Document:

Exhibit 10.5

     

    EMPLOYMENT
      AGREEMENT 

     

         THIS
      EMPLOYMENT AGREEMENT (“Agreement”)
      is
      made and entered into as of November 30, 2006, by and between Xcorporeal,
      Inc., a Delaware corporation (“Company”),
      and
      Victor Gura, M.D. (“Executive”).
      

     

    RECITALS 

     

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

     

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

     

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

     

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

     

    AGREEMENT 

     

    1.
      TERM
      OF EMPLOYMENT 

     

         1.1
      Initial
      Term.
      The
      initial term of employment will begin on December 1, 2006 (the
“Commencement
      Date”)
      and
      will continue until four (4) years following the Commencement Date
      (“Initial
      Term”).
      After
      the expiration of the Initial Term, Executive will be employed on an at-will
      basis, with either party able to terminate the employment, with or without
      cause
      and with or without notice. For purposes of this Agreement, the “Term”
shall
      mean the period during which Executive is an employee of the Company.

     

    2.
      EMPLOYMENT 

     

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

     

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

         2.3
      Standard
      of Performance.
      Executive agrees that he will at all times faithfully and industriously and
      to
      the best of his ability, experience and talents perform all of the duties that
      may be required of and from him pursuant to the terms of this Agreement. Such
      duties will be performed at such place or places as the interests, needs,
      business and opportunities of Company will require or render advisable.

     

         2.4
      Exclusive
      Service.
      

     

              (a) Subject
      to Section 2.4(b),
      Executive will (i) devote substantially all of his business energies and
      abilities and all of his productive time to the performance of his duties under
      this Agreement (reasonable absences during holidays and vacations excepted),
      and
      will not, without the prior written consent of Company, render to others any
      service of any kind (whether or not for compensation) that, in the opinion
      of
      Company, would materially interfere with the performance of his duties under
      this Agreement, and (ii) not, without the prior written consent of Company,
      maintain any affiliation with, whether as an agent, consultant, employee,
      officer, director, trustee or otherwise, nor will he directly or indirectly
      render any services of an advisory nature or otherwise to, or participate or
      engage in, any other company or business activity. 

     

              (b) Provided
      that doing so does not interfere with Executive’s obligations under the other
      provisions of this Section 2,
      Executive may spend up to ten hours per week (on a non-cumulative basis)
      attending and presenting at medical conferences, meetings and symposiums,
      lecturing and teaching at UCLA The Geffen School of Medicine, or treating
      private patients, all in a manner that does not compete with the business of
      the
      Company. 

     

    3.
      COMPENSATION 

     

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

     

         3.2
      Base
      Salary.
      Company
      will pay to Executive a base salary equivalent to $420,000.00 per year
      commencing the Commencement Date, payable in accordance with Company’s standard
      payroll practices. At Company’s sole discretion, Executive’s base salary may be
      increased, but not decreased, annually. Notwithstanding the foregoing,
      commencing on January 1, 2008 and annually thereafter, the Base Salary will
      be increased by at least the Consumer Price Index for Los Angeles, California
      (or a reasonable proxy thereof). 

     

         3.3
      Discretionary
      Bonus.
      Except
      as described in Section 5.1
      below,
      Executive is eligible to receive an annual bonus in an amount that will be
      targeted at 50% of Executive’s base salary for such year. The bonus will be
      based on Executive achieving designated individual goals and milestones, and
      the
      overall performance and profitability of the Company. The goals and milestones
      will be established and reevaluated on an annual basis by mutual agreement
      of
      Executive and the Chairman, subject to review and approval by the Board or
      its
      Compensation Committee. Any bonus under this Section 3.3
      will be
      based on a calendar year and will be paid no later than the
      March 15th
      of the
      following year, and will be payable to the extent awarded regardless of whether
      Executive’s employment terminated prior to such payment. The first 

     

    
      
        
        

      

      
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    annual
      bonus (for calendar year 2006), to the extent granted at the sole discretion
      of
      the Company, will be prorated based on the Commencement Date. 

     

         3.5
      Stock
      Options.
      

     

              (a) Upon
      U.S. Food and Drug Administration approval of the Company’s first product,
      Executive will, subject to Board approval (which will not be unreasonably
      withheld), be granted an option to purchase 500,000 shares of Company’s common
      stock pursuant to a stock option agreement under the provisions of Company’s
      2006 Stock Incentive Plan (“Plan”)
      at an
      exercise price equal to the fair market value of the common stock on the date
      of
      grant, with a term of 10 years. This option is in addition to the option to
      purchase 500,000 shares of common stock granted to Executive on November 14,
      2006 in his capacity as a director of the Company. 

     

              (b) Except
      as otherwise set forth herein, vesting of options will cease upon the
      termination of both Executive’s service as a director and employment with
      Company and its affiliates. 

     

         3.6
      Fringe
      Benefits.
      Subject
      to Section 3.7
      and upon
      satisfaction of the applicable eligibility requirements, Executive and
      Executive’s family will be provided with group medical and dental insurance and
      group dental coverage through Company’s plans. Medical and dental benefits will
      commence on the first day of the month following the Commencement Date. In
      the
      event that no benefit plans are in place at that time, the Company will
      reimburse Executive for COBRA coverage until such time as Executive is covered
      under the Company’s group medical and dental plans. Company will pay for
      $500,000 of term life insurance for the benefit of Executive, subject to the
      standard physical examination that is required by the issuing insurance company.
      In addition, Executive will be provided with accidental death and disability
      and
      long-term disability insurance, or reimbursed for the reasonably equivalent
      cost
      of a private disability policy. Executive will also be provided with $1,500
      per
      month to reimburse executive for the cost of an automobile. Executive is also
      eligible to participate in Company’s 401K plan beginning on the first day of the
      month following the Commencement Date. 

     

         3.7
      Paid
      Time Off.
      Executive will accrue, on a daily basis, a total of four (4) workweeks of paid
      time off (PTO) per year commencing with the Commencement Date, provided,
      however, that Executive’s accrued and unused PTO may not exceed a total of seven
      (7) workweeks. This PTO will be in addition to normal Company holidays,
      which will be determined at the discretion of the Company from time to time.
      Thereafter, Executive will not continue to accrue PTO benefits until he has
      used
      enough PTO time to fall below this maximum amount. Any accrued but unused PTO
      will be paid to Executive, on a pro rata basis, at the time that his employment
      is terminated. In addition to PTO, the Executive will be entitled to normal
      Company holidays. 

     

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

     

    
      
        
        

      

      
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    4.
      REIMBURSEMENT OF EXPENSES 

     

         4.1
      Travel
      and Other Expenses.
      Company
      will pay to or reimburse Executive for those travel, promotional, professional
      continuing education and licensing costs (to the extent required), professional
      society membership fees, seminars and similar expenditures incurred by Executive
      which Company determines are reasonably necessary for the proper discharge
      of
      Executive’s duties under this Agreement and for which Executive submits
      appropriate receipts and indicates the amount, date, location and business
      character in a timely manner. 

     

         4.2
      Liability
      Insurance.
      Company
      will provide Executive with officers and directors’ insurance, or other
      liability insurance, consistent with its usual business practices, to cover
      Executive against all insurable events related to his employment with Company.
      

     

         4.3
      Indemnification.
      Promptly upon written request from Executive, Company will indemnify Executive,
      to the fullest extent under applicable law, for all judgments, fines,
      settlements, losses, costs or expenses (including attorney’s fees), arising out
      of Executive’s activities as an agent, employee, officer or director of Company,
      or in any other capacity on behalf of or at the request of Company. Such
      agreement by Company will not be deemed to impair any other obligation of
      Company respecting indemnification of Executive otherwise arising out of this
      or
      any other agreement or promise of Company or under any statute. The rights
      to
      indemnification will survive any termination of Executive’s employment or this
      Agreement. 

     

    5.
      TERMINATION 

     

         5.1
      Termination
      With Good Cause; Resignation Without Good Reason.
      Company
      may terminate Executive’s employment at any time, with or without notice, or
      Good Cause (as defined below). If Company terminates Executive’s employment with
      Good Cause, or if Executive resigns without Good Reason (as defined below),
      Company will pay Executive his salary prorated through the date of termination,
      at the rate in effect at the time notice of termination is given, together
      with
      any benefits accrued through the date of termination and any accrued bonus
      earned through the date of termination. Company will have no further obligations
      to Executive under this Agreement or any other agreement, and all unvested
      options will terminate. 

     

         5.2
      Termination
      Without Good Cause; Resignation with Good Reason.
      Executive will have the right to terminate his employment with notice and Good
      Reason. If Company terminates Executive’s employment without Good Cause, or
      Executive resigns for Good Reason: 

     

              (a) Company
      will pay Executive his salary prorated through the date of termination, at
      the
      rate in effect at the time notice of termination is given, together with any
      benefits accrued through the date of termination; 

     

              (b) Company
      will pay Executive in a lump sum an amount equal to two (2) year’s salary
      (at the rate in effect at the time of termination) plus a bonus equal to 200%
      of
      the targeted bonus for the year in which termination occurs; 

     

              (c) All
      of Executive’s unvested stock options will vest immediately; and 

     

    
      
        
        

      

      
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              (d) In
      addition to any rights under COBRA, the term for continued medical benefits
      provided by Company will continue for a period of two years from the date of
      termination, provided that coverage will terminate sooner if Executive and
      his
      family become eligible for coverage under another employer’s plan. 

     

              To
      be eligible for the compensation provided for in Section 5.2(b),
      (c) and (d)
      above,
      Executive must execute a full and complete release of any and all claims against
      Company, excluding only: (i) claims for indemnification under (A)
Sections 4.3
      or 10.12
      of this
      Agreement, (B) the Indemnification Agreement dated October 13, 2006
      between the Company and Executive, or (C) the articles of incorporation or
      bylaws of the Company or applicable law; (ii) post-employment termination
      rights under employee benefit plans and stock option agreements; and
      (iii) rights to the compensation provided for in Section 5.2(b),
      (c) and (d)
      above.
      Except as set forth above, the release shall be in substantially the standard
      form used by Company (“Release”). 

     

         5.3
      Good
      Cause.
      For
      purposes of this Agreement, a termination will be for “Good Cause” if Executive
      has: 

     

              (a) Commited
      an act of actual fraud, moral turpitude, misappropriation of funds or
      embezzlement in connection with his duties under this Agreement; 

     

              (b) Willfully
      or recklessly violated (i) Executive’s fiduciary duty to Company;
      (ii) any material provision of Company’s written Executive Handbook which
      results in material damage to the Company, or (iii) any applicable state or
      federal law or regulation; 

     

              (c) Willfully,
      recklessly or grossly negligently failed or refused to comply with (i) the
      Company’s written Codes of Ethics as adopted by the Board or (ii) all
      relevant and material obligations, assumable and chargeable to an executive
      of
      his corporate rank and responsibilities, under the Sarbanes-Oxley Act and the
      regulations of the Securities and Exchange Commission promulgated thereunder;
      

     

              (d) Materially
      breached this Agreement (other than Section 10.1)
      or the
      Confidentiality Agreement (defined below), or willfully failed to or refused
      to
      comply with the lawful directives of the Chairman or the Board in the
      performance of his duties under this Agreement (other than a failure caused
      by
      temporary disability); provided, however, that no termination will occur on
      that
      basis unless the Company first provides the Executive with written notice to
      cure; the notice to cure will reasonably specify the acts or omissions that
      constitute the Executive’s failure or refusal to perform his duties, and the
      Executive will have a reasonable opportunity given the circumstances (not to
      exceed 30 days after the date of notice to cure) to correct his failure or
      refusal to perform his duties; 

     

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

     

    
      
        
        

      

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

     

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

     

              (b) Relocation
      of Executive’s site of employment outside a 30 mile radius of Los Angeles
      (unless closer to Executive’s residence) without Executive’s consent, except for
      reasonably required travel on Company’s business; 

     

              (c) Failure
      to cause any acquiring or successor entity following a Change in Control to
      assume Company’s obligations under this Agreement, unless such assumption occurs
      by operation of law; or 

     

              (d) Material
      breach of this Agreement by Company, or failure to timely pay to Executive
      any
      amount due under Section 3,
      which
      continues after written notice and reasonable opportunity to cure (not to exceed
      10 days after the date of notice); 

     

              (e) Executive
      is asked to report to an individual other than the current Chairman or Board;
      

     

              (f) The
      Company voluntarily sells, transfers or assigns all or substantially all of
      its
      rights under the Company’s License Agreement dated September 1, 2006;

     

              (g) Company’s
      failure to grant the stock options as provided in Section 3.5(a);
      or

     

              (h) The
      occurrence of a Change in Control (as defined below). 

     

         5.5
      Effects
      of Change in Control.
      Immediately upon a Change in Control, all of Executive’s unvested options will
      vest immediately, and remain exercisable until the later of the expiration
      date
      of the options as specified in the option agreement or three (3) years
      after the Change of Control. 

     

         5.6
      Change
      in Control.
      For
      purposes of this Agreement, a “Change
      in Control”
will
      be
      defined as: 

     

              (a) The
      acquisition of Company by another entity by means of a transaction or series
      of
      related transactions (including, without limitation, any reorganization, merger,
      stock purchase or consolidation); 

     

              (b) The
      sale, transfer or other disposition of all or substantially all of the Company’s
      assets; or 

     

              (c) The
      acquisition by merger, purchase of stock or otherwise, in one or a series of
      transactions, of more than 50% of the common stock of the Company, or of other
      voting 

     

    
      
        
        

      

      
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    securities
      of the Company having the ability to elect a majority of the members of the
      Board, by a person, entity or a “group” (as defined in Section 13(d)(3) of
      the Securities Exchange Act), other than the person who is the Chairman as
      of
      the date of execution of this Agreement, or any of his affiliates. 

     

         5.7
      No
      Change in Control.
      Notwithstanding the provisions of Section 5.6,
      the
      following will not constitute a Change in Control: 

     

              (a) If
      the sole purpose of the transaction is to change the state of the Company’s
      incorporation or to create or eliminate a holding company that will be owned
      in
      substantially the same proportions by the same beneficial owners as before
      the
      transaction; 

     

              (b) If
      Company’s stockholders of record as constituted immediately prior to the
      transaction will, immediately after the transaction (by virtue of securities
      issued as a consideration for Company’s capital stock or assets or otherwise),
      hold more than 50% of the combined voting power of the surviving or acquiring
      entity’s outstanding securities; 

     

              (c) An
      underwritten public offering of Company’s common stock, if Company’s
      stockholders of record as constituted immediately prior to the offering will,
      immediately after the offering, continue to hold more than 50% of the combined
      voting power of Company’s outstanding securities; 

     

              (d) The
      private placement of preferred or common stock, or the issuance of debt
      instruments convertible into preferred or common stock, for fair market value
      as
      determined by the Board, provided the acquiring person does not as a result
      of
      the transaction own more than 50% of the outstanding capital stock of Company,
      have the right to vote more than 50% of the outstanding voting stock of Company,
      or have the right to elect a majority of the Board; or 

     

              (e) If
      Executive is a member of a group that acquires control of Company in an event
      that would otherwise be a Change in Control, such event will not be deemed
      a
      Change in Control and Executive will have no right to benefits hereunder as
      a
      result of such event; provided, however, that Executive will not be deemed
      a
      member of any acquiring group solely by virtue of his continued employment
      or
      ownership of stock or stock options following a Change in Control. 

     

         5.8
      Death
      or Disability.
      To the
      extent consistent with federal and state law, Executive’s employment, salary,
      and accrual of commissions will terminate on his death or disability.
“Disability” means any health condition, physical or mental, or other cause
      beyond Executive’s control, that prevents him from performing his duties, even
      after reasonable accommodation is made by Company, for a period of 180
      consecutive days within any 360 day period. In the event of termination due
      to death or Disability, Company will pay Executive (or his legal representative)
      his salary prorated through the date of termination, at the rate in effect
      at
      the time of termination, together with any benefits accrued through the date
      of
      termination, and an amount equal to (a) one year of salary (at the rate in
      effect at the time of termination); and (b) the Executive’s full targeted bonus
      for that year. To be eligible for the compensation provided for in this
Section 5.5,
      Executive’s representative must execute a Release (as contemplated by
      Section 5.2) on behalf of Executive or Executive’s estate. 

     

    
      
        
        

      

      
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         5.9
      Return
      of Company Property.
      Within
      five (5) days after the Termination Date, Executive will return to Company
      all products, books, records, forms, specifications, formulae, data processes,
      designs, papers and writings relating to the business of Company including
      without limitation proprietary or licensed computer programs, customer lists
      and
      customer data, and/or copies or duplicates thereof in Executive’s possession or
      under Executive’s control. Executive will not retain any copies or duplicates of
      such property and all licenses granted to him by Company to use computer
      programs or software will be revoked on the Termination Date. 

     

    6.
      DUTY
      OF LOYALTY 

     

         6.1
      During his employment with the Company, Executive will not, without the prior
      written consent of Company, directly or indirectly render services of a
      business, professional, or commercial nature to any person or firm, whether
      for
      compensation or otherwise, or engage in any activity directly or indirectly
      competitive with or adverse to the business or welfare of Company, whether
      alone, as a partner, or as an officer, director, employee, consultant, or holder
      of more than 1 % of the capital stock of any other corporation. Otherwise,
      Executive may make personal investments in any other business so long as these
      investments do not require him to participate in the operation of the companies
      in which he invests. Notwithstanding the foregoing, Executive will be permitted
      to engage in non-competitive professional activities as provided in Section
      2.4(b).
      

     

    7.
      CONFIDENTIAL INFORMATION 

     

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

     

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

     

         7.3
      Inevitable
      Disclosure.
      Subject
      to Section 5.2,
      after
      Executive’s employment has terminated with Good Cause or without Good Reason,
      Executive will not accept employment with any direct competitor of Company
      for a
      period of one (1) year, where the new employment is likely to result in the
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    information,
      or it would be impossible for Executive to perform his new job without using
      or
      disclosing trade secrets or confidential information. 

     

         7.4
      Limited
      Exceptions.
      Notwithstanding the foregoing, no information will be considered trade secret
      or
      confidential to the extent it is or becomes publicly available without breach
      of
      this Agreement by Executive, is rightfully received by Executive without
      obligations of confidentiality, or is ordered released or disclosed by court
      order, lawful process or government authority. 

     

         7.5
      Continuing
      Effect.
      The
      provisions of this Section 7
      will
      remain in effect after the Termination Date. 

     

    8.
      NO
      SOLICITATION 

     

         8.1
      No
      Solicitation of Executives.
      Subject
      to Section 5.2,
      Executive agrees that he will not, during the Term and for one (1) year
      thereafter if terminated without Good Cause or with Good Reason or for two
      (2) years thereafter if terminated with Good Cause or without Good Reason,
      encourage or solicit any other employee of Company to terminate his or her
      employment for any reason, nor will he assist others to do so. 

     

         8.2
      No
      Solicitation of Customer.
      Subject
      to Section 5.2,
      Executive agrees that he will not, during the Term and for one (1) year
      thereafter if terminated without Good Cause or with Good Reason or for two
      (2) years thereafter if terminated with Good Cause or without Good Reason,
      directly or indirectly call on, or otherwise solicit, business within the scope
      of business sought by Company from any actual customer or potential customer
      known by Executive to be targeted by Company, nor will he assist others in
      doing
      so. 

     

    9. INTELLECTUAL
      PROPERTIES. 

     

         The
      Executive has signed a separate Innovation, Proprietary Information and
      Confidentiality Agreement (“Confidentiality
      Agreement”).
      

     

    10.
      OTHER
      PROVISIONS 

     

         10.1
      Compliance
      With Other Agreements.
      Executive represents and warrants to Company that the execution, delivery and
      performance of this Agreement will not conflict with or result in the violation
      or breach of any term or provision of any order, judgment, injunction, contract,
      agreement, commitment or other arrangement to which Executive is a party or
      by
      which he is bound. 

     

         10.2
      Injunctive
      Relief.
      Executive acknowledges that the services to be rendered under this Agreement
      and
      the items described in Sections 6,
      7, 8 and 9
      are of a
      special, unique and extraordinary character, that it would be difficult or
      impossible to replace such services or to compensate Company in money damages
      for a breach of this Agreement. Accordingly, Executive agrees and consents
      that
      if he violates any of the provisions of this Agreement, Company, in addition
      to
      any other rights and remedies available under this Agreement or otherwise,
      will
      be entitled to temporary and permanent injunctive relief, without the necessity
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    proving
      actual damages and without the necessity of posting any bond or other
      undertaking in connection therewith. 

     

         10.3
      Attorneys’
      Fees.
      The
      prevailing party in any suit or other proceeding brought to enforce, interpret
      or apply any provisions of this Agreement, will be entitled to recover all
      costs
      and expenses of the proceeding and investigation (not limited to court costs),
      including all attorneys’ fees. 

     

         10.4
      Counsel.
      The
      parties acknowledge and represent that, prior to the execution of this
      Agreement, they have had an opportunity to consult with their respective counsel
      concerning the terms and conditions set forth herein. Company will pay the
      reasonable attorneys fees of Troy & Gould P.C. as counsel for Executive in
      connection with the negotiation, drafting and execution of this Agreement.
      Additionally, Executive represents that he has had an opportunity to receive
      independent legal advice concerning the taxability of any consideration received
      under this Agreement. Executive has not relied upon any advice from Company
      and/or its attorneys with respect to the taxability of any consideration
      received under this Agreement. Executive further acknowledges that Company
      has
      not made any representations to him with respect to tax issues. 

     

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

     

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

     

         10.7
      Arbitration.
      Any
      dispute, controversy or claim arising out of or relating to this Agreement,
      or
      Executive’s employment with Company, including without limitation the issue of
      arbitrability, will be resolved by final and binding arbitration before a
      retired judge at JAMS or its successor in Santa Monica, California. To the
      maximum extent permitted by applicable law he prevailing party will be awarded
      its arbitration, attorney and expert witness fees, costs and expenses. Judgment
      on any interim or final award of the arbitrator may be entered in any court
      of
      competent jurisdiction. 

     

         10.8
      Severability.
      The
      invalidity or unenforceability of any particular provision of this Agreement
      will not affect the other provisions, and this Agreement will be construed
      in
      all respects as if any invalid or unenforceable provision were omitted.

     

         10.9
      Binding
      Effect.
      The
      provisions of this Agreement will bind and inure to the benefit of the parties
      and their respective successors and permitted assigns. 

     

         10.10
      Notice.
      Any
      notices or communications required or permitted by this Agreement will be deemed
      sufficiently given if in writing and when delivered personally or 48 hours
      after
      deposit with the United States Postal Service as registered or certified mail,
      postage prepaid and addressed as follows: 

     

    
      
        
        

      

      
        -
          10
          -

        
          

        

      

      
        
        

      

    

     

         (a) If
      to Company, to the principal office of Company in the State of California,
      marked “Attention: Chairman”; or 

     

         (b) If
      to Executive, to the most recent address for Executive appearing in Company’s
      records or such other address as may be provided by Executive to the Company.
      

     

         10.11
      Headings.
      The
      Section and other headings contained in this Agreement are for reference
      purposes only and will not affect in any way the meaning or interpretation
      of
      this Agreement. 

     

         10.12
      Additional
      Indemnification.
      Provided that Executive resigns as an employee, officer and director of his
      current employer prior to the Commencement Date, notwithstanding Section 10.1,
      Company
      will indemnify, defend and hold harmless Executive from any Losses relating
      to
      any threatened, pending or completed claim, action, suit or proceeding brought
      by or on behalf of such employer relating to Executive’s resignation, entering
      into this Agreement, accepting employment with the Company and/or performing
      services hereunder. For this purpose, and any such claim, action, suit or
      proceeding will be considered a Claim and will be treated and handled in all
      respects pursuant to the Indemnification Agreement between Company and Executive
      dated as of October 13, 2006. 

     

         10.13
      Amendment
      and Waiver.
      This
      Agreement may be amended, modified or supplemented only by a writing executed
      by
      each of the parties. Either party may in writing waive any provision of this
      Agreement to the extent such provision is for the benefit of the waiving party.
      No waiver by either party of a breach of any provision of this Agreement will
      be
      construed as a waiver of any subsequent or different breach, and no forbearance
      by a party to seek a remedy for noncompliance or breach by the other party
      will
      be construed as a waiver of any right or remedy with respect to such
      noncompliance or breach. 

     

         10.14
      Entire
      Agreement.
      This
      Agreement is the only agreement and understanding between the parties pertaining
      to the subject matter of this Agreement, and supersedes all prior agreements,
      summaries of agreements, descriptions of compensation packages, discussions,
      negotiations, understandings, representations or warranties, whether verbal
      or
      written, between the parties pertaining to such subject matter. 

     

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

     

    EXECUTIVE:
      

     

    
      	
              /s/
                Victor Gura 

            	
               

            	
               

            
	
              Victor
                Gura, M.D.

            	
               

            	
               

            

    

    

     

    
      	
               

            	
               

            	
              COMPANY:

            	
               

            	
               

            
	
               

            	
               

            	
               

            	
               

            	
               

            	
               

            	
               

            
	
               

            	
               

            	
              XCORPOREAL,
                INC.

            	
               

            	
               

            
	
               

            	
               

            	
               

            	
               

            	
               

            	
               

            	
               

            
	
               
                

            	
               

            	
              By
                

            	
               

            	
              /s/
                Terren S. Peizer 

            	
               

            	
               

            
	
               
                

            	
               

            	
               

            	
               

            	
              Terren
                S. Peizer, Chairman

            	
               

            	
               

            

    

     

    
      
        
        

      

      
        -
          11
          -Exhibit 10.6

     

    INNOVATION,
      PROPRIETARY INFORMATION

    AND
      CONFIDENTIALITY AGREEMENT 

     

         As
      a condition of becoming employed or retained as a consultant by Xcorporeal,
      Inc., a Delaware corporation (together with any of its current or future
      affiliates, successors or assigns, collectively, the “Company”),
      and
      in consideration of my employment or consulting relationship with the Company
      and my receipt of the compensation paid to me by the Company, I agree to the
      following: 

     

    Recitals 

     

         A. The
      Company is dedicated to a policy of exerting a significant influence in its
      chosen fields through technical innovation and creative administration and
      marketing. The competitive success of this policy depends to a large extent
      on
      the Company’s ability to maintain a free flow of pertinent information among its
      employees and consultants. 

     

         B. All
      key employees and consultants are required to sign this standard Agreement,
      under which: (i) requirements are specified for avoiding conflicting
      outside activities while associated with the Company, (ii) the Company is
      assured of disclosure of, and exclusive rights to, my inventions, ideas and
      works which relate to Company business, and (iii) the Company is protected
      against unauthorized disclosure of confidential information of the Company
      or
      other persons and against retention of Company records. 

     

    Agreement 

     

         1. Confidential
      Information.
      

     

              (a) I
      agree at all times during the term of my relationship with the Company and
      thereafter, to hold in strictest confidence, and not to (i) use, except for
      the benefit of the Company, (ii) disclose to any person or entity without
      written authorization of the Board of Directors of the Company, or
      (iii) make copies of, except as authorized by Company, any of the
      following: confidential or proprietary information, inventions, trade secrets,
      know-how, theories, research, data, plans, products, services, suppliers,
      customers, prices, costs, markets, software, hardware, developments,
      improvements, processes, formulas, methods, technology, machines, apparatus,
      designs, drawings, engineering, configurations, laboratory notebooks, licenses,
      finances, budgets or projections, directly or indirectly created, conceived,
      invented, made, discovered, developed, worked on, learned by or disclosed to
      me
      during the course of my relationship with the Company, either orally, in
      writing, or by observation, whether or not during working hours (all of the
      foregoing, collectively, “Confidential
      Information”).
      

     

              (b) Confidential
      Information includes, but is not limited to, information pertaining to any
      aspect of the Company’s business or any use or application arising out of or
      relating to any: (i) portable or continuous dialysis method or device,
      specifically including any wearable artificial kidney, or related device,
      (ii) portable or continuous ultra-filtration method or device, specifically
      including any congestive heart failure device, or related device,
      (iii) device, method or treatment for kidney failure or congestive heart
      failure, (iv) “Technology” or “Licensed Product” as defined in the Company’s
      September 1, 2006 License Agreement, or (v) 

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    medical
      device, treatment or method substantially similar in functionality to any of
      the
      foregoing; (all of the foregoing, collectively, the “Products”).
      

     

              (c) Confidential
      Information does not include any information that is publicly and widely known
      and made generally available through no wrongful act of mine or of others who
      were under confidentiality obligations. In these regards, although certain
      information or technology may be generally known in the relevant industry,
      the
      fact that the Company uses same, and how the Company uses same, may not be
      so
      known and therefore is Confidential Information. Furthermore, the fact that
      various fragments of information or data may be generally known in the relevant
      industry does not mean that the manner in which the Company combines them and
      the results obtained thereby are so known and in such instance are also
      Confidential Information. Confidential Information also does not include
      information that I can show be clear and convincing documentary evidence was
      known to me prior to its disclosure to me by the Company. 

     

              (d) I
      recognize 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. I agree to hold all such confidential
      or proprietary information in the strictest confidence and not to disclose
      it to
      any person or entity, or to use it except as necessary in carrying out my work
      for the Company, consistent with the Company’s agreement with such third party.

     

         2. Conflicts
      of Interest.
      

     

              (a) During
      the term of my employment or consulting relationship with Company, I will not,
      without the prior written approval of the President or Chief Executive Officer
      of the Company, directly or indirectly, participate in or assist any person
      or
      business that is a current or potential competitor, customer or supplier of
      the
      Company. For these purposes, a current or potential competitor of the Company
      is
      any person or entity that has developed, is developing, is seeking to develop,
      or is selling, marketing or distributing any Products.
      I
      understand that the purpose of these restrictions is to avoid conflicts of
      interest and to avoid inadvertent trade secret disclosure during periods I
      am
      most likely to retain valuable Company trade secrets. 

     

              (b) I
      represent that my performance of all the terms of this Agreement and my work
      for
      the Company does not and will not breach any invention assignment, proprietary
      information, confidentiality or other agreement with any former employer or
      other party, or create any conflict of interest with anyone. I will not disclose
      to the Company or use for the benefit of the Company any confidential
      information derived from sources other than employment or consultation with
      the
      Company. I agree that if I am in doubt as to the confidential status of any
      information, I will refer to an executive officer of the Company the question
      of
      whether such information is available for disclosure and use for the benefit
      of
      the Company. 

     

              (c) I
      have not and will not enter into any other agreement with any other person
      or
      entity, either written or oral, in conflict with the terms of this Agreement.
      

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

         3. Inventions.
      

     

              (a)
      Disclosure.
      I will
      immediately disclose to the Company all discoveries, inventions, ideas,
      improvements, works of authorship, developments, concepts, trade secrets,
      Confidential Information, and other intellectual property, whether or not
      patentable or copyrightable (collectively, “Work
      Product”),
      that
      I create, conceive, invent, make, discover, develop, work on, or reduce to
      practice, in whole or in part, during the term of my employment or consulting
      relationship with Company, either solely or jointly with others, whether or
      not
      in the course of my employment, whether or not reduced to drawings, written
      description, documentation, models, or other tangible form. 

     

              (b)
      Work
      for Hire.
      I
      further acknowledge that all Work Product other than Personal Inventions is
      “work made for hire” to the greatest extent permitted by applicable law and are
      compensated by my salary (if I am an employee) or by such amounts paid to me
      under any applicable consulting agreement or consulting arrangements (if I
      am a
      consultant), unless regulated otherwise by mandatory applicable law.

     

              (c)
      Assignment.
      I will
      hold in trust for the sole right and benefit of the Company all Work Product
      other than Personal Inventions, and all such Work Product will forthwith and
      without further consideration become and be the exclusive property of the
      Company. I hereby absolutely, unconditionally and irrevocably assign, transfer
      and convey to the Company all Work Product and all rights in, to, arising out
      of, or relating to any Work Product, including without limitation all patents,
      copyrights, trademarks, mask works and other statutory and common law
      protections in all countries, except Personal Inventions and inventions that
      qualifies fully for exemption under California Labor Code Section 2870 or
      any other applicable law. I hereby appoint the Company’s Secretary or any other
      officer of the Company as my attorney-in-fact and agent to execute all documents
      required or appropriate to perfect or enforce all rights assigned under this
      Agreement. 

     

              (d)
      Sole
      Exception.
      The
      assignment requirement of the preceding section will not apply to Work Product
      for which all of the following conditions are met: (i) no equipment,
      supplies, facilities, or trade secret information of the Company was used,
      (ii) was developed entirely on my own time, (iii) does not arise out
      of or relate in any way to the Products, the business of the Company, or the
      Company’s actual or demonstrably anticipated research or development, and
      (iv) does not result, in whole or in part, from any work performed by me
      for the Company. Work Product satisfying all of these conditions is hereinafter
      referred to as “Personal
      Inventions.”
I
      agree that if I am in doubt as to whether any given Work Product must be
      disclosed to the Company by the terms of this Agreement, I will refer such
      question to the management of the Company. 

     

              (e)
      Assistance.
      I will
      assist the Company in every reasonable way, including without limitation
      (i) signing of all papers, authorizations, applications and assignments,
      (ii) making and keeping proper records of all Work Product,
      (iii) giving evidence and testimony (all at the Company’s reasonable
      expense), to obtain and to maintain for the use and benefit of the Company
      or
      its nominees all patents, copyrights, mask works and other protections, in
      all
      countries, for all Work Product. My obligations under this Section will extend
      beyond the termination of my employment or consulting relationship with the
      Company. 

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

              (f)
      Schedule A.
      I have
      attached hereto, as Schedule A,
      a list
      describing with particularity all Work Product, including Personal Inventions,
      that (i) was made by me prior to the commencement of my relationship with
      the Company, (ii) belongs solely, or jointly with others, to me or an
      entity in which I own or control a direct, indirect or beneficial interest,
      (iii) relates in any way to any of the Products or any application or use
      thereof, and (iv) is not assigned to the Company hereunder (collectively,
      the “Prior
      Inventions”);
      or,
      if no such list is attached, I represent that there are no Prior Inventions.
      

     

              (g) If,
      in the course of my relationship with the Company, I incorporate into a Company
      product, process or machine a Prior Invention owned by me (or, to the extent
      I
      have the ability to do so, in which I have an interest), the Company is hereby
      granted and shall have a non-exclusive, royalty-free, irrevocable, perpetual,
      worldwide license (with the right to sublicense) to make, have made, copy,
      modify, make derivative works of, use, sell and otherwise distribute such Prior
      Invention as part of or in connection with such product, process or machine.
      

     

         4. Records.
      

     

              (a) I
      will keep and maintain adequate and current written records of all Work Product
      made by me (solely or jointly with others) during the term of my relationship
      with the Company. The records may be in the form of notes, sketches, drawings,
      flow charts, electronic data or recordings, laboratory notebooks, and any other
      format. The records will be available to and remain the sole property of the
      Company at all times. I will not remove such records from the Company’s place of
      business except as expressly permitted by Company policy for the purpose of
      furthering the Company’s business. 

     

              (b) All
      data and records coming into my possession or kept by me in connection with
      the
      Company are the exclusive property of the Company. Any property situated on
      the
      Company’s premises or owned by the Company, including disks and other storage
      media, filing cabinets or other work areas, is subject to inspection by Company
      personnel at any time, with or without notice. 

     

              (c) I
      will return to the Company all originals and copies of such data and records
      upon termination of my relationship for any reason, unless specific written
      consent is obtained from an executive officer of the Company to retain any
      such
      data or records. In the event of the termination of the relationship, I agree
      to
      sign and deliver the “Termination Certification” attached hereto as Schedule B.
      

     

         5. Non-Solicitation.
      During
      my relationship with the Company and for a period one year thereafter, I will
      not, without the express prior written permission of an executive officer of
      the
      Company, solicit or encourage (nor will I direct or encourage anyone under
      my
      authority or control to solicit or encourage) any of the Company’s employees or
      full-time consultants to work elsewhere. 

     

         6. Equitable
      Relief.
      The
      Company will have the right to enforce this Agreement and any of its provisions
      by injunction, specific performance or other equitable relief, without bond
      and
      without prejudice to any other rights or remedies the Company may have, because
      a breach of this Agreement will cause irreparable harm for which there is no
      adequate remedy at law. 

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

         7. Insider
      Trading.
      I am
      aware that the United States securities laws prohibit any person who has
      material, non-public information concerning the Company from purchasing or
      selling securities of the Company or from communicating such information to
      any
      other person under circumstances in which it is reasonably foreseeable that
      such
      person is likely to purchase or sell such securities. 

     

         8. At
      Will Relationship.
      Except
      as set forth in a written agreement signed by the Chairman, President or CEO
      of
      the Company, by employment or consulting relationship with the Company is at
      will, and may be terminated by me or the Company at any time. Except as
      otherwise provided herein, the provisions of this Agreement will survive
      termination of my relationship with the Company. 

     

         9. General.
      

     

              (a) This
      Agreement will not be terminated or altered by changes in duties compensation,
      or other terms of my employment or consulting arrangement. 

     

              (b)
      Disclosure.
      I
      hereby authorize the Company to disclose this Agreement and my responsibilities
      hereunder to any person or entity, including without limitation, my future
      employers or clients. 

     

              (c)
      Severability.
      The
      invalidity or unenforceability of any provisions of this Agreement under
      particular facts and circumstances will not affect the validity or
      enforceability either of other provisions of this Agreement or, under other
      facts and circumstances, of such provisions. In addition, such provisions will
      be reformed to be less restrictive if under such facts and circumstances they
      would then be valid and enforceable. 

     

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

     

              (e)
      Arbitration.
      Any
      dispute, controversy or claim arising out of or relating to this Agreement,
      or
      my employment or consulting relationship with the Company, including without
      limitation the issue of arbitrability, will be resolved by final and binding
      arbitration before a retired judge at JAMS or its successor in Santa Monica,
      California. To the maximum extent permitted by applicable law he prevailing
      party will be awarded its arbitration, attorney and expert witness fees, costs
      and expenses. Judgment on any interim or final award of the arbitrator may
      be
      entered in any court of competent jurisdiction. 

     

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

     

              (g)
      Waiver.
      No
      waiver by either party of a breach of any provision of this Agreement will
      be
      construed as a waiver of any subsequent or different breach, and no forbearance
      by a party to seek a remedy for noncompliance or breach by the other party
      will
      be construed as a waiver of any right or remedy with respect to such
      noncompliance or breach. 

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

              (h)
      Amendment.
      This
      Agreement may be amended, modified or supplemented only by a writing executed
      by
      the Chairman, President or CEO of the Company. 

     

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

     

    
      	
               

            	
               

            	
               

            
	
              ________________________________
                

            	
               

            	
              ________________________________

            
	
              Signature
                

            	
               

            	
              Date

            
	
               

            	
               

            	
               

            
	
              ________________________________

            	
               

            	
               

            
	
              Printed
                Name

            	
               

            	
               

            

    

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    Schedule A 

     

    LIST
      OF PRIOR INVENTIONS 

     

    
      	
              ___
                

            	
               

            	
              I
                have no Prior Inventions as defined in the Innovation, Proprietary
                Information And Confidentiality Agreement.

            
	
               

            	
               

            	
               

            
	
              ___
                

            	
               

            	
              I
                have the following Prior
                Inventions:

            

    

    

     

    
      	
              No.

            	
               

            	
              Title

            	
               

            	
               

            	
              Description

            	
               

            
	
               

            	
               

            	
               

            	
               

            	
               

            	
               

            	
               

            	
               

            	
               

            
	
               

            	
               

            	
               

            	
               

            	
               

            	
               

            	
               

            	
               

            	
               

            
	
               

            	
               

            	
               

            	
               

            	
               

            	
               

            	
               

            	
               

            	
               

            
	
               

            	
               

            	
               

            	
               

            	
               

            	
               

            	
               

            	
               

            	
               

            
	
               

            	
               

            	
               

            	
               

            	
               

            	
               

            	
               

            	
               

            	
               

            
	
               

            	
               

            	
               

            	
               

            	
               

            	
               

            	
               

            	
               

            	
               

            

    

    Number
      of
      Prior Inventions listed (if any): ___ 

     

    Number
      of
      additional pages attached (if any): ___ 

     

    
      	
               

            	
               

            	
               

            
	
              ________________________________
                

            	
               

            	
              ________________________________

            
	
              Signature
                

            	
               

            	
              Date

            
	
               

            	
               

            	
               

            
	
              ________________________________

            	
               

            	
               

            
	
              Printed
                Name

            	
               

            	
               

            

    

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    Schedule B 

     

    TERMINATION
      CERTIFICATION 

     

         This
      is to certify that I do not have in my possession, nor have I failed to return,
      any devices, records, data, notes, reports, proposals, lists, correspondence,
      specifications, drawings, blueprints, sketches, laboratory notebooks, flow
      charts, materials, equipment, other documents or property, or copies or
      reproductions of any aforementioned items belonging to Xcorporeal, Inc., its
      affiliates, successors or assigns (together the “Company”).
      

     

         I
      further certify that I have complied with all the terms of the Innovation,
      Proprietary Information And Confidentiality Agreement (“Agreement”) signed by
      me, including the reporting of any inventions and Work Product (as defined
      therein), conceived or made by me (solely or jointly with others) covered by
      the
      Agreement, and the return do all Company documents and records. 

     

    
      	
              ________________________________
                

            	
               

            	
              ________________________________

            
	
              Signature
                

            	
               

            	
              Date

            
	
               

            	
               

            	
               

            
	
              ________________________________

            	
               

            	
               

            
	
              Printed
                Name

            	
               

            	
               

            

    

     

    
      
        
        

      

      
        8

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