Document:

vray-ex103_311.htm

 

Exhibit 10.3

TRANSITION AND SEPARATION AGREEMENT

 

This Transition and Separation Agreement (the “Agreement”) by and between David Chandler (“Executive”) and ViewRay, Inc. (the “Company”) is dated as of June 8, 2016 and is made effective as of eight (8) days after Executive’s signature hereto (the “Effective Date”), unless Executive revokes his acceptance of this Agreement as provided in Section 6(d) below.

 

	
 
	
A.
	
Executive’s employment with the Company and status as an officer and employee of the Company and each of its affiliates will end effective upon the Separation Date (as defined below).

 

	
 
	
B.
	
Executive and the Company want to transition Executive’s duties and end their employment relationship amicably and also to establish the obligations of the parties including, without limitation, all amounts due and owing to Executive.

 

	
 
	
C.
	
The payments and benefits being made available to Executive pursuant to this Agreement are intended to satisfy all outstanding obligations under that certain offer letter agreement by between Executive and the Company dated as of November 11, 2010 (the “Employment Agreement”).

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth, the parties agree as follows:

 

	
 
	
1.
	
Separation Date.  Executive acknowledges and agrees that his status as an officer and employee of the Company and as an officer and/or director of the Company’s parent and subsidiaries will end effective as of June 8, 2016 (the “Separation Date”).  Executive hereby agrees to execute such further document(s) as shall be determined by the Company as necessary or desirable to give effect to the end of Executive’s status as an officer of the Company and, if applicable, officer and/or director of any of parent or its subsidiaries; provided that such documents shall not be inconsistent with any of the terms of this Agreement.

	
 
	
2.
	
Transition Services.  During the period (the “Transition Period”) commencing on the Separation Date and ending on the three (3)-month anniversary of the Separation Date Executive shall enter into a mutually-agreeable consulting agreement to provide such transition services (the “Transition Services”) in his area of expertise as shall be requested by the Company.  During the first two weeks of the Transition Period, Executive shall spend at least two business days at the Company’s office in Mountain View, California.  During the Transition Period, Executive may engage in other full-time or part-time employment or other business endeavors of Executive’s choosing, provided that he is able to perform the Transition Services at such times and locations as mutually agreed to by Executive and the Company. 

3.Final Paycheck; Payment of Accrued Wages and Expenses.  

	
 
	
(a)
	
Final Paycheck.  As soon as administratively practicable on or after the Separation Date, the Company will pay Executive all accrued but unpaid base salary and all accrued and unused vacation earned through the Separation Date, subject to standard payroll deductions and withholdings.  Executive is entitled to these payments regardless of whether Executive executes this Agreement.

	
 
	
(b)
	
Business Expenses.  The Company shall reimburse Executive for all outstanding expenses incurred prior to the Separation Date which are consistent with the Company’s policies in effect from time to time with respect to travel, entertainment and other business expenses, subject to the Company’s requirements with respect to reporting and documenting such expenses, including, without limitation, expenses incurred pursuant to Executive’s services as a director of any of the 

1

 

 

 

	
 
		
Company’s subsidiaries.  Executive is entitled to these reimbursements regardless of whether Executive executes this Agreement. 

	
 
	
(c)
	
COBRA.  If eligible, Executive will be given the opportunity to elect continuation of healthcare benefits pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, or the applicable state equivalent (together, “COBRA”).  If eligible, Executive is entitled to elect COBRA coverage regardless of whether Executive executes this Agreement.

	
 
	
4.
	
Separation Payments and Benefits.  Without admission of any liability, fact or claim, the Company hereby agrees, subject to (i) Executive’s execution of this Agreement following the Separation Date but on or within twenty-one (21) days following Executive’s receipt of the Agreement, (ii) Executive not revoking this Agreement prior to the Effective Date and (iii) Executive’s performance of his continuing obligations pursuant to this Agreement, including the provisions of Transition Services, the Employment Agreement and that certain Employee Confidentiality, Inventions and Non-Interference Agreement by and between Executive and the Company dated as of November 11, 2010 (the “Confidentiality Agreement”) (including, without limitation, the non-solicitation restrictive covenants set forth therein for the periods set forth in the Confidentiality Agreement), to provide Executive the following severance benefits:  

	
 
	
(a)
	
Severance.  The Company shall continue to pay to Executive his base salary at the rate in effect as of immediately prior to the Separation Date for the period of time commencing on the Separation Date and ending on the six (6)-month anniversary of the Separation Date (such payments, the “Severance Payments”).  Severance Payments shall be made in accordance with the Company’s standard payroll practices, less applicable withholdings and deductions, with each payment deemed to be a separate payment for purposes of Section 409A of the Code.  The first such Severance Payment shall commence on the first payroll date following the Effective Date. In addition to the Severance Payments, the Company shall pay to Executive evenly distributed over the same 6 month period, a total cash payment equal to $19,828, which represents fifty percent (50%) of Executive’s 2015 annual bonus, these payments shall be made in accordance with the Company’s standard payroll practices less applicable withholdings and deductions. 

	
 
	
(b)
	
2015 Bonus.  The Company shall pay to Executive $39,665.00, which constitutes the amount of the bonus Executive earned for fiscal year 2015.  Any amount that becomes payable under this Section 4(b) shall be paid, less applicable withholdings and deductions, to Executive within thirty (30) days following the payment to other executives of their 2015 Bonuses. 

	
 
	
(c)
	
Stock Options.  As of June 8, 2016, Executive will hold vested options to purchase 207,879 shares of Company common stock and unvested options to purchase 73,115 shares of Company common stock pursuant to the Company’s equity incentive plans and the option agreements evidencing such grants (collectively, the “Equity Awards”).  Upon the Separation Date, Executive’s Equity Awards shall cease vesting and the unvested portion of such Equity Awards as of such date shall terminate.  Executive warrants and represents to the Company that Executive presently intends to exercise for cash consideration all vested Equity Awards held by Executive, except the 19,310 vested options in grant named 072315-ISO $5, on or before September 1, 2016. Executive hereby agrees that each agreement evidencing his Equity Awards shall be deemed amended to the extent necessary to provide that Executive’s vested Equity Awards, to the extent unexercised, shall terminate on September 1, 2016.  If Executive desires to exercise any vested Equity Awards, Executive must follow the procedures set forth in Executive’s option agreements, including payment of the exercise price and any withholding obligations before such date.  If by September 1, 2016, the Company has not received a duly executed notice of exercise and remuneration in accordance with Executive’s option agreements, Executive’s vested Equity Awards shall terminate for no consideration and be of no further effect.

 

 

 

	
 
	
(d)
	
Taxes.  Executive understands and agrees that all payments under this Agreement will be subject to appropriate tax withholding and other deductions.  To the extent any taxes may be payable by Executive for the benefits provided to him by this Agreement beyond those withheld by the Company, Executive agrees to pay them himself and to indemnify and hold the Company and the other entities released herein harmless for any tax claims or penalties, and associated attorneys’ fees and costs, resulting from any failure by him to make required payments arising from this Agreement.  To the extent that any reimbursements payable pursuant to this Agreement are subject to the provisions of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), such reimbursements shall be paid to Executive no later than December 31 of the year following the year in which the expense was incurred, the amount of expenses reimbursed in one year shall not affect the amount eligible for reimbursement in any subsequent year, and Executive’s right to reimbursement under this Agreement will not be subject to liquidation or exchange for another benefit. 

	
 
	
(e)
	
SEC Reporting.  Executive acknowledges that to the extent required by the Securities Exchange Act of 1934, as amended (the “Exchange Act”), he will have continuing obligations under Section 16(a) and 16(b) of the Exchange Act to report any matching transactions in Company common stock for six (6) months following the Separation Date.  Executive hereby agrees not to undertake, directly or indirectly, any matching transactions until the end of such six (6) month period.

	
 
	
(f)
	
Sole Separation Benefit.  Executive agrees that the payments provided by this Agreement are not required under the Company’s normal policies and procedures and are provided as a severance solely in connection with this Agreement.  Executive acknowledges and agrees that the payments referenced in this Agreement constitute adequate and valuable consideration, in and of themselves, for the promises contained in this Agreement.

	
 
	
(g)
	
No Mitigation. In no event shall Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to Executive under any of the provisions of this Agreement, nor shall the amount of any payment hereunder be reduced by any compensation earned by Executive as a result of subsequent employment.

	
 
	
5.
	
Full Payment.  Executive acknowledges that the payment and arrangements herein shall constitute full and complete satisfaction of any and all amounts properly due and owing to Executive as a result of his employment with the Company and the termination thereof, including, without limitation, all amounts set forth in the Employment Agreement.  Executive further acknowledges that, other than the Confidentiality Agreement, this Agreement shall supersede each agreement entered into between Executive and the Company regarding Executive’s employment (including, without limitation, the Employment Agreement) other than the agreements evidencing Executive’s Equity Awards, and each such agreement shall be deemed terminated and of no further effect as of the Separation Date.

	
 
	
6.
	
Executive’s Release of the Company.  Executive understands that by agreeing to the release provided by this Section 6, Executive is agreeing not to sue, or otherwise file any claim against, the Company or any of its employees or other agents for any reason whatsoever based on anything that has occurred as of the date Executive signs this Agreement.

	
 
	
(a)
	
On behalf of Executive and Executive’s heirs, assigns, executors, administrators, trusts, spouse and estate, Executive hereby releases and forever discharges the “Releasees” hereunder, consisting of the Company and each of its owners, affiliates, subsidiaries, predecessors, successors, assigns, agents, directors, officers, partners, employees, and insurers, and all persons acting by, through, under or in concert with them, or any of them, of and from any and all manner of action or actions, cause or causes of action, in law or in equity, suits, debts, liens, contracts, agreements, promises, liability, claims, demands, damages, loss, cost or expense, of any nature 

 

 

 

	
 
		
whatsoever, known or unknown, fixed or contingent (hereinafter called “Claims”), which Executive now has or may hereafter have against the Releasees, or any of them, by reason of any matter, cause, or thing whatsoever from the beginning of time to the date hereof, including, without limiting the generality of the foregoing, any Claims arising out of, based upon, or relating to Executive’s hire, employment, remuneration or termination by the Releasees; Claims arising under federal, state, or local laws relating to employment; Claims of any kind that may be brought in any court or administrative agency, including any Claims arising under the Age Discrimination in Employment Act (“ADEA”), 29 U.S.C. § 621, et seq., Title VII of the Civil Rights Act of 1964, as amended by the Civil Rights Act of 1991, 42 U.S.C. § 2000 et seq., the Equal Pay Act, 29 U.S.C. § 206(d), the Civil Rights Act of 1866, 42 U.S.C. § 1981, the Family and Medical Leave Act of 1993, 29 U.S.C. § 2601 et seq., the Americans with Disabilities Act of 1990, 42 U.S.C. § 12101 et seq., the False Claims Act, 31 U.S.C. § 3729 et seq., the Employee Retirement Income Security Act, 29 U.S.C. § 1001 et seq., the Worker Adjustment and Retraining Notification Act, 29 U.S.C.  § 2101 et seq., the Fair Labor Standards Act, 29 U.S.C. § 215 et seq., the Sarbanes-Oxley Act of 2002, , the Washington Law against Discrimination, the Washington State Minimum Wage Act, the Washington State Industrial Welfare Act, the California Fair Employment and Housing Act, as amended, Cal. Lab. Code § 12940 et seq., the California Equal Pay Law, as amended, Cal. Lab. Code §§ 1197.5(a),199.5, the Moore-Brown-Roberti Family Rights Act of 1991, as amended, Cal. Gov’t Code §§12945.2, 19702.3, California Labor Code §§ 1101, 1102 and the California WARN Act, California Labor Code §§ 1400 et seq., and California Labor Code §§ 1102.5(a),(b); Claims for wages under the Washington and California Labor Codes and any other federal, state or local laws of similar effect; Claims under the employment and civil rights laws of California and Washington; Claims for breach of contract; Claims for breach of contract; Claims arising in tort, including, without limitation, Claims of wrongful dismissal or discharge, discrimination, harassment, retaliation, fraud, misrepresentation, defamation, libel, infliction of emotional distress, violation of public policy and/or breach of the implied covenant of good faith and fair dealing; and Claims for damages or other remedies of any sort, including, without limitation, compensatory damages, punitive damages, injunctive relief and attorney’s fees.   

	
 
	
(b)
	
Notwithstanding the generality of the foregoing, Executive does not release the following claims:

(i)Claims with respect to the Company’s obligations under this Agreement;

	
 
	
(ii)
	
Claims for unemployment compensation or any state disability insurance benefits pursuant to the terms of applicable state law; 

	
 
	
(iii)
	
Claims for workers’ compensation insurance benefits under the terms of any worker’s compensation insurance policy or fund of the Company;

	
 
	
(iv)
	
Claims to continued participation in certain of the Company’s group benefit plans pursuant to the terms and conditions of COBRA;

	
 
	
(v)
	
Claims to any benefit entitlements vested as the date of Executive’s employment termination, pursuant to written terms of any Company employee benefit plan;

	
 
	
(vi)
	
Claims for indemnification under the Company’s directors and officers liability insurance, any indemnification agreement, the Company’s Bylaws or applicable law; and

	
 
	
(vii)
	
Executive’s right to bring to the attention of the Equal Employment Opportunity Commission claims of discrimination; provided, however, that Executive does release Executive’s right to secure any damages for alleged discriminatory treatment.

 

 

 

	
 
	
(c)
	
EXECUTIVE ACKNOWLEDGES THAT EXECUTIVE HAS BEEN ADVISED OF AND IS FAMILIAR WITH THE PROVISIONS OF CALIFORNIA CIVIL CODE SECTION 1542, WHICH PROVIDES AS FOLLOWS: 

“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH, IF KNOWN BY HIM OR HER, MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.”

BEING AWARE OF SAID CODE SECTION, EXECUTIVE HEREBY EXPRESSLY WAIVES ANY RIGHTS EXECUTIVE MAY HAVE THEREUNDER, AS WELL AS UNDER ANY OTHER STATUTES OR COMMON LAW PRINCIPLES OF SIMILAR EFFECT.

	
 
	
(d)
	
In accordance with the Older Workers Benefit Protection Act of 1990, Executive has been advised of the following:  Executive acknowledges that Executive is knowingly and voluntarily waiving and releasing any rights Executive may have under the ADEA.  Executive also acknowledges that the consideration given for the waiver and release herein is in addition to anything of value to which Executive was already entitled.  Executive further acknowledges that Executive has been advised by this writing, as required by the ADEA, that: (i) Executive’s waiver and release do not apply to any rights or claims that may arise after the execution date of this Agreement; (ii) Executive has been advised hereby that Executive has the right to consult with an attorney prior to executing this Agreement; (iii) Executive has twenty-one (21) days from the date of this Agreement to execute this Agreement (although Executive may choose to voluntarily execute this Agreement earlier); (iv) Executive has seven (7) days following the execution of this Agreement by Executive to revoke the Agreement, and Executive will not receive the payments provided by Section 4 above unless and until such seven (7) day period has expired; (v) this Agreement will not be effective until the date upon which the revocation period has expired, which will be the eighth (8th) day after this Agreement is executed by Executive, provided that the Company has also executed this Agreement by that date; and (vi) this Agreement does not affect Executive’s ability to test the knowing and voluntary nature of this Agreement.  If Executive wishes to revoke this Agreement, Executive must deliver notice of Executive’s revocation in writing, no later than 5:00 p.m. Pacific Time on the 7th day following Executive’s execution of this Agreement to Chief Financial Officer, 815 E. Middlefield Road, Mountain View CA 94043, fax: 1-800-417-3459.

	
 
	
7.
	
Non-Disparagement, Transition, Transfer of Company Property and Limitations on Service.  Both parties further agree that:

	
 
	
(a)
	
Non-Disparagement.  Executive agrees that Executive will not make statements or representations to any person, entity or firm which could reasonably be expected to cast the Company or any entity or employee affiliated with the Company in an unfavorable light or which could reasonably be anticipated to adversely affect the name or reputation of the Company or any entity affiliated with the Company, or the name or reputation of any officer, agent or employee of the Company or of any entity affiliated with the Company; provided that Executive will respond accurately and fully to any question, inquiry or request for information when required by legal process, or as otherwise requested.  The Company shall not, and shall instruct its officers and directors to not, make any derogatory or disparaging remarks or statements, oral or written, to any third parties concerning Executive in any manner likely to be harmful to Executive’s business reputation or personal reputation; provided that the Company, and its officers and directors, may respond accurately and fully to any question, inquiry or request for information when required by legal process, or as otherwise requested. 

 

 

 

	
 
	
(b)
	
Transition.  Each of the Company and Executive shall use its or his respective reasonable efforts to cooperate with each other in good faith to facilitate a smooth transition of Executive’s duties to other executive(s) of the Company.  Executive agrees that Executive will not act in any manner that might damage the business of the Company.   

	
 
	
(c)
	
Transfer of Company Property.  On or before the Separation Date, Executive shall turn over to the Company all files, memoranda, records, and other documents, and any other physical or personal property which are the property of the Company and which he had in his possession, custody or control at the time he signed this Agreement.

	
 
	
(d)
	
Job References.  Executive should direct any job reference inquiries to the Company’s Human Resources.  Pursuant to Company policy, in response to any such inquiries, the Company will provide only the position Executive held and the dates of employment.  The Company will confirm Executive’s salary in response to any such inquiry only if Executive submits a signed request to the Company to disclose such information. 

	
 
	
8.
	
Executive Representations.  Executive warrants and represents that (a) he has not filed or authorized the filing of any complaints, charges or lawsuits against the Company or any affiliate of the Company with any governmental agency or court, and that if, unbeknownst to Executive, such a complaint, charge or lawsuit has been filed on his behalf, he will immediately cause it to be withdrawn and dismissed, (b) he has reported all hours worked as of the date of this Agreement and has been paid all compensation, wages, bonuses, commissions, and/or benefits to which he may be entitled and no other compensation, wages, bonuses, commissions and/or benefits are due to him, except as provided in this Agreement, (c) he has no known workplace injuries or occupational diseases and has been provided and/or has not been denied any leave requested under the Family and Medical Leave Act or any similar state law, (d) the execution, delivery and performance of this Agreement by Executive does not and will not conflict with, breach, violate or cause a default under any agreement, contract or instrument to which Executive is a party or any judgment, order or decree to which Executive is subject, and (e) upon the execution and delivery of this Agreement by the Company and Executive, this Agreement will be a valid and binding obligation of Executive, enforceable in accordance with its terms.  

	
 
	
9.
	
No Assignment by Executive.  Executive warrants and represents that no portion of any of the matters released herein, and no portion of any recovery or settlement to which Executive might be entitled, has been assigned or transferred to another person, firm or corporation not a party to this Agreement, in any manner, including by way of subrogation or operation of law or otherwise.  If any claim, action, demand or suit should be made or instituted against the Company or any other Releasee because of any actual assignment, subrogation or transfer by Executive, Executive agrees to indemnify and hold harmless the Company and all other Releasees against such claim, action, suit or demand, including necessary expenses of investigation, attorneys’ fees and costs.  In the event of Executive’s death, this Agreement shall inure to the benefit of Executive and Executive’s executors, administrators, heirs, distributees, devisees, and legatees.  None of Executive’s rights or obligations may be assigned or transferred by Executive, other than Executive’s rights to payments hereunder, which may be transferred only upon Executive’s death by will or operation of law.  

	
 
	
10.
	
Governing Law.  This Agreement shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the laws of the State of California or, where applicable, United States federal law, in each case, without regard to any conflicts of laws, provisions or those of any state other than California.

	
 
	
11.
	
Miscellaneous.  This Agreement, collectively with the Confidentiality Agreement and the Equity Award agreements, comprise the entire agreement between the parties with regard to the subject matter hereof and supersedes, in their entirety, any other agreements between Executive and the Company with regard to the subject matter hereof.  The Company and Executive acknowledge that the separation of the 

 

 

 

	
 
		
Executive’s employment with the Company is intended to constitute an involuntary separation from service for the purposes of Section 409A of the Code, and the related Department of Treasury regulations.  Executive acknowledges that there are no other agreements, written, oral or implied, and that he may not rely on any prior negotiations, discussions, representations or agreements.  This Agreement may be modified only in writing, and such writing must be signed by both parties and recited that it is intended to modify this Agreement.  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 agreement.   

	
 
	
12.
	
Company Assignment and Successors.  The Company shall assign its rights and obligations under this Agreement to any successor to all or substantially all of the business or the assets of the Company (by merger or otherwise).  This Agreement shall be binding upon and inure to the benefit of the Company and its successors, assigns, personnel and legal representatives.    

	
 
	
13.
	
Maintaining Confidential Information.  Executive reaffirms his obligations under the Confidentiality Agreement.  Executive acknowledges and agrees that the payments provided in Section 4 above shall be subject to Executive’s continued compliance with Executive’s obligations under the Confidentiality Agreement.  

	
 
	
14.
	
Executive’s Cooperation.  After the Separation Date, Executive shall cooperate with the Company and its affiliates, upon the Company’s reasonable request, with respect to any internal investigation or administrative, regulatory or judicial proceeding involving matters within the scope of Executive’s duties and responsibilities to the Company or its affiliates during his employment with the Company (including, without limitation, Executive being available to the Company upon reasonable notice for interviews and factual investigations, appearing at the Company’s reasonable request to give testimony without requiring service of a subpoena or other legal process, and turning over to the Company all relevant Company documents which are or may have come into Executive’s possession during his employment); provided, however, that any such request by the Company shall not be unduly burdensome or interfere with Executive’s personal schedule or ability to engage in gainful employment.   

(Signature page(s) follow)

 

 

 

 

 

 

IN WITNESS WHEREOF, the undersigned have caused this Transition and Separation Agreement to be duly executed and delivered as of the date indicated next to their respective signatures below, which date shall be after the Separation Date, but on or prior to the twenty-first (21st) day following the date Executive received this Agreement.

 

DATED: June 8, 2016

/s/ D. David Chandler_

David Chandler

 

 

ViewRay, Inc.

DATED: June 8, 2016

 

 

By: /s/ Chris A. Raanes__

Name: Chris A. Raanes

Title: President & CEOEX-10.1

 

 
 Exhibit 10.1 

June 6, 2016 
 Ken Stratton 

[***] 
  

	 	Re:	Severance Buy-Out Agreement, Compromise and Release 

 Dear Ken: 

As you know, StemCells, Inc. (the “Company” or “StemCells”) has terminated its Phase II Pathway Study and has begun a wind down of the
Company’s operations. The Company has determined that both your continued employment and cooperation to support this wind down process are necessary to maximize the value of the Company’s assets. In recognition of, and as consideration
for, your efforts during this time, the Company hereby offers you the payments and consideration provided in this letter, which you can accept by returning a signed copy of this letter to Cindy Hayashi on or before Friday, June 10, 2016. In
addition, the Company plans to concurrently enter into a Cooperation and Consulting Agreement with you (the “Cooperation and Consulting Agreement”), which agreement will set forth the terms of additional compensation to which you may be
entitled upon the achievement of certain milestones, as described therein. 
 This letter supersedes any and all separation, severance and salary
continuation arrangements, programs and plans which were previously offered by StemCells, Inc., and in particular supersedes and terminates your Employment Agreement, dated February 2, 2007 as amended on August 6, 2009 and March 15, 2016
(collectively, the “Superseded Agreement”). In other words, by your counter-signature below, you agree that you will not receive, and release all entitlement to, any payments and other benefits provided for under the Superseded Agreement,
except as otherwise provided herein. 
 You will continue to be employed by the Company, and receive your current salary on current terms, until the earlier
of (a) your voluntary termination from the Company or (b) August 1, 2016, except if you are dismissed for cause (including, but not limited to, material violation of Company policy or procedures, job abandonment, serious misconduct, or the
unauthorized use or disclosure of the Company’s confidential information or trade secrets). In exchange for your good faith during this period, you will be entitled to receive the following: 

A. Severance Benefit.
 1.
Cash Severance. On June 14, 2016, or as soon thereafter as practicable (the “Deposit Date”), your Severance (as defined below) will be deposited into an irrevocable trust created by the Company for the benefit of you and other
Company employees to make severance payments owed in connection with the Company’s wind down of operations. On your last day of work at StemCells (your “Separation Date”), you will be entitled to receive severance pay in the form of a
lump sum payment equal to $141,667 (your “Severance”), which will be paid by the trust, provided you have not become disqualified from receiving this 
  

 
 7707 Gateway Boulevard Newark, CA
94560 USA 
 T +1 (510) 456-4000 ● F +1 (510) 456-4001 

www.stemcellsinc.com 

 Ken Stratton 

June 6, 2016 
 Page 2 

 

 
Severance, as provided by section A.3, below, and provided you have delivered and not revoked an executed Release of Claims (defined below). Note that the Severance will only be released after
the expiration of the revocation period set forth in Section 16 of the Release of Claims. It is acknowledged that the Severance amount represents a 50% reduction in the amount of your total severance payment under the Superseded Agreement,
after taking into account the continuation of your salary until August 1, 2016. The Company will also withhold taxes and all other applicable payroll deductions from the lump sum payment before placing it into the irrevocable trust. 

2. Structural Benefits. We appreciate that you are agreeing to a reduction in your severance payment. In exchange for your
acceptance of a reduction, you will receive the benefit of a lump sum payment upon the occurrence of your Separation Date rather than payments made over time, and this lump sum payment will be further protected by being placed in trust for your
benefit. In addition, you will be entitled to certain additional compensation under the Cooperation and Consulting Agreement if the Company generates revenue through the sale or other divestiture of assets. 

3. Disqualification. You will be disqualified from receiving your Severance (and your Severance will be returned by the
irrevocable trust to the Company) if: (i) you are dismissed for cause before your Separation Date, (ii) you refuse to accept an offer of continuing employment, on terms which are not substantially worse than your current terms of employment, made by
an acquirer of Company assets or other Company successor in interest (a “Successor”), or (iii) you do not sign and timely deliver (or you revoke) the Release of Claims. 

4. Continuing Severance Rights. We agree that any offer of employment by a Successor will be viewed as substantially worse
than your current terms of employment if the offer does not include a contract between you and the Successor providing you with continuing severance rights substantially no different from those contained in your Superseded Agreement.

B. Health Benefits. If you are receiving Company-provided health benefits as of your Separation Date, the Company will pay the premiums
owed under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), for the continuation of current health insurance coverage for you and your eligible dependents until August 31, 2017, provided you (and any
covered dependents) are and remain eligible for such coverage under COBRA and timely make the necessary elections. Following such date, you and your dependents may have the right to continue such coverage under COBRA at your own
expense. Notwithstanding the foregoing, (1) dental coverage will not extend beyond August 31, 2016, and (2) because the Company’s immediate plans and long-term prospects remain uncertain, no assurances can be given that COBRA continuation
of health care benefits will be available after August 31, 2016. 
 C. Purchase of Property. On or prior to the Deposit Date, you will be
offered the opportunity to purchase from the Company certain furniture and equipment identified by the Company as having no use or appreciable resale value, such as the office chairs, computers, cell phones, printers, and monitors provided to
you during your employment in order to perform your job (“Property”). All Property sold to you will be sold on an as-is basis. The sales price for this Property to you will not exceed $200 in aggregate, which will be deducted from
your Severance before the Severance is placed into the irrevocable trust. The sale of any Property to you pursuant to this section C. will be irrevocable once your Severance, less the purchase price, is deposited into the trust; provided,
however, that you must allow the 

  

 Ken Stratton 

June 6, 2016 
 Page 3 

 

 
Company to remove, before your Separation Date, all Company confidential and/or proprietary information from any and all electronics purchased from the Company. Financial responsibility for
any service agreements associated with any telecommunication equipment purchase by you (for example, cell phones) will transfer to you promptly following your Separation Date. 

D. Release of Claims. To receive the above awards, you will need to sign, deliver and not revoke a separation agreement in
substantially the form attached as Exhibit A to this letter (your “Release of Claims”), no earlier than your Separation Date and no later than 120 days following your Separation Date. You will also need to act in good faith with
respect to the Company’s wind-down and comply with the Company’s policies and procedures, including the continuing provisions in your Employment Agreement with the Company and all obligations with respect to the use or disclosure of
confidential information or trade secrets of the Company or any Company subsidiary. 
 E. Other Provisions. This letter
agreement shall be deemed to be a contract made under the laws of the State of California and for all purposes it, and any related or supplemental documents and notices, shall be construed in accordance with, and governed by, the laws of
California. This letter agreement may not be, and shall not be, deemed or construed to have been modified, amended, rescinded, canceled, or waived, in whole or in part, except by written instruments signed by the parties hereto. This
letter agreement, including the exhibit attached hereto which is made a part hereof, constitutes and expresses the entire agreement and understanding between the parties. All previous discussions, promises, representations, and understandings
between the parties relative to the subject matter of this letter agreement, if any, have been merged into this document. Except as explicitly stated in this letter agreement, this document will not confer any rights or remedies upon any person
other than the parties hereto and their respective successors and permitted assigns. Each party has had as much opportunity to participate in the drafting of this letter agreement as each has chosen, and so its terms shall be interpreted
according to their plain meaning and not strictly for or against either party. Employee is not relying on the advice of StemCells or anyone associated with StemCells as to the legal, tax or other consequences of this letter agreement. This
agreement may be executed in one or more counterparts, with signatures delivered by facsimile or as a .pdf, each of which will be deemed an original as if delivered in person, but all of which together will constitute one and the same instrument.

 The other directors and I thank you for your dedication to the Company and for your continued service to the Company during this difficult time. We are
proud of the work that we have done and grateful for the excellent efforts of our employees. 
 Sincerely, 

 

	
	StemCells, Inc.
	
	/s/ Ian Massey
	
	By: Ian Massey, D.Phil.
	President and CEO
	
	Acknowledged and agreed:
	
	 /s/ Ken Stratton

	Ken Stratton

  

 EXHIBIT A: Template Separation Agreement and Release of Claims 

This Separation Agreement and Release of Claims (this “Agreement”), is made and entered into by and between StemCells, Inc., a Delaware corporation,
with a business address of 7707 Gateway Blvd., Newark, CA 94560 (together with its wholly-owned subsidiaries, “StemCells” or the “Company”), and
                    , whose residence is
                     (“Employee”). In connection with Employee’s loss of employment, StemCells has issued Employee a severance
pay award under the terms of that certain letter from the Company to Employee dated June 6, 2016 (the “Letter”), which requires execution of this Agreement for Employee to receive payment of the award as well as certain other benefits
identified herein and therein. Capitalized terms used herein but not otherwise defined shall have the meanings ascribed to them in the Letter. 
 In
consideration of the provisions and agreements set forth below, and under the terms of the Letter, the parties agree as follows: 

1. Separation. Employee’s last day of employment with the Company will be
                     (the “Separation Date”), after which Employee shall perform no further services on behalf of the Company as an
employee. Under no circumstances may Employee execute this Agreement before his or her Separation Date. Employee has until                     
[+45 days (age 40+) / +21 days (under age 40)] to consider this Agreement (see Section 16, below), and the offers provided herein by the Company will not be revoked before that time. Whether to sign this Agreement before then is entirely a
matter of Employee’s sole choosing. 
 2. Accrued Salary and Paid Time Off. Not later than the Separation Date, the
Company will pay Employee all accrued salary, and all accrued and unused vacation and paid time off, subject to standard payroll deductions and withholdings. Employee’s final paycheck will be in the net amount of
$         (Employee’s “Final Paycheck”). Employee is entitled to this payment regardless of whether or not Employee signs this Agreement or the Letter. 

3. No Other Compensation or Benefits. Employee acknowledges that, except as expressly provided in the Letter or in a
writing signed by the Company’s Chief Executive Officer, Employee will not receive any additional compensation, severance, stock option vesting, stock or option grants, or other benefits after the Separation Date, with the exception of any
vested right Employee may have under the terms of a written ERISA-qualified benefit plan (e.g., 401(k) account), and that Employee’s participation in the Company compensation and benefit plans, programs and policies will cease as of the
Separation Date. By way of example, but not limitation, Employee acknowledges that Employee has not earned and is not owed any bonus, incentive compensation, equity grant, or wages in excess of the Final Paycheck.

4. Expense Reimbursements. Employee agrees that, within three (3) days of the Separation Date, Employee will have submitted
his or her final documented expense reimbursement statement reflecting all business expenses Employee incurred through the Separation Date, if any, for which Employee seeks reimbursement. The Company will reimburse Employee for these expenses
pursuant to its regular business practices. 

  
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 5. Return of Company Property. Employee agrees that, on or before the
Separation Date, Employee will return to the Company all Company documents (and all copies thereof) and other Company property that Employee has had in Employee’s possession at any time, including, but not limited to, Company files, notes,
drawings, records, business plans and forecasts, financial information, specifications, computer-recorded information, tangible property (including, but not limited to, computers), credit cards, phones, computers, entry cards, identification badges
and keys; and, any materials of any kind that contain or embody any proprietary or confidential information of the Company (and all reproductions thereof); notwithstanding this, Employee has no obligation to return any Property purchased from the
Company by the Deposit Date. 
 6. Proprietary Information Obligations. Both during and after Employee’s employment,
Employee acknowledges and will abide by all of Employee’s continuing obligations under Employee’s executed Employment Agreement with the Company, dated
                     (“Employment Agreement”).

7. Confidentiality. The fact, terms and conditions of both this Agreement and the Letter will be held in strictest
confidence by the parties and will not be publicized or disclosed in any manner whatsoever. Employee covenants that, at no time prior to the date of Employee executing this Agreement and the Letter, has Employee reviewed, discussed or
disclosed, orally or in writing, the existence of the Agreement or the Letter, the negotiations leading to the Agreement or the Letter, or any of the terms or conditions of the Agreement or the Letter with any person, organization or entity other
than Employee and/or Employee’s immediate family, attorney, accountant and/or tax consultant. Employee agrees that he or she will keep the fact, terms, and amount of this Agreement and the Letter completely confidential, and that Employee
will not hereafter disclose the terms, amount of or fact of the settlement embodied in this Agreement; provided, however, that: (a) Employee may disclose both this Agreement and the Letter in confidence to his or her immediate family; (b)
the parties may disclose both this Agreement and the Letter in confidence to their respective attorneys, accountants, auditors, tax preparers, and financial advisors; (c) the Company may disclose both this Agreement and the Letter as necessary to
fulfill standard or legally required corporate reporting or disclosure requirements; and (d) the parties may disclose both this Agreement and the Letter insofar as such disclosure may be necessary to enforce their terms or as otherwise required
by law. Such recipients of settlement information shall be informed of this continuing confidentiality requirement. 
 8.
Nondisparagement. Employee agrees not to take any illegal or tortious action detrimental to the interests of the Company or disparage the Company or its officers, directors, employees, stockholders, or agents, in any manner likely to be
harmful to them or their business, business reputation or personal reputation; provided that Employee may respond accurately and fully to any question, inquiry or request for information when required by legal process. 

9. No Pending Actions and Covenant Not to Sue. Employee represents that Employee has not filed any complaint, claims, or
actions against the Company or the Company’s agents, directors, supervisors, employees, or representatives, attorneys, divisions, parents, subsidiaries, parents’ subsidiaries, affiliates, partners, limited partners, successors and/or
assigns with any state, federal, or local agency or court, and that Employee will not do so at any time hereafter. Nor will Employee become a party to any action or claim asserted by others. Should Employee violate this provision, Employee
shall be liable to the Company for its reasonable attorney’s fees and other litigation costs and 

  
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expenses incurred in defending such an action. Subject to Section 19, below, Employee agrees that Employee will not voluntarily assist any person in bringing or pursuing any claim or
action of any kind against the Company, its parents, subsidiaries, affiliates, officers, directors, employees or agents, unless pursuant to subpoena or other compulsion of law. 

10. Cooperation. Employee agrees to cooperate with the Company in connection with its actual or contemplated defense,
prosecution, and investigation of any claims or demands by third parties, or other matters, arising from events, acts, or failures to act that occurred during the time period in which Employee was employed by the Company. Without limiting the
foregoing, Employee agrees (1) to meet with Company representatives, its counsel, or other designees at mutually convenient times and places with respect to any items within the scope of this provision; (2) to provide truthful testimony regarding
same to any court, agency, or other adjudicatory body; and (3) to provide the Company with notice of contact by any adverse party or such adverse party’s representative, except as may be required by law. The Company will reasonably
accommodate Employee’s scheduling needs. In addition, Employee agrees to execute all documents (if any) necessary to carry out the terms of this Agreement. 

11. Reserved. 

12. Release. In exchange for the consideration under this Agreement and the Letter to which Employee would not otherwise be
entitled, and notwithstanding the provisions of section 1542 of the California Civil Code, Employee without limitation hereby generally and completely irrevocably and unconditionally releases and forever discharges the Company and its officers,
agents, directors, supervisors, employees, representatives, attorneys, divisions, parents, insurers, subsidiaries, parents’ subsidiaries, affiliates, partners, limited partners, predecessors, successors, and assigns, and all persons acting by,
through, under, or in concert with any of the Company’s subsidiaries, successors, predecessors and affiliates, and its and their respective directors, officers, employees, agents, attorneys, insurers, affiliates and assigns (collectively, the
Company’s “agents and representatives”), from any and all charges, complaints, claims, causes of action, debts, sums of money, controversies, agreements, promises, damages and liabilities of any kind or nature whatsoever, both at law
and equity, known or unknown, suspected or unsuspected (hereinafter referred to as “claim” or “claims”), that arise out of or are in any way related to events, acts, conduct, or omissions occurring at any time prior to and
including the date Employee executes this Agreement, including without limitation any claims incidental to or arising out of Employee’s employment with the Company. Employee agrees and acknowledges that Employee has: (1) received all
wages, overtime payments and other monetary compensation to which Employee was entitled as a result of Employee’s employment and/or separation of employment with the Company and (2) reported to the Company any and all work-related injuries
incurred during employment by the Company. This provision is intended by the parties to be all encompassing and to act as a full and total release of any claim, whether specifically enumerated herein or not, that Employee might have or has had,
that exists or ever has existed on or prior to the date of this Agreement. Employee and the Company understand the word “claim” or “claims” to include without limitation all actions, claims and grievances, whether actual or
potential, known or unknown, related, incidental to or arising out of Employee’s employment relationship with the Company. All such claims, including related attorneys’ fees and costs, are forever barred by this Agreement without
regard to whether those claims are based on any alleged breach of a duty arising in contract or tort; any alleged unlawful act, any other claim or cause of action; and regardless of the forum in which it might be brought. This general

  
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release specifically includes, but is not limited to: (a) all claims arising out of, or in any way related to, Employee’s employment with the Company or the termination of that employment;
(b) all claims related to Employee’s compensation or benefits, including salary, bonuses, commissions, vacation pay, expense reimbursements, severance pay, fringe benefits, stock, stock options, or any other equity interests in the Company; (c)
all claims for breach of contract, wrongful termination, and breach of the implied covenant of good faith and fair dealing; (d) all tort claims, including claims for fraud, defamation, emotional distress, and discharge in violation of public policy;
and (e) all federal, state, and local statutory claims, including claims for discrimination, harassment, retaliation, attorneys’ fees, or other claims arising under the federal Civil Rights Act of 1964 (as amended), the federal Americans with
Disabilities Act of 1990 (as amended)(“ADA”), the federal Age Discrimination in Employment Act (as amended) (“ADEA”), the California Labor Code, and the California Fair Employment and Housing Act (as amended). Except as
provided below in Section 19, Employee understands and agrees that this release of claims is intended to be broadly construed so as to resolve any pending or potential disputes between Employee and either the Company or its agents and
representatives that Employee may have up to the Separation Date. 
 13. Waiver of Unknown Claims. In giving this
release, which includes claims that may be unknown to Employee at present, Employee acknowledges that Employee has read and understands Section 1542 of the California Civil Code which reads as follows:

“A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing
the release, which if known by him must have materially affected his settlement with the debtor.”
 Employee expressly waives and relinquishes all
rights and benefits under that section and any law of any jurisdiction of similar effect with respect to Employee’s release of claims herein, including but not limited to Employee’s release of any unknown or unsuspected claims he or she
may have against the Company or its agents and representatives. 
 14. Non-Admission. This Agreement and the Letter, as
well as compliance with this Agreement and the Letter, shall not be construed as an admission by either Employee or the Company of any wrongdoing or any violation of the rights of the other, violation of federal, state or local law, or liability
whatsoever to the other, nor shall the Agreement be considered to be evidence of any liability or wrongdoing whatsoever. The Company specifically disclaims any liability for any alleged violation of any rights, or for any alleged violation of
any order, law, statute, duty or contract on the part of the Company or its employees, agents or successors. 
 15. Voluntary
Agreement. Employee acknowledges (i) that Employee has been provided a full opportunity to review and reflect upon the terms of this Agreement and the Letter, including the release of known and unknown claims (sections 12 and 13, above,
hereinafter the “Release”), (ii) that Employee has been advised, and hereby is advised in writing, to consider the terms of this Release and consult with an attorney of Employee’s choice prior to executing this Agreement, (iii) that
Employee has carefully read and fully understands all of the provisions of this Agreement, and (iv) that Employee’s signature is freely, voluntarily and knowingly given. Each party has had as much opportunity to participate in the drafting
of this Agreement and the Letter as each has chosen. The parties agree that this Agreement and the Letter shall be interpreted according to their plain 

  
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meaning and not strictly for or against either party. Employee represents that Employee is not relying on the advice of StemCells or anyone associated with StemCells as to the legal, tax or
other consequences of this Agreement or the Letter.
 16. Notice of Rights to Review and Revoke. Employee acknowledges
receipt of this Agreement and further acknowledges that Employee has been provided the right to consider this Agreement, including the Release, for a period of [twenty-one (21) days if Employee is under 40-years-old/forty-five (45) days if Employee
is 40 or older] days prior to executing same. The parties acknowledge that Employee has seven (7) days after signing this Agreement to revoke it, and that this entire Agreement shall not be effective or enforceable, in whole or in part, until
the revocation period has expired. If Employee revokes the Agreement within seven (7) days of execution, it is understood and agreed that such revocation shall render this entire Agreement null and void, and StemCells will have no obligation to
provide any of the payments or other benefits described in the Letter. To be effective, the revocation must be in writing, signed by the Employee, and received by StemCells within the seven (7) day revocation period. All notices shall be
delivered by hand, overnight delivery service, certified or registered mail, return receipt requested, to Ken Stratton, StemCells, Inc., c/o Keller & Benvenutti LLP, 650 California Ave. Suite 1900, San Francisco, CA 94108. Employee further
agrees that any mutually-agreed upon changes to this Agreement or to the scope of the Release, whether material or immaterial, will not restart the running of the [21-day or 45-day, as applicable] consideration period. 

17. Choice of Law. This Agreement shall be governed by the Letter and as provided by the laws of California without regard
to its choice of law provisions, except insofar as ERISA federal law may apply. If, at any time, a violation of any term of this 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. 
 18. Successors / Assigns. The
parties represent and warrant that they have not made, and will not make, any assignment or transferred to any person or entity, of any claim, cause or right of action, or right or any right of any kind whatsoever, released, embodied in any of the
claims and obligations that are released, granted or conveyed pursuant to this Agreement, and that no other person or entity of any kind, other than Employee, had or has any interest in any claims that are released herein. Employee covenants
and agrees Employee’s obligations under this Agreement are personal to Employee, and that Employee may not assign any rights or obligations under this Agreement without the prior written consent of StemCells. This Agreement is binding upon
the parties hereto and upon their respective heirs, administrators, representatives, executors, successors, and assigns, and shall inure to their benefit. Employee agrees to indemnify and hold harmless the Company from any and all claims,
demands, expenses, costs, attorneys’ fees, and causes of action asserted by any person or entity due to a violation of this non-assignment provision. 

19. No Interference with Rights. Nothing in this Agreement is intended to waive claims (i) arising under unemployment
insurance or workers’ compensation laws, (ii) for vested rights under ERISA-covered employee benefit plans as applicable on the date Employee executes this Agreement, (iii) that may arise after Employee executes this Agreement, or (iv) which
cannot be released by private release as a matter of law, such as claims under USSERA and California Labor Code section 2804. In addition, nothing in this Agreement, including the Release and the proprietary information, confidentiality,

  
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cooperation, covenant not to sue, and non-disparagement provisions, prevent Employee from filing a charge or complaint with or from participating in an investigation or proceeding conducted by
the Equal Employment Opportunity Commission, National Labor Relations Board, the Securities and Exchange Commission, or any other any federal, state or local agency charged with the enforcement of any laws, or from exercising rights under Section 7
of the NLRA to engage in joint activity with other employees, although by signing this release Employee is waiving rights to individual relief based on claims asserted in such a charge or complaint, or asserted by any third-party on Employee’s
behalf, except where such a waiver of individual relief is prohibited. Employee is also not releasing the Company hereby from any indemnification obligations pursuant to the certificate of incorporation and bylaws of the Company, applicable
law, and any current indemnification agreements between Employee and the Company.
 20. Entire Agreement /
Modification. The parties hereto represent and acknowledge that in executing this Agreement they do not rely and have not relied upon any representation or statement made by any of the parties or by any of the parties’ agents,
attorneys, or representatives with regard to the subject matter or effect of this Agreement or otherwise, other than those specifically stated in this written Agreement. This 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 Agreement shall not in any way affect, modify, or nullify any prior agreement
Employee entered into with the Company regarding confidentiality, trade secrets, inventions, or unfair competition, including the Employment Agreement. Neither this 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 Agreement shall not constitute a waiver of any other provision of this Agreement unless expressly so indicated. 

21. Severability. Should any provision of this 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 Agreement. 
 22. Counterparts. This 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.
 WHEREFORE, the parties execute this Separation
Agreement and Release of Claims effective the date set forth below. 
  

					
	EMPLOYEE	  		  	STEMCELLS, INC.
			
	Signature:
                                         
                       	  		  	Signature:
                                         
                       
	Name:	  		  	Name:
	Date:	  		  	Title:
		  		  	Date:

  
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