Unassociated Document


    EMPLOYMENT
      AGREEMENT

     

    THIS
      EMPLOYMENT AGREEMENT (“Agreement”)
      is
      made and entered into as of _________ __, 2008, by and between Xcorporeal,
      Inc.
      (“Company”)
      and
      Kelly McCrann (“Executive”),
      to
      become effective the 2nd
      day of
      October, 2008 (the “Effective
      Date”).

     

    RECITALS

     

    A. WHEREAS,
      Executive has experience and expertise to perform as the Chief Executive Officer
      of Company, Company has agreed to employ Executive, and Executive has agreed
      to
      enter into such employment, on the terms set forth in this
      Agreement.

     

    B. WHEREAS,
      Executive acknowledges that this Agreement is necessary for the protection
      of
      Company’s investment in its business, good will, products, methods of operation,
      information, and relationships with its customers and other
      employees.

     

    C. WHEREAS,
      Company acknowledges that Executive desires clarification of his compensation,
      benefits, and other terms of employment.

     

    NOW,
      THEREFORE, in consideration thereof and of the covenants and conditions
      contained herein, the parties agree as follows:

     

    AGREEMENT

     

    1. TERM
      OF
      AGREEMENT

     

    The
      term
      of this Agreement shall begin on the Effective Date and shall continue until
      the
      earlier of: (a) the date on which it is terminated pursuant to Section 5; or
      (b)
      two (2) years following the Effective Date (“Term”).
      In
      the event Executive ceases to be employed by Company for any reason, Executive
      shall tender his resignation from all positions he holds with the Company,
      effective on the date his employment terminates.

     

    2. EMPLOYMENT

     

    2.1 Employment
      of Executive.
      Company
      agrees to employ Executive to render services on the terms set forth herein.
      Executive hereby accepts such employment on the terms and conditions of this
      Agreement.

     

    2.2 Position
      and Duties.
      Executive shall serve as Chief Executive Officer of Company, reporting to the
      Company’s Board of Directors (“Board”),
      and
      shall have the general powers, duties and responsibilities of management usually
      vested in that office and such other powers and duties as may be prescribed
      from
      time to time by the Board. 

     

    2.3 Standard
      of Performance.
      Executive agrees that he will at all times faithfully and industriously and
      to
      the best of his ability, experience and talents perform all of the duties that
      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 and opportunities of Company shall require or render
      advisable.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    2.4 Exclusive
      Service.
      Executive shall devote substantially all of his business energies and abilities
      and all of his productive time to the performance of his duties under this
      Agreement (reasonable absences during holidays and vacations excepted). The
      Company acknowledges that Executive currently serves as the Chairman of
      PatientFYI, LLC as well as an independent director of several other non-public
      companies. The Company agrees that Executive may continue those activities
      in
      addition to his responsibilities as Chief Executive Officer. 

     

    3. COMPENSATION

     

    3.1 Compensation.
      During
      the term of this Agreement, Company shall pay the amounts and provide the
      benefits described in this Section 3, and Executive agrees to accept such
      amounts and benefits in full payment for Executive’s services under this
      Agreement.

     

    3.2 Base
      Salary.
      Company
      shall pay to Executive an annual base salary of $325,000, less applicable taxes,
      earned and payable in substantially equal installments in accordance with
      Company’s standard payroll practices. At Company’s sole discretion, Executive’s
      base salary may be increased, but not decreased, annually. 

     

    3.3 Discretionary
      Bonus.
      Executive is eligible to receive an annual bonus in the sole discretion of
      Company, based on Executive achieving designated individual goals and
      milestones, and the overall performance and profitability of Company. The goals
      and milestones will be established and reevaluated on an annual basis by mutual
      agreement of Executive and the Board. Any bonus under this Section 3.3 will
      be
      based on a calendar year and shall be paid on or about April 30th
      of the
      following year, and in no event later than December 31 of the following year.
      The first annual bonus, to the extent granted at the sole discretion of Company,
      shall be prorated based on the Effective Date. The goals and objectives related
      to the 2008 target bonus shall be established within thirty (30) days of the
      Effective Date. Executive must be employed as of the last day of the calendar
      year to which the bonus relates in order to receive any bonus for such year.
      

     

    3.4 Equity
      Incentive Plan.

     

    (i) Executive
      shall be granted options to purchase 700,000 shares of Company’s common stock
      (the "Initial
      Grant"),
      at an
      exercise price equal to the greater of (a) $1.50 per share or (b) the fair
      market value of a share of Company common stock on the Effective Date, pursuant
      to a Stock Option Agreement granted under the provisions of the Company's Stock
      Incentive Plan (the "Plan").
      The
      option will vest as follows: 25% on the first, second, third, and fourth
      anniversaries of the Effective Date.

     

    (ii) If
      Company issues shares to National Quality Care, Inc. ("NQCI")
      pursuant
      to its current negotiations with NQCI, Executive shall, upon the date of such
      issuance to NQCI (the "Grant
      Date"),
      be
      granted an additional option under the Plan to purchase such shares of Company's
      common stock, at an exercise price equal to the greater of (a) $1.50 per share
      or (b) the fair market value of a share of Company common stock on the Grant
      Date, necessary to preserve Executive's ownership percentage of the Company
      on a
      fully diluted basis, based upon the ownership percentage determined as of the
      date of the Initial Grant. The option shall be granted pursuant to a Stock
      Option Agreement granted under the provision of the Plan, and shall vest as
      follows: 25% on the first, second, third, and fourth anniversaries of the Grant
      Date.

     

    
      
         

      

      
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    (iii) Except
      as
      otherwise set forth herein, vesting of options will cease upon the termination
      of Executive’s employment with Company.

     

    3.5 Fringe
      Benefits.
      Upon
      satisfaction of the applicable eligibility requirements, during the term of
      his
      employment, Executive (and his dependents) shall be included in any medical,
      dental, disability and life insurance, pension and retirement plans and other
      benefit plans or programs maintained by Company for the benefit of its
      employees, subject to the terms of such plans and programs.

     

    3.6 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 Effective Date, provided, however, that
      Executive’s accrued and unused PTO may not exceed a total of seven (7)
      workweeks. Thereafter, Executive will not continue to accrue PTO benefits until
      he has used enough PTO time to fall below this maximum amount. Any accrued
      but
      unused PTO will be paid to Executive, on a pro rata basis, at the time that
      his
      employment is terminated. This PTO shall be in addition to normal Company
      holidays, which shall be determined at the discretion of Company from time
      to
      time.

     

    3.7 Relocation.
      If
      Executive chooses to relocate his principal residence so that he may reside
      in
      closer proximity to the Company's headquarters, the Company shall reimburse
      Executive for the reasonable packing, shipping, and transportation costs
      incurred in relocating Executive's and his family's personal effects from his
      then current home to the area in which the Company then is located, and for
      any
      additional costs upon which the Company and Executive then may mutually
      agree.

     

    3.8 Deduction
      from Compensation.
      Company
      shall deduct and withhold from all compensation payable to Executive all amounts
      required to be deducted or withheld pursuant to any present or future law,
      ordinance, regulation, order, writ, judgment, or decree requiring such deduction
      and withholding.

     

    4. REIMBURSEMENT
      OF EXPENSES

     

    4.1 Travel
      and Other Expenses.
      Company
      shall pay to or reimburse Executive for those travel, cell phone, promotional,
      professional continuing education and licensing costs (to the extent required),
      professional society membership fees, seminars and similar expenditures incurred
      by Executive which Company determines are reasonably necessary for the proper
      discharge of Executive’s duties under this Agreement and for which Executive
      submits appropriate receipts 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 cover
      Executive against all insurable events related to his employment with Company.
      

     

    
      
         

      

      
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    4.3 Indemnification.
      Promptly upon written request from Executive, Company shall indemnify Executive,
      to the fullest extent under applicable law, for all judgments, fines,
      settlements, losses, costs or expenses (including attorneys’ fees), arising out
      of Executive’s activities as an agent, employee, officer or director of Company,
      or in any other capacity on behalf of or at the request of Company, unless
      such
      judgment, fine, settlement, loss, cost or expense is the result of Executive’s
      gross negligence or misconduct. Such agreement by Company shall not be deemed
      to
      impair any other obligation of Company respecting indemnification of Executive
      otherwise arising out of this 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
      may terminate Executive’s employment at any time, with or without notice, for
      Good Cause (as defined below). If Company terminates Executive’s employment for
      Good Cause, or if Executive resigns without Good Reason (as defined below),
      Company shall pay Executive his base salary prorated through the date of
      termination, at the rate in effect at the time notice of termination is given,
      together with any benefits mandated under the Consolidated Omnibus Budget
      Reconciliation Act of 1985 (COBRA), or required under the terms of any death,
      insurance or retirement plan, program or agreement provided by Company and
      to
      which Executive is a party or in which Executive is a participant. Company
      shall
      have no further obligations to Executive under this Agreement or any other
      agreement, and all unvested options will terminate.

     

    5.2 Termination
      Without Good Cause; Resignation with Good Reason.
      Executive shall have the right to terminate his employment with notice and
      Good
      Reason and Company shall have the right to terminate Executive’s employment at
      anytime without Good Cause. If, at anytime prior to the expiration of the Term,
      Company terminates Executive’s employment without Good Cause, or Executive
      resigns for Good Reason:

     

    (i) Company
      shall pay Executive his base salary prorated through the date of termination,
      at
      the rate in effect at the time notice of termination is given, together with
      any
      benefits mandated under COBRA, or required under the terms of any death,
      insurance or retirement plan, program or agreement provided by Company and
      to
      which Executive is a party or in which Executive is a participant;

     

    (ii) Company
      shall continue to pay Executive his base salary (at the annual rate in effect
      at
      the time of termination) for a period of twelve (12) months following
      termination (the “Severance
      Period”),
      payable in substantially equal installments in accordance with Company’s payroll
      policy from time to time in effect; and

     

    (iii) If
      Executive elects COBRA continuation coverage, Company shall pay for such health
      insurance coverage through the Severance Period at the same rate as it pays
      for
      health insurance coverage for its active employees (with Executive required
      to
      pay for any employee-paid portion of such coverage). After the Severance Period
      concludes, Executive shall be responsible for the payment of all premiums
      attributable to COBRA continuation coverage at the same rate as Company charges
      all COBRA beneficiaries. Nothing herein provided, however, shall be construed
      to
      extend the period of time over which such COBRA continuation coverage otherwise
      may be provided to Executive and/or his dependents. 

     

    
      
         

      

      
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    To
      be
      eligible for the compensation provided for in Sections 5.2(ii) and (iii) above,
      Executive must sign an agreement acceptable to Company that (a) waives any
      rights Executive may otherwise have against Company, (b) releases Company from
      actions, suits, claims, proceedings and demands related to the period of
      employment and/or the termination of employment, and (c) contains certain other
      obligations which shall be set forth at the time of the termination. Company
      shall have no further obligations to Executive under this Agreement or any
      other
      agreement.

     

    5.3 Good
      Cause.
      For
      purposes of this Agreement, a termination shall be for “Good Cause” if
      Executive, in the subjective, good faith opinion of Company, shall:

     

    (i) Commit
      an
      act of fraud, moral turpitude, misappropriation of funds or embezzlement in
      connection with his duties;

     

    (ii) Breach
      Executive’s fiduciary duty to Company, including, but not limited to, acts of
      self-dealing (whether or not for personal profit);

     

    (iii) Breach
      this Agreement, the Confidentiality Agreement (defined below), or Company’s
      written Codes of Ethics as adopted by the Board;

     

    (iv) Commit
      a
      willful, reckless or grossly negligent violation of any material provision
      of
      Company’s written Employee Handbook, or any applicable municipal, state or
      federal law or regulation;

     

    (v) Fail
      or
      refuse (whether willfully, recklessly or negligently) to comply with all
      relevant and material obligations, assumable and chargeable to an executive
      of
      his corporate rank and responsibilities, under the Sarbanes-Oxley Act and the
      regulations of the Securities and Exchange Commission promulgated
      thereunder;

     

    (vi) Fail
      to
      or refuse to comply with the lawful directives of the Board in the performance
      of his duties under this Agreement (other than a failure caused by temporary
      disability); provided, however, that no termination shall occur on that basis
      unless Company first provides the Executive with written notice to cure. The
      notice to cure shall reasonably specify the acts or omissions that constitute
      the Executive’s failure or refusal to perform his duties, and the Executive
      shall have a reasonable opportunity (not to exceed 10 days after the date of
      notice to cure) to correct his failure or refusal to perform his duties.
      Termination under this subsection (vi) shall be effective as of the date of
      written notice to cure; or

     

    (vii) Be
      convicted of, indicted for, or enter a plea of guilty or no contest to, a felony
      or misdemeanor under state or federal law, other than a traffic violation or
      misdemeanor not involving dishonesty or moral turpitude.

     

    
      
         

      

      
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    5.4 Good
      Reason.
      For
      purposes of this Agreement, a resignation shall be for “Good Reason” if tendered
      within ninety (90) days of any of the following actions by Company:

     

    (i) Assignment
      to Executive of duties materially inconsistent with Executive’s status as
      defined in Section 2.2, or a material reduction in the nature or status of
      Executive’s responsibilities;

     

    (ii) A
      material change in the geographic location at which Executive must perform
      the
      services hereunder;

     

    (iii) Any
      other
      action or inaction that constitutes a material breach of this Agreement by
      Company; or

     

    (iv) Executive
      is asked to report to any one other than the Board.

     

    A
      resignation with Good Reason shall not be effective unless Company is first
      provided with written notice of the action constituting Good Reason and an
      opportunity to cure. The notice to cure shall reasonably specify the event
      or
      action constituting Good Reason and Company shall have an opportunity of thirty
      (30) days to remedy such action. 

     

    5.5 Death
      or Disability.
      To the
      extent consistent with federal and state law, Executive’s employment, salary,
      and compensation shall terminate on his death or disability. “Disability” means
      any health condition, physical or mental, or other cause beyond Executive’s
      control, that prevents him from performing his duties, even after reasonable
      accommodation is made by Company, for a period of 180 days within any 360 day
      period. In the event of termination due to death or Disability, Company shall
      pay Executive (or his legal representative) his salary prorated through the
      date
      of termination, at the rate in effect at the time of termination, together
      with
      any benefits accrued through the date of termination. Company shall have no
      further obligations to Executive (or his legal representative) under this
      Agreement.

     

    5.6 Return
      of Company Property.
      Upon
      the termination of his employment or at any time prior thereto upon the request
      of Company, 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 without limitation proprietary
      or
      licensed computer programs, customer lists and customer data, and/or copies
      or
      duplicates thereof in Executive’s possession or under Executive’s control.
      Executive shall not retain any copies or duplicates of such property and all
      licenses granted to him by Company to use computer programs or software shall
      be
      revoked upon the termination of Executive’s employment, unless earlier
      terminated by Company. 

     

    5.7 Compliance
      with Section 409A.
      Payments and benefits under this Paragraph 5 shall be paid or provided only
      at
      the time of a termination of Executive’s employment that constitutes a
“separation from service” within the meaning of Section 409A of the Internal
      Revenue Code of 1986, as amended (the “Code”),
      and
      the regulations and guidance promulgated thereunder. Further, if Executive
      is a
“specified employee” as such term is defined under Section 409A of the Code and
      the regulations and guidance promulgated thereunder, any payments described
      in
      Paragraph 5 shall be delayed for a period of six (6) months following
      Executive’s separation of employment to the extent and up to an amount necessary
      to ensure such payments are not subject to the penalties and interest under
      Section 409A of the Code.

     

    
      
         

      

      
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    5.8 Excess
      Parachute Payments.
      If
      Executive would, except for this Section 5.8, be subject to a tax pursuant
      to Section 4999 of the Code, or any successor provision that may be in effect,
      as a result of "parachute payments" (as that term is defined in Section
      280G(b)(2)(A) and (d)(3) of the Code) made pursuant to this Agreement or
      pursuant to any plan, program, or policy of Company, or a deduction would not
      be
      allowed to Company for all or any part of such payments by reason of Section
      280G(a) of the Code, or any successor provision that may be in effect, such
      payments shall be reduced, eliminated, or postponed in such amounts as are
      required to reduce the aggregate "present value" (as that term is defined in
      Section 280G(d)(4) of the Code) of such payments to one dollar less than an
      amount equal to three times Executive's "base amount" (as that term is defined
      in Section 280G(b)(3)(a) and (d)(1) and (2) of the Code). To achieve such
      required reduction in aggregate present value, Executive shall determine what
      item(s) constituting the parachute payments shall be reduced, eliminated, or
      postponed, the amount of each such reduction, elimination, or postponement,
      and
      the period of each such postponement. To enable Executive to make such
      determination, Company shall be required to provide Executive with such
      information as is reasonably necessary for such determination. Prior to the
      making of any payment under this Agreement, either party may request a
      determination as to whether such payment would constitute a "parachute payment,"
      and, if so, the amount by which the payment must be reduced in accordance with
      this Section 5.8. If such a determination is requested, it shall be made
      promptly, at Company's expense, by tax counsel selected by Company and approved
      by Executive (which approval shall not unreasonably be withheld), and such
      determination shall be conclusive and binding on the parties. Company shall
      provide such information as such counsel may reasonably request, and such
      counsel may engage accountants or other experts at Company’s expense to the
      extent that it reasonably deems it necessary to reach a
      determination.

     

    6. DUTY
      OF
      LOYALTY

     

    Other
      than those activities described in Section 2.4, during the term of his
      employment, Executive shall not, without the prior written consent of Company,
      directly or indirectly render services of a business, professional, or
      commercial nature to any person or firm, whether for compensation or otherwise,
      or engage in any activity directly or indirectly competitive with or adverse
      to
      the business or welfare of Company, whether alone, 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
      investments in any other business so long as these investments do not require
      him to participate in the operation of the companies in which he invests.


     

    7. CONFIDENTIAL
      INFORMATION

     

    7.1 Trade
      Secrets of Company.
      Executive, during the term of his employment, will develop, have access to
      and
      become acquainted with various trade secrets which are owned by Company and/or
      its affiliates and which are regularly used in the operation of the businesses
      of such entities. Executive shall not disclose such trade secrets, directly
      or
      indirectly, or use them in any way, either during the term of his employment
      or
      at any time thereafter, except as required in the course of his employment
      by
      Company. All files, contracts, manuals, reports, letters, forms, documents,
      notes, notebooks, lists, records, documents, customer lists, vendor lists,
      purchase information, designs, computer programs and similar items and
      information, relating to the businesses of such entities, whether prepared
      by
      Executive or otherwise and whether now existing or prepared at a future time,
      coming into his possession shall remain the exclusive property of such entities,
      and shall not be removed, other than for work-related purposes, from the
      premises where the work of Company is conducted, except with the prior written
      authorization by Company.

     

    
      
         

      

      
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    7.2 Confidential
      Data of Customers of Company.
      Executive, in the course of his duties, will have access to and become
      acquainted with financial, accounting, statistical and personal data of
      customers of Company and of their affiliates. All such data is confidential
      and
      shall not be disclosed, directly or indirectly, or used by Executive in any
      way,
      either during the term of his employment (except as required in the course
      of
      employment by Company) or at any time thereafter.

     

    7.3 Continuing
      Effect.
      The
      provisions of this Section 7 and Sections 8 and 9 of this Agreement shall remain
      in effect after the Term and/or following the termination of Executive’s
      employment with Company.

     

    8. NO
      SOLICITATION

     

    8.1 No
      Solicitation of Employees.
      Executive agrees that he will not, during his employment with Company, and
      for
      one (1) year thereafter if terminated without Good Cause or with Good Reason
      or
      for two (2) years thereafter if his employment terminates for any other reason,
      encourage or solicit any other employee of Company to terminate his or her
      employment for any reason, or solicit the service of any other employee of
      Company (or any individual who was an employee of Company during the year
      preceding such solicitation), nor will he assist others to do so, nor agree
      to
      hire any employee of Company (or an individual who was an employee of Company
      during the year preceding such hire) into employment with himself or any other
      person or entity. 

     

    8.2 No
      Solicitation of Customers.
      Executive agrees that he will not, during his employment with Company, and
      for
      one (1) year thereafter if terminated without Good Cause or with Good Reason
      or
      for two (2) years thereafter if his employment terminates for any other reason,
      directly or indirectly call on, or otherwise solicit business from any actual
      customer or potential customer known by Executive to be targeted by Company,
      nor
      will he assist others in doing so, nor will he otherwise interfere in Company’s
      relationship with any of its customers. 

     

    9. INTELLECTUAL
      PROPERTIES.

     

    To
      the
      extent permissible under applicable law, all intellectual properties made or
      conceived by Executive arising out of or relating to this Agreement or Company’s
      business during the term of this employment by Company shall be the right and
      property solely of Company, whether developed independently by Executive or
      jointly with others. As a condition to his employment, Executive will sign
      the
      Company’s standard Executive Innovation, Proprietary Information and
      Confidentiality Agreement (“Confidentiality
      Agreement”).

     

    
      
         

      

      
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    10. OTHER
      PROVISIONS

     

    10.1 Compliance
      With Other Agreements.
      Executive represents and warrants to Company that the execution, delivery and
      performance of this Agreement will not conflict with or result in the 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 under this Agreement
      and
      the items described in Sections 6, 7, 8 and 9 are of a special, unique and
      extraordinary character, that it would be difficult or impossible to replace
      such services or to compensate Company in money damages for a breach of such
      Sections. Accordingly, Executive agrees and consents that if he violates any
      of
      the provisions of this Agreement, Company, in addition to any other rights
      and
      remedies available under this Agreement or otherwise, shall be entitled to
      temporary and permanent injunctive relief, without the necessity of proving
      actual damages and without 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 to enforce, interpret
      or apply any provisions of this Agreement, shall be entitled to recover all
      costs and expenses of the proceeding and investigation (not limited to court
      costs), including all attorneys’ fees.

     

    10.4 Counsel.
      The
      parties acknowledge and represent that, prior to the execution of this
      Agreement, they have had an opportunity to consult with their respective counsel
      concerning the terms and conditions set forth herein. Additionally, Executive
      represents that he has had an opportunity to receive independent legal advice
      concerning the taxability of any consideration received under this Agreement.
      Executive has not relied upon any advice from Company and/or its attorneys
      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 to tax issues.

     

    10.5 Nondelegable
      Duties.
      This is
      a contract for Executive’s personal services. The duties of Executive under this
      Agreement are personal and may not be delegated or transferred in any manner
      whatsoever, and shall not be subject to involuntary alienation, assignment
      or
      transfer by Executive during his life. 

     

    10.6 Governing
      Law.
      The
      validity, construction and performance of this Agreement shall be governed
      by
      the laws, without regard to the laws as to choice or conflict of laws, of the
      State of California.

     

    10.7 Venue.
      If any
      dispute arises regarding the application, interpretation or enforcement of
      any
      provision of this Agreement, including fraud in the inducement, such dispute
      shall be resolved either in federal or state court in Los Angeles,
      California.

     

    
      
         

      

      
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    10.8 No
      Jury.
      If any
      dispute arises regarding the application, interpretation or enforcement of
      any
      provision of this Agreement, including fraud in the inducement, the parties
      hereby 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 the inducement, the parties
      hereby waive their right to seek punitive damages in connection with said
      dispute.

     

    10.10 Severability.
      If any
      provision of this Agreement shall be found invalid or unenforceable for any
      reason, in whole or in part, then such provision shall be deemed modified,
      restricted, or reformulated to the extent and in the manner necessary to render
      the same valid and enforceable, or shall be deemed excised from this Agreement,
      as the case may require, and this Agreement shall be construed and enforced
      to
      the maximum extent permitted by law, as if such provision had been originally
      incorporated herein as so modified, restricted, or reformulated or as if such
      provision had not been originally incorporated herein, as the case may be.
      The
      parties further agree to seek a lawful substitute for any provision found to
      be
      unlawful; provided, that, if the parties are unable to agree upon a lawful
      substitute, the parties desire and request that a court or other authority
      called upon to decide the enforceability of this Agreement modify those
      restrictions in this Agreement that, once modified, will result in an agreement
      that is enforceable to the maximum extent permitted by the law in existence
      at
      the time of the requested enforcement.

     

    10.11 Binding
      Effect.
      The
      rights and obligations of Company under this Agreement shall be binding upon
      and
      inure to the benefit of its successors and assigns.

     

    10.12 Notice.
      Any and
      all notices required in connection with this Agreement shall be deemed
      adequately given only if in writing and (a) personally delivered, or sent
      by first class, registered or certified mail, postage prepaid, return receipt
      requested, or by recognized overnight courier, (b) sent by facsimile,
      provided a hard copy is mailed on that date to the party for whom such notices
      are intended, or (c) sent by other means at least as fast and reliable as
      first class mail. A written notice shall be deemed to have been given to the
      recipient party on the earlier of (a) the date it shall be delivered to the
      address required by this Agreement; (b) the date delivery shall have been
      refused at the address required by this Agreement; (c) with respect to
      notices sent by mail or overnight courier, the date as of which the Postal
      Service or overnight courier, as the case may be, shall have indicated such
      notice to be undeliverable at the address required by this Agreement; or
      (d) with respect to a facsimile, the date on which the facsimile is sent
      and receipt of which is confirmed. Any and all notices referred to in this
      Agreement, or which either party desires to give to the other, shall be
      addressed to his residence in the case of Executive, or to its principal office
      in the State of California, marked “Attention: Chairman” in the case of
      Company.

     

    10.13 Headings.
      The
      Section and other headings contained in this Agreement are for reference
      purposes only and shall not affect in any way the meaning or interpretation
      of
      this Agreement.

     

    10.14 Amendment
      and Waiver.
      This
      Agreement may be amended, modified or supplemented only by a writing executed
      by
      each of the parties. Either party may in writing waive any provision of this
      Agreement to the extent such provision is for the benefit of the waiving party.
      No waiver by either party of a breach of any provision of this Agreement shall
      be construed as a waiver of any subsequent or different breach, and no
      forbearance by a party to seek a remedy for noncompliance or breach by the
      other
      party shall be construed as a waiver of any right or remedy with respect to
      such
      noncompliance or breach.

     

    10.15 Entire
      Agreement.
      This
      Agreement is the only agreement and understanding between the parties pertaining
      to the subject matter of this Agreement, and supersedes all prior agreements,
      summaries of agreements, descriptions of compensation packages, discussions,
      negotiations, understandings, representations or warranties, whether verbal
      or
      written, between the parties pertaining to such subject matter.

     

    
      
         

      

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

     

    EXECUTIVE:

     

    
      	 	 	 	 
	
               Kelly
                McCrann

            	 	 	 
	 	 	 	 
	 	 	
              COMPANY:

               

              XCORPOREAL,
                INC.

            
	 	 	 	 
	 	 	By	 
	 	 	 	Terren S. Peizer
	 	 	 	
              Its
                Chairman

            


    

     

    
      
         

      

      
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