Exhibit 10.13

AMENDMENT TO EXECUTIVE EMPLOYMENT AGREEMENT

This Amendment to Executive Employment Agreement (the “Amendment”) is entered
into as of July 2, 2009, by and between NovaRay Medical, Inc., a Delaware
corporation with its principal place of business at 39655 Eureka Drive, Newark,
California 94560 (“Company”) and Edward G. Solomon (“Executive”) (collectively,
the “parties”). All capitalized terms not otherwise defined herein shall have
the meaning ascribed to them in that certain Executive Employment Agreement
dated as of December 19, 2007 with Executive (the “Agreement”).

RECITALS

WHEREAS, the Company and Executive entered into the Agreement;

WHEREAS, the Company and Executive desire to amend the Agreement to be as set
forth herein.

NOW, THEREFORE, in compliance with Section 16 of the Agreement and in
consideration of the mutual promises and covenants set forth herein and in the
Agreement and Statement of Work, the Client and the Company hereby agree as
follows:

Section 2.3 of the Agreement is herby amended to read in its entirety:

Work Location. Executive’s principal place of work shall be located in Newark,
at Company’s offices.

Section 4.1 of the Agreement is hereby amended to read in its entirety:

“Salary. As compensation for the proper and satisfactory performance of all
duties to be performed by Executive hereunder, Company shall pay to Executive a
base salary of $285,000.00 per year, less applicable withholdings (the “Base
Salary”). Until the receipt of gross proceeds from equity or debt or other
financing obtained by Company of at least Five Million Dollars ($5,000,000) in
the aggregate after July 7, 2009, eighty percent (80%) of the Base Salary or
$9,500 for each applicable semi-monthly pay period, less applicable
withholdings, shall be paid in accordance with the Company’s regularly
established payroll practice. The remaining $2,375 for each applicable
semi-monthly pay period, less applicable withholdings, shall be paid in the
event of (i) a receipt of gross proceeds from equity or debt or other financing
obtained by Company of at least Five Million Dollars ($5,000,000) in the
aggregate after July 7, 2009, (ii) a termination of

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Executive’s employment under the Agreement by the Company without Cause or
(iii) a termination of Executive’s employment under the Agreement by Executive
for Good Reason. After the receipt of gross proceeds from equity or debt or
other financing obtained by Company of at least Five Million Dollars
($5,000,000) in the aggregate after July 7, 2009, the Base Salary shall be paid
in accordance with the Company’s regularly established payroll practice. In the
event Executive’s employment under this Agreement is terminated by either party,
for any reason, Executive will be entitled to receive such amount of his salary
earned as provided in this Section through the date of such termination.”

Section 4.2 of the Agreement is hereby amended to read in its entirety:

Incentive Compensation.

 

  (a) Discretionary Incentive Compensation. Executive may be granted incentive
compensation in the Company’s discretion. If Company, in its sole and absolute
discretion, grants Executive incentive compensation, the terms, amount and
payment of such incentive compensation will be determined solely by Company.
Such incentive compensation may be payable in either cash or stock of the
Company or any combination thereof at the election of the Company and pursuant
to terms and conditions established by the Board of Directors of the Company.

 

  (b) Debt or Equity Financing. In the event the Company receives aggregate
gross proceeds not less than $3,000,000 from debt or equity financings after
July 7, 2009 and prior to December 31, 2010 (excluding proceeds from funds
managed by Vision Capital Advisors, LLC), Executive shall receive incentive
compensation set forth in Section 4.3(c) below for raising such additional debt
or equity financing provided that Executive is employed with the Company at the
time of such receipt of gross proceeds.

 

  (c)

Calculation. The method described in this section are to be used as guidelines
for determining such incentive compensation. The Board of Directors of the
Company in its sole and absolute discretion may adjust percentages up or down
based on the terms of such debt or equity financing transaction. In the event
the Company receives aggregate gross proceeds not less than $3,000,000 from
equity financings after July 7, 2009 and prior to December 31, 2010 (excluding
proceeds from funds managed by Vision Capital Advisors, LLC), such compensation
will be initially based on a percentage of Executive’s base salary listed in
Table 1 below taking into account the amount raised and the pre-money valuation.
In the event the Company receives aggregate gross proceeds not less than
$3,000,000 from straight debt financings after July 7, 2009 and prior to
December 31, 2010 (excluding proceeds from funds managed by Vision Capital
Advisors, LLC), such compensation will be initially

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based on a percentage of Executive’s base salary listed in the $80M pre-money
valuation row in Table 1 below. In the event the Company receives aggregate
gross proceeds not less than $3,000,000 from convertible debt financings after
July 7, 2009 and prior to December 31, 2010 (excluding proceeds from funds
managed by Vision Capital Advisors, LLC), such compensation will be initially
based on a percentage of Executive’s base salary listed in Table 1 below taking
into account the amount raised and the pre-money valuation assuming conversion
of such convertible debt. In the event such converted pre-money valuation is
unknown, the Board of Directors of the Company will determine the appropriate
percentage. Such incentive compensation may be payable in either (i) cash or
(ii) a combination of cash and up to 60 to 70% of such incentive compensation in
Incentive Stock Options issued pursuant to the Company’s 2008 Stock Incentive
Plan in lieu of cash with the value of such options determined by the Black
Scholes valuation method used the Company to value stock options in its audited
financial statements.

Table 1

Valuation Percentage

 

Premoney Valuation $M    Amount Raised $M        $3     $5     $7.50     $10  

$30

   9 %    15 %    21 %    24 % 

$40

   12 %    20 %    28 %    32 % 

$50

   15 %    25 %    35 %    40 % 

$60

   20 %    33 %    48 %    60 % 

$70

   25 %    41 %    61 %    80 % 

$80+

   30 %    50 %    75 %    100 % 

or straight debt

        

Section 4.3 of the Agreement is hereby amended to read in its entirety:

Stock Options. Executive may be granted stock options from time to time in the
discretion of Company subject to the terms and conditions of a Company approved
stock option plan and pursuant to the stock option agreement under which such
options are granted. Provided that Company has not terminated Executive’s
employment for Cause and Executive has not terminated his employment other than
for Good Reason, the Company shall grant Executive an option to purchase 275,000
shares of the Common Stock of the Company upon receipt of gross proceeds from
equity or debt or other financing obtained by Company of at least Five Million
Dollars ($5,000,000) in the aggregate after July 7, 2009. Such option shall be
immediately vested, have an exercise

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price equal to the then current fair market value of such Common Stock, have a
ten year term and be subject to the terms of the Company’s 2008 Stock Incentive
Plan and the terms of the form of Stock Option Agreement under such plan.”

Section 7.2 of the Agreement is hereby amended to read in its entirety:

“Termination Without Cause By Company/Severance. Company may terminate
Executive’s employment under this Agreement without Cause at any time. In the
event of such termination, Executive will receive the Standard Entitlements plus
the following Severance Pay: (a) twelve (12) months of Executive’s Base Salary
then in effect on the date of termination, payable in the form of salary
continuation, and twelve (12) months of Executive’s health care benefits then in
effect on the date of termination provided the cost to the Company of such
health care benefits does not exceed the cost in effect on the date of
termination and for such salary continuation and such health care benefits (the
“Severance Pay”) and (b) the vesting of any stock options held by Executive at
the time of such termination will accelerate as to the number of shares that
otherwise would have vested and been exercisable as of the date that is
twenty-four (24) months from the date of termination. The Severance Pay will be
payable in accordance with Company’s regular payroll cycle. Executive’s receipt
of the Severance Benefits will be contingent upon: (x) Executive’s compliance
with all surviving provisions of this Agreement as specified in subparagraph
15.7 below; (y) Executive’s execution of a full general release in a form
provided by the Company, releasing all claims, known or unknown, that Executive
may have against Company arising out of or any way related to Executive’s
employment or termination of employment with Company; and (z) Executive’s
agreement to act as a consultant for Company for up to a maximum of sixty
(60) calendar days immediately following the date of termination, without
additional compensation, if requested to do so by Company. All other Company
obligations to Executive pursuant to this Agreement will become automatically
terminated and completely extinguished.”

Section 7.3 of the Agreement is hereby amended to read in its entirety:

“Voluntary Resignation By Executive. Executive may voluntarily resign
Executive’s position with Company at any time on thirty (30) days advance
written notice. The Company shall have the option, in its sole discretion, to
make Executive’s termination effective at any time prior to the end of such
notice period as long as the Company pays Executive the amount provided in
Section 4.1 above through the last day of the thirty (30) day notice period. In
the event of Executive’s resignation, Executive shall be entitled to receive
only the (i) the amount provided in Section 4.1 above, earned through the date
of such termination, (ii) benefits coverage through the date of such
termination, and (iii) reimbursement of business expenses properly incurred
prior to the date of such termination and submitted in accordance with the
Company’s policies. All other

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Company obligations to Executive pursuant to this Agreement will become
automatically terminated and completely extinguished. In addition, in the event
Executive resigns from his employment with the Company, Executive will not be
entitled to receive the Severance Pay described in Section 7.2 herein.

The Company and Executive hereby acknowledge and consent to the foregoing
amendments to the Agreement as set forth herein.

Except as amended herein, all other terms and provisions of the Agreement shall
remain in full force and effect.

This Amendment shall be effective upon its execution by the Company and
Executive.

This Amendment may be executed in any number of counterparts, each of which when
so executed shall be deemed to be an original and all of which taken together
shall constitute one and the same agreement and shall become effective when
counterparts have been signed by each party and delivered to the other parties
hereto, it being understood that all parties need not sign the same counterpart.
In the event that any signature is delivered by facsimile or electronic
transmission, such signature shall create a valid binding obligation of the
party executing (or on whose behalf such signature is executed) the same with
the same force and effect as if such facsimile or electronic signature were the
original thereof.

IN WITNESS WHEREOF, the parties have duly executed this Amendment as of the date
first written above.

 

Dated: July 2, 2009  

/s/ Edward G. Solomon

  Edward G. Solomon Dated: July 2, 2009   NovaRay Medical, Inc.   By:  

/s/ Marc C. Whyte

    Marc C. Whyte    

Chief Executive Officer

NovaRay Medical, Inc.