Document:

ex10-14.htm

Exhibit 10.14

INDEPENDENT CONSULTING AGREEMENT

This Independent Consulting Agreement (“Agreement”), effective as of March 6, 2014 (“Effective Date”) is entered into by and between FLUOROPHARMA MEDICAL, INC., a Nevada corporation (herein referred to as the “Company”), and THE DEL MAR CONSULTING GROUP, INC., a California corporation and ALEX PARTNERS, LLC, a Washington State Limited Liability Corporation (collectively hereinafter referred to as the “Consultants” and each a “Consultant”), is dated as of March 24, 2014.

RECITALS

WHEREAS, the Company is a publicly-held corporation with its common stock traded on the OTC Bulletin Board; and

WHEREAS, the Company desires to engage the services of the Consultants to assist the Company in investor communications and public relations with existing shareholders, brokers, dealers and other investment professionals as to the Company’s current and proposed activities, and to consult with management concerning such Company activities;

NOW THEREFORE, in consideration of the promises and the mutual covenants and agreements hereinafter set forth, the parties hereto covenant and agree as follows:

1.           Term of Consultancy.  The Company hereby agrees to retain the Consultants to act in a consulting capacity to the Company, and the Consultants hereby agrees to provide services to the Company for an initial four month period commencing on the date hereof (the “Commencement Date”) and shall continue for successive one month renewal periods unless terminated by either party by written notice delivered to the other party not less than ten (10) days prior to any renewal period (the “Term”).

2.1           IR Duties of Consultants.  During the Term, the Consultants agree that they will provide the following specified consulting services through its officers and employees:

(a) Consult with and assist the Company in developing and implementing appropriate plans and means for presenting the Company and its business plans, strategy and personnel to the financial community, establishing an image for the Company in the financial community, and creating the foundation for subsequent financial public relations efforts;

(b) Introduce the Company to the financial community, including, but not limited to, retail brokers, buy side and sell side institutional managers, portfolio managers, analysts, and financial public relations professionals;

(c) With the cooperation of the Company, maintain an awareness during the Term of the Company’s plans, strategy and personnel, as they may evolve during such period, and consult and assist the Company in communicating appropriate information regarding such plans, strategy and personnel to the financial community;

(d) Assist and consult with the Company with respect to its (i) relations with shareholders, (ii) relations with brokers, dealers, analysts and other investment professionals, and (iii) financial public relations;

(e) Perform the functions customarily performed by in-house investor relations departments in public companies, including responding to telephone and written inquiries (which may be referred to the Consultants by the Company); preparing press releases for the Company’s review and approval, reports and other communications with or to shareholders, the investment community and the general public; consulting with the Company with respect to the timing, form, distribution and other matters related to such releases, reports and communications; and, at the Company’s request and subject to the Company’s securing its own rights to the use of its names, marks, and logos, consulting with respect to corporate symbols, logos, names, the presentation of such symbols, logos and names, and other matters relating to corporate image;

  

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(f) Upon and with the Company’s direction, disseminate information regarding the Company to shareholders, brokers, dealers, other investment community professionals and the general investing public;

(g) Upon and with the Company’s direction, conduct meetings, in person or by telephone, with brokers, dealers, analysts and other investment professionals to communicate with them regarding the Company’s plans, goals and activities, and assist the Company in preparing for press conferences and other forums involving the media, investment professionals and the general investment public;

(h) Otherwise perform as the Company’s Consultants for investor relations with financial professionals;

(i)  At the Company’s request, review business plans, strategies, mission statements, budgets, proposed transactions and other plans for the purpose of advising the Company of the public relations implications thereof; and

3.           Allocation of Time and Energies.  The Consultants hereby promise to perform and discharge diligently and faithfully the duties detailed in Section 2 above, and such further responsibilities which may be assigned to the Consultants from time to time by the officers and duly authorized representatives of the Company in connection with the conduct of its investor relations and corporate communications activities (collectively, the “Services”). Although no specific hours-per-day requirement will be required, the Consultants and the Company agree that during the Term the Consultants will perform the Services in a full, diligent and professional manner.

4.           Remuneration.  In consideration for performing the Services and for other good and valuable consideration, the Company agrees to pay to the Consultants as follows:

4.1           During the Term, the Company will pay The Del Mar Consulting Group, Inc. a cash retainer of $6,000 per month and Alex Partners, LLC a cash retainer of $4,000 per month, the first monthly payment(s) being due and payable on March 31, 2014 and each subsequent payment(s) being due and payable on the fifteenth day of the month.

4.2            The Company shall pay the Consultants an upfront fee of $125,000 (the “Upfront Fee”). The Upfront Fee shall be due and payable within ten (10) days following the Commencement Date. At the Company’s sole discretion, the Upfront Fee may be paid in cash or restricted shares (the “Restricted Shares”) of the Company’s common stock, $0.001 par value per share (“Common Stock”) based on the Market Price of the Common Stock.  The Company agrees to pay 60% of the Upfront Fee to The Del Mar Consulting Group, Inc. and 40% of the Upfront Fee to Alex Partners, LLC.

4.3           Unless this Agreement has been terminated in accordance with the provisions of Section 1 hereof, the Company shall pay the Consultants a renewal fee of $125,000 (the “Renewal Fee”). The Renewal Fee shall be due and payable within ten (10) days following the five month anniversary of the Commencement Date. At the Company’s sole discretion, the Renewal Fee may be paid in cash or Restricted Shares based on the Market Price of the Common Stock. The Company agrees to pay 60% of the Renewal Fee to The Del Mar Consulting Group, Inc. and 40% of the Renewal Fee to Alex Partners, LLC.

4.4           For purposes of this Section 4, “Market Price” shall be the lower of (i) the closing bid price of the Common Stock on the trading day immediately preceding the Effective Date or (ii) the volume weighted average price of the Common Stock for the five (5) trading days immediately preceding the Effective Date.

4.5           The Company warrants that the Restricted Shares, if and when issued to the Consultants, will be duly authorized by the Company’s Board of Directors and validly issued.

  

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4.6           The Consultants acknowledges that any Restricted Shares that may be issued pursuant to this Agreement have not been registered under the Securities Act of 1933, as amended (the “Securities Act”) and accordingly are “restricted securities” within the meaning of Rule 144 of the Securities Act.  As such, the Restricted Shares may not be resold or transferred unless the Company has received an opinion of counsel and in form reasonably satisfactory to the Company that such resale or transfer is exempt from the registration requirements of that Securities Act.  Consultants agree that during the Term, that it will not sell or transfer any of the Restricted Shares, registered or unregistered, issued to it by the Company hereunder. If and when Consultants sell any of the Restricted Shares in a manner that complies with an exemption from registration, the Company will promptly instruct its counsel to issue to the transfer agent an opinion permitting removal of any restrictive legend indefinitely if such sale is pursuant to Rule 144, provided that the Consultants deliver reasonably requested representations in support of such opinion.  The Company agrees to bear all of the cost(s) of any such legal opinion(s) and removal of restrictive legends and reissuance of shares free of restrictive legends.

4.7           In connection with the possible acquisition of Restricted Shares, the Consultants represent and warrants to Company as follows:

(a)           The Consultants have been afforded the opportunity to ask questions of and receive answers from duly authorized officers or other representatives of the Company concerning an investment in the Restricted Shares, and any additional information that the Consultant have requested.

(b)           The Consultants’ investment in restricted securities is reasonable in relation to the Consultants’ net worth, which is in excess of ten (10) times the Consultants’ cost basis in the Restricted Shares.  The Consultants have experience in investments in restricted and publicly traded securities, and the Consultant have experience in investments in speculative securities and other investments that involve the risk of loss of investment.  The Consultants acknowledge that an investment in the Restricted Shares is speculative and involves the risk of loss.  The Consultants have the requisite knowledge to assess the relative merits and risks of this investment without the necessity of relying upon other advisors, and the Consultants can afford the risk of loss of their entire investment in the Restricted Shares.  The Consultants are accredited investors, as that term is defined in Regulation D promulgated under the Securities Act.

(c)           The Consultants will be acquiring the Restricted Shares for the Consultants’ own accounts for long-term investment and not with a view toward resale or distribution thereof except in accordance with applicable securities laws.

4.8           In the event that any payments are made to the Consultants in Restricted Shares, then if at any time after the effective date of this Agreement, the Company proposes to file a registration statement with respect to its Common Stock (other than in connection with a primary offering of its securities, a transaction contemplated by Rule 145 promulgated under the Securities Act or pursuant to Form S-8 or any equivalent form), the Company shall notify the Consultants at least ten (10) days prior to the filing of such registration statement and will offer to include in such registration statement all of the Restricted Shares issued to the Consultants hereunder.  In a written notice to be delivered to the Company within ten (10) days after receipt of any such notice from the Company, the Consultants shall state the number of the Restricted Shares that they wish to register for resale and distribution publicly under the proposed registration statement.  The Company will also use its reasonable commercial efforts, through its officers, directors, auditors and counsel in all matters necessary or advisable, to include within the coverage of each such registration statement (except as hereinafter provided) the Restricted Shares that Consultants have advised the Company that the Consultants wish to register pursuant to such registration statement for resale and distribution, to prosecute each such registration statement diligently to effectiveness, and to cause such registration statement to become effective as promptly as practicable.  Notwithstanding the foregoing, the Company makes no representation or warranty as to its ability to have any registration statement declared effective.  In the event the Company is advised by the staff of the SEC, or any applicable self-regulatory or state securities agency that the inclusion of the Restricted Shares will prevent, preclude or materially delay the effectiveness of a registration statement filed, the Company, in good faith, may amend such registration statement to exclude the Restricted Shares without otherwise affecting the Consultants’ rights to any other registration statement

  

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5.           Assignability of Services.  The Consultants’ services under this Agreement are offered to Company and may be assigned by Company to any entity with which Company merges with or which acquires the Company or substantially all of its assets.  In the event of such merger or acquisition, all compensation to Consultants herein shall remain due and payable.  The Consultants may not assign their rights or delegate their duties hereunder without the prior written consent of Company.

6.           Expenses.  The Consultants agree to pay for all of its expenses incurred in connection with the delivery of services hereunder other than extraordinary items (including travel required by/or specifically requested by the Company, luncheons or dinners to groups of investment professionals, mass emailing to a sizable percentage of the Company’s constituents, investor conference calls, print advertisements in publications) approved by the Company in writing prior to its incurring an obligation for reimbursement. The Company agrees and understands that the Consultants may participate in the preparation of but will not be responsible for preparing or mailing due diligence and/or investor packages on behalf of the Company.

7.           Indemnification.  The Company warrants and represents that all written communications, documents or materials furnished to the Consultants or the public by the Company with respect to financial affairs, operations, profitability and strategic planning of the Company are accurate in all material respects and the Consultants may rely upon the accuracy thereof without independent investigation. The Company will protect, indemnify and hold harmless the Consultants against any claims or litigation including any damages, liability, cost and reasonable attorney’s fees as incurred with respect thereto resulting from Consultants’s communication or dissemination of any said information, documents or materials unless resulting from the Consultants’s communication or dissemination of information not provided by the Company or in a manner not authorized by the Company in writing.

8.           Representations.  The Consultants represents that they are not required to maintain any licenses and registrations under federal or any state regulations necessary to perform the Services. The Consultants acknowledge that, to the best of their knowledge, the performance of the Services will not violate any rule or provision of any regulatory agency having jurisdiction over the Consultants. The Consultants acknowledge that, to the best of its knowledge, Consultants and its officers and directors are not the subject of any investigation, claim, decree or judgment involving any violation of federal or state securities laws, rules or regulations. The Consultants further acknowledge that they are not a securities broker dealer or a registered investment advisor. The Company acknowledges that, to the best of its knowledge, that it has not violated any rule or provision of any regulatory agency having jurisdiction over the Company with respect to the engagement of the Consultants.

9.           Legal Representation.  Each of the Company and the Consultants represent that they have consulted with independent legal counsel and/or tax, financial and business advisors, to the extent that they deemed necessary.

10.           Status as Independent Contractors.  The Consultants’ engagement pursuant to this Agreement shall be as independent contractors, and not as an employee, officer or other agent of the Company. Neither party to this Agreement shall represent or hold itself out to be the employer or employee of the other.  The Consultants further acknowledge the consideration provided hereinabove is a gross amount of consideration and that the Company will not withhold from such consideration any amounts as to income taxes, social security payments or any other payroll taxes unless required by law. All such income taxes and other such payment shall be made or provided for by the Consultants and the Company shall have no responsibility or duties regarding such matters. Neither the Company nor the Consultants possesses the authority to bind each other in any agreements without the express written consent of the entity to be bound.

11.           Attorneys’ Fees.  If any legal action or any arbitration or other proceeding is brought for the enforcement or interpretation of this Agreement, or because of an alleged dispute, breach, default or misrepresentation in connection with or related to this Agreement, the successful or prevailing party shall be entitled to recover reasonable attorneys’ fees and other costs in connection with that action or proceeding, in addition to any other relief to which it or they may be entitled.

 

12.           Waiver.  The waiver by either party of a breach of any provision of this Agreement by the other party shall not operate or be construed as a waiver of any subsequent breach by such other party.

  

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13.           Notices.  All notices, requests, and other communications hereunder shall be deemed to be duly given if sent by U.S. mail, postage prepaid, addressed to the other party at the address as set forth herein below:

To the Company:

Thijs Spoor, CEO

FluoroPhrama Medical, Inc.

8 Hillside Avenue; Suite 207

Montclair NJ, 07042

 tspoor@fluoropharma.com

To the Consultants:

Robert B. Prag, President

The Del Mar Consulting Group, Inc.

2455 El Amigo Road

Del Mar, CA 92014

bprag@delmarconsulting.com

and

Scott Wilfong President

Alex Partners, LLC

511 7th Ave. #2

Kirkland, WA 98033

scott@alexpartnersllc.com

 

It is understood that either party may change the address to which notices for it shall be addressed by providing notice of such change to the other party in the manner set forth in this paragraph.

15.           Choice of Law. This Agreement shall be governed by, construed and enforced in accordance with the laws of the State of New York.

16.           Complete Agreement.  This Agreement contains the entire agreement of the parties relating to the subject matter hereof. This Agreement and its terms may not be changed orally but only by an agreement in writing signed by the party against whom enforcement of any waiver, change, modification, extension or discharge is sought. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original and all of which shall constitute one agreement.  A telefacsimile of this Agreement may be relied upon as full and sufficient evidence as an original.

  

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

Company:

FLUORORPHARMA MEDICAL, INC.

 

By:           /s/ Thijs Spoor                                                      

Name: Thijs Spoor

Title:           Chief Executive Officer

Consultant:

THE DEL MAR CONSULTING GROUP, INC.

 

By:           /s/ Robert B. Prag                                                      

Name:           Robert B. Prag

Title:  President

Consultant:

ALEX PARTNERS, LLC

 

By:           /s/ Scott Wilfong                                                      

Name:           Scott Wilfong

Title:           Presidentex10-1.htm

Exhibit 10.1

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (the “Agreement”) is entered into March 19, 2014 by and between ISC8 Inc., a Delaware corporation (the “Company”) and Kirsten Bay, an individual (the “Executive”).

 

WHEREAS, the parties hereto desire to enter into a written agreement, subject to Executive’s reference checks, to document the terms of Executive’s employment with the Company.

 

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged and in consideration of the mutual covenants and obligations contained herein, the parties hereto agree as follows:

 

1. Term.   This Agreement shall be effective upon completion of reference checks, which effective date shall be communicated to Executive by written notice (the “Effective Date”). The Start Date of employment will be as soon as practical following the Effective Date. The term of this Agreement shall be for a period of three (3) years measured from the Effective Date (the “Term”) and shall remain in full force and effect for that time or until termination of Executive’s employment with the Company for any or no reason, whichever is less (the “Employment Period”).  The Agreement shall be automatically renewed for successive Terms of two (2) years unless either Executive or the Company gives the other written notice of termination not less than one hundred eighty (180) days prior to the expiration of the initial Term or one hundred eighty (180) days prior to the expiration of any subsequent Term. The parties agree that the Executive’s employment with the Company shall be on an “at-will” basis, which means that notwithstanding the provisions of this Agreement, either the Executive or the Company may terminate the employment relationship and this Agreement at any time, for any or no reason, with or without Cause.

 

2. Duties and Responsibilities.  Executive shall serve as the Company’s President and Chief Executive Officer, reporting directly to the Board of Directors.  The Executive agrees to devote all of her business time and efforts to the performance of her duties hereunder.  Executive agrees to use her best efforts to advance the business and welfare of the Company, to render her services under this Agreement faithfully, diligently and to the best of her ability.

 

3. Cash Compensation.

 

(a) Base Salary.  Executive’s initial base salary shall be $300,000 per year (the “Base Salary”), which shall be payable in accordance with the Company’s standard payroll schedule (but in no event less frequent than on a monthly basis).

 

(b) Bonus. Executive shall also be eligible to receive discretionary bonuses from time to time.  Such bonuses will be targeted at 100% (the “Target Bonus Percentage”) of Executive’s Base Salary each year (but pro rated for the Company’s fiscal year ending September, 2014), and will be based upon performance goals tied to the Company’s achievement of revenue and profitability objectives or other metrics and scales as established from time to time by the Company’s Compensation Committee, which goals, metrics and scales the Company’s Compensation Committee shall in good faith believe are achievable at the time such goals, metrics and scales are established.  Except as otherwise provided in Section 7 hereof, all bonuses shall be payable in accordance with the terms of the applicable bonus plan.  The terms of this Agreement relating to Executive’s bonus may from time to time be changed if the Compensation Committee deems it advisable in connection with any change in the SEC’s or other applicable rules and regulations relating to executive compensation and disclosure of executive compensation.

  

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(c) Other Expense Reimbursement.  In addition to the compensation specified above, Executive shall be entitled to receive reimbursement from the Company for all reasonable business expenses and business travel (and related services) incurred or paid by Executive in the performance of Executive’s duties hereunder, provided that Executive furnishes the Company with vouchers, receipts and other details of such expenses in the form reasonably required by the Company to substantiate a deduction for such business expenses under all applicable rules and regulations of federal and state taxing authorities.  Any reimbursement for expenses that would constitute nonqualified deferred compensation subject to Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) shall be subject to the following additional rules: (i) no reimbursement of any such expense shall affect the Executive’s right to reimbursement of any such expense in any other taxable year; (ii) reimbursement of the expense shall be made, if at all, promptly, but not later than the end of the calendar year following the calendar year in which the expense was incurred; and (iii) the right to reimbursement shall not be subject to liquidation or exchange for any other benefit.

 

(d) Applicable Withholdings.  The Company shall deduct and withhold from any amounts or benefits payable to Executive hereunder any and all applicable federal, state and local income and employment withholding taxes and any other amounts Employer deems required or advisable to be deducted or withheld under applicable statutes, regulations, ordinances or orders governing or requiring the withholding or deduction of amounts otherwise payable as compensation or wages to employees.

 

4. Equity Compensation.

 

(a) Option Grant.  As soon as practicable following the Effective Date, the Company’s Compensation Committee shall grant to Executive an option (the “Option”) to purchase shares of the Company’s Common Stock equal to five percent (5%) of the Company’s Common Stock then outstanding.  The vesting schedule for the Initial shall vest in thirty-six (36) equal monthly installments thereafter.  The Initial Option shall have a term of ten years and the exercise price for such options shall be equal $0.042, as determined in good faith by the Compensation Committee.

 

(b) Future Awards.  Executive shall also be entitled to participate in any equity incentive plans of the Company.  All such options or other equity awards will be made at the discretion of the Company’s Compensation Committee or the Company’s Board of Directors and shall be pursuant and subject to the terms and conditions of the applicable equity incentive plan, including any provisions for repurchase thereof.  The option exercise price and value of any equity award granted to Executive will be established by the Company’s Board of Directors or its Compensation Committee as of the date such awards are granted but shall not be less than the fair market value of the class of equity underlying such award.

 

5. Fringe Benefits.

(a) Vacation.  Executive shall be entitled to time off (“Time Off”), subject to the Company’s policies including with respect the Company’s vacation policy.  Executive and the Company shall schedule such paid time off at times mutually agreed upon.

(b) Group Plans.  Executive shall, throughout the Term of this Agreement, be eligible to participate in all of the Company’s group health, life, long term disability, 401(k) and other plans or benefit programs (for which Executive qualifies) that are available to the executive officers of the Company, subject to the policies of the Company and terms and conditions with respect to all of such plans or programs then in effect.

 

6. Proprietary Information.  On or prior to the Effective Date, Executive shall execute and deliver to the Company a manually signed copy of the Company’s standard proprietary information and assignment of inventions agreement (the “Confidentiality Agreement”), which is hereby incorporated by this reference as if set forth fully herein.  Executive shall comply with all of the terms and conditions of the Confidentiality Agreement, as such may be amended from time to time.  Executive’s obligations pursuant to the Confidentiality Agreement will survive termination of Executive’s employment with the Company.

  

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7. Termination of Employment.  Upon the termination of Executive’s employment with the Company for any reason or without reason, Executive (or, in the case of Executive’s death, Executive’s estate and beneficiaries) shall have no further rights to any other compensation or benefits from the Company on or after the termination of employment except as follows:

 

(a) Payment of Accrued Obligation upon Termination of Employment.  In the event Executive’s employment with the Company is terminated for any reason (regardless of whether for Cause, Disability, Death or other reason) or for no reason, the Company shall pay to Executive (i) Executive’s unpaid Base Salary that has been earned through the termination date of her employment; (ii) any accrued but unreimbursed business expenses in accordance with Section 3(c) above, (iii) any other payments as may then be required under applicable law (collectively, the “Accrued Obligations”).

 

(b) Termination for Cause.  The Company may terminate this Agreement for “Cause” effective immediately upon the occurrence of any of the following events:  (i) Executive has been convicted of, or entered a plea of nolo contendre to, any felony  (other than an offense related to the operation of an automobile that results only in a fine or other noncustodial penalty) or of any crime arising out of any material fraud or act of dishonesty; (ii) the Board’s determination that Executive has had repeated failures to perform material services required under this Agreement; (iii) willful misconduct or gross negligence in the performance of Executive’s duties; (iv) gross disregard or willful violation of the legal rights of any employees of the Company or of the Company's written policies regarding harassment or discrimination; or (v) the violation or breach by Executive of her Confidentiality Agreement with the Company; (vi) the material breach of any provision of this Agreement after 10 days written notice to Executive of such breach and a reasonable opportunity to cure such breach; or (vii) any material financial dishonesty involving the Company or its assets, including, without limitation, misappropriation of the Company’s funds or property.  In the event Executive’s employment with the Company is terminated for Cause, Executive shall only be entitled to the Accrued Obligations.

 

(c) Termination Upon Death.  If Executive dies during the Employment Period of this Agreement, the Executive’s employment with the Company shall be deemed terminated as of the date of death, and the obligations of the Company to or with respect to Executive shall terminate in their entirety upon such date.  The Company shall pay the Accrued Obligations to the Executive's legal representative(s), within 30 days of her (their) appointment and delivery to the Company of proof of such appointment, in full and complete satisfaction of all of the Company's obligations under this Agreement.  The Company shall also pay to Executive’s legal representatives a pro rated bonus payment, but only to the extent the Company ultimately achieves any corporate goals or milestones for such payment and provided that such payment shall be pro rated based on the date of Executive’s date of death relative to the calendar year in which her death occurs, and provided further that such bonus shall only be paid at such time set forth in the applicable bonus plan and when bonuses are paid to other executives of the Company.  In addition all outstanding stock shall become fully vested.

 

(d) Termination Upon a Disability.  If Executive becomes subject to a Disability (as defined below), then the Company shall have the right, to the extent permitted by law, to terminate the employment of Executive for such Disability upon 30 days prior written notice to Executive.  In the event of a termination due to a Disability, Executive shall be entitled to receive the following in addition to the Accrued Obligations: (i) continuation of Executive’s Base Salary (which shall be payable in accordance with the Company’s standard pay policies) until Executive is eligible for short-term disability payments under the Company’s group disability policies; provided however, that in no event shall such period of continued Base Salary exceed 90 days following Executive’s termination of employment, and (ii) a bonus payment equal to Executive’s target bonus for the year in which Executive becomes disabled but only to the extent the Company ultimately achieves any corporate goals or milestones for such payment and provided that such payment shall be pro rated based on the date of Executive’s termination of employment relative to the calendar year in which her employment is terminated and such bonus shall only be paid at such time set forth in the applicable bonus plan and when bonuses are paid to other executives of the Company. In addition all outstanding stock options shall vest in full immediately following Executive’s termination of employment.

 

  

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For the purposes of this Section, “Disability” shall mean a physical or mental impairment which, the Board in good faith determines, after consideration and implementation of reasonable accommodations, precludes the Executive from performing her essential job functions for a period longer than three consecutive months or a total of one hundred twenty (120) days in any twelve month period (or such longer period as may be required to comply with the Family Medical Leave Act or other applicable law.

 

(e) Termination Without Cause; Resignation for Good Reason.

 

(i) In the event that the Executive’s employment is terminated by the Company without reason or for any reason without Cause (other than upon Death or Disability) or due to the Executive’s resignation for Good Reason (as defined below), provided that within sixty (60) days following the date of termination, the Executive executes and does not revoke (during any applicable revocation period) an effective general release of all claims against the Company and its affiliates in a form reasonably acceptable to the Company, Executive shall also be entitled to receive the following severance benefits (collectively, the “Severance Benefits”):  (1) salary continuation payments for the twenty-four (24) months, payable in accordance with the Company’s regular pay practices in effect at that time and provided that Executive is not in violation of her obligations under this Agreement; and (2) Executive’s target bonus for the year in which Executive’s employment is terminated but only to the extent the Company ultimately achieves any corporate goals or milestones for such payment and provided that such payment shall be pro rated based on the date of her termination of employment relative to the calendar year in which the termination occurs, and such bonus shall only be paid at such time set forth in the applicable bonus plan and when bonuses are paid to other executives of the Company; (3) In addition all outstanding stock options shall vest in full immediately following Executive’s termination of employment.

 

(ii) Good Reason.  For the purposes of this Agreement, “Good Reason” shall mean the occurrence of one or more of the following events, if applicable, without the Executive’s written consent: (1) a material reduction in the Executive’s authority, duties or responsibilities (and not simply a change in title or reporting relationships); (2) a material reduction by the Company in the Executive’s compensation (for avoidance of doubt, a 5% reduction in the combined level of Base Salary and annual target bonus opportunity shall constitute a material reduction in Executive’s compensation); or (3) a material breach by the Company of its obligations under Section 10 of this Agreement.  Notwithstanding the foregoing, “Good Reason” shall only be found to exist if the Executive has provided 90 days written notice to the Company prior to her resignation indicating and describing the event resulting in such Good Reason, and the Company does not cure such event within 30 days following the receipt of such notice from Executive.

 

(iii) Additional Conditions to Severance Benefits. Executive acknowledges that so long as Executive is receiving Severance Benefits hereunder, Executive is bound by Sections 6, 9 and 10 of this Agreement.  Executive’s rights to receive any Severance Benefits is expressly subject to Executive’s continuing compliance with each of Sections 6, 8 and 9 and all Severance Benefits shall immediately be forfeited upon Executive’s breach of any of Sections 6, 8 and 9 of this Agreement, and the Company shall have no obligation to make or continue to make any Severance Benefits to Executive upon such breach of any of Sections 6, 8 and 9.

  

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(iv) Section 409A.  Any Severance Benefits under Section 7 of this Agreement are intended to qualify as an involuntary separation pay arrangement that is exempt from application of Section 409A of the Code because all Severance Benefits are treated as paid on account of an involuntary separation (including a voluntary separation for Good Reason).  If any portion of the Severance Benefits in this Section 7 is subject to Section 409A of the Code, notwithstanding anything to the contrary in this Agreement, the payment of such severance shall be delayed until the first day of the seventh month following Executive’s termination, but only to the extent that such payment exceeds the applicable dollar limits provided under 409A of the Code or the Treasury Regulations promulgated thereunder. To the extent any payments or benefits pursuant to this Section 7 (a) are paid from the date of termination of Executive’s employment through March 15 of the calendar year following such termination, such Severance Benefits are intended to constitute separate payments for purposes of Section 1.409A-2(b)(2) of the Treasury Regulations and thus payable pursuant to the “short-term deferral” rule set forth in Section 1.409A-1(b)(4) of the Treasury Regulations; (b) are paid following said March 15, such Severance Benefits are intended to constitute separate payments for purposes of Section 1.409A-2(b)(2) of the Treasury Regulations made upon an involuntary separation from service and payable pursuant to Section 1.409A-1(b)(9)(iii) of the Treasury Regulations, to the maximum extent permitted by said provision, and (c) are in excess of the amounts specified in clauses (a) and (b) of this paragraph, shall (unless otherwise exempt under Treasury Regulations) be considered separate payments subject to the distribution requirements of Section 409A(a)(2)(A) of the Code, including, without limitation, the requirement of Section 409A(a)(2)(B)(i) of the Code that payments or benefits be delayed until the first day of the seventh month after Executive’s separation from service if Executive is a “specified employee” within the meaning of the aforesaid section of the Code at the time of such separation from service. In the event that a six month delay of any such Severance Benefits is required, on the first regularly scheduled pay date following the conclusion of the delay period Executive shall receive a lump sum payment or benefit in an amount equal to the Severance Benefits that were so delayed, and any remaining Severance Benefits shall be paid on the same basis and at the same time as otherwise specified pursuant to this Agreement (subject to applicable tax withholdings and deductions).

 

8. Non-Competition.  Executive acknowledges and agrees that given the extent and nature of the confidential and proprietary information he will obtain during the course of her employment with the Company, it would be inevitable that such confidential information would be disclosed or utilized by the Executive should he obtain employment from, or otherwise become associated with, an entity or person that is engaged in a business or enterprise that directly competes with the Company.  Consequently, during any period for which Executive is receiving payments from the Company, either as wages or as a severance benefit (including all Severance Benefits hereunder), Executive shall not, without prior written consent of the Company, directly or indirectly own, manage, operate, control or participate in the ownership, management, operation or control of, or be employed by or provide advice to, any enterprise that is engaged in any business directly competitive to that of the Company at the time of the termination of Executive’s employment with the Company; provided, however, that such restriction shall not apply to any passive investment representing an interest of less than 1% of an outstanding class of publicly-traded securities of any company or other enterprise where Executive does not provide any management, consulting or other services to such company or enterprise.

 

9. Non-Solicitation and Non-Disparagement.  During the period for which Executive is receiving Severance Benefits from the Company, Executive agrees that during such period of time Executive shall not, directly or indirectly, solicit any employee, independent contractor, consultant or other person or entity in the employment or service of the Company or any of its respective subsidiaries or affiliates (each of the preceding, a “Group Company”), at the time of such solicitation, in any case to (i) terminate such employment or service, and/or (ii) accept employment, or enter into any consulting or other service arrangement, with any person or entity other than a Group Company.  In addition, the two years following the Effective Date, the Executive agrees that (a) he will not speak to a third party or publicly act in any manner that is intended to, and does in fact, damage the goodwill or the business of the Company or the business or personal reputations of any of its current or past directors, officers, agents, employees, clients, attorneys or suppliers, and (b) he will refrain from making any statement to the public concerning (i) the Company’s business or its operation or methods of doing business, which is in any way negative or unflattering, or (ii) the Company, its officers, directors, employees, agents, clients, attorneys or suppliers, which is intended to, and does in fact, subject them to any public disrespect, scorn or ridicule, or legal or regulatory action, except in each case as directed or authorized by the Company.

  

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10. Successors and Assigns.  This Agreement is personal in its nature and the Executive shall not assign or transfer her rights under this Agreement.  The provisions of this Agreement shall inure to the benefit of, and shall be binding on, each successor of the Company whether by merger, consolidation, transfer of all or substantially all assets, or otherwise, and the heirs and legal representatives of Executive.  The Company shall exercise its commercially reasonable best efforts to obtain the assumption of this Agreement by any successor.

 

11. Notices.  Any notices, demands or other communications required or desired to be given by any party shall be in writing and shall be validly given to another party if served either personally or via an overnight delivery service such as Federal Express, postage prepaid, return receipt requested.  If such notice, demand or other communication shall be served personally, service shall be conclusively deemed made at the time of such personal service.  If such notice, demand or other communication is given by overnight delivery, such notice shall be conclusively deemed given two business days after the deposit thereof with such service, properly addressed to the party to whom such notice, demand or other communication is to be given as hereinafter set forth:

 

	
  

	
To the Company:

	
ISC8 Inc

	
  

	
151 Kalmus Drive, Suite A-203

	
  

	
Costa Mesa, California  92626

	
  

	
Attn:

	
John Vong

Chief Financial Officer

	
  

	
To Executive:

	
At Executive’s last residence as provided by

 

	
  

	
Executive to the Company for payroll records.

 

Any party may change such party’s address for the purpose of receiving notices, demands and other communications by providing written notice to the other party in the manner described in this Section 11.

 

12. Governing Documents.  This Agreement, along with the documents expressly referenced in this Agreement, constitute the entire agreement and understanding of the Company and Executive with respect to the terms and conditions of Executive’s employment with the Company and the payment of severance benefits, and supersedes all prior and contemporaneous written or verbal agreements and understandings (including any offer letter of employment) between Executive and the Company relating to such subject matter.  This Agreement may only be amended by written instrument signed by Executive and an authorized officer of the Company.  Any and all prior agreements, understandings or representations relating to the Executive’s employment with the Company are terminated and cancelled in their entirety and are of no further force or effect.

 

13. Governing Law.  This Agreement, and all disputes arising under or related to it, shall be governed by the law of the State of California and the parties agree that any suit shall be brought exclusively in the state or federal courts in Orange County, California.

 

14. Severability.  If any provision of this Agreement as applied to any party or to any circumstance should be adjudged by a court of competent jurisdiction to be void or unenforceable for any reason, the invalidity of that provision shall in no way affect (to the maximum extent permissible by law) the application of such provision under circumstances different from those adjudicated by the court, the application of any other provision of this Agreement, or the enforceability or invalidity of this Agreement as a whole.  Should any provision of this Agreement become or be deemed invalid, illegal or unenforceable in any jurisdiction by reason of the scope, extent or duration of its coverage, then such provision shall be deemed amended to the extent necessary to conform to applicable law so as to be valid and enforceable or, if such provision cannot be so amended without materially altering the intention of the parties, then such provision will be stricken and the remainder of this Agreement shall continue in full force and effect.

  

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15. Remedies.  The parties to this Agreement agree that:  (i) Executive’s services are unique, because of the particular skill, knowledge, experience and reputation of Executive; (ii) if Executive breaches this Agreement, the damage to the Company will be substantial, and difficult to ascertain, and, further, that money damages will not afford the Company an adequate remedy. Consequently, if Executive is in breach of any provision of this Agreement, or threatens a breach of this Agreement, the Company shall be entitled, in addition to all other rights and remedies as may be provided by law, to seek specific performance and injunctive and other equitable relief to prevent or restrain a breach of any provision of this Agreement.  All rights and remedies provided pursuant to this Agreement or by law shall be cumulative, and no such right or remedy shall be exclusive of any other right or remedy.

 

16. No Waiver.  A waiver by either party of any Section, term or condition of this Agreement in any instance shall not be deemed or construed to be a waiver of such Section, term or condition for the future or of any subsequent breach thereof, and any such waiver must be in writing, signed by the party to be charged.

 

17. Taxes. Except as otherwise provided under Section 8, each party agrees to be responsible for its own taxes and penalties.

 

18. Counterparts; Headings.  This Agreement may be executed in more than one counterpart, each of which shall be deemed an original, but all of which together shall constitute but one and the same instrument.  Any executed counterpart returned by facsimile shall be deemed an original executed counterpart.  The headings and titles to the Sections of this Agreement are inserted for convenience only and shall not be deemed a part of or affect the construction or interpretation of any provisions of this Agreement.

 

19. Representation of Executive.  Executive represents and warrants to the Company that Executive read and understands this Agreement, has consulted with independent counsel of her choice prior to agreeing to the terms of this Agreement and is entering into the agreement, knowingly, willingly and voluntarily.  The parties agree that this Agreement shall not be construed for or against either party in any interpretation thereof.

 

 

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

 

ISC8 CORPORATION.

 

 

By: /s/ Simon Williams

Simon Williams

Chairman of the Board of Directors

I have read and accept this employment offer:

 

 

/s/ Kirsten Bay

Kirsten Bay

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