newcardio_ex1021.htm


    EXHIBIT
10.21

    
SETTLEMENT
AND RELEASE AGREEMENT

     

    This
Settlement and Release Agreement (the "Agreement") is made by and between
NewCardio, Inc., a Delaware corporation (the "Company") and Samuel E. George,
M.D. ("SG") as of October 1, 2006 (the "Effective Date").

     

    WHEREAS,
SG served as a consultant to the Company from approximately September 24, 2004
to approximately August 22, 2005, and as Vice President and Chief Medical
Officer of the Company from approximately August 22, 2005 to approximately
August 22, 2006 and as a member of the Board of Directors of the Company from
approximately August 15, 2005 to approximately June 15, 2006;

     

    WHEREAS,
the Company has been trying to raise additional capital to fund its operations
so that it is able to hire full time employees, which may include
SG;

     

    WHEREAS,
the Company has not yet been able to secure such funding;

     

    WHEREAS,
SG and the Company are mutually desirous of working together notwithstanding the
Company's current financial condition; and

     

    WHEREAS,
the parties hereto desire to set out the terms for SG's ongoing involvement with
the Company and settle all existing matters.

     

    NOW
THEREFORE, in consideration for the promises made herein, the parties hereto
agree as follows:

     

    1.  Consideration.

     

    (a)  Accelerated Vesting of
Options.

     

    (i)  SG was
previously granted options to purchase 100,000 and 150,000 shares of
the Company's Common Stock at exercise prices of $0.001 and $0.01 per share,
respectively. On the Effective Date, each of the aforementioned options shall be
fully vested.

     

    (ii)  SG was
granted an option to purchase 350,000 shares of the Company's
Common Stock, vesting monthly over 48 months, on August 22, 2005 (the "2005
Option"). As of a meeting between the Parties on August 25, 2006, 87,500 shares
subject to the 2005 Option have vested, and 262,500 shares subject to the 2005
Option are unvested. Upon the Effective Date, the 2005 Option shall be amended
such that SG shall be permitted to purchase 137,500 shares of the Company's
Common Stock, such 137,500 shall be considered fully vested, and no additional
shares shall be subject to purchase under the 2005 Option.

     

    (b)  Cash Compensation.
Subject to the Company having sufficient capital resources
if and when it obtains financing from one or more individuals or entities, the
Company shall pay
to SG a sum of $95,000, which represents amounts the Company originally intended
to pay to SG but is not able to at this time.

     

    
      
        
        

      

      
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    (c)  Reimbursement of
Expenses. Subject to the availability of sufficient capital resources,
the Company shall reimburse SG for all reasonable out-of-pocket expenses
incurred and approved by the Company provided that such reimbursement amount
will be reduced by $5,000, which represents an existing obligation of SG owing
to the Company.

     

    (d)  The
parties hereto agree to enter into the consulting agreement in the form
attached
hereto as Exhibit
A.

     

    2.  Release of Claims.
For and in consideration of the consideration herein and execution of this
Agreement, each party on behalf of himself, itself or assigns, hereby fully and
forever releases the other party and its officers, directors, employees, agents,
shareholders, administrators, affiliates, divisions, subsidiaries, successor
corporations, and assigns, if any, from any and all claims, duties, obligations,
or causes of action relating to SG's prior services provided to the Company, as
an officer and director of the Company, whether presently known or unknown,
suspected or unsuspected, that either party may possess arising from any
omissions, acts, or facts that have occurred up to and including the date of
this release, including without limitation the following:

     

    (a)  any and
all claims relating to amounts owed, or promised to be paid, to SG for
bonuses,
reimbursement of expenses, or otherwise;

     

    (b)  any and
all claims relating to, or arising from, SG's right or option to purchase,
or actual purchase of, shares of Company stock, including, but not limited to,
any claims for fraud, misrepresentation, breach of fiduciary duty, breach of
duty under applicable state corporate law, and securities fraud under any state
or federal law;

     

    (c)  any and
all claims under the law of any jurisdiction, including, but not limited
to,
wrongful discharge of employment; constructive discharge from employment;
termination in violation of public policy; discrimination; breach of contract,
both express and implied; breach of a covenant of good faith and fair dealing,
both express and implied; promissory estoppel; negligent or intentional
infliction of emotional distress; negligent or intentional misrepresentation;
negligent or intentional interference with contract or prospective economic
advantage; unfair business practices; defamation; libel; slander; negligence;
personal injury; assault; battery; invasion of privacy; false imprisonment; and
conversion;

     

    (d)  any and
all claims for violation of any federal, state or municipal statute,
including,
but not limited to, Title VII of the Civil Rights Act of 1964; the Civil Rights
Act of 1991; the Age Discrimination in Employment Act of 1967; the Americans
with Disabilities Act of 1990; the Fair Labor Standards Act; the Executive
Retirement Income Security Act of 1974; the Worker Adjustment and Retraining
Notification Act; the Older Workers Benefit Protection Act; the Family and
Medical Leave Act; the Fair Credit Reporting Act; the California Family Rights
Act; the California Fair Employment and Housing Act; and the California Labor
Code;

     

    
      
        
        

      

      
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    (e)  any and all claims for
violation of the federal, or any state, constitution; 

     

    (f)  any and
all claims arising out of any other laws and regulations relating to employment
or employment discrimination;

     

    (g)  any claim
for any loss, cost, damage, or expense arising out of any dispute over the
non-withholding or other tax treatment of any of the proceeds received by SG as
a result of this Agreement; and

     

    (h)  any and
all claims for attorney fees and costs.

     

    The
Company and SG agree that the release set forth in this section shall be and
remain in effect in all respects as a complete general release as to the matters
released. This release does not extend to any obligations incurred under this
Agreement.

     

    3.  Civil Code Section
1542. Each party represents that he or it is not aware of any claim
by him or
it other than the claims that are released by this Agreement. Each party
acknowledges that he or it has been advised by legal counsel and is familiar
with the provisions of California Civil Code Section 1542, which provides as
follows:

     

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

     

    Each
party, being aware of said code section, agrees to expressly waive any rights he
or it may have thereunder, as well as under any other statute or common law
principles of similar force or effect.

     

    4.  No Pending or Future
Lawsuits. Each party represents and warrants that there are no
lawsuits,
claims, or actions pending in any collective or class action, or on behalf of
any other person or entity, against the other party. Each party also represents
and warrants that there is no intent to bring any claims on behalf of any other
person or entity against the other party relating to any acts, events, or
transactions occurring before the Effective Date.

     

    5.  No Admission of
Liability. Each party understands and acknowledges that this Agreement
constitutes a compromise and settlement of disputed claims. No action taken by
either party, either previously or in connection with this Agreement, shall be
deemed or construed as (a) an admission of the truth or falsity of any claims
heretofore made or (b) an acknowledgment or admission by the other party of any
fault or liability whatsoever to said party or to any third party.

     

    6.  Costs. The Company
and SG shall each bear their own costs, attorneys' fees and other
fees incurred in connection with their dispute, in entering into this Agreement
and in connection with the matters contained herein.

     

    7.  Arbitration.

     

    
      
        
        

      

      
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    (a)  Any
controversy between the parties hereto involving any claim arising out of or
relating to this Agreement shall be finally settled by arbitration in Santa
Clara County, California, in accordance with the then current Commercial
Arbitration Rules of the American Arbitration Association, and judgment upon the
award rendered by the arbitrators may be entered in any court having
jurisdiction thereof.

     

    (b)  THE
PARTIES HERETO HAVE READ AND UNDERSTAND THIS SECTION 7, WHICH DISCUSSES ARBITRATION. SG
UNDERSTANDS THAT BY SIGNING THIS AGREEMENT, EACH PARTY AGREES TO SUBMIT, UNLESS
OTHERWISE REQUIRED BY LAW, ANY CLAIMS ARISING OUT OF, RELATING TO, OR IN
CONNECTION WITH THIS AGREEMENT, THE INTERPRETATION, VALIDITY, CONSTRUCTION,
PERFORMANCE, BREACH OR TERMINATION HEREOF, OR ANY OF THE MATTERS HEREIN TO
BINDING ARBITRATION, AND THAT THIS ARBITRATION CLAUSE CONSTITUTES A WAIVER OF
EACH PARTY'S RIGHT TO A JURY TRIAL AND RELATES TO THE RESOLUTION OF ALL DISPUTES
RELATING TO ALL ASPECTS OF THIS AGREEMENT AND RELEASE OF ALL
CLAIMS.

     

    8.  Authority.
The Company and SG represent and warrant that (a) the persons signing
this
Agreement have the authority to bind the person or entity entering into this
Agreement and all who may claim through he, she or it to the terms and
conditions of this Agreement; and (b) there are no liens or claims of lien or
assignments in law or equity or otherwise of or against any of the claims or
causes of action released herein.

     

    9.  No
Representations. Each party to this Agreement represents that he or it
has had the opportunity
to consult with an attorney, and has carefully read and understands the scope
and effect of the provisions of this Agreement. No party has relied upon any
representations or statements made by any other party hereto which are not
specifically set forth in this Agreement.

     

    10.   
Tax
Consequences. The Company makes no representations or warranties with
respect
to the tax consequences of the payment of any consideration to SG under the
terms of this Agreement. SG understands that he is responsible for payment, if
any, of local, state and/or federal taxes on any consideration paid hereunder by
the Company and any penalties or assessments thereon.

     

    11.   
Severability.
In the event that any provision of this Agreement becomes or is declared
by a court of competent jurisdiction to be illegal, unenforceable, or void, this
Agreement shall continue in full force and effect without said
provision.

     

    12.  
Successors.
This Agreement shall be binding upon and inure to the benefit of, and
shall be
enforceable by SG and the Company, their espective heirs, executors,
administrators, successors and assigns. In the event the Company is merged,
consolidated, liquidated by a parent corporation, or otherwise combined into one
or more corporations, the provisions of this Agreement shall be binding upon and
inure to the benefit of the parent corporation or the corporation resulting from
such merger or to which the assets shall be sold or transferred, which
corporation from and after the
date of such merger, consolidation, sale or transfer shall be deemed to be the
Company for purposes of this Agreement.

     

    
      
        
        

      

      
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    13.   
Entire Agreement.
This Agreement represents the entire agreement between SG and the
Company and supersedes and replaces any and all understandings or agreements,
whether written or oral, concerning the subject matter herein.

     

    14.    
No Oral Modification.
This Agreement may only be modified by a writing signed by the
Company and SG.

     

    15.    
Governing Law. This
Agreement shall be governed by the laws of the State of California,
without reference to conflict of law provisions.

     

    16.   
Counterparts. This
Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, and when taken together, shall constitute one and
the same instrument.

     

    17.    Voluntary Execution of
Agreement. This Agreement is executed voluntarily and without
duress or undue influence on the part or behalf of the Company or SG, with the
full intent of releasing all claims. The Company and SG acknowledge
that:

     

    (a)  They have
read this Agreement;

     

    (b)  They have
been represented in the preparation, negotiation and execution of this Agreement
by legal counsel of their own choice or have knowingly declined to have such
representation;

     

    (c)  They
understand the terms and consequences of the Agreement and the release set forth
herein; and

     

    (d)  They are
fully aware of the legal and binding effect of this Agreement.

     

    
      
        
        

      

      
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    IN
WITNESS WHEREOF, the parties hereto have executed this Agreement on October 22,
2006.

     

    
      	 	NEWCARDIO, INC. 
	 	 
	 	By:   /s/ Branislav
      Vajdic                                              
      
	 	
              Branislav Vajdic,
      Ph.D, Chief Executive Officer and Director 

            
	 	 
	 	 
	 	        
      /s/ Samuel E.
      George                                            
      
	 	SAMUEL E. GEORGE,
  M.D. 


    

     

     

     

     

     

     

     

    
      
        
        

      

      
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    EXHIBIT
A

     

    Consulting
Agreement

     

    [see
attached]

     

     

     

    
      
        
        

      

      
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    NEWCARDIO,
INC.

     

    CONSULTING
AGREEMENT

     

    This
Consulting Agreement ("Agreement") is entered into
as of October 1, 2006 by and between NEWCARDIO, INC. (the "Company") and Samuel E.
George, M.D. ("Consultant").
The Company desires to retain Consultant as an independent contractor to
perform consulting services for the Company, and Consultant is willing to
perform such services, on the terms described below. In consideration of the
mutual promises contained herein, the parties agree as follows:

     

    1.  Services and Compensation.
Consultant agrees to perform for the Company the services described in
Exhibit
A (the "Services"), and the Company
agrees to pay Consultant the compensation described in Exhibit
A for Consultant's performance of the Services.

     

    2.  Confidentiality.

     

    A.  Definition. "Confidential Information"
means any non-public information that relates to the actual or
anticipated business or research and development of the Company, technical data,
trade secrets or know-how, including, but not limited to, research, product
plans or other information regarding Company's products or services and markets
therefor, customer lists and customers (including, but not limited to, customers
of the Company on whom Consultant called or with whom Consultant became
acquainted during the term of this Agreement), software, developments,
inventions, processes, formulas, technology, designs, drawing, engineering,
hardware configuration information, marketing, finances or other business
information. Confidential Information does not include information that (i) is
known to Consultant at the time of disclosure to Consultant by the Company as
evidenced by written records of Consultant, (ii) has become publicly known and
made generally available through no wrongful act of Consultant or (iii) has been
rightfully received by Consultant from a third party who is authorized to make
such disclosure.

     

    B.  Nonuse and Nondisclosure.
Consultant will not, during or subsequent to the term of this Agreement,
(i) use the Confidential Information for any purpose whatsoever other than the
performance of the Services on behalf of the Company or (ii) disclose the
Confidential Information to any third party. Consultant agrees that all
Confidential Information will remain the sole property of the Company.
Consultant also agrees to take all reasonable precautions to prevent any
unauthorized disclosure of such Confidential Information. Without the Company's
prior written approval, Consultant will not directly or indirectly disclose to
anyone the existence of this Agreement or the fact that Consultant has this
arrangement with the Company.

     

    C.  Former Client Confidential
Information. Consultant agrees that Consultant will not, during the term
of this Agreement, improperly use or disclose any proprietary information or
trade secrets of any former or current employer of Consultant or other person or
entity with which Consultant has an agreement or duty to keep in confidence
information acquired by Consultant, if any. Consultant also agrees that
Consultant will not bring onto the Company's premises any unpublished document
or proprietary information belonging to any such employer, person or entity
unless consented to in writing by such employer, person or entity.

     

    
      
        
        

      

      
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    D.  Third Party
Confidential Information. Consultant recognizes that the Company has
received and in the future will receive from third parties their confidential or
proprietary information subject to a duty on the Company's part to maintain the
confidentiality of such information and to use it only for certain limited
purposes. Consultant agrees that, during the term of this Agreement and
thereafter, Consultant owes the Company and such third parties a duty to hold
all such confidential or proprietary information in the strictest confidence and
not to disclose it to any person, firm or corporation or to use it except as
necessary in carrying out the Services for the Company consistent with the
Company's agreement with such third party.

     

    E.  Return of
Materials. Upon the termination of this Agreement, or upon Company's
earlier request, Consultant will deliver to the Company all of the Company's
property, including but not limited to all electronically stored information and
passwords to access such property, or Confidential Information that Consultant
may have in Consultant's possession or control.

     

    3.  Ownership.

     

    A.  Assignment.
Consultant agrees that all copyrightable material, notes, records,
drawings, designs, inventions, improvements, developments, discoveries and trade
secrets conceived, discovered, developed or reduced to practice by Consultant,
solely or in collaboration with others, during the term of this Agreement that
relate in any manner to the business of the Company that Consultant may be
directed to undertake, investigate or experiment with or that Consultant may
become associated with in work, investigation or experimentation in the
Company's line of business in performing the Services under this Agreement
(collectively, "Inventions"),
are the sole property of the Company. Consultant also agrees to assign
(or cause to be assigned) and hereby assigns fully to the Company all Inventions
and any copyrights, patents, mask work rights or other intellectual property
rights relating to all Inventions.

     

    B.  Further Assurances.
Consultant agrees to assist Company, or its designee, at the Company's
expense, in every proper way to secure the Company's rights in Inventions and
any copyrights, patents, mask work rights or other intellectual property rights
relating to all Inventions in any and all countries, including the disclosure to
the Company of all pertinent information and data with respect to all
Inventions, the execution of all applications, specifications, oaths,
assignments and all other instruments that the Company may deem necessary in
order to apply for and obtain such rights and in order to assign and convey to
the Company, its successors, assigns and nominees the sole and exclusive right,
title and interest in and to all Inventions, and any copyrights, patents, mask
work rights or other intellectual property rights relating to all Inventions.
Consultant also agrees that Consultant's obligation to execute or cause to be
executed any such instrument or papers shall continue after the termination of
this Agreement.

     

    C.  Pre-Existing
Materials. Subject to Section 3.A, Consultant agrees
that if, in the course of performing the Services, Consultant incorporates into
any Invention developed under this Agreement any pre-existing invention,
improvement, development, concept, discovery or other proprietary information
owned by Consultant or in which Consultant has an interest, (i) Consultant will
inform Company, in writing before incorporating such invention, improvement,
development, concept, discovery or other proprietary information into any
Invention, and (ii) the Company is hereby granted a nonexclusive, royalty-free,
perpetual, irrevocable, worldwide license to make, have made,
modify, use and sell such item as part of or in connection with such Invention.
Consultant will not incorporate any invention, improvement, development,
concept, discovery or other proprietary information owned by any third party
into any Invention without Company's prior written permission.

     

    
      
        
        

      

      
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    D.  Attorney-in-Fact. Consultant
agrees that, if the Company is unable because of Consultant's unavailability,
dissolution, mental or physical incapacity, or for any other reason, to secure
Consultant's signature for the purpose of applying for or pursuing any
application for any United States or foreign patents or mask work or copyright
registrations covering the Inventions assigned to the Company in Section 3.A, then Consultant
hereby irrevocably designates and appoints the Company and its duly authorized
officers and agents as Consultant's agent and attorney-in-fact, to act for and
on Consultant's behalf to execute and file any such applications and to do all
other lawfully permitted acts to further the prosecution and issuance of
patents, copyright and mask work registrations with the same legal force and
effect as if executed by Consultant.

     

    4.  Conflicting
Obligations.

     

    A.  Conflicts. Consultant
certifies that Consultant has no outstanding agreement or obligation that is in
conflict with any of the provisions of this Agreement or that would preclude
Consultant from complying with the provisions of this Agreement. Consultant will
not enter into any such conflicting agreement during the term of this Agreement.
Consultant's violation of this Section 4.A will be considered
a material breach under Section
6.B.

     

    B.  Substantially Similar Designs.
In view of Consultant's access to the Company's trade secrets and
proprietary know-how, Consultant agrees that Consultant will not, without
Company's prior written approval, design identical or substantially similar
designs as those developed under this Agreement for any third party during the
term of this Agreement and for a period of 6 months after the termination of
this Agreement. Consultant acknowledges that the obligations in this Section 4 are ancillary to
Consultant's nondisclosure obligations under Section 2.

     

    5.  Reports. Consultant
also agrees that Consultant will, from time to time during the term of this
Agreement or any extension thereof, keep the Company advised as to Consultant's
progress in performing the Services under this Agreement. Consultant further
agrees that Consultant will, as requested by the Company, prepare written
reports with respect to such progress. The Company and Consultant agree that the
time required to prepare such written reports will be considered time devoted to
the performance of the Services.

     

    6.  Term and
Termination.

     

    A.  Term. The term of this
Agreement will begin on the date of this Agreement and will continue until the
earlier of (i) final completion of the Services, (ii) termination as provided in
Section 6.B, or (iii)
six (6) months from the date of this Agreement.

     

    
      
        
        

      

      
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    B.  Termination.
Either party may terminate this Agreement upon giving the other party 14
days' prior written notice of such termination pursuant to Section 11.E of this
Agreement. The Company may terminate this Agreement immediately and without
prior notice if Consultant refuses to or is unable to perform the Services or is
in breach of any material provision of this Agreement.

     

    C.  Survival.
Upon such termination, all rights and duties of the Company and
Consultant toward each other shall cease except:

     

    (1) The
Company will pay, within 30 days after the effective date of termination, all
amounts owing to Consultant for Services completed and accepted by the Company
prior to the termination date and related expenses, if any, submitted in
accordance with the Company's policies and in accordance with the provisions of
Section 1 of this
Agreement; and

     

    (2) Section 2 (Confidentiality),
Section 3 (Ownership),
Section 4 (Conflicting
Obligations), Section 7
(Independent Contractor; Benefits), Section 8 (Indemnification),
Section 9
(Nonsolicitation) and Section 10 (Arbitration and
Equitable Relief) will survive termination of this Agreement.

     

    7.  Independent Contractor;
Benefits.

     

    A.  Independent
Contractor. It is the express intention of the Company and Consultant
that Consultant perform the Services as an independent contractor to the
Company. Nothing in this Agreement shall in any way be construed to constitute
Consultant as an agent, employee or representative of the Company. Without
limiting the generality of the foregoing, Consultant is not authorized to bind
the Company to any liability or obligation or to represent that Consultant has
any such authority. Consultant agrees to furnish (or reimburse the Company for)
all tools and materials necessary to accomplish this Agreement and shall incur
all expenses associated with performance, except as expressly provided in Exhibit A. Consultant
acknowledges and agrees that Consultant is obligated to report as income all
compensation received by Consultant pursuant to this Agreement. Consultant
agrees to and acknowledges the obligation to pay all self-employment and other
taxes on such income.

     

    B.  Benefits.
The Company and Consultant agree that Consultant will receive no
Company-sponsored benefits from the Company. If Consultant is reclassified by a
state or federal agency or court as Company's employee, Consultant will become a
reclassified employee and will receive no benefits from the Company, except
those mandated by state or federal law, even if by the terms of the Company's
benefit plans or programs of the Company in effect at the time of such
reclassification, Consultant would otherwise be eligible for such
benefits.

     

    8.  Indemnification.
Consultant agrees to indemnify and hold harmless the Company and its
directors, officers and employees from and against all taxes, losses, damages,
liabilities, costs and expenses, including attorneys' fees and other legal
expenses, arising directly or indirectly from or in connection with (i) any
negligent, reckless or intentionally wrongful act of Consultant or Consultant's
assistants, employees or agents, (ii) a determination by a court or agency that
the Consultant is not an independent contractor, (iii) any breach by the
Consultant or Consultant's assistants, employees or agents of any of the
covenants contained in this Agreement, (iv) any failure of
Consultant to perform the Services in accordance with all applicable laws, rules
and regulations, or (v) any violation or claimed violation of a third party's
rights resulting in whole or in part from the Company's use of the work product
of Consultant under this Agreement.

     

    
      
        
        

      

      
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    9.  Nonsolicitation. From the
date of this Agreement until 12 months after the termination of this Agreement
(the "Restricted Period"), Consultant will not, without the Company's prior
written consent, directly or indirectly, solicit or encourage any employee or
contractor of the Company or its affiliates to terminate employment with, or
cease providing services to, the Company or its affiliates. During the
Restricted Period, Consultant will not, whether for Consultant's own account or
for the account of any other person, firm, corporation or other business
organization, intentionally interfere with any person who is or during the
period of Consultant's engagement by the Company was a partner, supplier,
customer or client of the Company or its affiliates.

     

    10.  Arbitration
and Equitable Relief

     

    A.  Arbitration. Consultant
agrees that any and all controversies, claims or disputes with anyone (including
the Company and any employee, officer, director, shareholder or benefit plan of
the Company, in its capacity as such or otherwise) arising out of, relating to
or resulting from Consultant's performance of the Services under this Agreement
or the termination of this Agreement, including any breach of this Agreement,
shall be subject to binding arbitration under the Arbitration Rules set forth in
California Code of Civil Procedure Section 1280 through 1294.2, including
Section 1283.05 (the "Rules") and pursuant to California law. CONSULTANT AGREES
TO ARBITRATE, AND THEREBY AGREES TO WAIVE ANY RIGHT TO A TRIAL BY JURY WITH
RESPECT TO, ALL DISPUTES ARISING FROM OR RELATED TO THIS AGREEMENT, INCLUDING
BUT NOT LIMITED TO: ANY STATUTORY CLAIMS UNDER STATE OR FEDERAL LAW, CLAIMS
UNDER TITLE VII OF THE CIVIL RIGHTS ACT OF 1964, THE AMERICANS WITH DISABILITIES
ACT OF 1990, THE AGE DISCRIMINATION IN EMPLOYMENT ACT OF 1967, THE OLDER WORKERS
BENEFIT PROTECTION ACT, THE FAMILY AND MEDICAL LEAVE ACT, THE CALIFORNIA FAMILY
RIGHTS ACT, THE CALIFORNIA FAIR EMPLOYMENT AND HOUSING ACT, THE CALIFORNIA LABOR
CODE, CLAIMS OF HARASSMENT, DISCRIMINATION OR WRONGFUL TERMINATION AND ANY
STATUTORY CLAIMS. Consultant understands that this Agreement to arbitrate also
applies to any disputes that the Company may have with Consultant.

     

    B.  Procedure. Consultant agrees
that any arbitration will be administered by the American Arbitration
Association ("AAA"), and that a neutral arbitrator will be selected in a manner
consistent with its National Rules for the Resolution of Employment Disputes.
Consultant agrees that the arbitrator will have the power to decide any motions
brought by any party to the arbitration, including discovery motions, motions
for summary judgment and/or adjudication and motions to dismiss and demurrers,
prior to any arbitration hearing. Consultant agrees that the arbitrator will
issue a written decision on the merits. Consultant also agrees that the
arbitrator will have the power to award any remedies, including attorneys' fees
and costs, available under applicable law. Consultant understands that the
Company will pay for any administrative or hearing fees charged by the
arbitrator or AAA, except that Consultant shall pay the first $125.00 of any
filing fees associated with any arbitration Consultant initiates. Consultant
agrees that the arbitrator will administer and conduct any arbitration in a
manner consistent with the Rules and that, to the extent that the AAA's
National
Rules for the Resolution of Employment Disputes conflict with the Rules, the
Rules will take precedence.

     

    
      
        
        

      

      
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    C.  Remedy. Except as provided by
the Rules, arbitration will be the sole, exclusive and final remedy for any
dispute between the Company and Consultant. Accordingly, except as provided for
by the Rules, neither the Company nor Consultant will be permitted to pursue
court action regarding claims that are subject to arbitration. Notwithstanding
the foregoing, the arbitrator will not have the authority to disregard or refuse
to enforce any lawful Company policy, and the arbitrator shall not order or
require the Company to adopt a policy not otherwise required by law which the
Company has not adopted.

     

    D.  Availability of Injunctive Relief
In addition to the right under the Rules to petition the court for
provisional relief, Consultant agrees that any party may also petition the court
for injunctive relief where either party alleges or claims a violation of Sections
2 (Confidentiality), 3
(Ownership) or 4
(Conflicting Obligations) of this Agreement or any other agreement
regarding trade secrets, confidential information, nonsolicitation or Labor Code
§2870. In the event either the Company or Consultant seeks injunctive relief,
the prevailing party will be entitled to recover reasonable costs and attorneys'
fees.

     

    E.  Administrative Relief
Consultant understands that this Agreement does not prohibit Consultant
from pursuing an administrative claim with a local, state or federal
administrative body such as the Department of Fair Employment and Housing, the
Equal Employment Opportunity Commission or the workers' compensation board. This
Agreement does, however, preclude Consultant from pursuing court action
regarding any such claim.

     

    F.  Voluntary Nature of Agreement.
Consultant acknowledges and agrees that Consultant is executing this
Agreement voluntarily and without any duress or undue influence by the Company
or anyone else. Consultant further acknowledges and agrees that Consultant has
carefully read this Agreement and has asked any questions needed to understand
the terms, consequences and binding effect of this Agreement and fully
understand it, including that Consultant is waiving its right to a jury trial.
Finally, Consultant agrees that Consultant has been provided an opportunity to
seek the advice of an attorney of its choice before signing this
Agreement.

     

    11.  Miscellaneous.

     

    A.  Governing Law. This Agreement
shall be governed by the laws of California without regard to California's
conflicts of law rules.

     

    B.  Assignability. Except as
otherwise provided in this Agreement, Consultant may not sell, assign or
delegate any rights or obligations under this Agreement.

     

    C.  Entire Agreement. This
Agreement constitutes the entire agreement between the parties with respect to
the subject matter of this Agreement and supersedes all prior written and oral
agreements between the parties regarding the subject matter of this
Agreement.

     

    D.  Headings. Headings are used
in this Agreement for reference only and shall not be considered when
interpreting this Agreement.

     

    
      
        
        

      

      
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    E.  Notices.
Any notice or other
communication required or permitted by this Agreement to be given to a party shall be in
writing and shall be deemed given if delivered personally or by commercial messenger or courier
service, or mailed by U.S. registered or certified mail (return receipt requested), to the party at the
party's address written below or at such other address as the party may have
previously specified by like notice. If by mail, delivery shall be deemed
effective three business
days after mailing in accordance with this Section
11.E.

     

    
      (1)  
If to the
Company, to: 

      NewCardio,
Inc.

      7197 Indian Valley 

      San Jose, CA 95139 

      Attention: Chairman

    

     

    (2)  
If to
Consultant, to the address for notice on the signature page to this Agreement
or, if no such address is provided, to the last address of Consultant provided
by Consultant to the Company.

     

    F.  Attorneys'
Fees. In any court action at law or equity that is brought by one of the
parties to this Agreement to enforce or interpret the provisions of this
Agreement, the prevailing party will be entitled to reasonable attorneys' fees,
in addition to any other relief to which that party may be
entitled.

     

    G.  Severability.
If any provision of this Agreement is found to be illegal or
unenforceable, the other provisions shall remain effective and enforceable to
the greatest extent permitted by law.

     

    IN
WITNESS WHEREOF, the parties hereto have executed this Consulting Agreement as
of the date first written above.

     

     

    
      	CONSULTANT	NEWCARDIO,
      INC. 
	 	 
	By:       /s/
      Samuel E. George,
      M.D.                         	By:       /s/
      Branislav Vajdic,
      Ph.D                        
      
	 	 
	Name:  Samuel E. George,
      M.D.                          
       	Name:  Branislav Vajdic,
      Ph.D                               
	 	 
	Title:  Senior Vice
      President                                
       	Title:  Chief Executive Officer and
      Director        
  
	 	 
	Address for
      Notice: 	 
	 	 
	7904 NW Hawkins
    Blvd 	 
	Portland, OR
    97229 	 
	 	 


    

     

     

     

    
      
        
        

      

      
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    EXHIBIT
A

     

    Services and
Compensation

     

     

    1.  Contact.
Consultant's principal Company contact: 

     

    Name:  Samuel E. George,
MD                                
 .

     

    Title:
Consultant & Senior Vice
President              .


     

    2.  Services.
The Services shall include, but shall not be limited to, the
following:

     

    A.  Consultant
shall serve as Senior Vice President of the Company.

     

    B.  Consultant
shall prepare and submit new patent applications timely for the
following:

     

    1.  new
QTinno-related tools [MILESTONE] ,
and

     

    2.  novel
tools for analysis of cardiac repolarization, recently developed jointly
by Bosko Bojovic and Alexei Shvilkin
[MILESTONE].

     

    C.  Consultant shall oversee and contribute
to preparation of a manuscript describing results of the Harvard acute MI study
and ensure that it is submitted to a peer-reviewed journal of reasonable quality [MILESTONE]

     

    D.  Consultant shall review and audit the
CardioBip data from the Petrovic Clinic and prepare figures, slides, reports and
other materials that will summarize the CardioBip story. The intent is to prepare accurate,
persuasive and readily understandable materials that can be used by the
Board and Company
executives in discussions with potential investors [MILESTONE].

     

    E.  Clinical Research
Tasks:

     

    1.  Consultant
shall prepare a "shelf registration" package for submission to IRBs in Belgrade, allowing the Company to
obtain VisualECGs for research purposes upon signing of a standard informed consent
form. Such "shelf registration" shall simplify clinical research for the Belgrade team and
allow them to obtain VisualECGs easily in virtually any situation. [MILESTONE]

     

    2.  Consultant
shall advise and assist Bosko Bojovic, Vladan Vukcevic, and other investigators
with respect to small-scale clinical research studies that may be conducted in
Belgrade during the next 6 months.

     

    3.  Consultant shall
summarize the Company's cardiac safety data to date in written materials and slides that can
be used by the Board and Company executives in discussions with potential investors.
[MILESTONE]

     

    
      
        
        

      

      
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    4.  Consultant shall
diligently attempt to obtain access to the FDA's database of cardiac
safety ECGs, and if access is obtained, use them to conduct at least one major
new study of QTinno speed and accuracy in cardiac safety.

     

    F.  Consultant
shall provide reasonable support for Board in their efforts to obtain funding
and to hire a new Chief Executive Officer.

     

    G.  Consultant
shall make reasonable efforts to continue the Company's relationships with key
cardiovascular opinion leaders and seek to develop new
relationships.

     

    H.  Consultant
shall give whatever other support can be reasonably provided based on the
Company's needs and the Board's requests.

     

    I.  Consultant's
acheivement of Milestones shall be determined by the Board in their reasonable
and objective judgment. Standard to be applied is a workmanlike product
reflecting at a minimum the ordinary skill, diligence and expertise expected of
a Consultant with similar training and experience.

     

    J.  Both parties recognize
that the Milestones outlined above are targeted to key areas of need for the
Company, but the Company's goals and needs will likely change in the coming
months. If changes are necessary, the parties will work together in good faith
to modify or change Milestones as needed. The order of Milestones herein is for
convenience and is not intended to assign priority or establish order of
performance and shall not affect the vesting of the Shares.

     

    3.  Compensation.

     

    A.  The
Company will pay Consultant no cash compensation in connection with this
Agreement.

     

    B.  The
Company will reimburse Consultant for all reasonable expenses incurred by
Consultant in performing the Services pursuant to this Agreement, if Consultant
receives consent from an authorized agent of the Company prior to incurring such
expenses and submits receipts for such expenses to the Company in accordance
with Company policy. Such reimbursement shall occur upon the Company's
availability of sufficient funds.

     

    C.  The Company will
recommend at the first meeting of the Company's Board of Directors following the
date of this Agreement that the Company grant Consultant a nonqualified stock
option to purchase 72,000 shares of the Company's Common Stock at a price per
share equal to the fair market value per share of the Common Stock on the date
of grant, as determined by the Company's Board of Directors. 6,000 of said
Shares subject to the option shall vest each month after the date vesting begins
for a period of 6 months (such that a total of 36,000 of the Shares shall vest
over the 6 month period) and no shares shall vest before such date and no rights
to any vesting shall be earned or accrued prior to such date and 6,000 of said
Shares shall vest upon the achievement of each Milestone as described in Section
2 of this Exhibit A. This option grant shall be subject to the terms and
conditions of the Company's Equity Incentive Plan and Stock Option Agreement,
including vesting requirements.

     

    
      
        
        

      

      
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    This
Exhibit A is accepted and agreed as of October 1, 2006, and this instrument is
executed on October 22, 2006.

    
       

       

      
        	CONSULTANT	NEWCARDIO,
      INC. 
	 	 
	By:       /s/
      Samuel E. George,
      M.D.                      
      	By:       /s/
      Branislav Vajdic,
      Ph.D                        
      
	 	 
	Name:  Samuel E. George,
      M.D.                          
       	Name:  Branislav Vajdic,
      Ph.D                               
	 	 
	Title:  Senior Vice
      President                                
       	Title:  Chief Executive Officer and
      Director        
  


      

       

       

       

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