	 	Halter Financial Group, L.P.
	 
	 	 
	 

	 	By: [TIMOTHY P. HALTER]
	 

	 	     Timothy P. Halter, Chairman, Halter
	 

	 	Financial Group GP, LLC, its General Partner
	 
	 	 
	 

	 	The Company:
	 

	 	International Stem Cell Corporation
	 
	 	 
	 

	 	By: [KENNETH C. ALDRICH]
	 

	 	Name: Kenneth C. Aldrich
	 

	 	Its: Chairman

FINANCIAL ADVISORY AGREEMENT - Page 3

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