EXHIBIT10.3EMPLOYMENT AGREEMENT     THIS EMPLOYMENT AGREEMENT (“Agreement”) is made and entered into as of October 13, 2006, byand between Xcorporeal, Inc. (“Company”), and Daniel S. Goldberger (“Executive”).RECITALS     A. WHEREAS, Executive has experience and expertise applicable to employment with Company toperform as the President and Chief Operating Officer of Company, Company has agreed to employExecutive and Executive has agreed to enter into such employment, on the terms set forth in thisAgreement.     B. WHEREAS, Executive acknowledges that this Agreement is necessary for the protection ofCompany’s investment in its business, good will, products, methods of operation, information, andrelationships with its customers and other employees.     C. WHEREAS, Company acknowledges that Executive desires definition of his compensation andbenefits, and other terms of his employment.     NOW, THEREFORE, in consideration thereof and of the covenants and conditions contained herein,the parties agree as follows:AGREEMENT     1. TERM OF AGREEMENT          1.1 Initial Term. The initial term of this Agreement shall begin on October 6, 2006and shall continue until the earlier of: (a) the date on which it is terminated pursuant to Section5; or (b) four (4) years following the Commencement Date (“Initial Term”). After the expiration ofthe Initial Term, Executive shall be employed on an at-will basis, with either party able toterminate the employment, with or without cause and with or without notice.2. EMPLOYMENT          2.1 Employment of Executive. Company agrees to employ Executive to render services onthe terms set forth herein. Executive hereby accepts such employment on the terms and conditionsof this Agreement.          2.2 Position and Duties. Executive shall serve as President and Chief OperatingOfficer of Company, reporting to the Chairman (“Chairman”) of the Company’s Board of Directors(“Board”), and shall have the general powers, duties and responsibilities of management usuallyvested in that office in a corporation and such other powers and duties as may be prescribed fromtime to time by the Chairman or the Board.          2.3 Standard of Performance. Executive agrees that he will at all times faithfullyand industriously and to the best of his ability, experience and talents perform all of the dutiesthat may be required of and from him pursuant to the terms of this Agreement. Such 
 

 
duties shall be performed at such place or places as the interests, needs, business andopportunities of Company shall require or render advisable.          2.4 Exclusive Service. Commencing 30 days after the Company receives debt or equityfinancing in the amount of at least $10 million, or a date otherwise mutually agreed between theparties, (the “Commencement Date”), Executive shall (a) devote all of his business energies andabilities and all of his productive time to the performance of his duties under this Agreement(reasonable absences during holidays and vacations excepted), and shall not, without the priorwritten consent of Company, render to others any service of any kind (whether or not forcompensation) that, in the opinion of Company, would materially interfere with the performance ofhis duties under this Agreement, and (b) not, without the prior written consent of Company,maintain any affiliation with, whether as an agent, consultant, employee, officer, director,trustee or otherwise, nor shall he directly or indirectly render any services of an advisory natureor otherwise to, or participate or engage in, any other business activity.     3. COMPENSATION          3.1 Compensation. During the term of this Agreement, Company shall pay the amountsand provide the benefits described in this Section 3, and Executive agrees to accept such amountsand benefits in full payment for Executive’s services under this Agreement.          3.2 Base Salary. Company shall pay to Executive a base salary equivalent to $10,000per month prior to the Commencement Date, and $275,000 per year after the Commencement Date, lessapplicable taxes, payable in accordance with Company’s standard payroll practices. At Company’ssole discretion, Executive’s base salary may be increased, but not decreased, annually.Notwithstanding the foregoing, commencing on January 1, 2007 and annually thereafter, the BaseSalary shall be increased by at least the Consumer Price Index for Los Angeles, California (or areasonable proxy thereof).          3.3 Discretionary Bonus. Except as described in Section 5.1 below, Executive iseligible to receive an annual bonus in the sole discretion of Company. This discretionary bonuswill be targeted at 50% of Executive’s base salary, based on Executive achieving designatedindividual goals and milestones, and the overall performance and profitability of the Company. Thegoals and milestones will be established and reevaluated on an annual basis by mutual agreement ofExecutive and the Chairman, subject to review and approval by the Board or its compensationCommittee. Any bonus under this Section 3.3 will be based on a calendar year and shall be paid nolater than April 30th of the following year. The first annual bonus, to the extentgranted at the sole discretion of the Company, shall be prorated based on the Commencement Date.The goals and objectives related to the 2006 target bonus shall be established within thirty days.          3.4 Commuting. Executive expects to relocate from his home in Boulder, CO inapproximately June 2008. During this commuting period, Executive will be on location in the LosAngeles office Tuesday – Thursday unless otherwise required to travel on Company business.Reasonable and customary travel and accommodations for such commuting will be at Company expense.Executive will maintain a fully equipped home office at his own
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expense during the commuting period and will work at least eight hours per day while away fromthe Los Angeles office.          3.5 Equity Incentive Plan.               (a) Executive shall be granted options to purchase 400,000 shares of Company’s common stock,at fair market value, pursuant to a Stock Option Agreement under the provisions of Company’s 2006Stock Incentive Plan (“Plan”), upon approval by the Board and the Company’s stockholders. Theoptions will vest as follows: 20% on the first, second, third, fourth and fifth anniversariesthereof.               (b) Except as otherwise set forth herein, vesting of options will cease upon the terminationof Executive’s employment with Company.          3.6 Fringe Benefits. Subject to Section 3.7 and upon satisfaction of the applicableeligibility requirements, Executive and Executive’s family shall be provided with group medical anddental insurance and group dental coverage through Company’s plans. Medical and dental benefitswill commence on the first day of the month following the Commencement Date. In the event that nobenefit plans are in place at that time, the Company will reimburse Executive for COBRA coverageuntil such time as Executive is covered under the Company’s group medical and dental plans.Company will pay for $300,000 of term life insurance for the benefit of Executive, subject to thestandard physical examination that is required by the issuing insurance company. In addition,Executive will be provided with accidental death and disability and long-term disability insurance,or reimbursed for the reasonably equivalent cost of a private disability policy. Executive is alsoeligible to participate in Company’s 401K plan beginning on the first day of the month followingthe Commencement Date.          3.7 Paid Time Off. Executive shall accrue, on a daily basis, a total of four (4)workweeks of paid time off (PTO) per year following the date of this Agreement, provided, however,that Executive’s accrued and unused PTO may not exceed a total of seven (7) workweeks. This PTOshall be in addition to normal Company holidays, which shall be determined at the discretion of theCompany from time to time. Thereafter, Executive will not continue to accrue PTO benefits until hehas used enough PTO time to fall below this maximum amount. Any accrued but unused PTO will be paidto Executive, on a pro rata basis, at the time that his employment is terminated. In addition toPTO, the Executive shall be entitled to normal Company holidays.          3.8 Deduction from Compensation. Company shall deduct and withhold from allcompensation payable to Executive all amounts required to be deducted or withheld pursuant to anypresent or future law, ordinance, regulation, order, writ, judgment, or decree requiring suchdeduction and withholding.     4. REIMBURSEMENT OF EXPENSES          4.1 Travel and Other Expenses. Company shall pay to or reimburse Executive for thosetravel, promotional, professional continuing education and licensing costs (to the extentrequired), professional society membership fees, seminars and similar expenditures
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incurred by Executive which Company determines are reasonably necessary for the properdischarge of Executive’s duties under this Agreement and for which Executive submits appropriatereceipts and indicates the amount, date, location and business character in a timely manner.          4.2 Liability Insurance. Company shall provide Executive with officers and directors’insurance, or other liability insurance, consistent with its usual business practices, to coverExecutive against all insurable events related to his employment with Company.          4.3 Indemnification. Promptly upon written request from Executive, Company shallindemnify Executive, to the fullest extent under applicable law, for all judgments, fines,settlements, losses, costs or expenses (including attorney’s fees), arising out of Executive’sactivities as an agent, employee, officer or director of Company, or in any other capacity onbehalf of or at the request of Company. Such agreement by Company shall not be deemed to impairany other obligation of Company respecting indemnification of Executive otherwise arising out ofthis or any other agreement or promise of Company or under any statute.     5. TERMINATION          5.1 Termination With Good Cause; Resignation Without Good Reason. Company mayterminate Executive’s employment at any time, with or without notice, or Good Cause (as definedbelow). If Company terminates Executive’s employment with Good Cause, or if Executive resignswithout Good Reason (as defined below), Company shall pay Executive his salary prorated through thedate of termination, at the rate in effect at the time notice of termination is given, togetherwith any benefits accrued through the date of termination. Company shall have no furtherobligations to Executive under this Agreement or any other agreement, and all unvested options willterminate.          5.2 Termination Without Good Cause; Resignation with Good Reason. Executive shallhave the right to terminate his employment with notice and Good Reason. If Company terminatesExecutive’s employment without Good Cause, or Executive resigns for Good Reason:               (a) Company shall pay Executive his salary prorated through the date of termination, at therate in effect at the time notice of termination is given, together with any benefits accruedthrough the date of termination;               (b) Company shall pay Executive in a lump sum an amount equal to one (1) year’s salary (at therate in effect at the time of termination) plus a bonus equal to 100% of the targeted bonus;               (c) All of Executive’s unvested stock options will vest immediately; and               (d) In addition to any rights under COBRA, the term for continued medical benefits provided byCompany shall continue for a period of one year from
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the date of termination, provided that coverage will terminate sooner if Executive becomeseligible for coverage under another employer’s plan.     To be eligible for the compensation provided for in Section 5.2(b), (c) and (d) above,Executive must execute a full and complete release of any and all claims against Companysubstantially in the standard form used by Company (“Release”). Company shall have no furtherobligations to Executive under this Agreement or any other agreement.          5.3 Good Cause. For purposes of this Agreement, a termination shall be for “GoodCause” if Executive, in the subjective, good faith opinion of Company, shall:               (a) Commit an act of fraud, moral turpitude, misappropriation of funds or embezzlement inconnection with his duties;               (b) Breach Executive’s fiduciary duty to Company, including, but not limited to, acts ofself-dealing (whether or not for personal profit);               (c) Materially breach this Agreement, the Confidentiality Agreement (defined below), orCompany’s written Codes of Ethics as adopted by the Board;               (d) Willful, reckless or grossly negligent violation of any material provision of Company’swritten Executive Handbook, or any applicable state or federal law or regulation;               (e) Fail or refuse (whether willful, reckless or negligent) to comply with all relevant andmaterial obligations, assumable and chargeable to an executive of his corporate rank andresponsibilities, under the Sarbanes-Oxley Act and the regulations of the Securities and ExchangeCommission promulgated thereunder;               (f) Fail to or refuse to comply with the lawful directives of the Chairman or the Board in theperformance of his duties under this Agreement (other than a failure caused by temporarydisability); provided, however, that no termination shall occur on that basis unless the Companyfirst provides the Executive with written notice to cure; the notice to cure shall reasonablyspecify the acts or omissions that constitute the Executive’s failure or refusal to perform hisduties, and the Executive shall have a reasonable opportunity (not to exceed 10 days after the dateof notice to cure) to correct his failure or refusal to perform his duties; termination shall beeffective as of the date of written notice to cure; or               (g) Be convicted of, or enter a plea of guilty or no contest to, a felony or misdemeanor understate or federal law, other than a traffic violation or misdemeanor not involving dishonesty ormoral turpitude.          5.4 Good Reason. For purposes of this Agreement, a resignation shall be for “GoodReason” if tendered within ninety (90) days of any of the following actions by Company:
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               (a) Assignment to Executive of duties materially inconsistent with Executive’s status asdefined in Section 2.2, or a substantial reduction in the nature or status of Executive’sresponsibilities;               (b) Relocation of Executive’s site of employment outside a 30 mile radius of Los Angeles(unless closer to Executive’s residence) without Executive’s consent, except for reasonablyrequired travel on Company’s business;               (c) Failure to cause any acquiring or successor entity following a Change in Control to assumeCompany’s obligations under this Agreement, unless such assumption occurs by operation of law; or               (d) Material breach of this Agreement by Company, or failure to timely pay to Executive anyamount due under Section 3, which continues after written notice and reasonable opportunity to cure(not to exceed 10 days after the date of notice).               (e) Executive is asked to report to an individual other than the current Chairman or Board.          5.5 Effects of Change in Control. Immediately upon a Change in Control (as definedbelow) all of Executive’s unvested options shall vest immediately, and remain exercisable for aperiod of three (3) years thereafter. Further, if Executive is terminated without Good Cause orresigns for Good Reason during the first twelve (12) months following a Change in Control,Executive shall be entitled to receive a lump sum in an amount equal to (i) one and one-half yearsof salary (at the rate in effect at the time of termination); and (ii) one and one-half times theExecutive’s full targeted bonus for that year. In addition to any rights under COBRA, the term forcontinued medical benefits provided by Company shall continue for a period of eighteen (18) monthsfrom the date of termination, provided that coverage will terminate sooner if Executive becomeseligible for coverage under another employer’s plan. To be eligible for the compensation providedfor in this Section 5.5, Executive must execute a Release. Company shall have no furtherobligations to Executive under this Agreement or any other agreement.          5.6 Change in Control. For purposes of this Agreement, a “Change in Control” shall bedefined as:               (a) The acquisition of Company by another entity by means of a transaction or series ofrelated transactions (including, without limitation, any reorganization, merger, stock purchase orconsolidation); or               (b) The sale, transfer or other disposition of all or substantially all of the Company’sassets.          5.7 No Change in Control. Notwithstanding the provisions of Section 5.6, thefollowing shall not constitute a Change in Control:
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               (a) If the sole purpose of the transaction is to change the state of the Company’sincorporation or to create or eliminate a holding company that will be owned in substantially thesame proportions by the same beneficial owners as before the transaction;               (b) If Company’s stockholders of record as constituted immediately prior to the transactionwill, immediately after the transaction (by virtue of securities issued as a consideration forCompany’s capital stock or assets or otherwise), hold more than 50% of the combined voting power ofthe surviving or acquiring entity’s outstanding securities;               (c) An underwritten public offering of Company’s common stock, if Company’s stockholders ofrecord as constituted immediately prior to the offering will, immediately after the offering,continue to hold more than 50% of the combined voting power of Company’s outstanding securities;               (d) The private placement of preferred or common stock, or the issuance of debt instrumentsconvertible into preferred or common stock, for fair market value as determined by the Board,provided the acquiring person does not as a result of the transaction own more than 50% of theoutstanding capital stock of Company, have the right to vote more than 50% of the outstandingvoting stock of Company, or have the right to elect a majority of the Board; or               (e) If Executive is a member of a group that acquires control of Company in an event thatwould otherwise be a Change in Control, such event shall not be deemed a Change in Control andExecutive shall have no right to benefits hereunder as a result of such event; provided, however,that Executive shall not be deemed a member of any acquiring group solely by virtue of hiscontinued employment or ownership of stock or stock options following a Change in Control.     5.8 Death or Disability. To the extent consistent with federal and state law,Executive’s employment, salary, and accrual of commissions shall terminate on his death ordisability. “Disability” means any health condition, physical or mental, or other cause beyondExecutive’s control, that prevents him from performing his duties, even after reasonableaccommodation is made by Company, for a period of 180 consecutive days within any 360 day period.In the event of termination due to death or Disability, Company shall pay Executive (or his legalrepresentative) his salary prorated through the date of termination, at the rate in effect at thetime of termination, together with any benefits accrued through the date of termination. Companyshall have no further obligations to Executive (or his legal representative) under this Agreement.     5.9 Return of Company Property. Within five (5) days after the Termination Date,Executive shall return to Company all products, books, records, forms, specifications, formulae,data processes, designs, papers and writings relating to the business of Company including withoutlimitation proprietary or licensed computer programs, customer lists and customer data, and/orcopies or duplicates thereof in Executive’s possession or under Executive’s control. Executiveshall not retain any copies or duplicates of such property and all
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licenses granted to him by Company to use computer programs or software shall be revoked onthe Termination Date.     6. DUTY OF LOYALTY          6.1 During the term of this Agreement, Executive shall not, without the prior written consentof Company, directly or indirectly render services of a business, professional, or commercialnature to any person or firm, whether for compensation or otherwise, or engage in any activitydirectly or indirectly competitive with or adverse to the business or welfare of Company, whetheralone, as a partner, or as an officer, director, employee, consultant, or holder of more than 1 %of the capital stock of any other corporation. Otherwise, Executive may make personal investmentsin any other business so long as these investments do not require him to participate in theoperation of the companies in which he invests. Notwithstanding the foregoing, Executive will bepermitted to render services to his previous employers to support the closing of a finaltransaction currently in process.     7. CONFIDENTIAL INFORMATION          7.1 Trade Secrets of Company. Executive, during the term of this Agreement, willdevelop, have access to and become acquainted with various trade secrets which are owned by Companyand/or its affiliates and which are regularly used in the operation of the businesses of suchentities. Executive shall not disclose such trade secrets, directly or indirectly, or use them inany way, either during the term of this Agreement or at any time thereafter, except as required inthe course of his employment by Company. All files, contracts, manuals, reports, letters, forms,documents, notes, notebooks, lists, records, documents, customer lists, vendor lists, purchaseinformation, designs, computer programs and similar items and information, relating to thebusinesses of such entities, whether prepared by Executive or otherwise and whether now existing orprepared at a future time, coming into his possession shall remain the exclusive property of suchentities, and shall not be removed, other than work-related purposes, from the premises where thework of Company is conducted, except with the prior written authorization by Company.          7.2 Confidential Data of Customers of Company. Executive, in the course of hisduties, will have access to and become acquainted with financial, accounting, statistical andpersonal data of customers of Company and of their affiliates. All such data is confidential andshall not be disclosed, directly or indirectly, or used by Executive in any way, either during theterm of this Agreement (except as required in the course of employment by Company) or at any timethereafter.          7.3 Inevitable Disclosure. Subject to Section 5.2, after Executive’s employment hasterminated with Good Cause or without Good Reason, Executive shall not accept employment with anydirect competitor of Company for a period of one (1) year, where the new employment is likely toresult in the inevitable disclosure of Company’s trade secrets or confidential information, or itwould be impossible for Executive to perform his new job without using or disclosing trade secretsor confidential information.
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          7.4 Continuing Effect. The provisions of this Section 7 shall remain in effect afterthe Termination Date.     8. NO SOLICITATION          8.1 No Solicitation of Executives. Subject to Section 5.2, Executive agrees that hewill not, during his employment with Company, and for one (1) year thereafter if terminated withoutGood Cause or with Good Reason or for two (2) years thereafter if terminated with Good Cause orwithout Good Reason, encourage or solicit any other employee of Company to terminate his or heremployment for any reason, nor will he assist others to do so.          8.2 No Solicitation of Customer. Subject to Section 5.2, Executive agrees that hewill not, during his employment with Company, and for one (1) year thereafter if terminatedwithout Good Cause or with Good Reason or for two (2) years thereafter if terminated with GoodCause or without Good Reason, directly or indirectly call on, or otherwise solicit, business fromany actual customer or potential customer known by Executive to be targeted by Company, nor will heassist others in doing so.     9. INTELLECTUAL PROPERTIES.          To the extent permissible under applicable law, all intellectual properties made or conceivedby Executive arising out of or relating to this Agreement or the Company’s business during the termof this employment by Company shall be the right and property solely of Company, whether developedindependently by Executive or jointly with others. The Executive will sign the Company’s standardExecutive Innovation, Proprietary Information and Confidentiality Agreement (“ConfidentialityAgreement”).     10. OTHER PROVISIONS          10.1 Compliance With Other Agreements. Executive represents and warrants to Companythat the execution, delivery and performance of this Agreement will not conflict with or result inthe violation or breach of any term or provision of any order, judgment, injunction, contract,agreement, commitment or other arrangement to which Executive is a party or by which he is bound.          10.2 Injunctive Relief. Executive acknowledges that the services to be rendered underthis Agreement and the items described in Sections 6, 7, 8 and 9 are of a special, unique andextraordinary character, that it would be difficult or impossible to replace such services or tocompensate Company in money damages for a breach of this Agreement. Accordingly, Executive agreesand consents that if he violates any of the provisions of this Agreement, Company, in addition toany other rights and remedies available under this Agreement or otherwise, shall be entitled totemporary and permanent injunctive relief, without the necessity of proving actual damages andwithout the necessity of posting any bond or other undertaking in connection therewith.          10.3 Attorneys’ Fees. The prevailing party in any suit or other proceeding brought toenforce, interpret or apply any provisions of this Agreement, shall be
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entitled to recover all costs and expenses of the proceeding and investigation (not limited tocourt costs), including all attorneys’ fees.          10.4 Counsel. The parties acknowledge and represent that, prior to the execution ofthis Agreement, they have had an opportunity to consult with their respective counsel concerningthe terms and conditions set forth herein. Additionally, Executive represents that he has had anopportunity to receive independent legal advice concerning the taxability of any considerationreceived under this Agreement. Executive has not relied upon any advice from Company and/or itsattorneys with respect to the taxability of any consideration received under this Agreement.Executive further acknowledges that Company has not made any representations to him with respect totax issues.          10.5 Nondelegable Duties. This is a contract for Executive’s personal services. Theduties of Executive under this Agreement are personal and may not be delegated or transferred inany manner whatsoever, and shall not be subject to involuntary alienation, assignment or transferby Executive during his life.          10.6 Governing Law. The validity, construction and performance of this Agreementshall be governed by the laws, without regard to the laws as to choice or conflict of laws, of theState of California.          10.7 Venue. If any dispute arises regarding the application, interpretation orenforcement of any provision of this Agreement, including fraud in the inducement, such disputeshall be resolved either in federal or state court in Los Angeles, California.          10.8 No Jury. If any dispute arises regarding the application, interpretation orenforcement of any provision of this Agreement, including fraud in the inducement, the partieshereby waive their right to a jury trial.          10.9 No Punitive Damages. If any dispute arises regarding the application,interpretation or enforcement of any provision of this Agreement, including fraud in theinducement, the parties hereby waive their right to seek punitive damages in connection with saiddispute.          10.10 Severability. The invalidity or unenforceability of any particular provision ofthis Agreement shall not affect the other provisions, and this Agreement shall be construed in allrespects as if any invalid or unenforceable provision were omitted.          10.11 Binding Effect. The provisions of this Agreement shall bind and inure to thebenefit of the parties and their respective successors and permitted assigns.          10.12 Notice. Any notices or communications required or permitted by this Agreementshall be deemed sufficiently given if in writing and when delivered personally or 48 hours afterdeposit with the United States Postal Service as registered or certified mail, postage prepaid andaddressed as follows:
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               (a) If to Company, to the principal office of Company in the State of California, marked“Attention: Chairman”; or               (b) If to Executive, to the most recent address for Executive appearing in Company’s records.          10.13 Headings. The Section and other headings contained in this Agreement are forreference purposes only and shall not affect in any way the meaning or interpretation of thisAgreement.          10.14 Amendment and Waiver. This Agreement may be amended, modified or supplementedonly by a writing executed by each of the parties. Either party may in writing waive any provisionof this Agreement to the extent such provision is for the benefit of the waiving party. No waiverby either party of a breach of any provision of this Agreement shall be construed as a waiver ofany subsequent or different breach, and no forbearance by a party to seek a remedy fornoncompliance or breach by the other party shall be construed as a waiver of any right or remedywith respect to such noncompliance or breach.          10.15 Entire Agreement. This Agreement is the only agreement and understandingbetween the parties pertaining to the subject matter of this Agreement, and supersedes all prioragreements, summaries of agreements, descriptions of compensation packages, discussions,negotiations, understandings, representations or warranties, whether verbal or written, between theparties pertaining to such subject matter.     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and yearfirst above written.EXECUTIVE:        Daniel S. Goldberger        COMPANY:           XCORPOREAL, INC.           By              Terren S. Peizer      Its Chairman  
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