ex10-2.htm


    
      

    

    EXHIBIT
10.2

     

    
      EMPLOYMENT
AGREEMENT

       

      THIS
AGREEMENT (the “Agreement”) to be effective as of August 15, 2008 (the
“Effective Date”), between Health Discovery Corporation (the “Company”), and
Stephen Barnhill (the “Executive”).

       

      INTRODUCTION

      


      The
Company and the Executive are parties to an employment agreement dated September
15, 2003, which expires on September 15, 2008, and now desire to enter into this
Agreement to replace and supersede the existing employment
agreement.

       

      NOW, THEREFORE, the parties
agree as follows:

       

      1.    Terms and Conditions of
Employment.

       

      (a)           Employment.  During
the Term, Company will employ the Executive, and the Executive will serve as the
Chief Executive Officer of the Company on a full-time basis and will have such
responsibilities and authority as may from time to time be assigned to the
Executive by the Board of Directors of the Company.  Executive shall
be responsible for:  all medical, scientific research and development
issues including without limitation, research projects, budgets with respect to
such projects, hiring and firing of all employees, strategic direction and
strategic alliance (in conjunction with the board of directors of Employer),
patents, presentations and publications; all personnel; and all business
operations of the Company.  In this capacity, Executive will provide
unique services to the Company and be privy to the Company’s Confidential
Information and Trade Secrets.  The Executive will report to the Board
of Directors of the Company.  Executive shall serve on the Board of
Directors without additional compensation beyond that set forth in this
Agreement, and shall continue to so serve for so long as he is thereafter
elected to such position by the Company’s stockholders.  The
Executive’s primary office will be at the Company’s headquarters in such
geographic location within the United States as may be determined by the
Company.

       

      (b)           Exclusivity.  Throughout
the Executive’s employment hereunder, the Executive shall devote substantially
all of the Executive’s time, energy and skill during regular business hours to
the performance of the duties of the Executive’s employment, shall faithfully
and industriously perform such duties, and shall diligently follow and implement
all management policies and decisions of the Company; provided, however, that
this provision is not intended to prevent the Executive from managing his
investments, so long as he gives his duties to the Company first priority and
such investment activities do not interfere with his performance of duties for
the Company.  Notwithstanding the foregoing, other than with regard to
the Executive’s duties to the Company, the Executive will not accept any other
employment during the Term, perform any consulting services during the Term, or
serve on the board of directors or governing body of any other business, except
with the prior written consent of the Board of Directors.  Further,
the Executive has disclosed on Exhibit A hereto, all
of his nonpublic company bio-discovery related investments, and agrees during
the Term not to make any investments during the Term hereof except as a passive
investor.  The Executive agrees during the Term not to own directly or
indirectly equity securities of any public healthcare related company (excluding
the Company) that represents five percent (5%) or more of the value of voting
power of the equity securities of such company.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      2.    Compensation.

       

      (a)           Base
Salary.  The Company shall pay the Executive base salary of
$300,000.00 per annum (the “Annual Base Salary”), which base salary will be
subject to review effective at least annually thereafter by the Company for
possible increases. The base salary shall be payable in equal installments, no
less frequently than twice per month, in accordance with the Company’s regular
payroll practices.

       

      (b)           Bonus.

       

      (i)          Retention
Bonus. The Company shall pay Executive a one time retention signing bonus of
$50,000.00 to continue his employment as Chief Executive Officer for an
additional two year term. The Retention Signing Bonus will be paid on the
Effective Date.

       

      (ii)         Cash
Bonus.  During the Term, the Company shall pay Executive a cash bonus
equal to 10% of all Company net revenue (“Company Net Revenue”)
collected  beginning with the Effective Date and ending on the
effective date of the termination of this Agreement (the “Cash Bonus”), which
will include, but not be limited to revenue derived from development fees,
license fees, royalties pursuant to agreements between the Company any entity
with which the Company enters into a contract and also shall include
distributions from SVM Capital, LLC and the proceeds of any transaction effected
by Patent Profit International on behalf of the Company (each a “Revenue
Contract”),  but shall not include the proceeds of any capital
infusions from the exercise of outstanding options or warrants or as a result of
any capital raise undertaken by the Company.  For purposes of this
Agreement, the term “Company Net Revenue” means gross revenues collected under
the Revenue Contracts, reduced by the amount of any out-of-pocket costs or
expenses that are directly related to obtaining, negotiating or documenting the
Revenue Contracts and the performance of such Revenue Contracts, regardless of
when such expenses were incurred; provided, however, no portion of the general
Company overhead, including the salaries of Company employees, shall reduce
Company Net Revenue unless any such cost or expense is an explicit element of a
Revenue Contract.  Notwithstanding anything else to the contrary, no
additional Cash Bonus amounts shall be paid if and when during the Term the
amount of the Cash Bonus equals 300% of the Executive’s Annual Base
Salary.  A Cash Bonus amount, if any, shall be paid to Executive
within four business days after the receipt of any cash payment by the
Company.

       

      (c)           Equity
Compensation.  The Executive shall receive options to acquire
shares of the Company’s Common Stock at an exercise price per share equal to the
greater of the fair market value of a share of the Company’s Common Stock or
$0.08, which shall vest pursuant to the vesting schedule set forth on Exhibit B
hereto and which grant shall be evidenced by an option agreement in form and
substance reasonably satisfactory to the Company and Executive.

       

      (d)           Expenses.  The
Executive shall be entitled to be reimbursed in accordance with Company policy
in effect for reasonable and necessary expenses incurred by the Executive in
connection with the performance of the Executive’s duties of employment
hereunder; provided, however, the Executive shall, as a condition of such
reimbursement, submit verification of the nature and amount of such expenses in
accordance with the reasonable reimbursement policies from time to time adopted
by the Company.  Any
travel by Executive on
behalf of the Company shall be at the Company’s expense and shall include, but
not be limited to, all costs for the Executive’s transportation, lodging, meals,
and with respect to air fare at full coach rates for domestic flights with a
scheduled flight time of less than four hours and at full business class rates
for all domestic flights with a scheduled flight time of four hours or more and
for all international flights.

       

      
        
          
          

        

        
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      (e)           Paid Time
Off.  Executive
shall be entitled to 20 paid vacation days during the calendar year from
January 1 to December 31. For employment periods of less than one
calendar year, vacation days shall accrue at the rate of 0.83 days per month of
employment.  All vacation must be taken by December 31 in the calender year
in which such vacation is earned.

       

      (f)           Benefits.

       

      (i)          The Company shall at all times during
the Term pay all premiums for health insurance benefits for Executive and his
dependants with coverage and premiums no less favorable to Executive as such
coverage and premiums to which Executive is receiving immediately prior to the
date of this Agreement; provided, however, Executive shall be responsible for
all deductibles, co-payment requirements or similar obligations under such
health insurance, and provided, further, that the Company's obligations under
this Section 2(f)(i) shall not exceed $30,000.

       

      (ii)         In addition to the benefits payable to
the Executive specifically described herein, the Executive shall be entitled to
such benefits as generally may be made available to all other executives of the
Company from time to time; provided, however, that nothing contained herein
shall require the establishment or continuation of any particular plan or
program; provided, further, that Executive shall not be entitled to participate
in any stock option or other equity plan otherwise made available to other
executives of the Company.

       

      (g)           Director
& Officer Insurance.  The Company, at its expense, shall maintain
director and officer insurance covering Executive at levels consistent with past
practice with a reputable carrier. The Executive shall be entitled to
indemnification, including advancement of expenses (if applicable), in
accordance with and to the extent provided by the Company’s bylaws and articles
of incorporation, and any separate indemnification agreement, if
any.

       

      (h)           Reimbursement
Conditions.  Except as provided in Section 8(h) below, all
expenses eligible for reimbursement under this Agreement must be incurred by the
Executive during the Term of this Agreement to be eligible for
reimbursement.  Except as provided in Section 8(h) below, all
reimbursements shall be paid as soon as administratively practicable, but in no
event shall any reimbursement be paid after the last day of the calendar year
following the calendar year in which the expense was incurred, nor shall the
amount of reimbursable expenses incurred in one taxable year affect the expenses
eligible for reimbursement in any other taxable year.

      


      (i)           Withholding.  All
payments pursuant to this Agreement shall be reduced for any applicable state,
local, or federal tax withholding obligations.

       

      3.    Term, Termination and
Termination Payments.

       

      (a)           Term.  The
term of this Agreement shall begin as of the Effective Date.  It shall
continue through the second anniversary of the date hereof or until sooner
terminated earlier pursuant to Section 3(b) hereof (the “Term”).

       

      (b)           Termination.  This
Agreement and the employment of the Executive by the Company hereunder shall
only be terminated: (i) by expiration of the original Term; (ii) by the
Company without Cause; (iii) by the Executive for Good Reason; (iv) by
the Company or the Executive due to the Disability of the Executive; (v) by
the Company for Cause; (vi) by the Executive for other than Good Reason or
Disability, upon at least ninety (90) days prior written notice to the Company;
or (vii) upon the death of the Executive.  Notice of termination by
any party shall be given prior to termination in writing and shall specify the
basis for termination and the effective date of termination.  Further,
notice of termination for Cause by the Company or Good Reason by the Executive
shall specify the facts alleged to constitute termination for Cause or Good
Reason, as applicable.  Except as provided in Section 3(c), the
Executive shall not be entitled to any payments or benefits after the effective
date of the termination of this Agreement, except for base salary pursuant to
Section 2(a) accrued up to the effective date of termination, any unpaid earned
and accrued Cash Bonus, if any, pursuant to Section 2(b), pay for accrued but
unused vacation that the Company is legally obligated to pay Executive, if any,
and only if the Company is so obligated, as provided under the terms of any
other employee benefit and compensation agreements or plans applicable to the
Executive, expenses required to be reimbursed pursuant to Section 2(d), and any
rights to payment the Executive has under Section 2(g).

       

      
        
          
          

        

        
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      (c)           Termination by the Company
without Cause or by the Executive for Good Reason.

       

      (i)           If
the employment of the Executive is terminated by the Company without Cause or by
the Executive for Good Reason and such termination constitutes a Termination of
Employment, the Company will pay the Executive (A) his base salary pursuant to
Section 2(a) hereof for the remainder of the original Term, plus (B) an
amount equal to the actual cost of ninety (90) days of the Executive’s
COBRA premium payments, commencing with the COBRA payment next due after
termination, should the Executive elect COBRA (the “Continuing
Benefit”).  Such amount shall be paid in arrears in
substantially equal installments not less frequently than monthly over the
remainder of the original Term commencing within thirty (30) days following the
effective date of termination; provided, however, if the Executive is a
“specified employee” within the meaning of Section 409A of the Internal Revenue
Code, as amended (the “Code”), at the date of his Termination of Employment,
then such portion of the payments that would result in a tax under Code Section
409A if paid during the first six (6) months after Termination of Employment
shall be withheld, starting with the payments latest in time during such six (6)
month period, and paid to the Executive during the seventh month following the
date of his Termination of Employment.  Notwithstanding the foregoing,
if the total payments to be paid to the Executive hereunder, along with any
other payments to the Executive, would result in the Executive being subject to
the excise tax imposed by Code Section 4999, the Company shall reduce the
aggregate payments to the largest amount which can be paid to the Executive
without triggering the excise tax, but only if and to the extent that such
reduction would result in the Executive retaining larger aggregate after-tax
payments.  The determination of the excise tax and the aggregate
after-tax payments to be received by the Executive will be made by the
Company.  If payments are to be reduced, the payments made latest in
time will be reduced first.

       

      (ii)          If
the original Term is not extended or the Company or the Executive terminates the
Executive’s employment upon or following expiration of the Term, such
termination shall not be deemed to be a termination of the Executive’s
employment by the Company without Cause or a resignation by Executive for Good
Reason.

       

      (iii)         Notwithstanding
any other provision hereof, as a condition to the payment of the amounts in this
Section, the Executive shall be required to execute and not revoke within the
revocation period provided therein, the Release.

       

      (d)           Survival.  The
covenants in this Section 3 hereof shall survive the termination of this
Agreement and shall not be extinguished thereby.

       

      4.    Ownership and Protection of
Proprietary Information.

       

      (a)           Confidentiality.  All
Confidential Information and Trade Secrets and all physical embodiments thereof
received or developed by the Executive while employed by the Company are
confidential to and are and will remain the sole and exclusive property of the
Company.  Except to the extent necessary to perform the duties
assigned by the Company hereunder, the Executive will hold such Confidential
Information and Trade Secrets in trust and strictest confidence, and will not
use, reproduce, distribute, disclose or otherwise disseminate the Confidential
Information and Trade Secrets or any physical embodiments thereof and may in no
event take any action causing or fail to take the action necessary in order to
prevent, any Confidential Information and Trade Secrets disclosed to or
developed by the Executive to lose its character or cease to qualify as
Confidential Information or Trade Secrets.

       

      
        
          
          

        

        
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      (b)           Return of Company
Property.  Upon request by the Company, and in any event upon
termination of this Agreement for any reason, as a prior condition to receiving
any final compensation hereunder (including any payments pursuant to
Section 3 hereof), the Executive will promptly deliver to the Company all
property belonging to the Company, including, without limitation, all
Confidential Information and Trade Secrets (and all embodiments thereof) then in
the Executive’s custody, control or possession.

       

      (c)           Survival.  The
covenants of confidentiality set forth herein will apply on and after the date
hereof to any Confidential Information and Trade Secrets disclosed by the
Company or developed by the Executive while employed or engaged by the Company
prior to or after the date hereof.  The covenants restricting the use
of Confidential Information will continue and be maintained by the Executive for
a period of two years following the termination of this
Agreement.  The covenants restricting the use of Trade Secrets will
continue and be maintained by the Executive following termination of this
Agreement for so long as permitted by the governing law.

       

      5.    Non-Competition and
Non-Solicitation Provisions.

       

      (a)           The
Executive agrees that during the Applicable Period, the Executive will not
(except on behalf of or with the prior written consent of the Company, which
consent may be withheld in Company’s sole discretion), within the Area either
directly or indirectly, on his own behalf, or in the service of or on behalf of
others, provide managerial services or management consulting services
substantially similar to those Executive provides for the Company to any
Competing Business.  The Executive acknowledges and agrees that the
Business of the Company is conducted in the Area.

       

      (b)           The
Executive agrees that during the Applicable Period, he will not, either directly
or indirectly, on his own behalf or in the service of or on behalf of others
solicit any individual or entity which is an actual or, to his knowledge,
actively sought prospective client of the Company or any of its Affiliates
(determined as of date of termination of employment) with whom he had material
contact while he was an Executive of the Company, for the purpose of offering
services substantially similar to those offered by the Company.

       

      (c)           The
Executive agrees that during the Applicable Period, he will not, either directly
or indirectly, on his own behalf or in the service of or on behalf of others,
solicit for employment with a Competing Business any person who is a management
level employee of the Company or an Affiliate with whom Executive had contact
during the last year of Executive’s employment with the Company.  The
Executive shall not be deemed to be in breach of this covenant solely because an
employer for whom he may perform services may solicit, divert, or hire a
management level employee of the Company or an Affiliate provided that Executive
does not engage in the activity proscribed by the preceding
sentence.

       

      (d)           The
Executive agrees that during the Applicable Period, he will not make any
statement (written or oral) that could reasonably be perceived as disparaging to
the Company or any person or entity that he reasonably should know is an
Affiliate of the Company.

       

      
        
          
          

        

        
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      (e)           In
the event that this Section 5 is determined by a court which has jurisdiction to
be unenforceable in part or in whole, the court shall be deemed to have the
authority to strike any unenforceable provision, or any part thereof or to
revise any provision to the minimum extent necessary to be enforceable to the
maximum extent permitted by law.

       

      (f)           The
provisions of this Section 5 shall survive termination of this
Agreement.

       

      6.    Remedies and
Enforceability.

       

      The
Executive agrees that the covenants, agreements, and representations contained
in Sections 4 and 5 hereof are of the essence of this Agreement; that each of
such covenants are reasonable and necessary to protect and preserve the
interests and properties of the Company; that irreparable loss and damage will
be suffered by the Company should the Executive breach any of such covenants and
agreements; that each of such covenants and agreements is separate, distinct and
severable not only from the other of such covenants and agreements but also from
the other and remaining provisions of this Agreement; that the unenforceability
of any such covenant or agreement shall not affect the validity or
enforceability of any other such covenant or agreements or any other provision
or provisions of this Agreement; and that, in addition to other remedies
available to it, including, without limitation, termination of the Executive’s
employment for Cause, the Company shall be entitled to seek both temporary and
permanent injunctions to prevent a breach or contemplated breach by the
Executive of any of such covenants or agreements.

       

      7.    Notice.

       

      All
notices, requests, demands and other communications required hereunder shall be
in writing and shall be deemed to have been duly given if delivered or if
mailed, by United States certified or registered mail, prepaid to the party to
which the same is directed at the following addresses (or at such other
addresses as shall be given in writing by the parties to one
another):

       

      
        If to the
Company:

      

       

      2 East
Bryan Street, Suite 601

      Savannah,
GA 31401

      


      If to the
Executive:

       

      2
Springfield Place

      Savannah,
GA 31411

      


      Notices
delivered in person shall be effective on the date of
delivery.  Notices delivered by mail as aforesaid shall be effective
upon the fourth calendar day subsequent to the postmark date
thereof.

       

      8.    Miscellaneous.

       

      (a)           Assignment.  The
rights and obligations of the Company under this Agreement shall inure to the
benefit of the Company’s successors and assigns.  This Agreement may
be assigned by the Company to any legal successor to the Company’s business or
to an entity that purchases all or substantially all of the assets of the
Company, but not otherwise without the prior written consent of the
Executive.  In the event the Company assigns this Agreement as
permitted by this Agreement and the Executive remains employed by the assignee,
the “Company” as defined herein will refer to the assignee and the Executive
will not be deemed to have terminated his employment hereunder until the
Executive terminates his employment with the assignee.  The Executive
may not assign this Agreement.

       

      
        
          
          

        

        
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      (b)           Waiver.  The
waiver of any breach of this Agreement by any party shall not be effective
unless in writing, and no such waiver shall constitute the waiver of the same or
another breach on a subsequent occasion.

       

      (c)           Governing
Law.  This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Georgia.  The
parties agree that any appropriate state or federal court located in Chatham
County, Georgia shall have jurisdiction of any case or controversy arising under
or in connection with this Agreement and shall be a proper forum in which to
adjudicate such case or controversy.  The parties consent to the
jurisdiction of such courts.

       

      (d)           Entire
Agreement.  This Agreement embodies the entire agreement of the
parties hereto relating to the subject matter hereof and supersedes all oral
agreements, and to the extent inconsistent with the terms hereof, all other
written agreements.

       

      (e)           Amendment.  This
Agreement may not be modified, amended, supplemented or terminated except by a
written instrument executed by the parties hereto.

       

      (f)           
Severability.  Each
of the covenants and agreements hereinabove contained shall be deemed separate,
severable and independent covenants, and in the event that any covenant shall be
declared invalid by any court of competent jurisdiction, such invalidity shall
not in any manner affect or impair the validity or enforceability of any other
part or provision of such covenant or of any other covenant contained
herein.

       

      (g)           Captions and Section
Headings.  Except as set forth in Section 9 hereof,
captions and section headings used herein are for convenience only and are not a
part of this Agreement and shall not be used in construing it.

       

      (h)           Dispute
Resolution.  If a dispute arises between Company and Executive
regarding the interpretation of this Agreement, the parties agree to negotiate
in good faith regarding a resolution of the issues involved for at least thirty
days. If the parties fail to resolve the dispute during this period of
negotiation and either party initiates proceedings to enforce its rights no
later than twelve months following any termination of this Agreement, Company
will immediately escrow $50,000 from which Executive will be reimbursed for his
reasonable litigation expenses monthly upon presentation to the escrow agent of
reasonable proof of expenditure. Company will replenish this escrow fund with an
additional $25,000 whenever the balance falls below $10,000. Executive shall, as a condition of any
such reimbursement, submit proof of any expenditure within thirty days of
incurring the expenditure. Any amounts payable to Executive under this
Section shall include a tax  gross up amount to cover any applicable
income taxes based upon the Executive’s effective marginal federal and state tax
rate for the calendar year immediately preceding the calendar year in which the
reimbursement is made. Within sixty (60) days after a final determination
(excluding any appeals) is made with respect to the proceedings, unless the
parties agree otherwise, the losing party will reimburse the winning party’s
reasonable attorney’s fees and costs incurred in the litigation, and if
Executive shall be the losing party, Executive shall reimburse Company at the
same time for all prior payments to him of his reasonable litigation expenses
with appropriate interest calculated from the date(s) such prior payments were
paid to him through the date the Executive reimburses the Company. For purposes
of this Section, the appropriate interest rate means the “Prime Rate,” as reported by the
Wall
Street Journal, for the
date of the final determination of the proceedings or, if that date is not a
business day, for the first business day thereafter. ALL DISPUTES ARISING OUT OF OR
RELATED TO THIS AGREEMENT OR TO COMPANY’S EMPLOYMENT OF EXECUTIVE OR THE
TERMINATION OF EXECUTIVE’S EMPLOYMENT SHALL BE SUBMITTED EXCLUSIVELY TO BINDING
ARBITRATION IN SAVANNAH, GEORGIA, PURSUANT TO THE NATIONAL RULES FOR THE
RESOLUTION OF EMPLOYMENT DISPUTES OF THE AMERICAN ARBITRATION
ASSOCIATION, provided however that Company shall be entitled to
injunctive relief from any court of jurisdiction against Executive’s breach of
any covenant in Articles 6 and 7, and further provided that this Agreement shall
not require arbitration of any claim for workers’ compensation benefits or any
claim for unemployment compensation. Executive understands that agreeing to
arbitration waives the right to a jury trial. Arbitral awards shall be
enforceable by any court of competent jurisdiction.

       

      
        
          
          

        

        
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      9.    Definitions.

       

      (a)           “Affiliate” means any
person, firm, corporation, partnership, association or entity that, directly or
indirectly or through one or more intermediaries, controls, is controlled by or
is under common control with the Company.

       

      (b)           “Applicable Period”
means the period commencing as of the date of this Agreement and ending twelve
months after the termination of the Executive’s employment with the Company or
any of its Affiliates.

       

      (c)           “Area” means the
United States.

       

      (d)           “Business of the
Company” means any business that uses or provides consulting services
related to support vector machines or fractal genomic modeling.

       

      (e)           “Cause” the occurrence
of any of the following events:

       

      (i)          willful failure or refusal to perform
the duties as set forth in Section 1(a) as determined by the Board of Directors
or implement a directive from the Board of Directors, in each case remaining
uncured for a period of fourteen (14) days after receipt of written notice from
the Board of Directors specifying such failure or refusal;

       

      (ii)         intentional
disclosure by the Executive to an unauthorized person of Confidential
Information or Trade Secrets, which causes material harm to the
Company;

       

      (iii)        any
act by the Executive of fraud against, material misappropriation from, or
significant dishonesty to either the Company or an Affiliate, or any other
party, but in the latter case only if in the reasonable opinion of at least
two-thirds of the members of the Board of Directors of the Company (excluding
the Executive), such fraud, material misappropriation, or significant dishonesty
could reasonably be expected to have a material  adverse impact on the
Company or its Affiliates;

       

      (iv)        conviction of, or plea of nolo
contendere to, a felony which adversely and materially affects the
Company; or

       

      (v)         a
material breach of this Agreement by the Executive, provided that the nature of
such breach shall be set forth with reasonable particularity in a written notice
to the Executive who shall have ten (10) days following delivery of such notice
to cure such alleged breach, provided that such breach is, in the reasonable
discretion of the Board of Directors, susceptible to a cure.

       

      
        
          
          

        

        
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      (f)           
“Competing
Business” means the entities listed below and any person, firm,
corporation, joint venture, or other business that is engaged in the Business of
the Company:

       

      (g)           “Confidential
Information” means data and information relating to the Business of the
Company or an Affiliate (which does not rise to the status of a Trade Secret)
which is or has been disclosed to the Executive or of which the Executive became
aware as a consequence of or through his relationship to the Company or an
Affiliate and which has value to the Company or an Affiliate and is not
generally known to its competitors.  Confidential Information shall
not include any data or information that has been voluntarily disclosed to the
public by the Company or an Affiliate (except where such public disclosure has
been made by the Executive without authorization) or that has been independently
developed and disclosed by others, or that otherwise enters the public domain
through lawful means without breach of any obligations of confidentiality owed
to the Company or any of its Affiliates by the Executive.

       

      (h)           “Disability” means the
inability of the Executive to perform the material duties of his position
hereunder due to a physical, mental, or emotional impairment, for a ninety (90)
consecutive day period or for aggregate of one hundred eighty (180) days during
any three hundred sixty-five (365) day period.

       

      (i)           “Good Reason” means
the occurrence of all of the events listed in either (i) or (ii)
below:

       

      (i)          
(A)      the
Company materially breaches this Agreement, including without limitation, a
material diminution of the Executive’s responsibilities as Chief Executive
Officer, as reasonably modified by the Board of Directors from time to time
hereafter, such that the Executive would no longer have responsibilities
substantially equivalent to those of other chief executive officers at companies
with similar revenues and market capitalization;

       

       
(B)       the Executive gives written
notice to the Company of the facts and circumstances constituting the breach of
the Agreement within ten (10) days following the occurrence of the
breach;

       

       
(C)        the Company fails to remedy
the breach within ten (10) days following the Executive’s written notice of the
breach; and

       

        (D) 
      the Executive terminates his
employment within ten (10) days following the Company’s failure to remedy the
breach; or

       

      (ii)         (A)        the
Company requires the Executive to relocate the Executive’s primary place of
employment to a new location, that is more than fifty (50) miles (calculated
using the most direct driving route) from its current location, without the
Executive’s consent;

       

       
(B)        the Executive gives written
notice to the Company within ten (10) days following receipt of notice of
relocation of his objection to the relocation;

       

       
(C)        the Company fails to
rescind the notice of relocation within ten (10) days following the Executive’s
written notice; and

       

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

       

       
(D)        the Executive terminates
his employment within ten (10) days following the Company’s failure to rescind
the notice.

       

      (j)           “Release” means a
comprehensive release, covenant not to sue, and non-disparagement agreement from
the Executive in favor of the Company, its executives, officers, directors,
Affiliates, and all related parties, in the form attached hereto as Exhibit
C.

       

      (k)           “Term” has the meaning
as set forth in Section 3(a) hereof.

       

      (l)           “Termination of
Employment” means
either that (a) the Executive has ceased to perform any services for the Company
and all affiliated companies that, together with the Company, constitute the
“service recipient” within the meaning of Section 409A of the Code and the
regulations thereunder (collectively, the “Service Recipient”) or (b) the level
of bona fide services the Executive performs for the Service Recipient after a
given date (whether as an employee or as an independent contractor) permanently
decreases (excluding a decrease as a result of military leave, sick leave, or
other bona fide leave of absence if the period of such leave does not exceed six
months, or if longer, so long as the Executive retains a right to reemployment
with the Service Recipient under an applicable statute or by contract) to no
more than twenty percent (20%) of the average level of bona fide services
performed for the Service Recipient (whether as an employee or an independent
contractor) over the immediately preceding 36-month period.

      


      (m)           “Trade Secrets” means
data and information relating to the Business of the Company or an Affiliate
including, but not limited to, technical or nontechnical data, formulae,
patterns, compilations, programs, devices, methods, techniques, drawings,
processes, financial data, financial plans, product plans or lists of actual or
potential customers or suppliers which (i) derives economic value, actual
or potential, from not being generally known to, and not being readily
ascertainable by proper means by, other persons who can obtain economic value
from its disclosure or use, and (ii) is the subject of efforts that are
reasonable under the circumstances to maintain its secrecy.

       

      IN WITNESS WHEREOF, the
Company and the Executive have each executed and delivered this Agreement as of
the date first shown above.

       

      
        	 
      	
                COMPANY:

              	 
      
	 
      	 
      	 
      	 
      
	 
      	
                Health
      Discovery Corporation

              	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
                By:

              	/s/ Dr.
      Michael Hanbury  	 
      
	 
      	 
      	
                Dr.
      Michael Hanbury, as an independent director

              
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
                THE
      EXECUTIVE:

              	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	/s/
      Dr. Stephen Barnhill  	 
      
	 
      	
                Dr.
      Stephen Barnhill

              	 
      


      

      


      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

      


      EXHIBIT
A

      


      
        	
                None

              	 
      
	 
      	 
      


      

      


      


      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

      


      EXHIBIT
B

      


      
        	
                Vesting Date

              	
                Minimum Share Price

              	
                Number of Options

              
	
                August
      15, 2008

              	
                $0.10

              	
                1,000,000

              
	
                January
      1, 2009

              	
                $0.15

              	
                2,000,000

              
	
                January
      1, 2010

              	
                $0.20

              	
                2,000,000

              
	
                January
      1, 2010

              	
                $0.25

              	
                1,000,000

              


      

      


      Each
portion of the option identified  under the “Number of Options” column
above shall vest only if and when (1) the Executive has been continuously
employed by the Company through the applicable Vesting Date, (2) the Company’s
Common Stock’s closing price for any 20 consecutive trading days is no less than
the Minimum Share Price stated for the specified Vesting Date at any point after
the Effective Date, and (3) with respect to the options that have a Vesting Date
of January 1, 2010, either the Company has (i) cash on hand in excess of
$800,000, or (ii) a positive, trailing 90-day EBITDA, or (iii) raised an
additional $1,000,000 in capital from new investments, excluding any proceeds
from the exercise of any warrants or options.

      


      


      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      

      


      


      


      EXHIBIT
C

      


      RELEASE,
AGREEMENT PURSUANT TO

      EMPLOYMENT
AGREEMENT

      


      This
Agreement (this “Agreement”) is made this ___ day of _____, 200_, by
_______________ (the “Employer”) and ________________ (the
“Employee”).

      


      Introduction

      


      Employee
and the Employer entered into an Employment Agreement dated ________, 200_ (the
“Employment Agreement”).

      


      The
Employment Agreement requires that as a condition to the Employer’s obligation
to pay payments and benefits under Section 3(c) of the Employment Agreement (the
“Severance Benefits”), Employee must provide a release and agree to certain
other conditions as provided herein.

      


      NOW,
THEREFORE, the parties agree as follows:

      


      
        	
                1.

              	
                Employee
      has been offered twenty-one (21) days from receipt of this Agreement
      within which to consider this Agreement. The effective date of this
      Agreement shall be the date eight (8) days after the date on which
      Employee signs this Agreement (“the Effective Date”). For a period of
      seven (7) days following Employee’s execution of this Agreement, Employee
      may revoke this Agreement, and this Agreement shall not become effective
      or enforceable until such seven (7) day period has expired. Employee must
      communicate the desire to revoke this Agreement in
      writing.  Employee understands that he or she may sign the
      Agreement at any time before the expiration of the twenty-one (21) day
      review period.  To the degree Employee chooses not to wait
      twenty-one (21) days to execute this Agreement, it is because Employee
      freely and unilaterally chooses to execute this Agreement before that
      time.  Employee’s signing of the Agreement triggers the
      commencement of the seven (7) day revocation period.

              
	 
      	 
      
	
                2.

              	
                In
      exchange for Employee’s execution of this Agreement and in full and
      complete settlement of any claims as specifically provided in this
      Agreement, the Employer will provide Employee with the Severance
      Benefits.

              
	 
      	 
      
	
                3.

              	
                Employee
      acknowledges and agrees that this Agreement is in compliance with the Age
      Discrimination in Employment Act and the Older Workers Benefit Protection
      Act and that the releases set forth in this Agreement shall be applicable,
      without limitation, to any claims brought under these
  Acts.

              
	 
      	 
      
	 
      	
                The
      release given by Employee in this Agreement is given solely in exchange
      for the consideration set forth in Section 2 of  this Agreement
      and such consideration is in addition to anything of value that Employee
      was entitled to receive prior to entering into this
    Agreement.

              
	 
      	 
      
	 
      	
                Employee
      has been advised to consult an attorney prior to entering into this
      Agreement and this provision of the Agreement satisfies the requirement of
      the Older Workers Benefit Protection Act that Employee be so advised in
      writing.

              
	 
      	 
      
	 
      	
                By
      entering into this Agreement, Employee does not waive any rights or claims
      that may arise after the date this Agreement is
  executed.

              


      

       

      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

      

       

      
        	
                4.

              	
                This
      Agreement shall in no way be construed as an admission by the Employer
      that it has acted wrongfully with respect to Employee or any other person
      or that Employee has any rights whatsoever against the
      Employer.  The Employer specifically disclaims any liability to
      or wrongful acts against Employee or any other person on the part of
      itself, its employees or its agents.

              
	 
      	 
      
	
                5.

              	
                As
      a material inducement to the Employer to enter into this Agreement,
      Employee hereby irrevocably releases the Employer and each of the owners,
      stockholders, predecessors, successors, directors, officers, employees,
      representatives, attorneys, affiliates (and agents, directors, officers,
      employees, representatives and attorneys of such affiliates) of the
      Employer and all persons acting by, through, under or in concert with them
      (collectively, the “Releasees”), from any and all charges, claims,
      liabilities, agreements, damages, causes of action, suits, costs, losses,
      debts and expenses (including attorneys’ fees and costs actually incurred)
      of any nature whatsoever, known or unknown, including, but not limited to,
      rights arising out of alleged violations of any contracts, express or
      implied, any covenant of good faith and fair dealing, express or implied,
      or any tort, or any legal restrictions on the Employer’s right to
      terminate employees, or any federal, state or other governmental statute,
      regulation, or ordinance, including, without limitation: (1) Title VII of
      the Civil Rights Act of 1964, as amended by the Civil Rights Act of 1991
      (race, color, religion, sex, and national origin discrimination); (2) the
      Employee Retirement Income Security Act (“ERISA”); (3) 42 U.S.C. § 1981
      (discrimination); (4) the Americans with Disabilities Act (disability
      discrimination); (5) the Equal Pay Act; (6) the Age Discrimination in
      Employment Act; (7) the Older Workers Benefit Protection Act;  (6) Executive
      Order 11246 (race, color, religion, sex, and national origin
      discrimination); (7) Executive Order 11141 (age discrimination); (8)
      Section 503 of the Rehabilitation Act of 1973 (disability discrimination);
      (9) negligence; (10) negligent hiring and/or negligent retention;
      (11) intentional or negligent infliction of emotional distress or
      outrage; (12) defamation; (13) interference with employment;
      (14) wrongful discharge; (15) invasion of privacy; or
      (16) violation of any other legal or contractual duty arising under
      the laws of the State of Maryland or the laws of the United States
      (“Claim” or “Claims”), which Employee now has, or claims to have, or which
      Employee at any time heretofore had, or claimed to have, or which Employee
      at any time hereinafter may have, or claim to have, against each or any of
      the Releasees, in each case as to acts or omissions by each or any of the
      Releasees occurring up to and including the Effective
  Date.

              
	 
      	 
      
	
                6.

              	
                The
      release in the preceding paragraph of this Agreement does not apply to
      (a) all benefits and awards (including without limitation cash and
      stock components) which pursuant to the terms of any compensation or
      benefit plans, programs, or agreements of the Employer are earned or
      become payable, but which have not yet been paid, and (b) pay for
      accrued but unused vacation that the Employer is legally obligated to pay
      Employee, if any, and only if the Employer is so obligated,
      (c) unreimbursed business expenses for which Employee is entitled to
      reimbursement under the Employer’s policies, and (d) any rights to
      indemnification that Employee has under any directors and officers or
      other insurance policy the Employer maintains or under the bylaws and
      articles of incorporation of the Company, and under any indemnification
      agreement, if any.

              
	 
      	 
      
	
                7.

              	
                Employee
      promises that he will not make statements disparaging to any of the
      Releasees.  Employee agrees not to make any statements about any
      of the Releasees to the press (including without limitation any newspaper,
      magazine, radio station or television station) without the prior written
      consent of the Employer.  The obligations set forth in the two
      immediately preceding sentences will expire two years after the Effective
      Date.  Employee will also cooperate with the Employer and its
      affiliates if the Employer requests Employee’s testimony.  To
      the extent practicable and within the control of the Employer, the
      Employer will use reasonable efforts to schedule the timing of Employee’s
      participation in any such witness activities in a reasonable manner to
      take into account Employee’s then current employment, and will pay the
      reasonable documented out-of-pocket expenses that the Employer
      pre-approves and that Employee incurs for travel required by the Employer
      with respect to those activities.

              


      

       

      
        
          
          

        

        
          14

          
            

          

        

        
          
          

        

      

       

      
        	
                9.

              	
                Except
      as set forth in this Section, Employee agrees not to disclose the
      existence or terms of this Agreement to anyone.  However,
      Employee may disclose it to a member of his immediate family or legal or
      financial advisors if necessary and on the condition that the family
      member or advisor similarly does not disclose these terms to
      anyone.  Employee understands that he will be responsible for
      any disclosure by a family member or advisor as if he had disclosed it
      himself.  This restriction does not prohibit Employee’s
      disclosure of this Agreement or its terms to the extent necessary during a
      legal action to enforce this Agreement or to the extent Employee is
      legally compelled to make a disclosure.  However, Employee will
      notify the Employer promptly upon becoming aware of that legal necessity
      and provide it with reasonable details of that legal
      necessity.

              
	 
      	 
      
	
                10.

              	
                Employee
      has not filed or caused to be filed any lawsuit, complaint or charge with
      respect to any Claim he releases in this Agreement.  Employee
      promises never to file or pursue a lawsuit, complaint or charge based on
      any Claim released by this Agreement, except that Employee may participate
      in an investigation or proceeding conducted by an agency of the United
      States Government or of any state.  Employee also has not
      assigned or transferred any claim he is releasing, nor has he purported to
      do so.

              
	 
      	 
      
	
                11.

              	
                The
      Employer and Employee agree that the terms of this Agreement shall be
      final and binding and that this Agreement shall be interpreted, enforced
      and governed under the laws of the State of Maryland.  The
      provisions of this Agreement can be severed, and if any part of this
      Agreement is found to be unenforceable, the remainder of this Agreement
      will continue to be valid and effective.

              
	 
      	 
      
	
                12.

              	
                This
      Agreement sets forth the entire agreement between the Employer and
      Employee and fully supersedes any and all prior agreements or
      understandings, written and/or oral, between the Employer and Employee
      pertaining to the subject matter of this Agreement.

              
	 
      	 
      
	
                13.

              	
                Employee
      is solely responsible for the payment of any fees incurred as the result
      of an attorney reviewing this agreement on behalf of
      Employee.  In any litigation concerning the validity or
      enforceability of this contract or in any litigation to enforce the
      provisions of this contract, the prevailing party shall be entitled to
      recover reasonable attorneys’ fees and costs, including court costs and
      expert witness fees and costs.

              


      

       

      Employee’s
signature below indicates Employee’s understanding and agreement with all of the
terms in this Agreement.

       

      Employee
should take this Agreement home and carefully consider all of its provisions
before signing it. Employee may take up to twenty-one (21) days to decide
whether Employee wants to accept and sign this Agreement.  Also, if
Employee signs this Agreement, Employee will then have an additional
seven (7) days in which to revoke Employee’s acceptance of this Agreement
after Employee
has signed it.  This Agreement will not be effective or enforceable,
nor will any consideration be paid, until after the seven (7) day
revocation period has expired. Again, Employee is free and encouraged to discuss
the contents and advisability of signing this Agreement with an attorney of
Employee’s choosing.

       

      
        
          
          

        

        
          15

          
            

          

        

        
          
          

        

      

       

      Employee
should read carefully.  This agreement includes a release of all known
and unknown claims through the effective date.  Employee is strongly
advised to consult with an attorney before executing this document.

       

      IN
WITNESS WHEREOF, Employee and the Employer have executed this agreement
effective as of the date first written above.

      


      
        	 
      	
                EMPLOYEE

              	 
      
	 
      	 
      	 
      	 
      
	 
      	   
      	 
      
	 
      	Name	 
      
	 
      	 
      	 
      	 
      
	 
      	  
      	 
      
	 
      	Date
      Signed	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
                EMPLOYER:

              	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
                By:

              	 
      	 
      
	 
      	
                Title:

              	 
      	 
      


      

       

       

      16