Document:

Exhibit 10.38

 

EMPLOYMENT AGREEMENT

KineMed, Inc.

[Full-Time Regular Employee]

 

THIS EMPLOYMENT AGREEMENT
("Agreement") is made to be effective as of the 31st day of January, 2014, between KINEMED, INC., a Delaware corporation
(“KineMed”), and Matthew M. Loar (“Employee”).

 

RECITALS

 

A.   KineMed is a Delaware
corporation that holds proprietary rights to assay measurement and dynamic proteomic technologies that utilize stable isotope labeling
and mass spectrometric, as well as other techniques, to observe activity of biochemical pathways in intact mammalian organisms,
measure molecular fluxes within such pathways, and measure the appearance and disappearance of thousands of individual proteins
in the living system. The kinetic data generated from animals and humans track changes in the biochemical process and provide active
measures of the changes occurring. These measurements allow a comparison of healthy and disease states in living organisms, improvements,
if any, due to therapy, an evaluation whether a compound produces activity in specific targeted disease pathways, and the discovery
of previously unanticipated activities of compounds with potential therapeutic utility (the “KineMed Assay Technology”).

 

B.  KineMed desires to hire and
employ Employee as a full-time regular employee on the terms set forth below.

 

C.  During the course of his
employment, KineMed of necessity will disclose to Employee or will allow Employee access to certain confidential matters and information,
and Employee will work on and may create “Works” or “Inventions, defined below, that will be the property of
KineMed.

 

D.  The parties wish to document
their understanding of the employment agreement and relationship between them.

 

NOW, THEREFORE, for good and valuable
consideration, the parties agree as follows:

 

1.  Hiring. KineMed hereby
hires and employs Employee as a full-time regular employee, and Employee accepts such employment and agrees to perform the duties
specified below on the terms and conditions described herein.

 

2.  Duties. Employee agrees,
to the extent of the time commitment set forth below, to devote Employee’s undivided attention to the performance of the
following services to KineMed:

 

		A.	Employee shall be a full-time regular, exempt employee and shall devote one hundred percent (100%)
of each work week to the performance of his duties on behalf of KineMed.

 

		B.	Employee shall act initially as Chief Financial Officer. In this capacity, Employee shall be responsible
for all aspects of financial planning and reporting, including the controller function, accounting, treasury, and tax on a global
basis to ensure compliance with financial reporting standards, shareholder requirements and regulatory requirements. Specific responsibilities
include, without limitation: cash flow planning; development and monitoring of budgets, financial business plans, and forecasts;
overseeing the accounting department to ensure proper maintenance of all accounting systems and function; ensuring maintenance
of appropriate internal controls and financial procedures and financial and management reporting; overseeing the preparation quarterly
and annual financial statements, audits, working with the Audit Committee, and the proper filing of tax returns.

 

		C.	If requested, Employee shall be available from time to time to attend and participate in meetings
and conferences, under the reasonable direction of KineMed, and to participate in planning sessions with other KineMed personnel.

 

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		D.	Employee shall comply with KineMed’s written policies set out in KineMed’s Employee
Handbook, a copy of which has been provided to Employee prior to execution of this Agreement. Employee acknowledges receipt of
a copy of the Employee Handbook, agrees to comply with the matters set forth therein and acknowledges that such policies, from
time to time, may be changed at KineMed’s discretion.

 

		E.	Employee, on a continuing basis from the commencement of his employment and at all times thereafter,
shall have the highest fiduciary and affirmative duty to disclose any other scientific or business relationships in which Employee
is involved or connected that may have a direct or indirect similarity or potential or actual conflict of interest with the scientific
or business activities of KineMed.

 

		F.	Employee shall account for any and all property of KineMed that may come into Employee's possession
in the course of the employment, and at the termination of employment, Employee agrees to return all such property.

 

		G.	Employee hereby grants to KineMed the right to use Employee’s name, picture, and curriculum
vitae in connection with any brochures, web sites, slide presentations, offering memoranda, and other materials as needed.

 

		H.	Employee agrees not to engage in any other employment, occupation, or consulting activity without
the prior approval of the Chief Executive Officer, except that Employee may serve on the board of directors of other companies
(currently Neurobiological Technologies, Inc. and Transcept Pharmaceuticals, Inc.) provided that there is no business conflict
between the interests of the other company and KineMed, as reasonably determined by the Chief Executive Officer.

 

		I.	KineMed reserves the right to change, either by increasing or decreasing, the duties of Employee
and to designate other duties and responsibilities of Employee within the general scope of the foregoing.

 

		J.	Employee shall initially report to and render such other services as may be reasonably requested
from time to time by David Fineman, Chief Executive Officer and Chairman of the Board of Directors (“CEO”).

 

3.  At Will Employment; Termination.
The parties acknowledge that their employment relationship is “at will.” This means that either party can terminate
the relationship with or without cause or notice at any time. No oral or written modifications, express or implied, may alter or
vary the “at will” nature of Employee’s employment with the KineMed, unless such modification is specifically
documented in a written agreement signed by both Employee and the CEO of KineMed. Any representations to the contrary, express
or implied, written or oral, are hereby disclaimed.

 

4.  Introductory Period.
KineMed’s goal is to hire the best employee for each position. It is, however, to both KineMed’s and Employee’s
advantage to have an initial period of employment in which Employee has time to appraise KineMed and Employee’s job content,
and KineMed has a similar opportunity to appraise Employee’s suitability in terms of knowledge, skills, abilities, interest,
and other factors. Therefore, there will be an introductory period of ninety (90) days, measured from Employee’s start date.
At KineMed’s discretion, the introductory period may be extended up to an additional ninety (90) days. Nothing herein shall
be interpreted as modifying the “at will” relationship described in the preceding paragraph; thus throughout the introductory
period and thereafter, Employee is and shall remain an “at will” employee.

 

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5.  Compensation.

 

A.  In exchange
for Employee’s faithful and diligent performance of his employment duties, KineMed shall pay Employee the gross sum of Twenty
Seven Thousand Eighty Three Dollars and 34/100 ($27,083.34) per month (“Compensation”). Compensation is normally payable
in two semimonthly installments for work performed from the 1st to the 15th day and from the 16th
day to the last day of each calendar month, and shall be subject to standard payroll taxes and deductions, as determined by KineMed
or its agents. Compensation for the initial and final months of Employee’s employment shall be prorated based on the number
of days of employment during such initial or final month. As a salaried exempt employee, Employee is not entitled to additional
compensation or overtime for additional hours worked beyond KineMed’s standard workweek of forty (40) hours or standard workday
day of eight (8) hours as necessary to complete assignments or when reasonably required by business needs.

 

B.  In addition
to salary compensation, Employee shall be eligible for a performance bonus of up to 50% of annual base salary, with the percentage
applicable to each year determined annually based on agreement between Employee and Employee’s Supervisor. Employee’s
eligibility for a performance bonus for calendar year 2014 has been agreed at up to 33% of annual base salary (pro-rated based
on start date of January 31, 2014). At the end of Introductory Period, Employee and Employee’s Supervisor, Chairman &
CEO David M. Fineman, will agree on certain performance milestones and/or achievements to be accomplished within the calendar year
2014. The list of milestones and achievements shall be approved by the Compensation Committee and shall become part of this Agreement.
In early 2015, Chairman Fineman shall report to KineMed’s Compensation Committee whether, in his opinion, Employee has reached
and has satisfied the performance milestones and achievements for 2014 and shall recommend to the Compensation Committee whether
Employee should be awarded a specific cash bonus and if so, the amount thereof up to $107,250.00. The Compensation Committee, based
on the recommendation of the Chairman, will take the necessary action to award Employee a cash bonus of up to $107,250.00, which
shall be payable in accordance with KineMed’s normal payroll practices and policies no later than March 15th of
2015.

 

C.  In addition,
a recommendation will be made to the Compensation Committee that Employee will be granted an option to purchase up to 4,000,000
shares of Common Stock of the Company, $0.001 par value per share, pursuant to the terms and conditions of the KineMed 2010 Equity
Incentive Plan ("the Plan") and the Stock Option Agreement.  This number of shares is based on the current capitalization
structure of the Company. Employee acknowledges and agrees that the foregoing number of shares will be adjusted for stock splits
and stock combinations that occur after today’s date. If and when a reverse stock split, which is being discussed, is put
in effect, each of the foregoing numbers will be adjusted accordingly. The formal grant and all of its terms, including the option
price, number of shares, vesting, and term shall be determined by the Compensation Committee. Once granted, the
terms of the Stock Option Agreement with Employee and the terms of the Plan are incorporated herein by reference as if set forth
in full. Employee acknowledges receipt of one copy of the Plan and acknowledges that this Plan may be amended and restated
in the event KineMed pursues an Initial Public Offering of its common stock.

 

D.  The
amount of Compensation may be adjusted effective only upon the execution by both parties of either a written amendment to this
Agreement or a KineMed, Inc. Payroll Data Change form.

 

E.  KineMed’s
payroll, fringe benefits other than the Plan, and human resource management services will be provided by and through Emplicity,
a professional employer organization (“Emplicity”). Under KineMed’s arrangement with the Emplicity, and to take
advantage of the Emplicity’s benefit package, Employee’s employer of record for purposes of payroll, fringe benefits,
and human resource matters will be Emplicity; however, the board of directors of KineMed and the Compensation Committee established
by the board shall be primarily responsible for overseeing Employee’s work and reviewing Employee’s performance, which
may include input from Emplicity. Employee will execute forms and agreements provided by Emplicity to accomplish these purposes
and to gain access to the Emplicity’s website for KineMed.

 

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F.  Employee
shall be eligible to receive the fringe benefits provided by KineMed to its Regular Employees, such as paid vacation time, sick
leave, and medical, dental, and vision insurance on the terms and as described in the Employee Handbook and in the KineMed-dedicated
Emplicity website and on-line self-service portal, as they may be revised from time to time. No representation is made whether
any of these fringe benefits will continue to be offered on the same basis. Any such benefits may be changed from time to time
by KineMed or Emplicity.

 

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6.  Confidential and Proprietary
Information.

 

A.  During
his employment, Employee may have access to or may become familiar with information that belongs to or is treated by KineMed as
proprietary or confidential. Such information includes, without limitation, the following: (a) information or details relating
to existing or potential products of KineMed, such as the KineMed Assay Technology; (b) the business plan, budget, product development
plan, potential sources of existing and possible future revenue, financing, and grants; (c) marketing and distribution techniques;
(d) information and data stored on KineMed servers, computer drives, tapes, and disks; and (e) other similar information that is
customarily deemed to be of a proprietary nature. All of the foregoing items are referred to herein as “Proprietary Information.”
Employee acknowledges and agrees that all such Proprietary Information is and shall remain the property of KineMed, and Employee
will not misuse, misappropriate, or disclose any such Proprietary Information, directly or indirectly, to any other person or use
any such Proprietary Information in any way, either during Employee's employment or at any time thereafter, except as is required
to carry out Employee’s duties hereunder. Proprietary Information shall not include information that: (a) was in the public
domain at the time it was communicated to Employee; (b) enters the public domain through no fault, unauthorized act or omission
of Employee during or after his Employment; (c) can be demonstrated to be independently developed knowledge in the possession of
Employee prior to the date of this Agreement; (d) is subsequently communicated or disclosed to Employee by a third party who has
the right to make such disclosure; or (e) is made use of or is disclosed pursuant to written consent by KineMed. Employee further
agrees that all files, documents, notes, computer disks, computer software and hardware and similar items relating to KineMed or
to KineMed’s business are and shall remain exclusively the property of KineMed, and all of the foregoing and all Proprietary
Information in the possession of Employee shall be returned to KineMed upon termination of Employee’s employment. Employee
further represents that any confidential or proprietary information obtained by Employee from a former employment or consulting
relationship shall not be used in connection with the tasks being undertaken by Employee for KineMed, and Employee shall respect
the confidential and proprietary nature of such information.

 

B.  Employee
acknowledges that KineMed currently intends to become a public reporting corporation and if so, certain information Employee will
have access to is or may be considered “insider information” under various federal and state securities laws (“Confidential
Insider Information”). In addition to the Proprietary Information described above, Employee shall not disclose any Confidential
Insider Information, directly or indirectly, to any other person or use any such Confidential Insider Information in any way, either
during the Term or at any time thereafter, except as is required to carry out Employee’s duties hereunder. Confidential Insider
Information shall not include information that: (a) was in the public domain or filed with the SEC at the time it was communicated
to Employee; (b) enters the public domain through no fault, unauthorized act or omission of Employee during or after the Term;
(c) can be demonstrated to be independently developed knowledge in the possession of Employee prior to the date he commenced rendering
services to KineMed; (d) is subsequently communicated or disclosed to Employee by a third party who has the right to make such
disclosure; or (e) is made use of or is disclosed pursuant to written consent by KineMed.

 

7.  Unfair Competition.
Employee agrees that the sale or unauthorized use or disclosure of any of Proprietary Information by Employee would constitute
unfair competition. Employee agrees not to engage in any unfair competition with KineMed (whether or not such activity is described
herein), either during Employee’s employment or following termination or expiration of such employment. Employee further
agrees that all files, notes, computer disks, records, documents, drawings, specifications, and similar items relating to KineMed’s
business, whether prepared by Employee or others, are and shall remain exclusively the property of KineMed and that they and all
copies thereof shall be returned to KineMed immediately upon termination of Employee’s employment.

 

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8.  Inventions.

 

A.  Employee
hereby sells, transfers, and assigns to KineMed or to any person or entity designated by KineMed all of the right, title, and interest
of Employee in and to all inventions, ideas, disclosures, and improvements, whether patented or not, and copyrightable material,
made or conceived by Employee, solely or jointly, or in whole or in part, during Employee’s employment (collectively, “Inventions”),
that: (i) relate to methods, designs, products, processes, or assays to be sold or developed by KineMed; (ii) otherwise relate
or pertain to the business or scientific functions or operations of KineMed; (iii) were made or conceived using KineMed’s
equipment, supplies, facilities, or trade secret information; or, (iv) were made or conceived during KineMed working hours. Employee
shall communicate promptly and disclose to KineMed, in such form as KineMed requests, all information, details, and data pertaining
to the aforementioned Inventions, all of which shall be deemed works for hire. Whether during Employee’s employment or thereafter,
Employee shall execute and deliver to KineMed such formal transfers and assignments and such other papers and documents as may
be required of Employee to permit KineMed or any designated person to file and prosecute a patent application or, as to copyrightable
material, to obtain copyright thereon for any such Inventions. Employee shall also promptly disclose to KineMed any Invention by
Employee within the one year period following the termination of Employee’s employment with KineMed so that KineMed may evaluate
whether such Inventions fall within the provisions of this paragraph 8 and belong to KineMed.

 

B.  Employee
is hereby notified, pursuant to California Labor Code § 2870, that the provisions of Section 7(A) do not apply to any invention
Employee develops entirely on Employee’s own time without using KineMed’s equipment, supplies, facilities, or trade
secret information, except for those inventions that either: (i) relate at the time of conception or reduction to practice of the
invention to KineMed’s business, KineMed Assay Technology, or actual or demonstrably anticipated research or development
of KineMed; or (ii) results from any work performed by Employee for KineMed. To the extent that a provision in this Agreement purports
to require Employee to assign an invention otherwise excluded from being required to be assigned under this Section 7(B), the provision
is against the public policy of California and is unenforceable.

 

9.  Non-Solicitation.
During the term hereof and for a period of three (3) years thereafter, Employee shall not, directly or indirectly, (i) solicit,
induce, attempt to hire, recruit, encourage, take away, or hire any employee of KineMed or cause such employee to leave his or
her employment or relationship with KineMed either for Employee or for any other entity or person, or (ii) use Proprietary Information
to solicit or refer any customers, suppliers or employees of KineMed to any other entity or person.

 

10. Agreement on Business Combination.
In the event of a merger in which KineMed is not the surviving entity, or of a sale of all or substantially all of the KineMed’s
assets, KineMed may, at its sole option: (a) assign this Agreement and all rights and obligations under it to any business entity
that succeeds to all or substantially all of the KineMed’s business through that merger or sale of assets, or (b) upon written
notice to Employee, terminate this Agreement effective on the date of the merger or sale of assets, provided, however, that KineMed
shall not incur any tax liability on account thereof.

 

11.  Notices. Any and
all notices or other communications required or permitted by this Agreement or by law to be served on or given to a party hereto
by the other party shall be deemed given: (i) when personally delivered; (ii) one (1) business day after timely delivery to Federal
Express, United Parcel Service, or other courier for overnight delivery, charges prepaid; (iii) at the earlier of its receipt or
five days after deposit in a regularly-maintained receptacle for the deposit of the United States mail, first-class postage prepaid,
addressed as described below; or (iv) if a fax number or email address is set forth on the signature page, upon written confirmation
by the fax machine or the computer of the party sending the notice that the notice has been transmitted successfully to the receiving
party’s fax machine or computer, in each case addressed, faxed, or emailed to the addressee at the address or fax number
set forth on the signature page below. Either party may change his, her, or its address, fax number, or email address for notice
purposes by a notice given in this manner.

 

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12.  Assignment. This
Agreement shall be binding on and shall inure to the benefit of the parties and their respective legal representatives, successors,
and assigns. Employee acknowledges that this is an agreement for Employee’s personal services and agrees that Employee shall
perform such services individually and may not assign his rights nor transfer his obligations under this Agreement to any other
party. KineMed shall be permitted to assign this Agreement in whole or in part.

 

13.  Dispute Resolution through
Binding Arbitration.

 

A.   Employee,
KineMed, and Emplicity agree to utilize binding arbitration as the sole and exclusive means to resolve all disputes that may arise
out of or be related in any way to Employee’s employment, including, but not limited to, the termination of Employee’s
employment and Employee’s compensation. Employee specifically waives and relinquishes his or her right to bring a claim against
KineMed and Emplicity in a court of law, and this waiver shall be equally binding on any person who represents or seeks to represent
Employee in a lawsuit against KineMed or Emplicity in a court of law. Similarly, KineMed and Emplicity specifically waive and relinquish
their rights to bring a claim against Employee in a court of law, and this waiver shall be equally binding on any person who represents
or seeks to represent KineMed or Emplicity in a lawsuit against the Employee in a court of law. Employee, KineMed, and Emplicity
agree that any claim, dispute, and/or controversy that Employee may have against KineMed, or its stockholders, directors, officers,
employees, or agents, or Emplicity, or its owners, directors, officers, managers, employees, or agents, or that KineMed or Emplicity
may have against Employee, shall be submitted to and determined exclusively by binding arbitration under the Federal Arbitration
Act, 9 U.S.C. § 1 et seq. (“FAA”), in conformity with the procedures of the California Arbitration Act
(Cal. Code Civ. Proc. sec 1280 et seq., including section 1283.05 and all of the Act’s other mandatory and permissive rights
to discovery). The FAA applies to this agreement because both KineMed’s and Emplicity’s businesses involve interstate
commerce. Included within the scope of this Agreement are all disputes, whether based on tort, contract, statute (including, but
not limited to, any claims of discrimination, harassment and/or retaliation, whether they be based on the California Fair Employment
and Housing Act, Title VII of the Civil Rights Act of 1964, as amended, or any other state or federal law or regulation), equitable
law, or otherwise. The only exception to the requirement of binding arbitration shall be for claims arising under the National
Labor Relations Act, which are brought before the National Labor Relations Board, claims for medical and disability benefits under
the California Workers’ Compensation Act, Employment Development Department claims, or as may otherwise be required by state
or federal law. However, nothing herein shall prevent Employee from filing and pursuing proceedings before the California Department
of Fair Employment and Housing, the United States Equal Employment Opportunity Commission, the National Labor Relations Board,
or any other similar federal, state or local agency, although if Employee chooses to pursue a claim following the exhaustion of
such administrative remedies, that claim will be subject to the provisions of this Agreement. By entering into this binding arbitration
provision, Employee, KineMed, and Emplicity give up their right to trial by jury of any claim that Employee may have against KineMed
or Emplicity or of any claim KineMed or Emplicity may have against Employee. This agreement is not intended to interfere with Employee’s
rights to collectively bargain, to engage in protected, concerted activity, or to exercise other rights protected under the National
Labor Relations Act.

 

B.  In addition
to any other requirements imposed by law, the arbitrator selected shall be a retired California Superior Court Judge, or an otherwise
qualified individual to whom the parties mutually agree, and shall be subject to disqualification on the same grounds as would
apply to a judge of such court. All rules of pleading (including the right of demurrer), all rules of evidence, all rights to resolution
of the dispute by means of motions for summary judgment, judgment on the pleadings, and judgment under Code of Civil Procedure
Section 631.8 shall apply and be observed. The arbitrator shall have the immunity of a judicial officer from civil liability when
acting in the capacity of an arbitrator, which immunity supplements any other existing immunity. Likewise, all communications during
or in connection with the arbitration proceedings are privileged in accordance with Cal. Civil Code Section 47(b). As reasonably
required to allow full use and benefit of this agreement’s modifications to the Act’s procedures, the arbitrator shall
extend the times set by the Act for the giving of notices and setting of hearings. Awards shall include the arbitrator’s
written reasoned opinion.

 

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C.  This
binding arbitration agreement shall not be construed to allow or permit the consolidation or joinder of other claims or controversies
involving any other employees, persons, or parties, and the parties to this Agreement understand and agree that any arbitration
conducted hereunder will not proceed as a class action, collective action, private attorney general action, or any similar representative
action. No arbitrator shall have the authority under this agreement to order any such class, collective, or representative action.
Employee, KineMed and Emplicity further understand and acknowledge that the terms of this Agreement include a waiver of any substantive
or procedural rights that each may have to bring an action on a class, collective, private attorney general, representative, or
other similar basis.

 

D.  Resolution
of all disputes shall be based solely upon the law governing the claims and defenses pleaded, and the arbitrator may not invoke
any basis, including, but not limited to, notions of “just cause,” other than such controlling law. Within (30) thirty
days of the arbitrator’s final written opinion and order, the opinion shall be subject to affirmation, reversal, or modification,
at either party’s written request, following review of the record and arguments of the parties by a second arbitrator who
shall, as far as practicable, proceed according to the law and procedures applicable to appellate review by the California Court
of Appeal of a civil judgment following court trial.

 

E.  This
is the entire agreement between Employee, KineMed, and Emplicity regarding dispute resolution, the length of Employee’s employment,
and the reasons for termination of employment, and this agreement supersedes any and all prior agreements regarding these issues.

 

F.  It is
further agreed and understood that any agreement contrary to the foregoing must be entered into, in writing, by Employee, the Chief
Executive Officer of KineMed, and the President of Emplicity. No supervisor or representative of KineMed, other than its Chief
Executive Officer, or supervisor or representative of Emplicity, other than its President, has any authority to enter into any
agreement contrary to the foregoing. Oral representations made before or after employment do not alter this Agreement.

 

14.  Amendments. This
Agreement may be amended at any time, but any amendment must be in writing and signed by both parties.

 

15.  No Waiver. The failure
of either party to insist on strict compliance with any of the terms, covenants, or conditions of this Agreement by the other party
shall not be deemed a waiver of that term, covenant, or condition, nor shall any waiver or relinquishment of any right or power
at any one time or times be deemed a waiver or relinquishment of that right or power for all or any other times.

 

16.  Severability. If
any term or provision, or portion of this Agreement is declared void or unenforceable, it shall be severed, and the remainder of
this Agreement shall be enforceable and shall in no way be affected, impaired, or invalidated.

 

17.  Integration. This
Agreement and agreements specifically referenced herein represent the entire agreement and understanding among Employee, KineMed,
and Emplicity regarding Employee’s relationship with KineMed and Emplicity, and supersede and replace any and all prior agreements
and understandings concerning Employee’s relationship with the KineMed.

 

(signatures on next page)

 

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IN WITNESS WHEREOF, the parties have executed
this Agreement to be effective as of the date set forth herein.

 

	EMPLOYEE:	 	KINEMED:
	 	 	KineMed, Inc.
	 	 	a Delaware corporation
	 	 	 	 
	/s/ Matthew M. Loar	 	By: 	/s/ David M. Fineman
	Matthew M. Loar	 	Its: 	Chief Executive Officer

 

	ADDRESS AND FAX NUMBER:	 	 
	 	 	 
	Employee:	KineMed:	KineMed, Inc. - Attention: CEO 
	 	 	5980 Horton Street, Suite 470
	 	 	Emeryville, CA 94608-2059
	 	 	Fax:  510 655 6506

 

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Amendment and Restated Employment Agreement – Matthew M. LoarLETTER AGREEMENT

 

This Letter Agreement is entered into effective
as of 25 April 2014 by and between PONTA E&P, LLP (“PONTA”), a Limited Liability Partnership whose address is 2000
Bering Drive, Suite 260, Houston, TX 77057, and HORIZON ENERGY CORP., 14116 Customs Boulevard, Suite 111, Gulfport, MS 39503 (“HORIZON”).

 

WHEREAS, PONTA, as
operator, and HORIZON, as non-operator, are desirous of
entering into a business relationship with PONTA, as oil and gas operator, and PONTA to furnish 82.89 acres of leases, also known
as the Holmes Oil Unit 1 (HOU) with a 75% net revenue interest (NRI), and HORIZON to provide funding for some limited field operations
on the HOU, with the execution of this Letter Agreement do hereby agree to the following terms and conditions for the purpose of
conducting oil and gas operations in Cherokee and Rusk Counties, Texas; and,

 

WHEREAS, PONTA is
the lessee of record of 16 leases covering approximately 82.89 acres more or less, known as the Holmes Oil Unit #1 (“HOU”),
in Cherokee and Rusk Counties, Texas, said leases, and the property covered thereby being more fully described in Exhibit “A”
attached hereto; and HORIZON is committed to being a non-operating partner in the venture to earn a working interest in the leases
for a capital contribution as described below;

 

WHEREAS, PONTA has
committed to assign HORIZON a 50% working interest (37.5% NRI) “Before Payout” in the 75% net revenue 82.89 ac. HOU;
and, a 25% working interest (18.75% NRI) “After Payout” in the 75% NRI 82.89 ac. HOU from the surface to the base of
the Pettet Formation held by PONTA;

 

WHEREAS, PONTA and
HORIZON have entered into this Letter Agreement and a Joint Operating Agreement (“JOA”) is attached and with execution
by all parties will govern their relationship concerning the 82.89 acre HOU leases; and

 

THEREFORE, it is the
intent of PONTA and HORIZON to have all parties execute this Letter Agreement and Joint Operating Agreement (JOA) and become governed
by the terms and provisions.

 

WITNESSETH

 

1.          The
JOA attached as Exhibit “B” to this Letter Agreement and this executed Letter Agreement shall be construed together as
one instrument and upon final election and terms acceptable to all parties will be executed in order to carry out proposed operations
on the 82.89 acre HOU held by PONTA.

 

2.          In
addition to outlining operational obligations, the JOA shall also control the financial obligations of the parties hereto and the
penalties for failure to meet any cash calls. As to the division of ownership of those interests fully earned under this Letter
Agreement and JOA in the 75% NRI of the HOU 82.89 acres by the parties hereto, this Letter Agreement shall control. Furthermore
this Letter Agreement shall control the division of ownership of those interests fully earned under the JOA which shall commence
with PONTA having a 50% working interest (37.5% NRI) “Before Payout” in the 75% NRI 82.89 ac HOU and 75% working interest
(56.25% NRI) “After Payout”; and HORIZON shall have a 50% working interest (37.5% NRI) “Before Payout” in the
75% net revenue 82.89 ac HOU and 25% working interest (18.75% NRI) “After Payout” assigned until Payout of HORIZON’S
ONE HUNDERD THOUSAND ($100,000) DOLLARS plus their 50% contribution to the insurance costs is reached as that term is defined below,
the ownership interests of the parties to this Agreement shall automatically convert to the 75% working interest (56.25% NRI) in
favor of PONTA “After Payout” and 25% working interest (18.75% NRI) in favor of HORIZON when payout occurs.

 

    	 

    	 

    

 

3.     Payout
shall be deemed to have occurred when the producing well has generated revenue sufficient to cover the turnkey completion cost
of US$ 100,000, less any lease operating expenses (“LOE”), insurance costs, severance taxes, ad valorem taxes, sales
taxes, royalty and overriding royalty payments attributable to the said HOU well. Any other taxes such as income taxes or franchise
taxes shall not be considered in calculating payout The accounting for the calculation of payout will be conducted by PONTA at
its office and a monthly statement will be generated and sent to HORIZON as non-operator. Lease operating expenses will be split
evenly by the partners on a 50% basis until payout and then revert to 75% Ponta and 25% HORIZON. The normal monthly lease operating
expenses include $450/month for pumper’s fee and $600/month for accounting and administration. During the course of normal
operations, a workover of the well has to be performed occasionally and will be billed to the partners based on their working interest
The normal cycle for workover operations for wells in the Pettet Formation in this area is about every 1.5 years in order to clean
paraffin out of the tubing. This workover operation usually costs about $20,000 or $1,100/month added to the LOE. Additionally,
insurance costs will be split on a 50% basis between PONTA and HORIZON and HORIZON’s share will be added to the base payout
amount of $100,000.

 

4.     In
order to earn a 50% working interest (37.5% NRI) “Before Payout” in the 75% net revenue 82.89 ac HOU and 25% working
interest (18.75% NRI) “After Payout” held by PONTA, HORIZON has agreed to the following workover operations based on
a maximum financial commitment of US$ 100,000 plus 50% of insurance costs and normal operations, stipulated in the Joint Operating
Agreement (JOA) that is Exhibit “B” including the joint accounting document (COPAS) attached as Exhibit “C”
and AFE attached as Exhibit “H”:

 

a.) Frac the Holmes
Unit #1 well in the Lower Pettet Transition Zone. HORIZON will fund the workover operations and testing of the zone of interest
for a Turnkey Cost of US$ 100,000 plus its 50% share of insurance costs. Ponta will fund any amount over the $100,000 plus its
50% share of insurance costs. HORIZON shall also earn its proportionate share of equipment that is part of the HOU property including
a pumping unit, tanks, and separators.

 

5.     Term.
This Agreement shall terminate pursuant to the provisions of Article XIII Option 1 of the JOA.

 

6.     Binding
Upon Heirs, Personal Representatives, Successors and Assigns. This Agreement shall be binding upon the heirs, personal representatives,
successors and assigns of each of the parties to this Agreement.

 

7.     Entire
Agreement. This Letter Agreement and the JOA set forth the entire agreement by and between PONTA and HORIZON.

 

8.     GOVERNING
LAW. THE LAWS OF THE STATE OF TEXAS SHALL GOVERN THIS AGREEMENT.

 

9.     Relationship.
It is not intended, and this agreement shall not be construed to create or perpetuate a partnership, joint venture, mining partnership
or association of any kind between the parties.

 

10.   Indemnification:
PONTA shall indemnify HORIZON from any and all claims arising out of PONTA’S operation of the HOU.

 

    	 

    	 

    

 

ACKNOWLEDGEMENTS

 

IN WlTNESS WHEREOF, this agreement is executed
effective as of the date set forth above.

 

	 	Ponta E&P LLP (Operator)	 	 
	 	 	 	 	 
	 	By:	/s/ Milton H. West, III	 	 
	 	 	Print Name	Milton H. West, III	 
	 	 	 	 	 
	 	 	Title	Partner	 

 

STATE OF TEXAS                          §

 

COUNTY OF HARRIS                    §

 

This instrument was acknowledged before
me, this 23rd day of April, 2014, by
Milton H. West, III.

 

		Diana Olivares	 
	Notary Public for the State of Texas
	Printed Name: 	Diana Olivares

 

	 	Horizon Energy Corp (Non-operator)	 
	 	 	 	 	 
	 	By:	/s/ Robert Bludorn	 	 
	 	 	Print Name	Robert Bludorn	 
	 	 	 	 	 
	 	 	Title	President and CEO	 

 

STATE OF LA.                                 §

 

COUNTY OF ST. TAMMANY       §

 

This instrument was acknowledged before
me, this 13th day of May, 2014, by Robert.
Bludorn.

 

		Steven Teal	 
	Notary Public for the State of LA.
	Printed Name: 	Steven Teal
	 	 

 

 

    	 

    	 

    

 

EXHIBIT “A”

 

ATTACHED TO AND MADE A PART OF THAT CERTAIN
OPERATING AGREEMENT DATED April 25, 2014 BETWEEN PONTA E&P LLP, AS OPERATOR, and HORIZON ENERGY CORP AS NON-OPERATOR.

 

The leases total 82.89
acres, more or less, covering three tracts in the Stephen F. Noble Survey A-637 in Cherokee County, TX and M.H. Davis Survey A-249
in Cherokee and Rusk Counties, Texas.

 

 

    	 

    	 

    

 

EXHIBIT “B”

 

Attached to and made a part of that certain
letter agreement dated April 5, 2014 between PONTA and HORIZON.

 

A.A.P.L. FORM 610 - 1989

 

MODEL FORM OPERATING AGREEMENT

 

    	 

    	 

    

 

EXHIBIT “C”

 

	NAME OF OWNER	 	LEASE DATE	 	
        LEASE

        VOL/PAGE
	 	
        LESSOR LSE

        ROYALTY

	 	 	 	 	 	 	 
	Faye Louise Byrd	 	7/29/2011	 	2087/733	 	0.187500
	 	 	 	 	 	 	 
	Larry C. Christopher	 	7/29/2011	 	2087/742	 	0.187500
	 	 	 	 	 	 	 
	Danny F. Christopher	 	7/29/2011	 	2087/749	 	0.187500
	 	 	 	 	 	 	 
	Celesta Christopher Whatley	 	7/29/2011	 	2087/752	 	0.187500
	 	 	 	 	 	 	 
	Donna Faye Baker	 	7/29/2011	 	2087/730	 	0.187500
	 	 	 	 	 	 	 
	Marie Christopher	 	7/29/2011	 	2087/739	 	0.187500
	 	 	 	 	 	 	 
	Patricia B. Christopher	 	7/29/2011	 	2087/736	 	0.187500
	 	 	 	 	 	 	 
	Lewie Byers	 	7/29/2011	 	2087/745	 	0.200000
	 	 	 	 	 	 	 
	William M. Holland	 	7/29/2011	 	2094/315	 	0.200000
	 	 	 	 	 	 	 
	Pogo Producing Company, LLC	 	10/31/2011	 	2088/215	 	0.250000
	 	 	 	 	 	 	 
	Culroy PA, a Texas general partnership	 	11/11/2011	 	2094/307	 	0.200000
	 	 	 	 	 	 	 
	LaNelle F. Hawkins, Trustee of the Hawkins Revocable Trust	 	11/11/2011	 	2094/311	 	0.200000
	 	 	 	 	 	 	 
	Donald W. Hawkins	 	11/11/2011	 	2094/319	 	0.200000
	 	 	 	 	 	 	 
	Wyatt T. Norman, III	 	11/11/2011	 	2094/304	 	0.250000
	 	 	 	 	 	 	 
	Kevin Bliss Norman	 	11/11/2011	 	2094/304	 	0.250000
	 	 	 	 	 	 	 
	Carl Dan Downs and Deborah Joy Holmes Downs, husband and wife	 	1/17/2011	 	2053/816	 	0.187500

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